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

Michigan Mortgage Professionals Association Headquarters 350 West 22nd Street, #104 O Lombard, IL 60148 Phone: (888) 869-5999 O E-mail: Web site: OFFICERS

Brian Siebert Kevin Goldman Buck Drummond Lue Turner

President President-Elect Treasurer Secretary

Phone # (248) 666-2700 (248) 538-1500 (248) 203-7726 (248) 557-3230


ADMINISTRATION Marve Stockert Jim Ryan

Executive Director Lobbyist

(888) 869-5999 (517) 371-3800

DIRECTORS Allan Daniels Patricia Finn Dan Giroux Tim Kleyla Eric Stevenson Drew Sygit Kirk Van Horn

(248) 335-6166 (989) 284-4017 (231) 932-9300 (616) 392-2290 (517) 272-5626 (248) 356-3739 (269) 926-8966

MMPA 2010 Industry Partners

A Message From MMPA President Brian Seibert As we move into the last half of 2010, we have many challenges that face us as we read originate mortgages. The new financial and mortgage law will affect compensation levels and the way we do business when it comes to fees that can be charged and we are limited as to what can be charged. These challenges will be met as we have the past, and it will be a difficult, yet manageable task, as we learn new ways to do business. Over the next 90 days, we will see many new regulations coming out that will help us gather a better understanding of the new laws and how they are going to be implemented. Another key factor is the dealing with the Home Valuation Code of Conduct (HVCC) and how the lenders will be interpreting and implementing the new law. Even though each HVCC may be sunset, that does not mean lenders will be following those guidelines as the law, at this point, has indicated that it is still going to be up to the lenders. Please be assured, that the Michigan Mortgage Professionals Association is doing everything they can to keep you up-to-date and informed on these changes as they become evident. On the lighter side, we are inviting you to attend the MMPA Golf Outing & Dinner on Thursday, Sept. 16 which will give you an opportunity to have some fun and enjoy the day at the beautiful Emerald Golf Course in St. Johns, Mich. There will be 18 holes of golf, lunch and a party afterwards, along with prizes and awards that should finish up by 6:00 p.m. after our 10:00 a.m. shotgun start. On Nov. 4, we are having our Fall Conference at the Johnson Center in Howell, Mich. We hope that you will join us for a great day of education, top industry speakers and a mini marketplace at the end of the day. Watch for more information as we approach this date in Michigan Mortgage Professional Magazine and online at A big thank you to all of you who are members of MMPA for your support and belief in our association. Have a great month ‌ Brian Seibert, President Michigan Mortgage Professionals Association

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NOVEMBER 2010 Thursday, November 4 MMPA 2010 Fall Conference The Johnson Center Howell, Mich.

For information on all MMPA events, call the MMPA office at (888) 869-5999 or visit

newest members

Please join the Michigan Mortgage Professionals Association in welcoming its newest members. We look forward to their active participation in the association.

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For more information on the MMPA Industry Partners Program, contact the state office at (888) 869-5999 or visit

Penny Behne of Hower & Associates LLC, Hudsonville, Mich. Robert S. DeLa Torre of Prospect Mortgage, St. Joseph, Mich. Robert Faber of Firstmark Financial, Grandville, Mich. Shaun P. Gober of Versatile Mortgage LLC, Traverse City, Mich. Michael J. Proctor of Professional Mortgage Association, Clarkston, Mich. Michael Wager of Security Mortgage Corporation, Farmington Hills, Mich.



SEPTEMBER 2010 Thursday, September 16 MMPA Golf Outing & Dinner Emerald Golf Course 2300 West Maple Rapids Road St. Johns, Mich.

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Exhibitors and Sponsors


2010 NAMB/WEST Conference

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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

By Paul Donohue, CRMS


The NAMB Perspective


The Secondary Market Overview: From Bonds to Production … All Over the World By Dave Hershman


SAFE Smart … Tick-Tock Goes the SAFE Clock



















Forward on Reverse: Forensic Counseling Tools for Whole-Person HECM Lending: Part II … A Conversation With NCOA’s Barbara Stucki By Atare E. Agbamu, CRMS


Value Nation: Dusting Off and Enhancing the Appraisal Review By Charlie W. Elliott Jr., MAI, SRA


Compliant Business Systems: Part II of III By Don DeRespinis


The Trusted Mortgage Professional: Extreme Makeover— Broker Edition By Greg Schroeder


NMP Mortgage Professional of the Month: Jim Pair, CMC, President, Mortgage Associates Corpus Christi


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


FHA Issues Guidance for Lender Approvals By Jonathan Foxx



Originators and Lenders Have Multiple Options for Compliance With Fannie Mae’s LQ1 By Terry W. Clemans



The Future of the Mortgage Broker and Correspondent Markets By Andy W. Harris, CRMS


A View From the C-Suite: Wholesale and Correspondent Markets … What’s Next? By David Lykken


The State of the Wholesale Marketplace 2010


“Who’s Left in Wholesale” Top 30 Lenders


Regulatory Compliance Outlook: July 2010—Fannie Mae: New Appraisal Guidelines By Jonathan Foxx




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July 2010 Volume 2 • Number 7



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


Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 Jennifer Moeller Billing Coordinator (516) 409-5555, ext. 324

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





JULY 2010 

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.



ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Senior National Account Executive Karen Krizman at (516) 409-5555, ext. 326 or e-mail




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 Is wholesale back? Between some closed doors meetings I have had with new investors looking to bring niche products to the marketplace the fastest way with minimal infrastructure cost, to the wholesale lenders who have remained in support of the mortgage broker, to the huge increase in net worth requirements it takes to become a DE lender with the Federal Housing Administration (FHA) (see page 20 for Jonathan Foxx’s “FHA Issues Guidance for Lender Approvals”) … the mortgage broker model is beginning to look a little more attractive than in the past three or so years. Don’t get me wrong, the days of getting approved by any lender that you are willing to represent merely by filling out a broker package are gone. That factor, combined with increase expenses of doing your own quality control, managing increased regulatory compliance and keeping competitive on the street in the pricing department, makes it a rather difficult time to be a mortgage broker. In spite of it all this, the model works! As a mortgage broker, you are an entrepreneur in the truest sense of the word as defined by the French economist Jean-Baptiste Say. Today, the mortgage brokers who remain are the ones with very strong and unique selling propositions in their community. Those who were just here for a paycheck are long gone. Today, it’s the relationship-based mortgage broker who provides value to the community and their referral sources. They are the experts in knowing how to work with the right lenders to get their borrower’s files done as fast and as competitively as their banker counterparts.

Wholesale’s new frontier Our Special Focus section kicks off this month with “The Future of the Mortgage Broker and Correspondent Markets” by Andy W. Harris, CRMS followed by David Lykken’s “Wholesale and Correspondent Markets … What’s Next?” We wanted to get a perspective from the wholesalers on how the industry was doing, so we approached some regional experts who provided a great deal of insight and knowledge in our “The State of the Wholesale Marketplace 2010” section on page 30. On the following page, we list 30 wholesale lenders who we are getting a lot of positive feedback from their industry peers. This list is not indicative of all the wholesalers out there in the marketplace, and we are sure there are others that are great to do business with; however, this was a list of wholesalers as reported by our readers to a recent survey.

The changing of the guards This month, we welcome William R. Howe, CMC, CRMS as the newly installed president of the National Association of Mortgage Brokers. On page 7, you can read about some of NAMB’s new initiatives that have already been put in place. As the official publication of NAMB, we are excited about working with Mr. Howe on continuing to support the mortgage broker and protecting the valuable access they provide to competitive mortgage options for consumers.

NMP’s Mortgage Professional of the Month As featured on page 18, we have chosen outgoing NAMB President Jim Pair, CMC of Mortgage Associates Corpus Christi as this month’s NMP Mortgage Professional of the Month. Jim gives some insight on his background and how he continued to run a successful shop, while sacrificing both business and personal responsibilities during one of the most challenging years for mortgage brokers. I hope you enjoy yet another issue of National Mortgage Professional Magazine. As we enter our second year, we seek to continue to provide you with informative articles and tips to help grow your business, and serve as your handbook and guide to success. It is our goal to be your one-stop shop for all the mortgage industry news that’s fit to print, and please do not hesitate to tap into this great resource that we provide. 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

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

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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


Deb Killian, CRMS Charter Oak Lending Group LLC 3 Corporate Drive, PO Box 3196  Danbury, CT 06813-3196 (203) 778-9999, ext. 103

President Gary Tumbiolo, CMI (919) 452-1529 

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

National Board of Directors

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JULY 2010 




FHFA orders Fannie and Freddie stock de-listing from New York Stock Exchange The Federal Housing Finance Agency (FHFA) has directed the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to de-list their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange. Once the de-listing is completed, each enterprise’s common and preferred stock is expected to be quoted on the Over– the-Counter Bulletin Board. “FHFA’s determination to direct each company to delist does not constitute any reflection on either enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator,� said FHFA Acting Director Edward J. DeMarco. “The determination to direct de-listing is related to stock exchange requirements for maintaining price levels and curing deficiencies.� Fannie and Freddie’s common stock price has hovered near the NYSE minimum average closing price requirement of $1 over 30 trading days for most months since the conservatorships were established in September 2008. Most recently, Fannie Mae’s closing stock price has been below the required $1 average price for the past 30 trading days. Per NYSE rules, a company in that condition must either drop from the exchange or undertake a ‘cure’ to restore the stock price above the $1 mark if it does not meet the NYSE’s minimum price requirements. The alternatives for putting in place such a cure do not assure maintaining the minimum price level or avoiding loss of shareholder value. In view of Freddie Mac’s share price being close to the $1 mark and the common situation of both companies operating in conservatorship with support from the Treasury Department through the Senior Preferred Stock Purchase Agreements, FHFA has determined that Freddie Mac should also initiate an orderly de-listing process. “A voluntary delisting at this time simply makes sense and fits with the

goal of a conservatorship to preserve and conserve assets,� said DeMarco. Each enterprise’s stock will continue to trade, but through a different trading mechanism. The enterprises remain Securities & Exchange Commission (SEC) registrants and are subject to applicable federal securities laws. For more information, visit

PRMG Campus invests $100,000-plus in broker education As part of Paramount Residential Mortgage Group (PRMG’s) ongoing quest to preserve the mortgage brokers and the wholesale channel they serve, PRMG is “putting their money where their mouth is� and has announced that they are budgeting more than $100,000 toward helping provide continued education for mortgage brokers and originators. “Now, more than ever, we need to stand behind the broker community,� said PRMG Chief Executive Officer and President Paul Rozo. “As I have mentioned before, we are very committed to the mortgage brokers and therefore, we remain steadfast in that we believe in them and will continue to support them in any way we can and on many fronts, including education.� Over the next three to six months, PRMG will be holding regular Nationwide Mortgage Licensing System (NMLS) prep class training sessions onsite at their PRMG Campus facility for mortgage brokers and originators to continue required training and certification. Classes will be taught by a certified NMLS instructor and will be offered at significant discount to brokers and originators. Specifically, PRMG will be subsidizing 50 percent of the cost per student. PRMG is encouraging all brokers and originators to register for the classes and not delay in getting their required NMLS prep and certification. In addition, PRMG will be offering Federal Housing Administration (FHA) training courses for brokers who have previously been unable to originate such loans; however, with FHA’s new policy will be able to do so moving forward. “With all the uncertainly going on in continued on page 6





Montreal, Quebec, Canada Palais des Congrès



November 21 - 23, 2010

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news flash

continued from page 4

the mortgage industry today, we need to pull together and fight back by staying in the game and not giving in,” said Rozo. PRMG applauds those entities and organizations that continue to provide education and support to the mortgage brokers along with the best possible loan programs, service and technology to ensure they can succeed in today’s mortgage environment. For more information, visit

Tick-Tock Goes the SAFE Clock We are here at the mid-year mark of 2010 and the SAFE Act deadlines are flying by. At the end of July, 39 states will require new originators to complete the licensure process before they can originate a mortgage loan. For existing originators in these states, deadlines are looming and the clock is ticking. Seriously, if you have not already completed your SAFE Act requirements, it’s time to establish a strategy to get it done. I’ve witnessed many people fail because of haphazard attempts at education and testing. I’ve also learned the most effective approaches for success the first time through. The essential steps are education and testing, which must be completed before you can apply for your state mortgage loan originator’s (MLO) license.



The SAFE Act requires every originator to complete a minimum of 20 hours of Nationwide Mortgage Licensing System (NMLS)-approved education. Now each state requires an originator’s license and national pre-licensing education. To date, 19 states have also chosen to require some amount of state-specific education. Begin by going to the NMLS Web site,, and look for the “MLO SAFE Requirements Compliance Chart.” Check your individual state’s education deadlines and whether your state is participating in certification. Thirty-five states are certifying past education for existing MLOs. In these states, you may have already fulfilled the pre-licensing education requirement. Step one is to determine how much, if any, pre-licensing education you must complete and establish your deadline for completion.

JULY 2010 


Testing The state and national tests are a source of high anxiety. The bar has been raised substantially and these tests are designed to be challenging. Every new and existing MLO must take the national test component with no exceptions. However, 17 states are certifying previous testing, and in these states, you may be exempted from taking the state-specific test component. As of June 1, 2010, more than 127,000 state and national tests have been completed with surprising results. Currently, 71 percent are passing the national test on the first attempt, however, 56 percent of people who failed the first time are failing again on their second attempt. Average first-time pass rates on state tests are 79 percent with 40 percent of retakes failing on the second attempt. To date, there have been more than 42,000 failed attempts. It is clear not all originators are properly prepared. Step two is to determine if you need to take both tests. Establish your state deadlines and commit yourself to proper test preparation.

SAFE Smart advice for the professional era This is the era of the professional MLO. Your state MLO license is an asset that differentiates you in the marketplace. My SAFE Smart advice is to get started by shopping for the highest quality education and find the best test preparation tools possible, and then commit yourself to study. With deadlines approaching and 30 days of waiting between retakes, there is no time for failure. Tick-tock goes the SAFE clock. 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.

HUD announces new strategic plan U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan has unveiled the agency’s Strategic Plan, which will serve as the agency’s roadmap toward accomplishing its mission to “create strong, sustainable, inclusive communities and affordable homes for all.” The Plan will guide the agency through fiscal years 2010-2015. Through the Strategic Plan’s five specific goals, HUD will:  Strengthen the housing market to bolster the economy and protect consumers.  Meet the need for quality affordable rental homes.  Utilize housing as a platform for improving quality of life.  Build inclusive and sustainable communities free from discrimination.  Transform the way HUD does business. “This Strategic Plan isn’t just a paper exercise to produce a set of marching orders, but a real attempt to express what we want our agency, our homes and our neighborhoods to look like in the years to come,” said Shaun Donovan during his address to all HUD staff nationwide. “The plan sets out clear goals and defines success as we take HUD to its 50th anniversary in 2015.” For more information, visit

MBA study looks at risk management practices that contributed to housing crisis Multiple factors, including poor data, incomplete performance metrics, and, shortterm focus and unrealistic optimism among senior business managers contributed to the collapse in the U.S. housing and mortgage markets, according to a study, “Anatomy of Risk Management Practices in the Mortgage Industry,” released by the Mortgage Bankers Association (MBA). The study, conducted by Professor Cliff Rossi of the University of Maryland and sponsored by the MBA’s Research Institute for Housing America (RIHA), analyzes the risk management processes employed by mortgage lenders leading

up to the housing crisis and discusses lessons learned for future risk managers. “As home prices increased, lenders were pressured to offer innovative products that could help borrowers afford a home. The resulting increase and expansion of risk layering and change in borrower behavior, left risk managers unable to offer reliable risk estimates,” said Professor Rossi. “According to some empirical analysis, when market conditions changed, mortgage performance models proved unstable, with loans originated in 2006 defaulting at four times the rate of what a model prior to 2004 would have predicted. Moving forward, it will be essential for the industry to develop early warning measures of the level of risk in new originations and less reliance on imprecise historical performance of new loan products. In addition to the limits in information available to risk managers, corporate culture and cognitive biases also strongly influenced decision-making during the boom. Of particular influence, was the decline in senior business management’s loss aversion due to the lengthy period of strong home prices and low defaults, which led to relaxed underwriting and high levels of risk layering.” Michael Fratantoni, MBA’s vice president of research and economics, said, “Today’s mortgage industry is operating under vastly different guidelines than just a few years ago and the survivors in the industry today are clearly the companies that did things right. However, it is imperative that we look back and examine the factors that led to the problems that fed the financial crisis. There are a range of views regarding the causes of the crisis. We asked Professor Rossi, given his extensive academic and industry experience, to offer us his views on what happened, and what the industry can do going forward to prevent such misjudgments in the future. There is room for debate on how best to proceed, but certainly building a stronger risk management framework around the mortgage industry will be critical.” For more information, visit

Financial Fraud Enforcement Task Force launches largest mortgage fraud roundup United States Attorney General Eric Holder, Federal Bureau of Investigations (FBI) Director Robert S. Mueller III, U.S. Department of Housing & Urban Development (HUD) Inspector General (HUD-OIG) Kenneth M. Donohue, and continued on page 10

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

NAMB in 2010 and Beyond … A Message From NAMB 2010-2011 President William R. Howe, CMC, CRMS

NAMB 2010-2011 Board of Directors President ..............William R. Howe, CMC, CRMS ............Howe Mortgage Corporation, Scottsdale, Ariz. President-Elect......Michael D’Alonzo, CMC ............................Creative Mortgage Group, Maple Glen, Pa. Vice President ......Donald J. Frommeyer, CRMS ..............Amtrust Mortgage Funding Inc., Carmel, Ind. Secretary ..............Virginia Ferguson, CMC ..................Heritage Valley Mortgage Inc., Pleasanton, Calif. Treasurer ..............John Councilman, CMC, CRMS ..................AMC Mortgage Corporation, Fallston, Md. Past President ......Jim Pair, CMC ....................Mortgage Associates Corpus Christi, Corpus Christi, Texas Director ................Olga Kucerak, CRMS ..........................................Crown Lending, San Antonio, Texas Director ................Donald Fader, CRMS..............................................SMC Home Finance, Kinston, N.C. Director ................Michael Anderson, CRMS ................................Essential Mortgage, Baton Rouge, La. Director ................Deb Killian, CRMS ..........................Charter Oak Lending Group LLC, Danbury, Conn. Director ................Walter Scott ..................................................Excalibur Financial Inc., Wayne, Penn. Director ................Donald Starks ................................DC Starks Mortgage Associates, Bourbonnais, Ill.


NAMB 2010-2011 Committee Chairs  Awards Committee Chair ........................................................................................Michael D’Alonzo  By-Laws Committee Chair ..............................................................................Virginia Ferguson, CMC  Certifications Committee Chair ............................................................Brian Short, CMC, CRMS, GMA  Commercial Committee Chair ......................................................................................Donald Starks  Communication Committee Chair ..........................................................Donald J. Frommeyer, CRMS  Consumer Protection Committee Chair............................................................................Walter Scott  Credit Scoring Committee Chair ..........................................Virginia Ferguson, CMC & David Wheeler  CSBS Committee Chair..................................................................................................Mike D’Alonzo  Delegate Council Committee Chair..........................................................................Michael D’Alonzo  Education & State Partners Committee Chair ............................................................Rocke Andrews  Ethics & Professional Standards Committee Chair ........................................................Olga Kucerak  FHA Committee Co-Chairs ....................................John Councilman, CMC, CRMS & Deb Killian, CRMS  Finance Committee Chair ....................................................................John Councilman, CMC, CRMS  Government Affairs Committee Chair ..........................................................Michael Anderson, CRMS  Industry Partners Committee Chairs........Jim Nabors, CMC, CRMS; Deb Killian, CRMS & Jim Pair, CMC  Membership Committee Chair ............................................................................Donald Fader, CRMS  NAMBPAC Chair............................................................................................Michael Anderson, CRMS  Nominating Committee Chair........................................................................................Jim Pair, CMC  Veterans Affairs Committee Chair ......................................................................................Jim Brown

Gateway Mortgage Group is seeking more leaders to run a retail branch office. Qualified Candidates with a proven track record will get: • Guaranteed Salary • Full Benefits Package • Bonus based on profitability of branch office. • Assistance with recruiting and training team.

Call Dane Basham today 888-544-0034

Andrew Berman, Executive Vice President, The Mortgage Press was a consultant or contractor to Dane at Gateway Mortgage Group LLC

 JULY 2010

“If I was in the market to become a branch manager or work as a loan officer, Dane would be on the short list of friends I would contact. His positive attitude is infectious. You cannot have a conversation with Dane and NOT be motivated.” November 28, 2006


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

At the recent National Association of Mortgage Brokers 2010 Mid-Year Meeting in Phoenix, Ariz., the association elected its new leadership for the next year. Congratulations to the following: 

Let me begin by saying “thank you” for electing me as your president of the National Association of Mortgage Brokers for 2010-2011. It is certainly a trying time to be in the mortgage industry, but I firmly believe that together, we can make a change for the better. NAMB has downsized just as you have in your business and hopefully in your state associations. Expenses must be cut everywhere and cut deeply. I am sure you have felt the cuts personally in your own business as we have at NAMB. At the end of the day, this has forced NAMB to examine every aspect of its expenses and this process will make us stronger in the long run. Let’s take a look at just a few of the expense reductions that NAMB has experienced. First, have you had an opportunity to contact NAMB for any reason in the last couple of months? We have a new smaller office, in fact it is a virtual office, except for our lobbying staff on Capitol Hill. I am willing to bet that if you did contact the office, you couldn’t tell we were virtual. We have a very efficient live person answering the phone and routing the call to the proper parties. We have also embraced cloud computing for tremendous cost savings. You should also look for our new Web site in the coming months. Let’s discuss disaffiliated states for a moment … NAMB has hired a Call Center to reach out to people in the mortgage business who are not members of NAMB. What we discovered and are still discovering is that a lot of people want to belong to NAMB. They see the value in NAMB being the only national association protecting the mortgage broker industry that has actual paid lobbyists. We are not the one person, one issue association that has started to split the membership. We have not been the best at communicating our success on Capitol Hill, but you must understand that many times those stories just cannot be told. We are working on several areas to improve our communication efforts. We are starting down the road to video e-mails. Mike Anderson, our new Government Affairs Committee Chairman, was the first and don’t you think he looks good on the screen … ah yes, a star is born! I was privileged to be on the legislative calls all year long. I am truly amazed by the knowledge, contacts and understanding our lobbying team possesses. Roy DeLoach, NAMB’s chief executive officer, is to be applauded for putting this team together. If you think the bills that have been passed and the bills that have been proposed are bad, you should have seen what this team was successful in keeping out of the final bills. Fiduciary duty, no indirect compensation, no mortgage brokerage business … just to name a few. Congratulations to the entire lobbying team. The University of Phoenix offers college education through campus and online degree programs, certificate courses and individual online classes. You can get your Master’s Degree online with the University of Phoenix. Because NAMB has the Certified Mortgage Consultant (CMC) and the Certified Residential Mortgage Specialist (CRMS) designations and they are maintained as certified programs, it is my honor and privilege to announce a partnership between the University of Phoenix and NAMB. The University has offered NAMB members with CMC and CRMS designations college credit hours for your designations. Let me be perfectly clear here, we will not get hour-for-hour, but a couple of college credit hours for having an NAMB designation is not bad. If you decide to get your Master’s Degree online at night, the partnership between NAMB and the University of Phoenix can save you time and expense. Please look into this exciting educational opportunity. I sincerely hope each and every one of you will embrace, help, pray for and cooperate with the new NAMB board of directors and staff as we move forward. Again, I thank you for allowing me to represent you.

NAMB Elects 2010-2011 Board at Mid-Year Meeting

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All Over the World From Greece to Korea to the Gulf. Does that just about cover the globe? When we talk about a “global economy,” now it has some specific meaning. In previous columns, I mused about how hard predicting the future really is. If anyone could predict the future, frankly they would be doing something else for a living. Most likely it would be on the beach. Let me ask you, how many predictions did you read that rates would be heading down to their absolute lows as the summer approached? I did predict a wild ride. Wild rides usually mean that the markets will be moving in both directions, rapidly. While the European debt crisis was absolutely predictable, but who could have predicted …

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continued on page 13


 JULY 2010

around 10 million. Everyone has agreed that the housing recovery is not permanent until this inventory is gone or at least reduced to a manageable level. Forecasts say that this period of working through the inventory could last anywhere from three years to seven years on a national basis. For some areas, the time frame is shorter than others. Some are saying that it could be as long as a decade for the hardest-hit states. The conservative forecasts also indicate that we are in line for a double dip in housing prices as this inventory works its way through the system. Some would argue the logic that the markets’ movements this spring are indicative of such a prediction, including lower rates, lower oil prices and a lower Dow. Keep in mind that the markets are no better at predicting the future than we are. My advice this month for producers? You should be directly involved in some way in the servicing of this market. It is too large not focus upon. Whether it is modification counseling, working with investors, facilitating short sales, working with bank inventory, helping real estate agents market their foreclosure inventory, credit repair or another aspect, there are tens of millions who will be affected for many years. This is a landscape that has changed our industry and there are opportunities to learn new skills and even set up new lines of income. For ideas, feel free to e-mail me at, however, make sure you describe what your involvement has been up until this junc-

…When you could speak directly with easy-to-reach underwriters who issued fast approvals with common sense underwriting? Well so do we.


Whether it is Mother Nature or human nature causing the chaos, predictions are absolutely fruitless. And that is why we don’t know if rates are going to skyrocket or dive in any one month, let alone next week. Of course, they could do both. Word to the wise … if at all possible, be prepared for both and most likely you won’t be disappointed or caught off guard. This is why you need to know what the markets are doing from hour-to-hour and also why you need to know what “scheduled” events are likely to affect rates (see below for information on a free trial for the RateLink advisory service). I am sorry that we cannot give you the unscheduled events.

“We cannot fix real estate without fixing unemployment and we cannot fix unemployment without real estate. Anyone dizzy yet?”


 A South Korean ship being destroyed allegedly by North Korea—especially when relations between the two seemingly were thawing a bit.  A drilling rig exploding in the Gulf and millions upon millions of gallons of crude dumping into the ocean, while the efforts at containment are horrendously ineffective. All this happens while the government is about to start issuing permits to expand drilling and we are also expanding our search for alternative energy sources. What could this spill do to our economy of not only of the Gulf States, but also the economy of the entire country? I read an article recently that stated that if the Gulf Region were a country, it would be the 29th largest country in the world.

One area that has been overly scrutinized with good reason is the issue of shadow inventory. Shadow inventory consists of houses owned by banks or houses that are still to go to foreclosure. By broader definition, it could also include homes that would be for sale tomorrow if sellers thought they would sell. Researchers have pegged this inventory at anywhere from a low of three million to

news flash

JULY 2010 



continued from page 6

additional members of the Financial Fraud Enforcement Task Force have announced the results of a nationwide takedown, Operation Stolen Dreams, which targeted mortgage fraudsters throughout the country and is the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The sweep was organized by President Barack Obama’s interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on March 1, to date Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses. Additionally, to date the operation has resulted in 191 civil enforcement actions which have resulted in the recovery of more than $147 million. “Mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible direction is vital,” said Attorney General Holder. “We will use every tool available to investigate, prosecute and prevent mortgage fraud, and we will not rest until anyone preying on vulnerable American homeowners is brought to justice.”

Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement, recovering money for victims and increasing cooperation with state and local partners. The operation was conducted in conjunction with the U.S. Department of Justice—including the FBI, U.S. Attorneys Offices, the U.S. Trustee Program and other components—as well as HUD, the Department of the Treasury, the Federal Trade Commission (FTC), the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Secret Service, the National Association of Attorneys General and the National District Attorneys Association. “From homebuyers to lenders, mortgage fraud has had a resounding impact on the nation’s economy,” said FBI Director Robert S. Mueller III. “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes and you will be brought to justice.” The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local

law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information, visit

FTC settles with Countrywide for $108 million for excessive fee charge

Two Countrywide mortgage servicing companies will pay $108 million to settle Federal Trade Commission (FTC) charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. The $108 million represents one of the largest judgments imposed in an FTC case, and the largest mortgage servicing case. It will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by Bank of America in July 2008. “Life is hard enough for homeowners who are having trouble paying

their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible,” said FTC Chairman Jon Leibowitz. “We’re very pleased that homeowners will be reimbursed as a result of our settlement.” According to the complaint filed by the FTC, Countrywide’s loan servicing operation deceived homeowners who were behind on their mortgage payments into paying inflated fees—fees that could add up to hundreds or even thousands of dollars. Many of the homeowners had taken out loans originated or funded by Countrywide’s lending arm, including sub-prime or nontraditional mortgages, such as payment option adjustable-rate mortgages, interest-only mortgages, and loans made with little or no income or asset documentation, the complaint states. In addition, in servicing loans for borrowers trying to save their homes in Chapter 13 bankruptcy proceedings, the complaint charges that Countrywide made false or unsupported claims to borrowers about amounts owed or the status of their loans. Countrywide also failed to tell borrowers in bankruptcy when new fees and escrow charges were being added to their loan accounts. The FTC alleges that after the bankruptcy case closed and borrowers no longer had bankruptcy court protection, Countrywide unfairly tried to collect those amounts, including in some cases via foreclosure. continued on page 15

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Forensic Counseling Tools for Whole-Person HECM Lending: Part II A Conversation With NCOA’s Barbara Stucki 2005 study on aging-in-place via reverse mortgages, “Using Your Home to stay at Home.” She has testified before Congress and the Federal Reserve Board, and her research has been quoted in The New York Times, Wall Street Journal, USA Today, BusinessWeek, Fortune Magazine, Bloomberg News, The Washington Post, Money Magazine, Kiplinger’s Personal Finance Magazine and National Public Radio, among other media. This is the second and final part of this interview series with Dr. Stucki.

continued on page 14

 JULY 2010

Now, I can see some lenders saying, “Hey, seniors go through trained counselors … that’s enough for me. Why do I have to duplicate the process by putting them through these touchy-feely questions again?” How would you respond to people who might say that? Taking out a reverse mortgage is a deci-


What are the benefits of tools such as FIT and BCU for reverse mortgage lenders? FIT can be a valuable risk-management tool for lenders. Seniors who go through counseling will receive a customized FIT summary printout, showing the types “yellow flag” issues raised and the implications these issues may have for their ability to fully benefit from a reverse mortgage. Lenders can use this report as tool to further conversation, understand the risks their clients may face, and for gaining insight into the suitability of the loan for different senior homeowners. Having this discussion upfront could help lenders manage reputation, litigation, and financial risks. Through FIT, NCOA also collects data on counseling clients to better understand the potential needs and risks of this group of seniors. These data could help to inform product design, develop seniors-sensitivity training for lenders, and provide a better handle on the nature and magnitude of the potential vulnerabilities of reverse mortgage borrowers beyond anecdotes.


For some seniors who take out reverse mortgages, potential financial problems are often rooted in “non-financial” matters. Slowly, financial problems ooze out of everyday issues. “Soft” issues that financial people may not always appreciate, such as losing a spouse, living alone, staying far away from relatives, having difficulty getting up from bed or getting dressed, taking a lump sum reverse mortgage advance, relying on reverse mortgage funds for too many needs, having frequent falls and being in poor health, and lacking information about private and public benefits programs for which they may qualify, among others. Before long, these issues mushroom into an inability to meet borrower obligations. Yes, they become “financial problems.” Built around traditional budget analysis and information about reverse mortgage alternatives and disclosures of obvious borrowers’ risks, the best conventional Home Equity Conversion Mortgage (HECM) counseling often miss these existential issues and their financial implications, let alone address them. That is about to change, thanks to two evolving forensic reverse mortgage counseling tools developed by the National Council on Aging (NCOA): The Financial Interview Tool (FIT) and BenefitsCheckUp (BCU). Any day now, Federal Housing Administration (FHA) Commissioner David H. Stevens could issue a Mortgagee Letter mandating their use in HECM counseling. To understand these vital and emerging front-end HECM-borrower risk management tools and to share that understanding with you, I spoke with Dr. Barbara Stucki, vice president of home equity initiative at NCOA. NCOA is one of four U.S. Department of Housing & Urban Development (HUD) HECM Counseling Intermediary organizations, and Dr. Stucki runs the national reverse mortgage counseling network for NCOA. A former researcher for the American Council of Life Insurers and AARP, Dr. Stucki directed NCOA’s highly-regarded

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the secondary market overview

By Charlie W. Elliott Jr., MAI, SRA

Dusting Off and Enhancing the Review Appraisal

Depression), but it seems that things happen more quickly today. For example, population growth heated up at the turn of the decade that that is one reason for this hot real estate market. I am predicting that we will be working through the inventory quickly? No. I am just saying that predictions are tough. They are even tougher with uncontrollable events that could happen halfway around the world. Who predicted that 9-11 would have been one of many factors that helped touch off the real estate frenzy? For now, we are still in recovery mode even though the markets seem to be predicting a turn for the worse. Just about everyone had predicted a recovery of “stops and starts,” and therefore, no one should be surprised about this prediction coming true. 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 13

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Over the years, it seems that there has and appraisal guidelines have come been as many property-evaluation tools from Fannie Mae in the past. Freddie out there as Carter has pills. Fannie Mac followed suit by taking the same Mae and Freddie Mac have a plethora forms and guidelines and put its name of different appraisal forms, and they on it, creating a sister form, so that are constantly undergoing change. things would not be so confusing. For This past year, Fannie introduced yet this we are thankful. another form, the FNMA MC, which was Given all of the changes in the past, designed as an addendum to the regular what new appraisal forms or techFNMA 1004 or the stanniques should we expect dard Fannie Mae singlein the future? If I were a family-appraisal form. The betting man, I would say MC stands for “Market that the next wrinkle in Conditions,” and the form appraisals will not be was designed to reflect new at all but a rehash of information not on the a previous tool whose regular 1004, given all of time has come again. The the severe changes in the time is right for a revival market, due to the finanof the review appraisal. cial crisis. Data, such as the Yes, we will have the number of homes on the standard residential form market or average turnover appraisals, and they will “Given all of the rates, is addressed, giving be required for all new changes in the past, underwriters more inforloans. The difference, I what new appraisal mation about the current predict, will be that there forms or techniques market than they would will be a lot more review should we expect in otherwise have. Necessity is appraisals. the future?” said to be the mother of Why? Many banks want invention, and this would to retain control of the certainly be a good example. appraisal process, so they continue to At one time or another, we have order their own appraisals from the been introduced to various new tech- same pool of appraisers. This by itself niques and/or forms designed to lay to can cast a ray of doubt as to the validirest the challenges of placing a value on ty of the appraisal process and/or the a property to be used for mortgage col- validity of specific appraisals. By using lateral. Each time it happens, we are led the review appraisal, complying with to believe that it is the end all to prop- regulations will be easier. This method erty appraisals only to find that later on, of validation may very well satisfy the something else will come along to lender, as well as the regulator. Banks replace it. We have had limited are responsible for reviewing appraisals appraisals, drive-by appraisals, wind- anyway, and having a complete review shield appraisals, narrative appraisals, appraisal at hand to support the origielectronic appraisals, broker price opin- nal appraiser and appraisal will go a ions (BPOs) and automated valuation long way toward to satisfying regulamodels (AVMs), as the flavor of the day tions and regulators. in one year or another. Will the old tried and true desk What generates all of these review or field review be adequate for changes, and why do we need so many this purpose? In some cases it may, different property evaluation tools? however, with all of the technology Most, in fact practically all, of our rescontinued on page 16 idential appraisal body of knowledge

ture so I can best assess the opportunities with which you might get involved. Can the real estate market absorb this inventory without further damage? Yes, it is possible. Low rates, modifications, government aid programs and higher employment levels all would contribute to this scenario. The problem is that these factors are intertwined. Recently, the National Foreclosure Mitigation Counseling (NFMC) program indicated that 58 percent of their clients listed unemployment as the main reason for default. So we just need to create more jobs. However, because the real estate industry is such an important employer, we cannot grow employment fast enough without a strong real estate industry. We cannot fix real estate without fixing unemployment and we cannot fix unemployment without real estate. Anyone dizzy yet? I do recall in the early 1990s reading The Washington Post and the story I was focused upon was predicting the end of real estate appreciation. One decade later, we had the hottest real estate market in history. Too hot, actually. Yes, we have had decades of no appreciation in our history (more than one decade in a row after the Great

continued from page 9

forward on reverse Compliant Business Systems: Part II of III By Don DeRespinis

JULY 2010 



In the first part of this article, I dis- in the military at the time. A single cussed the new laws and background authority uses a tightly organized regto be considered when developing a imen of officers and soldiers to execute the mission. Business is also compliant system. A compliant system stems from the organized in the same way. A branch use of business policy management. manager has the authority of the offiPolicy management involves the execu- cer who is in charge of a branch or a battalion. A senior pertion of the business plan, son usually takes on the its strategies, policies and role of the officers. activities designed to Leadership is vital in accomplish the goals of changing an organization as the organization. These it heads into unknown terrigoals are derived from tory, imposing a prospect of the mission. The execufailure and what that means tion must contain to the organization. Every detailed steps covering new employee, customer, the timing and the quanreferral source and vendor tity of specific outcomes. must be dealt with delegatJust as a successful busied leadership. Executing ness must have a business “Just as a successful planned activities in a policy and a system to practiced manner signifies support it, there must business must have a also be a system of com- business policy and a the leadership. Leadership says we are performing pliance that works system to support it, our business to protect together with the other there must also be a and enhance the value of underlying systems. The system of compliance the organization to our development and executhat works together customers and to the comtion of a compliant system requires the same with the other under- munities we serve. That is lying systems.” quite a proposition. Don’t strategy of any other syswe all feel that way? tem. Therefore, running a Leadership requires us to reorganize compliance system is similar to fighting our staff and empower them with a a long-term war. new imperative to play a part in something new and improved. A complete Background: A historical business plan must be selected and perspective In 1781, the British surrendered to promoted first to each employee then George Washington at Yorktown. This to each affiliate, referral source and was not a major battle. The defeat of customer. Training is a standard in the military. the British was the direct result of implementing a strategy, which was First, they train the body in boot camp, nothing more than a carefully then they train your mind in the classdesigned system using all of the room, and then they put you to work knowledge available at the time. The doing your job repetitively until you victory at Yorktown was the result a have it right. In the case of mortgage five-year plan to accomplish over- operations, training involves doing whelming odds and defeat the most things in a new way that is well docupowerful fighting force that ever exist- mented and creates accountability. ed. This strategy and implementation Instead of scanning a document and edefine the components of a successful mailing it through Outlook, the docuplan and has enormous value to busi- ment is first cataloged, compressed, ness operators today. The key compo- stored in a secure environment and nents of Washington’s strategy were then backed up. The e-mail and its conleadership, training, weapons and tents are then created in a standard companywide format, delivered to the intelligence. customer documented by a copy sent to

Leadership Leadership was very much a standard

continued on page 17

continued from page 11

sion that has long-term consequences and carries significant costs, so people who make these decisions about these loans should be as informed as possible. That is just good business. It is due diligence and making sure the loan is suitable for the borrower. For example, borrowers in poor health and on marginal income may find themselves at some point needing public assistance to stay at home. If they select a loan that requires a lump sum advance, they will probably not qualify for that kind of assistance. This could make it hard for them to meet their borrower obligations. For certain borrowers, the combination of public benefits with a reverse mortgages can make this whole package work. So, there are a lot of ways lenders can benefit from this approach that looks at the bigger picture. That is part of what we are trying to do here, to think more holistically about seniors and reverse mortgages.

poor health, has recently had a fall, and owns a house that has stairs, they will likely need some home modifications to live there safely. Unless they have other funds to pay for these renovations, they could benefit from a line of credit or some kind of lump sum payment. It is often a combination of problems that needs to be solved, and there may be trade-offs. Some of these needs can be conflicting. For example, the borrower may also want to have a high monthly income to enhance their quality of life.

I like the description of the FIT number as an indication of the “intensity of need.” How should loan officers use this review? To the extent borrowers continue to meet their obligations, there are no risks to lenders. But if borrowers expect to use a reverse mortgage to meet a lot of needs, then their money could be depleted very quickly. If they don’t How should lenders have additional resources, use FIT? such as help from family or Dr. Barbara Stucki, Vice Along with the counseling other financial assets, they President of home equity certificate, counselors will Initiative, National Council could find themselves in a send each client a FIT review difficult situation. Putting on Aging (NCOA) report which includes two those two factors together things—an FIT number and “People need to know gives loan officers a better list of advice that is based on about the loan basics, sense of the risk. To the the client’s responses. The extent that lenders keep but we believe it is FIT number summarizes the not just the life of the track of a person’s FIT total number of “yellow number, they may be able loan, but the life of flag” issues raised during the to evaluate the impact of the borrower that counseling session. For these potential risks over needs to be considexample, if a person is in time, in terms of who ered in making these poor health and recently decides to take out a loan had a fall, FIT will count two and whether they are liketypes of decisions.” yellow flags. FIT numbers ly to face foreclosure. range from a high of five (no “yellow flag” issues) to a low of one (10 or more “yellow Again, you said earlier that this is a flag” issues). conversation tool. Somebody might The more yellow flags, the more have a FIT number of one or two and issues a senior is facing, and the more that might indicate a high level of pressure may be put on the reverse risk. If a lender turns somebody like mortgage as a solution. Lenders should that down on the basis of a FIT numencourage clients to share the FIT sum- ber, that lender might be violating mary, to ensure that the choices bor- some lending rules, such as Equal rowers make in taking out a loan meet Credit Opportunity Act (ECOA). If the their needs. It will also be important to person is in dire financial need, the take yellow flag issues into considera- lender might be doing a disservice. tion to ensure that clients select appro- What should a lender do if a borrowpriate loan types and loan features. er has a FIT number of one or two? As I mentioned, the FIT number is a How would a FIT number of three measure of the level and range of need, affect the selection of specific loan and those needs do present financial features? risks to borrowers. A low FIT number The FIT number reflects the intensity of does not mean a person should not get needs that a person might have. a reverse mortgage. It means that they Someone with a FIT number of three are dealing with many issues, which would have mentioned between four to will require a lot of thoughtful discussix “yellow flag” issues during counseling. sion, and perhaps some honesty about As a result, these older homeowners may how long this person is going to be able be trying to solve several different prob- to stay at home. For some, reverse lems, which can make decisions about a mortgages may be exactly the tool that reverse mortgage more challenging. For example, if a borrower lives alone, is in continued on page 16

news flash


continued from page 10

HOPE NOW reports 172,000-plus loan mods completed in April HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors have announced that its April 2010 data continues to show an increase in the total number of loan modifications offered to atcontinued on page 16


Extreme Makeover: Broker Edition

The need for brokers to rehab their image through grassroots PR By Greg Schroeder Where is Ty Pennington when you need him? If any group is in need of a solid foundation to rebuild themselves upon and a dry roof over their heads to shelter them from the elements, brokers should be at the top of the list. The series of events that have occurred over the past two years have left brokers battered, bruised and in dire need of a fresh start. The industry has invested a lot of time and effort in rehabilitating the wholesale channel from an operational and compliance perspective, but that effort will be for naught if brokers fail to restore some measure of trust with consumers and lenders. What brokers need right now is some positive PR. As any good publicist will tell you, image is everything, and when it comes to revamping a tarnished image, actions speak louder than words. To begin to repair the reputational damage wrought by the reckless actions of a few greedy individuals, brokers need to engage themselves in the oldest of grassroots PR tactics—volunteerism. Think about it. Is there a better way to enhance your own image than to selflessly give to others? By associating themselves with a positive cause, brokers can begin to undo the injuries sustained through tangential association with their unscrupulous (and now, hopefully, defunct) peers and regain the public’s trust, as well as the industry’s faith in the wholesale channel. The non-profit world is ripe with opportunities for brokers to connect with positive, housing-related causes. The most obvious of these of course is Habitat for Humanity. The cost to participate is minimal … just a day or two of your time to assist in a build, usually during the weekend, and the Habitat for Humanity Web site ( makes it easy to locate and contact your local chapter. Other examples of living/housing-related causes include combating homelessness, creating green spaces in urban communities and performing common household repairs for the needy. Additionally, many high schools and colleges across the country are eager for businesses to conduct financial education seminars for their students to prepare them to take responsibility of their financial futures, and brokers are in a prime position to educate consumers of all ages on financial management and the responsible use of credit and financing. However, for a service effort to truly have a positive impact on an organization’s image and reputation, simply writing a check or participating in a single service day won’t cut it. Active and frequent participation is required, and above all, sincerity is paramount. If you don’t wholeheartedly believe in the cause you are supporting, your efforts will come off as being disingenuous, and any reputational benefit that might have been gained through participation will have been squandered. Once you’ve begun participating, let people know about it. Take photos, and post them on your company’s Web site. Issue a press release announcing your company’s volunteerism initiatives, and recap your experiences through a corporate blog. Being front and center for doing something positive can do wonders for an organization’s reputation, but remember to also temper the tone in which you describe your organization’s participation so that your descriptions come across as enthusiastic versus blatantly self-aggrandizing and purely promotional. Abraham Lincoln once said, “Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.” Organizations, large and small, live and die by their reputations, and a bad reputation, regardless whether it’s based in fact, will torpedo a company’s chances of success unless swift action is taken to remedy the situation. To regain their status as Trusted Mortgage Professionals, brokers must tend to their tarnished public image, as the light in which stakeholders view your organization can either illuminate it or obscure it completely. 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.


 JULY 2010

Jonathan Foxx, president and managing director of Lenders Compliance Group, has announced the official launch of the Association of Residential Mortgage Compliance Professionals (ARMCP), a national organization devoted exclusively to residential mortgage compliance professionals. ARMCP is a 501(c)(6) and a DE Not-for-Profit. It is the first and only national organiza-



New association formed for residential mortgage compliance professionals

tion 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. “In these demanding times, the mortgage loan origination industry needs competent compliance guidance and expertise in managing the labyrinth of regulatory rules and requirements,” said Foxx, whose mortgage risk management firm is sponsoring the founding of the association. “But until now there has been no single organization that responds to the unique interests and specific needs of compliance professionals, giving them the ways and means to review residential mortgage compliance issues among one another.” ARMCP will offer discussion groups, educational forums, panels, lectures, and other venues for residential mortgage compliance professionals. It seeks to improve ways and means to better serve the residential mortgage industry and, where appropriate, advocate the association’s viewpoint. The goal is to encounter ideas and explore compliance issues, news, guidelines, and banking laws for the benefit of mortgage industry participants and for enhancing communications between members of the mortgage industry, regulators and the consumer. In a statement to new members, Foxx confirmed that the association will “reach out to other mortgage industry associations and offer our perspective toward proposed and existing mortgage banking regulations. Virtually every facet of residential mortgage compliance will have a committee to support all the members.” ARMCP has initially chosen the LinkedIn venue to facilitate membership, because it is a sufficiently robust platform for general communications and dissemination of information. The new group is assembling at LinkedIn, where members will work together to build this new professional organization of the residential mortgage industry. For more information, visit 

The FTC’s complaint and settlement order name two mortgage servicers as defendants: Countrywide Home Loans Inc. and BAC Home Loans Servicing LP, formerly doing business as Countrywide Home Loans Servicing LP. The settlement requires Countrywide to pay $108 million, which will be refunded to homeowners who Countrywide overcharged before July 2008. In addition, the settlement order prohibits Countrywide from taking advantage of borrowers who have fallen behind on their payments. The defendants continue to service millions of mortgage loans, including tens of thousands of loans involving borrowers in bankruptcy and foreclosure. In the servicing of loans, the defendants are permanently barred from:  Making false or unsubstantiated representations about loan accounts, such as amounts owed.  Charging any fee for a service unless it is authorized by the loan instruments, by law, or by the consumer for a specific service requested by the consumer.  Charging any fee for a default-related service unless it is a reasonable fee charged by a third party for work actually performed. If the service is provided by an affiliate of a defendant, the fee must be within limits set by state law, investor guidelines, and market rates. Defendants must obtain annual, independent market reviews of their affiliates’ fees to ensure that they are not excessive. In addition, Countrywide must advise consumers if it intends to use affiliates for default-related services and, if so, provide a fee schedule of the amounts charged by the affiliates. The settlement also requires Countrywide to make significant changes to its bankruptcy servicing practices. For example, Countrywide must send borrowers in Chapter 13 bankruptcy a monthly notice with information about what amounts the borrower owes—including any fees assessed during the prior month. The defendants also must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy. For more information, visit

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news flash

JULY 2010 



forward on reverse

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risk homeowners. Mortgage servicers report that proprietary loan modifications combined with the government Home Affordable Modification Program (HAMP) have assisted a broad range of at-risk homeowners. More than 104,000 (104,265) borrowers received proprietary modifications during the month of April. The year to date total for these types of loan modifications is now 409,783. When added to the HAMP loan modifications tabulated by the United States Treasury, the industry completed more than 172,000 loan modifications in the month of April and almost 642,000 (641,937) permanent loan modifications for at-risk homeowners so far in 2010. The 172,000 loan modifications for the month of April represents a 46 percent increase compared to the same month last year, when the industry completed 117,818 loan modifications. The number of HAMP modifications continues to increase, but for homeowners who are not eligible, sustainable proprietary modifications continue to play an important role in helping homeowners in difficulty across the country. “Our data continues to show that the industry’s comprehensive loan modification efforts are making significant headway,” said Faith Schwartz, senior advisor for HOPE NOW. “The total number of modifications, including HAMP, show that more than three million homeowners have received modifications since 2007.” For more information, visit

Interthinx finds mortgage fraud risk ranking in highest since 2004

Interthinx has released its quarterly Mortgage Fraud Risk Report, covering data collected during the first quarter of 2010. The report includes an analysis of national mortgage fraud risk and indices for the four most common types of mortgage fraud risk. Based on the most current data available, overall fraud risk has increased by four percent from the previous quarter and 11 percent from the same quarter a year ago to 151 (n=100). This is the first time since 2004 that the index has exceeded 150. Major findings include the following:  Arizona surpassed California as the state with the highest fraud risk, possibly because of a migration from neighboring Nevada similar to that which occurred in 2004 to 2006. Nevada remains in second place with California, Florida, and Michigan rounding out the top five states.

 After a brief dip in the last quarter, property valuation fraud risk resumed the upward trend that began in fourth-quarter 2007, and it remains the primary driver of the index.  Identity fraud risk and employment/income fraud risk are both up around 10 percent from the last quarter. The rise in employment/income fraud risk strengthens evidence that it is starting an upward trend after a long period of decline.  Occupancy fraud risk is down by 11 percent, a sharp reversal from last quarter’s rise of 16 percent. Still it is likely that fueled by plentiful inventories and the expected release of “shadow” foreclosure inventory, this index will trend upward in the near future. “Our lender customers can now benefit from our investment in fraud detection and risk mitigation analytics as we share a more detailed analysis of the data we’ve been collecting,” said Kevin Coop, president of Interthinx. “The data we’ve analyzed in our most recent report will help lenders anticipate and prepare for trends that will impact their risk mitigation strategies. This will contribute to their continued success.” The Mortgage Fraud Risk Report is an Interthinx information product created by an internal team of fraud experts. The report was prepared with input from Constance Wilson, Ann Fulmer, Shane De Zilwa, Ph.D., and the Interthinx analytics team. This is the fourth time the company has released its quarterly report, which is providing deeper insight into current fraud trends through analysis of the extensive pool of data the company amasses from the industry’s use of the Interthinx FraudGUARD loan-level fraud detection tool. “It behooves all lenders to take a closer look at the first-quarter report and take advantage of the analysis our research team has performed,” said Mike Zwerner, senior vice president for Interthinx. “Our quarterly report is fast becoming the primary source for detailed fraud risk information for the mortgage industry. It provides the only regular report on what is happening in originations today, which allows lenders to take proactive steps to reduce their risk substantially.” For more information, visit

MBA: Commercial/multifamily debt outstanding drops 0.9 percent in Q1 The level of commercial/multifamily mortgage debt outstanding decreased in the first continued on page 22

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will address these diverse set of needs. One of the great strengths of a reverse mortgage is that it can be used for any purpose. Similarly, if a person has a high FIT number of five, they may not be facing any imminent risks or cash needs. For these older homeowners, the question may be “Why are they taking out a reverse mortgage?” Is it really appropriate for somebody who may not have much need for these types of loans to incur those costs? Perhaps they should wait until there is a more immediate need. On the other hand, they may want to liquidate some of their home equity so that they can prepare for emergencies. The FIT number itself does not give the answer, but it opens up a more fruitful and broad-based discussion about the various issues people are trying to solve by taking out a reverse mortgage. Why are you excited about FIT and BCU for counselors and lenders? Counseling on reverse mortgages offers an important “teachable moment” because it occurs when people are making important decisions that could affect the rest of their lives. It is also an opportunity to reach out to middleincome families, who may not have the luxury of working with a financial plan-

value nation

ner or who may not easily qualify for public benefits. Enhancing this counseling through FIT and BCU helps to strengthen financial planning and the financial education continuum. Are FIT and BCU essentially HECM counseling enhancement tools? Absolutely! That is the way we’ve always looked at it. People need to know about the loan basics, but we believe it is not just the life of the loan, but the life of the borrower that needs to be considered in making these types of decisions. 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.

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available and with the many databases of property sales information, we can expect more and different review appraisal formats coming down the pike. In fact, we are already seeing this offered by some of the larger technology companies. On a recent visit to the FNC headquarters in Oxford, Miss., I had a chance to see some of its new cutting-edge products firsthand. FNC’s Collateral DNA suite of products, offers a variety of options designed to provide additional market data to reviewers, whether they be underwriters or review appraisers. These include the GAAR Report, Property Scan Report and the Market Report, all designed to provide additional sales data to assist the reviewer along with the QC Vigilance Report, which not only offers an online appraisal form, but it also populates the form with sales data, not necessarily found in the original appraisal. This allows the reviewer fingertip information with which to develop a more thorough review with the least investment in time and money. There are also other technology companies offering advanced high-tech products that are available as we speak. These will

address the demand for the enhanced review appraisals and other reviewand-underwriting needs, dictated by our current economic environment. In conclusion, you may expect a larger number of independent, as well as in-house reviews of appraisals, used by the lending community, going forward. Because there will be and already is more demand for quality control and independent opinions, expect to see more appraisal-review products. Among the most popular of these will be the Web-based systems, offering additional sales data for the reviewer to use in his or her analysis. This is due to new technological developments, including better software and larger pools of comparable data, which favor quicker and cheaper services at a time when more indepth review services are in demand. 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, email or visit his company’s Web site,

compliant business systems

tation. He had to know where the enemy was and, most importantly, where they would be going. To implement the American strategy, Washington needed a system that gathered key information while providing a secure, fast and reliable way to transmit the information back to a single source, the command center. As each new piece of information was delivered though a strategically designed spy network, strategists were planning continuous small attacks on the main armies. This continued for five

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


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• Debunk the myths related to the credit repair industry. • Discover how a compliant and profitable credit repair service can add to your bottom line. • Learn how to avoid the errors that most companies offering "credit repair services" make. • Discover how to better qualify your prospects to eliminate future headaches. • Understand how to automate a majority of items in your business that cost you valuable time. • Learn from a FICO scoring expert on "How the Credit Rules Have Changed" with respect to the CARD Act and how those changes can provide you with a number of lucrative opportunities. • Understand the importance of "score cards" and how consumers are scored differently based on the types of derogatory tradelines. • Become a FICO expert. • Learn the importance of credit education and how to help your consumers not repeat past mistakes. • Discover how you can expand your business beyond your state's boundaries. • Understand how to develop ongoing commission structures that motivate and create incentives for your sales team. • Learn how to penetrate the biggest banks to get hundreds of leads.

• Walk away with the immediate knowledge and tools to build your own compliant and profitable credit repair business. • Be able to explain to your staff and clients how fixing their credit is legal and is your right to dispute any derogatory content in their reports under the Fair Credit Reporting Act (FCRA). • Master the intricacies of FICO scoring cards. • Advise clients on how they can benefit from credit repair. 

the sender. An entry that the e-mail was delivered and to whom, is automatically recorded. Every process performed by every individual goes through this process or data gets lost, and information vital to closing a loan is delayed and business suffers. Training on a system is the only training that can have a lasting effect. Teaching your staff on accessing documents, data storage and accountability deals with e-mails, faxes and copies. Weapons are the tools that we use to leverage our abilities and help us accomplish our goals on a day-to-day basis. One of the amazing reasons why America won its independence can be attributed to a single weapon that had been in existence for years. You would have thought it was a cannon, machine gun, poison or some chemical used. It wasn’t. It was something carried by every enemy soldier at the time. It was a mainstay of military fighting and used by the British for hundreds of years. British military forces were so powerful they would usually overrun enemy forces in a standard military line formation. With guns and cannons they would pulverize their enemy long before any close encounter. George Washington had been trained in British battle tactics. The only way he would ever defeat an enemy hundreds of times more powerful than his was to implement strategies to defeat the traditional battle formation. He needed to change the very nature of the battle. He needed to use everything he knew about battle tactics by breaking down each component. For the past 100 years in America, rifles and handguns were the dominant weapons to overcome an enemy. Stand up enough people with guns all firing in the same direction and soon enough the enemy was defeated. Being resourceful, Washington could not play that game. So he changed the way the soldier’s weapons were used. He turned the large battlefield, where most wars were fought, into small skirmishes of hand-to-hand combat. This strategy slowly eroded the very power that could have easily defeated him. Instead of training his troops on standard battlefield maneuvers, Washington trained his army on guerrilla warfare and handto-hand combat. His weapon of choice was the bayonet attached to each rifle, and the rest is history. When they could not form battle lines and perform as trained, Washington used his weapon to attack from the side. The success of his system of hand-to-hand combat was solely dependent on the last of the key factors … intelligence. Washington’s use of intelligence was the most important factor in implemen-

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years, 24 hours a day. Politicians scolded Washington for failure to produce victories in major battles. Washington was determined to win the war, not just gain the glory of a victorious major battle. He knew he had a system and that he had to stick to it for it to work. He knew he could not listen to the politicians and subordinates and that he had to keep his system confidential. He certainly was not going to divulge strategies to Congress. Washington’s strategies have many similarities to the mortgage origination business of today. In Part III of this series, I will discuss the basic principles of compliance and how to build these principles into your system.

Jim Pair, CMC, President, Mortgage Associates Corpus Christi

JULY 2010 



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 email at for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Jim Pair, president of Mortgage Associates Corpus Christi (MACC) and immediate past president of the National Association of Mortgage Brokers (NAMB). Pair began his career in mortgage banking in 1961 as a loan originator after a stint in the U.S. military. He served as a senior officer of a mortgage banker, and five years as the president of two savings and loan associations in Texas in the late 1970s and early 1980s. In 1992, Jim founded MACC, serving as president, focusing primarily on the origination of conventional single-family loans. In 1994, MAAC was approved to originate Veterans Affairs (VA) loans, and in 2001, was approved to originate Federal Housing Administration (FHA) loans. MAAC continues to be a top mortgage shop in the Corpus Christi area, having been honored four times with the “Best of the Best Award for Mortgage Lending in Corpus Christi,” as

bestowed by the readers of the Corpus Christi Caller Times. Jim became involved with mortgage trade associations in 1992. Taking the advice from friends in Houston who were members of the Texas Association of Mortgage Brokers (TAMB), now the Texas Association of Mortgage Professionals (TAMP), he approached the Texas affiliate of NAMB about forming a chapter in Corpus Christi. They agreed and Jim launched TAMP’s Corpus Christi Chapter, serving as the chapter’s first-ever president and as a member of the TAMP statewide board of directors. As he became more active on the state level with TAMP, Jim became involved with the legislative affairs of the association and the Texas State House in Austin, educating senators and representatives on the role of the mortgage broker in the housing finance industry. His involvement with TAMP eventually led to the seat of TAMP statewide president in 2000-2001. He eventually became involved nationally with NAMB, serving as chair of both the Membership Committee and the Education Committee. He soon after joined the NAMB board of directors and just wrapped up his term as NAMB president in June. He will continue to serve on the NAMB board of directors in the role of immediate past president, and serving as chairman of the NAMB Nominating Committee and co-chair of the Industry Partners Committee over the next year. How did you first get involved in the mortgage industry? While attending college, I worked part-time for a mortgage banker. After completing my degree and my military obligation, I went to work full-time for a mortgage banker in Houston, Texas. Since that time, I have been involved with mortgage bankers, savings and

loan associations, real estate development firms, and currently, as a mortgage broker.

taking on the role of chairman of NAMB’s Membership, Education and Communication Committees.

How did you first get involved with mortgage industry trade associations and how did you help grow membership of your Texas state affiliate of NAMB? I became heavily involved when licensing had been approved for mortgage brokers in the state of Texas. The regulatory agency that would oversee the broker industry, the Texas Savings & Loan Department, was approved in the law licensing brokers, and was subject to review by the legislators for sunset. During my term as president of the Texas Association of Mortgage Brokers, now known as the Texas Association of Mortgage Professionals, we had to fight to retain the Department as our regulatory agency. We were still in the process of rule-making with the agency and clarifying wording in the bill. All of this was accomplished during my term as president of TAMB/TAMP. In addition, we saw a great spike in membership due to the passage of the licensing law.

You served NAMB as president last year. What goals did you set when you took the office of NAMB president and do you feel you accomplished these goals set at the outset of your term? My goals as NAMB president were to build unity with our members and our state affiliates, protect our industry in Washington, D.C. and keep our association alive during the economic downturn we were experiencing. In all instances, we were successful. This could not have been achieved without the leadership and support of our volunteers, the hard work of our members and the dedicated staff at NAMB. They are the ones who stepped up and made this happen, and they are the ones who deserve all the credit. Without their commitment, nothing would have been achieved.

When did you begin to become more active on the national level with NAMB? As president of TAMB/TAMP, I served as a delegate to the NAMB Delegate Council for two years. Before serving as a delegate, I was aware of NAMB, but did not fully understand its purpose. My experience as a delegate led me to become more involved on the national level. I could see all the good NAMB was providing its members, and I wanted to give back to the industry. I volunteered to serve on a number of committees for NAMB after my term as president of TAMP. Working on these committees led me eventually

“My goals as NAMB president were to build unity with our members and our state affiliates, protect our industry in Washington, D.C. and keep our association alive during the economic downturn we were experiencing. In all instances, we were successful.”

After a whirlwind year as NAMB president, you can now focus again on your business in Texas, Mortgage Associates Corpus Christi. Mortgage Associates Corpus Christi was started in July of 1992 to provide permanent loans to customers of several builders who were building custom homes. At that time, it was very difficult for a builder to obtain construct-

ing financing on a custom home without a firm commitment letter from a lender. We were able to provide that service to the builders and we grew from there. Based on the quality of service we were providing to the consumer, we were able to expand into the Realtor market. Over the years, our referral based experienced tremendous growth, to the extent that referrals contribute to the majority of our originations. How did you manage your duties of serving as president of a nationwide trade association such as NAMB, over the last year while keeping MACC’s operations running smoothly? I am very fortunate to have a great partner in Jo-Anne Lamorey at MACC. We started together in 1992, and have always complemented each other’s strengths and weakness. Jo-Anne is a strong producer. This allowed me to concentrate on my duties with NAMB at the national level and the day-today operations of the company without the responsibility of production. Without her, I could not have served as president. We are a small shop and someone had to keep the loans coming in and she did that for me.

“Enforcement is the key to the future of our industry, and I am afraid that Congress and the agencies are not paying that much attention to future enforcement.”

I think that we can agree that the Home Valuation Code of Conduct (HVCC) is here to stay. The most recent change I see impacting the appraisal world are the states writing legislation in regard to appraisals management. It is funny to see the different approach each state is taking. It is very obvious that the legislation is written by appraisers because the states are missing the full picture of mortgage banking and the intent of the HVCC. Much of the new legislation appears to be written to degrade the operations of appraisal management companies (AMCs) and protect appraisers. I am for the appraiser, and I am glad to see them rally at the local level to unify their efforts and protect their industry. From a bigger picture, I think legislation will adversely impact the appraiser. Because of the lack of unity and continuity from the respective states, the states will create more industry hardships that will require more federal intervention for standards. For example, Arkansas will no longer allow broker price opinions (BPOs) to be an option. I will agree that this example keeps business channeled to the appraiser, but it defeats the purpose of what a BPO was designed to do. Look at Arizona’s employment requirements: Any employee of an AMC or any person working on behalf of an AMC who has the responsibility of selecting independent appraisers for the performance of real property appraisal services for the AMC or providing appraisal review services on a completed appraisal, shall be appropriately trained and qualified in compliance with this chapter (USPAP, Appraisal Classes). Does this mean that all those banks, credit union and lenders who manage their own rotations are required to take USPAP classes? I don’t think Arizona had them in mind when writing this law. The local chapter of the Appraisal Institute did a good job of making sure of their survival in Arizona on this one. The only thing I see wrong with it is that the classes will not prevent these lending institution from violating USPAP and influencing appraisers. Look at Tennessee … Desk reviews must be performed by individuals holding an appraiser’s license.


“Appraisal review” means the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal assignment, except that an examination of an appraisal for grammatical, typographical, or other similar errors shall not be an appraisal review. I will take the assumption that Tennessee is directly targeting AMCs, and not underwriters and quality control personnel who perform desk reviews on every loan they touch. As you can tell, the AMCs have their work cut out to be able to do business and the appraisers are taking revenge, but they are taking it out on the wrong people. HVCC is all about mortgage and appraisal compliance and following the many policies of USPAP. I think these state requirements will adversely affect some AMCs and the larger AMC will become even larger … or, move lenders back into managing their own appraisals. Then what? Appraiser influence is still strong and it is mostly coming from those who manage their own rotations. Until lenders realize HVCC should be managed by the quality control department, the industry will not achieve the tenants of both USPAP and HVCC. Quality Mortgage Services integrates appraisal management as a quality control solution reporting on Sections II, IV & VI of the Code to insure USPAP is followed and reported and offers its Appraisal Management Software (AMS) to those who want to integrate appraisal management into their quality control program.

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

 JULY 2010

What do you feel the future holds for the mortgage broker profession? There will always be a future for a professional mortgage broker. Mortgage brokers provide a service to the consumer that no other channel of distribution provides. We offer choice for the consumer and are willing to work with the consumer to achieve their dream of homeownership for however long it takes. We are always available to our customers, unlike other channels. These are qualities that other channels do not provide. Of equal importance is that members of NAMB have pledged to follow a strict Code of Ethics and abide by a code of strong Better Business Practices. The NAMB Lending Integrity Seal of Approval is a powerful symbol of our professionalism as mortgage brokers in today’s marketplace.

What is happening in the appraisal world?


What do you do to generate business with MACC? Our business model is based on referrals. This model has allowed our company to experience a steady stream of business and modest growth from year to year. The quality of service provided to the consumer is key.

What advice do you have for mortgage professionals in order to strengthen their viability in today’s marketplace? We must go back to the basics that all mortgage brokers started with … innovation and being creative. It seems the longer we are in business, we lose sight of the necessity of being innovative and creative. We should seek to build customers for a lifetime, not just for one transaction. These basics will always allow mortgage professionals to compete in today’s market.

By Tommy A. Duncan, CMT 

How has your local market in Corpus Christi, Texas reacted to the housing crisis? Corpus Christi is a unique market, in that historically, we have not experienced great fluctuations in growth from year to year. It is a slow but steady market. This has helped us in the downturn the nation has experienced over the last few years. We still have a good purchase market based on the state of the economy of the rest of the nation. We have not experienced the dramatic loss in property values that many regions of the country have experienced. One good thing I can say about the market in Corpus Christi is that when the rest of the country is down, our market is not down nearly as much, and when the rest of the country is up, our market is not up nearly as much. It is what I would call a “ho-hum market.”

What methods do you feel need to be put in place to police the industry? Is the Nationwide Mortgage Licensing System (NMLS) and greater enforcement of the laws currently on the books enough, or do you feel new regulation is necessary? We certainly do not need any new laws and regulation. Congress has already overreacted with the new laws that have been enacted just this past year alone. This is true with the agencies that oversee our industry. The market place has corrected itself without the help of Congress and the agencies. The NMLS has provided a platform that standardizes the licensing of mortgage professionals across the nation. That was indeed a necessity since many states had very lax licensing requirements if any at all. Enforcement is the key to any laws or rules. If there had been strong enforcement of the laws and regulations that were already on the books prior to the current mortgage meltdown, the problem would not have been nearly as severe as it was. Enforcement is the key to the future of our industry, and I am afraid that Congress and the agencies are not paying that much attention to future enforcement.

JULY 2010 



On June 11, 2010, the U.S. Department of Housing & Urban Development (HUD) issued Mortgagee Letter 2010-20,1 which provided the long-awaited guidance regarding the implementation of its Final Rule.2 The Rule adopted changes pertaining to the approval of mortgage lenders by the Federal Housing Administration (FHA) that are designed to strengthen FHA by improving its management of risk. This Final Rule, among other things, has increased the net worth requirement for FHA-approved mortgagees and also provided for elimination of the FHA approval process for loan correspondents. Loan correspondents will no longer be approved participants in FHA programs, but they will continue to have the opportunity to participate in FHA programs as third-party originators (TPOs) through sponsorship by FHA-approved mortgagees, as is currently the case, or through application to be approved as an FHA-approved mortgagee. In eliminating the FHA’s approval of loan correspondents, FHA-approved mortgagees assume full responsibility to ensure that a sponsored loan correspondent adheres to the FHA’s loan origination and processing requirements.

The most recent August 2008 Table of Small Business Size Standards, published through the Small Business Administration, indicates the following thresholds:

Subsector 522—Credit Intermediation and Related Activities 522110

Commercial Banking8

$175 million in assets8


Savings Institutions8

$175 million in assets8


Credit Unions8

$175 million in assets8


Other Depository Credit Intermediation8

$175 million in assets8


Credit Card Issuing8

$175 million in assets8


Sales Financing



Consumer Lending



Real Estate Credit



International Trade Financing

$175 million in assets8


Secondary Market Financing


Increased net worth requirements: Two phases


All Other Non-Depository Credit Intermediation


HUD is phasing in the increased net worth mandates through 2013.


Mortgage and Non-Mortgage Loan Brokers


Phase one The first stage of Phase One has already passed, since all new applicants for FHA approval, beginning on May 20, 2010, must now possess a net worth of at least $1 million. And the net worth must consist of at least 20 percent in liquid assets (i.e., cash or cash equivalent). The second stage, which begins on May 20, 2011, is a little tricky, since a metric is introduced using a Small Business Administration (SBA) statute in order to bifurcate lender approval criteria. On and after that date, a standard will be applied using the Table of Small Business Size Standards for a small business, as defined by the SBA at 13 CFR 121.201, Sector 52 (Finance and Insurance), Subsector 522 (Credit Intermediation and Related Activities). 3


Financial Transactions, Reserve and Clearinghouse Activities


 Effective May 20, 2011, lenders that exceed the size standards as provided in the above-cited statute must possess a net worth of at least $1 million of which no less than 20 percent must be liquid assets (i.e., cash or cash equivalent).4  Effective May 20, 2011, lenders that meet the size standards as provided in the above-cited statute must possess a net worth of at least $500,000, of which no less than 20 percent must be liquid assets (i.e., cash or cash equivalent).



Other Activities Related to Credit Intermediation $7.0

A size standard is the largest that a concern can be and still qualify as a small business for federal government programs.5 From the table above, it should be noted that SBA’s current requirements for classification as a small business, as set forth in this Subsector, are less than $7 million in annual receipts for non-depository institutions and less than $175 million in assets for depository institutions.6 Phase two Phase Two begins on May 20, 2013 and affects the category of participation in FHA programs. Identify the institution’s participation to determine the net worth thresholds:  Single family programs: Minimum net worth of not less than $1 million plus an additional net worth of one percent of the total volume in excess of $25 million of FHA single family insured mortgages originated, underwritten, purchased, or serviced during the prior fiscal year, up to a maximum required net worth of $2.5 million. Not less than 20 percent of a mortgagee’s required net worth must be liquid assets (i.e., cash or cash equivalent).

 Participation in multifamily programs with engagement in mortgage servicing: Minimum net worth of not less than $1 million, plus an additional net worth of one percent of the total volume in excess of $25 million of FHA multifamily insured mortgages originated, underwritten, purchased, or serviced during the prior fiscal year, up to a maximum required net worth of $2.5 million. Not less than 20 percent of a mortgagee’s required net worth must be liquid assets (i.e., cash or cash equivalent).  Participation in multifamily programs without engagement in mortgage servicing: Minimum net worth of not less than $1 million, plus an additional net worth of one-half of one percent of the total volume in excess of $25 million of FHA multifamily insured mortgages originated, underwritten, or purchased during the prior fiscal year, up to a maximum required net worth of $2.5 million. Not less than 20 percent of a mortgagee’s required net worth must be liquid assets (i.e., cash or cash equivalent).  Participation in single family and multifamily programs: The higher net worth requirements for single family mortgagees. Evidencing net worth is now requiring a higher due diligence review process, since all mortgagees (i.e., supervised, investing and non-supervised), with the exception of government mortgagees, are required to submit audited financial statements as a condition of their approval or renewal.

Loan correspondent approval for single family programs

 Underwriting and approvals will be performed by an FHA-approved mortgagee for all loans originated by sponsored TPOs. Once approved by the sponsoring FHA-approved mortgagee, a loan must close in the name of the sponsoring underwriting mortgagee.11 Finally, HUD officials fielded several questions regarding the current prohibition on closing an FHA-insured loan in the name of a TPO. The Department’s representatives acknowledged that HUD cannot change the prohibition on TPOs closing in their own names unless and until Congress amends the National Housing Act. As you may know, HR 5072, the FHA Reform Act of 2010, would accomplish this goal. This piece of legislation was recently passed in the House of Representatives and currently awaits deliberation in the Senate.  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 TPO, 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. HUD 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. Loan performance  Neighborhood Watch will post data for all loans originated via a sponsored TPO, and will be made available only to FHA-approved mortgagees for the purcontinued on page 23

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.

 Non-approved originators (and expired approvals)—sponsored: Permitted to participate through sponsorship by an FHA-approved Direct Endorsement mortgagee. An FHA-approved mortgagee may permit its sponsored TPO to perform all origination and processing tasks related to an FHA loan transaction (except for FHA Connection access). Sponsoring FHA-approved mortgagees will determine the “exact origination and processing duties their sponsored third party originators may perform.”10

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.

 An approved mortgagee may permit a sponsored TPO to originate Home Equity Conversion Mortgages (HECMs), provided that the sponsored TPO adheres to all other HECM origination requirements.


Very truly yours, Tricia A. Odierna, Esq.

 JULY 2010

 Approved as of May 20, 2010: May continue to originate mortgage loans insured by FHA through the end of the calendar year.

 Because of updates that HUD must make to its data systems, sponsoring mortgagees will enter their five-digit FHA ID in FHA Connection as the loan originator



Originations 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 TPO (unless applicable law or regulation governing the violations in question require specific knowledge on the part of the party to be held responsible). It is, therefore, critical that sponsoring FHAapproved mortgagees set forth and clearly delineate policies, procedures, approval guidelines, quality control requirements, and many other features of FHA and regulatory compliance, with respect to their sponsored TPOs.9

 FHA-approved mortgagees will not be permitted to use a Direct Lending branch office identification number to order case numbers for loans originated by sponsored TPO, because this identification number can only be used to originate direct-to-consumer loans obtained by the FHA-approved mortgage through the Internet and Call Centers. 

Approvals Effective May 20, 2010, FHA no longer accepts any new applications for loan correspondent approval. FHA will complete the processing of loan correspondent applications received prior to that date for those entities. If an application for loan correspondent approval was received by FHA on or after May 20, 2010, the application and fee will be returned to the applicant. Loan correspondents approved, and in good standing, will be permitted to retain their approval through Dec. 31, 2010. For loan correspondents with fiscal years ending on or after Dec. 31, 2009, and that were required to renew their FHA approval prior to May 20, 2010, the FHA will rely on the submission of the prior year’s audited financial statements for the renewal of loan correspondent approval.7 Therefore, loan correspondents whose fiscal years ended on or before Dec. 31, 2009 had to submit the Yearly Verification Report, the applicable recertification fee, and audited financials. Loan correspondents whose fiscal year ends after Dec. 31, 2009 are required to submit the Yearly Verification Report and the applicable recertification fee, but not audited financials. After Dec. 31, 2010, loan correspondents (i.e., third-party originators, so-called “TPOs”) will only be permitted to continue participation in FHA programs by establishing a sponsorship relationship with an FHA-approved mortgagee. Indeed, loan correspondents will no longer have access to non-public FHA systems, beginning Jan. 1, 2011 (i.e., FHA Connection). Only FHA-approved mortgagees will be permitted to order FHA case numbers from the FHA Connection. HUD will provide future guidance, with respect to the processing of case numbers ordered prior to the Jan. 1, 2011.8

for sponsored TPO loans; that is, for the time being all loan originations from sponsored TPOs will appear in FHA’s systems as a retail origination of the sponsoring mortgagee. (HUD hopes to have their data systems updated by Sept. 30, 2010.)

Originators and Lenders Have Multiple Options for Compliance With Fannie Mae’s LQI

By Terry W. Clemans

JULY 2010 



Earlier this year, Fannie Mae’s Loan and closing, that is an acceptable practice. Quality Initiative (LQI) was announced and If the lender believes they need to “refresh” implemented. One aspect of the program the credit report (as Fannie Mae refers to it) requires a major change in the pre-closing with a new credit report just prior to closprocess of many lenders and originators. ing, that is also acceptable and seems to be This change is due to the need to confirm the most common approach lenders are that no “undisclosed liabilities” or new taking as it provides the greatest risk reduccredit have been established between the tion. If the latter is preferred, now the time of the loan application and closing, quandary is, “How many credit repositories or the loan may be subject to buyback. to access, weather to obtain new credit While this is not a new rule, Fannie Mae scores with the new file, and if the new file determined that the steps should be pulled with hard being taken to prevent or soft inquiries?” problems related to this All variations of the unforeseen liability have above are acceptable, pendnot been sufficient in the ing the amount of risk the past, and is providing new lender wants to avoid. Since urgency to assure that only mortgage transactions lenders or originators fulfill require multiple credit their due diligence on this repositories, and the reposiissue or possibly face seritories do not share inquiry ous repercussions. data from their files with In a transaction with a each other, a simple way of wholesale lender, one looking at the risk is to estimust first determine who mate each of the national “The desire to be is going to handle the LQI repositories to represent involved in making requirements. This may be about one-third of the credit improvement part of the lender’s prepapotential risk from new liahappen is obvious, ration for closing, and not bilities. If you access only but at what cost?” the responsibility of the one of the three national loan originator; however, it can also be credit repositories for your “refresh assigned to the loan originator and listed report,” you are taking a chance of missas a final condition prior to closing. ing liabilities as roughly two-thirds of all Either way, the originator and the whole- inquiries will be missed by this practice. sale lender need to be on the same page Add a second repository to your refresh as to whom is going to handle it and report, and then you are two-thirds covwhat type of due diligence is required by ered and only potentially missing onethe lender to confirm that the consumer third of the liabilities. The only way to did not create any new liabilities. cover all potential liabilities is with a When it comes to compliance with the three repository refresh. credit reporting portion of the LQI, there This same formula applies to credit monare numerous options pending the itoring as well. Fannie Mae suggests that lender’s desired preference of risk man- monitoring the credit report instead of actuagement. As of the time of this writing, ally accessing a full file may be a route to Fannie Mae has not set specific standards compliance. Just as above, if you’re only that must be followed for this compli- monitoring one of the national repositories, ance, and in several communications you’re still more likely to miss a new account with them, they have not indicated any than to discover it (pun not intended). plans to do so. Due to so many different Regardless of the fashion of monitoring interpretations on what is needed for risk or refreshing the credit report, once a new avoidance, the credit reporting industry inquiry is discovered, someone needs to has stepped up to provide many options contact the creditor listed to determine if on services so that the lender is comfort- a new account was actually opened from able with the level of due diligence. that new inquiry. This is a function that If the lender believes that having the can be performed by the credit reporting consumer sign a document stating they continued on page 24 created no new debts between application

news flash

continued from page 16

quarter, to $3.31 trillion, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. Declines were driven by drops in commercial and multifamily mortgages held in commercial mortgage-backed securities (CMBS) and construction loans held by banks and thrifts. The $3.31 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $31 billion or 0.9 percent from the fourth quarter of 2009. Multifamily mortgage debt outstanding rose to $852 billion, an increase of $3 billion or 0.4 percent from the fourth quarter of 2009. “Low levels of commercial mortgage borrowing mean that property investors are paying off and paying down more in mortgages than they are taking out,” said Jamie Woodwell MBA’s vice president of commercial real estate research. “The balance of construction loans at banks, and commercial and multifamily mortgages held in CMBS and by life insurance companies, saw the largest declines. The balance of multifamily mortgages backed by Fannie Mae, Freddie Mac and FHA saw the largest increase.” Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.49 trillion, or 45 percent of the total. Many of the commercial mortgage loans reported by commercial banks however, are actually “commercial and industrial” loans to which a piece of commercial property has been pledged as collateral. An MBA Research PolicyNote found that among the top 10 commercial real estate bank lenders, 48 percent of their aggregate balance of commercial (non-multifamily) real estate loans were related to owner-occupied properties. CMBS, CDO and other ABS issuers are the second largest holders of commercial/multifamily mortgages, holding $679 billion, or 21 percent of the total. Agency and GSE portfolios and MBS hold $309 billion, or nine percent of the total. Life insurance companies hold $302 billion, or nine percent of the total, and savings institutions hold $184 billion, or six percent of the total. As noted above, many life insurance companies, banks and the GSEs purchase and hold a large number of CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS category previously referenced. Looking just at multifamily mortgages, the GSEs and Ginnie Mae hold or guarantee the largest share of multifamily mortgages, with $309 billion or 36 percent of the total multifamily debt outstanding. They are followed by commercial banks with $210 billion, or 25 percent of the total. CMBS, CDO and other ABS issuers hold $107 billion, or

13 percent of the total; state and local governments with $77 billion, or nine percent of the total; savings institutions with $60 billion, or seven percent of the total; and life insurance companies with $48 billion, or six percent of the total. In the first quarter of 2010, commercial banks saw the largest decrease in dollar terms in their holdings of commercial/multifamily mortgage debt—a decrease of $19 billion or 1.3 percent. CMBS, CDO, and other ABS issues decreased their holdings of commercial/multifamily mortgages by $11 billion or 1.6 percent. Life insurance companies decreased their holdings of commercial/multifamily mortgages by $4 billion or 1.4 percent. The Federal government decreased their holdings of commercial/multifamily mortgages by $3 billion or three percent. As mentioned earlier, the decline in bank and thrift holdings was driven by a drop in construction loans, many of them for the development of single-family homes. In percentage terms, non-financial corporate business saw the largest decrease in their holdings of commercial/multifamily mortgages, a drop of seven percent. Private pension funds saw their holdings increase by eight percent. The $3 billion increase in multifamily mortgage debt outstanding between the fourth quarter 2009 and first quarter 2010 represents a 0.4 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $6 billion, or two percent. State and local government increased their holdings of multifamily mortgage debt by $898 million, or one percent. Private pension funds increased by $272 million, or 10 percent. Commercial banks saw the biggest decrease in their holdings of multifamily mortgage debt by $1.4 billion or 0.7 percent. In percentage terms, private pension funds recorded the biggest increase in their holdings of multifamily mortgages at 10 percent. Finance companies saw the biggest decrease of eight percent. For more information, visit

Fannie and Freddie loan mods and refis rise in Q1 of 2010 Loan modifications and refis by Fannie Mae and Freddie Mac increased significantly in the first quarter as the volume of permanent modifications under the Administration’s Home Affordable Modification Program (HAMP) tripled, and refinancings steadily grew continued on page 24

fha issues guidance

ing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at continued from page 21

pose of evaluating sponsored TPO origination trends and performance Third-party fees  HUD will review all fees charged to a consumer by both FHA-approved lenders and TPOs and will hold the lender accountable for all of the fees charged, including those charged imposed by a TPO. Acceptable fees will be those that appear to be reasonable, common, and customary for the geographic area.12  Broker consulting fees, which are charged by a broker, must be paid outside of closing from the consumer’s own funds, and must be compliant with Real Estate Settlement Procedures Act (RESPA) guidelines.13 Employment requirements FHA’s employment requirements for approved mortgagees and lenders are outlined in Chapter 2 of Handbook 4060.1, Rev. 2. FHA-approved mortgagees shall ensure that sponsored TPOs involved in FHA loan transactions adhere to all applicable federal, state and local requirements governing their FHA loan origination and processing activities. HUD will no longer monitor TPOs and will not impose restrictions on employment. Therefore, sponsored TPO employees can be paid on a W-2 or 1099 basis, and can have dual employment (i.e., mortgage originator, as well as real estate agent). Also, there will be no “brick and mortar” requirements for sponsored TPOs.14 As a reminder to currently approved mortgagees and lenders, HUD prohibits HECM mortgage originators from also engaging in the sale or solicitation of other financial or insurance products. FHA-approved mortgagees must carefully evaluate the specific guidelines governing the programs and activities in which they wish to participate, as well as relevant state and local laws and regulations governing such activities.

Principal-authorized agent relationships Principal-authorized agent relationships can now only be entered into by two FHAapproved mortgagees, both of which must possess unconditional Direct Endorsement approval. This relationship, and the respective roles of the parties involved, must be documented accurately and accordingly in FHA Connection. Additional time is needed to support such documentation in FHA Connection. Due to impending system changes necessary to support and validate Principal-Authorized Agent transactions, FHA is issuing a regulatory waiver that will delay implementation of this provision until Jan. 1, 2011.15  For forward mortgages, the principal can have either unconditional DE or unconditional HECM approval. The authorized agent must have unconditional DE approval.  For HECM mortgages, the principal can have either unconditional DE or unconditional HECM approval. The authorized agent must have unconditional HECM approval.

Footnotes 1—Mortgagee Letter 2010-20, June 11, 2010, Implementation of Final Rule FR 5356-F-02, “Federal Housing Administration: Continuation of FHA ReformStrengthening Risk Management through Responsible FHA-Approved Lenders.” 2—April 20, 2010 at 75 FR 20718, with technical correction published on May 4, 2010 at 75 FR 23582. 3—Under the final regulations, small businesses are those that meet the size standard for their industry classification established by the Small Business Administration at 13 C.F.R. § 121.201 Sector 52 (Finance and Insurance), Subsector 522 (Credit Intermediation and Related Activities). Non-small businesses are those lenders and mortgagees that exceed this size standard. Id. at 20,734 [citing new Section 202.5(n)(iii)]. 4—Under the final regulations, small businesses are those that meet the size standard for their industry classification established by the Small Business Administration at 13 C.F.R. § 121.201 Sector 52 (Finance and Insurance), Subsector 522 (Credit Intermediation and Related Activities). Non-small businesses are those lenders and mortgagees that exceed this size standard. Id. at 20,734 [citing new Section 202.5(n)(iii)]. 5—U.S. Small Business Administration Table of Small Business Size Standards Matched to North American Industry Classification System Codes, Aug. 22, 2008, p. 29 (Data–2007) 6—Op.cit. 1, Footnote (2). 7—See Mortgagee Letter 2009-01: Loan correspondents must submit the online annual certification and the annual renewal fee or be subject to administrative action leading to the possible withdrawal of their FHA approval. 8—Industry Conference Call, June 29, 2010: Hosted by HUD to summarize the new regulatory changes and the corresponding guidance provided in Mortgagee Letter 2010-20. 9—Additionally, FHA’s employment requirements for approved mortgagees and lenders, as outlined in Chapter 2 of Handbook 4060.1, Rev. 2, requires FHAapproved mortgagees to ensure that sponsored TPOs involved in FHA loan transactions adhere to all applicable federal, state, and local requirements governing their FHA loan origination and processing activities. 10—Op.cit. 1, p. 4. 11—The current prohibition on closing in a TPO’s name cannot be changed until Congress amends the National Housing Act. The FHA Reform Act of 2010 (HR 5072), which was recently passed in the House and currently awaits deliberation in the Senate, would accomplish this goal. 12—Op.cit. 8. 13—Op.cit. 8. 14—Op.cit. 8. 15—Op.cit. 8. 16—Mortgagees will order case numbers for any state in which they are approved to underwrite an FHA loan. Until system modifications are made, mortgagees will need to enter their five digit ID in the sponsor field in FHA Connection’s case number assignment screen. 17—Op.cit. 8.


 The principal in these relationships must originate the loan and the authorized agent must underwrite the loan.

Areas Approved for Business (AAFB)

The 40 Most Influential Mortgage Professionals Under 40

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.

New Form 92900-A: Addendum to the URLA 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.

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 provid-

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

 JULY 2010

HUD intends to amend Form 92900-A (Addendum to the Uniform Residential Loan Application) in order to obtain information related to sponsored TPOs.17 The new form will add additional boxes for a TPO’s legal name, tax identification number, and Nationwide Mortgage Licensing System Registry (NMLS) number for the company (if applicable). A date of mid-September 2010 is anticipated for implementation of the new form.


FHA-approved mortgagees may underwrite sponsored TPO loans in any state in which they are permitted by the state to do so, and in which sponsored TPOs are permitted to conduct mortgage origination activities. Hence, an FHAapproved mortgagee’s wholesale Areas Approved for Business (AAFB) consists of all states in which it sponsors a mortgage originator that meets the applicable requirements for loan origination of that state and in which the mortgagee is permitted by the state to underwrite mortgage loans and sponsor mortgage originators.16 HUD will provide more detailed requirements for the submission of sponsored TPO loans in a subsequent Mortgagee Letter. That Mortgagee Letter will include instructions for data submission and the process for ordering and transferring FHA case numbers for loans originated by sponsored third party originators.

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

 The loan may close in either the name of the principal or the authorized agent, and either party may submit the loan for insurance endorsement.

multiple options


news flash

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company or the lender pending their interpretations on how to best comply. This is another area the industry has been quickly changing to meet the lenders’ needs. Several companies have come up with LQI solutions that offer a combination of refresh credit report and the investigation of any inquiries discovered. Now the question of hard versus soft inquires and scores … If scores are accessed and are different from the scores at the time of application, there are issues associated with the change, and many of them could be fatal to the loan if the credit score has dropped below a fundable level. For that reason, many lenders have elected to not obtain credit scores with a refresh report. The downside to that would incur if the consumer has opened new liabilities which would require the loan to be resubmitted to Desktop Underwriter (DU). That would require another credit report. This also applies to the question of hard versus soft inquires. If the inquiry is hard, meaning it will be on the consumers credit profile for all to see, and potentially impact the next credit score calculation, that file could be issued to DU (as long as scores where obtained too) if needed. Any refresh reports accessed with soft inquires, those only seen by the consumer with no impact on the credit score, are not re-issuable to DU.

One of the best methods of avoiding undisclosed liabilities from lurking in your files is a simple consumer education step. Make sure that the consumer understands at the time of the application not to apply for any new credit until after the loan is closed, and that there are quality control procedures to determine if they have that may kill the loan in the final hours prior to closing if they decide not to heed your warning. While this seems basic, many consumers get so thrilled about the quick approval that they think there are no other hurdles and immediately begin the process of buying the new furniture, home improvement materials, etc., and they may buy their way into a non-eligible loan status. For more info on Fannie Mae’s Loan Quality Initiative, visit Fannie Mae’s LQI homepage at Fannie Mae’s LQI FAQ’s, see questions four through six at Terry W. Clemans is the executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail Visit the National Credit Reporting Association Inc. (NCRA) on the Web at

continued from page 22

under the Home Affordable Refinance Program (HARP). Loans 60-plus-days delinquent also declined for the first time in two years. The data were released in Federal Housing Finance Agency’s (FHFA) “First Quarter 2010 Foreclosure Prevention & Refinance” report, which includes data on all of the government-sponsored enterprises (GSEs) foreclosure prevention efforts. Highlights of the quarterly report include:  Completed foreclosure prevention activity increased 75 percent to approximately 239,000, driven by increases in all home retention activity, short sales and deeds-inlieu.  HAMP permanent modifications tripled to 136,000 at the end of the first quarter, up from 43,000 in the fourth quarter. More than 448,000 borrowers were in a HAMP trial modification at the end of March.  HARP cumulative refinance volume increased 53 percent to nearly 291,600 at the end of the first quarter, up from 190,180 in the fourth quarter.  Loans 60-plus-days delinquent declined for the first time in two years, by nearly 23,800 loans to approximately 1.7 million.  Approximately 66 percent of loan modifications completed in the fourth quarter lowered borrowers’ monthly payments by over 20 percent. For more information, visit

JULY 2010 


FHFA index finds home prices rise 0.8 percent from March to April

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Work with a financial partner committed to helping you and your clients close the deal. Vivian Madey • 630-242-7251 • Austin, San Antonio, Dallas/Fort Worth, Denver, Salt Lake City

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Helping you do more.

House prices rose 0.8 percent on a seasonally adjusted basis from March to April, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. The previously reported 0.3 percent increase in March was revised to a 0.1 percent increase. For the 12 months ending in April, U.S. prices fell 1.5 percent. The U.S. index is 12.8 percent below its April 2007 peak. The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from March to April ranged from -1.3 percent in the Middle Atlantic Division to +2.4 percent in the East North Central Division. Federal tax credits for first-time homebuyers and existing homeowners contributed to the strength of house prices in April. The tax credits, which required that purchase contracts be signed by the end of April, increased sales volumes dramatically during the month and, in some cases, likely increased bidding prices. For more information, visit

NEDAP report finds prime lending cut in minority communities Lenders sharply cut prime mortgage lending in minority communities in recent years—for both home purchases and refinancing of existing mortgages. Although mortgage lending has decreased across the board since the financial meltdown, prime lending in “communities of color” has dropped more than twice as much as in predominantly white neighborhoods. According to the report, “Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color,” released by Neighborhood Economic Development Advocacy Project (NEDAP) and six other groups across the country, systematic redlining of communities of color has worsened since the onset of the financial crisis. The report examines overall mortgage lending patterns between 2006 and 2008, in seven metropolitan areas in the United States, with separate analysis for the nation’s four largest financial institutions—Bank of America, Citi, JPMorgan Chase and Wells Fargo. The four banks, all recipients of funds from the Troubled Asset Relief Program (TARP), significantly decreased access to prime refinance loans in communities of color, at the same time they increased prime refinance lending in predominantly white communities. “The largest banks, which took billions in bailout dollars, continue to harm communities of color through ongoing discriminatory practices,” said Alexis Iwanisziw of NEDAP, who coauthored the report. “To address these glaring disparities, Congress must enact meaningful financial reform and regulators must start to hold banks accountable.” Key findings of the NEDAP study include:  Lenders decreased prime home purchase and refinance lending by 60.3 percent in neighborhoods of color, compared to 28.4 percent in predominantly white neighborhoods.  Bank of America, Citi, JPMorgan Chase and Wells Fargo collectively increased their prime refinance lending in predominantly white communities by 32 percent, but decreased it in communities of color by 33 percent.  Lenders overall decreased their prime refinance lending by 66.4 percent in communities of color, compared to 13.9 percent in predominantly white communities. In New York City, overall prime refinance lending declined by 68.8 percent in neighborhoods of color,



compared to 39.5 percent in pre- all loans outstanding as of the end of the first quarter of 2010, an increase of dominantly white areas. For more information, visit 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago, according to the FHA announces new contracts to handle HUD Mortgage Bankers Association’s (MBA) National Delinquency Survey. The noninventory The U.S. Department seasonally adjusted delinquency rate of Housing & Urban decreased 106 basis points from 10.44 Development (HUD) percent in the fourth quarter of 2009 to has announced that 9.38 percent this quarter. The percentage of loans on which it is awarding contracts to 23 companies to serve as Asset foreclosure actions were started durManagers (AM) and 32 other firms to serve ing the first quarter was 1.23 percent, as Field Service Managers (FSM) under the up three basis points from last quarter third generation of its Management and but down 14 basis points from one Marketing (M&M) program, known as year ago. The delinquency rate includes loans M&M III. The new contracts announced are intended to reduce risk, increase sale that are at least one payment past due, prices and accelerate the pace of reselling but does not include loans in the HUD’s inventory of foreclosed Federal process of foreclosure. The percentage of loans in the foreclosure process at Housing Administration (FHA) homes. Under prior agreements, M&M contrac- the end of the first quarter was 4.63 tors were responsible for both maintenance percent, an increase of five basis points and marketing of HUD’s real estate-owned from the fourth quarter of 2009 and 78 (REO) properties. The change announced basis points from one year ago. This separates those functions, which require represents another record high. The significantly different skill sets, thereby combined percentage of loans in foreincreasing the effectiveness of the closure or at least one payment past due was 14.01 percent on a non-seaDepartment’s asset disposition program. “These new contracts epitomize FHA’s sonally adjusted basis, a decline from continuing effort to reduce risk, increase 15.02 percent last quarter. The serious delinquency rate, the net returns, decrease holding times and improve efficiency in the resale of its inven- percentage of loans that are 90 days or tory of foreclosed properties,” said HUD more past due or in the process of foreSecretary Shaun Donovan. “It is critically closure, was 9.54 percent, a decrease of important that FHA successfully and effi- 13 basis points from last quarter, but an ciently sell its inventory of these properties increase of 230 basis points from the and these contractors will help us do that.” first quarter of last year. “The issue this quarter is that the Under M&M III, the functions of maintaining and selling the property seasonally adjusted delinquency rates have been separated. The Field Service went up while the unadjusted rates Managers will be responsible for prop- went down,” said Jay Brinkmann, MBA’s erty maintenance and preservation and chief economist. “Delinquency rates the Asset Managers will be responsible traditionally peak in the fourth quarter for the sale of the homes. HUD’s cur- and fall in the first quarter and we saw rent inventory of foreclosed FHA prop- that first quarter drop in the data. The erty is approximately 44,000 homes. question is whether the drop represents That is up from the usual average level anything more than a normal seasonal of 35,000 to 40,000. This new system decline or a more fundamental will help HUD deal with this challenge. improvement. Most importantly, the There will be multiple Field Service normal seasonal drop is coming right at Manager and Asset Manager contractors the point where we believe delinquenin most areas. This is expected to foster cies could potentially be declining and competition among the contractors the problem for the statistical models is thereby improving responsiveness, reduc- determining which is which.” ing risk and increasing net returns to the The seasonally adjusted delinquency agency. Each contractor will establish an rate increased for all loan types with office within its awarded geographic area. the exception of Federal Housing These awards are projected to create Administration (FHA) loans. On a sea1,200 new professional jobs nationwide. sonally adjusted basis, the delinquency HUD’s Homeownership Centers in rate stood at 6.17 percent for prime Atlanta, Georgia; Denver, Colorado; fixed loans, 13.52 percent for prime Philadelphia, Pennsylvania and Santa adjustable-rate mortgage (ARM) loans, Ana, California will be responsible for the 25.69 percent for sub-prime fixed direct oversight of the new contracts with- loans, 29.09 percent for sub-prime ARM in their respective jurisdictions. loans, 13.15 percent for FHA loans, and For more information, visit 7.96 percent for U.S. Department of Veterans Affairs (VA) loans. On a nonDelinquencies and foreseasonally adjusted basis, the delinclosures increase in latest quency rate fell for all loan types. The foreclosure starts rate increased MBA delinquency survey The delinquency rate for all loan types with the exception of for mortgage loans subprime loans. The foreclosure starts on one-to-four-unit rate increased six basis points for prime residential properties fixed loans to 0.69 percent, 17 basis increased to a seacontinued on page 32 sonally adjusted rate of 10.06 percent of

The Future of the Mortgage Broker and Correspondent Markets By Andy W. Harris, CRMS

JULY 2010 



I want to begin by saying that I support Man did they ever succeed! I am not a all channels of loan origination if they big fan of monopolization in our indusare operated with integrity and are eth- try which reduces competition and negically compliant. To say our industry atively affects consumers and small has gone through change is a severe business. The quick “too big to fail” understatement. While these changes merging of banks/depositories was a have made a quick impact on how we concern regarding influence to their operate, it’s not over yet. More changes now massive servicing portfolios, but are coming, and in the next several days, excessive net branching should also not we will have an idea on how the final go unnoticed. draft of this new bill will impact our So where do we go from here? I prebusiness on all channels as financial dict that wholesale, correspondent and reform will happen in one way or anoth- retail bank loan production as a whole er. Is that bad? Depends will shrink over the next on who you ask … few years while rates For those who are still increase. Companies who here, we can assume you cannot control overhead are fully dedicated to your costs or loan originators career. It’s been a very who cannot obtain market busy year from Real Estate share will exit the industry Settlement Procedures Act after final U.S. Department (RESPA) reform, the SAFE of Housing & Urban Act, Nationwide Mortgage Development (HUD), NMLS Licensing System (NMLS), and financial reform settles. etc. Right now, it is imporTime will tell us more about tant for anyone in the how compliance and buy“For those who are mortgage industry to stop backs will impact those in still here, we can and take some time to the correspondent lending reflect on what is actually assume you are fully world on line health/capachappening without preity, not to mention asset dedicated to your mature decisions or requirements. career.” assumptions. The last few Time will also tell how years have been a chalsmall the wholesale chanlenging mental game and how you con- nel will get based on support from loan trolled your emotions and predictions originators and industry business ownduring this time makes a difference. ers. Remember, we as originators bring Decisions made were either derived from the loans to the lenders … how we a positive view or negative view. Those choose to do that will determine the decisions still impact your life and busi- future of our industry. ness today. Some of you recently might have Over the last few years, I have wit- received a survey requesting numbers nessed a lot of pessimism and fear to try and determine correspondent regarding our industry, primarily and wholesale loan production. It will regarding the wholesale lending chan- be interesting to get the results from nel. This behavior created massive any of these studies. When hearing panic, followed by extensive marketing these numbers in the recent past or in from smaller to mid-sized lenders look- the future, we need to realize that the ing to capitalize on net branching bank and brokered loan percentages opportunities from the falling broker are/were heavily skewed due to the community. This, of course, would consolidation and growth of lenders expand their retail influence for line servicing portfolios and the lowest rates capacity, market share, profits, etc. in history. They hammered their servic-

ing portfolio with marketing and loans I call the “Super SRP Streamline No Cost Refi” … talk about leverage and profit. Little did these customers know they likely had more favorable choices available. Undisclosed service release premium (SRP) or disclosed yield-spread premium (YSP) really makes no difference, as long as the consumer is educated properly about the interest rate and Box A of the transparent Good Faith Estimate (GFE). It’s really that simple. Often, we hear more about YSP than SRP simply because of the banking influence. One channel is not better than the other, but we have an ongoing debate on price and benefit (which the consumer can determine). The playing field isn’t level, but many mortgage brokers look at YSP disclosure and credits as a benefit to their business and their clients. The main item that brings value to the consumer is the loan originator. The loan originator is in the driver’s seat and carries the responsibility on how they handle their clients. There is no doubt about it that wholesale lending is the most costeffective and efficient way for the lender to deliver products to the market. Wholesale lending is a very important aspect to our business on all channels. If anyone disagrees with that, than they are either in denial or obviously need to rethink their profession. The only thing that can kill wholesale lending is us! If you don’t feed something, it will starve and ultimately die. The wholesale channel needs to continue to receive good quality loans. The word “monopoly” and “competition” don’t work well together in our industry. The local small business mortgage broker in the community is very important for the health of our industry and the protection of the consumer through competition. I am currently a supporter of the wholesale lending channel and have chosen to commit my practice to brokering exclusively with my preferred lending partners. In my opinion, this is the most favorable channel for my clients for pricing and loan comparison. I feel it is more hands-on without the potential compensation hits for not using a line, which some consider steering if there is a better program available by brokering. I simply prefer to

work for my client exclusively and not the banks priorities, regardless of the potential missed income as a business owner through SRP or overrides. I still support my colleagues in the banking and correspondent channels who do right by their clients, but will stand up to those who spread false information about good mortgage brokers or dishonest benefits in carrying a line of credit, such as turn-times, pricing or in house underwriting.

“There is no doubt about it that wholesale lending is the most cost-effective and efficient way for the lender to deliver products to the market.” The banker/broker “tifts” in our industry and national industry trade associations needs to stop. You can have your opinions, but good people need to come together for support. At a recent industry meeting, I had a conversation with a colleague that brought up a good point. The true definition of a “banker” is one who accepts payment on a debt, or a “loan servicer.” Because many of those with correspondent lines do not service loans, they should not fall under the same non-disclosure guidelines as those who do service loans. I have always had my own similar input on this topic, but it was an interesting view. If you were to get a personal line of credit approved at the bank and then use that line to offer a loan to a friend would you call yourself a banker? Does that make you a direct lender or an indirect lender? The structure and judgment of our lending channels is quite interesting. Pre-judgment without knowledge could be another definition for ignorance. Make sure you understand the pros, cons and health of each channel and truly how they operate. The one thing we need to always remember and never forget is that our employer, the consumer, is the most important piece of this puzzle. What is best for them? Banking or brokering? The truth is that it doesn’t matter as long as they have choice, competition and a person with experience and integrity helping them. Wholesale lending and the mortgage broker are here to stay. Correspondent

lending is here to stay. I personally feel that I have a unique approach in my business and have no problem being the minority. I’m excited for the future of our industry.

same goes for those who buy. Don’t let your ego get stuck in an expensive “A building” when you could increase profits and pay your employees better in a “B building.” Focus on growing net worth if required.

“The local small business mortgage broker in the community is very important for the health of our industry and the protection of the consumer through competition.”

Market and prospect! (both)

None of us want to see more banks leverage toward retail and away from correspondent and wholesale lending. So, what should you do going forward to protect and grow your business as a mortgage broker or correspondent?

Closely monitor quality and pull-through (brokers) Make sure your lock pull-through and loan quality is excellent. Focus on being a preferred tier one broker. Lock fallout should always be 10 percent or lower (preferably under five percent) other than denied loan files. I know this is a hard number to swallow, but make it a goal. Do not prematurely lock or pull files for resubmission elsewhere. Be a respected and soughtafter partner for wholesale lenders. I promise that being a preferred broker has its perks.

Don’t bite the hand that feeds you (brokers)

Make sure you maintain your initial and CE as required under the NMLS, but also focus on elective education and building your skills as a mortgage professional.

Control your overhead (both)

Monitor your underwriting and quality control (correspondents) If you choose to underwrite and fund your own loans, make sure that you have experienced underwriters and tight quality control. The concern and level of buy-backs is on the rise and you cannot take the risk of non-compliance or fraud to put your line capacity at risk. There is only so much allocated.

Two arms are better than one (correspondents) Don’t put all of your eggs in one basket. Make sure you have more than one or two approved credit lines. Even more importantly, make sure you are approved with numerous lenders for brokering unique programs needed to be competitive in the marketplace and provide choice and comparison.

Choose your home carefully (both) Make sure to do a lot of research on the company you plan to set up your license or your branch with without influence by fear. Reputation is everything in this shrinking industry. Look at others within the company (if a larger company) that could either help or hurt your business. Make sure you have all the tools and support needed. Ensure they have enough in assets for new HUD approval (correspondent) and enough capacity on lines to avoid and funding or other issues.

Net worth (owners) Each state has their own requirements regarding net worth for mort-

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or e-mail or visit 27

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Now is time to tighten your belt. Check your financials regularly and cut what is not necessary. Carefully review any lease agreements and make sure you keep the term as short as possible and negotiate the lowest rents possible. The

You’ve dealt with enough. Be confident in what you bring to the market and support the wholesale lending channel. Educate consumers and the media regarding how the industry works and what a mortgage broker means to them.

Now is an exciting time to be a loan originator. Focus on your education and the quality you bring to your clients. Support your local and national industry trade associations. We are in the final stages of industry cleansing which presents new market share opportunities for the best of the best. It’s extremely important that we police our own going forward to avoid more issues in the future. Dig in your heels, set your goals and stay positive!


Education (both)

Stand strong (brokers)

meet requirements. I think there should be a level of flexibility on the smaller correspondent firms, but each business is so unique, it’s an area I know has been discussed quite often. 

Without your lenders, your business cards don’t work and you have nothing to offer. Be kind and supportive to your lenders and account executives. Be someone they look forward to seeing every week. Build relationships internally and earn respect. If you are negative or arrogant, you need to reevaluate yourself and your business. If you have issues with lenders, make sure you communicate with them and your account rep.

Continue marketing efforts and look at low cost ways to attract more business. Focus on referrals, technology, social media, etc. Never put this on hold or discontinue efforts in this area.

gage brokers to obtain licensing. Some require it and some do not. In my opinion, the verified net worth of a third-party originator will not change the level of risk to the lender or to their clients. This must be audited through loan quality, tracking and scoring. I do not personally believe there should be net worth requirements for mortgage brokers, however I do believe that they should have some kind of surety bond or other insurance as typically required and based off their production. At this point, it appears the industry does not require brokers to carry a specific net worth other than state or lender overlays. Lenders and correspondents are definitely seeing changes in regards to net worth requirements for HUD and bank line/capacity approval. I do support the changes made by HUD regarding third party originator (TPO) approval and originations similar to other conventional methods of origination. Time will determine how this production-driven asset requirement will impact more future mergers to

A View From the C-Suite Wholesale and Correspondent Markets … What’s Next? By David Lykken

JULY 2010 



At the beginning of this article, let me a time and a season when everything emphatically make this assertion … was changing. But the question I am “As goes the future of Fannie Mae and going to explore now is how different Freddie Mac, so goes the future of the were things back then compared to independent mortgage banker” and what they are today. There have been dramatic shifts in “As goes the future of the independent mortgage banker, so goes the future of the various business channels within wholesale and correspondent lend- our industry. The wholesale channel ing.” The answer to the question posed has fallen from its one time dominance in the title of this article is, in my opin- of controlling as much as 65 percent or ion, almost wholly reliant and depend- more of all loans originated, to less than 30 percent, and is ed upon the future of anticipated to fall to Fannie Mae and Freddie below 15 percent. Mac. Correspondent lending Note: The definition of has dramatically changed “wholesale” and “correas well, with increased capspondent” first needs italization requirements, far clarification: There is the fewer options to sell their East Coast definition of loans at competitive prices, “wholesale” and the West constantly changing credit Coast definition of the overlays and generally anysame … they can be very thing but “business as different. It is not uncomusual” compared to a few mon for someone on the years ago. East Coast to use the “The answer to the For the vast majority of words “wholesale” and those involved in the “correspondent” inter- question posed in the title of this article is, mortgage lending induschangeably, whereas in my opinion, almost try, life is far more diffisomeone on the West cult today than it was just Coast has a very clear diswholly reliant and 24 to 36 months ago, and tinction between the two. depended upon the certainly more difficult It happened to me again future of Fannie Mae than it was 40 years ago today as I was writing this and Freddie Mac.” … or is it? article. I received a call from someone asking me, “Who is the biggest ‘wholesaler’ in the Consider history country?” Knowing that the caller was Consider this … Fannie Mae, originally from the East Coast, I dug a little deep- known as the Federal National er to realize that the person really was Mortgage Association (FNMA), was creasking, “Who is the largest correspon- ated in 1938 by President Franklin D. dent lender in the country?” So as a Roosevelt as a part of the New Deal. I way of clarification and getting our lex- was amazed to learn that Fannie Mae icons aligned for this article, “whole- was originally established as a governsale lending” is when a mortgage bro- ment-owned entity for the two-fold ker originates and processes a loan purpose of reestablishing the nation’s and then submits it to a lender for housing market in a post-Great underwriting and funding. A “corre- Depression environment, and ensuring spondent lender” is a company that a reliable supply of mortgage credit purchases loans that have already throughout the country. And then, get this, in 1968, due to the fiscal pressures been funded and closed. created by the Vietnam War, Fannie Mae was privatized, and by 1970, was a The times, they are full-functioning, self-sufficient governa-changing Okay, this is going to date me at bit … ment-sponsored enterprise (GSE). What I find so interesting is how hisI can still remember like yesterday way back in 1964 while in high school tory seems to repeat itself. The question when the song, “The Times They Are A- is, “Are we learning anything from hisChanging,” written and recorded by tory?” Back in the late 1930s as our singer-songwriter Bob Dylan, shot to country was emerging from one of the the top of the charts and in 1965 when worst financial crises of all time, The Byrds released their hit song President Roosevelt and the U.S. “Turn! Turn! Turn!” No question, it was Congress found it necessary to form an

entity to rebuild the housing markets. While maybe not yet as severe, how is that different from what we’re experiencing today? And I am of the opinion that we have not yet seen the worst of this recession. With each passing day, it seems like the billions of dollars of stimulus money that have been dumped into the economy have failed to produce the desired results and our economy is not showing any convincing signs of a sustainable recovery. In fact, there is mounting evidence that this recession may have the dreaded “Double Dip” W-shaped pattern with the second “dip” being potentially worse than the first “dip.” Think about it for a moment … Fannie Mae has returned to its roots as a government-owned entity at a time when that may be the best place for them to be. I can hardly believe that I’m writing these words in light of my deepseated “free markets” convictions. Isn’t it interesting that the original “two-fold purpose” for the creation of Fannie Mae is as relevant and “mission-critical” today as when it was established in 1938? While I don’t share this view, many of the “anti-war” advocates attribute the genesis of our present day fiscal pressures to yet another controversial and unpopular war … this time, the war on Iraq and ongoing war in Afghanistan. Whether you share my views of “less government is better” or not, I challenge you to do as I have done to reconsider if privatizing the GSEs is a good idea in the near term and possibly even in the long term. Finishing up of my history lesson, I also find it interesting that Freddie Mac, originally known as Federal Home Loan Mortgage Corporation (FHLMC), was formed by the Emergency Home Finance Act of 1970 to ensure that Fannie Mae did not monopolize the housing market? Did you get that? Emergency Home Finance Act of 1970! You mean to say that we had a home finance emergency back then? Does the movie title “Back to the Future” seem applicable again here? Now consider some recent history … Do you remember, just a few years ago, the articles that were appearing in leading trade journals questioning whether or not we even needed Fannie Mae and Freddie Mac anymore? The rationale behind that discussion was that the secondary markets had evolved and had become so efficient, thanks to Wall Street, that we didn’t need these two “evil twins” (as one trader referred to them) anymore. But other than that brief insane aberration in mortgage history when a few ‘elites’ thought we could live without the GSE giants, it is unthinkable in

today’s world to consider a healthy mortgage and housing climate without Fannie Mae and Freddie Mac or a very well-established equally strong equivalent.

Intertwined destinies Again, let me again emphatically state, “As goes the future of Fannie Mae and Freddie Mac, so goes the future of the independent mortgage banker” and “As goes the future of the independent mortgage banker, so goes the future of wholesale and correspondent lending.” There is no one single driving factor more significant to this discussion about the future of wholesale correspondent lending than the future of Fannie Mae and Freddie Mac. Whether or not you agree with my opinion that things economically may get far worse before they are going to improve, there is no debate that our economic recovery will be through job creation and the recovery of the housing industry … all the result of a healthy and vibrant mortgage industry. In my opinion, this includes having healthy wholesale and correspondent channels. So, how does this play out? Consider the first of two questions: “Who has benefited the most from consistently healthy, competitive and liquid secondary markets thanks to Fannie Mae and Freddie Mac?” While you might answer “everyone has benefited” which of course is true, no one has benefited more than independent mortgage bankers. By way of comparison, let’s say for some reason a bank cannot sell their loans into the secondary market. They ultimately have their deposit base to fall back on for liquidity to carry them through whatever liquidity issues they may be experiencing. In other words, while banks benefited from having secondary markets, it hasn’t been essential to their existence. On the other hand, independent mortgage bankers do not have a deposit base to fall back upon. Their very existence is directly tied to having consistent and immediate access to liquidity via secondary markets. So without question, it is independent mortgage bankers of all shapes and sizes that have been the primary benefactor of consistently healthy competitive secondary markets. Second question … “Who, over time, has been the most active in the wholesale and correspondent markets? Again, the answer is independent mortgage bankers! While big banks have been involved in the wholesale and correspondent channels for years, it has been thousands upon thousands of independent mortgage bankers that have been providing consistent underwriting and funding loans for mortgage

lation that has come out of the federal government that has been “spot on” at addressing the legitimate issues of whatever they’re trying to manage through legislation.

“… there is a growing and overall recognition that for our nation to have a healthy housing market, it requires that we also have healthy wholesale and correspondent markets.”

mation I’ve written numerous times in past articles? I’ll say it again as a way of encouragement … “I predict that more money will be made in mortgage banking in the next five years than the previous 25 years!” If you’re wondering how you can be one of those who prospers in these uncertain times, call or e-mail me at . Our firm welcomes the opportunity to talk to you about successful strategies that will ensure your prosperous future. Now that you have read this article, I would encourage you to go back and read the article I wrote last year on the same topic for this publication. Most of what I wrote back then is as true today as it was then. I encourage you to go back to the archives of this publication and find that article. If you can’t find it, e-mail me at, and I would be happy to send you a copy of it. 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.


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Another thing that should be encouraging to many mortgage originators is that we as an industry have learned that banks and larger financial institutions find it difficult to cost-effectively expand market share. As a result, they will again find themselves returning to the wholesale/broker channel to gain the desired market share. For this reason, I remain cautiously optimistic about the return, to a modest degree, of the wholesale channel. However, I do not envision in my lifetime the wholesale channel ever regaining the market dominance that it enjoyed in the last business cycle. The big banks, while they’ve enjoyed enormous market share of late, will find it difficult to effectively compete over the long haul once the markets recover. Many of the loan originators, and you may be one of them reading this article, who were formerly brokers, found it necessary to go to work for a bank. While grateful for the job, they find themselves in a suffocating culture, and I predict, will jump ship at the first opportunity to leave and set up their own mortgage brokerage operation again. What they’ll find however, is that the barrier of entry has and will continue to rise. Gone are the days where anyone with a laptop and $50,000 will be able to open up a mortgage brokerage operation. Higher capital requirements are here to stay, throughout the entire mortgage “food chain.” Only those with an impeccable credit history, strong industry credentials and a reasonable net worth will be allowed to own and operate their own business. There will be a new skill set for the successful business owner/operators of tomorrow. They will have to be much more disciplined in their business acumen and need a greater understanding of risk. New regulations and higher capital requirements are going to set the bar substantially higher in the next business cycles. Thankfully (and hopefully), our industry will only attract those who have

carefully considered the pros and cons of being in the industry and will select it as a “career of choice,” rather than haphazardly and opportunistically seeing it as a get-rich-quickly “career of convenience.” Yes, future compensation will be regulated, and while there must be some inequities in this regulation, it will achieve the desired effect of keeping out those who are more short-term-minded than those more responsible and willing to put consumer interests ahead of their own financial gain. As it relates to regulation, we will, in fact, continue to witness an onslaught of new state and federal legislation as a reactive and misguided way to protect consumers. In doing so, we, as an industry, are going to experience an increase in the cost of doing business. And the penalties for not following regulation will be onerous and ugly … even criminal. The mortgage business will be a much more disciplined business moving forward and is going to require significant changes for all those who choose to remain in the industry. To quote one of my favorite books, “All those with ‘listening ears,’ hear what is being said.” And for those who recognize these trends and have prepared themselves for the opportunities that lie ahead, they will look like the lucky ones in the next business cycle. Remember the definition of “luck” is “when preparation met opportunity.” Folks, the times, they are a-changing … and how you approach these changing times will determine your success or failure. Wholesale and correspondent lending will survive, but business is going to be done in a vastly different climate. Recognize and work with the changes and you will prosper. Do you remember the bold procla- 

brokers. Banks have a track record of entering and exiting the market based on a host of variables. Bottom line is that banks, while valuable component of the industry, are not the consistent participants needed to experience a consistent and sustainable housing recovery. What allows independent mortgage bankers to stay consistently involved in the industry is having a healthy Fannie Mae and Freddie Mac. Regrettably, Fannie and Freddie are anything but healthy these days. The issues facing them are complex and are the result of years of mismanagement. Yet, I am encouraged by the dialogue that I’m hearing from a number of U.S. Congressmen and their staff, not because there’s a silver bullet to the problems that Fannie Mae and Freddie Mac face, but because they have come to recognize that Fannie Mae and Freddie Mac are essential to providing much-needed liquidity to the mortgage markets, and as a result, the housing markets. As we face the mid-term elections in November, I predict that we will see massive changes in the complexion of the House and Senate. It is essential that each of us in the industry become proactive in quickly educating the new freshmen elected representatives on the importance of Fannie Mae and Freddie Mac. If you want to stay on top of the issues, I welcome you to listen to my weekly radio program, Lykken on Lending, which is broadcast each Monday at noon Central Time on the Internet. You can listen by either visiting or dialing in to the program by phone at (646) 716-4972. I predict that Fannie Mae and Freddie Mac, or a combination thereof, will return to a place of prominence in our mortgage landscape. I predict that they will not remain in conservatorship beyond the next two years, but I am leaning more towards encouraging our congressmen to keeping it a part of the federal government and avoiding the otherwise tempting alternative of privatization. I also believe that there is a growing and overall recognition that for our nation to have a healthy housing market, it requires that we also have healthy wholesale and correspondent markets. Brokers have always been and always will be the low-cost originators. With new regulations coming into play, a lot of the things that allow the broker market to get out of hand will be somewhat constrained from happening again. In that way, we have learned from history. That said, I am not suggesting that the legislation is coming forth is ideal … far from it. But I don’t know if there has ever been any legis-

The State of the Wholesale Marketplace 2010 It’s doesn’t take a genius to know that the wholesale channel now represents less than the inverse of what it did once control. What remaining players are left have strong business models that are relationship-based, not relying on rate drops and market fluctuations. In an effort to get a handle on how volume has been in the wholesale channel, National Mortgage Professional Magazine polled a group of individuals who really have their fingers on the pulse of the wholesale channel. We start off with Joe Bowerbank, senior vice president, marketing and strategic alliances for Loan-Score Decisioning Systems, a firm that provides decision making software for the most of the top wholesale lenders. We also collected a “state of wholesale” update from a handful of regional wholesale lenders that have a real grasp on their local markets throughout the country.

Joe Bowerbank, Senior Vice President, Marketing and Strategic Alliances Loan-Score Decisioning Systems  Irvine, Calif.

JULY 2010 



Whilst the pundits contend that the wholesale channel could weaken to the point of extinction, what we’ve observed in the marketplace suggests the antithesis of that position. As a mortgage technology provider, LoanScore Decisioning Systems has a lot of wholesale clients that are thriving in this market. Where companies have contracted or closed their doors, opportunity presents itself, and we are seeing lenders capitalize on that. In fact, we have quite a few de novo wholesalers in our stable of clients. What’s more, our wholesale clients are growing by leaps and bounds. We are also watching our customers embark on aggressive hiring sprees for top tier account executives, seeking those highly-sought-after brokers. Wholesale lenders are also investing significant money in broker-facing technologies that help grow the business—a major commitment to the wholesale channel. Clearly, there’s been a lot of regulatory changes and new lending rules for the wholesale world, which caused many mortgage bankers to table growing their wholesale business and to begin concentrating on retail. However, the broker controls that have been put in place are making warehouse lenders and investors feel much more secure about buying brokeroriginated loans. By and large, we’re almost out of the woods, and we’ll see this channel began to grow again.

Joseph Amoroso, National Sales Manager REMN (Real Estate Mortgage Network)  River Edge, N.J. Our industry has been reengineered. Lenders and brokers alike need to accept this, make the required changes in their operations and move on with confidence. The ability for a poorly-run company to succeed in the mortgage business today is long gone. It’s all about quality. Quality loans originated, underwritten and packaged by quality companies. Do it right or don’t do it at all. The opportunity is enormous for brokers and lenders who have made the commitment to play within the new rules the industry has imposed upon us. Bring it on …

Shane O’Dell, Director of Wholesale Production Bay Equity LLC  San Francisco, Calif. In the past few months we have witnessed an increase in activity and a positive outlook within the broker community and I am bullish on the future. This has been driven not only by the current low rate environment but by rate and service disparity between what brokers are able to offer and the normally much higher rates and extremely long service levels delivered by the large institutions. We dealt with a lot of fear in the first six month of the year with the new GFE, Loan officer Licensing and multiple HUD changes. Now that those have settled we are seeing loan officers move back into the broker side of the business. As

product increases we believe this will be a positive for both barrowers and brokers.

Kevin Marconi, Chief Operating Officer United Fidelity Funding  Kansas City, Mo. The Case-Shiller index has indicated that we will see a slower rate of decline in housing values in 2010; with appreciation expected to start starting in the first quarter of 2011. The high inventory of unsold homes still represents a huge potential for downward pressure on home prices in 2010 (due to large foreclosure inventory). A large majority of the purchase business that we are seeing at United Fidelity Funding is distressed home sales and supports these studies. The Mortgage Bankers Association has forecasted a large decrease in refinance activity from 2009 to 2010; 1368 B in 2009 to 529 B in 2010, and an even larger tapering off in 2011 to 374 B. It was also widely believed that once the fed ended their mortgage-backed securities purchase program that interest rates would rise 25 to 50 basis points. This belief, coupled with declining home prices (comparables) and a tightening of lending guidelines due to an increase in government regulation, would logistically make it impossible for the average homeowner to refinance their home. For this reason, I do not foresee a refi boom or even a mini-refi boom because rates haven’t decreased after the Fed pulled out of the MBS purchase program. Instead, I believe more likely, we will experience less shrinkage in the refi segment of production for a short amount of time while rates remain low. There are just too many other factors which would stifle a refi boom of any sort at this time. I looked at a heat map which showed who in the U.S. even qualified for a refinance based on their current rate. Basically, it showed that the two coasts were completely saturated, and only a very small saturation of people could qualify to refi and the Midwest had the highest number of potential refinance candidates still remaining. Yes, obviously this map would have to be redrawn if rates dropped down to 4.5 percent levels and the U.S. would be opened back up and a refi boom would possible. But how likely is that? Rates are being held artificially low right now. How long is that going to last? The MBA forecast of dwindling refi numbers until 2011 is on pace, regardless of current rates. Lastly, the fallout from the passage of S.3217, the Restoring American Financial Stability Act of 2010, will no doubt not help the situation.

Michael Maida, National Sales Director GSF Wholesale  Brookfield, Wis. Over the last two years, wholesale brokers have experienced substantial headwind from both regulatory and market-driven challenges. Within this two-year period, business owners have adjusted to the following regulatory changes affecting workflow and profitability: the Home Valuation Code of Conduct (HVCC), Federal Housing Administration (FHA) appraisal independence, Mortgage Disclosure Improvement Act (MDIA), Good Faith Estimate (GFE) 2010 and most recently, the American Financial Stability Act. Each of these changes impact the velocity in which a loan may close, and in some cases, the quality of appraisal review due to poorly managed appraisal management companies (AMCs). The differences in interpreting the MDIA and Regulation Z by aggregated servicers delays the consummation of loans due to re-disclosure requirements. The GFE 2010 requirements differ slightly among servicers affecting the submission process. Most recently, the American Financial Stability Act of 2010, reconciling with the Wall Street Reform and Consumer Protection Act of 2009 (HR 4173) and the passage of the S.3217 bill with components regulating the compensation of yield-spread premiums and up-front charges to the consumer, will now challenge wholesale brokers from a monetary compensation standpoint.

"Who's Left in Wholesale" Top 30 Lenders ACC Mortgage BankFinancial (commercial) Emigrant Mortgage Company (north east region) Flagstar Wholesale Lending GFS Wholesale ING Mortgage PB Financial REMN (Real Estate Mortgage Network)


Ridgewood Savings Bank (north east region) Terrace Mortgage Company


"Who's Left in Wholesale" Top 30 Lenders was compiled based upon reader feedback and is not based on volume. This list represents just a sampling of the wholesale lenders actively supporting the mortgage broker. If you have other lenders you would like to share with us, please e-mail 

360 Mortgage Group AmTrust Mortgage Banking Bank of America Home Loans Bay Equity Wholesale Lending Direct Mortgage Wholesale Fifth Third Wholesale Mortgage Franklin American Mortgage ICON Residential Lenders MetLife Home Loans Mortgage Services III LLC Nationstar Mortgage NetMore America Paramount Residential Mortgage Group (PRMG) Plaza Home Mortgage Inc. Presidents First Provident Funding Sierra Pacific Mortgage Stearns Lending Inc. United Fidelity Funding Wells Fargo Wholesale Lending

news flash

continued from page 25

points for prime ARM loans to 2.29 percent, 18 basis points for FHA loans to 1.46 percent, and eight basis points for VA loans to 0.89 percent. For subprime fixed loans, the rate decreased nine basis points to 2.64 percent and for subprime ARM loans the rate decreased 39 basis points to 4.32 percent. Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes. The non-seasonally adjusted delinquency rate increased 151 basis points for prime fixed loans, 172 basis points for prime ARM loans, 343 basis points for sub-prime fixed loans, and 244 basis points for subprime ARM loans from the first quarter of 2009. The delinquency rate was 48 basis points lower for FHA loans and 12 basis points for VA loans relative to the same quarter a year ago. The non-seasonally adjusted foreclosure starts rate increased eight basis points for prime fixed loans, 36 basis points for FHA loans and 17 basis points for VA loans compared to the first quarter of 2009. The rate decreased 22 basis points for prime ARM loans, 10 basis points for subprime fixed loans, and 259 basis

points for subprime ARM loans on a year over year basis. About half of the states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Oregon, North Carolina and Maryland. The largest decreases were in Florida, Rhode Island and California. Almost all of the states saw year-over year decreases in subprime ARM foreclosure starts while almost all had increases in prime fixed-rate and FHA foreclosure starts. For more information, visit

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of:

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


JULY 2010 


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Ocwen reports: 83 percent of trial modifications become permanent Ocwen Financial Corporation, a servicer of sub-prime mortgages, has converted the highest percentage of trial loan modifications for distressed homeowners to permanent status, when compared with the other servicers participating in the U.S. Treasury Department’s Home Affordable Modification Program (HAMP). According to a HAMP report on servicer performance through April 2010, 83 percent of Ocwen’s customers who had trial modifications under HAMP now have permanent modifications, meaning their home loan payments have been reduced to a level that should be affordable and sustainable. Borrowers in permanent HAMP reductions are receiving median payment reductions of 36 percent, more than $500 per month, the report said. One other servicer converted 83 percent of eligible borrowers, and the four largest servicers in HAMP, including big banks, have conversion rates below 30 percent. Ocwen attributes its conversion success in part to its established practice of requiring verified documentation from borrowers before putting them in trial modifications. Many servicers have relied simply on stated income for trial modifications. Treasury is now requiring all HAMP servicers, as of June 1, 2010, to require upfront documentation prior to initiating new trial modifications. “We are doing everything we can to help make the HAMP program a success,” said Ronald M. Faris, Ocwen’s president. “Loan modifications are the best solution for helping American families avoid foreclosure, but modifications have to be sustainable, rigorously formulated and effected on a meaningful scale. We’re gratified that the Treasury has recognized that our upfront documentation approach, while process-intensive, benefits homeowners and the program—and that approach is now required of all HAMP servicers.” Since the onset of the mortgage crisis, Ocwen has saved more than 100,000 homes from foreclosure. In doing this, Ocwen has partnered with community groups around the country to reach out to, educate and provide services for customers in distress and at foreclosure risk.

“Our message to homeowners facing difficulty paying their mortgages is to work with their servicer,” said Faris. “Modifications represent a very promising solution. They also require proactive communications with the servicer and a real investment of time. But it’s worth it. We urge patience and persistence.” For more information, visit

Genworth saves nearly $3.4 billion in mortgages from foreclosure Genworth Financial, a mortgage insurer, saved nearly $3.4 billion in mortgages from foreclosure in the 12 months ending March 31, 2010, according to the company’s most recent Foreclosure Prevention Scorecard. Mortgage dollars saved were up more than 81 percent from the same period last year. During the period, Genworth worked with its lender partners and servicers to complete more than 23,000 mortgage workouts nationwide through its Homeowner Assistance Program. The leading states for workouts, in order, included California ($347 million), Florida ($342 million), Arizona ($175 million), Texas ($173 million), Illinois ($167 million), Georgia ($164 million), New York ($152 million), New Jersey ($144 million), North Carolina ($122 million), Maryland ($107 million). “Genworth is totally committed to helping distressed borrowers avoid foreclosure and protect their credit. For the borrowers we able to help our homeowner assistance efforts are a lifeline to get their lives back on track,” said Alan Goldberg, vice president of Homeowner Assistance for Genworth’s U.S. mortgage insurance business. “We are especially happy with the growing success of the Obama Administration’s Home Affordable Modification Program (HAMP). We saw HAMP workouts increase 74 percent increase in the first quarter of 2010 over the previous quarter, amounting to more than $750 million in mortgage dollars saved.” Nationally, eight out of 10 workouts were “cures,” meaning the borrower was able to save their home and get current on their mortgage, with nearly $145,000 saved per borrower. Genworth’s cure rate remains above 80 percent in 35 of 50 states nationwide. Loan modifications (33 percent), were the leading workout type, followed by the HAMP program (24 percent), repayment

plans (19 percent), short sales (18 percent), and Genworth’s Homesaver Advance program (four percent). Among the top 10 states, California and Arizona saw triple digit increases in workouts. Phoenix was the leading city for mortgage dollars saved ($51 million), followed by Chicago ($40 million), Miami ($31 million), Houston ($22 million) and Charlotte ($19 million). For more information, visit

type of service to the mid-size mortgage banking community,” said Richard Dubnoff, chief executive officer of AFR. “The AFR Mortgage Correspondent Lending Division will be a trusted source for the secondary market.” AFR will be one of the few secondary investors in the country to purchase FHAinsured loans on manufactured homes. For more information, visit

Kislak re-enters the mortgage marketplace

Nationwide Home Mortgage announces merger with Apex Home Loans

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 JULY 2010

AmericanFinancial Resources Inc. (AFR Mortgage) has announced the launch of its Federal Housing Administration (FHA) correspondent lending division that will purchase closed loans from selected FHA direct endorsed lenders. “There is a real need to provide this

continued on page 34


AFR Mortgage launches FHA correspondent division

Apex Home Loans Inc., a company founded in 1998 by Eric Gates and Craig Strent and head-

“Two plus two equals five in this case and the solid foundation we are building will provide us the opportunity to grow the new entity into the best independent mortgage banking operation in the region,” said Parsons, who co-founded Nationwide Home Mortgage and will serve as chairman of the new company. “The rapidly evolving regulatory environment favors the model of the independent mortgage banker, and allows us to continue to deliver the competitive rates and exceptional service levels that our discerning customers demand and deserve,” said Strent. For more information, visit 

The Kislak Organization has announced the opening of two new divisions focused on residential consumer mortgages and providing back-office mortgage services to community banks and other lenders. The company will be re-entering the residential mortgage market, initially, with store-front offices across the state of Florida and the broader South East region of the United States. Kislak entities will simultaneously launch two offerings; J.I. Kislak Mortgage LLC, a direct lender and Kislak Lending Solutions LLC (KLS), a wholly-owned subsidiary of J.I. Kislak Mortgage LLC, which already provides turnkey loan fulfillment services to Kislak’s lending activities and other customers including builder-owned mortgage firms and community banks. Kislak Mortgage will focus initially on retail loan originations in the Southeast United States, while providing “private label” wholesale lending services to a very select number of mortgage lending businesses and end-to-end loan fulfillment services to community banks. Kislak Mortgage is a joint initiative with Thomas Meyer, a long-time Kislak associate and founder of HomeBuilders Financial Network, a pioneering mortgage management firm which Meyer sold to Fidelity National Financial in 2002. “We believe that there is significant opportunity for a well-capitalized, wellmanaged and customer-driven mortgage lender in today’s market. Consumers still need access to capital, still need smart lenders who can help them buy the homes of their dreams, and Kislak will once again be that company,” said Meyer, chief executive officer of Kislak Mortgage. Before selling its multibillion dollar residential mortgage servicing portfolio in 1996, Kislak was one of the nation’s largest privately held mortgage bankers, originating and servicing loans nationwide. For more information, visit

quartered in Bethesda, Md., is merging its operations with Nationwide Home Mortgage Inc., a Rockville, Md.-based company founded in 1996 by Stewart Zemil and Michael Parsons. Additionally, the two companies, which both operate as mortgage brokers, are making a major transition in their business model as they convert to mortgage bankers. The merged companies will operate under the name Apex Home Loans Inc. and have relocated into new space in Rockville, Md., with a sales and support staff of about 30 mortgage professionals. All four founders of the two entities will remain with the new company and each bring a specialized set of skills that they believe will make the whole of the new company greater than the sum of its parts.

heard on the street

continued from page 33

Quicken Loans launches new Mortgage Services Division

JULY 2010 



Quicken Loans has announced the formation of Quicken Loans Mortgage Services (QLMS), a new division servicing the home financing needs of community banks and credit unions across the country. “Quicken Loans Mortgage Services provides a very exciting opportunity for Quicken Loans, as well as for the thousands of small-to-midsize financial institutions who continually seek to improve their offerings to their clients,” said Bill Emerson, chief executive officer of Quicken Loans. “While there are a handful of other lenders who provide a similar service, none are able to offer the level of client service or mortgage technology platform that has made Quicken Loans the nation’s largest online lender for the past six years.” Through Quicken Loans Mortgage Services, partner financial institutions are able to meet with their existing clients, investigate their current situation and goals, and then begin the mortgage application. The bank or credit union remains the point-ofcontact for the client, while QLMS man-

ages the work necessary to complete the loan. The client will then sign their loan closing documents in their hometown bank or credit union. Banks partnering with Quicken Loans Mortgage Services will be able to offer a wide variety of mortgage programs, including conventional (Fannie Mae and Freddie Mac), Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and Fannie Mae HomePath mortgages. “Many banks and credit unions understand the incredible value in offering a wide variety of mortgage products and options to their customers,” said Tod Highfield, vice president of Quicken Loans Mortgage Services. “With QLMS, these financial institutions will be able to increase their offerings, add to their revenue, and partner with a company with a reputation for closing loans quickly and for providing unparalleled client service.” For more information, visit

Mortgage Services III acquires Complete Mortgage Inc. Mortgage Services III LLC (MSI) has announced the expansion of its home loan division into the Greater Milwaukee area with the acqui-

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sition of Complete Mortgage Inc. of Sussex, Wis. The newly acquired team will be located in Waukesha, Wis. The Waukesha office will focus on home purchases as well as refinancing current mortgages using conventional, Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and USDA programs. “I am extremely pleased that John Scaffidi and his staff have joined the MSI team,” said Mark Young, president and chief executive officer of Mortgage Services III LLC. “Complete Mortgage has been a valued wholesale lending partner for years and will be a valued asset to the Mortgage Services home loan team.” The national headquarters of Mortgage Services III LLC is located in Bloomington, Ill. MSI also has additional sales and operations platforms in Oakbrook Terrace, Ill.; Urbandale, Iowa; Warrenville, Ill.; St. Charles, Ill. and two downtown Chicago locations. For more information, visit

Valligent partners with Kirchmeyer & Associates/Real Info for valuation offerings Valligent, a provider of collateral valuation and risk management solutions, and Kirchmeyer & Associates/Real Info Inc., a national appraisal, database and real estate appraisal consulting company, announced that they have formed an alliance to provide lenders

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and investors with access to a vast realm of valuation products and services, from automated valuation models to full-scale appraisals and consulting services. The partnership is in response to customers’ growing needs for a wider range of valuation products and services, with the rise in requirements such as the Home Valuation Code of Conduct (HVCC), Fannie Mae’s new guidelines, as well as Fannie Mae’s new electronic appraisal delivery standards. Products and services available from Valligent under the partnership include the company’s proprietary suite of DRiVE collateral valuation solutions, as well as automated valuation model (AVM) reports, traditional reviews, and its weighted quantitative scoring mechanism (AQS) database used to evaluate appraisers and identify substandard and fraudulent practitioners. Kirchmeyer & Associates will provide complete and limited appraisals, construction inspections, field reviews, desktop reviews, and other services. Its partner firm, Real Info, Inc., delivers automated property valuations and uses proprietary Internet delivery technology to provide searchable real estate data on over 100 million parcels across the United States through its realAccess subscription service. “This partnership helps both Kirchmeyer & Associates/Real Info and Valligent round out their product offerings for their clients and delivers a total valuation solution for lenders who are concerned about cost-effective valua-

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tions that are compliant with the rising number of industry regulations and escalating quality expectations,” said Jim Kirchmeyer, chief executive officer of Kirchmeyer & Associates/Real Info. “Whether lenders need valuations for loan originations on the front end, or quality control or foreclosure valuations on the back end, both companies now provide the full spectrum of valuation products, from AVMs to desktop and hybrid valuations to traditional appraisal reports” For more information, visit or

Equifax partners with First American CoreLogic MBS market solution


Total Mortgage Services continues its national expansion

Total Mortgage Services LLC has announced that it received its state of Pennsylvania Mortgage Lender License continued on page 37



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 JULY 2010

Radian Guaranty Inc., the private mortgage insurance (MI) subsidiary of


MI, borrowers pay a one-time lump sum payment, or, if they do not have sufficient funds at closing, Radian’s single-financed premium allows them to finance their MI payment into the loan amount. For more information, visit


Radian announces new “Radian is Ready” marketing campaign


and promote homeownership for low downpayment borrowers,” said Bryce. “Not only do we have the capacity to write more business, but we also believe we have the guidelines, products and financial stability to help lenders compete and win business in the midst of a recovering economy.” Radian is working to educate lenders on the competitive advantages of providing borrowers with flexible MI payment options over the FHA’s one product approach. Radian’s line of products, including single (or singlefinanced) premium MI, is an especially appealing alternative to the FHA’s high upfront premiums by offering lower monthly payments and minimal funds needed at closing. With single premium 

Equifax Inc. has introduced a new data solution that statistically matches more than 90 percent of an investor’s mortgage loan data to anonymous borrower credit information. Equifax ABS Credit Risk Insight Direct was developed with First American CoreLogic, a member of The First American Corporation family of companies. With this latest Equifax solution, investors can gain access to the most up-to-date borrower credit scores and credit data for non-agency mortgagebacked securities (MBS), as well as First American CoreLogic’s LoanPerformance loan-level securities data. ABS Credit Risk Insight Direct allows investors to improve model accuracy, differentiate between healthy and unhealthy deals and enhance deal surveillance. The solution provides leading indicators of loan performance, such as updated credit scores, performance on past mortgages, second lien balances, delinquencies, monthly payments and credit inquiries across all borrower accounts. With access to up-to-date credit scores and extensive borrower credit data for nearly every mortgage-backed security, investors can better predict loan delinquency, default and prepayment. “The prevalence of hidden risks, such as unreported second lien balances and loans misreported as owner/occupied at origination, underscore the need for solutions to help investors accurately value non-agency mortgage-backed securities,” said Steve Albert, vice president of Equifax Capital Markets. “Through our relationship with First American CoreLogic, we have developed a transformative solution that gives mortgage investors greater visibility into borrower credit health.” ABS Credit Risk Insight Direct is part of Equifax’s suite of Capital Markets solutions that empowers lenders and investors to make buy/sell decisions with up-to-date borrower and property-value information. For more information, visit, or

Radian Group Inc., has announced the launch of a broad-spectrum marketing campaign, “Radian is Ready.” Designed with mortgage lenders in mind, the new campaign highlights Radian’s readiness for writing new MI business, as well as the company’s position as a compelling alternative to Federal Housing Administration (FHA). The campaign reaches out to lenders through a custom Web site at, which features the president of Radian’s mortgage insurance business, Teresa Bryce, as well as sample scenarios and a video featuring the benefits of private versus governmentfunded MI. “Now more than ever, Radian is committed to being the partner our lenders need to originate profitable business

JULY 2010 



Mortgage Pricing Systems announces pricing integration with Calyx Software

Coester Appraisal Group unveils ValueSafe pricing program

Mortgage Pricing Systems (MPS), developers of pricing solutions for mortgage lenders, has announced that LEAP!, MPS’s flagship mortgage product and pricing system, has been integrated into Calyx Software’s Point software. Calyx Software is a provider of loan marketing, originating and processing software. With this integration, MPS can provide instantaneous loan pricing to Point users. “The integration between Calyx Point and LEAP! is bidirectional, which means that information is shared between the two systems,” said John Coppa, a managing partner at MPS. “Changes in Point affect the calculations in LEAP! and adjustments to qualifications in LEAP! modify the loan in Calyx. What’s more, the LEAP! administrator has complete control over what data is returned to Point. We’re the only system on the market that provides that level of configuration.” By clicking a button within Calyx Point, the user is transported directly to the LEAP! interface. The user is provided with qualified loan products, rates, and prices as well as on-demand sorting and filtering. The rate and pricing information is automatically updated in Calyx Point. “Calyx is excited about the integration of MPS into the Calyx Network,” said Dennis Boggs, Calyx Software’s senior vice president of business development. “MPS’s technology multiples our capabilities to provide Point users with more options.” For more information, visit or

Coester Appraisal Group, a nationwide appraisal management company (AMC), has launched ValueSafe, a new pricing program that enables residential mortgage lenders to “piggyback” a full appraisal onto a previously ordered desk appraisal, with all original fees paid being credited toward the full appraisal price. ValueSafe, which is currently available to Coester Appraisal Group’s customers, offers lenders and servicers a costprotected way to take the first step in determining whether a full appraisal will be necessary on a given transaction. “Many lenders and servicers recognize desktop appraisals as a reliable, cost-effective alternative to a full traditional appraisal,” said Brian Coester, chief executive officer of Coester Appraisal Group. “The issue arises when a full appraisal is needed on that same subject property, after a desktop appraisal has been completed. Most AMCs would charge the client for the full appraisal on top of fees they’ve already paid, which seems like they’re penalizing their customers for being diligent in their efforts to transact quality loans. At Coester, we believe that any effort to ensure quality should be supported, not undermined. That’s why we created the ValueSafe pricing structure.” Factors like a tenuous housing market, falling property values and heightened scrutiny of whole loan pools and continued on page 39

Fannie Mae: New Appraisal Guidelines On June 30, 2010, Fannie Mae issued additional guidance on appraisal-related policies, along with a number of other miscellaneous changes to its Selling Guide: Fannie Mae Single Family.1 Fannie’s new policy requirements and clarifications concerning existing lender requirements are being added to a number of appraisal sections of the Selling Guide, with respect to post-purchase reviews of mortgage loan files.

Policies and clarifications  Inclusion of interior photographs in the appraisal report  Lender changes to the appraised value and guidance on addressing appraisal deficiencies  Appraiser selection criteria  Sources of comparable market data  Selection of comparable sales  Communication under the Home Valuation Code of Conduct (HVCC)  Seller concessions  Treatment of personal property  Market Conditions Addendum to the Appraisal Report (Form 1004MC)

Inclusion of interior photographs in the appraisal report  B4-1.2-06: Appraisal Forms and Report Exhibits2 Effective: All applications dated on/after Sept. 1, 2010 Fannie Mae is requiring that interior photographs of specific rooms and areas be included in appraisal reports whenever an interior inspection is performed.

Lender changes to the appraised value and guidance on addressing appraisal deficiencies  B4-1.4-21: Appraisal Report Review: Valuation Analysis and Final Reconciliation Effective: All applications dated on/after Sept. 1, 2010 Previously, Fannie Mae did not provide requirements concerning lenders making changes to the opinion of market value reflected in the appraisal report. Fannie Mae has updated its appraisal policies to address the practice of lenders changing the appraiser’s opinion of market value and also to provide specific guidance when an appraisal is considered deficient.

Appraiser selection criteria

Mortgage Brokers and Loan Originators

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 B4-1.1-03, Appraiser Selection Effective: June 30, 2010 The use of an appraiser who has the appropriate knowledge of specific geographical markets, access to the appropriate data sources, and experience in appraising specific property types within the relevant geographic markets ensures that valuations are accurate and that appraisal practices are appropriate. Fannie Mae requires that lenders only use appraisers who have the appropriate knowledge and experience, and does not allow the flexibility of the USPAP (Uniform Standards of Professional Appraisal Practice), which permits an appraiser who does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment. The Selling Guide has been updatcontinued on page 38

heard on the street

continued from page 35

from the Pennsylvania Department of Banking and can now originate residential mortgage loans throughout Pennsylvania. “Total Mortgage is very excited about opening for business in Pennsylvania and we look forward to working with high quality borrowers throughout the state,� said John Walsh, president and founder of Total Mortgage. “We offer significant value to our clients every day by combining low rates and great service. In addition, we have a team of very experienced and knowledgeable loan officers, traits that are required in this rapidly-evolving lending environment.� Total Mortgage is coming off one of the most successful years in its history. Despite the a decline in originations in the overall U.S. marketplace, Total Mortgage is projecting 2010 origination volume to increase to over $1 billion, compared to about $700 million in 2009. “Our customer-centric philosophy of low rates and responsible lending is being very well received in the marketplace,� said John Walsh. “While so many in our industry focused on lowquality mortgage loans, we maintained sound underwriting standards and continued to loan only to those with the ability to make their mortgage payments.� Total Mortgage is currently doing business in 21 states, with plans under development to originate loans in 45 states by the end of 2011. For more information, visit

ter in the future, it was clear that we wanted to be part of this group. Because so much of the work ALFN members do depends upon solid collateral valuations, our expertise should also serve this organization well.� For more information, visit

Mortgage Professionals to Watch  Thomas R. Sirico has joined Mortgage Concepts as vice president of business development.

Thomas R. Sirico

 The Mortgage Bankers Association (MBA) has announced the hiring of Bill Killmer as senior vice president of legislative and political affairs.  Luke Hayden has been named president of PHH Mortgage.  Paramount Residential Mortgage Group (PRMG) has hired Paul Lucido as national marketing director.

Paul Lucido

 Mike McRoberts has been named head of multifamily production and sales at Freddie Mac.  LoanSifter Inc. has announced the addition of Rob Withers as vice president of product development.  Radian Guaranty, the mortgage continued on page 38

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Equi-Trax Asset Solutions LP, a national collateral valuation provider offering a line of hybrid valuation products, has joined the American Legal & Financial Network (ALFN). The ALFN is a national network of legal and residential mortgage banking professionals and leads the industry as a provider of strategic and timely education. The organization’s mission is to serve the Legal and Residential Mortgage Banking Professional through leadership, education and professional development. It is the largest national organization of its kind. The ALFN was one of three groups that hosted the first National Summit Meeting of an initiative called the Coalition for Mortgage Industry Solutions (CMIS). “We take our trade group affiliations very seriously and consider each organization carefully before joining,� said Guy Taylor, chief executive officer of Equi-Trax Asset Solutions LP. “After investigating the work the members of the ALFN have accomplished and their ambitions for making the industry bet- 

Equi-Trax joins up with American Legal & Financial Network

regulatory compliance outlook

continued from page 36

ed to state that appraisers who lack the requisite knowledge, experience, and access to appropriate data must not be utilized.  Revisions have been made to clarify that the lender is responsible for the appraiser’s qualifications and quality of the work, and to provide guidance for determining an appraiser’s qualifications.  The Selling Guide has also been updated with regard to the lender’s use of thirdparty vendors, such as appraisal management companies (AMC), to clarify that:  Neither the HVCC nor Fannie Mae requires the use of a third-party vendor;  Lenders are ultimately responsible for representations and warranties related to the value, condition and marketability of the subject property; and  Lenders must hold the AMC responsible for complying with Fannie Mae’s requirements.

Selection and use of comparable sales  B4-1.4-16: Appraisal Report Review: Sales Comparison Approach Effective: June 30, 2010

Data and verification sources Fannie Mae’s appraisal forms require that the appraiser list both data sources and verification sources with respect to comparable sales selected by the appraiser. This subject has been updated to provide examples of acceptable data and verification sources.

Use of foreclosures, short sales and builder sales as comparable properties  The appraiser is responsible for determining which comparables are most appropriate for the assignment. Fannie Mae updated the guidelines required to be implemented whenever an appraiser chooses to use either a foreclosure sale or a short sale as a comparable property.  Additional guidance is provided concerning the acceptability for an appraiser to view the HUD-1 for a new construction property, in order to verify a recent sale that is not yet available through other data sources. 38

can then lead to an inflated market value. Attention should be given to unusual sales or financing concessions to ensure that they are properly accounted for in the appraisal report. Appraisals must reflect an opinion of market value after adjustments for any special or creative financing or sales concessions have been made, such as interest rate buydowns or payment of condo or homeowners’ association fees.

Treatment of personal property Personal property may not be included as additional security for any mortgage on a one-unit property (unless otherwise specified by Fannie Mae). Personal property is permitted as part of the security for a loan on a two- to-four-unit property to the extent it is pledged by the 1-4 Family Rider (i.e., Form 3170). Whether an item is real or personal property is generally determined by the law of the jurisdiction where the property is located. A professional appraiser who has the knowledge, experience, and geographical competence to complete the appraisal assignment must also possess the expertise to identify personal property items in the appraisal.

Market conditions addendum to the appraisal report (Form 1004MC) In order to provide the most accurate depiction of the “Months of Housing Supply” as of the effective date of the appraisal, the “Total # of Comparable Active Listings” should be based on a specific point in time. For example, when completing the “Current–3 Months” column for “Total # of Comparable Active Listings,” the number should reflect the listings on the most recent date in the three-month period (which is also the effective date of the appraisal), and not the cumulative number of listings for the entire three-month time period. If data is available for the previous time periods, such as “Prior 4-6 Months” and “Prior 7-12 Months,” the “Total # of Comparable Active Listings” should be based on the most recent day in each of those time periods. For example, in the “Prior 4-6 Months” column, the “Total # of Comparable Active Listings” should reflect the listings on the last (most recent) day in that time period. Likewise, in the “Prior 712 Months,” the “Total # of Comparable Active Listings” should reflect the listings on the last (most recent) day in that time period. 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

Miscellaneous appraisal-related guidance


Effective: The following clarifications are effective on June 30, 2010, except for the calculations related to Form 1004MC; however, appraisers will be required to use the specified calculations for all mortgage loan applications dated on and after Sept. 1, 2010.

1—Selling Guide Updates and Additional Guidance on Appraisal-Related Policies, Announcement SEL-2010-09 June 30, 2010. 2—All citations refer to the updated Selling Guide, June 30, 2010.

JULY 2010 


Communication under the HVCC Fannie Mae has determined that appropriate communication under the HVCC is permitted, and that Section 1-C of the HVCC does not prohibit any employee of the lender or an authorized third-party from requesting that an appraiser provide additional information or explanation about the basis for a valuation or from correcting objective factual errors in an appraisal report. Section III-B of the HVCC, however, does prohibit anyone in loan production, or who is compensated on a commission basis upon the successful completion of a loan, or who reports ultimately to any officer of the lender not independent of the loan production staff and process, from having any substantive communication with an appraiser or AMC relating to or having an impact on valuation.

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Seller concessions Excessive sales concessions can artificially inflate the sales price of a property, which

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insurance subsidiary of Radian Group Inc., welcomes Jeffrey J. Sommers as senior account manager. DocuTech Corporation has named Tony Inskeep and Diane Newland as vice presidents of major accounts. Prudential Mortgage Capital has named John DeWitt and Marty Fayer managing directors of Prudential’s Freddie Mac Program Plus program. Kevin Quinn has been named vice president of business development and client relations for Matrix Servicing LLC. MRG Document Technologies has announced the addition of Kathleen Mantych as senior marketing director. LoanCare, a division of FNF Servicing Inc., has named Raymond F. Morris Jr. national sales executive. C. Donald Babers has been named acting southwest regional director for the U.S. Department of Housing & Urban Development (HUD). Former Fidelity Southern Corporation Executive Kathy Ireland has joined mortgage due diligence and risk man-

agement firm Allonhill as director of securitizations.  Scottsdale, Ariz.-based Loan Resolution Corporation has named Michelle Carothers as vice president of foreclosure alternatives.

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.

new to market

Interthinx releases ValueGUARD risk assessment tool

continued from page 36

portfolios have led to an increase in lenders’ and servicers’ use of alternative valuation methods, which save time and costs when a full appraisal is not yet necessary. Like traditional full appraisals, desk appraisals are completed by a local licensed or certified appraiser and are based on the same logic as a traditional full appraisal. A traditional appraisal, however, includes a full interior and exterior inspection of the property, while a desk appraisal does not. “ValueSafe has been the big rave among our lender beta testers—they couldn’t imagine getting a quick accurate valuation by a local certified appraiser and not having to worry about paying double if they needed a full appraisal,” said Coester. “At Coester, our focus is on bringing value to our clients and the industry. We’re fortunate to have a team of very talented professionals, so thinking outside the box is completely natural for us. While other AMCs are still struggling with the status quo, we’ll continue to introduce innovative solutions. ValueSafe is a prime example of a solution that benefits the lender, borrower and appraisal industry. We’re excited to be helping to rebuild trust for appraisal management companies among the lending community.” For more information, visit

Credit Plus releases new suite conforming with Fannie Mae’s Loan Quality Initiative Credit Plus Inc. has announced that it is offering a suite of products to help lenders comply with Fannie Mae’s Loan Quality Initiative (LQI) suggestions and requirements. As of June 1, mortgage lenders must have processes in place to meet Fannie Mae’s LQI Lender Letter LL-2010-03. Fannie Mae will implement additional LQI enhancements throughout the year. It has developed these suggestions and requirements with a focus on capturing and verifying critical loan data earlier in the process to reduce repurchase requests to lenders, which have increased dramatically in the past few years. “Our focus at Credit Plus remains on developing tools that make the mortgage process easier for lenders,” said Greg Holmes, national director of sales and marketing for Credit Plus. “New rules and regulations are constantly being put into place. We work diligently to help keep lenders compliant. Our suite of products assists lenders with pre-closing and post-closing initiatives.” For more information, visit

Interthinx has announced the release of ValueGUARD, an automated collateral risk solution that revolutionizes the way property, neighborhood and market area risk can be assessed by lenders and investors. ValueGUARD identifies potential risk associated with the current value of a property and the potential risk of future value deterioration. “Based on history and a meltdown none of us will forget, it’s important for lenders and investors to re-evaluate current collateral risk mitigation processes and embrace innovation,” said Mark Chapin, chief valuation officer for Interthinx. “ValueGUARD considers risk associated with the subject, neighborhood, and market—not just a single value. Only ValueGUARD incorporates MLS data, offers retrospective capabilities, and provides a transparent scoring model. With these exciting developments, the industry no longer needs to accept antiquated collateral risk tools.” The collateral risk solution provides revolutionary analytics within a layout optimized for ease of use. Along with the option of integrating iAVM Plus, a market AVM (automated valuation model), an “alert-based and transparent scoring” streamlines collateral evaluation by identifying high-risk properties and guiding further under-

writing processes. The solution also enables servicers to gain a better understanding of the valuation risk associated with their portfolios. “ValueGUARD transforms the collateral risk market,” said Kevin Coop, president of Interthinx. “We are expanding our expertise in collateral risk mitigation by offering a critical solution with valuable data and intelligent design. I look forward to the market’s reception, as early feedback indicates the product addresses a growing need for more accurate collateral risk analysis using both historical and current market conditions.” For more information, visit

Informative Research announces solution to meet Fannie Mae’s LQI requirements Informative Research has developed a solution to meet Fannie Mae’s June 1 Loan Quality Initiative (LQI) requirements, designed to “promote loan delivery data that is complete, accurate and fully reflective of the terms of the mortgage” including the requirement to evaluate all debts of the borrower up to the closing of the loan, and to review and evaluate the “inquiries” section of the credit report. Informative Research’s “PreCloseCredit” continued on page 40


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offers a comparison summary report that shows changes from the initial credit report. The summary specifically addresses all of FNMA’s LQI ‘undisclosed liability’ requirements including: changes in balances and payments, any new credit activity, inquiry tracking and recent changes in credit quality, each with the appropriate detail. Additionally, quick verification links are included to streamline the ordering of borrower and/or creditor verifications (for any or all inquiries) to identify whether any inquiries resulted in new open credit accounts. Informative Research’s “PreCloseCredit” is also unique in providing important client setting options – optional credit scores, format or full attached report—to best match the lender’s specific procedures regarding LQI. “There are a host of solutions out there that appear to address one or two parts of the new Fannie Mae LQI requirements,” said Brad Kelso, executive vice president, sales and marketing for Informative Research. “Informative Research offers solutions to all of the requirements. In addition to undisclosed liabilities and inquiry requirements, Informative Research also offers borrower identity verification, validation of social security numbers, and validation of qualified parties to the transaction as specified in the LQI.” For more information, visit

Bank of America begins principal reduction enhancement under Obama’s NHRP Bank of America has begun implementation of an earned principal forgiveness approach to modifying certain loans eligible for its National Homeownership Retention Program (NHRP). The plan is being offered to homeowners who owe considerably more on their loan than the current value of their home, when the loan is being considered for modification through the government’s Home Affordable Modification Program (HAMP). Among several enhancements to the NHRP announced in late March, the bank unveiled their approach to employing a principal reduction as the first step toward reaching HAMP’s affordable payment target of 31 percent of household income when modifying certain NHRP-eligible mortgages—ahead of lowering the interest rate and extending the term. The reduced principal balance will be a noninterest bearing forbearance amount, and the homeowner may earn forgiveness of the forborne amount by remaining in good standing on payments. The NHRP enhancement was implemented on schedule in mid-May with


continued from page 39

Experian provides new level of transparency for non-agency MBS


the mailing of the first letters notifying customers who may qualify for the new program. Customers are required to submit required documentation of financial information for consideration in determining eligibility and underwriting the modification plan. Upon completion of these review processes, the first trial modification offers under the earned principal forgiveness program may be ready for mailing in the second half of June. NHRP-eligible loans include subprime, pay-option ARM and primequality two-year hybrid ARM loans originated by Countrywide on or prior to Jan. 1, 2009, if the amount of principal owed exceeds the current property value by at least 20 percent and the loan is 60 days or more past due. “Our tests have shown that many homeowners who are severely underwater on their mortgages will respond positively to a modification offer that includes reduction of their principal balance, increasing the rates of acceptance of HAMP trial modification offers, conversion to permanent modifications and longterm success of the homeowner,” said Jack Schakett, credit loss mitigation executive for Bank of America Home Loans. In the first round of outreach, letters outlining the program and requesting financial information are being sent to certain NHRP-eligible homeowners who are more than 120 days overdue on payments. “We met our goal to begin offering this program in mid-May, providing opportunities for customers who are in the most imminent danger of foreclosure to begin trial modifications by the end of June,” said Schakett. “At the same time, we are aligning the NHRP enhancement with some guidelines we expect to be included in the government’s program when it is rolled out in the coming months.” As part of the alignment, Bank of America may offer earned principal forgiveness over a five-year period, as it announced in March, or over the three-year timeframe that Treasury intends to include in its HAMP principal forgiveness design, depending on individual borrower situations. For more information, visit

email: visit:

Experian has announced the launch of CreditHorizons for Securities, a datafeed product that provides a link to understanding the true creditworthiness of the underlying borrowers in each mortgage deal. CreditHorizons for Securities consists of anonymized U.S. consumer credit profiles that have been matched to the private-label securitized mortgage deals in the industryleading loan-level database from First American CoreLogic/Loan Performance. “Monthly trustee and servicer data sets provide a limited foundation for predicting payment patterns,” said Ethan Klemperer, general manager of Experian Capital Markets. “To compete profitably in today’s market, investors

need upgraded valuation methods with increased transparency and predictive power. We’re delighted to work with First American CoreLogic to launch CreditHorizons for Securities, providing the critical behavioral data needed to determine the true value and future payment trend of clients’ securities.” Experian’s CreditHorizons for Securities offers a predefined set of more than 50 anonymized consumer credit data variables that have been carefully evaluated and selected for their predictive ability by Experian’s team of credit experts. Maintaining a relatively small number of variables ensures that the product is userfriendly and easy to implement. “We’re pleased to join Experian in bringing CreditHorizons for Securities to the marketplace,” said George Livermore, president, data and analytics segment for The First American Corporation. “By augmenting existing modeling with consumer credit information, investors obtain a holistic view of the underlying collateral and can better predict delinquency and default probabilities for their residential mortgage–backed securities portfolios.” For more information, visit

Stewart Title announces LPS SoftPro upgrade for title insurance agencies Stewart Title Guaranty Company, whollyowned subsidiary of Stewart Information Services Corporation, has announced an integrated application for LPS SoftPro for Stewart’s network of title insurance agencies. With the new integration of Stewart Agency Technology and SoftPro, a real estate closing and title insurance software, it’s easier than ever for title agencies using SoftPro to do business with Stewart. “At Stewart, we strive to provide our agencies with the products and services they need to improve their operations and make it easier for them to do business,” said George Houghton, executive vice president, agency services group for Stewart Title Guaranty Company. “If title agencies use SoftPro, they can now enjoy direct access to Stewart policies previously accessible only through STEPS, Stewart Title Electronic Policy System, allowing new levels of productivity when producing title policies. The Stewart Agency Technology enables SoftPro users to increase efficiency, automate various parts of workflow and better manage forms.” For more information, visit

Generation Mortgage offering new jumbo reverse loan product Generation Mortgage Company has announced the availability of a new jumbo reverse mortgage loan for homes valued up to $6 million. Currently, the only fixed-rate jumbo reverse loan offered industry-wide for higher-valued homes, Generation Mortgage’s Generation Plus loan product caters to a presently underserved consumer segment, seniors owning homes appraising higher than $1 million.

combined result of protecting lenders from losses caused by faulty appraisals and covering those who buy their loans, too. They provide new levels of confidence in mortgages to the capital markets system, and will help bring greater liquidity to the industry.� For more information, visit

PropertyInfo launches SureClose iPhone app PropertyInfo Corporation, a Stewart company, has announced the launch of an iPhone application for the SureClose online transaction management system. With the SureClose iPhone app, customers can view updated transaction information, documents, tasks and con-

tacts within the transaction to enhance and provide transparency in the closing process. “We are pleased to offer the iPhone application for our customers,� said Tom Groom, chief technology officer, senior vice president of the real estate segment of PropertyInfo Corporation. “A growing number of our customers are conducting business online and remotely. With our iPhone application, real estate agents and brokers can truly conduct their business anywhere, at any time—whenever and wherever their customers need them to.� SureClose customers can access all their transaction information through the iPhone mobile device, including: A list of all current files and documents; a summary of each transaction; the ability to view and share documents via e-mail; check

task status to stay up-to-date; and keep in touch with the contacts in each file. For more information, visit

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.

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





“Many owners of higher-valued homes find themselves in the position of being house rich and cash poor,� said Jeff Lewis, chairman of Generation Mortgage. “With our Plus loan, these owners can receive the liquidity they require without having to sell their home or other assets. And, with an improving real estate market, this offering becomes even more attractive.� For the Generation Plus reverse mortgage loan product, the minimum appraised home value eligible is $500,000 while the maximum value is $6 million. Available in most states throughout Generation Mortgage’s national footprint, the jumbo Generation Plus loan is offered at a fixed rate and may be obtained on primary residential homes, including Federal Housing Administration (FHA)-approved townhomes. Payout is completed at closing and may be used for any purpose, including covering medical expenses or making home repairs or improvements. “Generation Mortgage is in the business of helping clients to enjoy their homes for as long as possible,� said Lewis. “We will continue to introduce innovative products like Generation Plus to fulfill that goal for the full spectrum of the senior community.� For more information, visit




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Solidifi U.S. has announced the Solidifi CoverageMAX and Solidifi CoveragePLUS insurance programs to provide mortgage lenders and their investors assurances of appraisal quality and value accuracy. The new programs are designed to address weaknesses in previous appraisal insurance coverage concepts that have been tried without significant success in protecting lenders and those who buy their loans. Working with A.M. Best â&#x20AC;&#x2DC;Aâ&#x20AC;&#x2122; (Excellent) rated insurer, Companion Specialty Insurance Group and Wells Fargo Special Risks Inc., Solidifi has created two flexible representation and warranty programs that address the risk mitigation concerns of mortgage lenders and their investors. The process starts with the highest possible quality appraisal, enabled by Solidifiâ&#x20AC;&#x2122;s renowned approach of paying full fees to its appraisers and attracting the most qualified professionals to perform the valuations. Then, a coverage level is selected based on the needs of the lender and its investors: Solidifi CoverageMAX protects lenders against loss incurred on foreclosures and most repurchase requests caused by valuation inaccuracies, and is available for virtually all loan types at various levels of loan-to-value (LTV), credit score and loan amount. Solidifi CoveragePLUS protects lenders against losses incurred on repurchases and foreclosures similarly, but with some limitations and lower premiums. â&#x20AC;&#x153;When you look at the other appraisal insurance concepts out there, you realize that they leave investors with little or no coverage at all,â&#x20AC;? said Griff Straw, president of Solidifi U.S. â&#x20AC;&#x153;These highly affordable programs have the

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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.

Loan Incentives

Cruise4Two-Loan Incentives 1-866-541-8077 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!!

Events 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.

Loan Management Systems Xetus ....................................................877-GO-XETUS

NYC Real Estate Expo LLC Anthony Kazazis - Director

XetusOne is a powerful, easy-to-use loan management system that streamlines loan processing. Our affordable SaaS applications are lenders #1 choice for origination, subordination & modification. •

646.210.2545 • 914.763.8008 “The Expo for Real Estate Professionals" For ongoing Networking Events throughout the year please visit

Inlanta Mortgage W229 N1433 Westwood Drive, Suite 103 Waukesha, WI 53186 • 262-513-9853

Hard Money/Private Lending Calyx Software 800-362-2599

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.

Loan Origination Systems

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.

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



Comergence Compliance Monitoring, LLC 630 The City Drive South, Suite 205 • Orange, CA 92868 Office: 714-740-9000

Flagstar Wholesale Lending (866) 945-9872

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.

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.

Title Intracoastal Abstract Co. Inc.................516-358-0505 Privately owned & operated full service title insurance agency in NY, NJ and FL, with affiliates throughout the US & Canada. Escrow Agent in Florida.




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.

Register Today! Call 888-409-9770 Ext. 4 to Register Your Company



Sign-on weekly at 43

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

 JULY 2010

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



Exhibitors and Sponsors

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

Monday-Wednesday, September 20-22 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 SEPTEMBER 2010

Thursday, September 16

Thursday, September 9

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

Minnesota Mortgage Association 2010 Convention & Exhibitor Showcase Sheraton Bloomington Hotel Minneapolis South 7800 Normandale Boulevard Bloomington, Minn. For more information, call (952) 3453240 or visit

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

Sunday-Tuesday, September 19-21 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


Second Annual Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (973) 3797447 or visit

Tuesday, September 21 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

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


Abacus Mortgage Training and Education .......... ......................................6 & 39 ACC Mortgage .................................................. ....................................4 BankFinancial.................................................. ......................................24 Calyx Software ................................................ ......................................40 CAAMP ............................................................ ..................................5 Coester Appraisal Group.................................... ..................................38 Comergence Compliance Monitoring, LLC .......... ..........15 & 41 Credit Mastery Event ........................................ ..............................17 Flagstar Wholesale Lending .............................. ....................Back Cover Freedom Mortgage .......................................... ......................Inside Back Cover Frost Mortgage Banking Group .......................... Gateway Mortgage Group, LLC .......................... ..........................................7 GSF Mortgage Corporation ................................ ........Inside Front Cover & 10 Guaranteed Home Mortgage.............................. ....................................33 Inlanta Mortgage.............................................. ....................................13 iServe Residential Lending, LLC ........................ ..................................34 NAMB/WEST .................................................... ............................MI4, 36 & 43 NAPMW .......................................................... ..................................................25 PB Financial Group Corp. .................................. ..............................................32 Quality Mortgage Services ................................ ..................................19 & 29 REMN (Real Estate Mortgage Network)................ ....................................35 “Seeking Active Mortgage Bank......................................................................................................21 Shore Financial Services, Inc. ........................................................................................................37 Terrace Mortgage Company .............................. ....................................9 Titan Lists and Mailing Services, Inc................... ..............................................11 United Northern Mortgage Bankers Ltd. ............ ............................ 12 & 27 Xetus Mortgage Corporation.............................. ....................................................4

Thursday-Friday, October 14-15 Kentucky Association of Mortgage Professionals 2010 Annual Convention Location to be determined For more information, call (270) 9292836 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

Mortgage Bankers of Pennsylvania Conference Wyndham-Conference Center 95 Presidential Circle Gettysburg, Pa. For more information, call (973) 379-7447 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) 3425900 or visit





JULY 2010 


Monday-Wednesday, November 8-10




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) 6229046 or visit



Wednesday-Friday, September 22-24