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Delinquencies in Indiana Rise in Latest National Survey The delinquency rate for mortgage loans on residential properties in Indiana was 10.35 percent at the end of the second quarter of 2010, an increase of 57 basis points from the first quarter of 2010, according to the Mortgage Bankers Association (MBA). The delinquency rate excludes loans in the process of foreclosure. The percentage of loans in Indiana on which foreclosure was started during the quarter fell 15 basis points to 1.08 percent, while the percentage of loans in the foreclosure process at the end of the quarter fell one basis point to 4.5 percent. These rates are not seasonally adjusted. Mortgage delinquency rates normally rise between the first and second quarters of the year due to a variety of seasonal factors. The delinquency rate for prime adjustable-rate mortgage (ARM) loans increased 47 basis points to 11.07 percent and the rate for prime fixed-rate mortgage loans increased 12 basis points to 5.63 percent. The delinquency rate for the sub-prime ARM loans increased 163 basis points to 31.82 percent, while the rate for subprime fixed-rate loans increased 120 basis points to 25.13 percent. The delinquency rates for FHA and VA loans were 13.7 percent and 9.75 percent, respectively—up 109 basis points for FHA loans and up 56 basis points for VA loans. The foreclosure starts rate for prime ARM loans in Indiana decreased 10 basis points to 1.18 percent, while the rate for prime fixed-rate loans increased three basis points to 0.74 percent. The foreclosure starts rate for sub-prime ARM loans decreased 83 basis points to 2.89 percent, while the rate for sub-prime fixed-rate loans decreased 31 basis points to 2.19 percent. The percentage of prime ARM loans in foreclosure decreased 11 basis points to 7.31 percent and increased nine basis points to 2.65 percent for prime fixed-rate loans. The rate for sub-prime ARM loans decreased 79 basis points to 17.77 percent, while the rate for sub-prime fixed-rate loans increased seven basis points to 8.74 percent. The percentage of FHA loans in foreclosure decreased 35 basis points to 4.96 percent. The percentage of VA loans in foreclosure decreased 32 basis points to 4.54 percent.

Among the 50 states and the District of Columbia, Indiana ranked 12th in delinquencies and 11th in foreclosures started. Mississippi ranked first in delinquencies with a rate of 13.66 percent and Nevada ranked first in foreclosure starts with a rate of 2.93 percent. On a national level, the delinquency rate for mortgage loans on one-to-fourunit residential properties was 9.40 percent on a non-seasonally adjusted basis, up two basis points from 9.38 percent in the first quarter of 2010. The seasonally adjusted delinquency rate on residential properties was 9.85 percent in the first quarter, down 21 basis points from last quarter’s seasonally adjusted rate. The non-seasonally adjusted percentage of loans in which foreclosure was started during the quarter decreased 12 basis points to 1.11 percent, while the non-seasonally adjusted percentage of loans in the foreclosure process at the end of the quarter fell six basis points to 4.57 percent. For more information, visit

r ne Lea s n sso


Le Florida ss: Out of o : e B m e h d Sc ver ge Frau erco M o rtga s a Un d x e T ast Major E 203(k) Rehab Loan Program: Foreclosures Present Challenges, Opportunity NMLS an d St ate Testing fo r Mortgage Pr ofessionals

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“When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu has set down an impressive amount of information ... And he delivers it in an easy-to-read, simpleto-understand style that will make this book essential reading for all reverse mortgage professionals.” —from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom Senior Funding Corporation, and former four-term Co-Chair of NRMLA’s Board of Directors

“The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and acceptance of reverse mortgages among us laypeople. They are very compelling ...” —Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends of the Elderly

“This book should be required reading for all new loan consultants originating reverse mortgages and is recommended for experienced ones as well. This book provides excellent insight and information on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan process and shorten the time to closing. Most of the problems caused in the processing and closing of reverse mortgages come from inadequate preparation.” —Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company


Part I: The new pillar of retirement security Part II: Marketing reverse mortgages: It’s all about education Part III: Originating reverse mortgages Part IV: Enhancing freedom: The essence of reverse mortgages Part V: A new frontier in mortgage lending

—Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLA’s Board of Directors




“Atare Agbamu is one of only a handful of people in the reverse mortgage arena who possesses a commanding understanding of the reverse mortgage industry. As an originator, he has hands-on experience educating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing the unique insights and experience of an ardent reverse mortgage expert into a wider business context. “This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information on marketing and originating reverse mortgages. “Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skillfully woven into this book. If you plan to succeed in this industry, this book is the place to start.”


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For more details on Exhibiting and Sponsorship, please contact Kinsley at 303-798-3664 or

Compliant Business Systems: Part III of III By Don DeRespinis



















6 12

Regulatory Compliance Outlook: August 2010—Avoiding FHA’s Mortgagee Review Board By Jonathan Foxx


Ask Tommy: Your QC Expert By Tommy A. Duncan, CMT


The NAMB Perspective


Value Nation: Avoiding Deals With Property Value Issues By Charlie W. Elliott Jr., MAI, SRA


SAFE Smart … The SAFE Call Report: Feels Like a Punishment By Paul Donohue, CRMS


The Secondary Market Overview: From Bonds to Production … More on Predictions By Dave Hershman


The Trusted Mortgage Professional: Tough Times Getting Tougher? By Greg Schroeder


NMP Mortgage Professional of the Month: Joe Amoroso, Director of National Sales, REMN-Real Estate Mortgage Network Inc.


Forward on Reverse: Reverse Mortgages as National Security Assets By Atare E. Agbamu, CRMS


Landmark Financial Legislation: New Rules for Mortgage Originators (Part I: Reformation and Regulations)

28 30

A View From the C-Suite: Unraveling the Complexities of Compliance in the Age of Technology By David Lykken


The HUD Hammer Hits Hard: FHA Withdraws Approval Status From 905 Lenders By Jeff Mifsud


Taming Mortgage Compliance: Technology is the Secret Weapon By Lionel Urban


Getting Your Technology Ready for Multi-State Regulatory Exams By Jason Roth


GBLA Compliance: Save Thousands on Overhead and Make More Money at the Same Time By Andrew May


RESPA Technology Compliance: Could an Outside Source be the Answer? By David Leoncavallo






 AUGUST 2010

Have you reserved your user name on


Keep Those Cards and Letters Coming By Bill James, CMC


Trend Spotter: The Top Four Ways to get Fence-Sitters to … Jump! By Gibran Nicholas

By Jonathan Foxx






August 2010 Volume 2 • Number 8



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

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site: STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 Domenica Trafficanda Art Director Karen Krizman Senior National Account Executive (516) 409-5555, ext. 326


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ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail The deadline for submissions is the first of the month prior to the target issue. SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail or visit Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Credit Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data. MO








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National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2010 NMP Media Corp.

A Message From NMP Media Corp. Executive Vice President Andrew T. Berman Landmark legislation to rock the industry? When President Barack Obama signed the Dodd-Frank Wall Act into law in July, the intent of the legislation, which weighs in at a whopping 2,319 pages, was to prevent future collapses of our financial system from happening ever again. This month, Jonathan Foxx will dissect this historic bill in the first part of his series, “Landmark Financial Legislation: New Rules for Mortgage Originators.” Jonathan’s in-depth analysis takes the content of this 2,319-page bill and breaks down the highlights as it pertains to you, the mortgage professional. This is a must read for sure!

Compliance is a way of business As the mortgage professional of today makes their way through the never-ending maze of regulatory and compliance changes, this month, we take a close look at this topic and tackle it from a number of angles. For starters, we wrap up the three-part series by Don DeRespinis on compliant business systems and what it takes to bring your business to a whole new level of quality. David Lykken looks at technology’s role in compliance, while Jeff Mifsud, our resident FHA expert, breaks down recent FHA violations for non-compliance. We continue with another take on technology and compliance, this time from Lionel Urban of as he details ways to manage your compliance systems. Jason Roth of ComplianceEase discusses the role of education and testing and how to keep your staff in compliance under the SAFE Act rules and the Nationwide Mortgage Licensing System (NMLS). Andrew May of American Dream Residential discusses compliance with the Gramm-Leach-Bliley Act how exposing your client’s personal information can cost you, and we wrap things up with David Leoncavallo from Spora Capital as he explains how hiring an outside compliance specialist can save you money and headaches.

Our Professional of the Month This month, we spotlight Joe Amoroso, director of national sales for REMN-Real Estate Mortgage Network Inc. Joe’s 20-plus year career in the industry (mostly on the wholesale side) has taken him from small shops to big shops. In his profile, he details the major differences between the two and discusses the importance of his “open door policy” at REMN and sticking to a unique selling proposition that promises same day turn times. Joe details how the lines between loan officers and upper management have been blurred at REMN, as the lines of communication throughout the company are wide open, from the top to the bottom.

Mortgage Revolution set to invade New York If you’ve read my columns in the past, you know how strong a supporter of the efforts of Mortgage Revolution movement I am. I truly believe in the proven concept of creating the perfect forum of a freeflow exchange ideas with your peers on how to improve business and expand the lifeline of the mortgage industry, not bury the competition in the process. That being said, Mortgage Revolution will bring their event to New York’s Westchester Marriott in Tarrytown, N.Y., Friday-Sunday, Oct. 15-17. They set this one for the weekend, as to not interfere with the busy work week. For more information on MRev North East, visit If you are interested in sponsorship opportunities, please contact me directly at 516-409-5555, ext. 333. Sincerely,

Andrew T. Berman, Executive Vice President NMP Media Corp.

The National Association of Mortgage Brokers

National Association of Professional Mortgage Women

11325 Random Hills Road, Suite 360 Fairfax, VA 22030 Phone #: (703) 342-5900  Fax #: (703) 342-5905

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

NAMB Board of Directors Officers President—William R. Howe, CMC, CRMS Howe Mortgage Corporation 13322 East Paradise Drive  Scottsdale, AZ 85259 (602) 200-8100 President-Elect—Michael D’Alonzo, CMC Creative Mortgage Group 1126 Horsham Road, Suite D  Maple Glen, PA 19002 (215) 657-9600 Vice President—Donald J. Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D  Carmel, IN 46032 (317) 575-4355 Secretary—Virginia Ferguson, CMC Heritage Valley Mortgage Inc. 5700 Stoneridge Mall Road, Suite 225  Pleasanton, CA 94588 (925) 469-0100 Treasurer—John Councilman, CMC,CRMS AMC Mortgage Corporation 2613 Fallston Road  Fallston, MD 21047 (410) 557-6400 Immediate Past President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208  Corpus Christi, TX 78413 (361) 853-9987


Donald Fader, CRMS SMC Home Finance P.O. Box 1376  Kinston, NC 28503-1376 (252) 523-5800 Deb Killian, CRMS Charter Oak Lending Group LLC 3 Corporate Drive, P.O. Box 3196  Danbury, CT 06813-3196 (203) 778-9999, ext. 103

Walter Scott Excalibur Financial Inc. 175 Strafford Avenue, Suite 1  Wayne, PA 19087 (215) 669-3273

President-Elect Laurie Abshier, GML, CMI (661) 283-1262 E-Mail:

Vice President—Eastern Region Christine Pollard (646) 584-8332

Senior Vice President Candace Smith, CMI, CME (512) 329-9040

Secretary Murielle Barnes, CME (806) 373-6641

Vice President—Northwestern Region Jill M. Kinsman (206) 344-7827

Treasurer Hulene Bridgman-Works (972) 494-2788

Vice President—Western Region Tim Courtney (760) 792-5620

Parliamentarian Dawn Adams, GML, CMI (607) 737-2584

National Credit Reporting Association Inc. 125 East Lake Street, Suite 200  Bloomingdale, IL 60108 Phone #: (630) 539-1525  Fax #: (630) 539-1526 Web site:


2010 Board of Directors Marty Flynn President (925) 831-3520, ext. 224

Sanford (Sandy) Lubin Director (805) 481-3155

Tom Conwell Vice President (248) 473-7400

Judy Ryan Director (800) 929-3400, ext. 201

Daphne Large Treasurer (901) 259-5105

Tom Swider Director (856) 787-9005, ext. 1201

William Bower Director (800) 288-4757

Donald J. Unger Director (303) 670-7993, ext. 222

Mike Brown Director (800) 285-6691

NCRA Staff

Susan Cataldo Director (404) 303-8656, ext. 204 Nancy Fedich Director (908) 813-8555, ext. 3010

Terry Clemans Executive Director (630) 539-1525 Jan Gerber Office Manager/Membership Services (630) 539-1525

 AUGUST 2010

Donald Starks D.C. Starks Mortgage Associates Inc. 141 South Main Street  Bourbonnais, IL 60914 (815) 935-0710

Vice President—Central Region Lisa Puckett (405) 741-5485


Olga Kucerak, CRMS Crown Lending 222 East Houston, Suite 1600  San Antonio, TX 78205 (210) 828-3384

President Gary Tumbiolo, CMI (919) 452-1529  INDIANA

Michael Anderson, CRMS Essential Mortgage 3029 S. Sherwood Forest Boulevard, Suite 200 Baton Rouge, LA 70816 (225) 297-7704

National Board of Directors

New mortgage industry trade association for compliance professionals forms committees




Jonathan Foxx, president of the Association Residential Mortgage Compliance Professionals (ARMCP), has announced the formation of the following new ARMCP Committees: Advocacy, Best Practices & Standards, Ethics, Events, Legislation, Industry Liaison, Job Opportunities, Media and Press, Newsletter, Professional Development, Regulatory Updates, Research, Social Media, Steering, and Web site and Weblog. Other committees are planned. Virtually every facet of residential mortgage compliance will have a committee to support all the members, with the goal of creating a coherent, professional approach that is

recognized by its members. “We launched our new organization on June 1, 2010, and the membership response has been very encouraging. Now we will begin the process of laying down a secure foundation for our future. With this in mind, we are forming committees to address important aspects of our work in many areas of residential mortgage compliance,” said Foxx. “Each committee will meet at LinkedIn, as a Subgroup, and work together to formulate policy, procedures, and services for our membership. And we will soon be convening a Steering Committee to set forth guidelines for electing officers, finalizing by-laws for members’ approval, and helping to arrange information and documentation for all ARMCP members to consider and vote on.” ARMCP is now expanding its new Web site to include special new features for its

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members’ use. Additionally, it is building access to “cloud” computing, which will allow the group’s participants to work together jointly and simultaneously on the organization’s projects. The updated version of the Web site should be available by June 30, 2010. In a statement to the membership, Foxx said “it is important to take advantage of technology to help build the ARMCP and especially to explore compliance issues, news, guidelines, and banking laws in real-time.” Eventually, the organization will use LinkedIn as a legacy setting and move its overall Web space experience to its own Web site, with built-in interactive and dynamic features. ARMCP is the first and only national organization in the United States formed to offer discussion panels, educational forums, lectures, regulatory FAQs, advocacy, and other venues exclusively for residential mortgage compliance professionals. Regular Members must be industry participants who have an actual practice or institutional responsibilities involving residential mortgage compliance. Membership is free at this time. For more information, visit

employees of national and state banks, savings associations, Farm Credit System institutions, credit unions, and certain of their subsidiaries (agency-regulated institutions) to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act). The final rules are being issued by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), Farm Credit Administration, and National Credit Union Administration (NCUA). The SAFE Act requires residential mortgage loan originators who are employees of agency-regulated institutions to be registered with the Nationwide Mortgage Licensing System and Registry. The NMLS is a database created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to support the licensing of mortgage loan originators by the states. As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks. The SAFE Act generally Final rules issued to prohibits employees of agency-regulatimplement SAFE Act ed institutions from originating residenrequirements for registra- tial mortgage loans unless they register tion of loan officers with the registry. Federal agencies have The agencies’ final rules establish issued final rules requir- the registration requirements for resing residential mortgage continued on page 10 loan originators who are

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 AUGUST 2010

Compliant Business Systems: Part III of III By Don DeRespinis




As we discussed in Part II of this article, to violations and breaches. Let’s look at George Washington’s strategies have each component. To raise awareness, there must be many similarities to the mortgage origination business of today. Originators notice and validation of proper methods and processors strive to serve cus- to officially document an activity making tomers with the same products the the First Principal of Compliance that all competition (big banks) have. The com- communication must be recorded, timestamped and serially logged petition uses tactics and to be considered a valid attack in line formation transaction. All replies and with large numbers of comments that relate to the people, advertisements, original communication and capital. They form must contain a copy of the marketing alliances with original, thus validating it. Realtor partners and use For example, an originaexpensive direct mail, teltor requests their processor evision and the Internet to to run a loan through a entice customers, somelender’s automated undertimes into paying higher writing system (AUS) and fees and interest rates then notify them of the than the smaller company results. The processor would charge. They have “Leadership requires would then submit the unlimited resources, but proactive measures loan, get the findings, they also must maintain to move the business record the findings in the the line formation tactics forward and to record and notify the origiand cannot deviate. remove unnecessary nator of the results by The Successful Mortgage obstacles.” replying to the request. If Broker takes a hand-tothe processor were delayed hand approach with people to the community, providing a service in performing the request, the reply would and access to knowledgeable profes- indicate an acknowledgement of the sionals. Leadership, training, weapons request and document when it would be and intelligence are the most viable completed. This process is called notificasolutions for small businesses today. tion and verification. It works with all The training, weapons and intelligence interactions between employees and preare all components of a system that vents misunderstanding and potential can be worked on and modified as compliance violations. In order for this process to occur, the quickly as the intelligence feeds us new information on rates, programs, laws creation of Policies, Procedures and and regulations. The weapons used in Protections would be necessary. The mortgage origination are transparen- definition of a valid transaction is the cy, education, accountability and a fact that they are documented and complete system to document the made readily available to all parties. This makes the Second Principal of results. This leads us to the Principals of Compliance that all valid business poliCompliance, which formulates a work- cies and procedures are documented in ing system around the company policies a single Company Model. The Company and procedures model. The principals Model is a combination of the employgovern appropriate business processes, ment contracts, employee manuals, activities and outcomes to meet legal company charter and company operating manuals. All activities, goals, requirements. The Principals of Compliance include resources, guidelines and policies are raising awareness; creating policies, derived directly from the Company procedures and protections; frequent Model. Execution of an ongoing training training; holding all employees and system is necessary for compliance. As vendors accountable; monitoring and re-training employees on policy a result of the Secure and Fair breaches; actively protecting cuscontinued on page 9 tomers; detecting risks; and responding




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compliant business systems

The Company Model and all valid transactions are reviewed and summarized to identify potential risks. Principal Seven is inspect what is expected. A system to review and control communications is critical to supporting a claim of full compliance. As e-mail becomes the primary method of communication, all e-mails are maintained in separate accounts. Company managers cannot review the e-mails of every employee in realtime. However, when a company uses an internal messaging system for all




can be overwhelming unless you have a system that is designed to handle it. Don DeRespinis is a certified public accountant (CPA) and a Certified Residential Mortgage Specialist (CRMS). He and his wife Deb Killian have operated Charter Oak Lending Group LLC, a mortgage broker and correspondent lender with licenses in Connecticut, New York and Florida for the past 15 years. They have also developed a comprehensive and integrated business operating system used to operate all aspects of a mortgage origination branch, including integrated document management, communication management, accounting, compliance and controls. For more information, visit or e-mail



These days, not many mortgage companies are talking product. Naturally, REMN has FHA, VA and Conventional solutions to fit the needs

Our product is our people.

of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations teams give you – and your loans – the time and attention you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us on time. It’s time to get to know our people.

Learn more at

Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third parties. Information is accurate as of date of printing and is subject to change without notice.

 AUGUST 2010

* Same-day decisions guaranteed if file is received by 11 a.m. EST.


to get the little, yet vital, things taken care of  INDIANA

Enforcement for Mortgage Licensing Act (SAFE Act), all states now require continuing education (CE) to inform originators now to operate lawfully. Changes in laws, new regulations or even new programs must be included in a system of processes designed to educate staff and arm them with the most effective weapons. The Third Principal is that all activities must be included in the Company Model and all training must apply to the components of the Company Model to be valid. For instance, the company policy may require a written opinion letter to be sent to every applicant even if the company is unable to provide a loan. The policy is designed to improve the chances that a person will come back to the company at a later date when they have met the requirements of the opinion letter. Maybe you could not submit a loan for them because their credit score is below 580. The opinion letter would inform them what steps they need to take in order to qualify for a loan at the best rates available by recommending how to increase their scores. It’s a good reason to mail them something they will hang onto by taking information and providing a comprehensive narrative about their current credit status. The Fourth Principal is any violation of principals is automatically considered a personal transaction. A personal transaction, along with all its associated communications, is not considered valid and is solely executed by the individual on his or her own responsibility. Such transactions, when identified, are analyzed, grouped together and isolated from company documentation, allowing the company to prove the employee acted without authority and in violation of company policy. Violations of Compliance Principals must be addressed in a process that monitors and retrain employees on policy breaches using minor violations as an education, while repeated or major violations are eliminated quickly. The Fifth Principal of Compliance is staff can only be judged by the results of valid transactions. Inappropriate use of company time or resources for invalid and consequently inappropriate transactions will always be a reason for termination … no exceptions. Committing violations of the company model is automatically considered as an act against protecting customers and every effort must be taken to consider if there can be an adverse effect on the customers and vendors we serve. Principal Six is any valid or invalid use of staff time or resources must be reviewed and its effects on customer considered.

continued from page 6

communications, the file can be easily monitored. Methods that search for keywords can produce significant information about the content of messages and potentially divert a difficult situation. In order to respond to violations or breaches, the violation must be promptly identified, evaluated and corrected in accordance with the Company Model for violations. Principal Eight is to Protect Your Mission by complying with it every day. Leadership requires proactive measures to move the business forward and to remove unnecessary obstacles. Creating a compliant system requires daily policies, procedures and protections to become routine. Compliance in itself

news flash




continued from page 4

idential mortgage loan originators employed by agency-regulated institutions and requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the SAFE Act and final rules. As required by the SAFE Act, the final rules also require that each residential mortgage loan originator obtain a unique identifier through the registry that will remain with that residential mortgage loan originator, regardless of changes in employment. This will enable consumers to easily access employment and other background information about registered mortgage loan originators from the registry. Under the final rules, registered mortgage loan originators and agency-regulated institutions must provide these unique identifiers to consumers. The final rules take effect on Oct. 1, 2010. The agencies anticipate that the registry could begin accepting federal registrations as early as Jan. 28, 2011. Employees of agency-regulated institutions must not register until the agencies instruct them to do so. The agencies will provide an advance announcement of the date when the registry will begin accepting federal registrations, and agency-regulated institutions and their applicable employees will have

180 days from that date to comply with the initial registration requirements. For more information, visit

can withdraw a lender’s FHA approval so that the lender cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements with lenders to bring them into compliance. The Board can also impose civil money penalties, probation, suspension, and issue letters of reprimand. For more information, visit

Citigroup to pay SEC’s $75 million penalty for misleading investors on The Federal Housing sub-prime loans

FHA’s Mortgagee Review Board fines hundreds of lenders for violations

Administration’s Mortgagee Review Board (MRB) has published a notice in the Federal Register to announce dozens of administrative actions against FHAapproved lenders who failed to meet its requirements. This year alone, the MRB took nearly 1,500 administrative sanctions against lenders, including reprimands, probations, suspensions, withdrawals of approval, and civil money penalties. “Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices,” said FHA Commissioner David H. Stevens. “Any FHA-approved lender that does business with us must follow our standards. If we determine that our partners are not playing by the rules, we will take action—it’s that simple.” FHA’s Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency’s program requirements. For serious violations, the Board

The Securities and Exchange Commission (SEC) has charged Citigroup with misleading investors about the company’s exposure to sub-prime mortgage-related assets. The SEC also charged one current and one former executive for their roles in causing Citigroup to make the misleading statements in an SEC filing. The SEC alleges that, in response to intense investor interest on the topic, Citigroup repeatedly made misleading statements in earnings calls and public filings about the extent of its holdings of assets backed by sub-prime mortgages. Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13 billion or less, when in fact it was more than $50 billion. “Even as late as fall 2007, as the mortgage market was rapidly deteriorating, Citigroup boasted of superior risk management skills in reducing its subprime exposure to approximately

$13 billion. In fact, billions more in CDO and other subprime exposure sat on its books undisclosed to investors,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “The rules of financial disclosure are simple—if you choose to speak, speak in full and not in half-truths.” Citigroup and the two executives have agreed to settle the SEC’s charges. Citigroup agreed to pay a $75 million penalty. Former chief financial officer Gary Crittenden agreed to pay $100,000, and former head of investor relations Arthur Tildesley Jr., (currently the head of cross marketing at Citigroup) agreed to pay $80,000. According to the SEC’s complaint, filed in U.S. District Court for the District of Columbia, Citigroup represented in earnings calls and public filings from July 20 to Oct. 15, 2007, that its investment bank’s sub-prime exposure was $13 billion or less and had declined over the course of 2007. However, the $13 billion figure reported by Citigroup omitted two categories of sub-prime-backed assets: “super senior” tranches of collateralized debt obligations (CDOs) and “liquidity puts.” Citigroup had more than $40 billion of additional sub-prime exposure in these categories, which it didn’t disclose until November 2007 after a decline in their value. The SEC’s complaint alleges that as early as April 2007, Citigroup’s senior continued on page 17

Mortgage Brokers and Loan Originators

SAVE THE DATE! Attend the 2010 NAMB/WEST Conference December 4-6, 2010 at the MGM Grand Las Vegas.

Visit for updates.


At United Northern, we give you the freedom to originate and succeed with our winning team. About working with United Northern Mortgage Bankers • Ongoing training and consultation with top industry executives • An in-house team to monitor SAFE Act compliance • Access to in-house marketing services

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• Pricing support desk to ensure maximum profitability on each • Most loans underwritten in 24 to 48 hours loan, while maintaining a competitive advantage over the street • Multiple valuation tools to research value • Proven leading-edge technology (built on Encompass 360 • In-house valuation desk to help ensure accurate technology) values and responsive turnaround time • Virtual office support • Multiple established warehouse lines • Licensing and regulatory compliance services

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Learn about the great opportunities available by making an appointment with United Northern Mortgage Bankers Executive Vice President Julio de Cardenas by calling 888-600-8808, ext. 1 or by e-mailing

United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender


The Top Four Ways to Get Fence-Sitters to … Jump! It’s no secret that mortgage rates are at record lows. But many so-called “gurus” are discouraging consumers from taking action. Just recently, a report was widely circulated suggesting that a whopping 62 percent of homeowners would NOT benefit by refinancing in spite of mortgage rates being at all-time lows. Don’t let all of the guru noise or Internet-babble fool you or your clients. Your mission, should you choose to accept it, is to cut through all the noise and motivate people to get moving before it’s too late! Here are four simple ways to do just that.


“Your mission, should you choose to accept it, is to cut through all the noise and motivate people to get moving before it’s too late!”

#1. Illustrate How Small Changes Bake a BIG difference

Consider someone who just purchased a home or refinanced their $200,000 mortgage several months ago. They might have a mortgage rate of 5.5 percent. Many “experts” would say it’s not worth it to refinance unless they can lower their rate by a full one percent without paying points. However, what if they paid $4,000 in points and closing costs and bumped up their mortgage balance to $204,000? Here’s what their situation might look like:

(in the 1980s), mortgages were being marked up. This time around, there is also a huge clearance sale going on in the mortgage market. Most fence-sitting consumers don’t understand the dynamics of the housing and mortgage markets. However, most fence-sitting consumers completely understand the dynamics of clearance sales. Many of them will get off that fence if you can show them how the giant clearance sale in the housing and mortgage markets benefits them.

#3. Illustrate how the mortgage market is schizophrenic Mortgage rates fluctuate based on the price fluctuations and trading patterns of mortgage-backed securities (MBS) that trade on the bond market. The traders that manage billions of dollars of MBS and pull the trigger on the trades are human beings. This means that they are emotional beings just like you and me. When these money managers are fearful, they sell out of their riskier stock market investments and buy safer investments like MBS. This drives mortgage rates down. When these money managers are feeling good about life, they get greedy, sell out of their safer MBS investments and put their money into riskier investments. This drives mortgage rates up. Remember the fear and market panic when Lehman Brothers went bankrupt in September 2008? The fear only lasted a few short months and the traders started getting greedy, driving the stock market up over 30 percent in 2009. Now, the traders are fearful again because of the lousy economic reports and the European debt crisis. Here is a chart illustrating the volatility of the MBS market and the emotional schizophrenia of the bond traders.



Old payment ..............................$1,135.58 New payment ............................$1,033.64 Payment savings ..........................$101.94 If they save the $101 at 4.5 % they will have

If they save the $101 at 6% they will have

$6,782 in five years

$7,047 in five years

$15,271 in 10 years

$16,552 in 10 years

$25,897 in 15 years

$29,373 in 15 years

$39,210 in 20 years

$46,666 in 20 years

$76,698 in 30 years

$101,456 in 30 years

Wow!! What if this represents an old borrower in your database, or a client of a Realtor or financial advisor referral partner? If this consumer listens to all the “gurus” telling them not to bother refinancing, they would actually lose up to $101,456! You need to communicate this to consumers and referral partners. Tell them to do themselves a favor and put that $101,456 back in their pocket by calling you today! Remember, people are often more motivated by the fear of loss than the hope of gain. This means it may be better for you to focus on helping the client avoid losing $101,000 instead of focusing on helping them save $101 per month. Dynamic resources provided by the CMPS Institute help you paint a crystal clear picture of exactly how much money clients and prospects will lose by not doing business with you.

#2. Promote the biggest clearance sale of the century Everybody loves a good sale. In fact, clearance sales get people really excited. Here’s the deal: Houses are on sale right now! In fact, in some neighborhoods, there is a huge clearance sale going on. Not only that, but the last time houses were on sale

Pay special attention to the Greed displayed in the spring of 2009 and how this quickly drove down bond prices (mortgage rates quickly went up at that time). Also pay special attention to the Fear being displayed right now and how this is driving up bond prices (mortgage rates have gone down in response). Always keep in mind that market emotion is very fickle and can change in an instant. That’s why it’s so important to keep updated with real-time MBS info. You can motivate fence-sitters by showing them a picture of what’s happening in the market and why they need to get off the fence now, before it’s too late.

#4. Illustrate how financial reform will drive up mortgage rates There are two sections of the new financial reform law that will cause mortgage rates to increase in the future. First of all, the new law requires lenders to keep a five percent stake in the mortgages that they originate unless the loans meet a certain criteria. Impacted loans include adjustable-rate mortgages (ARMs), interest-only mortgages, alt-A loans, many types of jumbo loans, etc. This means that lenders won’t be able to offload some of the higher risk associated with these loans, and interest rates on these types of loans will rise. Secondly, the new law failed to address the issues Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and their future remains uncertain. The market doesn’t like uncertainty, and rates on all mortgages could rise in the future depending on when and how the issue of Fannie and Freddie is resolved. Think about it this way: 95 percent of all loans currently being originated are insured by continued on page 16

By Tommy A. Duncan, CMT

Avoiding FHA’s Mortgagee Review Board If there is one particular place every U.S. Department of Housing & Urban Development (HUD)/Federal Housing Administration (FHA)-approved mortgagee wants to avoid it is the Mortgagee Review Board (MRB). It was established in 1989 to take disciplinary action against any HUD/FHA-approved mortgagee who knowingly and materially violates FHA’s program statutes, regulations and handbook requirements.1 The MRB is empowered to enforce administrative sanctions, including reprimand, probation, and suspension, withdrawal of approval, cease-and-desist orders, and civil money penalties.2 Trust me … you don’t want to go there! If you are an FHA-approved lender within the Title I and Title II programs,3 you will likely provide your defense before the MRB if your violations involve the most serious findings. HUD/FHA staff will refer the lender to the MRB when there is evidence of widespread abuse of its program requirements.4 With respect to the single-family lenders, approximately 10 percent of Quality Assurance Division reviews are referred to the MRB for enforcement, with the remaining 90 percent handled at the Field Office level. In representing clients before the MRB, I can vouch for the exhaustive due diligence that is virtually mandated, the considerable costs involved, the experienced legal counsel and requisite regulatory compliance expertise that is needed, and the significant adverse impact on an FHA lender’s ability to conduct or even continue in business. So, what kinds of violations will send your case to the MRB?5 Recently, HUD published its required, Public Notice6 that advises of actions taken by the MRB from July 10, 2008 to March 18, 2010.7 It’s not a pretty picture, but the improper actions (or failure to implement required actions) on the part of other lenders may serve to enlighten you about what could await you—literally and figuratively—if you do not get with the program!

Let’s take a look at certain violations and administrative remedies that have taken place during the above-mentioned time frame. Many of these violations incurred civil money penalties, as well as other administrative actions. I shall exclude:

In the list that follows, please note that administrative actions often result from several violations of HUD/FHA requirements alleged by HUD, with discovery of such violations, taken together, often determined by means of HUD’s routine quality assurance examination.

continued on page 16

What this means is the sponsoring mortgagee “will diligently monitor and evaluate” and will require the “responsible originator” broker to perform post-closing quality control. The sponsoring mortgagee will have brokers provide evidence of post-closing audits, as well as other quality control items.

Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528 or e-mail You may also visit Quality Mortgage Services LLC on the Web at

Sponsored by

 AUGUST 2010

1. (a) Used official HUD Seal and FHA acronym on lender’s Web site; (b) violated HUD’s advertising requirements when it misrepresented that its Web site was owned and/endorsed by HUD; (c) continued to violate HUD requirements by displaying the Official Federal Housing Administration-Approved Lending Institution Seal (FHA Seal) improperly on its Web site and failed to accurately identify the lender as the owner of the Web site; and (d) failed to register the fictitious business name in violation of HUD requirements. Action: $30,000 civil monetary penalty without admitting fault or liability.

“HUD will hold FHA-approved mortgagees responsible for compliance with FHA requirements in all aspects of an FHA loan transaction, whether performed by the approved mortgagee or by its sponsored third-party originator, unless applicable law or regulation governing the violations in question require specific knowledge on the part of the party to be held responsible. HUD expects that FHA-approved mortgagees will pursue sponsoring relationships with responsible originators, and that approved mortgagees will diligently monitor and evaluate the activities and performance of those they sponsor. The Department will continue to carefully review and evaluate FHA-approved mortgagees’ activities and performance, and will take appropriate action to enforce its requirements when violations occur.”



(1) Those lenders who had their FHA approval immediately revoked for one year due to failing to meet the annual recertification requirements for HUD/FHA approval, a list of 905 (sic) lenders; and (2) Those lenders that cured this same violation by coming into compliance and settled by paying a $3,500 civil money penalty without admitting fault or liability, a list of 147 lenders.

The interpretations of Mortgagee Letter 2010-20 continue to manifest itself among the mortgage industry. Back in late 2009, the comment period began and a group of nation’s top post-closing quality control companies came together to address this issue through the Mortgage Bankers Association (MBA) with Tamara King acting as liaison between the MBA and the Federal Housing Administration (FHA). At that time, the FHA was not ready to provide clarification to the issue of post-closing quality control, and many of the brokers interpreted the up and coming Mortgagee Letter regarding the new policy between brokers, sponsoring mortgagees, and FHA as a “Get Out of Jail Free” card for the brokers to not have to be accountable for postclosing quality control on FHA loans. Many account executives have e-mailed or told brokers they will no longer have to perform post-closing quality control audits on FHA loans. Many of these broker clients have relayed this information to me. I have forwarded the e-mails to top executives in the quality control and fraud departments of banks and to mortgage bankers for clarification and they have all, on every occasion, communicated back to me that they have not released such information or authorized its publication. Karrie Bennett of U.S. Bank was taken aback by the rumors and had indicated that they will still requiring brokers to provide proof of a quality control program. She indicated that they were going to provide clarification of U.S. Bank’s intent regarding postclosing FHA quality control to their marketing department so their account executives would have no question where the company stands on this issue. I have had a number of conversations with mortgage brokers, as well as National Association Mortgage Brokers Immediate Past President Jim Pair. The conclusion reached by all parties is that the mortgage broker and third-party originators will more likely experience increased supervision in post-closing quality control than what was ever provided by FHA. Mr. Pair agrees and has communicated this publicly. Ron Miles, president of Transatlantic Mortgage LLC in Reisterstown, Md., concurs with Pair’s assessment and stated that he was going to continue post-closing quality control on his FHA loan as insurance and peace of mind. Ultimately Miles believes this will help with the prevention of repurchases. Mortgagee Letter 2010-10 states:  INDIANA

Settlement agreements, civil monetary penalties … Withdrawal of FHA approval … Suspensions, probations and reprimands

Brokers and account executive confused over compliance with Mortgagee Letter 2010-20

For more information on the National Association of Mortgage Brokers, visit

The 20 Year Mistake

A Message From NAMB President William R. Howe, CMC, CRMS After almost 20 years of government-imposed confusion, consumers may finally get a disclosure form that does not confuse them and not place mortgage brokers at a disadvantage in the marketplace. It appears the government is finally stepping up to the plate and will try to merge the Truth-in-Lending (TIL) and Good Faith Estimate (GFE) disclosures. Here is the reason for my hope. On Aug. 2, 2010, U.S. Treasury Secretary Timothy Geithner said the following, in reference to the language in the DoddFrank Act, which requires that within one year after the designated transfer date, the Consumer Financial Protection Bureau (CFPB) must propose a single, integrated disclosure for mortgage transactions combining disclosures for the Truthin-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).”




“First, consumer protection. We want to move quickly to give consumers simpler disclosures for credit cards, auto loans and mortgages, so that they can make better choices, borrow more responsibly, and compare costs. One of the ways we intend to do that is by combining the two separate and inconsistent federal mortgage disclosure forms that consumers currently get. Next month, we’ll convene mortgage com-

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panies, consumer advocates, housing counselors and other experts to gather ideas on how to do that. We’ll take the best ones, test them on consumers, and then soon be able to unveil a new, easy to understand, federal disclosure form.” *Taken from (link takes you to the entire speech). One of the many battles the National Association of Mortgage Brokers (NAMB) has fought for years is the GFE and TIL disclosures. Former U.S. Department of Housing & Urban Development (HUD) Secretary Mel Martinez was the first to attempt changing the GFE. NAMB members responded with thousands of letters to the HUD Secretary addressing concern over the new document. We attended roundtable meetings across the country attempting to give input into the process and were promised consumer testing. As we saw the HUD tests, they had to bury an initial test where they did not show indirect compensation (yield spread premium) and the consumer success at picking the cheaper mortgage jumped into the 90 percent range. The result is our current three-page GFE, grouping costs into blocks, and disclosure of indirect compensation so complex it confuses attorneys from Wall Street to Main Street. If consumer testing was really done on this new document, I would certainly like to have attended one of the testing sites as a consumer. The new document is not simplification. In fact, the old one-page GFE is now called the Initial Fees Worksheet, but is really the same form with the name changed. We should conduct a survey on how many of us still use the GFE, or wait, I mean the Initial Fees Worksheet, to explain the cost to a consumer. HUD was very proud when the new three-page GFE was unveiled. They hosted Webinars for brokers and lenders. It turns out that the lenders had to put on Webinars for the brokers as well because they heard something different from HUD than what the brokers heard. Additionally, NAMB has received many complaints from across the country from our members about the problem of double-counting the mortgage broker indirect compensation. Who has the complaint line for specific answers … the Federal Reserve Board or HUD? Or, does anyone really have any authority, except for the lender we are submitting a loan to, since in the end, all lenders must default to protection of their corporate brand. This is the price of confusion where the government tries to step in without considering the unintended consequences of their action, just as they did in 1992, when they decided to require disclosure of information that still confuses consumers to this day. Basically, consumers need about four pieces of information to make a decision on a mortgage product that was originally one page. The Truth-in-Lending Act (TILA) of 1968 is a U.S. federal law designed to protect consumers in credit by requiring clear key terms of the lending arrangement and all costs. Regulation Z is the implementing regulation of the statute (we all knew this because of the SAFE Act education classes we passed). The sole purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and costs, to be standardized, calculated and disclosed on a consumer’s principal dwelling. After seeing what happened to the GFE, I, for one, cannot wait to see what happens to merging the GFE and TIL disclosure. Combining these two forms is going to be nothing short of magic to make them understandable to a consumer. Again, I hope to be part of the consumer testing since I missed out the first time. How about you? Actually, I do look forward to a new, easy to understand, Federal Disclosure Form. Please join NAMB when we take this opportunity to make our case against that disclosure of our indirect compensation (what we call YSP). It only confuses consumers and places mortgage brokers at a competitive disadvantage with originators in banks, credit unions and lenders. In fact, NAMB has created several disclosure forms over the years that we believe are better for consumers than the ones we deal with today. In the next few weeks, NAMB will be placing these sample disclosure forms online so you can give us your opinion of each. Perhaps we can come up with an even better form we can take to Treasury Secretary Geithner. William R. Howe, CMC, CRMS is president of the National Association of Mortgage Brokers and president of Scottsdale, Ariz.-based Howe Mortgage Corporation. He may be reached by e-mail at

NAMB Honors Award Winners at Mid-Year Meeting in Phoenix

NAMB Vice President Donald J. Frommeyer, CRMS of Amtrust Mortgage Funding Inc. in Carmel, Ind. is recognized by John Councilman as one of the finalists for the NAMB 2010 Broker of the Year Award

NAMB Director and Government Affairs Committee Chair Michael Anderson, CRMS of Essential Mortgage in Baton Rouge, La. is congratulated by NAMB Treasurer John Councilman, CMC, CRMS of AMC Mortgage Corporation in Fallston, Md. on winning the NAMB 2010 Broker of the Year Award


NAMB 2010-2011 President William R. Howe, CMC, CRMS of Howe Mortgage Corporation in Scottsdale, Ariz. discusses his goals for his term as association president

NAMB Past President Harry Dinham is recognized with the 2010 Distinguished Service Award by fellow Texan and NAMB Immediate Past President Jim Pair

 AUGUST 2010

John Councilman (right) recognizes NAMB Director and Ethics & Professional Standards Committee Chair Olga Kucerak, CRMS from Crown Lending in San Antonio, Texas (left) as a finalist for the NAMB 2010 Broker of the Year Award


Donald J. Frommeyer proudly accepts the NAMB 2010 Volunteer of the Year Award from Immediate Past President Jim Pair  INDIANA

The presidents exchanging pins as Immediate Past President Jim Pair (right) passes the gavel of association leadership on to 2010-2011 President William R. Howe (left)

regulatory compliance outlook

continued from page 13

2. (a) Used the official HUD Seal on its Web site and (b) improperly implied that it was affiliated, connected or had authorization from HUD for its Web site. Action: Six months probation and imposing a $7,000 civil money penalty. 3. Failed to implement a quality control plan and conduct quality control reviews in accordance with HUD/FHA requirements. Action: $7,500 civil money penalty without admitting fault or liability. 4. Closed its only approved office and failed to notify HUD. Action: Permanently withdrawing FHA approval.

By Charlie W. Elliott Jr., MAI, SRA

Avoiding Deals With Property Value Issues




If we could somehow collect and reinvest when, and what was the estimated all of the resources wasted on potential value? loans that do not close due to unrealistic property value exercitations, we would 5. Has the local market experienced be wealthy individuals. This is especially more foreclosures than usual? true in today’s environment of underwriter skepticism and the tightening of 6. Is the economy in the area stable? Is standards due to the recent mortgage unemployment relatively high, or are meltdown. We are not talking about there plant closings near the subject appraiser mistakes that do occur from property? time to time. We are talking about circumstances The above signs are not where the property value within themselves offered simply is not there. to be foolproof. As an Wouldn’t it be nice if appraiser and one who we had a list of red flags deals with appraisals and to watch for to help preappraisers on a regular vent wasting our time basis, I would be the first and expenses on deals to say that there are differthat are dead upon the ences in appraisal-value arrival of the borrower’s estimates, strictly due to application? Due to the the different opinions of art involved in appraisals, the appraisers. Said in there is no surefire way of “Wouldn’t it be nice if another way, a given propknowing the value that we had a list of red flags erty on a given day may the appraiser will come to watch for to help pre- have a materially different up with prior to simply estimated value, dependvent wasting our time pulling the trigger and ing upon the appraisers and expenses on deals involved. That does not finding out. There are, however, danger signs, that are dead upon the mean that either appraiser and by being familiar arrival of the borrower’s is biased or less competent with these signals, there application?” than another. are preventative actions Sometimes, it is just a we can take in most cases. Below are matter of how one professional views a questions designed to detect some of given market, as opposed to how anoththese signals: er views it or the experiences that one appraiser has had, versus those of anoth1. Do the property tax records reflect a er. It should be noted, however, that value below that which must be met by when there are glaring red flags, most an appraisal of the property? appraisers will have similar opinions on a given property. 2. Is the house well maintained? Therefore, while a loan officer cannot expect to do a perfect job in reading how 3. Has the property been sold lately? If a particular appraiser will view a given so, did the sales price reflect a value property, it is possible to sort out many lower than that which must be reflect- unqualified loan applicants prior to the ed in an appraisal in order to make the investment of large amounts of time and loan? emotional energy, only to find that most any appraiser would have nixed the deal. 4. Has the property been appraised continued on page 18 within the past couple of years? If so,

5. (a) Failed to report all delinquent loans to HUD no later than the fifth business day of the following month; (b) failed to correct fatal errors that resulted from its monthly reporting to HUD’s Single Family Default Monitoring System; (c) failed to comply with HUD/FHA’s default servicing reporting requirements when it failed to timely submit a default servicing report; (d) failed to fully implement its quality control for oversight over this functional area. Action: $700,000 administrative payment to HUD without admitting fault or liability. 6. (a) Improperly used a simulated government form and seal to imply that correspondence relating to HUD’s Home Equity Conversion Mortgage (HECM) program was from, or endorsed by HUD/FHA; (b) misrepresented HUD program requirements in an advertisement by informing recipients that they were “entitled” to monthly benefits through the HECM program. Action: Six month probation without admitting fault or liability and $11,000 civil money penalty. 7. Failed to notify HUD that its business licenses had become inactive and revoked. Action: Permanently withdrawing FHA approval. 8. (a) Failed to comply with HUD’s requirements concerning Principal-Authorized Agent relationships by permitting loans to close in the name of an authorized agent; (b) failed to comply with HUD’s requirements when it charged borrowers a broker fee for loans it originated and also charged an origination fee, thus receiving a total loan origination fee in excess of the fee permitted by HUD. Action: $277,500 civil money penalty and refund broker fees charged to borrowers totaling $147,589.81 without admitting fault or liability. 9. (a) Failed to implement a quality control plan in compliance with HUD/FHA requirements; (b) failed to provide a clear and effective separation between lender and an “identity of interest” life insurance company; (c) failed to comply with HUD/FHA housing counseling requirements. Action: $97,500 civil money penalty and permanently withdrawing FHA approval. 10. (a) Failed to comply with HUD’s requirements concerning the registration of “doing business as” (d/b/a) name in the states in which it was doing business and continued on page 19

trend spotter

continued from page 12

the FHA or sold to Fannie and Freddie. This means that the federal government is essentially subsidizing 95 percent of the entire U.S. mortgage market. The government does not want to be in the mortgage business. At some point, the government subsidy will wind down and mortgage rates will go higher. This is yet another reason why fence-sitters should jump off that fence and get moving. Gibran Nicholas is the founder and chairman of the CMPS Institute (—NMLS Provider ID# 1400384). The CMPS Institute administers the Certified Mortgage Planning Specialist

(CMPS) designation and has enrolled more than 5,500 members since 2005. Through CMPS, Gibran empowers mortgage professionals with confidence, unique knowledge, and dynamic marketing resources to simplify compliance, increase their competitive advantage, and generate more business. Visit Gibran’s blog and Web site at Visit author Gibran Nicholas’s blog at where he shares his insights on economics, real estate and financial issues, including the current mortgage and credit crises.

news flash

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The housing scorecard now incorporates the monthly Making Home Affordable Program Servicer Performance Report, including HAMP modification data that once again shows a month-overmonth increase in permanent modifications, with average growth of roughly 50,000 permanent modifications per month over the last four months. Servicer data indicates close to half of the homeowners in HAMP trial modifications who were ultimately ineligible for a HAMP permanent modification were offered an alternative modification and less than 10 percent move to foreclosure sale In addition to the modifications through HAMP, servicers have adopted the HAMP guidelines as an industry standard and are now initiating their own modification agreements incorporating many of the HAMP affordability principles. The housing scorecard details new reporting on both the scope of Treasury’s compliance activities and the areas of focus for compliance reviews under HAMP. Compliance activities include on-site reviews, file reviews and reviews of net present value (NPV) model applications. Also included are the first-ever results of compliance-related “second look” reviews of select servicers to ensure that potentially eligible borrowers were solicited and properly evaluated for HAMP. Treasury’s compliance activities will lead to improvements in servicer performance and process improvements designed to minimize the likelicontinued on page 23

The SAFE Call Report: Feels Like a Punishment The SAFE Act addresses the “Call Report” with a brief (some would say ambiguous) mention by stating: “Each mortgage licensee shall submit to the Nationwide Mortgage Licensing System and Registry reports of condition, which shall be in such a form and shall contain such information as the NMLSR may require.” The SAFE Act provided no further detail on the subject of Call Reports, leaving its purpose, structure and implementation to the NMLS to define. And define they did, giving a whole new meaning to the cliché, “Give them and inch and they’ll take a mile.” We are living through post-housing-bust regulatory mania. Never underestimate the bureaucrat’s appetite for mandating redundant reporting and duplicative data. The financial Condition Report requires a glossary of 118 explanatory terms just to fill out the form. In its commentary to the NMLS, one member of the American Financial Services Association (AFSA) stated, “It will take 140 additional quarterly accounting reports for a total of 560 additional reports per year.” Whole new departments will have to be created in order to comply and much of the information’s usefulness can easily be challenged. The “Call Report” is a doozy. This one feels like a punishment.

Purpose The purpose of the NMLS Call Report is to provide timely, comprehensive and uniform information concerning the financial condition of licensed mortgage companies, their loan activities and production information. The proposed rules call for a company with one or more licenses in any “approved” status to file the NMLS Call Report on a quarterly basis with the following objectives:


I To replace unique state annual reports and standardize financial statement information; I Provide state regulators with information to supervise licensed production volume and calculate assessments; and I Give state regulators the ability to develop statewide reports on mortgage activity with the ability to compare across state lines.

Two parts to the Call Report The Call Report is comprised of two parts and will roll out in 2011. Part 1—Residential Mortgage Loan Activity Report: Shall be state by state, will include volume and reports on all first and subordinate loans including specific government loans, both forward and reverse. Part 2—Financial Condition Report: Will be reported on a year-to-date basis and is to include a current balance sheet, income statement and cash flow statement. Failure to submit the Call Report within 45 days of the end of each calendar quarter will result in a deficiency to be placed on the company’s license and may result in state regulatory action. At a minimum, such a deficiency will prevent license or registration renewal. One possible upside is that for smaller entities operating in states that require self-prepared financial statements on an annual basis, the NMLS Call Report may be used to meet this requirement.

SAFE observation No doubt this little-mentioned SAFE Act provision morphed into an onerous regulatory requirement. It remains to be seen if it yields meaningful results or inflicts more punishment. On SAFE Act Call Reports, call me skeptical. Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.

 AUGUST 2010

The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have introduced a monthly scorecard on the nation’s housing market. Each month, the scorecard will incorporate key housing market indicators and highlight the impact of the Administration’s unprecedented housing recovery efforts, including assistance to homeowners through

 After 30 straight months of decline and an expectation of continued nearly 14 percent decline, home prices leveled off in the past year and expectations have adjusted upward.  Mortgages are more affordable: Due to historically low interest rates, more than six million homeowners have refinanced, saving an estimated $150 per month on average and more than $11 billion in total. And more than 2.5 million families have purchased a home using the FirstTime Homebuyer Tax Credit.  Servicers report that the number of homeowners receiving restructured mortgages since April 2009 has increased to 2.8 million. Additionally, nearly half of homeowners unable to enter a HAMP permanent modification enter an alternative modification with their servicer, and fewer than 10 percent of cancelled trials move to foreclosure sale.


HUD and the Treasury Department announce new monthly housing scorecard

the Federal Housing Administration (FHA) and the Home Affordable Modification Program (HAMP). This scorecard contains key data on the health of the housing market including:  INDIANA

management began to gather information on the investment bank’s subprime exposure for purposes of possible public disclosure. From the outset of these efforts, internal documents describing the investment bank’s subprime exposure included the super senior CDO tranches and the liquidity puts, while noting that they bore little risk of default. Nevertheless on four occasions in 2007, Citigroup stated that its investment bank’s sub-prime exposure was reduced to $13 billion from $24 billion at the end of 2006—without disclosing the more than $40 billion in additional sub-prime exposure relating to the super senior CDO tranches and liquidity puts. These occasions included a July 20 earnings call, a July 27 Fixed Income investors call, an Oct. 1 earnings pre-announcement, and an Oct. 15 earnings call. “Citigroup’s improper disclosures came at a critical time when investors were clamoring for details about Wall Street firms’ exposure to sub-prime securities,” said Scott W. Friestad, associate director of the SEC’s Division of Enforcement. “Instead of providing clear and accurate information to the market, Citigroup dropped the ball and made a bad situation worse.” According to the SEC’s order instituting administrative proceedings against Crittenden and Tildesley, they were repeatedly provided with information about the full extent of Citigroup’s subprime exposure. Crittenden received a detailed briefing on valuation issues relating to the super senior tranches of CDOs in early September 2007. Tildesley received information that same month that discussed the possibility that Citigroup’s disclosures could be misleading because they did not include the amounts of the super senior tranches and the liquidity puts. The SEC’s order finds that both Crittenden and Tildesley helped draft and then approved the disclosures that were included in a Form 8-K filed with the SEC on Oct. 1, 2007. The SEC’s order finds that, in doing so, Crittenden and Tildesley caused Citigroup’s filing to be misleading to investors. For more information, visit

More on Predictions




Again and again in this column, we have discussed how hard it is to predict the future. However, when you pay economists the big bucks, they have to lay it out on the table. Not that you, as a mortgage professional, get big bucks for making predictions, but when you enter a real estate office for some reason, real estate agents and customers seem to think you can predict the future better than they can. I used to carry one of those Magic 8Balls when I made a presentation to agents. Why? I knew the question was coming: “What is going to happen to rates?” When the question came, I calmly took out the ball and asked what day are they looking to predict? Then, I shook the ball and got an answer such as “Not Today.” We all laughed and it was fun. It is not fun to be in a market in which you have no idea what will happen tomorrow … not only in terms of rates, but what lenders will be in business, what guidelines will be published and more. The only thing I am comfortable predicting is that we will have change in this industry (that has held true for 30 years). You can add the fact that the Democrats and Republicans will continue to fight and blame each other. Not much help is it? Many predicted an economic slowdown for the second half of 2010, but how many predicted record low interest rates? Again and again, we published quotes from respected analysts

indicating that rates would be rising this year. I remember getting e-mails and calls from panicked loan officers who attended a Webinar from a “respected industry expert” who pretty much said that rates would hit six percent by the end of the year. Now before you go ahead and trash that prediction, remember, there is still time until the end of the year. On the other hand, I will not be that bold because I recognize my own limitations. If I purchase a stock it goes in the tank the next day. Obviously, these predictions have not come to light as of yet. Now many are predicting that lower rates will stay with us for the foreseeable future, based upon the economic crisis in Europe and the flight to safety we are experiencing as investors purchase U.S. Treasuries. Our advice? Don’t get too comfortable. Remember when many predicted that housing prices had to fall based upon the spectacular increases we saw just a few years ago? The housing market kept on going, regardless of these predictions. Then, it ended when few were expecting the end to come. Doesn’t it always happen that way? Here is a recent quote from business analyst Allan Sloan in The Washington Post:

humbling example: The best investment by far for the first half of this year has been the one that people like me have been warning against: Long-term U.S. Treasury bonds. I’ve also said (and said) that you have to protect yourself against a decline in the value of the dollar because our need to borrow huge amounts to cover trade and budget deficits is eroding the greenback’s standing as the world’s reserve currency. But guess what: Even though it’s been a crummy year for U.S. stocks, the performance of foreign stocks has been considerably crummier. What’s happening, of course, is that we’re seeing a somewhat different version of the phenomenon in 2007-08, when scared investors sought refuge in U.S. Treasury securities because they feared a worldwide financial meltdown. This year, it’s the European problem that has prompted investors to seek safety in Treasuries. All that money flooding into the Treasury market drove down the interest rate on long-term Treasury bonds. Hence, long-term Treasury bonds’ strong performance for the first half of the year—and our country’s ability to finance its enormous deficits by selling Treasuries at very cheap rate. How do I explain that my predictions have been so wrong for the past six months? Simply this: In the long run, markets are rational. In the short run, anything can happen. The tech stock and house price bubbles lasted far longer than rationalists expected them to, but they ultimately popped. So will the Treasurybond bubble.” By the way, this “mea-culpa” does not mean that Allan is right about a bubble to be burst. What if we slide back into recession? Rates could stay low. We asked the opinion of our secondary market expert Eric Holloman, chief

value nation

executive officer of RateLink, and he added this factor to the equation: “These record low rates are causing the mortgage-backed securities (MBS) purchased by the Federal Reserve Board to pre-pay because of refinancing activity. This, in turn, is freeing up capital and giving the Fed more flexibility in case further stimulus activity is necessary.”

“I used to carry one of those Magic 8-Balls when I made a presentation to agents. Why? I knew the question was coming: ‘What is going to happen to rates?’” Regardless, we advise you not to get too comfortable. Again, no one can predict market turns. That is why a diversified marketing plan, which includes purchases and refinances, makes all the sense in the world. And this is why I delivered an “Originating Refinances” Webinar in June, but the first of July, scheduled a session, “Targeting Realtors to Increase Your Purchase Market Share,” on Aug. 11. Just staying ready! If you would like to register, log on to By that date, I should be able to tell you what happened in July. But forget about asking me what will happen in September! Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at If you would like to stay ahead of what is happening in the markets, visit for a free trial or e-mail

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For those seeking to take the pre“Financial markets can make you look qualification process a step further, really foolish, even if you thought your there are also helpful collateralanalysis was right, and still do. Today’s assessment tools that mortgage professionals can use to supplement their knowledge of a given market prior to making the commitment go through the application process. These tools • Nationwide Appraisal Company include the automated valuation • FHA and HVCC Compliance model (AVM) and access to local • Appraisals Multiple Listing Service (MLS) compa• BPO’s rable sales data. With these tools, the • AVM’s • National Vendor Network mortgage professional can get a rough • RealEC Integrated preview of the comparable sales data, • In Business Since 1970 which will be used by the appraiser to develop the appraisal. The customer can also be a resource in assisting with the preliminary evaluation of their collateral. A good question to start with is: “What has sold in your neighborhood that will support your 888-485-1999 Ext. 2 opinion of the value?” In summary, mortgage professionals

owe it to themselves to perform a certain amount of due diligence prior to making the commitment to carry an applicant through the formal application process. Savvy loan officers, in some cases, will spot problems early on in the process and save themselves time and emotional energy. Even though, typically, the lender officer does not spend a lot of out-of-pocket money on a failed application, time is often wasted, and time is money. Simply passing on potential borrowers with insufficient collateral and servicing those with the proper collateral can be best for the lender and the borrower. Charlie W. Elliott Jr., MAI, SRA, is president of Elliott & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889, e-mail or visit his company’s Web site,

regulatory compliance outlook

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with the Department; (b) improperly used the HUD seal on its Web site; (c) failed to ensure that loan applications were taken and processed by lender’s employees; (d) approved loans where borrowers failed to meet HUD’s minimum credit requirements because lender failed to provide adequate explanations for the derogatory credit; (e) failed to adequately document the stability and/or source of income used to qualify for loans; (f) failed to adequately document the source of funds used to close loans; (g) approved loans with debt-to-income ratios that exceeded HUD standards without significant compensating factors and/or explanations; (h) charged borrowers excessive and impermissible fees; (i) failed to resolve discrepancies and/or conflicting information in loan documents; (j) failed to complete quality control reviews for loans that were 60 days past due within the first six payments; (k) failed to have a written quality control plan as required by HUD/FHA. Action: $413,500, to indemnify HUD on 31 loans, and reimburse fees to 78 borrowers without admitting fault or liability.

★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★




Tough Times and Getting Tougher? Why Dodd-Frank should serve as a wake-up call to brokers By Greg Schroeder

11. (a) Used conflicting information in originating and obtaining HUD/FHA mortgage insurance; (b) submitted false certifications on the HUD 92900–A, Addendum to Uniform Residential Loan Application, which stated that an employee of the lender had obtained the information contained in the application directly from the borrower; (c) approved loans where borrowers failed to meet HUD’s minimum credit requirements; (d) failed to adequately document the stability and/or source of income used to qualify the borrowers for the FHA-insured mortgages; (e) failed to document the source of funds used to close the loan or to satisfy various omitted liabilities; (f) omitted liabilities from the underwriting analysis without supporting documentation, approved loans with debtto-income ratios that exceeded HUD standards without significant compensating factors and/or explanation; (g) exceeded HUD requirements when calculating the maximum insurable mortgage; (h) failed to process a loan in accordance with HUD policy on loans to HUD employees; (i) closed a loan with an excessive mortgage broker fee paid to an FHA-approved loan correspondent; (j) failed to provide the required Verification of Rent to support its loan approval decision; (k) submitted false certifications to HUD in connection with the submission of its Yearly Verification Report that concealed administrative sanctions and investigations by two of lender’s state regulators; (l) failed to notify HUD that one of lender’s employees was involved in fraudulent FHA insured mortgage originations in a timely manner; (m) permitted a borrower’s Verification of Employment to be hand-carried by the borrower; (n) approved loans that were not in compliance with FHA appraisal requirements. Action: $512,500 civil money penalty. 12. (a) Chief executive officer and 25 percent owner was indicted in the United States District Court, when he was charged with one count of bank fraud for his role in a scheme to create fictitious loans and warehouse those loans; (b) failed to notify HUD of the indictment; (c) failed to submit its Yearly Verification report. Action: Suspending lender’s HUD/FHA approval pending the outcome of a legal proceeding for federal indictment.

14. (a) Approved and closed a loan where the spouse was added to title without regard for debts and overall creditworthiness; (b) failed to perform quality control reviews of loans that went into default within the first six months; (c) failed to notify HUD of a business change when it failed to notify HUD that it had closed its home office. Action: Withdrawing FHA approval for a period of one year.

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 AUGUST 2010

16. (a) Failed to ensure that its employees were exclusive and did not have outside employment in the mortgage lending, real estate, or other related field; (b) failed to adequately document income, a stable two-year employment history, and other forms of effective qualifying income; (c) failed to document significant compensating factors for loans that exceeded HUD’s debt-to-income ratio; (d) failed to document the source and/or adequacy of borrower’s funds required to close the

Greg Schroeder is president of Comergence Compliance Monitoring. To learn more about how the Comergence Compliance Trusted Mortgage Professional program can help, call (714) 495-4720.


15. (a) Permitted non-employees and/or mortgage brokers to participate in the loan process; (b) failed to adequately staff its office because it never had any employees; (c) failed to comply with multiple requests from HUD’s OIG Office of Investigation to make its mortgage origination files available for review; (d) failed to provide evidence that original documents were reviewed, in that the loan files contained faxed documents with no indication that lender received and/or reviewed the original documents, or was able to clearly identify the source from which the documents originated. Action: Permanently withdrawing FHA approval.


13. Knowingly employed individuals who were debarred and/or had been convicted of an offense that reflects adversely upon lender’s integrity, competence, or fitness to meet the responsibilities of an FHA-approved mortgagee. Action: Permanently withdrawing FHA approval.

In last month’s column, I discussed the need for a change in perception. This month, I’d like to talk about the need for a change in perspective … a broker’s perspective, to be precise. The passage of the Dodd-Frank Act has many bemoaning the limits on compensation for mortgage originators, the expansion of “creditor” under the Truth-in-Lending Act (TILA) to include brokers, the increased penalties for non-compliance with the additions to TILA and so on. The final development and implementation of the regulations authorized by the passage of the Dodd-Frank Act leave a lot of unanswered questions, yet there is no doubt that drastic changes are imminent. Once again, the industry is fervently predicting gloom and doom for the future of the broker channel. This begs the question, “Where was this passion when financial reform was first introduced?” Brokers have had ample time to voice their opinion to sway legislators to adopt their line of reasoning. Now, it’s too late to do anything about DoddFrank, and dwelling on that which cannot be changed is simply an exercise in futility. What I suspect is, at the heart of this belated panic, the realization that being a broker today requires much more effort to achieve profits that are not even close to what top brokers were pulling down at the height of the mortgage bubble. Brokers, ye need not fear. There’s still money to be made in the broker game, but there are lots of hungry new players eager to stake their claim. The astronomical profits of days gone by can no longer be the measure by which brokers gauge success, and those veterans who are willing to stay in the game have to be prepared to work even harder for their money. Like the rest of the country, brokers must redefine what it means to be financially successful. It’s tempting to look back longingly at a simpler time, but reminiscing on what once was will not make the current situation look or feel any better. However, if the past can teach us anything, it is that there is strength in numbers. The National Association of Mortgage Brokers (NAMB) has lost a lot of its membership due to the misplaced media characterizations that the mortgage broker was the culprit behind the mortgage mess with the resulting economic downturn. Now, NAMB struggles with the rest of us to survive, however, there could be no better time for the surviving and thriving brokers to support NAMB and band together once again for the greater good of all. For man to survive, political theologian Thomas Hobbes says each must give up his or her right to self-determination and enter into a covenant or social contract for governance in order to protect the rights of all. It’s time for brokers to take a page from Hobbes and re-enter into a contract with each other for the preservation of the channel as a whole. Without any sort of governing body, brokers have no hope whatsoever of fighting reactionary legislation that could threaten the very existence of this vibrant and much-needed origination channel. While the Mortgage Bankers Association (MBA) is certainly active in Washington, D.C. on behalf of the industry, its membership is too diverse to be a truly effective voice for brokers alone. If brokers ever hope to regain their status as Trusted Mortgage Professionals and protect what moneymaking ability they have left, they must be willing to change their perspective on what it means to be a broker in today’s economy and work both harder and smarter to achieve success for themselves individually and the industry at-large.

Joe Amoroso, Director of National Sales, REMN-Real Estate Mortgage Network Inc.




Each month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Joe Amoroso, director of national sales, Real Estate Mortgage Network Inc. (REMN), headquartered in River Edge, N.J. A graduate of the State University of New York at Delhi, Joe began his career in the hospitality and restaurant industry, eventually moving into the broker business in the late 1980s. He began working for Fairbank Mortgage as senior vice president of sales, and was instrumental in the startup of the company’s wholesale channel. Ten years later, after Fairbank closed shop, Joe moved on to Northern Star Mortgage, which eventually became Home Star, and finally became Opteum Financial Services. Joe served as senior vice president of sales at Opteum for seven years. He was eventually recruited by Citi

Residential Lending as senior vice president of sales to handle the company’s merger with Argent Mortgage/Ameriquest. Joe remained with Citi and worked on the team responsible for merging Citi’s mortgage units, Citi Residential Lending and Citi Mortgage. After a year-plus at Citi and a taste of what it was like working for a “big bank,” Joe signed on with Security Atlantic Mortgage Company as the company’s national sales manager. Today, Joe serves as director of national sales for REMN, and while he and the other members of senior management at REMN run the company, a corporate culture exists where it’s a transparent, hands-on experience for everyone … from senior management, to regional management, all the way to REMN’s network of brokers. How did you first get started in the mortgage industry? I started out in the hospitality industry over 25 years ago, and through the hospitality industry, my family owned a number of restaurants in Connecticut and New York. I originally went to school for hospitality management and

hospitality development, and I know it’s a weird twist, but I grew tired of operating in the hospitality business. I got into mergers and acquisitions and business brokerage, and I specialized in selling restaurants, small hotels, wholesale distributorships, etc. I rented an office space adjacent to a hard money lender and my business was booming. All of a sudden, in the late 1980s, the banks stopped loaning money to small business acquisitions, so my business dried up. I was done, and was forced to either go back into the hospitality business or pursue another career. So I went to the hard money lender down the hall and learned the mortgage business. I used his broker’s license to start a shop. I would share my revenue with him because it was his license, as regulations back then were not quite as stringent as they are today. I was giving him checks every month, and after six months, he asked, “What’s this kid doing over there?” There was a significant amount of money coming my way, and I explained the mortgage brokerage business to him. He was a hard money lender, and that’s all he did, so it’s kind of funny how I got into the business. I was recruited to go to Fairbank Mortgage around 1990. They had a retail business, but the wholesale channel was just coming of age, so we started a wholesale business in the northeast and quickly became a regional player. I was at Fairbank for nearly 10 years, as the Ford Consumer Finances of the world, GE, Advanta and other large companies started popping up around us and it was interesting that we were able to compete with a lot of those companies. They were much bigger and had deeper pockets than Fairbank. Since the beginning of the wholesale business, I have mostly been, until

recently, the little guy. I have always worked for the little entrepreneurial wholesaler and competed mightily with the big guys and it has worked out very well. It was good for my skills not to have all of the resources available, as you have to make the best of what you have. In the late 1990s, all the big companies started to melt down and so did Fairbank. Colony was the New York name of the company, it was known as Fairbank everywhere else. I was recruited to join Peter Norden and we started a wholesale company at the time, called Northern Star. We began regionally, got our licenses and started to grow. We changed our name from Northern Star to Home Star, but eventually faced lawsuits because the name Home Star was taken. We did much research and chose the name Opteum Financial Services instead.

“This is, by no means, Armageddon for mortgage brokers, but it has certainly cleared out the men from the boys and has forced quality in originations and has stepped up the standards of underwriting.” Opteum Financial grew to be a significant publicly traded, national wholesaler. I ran the eastern region of the country for Peter. We had a terrific seven- to eight-year run at Opteum. That was the first time I actually had resources to work with … different things to actually grow a company, such as marketing and bigger budgets. It was also at that time that we were able to sit back and watch all of the mistakes that the industry was making. What was your next move? Opteum Financial Services was in business for about seven years, 2000-2007, and I

then moved onto Citi. I was recruited by Citi for the sole purpose of working on their acquisition of Argent Mortgage Company. I was actually placed in Argent and I worked there for nine months during the acquisition process, doing due diligence for that deal. This experience gave me exposure to not only the Citi corporate world, but the world of Argent and its parent company, Ameriquest, as well. The resulting company after the Argent purchase was named Citi Residential Lending and I ran their sales department.

How does the quality of the files being submitted by brokers today compare to the quality of the files submitted just five years ago? Overall quality is drastically improved. I

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SEEKING ACTIVE MORTGAGE BANK FOR ACQUISITION I have a client that is actively looking to purchase a Mortgage Bank licensed in at least, New Jersey, New York, and Pennsylvania. The requirements we have include a low FHA “Compare Ratio,” minimum of two existing warehouse lines in good standing, and at least three correspondent lender relationships that are also in good standing, with at least one being an “A” Tier investor. Must have full eagle. The owner/partner will need to be able to stay on until the change of control is completed for quality control purposes. There will be compensation paid during that time frame. There will be a quality control workflow to insure low exposure. Our management team is in place to make it a seamless transition. We would also consider merging our management team with the existing management team if the situation is right. We will use our net-worth to secure the warehouse lines when the change of control is complete. We are very open and willing to hear any situations, business plans, offers, etc. Please email me at with a good time to discuss this, or call me anytime at (631) 835-0000. I look forward to hearing from you. Very truly yours, Tricia A. Odierna, Esq.


 AUGUST 2010

How does this trickle down to smaller mortgage brokers and bankers that are facing similar situations with mergers and acquisitions? Some are taking their independence and part-

What is different about REMN compared to other wholesalers out there? Prior to the re-engineering of our industry, there were multiple layers of management. The industry, at its peak, could afford to have regional sales managers, area sales managers, divisional sales managers, and on and on, and everyone was fat and happy. Here at REMN, we have a different outlook on things, as we have about 50 account executives on the road nationally. We have a huge presence on the East Coast, the Midwest, in the Southeast, the Mid-Atlantic states, and we’re just really only just getting into the Texas and California regions. The bottom line is that it costs more to originate a loan today than it did three years ago … a lot more, and by virtue, you’ve got to run your business a little bit leaner and a little meaner. Our management structure is pretty simple at REMN. I’m the national director of sales, then there is the national

Carl and myself have day-to-day transactional exposure to our account executives. It’s no longer a situation where somebody is running a company and nobody ever talks to them or gets face time with them because they are so far removed. A true benefit of a managerial structure like we have here at REMN is that I consider myself in the trenches with what’s going on with the broker market because we are so close to our account executives.


What are some of the tricks in merging two different corporate cultures? It’s truthfully a complicated process due to what is going on in the industry. You have the changing of a corporate environment taking place, along with the total re-engineering of the mortgage lending landscape. You really have to listen and be very open-minded about what is taking place. You have to look at the two platforms and put the ego of the company aside and select the best culture, listening to both sides. You can have a small company that is running fine on all cylinders operationally and is doing great in the sales department, but to scale it to a larger level is a whole new animal. Not every company is scalable. It’s all trial and error and you do make mistakes, but you must amend them and move on.

What has led you to stay so committed to the wholesale channel and the broker channel? I am, without any question, a business-tobusiness guy. I appreciate and enjoy working with other businesses, as opposed to consumers. Granted, my customers are the people who deal with the consumers, so I need them. I truly enjoy doing business with the broker. I enjoy how different brokers run their businesses and how they market for deals, and I’m intrigued with the whole retail sector. Although I’m in wholesale and that’s my commitment, I have to consider myself a retail guy because my customers are retail. I was involved for many years with the Connecticut Mortgage Bankers Association (CMBA), and that involvement exposed me to the mortgage business on a grander scale. Just sitting in on meetings and talking with wholesale and retail mortgage professionals was very intriguing.

“… I think for a well-run mortgage broker company that runs their business considering compliance and delivering quality loans to the secondary market, there is enormous opportunity.”

hate to say it, but just five years ago, there were those who were not true mortgage professionals involved with the mortgage business. They jumped in and made a lot of money, and as a result, we as wholesalers were feeding Wall Street’s insatiable appetite for the paper that was being written. In many cases, the problem actually started in the field with the application being taken and then submitted to the wholesaler … the app was likely not properly processed or processed to a lesser quality. When it got to the wholesale level, investors were not as stringent as they are now. That mediocrity permeated from someone’s kitchen table or Internet site to the time when a poor quality file was submitted to the investor. . The people who were not serious about the business and were in it to make a quick dollar are gone for the most part. The people who remain are the true fighters of the industry who have survived and are serious about the mortgage industry. They are serious about the continued existence of the industry. You have got to deliver quality loans. We are a Ginnie Mae securitizer, quality is paramount to us, whether we are securitizing a loan or selling a loan to an investor. The industry has been cleaned up, but that cleanup has come at an enormous cost. REMN alone has 20-30 additional employees than just a year ago in order to  INDIANA

What was it like working for a company as large as Citi Residential Lending? It was both fun and exciting to work for a big company … and talk about resources … they had a lot of resources, but the challenge at Citi was you couldn’t just go and tap into those resources, whereas with Opteum Financial Services, your resources could be easily tapped into. It was a very “corporate” atmosphere, a more corporate lifestyle than I was accustomed to, and one in which everything took a village to accomplish something. Then, Citi decided to merge Citi Mortgage and Citi Residential Lending, so I was put on the merger team to bring the two entities together. There were still remnants of the Argent and Ameriquest culture there, my job was to assist with the merger. After my work on the merger, I was offered a position at Citi Mortgage as director of expanded lending. I stayed with Citi until they again re-organized, and I left to again to join a wholesale platform which is now part of REMN wholesale. That was approximately two years ago. That’s how we got to where we are today.

nering with someone or becoming part of a larger organization through branch opportunities. Do you have any specific advice for these independent originators? Some of the same elements that exist when you work blending the cultures of big companies together also exist on the smaller scale with brokers and bankers. I would say the same thing exists: You have to do what’s right for yourself and put your ego aside a little bit. You must make your decisions based on the actual fundamentals of today’s world. As a broker or a banker, you must decide what’s right for you and your employees, and not only what’s right for today or to get the company through the month, but what will get you through this next cycle of business as well.

sales manager, Carl Markman, and then we have five regional sales managers out there who are functioning salespeople. They actually have accounts and they manage accounts, as well as account executives. The sales structure is limited management, with major league access to the people who run the company. By “major league,” I mean there are no levels to go through.

mortgage professional make sure that we are producing higher quality files. There are more checkpoints and more technology is involved. I recently attended a few industry trade shows, and they were not mobbed like they were four to five years ago. The people who came to our booth to talk to us were concerned about the ongoing viability of the business and wanted to see our business continue to thrive. It’s definitely quality, not quantity, showing up at these trade shows, and I think that’s kind of what’s happening in the business.




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Do brokers who work with REMN have access to training? Yes, we do assist with training. We also have an online help desk. We actually have two trainers who work out of our headquarters. We recently did another Good Faith Estimate (GFE) training session for our account executives because we think it’s critical that they know all the changes to the GFE, through and through. We have hour-long teleconferences for all of our account executives nationwide so that they can review the GFE situation. Whenever we roll out new products, we train them on it. We are training our account executives so that they can train their brokers.

Due to the past sins of Wall Street, do you think that there will be a total removal of that sin in the future as our government enacts its What would you say are various forms of finanthe top three things brocial reform legislation? kers consistently make I’ll admit that I do not mistakes on with the know all the parameters of “I have always worked new GFE? this legislation, and I don’t for the smaller entre- The ones that come think anyone truly does preneurial wholesaler immediately to mind are know this legislation and competed mightily the mistake in the upfront through and through. I with the big guys and it mortgage insurance prethink financial reform is mium (MIP). We see broworked out very well.” one thing, but what I kers not properly putting would like to see is overall the yield spread premium mortgage reform. (YSP) in the borrower credit section, and Just talk about the cost of doing busi- the other thing that we see quite a bit is ness as a wholesaler these days ... if you do that the mortgage transfer taxes are put business in multiple states, and REMN in the wrong boxes. In some states, it’s a does business in more than 40 states, each moot point, but in New York, it’s a big one of them has different licensing one. requirements. Each state has different rules and regulations, from a disclosure Why should a broker do business with standpoint, from a net worth standpoint, REMN as opposed to another wholesaler? all these types of things. Those require- The big guys do a wonderful job at ments, and again, there are many, cost what they do. We put ourselves in a money. Being a multiple state lender is an totally separate category. The level of expensive proposition because you’ve got service and communication you get to be able to navigate through all of these from REMN is far superior to that of different rules. Our computer system cost what you get from the bigger compaa fortune in order to remain in compli- nies out there. I’ll specifically give you ance in 50 different states, however, these an idea of what I mean by that. costs are necessary. If there was national We’ve been interviewing and recruitmortgage reform and everything was uni- ing account executives nationwide. formly put on the table, it would probably When I ask them why they are sitting translate into bringing the price of a mort- across the table talking to me and gage down for the consumer. interested in working for REMN … their The Secure and Fair Enforcement for main reason is turn times. Our account Mortgage Licensing Act (SAFE Act) and the executives are in broker shops all day Nationwide Mortgage Licensing System and they know the service levels out (NMLS) are a big step forward in ensuring there with the bigger competitors of that the consumer is dealing with a com- ours. We have built our entire company petent and qualified loan officer. upon same-day turn times on new files that are submitted. So, if a file is subDo you think actually that there are mitted to REMN by 11:00 a.m., you will other regulations that are coming get an answer on that file that very same down the pipe specifically for the day. That is one of the cornerstones of mortgage broker? what we do. With all of the financial reform out there, If you were a broker and you get your I can understand why people are gravi- business from Realtors, it’s a beautiful tating more toward branch opportuni- thing to be able to send a file to REMN, ties. But, I think for a well-run mortgage and that day, the worst case the next broker company that runs their business day depending on the time the package considering compliance and delivering was submitted, you will have an answer quality loans to the secondary market, there is enormous opportunity. continued on page 24

regulatory compliance outlook

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loans; (e) failed to include all of the borrower’s liabilities in loan qualification for loans. Action: $68,500 civil money penalty and indemnifying HUD on nine loans without admitting fault or liability. 17. (a) Failed to maintain and implement a quality control plan in compliance with FHA requirements; (b) failed to ensure that quality control reviews were conducted on loans that went into default within the first six months; (c) failed to resolve discrepancies and/or conflicting information in the origination of loans; (d) failed to document a stable two-year employment history and other forms of effective income on loans; (e) approved loans with debt-to-income ratios that exceeded HUD standards without significant compensating factors; (f) failed to calculate income properly on loans; (g) approved loans that did not meet minimum credit requirements; (h) omitted revolving and installment debt liabilities on loans without documenting that the balance had been paid or otherwise should have been excluded; (i) allowed an appraiser who was not on the FHA Roster to appraise a home on a loan; (j) failed to ensure that loans met the eligibility requirements for FHA insurance; (k) exceeded HUD requirements when they calculated the maximum mortgage amount. Action: Permanently withdrawing FHA approval and imposing a civil money penalty in the amount of $674,000. 18. (a) Permitted a third-party to originate HUD/FHA insured mortgage loans, and subsequently submitted false certifications to HUD that these loans were originated by a full-time employee; (b) failed to implement a quality control plan in compliance with HUD/ FHA requirements; (c) failed to maintain quality control reports as required by HUD/FHA; (d) failed to document the borrower’s income in accordance with FHA requirements; (e) charged a borrower an unallowable tax service fee. Action: $168,500 civil money penalty without admitting fault or liability. 19. (a) Failed to perform a quality control review on loans that went into default within the first six payments; (b) failed to adopt and maintain a quality control plan in accordance with HUD/FHA requirements; engaged in a prohibited branch arrangement; (c) made false certifications on the form HUD–92900–A Addendum to the Uniform Residential Loan Application (URLA); (d) failed to comply with HUD/FHA requirements for home office operations; (e) failed to report compensation to an employee on IRS form W-2; (f) failed to process Verifications of Employment (VOE) on loans in compliance with HUD/FHA requirements. Action: Permanently withdrawing FHA approval and imposing a civil money penalty in the amount of $124,000. 20. (a) Hired loan officers as independent contractors and reported their compensation on IRS form 1099’s instead of the required W-2 forms; (b) improperly charged borrowers a broker fee in addition to an approximate one percent origination fee for loans it originated; (c) submitted a false certification to the Department in connection with an FHA-insured loan; (d) failed to disclose the broker fees charged to borrowers on the Good Faith Estimates (GFE); (e) charged borrowers commitment fees without a written agreement guaranteeing the interest rate and discount points. Action: Permanently withdrawing FHA approval and imposing a civil money penalty in the amount of $71,000. 21. Underwrote HECM loans without having the necessary HECM lending license in the state where the properties were located and failed to notify HUD that the state’s banking department had issued a Findings of Fact and Temporary Order to Cease and Desist Notice against the lender. Action: Issuing a letter of reprimand and imposing a $10,000 civil money penalty without admitting fault or liability. 22. (a) Failed to ensure HUD’s minimum credit requirements were satisfied; (b) failed to verify income and employment histories; (c) failed to document the source and/or adequacy of funds for the closing costs and/or debt satisfaction; (d) failed to verify documents faxed from an unknown source; (e) failed to ensure that properties met the conditions specified on the Uniform Residential Appraisal Reports, and were eligible for FHA insurance; (f) failed to discontinue misleading advertising concerning the FHA Mortgage Insurance Premium Refund, despite previous sanctions imposed by the Board for the same violation; (g) charged prohibited, duplicative, and/or noncustomary, non-reasonable fees to borrowers; (h) failed to ensure the completeness and accuracy of the data submitted to HUD; (i) failed to develop and implement a quality control plan in accordance with HUD/FHA requirements; (j) failed to notify HUD/FHA that it did not renew its license to originate home mortgages. Action: Permanently withdrawing FHA approval. continued on page 24

news flash

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hood that borrower applications are overlooked or that applicants are inadvertently denied a modification. For more information, visit

Foreclosure rescue firm to return $2.4 million to consumers to settle FTC charges

continued on page 25

 AUGUST 2010

Private investment firm Signature Group Holdings LLC has successfully reorganized Anaheim, Calif.-


Fremont exits bankruptcy and re-emerges as Signature Group Holdings


Home Assure LLC, a company that deceived consumers with promises it could save their homes from foreclosure, will pay $2.4 million to victims as part of a settlement with the Federal Trade Commission (FTC). The case is part of the FTC’s continuing crackdown on scams that prey on financially distressed homeowners. According to the FTC’s complaint, Home Assure LLC conducted a nationwide marketing campaign designed to take advantage of struggling homeowners by offering so-called mortgage foreclosure rescue services. Home Assure typically charged consumers an upfront fee of $1,500-$2,500. The company’s representatives falsely claimed that its special relationships with lenders would enable it to get favorable loan modifications or stop foreclosure, and that the company had helped thousands of consumers avoid foreclosure. One of the claims on its Web site was, “If we are unable to negotiate a plan with your lender that improves your situation or gives you a viable strategy to avoid foreclosure, we will refund 100 percent of your money. . . No questions asked!” According to the FTC, however, Home Assure did little or nothing to help consumers avoid foreclosure. In numerous instances the company refused to pay refunds, sometimes claiming that consumers did not meet the terms of the contract for a refund or that they had breached the contract by contacting their lender or filing for bankruptcy, and sometimes without giving a reason. The settlement order imposes a $2.4 million judgment on Home Assure and bans the company from selling mortgage loan modification and foreclosure relief services. The order also permanently prohibits Home Assure from misrepresenting any good or service, disclosing or benefitting from customers’ personal information, and failing to dispose of customer information properly. The FTC vote to authorize staff to file the stipulated final order was 5-0. The order was filed in the U.S. District Court for the Middle District of Florida, Tampa Division. For more information, visit

based Fremont General Corporation, ending a two-year battle over the fate of what was once one of the nation’s largest sub-prime lenders. Signature’s plan of reorganization became effective June 11, 2010, and as of that date, Fremont General changed its name to Signature Group Holdings Inc. Signature’s plan was previously approved by Fremont’s impaired debt and equity constituents and confirmed by Judge Erithe Smith of the U.S. Bankruptcy Court for the Central District of California in Santa Ana, Calif. The successful reorganization of Fremont ends a contested bankruptcy case that began in June 2008 and at one time attracted as many as six different plan proponents. Signature’s plan of reorganization includes a $10.3 million equity infusion and the issuance of warrants to purchase additional shares. In winning control over Fremont, Signature prevailed over five competing plans in a highly complex and competitive reorganization process. Signature intends to focus on creditoriented special situation lending and investments in middle-market companies on a national basis. One of the key features of the Signature plan is the preservation of Fremont’s equity—existing Fremont shareholders will hold approximately two-thirds of the outstanding shares of the reorganized company. Additionally, Signature’s plan of reorganization projects that approximately $769 million in net operating loss carry-forwards will be available to offset future taxable income. “We are excited about putting our plan to work and believe it represents a long-term win for Fremont’s investors and creditors,” said Signature Managing Director Craig Noell. “This is a tremendous opportunity to turn Fremont into a profitable business—one that can take a lead role in lending to and acquiring middle market companies, a sector that continues to be starved for capital and quality credit.” Signature Capital Advisers, LLC has entered into an interim investment management agreement with the new company. Key directors and officers include Signature co-Founders Craig Noell and Kyle Ross, along with Kenneth Grossman, a veteran turnaround professional and distressed investor, and Tom Donatelli, a managing director at Signature. “This is a true turnaround story, considering the fate of many of the nation’s other major subprime lenders,” said Grossman, a Signature Capital managing director. “As a special situations investor and commercial lender to quality credits, the Signature platform combines a healthy capital base, diverse shareholders, and a significant pool of net operating losses to offset future taxable income from our current

mortgage professional on whether or not the loan was approved. It’s a great retention tool for referral sources.

“The level of service you get from REMN is not even remotely close to that of what you get from the bigger companies out there.”




What lies ahead for the future of the mortgage broker? What do you say to those who are basically throwing in the towel and going to work for a net branch or are consider working for a bank? Do you have a message of hope or optimism for this group? I think that the branching opportunity is not a bad option for some people. It could be ideal for someone looking for multiple state licenses, and someone looking to deal with the bonding issues that are out there today. Seeking assistance with the new education requirements is another good reason to join a branch. That being said, I think there is a place in this market for the good, highquality broker who runs their shop well, writes quality loans, gives quality education to his or her loan officers, and keeps on top of the latest in legislative and regulatory changes. This is, by no means, Armageddon for mortgage brokers, but it has certainly cleared out the men from the boys and has forced quality back in the mortgage marketplace and has stepped up the standards of underwriting.

continued from page 22

Do you have any closing comments? I think that the relationship that we have here at REMN between management, senior managers and executive management, all the way down to our salespeople, is a transparent relationship that can be seen even by the brokers This relationship permeates right down to the broker shop. I just walked into the office of one of my regional managers, and he has four files in his arms trying to get them done. What do we do? He’s there with the other senior managers trying to figure out how it’s going to get done, and that’s the type of hands-on mentality we exhibit here at REMN. Our success starts at the top and it trickles down. I enjoy a scenario where the business culture includes working with the very top of the management chain, all the way down to the broker. Our very best brokers whom we have long-term relationships with are those who not only embrace doing business with REMN, but they embrace our culture and our commitment to customer service and loan quality. If you’re on the same page with the broker as far as what the end results are—that’s a good relationship. If you embrace a culture of quality loans from quality originators with quality underwriters who deliver a quality finished product, those are the very best relationships that exist out there and that is what we have built REMN’s business on.

National Mortgage Professional Magazine Presents ... The 40 Under 40

regulatory compliance outlook

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23. Failed to comply with HUD documentation requirements for the assignment of a defaulted multi-family apartment mortgage. Action: $37,500 civil money penalty without admitting fault or liability. 24. No longer had the requisite warehouse line of credit or other mortgage-funding program acceptable to HUD. Action: Permanently withdrawing FHA approval. “An ounce of prevention is worth a pound of cure.” —Benjamin Franklin I hope you have taken the time to go through this list. It is generally representative of the kinds of violations the MRB will review. If your case comes before the MRB, it will likely be evaluated by the following board members or their deputies: Assistant Secretary for Housing-Federal Housing Commissioner (who serves as the chairperson); the President of GNMA; HUD’s General Counsel; the Assistant Secretary for Administration; the Chief Financial Officer and the Assistant Secretary for Fair Housing and Equal Opportunity (who votes only on cases involving Fair Housing and Equal Opportunity issues). HUD’s Inspector General and the Director of HUD’s Office of Lender Activities and Program Compliance are non-voting advisors to the Board, but they can be expected to participate. The process starts when HUD sends the lender a Notice of Violation, which describes the particular findings upon which an administrative action is based. The lender will have only 30 days to respond to the Notice of Violation. If the lender does not submit a response, the case moves forward with the Department’s record. If the lender does respond, the Departmental Enforcement Center (DEC) staff reviews the response and presents the case to the MRB for its consideration. I would suggest that you make a firm commitment to implement all of HUD/FHA’s program statutes, regulations and handbook requirements. Be continually prepared for a Quality Assurance Examination and make sure you are fully executing and documenting corrective actions. Consult a competent, mortgage compliance professional to ensure that your policies, procedures, and regulatory compliance requirements are accurate, timely, properly enforced, and updated. If any of the above violations are in any way part of how you conduct business, be prepared eventually to face the MRB. Only you can avert the costly and, in some cases, terminal mistakes made by other FHA lenders.

Submit your questions … Do you have a regulatory compliance issue that you’d like to see addressed in the Regulatory Compliance Outlook Column? If so, e-mail your issue or concern to Jonathan Foxx at Jonathan Foxx, former chief compliance officer for two of the country’s top publiclytraded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at


The 40 Most Influential Mortgage Professionals Under 40

1—HUD Reform Act of 1989 (12 USC § 1708) established the Mortgagee Review Board (MRB), and the Code of Federal Regulations (24 CFR Part 25) outlines its duties and procedures. 2—Mortgagees may appeal any sanction the MRB imposes, except for a letter of reprimand. 3—Includes lenders involved in Single Family and Multifamily insurance programs.

We are seeking nominations from our readers for the National Mortgage Professional Magazine’s “40 Under 40” feature, slated to appear in our November 2010 edition. Who qualifies: Anyone who is under the age of 40 and has had a major impact on the industry. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on you, along with a color photo and company contact info to complete the profile.

To be considered for the 40 Under 40 feature, visit to submit your nominations.

4—The MRB also enforces the provisions of the Fair Housing Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, and Executive Order 11063 as they apply to the origination or servicing of HUD/FHA-insured single family and multifamily loans. 5—Lenders do not physically appear before the MRB to present their cases. The Departmental Enforcement Center (DEC) staff will include the lender’s written response in the material provided to the MRB. 6—Section 202(c) of the National Housing Act requires HUD to publish in the Federal Register the cause and description of the administrative action taken by the MRB against HUD approved mortgages. 7—Federal Register/Vol. 75, No. 142/Monday, July 26, 2010/Notices.

news flash

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income and deep-value investment strategy. The ‘old’ Fremont, now known as Signature Group Holding, Inc., has a second lease on life.” For more information, visit

SEC finds mismanagement of CDOs tied to mortgagebacked securities

Final guidance issued on incentive compensation

dollar’s current vitality comes from the Euro crisis which stems from the Greek debt crisis and rumors of potential national debt troubles in Spain, Portugal and other Eurozone countries. Nervous investors have been running into the dollar, raising the prices of U.S. Treasury and Treasury-like assets (HECMs are treasury-like because of the federal credit insurance behind them), and driving down the yield on the 10-year U.S. Treasury note to about three percent during the week beginning July 25. Some analysts believe the yield could fall to two percent soon.


“… reverse mortgages should be reframed as national debt-busters. They will help bring massive private resources to help Congress, the Obama and successive administrations combat the national debt.” The Euro-crisis-led flight to the dollar is the reason so much money is chasing HECM-reverse-mortgage-backed securities in the secondary market which, in turn, has led to mouth-watering yieldspread premiums (YSPs) and the current price war in the U.S. reverse mortgage market. When the pendulum swings the other way and fears over U.S. national debt cause investors and speculators to attack the dollar and dollar-denominated assets, there will be some painful re-adjustments in the reverse mortgage industry. This is the context for my suggestion that reverse mortgages should be reframed as national debt-busters. They will help bring massive private resources to help Congress, the Obama and successive administrations combat the national debt. In his memoirs, The Age of Turbulence, Alan Greenspan argued that private resources must be part of the solution to America’s entitlementscontinued on page 27

 AUGUST 2010

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Reverse mortgages are national security assets. They are part of the solution to America’s escalating entitlements and mounting national debt. They are national debt-busters. A fresh narrative crafted around the above ideas is needed if we are to build champions for Home Equity Conversion Mortgages (HECMs) and reverse mortgages at a time of deep anxieties about our national debt. On June 22, White House Budget Chief Peter Orszag resigned, in part, because of frustration over Congress and the Obama Administration’s inaction on our looming national debt crisis. On June 24, Joint Chiefs of Staff Chairman Admiral Mike Mullen called U.S. national debt the biggest threat to our nation’s security. Our $14 trillion national red-ink as the biggest threat to our national security? Wait a minute: Admiral Mullen is a military man, and he’s saying that al-Qaeda, the Taliban, Iran, North Korea, and weapons of mass destruction are small potatoes compared to the threat posed by our bloated national balance sheet. The Admiral’s words reflect concern about the military’s ability to maintain current fighting forces and to modernize weapons systems if the government doesn’t tighten its belt, including at the Pentagon. Among the world’s developed economies, the U.S. is the only nation without a coherent deficit-fighting plan. Thanks to the financial crisis and the massive rescue, the national debt has grown even bigger. It is projected to hit 75 percent of GDP by 2015. The same day Obama’s budget guy quit, British Chancellor of the Exchequer (Treasury Chief), George Osborne, presented a tough deficitbusting budget in Parliament. Across Europe, austerity budgets and anti-austerity protests are everywhere, from the weakest to the strongest economies, from Greece to Germany. We have been lucky so far because of the renewed strength of the dollar. The


The Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Office of Thrift Photo credit: Supervision (OTS), and Adam Gault the Federal Deposit Insurance Corporation (FDIC) have issued final guidance to ensure that incentive compensation arrangements at financial organizations take into account risk and are consistent with safe and sound practices. The guidance was originally proposed by the Federal Reserve last year. The OCC, OTS, and FDIC are joining in issuing the final version. The Federal Reserve, in cooperation with the other banking agencies, has completed a first round of in-depth analysis of incentive compensation practices at-large, complex banking organizations as part of a so-called horizontal review, a coordinated examination of practices across multiple firms. The Federal Reserve recently delivered assessments to the firms that included analysis of current compensation practices and areas requiring prompt attention. Firms are submitting plans to the Federal Reserve outlining steps and timelines for addressing outstanding issues to ensure that incentive compensation plans do not encourage excessive risk-taking. “Many large banking organizations have already implemented some changes in their incentive compensation policies, but more work clearly needs to be done,” Federal Reserve Governor Daniel K. Tarullo said. “The Federal Reserve expects firms to make material progress this year on the matters identified as we work toward the ultimate goal of ensuring that incentive compensation programs are risk appropriate and are supported by strong corporate governance.” During the next stage, the banking agencies will be conducting additional cross-firm, horizontal reviews of incentive compensation practices at the large, complex banking organizations for employees in certain business lines, such as mortgage originators. The agencies will also be following up on specific areas that were found to be deficient at many firms.

Reverse Mortgages as National Security Assets  INDIANA

The Securities & Exchange Commission (SEC) has charged Thomas Priore, a New York-based investment advisor, and three of his affiliated firms with fraudulently managing investment products tied to the mortgage markets as they came under pressure in 2007. The SEC alleges that, at the direction of its Owner and President Priore, ICP Asset Management LLC defrauded four multi-billion-dollar collateralized debt obligations (CDOs) by engaging in fraudulent practices and misrepresentations that caused the CDOs to lose tens of millions of dollars. Priore and his companies also improperly obtained tens of millions of dollars in advisory fees and undisclosed profits at the expense of their clients and investors. “ICP and Priore repeatedly put themselves ahead of their clients,” said Robert Khuzami, director of the SEC’s enforcement division. “Instead of acting as fiduciaries, they took advantage of a distressed market to line their own pockets.” According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, ICP began serving in 2006 as the collateral manager for what were known as the Triaxx CDOs, which invested primarily in mortgage-backed securities (MBS). ICP’s affiliated broker-dealer ICP Securities LLC and its parent company Institutional Credit Partners LLC also are charged in the SEC’s complaint. The SEC alleges that ICP and Priore directed more than a billion dollars of trades for the Triaxx CDOs at what they knew were inflated prices. ICP and Priore repeatedly caused the Triaxx CDOs to overpay for securities in order to make money for ICP and protect other ICP clients from realizing losses. The prices for such trades often exceeded market prices by substantial margins. In some trades, ICP caused the CDOs to pay a price that was substantially higher than the price another ICP client paid for the security earlier the same day. George S. Canellos, director of the SEC’s New York regional office, said, “The CDOs were complex but the lesson is simple: collateral managers bear the same responsibilities to their clients as every other investment adviser. When they violate their clients’ trust, we will hold them accountable.” According to the SEC’s complaint, ICP and Priore caused the CDOs to make numerous prohibited investments without obtaining necessary

approvals, and they later misrepresented those investments to the trustee of the CDOs and to investors. The prices of many of these investments were intentionally inflated to allow ICP to collect millions of dollars in advisory fees from the CDOs. The SEC further alleges that ICP and Priore executed undisclosed cash transfers from a hedge fund they managed in order to allow another ICP client to meet the margin calls of one of its creditors. Priore subsequently misrepresented the transfers to the hedge fund’s investors. For more information, visit

now has the right system in place for maximizing efficiency and quality.” For more information, visit or

MyCapitalAccess launched to provide revenue opportunities for mortgage professionals

Inlanta boosts efficiency with new AMB accounting system


Inlanta Mortgage has completed implementation of a new accounting system that allows the company’s branch offices to more efficiently manage their accounting practices. Inlanta selected the Accounting for Mortgage Bankers (AMB) system, a product of Advantage Systems Inc. of Irvine, Calif., that was designed specifically for the mortgage banking industry. Loan-level detail is built into the AMB system allowing the accounting department to work within one system rather than a sea of spread sheets. The system’s real-time processing feature also allows Inlanta and its branch managers to instantly access Web

reports on profitability by loan, loan officer and loan type, as well as for their branch. “The new system is a real benefit to our branches because it has eliminated the need for time-consuming posting routines,” said Jean Badciong, chief operating officer at Inlanta Mortgage. “Branches can easily log in and remotely access their profit-and-loss data, and even calculate commissions. AMB also offers features that are industry-specific, like being able to link money paid by the borrower to money paid out. All this functionality will enable Inlanta’s partner offices to continue to grow our business efficiently.” “To excel in today’s market, mortgage banking companies need the loan-level detail that AMB delivers,” said Brian Lynch, who founded Advantage Systems in 1986. “Inlanta

Gateway Mortgage Group is seeking more leaders to run a retail branch office.



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MyCapitalAccess, a provider of finance products and operational services to small businesses nationwide, has announced the launch of the company and the platform that connects small businesses with access to capital and the knowledge and resources to more successfully operate and grow their businesses. MyCapitalAccess was founded by mortgage industry veterans Anthony Chao, chief operating officer of Allied Mortgage; Leo Padron, founder and former chief executive officer of MetWest and previously the top commercial originator in the country; and Art “Ski” Swiatkowski, former vice president of business development for Interbay Funding and trainer for the National Association of Mortgage Bankers (NAMB) in the area of commercial lending. The company was developed with the goal of making capital and business resources accessible to small companies as they weather the current economic downturn and begin to grow again. “It is no secret that there are a significant number of small companies struggling to survive because they do not have access to the money they need to operate or grow their businesses,” said Swiatkowski. “In acting as an advocate for these companies, MyCapitalAccess assists borrowers in identifying all possible options to satisfy those needs.” Through the program, borrowers become members of MyCapitalAccess and are guided through the application process. A MyCapitalAccess staff member then determines the best solution for the member’s situation. “The MyCapitalAccess small business program has proven very valuable to me as I have built my company,” said Walter Ormazabal, president of Pilar Services. “With the company’s assistance in getting a $500,000 line of credit, my air conditioning business has expanded statewide with 45 employees and enabled me to take on larger projects.” MyCapitalAccess looks to expand its outreach to small businesses through a network of affiliates driven by mortgage, real estate and financial services professionals. By becoming an affiliate, these professionals are able to increase income by facilitating relationships with small companies and selling MyCapitalAccess memberships and services. “My co-founders and I have all watched mortgage brokers and other professionals suffer through extremely difficult conditions over the past two years,” said Swiatkowski. “With our mortgage backgrounds, it was impor-

tant to us to help those individuals find alternate sources of revenue.” To further assist small businesses and provide opportunities for affiliates, MyCapitalAccess is launching a suite of business knowledge services and products aimed at helping the company’s members successfully operate and grow their businesses. For more information, visit announces integration with credit reporting agency Avantus Inc. has announced an extended markup language (XML) data integration between its flagship loan origination system (LOS) InHouse Mortgage and credit reporting company Avantus LLC. The companies previously shared a standard two-way interface for ordering credit within IHM and populating screens with the returning liabilities, but upgraded to a MISMO-compliant integration for two reasons. “Fannie Mae and Freddie Mac will soon require that all transmission of sensitive borrower data on loans they purchase meet certain guidelines,” said Cy Brinn, chief operating officer of “Our integration with Avantus adheres to those standards.” is focused on new ways to use XML to increase automation in the production of mortgage loans through improved integration with other Webbased service providers. The integration with Avantus allows to extract much more data than is returned with a standard Fannie Mae 3.2-formatted interface, and the individual data elements can be used to drive business rules, data checks, and hard-stops that prevent a problem loan from moving forward. Avantus specializes in providing customized mortgage credit reports, tax return verification, fraud identification tools, flood certification, automated valuation models (AVMs) and a host of other mortgage-related services and technology to the nation’s financial community. “Our integration with will allow lenders to immediately increase their overall transactional efficiencies and improve the quality of their loan portfolios,” said Kevin Rost of Avantus LLC. “Lenders will be able to capture and incorporate critical credit and mortgage information into the earliest stages of the loan origination process. Given the importance of having the right information available at the right time, this integration will significantly improve lenders’ ability to provide exceptional service to their borrowers and deliver a high quality loan into the secondary market.” For more information, visit or continued on page 30

news flash

forward on reverse

continued from page 25

In addition to the work with the large, complex banking organizations, the agencies are also working to incorporate oversight of incentive compensation arrangements into the regular examination process for smaller firms. These reviews are being tailored to take account of the size, complexity, and other characteristics of these banking organizations. The guidance is designed to ensure that incentive compensation arrangements at banking organizations appropriately tie rewards to longer-term performance and do not undermine the safety and soundness of the firm or create undue risks to the financial system. Because improperly structured compensation arrangements for both executive and non-executive employees may pose safety and soundness risks, the guidance applies not only to top-level managers, but also to other employees who have the ability to materially affect the risk profile of an organization, either individually or as part of a group. Federal Reserve staff will prepare a report, in consultation with the other federal banking agencies, after the conclusion of 2010 on trends and developments in compensation practices at banking organizations. For more information, visit

OCC and OTS release Mortgage Metrics Report

influenced fiscal problems. Home equity is private resource. The size of U.S. home equity wealth makes it a strategic financial asset. Assuming zero home price appreciation, “free and clear” home equity controlled by older Americans aged 62 and older could reach $9 trillion by 2030, according to a June 2007 study by The Hollister Group. At a modest home appreciation of 2.3 percent, free home equity could climb to $19 trillion. And at 4.7 percent, the wealth could be a staggering $37 trillion, the study said. In spite of the recent housing bust, which lowered long-term house price growth expectations, the Obama Administration’s new housing scorecard ( cites Federal Reserve Board data showing that total home equity has already begun to grow again. That is why reframing reverse mortgages as the key to unlocking this massive private wealth to cushion tight public entitlements dollars and help cut our national debt should be the essence of any reverse mortgage industry communication strategy with policymakers, regulators and the media. The 20-year-old ad hoc narrative— reverse mortgages saved grandma

from certain financial ruin—is persuasive at the micro-marketing level. But at the macro-marketing level, it is now insufficient to persuade policymakers genuinely anxious about our escalating entitlements and runaway national debt. If Admiral Mullen’s assessment (U.S. national debt is the biggest national security threat) is correct, then reverse mortgages, as the keys to prudently unlocking multi-trillion-dollar private home-equity vaults, are national security assets. Atare E. Agbamu, CRMS is author of Think Reverse! and more than 130 articles on reverse mortgages. Since 2002, he writes the nationally distributed column, Forward on Reverse. Through his advisory, ThinkReverse LLC, Agbamu advises financial professionals, institutions, and regulators across the country. In a 2007 national report on reverse mortgages, AARP cited Agbamu’s work. He can be reached by phone at (612) 203-9434 and e-mail at Visit author Atare E. Agbamu’s blog at for his thoughts and insights on the reverse mortgage marketplace. 27

United Northern is Seeking Highly Qualified, Experienced Mortgage Professionals To Grow as We Grow • Operations Manager • Production Manager • Senior Underwriter • Virtual Mortgage Loan Officers (VMLOs) • In-House Mortgage Loan Officers (MLOs) • Team Leaders/Sales Managers

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

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

Visit UnitedNorthern.Jobs, email info@UnitedNorthern.Jobs or call (888) 600-8808 ext 1. United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender

 AUGUST 2010

Phone #: (516) 409-5555 E-mail:


Your turn  INDIANA

Performance on home mortgages serviced by the largest national banks and federally regulated thrifts improved earlier this year for the first time in more than two years, according to a report released by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). According to the OCC and OTS Mortgage Metrics Report for the First Quarter 2010, delinquency rates dropped in the quarter, with improvement in all categories of mortgages—prime, Alt-A, and sub-prime. The percentage of mortgages that were current and performing increased for the first time since the agencies began publishing this report in June 2008. Mortgages in all stages of pre-foreclosure delinquency improved during the first quarter, with the percentage of mortgages that were 30-to-59 days delinquent, 60-to-89 days delinquent, and 90 or more days delinquent all declining. However, the number of foreclosures increased substantially, including new foreclosures, foreclosures in process and completed foreclosures. Compared with the previous quarter, newly initiated foreclosures increased nearly 19 percent to almost 370,536; foreclosures in process increased nearly nine percent to 1,170,874; and completed foreclosures increased nearly 19 percent to 153,654. Prior reports also cited the increase in foreclosures, as servicers began to exhaust

options to assist holders of seriously delinquent mortgages and existing foreclosures in process worked through the system. At the same time, the number of modifications and other home retention actions also increased. Overall, the number of actions to prevent avoidable foreclosures increased more than five percent from the previous quarter and more than 61 percent from a year earlier. Servicers implemented nearly 630,000 new home retention actions in the first quarter, including nearly 100,000 modifications and 190,000 trial period plans made under the Home Affordable Modification Program (HAMP), and 130,000 modifications and 93,000 trial plans under other programs. The sustainability of modifications continued to improve, with more than 87 percent of loan modifications reducing payments, and nearly 55 percent reducing payments by 20 percent or more. According to the report, re-default rates for modified mortgages remained high, with more than half of all modified mortgages 60 or more days past due at 12 months following modification. However, recent modifications performed better. New analysis included in the report showed that, of the 590,000 modifications done in 2009, nearly 52 percent were current at the end of the first quarter of 2010. Only 27 percent of the modifications implemented during 2008 were current. While delinquency rates predictably increase over time, data suggest more recent vintages of modifications may perform better over time. As shown in previous reports, modifications that reduce the borrower’s monthly principal and interest payments consistently perform better than modifications that did not change payments or increased them. Early data showed that HAMP modifications were also performing better than modifications overall, probably because of the emphasis on lower payments based on affordability and requirements for documented and verified financial information from borrowers. At three months after modification, 7.7 percent of HAMP modifications were 60 or more days delinquent, compared with 11.3 percent of all modifications. For more information, visit and

continued from page 25

By Jonathan Foxx

“I never blame myself when I’m not hitting. I just blame the bat and if it keeps up, I change bats. After all, if I know it isn’t my fault that I’m not hitting, how can I get mad at myself?” —Yogi Berra




Let’s admit it: The tendency to pretend we’re holding somebody or some entity “accountable” for the mortgage crisis, when we’re really not, is just a fashionable avoidance of that unpleasant word “blame.” Once that label sticks, it’s on to dealing with the nasty culprits! Blaming is purported to be cowardly, even passive; and being held accountable is lauded as proactive and high-minded. So, the word “accountable” is now in vogue, instead of “blame.” Frankly, the word “accountable” in today’s world is merely politically-correct, euphemistic Newspeak for the fact that “you know you did wrong, I know you did wrong, everybody in the world knows you did wrong, but you’ll pay no penalties whatsoever for doing anything wrong.” Although the tone-at-the-top mantra of the Obama Administration is, “Let’s look forward and not look back,” or the Bush Administration’s tactic of retroactively making lawful what was heretofore unlawful (or unconstitutional) remains beyond contest, or the ongoing trading of opaque financial instruments seems to continue in an entirely unregulated market, or many government departments and agencies are still remaining reactive at best during a crisis—in the Newspeak of our times, we are assured of accountability, which now apparently means there’s nobody to blame at all, nobody held responsible for the meltdown, nobody to put in jail. Everybody’s free to go and, we’re admonished, it doesn’t do any good to blame anybody for anything, since we can’t fix this mortgage mess unless and until we all can get along, be bi-partisan, be post-partisan, and look to the better angels of our nature! Accountability these days seems to mean no adverse consequences to the perpetrator and no blame for anybody. If you find a person to blame, that person’s not accountable; and if you find somebody who is accountable, that person is not to blame. While lobbyists, dogmatists, political catechists, and ideologues just make stuff up, they’ve found the culprit for sure, those bad actors portrayed as directly and indirectly culpable, the rapacious mortgage originators: they certainly should be blamed, reined in, re-regulated, and de-incentivized for having largely contributed to the worst financial crisis since the Great Depression! Portraying mortgage originators as the culprit is a politically useful narrative meant for the consumption of low information voters; but, as we’ll see, there is plenty of blame in this game and, to date, not much real, old-fashioned accountability—the kind that has real world consequences—except, of course, for those who originated the mortgages in the first place. “Results are what you expect, consequences are what you get.” —Anonymous On Tuesday, June 22, 2010, a Conference Committee met in Room 106 of the Dirksen Senate Office Building, in Washington, D.C. to reconcile Senate and House versions of HR 4173, known as the Wall Street Reform and Consumer Protection Act. That bill ostensibly was drafted to create a new consumer financial protection “watchdog,” bring about an end to “too big to fail” bailouts, set up an early warning system to “predict and prevent” the next crisis, and bring transparency and accountability to exotic instruments such as derivatives. Led by Rep. Barney Frank (D-MA) and Sen. Christopher Dodd (D-CT), the conferees reviewed and voted on new regulations, as well as additions, deletions, and revisions of existing regulations.

The list of new regulations and amendments to existing regulations, consisting of thousands of pages, read like the attenuated, convoluted, cross-tabulated Index Section of a Whodunit’s Guide to the Perplexed. Seated around a large, rectangular dais, the Committee’s politicians called one another out, speechified, postured and legislated to protect their respective constituencies, absolved themselves of ever having allowed their own politics to contribute to the financial crisis, while the Clerk recorded votes, staff members raced around, and lawyers scurried about with various and sundry red-lined versions of financial reform legislation. On Friday, June 25, 2010, all the backroom, sub rosa, deals were ironed out, all the special interests had their way or lost their sway, and the votes tallied up mostly across party lines: Democrats-Aye, Republicans-Nay. The Ayes had it! Congratulations filled the conference chamber, Representatives and Senators praised one another, staff high-fived and hugged one another, and President Obama hailed the legislation as the “toughest financial reforms since the ones we passed in the aftermath of the Great Depression.”1 Now, only House and Senate approval was needed,2 and thence the President’s multi-pen signature, to become the law—which it did on July 21, 2010, just before noon. The legislation, now known as the Dodd-Frank Act, became the law of the land. Among the many features of the legislation, the following was gaveled in:  Requiring lenders to ensure a borrower’s ability to repay: Establishing a “simple federal standard” (sic) for all home loans to ensure that borrowers can repay the loans they are sold.  Prohibiting unfair lending practices: Prohibiting the financial incentives for sub-prime loans that “encourage lenders to steer borrowers into more costly loans,” including the bonuses known as yield spread premiums (YSPs) that “lenders pay to brokers to inflate the cost of loans.”  Penalizing irresponsible lending: Issuing monetary penalties to lenders and mortgage brokers who don’t comply with new standards by holding them accountable for as high as three-year’s interest payments and damages plus attorney’s fees (if any), and, protects borrowers against foreclosure for violations of the new standards.  Expanding consumer protections for high-cost mortgages: Expanding the protections available under federal rules on high-cost loans—lowering the interest rate and the points and fee triggers that define high-cost loans.  Mandating additional mortgage disclosures: Requiring lenders to disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.  Establishing an Office of Housing Counseling: Establishing a special office within the U.S. Department of Housing & Urban Development (HUD) to “boost homeownership and rental housing” counseling. And, most significantly, the legislation’s centerpiece: The creation of a new agency, tucked into the U.S. Treasury and clearly under its purview: The Bureau of Consumer Financial Protection (Bureau). The creation of a regulatory and supervisory authority to examine and enforce consumer protection regulations with respect to all mortgage-related businesses, large non-bank financial companies, and banks and credit unions with greater than $10 billion in assets. Some of these policies have been worthy of consideration, although others seem to be the result of reactive, political triage and short-sighted (if not also

short-term) fixes, without having given much thought to consequences, unintended or otherwise, on the consumer and the mortgage industry. The Spinmeisters have already begun their “Ode to Financial Reform!” In this article, the first in a series on this “landmark” legislation, we will un-spin and unpack the new law and seek to learn more about exactly what the Dodd-Frank Act (Act) has wrought for the mortgage industry.

Dodd-Frank Wall Street Reform and Consumer Protection Act Residential Mortgage Loan Originations Formation/Powers: Bureau of Consumer Financial Protection

 Bank Supervision  Preemption and Visitorial Powers  Interchange Fees  Credit Scores  Transfers (Remittances)  Enforcement and Remedies

Supervision of Non-Depository Institutions

 Rules  Recording  Examinations  Enforcement and Remedies  Enforcement in concert with FTC

Mortgage Loan Regulatory Provisions

 Residential Mortgage Loan Origination  Minimum Mortgage Standards  High-Cost Mortgages  Office of Housing Counseling  Mortgage Servicing  Appraisal Requirements  Mortgage Resolution and Modification  Other Provisions

Housing bubble? What housing bubble? “Homes that are occupied may see an ebb and flow in the price at a certain percentage level, but you’re not going to see the collapse that you see when people talk about a bubble.” —Barney Frank (D-MA), June 27, 20053 The Act spans to 2,319 pages and affects almost every aspect of the financial services industry in the United States. Just the sheer size of the Act is indicative of the complexity and detailed, interlocking, regulatory authorities and mandates involved.4 Compare this with the 31 pages of the Federal Reserve Act which became law almost one hundred years ago. The law’s size also should be taken to reflect the enormous increase in regulations in the intervening years that must be factored into or subsumed under the Act. Consider the following chart:5

Major financial legislation: Number of pages

Improving Access to Mainstream  Access to Financial Institutions Financial Institutions  Low-Cost Alternatives to Small Dollar Value Loans  Establishing Loan-Loss Reserve Funds Pre-Dispute Arbitration and Specific Bureau Authorities

 Investigations/Administrative Discovery  Hearings and Adjudication Proceedings  Litigation Authority  Relief Available  Other Enforcement Issues

For the remainder of this article, we will be reviewing the Mortgage Loan Regulatory Provisions and, where relevant, its integration into other parts of the Dodd-Frank Act.

Mortgage loan regulatory provisions Residential Mortgage Loan Origination The Act revises the Truth-in-Lending Act (TILA) by placing restrictions on “mortgage originators.” These new requirements are promulgated in addition to those imposed by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act).8 The SAFE Act includes both registered and licensed mortgage loan originators (MLO).9 Specifically, the Act prohibits an MLO from receiving compensation, such as a yield spread premium (YSP)10, based on the terms of the mortgage loan and it also effectively prevents the MLO from receiving compensation from other sources if such compensation is being otherwise received, directly or indirectly, from the consumer. TILA, as now revised by the Act, will provide that an MLO may not receive from any person (and no person may pay to an MLO), directly or indirectly, any compensation that varies based on the terms of the loan, other than the principal loan amount. With respect to the latter, compensation is allowed to the MLO (1) based on the principal amount of the loan, and (2) to be financed through the loan’s rate as long as it is not based on loan’s rate and terms and the MLO does continued on page 31

 AUGUST 2010

Analyzing this vast financial and mortgage reform legislation is a daunting prospect. Over this series of articles, we will highlight many of the Act’s components. The articles in this series on the Dodd-Frank Act are meant to provide an overview. However, this legislation is extremely detailed and extensive. Therefore, for guidance and risk management support, I recommend that you consult a residential mortgage compliance professional in developing policies and procedures to implement the Act’s requirements. Essentially, the following matrix provides a generalized outline of the salient provisions of the Act that directly affect residential mortgage loans originations.

Enforcement Powers of the Bureau



Residential mortgage loan provisions: New rules

Mortgage Reform and Predatory  Ability to Repay Lending Act  Defense to Foreclosure  Prepayment Penalties  Single Payment Credit Insurance  Arbitration Agreements  Negative Amortization Loans  Anti-Deficiency Protections  Partial Payments  Increase to Civil Liability Provisions  Lender Rights for Borrower Deception  Hybrid Adjustable Rate Mortgages  Required Disclosures at Consummation  Required Monthly Statements  Government Accounting Office Report  INDIANA

Perhaps it would ultimately be worth all the effort put into such a prodigious and voluminous legislation if its purported objective—prevention of another financial crisis—could be expected to result from enforcement of this law. Unfortunately, it won’t! The Act does very little to prevent the next financial crisis because, among other things, it side-steps the “too big to fail” issues, for instance, by not imposing size limits on any financial institution; offers virtually no resolution to the dysfunctional operations of the GSEs, Freddie Mac and Fannie Mae; and, fails to reinstate the Glass-Steagall Act’s wall of separation between “utility” and “casino” banking. Although it will not prevent the next financial tsunami or Black Swan,6 implementation of the regulatory requirements of the Act will dramatically and permanently affect the way residential mortgages are originated in this country. And if ineptitude, complacency, and failure to implement existing regulations were hallmarks of the regulatory environment prior to the Act, how will we know in advance how things are going with all these new regulatory requirements? After all, thanks to an unnoticed provision in the Act, the Securities & Exchange Commission (SEC) is now declaring itself exempt from Freedom of Information Act (FOIA) requests, one of the bulwarks of government transparency. Perhaps other government entities involved in the Act’s implementation will stake out similar positions.7 Of course, there are periodic reports to Congress on many issues and programs; however, Congress is the domicile of politicians and they often find ways to underplay failures and exaggerate successes.

 Pre-Dispute Arbitration  Bureau Authorities

This coming November (2010), I will complete my 51st year as a mortgage banker, and as the old saying goes, “Nobody knows the trouble I’ve seen.” The last 10 years make the previous 41 pale in comparison. That statement seems hard to believe, as I remember business slowdowns/recessions of the past five decades:




I have always made it a point to be a cheerleader or a thorn in the side of our political leaders, depending on their needs. Looking back to the early 1970s and forward, and reviewing letters I have received from congressmen, governors and even a United States president show a clear picture of negative change. My files include personal responses from some who actually show they read my  The Ohio usury law flare-up that put letters, from Sen. Joe Lieberman (who mortgage bankers out of business after a long and thoughtful response to for weeks; my concern, reminded me, “I am not  The absolute and total absence of your Congressman”), Sens./Reps. Sherrod mortgage money in the mid 1970s Brown (several letters), Ralph Regula, (solved by the genius John Glenn, Jesse Helms (a of Lewis Ranieri and very intelligent two-page his idea of mortgageletter), Rod Gram, George backed securities); Voinovich and Ohio Gov.  De-regulation of the James Rhodes. banks; The last few years, the  The early 1980s when responses are basically boilwe made mortgage er plate and most show loans at 20 percent they didn’t read or underinterest and more, and stand my concern … neverhoped and prayed that theless, I continue the bomsome day, rates would bardment of letters to electdrop back to a more ed officials. Several of these “The insanity of reasonable 12 percent; men have verified that  The savings and loan ‘sub-prime lending’ is heavy incoming citizen condebacle; and now being matched by cern on a particular subject  Much more! does get their attention. new lending regulaThe insanity of “sub-prime tions/requirements, The examples above lending” is now being many of which are are just a few of the matched by new lending inconsistent, detri“opportunities” we faced, regulations/requirements, mental to borrowers, and you know what, we many of which are inconsisovercame each and every and create draconian tent, detrimental to borone of these crises. penalties to lenders for rowers, and create draconUp until the mid- to ian penalties to lenders for errors that are easily late-1980s, we enjoyed at errors that are easily made made due to misunleast a semblance of com- derstanding foggy and due to misunderstanding petency in business and foggy and confusing rules. confusing rules.” political leadership. The Wonder what would haperosion in quality of leadpen if we simply reership, integrity and honesty seemed to imposed common sense underwriting that creep in virtually unnoticed over the served us well for most of the 20th last decade or so. The recessions we Century? faced were met with straightforward At the time of application, the borcommon sense, guided by “the law of rower is given a list of closing costs that the jungle.” There were no massive accurately show what cash they will government bailouts full of graft and need at closing, the note interest rate is pork, no coddling of incompetent man- clearly stated (not an annual percentagement, no changing of laws and reg- age rate that no one understands). A ulations to justify shady dealings, and borrower must have a credit report that corporate CEOs who failed or were shows a history depicting both the abilcaught with their hands in the cookie ity and willingness to pay their obligajar were dismissed and they didn’t tions (the credit report is actually leave with million dollar bonuses for underwritten by an underwriter, and is their inept failures! not credit score-driven) actually obtain-

ing a written verification of stable employment and showing income sufficient to service their mortgage and debt. The total mortgage payment would come to no more than 28-30 percent of their monthly household income, and total mortgage payment and total monthly debt payments would come to no more than 36-38 percent of their monthly income. In addition, they must verify actual cash in the bank available for downpayment. The cry would be loud and clear: “If you did this … no one could qualify for a mortgage!” Wrong … the borrower would now qualify for a mortgage they could handle! Instead of starting with a $250,000 home, they would have to buy a $180,000 home. That’s the way it worked when sanity prevailed. Up to the mid- to late-1980s, our company had a mortgage servicing portfolio of about $125 million dollars and our delinquency ratio on any payments 30 days or more past due was always less than three percent. Today, the industry standard is 10 percent or more on delinquencies! The politicians

heard on the street

and regulators are on a crusade … they are unapologetically on a mission to eliminate all but the banks and huge lenders from the business of mortgage lending. While the Mortgage Bankers Association (MBA) and National Association of Mortgage Brokers (NAMB) are fighting to preserve the industry as we know it, the changes already imposed have driven hundreds of small mortgage bankers and mortgage brokers out of business or into the arms of the banks. I know it seems like expectorating into the wind, but we must speak our minds, let the politicians and special interest groups know the huge mistakes that are now being made in our industry. E-mail every person you know who holds even a semblance of influence in our industry and clearly and honestly state your case! Those cards and letters must increase! Canton, Ohio’s own Bill James, CMC is a mortgage banker, freelance journalist and 12-year monthly columnist for The Ohio Mortgage Press. He may be reached by e-mail at

continued from page 26

Total Mortgage Services launches wholesale platform and expands reverse mortgage operations

Total Mortgage Services LLC has announced that it has formally launched its wholesale residential mortgage lending platform, TMS Funding, in 17 states across the United States. TMS Funding, which will compliment Total Mortgage’s successful retail lending platform, will offer mortgage brokers greater choice, service, efficiency and some of the lowest mortgage rates available. “There is a significant opportunity and need in the wholesale channel today for quality lenders,” said John Walsh, president of Total Mortgage. “Many lenders have exited the wholesale business and the remaining participants seem to have lost touch with the needs of the broker community. Through our centralized model, TMS Funding will enhance efficiencies and provide best-in-class service at very competitive rates. Our goal is to become an important resource for the mortgage broker community to help them quickly meet the needs of their clients.” Jim Lynch, executive vice president of wholesale lending, is heading up the management of TMS Funding. Lynch will be responsible for attracting and building sustainable relationships with high-quality mortgage brokers in order to increase production volumes and build market share. Lynch has more than 20 years of wholesale lending experience and has overseen wholesale lending channels on the east coast for

American Mortgage Network (AmNet), Wachovia, and SCME Mortgage Bankers. TMS Funding will operate through a centralized model from its headquarters in Milford, Conn. and will initially be doing business in 17 states, with plans underway to be able to originate in at least 35 states by the end of 2010. The current 17 states TMS Funding is lending in are: California, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Maryland, Michigan, New Jersey, New Hampshire, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. Total Mortgage Services LLC has also announced that it is expanding its reverse mortgage lending operation, the Total Mortgage Reverse Mortgage Program, to help more senior homeowners in need of accessing the equity available in their homes during this challenging economic environment. In conjunction with this expansion, Total Mortgage has hired Donna Marino as reverse mortgage specialist to lead the dedicated reverse mortgage product business. Overseeing the reverse mortgage program at Total Mortgage is Donna Marino, a licensed mortgage professional with more than 14 years of experience in the residential mortgage industry, and over four years of directly handling reverse mortgages. Prior to joining Total Mortgage in May 2010, Marino has held direct-to consumer mortgage lending positions at Campbell Mortgage, Mortgage Solutions and CT Mortgage during her well-established career. continued on page 40

landmark financial legislation

continued from page 29

not receive any other compensation such as discount points, or origination points, or fees other than third-party charges, from the consumer (or anyone else). Thus, mortgage brokers cannot receive some portion of compensation from the borrower in the form of points and another portion of compensation from the lender in the form of YSP. If the mortgage broker receives YSP from the lender, no points may be charged to the borrower. The Act permits “incentive payments” to the MLO based on the number of loans originated within a specified period of time: the amount of any commission will be limited to a commission based on loan size with bonuses on the volume of loans that are originated.11 Harkening back to the time when the MLO received a higher YSP in exchange for lower upfront costs with a higher interest rate, this new anti-steering rule is designed to preclude YSPs where the MLO is likely to steer a borrower to a particular loan because the MLO would receive additional compensation based upon the borrower’s rate of interest. The Federal Reserve Board (FRB) will be issuing new rules to limit “steering” by MLOs. That is, MLOs will not be permitted to “steer” a consumer toward a residential mortgage loan that (1) the consumer lacks, or can be expected to lack, the reasonable ability to repay; (2) has any predatory characteristics;12 and (3) promotes disparities among consumers of equal creditworthiness, but different race, ethnicity, gender or age. Steering is broadened to mean directing a consumer to a nonqualified mortgage if that consumer is qualified to receive a qualified mortgage.13 Furthermore, the FRB will issue rules that prohibit MLOs from misrepresenting the residential mortgage loans available to the consumer, the creditworthiness of the consumer, and the subject property’s appraised value. Unfair or deceptive acts or practices (UDAP) rules will be further strengthened through authority given to the FRB to enforce rules prohibiting abusive or predatory practices. Importantly, MLOs will be subject to the liability standards in TILA for violations: up to treble damages— three times the compensation received by the MLO for a residential mortgage loan. Minimum Mortgage Standards New standards will be promulgated through the FRB which will require lenders to make a “reasonable and good faith determination, based on verified and documented information” that consumers have a “reasonable ability to repay” their mortgage loans.

In the next article in this series we will discuss the relevant criteria in extensive detail. However, in general, lenders will need to consider the consumer’s (1) credit history, (2) current income, (3) expected future income, (4) current obligations (5) debt-to-income ratio or residual income (after paying all mortgage and nonmortgage debt), (6) employment status, and (7) “any other financial resources” other than equity in the property. Documenting all these requirements will be mandated; therefore, the lender will underwrite loans by obtaining verification of any income or assets normally used in repayment determination (i.e., tax returns, payroll receipts, bank records, and other third-party documents), but also either an IRS transcript of tax returns (i.e., 4506-T) or some other “Accountability these days seems third-party income documentation to mean no adverse consequences method acceptable to the FRB. to the perpetrator and no blame

for anybody.”

High-Cost Mortgages TILA has now been revised by further defining and elaborating the features and requirements of “high-cost mortgages,” which are those mortgages with annual percentage rates (APRs) or points and fees exceeding thresholds stated in the Act. With respect to high-cost mortgages, lenders are (1) prohibited from encouraging default on prior debt to be refinanced in whole or in part by a high-cost mortgage, (2) limited in imposing late payment fees on delinquent payments, (3) not allowed to include balloon payments, and (4) prohibited from charging a fee to modify, renew, extend or amend the loan. Under a due-on-sale provision, or for a material violation of the loan terms, or in the event of a default, accelerating the principal balance due is permissible. To originate a high-cost mortgage, the lender must receive certification from a HUDapproved counselor that the consumer has received counseling about the advisability of entering into the loan and the consumer must receive Real Estate Settlement Procedures Act (RESPA) disclosures prior to speaking with the counselor. Additionally, there are restrictions on financing prepayment penalties, points or fees. Office of Housing Counseling A new office and supporting bureaucracy will be created called the Office of Housing Counseling (OHC). The OHC will act in an oversight capacity to administer the counseling on homeownership, renter’s counseling and certain educational continued on page 39


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A View From the C-Suite Unraveling the complexities of compliance in the age of technology By David Lykken




So, if you think it’s been a challenge to feedback, most of which is very positive manage compliance in the past, brace (and let me say how much I appreciate yourself … it’s about to get 10 times your e-mails and kind comments … worse. The new complexities involved keep them coming … it motivates me to with being in compliance with the new keep writing this each month). If howevfinancial regulations are going to require er, there is one reoccurring constructive us to turn to technology more than ever criticism I receive from those who read before. So, how do you, as the C-Level this article each month it is that I am not executive of your company, select not as specific as I could be suggesting soluonly the right technology, but the right tions to the issues I raise in my articles. company behind the technology? The basis for this is that we as a conAs a national consulting firm advising sulting firm, and me, as the author of this hundreds of companies across the coun- monthly column, do our best to remain try, we are often called “vendor neutral.” Normally, upon to help companies there isn’t a “one size fits select the right solution. It all” solution and our firm is is for this reason that we more about finding the are constantly evaluating a right solution that meets host of solutions and the your specific needs than companies behind them. anything else. In most And I cannot stress enough cases, there is more than that you must look beyond one “good solution” out the compliance technology there that will work. and give even more diliHowever, in the area of gence to looking into the compliance and technolocompany behind the techgy, that isn’t the case. We “If you select what nology. If you select what find ourselves consistently looks to be a strong looks to be a strong comrecommending one solupliance technology solu- compliance technology tion over and over. So, I’m tion, you may find that you solution, you may find going to appease my critics have a great piece of techand be very specific in my that you have a great nology, BUT the company recommendation. piece of technology, that created the technoloWetzel Trott, located BUT the company gy may not have a full in Farmington Hills, Mich. that created the techgrasp of all the complexiis an example of a quality ties involved in complying nology may not have a control firm that uses full grasp of all the with all the new regulatechnology as the driving complexities involved tions. If you turn to a good force in maintaining compliance company that compliance at the level in complying with all has a weak technology necessary to succeed in the new regulations.” solution, you will find today’s marketplace. yourself stuck with too many manual Now, more then ever, you must have processes and you will not realize all of the proper controls in place to ensure the efficiencies that a good technology compliance. They have a Web-based solution should provide you. It’s finding quality control software known as QuiC the right combination of “carbon-based (Quality Underwriting Integrity Control) systems” (humans) and “silicone-based that provides the tools necessary for systems” (technology). It’s a delicate bal- auditors to identify and report compliance and finding the right solution for you ance related issues. We believe that can be harder than you think. Web-based systems offer the best soluOn a side note … each month, as I tion because of the constant requirewrite the C-Suite column, I get a lot of ment for updating.

For years, Wetzel Trott has specialized in quality control reviews for residential lenders, and currently has approximately 500 clients around the country. Quality control reviews are performed on conventional and government loan production in accordance with the requirements of Fannie Mae (FNMA), Freddie Mac (FHLMC), U.S. Department of Housing & Urban Development (HUD), the Veterans Administration (VA), and private investors. In addition, documents are checked to confirm that they meet federal regulatory requirements. QuiC was developed by Wetzel Trott for use in conducting quality control reviews. It is a user-friendly and flexible quality control system which also provides a sophisticated level of functions and options. It includes workflow management and tracking capacity, and allows for customization within both the review and reporting functions. The regulatory compliance portion of the quality control review is housed within QuiC’s Doc Review Wizard. The Doc Review Wizard presents question sets designed to guide the user through the steps necessary in determining whether federal disclosures are accurate, complete and compliant with regulatory requirements. Specifically, the Doc Review Wizard lists each document by name and then proceeds through questions customized to the details of the associated regulation. The question sets can be updated or edited as needed when regulations change, always ensuring that the review is accurate and up to date. The question sets can also be customized from a management perspective according to varying skill levels in potential users. The questions can be built very general for more advanced auditors or built more rigid for less experienced auditors. For the latter, the documents might have question sets built several layers deep. This format guides the auditor through all aspects of consideration necessary in confirming the acceptability of the documents being reviewed. The system will not allow a user to advance without answering a question; therefore it assures a complete and thorough review. Auditors report that they like the “prompts” built into the system and that they think of the question sets as a checklist, yet the technology offers that support in a paperless format. The Doc Review Wizard can even be customized according to loan type, mean-

ing that documents and associated questions would only appear as applicable to the type of loan being reviewed. For example, Right of Rescission questions will not fire on a purchase transaction. These types of customizations promote efficiency and help contribute to the bottom line. The reporting function in QuiC operates similar to the review function in that it also allows customization options. As auditors answer the question sets, issues are identified within QuiC and automatically populated to the individual audit report. All of the issues are developed at the management level and hard-coded into the system. However, administratively, they can be edited at any time. Issues evolve as regulations change. With the recent changes to the Real Estate Settlement Procedures Act (RESPA), many new issues have been added to Wetzel Trott’s system and some existing issues have been adjusted or deleted. This administrative editing function provides the ability to continually remain current with regulatory compliance requirements. As part of the quality control review, Wetzel Trott also performs Truth-inLending (TIL) calculations in order to ensure the authenticity of the TIL document being audited. A TIL Worksheet has been built into the QuiC quality control software. The worksheet assists the auditor with identifying discrepancies in finance charges, the amount financed, the annual percentage rate (APR), and the private mortgage insurance drop date. Essentially, the auditor enters the lender’s figures into the system and compares those figures to his own. The worksheet also assists the auditor in identifying discrepancies in the payment stream. There is a separate window function which helps the auditor determine if an excess lender credit cuts into the finance charge. Any discrepancies identified throughout the entire process easily populate into report ready issues. Additional narratives, unique to the file or issue, can be added when applicable. The feedback we have received is that the auditors use this system like the TIL Worksheet in QuiC because it simplifies calculations and eliminates the potential for arithmetic errors on their part. From the CLevel management perspective, the TIL Worksheet provides a “track record,” maintained within the system, which details the steps the auditor took during the review process. An important feature is that the history can be viewed at any time in the

future should questions arise regarding the review or the calculations used. I like the fact that Wetzel Trott partners with a third party vendor to complete the re-calculation of the TIL document. After an auditor completes the QuiC TIL Worksheet, they run the calculations through a third party technology system which calculates the APR, the payment stream, and the private mortgage insurance drop date. This type of technology partnering has become an important aspect in navigating a clear path through the complex area of regulatory compliance. It is not uncommon for companies to struggle with the demands of keeping up with state level compliance requirements. Wetzel Trott uses and recommends the use of third party vendors in providing the support needed in this area. Technology links to partnering vendors can be implemented within QuiC. Links to third party vendors provide the auditor ready access to state level regulations and ongoing updates. Other vendors provide the tools necessary for high-cost testing at both the state and federal level. We and our friends at Wetzel Trott believe firmly in employing all technology resources necessary to remain current in the area of regulatory compliance.

This includes working with vendor-provided technology tools to integrate and secure the controls necessary for a solid quality control and compliance process. It is a synergistic formula that gives you, the C-Level executive, the confidence that you are pulling from as many resources as possible to effectively manage the compliance risk for your company in the ever more complex and precarious regulatory world in which we live. David Lykken is president, mortgage strategies and managing partner with Mortgage Banking Solutions. David has more than 35 years of industry experience and has garnered a national reputation. David 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. 101 or e-mail To listen to author David Lykken’s online radio show, log on to and type in “Lykken on Lending” in the “Search” box on the right-hand side of the page.

By Jeff Mifsud

If you are not familiar with the FHA’s Mortgagee Review Board, it is responsible for issuing sanctions to FHA lenders that violate the agency’s policy requirements. In some extreme cases, the MRB can withdraw a lender’s FHA approval altogether, prohibiting the lender from offering FHA programs. In other cases, the MRB negotiates settlement agreements with lenders to insure compliance. The Board can also issue letters of reprimand and require probation, suspension, and civil money penalties.

Are you in compliance? As the title states, FHA withdrew the FHA approval status of 905 lenders for failing to meet requirements of the U.S. Department of Housing & Urban Development (HUD). It’s evident that much of this shake-out was from smaller brokers and lenders that lacked the


 AUGUST 2010

“Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices … Any FHA-approved lender that does business with us must follow our standards. If we determine that our partners are not playing by the rules, we will take action—it’s that simple.”

This is just a sampling of some of the companies affected by HUD’s recent roll through the lender neighborhood. It is a clear message that in this “Age of Compliance,” HUD means business! If you are an originator, it’s 1. A Utah lender was fined time to open your eyes $30,000 for using the HUD and determine if your seal and FHA acronym on employer is running a their Web site which gave compliant office. If not, the appearance that it was you may want to explore a government site. other companies that have the proper staff, 2. A Rhode Island lender knowledge and commitwas fined $7,500 for not ment to stay compliant. implementing a quality This shakedown is control plan. good for a lot more than providing more revenue 3. Another company was for the FHA MRB. The fact “It is a clear message charged $11,000 because is that it is good news for that in this ‘Age of they simulated a governthe industry and great Compliance,’ HUD ment form and seal to news for all of you who make it look like they means business! If you work for organizations were doing business with are an originator, it’s that take compliance seriHUD (this one is a big time to open your eyes ously. Companies that warning for all you direct and determine if your invest in compliance will mail originators). employer is running a continue to be the players and dominate the mortcompliant office.” 4. A Maryland company gage markets. If a compawas required to pay more ny is investing in the systhan $425,000 because they charged tems to assure their compliance, it’s likeborrowers a broker fee and an origina- ly that they are also investing in the tion fee and failed to meet other com- proper training of their sales staff and pliance requirements. giving them the competitive edge they need to sustain their growth. 5. A Missouri lender was hit with a When I think of well-managed com$700,000 penalty for not reporting infor- panies who take compliance seriously, mation according to HUD guidelines. three Michigan-based companies come to mind and I will mention these three 6. A New York firm was hit with $413,000 only because I know the owners personin fees for not registering their DBAs and ally and they have experienced growth for other compliance-related items. despite the suffering local economy that relies so heavily on the success of the U.S. 7. One lender had their FHA approval auto industry. As someone who has withdrawn for having hired an employee trained companies all over the country in that was debarred from HUD programs, FHA, I can tell you that you never know if which is a violation of HUD policy. a company, however large or small, is compliant unless you know the leaders 8. Another company was charged $68,500 of the organization personally (and even for failing to ensure their employees were then, sometimes you get fooled!). I share not simultaneously working in related these companies as examples of organifields like real estate or title companies, zations that put great emphasis on propand for not documenting loans properly. er hiring practices and do whatever it takes to keep a compliant office. The first 9. A company was charged $674,000 for two I will mention are regional FHA not documenting files properly and not lenders and the third has a national implementing quality control plans. reach. Capital Mortgage Funding in Southfield, 10. A company was fined $124,000 for not Mich. is one of the top FHA lenders in implementing a quality control plan, Michigan. Co-owners Harry Glanz and Dan maintaining non-compliant branch Burke understand the importance of comarrangements and not reporting employ- pliance and the value of maintaining good ee W-2 income earnings. working relationships with correspondent lenders. In business for nearly 20 years, they 11. A company was charged $71,000 for hiring loan officers as independent concontinued on page 34


The Federal Housing Administration’s Mortgagee Review Board (MRB) has been busy this year. They published a notice in the Federal Register that announced dozens of administrative actions against FHA-approved lenders who did not meet FHA policy requirements. In 2010 alone, up to the time of the writing of the notice, the MRB has issued around 1,500 sanctions against lenders, including “reprimands, probations, suspensions, withdrawals of approval and civil money penalties.” The following is a quote from FHA Commissioner David H. Stevens:

tractors and for charging brokers fees in addition to the origination fee.  INDIANA

The HUD Hammer Hits Hard: FHA Withdrawals Approval Status From 905 Lenders

financial resources to maintain their FHA approval status given the new net worth requirements. Just to give you an idea of how heavy the HUD Hammer is … here are 11 examples of recent sanctions against lenders; I left the names of the companies out, but they can be viewed in the Federal Register notice:




maintain a stellar reputation amongst consumers and have a very high percentage of repeat customer business because of their fair and honest business practices. They have always invested heavily in the staff necessary to keep their firm compliant. The second company is Success Mortgage Partners based in Plymouth, Mich. Headed by Vince Lee, Owen Lee and Kevin Broughton, this is a firm that opened its doors at the onset of the mortgage crash. Although it seemed counterintuitive to open a mortgage company at that time, they found it was a perfect time. Why? Because so many smaller brokers had to close their offices due to high overhead, this allowed Success Mortgage Partners to absorb some of the best talent in the industry and now they are experiencing steady growth and have become one of the top FHA lenders in southeastern Michigan. Success Mortgage remains a solid company because of their commitment to compliance and the hiring of the right staff to make it happen. The final company is Gold Star Mortgage Financial, a firm that also invests a lot of resources in compliance and their staff. Headquartered in Ann Arbor, Mich. and led by Chief Executive Officer Dan Milstein and Vice President Rick Richter, Gold Star does business on a national level, and in August 2009, made the Inc. 500 list for being one of the fastest growing mortgage companies in the country. This is no small feat in the face of a challenging market! Currently, the number one FHA lender in Wayne County (the 13th largest county in America), Gold Star continues to expand because of strong correspondent relationships and the outstanding business systems they have in place. Strong internal staff and welltrained loan officers assure that the company will continue to be a national force. The one trait that is common in all of the companies I have mentioned (and all those like them throughout the country) is a long-term business vision, personal

involvement in the day-to-day operations, and a passion for doing business the right way. They all understand that having the ability to provide FHA programs is a privilege and should not be taken for granted. On the other hand, I’ve had some experiences with less impressive and likely less compliant companies. In the aftermath of the sub-prime collapse, I did a lot of FHA training for what I refer to as “580 Refi Shops” who had previously done only subprime. Talking on the phone with them and looking at their Web sites, everything appeared compliant, but arriving at the office, I could practically smell non-compliance. I was concerned that these were the types of companies that would likely take advantage of the FHA programs and hammering borrowers on fees to supplement their lost sub-prime business. These are the types of lenders HUD is trying to purge from the industry and, as evident from the current list of withdrawn FHA approvals and imposed sanctions, HUD is walking their talk. It takes a lot of capital today to stay compliant, and if you are one of the fortunate ones to be working for a company that takes their HUD compliance seriously, you should feel grateful for that and express that gratitude to the owners of your companies, because in today’s “Age of Compliance,” only the best talent with the best business systems will be left standing. Go FHA! Jeff Mifsud founded Southfield, Mich.-based Mortgage Seminars LLC in 2004, has been an FHA originator for 13 years, is a contributor to and is a former FHA underwriter. Jeff may be reached at (877) 342-9100 or e-mail Visit author Jeff Mifsud’s Web site at for tips and information on FHA loans and details from some of the nation’s top FHA specialists.


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Taming Mortgage Compliance: Technology is the Secret Weapon By Lionel Urban

It has been said that the mortgage Valuation Code of Conduct (HVCC) set industry is a constant battle of growth, guidelines for the appraiser selection cutbacks and change. Although these and appraisal ordering process. Higherphases usually cycle through every few Priced Mortgage Loans (HPML) guideyears or so, in the past 24 months we’ve lines set a much lower threshold for had it all, and the foreseeable future loan terms that require a lender to promises more of the same. Record low issue additional disclosures prior to loan consummation. rates, tightening margins, The Fair and Accurate an economy that continCredit Transactions Act ues to limp along … and a (FACTA) amendments sea of regulatory compliknown as the “Red Flag ance changes. Rules” require lenders to Over the past 25 years, implement specific proit has been common to cedures to detect, prehave one new form of regvent and mitigate identiulatory change every couty theft. ple of years. The year 2009 The year 2010 brought blew that pace away with even bigger changes, four new requirements including the newly-forthat have substantially changed a lender’s respon- “With the proper plan- matted Good Faith ning, training, moniEstimate (GFE) and HUD-1A. sibilities, and in 2010, On the surface, it appears three more will be in effect toring and tools, simple. However, these by year’s end. To add to lenders can tame the new requirements hold the the challenge, existing mortgage compliance lender accountable for compliance responsibilibeast and achieve a accurate lender and thirdties are being enforced more than ever by state greater level of efficien- party service provider fee estimates. Compliance with and federal government, cy through increased the Secure and Fair as well as secondary marautomation as well.” Enforcement for Mortgage ket investors. But at least Licensing Act (SAFE Act) the challenge of compliance management comes with a silver requires lenders, their originators, and in lining: With the proper planning, train- certain circumstances, their staff, to register ing, monitoring and tools, lenders can with the National Mortgage Licensing tame the mortgage compliance beast System (NMLS). Additionally, the SAFE Act and achieve a greater level of efficiency sets forth uniformity for originator accountthrough increased automation as well. ability, training, and information sharing. Planning starts with a good summa- Additionally, well thought out initiatives by ry of all requirements and identifying the American Association of Residential the impact on each employee’s role. Mortgage Regulators (AARMR) include Training should be completed on a reg- establishing a standardized reporting ular basis, include a review of all expec- method that allows state regulators and tations, and identify the pain associat- auditors being set to single out high-risk ed with non-compliance. Most of the lenders and identify specific transactions for new requirements apply to loan origi- anti-predatory/high-cost legislation, Truthnators and that’s where the biggest in-Lending Act (TILA), Real Estate Settlement impact can be made. Effective training Procedures Act (RESPA), and state consumer should assume that originators need to law violations. The liability associated with noncover all aspects of compliance and test/certify originators upon comple- compliance can result in expensive tion. Most importantly, there should be fines, withdrawn U.S. Department of clearly identified procedures, simpli- Housing & Urban Development (HUD)fied support systems, and a thorough or secondary market investor approvals, and borrower recourse or litigation monitoring of all requirements. In 2009, mortgage compliance expenses. The good news is that, even changes included the Mortgage with today’s environment of rapid Disclosure Improvement Act (MDIA), change, mortgage compliance can be which identifies steps and specific time properly managed. However, lenders frames for disclosing and re-disclosing must be prepared to allot the appropriprior to loan consummation. The Home ate time and resources.

Technology is the secret weapon

Lionel Urban is president and chief executive officer of Inc., an enterpriseclass mortgage technology company that supports more than 250 banks, credit unions and mortgage companies. Urban is a 20-year industry and technology veteran. He has been responsible for loan production, operations, and secondary marketing, and has supervised lending department compliance at a variety of companies. For more information, call (877) 536-8686 or visit

Not too long ago, if you were responsible gather loan information and to conduct for technology in a mortgage operation, electronic examinations, often referred you could keep a reasonably safe dis- to as “e-Exams.” tance from the day-to-day details of lending compliance. Over the years, however, Technology brings it all several laws, including Sarbanes-Oxley together and Gramm-Leach-Bliley, have crept into CSBS and AARMR first contemplated the world of the mortgage IT profession- building their own technology to enable al, requiring that technology work in har- the new e-Exams. Ultimately, they chose mony with a legal department’s policies to evaluate solutions that were already and procedures. available and in use by the mortgage Today, mortgage regulaindustry. CSBS and AARMR tors are putting technology to announced in August of work in regulatory enforce2008 that, following an ment. Technology professioneight-month vetting period als and IT departments not involving representatives only need to understand the from 14 states, they had new regulatory examination selected technology from requirements, they also need ComplianceEase to facilito work more closely than tate the collection of loan ever with their compliance information and to autoand operations departments mate compliance audits on to help adapt to a more comloan files. prehensive, technology-driInstead of just looking ven regulatory compliance “Running audits at smaller samples of environment. ahead of time enables paper loan files by hand, regulators are using the you to identify and How we got here mitigate deficiencies technology to electronicalInitiatives at the state ly audit up to 100 percent before you find yourlevel to modernize mortof lenders’ and brokers’ gage examinations date self in the midst of an portfolios for regulatory e-Exam.” back to 2007. The two examinations. These new advocacy groups that repe-Exams include, among resent state banking and mortgage other things, checks for compliance with lending regulation, the Conference of federal laws, such as the Home Mortgage State Bank Supervisors (CSBS) and the Disclosure Act (HMDA), Truth-in-Lending American Association of Residential Act (TILA), Homeownership and Equity Mortgage Regulators (AARMR), worked Protection Act (HOEPA) and Real Estate together to establish an agreement that Settlement Procedures Act (RESPA), as their members could sign to enable the well as the full scope of state laws, numerous state agencies across the including high-cost, anti-predatory and country to work more closely together consumer credit laws that vary dependon regulatory enforcement. ing upon how an originator is licensed. Regulators called the unprecedented The technology is also enabling the agreement the Nationwide Cooperative type of multi-state coordination originalAgreement for Mortgage Supervision ly envisioned by CSBS and AARMR. States (NCA). Regulators from every state, the now collaborate on simultaneous examDistrict of Columbia and Puerto Rico inations of institutions that do business signed the agreement, enabling different in multiple states. Regulators refer to state agencies to collaborate and share them as “multi-state examinations.” information as they supervised state-regulated lenders and brokers. Although What to expect regulators still oversee institutions in In contrast to the mechanics of traditional their respective jurisdictions, multiple regulatory examinations, multi-state states and agencies can now work examinations will begin before examiners together to examine lenders and brokers go on-site. The coordinator for the exam, that do business in multiple states. called the Examiner-in-Charge (EIC), will To enable that kind of coordination contact the institution being audited and across multiple jurisdictions, CSBS and request an electronic upload of loan inforAARMR looked to existing technology in continued on page 36 the mortgage industry to help them


 AUGUST 2010

With today’s vendor solutions, mortgage lenders should consider real-time validations to identify fraudulent borrower activity and prohibit lender actions that are not in compliance with state, federal, and HUD or investor guidelines. These checks should be completed as part of the origination, processing and closing processes, and have the ability to catch non-compliance before it becomes a violation. This can include validating allowable fees, disclosure or re-disclosure for specific data or calculation tolerances,

By Jason Roth


Integrated fraud and compliance checks

Managing the new and existing compliance requirements may seem complex. However, mortgage companies that master this change have a significant competitive advantage. Most small- to mid-sized lenders still use origination software incapable of this level of automation, and most don’t address compliance in any comprehensive way. With the proper planning, training, monitoring and tools, lenders can face the mortgage compliance challenges of today’s lending environment and effectively grow their market share, while providing borrowers with superior service and financing.

Getting Your Technology Ready for Multi-State Regulatory Exams  INDIANA

Many retail lenders, including banks and credit unions, still use the loan origination systems popular from the early 1990s until the market crash several years ago. These ‘off-the-shelf’ products cannot provide the required level of automation to ensure compliance, and drain internal resources as companies attempt to make up for the shortcomings with inefficient (and inconsistent) manual stop-gap solutions. But lenders that examine the potential of a rules-based system accessed over the Internet quickly see that today’s technology is the secret weapon in managing compliance. Today, enterprise technology systems are very affordable and can be implemented in less than 60 days to simplify employee compliance and management monitoring. Web-based systems give lenders of all sizes access to much more sophisticated solutions with greatly reduced administrative and IT support requirements. Integrated features and services that mortgage companies should consider include system-based workflow rules; automated compliance checks; and detailed, centralized management reporting. Some loan systems today have the ability to productively manage workflow in a variety of ways. First, lenders should expect “hard stops” that ensure that originators and staff gather the right data and perform the correct activities at the appropriate times. Data checks should be integrated at all steps and be simple to use. They should prohibit issuing disclosures when key information is missing or not accurate and ensure that credit reporting interfaces and other electronic interfaces are only available when the appropriate information is gathered for government reporting. Other key workflow checks should include limiting the ability to close a loan when disclosures have not been completed correctly or in a timely manner. Most importantly, access control levels should identify the security rights and responsibilities of each employee to ensure data integrity and security is never compromised.

anti-predatory/high-cost monitoring, and Truth-in-Lending (TIL) audits. By integrating these checks within its workflow, a lender’s staff is required to complete preclosing audits and ensures the appropriate corrective steps are completed prior to funding a loan that is not in compliance. Summarized reporting is the final piece of the puzzle that ensures lender compliance. Real-time reporting identifies loans that require disclosures, and shows whether or not disclosures were prepared and if redisclosure is now necessary. With the new MDIA requirements, lenders must be prepared to monitor APR changes and re-disclosure with a change of 1/8 percent even without a change to the loan program or fees. This can occur when mortgage insurance is adjusted or when even a moderate change of the ARM index takes place. Oftentimes, these may be events outside of an originator’s or processor’s control, and they are typically the ones responsible for issuing such disclosures. With proper reporting, both employees and management are notified of non-compliance issues so the appropriate steps can be taken to become compliant. Combined with other elements of an enterprise system, real-time reporting often triggers these remedying steps automatically, which underscores two main benefit of enterprise systems: Centralized control and workflow automation. To simplify the implementation of these types of systems lenders can expect workflow requirements, compliance checks and reporting to be pre-configured and managed by their technology vendor. This saves countless hours of system administration and ensures the lender is implementing best business practices immediately.




mation for the examination time-frame. Again, the scope of the audit may extend to all of the loans in a licensee’s portfolio, so you’ll need to have all of your own loan information ready before you get tapped for an exam. That’s where technology preparation comes in. A good first step is to understand the technology that CSBS and AARMR have announced is being used in multi-state examinations. These organizations, as well as individual state agencies, have started notifying licensees about the data collection and reporting that will be expected of them. In particular, CSBS and AARMR have designated that the RegulatorConnect online Web portal at is the central point for submission of electronic loan information at the initiation of an e-Exam. State examiners will use the ComplianceAnalyzer and HMDA Analyzer audit software to conduct the electronic portions of the exams. Multi-state examinations will start offsite, with examiners receiving the required electronic loan information from the institution being examined. Examiners will run the loans through the audit software to identify loans that they want to look at in more detail, via on-site paper copies of loan files or electronic images. In the initial off-site examination phase, a lender may be scrutinized by 20 or more examiners from as many as 35 states. Ultimately, depending on whether an on-site visit is deemed necessary, five to 10 examiners will actually go on-site for the follow-up reviews. It’s important to note that this new type of examination is not just some faroff idea. As of July 2010, several states are pursuing pilot off-site monitoring programs. This means that loan information is collected and audited on an ongoing basis. Regulators build “risk profiles” of the entities they supervise, and target further examinations accordingly. For example, in a recent announcement, North Carolina stated that it will require mortgage lenders and mortgage brokers to provide the characteristics of originated loans in an electronic format on a quarterly basis, within 45 days after each calendar quarter. The state can make use of this information to track loan origination violations and, in turn, recommend companies for multi-state exams.

Getting prepared With all of these changes approaching quickly, it’s important to start your technology preparations today. A good first step is to go to the RegulatorConnect portal that CSBS and AARMR have designated as the hub for the new e-Exams. From there, licensees can download information about the necessary electronic data

formats and the submission process. Regulators require that loan information is submitted in a specific file format called a Licensee Examination File (LEF). Details about that format are available for license free-of-charge to qualified entities at the RegulatorConnect portal. State-regulated institutions can license the LEF format for use in formatting and transmitting loanlevel data required for use in e-Exams. You will first want to make sure that you have all of the required loan information in an electronic form. Depending on the size of your institution, the data may reside in multiple systems or data warehouses. Data gathering can be a chore, as any IT professional will tell you, so that’s just another reason to start preparations ahead of time. The LEF specifications will tell you what information you will need to have available electronically and how it needs to be formatted. Another option for lenders and brokers is to check to see if your systems already have built-in capability to export loans in the format needed for e-Exams. Systems of record that commonly have the necessary information include loan origination systems and loan document systems. You can talk to your technology vendors to find out whether they have built the necessary export capabilities into the systems you use. Similarly, as a mortgage technology vendor, you should be prepared for your customers to come to you asking what your systems can do to facilitate e-Exams. There is a portal called RCCertify, located at, for technology vendors to learn more about the capabilities they can develop to assist their clients with eExams. Vendors should review the e-Exam file format to see if they have most of the required information. If so, it may make sense for them to develop export capabilities for their customers to use for e-Exams. On the compliance side, institutions can plan ahead by instituting “selfexamination” policies and procedures. Compliance auditing technology is widely available in the mortgage industry. You should identify a system that covers all of the tests that the examiners run and works together with your existing technology systems. Running audits ahead of time enables you to identify and mitigate deficiencies before you find yourself in the midst of an e-Exam. You can expect that multi-state examinations will be more intensive and have a higher profile than individual state-by-state exams. Because states can share information, a compliance issue in one state can turn into an issue with many states. On the other hand, technology should make examinations more uniform and more predictable. Combining multiple state exams into a single multistate examination should save time and

money in the long run. Since regulators have publicized the examination scope and have made the industry aware of the exact tools they will be using for the new e-Exams, you can make technology and operational plans now so that you’ll have no surprises when your first multistate exam comes around. Note: This article has not been endorsed by CSBS, AARMR or any state regulator. The information contained herein is derived and compiled from numerous publications, presentations and interviews of regulatory officials.

Jason Roth is co-founder and SVP at ComplianceEase, overseeing the company’s suite of mortgage compliance and risk management products, including ComplianceAnalyzer, which audits loans for compliance with federal, state and municipal requirements. Roth has a bachelor of science degree from the California Institute of Technology (Caltech). His previous work includes positions at Adobe Systems Inc., developing Acrobat and PDF document technology. For more information, e-mail or visit

GLBA Compliance: Save Thousands on Overhead and Make More Money at the Same Time By Andrew May

Many mortgage originators are unknow- trail for compliance gives me peace of ingly violating the Gramm-Leach-Bliley mind that is simply priceless. We know Act (GLBA) by not adequately protecting who signed what and when, and we don’t the non-public personal information of have to overnight documents around borrowers. When discloseeking simultaneous sigsure docs are e-mailed, natures from the loan offifaxed or stored in an unsecer, borrower and lending cured office or file cabinet, institution. there are often no safeeSignatures provide a guards for privacy protecvery simple solution to tion as dictated by the these formerly common GLBA. This exposes you, compliance violations, but your loan officers to a lessthat’s just the beginning er extent, and your lenders when it comes to the beneto potentially huge legal fits of using them with disliability. With more regulaclosure docs. Our decision tory compliance scrutiny to use eSignatures has also than ever before, and con- “With more regulatory brought five critical advansumers more concerned tages to our business: compliance scrutiny about breaches in privacy, than ever before, and it’s critical that we protect 1. We saved consumers more contheir information and our$61,250 last cerned about breaches in selves from this potentially year thanks to privacy, it’s critical that eSignatures very expensive liability. we protect their inforeSignatures are a great My company drastically mation and ourselves first step to solving comreduced our overnight pliance risks. eSignatures from this potentially shipping bills, copier and keep client information very expensive liability.” storage expenses. Instead secure and GLBA compliof hustling to prepare ant. Since 2005, my company, American and mail documents, we send them Dream Residential, has used eSignatures from a PC, using eSignature software and on disclosure docs to ensure compliance the client can access and sign the docs with GLBA. In 2009, when the new RESPA instantly. There are no fees, no wasted laws took effect, we were glad we made time and no manual labor involved in the choice to adopt eSignatures because preparing docs for shipment. Our loan they provide an audit trail that proves officers sign these same documents in a Real Estate Settlement Procedures Act timely matter. Enough said. (RESPA) compliance, too. The audit trail can be accessed for any signature on any 2. We provide better doc, and shows a chain of custody that service to clients mitigates fraud. As an owner, this audit With mandated Housing and Economic

Recovery Act (HERA) delays and the unavoidable and time-consuming tasks involved in moving from application to closing, you’ve got to save time everywhere you can in order to close on time and be compliant in the same amount of time. eSignatures help keep closings on schedule because you are not burning time waiting on signatures or document shipping. You can have the client sign the documents while they are on the phone with you. When an appraisal or inspection takes a little longer than anticipated, you’re covered because you have saved (at least) two days with eSignatures at the beginning of the process. Clients will appreciate the speed, and they know that fast, accurate service is one of your top priorities. We’ve heard all of the “delayed closing” horror stories that cause huge frustrations for borrowers. But, when your customers experience the service provided with eSignatures, instead of horror stories, they will happily refer friends and associates.

3. You can better satisfy a new demographic of borrowers

4. We quickly turn shoppers into clients

At my company alone, we’ve saved more

These are the laws for “legal” eSignatures and the bare minimum requirement of your software package.

2. Insist on GLBA compliance That’s the initial point of this article and is a primary benefit of eSignatures, so don’t compromise. In order to comply with the Safeguards and Privacy Rules of the GLBA, make sure your eSignature software never sends documents or non-public information in unencrypted e-mail messages. E-mail should only used to send recipients notifications and instructions for viewing the actual documents. Again, consumer privacy protection is critical and violations will expose you and your lenders to gaping legal liability. Make sure your eSignature solution protects the borrower’s non-public information in your documents.

3. Get an end-to-end audit trail For a legitimate electronic signature and proof of compliance with other regulations, you need the complete document audit trail, including delivery, receipt, viewing and of course, signing.

4. Don’t pay more than you need to Some eSignature software is priced persignature or per-document envelope. Imagine paying per-signature, from every party, every time you have a change on the GFE, or paying per loan file and not knowing what your expense will be until you get the bill. It can add up very quickly, and the has-

If you’ve never used eSignatures, you’ll get a lot of benefit from a quick walkthrough tour or even a few short videos. Make sure your software provides introduction training and has a help line you can call when you have questions.

6. Make sure the software is made for our industry Now that eSignatures are becoming mainstream, new packages seem to be coming out of the woodwork. Make sure your vendor understands lending and your daily work. You don’t want to miss a disclosure signature or initial because the software didn’t know where to put your signature tags. Limit your search to lending specialists.

7. Make it easier on yourself with loan origination software (LOS) integration and automatic signature tagging The best eSignature options will integrate with your LOS so you just “print” to the eSignature software instead of

No matter which software solution you choose, make the move to incorporating eSignatures in your origination business. More and more lenders are moving in this direction and FHA has recently announced they’ll accept eSignatures on disclosure documents by the fall. With more pressure from borrowers, Realtors and others, eSignatures will soon become the standard. Prepare your company to be in the forefront for compliance and to capitalize on all of the benefits. Andrew May is founder and president of American Dream Residential, headquartered in Raleigh, N.C. May has more than 20 years of mortgage banking experience. A Master Certified Mortgage Banker, May earned his MBA in finance from Duke University, has owned and operated mortgage companies, and has worked for many large institutional companies. He received the first mortgage insurance patent in U.S. history in 1999. He may be reached by phone at (919) 771-3379 or by e-mail at

RESPA Technology Compliance: Could an Outside Source be the Answer? By David Leoncavallo

In the ever-changing world of regulatory compliance, lenders and mortgage professionals are constantly being subjected to new requirements, and as a result, continue to seek clear guidance and interpretation of lending regulations. Despite the fact that mortgage professionals and lenders are continually taking extensive measures to meet these changing regulation requirements—including investment and commitment in technology, training and quality control—the fight never ends. Recently, new Real Estate Settlement Procedures Act (RESPA) regulations have produced another significant challenge for mortgage professionals. A recent industry survey found that nearly 81

percent of respondents have encountered difficulties in beginning to use the new Good Faith Estimate (GFE) and the HUD-1 and HUD-1A uniform settlement statement forms. The new RESPA amendment, which went into effect May 1, 2010, made significant changes to the GFE and the HUD-1 and HUD-1A forms. These changes have thrown the entire industry into flux, while everyone figures how to stay compliant. According to new regulations, lenders already have to pay for mistakes and fines are quickly coming as well. With every new set of regulations continued on page 38


 AUGUST 2010

5. You can become paperless and green

1. Verify the software is compliant with ESIGN and UETA

5. If you’re new to eSignatures, go with a package that has good support and training if you need it

opening multiple applications. Also, make sure your eSignature software automatically places the signature tags (these are just placeholders that clearly alert your borrowers where to sign on the document) so you don’t have to do it yourself. You’ll save time and eliminate those inevitable errors from forgetting to place signature tags and being forced to bother your client again to get a forgotten signature.


With eSignatures, you can have the Truth-in-Lending (TIL) and Good Faith Estimate (GFE) on an applicant’s desk within one min. of the application. You can have those documents signed within another minute. You can have the loan in underwriting the “same day.” Without eSignatures, the applicant will continue to shop around until they feel their loan has officially been started. eSigning is a great way to assure a borrower that their loan is well underway and can prevent you from losing a client.

By now, I hope I’ve convinced you to at least try eSignatures for your disclosure documents. It’s really easy to get started and it’s shockingly affordable. There are many software applications available, so it may be a difficult choice if you’re new to eSignature technology. We chose SureDocs from a la mode and are very happy with the results. Here are six “must-haves” explained in layperson’s terms, to get you on the right path:

sles of tracking it all will definitely slow you down. Go with a solution that has an annual or monthly fee, regardless of loan volume.  INDIANA

The United States has a steadily growing population that conducts their banking, stays in touch with friends and family, rents movies, buys music, manages their investments and even dates online. Way back in 1997, I worked for a lender where one of the salespeople met his wife on the Internet. That was unheard of in those days. Now, those graduating from high school and college today, “digital natives,” grew up with the Internet and prefer using it over traditional faxing or time-consuming office visits. For this rapidly growing demographic, companies with online options get the business of the Internet savvy population, while competitors with only traditional services are playing catch-up.

than 345,000 pages of paper by using eSignatures. We are doing our part for the environment, and we also use our “green status” to appeal to a growing niche of borrowers who appreciate our much smaller environmental footprint. You can use your “green status” it in your marketing campaigns and our company hears positive comments from prospects and clients all the time.

that face mortgage professionals brings a new set of compliance challenges that must be met. Staying on top of all the new compliance rules can be challenging enough, so how can the use of technology help you win the compliancy battle? When should you use an outside company to assist with your compliancy issues? The new RESPA regulations present a unique set of challenges for mortgage professionals, because staying compliant means having real-time data. The revised GFE is now a three-page form, reflecting the additional information lenders must now disclose. The U.S. Department of Housing & Urban Development (HUD) had several goals in revising the GFE:  To encourage and make it easier for consumers to compare loan options and closing costs;  To increase the accuracy of settlement costs listed on the GFE by improving disclosures of yieldspread premiums (YSPs);  To facilitate comparison of the GFE and HUD-1/ HUD-1A forms; and

 To strengthen RESPA’s prohibition against the required use of affiliated businesses. While the new GFE is intended to be an “estimateâ€? of the loan terms and settlement costs for such things as settlement and title services, title insurance, inspections, and depending on the fee or service, the estimate must be either exact or within 10 percent of the fees paid or the lender must pay the overages and penalties will be levied. These changes are what everyone in the mortgage industry is facing right now, and becoming compliant is not an option ‌ it’s a must. Mortgage professionals across the country are asking, “How can we avoid these penalties and stay complaint?â€? With many other previous regulations, proper education and the simple implementation of new rules were sufficient enough to remain in compliance and keeping the issue in-house. However, with the new RESPA regulations, staying complaint means providing accurate costs for local service providers, such as title services and






inspection services, many of which time, customer service should be conwere previously never quoted. As a sidered as well. Are your customers result, mortgage lenders are quickly going to see a benefit from using this finding themselves in the unchartered new technology? Will the outsourced waters of trying to provide accurate solution save the customer time as well costs for services outside of the mort- as money? Without the use of gage industry, such as newly developed technolhome inspections, strucogy and service solutions, tural inspections, water lenders are facing nontesting, etc. I have heard compliance and the of mortgage lenders hirpotential cost of penalties ing new teams of employcan add up quickly. One ees to work on these bank recently failed to changes internally, and in include an $80,000 transsome cases, building sepfer tax on the GFE and was arate data or software responsible for the overdivisions just to work on sight. Another bank I becoming compliant. spoke with recently has When completing a cost analysis of how to “Staying on top of all said that they are receiving penalties almost daily for stay compliant, one ques- the new compliance non-compliance. Finally, tion that should be asked rules can be chalone lender recently told a is, “Should we find a lenging enough, so borrower that his land surthird-party technology how can the use of vey would cost around and services solution technology help you $450, a standard figure provider to assist us with win the compliancy that the lender had used compliance or can we battle?� in their GFE for years. The handle this in-house?� only problem was that Weighing the cost of staying compliant by using a trusted the survey was to be conducted on 20 outsourced solutions provider that has acres of land and the $450 figure is the technology and networks in place, accurate for a much smaller area. versus an in-house solution is an issue Without the new regulations the differthat many mortgage lenders are fac- ence in the estimate and actual cost for ing. Technology provided by an out- the land survey used to be changed side vendor can easily solve problems during the final closing and added to for the lender that would otherwise the closing costs. Not any longer. The require a great deal of time and effort actual total for the land survey was on the part of mortgage professionals $4,750 and the lender was forced to and take focus away from the business cough up the difference. The bottom line is that changes in they are in. regulations and compliance are hapTo stay compliant with the new GFE, HUD-1 and HUD-1A, there are outside pening on a regular basis. New techvendors that can provide solutions that nologies are proving to be a useful are guaranteed, provide mortgage tool for many of these problems. lenders piece of mind when facing Evaluating your specific situation, potential RESPA penalties and keep understanding the changes in regulation and how they could affect their deals moving along. In many cases, we learned that your business is crucial. The most mortgage professionals find it crucial important objective is to stay comto have a reliable third-party source to pliant. After that, look at how you provide verified information when can stay compliant while also saving implementing technology and service time and money and providing an solutions to meet the requirements. added benefit to your customer We saw an opportunity to use our base. More times than not, an outmore than 30 years of experience in side technology solutions provider the home inspection industry to could be the answer. develop software, GFEazy, and make it easy for lenders to comply with new David Leoncavallo is the founder, managing director and president of Salt Lake regulations. When weighing the costs of using a City, Utah-based Sopra Capital. Prior to new or outsourced technology and founding Sopra, 10 years ago, he foundsolutions provider, time should be the ed and developed an executive recruiting driving factor involved. If new technol- firm focused on franchise recruiting, ogy, from an outside source or not, can FranSearch, a company that has become provide time-saving methods with one of the largest franchising executive immediate solutions in solving prob- search firms in the world. He may be lems and staying compliant, the savings reached by phone at (801) 503-9210 or eare multiplied. In addition to saving mail

landmark financial legislation

tion under HAMP to use borrower-related and mortgage-related data for net present value analyses (NPV). A website is to be created that offers an NPV calculator. continued from page 31

materials. The HUD Secretary will appoint the OHC’s director and this new office will be given rule-making authority with respect to its administrative mission. The OHC will certify counselors under the authority of certain federal housing laws. Mortgage Servicing The Act also amends TILA with regard to servicing, requiring a lender to establish, prior to consummation, an escrow or impounds account for most mortgage loans secured by a first lien on the consumer’s primary residence.14 New consumer disclosures relating to an escrow or impounds account will be required. Prohibited practices include (1) obtaining force-placed hazard insurance (unless exemptions apply), (2) charging fees for responding to valid qualified written requests (QWR) from consumers,15 (3) delayed or belated responses to alleged payment allocation errors (i.e., response required within ten business days to an information request from a consumer relating to the owner or assignee of the loan). Posting of payments to the consumer’s escrow or impounds account must be implemented as follows: (1) apply the payment amount to the loan account on the date of receipt; (2) within five days of receipt if the consumer does not pay in accordance with the servicer’s payment instructions; and, (3) within a reasonable time not to exceed seven business days for a payoff. Appraisal Requirements For higher-risk mortgages,16 prior to extending credit and at no cost to the applicant, the lender must obtain an appraisal that includes a physical property visit. In certain circumstances, a second appraisal may be required. New standards for appraisal independence are to be implemented and several regulatory agencies will be involved in setting rules for the registration and ensuing supervision of appraisal management companies (AMC). Automated valuation models are permitted (AVM), however new quality control requirements will be promulgated by the affected regulatory agencies. Mortgage Resolution and Modification The HUD Secretary will establish a program to protect tenants’ rights and multifamily properties that are at risk. The Home Affordable Modification Program (HAMP) is to receive special attention by the Treasury Secretary in a tasking to develop guidelines that permit borrowers denied a request for mortgage modifica-

Other Provisions  GAO review: A mandate for the GAO to conduct a study on interagency efforts to address mortgage foreclosure rescue scams.  HUD review: A mandate to study the effects of the “Chinese drywall” on residential mortgage foreclosures.17  Congressional review: Consideration to the structural reform of governmentsponsored enterprises (GSEs), Fannie Mae and Freddie Mac.  Funds for HUD: $1 billion in emergency mortgage assistance and $1 billion for state and local governments for the redevelopment of abandoned and foreclosed homes.  Legal assistance: HUD Secretary to establish a grant-making program for legal assistance to low- and moderate-income homeowners, tenants relating to homeownership preservation, tenancy associated with home foreclosure, and also to those seeking to prevent foreclosure of their homes.  SAFE Act registration: Among amendments to the SAFE Act, the requirement to establish and maintain a system for registering employees of depository institutions (and their subsidiaries) regulated by a federal banking agency as registered loan originators with the Nationwide Mortgage Licensing System and Registry (NMLS) is transferred to the Bureau.

If not now, when? Various authorities will be transferred to the new Bureau. Many features of the consumer protection laws will be administered by the Bureau, which will become the administrator for the “federal consumer financial laws.” In other words, nearly every existing federal consumer financial statute, as well as new consumer financial protection mandates prescribed by the Act, will become the “enumerated consumer laws” transferred to the Bureau’s authority.18 On the one hand, regulations will be required to be finalized within 18 months of the designated date of transfer of authority to the Bureau. Then, those regulacontinued on page 41

Originating and closing loans these days can be very challenging. Lengthy turn times, inexperienced underwriters, and high costs can contribute to fewer closed loans.

“Protect your loans with GSF” Contact the Client Relations Manager today at

1-877-494-4448 or

 AUGUST 2010


GSF Wholesale is the safe and secure place for all of your business. Our experienced staff is dedicated to ensuring your loans are protected. With seasoned underwriters, efficient quality control department and competitive pricing, GSF Wholesale is focused on you and your business every day to meet the challenges of the new lending environment.  INDIANA

GSF Wholesale The Safe Place for your business!


heard on the street

continued from page 30

“A reverse mortgage is a financial option in today’s economy that every senior should at least know about and consider. It is a retirement tool that can provide them with security and piece of mind in planning their retirement years,� said Marino. “Total Mortgage’s model offers significant value to all its clients by combining low mortgage rates—maybe the lowest rates in the industry—and great service. We are committed to making sure a senior makes the right choices at this critical time in their lives.� For more information, visit or

Bank of America becomes largest servicer to sign on with HOPE LoanPort HOPE LoanPort, the Web-based housing counselor tool that streamlines submission of completed loan modification applications, has announced that Bank of America has agreed to use its proprietary technology to partner with nonprofit housing counselors to assist homeowners with loan modifications. Bank of America becomes the 11th mortgage servicer to sign onto HOPE

LoanPort. The company joins other servicer members American Home Mortgage Servicing Inc., Bayview Loan Servicing, Chase, Citi, GMAC, Ocwen Loan Servicing, OneWest, PNC Mortgage, Saxon Mortgage Services and SunTrust Mortgage Inc. HOPE LoanPort also has commitments from more than 200 counseling organizations across the country and is endorsed by House Majority Leader, Congressman Steny Hoyer (MD) and the Maryland Department of Housing and Community Development. “We are making great progress in helping our financially troubled customers complete loan modifications, now leading the industry in modifications completed and modification offers extended through HAMP,� said Rebecca

Consumers want to work with people Consumers want to work people they can trust and believe. they can trust and believe. starts by setting higher Trust starts byTrust setting higher BROKER standards for the mortgage industry. standards for the mortgage industry. ER








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Mairone, default servicing executive for Bank of America. “The nation’s housing counselors play a critical role in this process, working hand in hand with struggling homeowners. We believe HOPE LoanPort will enable us to more conveniently and reliably work with approved counselors as an extension of our team, working with our customers to achieve sustainable homeownership solutions.� “This is a significant development in the evolution of HOPE LoanPort, with far reaching implications,� said Larry Gilmore, chief executive officer of HOPE LoanPort. “By adding Bank of America to our roster, we now have two of the three largest mortgage servicers in the country signed up to use our Web portal. In addition, Bank of America and our ten other mortgage industry partners represent the majority of loans serviced throughout the United States. We are convinced that HOPE LoanPort is the future of simplifying the loan modification process for homeowners, servicers and counselors. With the nation’s largest mortgage servicer on board, we certainly feel that this assertion is validated.� For more information, visit or















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Gateway Funding Diversified Mortgage Services LP has announced its recent launch of its Correspondent Lending Division, buying loans from lenders, bankers and financial institutions in the Mid-Atlantic States. Gateway Funding Correspondent will offer a range of products, best in class turn times for underwriting and purchases, a customized servicing retention option, government sponsorship and much more. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s time for the market to get back to the basics of bringing value to a longterm relationship, everyone wins when you are committed to doing it the right way for the long termâ&#x20AC;?, said Bruno Pasceri, president and chief executive officer at Gateway Funding. As a strategic initiative, Gateway Funding has its eye on the FHA 203k Renovation Loan program. â&#x20AC;&#x153;Lenders today are looking for the next loan program that makes sense for the borrower, adds value and builds our communities. The 203k renovation program is just that opportunity.â&#x20AC;? Demand for renovation lending products is likely to continue increasing over the next several years. Lenders choosing to promote renovation lending as a strategic initiative should benefit from this growth and the opportunities for added profitability associated with these products. For more information, visit continued on page 43

landmark financial legislation

continued from page 39

tions become effective not later than 12 months after the regulations are issued. On the other hand, some provisions do not require implementing regulations and presumably would not be subject to the above-mentioned time period—which means, therefore, that the effective compliance date for certain provisions would actually be right after the enactment of the Dodd-Frank Act. Those regulations would include the restrictions on MLO compensation, certain disclosure requirements, and changes to financial triggers on “high-cost” loans under the Homeownership and Equity Protection Act (HOEPA). In the second part of this series, we will discuss the Mortgage Reform and Predatory Lending Act. And, in the third and final article we will consider not only the formation and powers of the new Bureau of Consumer Financial Protection but also the overall implications of the Act for the mortgage industry. Jonathan Foxx, former chief compliance officer for two of the country’s top publiclytraded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at

Footnotes 1—Press Release, June 25, 2010, The White House Office of the Press: “Remarks by the President on Wall Street Reform.” 2—Vote was 60 to 39. Three Republican Sens. Scott Brown (MA), Olympia J. Snowe (ME) and Susan Collins (ME), joined 57 members of the Democratic caucus. Sen. Russell Feingold (WI) was the lone Democratic opponent, saying the measure didn’t go far enough. 3—Speech on the House Floor, June 27, 2005, In Recognition of National Homeownership Month, A Resolution (You Tube) 4—See Foxx, Jonathan, “The CFPA Controversy: Asking the Tough Questions,” in National Mortgage Professional Magazine, October 2009, Volume 1, Issue 6, pp 2225, which recites that at least 16 consumer protection laws are affected or transferred to the Bureau, mutatis mutandis “enumerated,” including Alternative Mortgage Transaction Parity Act (AMTPA), Community Reinvestment Act (CRA), Consumer Leasing Act (CLA), Electronic Funds Transfer Act (EFTA), Equal Credit Opportunity Act (ECOA), Fair Credit Billing Act (FCBA), Fair Credit Reporting Act (except with respect to sections 615(e), 624 and 628) (FCRA), Fair Debt Collection Practices Act (FDCPA), Federal Deposit Insurance Act, subsections 43(c) through 43(f)(12) (FDIA) Gramm-Leach-Bliley Act, sections 502 through 509 (GLBA), Home Mortgage Disclosure Act (HMDA), Home Ownership and Equity Protection Act (HOEPA), Real Estate Settlement Procedures Act (RESPA), SAFE Mortgage Licensing Act (S.A.F.E. Act), Truth in Lending Act (TILA), and Truth in Savings Act (TISA).

Go Back in Time. At Terrace Mortgage Company, we believe in providing friendly, fast service with a personal touch, and we’ve done just that for 22 years. We pride ourselves on our easy-to-reach, seasoned underwriters who use common sense and offer unparalleled support by phone or email every step of the way. And we understand you need to close quickly. So we send a link with the closing package directly to the closing company right after you get a clear-to-close.

Terrace Mortgage Company Celebrating 22 years of wholesale lending Sandy Garcia, National Sales Director (866) 934-4631, ext 301


continued on page 42

 AUGUST 2010

7—Some legal experts say Section 929I of the Act could be interpreted to mean that the SEC can set its own rules about how to respond to Freedom of Information Act requests and that, potentially, the majority of SEC records could be exempt from public disclosure. The wording of the section says that the SEC should not be compelled to disclose records or information obtained “for use in furtherance of the purposes of this title, including surveillance, risk assessments, or other regulatory and oversight activities.” Rep. Darrell Issa (R-CA), the ranking member of the House Committee on Oversight and Government Reform, introduced legislation (HR 5924) back in May to repeal Section 929I. However, two other provisions have been identified that, in the interest of helping corporations shield information from the public, allow the SEC to ignore certain court subpoenas and FOIA requests.



6—The theory of Black Swan events was developed by Nassim Nicholas Taleb to explain the disproportionate role of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance and technology. In other words, according to Taleb, almost all major scientific discoveries, historical, financial, and technological events, and artistic accomplishments are undirected and unpredicted. If this is so, it seems to me that a derivative hypothesis would be that government regulations will tend to react to rather than counteract or prevent such crises. See: The Black Swan, Taleb, Nassim Nicholas, 2007, Random House.

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5—Chart by John Hall of the American Bankers Association, from “Every Death March Starts With A First Step,” Kevin Funnell, July 15, 2010, Bank Lawyer’s Blog:


landmark financial legislation

continued from page 41

8—Section 1503(3)(A)(i) of the SAFE Act defines “loan originator” as “an individual who (I) takes a residential mortgage loan application; and (II) offers or negotiates terms of a residential mortgage loan for compensation or gain.” Section 1503(3)(B), entitled “Other Definitions Relating to Loan Originator” provides “For purposes of this subsection, an individual ‘assists a consumer in obtaining or applying to obtain a residential mortgage loan’ by, among other things, advising on loan terms (including rates, fees, other costs), preparing loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan. 9—Among amendments to the SAFE Act, the requirement to establish and maintain a system for registering employees of depository institutions and their subsidiaries regulated by a federal banking agency as registered loan originators with the Nationwide Mortgage Licensing System and Registry is being transferred to the Bureau. 10—The Mortgage Reform Act re-designates 15 U.S.C. 1639a of TILA as section 129A and adds new section 129B: see 129B(c). 11—The Act expressly permits compensation to a creditor upon the sale of a consummated loan to a subsequent purchaser (i.e., secondary market transaction). And a consumer may finance origination fees or costs, as long as the fees or costs do not vary based on loan terms or the consumer’s decision to finance such fees, providing this financing takes place at the consumer’s option and solely through principal or rate. See Second Summary of Mortgage Related Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), 07/13/10, Mortgage Bankers Association 12—For a general description of predatory lending, see “Expanded Guidance for Evaluating Sub-prime Lending Programs,” FIL-9-2001 (01/31/01) which states that predatory lending involves at least one, and perhaps all three, of the following elements: (1) making unaffordable loans based on the assets of the borrower rather than on the borrower’s ability to repay an obligation; (2) inducing a bor-

rower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced (“loan flipping”); or (3) Engaging in fraud or deception to conceal the true nature of the loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower.” Other federal and many state guidelines add even broader definitions to the meaning of predatory lending. 13—See TILA, Section 129C(b)(2) for the definition of “qualified mortgage,” which includes most residential mortgage loan products, and also includes reverse mortgages (see: TILA Sec. 129C(b)(2)(A), as added by Sec. 1412 of the Dodd-Frank Act), although there is an exemption for reverse mortgages or bridge loans with a 12 month or less repayment period. 14—Used to pay taxes and hazard insurance and, if applicable, certain other costs with respect to the secured property; must remain in place for at least five years after loan consummation. 15—Section 6 of RESPA requires the lender (or servicer) to acknowledge receipt of the QWR within 20 business days and must try to resolve the issue within 60 business days. 16—See: TILA Sec. 129H, as added by Sec. 1471 of the Dodd-Frank Act. “Higherrisk mortgage” means a residential mortgage loan (other than a reverse mortgage that is a qualified mortgage) secured by a principal dwelling that (a) is not a qualified mortgage and (b) has an annual percentage rate (APR) that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set. For thresholds, see also TILA Sec. 129H(f), as added by Sec. 1471 of the Dodd-Frank Act. 17—In 2009, the Chinese drywall controversy reached Congress as a health and safety issue involving defective drywalls manufactured in China and imported by the United States starting in 2001. It is also considered an issue in many foreclosures. And in May 2009, the House passed an amendment to the Mortgage Reform and Predatory Lending Act (HR 1728) that would require HUD to study the effects of tainted Chinese drywalls on foreclosures and the availability of property insurance. 18—Op.cit. 4, provides the “enumerated laws,” to which add Section 626 of the Omnibus Appropriations Act and the Interstate Land Sales Full Disclosure Act.




Exhibitors and Sponsors

SAVE THE DATE! Join the 2010 NAMB/WEST Conference December 4-6, 2010 at the MGM Grand Las Vegas!

Visit for updates. Exhibitors will receive a complimentary ad in the December issue of the National Mortgage Professional

For more details on Exhibiting and Sponsorship, please contact Kinsley at 303-798-3664 or

heard on the street

continued from page 40

Former Sen. Fred Thompson named reverse mortgage spokesman for American Advisors Group

 David M. Moffett, former chief executive officer of Freddie Mac, has been named to the board of directors of CIT Group Inc.

 Paul M. Peters, CMB has joined

continued on page 45

You've Decided to Make a Move... 5 Questions You Must Ask! 1. Have they been branching for nearly two decades? 2. Will they work closely with you to expand your business? 3. Will they provide underwriting, compliance and accounting? 4. Can they license your branch in multiple states? 5. Will they pay the next day, on funded loans? Guaranteed Home Mortgage Company was founded in 1992 and was named in the Inc. 500 list of fastest growing companies in the United States. Last year, we moved to a larger headquarters to support our expansion.


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 AUGUST 2010

HomeTelos LP, a Dallas-based real estate services and technology firm, and an approved GSA Schedule

Paul M. Peters, CMB


HUD selects HomeTelos to market residential inventory

Mortgage Professionals to Watch

Mortgage Banking Solutions as a senior mortgage consultant.  INDIANA

As part of American Advisors Group’s (AAG) strategic growth plans to be the largest private national reverse mortgage lender in the country, AAG has secured former Sen. Fred Thompson as the company’s spokesman. Sen. Thompson remains active in politics and the national debate, and hosts a nationally-syndicated radio show and recently released his memoir about growing up in Tennessee, Teaching the Pig to Dance. As spokesman for AAG, Thompson will provide the credibility, integrity, and policy knowledge needed to ensure the longevity and growth of reverse mortgages, an important financial tool for seniors. “I am proud to join AAG’s efforts. In this tough economic climate, it’s important that America’s seniors know all their options, and have the facts they need to make informed decisions about their financial and retirement futures,” said Sen. Thompson. “Reverse mortgages present opportunities for seniors to stay in their homes and enjoy their retirements, and I look forward to informing America’s seniors of the benefits of this often misunderstood financial product.” “We are delighted to have Sen. Thompson on board and know this will be a game changer—not just for AAG but for the reverse mortgage industry as a whole,” said Reza Jahangiri, chief executive officer of AAG. “AAG looks forward to Sen. Thompson helping take our brand, company and industry to the next level. He and his experience will be invaluable as AAG further develops their reverse mortgage platform in the coming months.” Sen. Thompson, a Republican, was elected to the U.S. Senate from Tennessee in 1994 and retired in 2003. Since then, he has remained active in national and international affairs and public service. He was Chairman of the International Security Advisory Board at the U.S. Department of State and a member of the U.S.-China Economic and Security Review Commission. As an actor, Thompson has appeared in such successful films as No Way Out, In the Line of Fire, Die Hard II, Days of Thunder and The Hunt for Red October. In late 2002, Thompson joined the cast of the long-running NBC television series Law & Order, playing Manhattan District Attorney Arthur Branch. For more information, visit

Contractor, has been selected by the U.S. Department of Housing & Urban Development (HUD) to provide new and advanced marketing strategies to sell HUD’s single-family residential portfolio in five geographic regions encompassing Alabama, Arkansas, Colorado, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Texas, U.S. Virgin Islands, Utah, Virginia and West Virginia.

“We are eager to work with the professional real estate community in each area to aggressively market these homes and create solid homeownership opportunities,” said Stephen Polley, president of HomeTelos. “Our team has a tremendous respect for the communities in which we will work and looks forward to engaging real estate brokers and appraisers to provide the critical local market expertise we know is key to successfully selling residential assets.” For more information, visit

mous and no lender can contact you without your pre-approved consent. For more information, visit

Xetus releases new extension to loan management platform

Calyx launches platform




Calyx Software, a provider of mortgage solutions for banks, credit unions, mortgage bankers and brokers, has announced the launch of, the self-service Web portal for users of Calyx solutions. MyCalyx simplifies Calyx account management with convenient Web access and greater administrative control over Calyx accounts, allowing customers to spend more time building their businesses. With MyCalyx, customers can save time and money on installation and upgrades of Calyx software. Downloading the software is quick and easy for each user assigned a login and password. Customers also now have greater control over seat assignments and can make changes with just a few clicks vs. uninstalling and reinstalling CD applications. “We’ve always been the low-cost provider of quality software, and we are pleased to provide this significant convenience to our valued customers,” said Ted Hicks, product management group director for Calyx Software. “The added functionality of having a Web portal allows greater control while keeping the process simple and the cost down.” Point 7.3, scheduled for release in October, 2010, will be the first software update to be deployed exclusively via MyCalyx. Beginning with this release, MyCalyx will offer additional benefit of a convenient e-commerce engine that enables new customers to purchase software and existing customers to purchase additional seats or upgrade their software.

Training classes will also be available for purchase via MyCalyx at a later date. For more information, visit

LendingTree launches mortgage quote app for Blackberries LendingTree has announced the launch of its first Blackberry app, the Mortgage RateFinder, now available at Blackberry App World. The free application allows users to obtain on-the-spot loan offers anonymously. “In today’s low-rate mortgage environment, it’s important for consumers to shop around to ensure they’re receiving the best possible rate,” said Doug Lebda, founder and chief executive officer of LendingTree. “In fact, since the introduction of our iPhone Mortgage RateFinder app in January, consumers have received more than 51,000 loan offers from participating lenders.” The free Mortgage RateFinder App is extremely user friendly. Consumers simply enter information about the loan they would like and the app will instantly provide users with up to 30 different, customized loan offers from network lenders. Once a great offer is found, users can simply click to be contacted by that lender and move forward with the loan request. LendingTree is committed to protecting the privacy of all its customers. That’s why the Mortgage RateFinder only transmits a user’s personal information when that consumer requests to be contacted by a specific lender. Until that point, the search is anony-

Lykken on Lending is a weekly 60-minute show hosted by mortgage veteran of 37 yrs, David Lykken, along with special guest Alice Alvey & Joe Farr as well as featured special guests. Each week we provide our listeners with up-to-the-minute information of what is happening in mortgage and housing industry.

Sign-on weekly at

Xetus has announced the addition of a new module to XetusOne, a Web-based loan management platform. The new features enable lenders to analyze risk and mitigate losses when making decisions on loan modifications and HELOC extensions. Lenders’ need for these unique capabilities is urgent, as they experience an unprecedented number of loan modification requests from borrowers in need of payment relief. This growing trend is expected to persist for at least the next three to five years as depressed home values, high unemployment rates, and tightened credit conditions continue to linger. According to estimates, more than $1 trillion of ARMs will reset from 2010 to 2012. Bank of America added 24,000 borrowers to its ranks of Home Affordable Mortgage Program (HAMP) loan modifications in April—a figure that doubled the company’s previous all-time high from one month earlier. “With this new module, clients continue to receive the superior, collaborative qualities of XetusOne’s framework,” said Scott Stein, Xetus’ vice president of sales and marketing. “Its expanded risk analysis features are unique because they give lenders the tools to efficiently restructure debt and modify loans—including standard modifications, HAMP and 2MP modifications, and HELOC extensions.” Moreover, because the new capabilities are available as a standalone application, any lender not already using XetusOne can utilize just this specific set of features on a per-loan pricing basis. The addition of XetusOne to a lender’s existing workflow requires little effort because XetusOne’s SaaS capability allows the lender to access the service through an Internet browser. “Lenders have immediate access to XetusOne because there is no special software to install or maintain,” said Stein. “They are immediately able to turn what is typically a very paper-intensive process into a paperless one.” XetusOne’s architecture allows straightforward integration with the lender’s legacy servicing platform, providing the data to be used by XetusOne in making its determinations. These automatic determinations allow effortless re-examinations of financial risk, minimizing exposure in a fluctuating market by identifying situations where either a short-term or longterm modification makes sense. For more information, visit

CoreLogic to provide foreclosure data for Yahoo! Real Estate CoreLogic has announced that it will provide foreclosure data and property information to the Yahoo! Real Estate foreclosure service. Yahoo! Real

Estate, one of the leading real estate listings Web sites, provides users with nationwide distressed property listings including foreclosure and pre–foreclosure properties. The site also provides users with data trends and tips for acquiring distressed property as a primary residence or investment opportunity. Through this alliance, Yahoo! users will enjoy the industry-leading data resources of the CoreLogic RealQuest platform. The CoreLogic platform uses data covering 97 percent of U.S. residential properties (145 million) in 3,141 counties and 99.7 percent of the U.S. population to ensure that listings are comprehensive and timely. CoreLogic became a publicly traded company on June 2, 2010 trading under the ticker CLGX on the NYSE. The company, which provides real estate data to business, government and the media, plans to expand its data offerings to consumers through key partners such as Yahoo! The partnership enhances Yahoo! Real Estate’s foreclosure offerings by providing access to listings of properties at various stages of foreclosure or real estate-owned (REO). The deal will also introduce a new feature called CoreScore that allows consumers to evaluate the value of a specific property. CoreScore reports will provide Yahoo! users with a qualitative “grade” on a foreclosure property based on multiple factors that affect the home’s value such as crime rates, school systems and surrounding real estate activity. CoreLogic has built a comprehensive U.S. real estate, mortgage application and loan performance databases and supplies its property-level data to business and government customers. The CoreLogic RealQuest site, and now the Yahoo! portal, allows individual consumers to access this valuable data for personal and single-property use. “Partnering with Yahoo! brings our targeted, property-level real estate data to consumers on a widespread basis,” said George Livermore, group executive for data and analytics, CoreLogic. “As a new company, our announcement with Yahoo! is indicative of the kind of strategic partnerships we’ll look to forge to bring our data to more consumers. Yahoo! Real Estate is a tremendous resource for people who want to investigate and pursue real estate opportunities whether to live in or as investments, and we’re glad to be part of that resource and enhance the experience for Yahoo! users.” For more information, visit or

Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of:

New to Market column Phone #: (516) 409-5555 E-mail: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

heard on the street

continued from page 43

 Former United States Senator and Secretary of the U.S. Department of Housing & Urban Development (HUD) Mel Martinez has joined JPMorgan Chase to serve on the company’s executive committee, serving as a senior executive for the company’s Florida, Mexico, Central America and Caribbean regions.

 Tod Highfield, former co-founder of Decision One Mortgage, has joined Quicken Loans to serve community banks and credit unions through the company’s new division, Quicken Loans Mortgage Services.  Inlanta Mortgage has announced the hiring of Indar Ramadhar as a funding manager.

 Mel Martinez

 Chad Johnson has joined Meridian Capital Group LLC as managing director in the company’s commercial originations group.

Chad Johnson

 Gold Star Mortgage Financial Group has added Dave Prichard as the company’s new chief operating officer.

Indar Ramadhar

 Valuation Partners has named John Golletti vice president, national account executive and Dan Kennard vice president, operations.  Prospect Mortgage has named Joel Epstein REO manager for the company’s southeast region.  Lisa A. Pendergast, managing director of CMBS strategy and risk for Jeffries & Company, has been named president of the CRE Finance Council, a commercial real estate trade association.  The National Reverse Mortgage Lenders Associaiton (NRMLA) has elected Cheryl McNally, vice president—national sales manager of the

senior products group for Wells Fargo Home Mortgage, and John Nixon, reverse mortgage sales support and sales integration executive for Bank of America, as association co-chairs. PMI Mortgage Insurance has added four new sales executives: Brian Rowland for the Kansas, Oklahoma, western Missouri and northwestern Arkansas regions; Dave McGill for the Utah and northeast Nevada regions; Dave Stephan for the Wisconsin and upper Michigan regions; and Dan Putney for the upstate New York region. Ken Keranen has joined HomeServices Lending, a joint venture between HomeServices of America (a Berkshire Hathaway company) and Wells Fargo Home Mortgage. Lisa Bullington has been named manager of the Pennsylvania branch of Iwayloan LP. UnitedTech Lender Services (UTLS) has announced the hiring of the following new employees: Shane Durham as director of information security; Jeffrey Horrell as senior vice president, national sales; Rebecca Wilkins as managing principal of UTLS Consulting Services; Mercedes Esposito-Burns as a principal of UTLS Consulting Services; and Sandra Farias as UTLS Consulting Services principal. Clayton Holdings has announced the appointment of Brian R. Clark as senior managing director and business development officer for the company’s commercial real estate division. The Macquarie Group has added the following individuals to its commercial

mortgage finance and commercial mortgage-backed securities (CMBS) team: Randy Reiff as managing director and head of commercial mortgage finance and CMBS; Mark Lebowitz as managing director; James Conopask as managing director, Simon Breedon as senior vice president, Matthew Weinstein as senior vice president, and Andrew Flack as an associate.  Kevin Brungardt has been named chief executive officer of RoundPoint Financial Group.  Chase has named Cynthia Thompson as national manager of its Chase Homeownership Centers.  Braver Stern Securities LLC has announced the addition of Scott Buchta as a managing director and the head of investment strategy.

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

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



Golf Outing Check In — Harbor Pines, Egg Harbor City, NJ

12:00 Noon

Lunch at Golf Course — Harbor Pines

9:00 a.m. - 6:30 p.m.

Continuing Education: 8-Hr SAFE Course (includes 1-Hr PA)

7:00 p.m. - 9:00 p.m.

Opening Networking Cocktail Reception in the Exhibit Hall


9:00 a.m. - 12:00 p.m.

Concurrent Programs Meet FHA Lenders & Companies offering Net Branch Opportunities at Roundtables (In order to purchase a table you MUST be an exhibitor for the exhibit hall)

10:30 a.m. - 12:00 p.m.

Panel: Opportunities in obtaining Warehouse Lines

12:15 p.m. - 1:30 p.m.

Luncheon with Speaker: Mortgage Fraud Scams - How to Avoid Them! 4 Hr NJ State Laws Pre-license Education

Continental Breakfast

1:30 p.m. - 3:00 p.m.

Panel: How to Increase Client Credit Scores

9:00 a.m. - 12:30 p.m.

General Session

3:00 p.m.

Conference Ends

12:30 p.m. - 5:30 p.m.

Exhibit Hall Open

12:30 p.m. - 2:00 p.m.

Lunch in Exhibit Hall

2:30 p.m. - 4:00 p.m.

Panel: Branch Opportunities for Mortgage Brokers

4:00 p.m. - 5:30 p.m.

Special FHA Session a) How should Brokers prepare to work with Lenders under the new FHA ruling. b) How to originate and process FHA Loans.

6:00 p.m. - 8:00 p.m.

Networking Cocktail Reception

Visit for more information on Exhibit and Individual Attendee Registration

 AUGUST 2010

presented by the The New Jersey Association of Mortgage Brokers and The Pennsylvania Association of Mortgage Brokers


1:30 p.m. - 5:30 p.m.

8:30 a.m. - 9:00 a.m.  INDIANA



Appraisal Management Company

Coester Appraisal Group 7650 Standish Place, Suite 107 • Rockville, MD 20855 (888) 485-1999 Ext. 2 We are a premier National Appraisal Company since 1970. We have a complete product line for your entire organization. We guarantee HVCC and FHA regulatory compliance. Let our experience work for you. The way valuations should be.

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Compliance Consultants

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Hard Money/Private Lending Doc Management Guaranteed Home Mortgage Company, Inc. 108 Corporate Park Drive, Ste 301 White Plains, NY 10604 888-329-GHMC • Find out what Guaranteed can do for you. Branch Program for Professionals. It's what we do.

Inlanta Mortgage W229 N1433 Westwood Drive, Suite 103 Waukesha, WI 53186 • 262-513-9853 Established in 1993 and headquartered in Waukesha, Wisconsin, Inlanta Mortgage is a multi-state mortgage banking company committed to delivering superior service to our branch clients. For more information, call 262-513-9853 or visit

United Northern Mortgage Bankers......888-600-8808 Limited room available for established Team Leaders and Licensed Mortgage Originators. Become part of an established 30-year Mortgage Banker with a proven track record and success.

DocVelocity (877) 362-8356 DocVelocity is an end-to-end paperless solution designed to simplify the loan origination experience. Imagine having all your documents in the loan process as electronic files, all online, from preapproval to closing. DocVelocity provides: Fast and easy loan delivery to any lender … Automatic doc sorting, naming and filing … Real-time online document sharing for anyone you choose … Friendly and intuitive user interface … No start-up fees, and free training and support. DocVelocity addresses important compliance issues while giving your office the competitive advantage of being paperless. It streamlines all aspects of the mortgage process and most important, it does so in one easy-to-use and inexpensive package. Its newest version, DocVelocity 2.5, adds over 50 new features and enhancements to make the best paperless office even better. DocVelocity is the flagship product of Paperless Office Solutions, Inc., a wholly owned subsidiary of Flagstar Bancorp. Visit to find out more.

ACC Mortgage, Inc. 932 Hungerford Drive #6 • Rockville, MD 20850 240-314-0399 • 240-314-0336 fax We are doing traditional subprime lending, fix & flip lending and hard money lending.

Income Verification Services

Advanced Data (800) 537 - 0458 Advanced Data is a leading national provider of data services, streamlining income and employment verification with proprietary software. Clients can submit 4506-T directly through Encompass360. Also ask about our AVM and flood services!


Loan Management Systems


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Loan Origination Systems

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Internet’s Leading Consumer Mortgage Marketplace Attracting over 7 million unique consumers every month • 561-630-1257 Reach affluent and creditworthy consumers who are in-market and ready to transact. Bankrate is a consumer direct Web site, NOT a lead aggregator. Qualified leads for every sized budget, and pay only for performance. No set up fees! No contracts! No risk! • Reach self directed, highly qualified consumers that are actively searching for mortgage loans • Geo-targeting – reach the right consumers in the right markets • Our proprietary Advertiser Portal gives you complete control over your campaigns, budgets, and performance reports. • YOU determine your daily/weekly/monthly budget • Pay only for consumers who click on your listing • NO cancellation fees

End-to-end LOS system for multi-channel lending. PreQual thru Interim Servicing. Includes all back-office functionality; Underwriting,Secondary Marketing,Post Closing and much more SaaS, ASP and Client Server delivery options.

Flagstar Wholesale Lending (866) 945-9872 Flagstar Wholesale Lending, a division of Flagstar Bank, is one of the nation’s largest wholesale and correspondent mortgage lenders, providing the technology, products, service and support that independent mortgage brokers, correspondents, and bankers need in today’s mortgage arena. In the ever-changing environment of mortgage banking, Flagstar takes pride in accommodating the specific needs of each customer. At Flagstar, we understand that you need every available advantage to stay ahead of the competition. This is why we provide multiple technology options to meet your needs to register, lock, underwrite, close, fund and deliver your loans. Our wholesale website ( and the loan processing tool Loantrac provides our customers with the functionality that make it easier and faster to close loans, saving you time and money! Visit to learn more.


Wholesale/Residential Regulatory/Compliance

Try us risk-free! Call 561-630-1257 or visit for more details.

SM • 877-390-4750 is the largest online directory for mortgage professionals and a favorite of consumers shopping for mortgage loans. Our network attract over one million visitors per month. Our paid lead program as well as our free lender directory will help you connect with targeted new consumer traffic from with high-intent consumers searching online for the right mortgage lender.

Comergence Compliance Monitoring, LLC 630 The City Drive South, Suite 205 • Orange, CA 92868 Office: 714-740-9000 Comergence Compliance Monitoring is the mortgage industry’s only Complete broker desk management software and outsource solution for TPO management and monitoring. We can supplement lenders inhouse management and monitoring resources departments.

Terrace Mortgage 4010 W. Boyscout Blvd., Suite 550 Tampa, FL 33607 866-934-4631 • We offer competitive pricing and fast turn-times for FHA, VA, Conventional, and USDA programs without having a retail presence in the industry. We are a wholesale lender with 22 years of experience and believe in exceptional service.

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At Abacus we make your education count! Nationally approved mortgage education provider - #1400011 NMLS Approved Prelicensing and Continuing education courses National and State Exam Prep Materials - start studying now!

The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting), affiliated services and resources that is seen by more than 191,181 active Professionals. Call 888-409-9770 ext 4. to register your company.

Call 888-409-9770 ext 4. to register your company.

 AUGUST 2010

Increase your Loans,Get the Edge & Generate More Referrals! Offer your clients a 5 Day 4 Night Cruise certificate for Two to Mexico, the Bahamas or the Western Caribbean (up to a $1798.00 value) only when they close a loan with you. Only $159.00 per certificate!!

Abacus Mortgage Training and Education PO Box 780 Summerfield, NC 27358 888-341-7767 •

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


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Mortgage Builder Software 24370 Northwestern Highway, Suite 200 Southfield, MI 48075 800-460-5040 •


Second Annual Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk • Atlantic City, N.J. For more information, call (973) 379-7447 or visit

Tuesday, September 21

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

Illinois Association of Mortgage Professionals 21st Annual Fall Conference Meridian Conference Center 1701 Algonquin Road Rolling Meadows, Ill. For more information, call (630) 916-7720 or visit

Wednesday-Friday, September 22-24


Thursday, September 16

Thursday, September 9 Minnesota Mortgage Association 2010 Convention & Exhibitor Showcase Sheraton Bloomington Hotel Minneapolis South 7800 Normandale Boulevard Bloomington, Minn. For more information, call (952) 345-3240 or visit

Iowa Association of Mortgage Brokers 2010 Annual Convention White Oak Vineyards 15065 Northeast White Oak DriveCambridge, Iowa For more information, call (515) 210-4675 or visit

Sunday-Tuesday, September 19-21

Thursday-Saturday, September 9-11 Texas Association of Mortgage Professionals 2010 Annual Convention & Marketplace “All Roads Lead to Texas!” The Hilton Austin Hotel 500 East 4th Street • Austin, Texas For more information, call (800) 850-8262 or visit

Mortgage Bankers Association Mortgage Operations Conference 2010 Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail Grapevine, Texas For more information, call (800) 793-6222 or visit


Mortgage Bankers Association Quality Assurance & Underwriting Conference 2010 Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail • Grapevine, Texas For more information, call (800) 793-6222 or visit

Sunday-Tuesday, September 26-28 Mortgage Bankers Association Regulatory Compliance Conference 2010 JW Marriott Hotel 1331 Pennsylvania Avenue Washington, D.C. For more information, call (800) 793-6222 or visit OCTOBER 2010

Sunday-Tuesday, October 10-12 National Association of Hispanic Real Estate Professionals/Asian Real Estate Association of America 2010 Real Estate Marketing Conference The Bellagio Resort 3600 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (858) 622-9046 or visit

Monday-Tuesday, October 11-12



Thursday-Friday, October 14-15 Kentucky Association of Mortgage Professionals 2010 Annual Convention Location to be determined For more information, call (270) 929-2836 or visit

Tuesday-Wednesday, October 19-20 Utah Association of Mortgage Brokers 2010 Annual Expo Location to be determined For more information, call (801) 787-6611 or visit

Sunday-Wednesday, October 24-27 Mortgage Bankers Association 97th Annual Convention & Expo Atlanta Georgia Congress Center 285 Andrew Young International Boulevard NW • Atlanta For more information, call (800) 793-6222 or visit

Tuesday, November 16 Missouri Association of Mortgage Professionals 17th Annual Convention St. Charles Convention Center 1 Convention Center Plaza St. Charles, Mo. For more information, call (314) 909-9747 or visit

Wednesday-Friday, November 17-19 Mortgage Bankers Association Accounting, Tax & Finance Management Conference 2010 The Roosevelt New Orleans 123 Barrone Street New Orleans, La. For more information, call (800) 793-6222 or visit DECEMBER 2010

Saturday-Monday, December 4-6 NAMB/WEST 2010 MGM Grand Las Vegas 3799 Las Vegas Boulevard South Las Vegas For more information, call (703) 342-5900 or visit FEBRUARY 2011

Sunday-Wednesday, February 6-9 Mortgage Bankers Association’s Commercial Real Estate Finance/Multifamily Housing Convention & Expo 2011 Manchester Grand Hyatt San Diego One Market Place San Diego, Calif. For more information, call (800) 793-6222 or visit

Tuesday-Friday, February 22-25 Mortgage Bankers Association National Mortgage Servicing Conference & Expo Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail • Grapevine, Texas For more information, call (800) 793-6222 or visit APRIL 2011

Sunday-Wednesday, April 3-6 2011 National Association of Mortgage Brokers 2011 Legislative & Regulatory Conference Hyatt Regency Washington on Capitol Hill 400 New Jersey Avenue NW Washington, D.C. For more information, call (703) 342-5900 or visit





Abacus Mortgage Training and Education .......... ....................................17 & 31 ACC Mortgage .................................................. ....................................8 BankFinancial.................................................. ......................................14 Calyx Software ................................................ ........................................6 CAAMP ............................................................ ..................................5 CB Malaga Insurance Services LLC ...................... ............................................6 Coester Appraisal Group.................................... ..................................18 Comergence Compliance Monitoring, LLC .......... ..........19 & 40 Flagstar Wholesale Lending .............................. ....................Back Cover .................................... ................................IN2 Freedom Mortgage .......................................... ......................Inside Back Cover Gateway Mortgage Group, LLC .......................... ........................................26 GSF Mortgage Corporation ................................ ........Inside Front Cover & 39 Guaranteed Home Mortgage.............................. ....................................43 iServe Residential Lending, LLC ........................ ....................................4 MBA-NJ/NJAMB ................................................ ..................................................45 ................................IN3 Mortgage Concepts .......................................... ..................................7 NAMB/WEST .................................................... ......................IN1, IN4, 10 & 42 NAPMW .......................................................... ..................................................23 PB Financial Group Corp. .................................. ..............................................26 Quality Mortgage Services ................................ ..................................13 & 34 REMN (Real Estate Mortgage Network)................ ......................................9 “Seeking Active Mortgage Bank......................................................................................................21 Terrace Mortgage Company .............................. ..................................41 United Northern Mortgage Bankers Ltd. ............ ............................ 11 & 27 Xetus Mortgage Corporation.............................. ..................................................38

Mortgage Bankers of Pennsylvania Conference Wyndham-Conference Center 95 Presidential Circle Gettysburg, Pa. For more information, call (973) 379-7447 or visit





Virginia Association of Mortgage Brokers 22nd Annual Convention Colonial Williamsburg-Williamsburg Lodge 310 South England Street Williamsburg, Va. For more information, call (804) 285-7557 or visit


Monday-Wednesday, November 8-10


Monday-Wednesday, September 20-22