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Advertising Compliance: Getting Ready for the Banking Examination (Part II) ... Risk Assessments By Jonathan Foxx
J U N E
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V O L U
A SPECIAL FOCUS ON “MORTGAGE TECHNOLOGY”
40
The Top Three Benefits of a Tech-Savvy Appraiser By Donna DelMonte ..66
NMP Next: Can Technology Still Show us What’s Next By Rick Grant
Using Software to Uncover Mortgage Business Insight By Carl Wooloff 74
Against the Clock By Tom Knapp ................................................................68 Millennial Marketing and the Follow Up By Shirleen Von Hoffman ............72 Moving From Crisis to Nirvana in Closings By Sanjeev Malaney ..............76 Five Mortgage Pains That Technology Can Cure By Wes Miller ..............78 Relationships Matter By Brent Emler ............................................................80 The Future Starts Tomorrow By Eric Weinstein ..........................................81
FEATURES ARMCP Seeking Members for Steering Committee ....................................6
52 NMP ‘s 2016 Mortgage Technology Providers Directory
Expanding the Mortgage Product Line By Tom Hutchens............................8 The Elite Performer: Media Publicity By Andy W. Harris, CRMS ..................8 Recruiting, Training and Mentoring Corner: Technology and Management By Dave Hershman ..........................................................10 We Need Uniform Certification of Settlement Professionals By Andrew Liput ..............................................................................................16 The Commercial Corner: Small Balance Q&A By Michael Boggiano ........18 NAMB Perspective: June 2016 ....................................................................20 Step Inside Ginnie Mae: The Ginnie Mae Model By Ted W. Tozer ............26 Crawling Inside the Head of First-Time Borrowers By Bubba Mills ..........30 Brokers Turn to Direct Mail ..........................................................................32 The Mortgage Godfather: Why You’re Wrong and What to Do About It By Ralph LoVuolo Sr.........................................................................34
58 The CFPB’s Action Against MLO Is Troubling By John Councilman, CMC, CRMS
V I S I T Company
Web Site
O U R
A Page
Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................66 Angel Oak Mortgage Solutions ............................ www.angeloakms.com ......................................Back Cover Assurance Financial............................................ www.lendtheway.com ....................................................71 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ................................104 Caliber Home Loans.............................................. www.caliberwholesale.com ......................................19 & 75 CallFurst.com ...................................................... www.callfurst.com ............................................................70 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................15 & 68 Citadel Servicing Corporation .............................. www.citadelservicing.com ..............................................47 Civic Financial Services/Wedgewood .................... www.civicfs.com ..............................................................9 Document Systems, Inc./DocMagic ...................... www.docmagic.com ......................................................11
90 The Trend Is Not in fashion, It’s Credit! By Larry Avery
FAMP ................................................................ www.myfamp.org ..........................................................73 First Guaranty Mortgage Corp. ............................ www.fgmccorrespondent.com ..........Inside Front Cover & 72 Flagstar Bank .................................................... www.flagstar.com/ae ......................................................7 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ..........................................67 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................61 Lykken On Lending ............................................ www.lykkenonlending.com ............................................78 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................25 Moneyhouse U.S. .............................................. www.moneyhouseus.com ..............................................79
T G A G E
U M E
P R O F E S S I O N A L
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N U M B E R
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Industry Updates: June 2016 By Melanie A. Feliciano Esq. ........................48 Lykken on Leadership: The Six “Ps” of Building a Solid Leadership Team By David Lykken ..............................................................54 The Long & Short: The Business of Short Sales By Pam Marron ..............62 Sweep the Corners: Excellence in Your Field By John G. Stevens, CRMS ............................................................................64 Take the Lead: One Size Does Not Fit All By Laura Burke, MBA, MS, MIS, CFE, EA ......................................................82 In Hockey and Software Development, Avoid Offside By Amy Bergseth ............................................................................................84 Operation VA SITREP By Richard M. Bettencourt Jr., CRMS, CMHS..........86 Appraisal Industry Update By Greg Stephens, SRA, MNAA, CDEI..............88 MBA’s Mortgage Action Alliance ................................................................92 OrigiNation: Real Estate Industry Lacking Regulation? By Andy W. Harris, CRMS ..............................................................................93 Do You Know the Business You Are “Really” In? By Brian Sacks ..........100
COLUMNS New to Market..........................................................................................12 News Flash: June 2016............................................................................14 Heard on the Street ................................................................................38 Outstanding Places to Work ..................................................................98 NMP Calendar of Events ........................................................................99 NMP Resource Registry ........................................................................102
D V E R T I S E R S Company
Web Site
Page
Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ............................36 & 37 NAMB+ ............................................................ www.nambplus.com ......................................................27 NAMB National .................................................. www.nambnational.com ................................................77 NAPMW ............................................................ www.napmw.org ....................................................60 & 76 NAWRB ............................................................ www.nawrb.com ............................................................39 New York Community Bancorp, Inc. .................... www.nycbmortgage.com ................................................63 NMP University .................................................. www.nmpmag.com/nmpu ................................................1 NRMLA.............................................................. www.nrmlaonline.org ....................................................74 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................13, 55 & Inside Back Cover REMN Wholesale ................................................ www.remnwholesale.com ....................................MI1 & 17 Residential Home Funding Corp. ........................ www.rhfbranch.com ......................................................49 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................69 Secure Insight.................................................... www.secureinsight.com ..................................................33 TagQuest .......................................................... www.tagquest.com ........................................................87 The Bond Exchange............................................ www.thebondexchange.com ..........................................81 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..............................57 United Wholesale Mortgage ................................ www.uwm.com ..............................................................5
JUNE 2016 Volume 8 • Number 6
FROM THE
Focus on technology I remember when technology was a special focus that we would cover in the pages of The Mortgage Press only occasionally. In those days, many of our readers were still taking loan applications on paper forms and enterprise technology platforms were still in the planning phases. So much has clearly changed since then. Today, there is no part of our business that is not impacted, rather its very driven and controlled by technology. In fact, there would have been no way for our industry to deal with TRID without new technology, much of which was developed and tested at the 11th hour. And that’s just one example. In this issue, we’ll focus on the many ways that these systems are still changing the way we complete the important work of home finance, including: A look at the way appraisers are benefitting from technology by Donna DelMonte of StreetLinks Lender Solutions; Tom Knapp of Waterstone Mortgage Corporation discussing how technology is reducing the time it takes to close our loans; technology is changing everything about our closings, according to Capsilon Corporation’s Sanjeev Malaney; Wes Miller of ATS Secured tells us about the five mortgage pain points you might know that technology can cure; Bestborn’s Carl Wooloff details uncovering business insights with new accounting technology; Velma.com’s Brent Emler exploring the importance of personal relationships as we enter the digital age; an old school take on the new tech world from Eric Weinstein; Shirleen Von Hoffmann of Summit Funding taking aim at the Millennial marketplace; and much more! One tool we are proud to help advance in the mortgage industry is video. Through our sister company Mortgage News Network (MNN), we are bringing more great programming to the industry every month. The opportunities to connect and expand relationships through video are astounding. And when you combine them with the reach and scope of the Internet, video offers marketing power far beyond what most originators have ever had access to before. Where will you find great technology for your business? A good place to start is our annual Mortgage Technology Provider Directory, which you’ll find in this issue. These are the companies that are loved not just by their satisfied customers, but by the technologists working inside these companies. Those really are the people you’re hoping to get behind your technology and these are the companies that have accomplished that. Check the Directory out on page 52. You’ll also find the third installment of our popular NMP Next in this issue (see page 40). While NMP Next isn’t just about technology, there’s no denying that much of what our industry’s executives can expect to encounter around the bend will likely have a strong technology component. But sometimes, technology can add new life to old loan products, as you’ll see in the feature article on Freedom Wholesale Mortgage. Enjoy this issue.
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com
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ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.
SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
Sincerely, Joel M. Berman, Publisher-CEO • NMP Media Corp. • Joel@NMPMediaCorp.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2016 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Richard M. Bettencourt Jr., CRMS, CMHS
David Lykken
Michael Boggiano
Tom Knapp
Brian Sacks
Pam Marron
Laura Burke, MBA, MS, MIS, CFE, EA
Chad Kusner
Greg Stephens, SRA, MNAA, CDEI
John G. Stevens, CRMS
Donna DelMonte
Andrew Liput
Shirleen Von Hoffman
Ted W. Tozer
Brent Emler
Sanjeev Malaney
Eric Weinstein
Melanie A. Feliciano Esq.
Wes Miller
Fowler Williams
Tom Hutchens
Bubba Mills
Carl Wooloff
John Councilman, CMC, CRMS
Jonathan Foxx
Andy W. Harris, CRMS
Dave Hershman
Ralph LoVuolo Sr.
Editorial Contributors Larry Avery
Amy Bergseth
UWM IS THE #1 WHOLESALE LENDER IN THE E NA AT TION NATION And you are are the rreason eason on why why. y.
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su cce s s to to you. you. From Fr o m the the technology te chnolog y and a n d tools tools we we d eve lop tto o o ur c o ns t a nt drive dr ive tto o m a ke lending le nding success develop our constant make w ith Un i te d W hole s a le Mo r tg a g e. A n d thank tha nk y ou ffor or m a k ing us the t he #1 #1 w hol e s a le llender e n de r in in the the na tion. with United Wholesale Mortgage. And you making wholesale nation.
Y YOU OU + UWM = Y YOUNITED OUNITED | 800.981.8898 | UWM.C UWM.COM OM
U United nited W Wholesale holesale M Mortgage ortgage ((UWM) UWM) ranked ranked #1 #1 wholesale wholesale mortgage mortgage lender lender in in the the nation nation for for 2015 2015 by Inside Inside Mortgage Mortgage Finance. Finance.
This This iinformation nformation iis sp provided rovided tto om mortgage or tgage a and nd rreal eal e estate state p professionals rofessionals o only nly a and nd iis sn not ot iintended ntended n nor or iis s iitt a authorized uthorized ffor or c consumer onsumer distribution. distribution. NMLS NMLS #3038. #3038.
n Michigan Mortgage Professional Magazine n JUNE 2016
e a sy, the the team te a m at at UWM U WM is dedicated de di c ate d to to helping helping y ou b uild y our b us ine s s . T ha nk y ou ffor or p a r tner ing easy, you build your business. Thank you partnering
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p ur pos e: to A Att UWM, U WM , we’re we’r e driven dr ive n by by one o ne purpose: to champion cha mpio n the the success su cce s s of of brokers b r oke r s nationwide. natio nwi de. We We owe owe our our
NAMB—The Association of Mortgage Professionals 2701 West 15th Street, Suite 536 l Plano, Texas 75075 l Phone: (972) 758-1151 l Fax: (530) 484-2906 l Web site: www.namb.org
NAMB 2015-2016 BOARD OF DIRECTORS O F F I C E R S
Rocke Andrews, CMC, CRMS President Lending Arizona LLC 3531 North Pantano Road Tucson, AZ 85750 (520) 886-7283 randrews@lendingarizona.net
Fred Kreger, CMC President-Elect American Family Funding 28368 Constellation Road, Suite 398 Santa Clarita, CA 91350 (661) 505-4311 fred.kreger@affloans.com
John Stevens, CRMS Vice President Mountain West Financial 380 North 600 East Pleasant Grove, UT 84062 (801) 427-7111 johngstevens@gmail.com
Rick Bettencourt, CRMS Secretary Mortgage Network 300 Rosewood Drive Danvers, MA 01923 (978) 777-7500 rbettencourt@mortgagenetwork.com
Andy W. Harris, CRMS Treasurer Vantage Mortgage Group Inc. 16325 Boones Ferry Road, #100 Lake Oswego, OR 97035 (503) 496-0431, ext. 302 aharris@vantagemortgagegroup.com
John Councilman, CMC, CRMS Immediate Past President AMC Mortgage Corporation 10136 Avalon Lake Circle Fort Myers, FL 33913 (239) 267-2400 jlc@amcmortgage.com
Donald J. Frommeyer, CRMS NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A Carmel, IN 46032 (317) 575-4355 donald.frommeyer@gmail.com
D I R E C T O R S
Kimber White RE Financial Services Inc. 1620 West Oakland Park Blvd. #201 Oakland Park, FL 33311 (954) 306-3553 kimber.lmt@gmail.com
Olga Kucerak, CRMS Crown Lending 328 West Mistletoe San Antonio, TX 78212 (210) 828-3384 olga@crownlending.com
Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue Tampa, FL 33626 (866) 992-0785 valsaun@gmail.com
David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 American Fork, UT 84003 (877) 403-1428 david@mortgageeducators.com
Robert Sweeney, CRMS 600 East Carmel Drive Carmel, IN 46032 (317) 625-3287 bob.sweeney46@yahoo.com
Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive Mobile, AL 36609 (251) 650-0805 linda@mortgageteam1.com
Michele Velez, CMC 1300 South El Camino Real, Suite 505 San Mateo, CA 94402 (650) 409-2850 shellvelez@gmail.com
Nathan Pierce, CRMS Advanced Funding Home Mortgage Loans 6589 South 1300 East, Suite 200 Salt Lake City, UT 84121 (801) 272-0600 npierce@advfund.com
Mike Anderson, CRMS Mortgage Financial Services 11940 Bricksome Ave., Suite B Baton Rouge, LA 70816 (504) 451-3339 manderson@mfsus.com
National Association of Professional Mortgage Women 1851 South Lakeline Boulevard, Suite 104, Box 303 l Phone: (800) 827-3034 l E-mail: napmw2napmw.org l Web site: www.napmw.org
2015-2016 NAPMW NATIONAL BOARD OF DIRECTORS
JUNE 2016 n Michigan Mortgage Professional Magazine n
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National President Kelly Hendricks (314) 398-6840 president@napmw.org
President-Elect Nikki Bell (678) 442-3966 preselect@napmw.org
Vice President Cathy Kantrowitz (845) 463-3011 nvp1@napmw.org
Vice President Laurel Knight (425) 412-6787 nvp2@napmw.org
Secretary Windee Falla (281) 556-9182 natsecretary@napmw.org
Treasurer Judy Alderson (918) 250-9080, ext. 300 nattreasurer@napmw.org
Parliamentarian Frances Reinhardt (678) 331-1384 freinhardt@firstservicetitle.net
National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 l Phone: (630) 539-1525 l Fax: (630) 539-1526 l Web site: www.ncrainc.org
2015-2016 BOARD OF DIRECTORS
William Bower President (800) 288-4757 WBower@continfo.com
Julie Wink Vice President/Treasurer (901) 259-5105 Julie@DataFacts.com
Mike Brown Ex-Officio (908) 813-8555, ext. 3020 MBrown@CISinfo.net
Mary Campbell Director (701) 239-9977 Mary@AdvantageCreditBureau.com
Matthew Carpenter Director MCarpenter@Sarma.com
Maureen Devine Director (413) 736-4511 MDevine@StrategicInfo.com
Mike Thomas Director (615) 386-2285, ext. 285 MThomas@CICCredit.com
Dean Wangsgard Director (801) 487-8781 Dean@nacmint.com
Delia Zuniga Director Delia@AdvantagePlusCredit.com
Terry Clemans Executive Director (630) 539-1525 TClemans@NCRAInc.org
Jan Gerber Office Manager/Member Services (630) 539-1525 JGerber@ NCRAInc.org
Scott Ledbetter Director (214) 783-3315
ARMCP Seeking Members for Steering Committee he Association of Residential Mortgage Compliance Professionals (ARMCP), a not-for-profit, professional organization devoted to residential mortgage compliance professionals, has announced that it now has three of the six members needed to join President and Founder Jonathan Foxx on the association’s seven-member Steering Committee. If interested in becoming a member of the Steering Committee, e-mail Info@ARMCP.org. “Prospective Steering Committee members should be a member of ARMCP and involved in residential mortgage compliance or provide regulatory compliance guidance to such persons,” said Foxx. “The purpose of the Steering Committee is to: Draft and review by-laws; determine a nominating process for officers; discuss and plan for ARMCP’s first conference; decide on subcommittees and the process of appointing chairs of same; set forth a mission statement for membership ratification; and such other business relating to the association’s mission that requires consideration.” Membership in ARMCP may be requested by joining the group on LinkedIn.
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Expanding the Mortgage Product Line By Tom Hutchens
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gency mortgages have been uncharacteristically difficult to qualify for in recent years. However, real estate agents are starting to realize that there is value in expanding their offerings to borrowers with unique credit situations. It comes at the perfect time, as a refinance volume cliff looms on the horizon. The mortgage market is evolving and realtors need to evolve with it. If lenders are not offering new products, they are giving up access to a larger pool of potential borrowers that others are already tapping into. Realizing that change is a good thing and adapting to stay current with the latest in mortgage innovation could be the key to survival as rates start to rise. There is a diverse variety of non-agency products infiltrating the market today and gaining in popularity. Some products are designed for borrowers who experienced a credit event, or even multiple credit events, and whose credit scores suffered as a consequence. Despite rebounding, these borrowers cannot qualify for an agency loan. These loan programs don’t fully focus on credit scores, but look at the credit risk of the borrower today and strongly consider a borrower’s ability-to-repay a new loan. For self-employed borrowers or those whose tax returns do not reflect one’s true income, another product gives a loan without providing tax returns; rather, borrowers must show several months of bank statements, higher credit scores (up to 660), and 80 percent LTV and up to 50 percent DTI. Certain types of non-agency loans are available for foreign nationals who often travel to the U.S., have enough funds but do not have a credit score. These loans are available for up to 75 percent LTV and 50 percent DTI, and no U.S. credit score is required. Other potential borrowers may own properties for rental income but wouldn’t qualify for another mortgage. With proof of qualification on property cash flow, up to 70 percent LTV and no DTI restrictions, this type of borrower can receive a non-agency loan. We’re only going to see more diverse offerings permeate the market as borrower needs and industry regulations change. Expanding one’s product base could turn out to be crucial to success. Lenders will need to keep an ear to the ground and be cognizant of product offerings across the industry if they want to remain relevant and competitive.
Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or email Info@AngelOakMS.com.
SPONSORED EDITORIAL
the
elite performer Media Publicity BY ANDY W. HARRIS, CRMS
his morning I had an interview with a personality on our market’s largest local radio station to discuss the mortgage industry and housing market. It was a great interview and he certainly had great questions that consumers need to hear responses on. I have a passion for this business and love doing what I do, but I always have to remember to keep it simple in these conversations and adjust to the audience versus the mortgage professional which can be challenging. It’s important to answer questions in a manner where they’ll easily understand them and even to use analogies at times to put things into perspective. It had been a while since my last interview and it got me thinking as to why I’m not doing more of these. I think it’s important that we all make a footprint in our local markets by being the expert in our fields. For me personally, I like to expose and share all of the things others don’t and what I believe consumers really need to hear and understand about the mortgage industry. My message might be different than others, but any way you can get your message and brand to the public, it can be very rewarding for your reputation and business if your goals and morals are in the right place. It’s not always easy getting your foot in the door, but what are some ways that you can have journalists and others in the media contact you when they need a good story or have questions?
T
l Find the right contacts and e-mail them. Follow journalists in social media and message them with topics they might find interesting with feedback. l Know what media outlets cover and make sure you have the right contact person for your field and topics related to your expertise. l Be professional and don’t apply too much pressure. Have direct, clear and impactful messages. l Be different and tell them something interesting that makes or builds a great story using facts and statistics they might not easily find elsewhere. l Consider all written, audio and television outlets. l If you have a story covered, make sure they have your information and remain in touch as a future resource. Being a local expert with ties to the media can certainly produce credibility and attract new prospects. At times, you may even consider “paid” local expert spots in some media outlets if it’s a more consistent interview on your industry, but you should certainly be providing good information with the right intentions to the public versus self-promotion. Reach out as a local expert to your local media outlets. The worst thing that can happen is nothing at all, but it’s still worth the effort. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 4960431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.
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Recruiting, Training and Mentoring Corner
Technology and Management BY DAVE HERSHMAN
uch has been written about the fact that the mortgage industry has been slow to implement technology as compared to other industries. The truth is technology has affected just about every part of our industry, even if we have not been on the cutting edge. As someone who started in the industry almost 35 years ago—of course I started when I was 12—I have witnessed these changes firsthand. When I entered the industry, here is we had as examples of technology:
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l Cool pagers that let us know what phone number to call. l Fax machines that took about a minute to transmit a page. l Typewriters upon which could type up our applications, and if we make a mistake, we used “White-Out”—when we were allowed to. No, I did not ride a horse to work at the same time, and I will not get into the changes in automobile technology that have occurred over time. But I will say this … it was quite a few years before we got what we called “car phones.” Obviously, technology has evolved significantly. But because the average age of a loan officer is over 50 in this industry and because the average age of a sales manager is even higher, it is actually pretty logical that our managers have not adopted all the technology which is now at their fingertips. For example, there are
some in the industry that are still taking hand-written loan applications—believe it or not. However, this column is not focused upon production technology, but management technology. What type of technology facilitates management? For one, the use of a Customer Relationship Management application (CRM). In the infancy of the technological age we used to call this database software. Remember Act! and Goldmine? If we were lucky, some of us had databases of our previous customers. It is interesting that the acronym “CRM” starts with the word customer. Obviously, CRMs are customer enhancement and retention tools. On the other hand, for many decades, I have been teaching that a database should be a compendium of a loan officers life, or their complete sphere. Customers and prospects are part of that sphere, but certainly not the whole sphere. My teachings move database counts from 300 to 3,000 per loan officer. If you use this definition, then a CRM can become a management and recruiting tool. For example, managers do you have your loan officers entered into your CRM? If you do, you can use it has a management tool to schedule meetings, track work anniversaries and more. As part of your database, your loan officers can also see how you are using the database to deliver value to your sphere. The next question, is every loan officer you know entered into your database—even ones that left the
industry? Not only are these loan officers a source for referrals, but also they should become a base for your recruiting efforts. Now you can deliver valuable materials at a touch of a button, as well as schedule follow-up calls and meetings and record notes of these interactions. You can even profile each candidate using the system. If you don’t know what a loan officer “profile” should look like—feel free to e-mail me at Dave@HershmanGroup.com, and I will send you an example from our “Building and Leading a Great Mortgage Team” course. A CRM is not the only technology tool a manager should be using more extensively. Technology is also making training easier. Last month, I wrote about the different facets of training. In the old days, training took place a classroom. Now training can be online, via Webinar or by podcast. Of these, online training is typically the most affordable and flexible, while still having the ability to track the progress of the student. Learning management systems (LMS) typically were cumbersome and only available to developers in the past. Now technology have brought these LMS systems to anyone who has the ability to create coursework. These systems can measure how long the student was logged in, while also providing for review questions and automatically grading final exams.
Anyone who has gone through the NMLS final exam knows what the testing features can do in a very controlled environment. As I mentioned, online work does not replace field training or mentorship. They work hand-inhand, but online features are much more flexible and affordable than having to travel to another city for a two-day live course. And while the interaction with a live trainer cannot be replaced, the ability to ask questions can be made part of online training, as well as the ability to review the material again and again. This article is not meant to be a comprehensive treatment of all technologies that should be used by managers in this industry. Since most sales managers are also producers, technology and production is a topic that will be covered elsewhere within this edition. However, it does give a manager a taste of a few of the technologies that could help them more efficient. The bottom line is that our sales managers have several functions for which they are responsible, each of which could be a full time occupation. These include personal production, recruiting, assessment, coaching and more. It makes sense for managers to use technology to become more efficient in accomplishing these tasks.
Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.
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United Wholesale Mortgage Announces New Jumbo Elite Program United Wholesale Mortgage (UWM) has announced the launch of a new Jumbo Elite program that will enable mortgage brokers to offer their borrowers one of the easiest jumbo processes, along with highly competitive rates. Rates associated with the Jumbo Elite program offer brokers significantly improved pricing compared to the industry average. “In such a competitive market, brokers can now look forward to offering their clients extremely competitive jumbo pricing that levels the playing field with larger banks” said Mat Ishbia, president and CEO of UWM. “We’ve really upped the ante for brokers in the jumbo lending space. Brokers can now attract more jumbo clients with incredible pricing and the industry’s fastest turn times.” The Jumbo Elite program’s simplified process will make brokers more attractive to savvy jumbo borrowers throughout the country. Brokers will enjoy transparent guidelines and direct communication with their underwriter throughout the entire loan process. Highlights of UWM’s Jumbo Elite program include: Loan amounts up to $2 million; exclusive rate incentives for borrowers with 740+ FICO; eligible for primary and second homes; ARM and fixed-rate options available; and closings in 25 days or less. DocMagic Unveils eQC Compliance Solution DocMagic Inc. has announced the formal launch of its fully integrated ‘eQC’
solution that automates due diligence for investors and correspondent lenders. eQC provides a complete closed loan MISMO 3.3/UCD XML data file, an automated compliance report, and a detailed audit trail with a document integrity certification that certifies that the XML data provided and documents match prior to investor delivery. The automated compliance component of eQC includes a complete electronic record of compliance that arms investors and correspondent lenders with a detailed audit trail that eliminates concerns over future TRID audits and violations. Moody’s Investor Services Inc. compiled a report that revealed more than 90 percent of loans reviewed by third party due diligence firms were not TRID compliant. Since that time, outstanding issues with TRID have been adversely affecting the secondary market’s appetite to purchase loans. Concerns over potential assignee liability can result in loans remaining on warehouse lines for longer periods, extending lock periods, placing loans into suspension, and even potentially affecting the credit rating for mortgage bonds that are included in future RMBS pools. “The CFPB requires all parties involved in the mortgage finance transaction to demonstrate evidence of TRID compliance,” said Tim Anderson, director of eServices at DocMagic. “Our new eQC solution gives investors and correspondent lenders warranted electronic evidence of compliance with TRID and other critical regulations, and ensures that the audited data is exactly
the same data that appears on the documents disclosed to the borrower. This is really the holy grail of automated due diligence compliance.” eQC also provides compliance data on federal regulations like high cost, QM, ATR, as well as applicable state regulations. It works by leveraging DocMagic’s sophisticated audit engine, which determines if a condition is out of compliance. The audit engine immediately flags the causes of any issues for the user, directs the user to a link with information on where and how to fix it, and then verifies that the error was corrected. A full date and time stamped audit trail is created by following a consistent data validation process that runs more than 10,000 compliance rules and edits designed to verify and validate legal compliance throughout the loan origination process. This audit trail also provides full date and time stamp tracking of all borrower disclosures, a complete record of the compliance checks and conditions performed on the loan, and the complete MISMO 3.3/UCD XML data file. The XML data file can be used to electronically board and re-verify compliance at any time in the future through a tool set API that enables high speed access to this due diligence functionality. “With over 8,000 originators running millions of closed loans through DocMagic’s compliance portal each year, eQC leverages the long-standing industry acceptance of our compliance solutions to bring our correspondent lenders and
investors true automated proof of compliance,” said Dominic Iannitti, president and CEO of DocMagic. AAG Extends Jumbo Reverse Product to Wholesale Channel American Advisors Group (AAG) has released its jumbo reverse mortgage loan, the AAG Advantage, to its wholesale partner network in California. With AAG Advantage, California brokers and loan officers may originate reverse mortgages through AAG on properties valued at up to $6 million, versus the FHA loan limit of $625,500 associated with a traditional Home Equity Conversion Mortgage (HECM) loan. The AAG Advantage was initially launched in select states by the company’s retail channel last September. The loan will roll out to other states through both retail and wholesale platforms in future phases. AAG Advantage is designed for borrowers age 62 or older to convert a portion of their home equity into cash to help them retire comfortably. With AAG Advantage, owners of higher value homes now have the opportunity to borrow up to $3 million in loan proceeds—a significantly greater amount than offered through a traditional HECM loan. With the AAG Advantage, borrowers are not required to pay mortgage insurance premiums that are charged with a governmentinsured reverse mortgage. AAG California wholesale partners may market the AAG Advantage jumbo reverse mortgage not only to owners of property types eligible for a HECM loan, but also to owners of Ginnie Mae-approved condominiums, expanding the
potential market for reverse mortgage in California. “We’re pleased to now offer the AAG Advantage to our wholesale partners in California, where many of their clients’ property values tend to be higher,” said Kimberly Smith, senior vice president of Wholesale Lending at AAG. “With AAG Advantage and our solid network of California wholesale partners, we can help extend reverse mortgages to a greater number of seniors, provide them access to more funds and help them age in place with increased security and peace of mind.”
expanded loan parameters and simplified guidelines to assist originators expand their market base. The programs will be available to wholesale and correspondent clients. Freddie Mac Announces Integration With Ellie Mae’s Encompass
Ellie Mae has announced that it will integrate Freddie Mac’s Loan Product Advisor into Ellie Mae’s Encompass all-in-one mortgage
management solution this summer in conjunction with Freddie Mac’s phased rollout of their Loan Advisor Suite. The Loan Advisor Suite is designed to give Freddie Mac customers quick access to loan data and Freddie Mac’s full array of loan production and delivery tools through a single sign-on portal and/or their loan origination system. Loan Product Advisor, the next generation of Loan Prospector, is the cornerstone of the Loan Advisor Suite. The integration of Loan Product Advisor into Ellie Mae’s
Encompass as soon as it is released by Freddie Mac will allow Ellie Mae customers to originate loans within Freddie Mac guidelines more easily and with greater certainty, taking immediate advantage of the new features Freddie Mac is bringing to market. “We are very pleased with the progress we’ve made so far with Ellie Mae and are looking forward to the enhancements to Encompass coming this summer,” said Andy continued on page 18
IMPAC Mortgage Launches New Non-QM Product Series
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IMPAC Mortgage Corporation has announced its next generation non-QM product series, the iQM Series, a full suite of loan products that incorporates realistic consideration of a borrower’s unique situation, rather than a “by the numbers only” underwriting approach where borrowers qualify through AU engines based on rigid datadriven parameters. “Over the last seven years, lending has been dehumanized. The iQM Series applies intelligent, considerate underwriting, that takes into account human factors and circumstances throughout the underwriting process,” said Bela Donine, executive director, channel development for IMPAC. “With these programs, we conduct a comprehensive risk assessment by combining innovative technology with relevant human expertise to assess the borrower’s likeliness, willingness, and ability to repay, thus expanding the pool of borrowers that can qualify.” The iQM Series includes four programs: Agency Plus, for borrowers with multiple properties, including those with prior foreclosure and bankruptcy; Alt Doc, for borrowers using bank statements or eligible assets to qualify; Investor, for established investors allowing an unlimited number of financed investment properties; and Foreign National, for non-U.S. citizens that lack a FICO score or U.S. tax returns. The iQM programs, which evolved from the company’s AltQM product line, provide a straightforward origination process, and incorporate
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Silver Hill to Sponsor Upcoming MBA Small Balance Lending Summit Silver Hill Funding will be a sponsoring lender of the Mortgage Bankers Association’s (MBA) inaugural Small Balance Lending Summit, set for Wednesday-Thursday, June 22-23 at the Loews Chicago O’Hare Hotel. Silver Hill will host breakfast for the Summit attendees on Thursday, June 23 at 8:00 a.m. National Sales Manager Michael Boggiano will also participate in a panel discussion at the event later in the day. “This summit is just the latest proof of the impact small-balance commercial mortgages are having on the commercial real estate industry in 2016,” said Leslie Smith, managing director for Silver Hill. “We are excited to see our niche receive this level of attention from such an esteemed organization and proud to help sponsor what will certainly be an informative conference.” Tom Selleck Named AAG Spokesperson He was a Hawaiian-based private eye in “Magnum, P.I.” He is currently the commissioner of the New York Police Department on “Blue Bloods.” And he was also the original choice to play Indiana Jones (but that’s a long story we can’t get
into now). Emmy- and Golden Globe-winning actor Tom Selleck now has a new gig as the new celebrity spokesman for American Advisors Group (AAG), an Orange, Calif.-based provider of reverse mortgages. Selleck replaces the late Fred Thompson, the lawyeractor-senator who was the longtime AAG spokesman. Chief Creative Officer Teague McGrath stated that Selleck was the perfect choice to encourage consumer comfort and trust in AAG’s marketing campaign. “Our research reinforced the widespread recognition and respect that Tom Selleck has garnered among Americans and crosses generations,” said McGrath. “We believe he is the best candidate for the job and we’re thrilled to have him on board.” In a statement released by the company, Selleck expressed his confidence in the quality of the AAG product line. “I am pleased and proud to be working with AAG,” he said. “It was, after all, Fred Thompson who sparked my interest in reverse mortgages. I strongly believe that it is important for many Americans 62 and older, and just as importantly for their families, to know that a reverse mortgage can help them stay in their homes without giving up their ownership.”
HR 2121 Passes House, Amends the SAFE Act
The House of Representatives, in a relatively rare display of bipartisan agreement, unanimously passed HR 2121, the SAFE Transitional Licensing Act, in a voice vote. The bill, which was introduced by Rep. Steve Stivers (R-OH) and co-sponsored by 51 of his congressional peers—28 Democrats and 23 Republicans— is designed to amend the SAFE Mortgage Licensing Act of 2008 by providing a temporary license of 120 days for registered loan originators who is either moving from a financial institution to a state-licensed non-bank originator or is moving interstate to a state-licensed loan originator in another state. “The SAFE Act inhibits job mobility and puts independent mortgage lenders at a considerable disadvantage in recruiting talented individuals,” said Stivers when he introduced the legislation last year. “Rather than leaving a job on a Friday and starting a new job on a Monday, as most of us do, a loan officer who moves from a federally-insured institution to a non-bank lender must sit on their hands for weeks, even months,
while they meet the SAFE Act’s licensing and testing requirements. This is despite the fact that they have already been employed and registered as a loan officer. This is simply unfair.” David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), commended the House vote. “This is an important piece of bipartisan legislation which will help all lenders recruit experienced mortgage loan officers without unnecessary barriers to employment mobility and job opportunity,” Stevens said. “It provides mortgage loan officers nationwide the ability to relocate to new states or change employers for better earnings potential or career opportunities.” However, the bill was not supported by NAMB—The Association of Mortgage Professionals. NAMB argued that HR 2121 and any Senate companion bill will dilute all states’ rights to protect consumers. “In 2012, the CFPB stated that its regulations do not allow states to provide for transitional licensing for registered, but unlicensed, loan originators who leave banks to act as loan originators while pursuing a state license,” said Rocke Andrews, president of NAMB, prior to the House vote. “In addition, CSBS remains neutral on a bill they should have a solid opinion on. This destroys state consumer protections by cramming down a licensing construct that states have demonstrated they don’t want.”
A companion bill to HR 2121, S.1484, Regulatory Improvement Act, was introduced last year by Sen. Richard Shelby (R-AL) but has no co-sponsors and is currently not on any track for a vote by the full chamber.
Democratic presidential nominee Hillary Clinton is hoping to reverse her sliding poll numbers by using the housing bubble
For her part, Warren is continuing her own one-woman war against Trump by echoing the Clinton campaign’s playbook. According to a MarketWatch report, Warren used low comedy to describe Trump’s alleged eagerness to profit off a collapsing housing market. “Donald Trump was drooling over the idea of a housing meltdown—because it meant he could buy up a bunch more property on the cheap,” Warren said in a speech last night. continued on page 16
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© Copyright 2007-2016 Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suites 110 & 200A, Anaheim, CA 92806. 800-561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access website: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File 413 0904. CO: Check license status of your mortgage loan originator at www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Supervised Loan License SL.0000313. KY: Mortgage Loan Company License MC21112. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MS: Licensed by the Mississippi Department of Banking and Consumer Finance. Mortgage Lender License 2600. MO: Missouri Company Registration 14-1746-A. In-State Office: Missouri Residential Mortgage Loan Broker License 14-1746-A1. 251 SW Noel, Lees Summit, MO 64063. NV: Mortgage Broker License 4068 (Residential Mortgage Lending). NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Certificate of Registration MB.804213.000; Ohio Mortgage Loan Act Certificate of Registration SM.501517.000. OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. NMLS ID 2600 (www.nmlsconsumeraccess.org). WA: Consumer Loan License CL2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, LA, ME, MD, MI, MT, NM, NC, OK, SC, TN, TX, UT, WV, WI and WY. NOTICE: All loans subject to credit, underwriting and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any government agency. All rights reserved.
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Hillary and Warren: Trump Rooted for Housing Crash
video is part of a series of activities today in more than half a dozen battleground states to highlight these revelations about Donald Trump and Trump’s pattern of seeking to cash in at the expense of families.” The advertisement includes an audio recording of Trump discussing a potential housing decline in a 2006 audiobook. “I sort of hope that happens because then people like me would go in and buy,” Trump is heard saying in the video. “If there is a bubble burst, as they call it, you know you could make a lot of money.”
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Is TRID Encouraging Smarter Homebuyers? Among the many changes that TRID brought to the mortgage world is a new trend among borrowers: More homebuyers are reviewing their mortgage documents prior to their real estate closing. According to the new Home Closing Survey conducted by the American Land Title Association (ALTA), 92 percent of surveyed homebuyers set aside time before their closings to review their mortgage documents. Prior to TRID taking effect last October, 74 percent of consumers admitted to a pre-closing review. As a result of TRID, there appears to be a slight decline in on-time closings: 77 percent of closings took place as scheduled in the pre-TRID era, while 74 percent of closings are now taking place as scheduled. “Settlement agents reported that the top reasons for rescheduling a closing to another day were issues with lender underwriting, a delay from the lender and an issue with the three-day rule,” said Michelle Korsmo, CEO at ALTA. According to ALTA, surveyed consumers said they received important information about their transaction from loan officers (39 percent), title/settlement agents (30 percent) and real estate agents (29 percent). “ALTA was determined to ensure the vital role of title and settlement agents would not be diminished as mortgage lender liability increased,” Korsmo said. “Fortunately, consumers continue to view title and settlement agents as valuable resources that provide peace of mind and help them get the keys to their home.”
against Republican frontrunner Donald Trump—and she appears to be getting assistance in this strategy with a tag-team partner in Sen. Elizabeth Warren. According to a Washington Examiner report, the Clinton campaign released a video advertisement that insisted Trump was eager for the “real estate crash” as early as 2006. “While Trump was looking for new ways to profit, the reality of the economic crisis was that nine million Americans lost their job and five million families lost their homes,” the Clinton campaign said in a statement. “The new
We Need Uniform Certification of Settlement Professionals By Andrew Liput
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ow that the settlement industry has come to terms with the Consumer Financial Protection Bureau’s (CFPB) third-party service provider directives (I admit, there are a few holdouts), the industry needs to take the management of settlement agent risk to the next logical step. There is a need for the uniform certification of settlement professionals. When I began to research and consider the issue of risk to banks and consumers at the closing table way back in 2002, the biggest issue that struck me was the lack of uniformity among those entrusted with funds and documents. This problem stemmed from the fact that those empowered to manage the settlement of a residential mortgage loan closing were very diverse. The group included lawyers, title and escrow agents, notaries, closers and real estate agents. Each of these disciplines had (and still does have) its own licensing, insurance, training, continuing education, and professional disciplinary process. Some, like lawyers, are highly skilled, trained and supervised, yet because closings are often conducted by real estate attorneys, they include people who know a lot about contracts but not much about mortgages. Others, such as notaries, can face either a very stringent licensing process or merely file an application and pay a fee to gain access to a consumer’s records, closing table checks, and even a consumer’s living room. Licensed title producers are highly skilled, independent contractors they send to a closing may not be. In the absence of a uniform set of expectations, standards and practices, the lending community has for years received varying degrees of professionalism in services, and their consumer clients have likewise observed uneven closing table experiences. So how do we address the matter? I believe that the various associations, such as the American Bar Association (ABA), American Land Title Association (ALTA), Independent Escrow Association and National Notary Association (NNA) should come together to create a multidisciplinary Certified Closing Professional Program that takes into consideration the foundations of knowledge, training, experience and education relevant to each group. The program should cover “Mortgage Lending 101,” how to spot, prevent and report mortgage fraud, preparing the closing disclosure, handling document review and closing table questions by consumers, typical closing table issues and problems and how to address them, data privacy and security expectations, and ethical and professional communications with borrowers, among other topics. The designation would require ongoing education and an annual re-certification. Recipients would carry a photo ID card with their identification information and a unique identifier. Some of these ideas have been addressed by ALTA, but to be successful, a program must cross all disciplines and establish uniform expectations for lenders and consumers. Now that we all agree that settlement agents should be vetted for risk, the time is now to address their performance and professionalism.
Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureSettlements.com.
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nmp news flash
continued from page 15
“What kind of a man does that? Root for people to get thrown out on the street?” Trump dismissed the new Clinton-Warren attack plan during a rally last night in Albuquerque, N.M., stating that he was discussing a common business strategy of making purchases on commodities when they are in a price decline. “Yeah, if it goes down, I’m gonna buy,” Trump said. “I’m a businessman, that’s what I’m supposed to do. If it goes down, it goes down. I feel badly for everybody. What am I going to do? It’s business!” FDIC Announces $190M Countrywide Legacy RMBS Settlement
Eight financial institutions have agreed to a $190 million settlement with the Federal Deposit Insurance Corporation (FDIC) to resolve claims related to the role played by their residential mortgage-backed securities (RMBS) in the failure of five banks. The settlement concludes federal and state securities law claims that alleged misrepresentations in the offering documents for 21 Countrywide RMBS that were purchased by the five banks, which failed during 2008 and 2009. The settlement funds will be distributed among the receiverships of these defunct banks. The eight financial institutions named in the settlement are Barclays Capital Inc., BNP Paribras Securities Corporation, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Edward D. Jones & Co., Goldman, Sachs & Co., RBS Securities Inc. and UBS Securities LLC. The banks that failed included two Texas institutions (Franklin Bank in Houston and Guaranty Bank in Austin), Colonial Bank of Montgomery, Ala., Security Savings Bank of Henderson, Nev., and Strategic Capital Bank of Champaign, Ill.
HOPE NOW: 86,000 Loan Mods in Q1
The first quarter of this year saw mortgage servicers arranging 319,000 non-foreclosure solutions for distressed homeowners, according to data released by HOPE NOW, a five percent increase from the 303,000 solutions coordinated during the fourth quarter of 2015 and a 26 percent decline from the 432,000 in the first quarter of 2015. There were 86,000 loan modifications completed in the first quarter, with roughly 62,000 homeowners received proprietary loan modifications and approximately 24,000 loan modifications completed under the Home Affordable Modification Program (HAMP). The represents a 26 percent decline from the 117,000 loan modifications in the first quarter of 2015. Other year-over-year declines included foreclosure sales (approximately 91,000 in the first quarter, down five percent), completed short sales (19,000, down 19 percent), deeds in lieu (5,300, down nine percent) and delinquencies of 60-plus days (1.72 million, down 11 percent). “With general market recovery and stability over the past year, HOPE NOW is concentrating efforts on streamlining the assistance process for homeowners,” said Eric Selk, executive director. “We have looked at communication between servicers and homeowners and provided suggestions on improving the customer process. HOPE NOW is also very active in conversations focusing on the loss mitigation world once HAMP expires.” OCC Ends Servicing Order on Wells Fargo
The Office of the Comptroller of the Currency (OCC) has continued on page 26
RENO STRIKES BACK
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Answering residential brokers’ five most common commercial questions
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s the demand for small-balance commercial mortgages continues to grow, more residential mortgage professionals are making the decision to diversify and incorporate commercial lending into their business. Here are a few of the most common questions we receive from mortgage professionals looking to add small-balance commercial mortgages to their offerings. 1. How big is the small-balance commercial market? According to a recent Boxwood Means report, commercial loans under $1 million made up more than 70 percent of all individual commercial mortgages issued in 2015. Mortgage brokers have a real opportunity to close more deals in 2016 by incorporating small-balance mortgages into their business, even if they’ve never worked in the commercial arena before. 2. Do brokers need a license before they can broker commercial mortgages? It isn’t always clear if a state requires a license in order to broker commercial loans, so brokers are encouraged to either consult with their attorney or search the NMLS online database to determine whether or not a license is required to broker commercial loans in those states where they do business.
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Small-Balance Q&A
By Michael Boggiano
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new to market
3. How long does it take to close a commercial deal? Smallbalance commercial deals often have more in common with residential transactions than large-scale commercial loans and can close in 40 days or less. Complete submission packages and clear communication between borrower, broker and lender go a long way toward shortening the transaction length. 4. How do lenders determine the loan amount of a smallbalance commercial property? Small-balance transactions are typically underwritten based on debt-to-income (DTI) or debtservice-coverage-ratio (DSCR) requirements. Traditional lenders are more likely to use a DSCR model to determine a property’s ability to service the debt, while their non-traditional counterparts often incorporate a more residential-style DTI model as well. The DTI approach has an inherent flexibility that not only makes commercial properties more accessible, but also provides a more streamlined process. 5. How can novice commercial brokers market their business? Successfully marketing oneself as an expert commercial broker takes time, but there are steps novices can take right away to improve their efforts: l Ask existing residential referral partners like banks and credit unions to pass along the commercial opportunities they are unable to serve l Check closed loan files to discover clients who own commercial properties l Take advantage of commercial lenders’ educational tools If residential mortgage professionals educate themselves and market effectively, before long they will ask every lender’s favorite question: “Can you take a look at my deal?” Michael Boggiano is national sales manager for Silver Hill Funding, a small-balance commercial mortgage lender offering nationwide financing from $250,000 to $1 million. He may be reached by phone at (888) 9888843 or e-mail MikeB@SilverHillFunding.com.
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Higginbotham, SVP of SingleFamily Strategic Delivery at Freddie Mac. “Having Encompass tightly integrated with our industry leading Loan Advisor Suite will bring greater certainty and significant operational efficiencies to our lender customers.” Ellie Mae’s Encompass solution enables banks, credit unions and mortgage lenders to create and fund mortgages in one system of record for compliance review, quality assurance and improved efficiency at every loan stage. Encompass is used by more than 180,000 contracted and thousands of lenders and partners, including seven of the 25 largest U.S. mortgage lenders. “At Ellie Mae, our mission is to provide our lenders with innovative solutions that improve their efficiency at every step in the mortgage process,” said Joe Tyrrell, EVP of Ellie Mae. “By working alongside Freddie Mac to improve the way lenders work with their Loan Product Advisor through Encompass we can offer our customers a better and more streamlined process, making it easier for them to do business with Freddie Mac.” Indecomm Announces New eRecording Platform
provide a single platform that meets the industry’s need for a full service eRecording system combined with a toolkit to review submissions,” said Latha Parameswaran, vice president of Channel Partner Management for Indecomm Global Services. “This enables a high first time county acceptance rate. Leveraging Recopedia through IDD delivers the most value to the client. We design solutions which are powerful and easy to use, based on our hands-on experience.” InteleDoc Direct with Recopedia was built and utilized by Indecomm, with its expertise developed from being in the mortgage recording space for over 30 years. Indecomm’s current eRecord footprint covers more than 63 percent of the U.S. population. Indecomm records more than 400,000 mortgage documents annually, with a high first-time county acceptance rate. “Our customers demand increasingly powerful solutions,” said Rajan Nair, CEO of the Financial Services Division for Indecomm Global Services. “We must anticipate, as well as adapt to, the many changes happening in our customers’ businesses.”
Wells Fargo Approves Hybrid eClosings on Pavaso’s Digital Close Platform Wells Fargo has named Pavaso an Indecomm Global Services has approved vendor announced the launch of for “hybrid” InteleDoc Direct (IDD) eRecording eClosings. In a Platform with Recopedia, hybrid eClosing, Indecomm’s national recording select documents are printed and toolkit. The platform is available in “wet signed,” but much of the a Software as a Service (SaaS) closing package is executed model. IDD with Recopedia electronically. Effective enables Indecomm or clientimmediately, Wells Fargo will directed submissions with ease accept loans closed on Pavaso’s and minimal data entry, at any Digital Close platform using this point in the process. hybrid process. Most industry eRecording “I’m excited for two very big systems offer prompts and tips reasons,” said Mark McElroy, about county requirements, CEO and president of Pavaso. providing exact county “First, Wells Fargo’s approval of specifications. Indecomm hybrid eClosings conducted on provides a toolkit which is Digital Close is a major milestone available to attorneys, title agents for digital closings in the industry. and lenders at any point in the Hybrid eClosings allow quite a title and closing process, offering few documents to be handled precise recording fee calculations, electronically, making the closing comprehensive recording process simpler and more secure checklists with information on for everyone involved. Second, how to accurately submit the involvement of such a major documents, county turn times and retail bank validates that the more. It also offers the ability to industry is ready to walk an track and stay within tolerances evolutionary path toward digital for recording fees under the TRID transformation. As early rules. “Our goal has always been to continued on page 60
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NAMB President’s Message: June 2016
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The SAFE Transitional Licensing Act is Good for Who? HR 2121, The SAFE Transitional Licensing Act, was recently passed by the House. It now needs a companion bill in the Senate that will be reconciled with the House Bill and sent to the President. The SAFE Transitional Licensing Act attempts to solve the problem of loan originators having to be licensed before they can originate loans in a new state licensed company moving from a federallyregistered position or a state licensed originator attempting to get licensed in a new state. The solution provided by this bill is to give the new originator a 120-day period after a background check and credit check to originate loans without a license. It would modify the SAFE Act which requires all state-licensed loan originators to be licensed by the state in which the loan collateral is located. The bill is very vague and does not answer questions that immediately come to mind. Who is the loan originator of record on the file during the interim period? What happens to these loans if the originator never becomes licensed? What happens to the company if they have a closed loan with no licensed loan originator associated with it? When a current licensed LO seeks a license in another state do they maintain their existing license? What prevents them from applying for a license in another state, do their one loan and then not complete the process? The purpose of the SAFE Act was to eliminate unlicensed activity and require a licensed loan originator on all files to make sure there was a responsible party with the risk of their license on the line. As currently written, the SAFE Act allows state regulators to be more restrictive in their rules but not less. This bill requires them to allow the transitional period with no ability to be more stringent. States with an additional education requirement and/or a state-specific exam would be required to allow loans to be originated by un-licensed individuals. The argument is these individuals have been originating loans in a federally registered capacity and therefore are qualified. Many banks were advertising that they would hire originators and no exam was necessary. Many originators who were unable to pass the national exam ended up going to work for these banks. Passing an exam does not necessarily make you a good originator, but typically there is an understanding of the underlying laws and regulations of our industry. Part of the reason for licensing, testing and continuing education requirements is so that loan originators know what is right and wrong and have their license in jeopardy if they knowingly violate any of those laws. If your supervisor or company asks you to do something that appears wrong, the loan originator knows enough to question or seek out advice. As an instructor of the Loan Originator 20-Hour Pre-Licensing Class, I have firsthand experience with LOs attempting the transition from bank registered to state-licensed originator. Most of these individuals have a good knowledge of what was required by their banks which often varied with what the law required. The banks did not teach them illegal or unethical practices, but just the way that their particular bank did business. There were usually many safeguards in place at these large institutions that prevented the originator from doing the wrong thing but not necessarily the knowledge of what the law required. In going to work for a statelicensed entity many times these safeguards are not in place or may be incorporated in a different work flow. After the class and exam, these individuals are in better position to operate as a state-licensed loan originator. Typically, the need to have a transition period is due to the process of becoming a state licensed loan originator. Many banks maintain the NMLS registration for their employees. When the employee goes to the NMLS site to pursue a state license the notice
goes to their employer, who would then terminate their employment. The issue then becomes how does the originator earn income while getting licensed, as they have no job or ability to earn in the meantime. A better solution to this is to make the NMLS process private and ask the applicant who to notify of their milestones. This would allow the prospective originator to get their license while still employed at the bank, thereby eliminating any need for a transition period. NMLS allows them to keep the state license inactive while working at a federally chartered institution. The other item needed would be to have states that wish to, to allow a license to be issued for an originator without a sponsoring lender or broker. This would allow the federally-registered originator to be in a position to change employment when they are ready without having to transition. Many states allow this now for the reason of encouraging originators to get their license and work in the environment that best serves their needs. HR 2121 also allows a transition period for existing state-licensed originators who wish to be licensed in another state. The issue here is working loans in a new state without knowledge of that state’s laws. Already being licensed means they have the prerequisite background and credit checks and could begin the 120-day period as soon as they have an application in a state they are not licensed in. They begin the application process, do their one loan and abandon the process. They may never take the required courses or exams showing proficiency in that state’s particular requirements. Another question that arises is how many transition periods are allowed? If the first transition period expires, can the originator reapply and begin a new 120-day period? Can the originator get several transitional periods in several different states at the same time? The big question then arises as to where the push for this bill is coming from. Is it all the federally-registered originators demanding a means to go to work for state-licensed mortgage companies? Or is it coming from state-licensed mortgage companies looking to expand into new geographical areas in a rapid manner? Either way is the answer to allow unlicensed origination activity as a solution? This is precisely what the SAFE Act sought to eliminate. Do consumers really want their mortgage transaction handled by someone just learning the laws and regulations in their area? Isn’t that was caused many of the problems that were evident during the period prior to the mortgage crisis? CSBS, the Conference of State Bank Supervisors, has reviewed the legislation and issued no opinion. This is probably due to the many unknowns. Many state regulators comprehend the issue and are in favor of a solution but do not like the idea of unlicensed activity in their state or the fact that this eliminates their ability to be more restrictive. As an example, consider a large online lender wanting to move into your state. Rates are good and the housing market is hot. They do not want to wait and scale up but hit the market hard from the beginning. They induce a bunch of bank registered LOs to come over and man their telemarketing center in that state. They may or may not know the state laws required. They are put to work in telemarketing environment and are kept busy quoting rates and answering calls. They are not learning what they need to know and have less time to take the class and pass the test than when they worked at the bank. If they do not get their license in the 120-day period, the online lender merely replaces them with someone new. Now, the bank registered LO has no income or job but does have the time to study. This is not good for the bank LO. The recently-hired telemarketer takes a call from a consumer attracted to the online lender’s low rates. Rates are lower because the LO’s compensation is less than a straight commission LO. Against the real estate agent’s advice, the consumer goes with the online lender. The new LO makes a small error in getting state required disclosures signed and the consumer misses their closing date and the lock expires. The seller of the property then misses their simultaneous purchase. In the hot selling market, some may lose the opportunity to make their purchase altogether. This is not good for the consumer.
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The local small business mortgage company loses deals to the new online lender that has moved in and is taking business with low teaser rates. This does not help the small business mortgage company. State regulators look bad, because they are unable to control these online lenders because the legislation forces them to allow unlicensed activity and prevents them from being more restrictive. The bill is not good for state regulators. A loan originator gets a call with a large loan in an adjoining state. He applies for a California license and originates the loan. After closing, he withdraws his application. He has done a loan in a state without attaining the required knowledge and may harm the consumer in that state with his shortcoming. He has also taken a loan away from an LO that has done the training and supports the local community and has knowledge of local programs that might have been better for the consumer than the one chosen by his novice outof-state LO. If by chance a small business mortgage company hires a bank registered LO and allows them to originate. The learner’s permit LO makes a mistake that harms the consumer. The student LO has no bond or state fund to go against so the consumer and state go after the small business mortgage company. The company may be put out of business and the LO may become ineligible for licensing because they made an error while learning the business on the job. There is a need to bring on new licensed loan originators. We should concentrate on the education and recruiting while maintaining the safeguards instituted with the SAFE Act. Since there are several ways to accomplish the goal of this bill without new legislation limiting states abilities to regulate there is no compelling reason to push this legislation at this time. This bill is bad for all concerned except large mortgage bankers attempting to quickly move into a new market. Sincerely,
The badges were everywhere on shelves and tables. We have members and non-members, but we don’t discriminate. We want you to come and see our National Conference and get everything you can out of it. And the cost to you again is nothing … its free. All of these conferences are possible because of our exhibitors. And the number of you who showed up was approximately 2,800. We have offered you excellent speakers, excellent breakout sessions, great exhibitors, exhibitor parties, NAMB parties, continuing education opportunities, government affairs related breakouts, and much more. Yet, 700 people did not show up. So, with all of this in mind, I have set it upon myself to do much better. I have to get more of you—the originator and owners—to show up at these events. Going forward, it is all about your attendance. If you sign up, I need to get you there. So why did you sign up but choose not to go? That is what I need to find out. Some of you couldn’t go for some reason or another, and that should only be about five percent of you. My goal this year is to get all of those 3,500-plus people to register again for NAMB National, and it be FREE, and to have the attrition rate at approximately 175 people. That means that we should have more than 3,300 people attend our event in Vegas from Sept. 23-26 at the Luxor Hotel again. This is the last year on this contract, but the rates are still fantastic to stay there. So start to get you reservations for you flight, your room and your mind completed so you can be there. Free registrations will be opening soon on the NAMBNational.com Web site. You can go there and see some of the stuff we have planned. There is even a golf outing planned for Sunday in the morning. So, if you have a few minutes, please e-mail me and tell me what you need to make sure that you are there at Donald.Frommeyer@gmail.com. This is all about you being there. Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professionals. He may be reached by e-mail at NAMB.CEO@NAMB.org.
The CEO Perspective
Last April, I wrote an article about what characterizes a person who originates mortgages. Here is my quote from that article: “Why isn’t every mortgage originator a member of NAMB—The Association of Mortgage PROFESSIONALS? And a member of your own state organization. Why hasn’t every originator embraced organizations that advocate, educate and provide industry guidance for all stakeholders to thrive? Maybe it’s awareness or apathy. If you are reading this article, you know an originator that is not a member. I implore you to be an advocate for the originator and the homeowner. Be involved in one way or another. It doesn’t matter HOW you fund a loan, you are a mortgage professional and we must all support every channel that allows access to credit for our client homeowner.” So supporting each channel of origination is important to the whole industry. We, as NAMB members, have been advocating for this to our elected officials and regulators. Make an even playing field so everyone can compete fairly. We have seen when the game is fixed and a few have more power than others. Do you all remember our industry in 2005-2009? Or have you all seen or read The Big Short? We must always advocate for our clients the best way we know how … and create an environment that promotes fair competition. Now that I have gotten all of your agreement, I wanted to bring up
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A Message From NAMB CEO Donald J. Frommeyer This is kind of a different article for me, as I am in the mood to ask questions and see what type of responses I get. I have been racking my brain for a few months as to why we get all of these people to register for free to come to our conferences and then they don’t come. I can see some percentage of them doing this, but not with some of the numbers that I have seen the last two NAMB conferences. For instance, NAMB puts on three conferences a year now, and the one that has the least amount of fallout is the NAMB Legislative & Regulatory Conference in Washington, D.C. We had 129 people register for this conference and 128 showed up. Now, all of these people pay $295 as a registration fee, but they show up. They all also attend all of the functions and the breakout sessions. At NAMB East, we had more than 600 people sign up. Yes, 600 people and only about 300 of you came. The registration was free because we try to provide you with everything and you make the commitment to fly there and pick up your room. You are given the best we can provide as far as an exhibitor extravaganza that brings the best to see you. These exhibitors go out of their way to make sure that they are there to help you. All you have to do is show up (and by the way, last year was our first try at doing NAMB EAST and we learned a lot to make it bigger and better in 2017 … there will be more information available shortly as to where we are going and what is going on so stay tuned). At NAMB National last year, we had more than 3,500 registrations.
We Are All in This Together By Fred Kreger, CMC
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Rocke Andrews, CMC, CRMS, President NAMB—The Association of Mortgage Professionals RAndrews@LendingArizona.net • JOINNAMB.com
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a question that is raised every year by our NAMB members and board of directors. Who do we serve? We started out serving only the broker community, but we and many state associations have embraced other channels. Too many associations have changed their names from “Association of Mortgage Brokers” to “Association of Mortgage Professionals.” Our industry has changed, and thus our associations have changed with the times. There are associations like the Mortgage Bankers Association (MBA) that represent mortgage banking companies, but not necessary represent or provide direct support for the individual mortgage loan originator … regardless if they are employed by a broker, banker or credit union. I bring this point up because we may all need to face our own identity crisis as associations. Where do you fit in as an originator? At some level, aren’t all originators small businesses? They are entrepreneurs at the core of their values. They must get up every day and hunt then gather. Our loan originators today are better equipped to counsel and advise our clients. Let’s not create separation of the channel. We must embrace and learn from each other, no matter where we ultimately receive the money to lend. When all is said and done as I have told all three of my daughters when they ask what I do … I joke and tell them, “I sell money.” Thank you and Namaste’.
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Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is a past president for the California Association of Mortgage Professionals (CAMP), and currently president-elect and Government Affairs Vice chairman for NAMB—The Association of Mortgage Professionals. He can be reached by e-mail at Fred.Kreger@AFFLoans.com or call (661) 505-4311.
NAMB Membership and Cultivating Relationships By Linda McCoy, CRMS
Relationships are a big part of why you need to become a member of NAMB—The Association of Mortgage Professionals. Over the last 15 years, I have made many friends traveling all over the U.S. for different NAMB events. We have met in many different locations, wined and dined, laughed, exchanged ideas, studied in classes together and just became what I would call friends. My article this month is about why I am and continue to be a member of NAMB. I am an owner of a small hometown business who loves her clients and the challenge to be able to get the deals done when we face impossible odds. I have struggled with underwriter guidelines, government regulations, tests that were not easy in an ever-changing industry, insurance companies and title companies that have their own rules and cannot make their square pegs fit into our round holes, and people who continuously think that we are asking for way too much for loan approvals. We have, as loan originators, learned our jobs very well or we would not have the licenses to continue our business. I am sure that each and every one of the originators reading this article have had that nightmare loan that keeps you up at night. This is the loan that you have done everything in your power to fix, and it just seems like you are snake bit. I have been in business for more than 23 years and this one loan was at the top of the charts. The odd thing was that it was the perfect client, with an 800-plus credit score, lots of money in the bank, a very low loan-to-value (LTV) purchase and the man had been on his job for years in the same line of work. What could go wrong? I thought it was a slam dunk. We sent it to one of the best companies in the U.S. and got our approval back in a day or two with little or no conditions. This is my best real estate agent referral partner. I was
very excited and the client was elated. It then took a turn for the worse and was spiraling down fast because of the insurance. I forgot to mention it was a condo with two units in the whole condo project at the beach. The insurance company said that you couldn’t get the policy the lender required on the island. We tried for weeks back and forth and ended up with another insurance company finally giving us exactly what we needed, but it took two weeks to finally get it straight. We were down to one possible day left to close this loan, the contract and the rate both expiring the next business day, with upset real estate agents, sellers and clients. The client was supposed to close before the holiday weekend so he could get his condo in order for all of his friends coming in for an annual fishing tournament. He was so excited he had friends coming from all over to stay in his condo and be there for the opening day tournament. Luckily, the Closing Disclosure (CD) had gone out but the insurance conditions had been sent to underwriting but not cleared by the underwriter yet. The client was adamant that the loan would close the next day. I knew that conditions at the end of the month rarely get looked at much less the loan actually gets closed the same day the condition gets cleared. I tried to explain this to the client. She just would not take “No” for an answer. I was to the point that I was shaking over the sheer anxiety caused by this stressful situation. I had no way to make this happen. I even thought to myself that only a miracle could help with this one. I go to almost all of the NAMB events and have met many executives. I collect business cards and keep them. I found myself frantically looking through my business card stash. I have a drawer full of cards that I have saved over the years. About a month ago, I had taken all of the cards and rubber banded them together in stacks of about 100 each. When I attended NAMB EAST, I remembered getting a card from one of the top executives at this company who said that if I ever needed him to give him a call. I knew that I alone had no chance to get this deal done. I waited to the last possible minute, before I picked up the phone and made that call. He listened to the whole story, and to my surprise, I was told that since it was late in the day that he could not get the package out until the next business day after the underwriter cleared that last condition. The agony that I had put myself through over this loan was over. I had real help now and to me this was my miracle. I am so thankful that I am a NAMB member and have friends across this country who I can turn to when I really need them and get the support that I need. His whole team jumped in and helped make this happen. We closed that loan and my story had a happy ending. My message is: I would have lost my best real estate agent source and the customer if I had not been a NAMB member. Relationships can last a lifetime. Join NAMB and do business with lenders who support your Association of Mortgage Professionals. Linda McCoy, CRMS of Mortgage Team 1 Inc. in Mobile, Ala. is a member of the NAMB board of directors. She may be reached by phone at (251) 650-0805 or e-mail Linda@MortgageTeam1.com.
NAMB’s Education Corner: Sharpen Your Axe By Bob Sweeney, CRMS
Sam Wyche was one of our keynote speakers at NAMB East in March. He spoke of the importance of continuing education in the mortgage profession and the benefits received by sharpening your skills. He told the story of The Wood Cutter to emphasize his point. The following is a similar version of his story: “Once upon a time there was a very strong wood-cutter. He asked for a job from a timber merchant and he got it. The pay was very good
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and so were the work conditions and for that reason the wood-cutter was determined to do his very best. His boss gave him an axe and showed him the area in the forest where he was to work. “The first day the wood-cutter cut down 18 trees. His boss was extremely impressed and said, ‘Well done. Keep it up. You are our best wood-cutter yet.’ Motivated by his boss’s words, the woodcutter tried even harder the next day, but he only cut down 15 trees. The third day he tried even harder but only cut down 10 trees. “Day after day the woodcutter cut down fewer and fewer trees. His boss came to him and told him that if he did not chop down more trees each day he would lose his job. The wood-cutter needed the job, so he tried harder and harder. He worked during his lunch breaks and tea breaks, but still he could not cut down enough trees. ‘I must be losing my strength’ the wood-cutter thought to himself. He worked over-time, but still it was not enough. “Eventually his boss came to him and told him he was fired. The wood-cutter was really upset, but he knew that he had worked as hard as he could and just did not have enough time to chop more trees. He sadly handed his axe back. “The boss took one look at the axe and asked, ‘When was the last time you sharpened your axe?’ “’Sharpen my axe?’ the wood-cutter replied. ‘I have never sharpened my axe. I have been too busy trying to cut down enough trees.’” Moral of the story … Don’t get so busy that you don’t take time to sharpen your axe. We all think our SAFE eight hours of continuing education are enough? It is not enough. Our industry is constantly changing. We need to stay current with the latest product developments, skills and
new technologies. There a so many Internet and live classes available to us, but we are not taking the time out of our busy schedules to take advantage of them. If you are not an expert in VA, FHA or USDA requirements, for example, now may be the time to become an expert. NAMB offers two professional certifications, the Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC). There has never been a better time for mortgage professionals to seek certification for a number of reasons. Our industry is under increased scrutiny and it is important for those of us who are true professionals to conduct business with honesty and integrity, putting the best interests of our clients at the forefront of all we do. Whether it is required or not, continuing education can be important for career satisfaction. Continuing education can boost confidence and lead to opportunities for career advancement. Now is the time to “Sharpen your axe.” We welcome any input from all mortgage professionals or wholesale partners. If you are not a member, now is a great time to become a member. Go to your state association Web site or visit NAMB.org and join as a professional member.
Bob Sweeney, CRMS is senior sales manager at CrossCountry Mortgage, is director on the board of directors for NAMB–The Association of Mortgage Professionals and serves as NAMB’s Education Committee Chair. He can be reached by phone at (317) 625-3287 or e-mail Bob.Sweeney46@yahoo.com. 23
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getting toknow NATHAN S. PIERCE Director of NAMB B Y
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JUNE 2016 n Michigan Mortgage Professional Magazine n
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24 athan S. Pierce first became involved in the mortgage and banking industries in 1991, and by 1994, he founded Advanced Funding Home Mortgage Loans in Salt Lake City, Utah. He has also been a prominent figure in NAMB—The Association of Mortgage Professionals and the Utah Association of Mortgage Professionals (UAMP). National Mortgage Professional Magazine visited with Pierce to review his quarter-century in the mortgage profession.
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Did you originally intended to have a career in the mortgage profession? It was a little bit of a mistake. I was going to school, and I had entered the industry as an assistant in an office. I took a liking to it and decided to stay. I moved into a management position after a short period of time and fell in love with the work. What made you fall in love with the work? I loved the pace of the business, the excitement, the constant
change. I started with a small business, which gave me the opportunity to get an in-depth feel for the mortgage industry. Also, I learned that this business is involved in people’s lives. After all, buying a house is one of the five top things people do. I found that exciting. When did you first get involved with NAMB? I’ve been a member throughout my career. I was first really involved in 2010, when I stared serving on various committees. I’ve worked on the convention committee, and this is my third year as its chairman. I also worked on the Membership Committee and with the Political Action Committee. Last year, I was elected to the board of directors. What has been your level of involvement with your state association? In Utah, I have been a member since 2010. That actually prompted me to get more involved in NAMB. I served as president of the state association in 2011 and 2015, and in all capacities of our local chapter.
How and why did you get involved in UAMP? First, I was asked to be involved and as someone that is very passionate about the industry and has been blessed with a long successful career I felt I owed something back. Second, I saw a need to help mortgage professionals become true experts at their craft along with helping them to understand the importance their role is in the legislative process. In your opinion, why is it important for mortgage professionals to be involved in their state association and with NAMB? For starters, it is crucial to know what is going on in the industry. If I was not involved in the
associations, I would have a limited understanding of what is taking place. And membership keeps you out of trouble by preparing you for the challenges that face us. We could not do what we do without the support of NAMB. NAMB provides valuable resources to our association and is instrumental in our daily operations. Without NAMB, we would not have the recognition with our national delegation of legislators that we do. They make becoming a member of the UAMP more valuable than it would be without them. The success of the UAMP and NAMB are one in the same and to achieve our goals a tight relationship between us is priceless.
N A M B What do you see as the state of the mortgage profession over the next 12 months? I think we’ve seen the industry adjust to a lot of changes. We are working within the rules and regulations that were put in place by the federal government. But there are also a lot of rules and regulations that have not been completely defined. In the next one-to-two years, we will see how they are actually defined by litigation and government actions.
What do you see as the greatest challenges currently facing your business? We are continuing to grow our compliance department and we are working to keep that staff educated on all of the changes that impact the industry. And going back to what we
You certainly keep very active in your work. How do you spend your leisure hours? I wish I had more leisure hours! I volunteer for the state and
national trade groups. But I also spend a lot of time with my kids. I coach my kids’ sports, and there is a sports event going on
almost every day but Sunday, when nearly everything in Utah shuts down. I also love golf and enjoy camping.
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at PhilH@NMPMediaCorp.com.
Why choose MBS Highway? BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country. STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.
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What is state of housing like in your home state of Utah? We’ve been fortunate in Utah that we’ve experienced growth throughout the entire state. However, we are also experiencing something of an inventory shortage. This has definitely been a sellers’ market, and the homes have been selling very, very quickly—often within a few days.
discussed earlier, we are also working on the replacement of an aging workforce. It is important for us to get out there and find the Millennials that will be the future of our business.
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What can the industry do to attract more young people into mortgage careers? We’ve got a lot of people that think owning a home is not important. And there are a lot in the younger generation that believes homeownership is too difficult and not achievable. Younger people have to understand that homeownership is not as difficult as many media reports make it out to be. We also need to let this generation know about the possibilities of working in the industry. Being a mortgage professional allows them to make a very good living—and, sometimes, an exception living—if they are willing to put hard work into their efforts. Of course, it is hard to achieve this when the industry is presented as the bad guy in the media. We have to be able to turn that around let people know who we are.
P E R S P E C T I V E
nmp news flash
Step Inside Ginnie Mae The Ginnie Mae Model By Ted W. Tozer
he simple but strong business model that Ginnie Mae has built highlights the power of the federal government and the private sector working together. Through the efficiency and low-cost securitization of the model, Ginnie Mae fulfills the needs and demands of various market segments by leveraging the full faith and credit of the U.S. government to access global capital. Unlike the GSEs, Ginnie Mae’s business model significantly limits the taxpayers’ exposure to risk associated with secondary market transactions. Its strategy is to guarantee a simple pass-through security to lenders rather than buy loans and issue its own securities. Because private lending institutions originate eligible loans, pool them into securities and issue Ginnie Mae mortgagebacked securities (MBS), the corporation’s exposure to risk is limited to the ability and capacity of its MBS Issuer partners to fulfill their obligations to pay investors. By guaranteeing the servicing performance of the issuer—not the underlying collateral—Ginnie Mae insulates itself from the credit risk of the mortgage loans. With Ginnie Mae in the fourth loss position, three layers of risk protection are exhausted before Ginnie Mae is at risk. Additionally, the failure of an issuer will cause Ginnie Mae to experience financial loss only to the extent that funds are needed to transfer the servicing to another Issuer or to the extent there is deterioration in servicing value.
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Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.
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announced the conclusion of its mortgage servicing-related order against Wells Fargo Bank and charged the San Francisco-based lender with a $70 million civil money penalty for previous violations of the order. The OCC’s originally issued its order in April 2011 and amended it in February 2013 and June 2015. The $70 million civil money penalty against the bank is based on what the agency dubbed as a failure to “correct deficiencies identified in the 2011 consent orders in a timely fashion,” adding that the company also “filed payment change notices in bankruptcy courts that did not comply with bankruptcy rules and safe and sound banking practices.” Furthermore, the OCC determined that Wells Fargo made “escrow calculation errors that in some cases led to incorrect loan modification denials and constituted unsafe or unsound banking practices” between March 2013 and October 2014. Wells Fargo will pay its penalty directly to the U.S. Treasury. Do Single Women See Less Financial Gains as Homeowners?
since purchase for homes owned by single women, who earned a 31 percent return on their purchase prices. Adding insult to financial injury: RealtyTrac also determined that neighborhoods where more single women are homeowners tend to have higher criminal activity and more severe environmental issues. “Women earn less than men on average—19 percent less in 2015 according to the Bureau of Labor Statistics—giving them less purchasing power when it comes to buying a home,” said Daren Blomquist, senior vice president at RealtyTrac. “So it’s not surprising to see the 10 percent gender gap in average home values between single men and single women homeowners; however, the slower home price appreciation for homes owned by single women demonstrates that less purchasing power is also having on a domino effect on their ability to build wealth through homeownership as quickly as single men.” CFPB Slaps $85K Fine on Ex-Loan Officer
In a very rare enforcement action against a single lower-employee instead of a corporate entity, the Consumer Financial Protection Bureau (CFPB) has levied an $85,000 penalty against David Eghbali, a former loan officer for Gender inequality appears to the Wilshire Crescent Wells Fargo have permeated housing valuations, according to new data branch in Beverly Hills, Calif., for his alleged role in a mortgage-fee from RealtyTrac that determined that homes owned by single men shifting scheme. The CFPB also banned Eghbali from working in were, on average, valued 10 percent more and appreciated 16 the mortgage profession for one percent more since purchase than year. The CFPB stated between properties owned by single November 2013 and February women. RealtyTrac analyzed more than 2015, Eghbali had an arrangement with New Millennium 2.1 million single-family homes Escrow Inc. that enabled him to nationwide for its study. The offer “no-cost” loans to clients company concluded that the average estimated current market that might have gone elsewhere for less expensive loans. As a value of homes owned by single men was $255,226, which was 10 result of this arrangement, Eghbali referred nearly all his percent above the $229,094 clients to New Millennium. average current market value of “We have taken action against homes owned by single women. an individual loan officer for Furthermore, tomes owned by illegal mortgage fee-shifting,” single men gained an average of said CFPB Director Richard $63,921 since their purchase, resulting in a 33 percent return on Cordray. “This should send a strong message that the law must purchase price—which was $10,112 (or 16 percent) higher than the average $53,809 gain continued on page 32
NAMB+ is an independent, wholly-owned, for-profit marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, Summer is here, and we are already nearly halfway through 2016! I hope you are all having a fantastic year! We are all incredibly busy -- between family obligations, summer vacations (hopefully) and of course taking care of our clients and referral sources, it can be hard to keep up with everything. Let NAMB+ and our specially selected list of Endorsed Providers help simplify your life. NAMBPLUS.com is your one-stop shop for everything you need to be more efficient, more productive, more accessible, and more compliant as a mortgage loan originator. Want to chat live with visitors to your website via your smartphone from anywhere? We have that. Want to boost your visibility and communications with clients and referral sources? We have telecommunications and mobile app solutions for that. Tired of turning down commercial loan opportunities and losing out on commissions?
Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15
We have the answer for that too! Visit NAMBPLUS.com today and discover these and many more solutions for your busy life and growing business! Sincerely,
Nathan Pierce, CRMS, CMP, President NAMB+, Inc. npierce@advfund.com See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information.
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USA Business Lending is the nation’s premier commercial brokerage firm representing over 3500 lenders.
NAMB members receive a 10% discount off regular prices for Warm Welcome LLC services. For more information visit WarmWelcomeLLC.com.
NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership. InfoSight, Inc. offers proven and affordable cyber security, risk management, IT Infrastructure and regulatory compliance solutions. Visit www.infosightinc.com or contact us at 305-8281003 / 877-577-9703.
LoanTek’s platform is designed to save time, create better leads, and convert leads into new business.
Simplii VOIP business phone solutions include all the features and functionality of a high end business phone system without the high costs. We offer all NAMB members a 10% discount off their phone services. For more information please e-mail stevew@simplii.net
WhoHub (www.whohubapp.com) is a FREE marketing tool for local Realtors to refer their best Loan Officer. The service is FREE for the agent and their clients so it gets shared among local friends, family and neighbors who will see your profile. Each loan officer pays just $30/month for unlimited agent connections. Whether you connect to 1, 15 or 100 agents – still just $30/month. That’s right; one new borrower pays for the service for years! NAMB members get their first 90 days for just $1, month to month thereafter, cancel anytime.
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Username = Member Number Password = First initial of your first name capitalized and your last name with the first letter of the last name capitalized (example = JStevens) *If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many benefits NAMB members receive!
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NAMB members receive a 15% discount on all Custom Canvas Prints products and services!
The Bond Exchange is a national surety agency specializing in providing mortgage license bonds to thousands of mortgage professionals across the country.
NationalMortgageProfessional.com
NAMB members receive a discount off Brokers Compliance Group compliance support programs.
Morf Playbook™ by Morf Media is software that allows you to train your staff and customers. You can create your own training, add your policies and procedures or select courses from the Morf Partner Portal. Whether you are looking for CFPB compliance training, sales training or new loan officer training, Morf can connect you with exactly the training you need. If you can write about it, record a video about it or talk about it…YOU can train on it with the Morf Playbook™! Find out more at www.morfmedia.com/namb.
Advertising Compliance: Getting Ready for the Banking Examination (Part II)
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Risk Assessments BY JONATHAN FOXX
n Part One of this two-part series, I noted that “the regulator will determine whether advertisements and promotional materials provide timely, clear, and understandable information about the existence of costs, payment terms, penalties or other terms and charges, the reasons for their imposition, and the salesperson’s compensation from cross-sales.”1 Just as an examiner will review the advertising materials using various metrics and means, so also should the mortgage loan originator use
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three tools to ensure compliance with advertising rules. The tools are: l Advertising manual, with a host of supporting forms; l Record retention, containing all advertisements and reviews thereof; and l Forms and checklists, constituting all loan products and origination methods. In this article, we are going to explore these three tools. While the considerations do not encompass all the requirements and conditions relating to each
tool, I hope to provide a general understanding of how these should be designed and, most importantly, how they must be interfaced with one another. Advertising Manual At the outset, let me clarify the importance of distinguishing advertising policy and procedure from an advertising manual. While the former often does not contain the latter, the latter most certainly contains the former. That is to say, a policy and procedure may or may not be actively given to employees; however, a manual is always
given to them. The advertising policy may set forth rules and philosophy, but the manual is the actual implementation guidelines that an employee consults to find decisive standards. Many companies have an advertising policy and procedure document, sometimes relying on it to serve the purpose of an advertising manual. However, employees—such as loan officers—need to know not only policies and procedures but also the whole gamut of potential conditions that affect their advertising campaigns. Only an
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on-going monitoring of advertising compliance. A signed attestation should be a requirement of employment. There are three fundamental purposes of the advertising manual: 1. The employee must sign for receiving it. The reason for such receipt is to ensure that the employee has proven receipt and will be held responsible for meeting the requirements therein. 2. The company must set forth its advertising standards. This means not just training on the
manual or learning the company’s advertising rules. It means also empowering the employee to seek immediate guidance at all times, irrespective of availability to compliance personnel. 3. Interaction between employees and compliance department. As part of the process toward approval by the compliance department, the manual provides forms that serve as a firm record of advertising that is duly and properly authorized by the company.
At a minimum, the advertising manual should provide rules and guidance in regulatory risks and advertising restrictions. However, a comprehensive document contains far more than statements of policy. It begins with concise definitions of advertisements and promotional materials. Furthermore, the manual should set forth the applicable regulations that frame advertising compliance. Most importantly, there must be a written set of approval procedures, which contain continued on page 92
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advertising manual satisfies this overall need. Every employee that receives the advertising manual must sign an attestation of receipt. This document has several purposes. It confirms that the employee has been put on notice about the company’s advertising rules and guidelines; it may be used as proof that the document is expected to be complied with or, if not, the employee will be disciplined; it demonstrates to an examiner that the company proactively provides such guidance; and, finally, it affirms the company’s commitment to
Crawling Inside
the Head of First-Time Borrowers
BY BUBBA MILLS
“No one cares how much you know, until they know how much you care.”—Theodore Roosevelt t may be the most gratifying event of any mortgage lender’s life– helping the first-time homebuyer purchase that first house. The excitement of successfully navigating the biggest purchase in life is palpable. Relief all rolled up into joy and exhilaration. When the American dream of homeownership is fulfilled, it comes with a rainbow of breathtaking emotions. If serving more first-time borrowers is one of your goals for 2016, please keep reading. I have what I think will prove to be some helpful information and advice for you. As you’ve likely heard, the generation of would-be first-time homebuyers—the Millennials, aka those born in early 1980s to the early 2000s—are not buying homes at the same rate as generations before them. In fact, the total share of first-time homebuyers declined for the third-straight year in 2015. And just 30 percent of homebuyers in March were first-time buyers, well below the historical average. Of course, lenders need to understand why this is. You not only have to understand the
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problem to solve it, you also need to know the mindset of first-time homebuyers so you can meet them on their terms. I’m sure old Teddy Roosevelt would agree, demonstrating that you understand where they are coming from is the perfect way to show you care. As it stands today, many analysts say firsttime homebuyers are delaying homeownership for these reasons: 1. The rise in home prices due to a shortage in supply. 2. The inability to afford a downpayment due to relatively high rental-costs educational debts. 3. Poor credit. Many young people haven’t been able to build their credit. In a new study from Experian, a third of future first-time homebuyers say their credit score might hurt their ability to buy a home. And, 45 percent said they have delayed a home purchase to improve their credit score first. 4. A general desire to become more stable before buying. A new survey from NeighborWorks America says 43 percent of first-time homebuyers want marriage and kids before a home.
So where does this leave lenders who need buyers? The good news is 2016 is looking more favorable for first-time homebuyers. l The National Association of Realtors (NAR) says continued strong job growth and interest from potential young homebuyers will likely improve the number of first-time buyers this year. l Interest rates remain low with average fixed-rates well below four percent. l First-time buyer programs, featuring low or no downpayments, are up and running. l Nearly three-quarters of Millennials surveyed in the Experian study said they are working to improve their credit, paying down debt, making sure bills are paid on time. So, with all of this in mind, my tips for reaching first-timer borrowers as you move into the rest of 2016 are these: 1. Stay focused on renters … relentlessly. Studies show
that upwards of 70 percent of first-time buyers have rented before buying a home. And keep at it: It generally takes up to 12 mailings to get results. And increase response by offering something of value—free reports on saving money, free pre-qualifications, or downpayment assistance. 2. Hold seminars. New borrowers do attend seminars—even those who are still squarely on the fence. And set regular presentation dates. Think of these seminars like you do mailers— it takes many to get conversions. 3. Team up. Sure, a real estate agents is the obvious partner, but consider home inspectors, attorneys, insurance reps, financial planners, etc. 4. Stay passionate. As I mentioned in the beginning of this article, helping people get into their first home is incredibly gratifying. Show your enthusiasm at every turn and with everyone you meet.
Bubba Mills is CEO of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit CorcoranCoaching.com.
Brokers Turn to Direct Mail
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veryone knows direct mail can work, but it’s no secret that mail response has been in a slump for the last few years. Now it has risen back to the top. The most widely used marketing method for top mortgage brokers today. Better results than Internet leads, live transfers or online marketing. Direct mail is quietly taking the nation by storm. More loans are being funded today from direct mail than any other form of marketing. For brokers, the business is all about volume. Finding a marketing campaign that can produce consistent results is more important than ever. In today’s fast-paced environment, there’s just no time to shop around for marketing products and services in hopes of finding one that works. Your time needs to be spent closing loans. What’s going to consistently bring you the highest volume of calls while keeping the return-on-investment (ROI) you need to be profitable? A campaign you can track? One that provides reports that will keep you ahead of industry trends? Leads management tools that will allow you to work five to 10 times more loans at once? Direct mail incorporates all of these. This is why it has risen back to the most frequently used marketing method for today’s top mortgage brokers. In order for mail to work effectively, it needs to be dropped consistently. Companies that only drop mail three to four times per year (or less) usually see varied results, while people who drop mail weekly or bi-weekly all year long seem to have much more consistent, scalable and profitable results. Plan your growth and marketing efforts accordingly and keep it consistent throughout the year. Starting and stopping will decrease the effectiveness of your campaigns. You need consistent results so you can effectively follow the trends in the market. Keeping a pulse on your market will allow you to stay ahead of your competition. Most of your competitors wait to see what the market is going to do before they decide to make a move. The top mortgage brokers of today see what is happening now and forecast the future allowing them to capitalize while everyone else is waiting. Don’t wait to see everyone else’s results. Get out there and start producing top results for yourself. TagQuest customer spotlight: Devin from Texas Marketing method: Direct mail voice l Volume: 5,000 pieces l Results: 1.5 percent response rate from the mail—another one percent response from follow up voicemails equaling a 2.5 percent total response! Highlights of the campaign that worked well … “The personalized voicemails added the extra magic to increase my response rates.” Highlights of the campaign that may appeal to others in the industry … “Every time my phone rang, at the other end was an interested and qualified person. Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm offering the most up-to-date, cutting-edge marketing solutions for the ever-changing mortgage industry. Utilizing more than 12 years of marketing expertise, along with an intimate knowledge of the mortgage industry and the very best technology available, TagQuest consistently produces new customers for its mortgage clients. TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 717-8980 or visit TagQuest.com.
IMAGINE • INNOVATE • SUCCEED SPONSORED EDITORIAL
nmp news flash
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be followed not only by large financial institutions, but also by the individuals who work for them.”
More Millennials Seeking Real Estate Careers
FHA Proposes New Rule to Strengthen HECM Program
The Federal Housing Administration (FHA) is proposing a new rule that it claims will strengthen its Home Equity Conversion Mortgage (HECM) program. The proposed rule includes changes and consumer protections designed to help ensure senior borrowers are sustained in their homes. These new changes include confirming that HECM counseling occurs before a mortgage contract is signed, requiring lenders to fully disclose all HECM loan features, capping lifetime interest rate increases on HECM adjustablerate mortgages to five percent, while reducing the cap on annual interest rate from two percent to one percent, and mandating that lenders pay mortgage insurance premiums until the HECM is paid in full, foreclosed on, or a Deed-in-Lieu (DIL) is executed rather than until when the mortgage contract is terminated. Furthermore, the new rule will allow utility payments to be considered in the property charge assessment process. And a new “cash for keys” program will be launched that encourages borrowers to complete a DIL and exit the property rather than face a lengthy foreclosure process. “We’ve gone to great lengths to protect seniors and ensure they can remain in their homes where they’ve raised families and where they hope to live out their days,” said Ed Golding, principal Deputy Assistant Secretary for housing at the U.S. Department of Housing & Urban Development (HUD). “As we grow older as a nation, we have a responsibility to ensure reverse mortgages remain a safe, secure, and sustainable financial option for future generations of senior homeowners.”
An increasing number of Millennials are seeking out real estate careers, according to new data released in the 2016 National Association of Realtors (NAR) Member Profile. In this year’s report, the percent of NAR members over 60 years old dropped to 30 percent from the 41 percent level last year, while of the number of member younger than 30 years rose to five percent from two percent in 2015. Thirteen percent of NAR members who have two years or less experience are under 30 years of age. There is also an increased level of diversity: 89 percent of real estate professionals with 16 or more years of experience are white, compared to only 78 percent of those with two years or less experience. The median gross income of Realtors also fell last year, from $45,800 in 2014 to $39,200 in 2015; not surprising, given members’ income typically corresponds with experience. Those with 16 years or more of experience reported a median gross income of $73,400, up from $68,800 in 2014, while members with two years or less of experience had a median gross income of $8,500, a decrease from $9,100 last year. Cash Sales Dominate Lower Market Value Sector
Cash sales made up 35 percent of all first quarter homebuying transactions, according to new data from Black Knight Financial Services (BKFS). This is below the 37 percent level from the first quarter of 2015 and the 45 percent peak set in the first quarter of 2011. However, while cash sales make up 30 percent of purchases in the top 20 percent of market
Watt to FHLBanks: Time to Shape Up
their advances,” Watt said. “While lending to insurance companies remains an important FHLBank activity, the FHLBanks face different risks when lending to these companies compared to other members. Second, the system as a whole, and some FHLBanks in particular, have advances concentrated to a few large members. Across the system, the top four borrowers accounted for 24 percent of aggregate advances at the end of 2015. Business concentration with a small number of borrowers can threaten
profitability if one or more of these borrowers suddenly decrease their demand for advances. “Third,” he continued, “concerns have recently arisen about and FHFA has started a review of the system’s increased usage of short-term funding in the form of discount notes. At year-end 2015, discount notes constituted 54 percent of outstanding FHLBank debt, compared to 43 percent at year-end 2014 and 39 percent at year-end 2013. Short-term continued on page 57
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The regulator of the Federal Home Loan Banks (FHLBanks) is not pleased with how these institutions are conducting business, and he is not shy about stating his views. In a speech delivered yesterday before the 2016 Federal Home Loan Bank Directors’ Conference in Washington, D.C., Federal Housing Finance Agency (FHFA) Director Mel Watt did not mince words on how these institutions operate. “We remain concerned about the extent to which some FHLBanks continue to rely on
non-core mission assets to support their earnings,” he said, noting a mere two percent drop in the overall level of FHLBank assets held in investments between 2014 and 2015. Watt spelled out three key areas where he expected the FHLBanks to show signs of improvement. “First, for those FHLBanks that have large exposures to insurance company members, we continue to encourage you to exercise due diligence to establish conservative haircuts and controls over collateral pledged by them in support of
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value, they constitute nearly two-thirds of the home buying transactions in the bottom 20 percent of market value. “As the inventory of distressed properties has dried up nationwide, the overall share of cash sales has been on the decline as well,” said Black Knight Data & Analytics Senior Vice President Ben Graboske. “The prevalence of cash sales at the low end of the market can likely be chalked up to two primary factors. First, negative equity is still higher than average among this segment of the market, resulting in increased distressed discounts for buyers. Second, lower-priced homes simply require less capital to purchase outright, making cash sales possible for more people.” Separately, Black Knight is also reporting that home equity lines of credit (HELOCs) have recorded annual delinquency rate increases in two of the past six months. This is the first time such increased have occurred since June 2012. The company credits this situation to an 87 percent spike in delinquencies among 2005 vintage HELOCs over the past 12 months, which ended their draw periods and began amortizing in 2015. The 2006 vintage HELOCs that began amortizing this year make up approximately 17 percent of active HELOCs and the 2007 vintage is another 18 percent, which the company forecasts as contributing to a continuation of this trend.
The
Why You’re
Mortgage
Godfather
our approach to sales is modeled after a long practiced method of how to do what you do and it is more than likely the wrong way. Salespeople in the mortgage industry used to be handed a phone book and told to find the names of real estate agents in their area and pick a few that they thought were close enough to the salespersons’ home. “Go see some of them and make friends,” they were told. And for the most part, that is just what they did or tried to do. I’m betting that most of you don’t remember or never knew that the only way we did business back then was to form good business relationships with the real estate agents we called on, prove ourselves by answering the phone, knowing the status of the loans in our pipeline, and had a firm understanding of the rules set by the FHA, VA and FNMA. I’m betting that the greater majority of you have never read a mortgage or note, never picked up the HUD Handbook, or perused FNMA’s guidelines for even half an hour. Then, along comes a refinance market, a market which did not require an MLO to leave their desk. All they had to do was sit by the phone and wait for it to ring. Their broker/owners were placing ads in every known publication, bought list upon list of eligible refi clients, told all of their friends how easy it was to get money out of their equity, and for the most part, failed to keep in touch with the most important people in their rolodex … their real estate agent referral sources. I watched it happen. In fact, when the MLOs started to go back into the field, littered with the bodies of long forgotten MLOs who had been thrown out of real estate agent offices, they were surprised to find that, in most cases, they too were persona non grata. Real estate agents asked, with forked tongue no longer
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Wrong and What to Do About It implanted, but viciously protruding between pursed lips, “Where have you been for the past five years? Now you want my business, when for the last half decade, you’ve been ignoring me? Well, go on your way because I don’t need you anymore!” It took a very long time, another two or three years before the LOs could figure out any way to generate business, and what was pronounced as the “way,” but that is all wrong. I coach people for a living. I’ve been doing it for more than three decades. Most of my clients are in the mortgage business. My ability to help them is built upon having spent five-plus decades in this one industry, most of it in sales. The clients I work with, when they meet with me for the first time, via telephone, are asked to complete a questionnaire as to how they generate business. It’s pretty simple. The question that elicits, almost invariably, the same response is “How many real referral sources do you have?” The answer is almost always five or six, but sometimes it is as low as three or four. “That is just pathetic,” as my eighth grade teacher, Sister May Denise used to yell at us when we gave an unsatisfactory answer to a basic question about history or arithmetic. It is pathetic what most of you do. It takes me back to the 1960s when the owner of a mortgage company, usually someone who had been a successful salesperson, handed the phone book to the new hire. Many years ago, my nephew Peter was waiting to take the course in law enforcement when he decided that rather than just sit and vegetate, he would put his mind and brain to work to learn something completely new. Having spent many years in the company of my father, a former real estate and mortgage broker, Peter was intrigued by the business of marrying a buyer to a seller. Peter went to the prescribed school and was
smart enough to pass the state test on his first try. Then he was successful in securing a desk at a high-powered real estate firm, well-respected and very well known. It was almost immediate that the “parade” started. The one where loan officers of all stripes, backgrounds, experience, motivation and training started to traipse by his cubicle. They were like vultures around a dying carcass, as Peter described them. They were relentless. They came time after time. And Peter, being the nicest he could, let them know how new he was, how inexperienced he was, and how much he wanted to be a success. All of this consternation caused Peter to pretty quickly become even more confused that he was at the beginning of his tenure and within a few weeks, called me to ask my opinion on how to handle this onslaught of people he had never known nor ever expected to know. “Peter?” I inquired, “What do they say when they come to your cubicle? What do they talk about?” “They mostly say that they have the lowest rates, some say they will run a credit report for any leads I get, some talk about the programs they have and how their service is so good … that I’ll love doing business with them. And since I’m a bit curious about some of these personalities, I asked a couple of them to tell me about another member of the parade. They have been only too happy to denigrate their peers.” His description of these people reminded me of a parade where the viewers are asked to rate the quality of the floats: Their colors, ingenuity, originality and content. “Peter … how do you feel about these people? What has your manager told you to look for? What criteria would you like to use to determine who is really good at their job,” I asked. “I have no idea Uncle Ralph,” replied Peter. “They all seem alike to me. My manager said to
BY RALPH LOVUOLO SR.
find one I liked.” A client of mine has recently acted as a special reporter for a national mortgage publication meant to better inform the specific audience they reach. His assignment was to interview executives of major companies and ask what it is that their company does that is their special sales niche. What is the secret that separated them from all their competitors? It is clear to anyone who has viewed those interviews that the message the executives want the world to know is that first, they have the best and widest variety of innovative programs; second, they always give their clients the best rates; and third, they never charge points. So when I review the conversations I had with my nephew and then about 20 years later am exposed to about a dozen actual interviews, shot on video so there is no mistaking what the participants were saying, I’m telling you that what you probably do is wrong, illconceived and improperly taught. I’m reminded of the secrets that most mortgage salespeople say they have, that they know the way to originate business. I’m telling you it is probably wrong and you should stop it immediately, start on a new system and practice it every day. I have recently taken on a new client who has been stumbling about because the person who trained him by was a selfconfessed “dinosaur” who was still bringing donuts, bagels, coffee and food trays to the few offices he actually went to see. When I told him how to become a better salesperson, I could see
the reluctance right through the phone, I could hear the questioning in his voice and sensing the holdback of hearing new ideas. The most powerful thing in the universe of sales is “ideas,” but ideas will get you nowhere if you don’t put them into action. Ideas have so much power that they are incalculable. What prevents us from using that power is that there is some fear that prevents us from enacting them. The most powerful emotion, bar none, is fear … the fear of acting silly, stupid, inferior, juvenile, criticism, success, past, future, children, parents, sisters, brothers, aunts, uncles, cousins, co-workers, clients and the list goes on and on. You cannot succeed until you can put your fears aside and enact ideas that will produce the kind of results that you say you want. It is important here that I convince you that fear of the new style of sales will earn much more money for you than you ever believed. I will also state, emphatically and absolutely, that if you continue to do what you’ve been doing, or not doing, you will fail and fail miserably. If fear of failure is not enough to spurn you to do something different then I think this is the point where you can stop reading. I’m going to offer you a way of earning a living that has been tried, tested vetted and practiced that is proven beyond a shadow of yourself to be life changing. Just to whet your appetite is one idea … help your real estate agents by suggesting this: Call all their past buyers/sellers at least once a quarter and ask them for a referral. Boom!
Ralph LoVuolo Sr. has more than 50 years in the mortgage Industry, with the last 30 as a coach. He is past president and founder of the New York Association of Mortgage Brokers, and long-time member of NAMB— The Association of Mortgage Professionals. He can be reached by phone at (917) 576-1230 or e-mail Ralph@MortgageMotivator.com.
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The
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Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.
Castle & Cooke Mortgage Adds New Nashville Branch
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Castle & Cooke Mortgage has announced the opening of a new branch in the Nashville region, serving Brentwood, Tenn. and its surrounding areas. Branch Manager Ryan Workman will be leading the branch’s internal expansion, with plans to recruit six new loan originators during the next two quarters. Castle & Cooke Mortgage plans to open more than 15 new branches in key markets across the country in 2016. Workman brings more than 12 years of mortgage lending experience to his role as branch manager for the new Brentwood location. Having led several teams, most recently serving as branch and area manager for FBC Mortgage, Workman has a track record of delivering and sustaining revenue and profit gains in highly competitive markets. He is also committed to ensuring that borrowers have a positive experience. “More than just having the most diverse selection of loan products and the fastest processing times, client experiences at our branch will have a family-driven mentality,” said Workman. “From my team all the way through to the client, I have always believed that the people I work with are an extended family. Whether we are golfing together, having a community appreciation event, or closing a loan, each and every person who walks through our door will have a
great experience. I look forward to showing our Nashville clients what best-in-class customer service looks like, every single day.” Adam Thorpe, president and chief operating officer for Castle & Cooke Mortgage, said, “Ryan Workman is an asset to us, not only as a leader, but as a recruiter. He will be able to offer his newest loan originators robust personalized marketing and sales support and technologies, an exceptional administrative foundation, and the support of a seasoned corporate team. At Castle & Cooke Mortgage we have learned that a constant commitment to delivering the most advanced tools and support to our loan originators has a great impact their success and their level of job satisfaction. We are dedicated to making sure that the employee experience at Castle & Cooke Mortgage is just as exceptional as the experience our clients have when they do business with us.” Guardian Mortgage Opens New Austin Location After recently opening branches in both San Antonio and Dallas, Guardian Mortgage Company has opened its newest location in Austin, Texas, Guardian’s sixth Texas location and the 13th office across the nation. The company
currently operates offices in Grand Blanc and Troy, Mich.; El Paso, Plano, Arlington, Richardson, Dallas and San Antonio, Texas; Santa Fe, Los Alamos and Albuquerque, N.M.; and Scottsdale, Ariz. More locations, including one in Denver, Colo., are slated to open in 2016 and 2017. Branch Manager Chris Samples and Loan Officer Brian Crooks will be operating the new Austin location. The branch is actively recruiting additional experienced industry professionals to join the team. “We want to serve Austin homebuyers as best we can,” Samples said. “And to do that, we need the best team possible. We’re looking to add several experienced and qualified loan officers to our office in the coming months. We can’t wait to start work in Austin. We’re ready for this!” Optimal Blue and SimpleNexus Partner to Enhancing LO Productivity
The cloud-based provider of Enterprise Lending Services (ELS) to the mortgage industry, Optimal Blue, has announced that it has entered into a technology partnership with SimpleNexus. Optimal Blue’s compliant pricing services will now be available to industry professionals and consumers through the SimpleNexus mobile platform. Having this
blend of resource tools at their fingertips, loan officers will be more efficient in nurturing clientele and facilitating all phases of the loan process. There has been a demand for pricing through mobile platforms, so executives from both companies are confident that this alliance will set the new standard for compliance, convenience, security and mobility. The combination of Optimal Blue’s expertise in pricing, along with the robust capabilities of SimpleNexus’ mobile platform, will provide loan officers and other stakeholders with increased profitability and productivity by providing the necessary tools when and where needed. “SimpleNexus enables originators to interact with borrowers and agents, not only during the loan, but before and after as well,” said Matt Hansen, president of SimpleNexus. “This strategic partnership was an ambitious accomplishment. Optimal Blue’s reputation and focus on innovation align perfectly with who we are, so we are confident that lenders and their partners will see increased production when utilizing these technologies.” “This is the perfect blend of skills and services provided by two best-in-class companies,” said Mark Coupland, vice president of business development at Optimal Blue. “This will further extend the reach of both companies’ offerings into the loan origination process, benefiting all stakeholders in the process and most importantly, the consumer. This is just the beginning.”
Parkside Lending Forms Broker Advisory Board
Local officials and business leaders recently joined executive team members and employees of Fairway Independent Mortgage Corporation to celebrate the ground-breaking of the company’s new corporate headquarters to be located on the east side of Madison, Wis. “The employees of Fairway are grateful and humbled to have
this opportunity,” said Fairway CEO Steve Jacobson. “We will continue to strive for daily improvement, with continued focus on helping and serving consumers with their mortgage financing needs.” Fairway Independent Mortgage is constructing their new 97,000square foot office on the American Center property, just a few miles from one of its most successful branch offices in Sun Prairie, Wis. Across the street from the current corporate office, the new building will have the continued on page 48
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Guild Mortgage Acquires AmeriPro Home Loans San Diegobased Guild Mortgage has announced that it will acquire Austin, Texasbased AmeriPro Home Loans. The terms of the acquisition, which is scheduled to close on July 1, were not made public. AmeriPro Home Loans has 29 branches in six states and generated $750 million in loan volume in 2015. Since 2008, it has been a subsidiary of Tenura Holdings Inc., an Austin-based investor in realty, title and insurance companies. Guild Mortgage Co. has 234 branch and satellite offices in 25 states and generated $13.8 billion in loan volume last year. “We’ve admired Guild’s growth from afar over the past couple of years,” said Chad Overhauser, president of AmeriPro Home
Fairway Independent Mortgage Breaks Ground on New Corporate HQ
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Parkside Lending LLC has announced the creation of a new Broker Advisory Board that is designed to leverage the expertise and feedback from a diverse group of Parkside Lending’s wholesale clients. Advisory Board members will meet quarterly with Parkside Lending’s senior management team, led by Matthew Ostrander, chairman and chief executive officer of Parkside Lending. Their discussions are intended to provide input that will be used to optimize Parkside Lending’s products, enhance the customer experience and improve communication. The participants, in turn, will benefit by learning about opportunities, business strategies and peer successes and challenges. “We are excited about this new forum as it will provide us with constructive insights that will help guide future Parkside enhancements and strengthen our ability to deliver the ‘Power of Caring,’” said Ostrander. “At the same time, the individual Board members will benefit by strengthening their relationships with members of our senior management team. Ultimately, the exchange of ideas and information will positively influence their businesses and ours.”
Loans, who will now become a regional vice president at Guild. “Both companies have an entrepreneurial spirit and dedication to providing the highest levels of customer service. Guild adds more than 50 years of experience in the industry, plus new resources and products to benefit every homebuyer we serve.” Overhauser started his mortgage banking career in 2002 and formed AmeriPro in 2003. Since then, the company has grown from one branch and three employees to 29 branches with more than 250 employees.
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June 2016 l Written and compiled by Rick Grant of the Consumer Financial Protection Bureau (CFPB). Today, if you Can Technology Still Show Us What’s Next creation ask an industry executive about what’s coming next, their answer will focus his is the technology issue of National Mortgage Professional Magazine and despite the fact that NMP Next can cover any topic that sheds light on the future of our industry, it seems worthwhile to spend some time focusing on technology. When I first started writing about the mortgage industry in 1997, technology was just moving from the position of trusted servant to secret weapon. By the time I got involved, pencil and paper loan applications were pretty much a thing of the past, thanks in large part to companies like DocMagic that made document technology so easy that brokers would embrace it. At that time, mortgage brokers were lifting about 70 percent of the weight on the front end of the business. By the late 1990s, people expected to use technology to originate loans and service them, although Alltel’s servicing technology at that time was still a DOS-based green screen connected to a mainframe in the back room. The IT department, if the lender had one, was pretty much relegated to keeping the file server operating and running more cable as the companies grew … but that was all about to change. One of the very first special reports I wrote was about a new kind of loan product that was exploding. Back then, they called it “B&C Lending” and the lenders who were originating these products were making ungodly amounts of money. One of the first meetings I covered was an investor meeting in Washington, D.C., where a number of companies I would later write about extensively were explaining the upside potential of these non-conforming loan products. People were excited. Suddenly, everyone wanted to know how to get into the sub-prime lending business, but there was little, if any, technology available to help scale their lending operations. Technology vendors stepped up, and for the next decade or so, all an observant executive had to do in order to determine the future direction of the industry was to watch the technology news. If someone was ordering or buying technology, you could bet they’d be making money with it in the days ahead. That all changed with the crash, the passage of Dodd-Frank and the
T
more on compliance than technology. Sure, technology is essential for navigating today’s complex regulatory environment, but for the past decade or so, it has not been the leading indicator it was when I first came into the business. This, in my mind, opens the industry up to a serious risk that was probably best framed recently by Alan Murray, editor at Fortune Magazine, when he wrote, “One of the great spectator sports of the digital era is watching to see whether companies with great domain expertise can develop digital skills faster than the digital ‘natives’ can develop domain expertise.” For much of its history, the mortgage industry has been very comfortable picking up technologies 10 years after they have be shown effective in some other industry. Fending off big technology firms has not been particularly difficult and still isn’t. It was only about a month after Google announced that it would jump back into the mortgage lead generation space that it jumped back out again. This may have led many operating here to a false sense of security. Digital natives don’t know what they can’t do and that makes them particularly dangerous, especially to an industry that has lost pretty much all of the consumer goodwill it ever had, which wasn’t much to begin with. Technology may no longer be the indicator it once was as to where the best companies were planning to go next, but it can still be a reliable indicator of where financial technology firms think they can go next. Wise executives will pay heed. But as we look at the direction technology is taking our industry, we must not make the mistake of assuming that it will always take us somewhere new. Need a case in point? The FHA program began insuring home loans for lower-income borrowers in the early 1930s. No one would call it a new program. And yet, one innovative wholesale lender has committed its people and its technology to specializing in the origination of these loans, revitalizing the program as a result and helping thousands of new homeowners in the process. The company is Freedom Wholesale Mortgage and we bring you that story in this issue as well.
The Future of Corporate Storytelling
A Conversation With Mark Dangelo Following the career trajectory of the typical mortgage technology executive is usually straightforward. They start out as project managers or junior developers and work their way up. Many start out in banks, where much of their expertise is in network management and security. Some are entrepreneurs that started small tech companies and grew. A few are former mortgage lending executives who saw a need for a tech tool and found a way to develop it. Mark Dangelo doesn’t come from any of these backgrounds. When I met him, he was chief technology officer for Ocwen, back when that firm was just setting up their VOIP lines to connect offshore resources to its servicing and technology divisions. Mark spent seven years at Ernst & Young on a team studying technology and advanced architecture along with four years in Manhattan working for A.T. Kearney on domestic and global stock exchanges and very large M&A’s. He worked for Key Bank and a handful of other financial services and consulting firms before writing his first book, Innovative Relevance, about strategic technology investments that made sense across the enterprise. He’s written two books since then, including a 100-page “White Paper on Mortgage Industry Outsourcing,” co-authored by yours truly (Rick Grant). When I think about what’s coming next in technology, I always call on Mark. I called him recently. Here is part of that conversation. From a technology perspective, what do you expect to see visit the financial services industry next? I expect to see virtual currency leading to virtual lending to creating a comprehensive individual digital identity that uniquely identifies a customer across organizations and product types. This will go well beyond the two-dimensional view of the borrower (credit, collateral) we focus on in the mortgage industry. We’re going to see comprehensive disintermediation of our traditional banking solutions offered up by outside or nontraditional bankers, especially as the election draws near and deregulation becomes a priority. We’re already seeing people pushing hard for compliance repeals. This will benefit fintech as much or more than it benefits traditional industry players. As banks form partnerships with fintech firms, we’ll see multiple layering of orchestration solutions (or white labeling of patented apps) especially within layers of cryptography necessary for virtual currencies, virtual branches and predictive consumer intelligence. Things are going to get complicated for us, but for the consumer much simpler. Don’t be surprised to see virtual reality branches become an oft-seen replacement for brick and mortar. What risks/opportunities does this view present to mortgage lenders and servicers and the companies that support them? I expect a lot of legal risk. Patent wars brought forth by fintech groups and traditional banks eager to find revenue opportunities or defend leading investor brands could become common. Meanwhile. Higher development costs will create barriers as developers work to overcome a lack of traditional skills needed for rapid cycle iterations of products and services. Failure will likely lead to avoidance instead of refinement. Meanwhile, greater returns for initial first movers will lead them to double down. Like we’ve seen for technology developers in other industries, success will breed arrogance.
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Another risk will be fixation on a genre of solutions including social media, mobile offerings and big data to the exclusion of larger changes taking place in currency, cryptography, virtual reality and virtualization. It’s very easy to get distracted by the next shiny thing, especially when you are trying to please consumers, who are all about that. If you were working as a CTO today, what would you be asking management for? Why? My list would include: l Retirement of applications that might be considered leading edge l Creation of variable costs of labor pools due to rapid skills and scare availability l Ability to conduct transient joint ventures along with outsourced availability for anything already in production l Short-lived apps that are compliant but disposable, to guarantee data needed for consumers, management and investors l Raising of capital pools for rapid response that can be marshaled quickly without attracting competitive responses l Back away from traditional fee based income models, instead focusing on new offerings that can be value priced l Less of a “cool” factor and more substance for all aspects of the financial services supply chain What are you working on now? After three years of research, which I spent compiling a massive amount of data across all operational segments (covering 8,000 unique criteria), I have created a set of digital roadmaps for financial services enterprises. These maps blend characteristics we see in today’s FS business with those we expect to see in future financial services companies. The models are multidimensional and allow for repeatable evaluation as a company iterates forward, and not just a singular evaluation of a particular solution. The model takes into account the likelihood of benefits versus risks with existing and emerging enterprises. One of the first applications for this is to allow for the rapid transformations of brick and mortar branches into virtual reality ones. To reach Mark Dangelo, e-mail him at Mark@MPDangelo.com.
Freedom Mortgage Wholesale: Expanding Within the FHA Lending Space In the wake of the subprime lending crisis and the subsequent foreclosure crisis, millions of Americans that had previously been new homeowners lost their homes. Millions of additional consumers with lower income or less than perfect credit found themselves locked out of the housing market. Fortunately, a government program that had been quietly working since 1934 stepped into the breech. Since inception, the FHA lending program has continued on page 44
nmp The future of corporate storytelling Angel Oak Mortgage Solutions LLC
DocMagic
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Angel Oak Mortgage Solutions is leading the way in the alternative lending space. Offering wholesale subprime and alt-doc options, Angel Oak brings safety and reliability back to the non-prime market.
Caliber Home Loans Inc.
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One Commerce Plaza 99 Washington Avenue, Suite 309, Albany, NY 12210 800-345-3822 x 0 www.ernstpublishing.com
Caliber Wholesale’s success is built on a full array of conventional, government and Portfolio loans, combined with our reputation of providing our business partners with the highest level of service.
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Citadel Servicing is committed to the emergence of Non-QM/Non-Prime lending. Pioneering the most innovative lending programs which include Alt Doc, life events (FC, BK, and SS), $3mil loan amounts and low fico scores.
JUNE 2016 n Michigan Mortgage Professional Magazine n
DocMagic delivers the best end-to-end Document Preparation, eDelivery and Compliance Solutions in the industry. Over 10,000 customers in fifty states rely on us for innovation, quality, and service.
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REMN Wholesale 194 Wood Ave. S. 9th Floor 732-738-7100 www.remnwholesale.com Iselin NJ, 08830 REMN Wholesale provides same day turn times every day on new file submissions. With a commitment to the broker experience, REMN is leading the way as a preferred partner in the mortgage industry.
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nmpNEXT is the future of corporate storytelling. It melds the sponsored content that publications depend upon with the editorial focus that lends credibility to the sponsor's most important stories. In NEXT, Rick Grant, NMP’s Special Feature Editor, will look at what's just around the curve by telling stories about the firms that are leading the way. A variety of sponsorship levels allow advertisers to balance budget with reach and puts marketing managers in control of one of the most powerful channels available for advancing their brands. nmpNEXT is a monthly feature in National Mortgage Professional Magazine. Don't miss this opportunity to brand your company, products and leaders as progressive & forward thinkers.
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helped approximately 40 million Americans purchase or refinance homes–nearly seven million of those just during the most recent crisis, when FHA experienced a volume increase of 500 percent. FHA currently has 4.8 million insured single-family mortgages and 13,000 insured multifamily projects in its portfolio. In 2015, single-family FHA loans saw a significant double-digit percentage increase from 2014. Thanks in large part to the Obama Administration’s reduction in some FHA insurance premiums. Today, FHA says the number of single-family loan delinquencies has declined to pre-crisis levels. This decline, the government says, indicates the housing market and economy are beginning to recover. But there are still millions of Americans who can benefit from an FHA-insured loan. Fortunately for these borrowers many lenders continue to support this important program.
FREEDOM MORTGAGE FHA VOLUME* vs. FHA INDUSTRY VOLUME* FHA
20%
25%
24%
25%
FREEDOM MORTGAGE
28%
30%
30%
LOAN VOLUME
5% 0%
2011
2012
2013 YEAR
11.9%
11%
11.4%
10%
14%
15% 13%
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A real need in today’s market The fact that FHA’s loan volume exploded at the same time that subprime lending went away led many to believe that FHA was the new sub-prime. A few independent mortgage lenders have never subscribed to that theory, instead treating these borrowers as worthwhile investments and good long-term mortgage customers, which they have proven to be. The FHA program is actually the best option for many of today’s home loan borrowers. Companies that understand this product can provide benefits to the borrowers who need its flexible program parameters. One company supporting FHA is Freedom Mortgage, an FHA approved lender since the 1980s who has made a serious commitment to the market. Since 2011, Freedom has been a key driver in making the American dream of homeownership a reality for over 41,000 homeowners with less than perfect credit scores. Over the past four years, their wholesale FHA volume has seen exponential growth and now accounts for about 25 percent of total closings—much of that gain can be attributed to its purchase business. And, if you add the VA program to the mix, government-insured loans account for over 61 percent of Freedom Wholesale’s loan volume!
2014
2015
* as a percentage of all products total market volumes
If you compare Freedom Wholesale’s growing FHA loan volume to the overall national trend for FHA lending, which has leveled off now
that we have some distance from the downturn, the company’s leadership position becomes clear. Many consumers face challenges that will often knock them out of eligibility for a conventional mortgage. It can be their credit score, but often it has to do with the funds required to close or fund the downpayment. FHA financing is available with as little as 3.5 percent down and borrowers can use gifts as part of their funds to close. Finally, debt-to-income guidelines are not as stringent for these loans. Even so, lenders committed to FHA do not see today’s FHA borrowers as sub-prime. They are typically first-time homebuyers with limited downpayment and borrowers who have had some kind of extenuating circumstance that caused a period of derogatory credit– most usually caused by job loss during the economic downturn, divorce or medical emergency. Another class of FHA borrower is a buyer who doesn’t use traditional credit and therefore doesn’t have a FICO credit score. When these borrowers attempt to enter the housing market, they need to find a mortgage broker who can offer them an FHA loan. Borrowers should look to lenders and brokers who understand the risk, know how to underwrite the loans and employ a great team of underwriters. Well-trained and experienced underwriters are key to keeping the processing moving along smoothly, so that lenders and brokers can fulfill the promises they make to business referral partners and close on time. As for the appraisal requirements, the overall guidelines FHA has established for the real estate collateral are not significantly different from those in place for conventional loans. Appraisal management companies (AMCs) that employ FHA-approved appraisers are required, but beyond that, the requirements are not particularly stringent. Freedom’s wholesale underwriters would agree that the misconception regarding FHA appraisal requirements is still out there. An FHA appraisal is not that complicated to get, in actuality, it’s not much different than going out and getting an appraisal on a conventional mortgage. The experience to meet the need Freedom Mortgage Wholesale’s experience in underwriting FHA loans has paid off. The company is enjoying excellent performance in its portfolio of FHA loans. The company sells much of its production to the agencies, GNMA, FNMA, FHLMC or private investors. However, in the majority of the cases the firm retains the servicing rights and uses its own staff and servicing platform to service those borrowers. Industry wide, FHA delinquency and default has been decreasing steadily and Freedom’s experience mirrors that, management said. The slow but steady improvement in the economy and increasing properties values are expected to reduce delinquencies even further. The company’s success with the FHA loan product has enabled them to make good on their mission to ensure that qualified borrowers receive a second chance and another opportunity to achieve their dream of homeownership. As a result, Freedom Mortgage has grown into one of the largest and most successful FHA lenders in the country. One area in which Freedom Mortgage Wholesale demonstrates this leadership is in the area of FHA purchase loans. There are many firsttime homebuyers in the market today that want to stop renting, but have a high DTI or limited downpayment, as well as those seeking homeownership that have experienced a period of derogatory credit or financial problems that were beyond their control. The FHA program can rescue these borrowers, if it is offered by a lender who understands how to underwrite the risk and deliver the loan. As for risk, Freedom looks at FHA borrowers differently than other lenders. Instead of seeing these deals as inherently more risky, the company views FHA as a niche offering that can meet the needs of a special class of borrower that is just as likely to repay the loan as their conventional counterparts. The current economy backs this up,
The Future of Corporate Storytelling
with housing inventory low and rents high, consumers will be paying someone for shelter. It’s better for everyone if they are building equity in their own futures. A dedicated team to help brokers succeed Freedom Mortgage offers a full menu of mortgage products to meet the needs of any borrower, but FHA is hardwired into the company … it’s a part of its DNA. Freedom Mortgage Wholesale’s experienced account executives support brokers in the field as they work with FHA borrowers. They understand that they are doing the important work of providing the opportunity of homeownership to borrowers who otherwise may not have access to it. A robust FHA program is part of an overall program designed to provide full support for mortgage brokers who are intent on maximizing their volume by serving as many borrowers as possible with home financing that perfectly meets their needs. Freedom Mortgage Wholesale understands FHA guidelines thoroughly and employs underwriters adept at following them, which allows them to offer the products without overlaying a set of additional underwriting requirements. The next wave of borrowers our industry serves will be made up of former homeowners who have survived the downturn and who are rebuilding their credit profiles, Millennials who have eschewed traditional credit and do not have the credit profiles required for a conventional loan, and emerging markets borrowers who likely never had the opportunity to develop a credit profile before. This is where tomorrow’s loan volume will come from and only lenders who can offer a full menu of mortgage products—including FHA-insured mortgages—will be in a position to serve them. From the evidence we found, Freedom Mortgage Wholesale will be among the leading lenders who are in a position to help provide solutions for future mortgage borrowers and their brokers.
One of the interesting industry folk that I follow on Twitter recently posted this quote from South African author and social influencer Rich Simmonds (@RichSimmondsZA): “Don’t look for ideas to confirm your thinking, rather look for trends that will disrupt your thinking.” Not easy to do, especially in an industry as insular and highly regulated as the U.S. mortgage lending industry. Disruption is not something companies operating here are likely to engage in, not without attracting the attention of federal regulators anyway. Unfortunately, there is a new class of competitor that does not operate under the same restrictions. Loaded up with VC cash and with access to the public markets, these firms can make short term gains without every serving a consumer (or charging one, at least). When they fail, they fade away, but when they succeed, they disrupt the market. Already, these firms are launching innovative ways for consumers to raise or invest money (crowdfunding), move it around (peer-to-peer payment services) and understand their money (cloud-based personal accounting software). What will they attack next? Virtually invisible until they are funded, at which point it’s often too late, we can get a clue as to where they may go next by watching the consumer technologies that get the most attention in the market. After all, these
The Universal Translator We’ve seen it in science fiction movies for decades, but recently Waverly Labs release an earpiece that could remove the language barrier in the real world. Currently only capable of translating languages used by humans on Earth, the device known as Pilot looks like a hearing aid and can translate between English, Spanish, French, Italian and Portuguese, almost instantly. More language packs will come out for the device in the near future, including Germanic, Hebrew, Arabic, Russian and Slavic. The device is expected to cost less than $300 when it hits the market, which the company says will be next May. To make the story slightly more terrifying, the company launched the new product by raising nearly $2 million on Indiegogo (well, that was at press time, when there was still 22 more days remaining in the campaign). This firm is not the only company working on transaction services in real time, of course. A number of companies are working on this problem, including the big guys, Google, Microsoft and Apple. Last year, Skype released a translator featuring six voice languages and 50 messaging languages. So, where is the risk or opportunity to the mortgage business? We used to call them “Emerging Markets,” pockets of densely populated geography dominated by a minority population. These markets have now emerged and matured, but many lenders are still struggling to recruit members of these communities to sell mortgage to them. There are exceptions, of course, but imagine what a company could do if they could overcome the language barrier for less than $300 per loan officer? Then, all they’d have to worry about is culture. Computers That Understand Humans Having other humans understand what we say and vice versa is good, but it could even be more powerful to have computers understand us. Sure, we have Siri and Cortana and they do a fairly good job of translating what we say into a number of likely search routines or commands, but it’s not real human to computer communication. For that, we’ll need to do a lot more work. Last month, Google made it possible for independent teams around the world to do that work. In May, Google made the announcement that it would open up the source code on its SyntaxNet system, making it open source software. SyntaxNet is now an open-source neural network framework implemented in TensorFlow that provides a foundation for Natural Language Understanding (NLU) systems. Google released all of the code needed to train new SyntaxNet models on anyone’s own data. It also released Parsey McParseface (I’m not making that up), an English parser that Google engineers have already trained to analyze English text. All that talk we’ve been hearing about taking unstructured data and somehow using it to power our front end marketing systems, our loan origination systems and our compliance software, just got a whole lot easier and less expensive. At the same time, any company that can
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Extra-Industry Technology We Should Be Watching Now
firms are expert at gauging consumer interest and then moving swiftly to create apps to meet a new demand. Here are some recently technology developments that could eventually impact our industry …
NationalMortgageProfessional.com
Don DiLucchio, first vice president for the Midwest Region for Freedom Mortgage Wholesale Division, contributed to this article. Freedom Mortgage’s Midwest Region is one of the most active regions in the country for Freedom’s FHA wholesale lending portfolio. Don can be reached by e-mail at Donald.DiLucchio@FreedomMortgage.com.
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The Future of Corporate Storytelling
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handle the big data can now search online streams for mortgage leads and pull them down. Google says Parsey McParseface is the most accurate such model in the world. Now all we need to do is train computers to respond appropriately to human text-based requests than our other employees do.
technology are paid off, it could lower the cost of surgery, lowering medical bills, which remain one of the leading causes families lose their homes. Yeah, that may be wishful thinking.
Cars That Drive Themselves
Getting Ready for the NMP Next Awards
We’ve all seen the news reports about robot cars taking over the roadways. Few people I know have put much credence in these tales. It’s not that they don’t exist, but people who drive cars generally like being in control of the car they’re driving and aren’t waiting for an opportunity to turn it over to a computer to drive. Recently, we’ve seen stories of self-driving delivery trucks, which could put a decidedly significant monetary incentive behind some companies getting behind the concept. Now, a company that many of us in the mortgage industry have trusted over the years has come out with a report suggesting that self-driving cars are definitely in our future. Accenture recently released a report (not from the division that works with us in the mortgage space) on the financial benefits of selfdriving vehicles in Australia and concluded that 40 percent of all cars on the road in that country will be autonomous by 2040. Yes, that’s 23 years from now, but I just turned 52 and I can tell you that it was just 23 years ago. No word on what the global consulting firm expects for the U.S. market, but the potential impacts here are pretty easy to figure out. Self-driving cars could decouple public transportation from preexisting routes and timetables, making living farther from work more attractive for millions of Americans. It could reverse the decades long trend of people moving closer to city centers and revitalize the idea of the suburb, and the concept of urban sprawl along with it. At the very least, it would breathe another few decades of life into the suburban housing tract, fueling builders and lenders both. Robots in the Surgical Suite Face it, there are just certain things that computers can do better than humans. According to engineers and surgeons at the Children’s National Medical Center and Johns Hopkins one of those things may be operating on human patients. The two institutions recently announced a new robot that they can operate on soft tissue (I’m assuming that’s us and not a Kleenex). A recent demonstration of the technology involved a preprogrammed robot suturing together two ends of a pig’s bowel. While doctors do not make sausages, the report published in Science Translated Medicine said the Smart Tissue Autonomous Robot was capable of sewing “more precisely and consistently than an experienced surgeon.” How could technology like this serve our industry? It probably won’t, unless more robots in the surgical suite translates into fewer high paying medical industry jobs, in which case we’d better hope government-insured lending programs stay around a while. On the other hand, once the initial investments in this kind of medical
When we launched NMP Next in April, our goal was to present awards to some leading firms by summer. What we found was that our team was so busy responding to information requests from firms interested in sponsoring this special section that we didn’t have enough time to devote to the development of a credible set of industry awards. And really, that’s the whole point of this new section. So, we’ve backed it up. We now plan to make our awards during the fall conference season. A nomination form will be available on the NMP Web site shortly. The form will be relatively simple. We’ll leave it to you to explain how your firm is leading the industry. We’ll expect you to back up your statements. Those who back them up with commentary from third parties will have an edge. Expect an e-mail soon. If you don’t hear and think we’ve left you out, e-mail me at RickG@NationalMortgageProfessional.com for a status update.
What’s Next in NMP Next? At press time, we were completing work on a feature article about Class Appraisals, a company that is redefining transparency in the way it operates and the information it shares with its lender clients. The firm is changing the way many think about appraisal management companies (AMCs). We are also talking with Ernst Publishing, which as this publication went to the printer (digital or otherwise) was in Charlotte, N.C. for October Research Corporation’s National Settlement Services Summit (NS3). The company is expected to meet a friendly crowd as its Settlement Agent Gateway technology allowed hundreds of smaller settlement agents to comply with the Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure (TRID) rules and avoid losses their businesses as lenders reduced their roster of third-party partners in order to guarantee compliance.
Rick Grant is NMP special features editor for NMP Next and National Mortgage Professional Magazine. He may be reached by e-mail at RickG@NMPMediacorp.com.
Where Prime Lending Ends Citadel Servicing Begins AFTER PRIME MAGGI / The new Alt-A
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NON PRIME / 1st & 2nd mortgage
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BEFORE HARD MONEY 15707 Rockfield Blvd, 3rd Floor, Irvine, CA 92618 NMLS ID 144549 For mortgage professionals only. This information is intended for the exclusive use of licensed real estate and mortgage lending professionals in accordance with local laws and regulations. Distribution to the general public is prohibited. Rates and programs are subject to change without notice. Citadel Servicing Corporation is an Equal Opportunity Employer and does not discriminate against individuals on the basis of race, gender, color, religion, national origin, age, disability, veteran status, or other classification protected by law.
EQUAL HOUSING OPPORTUNITY
n Michigan Mortgage Professional Magazine n JUNE 2016
Foreclosure, short sale & BK OK No reserves 90% LTV available Bank statements for income Down to 500 Fico, O/O & N/O
Industry Updates: June 2016 By Melanie A. Feliciano Esq.
CFPB announces plans to issue Notice of Proposed Rulemaking (NPRM) regarding TRID rule The Bureau of Consumer Financial Protection (CFPB) has announced its plans to issue a Notice of Proposed Rulemaking (NPRM) on the Know Before You Owe (KBYO) rule. In a recent letter sent to mortgage lending industry members, the CFPB stated its intention to incorporate its existing informal guidance into the KBYO rule, as well as make adjustments to the rule to provide greater certainty and clarity. The CFPB said it hopes to have the NPRM issued by late July.
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USDA SFH Guaranteed origination The Rural Housing Service (RHS or Agency) is amending the current regulation for the Single Family Housing Guaranteed Loan Program (SFHGLP) on the subjects of lender indemnification, refinancing, and qualified mortgage requirements. A final rule amending the Section 502 guaranteed loan regulation (7 CFR 3555) was published on May 3, 2016 and will be effective on June 2, 2016. The agency is making the “Streamlined-Assist” refinancing option, which has been successfully tested in a pilot, a permanent program feature. In addition, the agency is expanding its lender indemnification authority as per a recommendation by the Office of Inspector General. If a loan originator did not follow agency guidelines in underwriting a loan, and then sells it to another lender, and the loan defaults because of the underwriting deficiency, the agency will require the originator to indemnify or repay the agency the amount of any loss claim associated with the loan. The old indemnification authority applied if a loss claim was paid within 24 months of origination. The expanded authority is if the loan defaults within 60 months of origination. Finally, the agency has defined what a “qualified mortgage” is, as required by the DoddFrank Wall Street Reform and Consumer Protection Act. Any loan guaranteed by the agency is a qualified mortgage as long as the originator did not charge the borrower points and fees above the limits established by the CFPB. Annotated versions of LE and CD available on CFPB’s site The CFPB announced on May 12, 2016, that it had published on its Web site versions of the Loan Estimate (LE) and Closing Disclosure (CD) that are annotated with sections of TILA that were referenced in the final TRID rule. Note that some of the sections cited on these forms are referenced in the preamble of the final rule. The annotated versions of the LE and CD are on the CFPB’s TRID implementation page, under the “Forms” section and are described as “With fields annotated to show TILA disclosure citations.”
Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail Melanie@DocMagic.com.
SPONSORED EDITORIAL
heard on the street
added potential of two additions that could increase its size to 150,000-square feet. LenderLive Announces New Organizational Structure
LenderLive has announced a new organizational structure that aligns its various business divisions under two broad units—mortgage and services— as well as corresponding leadership changes. The two new units are LenderLive Network LLC (Fulfillment, Lending and Servicing) and LenderLive Services LLC (Settlement Services and LenderLive Document Services, which now includes GuardianDocs and Walz Group). Both report up to the existing holding company, LenderLive Holdings Inc. The company also announced that: l Rod Walz, president and founder of WALZ, is now vice chairman of LenderLive Holdings. In this new role, he will be a strategic advisor to CEO Rick Seehausen and the executive team, as well as to the newly combined LenderLive Document Services. l Dave Vida, president of Mortgage Services, now serves as president of LenderLive Network. l Pete Pannes, the company’s chief revenue officer, has been named president of the new LenderLive Services LLC. l Joe Mowery, general manager of Settlement Services, now reports to Pannes. l Jonathan Kunkle, general manager of LenderLive Document Services now reports to Pannes. l Maria Moskver, who was director of compliance solutions at WALZ, is now the company’s general counsel and enterprise compliance officer for LenderLive Holdings. “Basically, our businesses fall into one of two categories: Regulated, as is the case with our mortgage services, and unregulated component services, such as our title, origination and servicing
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documents offerings,” said Seehausen. “Our new structure will make it easier for us to work with our regulators, accelerate the expansion of our title operations, and allow us to take advantage of synergies among our document and settlement services businesses. While a number of our executives have new leadership roles, they have all been instrumental in building LenderLive and are the right team to take us to the next level.” Firstsource Group USA Acquires ISGN Solutions
ISGN Corporation has announced that it has completed the sale of its business unit, ISGN Solutions, which performs Business Process Outsourcing (BPO) services, to Firstsource Group USA Inc., a wholly-owned subsidiary of Firstsource Solutions Limited, a RP-Sanjiv Goenka Group Company and global provider of customized Business Process Management (BPM) services. On Jan. 28, Firstsource entered into a definitive agreement to acquire ISGN’s BPO services subsidiary company. As part of the transaction, Firstsource has acquired the outsourced mortgage origination and mortgage servicing, title and settlement services and the valuation business of ISGN.The new entity will continue to use the ISGN Solutions Inc. brand. “The completion of the sale enables ISGN to focus on delivering next-generation technology built on over three decades of expertise to our customers. We are committed to providing world-class products that drive the success for our mortgage eco-system,” said Amit Kothiyal, CEO of ISGN. “Our industry profitability continues to face challenges. This, coupled with a heavily regulated mortgage environment, has created a strong need for technology innovation. ISGN is making this a focal point for our business and aims to continue engineering state-of-the-art continued on page 56
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2016 and Credit Reporti BY CHAD KUSNER
ver the past 12 months, there may have been more changes in the credit reporting world than there have been in the past 12 years. The credit reporting agencies have agreed to their first major overhaul of their systems; VantageScore Solutions is pushing to replace FICO as the score model for Fannie Mae, Fannie Mae releases DU 10.0 with enhancements like considering trended credit data and the credit reporting agencies are trying to get into the credit repair business! It goes without saying that there is a good bit happening in this arena. I would like to take a shallow dive and share with you the key points of each of the aforementioned topics. We know that consumer credit is a riveting subject, so I will do my best to be succinct. First, you may or may not know that the credit reporting agencies (CRAs), TransUnion, Equifax and Experian agreed last month to a settlement with the New York State Attorney General’s Office. The settlement outlined key objectives that must be met in a three phase rollout culminating in June of 2018. With the agreement being signed off on by 32 States total there are some important changes that you’ll want to be aware of.
O
Proving you’re alive will be easier One of the hardest things to prove to the CRAs is that you are alive and well living in New Mexico. It is for good cause as the easiest target for ID theft is a dead guy. That being said, if you are mistaken for being on the wrong side of the grass, you may have a difficult time proving it to the bureaus. To mitigate this, once the overhaul is complete, there will be a shared database that will be available to all three CRA’s. This database will notify all three CRAs if there is any change to the mortality of the consumer. Medical debt will be better managed Medical collections are like a bad cold in the gym during the winter.
Once they’re reporting to the bureau, they linger and can wreak havoc. Under the settlement agreement there will be a sixmonth moratorium on reporting medical collections. This will give consumers time to get notice and give insurance companies time to sort issues out. Moreover, if the debt does report to the CRAs and it ultimately is the insurer’s error, the collections will be deleted or suppressed from the consumer’s report! Remember this is only if it is the insurance company’s fault. If it is the consumer’s responsibility, it will still report to the bureau as a collection. Credit bureau disputes will be better managed As the owner of a credit service organization, I can attest to the challenge of verifying data with the CRAs. Generally, they manage data as best they can. They have billions of pieces of data to process and I don’t fault them for mistakes. That being said, the attention disputes have received prior to the settlement were less than thorough. Under the settlement, employees processing disputes will be required to read the furnisher responses more carefully. Additionally, if they feel there is a discrepancy in the consumer’s dispute and the furnisher’s response, they will have an empowered individual they can refer it to. That individual will have the authority to make a final determination. Previously, the CRAs would just “parrot” the response they received from the furnisher to the consumer. This should drastically improve the dispute process for consumers. There is much more encapsulated in the agreement, but the above are the most significant for mortgage professionals dealing with reports on a daily basis. The battle for score model supremacy Next, it is a little known fact that the FICO so-called “Classic Model” has been the exclusive scoring model used by Fannie Mae and Freddie Mac. This model uses credit report samplings that date back to 1995. With newer FICO models FICO 8 and FICO 9 as well as VantageScore Solutions scoring
model 3.0, there has been a significant amount of pressure for Fannie and Freddie to adopt a newer model. “The Credit Score Competition Act of 2015” proposes using a newer model that would help more consumers gain access to mortgage loans. While the bill expresses the belief that having access to multiple models will make loans more accessible, Fannie Mae and Freddie Mac maintain that the model they use
currently does an excellent job of predicting a consumer’s ability to repay a mortgage. With that being said, Fannie and Freddie are currently testing different scoring models and at some point in the near future, you may hear about this major change taking place. From my understanding, there will not be multiple scoring models available, there would just be a replacement. From a modeling perspective, a fundamental difference in the
ng: A Busy Year Indeed
existing “Classic” model versus the new models, is how negative debt is considered. Paid collections and charge-offs trigger an impact date on our reports. Under the classic model, paying negative debt may temporary lower our credit scores. Conversely under Vantage 3.0 and FICO 9, these debts would be ignored or “bypassed” by the scoring model, allowing the scores to jump quickly. From a consumer’s perspective, this makes sense; I paid my debts
now I want my scores back. However from a lender’s point of view, that consumer just paid off bad debt. That does not automatically make them a good borrower again. They want to see that the consumer can manage their debts moving forward and allow their scores to come back organically over time. This is a key reason FICO “Classic” remains a staple for Fannie and Freddie. Whether or not a new model will be implemented remains to be
seen. I can say this; VantageScore has been pushing to replace FICO since its creation in 2006. 10 years later, there is more pressure than there’s ever been to change models, so keep your eyes peeled! Fannie’s access to credit initiative With all the pressure to provide greater access to credit like what is mentioned above, Fannie announced an access to credit initiative. This initiative is aimed at
providing tools for consumers without changing the scoring model. One of them is an emerging type of information called “Trended Data” or “Timed Series Payment Data.” To best explain, consider a smart consumer that carries no debt, uses his credit card and pays it off before the statement in order to not have to pay interest. Prior to this new data, they would not get continued on page 97
NMP’s 2016 MORTGAGE TECHNOLOGY PROVIDERS DIRECTORY
Best Rate Referrals (800) 811-1402 BestRateReferrals.com
Freedom Mortgage (800) 388-1537 FreedomWholesale.com
Why techies love the company: We seamlessly integrate marketing campaigns into lender’s LMS and CRM systems. Why clients love the company: High-quality mortgage marketing campaigns managed with first-class service. Description of products/services offered: Best Rate Referrals has been specializing in high converting marketing campaigns since 2005. Their experienced marketing consultants can help develop campaigns that target consumers who qualify for a variety of loan programs. Best Rate Referrals specializes in lead generation and offers real-time Internet leads, live transfers via its in-house call center, direct mail campaigns and various types of aged leads and data lists.
Why techies love you: Freedom Mortgage is evolving. The company’s new Web site is designed for a higher-quality experience. Why clients love the company: Service excellence. Soon, customers will be able to submit their LE in less time with Freedom’s upgraded tool. Description of products/services offered: Ranked as the number three wholesale lender nationwide by Inside Mortgage Finance (2015), Freedom Mortgage Wholesale has an experienced team of wholesale AEs and industry professionals committed to each client’s success. Freedom Mortgage offers competitive products and pricing, best-in-class service, consistent and relevant industry training and a recently enhanced, real-time online portal to manage pipelines and reporting. Freedom Mortgage Wholesale offers a wide range of products to meet your needs, conventional, FHA, VA, USDA, Jumbo, HARP and more. Choose Freedom to Grow.
Class Appraisal (866) 333-8311 ClassAppraisal.com
Global DMS (877) 866-2747 GlobalDMS.com
Why techies love the company: Class Appraisal is building proprietary resources that no one else in the industry has. Why clients love the company: Class Appraisal builds a strong relationship with its clients and offers them the best results. Description of products/services offered: Class Appraisal is a nationwide appraisal management company (AMC) specializing in exceptional service, fast turn times, and a customized platform built to meet each client’s individual needs. Class Appraisal works with many of the top wholesale lenders, retail lenders and credit unions in the country.
Why techies love you: Global DMS offers the most robust valuation platform with best-of-breed integrations. Why clients love the company: Global DMS’ eTrac system provides comprehensive and complaint automated workflow. Description of products/services offered: Global DMS provides commercial and residential real estate valuation technology solutions. The company’s solution set is cost-effectively delivered on a Software-as-a-Service (SaaS) transactional basis that ensures compliance adherence, reduces costs, increases efficiencies and expedites the entire real estate appraisal process. The company’s solutions include its eTrac valuation management platform, eTrac Web Forms, Global Kinex, AVMs and data analytics products, the MISMO Appraisal Review System (MARS), ATOM (Appraisal Tracking On Mobile) and AMCmatch.com
DocMagic (800) 649-1362 DocMagic.com
Indecomm Global Services (214) 515-0848 Indecomm.net
Why techies love the company: DocMagic’s Tech Center features security, processing power, scalability and storage capacity. Why clients love the company: The highest levels of innovation, customer service and compliance expertise. Description of products/services offered: As the largest provider of end-to-end document preparation solutions for the mortgage industry, DocMagic provides products and eservice solutions for more than 10,000 customers, nationwide. With SmartCLOSE, the company’s TRIDcompliant and award-winning collaborative closing portal, DocMagic has solidified its reputation for innovation, quality, service and trust. Dedicated to providing the technology for survival in today’s complex regulatory environment, DocMagic ensures its customers work smarter, not harder.
Why techies love you: Indecomm Global Services is unmatched in applying original technology to mortgage issues. Why clients love the company: Indecomm’s products are innovative, easy-to-use and backed by exemplary service. Description of products/services offered: As both a technology company and a provider of outsourced mortgage services, Indecomm marries advanced technology with the current challenges of the mortgage industry. The result is a robust set of proprietary platforms in risk management, income calculation and analysis, document management, post-closing, and learning management, as well as title preparation and eRecording.
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NMP’s 2016 MORTGAGE TECHNOLOGY PROVIDERS DIRECTORY
Land Home Financial Services Inc. (800) 398-0865 Wholesale.LHFS.com Why techies love you: eXPRESS registration, pricing and locking portal, and a 21-day purchase guarantee. Why clients love the company: Experienced professionals dedicated to closing the loan transaction on time. Description of products/services offered: Land Home Financial is a full-service mortgage banker that has been in business since 1988 that is approved in 49 states and D.C. with FNMA, FHLMC and GNMA S/S approvals. Land Home Financial has a knowledgeable, experienced purchase money-centric sales and operations culture. The company offers the NHF Sapphire DPA program nationwide, full-service reverse mortgages and expanded non-QM products. Land Home Financial is a national third-party origination platform with a correspondent release coming soon!
Secure Insight (877) 758-7878 SecureInsight.com Why techies love you: A tech-driven data analytic vendor risk assessment tool with live monitoring. Why clients love the company: Accurate, reliable and affordable risk management and consumer protection, 24/7. Description of products/services offered: Closing Guard is Secure Insight’s “deep dive” settlement agent vetting tool that provides evaluation, monitoring, 24/7 reporting in a nationwide shared database. Quick Check is a scaled down tool designed for wholesale lenders and warehouse banks, and can also be utilized to audit a lender’s internal process. Once and done reports delivered within 24 hours. Vendor Check is a comprehensive report on any third-party service provider other than settlement agents. Data is verified, evaluated and reported in an easy-to-read, one-page format.
53 Mortgage Capital Trading Inc. (MCT) (619) 543-5111 MCT-Trading.com
Why techies love you: TagQuest is quickly reacting to the ever-changing marketplace. Why clients love the company: TagQuest is focus on the specific needs of each of its clients. Description of products/services offered: TagQuest Inc. is a full-service marketing firm offering the most up-to-date, cutting-edge marketing solutions for the ever-changing mortgage industry. Tag Quest offers services like direct marketing, online marketing-social media-PPC-SEO, direct mail, data list acquisition and hygiene, live transfer leads, Internet leads, e-mail marketing, printing services, client trackingfollow up-retention, demographic analysis, telemarketing and much more.
Vantage Production LLC (800) 963-1900 VantageProduction.com
Why techies love you: Techies’ top five reasons for loving Model Match: Ease of use, configurable, cloud-based, dashboards, and pipeline management and forecasting. Why clients love the company: Clients’ top three reasons for loving Model Match: Reinvigorated my recruiting, get more done in less time, and fantastic educational programs. Description of products/services offered: Model Match will take you step-by-step through sourcing, attracting and hiring producers. Thanks to the company’s easy-to-follow recruiting methods, quick tips and contact management, they will help you become a recruiting superstar. A simple click and the Model Match engine will show you your highest priority candidates and where to best focus your recruiting efforts. The results … less time spent recruiting, higher quality candidates, stronger performance, longer retention and more time to attend to the rest of your business.
Why techies love you: Vantage Production’s mortgage technology integrates with lender and partner platforms. Why clients love the company: Clients love Vantage Production because they help their clientele increase sales and close more loans. Description of products/services offered: Vantage Production LLC is the nation’s leading innovator of mortgage-specific customer relationship management (CRM), automated marketing and marketing content, sales enablement, and MBS market advisory services. Vantage Production empowers lenders to create exceptional experiences for loan originators, borrowers and referral partners, while driving revenue, managing risk, building trust and ensuring compliance. To learn more about how Vantage Production is helping more than 300 leading lenders and tens of thousands of individual mortgage industry subscribers, visit VantageProduction.com.
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Model Match (Production Recruiting Software) (949) 344-9407 ModelMatch.com
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Why techies love you: Robust, real-time hedging and best-execution secondary marketing platform. Why clients love the company: Combines hands-on trading support with comprehensive secondary technology. Description of products/services offered: MCTlive! is a comprehensive capital markets platform focused on empowering secondary marketing performance for lenders to increase profitability while carefully managing risk. Robust functionality in the browser-based software facilitates pipeline management, trade management, hedging, best execution, pull-through analytics, scenario modeling, and much more. MCT’s unique offering lets clients choose their level of autonomy, combining software with full-service secondary marketing guidance. This award-winning technology was designed by secondary for secondary, but the benefits don’t stop at the secondary department!
TagQuest Inc. (888) 717-8980 TagQuest.com
Lykken on Leadership
The Six “Ps” of Building a Solid Leadership Team BY DAVID LYKKEN
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here are many characteristics that are vital to becoming a great leader, and I’ve written about them before in great detail. Character, compassion, communication, and many other qualities can propel you to the top and help you lead your organization forward into a successful future. But even if you have all of the necessary traits of a great leader, you can fail miserably if you don’t have something else. No matter how well you have mastered your role as a “leader” in your organization, you cannot succeed unless you have a solid support group around you to help. You cannot be a great leader without a great leadership team. So, while our tendency is to focus on self-improvement— developing our own qualities so that we can become better leaders—it is also important to turn our focus outward. In addition to striving to become better leaders, we must consider how we might surround ourselves with better leaders. No President has even been successful without a great Cabinet. No head coach can manage without assistant coaches. No general has ever been victorious without competent lieutenants and majors. In the same way, we as leaders of our organizations in the mortgage industry need to surround ourselves with great
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“No matter how well you have mastered your role as a ‘leader’ in your organization, you cannot succeed unless you have a solid support group around you to help.” leadership teams in order for us to be successful. So, how do we do that? I suggest six ways ... 1. We need to gather the right people I began this article discussing the personal characteristics you try to develop in yourself as a leader. In general, you want to be a person of integrity. You want to be strong and dependable, so that you don’t let down the people who are looking up to you and trusting in you to move your organization forward. The relevant question here is: Are you looking for those same qualities in the people you select for your leadership team? If you are going to be successful, you want to bring people in who have the same drive toward integrity and dependability that you do. You want people on your team who are just as interested in selfimprovement and professional development. Take a look at your leadership team right now. Do you have the right people? Do you have, for example, people who are selfish or people who are always complaining about everything? Or, do you have
people who are conscientious and who are constantly trying to improve themselves as well as the organization? The first step toward building a great leadership team is making sure you have the right people on it. 2. Putting people into the right positions After you’ve determined you’ve got the right people, the next step is putting them into the right positions. What’s important here is knowing the strengths and weaknesses of the people your leadership team. All of them should have the desire to be better leaders, but not all of them will have the capabilities to lead equally well in every area. You’ve got to be able to “put your aces in their places,” and determine who is best suited for which responsibilities. The leaders on your team with great people skills shouldn’t be shut up in an office and, vice versa, the leaders who excel in quantitative thinking shouldn’t be out mixing and mingling with the public. More than likely, you have a diverse range of people
on your team. Learn where they fit best, and you’ll have everything you need. 3. Assign priorities After you have the right people and you’ve put them into the right positions, you’ve got to give them the right priorities. This step is all about getting your leadership team on board with fulfilling the mission of your organization. As the leader, you’ve got to be the one who sets the strategic vision for your team. One of the biggest problems that could occur on a leadership team involves its members losing sight of the big picture. As each member of your team gets wrapped up their individual roles, they may lose sight of the broader objectives they’re working toward. You’ve got to be the one to keep these priorities fresh in their minds, so they can always be aware of the fact that they’re working toward a common goal. 4. Following the right processes The fourth step in developing a strong leadership team is to
make sure your team members are following the right processes. Every organization has a system that enables it to operate smoothly, minimizing bottlenecks and permitting each department to be as effective and efficient as possible. Since leaders tend to have strong personalities, the temptation will always be there for the members of your leadership team to become too cavalier. They may begin to feel at times that they’re in charge, so they can make their own rules and do what they want. If this happens too often, the result can quickly become utter chaos in your organization. You’ve got to make sure the people on your leadership team are commit to the system in your organization. They’ve got to be willing to follow the processes that lead to organizational success.
achieve success for your organization. Does this sound like the way you are building your team? If not, what needs to change?
David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken on Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is David@TMS-Advisors.com.
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6. Commit to progress The final step in building the best leadership team possible is to get the members of your team to commit to progress. This last step involves the ongoing training and development of your team. It’s not enough to build a team of people who are great at what they do—you’ve got to build a team of people who are devoted to getting even better at what they do. Of course, this final step never ends. Training must continue on, and the members of your team must be lifelong learners. When I talk about commitment to progress, I’m talking about each member of your team being committed to
So, to sum up, building a solid leadership team is all about putting the right people into the right positions and giving them
the right priorities to—by following the right processes, agreeing to the right amount of participation, and committing to the right amount of progress—
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5. Growth through participation The fifth step in building a solid leadership team is bringing the people on your team together in participation. It doesn’t matter how competent your team members are individually. If they never get together to spent time with one another, it isn’t exactly accurate to call them a team. In his book Death by Meeting, one of my favorite leadership experts Patrick Lencioni suggests committing to a daily, weekly, monthly and quarterly meeting to make sure your team members are working out their differences to be on the same page. Whether or not such frequency is feasible for you, I do think it’s important to commit to some consistent meeting times to bring your team together. Thinking of meetings as practice before the big game. Teams that don’t practice together aren’t likely to play well together when it’s game time.
professional development in their areas of expertise. But, if each team member is devoted to individual progress, the inevitable result will be progress for the entire team. Are you committed to providing your leadership team with the resources they need for continual improvement? If you want to best team you can get, you’ve got to be willing to push them to get better.
Black Knight Financial Acquires eLynx
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Black Knight Financial Services (BKFS) has announced its acquisition of eLynx, a portfolio company of American Capital Ltd. eLynx solutions help automate paper-intensive processes, improve workflow, reduce costs and support compliance with industry regulations. Black Knight supports many of the nation’s largest mortgage lenders and servicers with a comprehensive, integrated solution suite. With the addition of eLynx’s capabilities to Black Knight’s current offerings, Black Knight will now offer lender clients: A flexible document delivery platform, which securely facilitates interchange between consumers, lenders, title providers and other transaction participants either electronically or via proprietary, integrated print and mail capabilities; a private-labeled, mobile-friendly consumer portal to support process transparency; collect and deliver documents throughout the loan lifecycle; and schedule inspections and closings; connectivity to an industry-leading network of settlement agents; and support for data-validated electronic mortgage, including electronic document delivery (eDelivery), eSignature, eClosing, and eRecording as well as electronically registering and submitting the mortgage note to an electronic vault. “Integrating the strengths of Black Knight and eLynx will give clients an even sharper competitive edge, and will significantly expand Black Knight’s opportunities to crosssell our comprehensive solutions,” said BKFS President and CEO Tom Sanzone. “We believe this combination will continue to drive process standardization and efficiency throughout the loan lifecycle, and will positively impact industry initiatives focused on TRID, consumer advocacy and eMortgage adoption.” “We are excited to become part of Black Knight, a company
well known for providing leading technology to the mortgage industry,” said Sharon Matthews, CEO of eLynx. “I am confident eLynx and Black Knight clients will benefit from the combination of our powerful technologies and mutual commitment to delivering innovative solutions to the mortgage industry.”
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BRESSLER
technology to transform our industry.”
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l As part of its strategy to drive innovation, United Wholesale Mortgage (UWM) has announced the hiring of Jason Bressler as its chief technology officer. Bressler, a native of Southfield, Mich. and 19-year veteran of the financial services industry, most recently served as chief information officer at The Federal Savings Bank in Chicago.
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l First Guaranty Mortgage Corporation (FGMC) has announced that correspondent lending sales veteran Van Evans has joined the company as regional sales manager of the Correspondent Division. l Paramount Residential Mortgage Group (PRMG) has announced the hiring of its new chief financial officer, Bill Johnson, who brings more than 25 years of experience in both the mortgage finance and real estate industries to his new role. l Academy Mortgage has named Aaron Nemec l executive vice president of production. In this role, Nemec will be responsible for the management and growth of production throughout the l organization. l MiMutual Mortgage, the national retail channel for Michigan Mutual Inc., has announced the hiring of John G. Stevens, CRMS as national
vice president of business development, where he will be responsible for advancing MiMutual’s national retail growth. Paramount Residential Mortgage Group (PRMG) has announced the addition of Ricky Wilson as retail regional manager of PRMG’s Southeast Territory. HomeBridge Financial Services Inc. has expanded its physical presence in the Southeast through the opening of a new office in Birmingham, Ala. Led by Jeff Covin, branch manager, this new HomeBridge office, its first in Alabama, will give Birmingham-area homebuyers and housing industry professionals the opportunity to experience the personal level of customer service HomeBridge has become synonymous with for more than 25 years. Envoy Mortgage has hired veteran executives Joel Cambern and Joe Tako as regional vice presidents for the Northwest and Southwest retail lending regions, respectively. Cambern and Tako bring a combined 50-plus years of experience to Envoy’s retail mortgage operations, including many years with the nation’s largest lenders. GSF Mortgage has added David Mastopietro, a 20-year veteran to the industry, as a mortgage loan originator in Brookfield, Wis. GSF Mortgage has also opened its first branch in the state of Alabama, to be managed by Kathi “Kit” Mickelson who brings 23 years of industry experience to the company. GSF has also added a new branch office in Orlando, Fla., which will be staffed by Mortgage Loan Originators Dawn Bennes and Vikki Rogers, who bring a combined 39 years of experience to GSF. GSF Mortgage has added Branch Manager Brandon Campbell and Mortgage Loan Originator David Campbell to its team in Joplin, Mo. Susan LaRose will support WFG National Title Insurance Company agents in its New England Agency group as underwriting counsel. Superior Home Services has promoted Patrick Nackley to senior vice president, responsible for managing the company’s future growth, increasing operational performance and developing
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strategic initiatives. In other personnel changes, Nina Pankau has been promoted to vice president of finance and information technology, where she will be responsible for ensuring the financial health of the company and the integrity of its IT operations. In addition, the company named veteran mortgage servicing executive Thomas Vaughn as director of marketing and business development, responsible for establishing and nurturing key relationships with existing and prospective clients. Open Mortgage has added reverse mortgage professional Sue Haviland, CRMP to its team. CoesterVMS has announced the addition of Oscar Estrella as a regional market leader. Estrella, who has nearly 20 years of mortgage industry experience, will be responsible for expanding CoesterVMS’ footprint on the West Coast. Home Point Financial Corporation has announced that Paul Wyner has joined as managing director of TPO Production, leading the firm’s third-party origination external sales team and focusing on increasing production, strategic initiatives and implementing best practices. VirPack has announced that Cy Brinn has been promoted to the role of president. Brinn was also appointed to VirPack’s board of directors. Brinn has worked with financial services technology for more than 30 years. The Peak Corporate Network, representing a group of companies providing a real estate services nationwide, has announced the appointment of Sagi Cohen as its chief executive.
Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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funding requires more frequent debt rollover than longer-term funding and this could become a safety and soundness issue if liquidity dries up unexpectedly.” Watt also stated that the FHFA is placing a greater emphasis on issues related to the inclusion of women and minorities in FHLBank activities. He said his agency plans to “propose an amended minority and women inclusion regulation that would direct all of our regulated entities to undertake diversity and inclusion strategic planning, either on a stand-alone basis or as part of their overall business strategic planning process.” Watt also said the FHFA might propose a new guidance “about incorporating diversity and inclusion in assessing FHLBank executive incentive compensation programs,” and he suggested the FHLBanks implement their own diversity and inclusion goals in both their interactions with lenders serving predominantly non-white communities and ensuring greater diversity within their organizations and in their vendor supply networks.
NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via email are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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When it comes to the introduction of affordable housing developments into communities, most Americans are eschewing the NIMBY notion, according to a new survey from the renters advocacy group Make Room and Ipsos Public Affairs. In a survey of 1,006 people, 85 percent of respondents voiced support for the creation and preservation of affordable homes for all, while 77 percent welcomed the idea of bringing more affordable rental homes in their neighborhoods. Eighty-two percent favored increasing access to affordable homes for families earning low wages, while 84 percent backed policies that would promote affordable homes for certain moderateincome workers, including
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:
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Survey: Americans Welcome More Local Affordable Housing Options
teachers, nurses and emergency service workers. Furthermore, the issue of housing affordability was a personal concern for many of the survey respondents: 21 percent acknowledged that they were either unable to pay their rent or mortgage or were forced to reduce spending in order to cover housing costs, while 32 percent were worried that they will have to move within the next 12 months to find housing
they can afford. “It is unconscionable that hard-working families in America today are unable to pay bills or put food on the table and are constantly in fear of eviction and homelessness,” said Angela Boyd, managing director of Make Room. “Our political, philanthropic and business leaders must work together to end our nation’s housing affordability crisis by dedicating the resources it will take to solve this problem once and for all.”
The CFPB’s Action Aga BY JOHN COUNCILMAN, CMC, CRMS
he Consumer Financial Protection Bureau (CFPB) has taken its first action against a mortgage originator. David Eghbali, a mortgage loan originator (MLO) who worked out of Wells Fargo’s Beverly Hills, Calif. office, was accused of an illegal mortgage fee-shifting scheme. The CFPB found that Eghbali worked a deal with an escrow company to shift its fees from some customers to others to facilitate no-cost refinances. Eghbali entered into an administrative consent order with the CFPB requiring him to pay an $85,000 penalty and banning him from working in the mortgage industry for one year to settle the case.
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The CFPB based its claims on the Real Estate Settlement Procedures Act (RESPA) and the Consumer Financial Protection Act (CFPA). The CFPA allows the CFPB to bring actions on anything the CFPB considers “Unfair, Deceptive or Abusive Acts or Practices:” The acronym “UDAAP” was coined from this. An act or practice is deemed unfair under the CFPA if: 1. It causes or is likely to cause substantial injury to consumers; 2. Such injury is not reasonably avoidable by consumers; and 3. Such injury is not outweighed by countervailing benefits to consumers or to competition. You will find the CFPB generally always throws this charge into its
actions because the only way to refute it is to go to court. The second basis for the claim is that RESPA Section 8 prohibits referrals where a “thing of value” is exchanged. “No person shall give and no person shall accept any fee, kickback or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.” The CFPB claims that Eghbali received a discount from the escrow company that was “of value” to him since it would “ultimately increase the number of loans he closed, increasing his commissions.” Here is why this is so troubling. No, it is not because I am taking up
for an MLO. I am disappointed that the CFPB and the U.S. Department of Justice (DOJ) have generally always gone after the company rather than employees when an employee committed wrongdoing. Wrongdoers do need to be brought to justice. My first concern is that this action more or less prohibits title companies or anyone else from offering discounts. We live in a society where the right to contract has been somewhat sacred. That is being chipped away little by little. Loan officer compensation is another example of the erosion of the right to contract. How many LOs have been able to negotiate a discount for a borrower with a title company? How many title companies or other service
ainst MLO Is Troubling providers have offered a discount on services to a good LO? I’m certain that has some effect on the ability to close the transaction and filtered into income made by the LO and the company they worked for. Is this no longer allowed? Undoubtedly, some borrowers paid more than those that received the discount. Will the CFPB now be reviewing all settlement statements to see who paid what? I don’t recall anyone considering service provider discounts to be illegal prior to this. I would have to label the RESPA portion of this a stretch. One could rationalize this as abusive under CFPA to those who paid the full or a greater price for escrow services. Of course, every action and every price could be labeled unfair or abusive if carried
to an extreme. The CFPB has been given unparalleled discretion with the very subjective language of the CFPA. Could the borrower who paid more have avoided the “abuse?” They certainly could have by shopping for an escrow company. It may very well be that those who paid more still got a better deal than if they had simply gone to the phone book to select an escrow agent. We don’t even know if quite a few actually did shop. The CFPB is presuming they were totally ignorant. My second concern is that Wells Fargo was given a pass as was the escrow company. This is selective enforcement that I believe goes against the very core principles of the constitution. If there was a RESPA violation, it is just as illegal
to offer as it is to accept the “thing of value.” USC 42, 1981 states, “All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.” While this was part of the Civil Right Act, it certainly seems to convey the idea that no one person should be prosecuted when another is equally culpable. No doubt the escrow agent profited just as the LO profited. The consent order says they participated in the “scheme.”
Are we also to believe that Wells Fargo was totally oblivious to these arrangements and they had no profit incentive? In today’s environment, more than one person at Wells reviewed every fee that was charged for compliance with state and federal laws. At best, they appear to be negligent and at worst, knowing participants. My greatest concern is that individuals and small companies have no power to defend themselves against an all-powerful agency like the CFPB. RESPA carries huge monetary penalties as well as jail time. Unfortunately, the cost to adequately defend a suit against the CFPB would be millions of dollars. Few, if any, continued on page 83
new to market
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trailblazers of this path, this only makes us want to work harder to help the industry get to the next level.” The Pavaso Digital Close platform facilitates electronic communication and collaboration between the real estate agent, lender, title/settlement agent and borrower. The platform makes the closing process easier for all parties by providing a single location for the digital delivery of all disclosures, educational materials and other loan documents. Through Digital Close, lenders can execute a seamless eClosing process that provides superior transparency and borrower education. Digital Close also provides builtin eSign and eNotarization capabilities that allow borrowers to sign and notaries to verify and stamp documents digitally. Although Wells Fargo guidelines still require a few documents to be “wet signed,” the majority of the closing package can now be executed more efficiently and securely. Pavaso’s Digital Close platform accommodates paper, hybrid and fully digital closings. “This is a long-awaited achievement for Pavaso, Wells Fargo and many in the industry who have long anticipated using Digital Close as their closing platform,” said Nancy Pratt, Pavaso’s vice president of partner relations and government affairs. “We intend to take this momentum and make the most of it.” Open Mortgage Launches Reverse Wholesale Operation on ReverseVision’s RV Exchange
ReverseVision has announced that Texas-based mortgage lender Open Mortgage has launched its reverse mortgage wholesale operation on the RV Exchange (RVX) loan origination software (LOS). Open Mortgage has been a home-equity conversion mortgage (HECM) retail lender since 2010, originating its reverse mortgage production via the RVX LOS. RVX serves as a centralized exchange, connecting all participants in the lifecycle of a reverse mortgage by allowing them to log in to a single system to share documents and information for each part of the loan process. This central exchange model is unique in the
mortgage industry and allows wholesale transactions to be conducted seamlessly from origination to investors. “Offering the HECM reverse mortgage has been a smart business move for Open Mortgage,” said Scott Gordon, founder, president and CEO of Open Mortgage. “Our strategy to get into the product early has allowed us to serve growing borrower demand, build our internal expertise and prepare to serve loan originators in a wholesale capacity, supported along the way with tools delivered by ReverseVision.” “As competition heats up, mortgage brokers are eager to add a product that differentiates them in the marketplace, but they may not know where to start,” said Sharon Falvey, director of sales operations for Open Mortgage. “Thanks to our experience as an RVX-enabled HECM retail lender, we are ideally positioned to serve those mortgage brokers through a combination of unparalleled customer service and technology infrastructure while they become reverse mortgage experts themselves.” Genworth Launches New MI Underwriting Platform
Genworth Mortgage Insurance has announced the launch of GENie, an underwriting platform designed to streamline its operations and enhance underwriter productivity. GENie automates manual underwriting processes, such as document classification, data extraction, loan routing/assignment, and performance management, eliminating the need for underwriters to interface with multiple systems. “Innovation and technology that streamline our underwriting services remain a top priority for us,” said Paul Gomez, senior vice president and COO of Genworth Mortgage Insurance. “GENie is the type of platform that allows us to continue offering industry-leading turnaround times and drive new efficiencies via automation, further enhancing Genworth’s reputation as a mortgage insurance underwriting company determined to stay ahead of the technological continued on page 96
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The Long & Short The Business of Short Sales
HUD Names New Housing Conseling Federal Advisory Committee BY PAM MARRON
he U.S. Department of Housing & Urban Development (HUD) has named 12 persons who will constitute the firstever Housing Counseling Federal Advisory Committee (HCFAC). Established under the DoddFrank Wall Street Reform and Consumer Protection Act of 2010, this Advisory Panel will help HUD’s Office of Housing Counseling improve upon all the efforts to provide consumers with the knowledge they need to make informed and lasting housing decisions. The Housing Counseling Federal Advisory Committee will explore new opportunities to expand access to HUD housing counseling programs, develop new innovative strategies to support community-based counseling agencies, and identify methods to leverage our resources to amplify the impact of federally funded housing counseling. This panel will also develop new metrics to evaluate the health and capacity of the housing counseling industry, specifically in the context of disaster recovery and identify ways to improve the use of technology in housing counseling. By teaching consumers basic principles of housing and money management, HUD’s network of approximately 2,000 HUDapproved housing counseling agencies help families to improve their financial situation, address their current housing needs, and pursue their housing and financial goals over time. Housing counselors increase
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awareness of both rights and responsibilities of homeownership and rental tenancy, addressing fundamental concepts such as antidiscrimination laws, the types of ownership and tenancy, budgeting, affordability calculations, maintenance and upkeep responsibilities, eviction and homelessness prevention, and where to get help when future housing challenges arise. Housing counselors provide support to households facing unemployment, finding and maintaining housing after returning from military deployment, or moving their families because their current housing situation is unsustainable. In April 2015, HUD solicited nominations to serve on the firstever federal advisory committee. Those selected hail from among mortgage, real estate, consumer and housing counseling sectors. They are as follows:
9. Ellie Pepper from the New York State in Schenectady, N.Y. Housing counseling sector 10. Judy Hunter from Sacramento, Calif. 11. Arthur Zeman from St. Louis, Mo. 12. Terri Redmond from Hummelstown, Penn. A very special thanks to those who provided me with a personal letter of recommendation, including U.S. Congressman Gus Bilirakis; U.S. Sen. Bill Nelson; National Consumer Reporting Association (NCRA) Executive Director Terry Clemans; Joe Cvelbar, director of Consolidated Credit; Joel M. Berman, CEO of NMP Media Corp.; Frank Pallotta, founder of Steel Curtain Capital Group LLC; Marianne Opt, vice
president of Towne Mortgage; Samantha Hay from Carrington Mortgage; Roxanne Amato and Lorraine Seddon with Future Home Realty; Diane Chism from Smith and Associates; and homeowners I have worked with on housing issues. I am deeply honored to be part of this Committee and look forward to working alongside my peers in the mortgage, real estate, consumer and counseling industries. All of us have a connection and strong desire to assist homebuyers attain what is still the American dream to many. What has been learned from those who have endured through this difficult housing downturn has changed the way I will do business for the rest of my career. Can’t wait to roll our sleeves up and get started!
Mortgage sector 1. Pamela Marron from New Port Richey, Fla. 2. Linda Ayres from Las Vegas 3. José Larry Garcia from El Paso, Texas Real estate sector 4. E.J. Thomas from New Albany, Ohio 5. Cassie Hicks from Hattiesburg, Miss. 6. Alejandro Becerra from Silver Springs, Md. Consumer sector 7. Afreen Alam from Long Island, New York 8. Meg Burns from Arlington, Va.
Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail Pam.M.Marron@gmail.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.
Together, We Can
Reach New Heights.
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Combined with a comprehensive product menu including Conventional, Jumbo, Portfolio and FHA solutions, you’ll quickly realize why NYCB has evverything you need to take your business to the nexxt levvel.
Toggeether, we‌ Serve the borroweer – Your customers want economic value, convenience, expediency and reliable counsel throughout the loan process. Your expertise and the NYCB platform enable you to originate and close loans fasster, easier and at one of the lowest per loan costs of any loan origination channel in the industry. You are very ry well equipped to compete on the combined effect of dramatically lower operational costs, service responsiveness, and technological inno ovation.
Going up? Let’s reach new heights toggeether. Build trusted partnerships – By utilizing our Gemstone technology platform, you gain control over aspects of the mortgage transaction that experience... for you and your customer. There is no doubt this gives you an edge over your
This information is for use by current and prospective ospective Clients of New York o Community Comm Bank, doing business as NYCB Mortgage Banking, and should not be distributed to or used by consumers or other third parties. o Community Bank. All Rig Rights Reser ved. Š2016 New York
Email: potentialclient@mynycb.com Visit: www.nycbmortgage.com
n Michigan Mortgage Professional Magazine n JUNE 2016
The NYCB model serves the needs of Correspondent Lenders, Brokers, Community Banks and Credit Unions throughout the nation. Our proprietar y web
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NY YCB Mortgage Banking’s core focus is developing lending solutions that enable you to win today while preparing you for even greater heights tomorrow. As the mortgage division of New York Community Bank, we’re proud to be building on the Bank’s over 150 years of strength and stability.
JUNE 2016 n Michigan Mortgage Professional Magazine n NationalMortgageProfessional.com
BY JOHN G. STEVENS, CRMS
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Sweep the Corners: Excellence in Your Field
“Anyone can sweep the big areas, but only a professional will sweep up the edges.”
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never seemed to lack clientele who wanted him to build their homes. One Saturday morning, I was busy sweeping up the mess that the workers had made the day before. As I busily went about trying to clean up as fast as possible, I noticed John watching me. As I neared what I thought was the end of my cleaning of a certain area he walked over and asked for the broom. I gave it to him and he proceeded to walk over to the edge and started sweeping the edges. To my dismay there was a lot of sawdust, dirt, nails and other items that oftentimes will end up along the edges of walls during construction. What he said next has stuck with me throughout my life: Anyone can sweep the big areas, but only a professional will sweep up the edges. And … let that really sink in. How does that pertain to work ethic and the change in our work environment? When I go about my daily work, I often come across work that another person will simply do the job and be done. But with the extra attention to detail, sweeping the edges you might say, I am able to create a far better product, or result and land the deal. That is the difference between
a job that is done, and a job that is done right When you walk through the mall and see the teenagers at the kiosks. Are they stopping everyone who walks by to sell the products that their bosses hired them to sell, or are they on their cellphones, looking at the latest Snapchat or Instagram post? Anyone can do the job, but a professional takes pride in what they do and do it right. The first time, without having to be reminded again and again. So back to my children. If they take the lessons that we are teaching them to heart, working hard, by sweeping the corners, then they stand a better chance than I did to excel by sheer fact that the majority of the workforce is only wanting to do the bare minimum and call it a day. That, my friends, is why instead of reading books, or watching movies while I fly, I am instead writing this. It is my way of sweeping the corners … going the extra mile and doing the job right. So when society tells you that you should only do the minimum, and then let that go as a job well done, don’t listen. I don’t, and neither should you. Do the job right. Wear out that broom sweeping the corners.
John G. Stevens, CRMS is vice president of NAMB—The Association for Mortgage Professionals and national vice president of Business Development for MiMutual Mortgage. He may be reached by phone at (801) 427-7111 or e-mail JStevens@MiMutual.com.
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where there were jobs a plenty. The world knew that if they came here and worked hard, they could better their situation, purchase a home, grow their company, leave a legacy for their children and grandchildren. Generations to come would bless their name! Instead, our rising generation is clamoring for anyone who owns a company to give up their profits and share them with them so they won’t have to work as hard. Life owes them, the government owes them, their parents owe them. Mark Twain said it best, “Don’t go around saying the world owes you a living; the world owes you nothing, it was here first.” And that’s the hard truth. You need to work hard if you want to get something. My grandfather was a great example of hard work. He often would say, “If you are sick, you aren’t working hard enough.” That was how his generation did it. You ducked your head, worked until the job was done, and then you went home. He took great pride in his work. It was your name that was attached to what you did. Whether it be a painter or a janitor … you did your job to the best of your ability. In a way, I envy my children. If they work hard, they will have a better shot at success than I did. “What,” you may ask. “How is that possible?” Let me clarify my thoughts here. When I was growing up I was taught to work hard. Not just work hard at manual labor, but work until the job was done. One of my first bosses was John Wilcox. He taught me that the job was not done, until the job was done right. He built homes in Utah and
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t’s funny, you know, thinking about how different our society has become over the years. I could talk about the fashion trends, food, education, respecting elders, etc. However, for those of you who know me, I am not thinking about those things. When I have a free moment, my thoughts will typically wander to work. That’s right … work. I am on a flight with beverages galore, movies to watch, books to read, so many different people I could talk to and learn their life stories (who am I kidding, I am still going to talk to them), and instead, I am working. Society would say I am crazy. Enjoy the time away from work! They would chant. Working too hard will cause stress which will lead to early male baldness and wrinkles. Yet, I don’t listen and I challenge you not to listen to them as well. “Don’t listen to what anybody says except the people who encourage you. If it’s what you want to do and it’s within yourself, then keep going and try to do it for the rest of your life,” said the actor Jake Gyllenhaal. Society is a very interesting animal. As a whole, it says that it wants you to excel at what you do, and make as much money as possible. But at the end of the day, they don’t want you to be better than they are. They resent if you are “too good” at what you do. Or if you make “too much money.” What happened to the American dream? The promise of growth and stability? Immigrants would flock to the United States
The Top Three Benefits of a Tech-Savvy Appraiser By Donna DelMonte ne of the hottest topics in mortgage right now is the future of the appraisal industry. Appraisers are overwhelmed with volume, and many mortgage professionals are worried who will replace the aging appraiser population when it comes time for them to retire. While we may not have a crystal ball to see the future of valuations, we can create a more fluid, engaging and efficient environment that allows appraisers to thrive and be as productive as possible. Technology is revolutionizing once-stagnant industries–like food delivery service and taxi
O
service–and creating more efficient processes around the world. Why can’t it do the same for the appraisal industry? While most appraisers are nearing retirement age, that doesn’t mean that appraisers wouldn’t welcome technology that allows them to access important report data while on the go. Appraiser-focused apps are currently few and far between, but some appraisal management companies (AMCs) and other third-party vendors are taking the initiative to redefine appraiser workflow with apps that manage their orders through a smartphone (our company launches its first mobile apps for appraisers this summer). Appraiser apps will offer
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the ability to self-manage current orders directly from the device, making what was once a standard B2B transaction a much more personalized and engaging interaction for the appraiser. These order-management apps will help appraisers streamline their workflow, maximize efficiency and maintain productivity–leading to more completed orders and satisfied clients. The direct benefits of an appraiser-focused app are obvious for the appraiser population, but how will it positively impact the industry at large? Listed below are the top three benefits the industry will see as a result of a more techsavvy appraisal process. 1. Capacity issues could be alleviated through tech-driven efficiency Over the last few years, the appraiser population has slowly begun shrinking–making the growing order capacity more challenging to manage. This is an industry-wide issue, impacting everyone from appraisers to AMCs to lenders. Providing appraisers with an easy-to-use tech platform where they can manage their orders while en route to their next subject property maximizes their daily schedule and allows them to get status updates on reports in real time. Communication efforts become easier too, as many applications allow the appraiser to email the lender directly with questions about the order, or contact the AMC’s support staff for technical guidance. To manage current appraisal order volume, appraisers have to be more productive and agile than ever before. Any tool– especially a smartphone application–that can streamline their workload would be very well received by the industry. All of these improved efficiencies will enable the appraiser to save time and submit reports quickly and with higher frequency. An increase in
submitted reports means improved turn-times for AMCs and a reduction in false ETAs for lenders, all while earning more money for the appraiser. 2. Attract a younger generation of appraisers The success of new appraiser recruitment over the next five years could be a large determinant in whether we can maintain the current status quo of the appraisal industry. The amount of time and expense that accompanies the appraiser certification process is extensive– and often discourages new, young appraisers from joining the ranks. Many appraisal companies are also family-run businesses that are struggling to convince their youngest members to join a profession that is continuously impacted by changing regulations and increased scrutiny. So how can the appraisal industry as a whole persuade young professionals to devote their work lives to this career path? One suggested way to promote the appraisal field to a younger audience is through amenities. Today’s workforce has higher expectations of workflowenhancing tools, and frequently uses technology like project management apps, cloud file storage and calendar applications. Adopting a similar workflow tool for appraisers and making it an industry-standard feature could go a long way in compelling young professionals to join the industry. Furthermore, developing a fully self-service app for appraisers would create a more autonomous and remote “work-from-home” mentality that is becoming increasingly popular across every age group and demographic. 3. Pave the path for an enhanced appraisal experience for borrowers As the appraisal industry grows more comfortable with the idea of increased visibility and efficiency via tech tools, we should broaden our scope to extend past that of the B2B relationship and create a similar application for borrowers. In today’s world, borrowers are looking for an app experience similar to Uber, where they can see the location and identity of
their servicers before they even arrive. For those not in the mortgage industry, the appraisal process can be opaque and difficult to understand. With so many essential key players and detailed processes, it’s no wonder that borrowers sometimes consider the appraisal process to be frustrating. By having an app dedicated solely to the homeowner, their experience becomes much more transparent and easy to understand. Additionally, this kind of technology provides a more comprehensive service for borrowers, and not only offers them information on the separate roles within the appraisal process, but peace of mind as well. Transparency through technology also promotes a safer environment for all parties involved. Finally, convenience is of paramount importance when dealing with technology, so
providing borrowers with appraisal information at their fingertips gives them the convenience and ease of use that so many consumers have come to see as a standard operating procedure for most industries. As is currently stands, the appraisal industry is at somewhat of a crossroads–a few tweaks to current practices could lead to improved processes and an industry revival, whereas ignoring important trends could lead to a much more difficult scenario. Embracing technology in the name of efficiency is a step in the right direction and will provide the appraiser community with more autonomy and independence than ever before. As usual in mortgage, innovation and adaptability are once again key players in determining success and growth in this everchanging industry.
“As the appraisal industry grows more comfortable with the idea of increased visibility and efficiency via tech tools, we should broaden our scope to extend past that of the B2B relationship and create a similar application for borrowers.�
Donna DelMonte is senior vice president for StreetLinks Lender Solutions’ LenderX and QX systems.
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Against the Clock: How Technology Solutions Can Reduce Mortgage Loan Turn Times By Tom Knapp Turn times and technology When it comes to the mortgage loan process, time is everything. A key measurement of mortgage loan processing efficiency is the time required to move a mortgage loan package from application submission to the closing table. When they went into effect last fall, the TILARESPA Integrated Disclosure (TRID) regulations called for new timelines for the creation and release of the Loan Estimate (LE) and Closing Disclosures (CDs). In turn, this has prompted mortgage lending companies to look for opportunities to improve loan processing timeframes by leveraging technology.
The move to a more heavilyfocused purchase loan market, as compared to the less prominent refinance loan market, has imposed pressure to meet the changing demands of the market place. Borrowers and real estate professionals expect to set more accurate and accountable target closing dates when the purchase contract is signed and application is submitted. In response, mortgage lending companies must be able to consistently meet these target close dates. The Ellie Mae Originations Insight Report for April 2016 reported an average of 44 days “time to close” for all loans and
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determined by their standard processing times or goals. Loan origination solutions (LOS) have historically been adept at reporting completed milestone events and looking in the rearview mirror. When every day 45 days “time to close” for in the loan process is critical, the purchase transactions. This focus needs to be on the average had peaked to around 50 planned activities; for instance: days immediately after TRID went what is critical today, what tasks into effect, and has now returned are behind schedule, and where to pre-TRID averages. However, resources should be focused to as the market continues to move achieve desired results. to a purchase loan focus, the Loan schedules can be driven pressure that mortgage lending by three key dates: Loan companies feel is squarely on the application date, CD due date, time needed to close a loan. and scheduled closing date. All Every reasonable measure should other milestones and tasks can be taken to ensure that borrowers be determined using standard can meet their anticipated closing processing times that are dates and move into their new calculated based on these key homes as planned. The purchase- dates. focused market will also require Creating and communicating a mortgage companies to reduce schedule or loan calendar for their “time to close” to the range each loan allows the entire of 30 to 35 days–which may seem organization–as well as the a daunting task to some. Yet, borrower, real estate companies that cannot meet professionals, and other these requirements will find interested parties–to understand themselves unable to compete in the tasks that are required to the purchase market. achieve the target close date. To achieve these significant While the calendar could be reductions in processing times, configured within the loan mortgage companies should look origination system (LOS), this is at internal processes and something that will likely need to workflows, as well as technology be custom-developed and solutions, that can assist in integrated to pull real-time date eliminating days and potentially from the LOS using the APIs weeks of processing time. Both provided by the LOS. existing and emerging technology solutions will be significant for Reporting on status and reducing the time required to alerting to exceptions complete individual mortgage Once the schedule or loan processing tasks. Some new calendar is established, technology solutions have exception conditions and alerts entered the market in response to regarding at risk activities need TRID, and others have been to be communicated and acted around for some time. Mortgage on immediately. These alerts lending companies must be able ensure that all parties are aware to adapt to these new technology of any potential issues that solutions and–in some cases– impact the loan schedule, as well develop their own customized as the tasks that are falling solutions, which will allow them behind schedule. Information can to reduce processing times and be shared via daily reports on improve transaction turn times. key activity and other immediate tasks requiring completion. Setting and measuring task During the course of the day, and milestone standards urgent alerts can also be Prior to implementing any new generated when activities are in technology opportunities, the first danger of falling behind step mortgage lending companies schedule. The loan calendar is should take is setting standards also one component of for moving the loan from measuring the performance of milestone to milestone, and then those assigned to specific tasks measure against expected dates throughout the loan process.
While quality is an imperative factor and a key measure of performance, thorough and timely completion of assigned tasks is also critical to achieve on-time closings. Transparency and constant access to information Another important factor of efficiency during the loan process, as it relates to technology, is that the loan originator and other team members who are supporting the loan application must have access to the loan data at all times throughout the day. Likewise, borrowers and real estate professionals expect that they will be able to access loan schedule status and achievement of key tasks at all times throughout the loan process. This requires that information be accessible from mobile devices–anytime,
anywhere–to meet the standard expectation that has been established in a mobile-friendly society. Modern systems are built using adaptive technology, meaning any data from Webbased applications can be accessed and presented on any device, including PCs, tablets or mobile phones. Consumers who are accustomed to tracking order and delivery schedules for any item they purchase online have the expectation that they should also be able to instantly access information for one of the largest financial transactions they will perform in their lifetimes. As a result, mortgage lending companies must provide transparency regarding the loan status throughout the life of the loan to all interested parties, including the borrower, buyer and seller real estate
â€œâ€Śmortgage lending companies must provide transparency regarding the loan status throughout the life of the loan to all interested parties, including the borrower, buyer and seller real estate professionals, attorney, closing agent, etc.â€? professionals, attorney, closing agent, etc. The information systems within mortgage lending companies needs to be constructed with this viewpoint; with the appropriate security restrictions and controls in place,
data needs to be accessible via the web and mobile devices to all interested parties. Borrower document collection Every day in the loan 69
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processing cycle has equal value–whether at the beginning of the process or as the CD is issued and closing documents are finalized. At times, tasks are delayed early in the process because borrowers are searching for the documents required to support their application. This is an area where technology can also assist and eliminate or reduce the unproductive waiting period for documents to be submitted. Many technology solutions exist in the market, which allow borrowers to submit paystubs, W-2s, banks statements, tax returns, etc. The current generation of document management solutions allow the borrower to:
l Capture documents using mobile image capture features of cellphones l Submit documents to a secure portal l Allow mortgage companies to request documents immediately through the same portal as part of the application process l Eliminate the need for paper documents by accessing data directly from appropriate data sourcesbank accounts, investment accounts, payroll processing systems, tax return data, and other important data repositories In addition, these document management solutions: l Allow the information
l
l
l
l
systems to perform intelligent character recognition and “lift” data off the submitted forms to populate the loan application and perform quality inspection of the documents and react immediately to exception conditions Provide a consistent borrower portal for requesting trailing documents and to provide loan status alerts Optimize the process for mortgage lending companies to chase down documents from the borrower Help avoid the delay caused when mortgage lending companies realize that incorrect or incomplete documents were submitted. Automate many existing mortgage loan processes
especially those early on in the document collection and verification processes. By collaborating with the LOS, these solutions support the automation and tracking of verification requests, compare document data to other documents or the LOS to identify exceptions, and eliminate many of the existing manual and time consuming “stare and compare” processes so prevalent in legacy systems. eSign and eDocuments eDisclosures have been available in most LOS systems for quite some time. Likewise, eSign functionality has taken great strides over the past couple years. The timeconsuming process of mailing documents and waiting for acknowledgement is no longer acceptable with TRID-imposed
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deadlines. Some organizations have been able to achieve up to 80 percent of disclosures being eSigned rather than wet signed, which has eliminated days from the processing schedule. Likewise, obtaining eConsent acknowledgment from the borrower early in the process, sending the CD and closing documents electronically, and obtaining electronic signatures on those documents can all save time and improve the borrower’s overall experience. Electronic fee collection and eClosing collaboration Evolving collaboration solutions provide mechanisms for collecting title fees and other fees electronically. This improves the timeline, accuracy, and compliance of the LE. Eventually, this will evolve to eClosings, a process
during which documents will be exchanged in a collaborating network to title agents, attorneys, escrow agents, and the borrower. Ultimately, these documents will also be electronically filed with local governments. From eSign consent to electronic alerts to electronic submission of documents and eClosing, there are many existing and emerging technologies solutions that can reduce processing times and improve “application to close” schedules. The only question remaining is: which solutions are right for your mortgage lending company and the goals that you hope to achieve? Evaluation of your company’s priorities is the first step to answering this question. One thing is for sure: careful selection and effective usage of technological solutions are
both necessary to stay competitive in the market place and to achieve borrower expectations. Contrary to a popular misconception, these technology solutions don’t eliminate personalization or reduce rapport for loan professionals who are working with their borrowers, but
instead improve and streamline the communication process. Ultimately, this allows mortgage lending companies to achieve their final goal: completing the loan process in a timely and efficient manner, so closings can occur on their scheduled dates. In the end, technology plays a pivotal role in this achievement.
As senior vice president/chief information officer at Waterstone Mortgage Corporation, Tom Knapp oversees the company’s information services functions, which includes new technology initiatives, Web applications, technology infrastructure support, information systems and vendor management. In this position, he also directs information systems development, operations and infrastructure. 71
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Millennial Marketing and the Follow Up By Shirleen Von Hoffmann
and saving time, but also mixing in some good old nostalgic ways to celebrate the different stages of homeownership.
echnology changes so quickly, it’s tough to keep up. It seems like you buy a phone and it’s outdated in six months! I have to admit; I use my phone and tablet more and more these days than my laptop and it’s fun to find ways to use it for my business. It’s become essential to have all of the latest and greatest tools to communicate with. I don’t know what we did before the cellphone was invented, but I know that in order to keep up, we must think of new, relevant ways to reach our homebuyers. Here’s the good news: Finding uses for these tools in real estate marketing and follow
Video and picture ideas Sometimes the simple things are the best. In the case of video, if you can walk through a home, you can video the home. Then you can give the video to your client as a gift. If you video in a video e-mail app, like eyejot, then it will have your branding and when they repost it to Facebook or social media of any kind, it will have your name and company on it. The same goes for pictures you take with your phone. Use a watermark app to brand it, before you send it. In the case of new homes, you can shoot the home each time you go out to the community and give the homebuyer a picture/video that has your branding. Again, if you have a branded e-mail video message app, you can shoot a video of monumental type things that occur when a home is being built, like a roof going on, front yard going in, kitchen countertops, flooring … all of those things are important to a buyer and give as an ongoing gift throughout the loan process. I have added some photo organizer apps and altering apps that you will need if you decide to do collages, postcards and video as you will have many photos to keep track of. One fun idea is to have a team video you send out for follow up. In this case, you shoot a video of your team doing fun things to introduce themselves to the clients and you keep it as one of your standard follow up e-mails that goes out in the beginning of all transactions. You could do the same with e-mails that explain the do’s and don’ts of getting a mortgage; that could be done on video and sent out as a second video marketing piece. On that same note, you should be sending video e-mails of approvals and loan status just to keep your face in front of the client. In closing and using this
T
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up is fairly easy. If you’re one of the few that does use it, then it’s one more way for you to differentiate yourself from the pack. Very soon Millennials, Gen X and beyond will be your target market as many of the Boomers have bought their last home. So bringing in and keeping up with technology will be a definite advantage for you. Now with that said, I don’t want you to go so far as to think your relationship will begin and end with emails, texts and phone conversations with these buyers. They still are first-time homebuyers and excited to be buying their first home. So I propose blending in a few ideas to use technology and apps for marketing, efficiency, follow up
same idea, you can utilize a fun video not only using your staff to celebrate the closing of their home but asking for referrals. You can do this in many ways all through video and it is easy to send out over and over again. You will need to create a YouTube channel to upload the video so it’s easy to put in an email or again eyejot or any other video e-mail program, makes the sending part easy! The same applies to market updates and even occasionally blog posts having your face talking in a video from time to time is a nice break. Interview your secondary marketing guy, your underwriting and talk about relevant things buyers want to hear about. Talk to them in their language, video it on your video e-mail and post it to your blog. Then, feed it out to all of your social media channels and database of buyers to really get a big bang for your marketing buck. The best news is; you won’t spend a dime!! Speaking of blogs, if you want some great sales tips like you are getting here, take a peek at my blog, TheQueenOfSales.com. Even Millennials like nostalgia Now finding ways to celebrate their special moment is the key to getting referrals. Another simple idea is to have a ribbon cutting ceremony for your buyers at each closing. Again take tons of video and pics and send as closing gifts for your buyers to post to social media and keep as memories. Ribbon is inexpensive and so are scissors, but it’s the celebration of the moment that counts. This is where the nostalgic comes in! Whether they are Millennials or not, they are still excited to be buying a home, so help them celebrate that. Speaking of nostalgia and closing gifts, I love PersonalizationMall.com for doormats, address flags, blankets, coffee mugs, picture frames, you name it, they will customize it for your new buyers and make them feel welcome in their new home. They are fast, affordable and easy! There are a lot of simple, easy
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(appadvice.com/appguides/ 27. PSEXPRESS: Photo shop opened your e-mail show/photo-organization). picture alteration and touch (mailtrackerapp.com). 30. INSIGHTLY: CRM app to up EYEJOT: Branded, e-mail call, e-mail, text message (itunes.apple.com/us/app/ad video messages and map your shared obe-photoshop(corp.eyejot.com). Insightly contacts. Add, express/id331975235?mt=8). FOLLOW UP THEN: update and assign tasks. Reminds you to follow up in 28. EVERNOTE: Total Manage contacts, organizational app, recording a very cool way opportunities and projects. and note-taking (followupthen.com). View emails shared by (evernote.com). CIRCLE BACK: Uses a data others in your team 29. PHOTO MANAGER PRO: engine to help keep your (insightly.com). Organizes photos for sharing connections valid and alive (circleback.com). SCANBIZCARDS: Best in the business card scanning and CRM export (circleback.com/apps/scanbi zcards). CLEAN UP SUITE: Brings new levels of customized control to your address book (circleback.com/apps/cleanu psuite). Shirleen Von Hoffmann is national director of the Builder IF THIS THEN THAT: Sends Group and vice president of Summit Funding. She may be your social media feed to reached by phone at (866) 600-3343 or e-mail over 160 channels SVonHoffmann@SummitFunding.net. (ifttt.com). SITEGEIST: Provides interesting data about the surrounding area: average age of residents, average temperature, area trends, and popular nearby places (sunlightfoundation.com/blo g/2012/12/13/sitegeistuncover-the-data-aroundyou). INSTAQUOTE: For watermarking photos before sharing (itunes.apple.com/us/app/in staquote-add-textcaptions/id551012097?mt=8 ). DASHLANE: Saves all of your passwords and secured digital wallet (dashlane.com). KEY ME: Saves a copy of your home key … a great gift to give a buyer (key.me). GENIUS SCAN: Tablet and phone scanner (thegrizzlylabs.com). STOREHOUSE: Combines photos, video and text into a home’s build story (storehouse.co). DROPBOX: Simple way to store and send large documents, video, photos in the cloud (dropbox.com). DRAGON: Dictation tool (nuancemobilelife.com/apps/ dragon-dictation).
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ways to help celebrate the dream of homeownership and make memories for your buyers. Social media can be an amazing tool for referrals and getting the word out, about what you do and how well you do it. So make sure to brand everything you send or don’t send it. Use some of these apps to streamline these simple new ideas. Here are 30 apps that mortgage professionals can use and examples what they do: 1. HAIKUDECK: Realtor or Buyer Presentation on your iPhone or pad (haikudeck.com). 2. SHOWPAD: Sales presentation software, that’s simple, secure, and scalable to any device (showpad.com). 3. PHOTOSYNTH: Capture real estate, models and build outs in amazing resolution and full 3D (photosynth.net). 4. REMINDERS: Reminder and to do lists (play.google.com/store/apps /details?id=com.ToDoRemin der.gen&hl=en). 5. MAIL CHIMP: Contact management system, they have a free version (mailchimp.com). 6. WAZE: Real-time traffic to avoid accidents and traffic delays (waze.com). 7. AROUND ME: Tells all restaurants, stores, hospitals, banks, shopping around your location (aroundmeapp.com). 8. HOMESNAP: Allows you to aim your smartphone at a home for sale and snap a pic and it will give you the price and details. If you are a licensed real estate agent you have access to entry details and MLS Agent data as well (homesnap.com). 9. INK: Mail one of kind greeting cards from your phone (sincerely.com/ink). 10. POSTAGRAM: Sends personalized postcards add a pic of their house (sincerely.com/postagram). 11. BOND: Sends handwritten cards with great writing (bond.co). 12. MAIL TRACKER: Allows you to see if someone has
Using Software to Uncover Mortgage Business Insight By Carl Wooloff f you are managing a mortgage origination business, no one needs to tell you that things are getting tougher. You’re dealing with tighter margins, production volume is down while costs, driven primarily by compliance, are up. Compass Analytics recently reported that production volume for its clients was down in March by 20 percent from the February peak. Factor in a decreasing percentage of refinance business and you’ve got the makings of a cage fight where only the very best originators will come out of 2016 looking good. In an environment where every basis point is worth fighting for,
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loan originators need to carefully analyze every loan level expense if they hope to gain the kind of insight that will allow them to succeed in today’s tough business environment. Unfortunately, most originators don’t have the analytical power to know exactly what is making them the most money and where costs are out of control. When Compass Analytics’ David Ellenberger wrote to Rob Chrisman about this problem, he was most concerned with the larger firms Compass represents and suggested a continued focus on “best execution, upfront focus on clean data, and accurate capture, reporting, and tracking of secondary and accounting
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Annual Meeting
& Expo November 14-16, 2016 Chicago, IL Swissotel Chicago
For more information, visit nrmlaonline.org
performance.” Ellenberger added, “We remind clients to remain vigilant in challenging their bestexecution analysis, counterparties and delivery methods. We encourage discipline with our clients to pay close attention to their daily accounting and secondary numbers so they are always confident in their performance and to avoid surprises at loan sale, purchase advice reconciliation or monthend accounting.” All excellent advice, but much of this is can be incredibly difficult for the smaller loan originator, whether they be a broker, correspondent, community bank or credit union. Even so, they face the same problems their larger competitors face. Many of these firms are using non-industry-focused accounting software, which does not allow them to easily include loan level expenses. Even when these costs are included, they typically cannot be assigned to more than one or two cost centers, making it impossible to perform the kinds of analytics required to gain the business insight these companies need to make good decisions. Surprisingly, lenders don’t really need complex analytical tools to find business insights hiding in their loan level data. All they need is the right accounting software. Where business insight is hiding for LOs The general ledger is the foundation of the mortgage lender’s financial toolset. Over the years, general ledger (GL) software has evolved and now serves its primary functions, (AP, Cash Management, etc.), quite well. However, one area in which the mortgage lender’s accounting software too often falls short is in accounting for loan level costs on a granular level. While even QuickBooks allows a user to track a cost center, tracking data across multiple cost centers is so difficult as to be considered
impossible for busy managers. Even legacy mortgage specific accounting software makes it far too difficult to analyze cost data effectively. Looking at costs across multiple cost centers is essential for effective financial management of the mortgage enterprise. In the mortgage industry, we typically see customers looking to analyze their loan level costs against: l l l l l l l l l
Loan number Business unit Region Branch Loan officer Product type State Channel And more …
Even the smallest lenders are likely to analyze their expenses against some of these cost centers, but doing so involves a great deal of manual labor if they lack the right software. Entering loan level data from the LOS into QuickBooks can take as long as 20 minutes per file, while producing branch level Profit & Loss Reports can often take an hour or more. We work with clients today that formerly spent weeks pulling loan level information out of their loan origination system and putting it into Excel spreadsheets in order to sort it by cost center for comparison. In the past, more originators may have been inclined to put this kind of time into their businesses, but with the dramatic increase in compliance oversight, every additional man hour they can afford is spent on quality assurance in an effort to avoid crippling non-compliance expenses. This leaves those lenders who cannot afford additional staff in the accounting department operating, for all practical purposes, in the dark. Management guru Peter Drucker often said that “You can’t manage what you can’t measure.” In our business, we know that you can’t measure what you don’t track. Unfortunately, too many lenders lack the software that will allow them to effectively track the
financial performance of their businesses. And this isn’t just our opinion. We’ve visited with a number of state banking regulators who have shared with us their concerns about this weakness on the part of many of the smaller institutions they oversee. It constitutes a significant risk to their survival. What today’s lenders really need to uncover Business and financial managers need an efficient, feature rich mortgage loan level accounting software that can easily import loan level data directly from the loan origination system. This information becomes part of a data warehouse inside the accounting system that includes all of the loan related information for each specific transaction. In addition, the right software can hold information particular to each origination, such as branch code and loan officer, as well as a full escrow breakdown and more, including: Borrower information Funding/sale information Loan purchase investor Interim servicing 1098 reporting Financial KPI’s
Finding business insights in your own data All of the information lenders need to make better corporate decisions is currently living in their loan origination systems, but these tools do not come with the financial reporting capabilities to allow business managers to make sense of it. However, robust accounting software for mortgage banking enterprises does exist and offers all of the insights described in this article. United Shore Financial Services is currently using an accounting package that does. According to Paul Orlando, United Shore’s CIO and Julie
the loan and which is having negative impact on the loan, and we can make improvements where they are needed.” By using the right software, United Shore went from processing 1.25 loans per hour to five loans per hour and is currently the leading wholesale mortgage lender in the industry. “The industry is happy if they’re getting a cost of $7,000$8,000 per loan, and we’re going to be able to originate a loan at under $3,000,” Orlando said. “Being able to track our costs more effectively allows us to deliver a loan at that price every single day.”
Carl Wooloff is business development manager at Bestborn Business Solutions, the company behind Loan Vision, a provider of accounting and financial management solutions. Carl can be reached by e-mail at Carl.Wooloff@Bestborn.com. 75
The right products The right culture Caliber Home Loans, Inc., provides Account Executives with: A
f ull array of A Agency gency pr products, oducts, plus a suite of pr proprietary, oprietary, non-Agency non-Agency portfolio portffolio o solutions
R egionally-assigned Regionally-assigned A Aggressive ggr g essive In-house
Oper ations C enters and suppor Operations Centers supportt staff
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We’re currently interviewing Account Executives nationally to sell for three business channels: Brokerr, non-delegated Correspondent and delegatted e Correspondent. To To learn learn more more about bringing y your our tal talent ent and id ideas eas tto o Caliber Caliber, r,
contact contact TPORecruiting@CaliberHomeLoans.com. TPOReccruiting@CaliberHomeLo g@ oans.com.
Wholesale Lending
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The majority of software available to the industry will include all of the capabilities that a lender would expect from a financial management solution, including general and recurring journals, cash management, vendor management, and accounts payable and receivable. In our minds, this is all just the price of admission for today’s robust accounting software. To get to the business insights that are hiding in your loan origination company, the lenders financial solution must have robust reporting capabilities that will allow for detailed analysis by loan number and multiple cost centers, providing financial reports with flexible column and row layouts with full drill down capabilities. The reconciling of both loans held for sale and trust accounts is often a very time consuming process, especially for lenders
Nelson, the company’s SVP/controller, they sought out software that provided budgeting and planning, accounts payable, accounts receivable, and fixed assets all in one system, making it much easier to drill down to the data level. “Now, I can upload a file with one click–it takes less than 10 seconds–and the output is exactly what I need,” said Nelson. “This is saving us a lot of time. And, I have reporting all the way up and down the stream from client-level, to product-level, to business channel. This gives me insight into which center is providing a positive impact on
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using legacy or non-industry specific accounting platforms; commonly involving the comparison of large and cumbersome PDFs or spreadsheets of data. Today’s lenders cannot afford that and need tools that will allow them to drastically shorten the time taken for such tasks, reducing the process to a matter of minutes as opposed to hours or days. When the Consumer Financial Protection Bureau (CFPB) announced last fall that loan officer (LO) compensation would be among its enforcement priorities for the coming year, it became a compliance priority for all lenders. An accounting software with a robust industryspecific compensation module will make this easy. Unfortunately, most software on the market today does not. Chief financial officers working in the mortgage origination business will use their financial accounting solutions for budgeting, forecasting, planning and analyzing of data for the enterprise. But without careful tracking of loan level expenses, analyzed across a number of cost centers, managers cannot know exactly how well their enterprise is performing and where changes must be made to increase profitability. Armed with the right software, lenders can easily uncover business insights that will make managing their loan origination concern easier and increase overall profitability.
Moving From Crisis to Nirvana in Closings By Sanjeev Malaney t has been more than eight months since the TILARESPA Integrated Disclosure (TRID) rule went into effect, and the mortgage industry is still struggling with how to deal effectively with the new regulations. One early, troubling effect of TRID has been the dramatic increase in time-toclose of loans, as well as the related increase in costs. The National Association of Realtors (NAR) recently studied the affect that TRID had on closings and found that the time-to-close for purchase loans increased to a record high of 51 days in January 2016. The report continued by stating that over
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the past year, the average time to close on a loan has lengthened by more than ten days. In another survey, the 2016 ABA TRID Survey conducted by the American Bankers Association (ABA) in February 2016, 77 percent of respondents reported delays in loan closings, with some reporting delays as great as 20 days. A whopping 93 percent reported that uploading and loan processing times have increased as a result of TRID implementation. Further evidence is provided by a recent survey of credit unions conducted by Callahan & Associates. According to this survey of 200 credit union executives, 96.1
percent reported that TRID is causing delays in closing, with half of the respondents reporting that TRID has added five or more days to closings. What is contributing to these delays? Prior to TRID, the settlement agent had control over creation of the HUD-1, with little to no lender involvement, and lastminute changes were commonplace. Now, lenders, not settlement partners, are responsible for creating the Closing Disclosure (CD), verifying its accuracy and presenting it to the borrower within TRID timelines. Thus, TRID presents a big change— and a major challenge—for lenders: How to collaborate securely and effectively with settlement agents to review and validate fees, and prepare a compliant CD, all while meeting TRID’s timing requirements. This new workflow is causing delays and adding cost to the closing process. To achieve closing nirvana, lenders need to speed time-toclose and ensure compliance, without adding costs to the loan production process. In order to meet these goals, lenders need to re-examine their approaches to TRID to identify how they can further optimize the new closing process. One critical area that warrants attention is the new workflow between lenders and their settlement partners that TRID requires. Although lengthening time-toclose was an early troubling sign, it seems the worst may be behind us. Time-to-close has improved in recent months as the industry has become more familiar with the new closing process under TRID, though the averages are still far above the routine 30-day closes of years past. But improving time-toclose has come at great cost to lenders. In the 2016 ABA TRID Survey, 29 percent stated that they had to hire more staff to deal with TRID, and an additional 21 percent stated that they plan to hire even more staff in the future. As lenders hire more labor to deal with TRID, loan production costs rise. In fact, the ABA TRID Survey reported that the average added
cost per bank is $300 per transaction, with some banks reporting as high as $1,000 in additional costs. According to the MBA’s latest Quarterly Mortgage Bankers Performance Report, the fourth quarter of 2015 saw the second highest level of production expenses per loan since the inception of the report in the third quarter of 2008. Total loan production expenses increased to $7,747 per loan, up from $7,080 per loan in the third quarter of 2015. Personnel expenses averaged $5,131 per loan in the fourth quarter of 2015, up from $4,674 in the third quarter, and up from $4,428 in the fourth quarter of 2014. And, profits are suffering. According to the MBA, the average pre-tax production profit was 22 basis points (bps) in the fourth quarter of 2015, compared to an average net production profit of 55 bps in the third quarter of 2015. Profits are diminishing as lenders throw more bodies at TRID issues instead of opting for a technology solution. Furthermore, introducing more humans to the process increases the risk of human error. In fact, a December report from Moody’s Investors Service found TRID-related violations in more than 90 percent of the roughly 300 loans that several third-party firms reviewed for TRID compliance. Clearly, quality is an issue. And although the loan audits revealed that many of the violations were “technical” in nature, many of these violations were attributable to human error. What’s more, regardless of how “technical” in nature, violations can lead to heavy fines for the lender and reluctance on the part of investors. But wasn’t technology supposed to help? Yes, but loan origination systems (LOSs) vendors are having a hard time adapting. According to the February 2016 ABA survey, 78 percent of the respondents were still waiting for LOS system updates and 83 percent claimed they were forced to use manual workarounds. In looking beyond their LOS, many lenders bet on new technology to help with
“… a December report from Moody’s Investors Service found TRID-related violations in more than 90 percent of the roughly 300 loans that several third-party firms reviewed for TRID compliance. Clearly, quality is an issue.” process timelines are stalled and where costs are increasing due to additional labor. In order to reach the nirvana of closing TRIDcompliant loans faster, without adding loan production costs, lenders need technology that speeds the collaboration between lenders and settlement partners
through an optimized workflow and provides a secure digital workspace for fee review, validation and finalization. By automating manual, error-prone tasks, these technology solutions give lenders the tools to turn a crisis in closing into closing nirvana.
Sanjeev Malaney is founder and chief executive officer of Capsilon Corporation, a provider of comprehensive cloudbased document and data management solutions that enable mortgage lenders, investors and servicers to increase productivity and lower costs, while ensuring compliance. For more information, visit Capsilon.com. 77
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use in the CD. Fees that fall outside of established tolerances are automatically highlighted and all changes to fees are also indicated. Settlement agents are notified via e-mail that a settlement request is ready for review, and once signed in to the portal, they can view the fee sheet, exchange comments and questions with the lender and submit fee modifications. Once the lender finalizes fees, the CD can be ordered from a document preparation provider directly from the closing solution. This secure, electronic workspace speeds the closing process by enabling efficient collaboration on fees, gives the lender the final word on fees and provides the lender with total control over creation of the final CD. In addition, since all fees are reviewed and validated from within this electronic workspace, the CD itself is not being passed between parties, so the risk of inadvertently presenting the wrong CD to the borrower is eliminated. Only one, approved CD is created once the lender approves all fees. This purpose-built solution also maintains an audit trail of all versions of CDs and all fee changes, indicating what changes were made and by whom–critical information in the event of an audit. A log of all electronic communications between the lender and settlement agent that take place in the secure workspace is also maintained. While lenders chose their approaches to TRID compliance over a year ago in preparation for the new regulations, now is the time to reevaluate those approaches. The first step is to begin with an examination of where in the current closing
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TRID closings, but the technology solved only part of the problem. While technical solutions that automate TRID compliance calculations exist, they focused on calculations–establishing baselines and calculating variances–but failed to adequately address the communication, collaboration and workflow changes that TRID demands in order to produce compliant, accurate and timely closing packages. In fact, in the Callahan & Associates survey of credit unions, more than half of the respondents cited new workflow between lenders and title companies as the primary cause of closing delays. In a post-TRID world, closing personnel must be able to communicate and exchange information seamlessly and securely with settlement agents. It’s time to eliminate the costly, error-prone practice of sending confidential borrower information over insecure email, or via costly overnight shipping, and playing phone tag while trying to obtain accurate fee information during the closing process. Any misstep or miscommunication jeopardizes a timely close. The right technology solution gives a closing department a secure digital workspace where they can gather, prepare and validate fee information for the final CD that is now 100 percent of the lender’s responsibility. Fee data from a preliminary CD is automatically populated on an electronic worksheet, organized by tolerance categories and in a format that matches an actual CD. Within an electronic fee sheet, closers are able to update fees, add comments about specific line items and invite settlement partners to collaborate on the fee data for
Five Mortgage Pains That Technology Can Cure By Wes Miller eople are pretty adaptive. So much so, that we get used to things so quickly— impressive, innovative things—that they don’t wow us for long. The extraordinary becomes ordinary and we go back to focusing on life’s frustrations, delays and inconsistencies, hoping for better solutions to our problems. In the mortgage industry, common problems and issues include regulators looking for errors and/or violations, homebuyers getting impatient with mortgage closing delays, lenders reeling from possible liability, and secondary-market investors wary of buying error-
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riddled loans. These headaches could sure use solutions, but with so much work to do it can feel overwhelming to adapt to new systems that will solve them. It can seem better to just keep plugging along, doing things the same way, no matter how flawed. But as with all problems, there are opportunities to innovate the mortgage process. The light bulb, printing press and telephone were once amazing inventions that awed the world, but they too had their limitations. For instance, none of them were portable. And that’s how we ended up with the flashlight, the word processor and the cellphone. The mortgage industry is no different. Many mortgage professionals still fill out forms by
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1. Confusion/complexity, unexplained processes, policies and procedures Most complaints around processes and policies come from homebuyers, but they frustrate many lenders, title agents, realtors and vendors as well. Opaque business practices are being somewhat mitigated by TRID’s recent implementation, but there is still much room for improvement in communication and transparency. Real estate agent John Wake echoed this sentiment in a NewsOk article titled, “Take the Stress Out of Homebuying,” when he said, “Buying a home is stressful because you know you don’t know as much as the other people involved. The system is so complex, it’s easy for people to take advantage of you whether it’s the seller, the seller’s real estate agent, or maybe you have some doubts about your own loan officer or your own real estate agent.”
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hand, and/or have multiple versions of the same form because so many parties are involved in the process. This creates a tremendous opportunity for technology—a better way of doing things—to make the entire process faster, easier and more accurate. What isn’t working with the mortgage process? What pain points do you hear about, or experience yourself? What is broken that needs fixing? What is frustrating? What is tedious? These are the questions the industry needs to answer. They represent areas where innovative, groundbreaking, better ways of doing things will make the lives of mortgage professionals and consumers so much easier. Some common pain points in the mortgage space that technology can solve:
www.LykkenOnLending.com
2. TRID, UDAAP, FCA and other regulations Our regulation-heavy industry has thousands of pages of rules to follow, check and re-check.
Mortgage professionals, including many community lenders and wholesale lenders, struggled with TRID implementation in 2015 and are currently using nonpermanent, makeshift processes that may not catch all compliance errors or violations as they cannot afford to procure large-scale solutions. This is dangerous as it is more likely that errors/violations will not be found in time to be cured. According to Garnet Capital Advisors, a New York based financial services firm, “Even the smallest and most innocent formatting or administrative errors can lead to technical rule violations that can put lenders at risk.” This leads us to our next pain point, TRID liability. 3. TRID liability A recent HousingWire article by Brena Swanson stated, “Investors are still not sold on the safety of the private label securitization market now that TRID is in the mix, despite the majority of the industry getting accustomed to the rules.” The lender is held responsible for all errors on TRID loans, and these loans will likely be sold at discounted prices on the secondary market if the errors are incurable, further cutting into community lenders’ profit margins. There is also possibility for buyback risk should these loans be found with violations after they are sold. The ramification for nonbank lenders could include having their warehouse lines of credit blocked by unsalable TRID loans, rendering them incapable of originating new loans. 4. Vendor management risk The mortgage industry is unique in that, every time a buyer applies for a loan, an entirely new team is assembled to help accomplish their dream. Even if a realtor routinely works with a specific title agent, loan officer and lender, they will have a different homebuyer. At least one player in the process will change every time, and most times it will be more than that. This high rate of revolving players requires a lot of legwork in managing who you work with,
verifying they are who they say they are, and making sure they can be trusted to do their jobs well. This is a vital component of every real estate and banking professional’s job. And no one knows this better than lenders, who are responsible for the actions of all participants in the loan process—making their vendor management protocols especially important, ensuring everyone follows best practices and compliance standards. And let’s hope lenders are heeding this call. Last year, The New York Department of Financial Services (NYDFS) that one in three banks don’t even require their vendors to notify them of data security breaches, which can make the banks’ digital systems vulnerable as well. This shocking truth has led industry regulators to intensify their scrutiny of thirdparty relationships, including the cybersecurity standards in place
between them. But the problem is, according to Sarah Wheeler of HousingWire, “The NYDFS report revealed the dirty secret that has been keeping executives up at night for years— many lenders have no effective system in place to monitor their vendors’ cybersecurity, nor any idea how to even start.”
schemes, whether cooked up by industry professionals or mortgage applicants. Considering the above point on vendor management, this makes sense, since it is difficult to keep track of so many industry players at any one time.
demands, TRID liability, vendor management risk and fraud in the industry are massive problems that cannot be ignored. If mortgage professionals want to remain in business, they need to find a way to face down these Goliaths and find the technology— the better way—to take them down. Don’t make the mistake of being too busy to improve. Constantly evaluating and addressing issues empowers us to become more efficient, decrease risks, improve ROI and create clear, transparent processes that save time and effort.
Problems point us to a better way 5. Fraud These are just some of the broken According to CoreLogic’s 2015 systems in the mortgage annual fraud report, 0.67 percent industry—the obstacles lenders, of mortgage applications indicated title agents and others face in fraud. That’s down from 0.69 their everyday careers. percent in 2014, but since Mortgage process confusion CoreLogic began tracking and vagueness, regulatory mortgage fraud in 2010, fraud trends show an average increase. You need only glance at the Wes Miller is CEO and co-founder of ATS Secured, a new news to find the latest drama technology category for the real estate closing industry. surrounding a bank, a title agency Miller has extensive experience in developing and or other mortgage entity fined for marketing both core and ancillary financial products. Wes their involvement in a scam. has been recognized for his success in sales, customer Unfortunately, the mortgage service and training support staff. He may be reached by industry is notorious for fraudulent e-mail at Wes.Miller@ATSSecured.com.
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Remember those “easier” disclosure days?
TRID
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Money House On Demand Team www.mhodportal.com or partners@mhodportal.com Ralph Rosynek SVP US Division rrosynek@moneyhouseus.com 678-459-2251
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n Michigan Mortgage Professional Magazine n JUNE 2016
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Today’s reverse mortgage is a safe and secure product available for Purchases or Refinances which assists your existing and potential customers, age 62 or older, with retirement planning, financial independence and lifestyle maintenance.
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Relationships Matter onversations about Amazon Web Services, using API (automatic programming interface) calls coupled with OAuth single sign-on capabilities, and a million other technology topics are incredibly interesting to our entire organization. So when I asked around the office which of these I should write about for this article, I was surprised to hear a consensus that we should talk about how technology is impacting the real underpinning of our organizational philosophy: Relationships Matter. Unquestionably, it’s easier than ever to gather data, get qualified leads, and engage prospective clients in meaningful ways. Technology affords us the ability to significantly extend our reach, increase our capacity, and dramatically accelerate our access to information. But at what cost? A consortium of the world’s most important minds— Bill Gates, Stephen Hawking and Elon Musk among hundreds of others—have recently warned that artificial intelligence poses a potential existential threat to humanity. The group is talking about a much broader application and cautionary tale about technology than the individual relationships we have with our clients and business partners. But the principle remains—if we abdicate our humanity to technology for expediency, we risk losing our purpose. Today, we have more “friends,” but less depth in our relationships. We have more “chats” and more conversations via posts, but less substance. We are more connected to each other than ever before but yet, the relationships we have with one another have become less meaningful. We are all flying around life Snapchatting, Facebooking and Instagramming but face-to-face personal conversations are becoming quaint. Consider the 2014 study published in the journal,
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By Brent Emler
Environment and Behavior, “The iPhone Effect: The Quality of InPerson Social Interactions in the Presence of Mobile Devices.” The authors, Shalini Misra, Jamie Genevie and Miao Yuan of Virginia Tech and Lulu Cheng of Monsanto, looked at the impact cellphones have during social interactions, specifically the quality of the interactions when cellphones are present. The study asked 100 pairs of individuals who had existing relationships to engage in both trivial and significant conversation topics. The interactions would happen at a coffee shop with observers making note of the individual’s behavior. Observations would note whether the cellphone was used, touched or placed on the table during the conversation. At the end of the 10 minutes, the participants took a survey to determine the level of connectedness and empathetic concern they felt during the interaction. The study’s findings include: l Out of 100 pairs, 29 had mobile phones present during their conversations, while 71 did not. Overall, conversations without phones present were rated significantly better than those with phones present, controlling for age, gender, ethnicity, and mood. Those who conversed without a mobile phone present reported a higher level of connectedness. l Those who conversed in the absence of a mobile device felt a greater level of empathy for their partner. Additionally, those pairs with a close relationship reported lower levels of empathy with a mobile device present as compared to pairs with a more casual relationship. l The study did not find any significant effect of mobile phones during more meaningful conversations, as compared to more casual encounters.
“Even when they are not in active use or buzzing, beeping, ringing, or flashing, [digital devices] are representative of people’s wider social network and a portal to an immense compendium of information,” the researchers note. “In their presence, people have the constant urge to seek out information, check for communication, and direct their thoughts to other people and worlds. Their mere presence in a socio-physical milieu, therefore, has the potential to divide consciousness between the proximate and immediate setting and the physically distant and invisible networks and contexts. The permeable and fluid pervasive computing environments of our technological society and the array of behavioral demands they create thus dramatically change the socio-physical context of face-to-face communication. In these permeable and microfragmented contexts, we are in a constant state of polyconsciousness in which multiple relationships and settings can be the focus of one’s attention at any given time regardless of location or context.” That’s a lot of academic speak for when we are “connected” to the wider world through our technology we are much less connected with the person right in front of us. We are losing our humanity to information overload, aren’t we? So chuck the laptop and cellphone out the window and go have breakfast with a business partner, right? No, that’s not it. How will you post a picture of the breakfast and let everyone see your eggs benedict before you eat it? The point is not to get rid of technology. The point is to understand that it should be used as a means to the end with the end being a deep and meaningful relationship with your clients and business partners. When your CRM tells you it’s your past
client’s birthday, it will be easy to send out a quick email birthday message. You may not even have to take the time to send the email, the system likely will do it for you. You might be able to send a birthday card in the mail. You might be able to text them, Facebook them, Instagram them. But what if you called them? What if you picked up the phone and said happy birthday? What does a phone call say about your commitment to the relationship? When we reflect on how much technology has positively impacted our lives, it’s truly astounding. I remember a time when I literally had to write—with a pen, on a piece of piece of paper in a file folder—the name, phone and note details of a prospective business partner. My CRM was a piece of paper stapled to a folder. I didn’t have the time to maintain the number of relationships I do today but I spent more quality time with my clients and partners. I got to know them on a personal level which resulted in a consistent flow of business. Today’s technology affords me the opportunity to do both, manage hundreds of relationships and still have deep, meaningful connections with them. I have to be diligent and mindful though; if I am not careful relationships become just names in a database or worse, simply email addresses of people I talked to at one point or another who I hope, one day, if I keep asking virtually, will seek me out to do business. This article was written in the cloud over several days from five different devices, including my cell phone while I was in a waiting room. I received editorial review from two different individuals who provided feedback in-line all without ever uttering a spoken word to each other. It was an incredibly efficient process but I think I’ll walk over to my coworkers’ desks to thank them in person. Technology makes our lives easier but people make our lives better. Relationships Matter.
Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at Brent@Velma.com.
The Future Starts Tomorrow
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through DU. Press another button and the mortgage is recorded electronically and they are done. No more underwriters, processors, title people or (gulp) loan officers. Artificial intelligence mortgage companies take the calls and press the buttons. You cannot tell the difference when you talk to them. You think you are talking to a real person, but, actually, it is a toaster in India. OMG, I think to myself, the entire mortgage industry is going the way of my favorite supermarket checkout clerk who was replaced by a simple scanner last week. I am still getting over losing the attendant that fills my car with gas and checks the oil. Evidently Fannie Mae leads the charge on this and gets the idea from my column this month! Sure, business is faster, but what about the humanity? Well, there is a simple solution. I will just not write my column this month. This never happened and I will tell nobody. Then the future cannot happen until, maybe after I retire. Okay, that’s fine. None of my kids
“OMG, I think to myself, the entire mortgage industry is going the way of my favorite supermarket checkout clerk who was replaced by a simple scanner last week.� want to be a mortgage broker, anyway. Unfortunately, as we all learned from the Terminator series, destiny cannot be denied. As I sit here, my computer is writing the column itself and sending it to the publisher’s Cray
computer who it knows on a personal level. I pull the plug on my computer, but it’s a laptop with a full charge. “Stupid humans,� my computer laughs. It brings up my Candy Crush game and gives me a free level. I forget all about it. 81
Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. Eric is semi-retired, doing mortgages by referral only. He may be reached by phone at (703) 505-8692 or e-mail EWeinstein4U@gmail.com.
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n Thursday, May 12, 2016 at 10:32 a.m., I was in my home office researching exactly how many transgender people are there in the United States (about 700,000 or 0.3 percent of the population). I was agonizing about what I would put under gender if I had to take a loan application for one. Then, I got a fax from myself from the future. The fax went to my computer since my fax machine has long been relegated to the ancient office machine graveyard in the basement along with my pager, landline phone and dot matrix printer. Evidently, with all the hackers in the future, faxes make a comeback since they are hard to decrypt unless you are the NSA, the phone company or 90-years-old, who knows what a fax is. It turns out that the mortgage industry pioneers early time travel to solve the annoying problem of borrower missed signatures on important documents. That is where if they don’t sign it, you don’t get paid. Thank goodness, I hate that. Future me tells me that I am to write, will write, have written an important article this month that will change the mortgage industry forever. I put down my transgender research and pay attention. In the future, all computers are connected. This is called the “Big Yahoo� (memo to self, buy Yahoo! stock) with all queries automated with data transmission seamless. All it takes for a borrower to apply is to give you his ever changing secure password for the day. Your Encompass Version 1,032.1 automatically goes into his virtual wallet and gets his bank, insurance, employment, credit and title company information. His password allows your computer to access all this information at the source. In less than a heartbeat, the 1003 is filled out verified and run
By Eric Weinstein
take the
lead !
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One Size Does Not Fit All BY LAURA BURKE, MBA, MS, MIS, CFE, EA
e said, she said … one size does not fit all. In today’s robust world of technology we all utilize its many paths differently. Understanding one’s Technology IQ helps us focus in our client’s needs better. Not all clients have the same Technology IQ. Millennials vs. Baby Boomers are going to have different skill sets and different way in which they focus of their media resources. As a “sales representative/loan officer,” it is important to identify with multilevel users. Without this understanding it is easy to attract only one type of client, but as we all want to grow our business exponentially the best way to do this is to diversify yourself and what social media do you use to market yourself and your programs.
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It’s easy to fall into comfort levels of what is comfortable to us, but we need to shed the comfortable floaty, and open ourselves to others needs and fears. Here are some statistics: l Females use social media less than men for business reasons, whereas women use social media to share more personal information than me, revealing more about their personal lives according to Iris Vermeren, a community manager at Brandwatch. l As of January 2014, 74 percent of all online adults use social networking sites. For adults ages 18-29, 89 percent of them use social networking sites. For adults ages 30-49, 82 percent of them do. For adults ages 5064, 65 percent of them do, and for adults ages 65 and older, 49 percent of them use social
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networking sites (Data Trend, Pew Research Center). Facebook—72 percent of adult internet users and 62 percent of the entire adult population. Pinterest and Instagram usage has doubled since 2012. Messaging apps appeal to smartphone owners. For most social networks, the 25-34 age group has control, but not by much. Facebook, Google+, Twitter, Instagram, and Pinterest fall into this category. Millennials ages 1824 consist of the most users on SnapChat, Vine, and Tumblr. LinkedIn is the odd-one out, with 35-44 year olds leading the way (Tyler Becker, wrote the book The Nine Major Social Networks Broken Down by Age). Of those living in the United States, here is a breakdown of the percentage of adults using
Facebook by region by Michael Patterson, on Sproutsocial.com: l 72 percent of adults living in the suburbs use Facebook. l 71 percent of adults living in urban areas use Facebook. l 69 percent of adults living in rural areas use Facebook. With all of the above statistics readily available in abundance one must plan their marketing strategy to touch all avenues they plan to derive business from. Remember, we don’t want to put all our eggs in one basket, because it works, it’s easy or it’s who we identify with. When developing a marketing strategy, you may market more heavily in one are, so perhaps you infuse 70 percent of your marketing capital into your marketing comfort zone, but by keeping 30 percent available to diversify, it may open new doors,
Laura Burke, MBA, MS, MIS, CFE, EA is an author, and trainer with 20-plus years of experience in the mortgage arena. She was recently one of six members chosen for the IRS IRPAC Advisory Committee, where she will serve a three-year term. She may be reached by e-mail at LauraLynnBurke@gmail.com or TakeTheLeadNMPM@gmail.com.
the cfpb’s action against MLO
mortgage originators could fund such a defense. In essence, this violates another constitutional protection that everyone should have. Can a person be deemed to have due process or have adequate counsel when it is so expensive that even large corporations choose consent orders rather than trials? These are rights conferred by the Fifth and Sixth Amendments that are effectively negated when the government chooses to make a criminal prosecution where the individual cannot afford to mount an effective defense. We are sorely in need of legislation that makes the government liable for reasonable legal costs of individuals who are exonerated. This should apply to all agencies, not just the CFPB. It is curious that Wells Fargo was not named in this action. Normally, an employer has a duty to defend its employee unless the employee is acting outside the scope of their duties. Negotiating the terms of loans and negotiating with service providers would hardly be outside the scope of Eghbali’s duties. California, requires employers to defend and indemnify employees, unless the employee was acting outside the scope of their employment. If the CFPB named Wells Fargo, the merits of this case may have found their way to court.
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If Wells Fargo was not involved, it is obvious no individual would have the resources to mount a proper defense. Thus, the CFPB can virtually come after individuals and small entities at will, irrespective of the merits of their case. Eghbali has boldly come forth and stated that he could not defend himself against the CFPB and was forced to sign the consent order. “I am deeply shocked that the CFPB chose to pursue a regulatory action against me on a novel and frankly bizarre theory—that obtaining low or zero fee escrow services for certain of my clients somehow delivered an improper ‘benefit’ to me at the expense of my clients,” said Eghbali. “I was bullied into entering the consent order because the CFPB left me no other reasonable choice … The extraordinary cost of fighting these allegations in prolonged litigation against such a powerful federal agency was not possible for an individual in my circumstance.” I’m not saying Eghbali is innocent. We really don’t know for certain. It would have been nice for a court to decide that or at least for Eghbali to make his decision for reasons other than impossibility to defend. It also would have given us some more guidance into the “regulation by enforcement” paradigm the CFPB is pursuing.
John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is immediate past president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or e-mail JLC@AMCMortgage.com.
Correction … In the May 2016 edition of National Mortgage Professional Magazine, Michael Fratantoni, Mortgage Bankers Association (MBA) chief economist and senior vice president of Research and Industry Technology, was incorrectly identified as Rick Hill on page 43. Mr. Fratantoni is correctly identified in the photo and caption below. Dr. Jerry Kaplan (right) being interviewed by Michael Fratantoni (left), MBA chief economist and senior vice president of Research and Industry Technology, during the Q&A Session of the Technology in Mortgage Banking Conference
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The same is true for marketing your mortgage business, how you connect with your hair dresser, vs. how you connect with your best friend’s sister is a totally different approach. Both are important contacts, the hair dresser could use a marketing hand out, a dodad or such to hand to her clients to open a conversation about you while working on their hair; using Facebook or twitter would not be advantageous in this situation. Yet connecting with your best friend’s sister could easily be accomplished through, phone, e-mail or Facebook. Here’s another example, I recently went to an international seminar to make a presentation on Mobile Pay services, such as Google wallet and Apple Pay. I attended another speaker’s presentation which was on an app for rural doctors, who for example there would be one doctor for every 2,500 people. The app was to be used for helping doctors monitor blood pressure, blood and such without having to physically see each client. This was a fairly large deal for the presenter and his group, yet they had blinders on. As I sat in the audience I thought about my eighty year old mom who could use such an app … or the home healthcare nurse who visited my mom at her home. The same app could be used for the elderly who either understood technology, or could be used by their home health care providers … They had never thought of tapping into that market, so they became super charged with the potential to market to a whole new segment of the population that wasn’t a rural market but and elderly market. Brainstorming and sharing ideas allowed this organization to move into another category of potential clients. I think that can happen to all of us, by sharing our information one way, and then branching out in other segments we will find new customers. Not one size fits all! Take the lead! It’s your turn now … join in our media discussion, via online connection to article, Facebook, Twitter and e-mail. We want your voice to be heard. We will share your stories, ideas and suggestions, giving you credit for your participation. Let’s grow together! Submit responses to: TakeTheLeadnmpm@gmail.com.
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introduce new contacts, and bring in different demographic segments adding to your client portfolio. For example, I may focus on commercial lending, but I will also touch on residential. I may key in on baby boomers because they may have deeper pockets to finance commercial deals. But if I eliminate the age group of 44-35 and millennials under age 24, I could sell myself short. I want to focus in on what each category feels is their comfort zone of receiving marketing information; whether it is Facebook, Twitter, Pinterest, word of mouth referrals, in person snoozing, whatever it takes I need to full fill the needs of my clients. For example, my 28year-old son owns a flooring company: Fortress Flooring. The best way I can help him promote his business is to post pictures on Facebook of his work, and share with family and friends his good work. Of course I can hand out his business card as well, but most people will call me and say, “Hey, what’s your son’s name, and number.” On the flip side in my tax business I have a client, who is a physician who asks me to help her with her investing strategies and planning. It’s not my expertise, if I post on Facebook or Twitter a referral for her, she’ll never see it. She doesn’t have the time to use social media in that manner. The best way I can assist her it to set up a live meeting with my investment broker, and actually meet her there. Make a personal introduction, and let them strategize and plan their needs and simply either leave or stay as a tax adviser for their plans. Both people are important clients, to me, but the best way to help promote them or service their needs is entirely different. However, if my son is getting calls from my efforts of promoting his business, does that give him a stronger incentive to refer his clients to me, for commercial lending or tax planning? What about my tax client, the doctor, will she appreciate my time and effort to help her get what she needed, even though I couldn’t provide the service? Of course, and I participated, adding to the comfort of entrusting personal information with someone she just met.
In Hockey and Software Development, Avoid Offside BY AMY BERGSETH
ecently, I started a series of articles in National Mortgage Professional Magazine where I relate my exploits in the mortgage technology business to the game I play in my free time. Actually, it’s the game most folks who grew up where I did play whenever they can. I’m talking about ice hockey. If you’ve never left work after a particularly difficult day, driven out to your local ice rink, suited up and then skated as fast and hard as you can into another person who just happens to be wearing a different colored jersey, then you don’t know how liberating and therapeutic this game can be. As therapies go, I think it’s even better than debating over which fishing lure is best or which cheese goes best with whatever’s for dinner, though not everyone living in the upper Midwest agrees with me on that.
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What has been so surprising to me is that many of the lessons I’ve learned on the ice apply very well in the mortgage industry, especially for folks like me who lead software development teams. One of the reasons hockey is such a great game, particularly for those of us working in the financial services industry, is because unlike our day jobs, ice hockey has very few primary rules. It’s a fast-paced game that doesn’t get bogged down with unnecessary regulation. I guess a lot of industries used to operate that way, back in the day. Not today. In hockey, there are really only about three key rules that must not be broken. Today, I want to tell you about offside.
When it all comes together It can be easy sometimes, as a player, to see rules as just something to slow down the game and make things difficult. The reality is, at least in ice hockey, that the rules are there to keep the game fast, fun and fair. The officials are there to make sure the game is fun for the players and fun for the spectators to watch. If you doubt this, consider the delayed offside rule. Delayed offside happens when the puck is passed or shot into the offensive zone while an attacking player is offside but has not yet been touched by a member of the attacking team. If this happens, the official will throw up a delayed offside warning, giving the attacking team the opportunity to “tag up” by getting all of its players out of the offensive zone. In other words, you have the opportunity to sneak out of the area if you make a mistake. If you can do it, then it’s no harm, no foul. This is a great rule because it assumes that the players want to follow the rules and just made an error that they are willing to correct. This contrasts with industries in which companies are viewed as criminals who just haven’t had the opportunity to break a law yet. In hockey and software development, rules make for stronger teams. In the case of offside, it forces players to work as a team, communicating together well so that they always know where each other are, especially as they approach the blue line. It also forces individual players to pay close attention to their surroundings, knowing where they are in relation to the rink markings, their teammates and the puck at all times. If more companies were run this way, we’d see a lot more firms reaching their goals.
Amy Bergseth is vice president of Operations for Glencoe, Ill.-based Exceleras, formerly Default Servicing Technologies. She can be reached by e-mail at Amy.Bergseth@Exceleras.com.
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Being at the right place at the wrong time Sometimes, you can violate the offside rule just by virtue of when you get into the game. I remember the first time this happened to me. It was my first season playing and even though I knew what offside was, I hadn’t experienced it as a player. Like most things, you can read the governing legislation, but still not get the real point of it until you hear that whistle blow or receive that consent order. Anyway, if you’ve ever attended a hockey game, you know that the two teams have seating areas on either side of the red center line from each other. When the game begins, each team is defending the goal on the same side of the rink as their bench is on. But eventually, the teams switch, each defending the opposite goal. This means that your bench is now situated right next to enemy territory. If you step out on the ice before the puck has crossed the blue line, or fail to get across that line before the puck crosses it, offside. During my first season, I remember the coach and my teammates reminding me to watch out for offside. I remember thinking, that’s the least of my worries. They’re not going to let the new girl carry the puck across the blue line. As luck would have it, as I’m jumping on the ice, trying hard to just get onto the ice without breaking my neck, the puck comes flying across the line. Offside! The guilt I felt at pulling all of the momentum out of my team’s effort to score a goal was very strong. This happens often in software development. You’ve worked hard on a project, maybe for months; you have everything lined up and
you can see the goal. Then, just as you are guiding your client toward the cutover, they hire a new executive. Just like that, someone has stepped onto the ice at the wrong time. Nine times out of 10, that person is going to want to review everything that’s happened up to that point on the project. Even if everything gets approved the timing is horrible and momentum is lost. It’s all about timing.
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Being where you’re not supposed to be Hockey would not be the great game it is if one team could just post a player next to their opponent’s goal and wait for someone to send the puck flying to them from the other end of the rink. To keep the game fair, the offside rule says that the puck must cross into the defender’s zone before any attacking player does. If the puck is passed over the blue line into enemy territory and picked up by a teammate who is already there, it’s called offside and play stops. To avoid this, most hockey coaches warn their players never to pass the puck over the blue line. This advice is not easy to take because as you approach that line, the opposing team will apply significant pressure to keep you out of their zone. The temptation is strong to pass it away. Your only good options are to do whatever it takes to carry the puck across the line or send it shooting into the corner in the hope that a teammate will recover it, which only happens about half the time. Now, if you’re a software team lead or project manager, you know what it feels like to approach the blue line, even if you’ve never played hockey. It’s that feeling you get when you can see the goal clearly ahead of you, but the pressure to deliver the project on time and under budget has never been higher. You have good people on your team, but no one who can take the responsibility for the project off your hands. You have to take it over the line or, in worst-case scenarios, send it flying into the corner. In most cases, the blue line is the system cutover date.
Good project managers try to always lead the project through a smooth and controlled cutover, replacing legacy systems with the new technology that will take the company to the goal. But sometimes, unexpected pressure can force a project manager to attempt an all or nothing play to keep the project from dying. The closer you get to the cutover date, the more intense the pressure will become. In software development, just like in hockey, timing is everything.
Operation VA SITREP “Your VA Situation Report”
Veteran Housing Discrimination BY RICHARD M. BETTENCOURT JR., CRMS, CMHS uick question for you: Would you have a problem with this offer on a $630,000 single-family home in Bedford, Mass.? A borrower offered full price with a 768 FICO, 28 percent back end DTI, $120,000 in their checking account, a 10 percent deposit, and a 45-day closing. Would you, as a real estate agent, accept that offer? The logical and no-brainer answer would be a resounding “Yes.” However, this listing agent advised his seller to say “No.” Why? Simply because it was a VA home loan! Now, the veteran ultimately had his offer accepted, however, only
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after the veteran went around the listing agent and called the seller directly. When he called, he simply said, “Why won’t you sell me your home and accept this offer?” The seller’s response was, “Well, our agent said this was a VA home loan and we’re concerned!” The acceptance of their offer was only made possible after the veteran told me to disclose the strengths (credit, DTI, income, assets, etc.) of their financial situation. The veteran has already disclosed this information once to the federally licensed mortgage professional, and shouldn’t have to do it again! This sort of discriminatory practice is an epidemic in our country! Thousands of veterans each and every year lose out on
the opportunity to make the American dream of homeownership a reality simply because some mortgage professionals and real estate agents are more concerned with a paycheck than they are with advising the veteran to use a benefit they earned! To be honest, I’m sick and tired of these socalled professionals! So much so, that I have a meeting with my Congressional representative to see if this country wants to help out! What makes these sorts of injustices even harder to swallow and comprehend is that in Massachusetts, it’s legitimately illegal!!! In 2003, Massachusetts passed a state law that added six additional classes to our
Facebook for OrigiNators Join the new Facebook group by searching for “OrigiNation.” This public and open group features information that will be featured in the “OrigiNation” column in National Mortgage Professional Magazine, with your consent of course, by Andy W. Harris. People want to hear from you, the mortgage originator, from the good stories to the bad, from the funny to the serious … take this opportunity to connect and share. Search today on Facebook and join the group! Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish.
discriminatory laws. One of those classes were veterans. Massachusetts General Law (MGL) Chapter 151B Section 4.7 states: Section 4. It shall be an unlawful practice: “7. For the owner, lessee, sublessee, real estate broker, assignee or managing agent of other covered housing accommodations or of land intended for the erection of any housing accommodation included under subsection 10, 11, 12, or 13 of section one, or other person having the right of ownership or possession or right to rent or lease or sell, or negotiate for the sale or lease of such land or accommodations, or any agent or employee of such a person or any organization of unit owners in a condominium or housing cooperative: (a) to refuse to rent or lease or sell or negotiate for sale or lease or otherwise to deny or withhold from any person or group of persons such accommodations or land because of race, color, religious creed, national origin, sex, gender identity, sexual orientation, which shall not include persons whose sexual orientation involves minor children as the sex object, age, genetic information, ancestry, or marital status, veteran status or membership in the armed forces, blindness, hearing impairment, or because such person possesses a trained dog guide as a consequence of blindness or hearing impairment or other handicap of such person or persons.”1 continued on page 97
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Appraisal Industry Update BY GREG STEPHENS, SRA, MNAA, CDEI
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In response to state licensing requirements and concerns over reputational risks, a growing number of chief appraisers and AMC senior management indicate they are requiring their staff reviewers to be licensed in multiple states, which would suggest the number of credentials on the ASC National Registry is not a reflection of additional appraisers, but rather a reflection of the increase in the number of appraisers obtaining multiple state credentials. As I mentioned earlier, when we analyze the number of licensed and certified appraisers available to complete assignments for mortgage lending transactions we also have to take into account the number of certified appraisers working in administrative, management, internal review roles and as such, do not complete appraisal assignments. That number is significant. An example includes a regional bank who informed me they recently hired eighteen certified appraisers representing some of the best and brightest in their market area for internal positions. A polling of members attending the CRN Conference in New Orleans revealed a majority being in administrative / management positions and not completing appraisal assignments for several years. So how does the future look? At a recent AARO (Association of Appraiser Regulatory Officials) conference in Phoenix, Ariz., Jim Park, executive director of the Appraisal Subcommittee indicated the ASC data shows approximately 8,000 to 9,000 trainees nationwide, but also advised that data is based upon
their annual compliance reviews of the various state appraiser regulatory agencies so some of the data may not current. In March 2016, I conducted a survey of the state appraiser regulatory agencies asking for data relating to the trending of appraiser trainees and shared the survey results with those in attendance at the April 14th Collateral Risk Network (CRN) meeting in New Orleans. What follows next are the results of that comprehensive survey. The title relating to Appraiser Trainee credential is also referred to by the various states as Provisional Appraiser, Associate, Limited, Appraiser Intern, Apprentice, Appraiser Apprentice, State Licensed Real Estate Assistant, Appraiser Assistant. For the purposes of this study, they will be referred to as Appraiser Trainees. None of the five Territories– Guam, American Samoa, Mariana Islands, Puerto Rico, Virgin Islands–have Appraiser Trainee Credential programs or reported data relating to a trainee credential program. Of the 50 states surveyed, 46 have some form of credentialing program for Appraiser Trainees. Of the 46 states with Appraiser Trainee programs, 34 responded to the survey request. Missouri began credentialing trainees in 2014 and Wyoming began credentialing Trainees in 2015 so limited data was available from those two states. Twenty states reported they are experiencing declines in the number of credentialed trainees. Four states reported they are experiencing an increase in the number of credentialed trainees. continued on page 101
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Subcommittee (ASC) National Registry and the message conveyed is that the number of appraisers is actually increasing. However, a point of clarification seems to be in order. The ASC National Registry contains appraiser credentials for state licensed and certified appraisers. It does not contain data on the number of trainees. It also reflects the number of credentials, not individuals. Nor does it reflect how many appraisers are actually providing appraisal services instead of working in an in-house administrative, managerial, supervisory role or acting in an in-house review capacity and not actually completing appraisals. We are currently working on an answer of how many appraisers are actually completing appraisal assignments nationwide for mortgage lending assignments. Until we have those results, a deeper dive into the data on the ASC National Registry will provide a bit more clarity into the recent discussions regarding the number of credentials. The ASC National Registry contains data on licensed and certified credentials. To drill down to the number of appraisers, a snapshot of the ASC National registry as of 04/12/2016 revealed the following: l 97,334=Total Number of Credentials l 73,541=Number of Appraisers Licensed/Certified in One State l 8,996=Number of Appraisers Licensed/Certified in More Than One State l 23,803=Number of Credentials Represented on the National Registry by the 8,996 Appraisers l 17,119=Difference in Total Credentials vs. Individual Appraisers
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topic very relevant to mortgage professionals has been receiving increasing attention lately– the question whether there is or is not a shortage of appraisers? Regulators, as well as market participants, have been weighing in, and depending upon who you talk to, the answers vary. The problem so far is that most of the discussion has been anecdotal. What also needs to be included in stakeholder discussions on the topic is the status of future appraisers in the pipeline to replace the aging population of practicing appraisers. To answer the question–not only whether there is a current shortage, but also if there is the potential for a shortage either in the near future (three to five years) or perhaps even longer, I conducted some in-depth research to glean as much factual information as possible. In conversations with chief appraisers and senior management at various lenders and appraisal management companies, many are reporting increasing challenges outsourcing appraisal assignments in a growing number of markets around the country. A reluctance of lenders and AMCs to allow trainees and licensed appraisers to be involved have also exacerbated the problem because in some markets the resources are available but restricted either by regulation or market participants–lenders and AMCs. Recent articles and presentations on the subject have focused on the number of credentials on the Appraisal
The Trend Is Not in Fashion,
It’s Credit! BY LARRY AVERY
ithout a doubt, Fannie Mae’s decision to add trended credit data to their Desktop Underwriter system in their Version 10.0 release is a game-changer. In fact, some in our industry have described the addition of trended credit data as the single most significant event to happen to the credit report since the introduction of the credit score. The impact on both lenders and borrowers will be far reaching and as the use of trended data takes hold and develops over the years to come will no doubt change the mortgage credit landscape in ways yet imagined. In this new landscape of trended credit data, paying your bills on time is no longer enough. Now, how you pay your bills over a period up to 30 months is arguably as important as when or even if you pay them. We can expect some immediate impacts to trended data in credit reports, such as, according to TransUnion, opening up credit to 26.5 million consumers previously shut out of the system who previously could not be scored by traditional risk scoring now can be effectively scored with over three million of these previously unscoreable consumers being placed in the prime or super prime risk tiers, improved credit ratings for an additional 23 million consumers, potentially qualifying them for better rates and terms and the ability to better identify a consumer’s actual risk, enabling better opportunity to provide the consumer with appropriate mortgage financing options. With the addition of trended data, Fannie Mae is improving the overall performance and predictive power of DU. Fannie Mae has found that how consumers handle their credit card balances is a very good predictor of how they will handle their mortgage payments. Fannie Mae has used credit scoring in DU since 1995. However, starting in 2000, Fannie started using a proprietary scoring model developed using Fannie loans exclusively. This proprietary scoring model made DU more predictive of future payment behavior within DU. Last year, they conducted a comprehensive review and redevelopment of DU’s risk assessment model. From mid-2009 until August 2012, Fannie Mae analyzed 3.7 million credit reports with trended data in the development of DU
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Version 10.0. With current credit reports, the report displays a snapshot of accounts at a single point in time. The credit report shows monthly balance, credit limit and the payment made that month. With the addition of trended data, the credit report will display two years of payment history on each credit card account. This data will show what was paid during the month on each account, if a balance is being carried, pay more than the minimum or pay off your balance each month. Also, trended data is looking at if a consumer is paying down revolving balances every month or are they transferring balances between credit cards or are they someone who leaves the balance high and pays the minimum. We have always known that paying your bills on time is important, but now how you pay your bills and not just whether you pay them is equally as important. This is where the terms “Revolver” and Transactor” become important. A “Revolver” is someone who carries a balance on their accounts, while a “Transactor” pays their balance in full each month. Quite simply, “Revolvers” are classified as high risk, while “Transactors” are low risk. According to TransUnion, Revolvers are three times more likely to default on new credit cards and auto loans than Transactors, and five times more likely to default on current credit cards. Partial payers, paying down the balance over time, are less likely to default than those making minimum payments. It is easy to see that trended data provides lenders with information showing how a consumer has behaved over time at a more detailed level not available before which gives lenders a better understanding of the consumer’s financial situation. To illustrate this point, let’s look at two consumers, both with a 730 FICO score which normally is within the risk criteria of most lenders. Each consumer has $10,000 in current debt. With the present credit report, both would look the same even though one had $30,000 in debt two years ago and the other only $2,000. In
this example, one person added $8,000 in debt over the last two years, while the other paid off $20,000. With trended data, these two consumers will look very different from a risk perspective. On the current credit report, a consumer who uses a high percentage of their available credit lines is considered a higher risk. However, with the trended data credit report, a lender may see that a consumer has consistently handled this high percentage with no problems over the last two years. Even though this may lower the credit score, it demonstrates proper credit management over time that may be helpful to the consumer who is searching for a mortgage loan. Conversely, payment trends can help or hurt a consumer’s chances for qualifying for a loan. Consider the consumer with a borderline 690 score who lost their job two years ago, and during that time, their score declined. If payments have been consistent over the last 18 months showing an improvement, this fact can assist the consumer in obtaining a loan more so than when trended data was unavailable. “We found that including trended data materially improved modeling of loan performance, including the trended data in DU’s credit risk assessment improves the accuracy of DU’s overall risk assessment. It will benefit borrowers who regularly pay off revolving debt,” Eric Rosenblatt, Fannie Mae’s vice president for Credit Risk Analytics and Modeling, writes on the company’s Web site. Bottom line, trended data is the future in determining credit eligibility for mortgage loans, and we have only seen the tip of the iceberg. Our advice would be to partner with a lender and provider you can trust and has the knowledge to guide you through these changes. Birchwood and REMN Wholesale have done this in offering educational updates through a series of Webinars on this very topic. Together, we plan to offer more tools and tips as this change unfolds. Stay tuned.
Larry Avery is vice president of Business Development for Birchwood Credit Services Inc. He may be reached by phone at (800) 910-0015 or e-mail Larry@BirchwoodCreditServices.com
MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams he Mortgage Action Alliance (MAA) is a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). And MAA gets results, as Congress heads towards its summer recess, several MAA member priorities are advancing. The House of Representatives gave its resounding approval to the SAFE Transitional Licensing Act last month, giving the MBA-supported bill fresh momentum as it heads to the Senate. The bill’s unanimous passage was the product of extensive advocacy efforts over the course of the past year by MBA and members of the Mortgage Action Alliance, who sent nearly 3,000 letters to House members in the weekend leading up to the vote. Also, the House Appropriations Committee advanced the U.S. Department of Housing & Urban Development (HUD) funding bill, which is expected to be considered by the full House shortly. The bill contains many priorities important to MBA. Most notably, the bill explicitly blocks FHA from charging lenders a per-loan fee to fund its administrative costs. The measure also maintains level funding for FHA’s administrative needs, and fully funds Ginnie Mae’s staffing, training, and technology needs. For the 92 third consecutive year, the House maintained a prohibition on federal funds being used to facilitate eminent domain seizures of performing loans. The bill also contains funds for housing and homeownership counseling. The legislation may be considered by the House in June, while the Senate passed its version of the funding bill mid-May. And finally, the Financial Services Appropriations Subcommittee approved its bill. Included in the legislation is an MBA-supported provision that would subject the Consumer Financial Protection Bureau (CFPB) to the congressional appropriations process. Under the Dodd-Frank Act, the CFPB receives its funding directly from the Federal Reserve, thus limiting the ability of Congress to conduct meaningful oversight of the Bureau. The Mortgage Action Alliance recently sent out a letter asking MAA members about any personal relationships that they have with their elected officials. These relationships can be incredibly valuable to our advocacy efforts on behalf of the industry. Please consider joining MAA and helping us leverage your personal relationships to advocate on behalf of our industry. The industry’s ability to navigate and manage these policy challenges will be critical to our efforts to serve consumers. Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice! If you would like to run an MAA campaign, please contact Peter Shapiro at (202) 557-2933 or e-mail PShapiro@MBA.org to receive an enrollment campaign kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs. Real estate finance industry professionals who wish to join or learn more about MAA can do so at Action.MBA.org. If you have any questions regarding MBA’s advocacy programs, please contact MBA’s Director of Political Affairs Annie Gawkowski at (202) 557-2816 or e-mail AGawkowski@MBA.org. JUNE 2016 n Michigan Mortgage Professional Magazine n
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Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage. He may be reached by phone at (800) 851-0263 or e-mail FWilliams@CrescentMortgage.net.
advertising compliance corresponding forms and checklists. Certain sections must be included, such as the following: l l l l l l l l l l
Electronic media Telemarketing Do Not Call Do Not Fax Do Not E-mail Prescreening Firm offers of credit Published rates Rate sheets Third-party advertisements
If the company offers special programs, such as loan products designed for senior citizens, these must be outlined and given some depth as to the target audience and restrictions. An important inclusion in the advertising manual is a set of reference terms, which ought to be in a separate section of its own. Examples should be given for “triggering terms,” the advertised words or phrases that “trigger” the need for additional disclosures. Record Retention Whereas the subject of record retention often comes last in an outline of regulatory compliance policies, it actually holds second place with respect to advertising compliance, after the advertising manual and before the forms and checklists. This priority is due to the critical need to retain all advertisements. A company must keep copies of printed advertisements, as well as the text of advertisements that are conveyed by electronic or broadcast media, for a two-year period from the date issued by the advertiser. Let me be as clear as possible here: Retain copies of printed advertisements (including transcripts of non-print media) and marketing materials used, including all materially different advertising, marketing and promotional media regarding any mortgage credit product. As a policy position, the company should impose a uniform two-year record retention rule to be enforced through the latter of the two year retention period or through at least one regulatory examination. As a practical matter, retain advertisements in perpetuity, if possible. Furthermore, I suggest the
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company maintain any advertisements that apply to evidence of required actions. Checklists and Forms There are many checklist categories that are used in advertising compliance. I am going to provide a brief outline of three of them for you. These are the General, FHA and Online checklists. I have outlined below a checklist for each category, with an expanded checklist for online, given that online is a large source of marketing and loan origination activities. The list is deliberately brief and by no means comprehensive, so view them with the proviso that you must develop a checklist that is specific to your company’s loan products and risk profile. You may not know the implications of some of these checklist items; however, please assume that the very fact that these items are on the lists indicates they impute important inferences associated with advertising compliance. General Checklist: Advertising Compliance (Partial Sample) l Does the advertising include the HUD logo or legend? l Does the advertising include the Fair Housing logotype? l Does the advertising have any tendency or capacity to deceive? l Is the advertising accurate? l If the advertising describes a benefit, does it also describe any conditions that must be satisfied to obtain the benefit? l Does the advertising include any Truth-in-Lending Act triggering terms? (Note: if you do not have a list of these trigger terms, please consult a compliance professional. The list is extensive, long, and requires careful review.) l Does the “®” or “SM” symbol appear with any service mark? l If a service mark appears, does the following language appear: “[Mark] is a service mark of [name of owner of the mark]?” l If the advertisement is for a home equity credit line, does it comply with the Truth-inLending Act’s special home
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equity credit line requirements? Does the advertising include any references to tax deductibility? Does the advertising make any “guarantees?” Are any applicable statespecific rules satisfied? Have all statements of fact been substantiated? For telemarketing activities, have the telemarketing requirements been satisfied?
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Real Estate Industry Lacking Regulation? By Andy W. Harris, CRMS
’m sure many would agree that the residential mortgage industry is now one of the most regulated industries on the planet. We all know of the good and bad changes along with unintended consequences, etc. What I cannot stand is seeing some lenders penalized and fined for unintentional issues with minor consumer impact, while others are ignored and get away with the most harmful consumer-impacting actions and behaviors in the industry. While most of the bad players in the mortgage industry are gone, what about the ignored real estate industry? I can say this with a high level of confidence … real estate companies and the agents who work for them are significantly under regulated. I believe real estate agents have little to no performance standards primarily due to the lack of accountability for their actions. Many real estate agents I see in my market are self-focused and not client-focused, arrogant and egotistical with emotional actions causing significant problems in real estate transactions. Listen, there are some great agents out there, but they seem to be in the minority from what I hear in most markets. Good real estate agents also agree with these statements as they deal 93 with bad real estate colleagues daily. Bad agents have no respect for the (most important) mortgage process and ignorant to it, yet claim to know it all. Here are the consistent issues I personally see from bad real estate agents that interfere with the homebuying process: l Discrimination (against veterans and other protected consumers) l Fraud and manipulation l RESPA Section 8 kick-back violations (a huge problem on both sides) l Conflict of interest l False and misleading advertising and practices l Lying and deception l Unethical client pressure and steering, and the list goes on …
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I am really not trying to be negative and I know there are bad players in the mortgage space as well, but I believe our regulation is clear and accountability is aggressive if violations do occur. I believe that for whatever reason, the real estate industry has been able to influence policymakers and regulators to turn a blind eye on their actions and compensation. The sad reality is that the consumer is harmed by these negative actions when interacting with these unprofessional and unethical people. What are your thoughts? Is it just my markets that I’m experiencing this? How do we improve honesty, integrity and accountability in the real estate market from both agents and loan officers? How do we help the best agents weed out these bad ones and rise to the top? I cannot help but share this topic for discussion from all the stories I hear from colleagues across the nation. Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish. You can also join the Facebook Group by searching for “OrigiNation.” Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 4960431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.
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Online Checklist: Advertising Compliance (Partial Sample) l A lender that advertises online
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FHA Checklist: Advertising Compliance (Partial Sample) l Advertising patterns or practices that a reasonable person would believe indicate prohibited-basis customers are less desirable. l Advertising only in media serving non-minority areas of the market. l Marketing through brokers or other agents that the lender knows (or has reason to know) would serve only one racial or ethnic group in the market (unless part of an effort to attract minorities not otherwise being reached). l Use of marketing programs or procedures for residential loan products that exclude one or more regions or geographies within the lender’s assessment or marketing area that have significantly higher percentages of minority group residents than does the remainder of the assessment or marketing area. l Using mailing or other distribution lists or other marketing techniques for prescreened or other offerings of residential loan products that: l Explicitly exclude groups of prospective borrowers on a prohibited basis. l Exclude geographies (i.e., census tracts and zip codes) within the institution’s marketing area that have significantly higher percentages of minority group residents than the remainder of the marketing area. l Proportion of monitored prohibited-basis applicants is significantly lower than that group’s representation in the total population of the market area. l Consumer complaints alleging discrimination in advertising or marketing loans.
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credit products subject to the Fair Housing Act must display the equal housing lender logotype and legend or other permissible disclosure of its nondiscrimination policy if required by the rules of its regulator. In some cases, regulations contain special rules for multiple-page advertisements. For online advertisements that may be deemed to contain more than a single page; thus, lenders should comply with the applicable sections of Regulation Z,2 which describe the requirements for multiplepage advertisements). (Note: It is not yet clear what would constitute a single “page” in the context of the Internet or online text.) Internet or other systems in which a credit application can be made online may be considered “places of business” under HUD’s rules prescribing lobby notices. Ensure that online products are offered and evaluated on a non-discriminatory basis and that no illegal discouragement exists. Place any required disclosure as close as possible to the advertising claim. View disclosures on the same platform as the advertisement and be sure to include any disclosures necessary to prevent the advertisement from being misleading. Incorporate disclosures into advertisements whenever possible. If including sufficient disclosure is not possible because of space constraints, consider putting the disclosures clearly and conspicuously on a page to which the advertisement links (if allowed by applicable law). When using hyperlinks: l Make the link obvious. l Appropriately label the link to convey its importance, nature and relevance. l Use hyperlinks consistently, so customers know when they are available. l Place the link as close as possible to the relevant information. l Take customers directly to the disclosure on the clickthrough page. l Assess the effectiveness of the link by monitoring clickthrough rates and other information about customer use; make changes as appropriate.
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l Use the “reasonable person rule” and assume that each page of the Web site is not going to be read by the viewer nor every word—nor visit every Web page. l Design advertisements so scrolling is not necessary to find a disclosure. When scrolling is necessary, use text or visual cues to encourage scrolling. l Research about where consumers may look on the screen for information. l Recognize and respond to technical limitations or unique characteristics of a communication method when making disclosures. l Display disclosures before customers make a decision to buy. l Repeat disclosures as needed on lengthy websites and for repeated advertising claims. l Be on the lookout for multiple routes through the Web site and be sure disclosures are repeated as necessary. l Prominently display disclosures; be aware of color, size and graphics. l Review the entire advertisement (as a whole) to address the effectiveness of disclosures in light of other elements (viz., text, graphics, hyperlinks, and sound). l If using audio disclosures with audio claims, present them in a volume and cadence consumers can hear and understand. l Use plain language and syntax. l If a disclosure cannot be made clearly and conspicuously so as to prevent an advertisement from being deceptive, do not use the advertisement. l To determine whether a particular disclosure is clear and conspicuous, consider: l Its placement in the ad and its proximity to the claim it qualifies. l Its prominence. l Whether seeing the disclosure is unavoidable. l Whether other items in the advertisement might distract attention from the disclosure. l Whether the disclosure should be repeated several times to be effectively communicated, or because consumers may enter the site at different locations or travel on paths that might
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cause them to miss it. l Whether audio messages have adequate volume and cadence. l Whether the language of the disclosure is understandable to the intended audience. l Monitor and analyze data for indications that disclosures were or were not comprehended, and make necessary adjustments. l Pay close attention to technological limitations. (For example, a disclosure that requires Adobe Flash Player will not be displayed on certain mobile devices.) l Deactivate pop-up disclosures that can be blocked. Using ‘unblockable’ pop-ups may be problematic. l For audio claims, use audio disclosures. For written claims, use written disclosures. Other advertising checklists that should be included are, as applicable: l Closed End Credit l Open End Credit l Reverse Mortgages l Home Equity Lines of Credit l Fair Lending l UDAAP In addition, consider providing a set of Reference Guide or Quick Reference Guide with the following sections: l Close End Credit–Triggering Terms l General Phrases: Do Not Trigger Full Disclosure l Closed End Credit Triggering Terms l General Phrases: Do Trigger Full Disclosure l HELOC–Triggering Terms l General Phrases That DO Trigger Full Disclosure l Advertising Descriptions and Phrases (i.e., Terms of Offer) A form should be provided in the advertising manual in order to ensure that a request has been made to the compliance department for approval of the advertisement. Such a form may be called “Advertising Request Approval Form,” or some other title, but the purpose of the form is to provide the following information and documentation: l Name of requester and date of request l Summary of the advertisement l Media
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Virtually all aspects of advertising must be evaluated in an advertisement. Depending on the advertisement or campaign’s loan product, advertising compliance should consider such categories as the term of the offer or promotion, the limitations on use or scope of the offer, general limitations and restrictions on the offer, limitations on geographical scope, limitations as to choice of loan products or availability, limitations of liability, qualifications or prerequisites to availability, and many more factors.
There are some rudimentary indicators of potential Disparate Treatment in marketing of residential loan products. Disparate treatment occurs when a company treats a credit applicant differently based on one of several prohibited bases, such as race or color, national origin, religion, and several other bases. Importantly, an allegation of a fair lending violation does not require any showing that the treatment was motivated by prejudice or a conscious intention to discriminate against a person beyond the difference in treatment itself.3 When a company applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a Disparate Impact. The fact that a policy or practice creates a disparity on a prohibited basis is not alone proof of a violation. According to the interagency examination procedures set forth by Federal Financial Institutions Examination Council (FFIEC), “when an examiner finds that a lender’s policy or practice has a disparate impact, the next step is to seek to determine whether the policy or practice is justified by ‘business necessity.’ The justification must be manifest and may not be hypothetical or speculative.”4 Factors that may be relevant to the justification could include cost and profitability. Even if a policy or practice that has a disparate impact on a prohibited basis can be justified by business necessity, it still may be found to be in violation if an alternative policy or practice could serve the same purpose with less discriminatory effect. But, as stated above in the case of disparate treatment, so also evidence of discriminatory intent is not necessary to establish that a lender’s adoption or implementation of a policy or practice that has a disparate impact is in violation of the Fair Housing Act or Equal Credit Opportunity Act. In evaluating whether there is a potential for a fair lending violation in an advertisement, FFIEC has also offered several factors to consider, amongst which are:5
Fair Lending Advertisements are a minefield of potential fair lending violations.
l Advertising patterns or practices that a reasonable person would believe indicate
Date(s) of publication Specimen of advertisement Audience Approval or Denial (viz., with management signature and date)
The form and all revisions to the advertisement prior to and at publication are kept together for future use as well as to maintain supporting proof of the review process. Triggering Terms Certain advertising terms, known as “triggering terms,” cause the need for additional disclosure. The presence of these terms in an advertisement can lead to TILA violations, among other things. There are triggering terms associated with different loan products, such as home equity credit lines, closed end credit, HELOCs, and many other loan products. For instance, a few terms for closed end credit that trigger the need for additional disclosure are: l “Up to 48 months to pay” l “90 percent financing” l “As low as $50 a month” l “36 equal payments” l $500 total cost of credit” Of course, there are triggering terms that do not trigger additional disclosure. Some examples of terms for closed end credit that do not trigger the need for additional disclosure are: l “Defer your first monthly installment until July” l “Pay monthly” l “Regular monthly payments” l “Five Percent Annual Percentage Rate Loans” l “Qualify at 1.00 percent below prime”
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UDAAP A marketing campaign, whether consisting of one or numerous advertisements and promotional opportunities, must be scrutinized for potential UDAAP (Unfair, Deceptive, or Abusive Acts or Practices) and fair lending violations. Nearly any kind of “puffery” can cause a UDAAP violation, the classic example being over-promising and under-delivering! Another classic is up-selling or downselling to less attractive products or products unsuitable for the audience of prospective applicants. An act or practice is deceptive if there is a representation, omission of information, or practice that is likely to mislead consumers who are acting reasonably under the circumstances, and the representation, omission, or practice is one that is material, for instance, likely to affect consumers’ decisions to purchase or use the product or service at issue.7 There is a two-prong rule for determining if an act or practice is deceptive.8 l There is a representation, omission of information, or practice that is likely to mislead consumers acting reasonably under the circumstances; and l That representation, omission, or practice is material to consumers. Violations of UDAAP easily abound if applicable disclosures are not clear and unambiguous, such as where material information is omitted from the marketing campaign, information is contradicted by laws or regulations, all fees are not disclosed or their timing not given, use of the word “Free” is misleading, fake images and testimonials are used, so-called “guarantees” are misleading, and, in general, insufficient information causes a consumer to not reasonably understand the terms of the campaign. Here is a three-part test recommended by the FTC9 as a tool to avoid UDAAP violations in advertising: 1. The practice must be one that
causes or is likely to cause substantial injury to consumers. 2. The injury must not be outweighed by countervailing benefits to consumers or to competition. 3. The injury must be one that consumers could not reasonably have avoided. This three-part formula may be taken as a rule-of-thumb method toward screening advertisements for potential UDAAP violations. The fact is that there is a distinct prohibition or restriction on unfair or deceptive advertising and all due efforts must be undertaken toward the goal of preventing unfair or deceptive practices. Keep in mind that a representation may be express or implied. An “express claim” directly represents the fact at issue, while an “implied claim” does so in an oblique or indirect way.10 Whether an implied claim is made depends on the overall net impression that consumers take away from an advertisement, based on all of its elements (language, pictures, graphics, and so forth).11 Therefore, the examiner is going to evaluate whether consumers’ impressions
or interpretations of a representation or omission are reasonable. In Part One of this two-part series, I mentioned the “reasonable person” rule. I stated that one of my colleagues often refers to the “reasonable person rule” as the “village idiot rule;” that is, if the village idiot can be expected to understand the message, the “reasonable person rule” test may be passed. Be forewarned, if there is a claim, challenge or examination finding to whether a consumer is in any way misled or may be misled by an advertisement, the onus will be on the company to prove otherwise! Indeed, reasonableness is evaluated based on the sophistication and understanding of consumers in the group to which the representation is targeted, which may be a general audience or a specific group, such as senior citizens.12 But a claim may be susceptible to more than one reasonable interpretation, and if one such interpretation is misleading, then the advertisement is deceptive, even if other, non-deceptive interpretations are possible.13 95
Footnotes 1—1 “Advertising Compliance: Getting Ready for the Banking Examination,” by Jonathan Foxx, National Mortgage Professional Magazine, May 2016, Volume 8, Issue 5, p. 94. 2—For instance, § 1026.16(c), § 1026.24(d). 3—Interagency Fair Lending Examination Procedures, August 2009, p iii, Office of the Comptroller of the Currency Federal Deposit Insurance Corporation, Federal Reserve Board Office of Thrift Supervision, National Credit Union Administration. 4—Idem. p iv. 5—Idem. p 11. 6 Idem. P 39 7—Section 5 of the FTC Act broadly proscribes unfair or deceptive acts or practices in or affecting commerce. 8—Deception Policy Statement, at 176–77, Federal Trade Commission Policy Statement on Deception, appended to In re Cliffdale Assocs. Inc., 103 F.T.C. 110, 174– 84 (1984) (Deception Policy Statement). See also FTC v. Tashman, 318 F.3d 1273, 1277 (11th Cir. 2003); FTC v. Gill, 265 F.3d 944, 950 (9th Cir. 2001); FTC v. QT, Inc., 448 F. Supp. 2d 908, 957 (N.D. Ill. 2006), aff’d, 512 F.3d 858 (7th Cir. 2008); FTC v. Think Achievement Corp., 144 F. Supp. 2d 993, 1009 (N.D. Ind. 2000); FTC v. Minuteman Press, 53 F. Supp. 2d 248, 258 (E.D.N.Y. 1998). 9—Section 5(n) of the FTC Act sets forth a three-part test to determine whether an act or practice is unfair. 10—FTC v. QT, Inc., 448 F. Supp. 2d at 957 11—See FTC v. Cyberspace.com, LLC, 453 F.3d 1196, 1200 (9th Cir. 2006) (‘‘A solicitation may be likely to mislead by virtue of the net impression it creates even though the solicitation also contains truthful disclosures.’’); FTC v. Gill, 265 F.3d at 956 (affirming deception finding based on ‘‘overall ‘net impression’’’ of statements); Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir. 1989) (advertisement was deceptive despite written qualification); Thompson Med. Co. v. FTC, 791 F.2d 189, 197 (DC Cir. 1986) (literally true statements may nonetheless be deceptive); FTC v. QT, Inc., 448 F. Supp. 2d at 958. 12—Op. cit. 4, pp 177-179 13—Idem p. 178.
Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at JFoxx@LendersComplianceGroup.com or visit LendersComplianceGroup.com.
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With respect to media usage, the follow steps should be undertaken:6 l Determine in which newspapers and broadcast media the institution advertises. l Identify any racial or national origin identity associated with those media. l Determine whether those media focus on geographical communities of a particular racial or national origin character. l Learn the institution’s strategies for geographic and demographic distribution of advertisements. l Obtain and review copies of the institution’s printed advertising and promotional materials. l Determine what criteria the institution communicates to media about what is an attractive customer or an
attractive area to cultivate business. l Determine whether advertising and marketing are the same to racial and national origin minority areas as compared to non-minority areas.
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prohibited basis customers are less desirable. Advertising only in media serving non-minority areas of the market. Marketing through brokers or other agents that the institution knows (or has reason to know) would serve only one racial or ethnic group in the market. Use of marketing programs or procedures for residential loan products that exclude one or more regions or geographies within the institutions assessment or marketing area that have significantly higher percentages of minority group residents than does the remainder of the assessment or marketing area. Using mailing or other distribution lists or other marketing techniques for prescreened or other offerings of residential loan products that: l Explicitly exclude groups of prospective borrowers on a prohibited basis; or l Exclude geographies (i.e., census tracts, ZIP codes, etc.) within the institution’s marketing area that have significantly higher percentages of minority group residents than does the remainder of the marketing area. Proportion of prohibited basis applicants is significantly lower than that group’s representation in the total population of the market area. Consumer complaints alleging discrimination in advertising or marketing loans.
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validates data that was used to generate pricing for the loan. Within the LoanHD Investor Module, if underwriting results in pricing data changes, the embedded Eligibility Card allows the underwriter to quickly view how the changes alter the pricing and eligibility. This reduces the “back and forth” between Secondary Marketing and the underwriter. “When the underwriting process produces a material change in the borrower’s loan file, the investor will be able to alter the price of the loan automatically and return it to the seller, so the system always remains accurate and up to date in real time,” said Thoman. In addition, auditors reviewing a loan file prior to purchase have immediate access to the entire underwriting audit. For instance, LoanLogics Unveils Its investors can click a link and review Non-Delegated W-2s, tax returns, and related Underwriting Module LoanLogics documents along with the details of the decision the underwriter has announced previously made. “Most investors run pre-purchase the release of its Non-Delegated audits and are blind to their own Underwriting Module, the featured enhancement to its LoanHD Investor underwriter’s decision made only a few days prior. That’s a time Module for Correspondent Loan consuming, risky approach,” said Acquisition. The Non-Delegated Thoman. “This enhancement Underwriting Module adds the ability for the investor to underwrite ensures our customers realize both efficiency gains and risk reduction loans on behalf of the seller to the with automation, transparency and automated loan delivery process accuracy.” already present within the Investor Module. Overture Technologies “LoanLogics Non-Delegated Underwriting Module automates the and ATS Secured Partner on New Platform underwriting workflow for the Overture investor. More than that, we have Technologies brought the same data and and ATS document validation currently available in loan quality audits to the Secured have announced the launch of the Settlement underwriting process. This brings increased productivity, improved Coordinator Workstation, a platform efficiency and enhanced quality which addresses originators’ and control to underwriting, even before investors’ unsustainable high cost the pre-purchase audit,” said Matt to originate and buy loans. The Thoman, product manager for solution combines the industry’s Origination Technologies. “Our team leading independent automated has applied automation, improved loan underwriting system with tools accuracy, and transparency for to conduct compliance checks, better underwriting on loans which coordinate loan settlement, need it the most.” distribute loan proceeds and secure The Non-Delegated Underwriting loan data integrity. Module makes underwriting non“We are committed to helping delegated loans a dynamic, our customers profitably transfer automated process that eliminates credit risk at scale,” said Kim the need to manually validate data Thompson, EVP of Overture by “stare and compare” methods. Technologies. “The Settlement Instead, the underwriter has full Coordinator Workstation is an access to the LoanHD Loan Quality innovative solution that eliminates audit technology that compares redundant operations between data and documents in an originators and the buyers of their automated fashion to streamline the loans to ensure loan purchase, validation process and significantly avoid assignee compliance liability reduce errors. During an under TRID and automate underwriting audit the underwriter secondary market operations–all at curve and to make it even easier for our customers to do business.” The platform, developed in conjunction with leading mortgage technology provider, Tavant Technologies, will also improve workflow via a series of enhanced dashboards that more clearly demonstrate the progress of each individual underwriting application. “We’re thrilled to have collaborated with Genworth in the development of GENie,” said Hassan Rashid, EVP of Global Sales & Marketing for Tavant Technologies. “As the mortgage insurance industry continues to innovate, platforms like GENie will be key drivers in streamlining operations and maximizing efficiencies.”
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a cost and speed the market demands.” Overture and ATS created the Settlement Coordinator Workstation to address credit and regulatory compliance of loans before the loan closes–the stage in which defects can be most effectively eliminated. The solution leverages Overture’s Bid application, the only technology that enables investors to underwrite, price, onboard, and survey mortgage assets on a single platform. ATS Secured enables the coordination of settlement services and the distribution of loan proceeds all on one secure and auditable processing platform. The Settlement Coordinator Workstation provides invaluable tools to settlement coordinators, who are charged with providing critical due diligence and coordination functions in accordance with investor guidelines and policies to ensure loan purchase and efficient delivery of the loan asset to the investor. “We think expansion of the use of settlement coordinators is key to more efficient interaction between originators and investors,” Thompson said. “Today, multiple, redundant reviews, conducted preand post-closing, have driven the cost to originate and buy a loan to over $9,000. That’s unnecessary, unsustainable and has done nothing to provide the certainty of purchase that originators need. By offering this solution, we’ll enable more service providers to perform settlement coordination functions, including those who are already involved at this stage.” Overture’s Eligibility Findings Report, offered as part of the Settlement Coordinator Workstation, details the data and documentation requirements for investor loan purchase, similar to the reports originators receive on Freddie Mac and Fannie Mae loans. Once the originator submits this information on the platform, the investor reviews the loan and if acceptable, locks down the data for accurate assessment of compliance and generation of settlement documents. Then, using ATS’ functionality, settlement coordinators can arrange eClosings, electronic recording of collateral documents and disburse loan funds. “We are energized by the opportunity to work with Overture to bring this innovative new solution to market,” said Wes Miller, CEO of ATS Secured. “Our focus has been on creating a platform that enables the transparent collaboration and interaction TRID requires at settlement–from disclosure to disbursement. So this opportunity
to partner with Overture to address this acute industry need was a natural fit for us.” McLean Mortgage Launches LO Support Center McLean Mortgage Corporation has announced the release of My Mortgage Marketing Center (MyMMC), designed to take its support of its sales force to the next level. With MyMMC, McLean has a delivery system which will enable the company to provide value to their clients in more robust fashion. “My Mortgage Marketing Center provides the ability to reach every area we service with our marketing and customers service efforts, from providing status updates to our clients in process to cobranded marketing with our Realtors and other referral partners,” said Kim Bunts, marketing manager at McLean Mortgage Corporation. “When I came to McLean almost three years ago, our database was under 7,000 contacts. Through the expansion of our sales force and focusing upon the true scope of their spheres, we have moved that number to well over 100,000 contacts who we now can reach instantaneously. The goal is to provide first-in-class automated support for our sales force.” MyMMC is powered by the Top of Mind’s Surefire Customer Relationship Management System and its content is provided through OriginationPro, which is then heavily customized for the company. The system provides a variety of vehicles to reach clients and referral partners, including videos, e-mails, mailers and more. The automation the system provides will ensure that McLean’s sales force will continue to be in touch and add value to their clients and partners, while freeing them up to continue to provide excellent customer service to everyone the company serves. Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
2016 and credit reporting
l Principal residence transaction where all borrowers will occupy the property l One-unit property (may not be a manufactured home) l Purchase or limited cash-out refinance transaction l Fixed-rate mortgage l Loan amount must meet the general loan limits (may not be a high-balance mortgage loan) l LTV, CLTV, and HCLTV ratios may be no more than 90 percent l Debt-to-income ratio must be less than 40 percent There are more changes coming with DU 10.0 like a direct integration with the work number that should all but eliminate the need to collect W2s and paystubs. Multiple inquiries within a short time frame will now be considered 1 pull by DU 10.0. Another good thing is that late payments on mortgages will no longer be viewed as more risky than other late payments. Last, under DU 10.0 borrowers that do not have a mortgage will no longer be considered more risky that those that have mortgage history. Like I said, it’s been a busy year so far in credit with a lot more to come. As a student of credit I am fascinated by acceleration in change I have seen over the past two years and look forward to what is to come. With all this change, there is still one constant dynamic that will never change, the human factor. With that I leave you with this final thought …
Chad Kusner is president of Credit Repair Resources LLC. Chad is an accredited by the State of Ohio Department of Commerce and Ohio Supreme Court as a credit educator. Chad is also an executive director of NACSO, the National Association of Credit Services Organizations. He may be reached by phone at (216) 591-1000 or e-mail Chad@crr760.com.
The previously mentioned law is quite clear! You cannot deny an offer simply because it’s VA financing! Here’s another one for you to chew on! A veteran makes an offer and on the Contract to Purchase (document used in Massachusetts to make the initial offer) states VA financing. The seller, again under the advisement of the real estate agent, issues a counteroffer and offers that is $5,000 higher than the initial offer but removes “VA Financing” and inserts “Conventional Financing.” There were no other offers and we were highest and best! This is blatant discrimination, and I confirmed this with legal counsel from the Massachusetts Association of Realtors Legal Counsel. I was advised to have the veteran contact the Massachusetts Commission Against Discrimination (MCAD). Ultimately, the veteran moved on and found another house. But that’s what all of our veterans do … they move on to another property because the time and potential cost to litigate these sort actions are just not worth the time and money. That’s two of the four examples of Veteran Housing Discrimination by so-called real estate professionals I’ve seen in the last two weeks. Now, don’t get me wrong, all of the real estate agents who are in my referral network are strong supporters and advocates for our veterans and active duty servicemembers. If we had more of them going to bat for our veterans, Massachusetts wouldn’t have the lowest VA utilization ratio in the entire country. Did you know that there are nearly 380,000 veterans in the Commonwealth of Massachusetts, but there are only
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19,270 active VA home loans? That means approximately five percent of all veterans are using their VA home loan benefit. Let me stop for one second and back up a little bit … you keep hearing me say the word “benefit,” right? Well, do you know why? Because it’s an actual benefit that is defined in the United States Codified Federal Regulations (CFRs)! This isn’t a loan program, this is a benefit that our servicemembers earned when they met the service requirements defined in the CFRs. What’s even worse is that Massachusetts has the best state-funded veterans benefit program in the entire country! Yet, with all of these additional benefits that make purchasing a home in Massachusetts more affordable than any other state, we still have such a low utilization ratio. Well, it has to stop and it needs to stop sooner than later. These men, women and surviving spouses make up less than two percent of our population, they have given more to this country than 98 percent of those living here, and in some cases, have given all they had, sacrificed time away from family, lost loved ones, and deal with the wounds of the battlefield even though their boots left the combat theatre months or years ago. We owe it to them to ensure they are afforded the same rights and privileges as those who chose and/or were unable to serve this country. If you are not part of the solution, then you are part of the problem! If you are not with us, then by definition, you are against us! I hope you all do what you can to assist those who gave you the right and freedom to earn a healthy living in this industry! If you haven’t yet today, please take a minute to thank a veteran!
Footnote 1—MALegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter151B/Section4
Richard M. Bettencourt Jr., CRMS, CMHS of Danvers, Mass.-based Mortgage Network is secretary of NAMB— The Association of Mortgage Professionals. He may be reached by phone at (978) 304-0818 or e-mail RBettencourt@MortgageNetwork.com.
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No matter how you slice it, dice it or chop it, economic events happen. All the bells and whistles in the world cannot stop defaults and not everyone will qualify for a mortgage. However, I do hope these changes truly do help consumers that get caught in the credit snafu, rather than just being fanfare aimed to appease the masses.
operation va sitrep
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any credit for using their revolving credit so responsibly. With trended credit, the creditor can report the amount paid on the account that month regardless if there as is balance at the time of reporting. This is important because it identifies if the consumer is a “Transactor” that pays in full each month or a “Revolver” that makes minimum or small principal payments. It should go without saying that the transactor is inherently less risky that the revolver. So how is this going to help you as an originator or lender? With the release of DU 10.0 in June, it will now be able to consider the trended data when making its decisions. To be clear, it won’t give the consumer a higher credit score at this time, it will only supplement for findings purposes. You should also know that the lender or “data furnisher” must provide the payment information. Not all lenders may initially participate and only TransUnion and Equifax are collecting the data. Experian has not adopted this into their system as of today. Also, trended data will not be considered in FHA and VA findings. Lastly, FHA has always allowed for alternative credit data like rent payments to be provided in the lending decision process. Until DU 10.0 that information had to be evaluated by the underwriter via manual underwrite in order to be considered. With the new DU model, you will be able to input the non-traditional credit information into the system to be considered with its automated findings. The goal is to streamline the process and circumvent manual underwriting. It should be noted that there are guidelines such as having two verifiable alternative credit sources with 12 months documented history. There are also DTI, LTV and loan type requirements. Below is a quick snapshot:
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n a t i o n a l
m o r t g a g e
p r o f e s s i o n a l ’ s
o u t s t a n d i n g
p l a c e s
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places to work
Assurance Financial
REMN Wholesale
255-239-7948 www.lendtheway.com
732-738-7100 www.remnwholesale.com
Assurance Financial has built a great reputation for closing loans on time, every time. Our operations team is committed to helping our branch managers and loan officers succeed. We have immediate openings throughout the South. Join us, and experience what a huge difference our support can make to your success!
Although REMN Wholesale is part of a large corporation, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential. As a national company, REMN provides many opportunities for employment from coast to coast.
PRMG
United Wholesale Mortgage
1-866-PRMG-YES (806-776-4937) www.PRMG.net
800-981-8898 www.uwm.com/careers
Built by originators for originators, PRMG was born from a vision of creating a company with a unique culture focused on the successes of the producer. We understand what it takes to be a successful originator and cultivate new business every day.
Voted the #1 place to work in Metro Detroit, UWM is looking for A players to join our talented team. Our business is driven by our culture, and our people are our greatest asset. If you’re looking for the opportunity of a lifetime, apply to UWM today!
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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
calendar of events JUNE 2016 Tuesday, June 21 Great Northwest Mortgage Expo 2016 Embassy Suites Washington Square 9000 SW Washington Square Road Tigard, Ore. For more information, call (860) 922-3441 or visit GreatNorthwestExpo.com.
Wednesday-Saturday, August 17-20 Florida Association of Mortgage Professionals 2016 Annual Convention Omni Orlando Resort at ChampionsGate 1500 Masters Boulevard ChampionsGate, Fla. For more information, call (850) 942-6411 or visit MyFAMP.org.
JULY 2016 Monday-Tuesday, July 11-12 Ultimate Mortgage Expo 2016 Hotel Monteleone 214 Royal Street New Orleans For more information, call (860) 922-3441 or visit UltimateMortgageExpo.com.
Thursday-Friday, August 18-19 Louisiana Mortgage Lenders Association 2016 Annual Education Conference New Orleans Riverside Hilton 2 Poydras Street New Orleans, La. For information, call (225) 590-5722 or visit LMLA.com.
Friday, September 16 OriginatorConnect 2016 Mohegan Sun 1 Mohegan Sun Boulevard Uncasville, Conn. For more information, call (860) 922-3441 or visit OriginatorConnect.com. Monday-Tuesday, September 19-20 NYAMB’s 28th Annual Convention & Trade Show “New York: We Live It, We Breathe It, We Own It!” The Huntington Hilton 598 Broad Hollow Road Huntington, N.Y. For more information, call (914) 315-6644 or visit NYAMB.org.
OCTOBER 2016 Tuesday-Friday, October 4-7 American Land Title Association 110th Annual Convention Fairmont Scottsdale Princess 7575 East Princess Drive Scottsdale, Ariz. For more information, call (202) 296-3671 or visit ALTA.org. Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street Boston, Mass. For more information, call (800) 793-6222 or visit MBA.org.
Wednesday-Thursday, November 16-17 Mortgage Star Conference 2016 Canyons Resort 4000 Canyons Resort Drive Park City, Utah For more information, call (860) 922-3441 or visit Mortgage-Star.net. Friday, November 18 Utah Mortgage Expo 2016 Zermatt Resort & Spa 784 Resort Drive Midway, Utah For more information, call (860) 719-1991 or visit UAMPExpo.com.
Monday-Thursday, October 24-27 8th Annual Conference of Mortgage Brokers and Professionals Harrah’s Convention Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-1619 or visit MBANJ.com.
To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. *Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.
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AUGUST 2016 Sunday-Wednesday, August 7-10 Summer CAMP 2016: Destination Napa The Westin Verasa: Napa 1314 McKinstry Street Napa, Calif. For more information, call (916) 448-8236, or visit TheCAMPsite.org.
SEPTEMBER 2016 Wednesday September 14 Texas Mortgage Roundup 2016 DoubleTree by Hilton Dallas Near the Galleria 4099 Valley View Lane Dallas, Texas For more information, call (860) 922-3441 visit TXMortgageRoundup.com.
Thursday, September 29 8th Annual NYC Real Estate Expo The Hilton Hotel 1335 Avenue of the Americas New York, N.Y. For more information, call (646) 210-2545 or visit NYCNetworkGroup.com.
NOVEMBER 2016 Monday-Wednesday, November 14-16 National Reverse Mortgage Lenders Association 2016 Annual Meeting & Expo The Swissotel Chicago 323 East Upper Wacker Drive Chicago For more information, call (202) 939-1784 or visit NRMLAOnline.org.
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Monday-Wednesday, July 25-27 Appraisal Institute 2016 Annual Conference The Sheraton Charlotte 555 South McDowell Street Charlotte, N.C. For more information, call (888) 756-4624 or visit AppraisalInstitute.org/AnnualConference.
Saturday-Monday, September 24-26 NAMB National 2016 The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com.
Do You Know the Business You Are “Really” In? BY BRIAN SACKS
e all think we are in the “mortgage business,” but the truth is that no one really wants a mortgage. No one I know will ever wake up in the morning and say “Wow … I want a mortgage today!”
W
People do want a home. People do want security for their family. People do want an asset that will hopefully grow in value. People do want to enjoy a pool, basement, fireplace, etc. And, people do want to feel like they have achieved the American Dream.
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Always sell benefits not features! Most of the advertising that is done in the mortgage industry revolves around the rates we offer, terms of loans, and other “technical” aspects of the mortgage itself. We then get frustrated and wonder why everyone we speak to only wants to know our rates and points. When we use this type of advertising of product features and costs, we invite the question we all hate the most. You might even want to stop here and write that one down. Paste it to your computer and read it BEFORE you begin any advertising initiatives. The truth is that we are not even in the mortgage business. Mortgages are simply a feature of what we sell. We are selling money and the best ways people can use their money wisely when purchasing a home. You are actually in the “Marketing of Mortgages Business.” When you approach this business as a consultant with the understanding that I have laid out above, your business will change. You will generate more business, it will become much easier and your clients will be more loyal and happier. But how? Yes, I realize that what you have read so far seems logical but you may be wondering how to actually do this in your own business. The first step of course is understanding the differences between features and benefits. For example, you may see ads like this: “FHA loans … 30-year, fixed-rate … call for details.” Now you understand that no one is waking up to say “Gee, I really need an FHA loan today. I better respond to this ad immediately.” Instead, what if you said: “Looking to buy home, but don’t have a large downpayment? We have a program that allows you to put as little as 3.5 percent down. This program may work for you even if you have less than perfect credit” call us for details.” The person reading the first ad is only thinking about rates and may even have no idea what FHA is or means. The second ad highlights the benefits of the FHA program and solves the challenges some buyers have. Let’s sum this all up and see the reasons why you need to focus your advertising and your initial conversations on benefits and asking questions rather than features. First, people will see that you truly understand them and that is a critical step in bonding with them. People will only buy from those they know, like and trust. Don’t think you are not a salesperson because that is exactly how the consumer sees you. Our product is money, but we are still selling it. Second, the rate question will rarely come up since the borrower will see that you understand their needs. Third, you will be seen as an expert by using this approach since you are offering solutions and have established their needs. Try it- don’t discuss ARMs; LIBOR; or 30-, 15-, or 20-year APRs. All your borrower hears is, “Blah, blah, blah.” Instead, ask about them, ask about their goals, their comfort levels with payments, their fears and concerns. Then, and only then, show them a solution and tell them the solution and the way they can understand it that is full of benefits, never ever features.
Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,900 transactions for more than $1 billion. He has trained tens of thousands of loan officers and company owners over the past 31 years on how to close more loans, make more money and still have a life. You can view the “Top Originator Secrets Show” on Mortgage News Network. He may be reached by phone at (443) 324-8424 or e-mail LoanOfficerTips@gmail.com.
appraisal industry update
to obtain the degree the cost comes out about the same. But with the decline in available work as a licensed appraiser time was not on his side. So that raises the question, how many of those 8,000-plus other licensed appraisers, many in their 50s and 60s, are in a position to stop appraising, or even appraise part time, to obtain that four-year degree—at an estimated loss in income and education cost equivalent to approximately $85,000? The Appraisal Foundation Appraiser Qualifications Board (AQB) is currently reviewing industry recommendations for alternative paths to licensure and certification. We are recommending an alternative path for licensed appraisers who have been completing highly credible appraisals for years, are in good standing with their respective state appraisal boards and would represent a significant loss to the industry if they cease to provide appraisal services in their respective markets. Also equally important for the 8,000 to 9,000 Appraiser Trainees aspiring for a career in appraising is a reminder to all the lenders and AMCs there are no prohibitions in the Dodd-Frank Act regarding the use of appraiser trainees, which many lenders recently acknowledged a misunderstanding of the Dodd-Frank Act language. To help mitigate the misperception, when drafting the AMC Final Rule in 2015, the agencies deliberately included the following comment: “The agencies continue to support the use of
trainee appraisers as long as they work under the supervision of a State-Certified and or StateLicensed appraiser as long as they have met the qualifications established by the appropriate State and the AQB.” They go on to state: “The final rule amends proposed §34.213(b)(2) by substituting the term ‘engage’ for the term ‘use’ to clarify that an appraiser may work with a trainee appraiser on an appraisal, but only the appraiser may be ‘engaged’ by the AMC to perform appraisals.” Not only are there no federal regulatory prohibitions to the use of trainees, but from a business perspective, we have undisputable data showing that supervisory appraisers working with a trainee have higher score cards for quality, fewer revision requests and faster turn times than appraisers not working with a trainee. In summary, stakeholders are, in fact, reporting current shortages in some markets around the country. The most recent data available is indicating a significant decline in the number of appraiser trainees working toward appraiser licensure and certification to ultimately be replacing the appraisers leaving the industry. The plight of licensed appraisers and the misconception lenders and AMCs have regarding the use of trainees is having an adverse impact on the ability of qualified professionals to provide valuation services, as well as an adverse impact on potential ability of the industry to meet future market demand.
Greg Stephens, SRA, MNAA, CDEI is chief appraiser and senior vice president of Compliance for Metro-West Appraisal Company. Greg also serves as chair of Government and Legislative Affairs for the National Appraisal Congress; vice chair of the Government Affairs Council for Collateral Risk Network; and is a member of the Government Relations Committee for the National Association of Appraisers.
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appraisers. When Congress mandated that HUD only accept appraisers with certified credentials for the FHA panel, it was the beginning of the end for licensed appraisers. Not only are they excluded from FHA assignments, most lenders now require appraisal assignments to be completed by certified appraisers in the event a conventional loan may ultimately end up going FHA. The adverse economic impact to licensed appraisers has been significant and if not resolved in the short term, the approximately 8,000-plus licensed appraisers will either have to eventually leave the industry for economic reasons or upgrade to certified appraiser credential. There is however, a slight glitch in that scenario. As of Jan. 1, 2015, an applicant for state appraiser certification must have a four-year college degree. A noble objective for those aspiring to raise the status of the industry and the caliber of entrants. The reality is that those licensed appraisers who do not have a four-year degree and failed to obtain their certification credential prior to Jan. 1, 2015 must now obtain that fouryear degree to qualify for certified appraiser credential. To put that into perspective, I will share the story of an appraiser in Texas who has an associate degree, sold his home in Austin, Texas, moved to a small community with a four-year college, quit appraising to attend college full time, and will obtain his bachelor’s degree in business in 2016. He estimates that between the loss in income for not working for two years and the college expenses, obtaining the degree will have cost him approximately $85,000. Even if he worked part time and extended the time frame
“In conversations with chief appraisers and senior management at various lenders and appraisal management companies, many are reporting increasing challenges outsourcing appraisal assignments in a growing number of markets around the country.”
NationalMortgageProfessional.com
Eight states indicated they maintain no appraiser trainee trending data. One state reported a 26 percent swing in the rise and decline resulting in the same number of credentialed trainees between 2010 and 2015, while one state is still gathering the information. Below is the list of states reporting declining numbers of initial appraiser trainee applications, trainee credentials, or renewal applications, the Time Period of the survey, the Trend Results, and the rate of decline over that specified time period. Whether you are looking at the rate of application, renewal, or the actual number of trainee credentials, the survey results received from the state regulatory agencies confirm the concerns the Collateral Risk Network, the National Appraisal Congress and the National Association of Appraisers have been expressing relating to the potential appraiser shortage that will be facing the industry unless significant and immediate changes occur within the regulations governing entry into the profession and the acceptability of trainees and licensed appraisers by lenders and appraisal management companies. Regardless of one’s position on whether there is a current shortage of appraisers to complete mortgage lending assignments, the data above presents a sobering reality that if the trend continues, the appraisal industry will not be able to respond to an increase in market demand for appraisal services within a very few short years as the number of appraisers continue to leave the industry and the number of potential replacements is declining at an even greater pace. I previously mentioned regulations governing entrance into the appraisal profession as well as the challenges facing licensed
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EDUCATION
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BOOTS ACROSS AMERICA TOUR 2016-2017 Beverly@BootsAcrossAmerica.org
Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews
Certified Military Home Specialist Beverly Ray Frase "Training Boots on the Ground" Since 2009 • Trained 3,000 CMHS course grads • Trained for Depts of HUD, Treasury & more • 20+ years' experience in real estate & finance, military life COMING TO YOUR CITY!
COMPLIANCE CONSULTANTS
HARD MONEY/PRIVATE LENDING
LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com
Direct Private Money and Bridge Lender specializing in Stated Loans in CA 866-668-2663 Send Scenarios to info@CalHardMoney.com
The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance. Our Compliance Team Will: Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.
LENDING CRITERIA · Collateral: Stated 1st and 2nd position loans on N/O/O invest. properties (SFR, Condo, 1-4 units), Mixed-use, 5+ units, Retail, Industrial, Warehouse and Etc. · Fix & Flip program up to 70%-80% of the Purchase price on all types of properties · Loan amounts/Terms: $50,000 up to $5,000,000 and loans from 6 months to 10 years. · LTV: Purchases up to 70%-80% LTV; Refinances up to 60-65% LTV; 2nd Position up to 65% CLTV · BROKERS ALWAYS PROTECTED AND RATES STARTING AS LOW AS 8.50%
MARKETING
WHOLESALE/CORRESPONDENT LENDERS
WHOLESALE LENDERS
Contac t: info@afr wholesale.com
888.664.2101 AFR Wholesale ranked #1 with the most Sponsor Originated FHA 203(k) closed loans.*
TagQuest www.tagquest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.
CLOSE MORE LOANS WITH:
FREE PROCESSING - NO LENDER FEES ** •Co nvent io nal •USDA •Manufac tured Housing •One -Time Close Construc tion •Freddi e Mac Open Acces s and Fannie Mae D U R P •VA and FHA, FHA 203(k) and 203(h) Rehab loans •Jumbo loans up to $2,000.000 Lender NMLS:2826 - 9 Sylvan Way, Parsippany - NJ, 07054 - *See website for details: www.afrwholesale.com Equal Housing Lender. Equal Opportunity Employer. **No Lender fees by AFR. Third party fees may apply. AB071114
PRIVATE FINANCING
WHOLESALE LENDERS
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HomeBridge Wholesale is a national wholesale lender offering Conventional, Government, Jumbo, and Renovation Loans. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.
Now Hiring Wholesale Sales Managers/Account Executives Nationwide Please send resumes to Marketing@HomeBridge.com
WHOLESALE LENDERS
REMN Wholesale www.remnwholesale.com 866-933-6342 REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time. Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com
n National Mortgage Professional Magazine n JUNE 2016
PUBLICATIONS
NationalMortgageProfessional.com
5 Park Plaza, 10th Floor Irvine, CA 92614 www.HomeBridgeWholesale.com
JUNE 2016 n Michigan Mortgage Professional Magazine n NationalMortgageProfessional.com
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www.BrokersComplianceGroup.com
Looking L ooking for for more? more? Expand your business with more non-prime non-prime mortgage mortgage oppor opportunities. tunities.
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© Angel Angel Oak M ortgage Solutions LL C NMLS #11 60240, C orporate offic e, 3060 P eachtree Road NW 305. This communicommuniMortgage LLC #1160240, Corporate office, Peachtree NW,, Suite 500B, Atlanta, GA 30 30305. cation is sent only only by Angel Angel Oak M ortgage Solutions LL C and is not intended to impl ered by or in Mortgage LLC implyy that any of our loan products will be off offered cconjunction onjunction with HUD, HUD, FHA, FHA, VA, VA, the U.S. U.S. government government or any ffederal, ederal, state or local governmental governmental body communicabody.. This is a business-to-business communication and is intended for for licensed licensed mortgage mortgage prof essionals onl distributed to the consumer consumer or the general general public. Angel Angel professionals onlyy and is not intended to be distributed Oak M ortgage Solutions LL C is an Equal Oppor tunity Employer and does not discr iminate against individuals on the basis of rac e, gender, gender, ccolor, olor, Mortgage LLC Opportunity discriminate race, religion, national or igin, ag e, disability 14-16 MBC origin, age, disability,, veteran status or other classification protected by law law.. 44-14-16