a new era
Why would the title industry not move forward on its own initiative and embrace these same safeguards?
continued from page 40
Similarly, most lenders have had no standard policy for reviewing and verifying CPLs, not just for their validity (i.e. were they properly issues), but also to verify the credentials of this to whom the letters were issued.
Fannie Mae’s recommendations were ignored … now the CFPB has issued a mandate
Richard Peter Stevens is of counsel at Jones Waldo Holbrook & McDonough in Salt Lake City, Utah, where he acts as leader of the Insurance Regulatory Practice Group. He also serves as Judge Pro Tempore, Utah’s Third District Court, was Assistant Commissioner for the State
A solution: Certification and uniform standards The emerging solution is to supplement the vetting process currently used by the lenders and title underwriters with independent third parties to perform objective scrutiny and verification of the settlement agent’s identity and credentials.
The public wants change
an underserved sector of the market, it allows us to grow rapidly without creating a large liability for ourselves. You mentioned 360 Mortgage is one of the leaders in HARP 2.0 loan. Do you feel a HARP 3.0 should be introduced? Mark: I am certainly a proponent of HARP 3.0, primarily because there are a lot of people that financed their homes on sub-prime mortgage securities beginning in the late 90’s and through the collapse of the sub-prime market. These people’s loans are nonagency, and for that reason, they haven’t had the ability to refinance through HARP 2.0. Those that would qualify for the HARP 3.0, I envision, have made their payments even though they have been stuck at escalated interest rates of seven, eight, nine, or even 10 percent. From an economic perspective, I believe that those who do not have the opportunity to refinance right now create a risk for the recovery of the real estate market, as well as the overall economy. It’s not consistent with the efforts that the government has put forth to help consumers. If these borrowers have made payments, then it’s a safe opportunity for the government to invest in these individuals’ economic well-being. Do you anticipate that 360 Mortgage will continue to hire account executives in 2012? Mark: We will continue to grow in an assertive manner where and when opportunities present themselves. We are recruiting high-quality account executives throughout the U.S. and those that are committed to forming a unique partnership with mortgage brokers to help them understand today’s market challenges and opportunities, as well as build a significant business, are the ones we want to have join 360 Mortgage.
technology system keeps everyone informed at every key point throughout the mortgage lending process. In addition, 360 is one of only a handful of mortgage banks that are exclusive to the wholesale channel and do not compete with the mortgage brokers. Finally, 360 is one of the very few lenders offering the HARP product without any guideline overlays within the wholesale channel. Why do you think mortgage brokers are well positioned to take back market share? Mark: Consumers like having options, and that will not change. And because mortgage brokers have access to many different lenders, as opposed to just one bank, it becomes a better solution for borrowers. We have seen mortgage brokers begin to come back to the industry over the course of the last eight to 12 months as they begin to understand that market regulations are not going to destroy the broker or wholesale channel. We are confident that this trend is going to continue. HARP 2.0 has certainly helped on this front, as many mortgage banks do not understand, and therefore do not offer, HARP 2.0. These banks have stringent overlays or additional guidelines that do not open the doors to consumers who can and deserve to take advantage of HARP 2.0. Many originators who left the broker channel and entered the mortgage banking side of the business are now unable to service clients they have had for years. These originators might have put customers in loans in 2005 or 2006 on homes which are now upside down. Now the customers want to refinance, but because their former mortgage broker now works for a mortgage bank, they are unable to receive a solution because of the overlays being imposed. Mortgage brokers are seeing the opportunity to service clients in the wholesale channel, and we are seeing many professionals return to the broker side of the business. And best of all, many of them are looking to partner with 360 Mortgage for solutions. continued on page 63
53
v JANUARY 2013
What differentiates 360 Mortgage from other wholesale lenders? Mark: We are 100 percent exclusive to wholesale and do not support a retail presence. Also, what truly differentiates us from other wholesale lenders is the technology we have developed in-house. The intuitive aspect of our
continued from page 50
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
In October 2012, an independent opinion poll was conducted by American Money Services of New York seeking public input on issues surrounding mortgage closings. The results were nothing less than fascinating, and should serve as a wakeup call for the settlement industry. An overwhelming majority of respondents believe that only attorneys should be permitted to act as settlement agents. That the attorneys should be more carefully regulated, that providing for their independent certification based on criteria including experience, is essential to establishing public faith in the process. Furthermore, 79 percent indicated that they were unaware settlement agents are not all required to have E&O coverage when handling their real estate matters, 92 percent believe that settlement agents should meet minimum uniform standards or experience and skill besides being licensed, 93 percent believe that banks need programs to better identify people who may commit fraud in mortgage closing transactions, 97 percent believe banks need policies and procedures to ensure that whoever handles the closing funds and documents is trustworthy, 44 percent believe banks giving mortgage loans are doing enough to protect consumers from losses for fraud, while 56 percent say they are NOT doing enough. Interestingly, in contrast to public positions taken by some agent groups, 93 percent of the public polled in the survey stated that they would feel more comfortable at a closing with someone who had an independent, vetted designation. Finally, 70 percent of those polled believe that with improvements such as additional protections from fraud at closing, lenders can rebuild the public’s trust in financial industry without government intervention. After decades of allowing the title industry to regulate the risks at closing the lenders and faced with highly publicized plans for a Washington designed, driven and enforced consumer protection regulations, the banks have already moved toward initiating new safeguards and self-regulated programs.
360 mortgage group
NationalMortgageProfessional.com v
Fannie Mae’s December 2005 Newsletter on “Preventing, Detecting & Reporting Mortgage Fraud” states in part that “mortgage lenders must know their business partners and consider using outside sources to selectivity choose closing attorneys and settlement agents.” These guidelines mirror the guidelines issued by the OCC for supervised banks in 2001. Yet until April 2012 there were very few lenders that followed this sound advice. Of course, in April 2012, the Consumer Financial Protection Bureau issued Bulletin 2012-3 which appears to mandate that non-bank entities, mortgage lenders and brokers, take affirmative steps to adopt adequate risk management policies to prevent consumer harm from third-party service providers. This Bulletin reaffirms the existing requirements for supervised banks to non-bank entities that have been in place for years. Today lenders, for the most part, have no comprehensive program to assess the risk from the actions of settlements agents. Compounding the problem, not one from the national or state bar associations, notary association, or title agents association have stepped forward with uniform standards, guidelines or requirements for certifying the qualifications of the people who control the loan documents and mortgage funds at closings nationwide. Recently, the American Land Title Association (ALTA) published a new set of title agent “Best Practices,” which is a welcome approach to publicizing uniform standards to a diverse industry. However even in the best of faith, with good intentions, voluntary industry associations have few resources to police their members, let alone turn them over to law enforcement and report them publicly for bad acts. Unfortunately, instead of embracing change in this area, some agents and small industry groups have decided to attack the messenger, or seek “exemptions” from compliance claiming that either “there is no problem,” or that “we are regulated enough.” Unfortunately, the escrow and closing fraud loss figures don’t support either position. Without a new method of vetting, monitoring and evaluating the risk of settlement agents, and properly insuring them for both fraud and negligence
at closing, it is foolhardy for lenders to continuing relying on the current closing protection letter as security for the proper coordination and execution of the mortgage loan closing process.
of Utah Insurance Department from 1999-2003 He serves on the Board of Advisors of Secure Settlements Inc. Andrew Liput has been a mortgage industry attorney for nearly 26 years, having served as a closing agent for numerous banks, as well as legal, compliance and regulatory counsel to numerous mortgage lenders. He founded Secure Settlements Inc. in April 2009 and presently serves as president and CEO.