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MONTANA MORTGAGE PROFESSIONAL MAGAZINE NationalMortgageProfessional.com O
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Mortgage PROFESSIONAL M O N T A N A
Your source for the latest on originations, settlement, and servicing
Montana Association of Mortgage Brokers P.O. Box 1012 O Helena, MT 59624-1012 Phone: (406) 227-5490 O Fax: (406) 227-7000 Web site: www.mtamb.com Montana Association of Mortgage Brokers
Honesty and Integrity
Code of Ethics and Business Standards
Montana Association of Mortgage Brokers
MAMB BOARD OF DIRECTORS Dave Christensen
Montana Association of Mortgage Brokers
MAMB members shall conduct business in a manner reflecting honesty, honor and integrity.
Professional Conduct MAMB members shall conduct their business activities in a professional manner.
Honesty in Advertising MAMB members shall endeavor to be accurate in all advertising and solicitations.
Confidentiality MAMB members shall avoid unauthorized disclosure of confidential information.
Compliance With Law MAMB members shall conduct their business in compliance with all applicable laws and regulations. For more information on MAMB membership, call the MAMB state office at (406) 227-5490 or visit www.mtamb.com.
LinkedIn.com (search National Mortgage Professional Magazine)
Montana Association of Mortgage Brokers
O JUNE 2010
For more information on the benefits of MAMB membership, call the MAMB state office at (406) 227-5490 or visit www.mtamb.com.
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
• Daily updated mortgage • Find loan programs industry news • Discover local and • Industry blogs national events • Write your own blog • Get access to video
The Montana Association of Mortgage Brokers (MAMB) is an association of licensed mortgage brokers and loan originators from across the state that share an interest in offering the best possible service to their clients and supporters. By offering quality in-person training, opportunities to meet and exchange ideas and a forum for discussion about the changes and ramifications of the licensing law, MAMB is striving to create a level of professionalism in the state of Montana that surpasses that of all others. Membership in MAMB also carries a membership in the National Association of Mortgage Brokers (NAMB) which gives members a voice in Washington, D.C. and up to date information on what is happening nationally. The Board members and membership of MAMB have been working diligently for the past ten years to establish a strong relationship with the Montana Department of Administration’s Division of Banking, brining quality trainers and courses to Montana and building strong industry relationships.
Are You an MAMB Member?
Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting. MT 2
Phoenix Airport Marriott® 1101 North 44th Street • Phoenix, Arizona 85008 USA Rooms are $99 per night, and will be honored at the same rate if you wish to extend your stay.
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Visit www.NAMB.org for details.
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Exhibitors and Sponsors
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2010 NAMB/WEST Conference
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December 4-6, 2010 at the MGM Grand Las Vegas!
Stay tuned for more information in July and visit www.NAMBWEST.com for updates. Exhibitors will receive a complimentary ad in the December issue of the National Mortgage Professional
For more details on Exhibiting and Sponsorship, please contact Kinsley at 303-798-3664 or firstname.lastname@example.org
SAFE Smart … Testing, Education and Licensing: Are You Certifiable? By Paul Donohue, CRMS
Value Nation: Appraisals, BPOs and AVMs
By Charlie W. Elliott Jr., MAI, SRA
Forward on Reverse: Forensic Counseling Tools for Whole-Person HECM Lending: Part I By Atare E. Agbamu, CRMS
The Trusted Mortgage Professional: Trust But Verify— Understanding the Wholesale Lender Mindset on Broker Credit By Greg Schroeder
COM MER CIAL REVE R MOR SE TGA GES
RESI DEN TIAL
TECH NOL OGY
COM PLIA NCE MAR KE SALE TING/ S SETT LE SERV MENT ICES TREN DS
Compliant Business Systems: Part I of III By Don DeRespinis
Department of Labor’s Reversal Requires Creative Approach to Compensation for Mortgage Loan Officers
ORIG INAT IONS SECO NDA RY SERV ICIN G
EXPLORER NMP 62+
By Tim Watson and Barry Miller
The NAMB Perspective
NMP Mortgage Professional of the Month: Michael Maida, National Sales Director, GSF Mortgage Corporation
Regulatory Compliance Outlook: June 2010—Fannie Mae Revises Quality Control Requirements By Jonathan Foxx
The Secondary Market Overview: The Wild Ride: Just the Beginning? By Dave Hershman
Successful Seminar Marketing Through Social Media By Gibran Nicholas
A View From the C-Suite: Social media … “So Show Me De Money!” By David Lykken
Why is Social Media Integral to Your Media Campaign?
Social Media: A New Pillar of the Mortgage Business
A Bit About Social Media By Brian Bluff
Ask Tommy: Your QC Expert By Tommy A. Duncan, CMT
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
By William C. Reichard, MBA
By Josephine Nicholas
June 2010 Volume 2 • Number 6
Mortgage PROFESSIONAL N A T I O N A L
Your source for the latest on originations, settlement, and servicing
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site: www.nationalmortgageprofessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 email@example.com Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 firstname.lastname@example.org Domenica Trafficanda Art Director email@example.com Karen Krizman Senior National Account Executive (516) 409-5555, ext. 326 firstname.lastname@example.org
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National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2010 NMP Media Corp.
A Message From NMP Media Corp. Executive Vice President Andrew T. Berman Opportunities abound in social media for mortgage professionals It’s pretty safe to say that social media has deeply impacted the way we communicate on a daily basis. Through social media outlets, such as LinkedIn, Twitter and Facebook, people can get a more personal and up-to-the-minute glimpse into the lives of friends, business partners and even the no longer-so-private lives of celebrities and athletes. Many use the terms “social media” and “social networking” interchangeably. I believe Mark Madsen said it best at last year’s NAMB/WEST conference in Las Vegas when he said, “Social media is an online platform that allows us to participate in social networks as sites that use artificial intelligence to help us connect to other like-minded users.” Social media can even be your blog, a platform that allows comments and interactivity with readers. This month, we shine the spotlight on social media and social networks and how they have become very effective in helping mortgage professionals market to borrowers and their referral partners. Our focus starts off with Gibran Nicholas as he shares a four-step plan to Webinar marketing through social media (want a shortcut to this idea … then check out the Webinar mentioned at the bottom of this page). Gibran’s article is followed by David Lykken’s latest installment of “A View From the C-Suite” entitled “Social Media … “So Show Me De Money!” where David lists 24 facts about the growth of social media, followed by some simple first steps to take on using social networking. Josephine Nicholas shares her ideas on how to create your own local celebrity status by sharing your opinions and engaging with others on social networks. William C. Reichard, MBA shares some basic ways to using social media and actually determine a return-onincome (ROI). The last contributed piece, “A Bit About Social Media” from Brian Bluff, discusses the basics in getting started in the worlds of social media and social networking. Still not getting your fill of social networking? Then I urge you to log on to our Web site, www.NationalMortgageProfessional.com, create a profile for yourself and take part in commenting on our articles with your peers and sharing your thoughts by writing a blog. Don’t be shy! If you have opinions on the state of the industry or issues you feel need to be addressed, do not hesitate to use our site as a launching pad as you embark into the new world of social media and networking. Sincerely,
Andrew T. Berman, Executive Vice President NMP Media Corp.
CMPS® WEBINAR – Financial Planning With Low Mortgage Rates 61% of Financial Advisors want to meet you and 81% of their clients want to be referred to you! What if YOU could be the local housing and mortgage expert for Financial Advisors in your community?
Attend our Webinar on July 15 and invite your Financial Advisor referral partners. You will walk away with resources and a plan of action to generate more qualified leads IMMEDIATELY! Webinar Title: Financial Planning With Low Mortgage Rates When: 12 p.m. ET, Thursday, July 15, 2010 Target Audience: You and your current and potential Financial Advisor referral partners Purpose of this webinar: To educate and motivate Financial Advisors to send you more mortgage referrals! Topics: • How to utilize low mortgage rates to maximize the benefits of the 2010 Roth IRA conversion rules. • How to help seniors purchase a new home now without taking a huge loss on the sale of their old home. • How to help clients boost their college, retirement, and investment savings with absolutely NO CHANGE to their monthly cash flow.
Invite financial advisors for free! • Add unique value to current and potential Financial Advisor referral partners (great as a lunch and learn). • CFP® professionals receive a free one hour of continuing education credit! This webinar has been accepted by the CFP® Board for one CFP® continuing education credit for Certified Financial Planners (CFPs). Invite as many Financial Advisors as you want! • Attend even if you are unable to invite Financial Advisors to learn how to educate and motivate Financial Advisors to send you more qualified mortgage leads.
Register Now! $149 registration fee for readers of National Mortgage Professional Magazine. Your registration allows you to invite as many Financial Advisors as you want!
Visit NMPMag.com/cfpwebinar for details.
The National Association of Mortgage Brokers
National Association of Professional Mortgage Women
7900 Westpark Drive, Suite T-309 McLean, VA 22102 Phone: (703) 342-5900 Fax: (703) 342-5905 Web site: www.namb.org
P.O. Box 140218 Irving, TX 75014-0218 Phone: (800) 827-3034 Fax: (469) 524-5121 Web site: www.napmw.org
NAMB Board of Directors Officers President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 firstname.lastname@example.org President-Elect—William Howe, CMC, CRMS Howe Mortgage Corporation 9414 E. San Salvador Drive, #236 Scottsdale, AZ 85258 (602) 200-8100 email@example.com Vice President—Michael D’Alonzo, CMC Creative Mortgage Group 1126 Horsham Road, Suite D Maple Glen, PA 19002 (215) 657-9600 firstname.lastname@example.org Secretary—Ginny Ferguson, CMC Heritage Valley Mortgage Inc. 5700 Stoneridge Mall Road, Suite 150 Pleasanton, CA 94588 (925) 469-0100 email@example.com Treasurer—Don Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355 firstname.lastname@example.org
Joe Camarena The Mortgage Source 10120 Southwest Nimbus Avenue, Suite C-7 Portland, OR 97223 (503) 443-1060 email@example.com
Olga Kucerak Crown Lending 8700 Crown Hill Boulevard, Suite 804 San Antonio, TX 78209 (210) 828-3384 firstname.lastname@example.org Walt Scott Excalibur Financial Inc. 175 Strafford Avenue, Suite 1 Wayne, PA 19087 (215) 669-3273 email@example.com
Senior Vice President Sharon Patrick, MML, CMI (386) 985-1620 firstname.lastname@example.org Vice President/Northwestern Region Jill M. Kinsman (206) 344-7827 email@example.com Vice President/Western Region Tim Courtney (760) 792-5620 firstname.lastname@example.org
Vice President/Southeastern Region Jessica Edmonston (919) 414-3028 email@example.com Secretary Laurie Abisher, GML, CMI (661) 283-1262 firstname.lastname@example.org Treasurer Kay Talley, MML (919) 846-4294 email@example.com Parliamentarian Hulene Bridgman-Works (972) 494-2788 firstname.lastname@example.org
Vice President/Central Region Candace Smith, CMI (512) 329-9040 email@example.com 3
National Credit Reporting Association Inc. 125 East Lake Street, Suite 200 Bloomingdale, IL 60108 Phone #: (630) 539-1525 Fax #: (630) 539-1526 Web site: www.ncrainc.org
2010 Board of Directors Marty Flynn—President (925) 831-3520, ext. 224 firstname.lastname@example.org Tom Conwell—Vice President (248) 473-7400 email@example.com Daphne Large—Treasurer (901) 259-5105 firstname.lastname@example.org William Bower—Director (800) 288-4757 email@example.com
Sanford (Sandy) Lubin—Director (805) 481-3155 firstname.lastname@example.org Judy Ryan—Director (800) 929-3400, ext. 201 email@example.com Tom Swider—Director (856) 787-9005, ext. 1201 firstname.lastname@example.org Donald J. Unger—Director (303) 670-7993, ext. 222 email@example.com
NCRA Staff Mike Brown—Director (800) 285-6691 firstname.lastname@example.org
Terry Clemans—Executive Director (630) 539-1525 email@example.com
Susan Cataldo—Director (404) 303-8656, ext. 204 firstname.lastname@example.org
Jan Gerber—Office Manager/Membership Services (630) 539-1525 email@example.com
Nancy Fedich—Director (908) 813-8555, ext. 3010 firstname.lastname@example.org
Don Starks D.C. Starks Mortgage Associates Inc. 141 South Main Street Bourbonnais, IL 60914 (815) 935-0710 email@example.com
President-Elect Gary Tumbiolo, CMI (919) 452-1529 firstname.lastname@example.org
Vice President/Greater Northeast Region Colleen-Therese McKeever, CMI (646) 584-8332 email@example.com
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road Fallston, MD 21047 (410) 557-6400 firstname.lastname@example.org
President Liz Roberts-Fajardo, GML (702) 498-8020 email@example.com
National Board of Directors
Are You Certifiable?
Certification through the Nationwide Mortgage Licensing System (NMLS) allows mortgage loan originators (MLOs) to use their previously completed education and state testing to satisfy certain state and national SAFE Act requirements. If your state is participating and certifies your past completion of education, you may not have to take the required 20 hours of NMLS-approved pre-licensure education (PE). If your state certifies that you have previously passed a state licensing test, you may not be required to take your state’s SAFE test component. Certification does not cover national testing. Every state-licensed MLO must take and pass the National Test Component by the prescribed state deadline. In short, if you intend to obtain a state license to originate, you will be taking the national test. If your state is participating in certification, you may not need to take PE or a state test.
Are you eligible?
If you are an MLO in one of the 35 states that have chosen to participate in certification, you may be eligible to participate. This includes certification of state testing and/or education. Certification is optional and some states have decided not to participate. If your state has elected to participate, they are required to communicate with whom they intend to certify. Each state has set deadlines by when you must have completed your previous education and/or state test in order to qualify. In order to participate, you must perform certain prescribed tasks to be certified and recorded in the NMLS.
Your next steps
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
1. MU4 filing To begin, you must apply for licensure with one state that will certify your past education and/or testing. To do so, make a MU4 filing through the NMLS. Access the “Getting Started: MLOs” section on the NMLS Web site for assistance. 2. Determine your state’s participation States began submitting certification with the NMLS in May of this year. Check the “Certification State List” section of the NMLS site to determine if the state in which you want to obtain a license in is participating in certification. Once you have filed your MU4 with that state, the NMLS should notify you that your certification invoice can be paid. 3. Pay invoice The invoice must be paid directly by the MLO following the step-by-step instructions in your NMLS notification. The costs are: O Education certification: $15 O Each state test certification: $5 4. Verify To confirm that you are “PE compliant” and/or “state test component compliant,” you can see your records by going to “Confirmation of Testing or Education Certification Quick Guide” section on the NMLS Web site.
A SAFE Smart shortcut Certification is one SAFE Act shortcut allowed to MLOs by the State Regulatory Registry (SRR) Board, which approves NMLS policies. By taking advantage of the certification process, you save the time, money and stress of the 20-hour PE and state testing requirements. The fly in the ointment is that you will still be required to take and pass the national test.
Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to AbacusMortgageTraining.com to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.
HUD releases April loan mod report: 13 percent increase in permanent mods over March’s numbers The U.S. Department of the Treasury and the U.S. Department of Housing & Urban Development (HUD) have released April data for the Administration’s Home Affordable Modification Program (HAMP) showing that permanent modifications for almost 300,000 homeowners—an increase of 68,000 or almost 13 percent over March. New in this month’s report is information about servicer-specific conversion rates to permanent modifications and servicer performance in giving homeowners timely decisions. The data show that there is wide variation among servicers in these areas, further demonstrating the need for transparency regarding servicer performance. “The number of homeowners receiving significant relief through a mortgage modification continues to rise,” said Chief of Treasury’s Homeownership Preservation Office (HPO) Phyllis Caldwell. “Our focus now is on improving the homeowner experience and holding servicers accountable for their performance. Increased transparency through more robust reporting of servicer-specific data will contribute handily to those efforts.” “As the number of homeowners receiving permanent modifications continues to increase, the Administration’s comprehensive efforts are making an impact in the housing market’s overall recovery,” said FHA Commissioner and HUD Assistant Secretary for Housing David H. Stevens. “Today, mortgage rates remain at historic lows, around five percent; foreclosure starts are down 27 percent from last year this time; and home prices and the pace of home sales have stabilized in recent months.” As part of a continued effort to improve servicer performance, the Administration hosted a summit with representatives from participating mortgage servicing companies to discuss ways to move qualified homeowners into permanent modifications, improve homeowners’ HAMP experience, quickly implement the Second Lien Modification Program and Home Affordable Foreclosure Alternatives (HAFA), and maintain the pace of new trial modification starts. The Administration also outlined for servicers its plans to begin reporting more detailed performance
measures. By July 2010, this reporting will include the eight largest servicers and will focus on servicer compliance, program execution and homeowner experience. In the coming months, the Administration will continue to enhance its methods of holding servicers accountable for their obligation to provide helpful and timely assistance to struggling homeowners. While enabling eligible homeowners to modify their mortgages is vital to addressing the housing crisis, this program is just one part of the Obama Administration’s multi-faceted approach to assisting homeowners and stabilizing the housing market, which also includes state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, mortgage refinancing, and support for Fannie Mae and Freddie Mac. For more information, visit www.financialstability.gov.
HOPE NOW reports 476,000-plus loan mods in first quarter of 2010 HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors has announced that its first quarter 2010 data shows a surge in solutions for troubled homeowners, including completed loan modifications, trial modifications and other workout plans. In all, the industry completed almost half a million loan modifications for homeowners (476,192) in the first quarter of 2010—a 29 percent increase from same quarter last year. These modifications combine proprietary modifications with Home Affordable Modification Program (HAMP) permanent modification solutions, as reported monthly by Treasury. In the first quarter of 2010, the industry completed 312,329 proprietary loan modifications and 163,863 permanent HAMP modifications. Since July of 2007, over 2.88 million borrowers have been offered modifications that allow them to stay in their homes. HOPE NOW and its Alliance partners recently expanded and retooled survey data reporting, collecting only proprietary modifications and continued on page 6
By Charlie W. Elliott Jr., MAI, SRA
Appraisals, BPOs and AVMs Strengths ....Moderately accurate and uses human judgment. Weaknesses..Less detail, slow turnaround time. Use..............Mostly used in cases of loss mediation and foreclosure.
3. The automated valuation model (AVM) Strengths ....Very fast and economical. Weakness....No human inspection or judgment and less certainty. Use..............Secondary or support to appraisal or BPO. The traditional appraisal is the most thorough and arguably the most accurate. It is generally used when it is important to get the most accurate evaluation, such as in the origination of a loan. It is the most expensive of the three methods and takes much longer to obtain than an AVM, which is available almost instantly. Most, but not all, appraisals are prepared after a thorough interior inspection. Appraisers are not expected to have any interest in the property and must conform to Uniform Standards of Professional Appraisal Practice (USPAP). The BPO is prepared by a real estate broker who has less evaluation training than an appraiser. It is usually prepared after an exterior-only or drive-by inspection. It is not subject to USPAP and is most often prepared by a broker with an interest in listing the property for sale. BPOs are not normally accepted by secondary market entities, such as Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) when they buy paper. The AVM has been more widely used lately, given the availability of more comparable data. It uses zero human judgment, rather a series of formulas that compare the subject to other sales of properties. There are no property inspections, and usually it is not proven that the property actually exists. If there has been
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Strengths ....Highly accurate, uses human judgment and thorough. Weaknesses..Higher cost and slower turnaround time.
2. The broker price opinion (BPO)
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
1. The traditional appraisal
Use..............First mortgage originations and many other alternative uses.
It seems that the opinions of those in the lending community, involving the different methods, procedures and practices pertaining to the evaluation of collateral, vary. Most of us have grown accustomed to appraisals; however, there are other methods being used that many of us never have had reason to become aware of. In today’s evaluation environment, we have many so-called appraisal techniques, that the scope of this article cannot contain all of them. Recent technological advances in computers and the Internet have been a game-changer in the property evaluation arena. There is a much broader array of products than there has been in the past. This can be a good thing, but it is not necessarily good. Each product has its strengths and shortcomings. This discussion may not have been as necessary as it is if we hadn’t had the recent economic crisis and mortgage meltdown. Over the decades, we have had other economic downturns, and with each downturn has come a review of why there were so many bank failures, foreclosures and other financial setbacks. With all of the safety nets, just what is it in our system that seems to make the banking industry so vulnerable to risk and loss? In most every occasion of this type, the microscope is placed upon appraisers. Even though I am an appraiser, I admit that this is a perfectly legitimate area to explore. Having said that, the industry is filled with those who suggest that collateral should be evaluated in some other way than the traditional appraisal. Issues, such as turnaround time, cost and trust, are always touted as areas where the traditional appraisal comes up short. Among the smorgasbord of evaluation techniques available, there are three that seem to be talked about the most, and which are probably used the most. They are as follows, and included is a brief statement as to their strengths, weaknesses and primary uses.
a fire that burned the home down or if Finally, if it is important to get the best there has been a mistake in the address, it and most accurate opinion of value for a is possible that there is minimal property property, choose an appraisal by a licensed value. The AVM is used mostly to support appraiser. The appraiser is trained for the or to provide additional data when other task, verifies the existence of the property, collateral assessment techtypically performs a thorniques are employed as a ough inspection of a propersecond opinion. ty, has access to all of the Sound confusing? What most recent comparable does all this mean to the data, has been trained to lender making a decision offer superior judgment relative to a mortgage loan? about a property, prepares a First, it is no more conproduct that is USPAP comfusing than we as people pliant and should be an make it. If it is necessary to unbiased party with no obtain a value indication interest in the property. immediately at little cost, Appraisers are people, and then the AVM may be the they are not perfect. They best alternative. This “The BPO can serve can make mistakes and they should only be tried prosometimes do. Other evaluas support to an vided that the decision appraisal or an AVM ation methods have their does not require verificaplace, depending upon can also serve as tion of the existence of the their intended purpose, but support to a BPO.” property, an evaluation of should not be considered the condition of the property or human an alternative to an appraisal when it is critjudgment relative to the comparing prop- ical to get the most professional and accuerty to comparable sales. rate opinion relative to a property. It may also be appropriate to purchase If you, like I, want to help prevent anothand use a BPO in evaluating a property er mortgage meltdown, support the use of a under some circumstances. If the property thorough appraisal by a licensed appraiser is subject to foreclosure, then a broker, on all purchase and refinance transactions. taking a look at it and rendering an opinion as to its market value and what price Charlie W. Elliott Jr., MAI, SRA, is president range the property will likely fall into, may of Elliott & Company Appraisers, a nationbe appropriate. The BPO can serve as sup- al real estate appraisal company. He can be port to an appraisal or an AVM can also reached at (800) 854-5889, e-mail charserve as support to a BPO. In some cases, firstname.lastname@example.org or visit his company’s all three may be appropriate. Web site, www.appraisalsanywhere.com.
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other non-HAMP Industry solutions, to show the breadth of workouts the industry is offering and implementing for at-risk homeowners. Data highlights: 1Q 2009 vs.1Q 2010:
Forensic Counseling Tools for Whole-Person HECM Lending: Part I A conversation with NCOA’s Barbara Stucki
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
For some seniors who take out reverse mortgages, potential financial problems are often rooted in “non-financial” matters. Slowly, financial problems ooze out of everyday issues. “Soft” issues that financial people may not always appreciate, such as losing a spouse, living alone, staying far away from relatives, having difficulty getting up from bed or getting dressed, taking a lump sum reverse mortgage advance, relying on reverse mortgage funds for too many needs, having frequent falls and being in poor health, and lacking information about private and public benefits programs for which they may qualify, among others. Before long, these issues mushroom into an inability to meet borrower obligations. Yes, they become “financial problems.” Built around traditional budget analysis and information about reverse mortgage alternatives and disclosures of obvious borrowers’ risks, the best conventional Home Equity Conversion Mortgage (HECM) counseling often miss these existential issues and their financial implications, let alone address them. That is about to change, thanks to two evolving forensic reverse mortgage counseling tools developed by the National Council on Aging (NCOA): The Financial Interview Tool (FIT) and BenefitsCheckUp (BCU). Any day now, Federal Housing Administration (FHA) Commissioner David H. Stevens could issue a Mortgagee Letter mandating their use in HECM counseling. To understand these vital and emerging front-end HECM-borrower risk management tools and to share that understanding with you, I spoke with Dr. Barbara Stucki, vice president of home equity initiative at NCOA. NCOA is one of four U.S. Department of Housing & Urban Development (HUD) HECM Counseling Intermediary organizations, and Dr. Stucki runs the national reverse mortgage counseling network for NCOA. A former researcher for the American Council of Life Insurers and AARP, Dr. Stucki directed NCOA’s highly-regarded
2005 study on aging-in-place via reverse mortgages, “Using Your Home to stay at Home.” She has testified before Congress and the Federal Reserve Board, and her research has been quoted in The New York Times, Wall Street Journal, USA Today, BusinessWeek, Fortune Magazine, Bloomberg News, The Washington Post, Money Magazine, Kiplinger’s Personal Finance Magazine and National Public Radio, among other media. What are FIT and BCU, and what are their purposes? “FIT” is an acronym for “Financial Interview Tool.” It is a series of additional questions that reverse mortgage counselors will ask their clients in discussion about immediate financial shortfalls, as well as their ability to stay at home over time. These questions help to inform the decision older homeowners make about the appropriateness of a reverse mortgage for their situation and the loan features that might meet their needs. “BCU” stands for “BenefitsCheckUp.” It is the nation’s most comprehensive Webbased service to screen for benefits programs for seniors with limited income and resources. Using a simplified version specifically designed for reverse mortgage counseling, counselors can quickly screen more than 1,800 public and private benefits programs from all 50 states and the District of Columbia. For seniors with limited incomes, benefits from existing federal, state, and local programs could be an important alternative or supplement to a reverse mortgage. Are FIT and BCU creations of the National Council on Aging? That’s right. We developed and started using the original questions for FIT when we began as a HECM Counseling Intermediary in 2007. Our national reverse mortgage counseling network is distinctive because it consists of agencies that primarily serve seniors. From the beginning, we continued on page 8
Total workout solutions increased from 0.71 million to 1.36 million (+92 percent) Modifications completed increased from 370,440 to 476,190 (+29 percent) Foreclosure starts decreased from 728,780 to 691,020 (-5 percent) 60 days-plus delinquency increased from 2.85 million to 3.99 million (+40 percent) Completed foreclosure sales increased from 201,310 to 291,380 (+45 percent) “At the beginning of 2009, after a tremendously challenging 18 months ramping up to meet the crisis, HOPE NOW and its Alliance partners promised distressed borrowers that we would re-double our efforts to help struggling homeowners,” said Faith Schwartz, executive director of HOPE NOW. “We continue to work collaboratively with Treasury, HUD, the Federal Reserve Banks, regulators and nonprofit counseling agencies to reach borrowers at-risk and implement proprietary and government loan programs, such as Making Home Affordable. HOPE NOW members are working aggressively to manage multiple solutions to avoid foreclosure. These include outreach through support of (888) 995-HOPE, more than 70 homeownership preservation events held nationwide to date, loan modifications which include P&I reductions and liquidation alternatives for borrowers seeking a graceful exit to homeownership. It is clear our work is far from over. Alliance members have demonstrated their commitment to helping homeowners, their ability to find workable solutions and their willingness to implement multiple intervention solutions to stabilize markets and homeowners. We will continue to report on our progress and work with borrowers via all of the tools at our disposal.” For more information, visit www.hopenow.com.
SEC charges Goldman Sachs with fraud tied to sub-prime mortgages The Securities and Exchange Commission (SEC) has charged Goldman Sachs & Company and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to sub-prime mortgages as the U.S. housing market was beginning to falter. The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on
the performance of sub-prime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO. “The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, director of the division of enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.” Kenneth Lench, chief of the SEC’s structured and new products unit, said, “The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress.” The SEC alleges that one of the world’s largest hedge funds, Paulson & Company, paid Goldman Sachs to structure a transaction in which Paulson & Company could take short positions against mortgage securities chosen by Paulson based on a belief that the securities would experience credit events. According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third-party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Company hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio. The SEC’s complaint alleges that after participating in the portfolio selection, Paulson & Company effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Company had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Company’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors. The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible for ABACUS 2007-AC1. Tourre structured the transaction, precontinued on page 8
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Compliant Business Systems: Part I of III By Don DeRespinis
Federal laws now require every “covered business” to have a compliant system in place at all times. Covered business includes mortgage brokers and lenders. Mortgage originators are also required by law to have compliant systems for the origination of mortgage loans. When I started my business 15 years ago, I began a mission of defining and using a “Compliant System.” This has resulted in the establishment of my company’s “Business Operating Principals.” One of the main principals is the “Principals of Compliance.”
Principals of Compliance
that govern some aspect of the mortgage origination business. The following laws required increased compliance for businesses that have access to non-public personal information:
USA Patriot Act (USAPA) 2001 The Patriot Act requires every company to identify, through appropriate documentation, the actual identity of a person.
SAFE Mortgage Licensing Act 2008
Trust But Verify: Understanding the Wholesale Lender Mindset on Broker Credit By Greg Schroeder
continued on page 12
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Trust is imperative in today’s lending environment. However, the adage “trust but verify” promises to dictate the relationship between third-party originators and their wholesale lenders. Brokers need to understand and adapt to the conditions that define this all-important relationship, not by becoming passive, but by becoming better informed. With consumer confidence at an ebb and investors in a state of extreme caution, and in consideration of the U.S. Department of Housing & Urban Development’s (HUD’s) recent memo regarding third-party originator (TPO) due diligence and management, the onus is on wholesale mortgage bankers to verify beyond a shadow of a doubt their TPO/broker partners’ trustworthiness. It follows, then, that to achieve a competitive advantage and enhance their overall appeal as a mortgage lending partner, brokers need to be acutely aware of the criteria wholesalers are using to evaluate potential TPO partners. They must also be prepared to negotiate additional consideration when the criteria used gives an incomplete or misleading picture. When determining whether a mortgage professional (i.e. a broker) should, in fact, be trusted, there are several areas of that professional’s background that wholesale lenders typically investigate. Among the most obvious and telling are the broker’s licensing status and loan performance history. Thanks to the SAFE Act and the creation of the Nationwide Mortgage Licensing System (NMLS), mortgage broker licensing is now the norm rather than the exception. However, everyone knows that a broker’s licensing status can change in the blink of an eye. Many lenders are adopting a policy of conducting ongoing checks of brokers’ license status, knowing that a spotty licensing history could signify big trouble. Additionally, wholesalers are zeroing in on brokers’ loan performance history. Granted, given the tsunami of foreclosures resulting from the current financial crisis, a couple of blemishes on an otherwise pristine record will not necessarily tank a potential relationship. However, a history of loans with high EPDs, FPDs or fraud is a clear indicator to wholesalers that a broker should not be admitted to their list of trusted mortgage professionals. Therefore, brokers should be especially diligent in executing advanced quality control protocols on their loans to “weed out” the bad loans. Okay, verifying licenses is reasonable and tracking loan performance makes sense, but what about personal credit history? Should brokers be surprised that some wholesale mortgage bankers view their personal credit problems as a huge red flag? Maybe yes, maybe no. The point is that wholesale lenders are under pressure on several fronts (investors and regulators are particularly inquisitive about wholesalers’ broker relationships) to thoroughly vet and err on the side of caution when considering a broker relationship. A credit report is a treasure trove of insight, to be certain. There is common sense in the notion that a debtburdened broker is at greater risk than a financially-stable broker, especially if evidence of the debt burden co-exists with recent loan problems. However, counterintuitive as it may sound, basing a partnership decision on a broker’s personal credit history alone could be bad business—for the lender. It is important that brokers understand the wholesaler’s need to know as much as possible, but in the event a broker believes their credit report is working against them, it is advisable to respond proactively with a well-articulated explanation. Of all the mortgage industry, brokers have been, without a doubt, the most adversely affected personally by the sub-prime meltdown. Both from within and outside of the industry, experts, critics, politicians and the media have all been eager to deposit blame primarily on brokers’ shoulders for a systemic failure. As
The SAFE Act mandates that all states enact laws “According to federal governing the qualifications and licensing of all laws, every mortgage originator has a legal state-licensed and regisresponsibility to deter, tered mortgage loan orig1. Safe handling of all detect and defend the inators. The individual states are in the process documents; information of every of implementing the spe2. Well-documented comperson they serve. cific requirements over munications between This requires compathe course of the coming all parties; nies to closely follow year. In addition, the U.S. 3. Safe handling of all Department of Housing electronic documents, all relevant laws cov& Urban Development e-mails, faxing and ering the operation of (HUD) has published the texts received and sent; their business.” proposed rule for mini4. Well-documented polimum standards as mancies and procedures; 5. Generally Accepted Accounting dated by the SAFE Act in order to faciliPrinciples (GAAP)-compliant finan- tate the responsibilities placed on HUD under the Act. State laws passed during cial controls; 6. Training and oversight of opera- 2009 and 2010 place requirements on all mortgage loan originators to comply tions; and with both federal and state laws. The 7. A Red Flags procedure. education and testing requirements of Every mortgage broker or lender the new laws make it clear that an business in the country must do some- understanding of the laws, are the minthing about implementing such a sys- imum requirement for entry into the tem. I would like to establish a starting profession. It is the implementation of point by which a small company would the SAFE Act that provides states with the authority to enforce compliance embark on such a mission. According to federal laws, every with the laws. mortgage originator has a legal responsibility to deter, detect and Real Estate Settlement defend the information of every per- Procedures Act (RESPA) son they serve. This requires compa- RESPA now requires a new Good Faith nies to closely follow all relevant laws Estimate (GFE) and HUD-1 form that covering the operation of their busi- requires lenders to make certain that ness. At this time, excluding individ- the actual costs disclosed on the GFE at ual state laws, there are about 75 major federal laws and regulations continued on page 9 According to the many consumer protection laws, a compliant operation has a system in place to document and apply the following:
forward on reverse
continued from page 6
felt that reverse mortgage counselors should discuss this loan using a holistic perspective that looks at factors that could affect a senior’s stay in the home and their level of dependence on the loan funds. BenefitsCheckUp was developed and is maintained by NCOA. Since 2001, more than 2.4 million people have used this online tool to find benefits programs that help them pay for prescription drugs, health care, rent, utilities, and other needs. We streamlined both FIT and BCU so they do not overwhelm our clients and help them look at the big picture. Seniors who have received counseling through NCOA have all gone through this process. Many have told us how much they appreciate the additional discussion. We have never received any complaint on this approach from lenders.
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flags,” are important and should be added to the overall assessment of a person’s needs and goals. BenefitsCheckUp produces a customized report which describes federal, state and some local programs for which a client may be eligible; it also provides contact information to help them apply for these benefits. For many middleincome families, the types of public programs they can get may be modest. But getting help with programs, such as weatherization, home repairs or with Meals-on-Wheels, can make the difference between being able to stay at home, and not.
Is HUD going to make FIT and BCU mandatory tools for counselors? That is our understanding. HUD is partnering with NCOA and the Administration on Why is FIT an improveAging (AoA) to provide the FIT ment on existing HECM and BCU as budget tools for counseling model? reverse mortgage counselFor people in dire financial ing. Counselors will be straits, a traditional budget required to complete a analysis can be important budget with every client to solve their immediate during the counseling ses“FIT will help counproblems. HUD also recogsion based on information selors engage their nizes the long-term conseobtained from the client clients in this deeper quences of taking a reverse using these tools. As part conversation. It is a mortgage, and FIT will help of FIT, counselors will counselors engage their review their clients’ tool to promote disclients in this deeper conmonthly budget shortfalls, cussion, not just a versation. It is a tool to proincluding extra cash needchecklist.” mote discussion, not just a ed for everyday expenses, Dr. Barbara Stucki, Vice checklist. It is a way of gethealth needs, family supPresident of home equity ting people, whose judgport and property taxes. Initiative, National Council ment may be clouded by They will also review their on Aging (NCOA) immediate needs, to think need for a lump sum long-term about how they amount to pay off existing plan on staying at home so they can get debt, make home modifications, and to the full value of this loan. meet other financial goals. FIT has counselors ask seniors a series of questions relating to risk factors that may Atare E. Agbamu, CRMS is author of not be considered a normal part of the dis- Think Reverse! and more than 130 articussion in taking out a loan. For example, cles on reverse mortgages. Since 2002, he is the person living alone? Have they had a writes the nationally distributed column, recent fall? Do they live in a house with Forward on Reverse. Through his advisostairs or other barriers? ry, ThinkReverse LLC, Agbamu advises By themselves, each of these issues financial professionals, institutions, and may not be a risk, but they can add up. regulators across the country. In a 2007 For example, seniors who live alone may national report on reverse mortgages, have few other resources so they may be AARP cited Agbamu’s work. He can be overly dependent on a reverse mortgage. reached by phone at (612) 203-9434 and If they are also in poor health and their e-mail at email@example.com. financial needs exceed their expectations, they may soon find themselves unable to Visit author Atare E. fulfill their borrower obligations, such as Agbamu’s blog at thinkrepaying property taxes, homeowners’ verse.com for his thoughts insurance and home maintenance. These and insights on the reverse types of risks, which we call “yellow mortgage marketplace.
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continued from page 6
pared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Company’s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Company invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Company’s interests in the collateral selection process were closely aligned with ACA’s interests. In reality, however, their interests were sharply conflicting. According to the SEC’s complaint, the deal closed on April 26, 2007, and Paulson & Company paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded. Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion. The SEC’s complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties. For more information, visit www.sec.gov.
QuestSoft survey finds RESPA tops compliance concerns for second consecutive year
According to QuestSoft’s annual compliance survey of lenders, the recently enacted fee tolerance changes to the Real Estate Settlement Procedures Act (RESPA) continue to pose the greatest mortgage compliance concern in 2010. This marks the second year that RESPA has held the top spot among the lenders surveyed. The poll rated the level of concern among 464 lenders for 12 regulatory changes affecting the mortgage industry this year. Eighty percent of respondents cited the adjustments to fee tolerance rules set forth in RESPA as a major concern for lending practices. Rounding out the top three concerns were Truth-inLending Act (TILA) changes (74 percent cited major concern) and other RESPA issues (66 percent cited major concern). “Even though RESPA’s new rules have been active for a few months, lenders are still concerned with how to comply with the fee tolerance rules and properly disclose loan terms to consumers,” said Leonard Ryan, president of QuestSoft. “Lenders are also closely watching predatory lending laws and new regulations at the state and local levels.” Changes to federal, state and local lending laws remained the fourth highest concern, with 37 percent of lenders citing these potential changes as a
major concern in 2010. Increased Fair Lending Exam scrutiny rounded out the top five with 31 percent of lenders claiming it as a major concern. Ryan said one surprising result was the lack of concern for the multi-state exams many lenders will be facing by the end of 2010; with only 15 percent reporting it as a major concern. “Even though 70 percent of QuestSoft’s client base will be subject to multi-state exams by the end of 2010, it ranked at the bottom of the survey,” Ryan said. “The placement of Truth-in-Lending changes planned for this summer as the second highest concern suggests that compliance professionals are being forced to deal with one new compliance crisis at a time.” Ryan added that since lenders are so worried with the next immediate change, they will have to rely on their compliance partners to look ahead and prepare for more long-range compliance changes. For more information, visit www.questsoft.com.
RealtyTrac finds decrease in foreclosure activity in April RealtyTrac, an online marketplace for foreclosure properties, has released its U.S. Foreclosure Market Report for April 2010, which shows that foreclosure filings— default notices, scheduled auctions and bank repossessions—were reported on 333,837 properties in April, a nine percent decrease from the previous month and a two percent decrease from April 2009. One in every 387 U.S. housing units received a foreclosure filing during the month. “There were two important milestones in the April numbers that show foreclosure activity has begun to plateau—but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac. “April was the first month in the history of our report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on a monthly and annual basis. We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties.” During the month a total of 103,762 properties received default notices, a decrease of 12 percent from the previous month and a decrease of 27 percent from April 2009—when default activity peaked at more than 142,000. Foreclosure auctions were scheduled for the first time on a total of 137,643 propcontinued on page 11
compliant business systems time of application, harmonize with the Settlement Statement the borrower sees at closing. In the past, the forms routinely differed, causing consumer complaints that led to the new regulations. If the amounts are expected to differ during the loan process due to verifiable â€œchanges in circumstances,â€? the lender is required to re-disclose and issue a revised GFE. At the same time, all the calculations must be consistent on the system to make certain the HUD-1 accurately reflects the changes. Failure for compliance will require mortgage brokers and lenders to detect such violations and reimburse customers within 30 days of closing or face penalties and increased rescission periods. Failure to comply will increase costs to brokers.
Truth-in-Lending Act (TILA) The final rule regarding TILA changes should be published at some point in 2010. The final rule will redefine fees and charges considered finance charges for annual percentage rate (APR) purposes, change the TIL Statement content and format, including amortization types, prohibit payments to mortgage brokers or creditor loan officers based on the interest rate or other loan terms, prohibit steering consumers to less favorable loans in order to increase compensation, require 60-day notification of ARM loan changes, require monthly statements on loans where negative amortization is possible, replace home equity line of credit (HELOC) disclosure, enhance periodic statements for open-end credit, require 45-day notice for changes to HELOC terms and change protections regarding credit line suspensions or reductions.
continued from page 7
including many lawyers, doctors and other professionals.
Gramm-Leach-Bliley Act The Gramm-Leach-Bliley Act imposed strict guidelines for the security and disclosure of Non-Public Private Information (NPPI). Privacy laws changed dramatically under this new law passed in 1999. The Gramm-LeachBliley Act imposed strict guidelines for the security and disclosure of NPPI. The complete law can be found at www.ftc.gov/privacy/glbact/glbsub1.htm.
Responsible Information Management
8. Respond to violations and breaches
Every person in your organization must be held accountable and every organization must create a system of â€œResponsible Information Managementâ€?. This system must be in use every day and by every employee. In order to meet the requirements, every company must:
In developing a compliant system, just as in any other process, it starts at the top. In this case, the top begins with the â€œResponsible Individual.â€?
1. 2. 3. 4.
Raise awareness Create policies and protections Train its staff Hold all employees and vendors accountable 5. Monitor and re-train employees on policy breaches 6. Actively protect customers 7. Detect risks
Responsible Individuals The federal SAFE Act, as implemented by many states, created a new classification of individuals for employment purposes in mortgage lending operations. The Responsible Individual (RI) or a branch manager is required to have two to three years of experience in the mortgage business, within the five years immediately preceding the application. continued on page 12
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FACTA directed financial regulatory agencies, including the Federal Trade Commission (FTC), to promulgate rules requiring â€œcreditorsâ€? and â€œfinancial institutionsâ€? with covered accounts to implement programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. FACTAâ€™s definition of â€œcreditorâ€? applies to any entity that regularly extends or renews creditâ€”or arranges for others to do soâ€” and includes all entities that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor. Some examples of creditors are finance companies, automobile dealers that provide or arrange financing, mortgage brokers, utility companies, telecommunications companies, non-profit and government entities that defer payment for goods or services, and businesses that provide services and bill later,
Fair and Accurate Credit Transactions Act of 2003 (FACTA)/Red Flags
Department of Labor’s Reversal Requires Creative Approach to Compensation for Mortgage Loan Officers By Tim Watson and Barry Miller
Ellie Mae files registration statement for proposed IPO and is approved by Wells Fargo as a technology partner
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Ellie Mae Inc. has announced that it has filed a registration statement on Form S-1 with the U.S. Securities & Exchange Commission (SEC) relating to a proposed initial public offering (IPO) of shares of its common stock. The number of shares to be offered and the price range for the offering have not yet been determined. The shares of common stock to be sold in this offering are proposed to be sold by Ellie Mae and certain stockholders. The underwriters of the offering will be Goldman, Sachs & Company; William Blair & Company, Keefe, Bruyette & Woods, Macquarie Capital, Piper Jaffray and ThinkEquity LLC. The offering will be made only by means of a prospectus. When available, a copy of the preliminary prospectus relating to the offering may be obtained from Goldman, Sachs & Company, 200 West Street, New York, NY 10282-2198 Attention: Prospectus Department. A registration statement relating to these shares of Ellie Mae common stock has been filed with the SEC but has not yet become effective. These shares may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale
of the shares of Ellie Mae’s common stock in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Ellie Mae has also announced that Wells Fargo Funding has approved Encompass360, Ellie Mae’s mortgage management solution, for e-signing and e-delivery of disclosure documents. Users of Encompass360 can now meet Wells Fargo Funding submission requirements after not only electronically delivering disclosure documents to borrowers, but also having borrowers electronically upload, sign and deliver disclosures back to the lender via Ellie Mae’s WebCenter, a consumer portal that securely connects borrowers to their originator’s Encompass360 system. “Wells Fargo Funding’s correspondents are able to leverage Encompass360’s robust capacity for fully auditable, transparent and secure e-signing and e-delivery of disclosure documents,” says Jonathan Corr, chief strategy officer for Ellie Mae. “Encompass360 was created to provide the built-in ability to leverage the power and speed of the Internet, so all Wells Fargo Funding needed to do was provide its best-practice guidelines and requirements.” In order to comply with Wells Fargo Funding’s certification requirements, Ellie Mae made several adjustments to Encompass360’s e-signing process. For continued on page 21
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In addition to the many other new reg- the DOL does have the power to withulations in the finance industry, mort- draw its prior guidance regarding mortgage lenders now also find themselves gage loan officers, and there is little wrestling with an old employment doubt that employers now have less issue that until recently had been certainty regarding the exempt status resolved in their favor. On March 24, of the position than they did before the issued its Administrative 2010, the U.S. Department of Labor DOL (DOL) announced a drastic change in Interpretation. For that reason, many the agency’s views about how mort- employers in the mortgage lending industry that have taken gage loan officers must the DOL’s new position at be paid. During the prior face value, are beginning administration, the DOL to analyze how it will issued a number of opinaffect their employees. ion letters based on speIn considering whether cific facts finding that to shift loan officers to an mortgage loan officers overtime-eligible status, are exempt from federal employers first need to overtime pay requireassess the type of work that ments. In March, howevthe loan officers are doing. er, the DOL reversed The DOL’s Administrative these findings and rejectInterpretation leaves in tact ed the decades-old prac“The DOL does not a prior finding that loan offitice of issuing opinion cers may meet the “outside letters based on specific have the power to sales” exemption to federal factual circumstances. change federal law overtime pay requirements, if Instead, the DOL issued merely by issuing their jobs require that they a new “Administrative interpretive guidspend a significant portion Interpretation” making ance, and some of their working time the blanket statement employers may use engaged in sales and prothat mortgage loan offithe courts to chalmotional activities outside cers generally are not lenge the validity of of their employer’s office. exempt from federal overYet, in the modern business time pay requirements the DOL’s reversal in environment, face-to-face under the Administrative position.” meetings with clients and Exemption to overtime prospects have often been pay—the most common Tim Watson, Partner, Labor & Employment Department, replaced by phone calls, eexemption applied by Seyfarth Shaw LLP mails and text messages. employers to their mortFor that reason, many gage loan officers, in addition to many other similar posi- employers will find that their loan officers tions. While the interplay of the vari- spend much of their time working the ous federal overtime exemptions can phones, online and meeting with cusbe complicated, the bottom line to the tomers in a stationary office. Even those DOL’s new position is that many mort- lenders that have loan officers who spend gage loan officers who have long been a significant amount of their time in the paid on a salary plus commission basis field find themselves in an uncertain posinow arguably must be paid overtime tion because the exact amount of time pay for any hours in excess of the 40 that an employee must spend outside to that they work in a week.1 As a result, meet the exemption remains unclear. mortgage lenders are struggling to find Thus, many mortgage loan companies a way to reconcile the shift in the DOL’s have begun to consider reclassifying loan position with the realities of the lend- officers as non-exempt and eligible for overtime compensation. This raises a ing marketplace. The first challenge that employers number of legal and business issues that face is understanding the significance these employers must address in order to and impact of the DOL’s new ensure the continuing profitability of the Administrative Interpretation. The DOL loan officer position, while steering clear does not have the power to change fed- of prohibitions in other provisions of the eral law merely by issuing interpretive state and federal wage laws. Generally, an overtime-eligible guidance, and some employers may use the courts to challenge the validity of employee is paid overtime pay at onethe DOL’s reversal in position. However, and-a-half times his “regular hourly rate.” even if the DOL’s new view is vulneracontinued on page 12 ble to legal challenge, it is likely that
continued from page 8
MBA finds commercial/multifamily originations down 46 percent in 2009
MARI reports mortgage fraud still on the rise
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Reported incidents of mortgage fraud and misrepresentation by professionals in the mortgage industry in continued on page 15
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Commercial and multifamily mortgage origination volumes decreased 46 percent in 2009 among repeat reporters, with mortgage bankers reporting $82.3 billion of closed commercial and multifamily loans, according to the Mortgage Bankers Association’s (MBA) 2009 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation report. Commercial banks and savings institutions were the largest single investor group for commercial and multifamily mortgages, responsible for $19.8 billion, or 24 percent, of the closed loan volume. Multifamily properties were the dominant property type—representing
$36.5 billion, or 44 percent of the lending total. “Relatively few commercial mortgages were made in 2009, as the recession curtailed both the supply of and demand for new mortgage debt,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “As the recession has receded, origination volumes have picked up slightly, but the absolute levels remain low.” Among the key findings are: Decreases were seen across most property types and investor groups, and were led by declines in loans
Lending for office properties had the largest percentage decrease in originations by property type, followed closely by retail properties and hotels/motels. Year-over-year changes are based on the changes in volume among “repeat reporters” that participated in both the 2008 and 2009 surveys. For more information, visit www.mortgagebankers.org.
erties during the month, a decrease of 13 percent from the previous month— when auction activity peaked with more than 158,000 properties scheduled for auction for the first time. Auction activity was up one percent from April 2009. Bank repossessions and real estateowned (REO) properties hit a record monthly high for the report in April, with a total of 92,432 properties repossessed by lenders during the month—an increase of one percent from the previous month and an increase of 45 percent from April 2009. Bank repossessions were less than one percent above their previous peak of 92,182 in December 2009. Nevada posted the nation’s highest state foreclosure rate for the 40th straight month, with one in every 69 housing units receiving a foreclosure filing in April—more than five times the national average. A 57 percent monthly increase in REO activity pushed the state’s overall foreclosure activity up 10 percent from the previous month, but overall foreclosure activity was statistically unchanged from April 2009. Arizona foreclosure activity decreased nearly 15 percent from the previous month, but the state’s foreclosure rate moved from third highest in March to second highest in April thanks to an even bigger decrease in California. One in every 169 Arizona housing units receiving a foreclosure filing in April—more than twice the national average. Florida posted the nation’s third highest foreclosure rate, with one in every 182 properties receiving a foreclosure filing, despite monthly and annual decreases in foreclosure activity. California posted the nation’s fourth highest foreclosure rate, with one in every 192 housing units receiving a foreclosure filing, and Utah posted the nation’s fifth highest foreclosure rate, with one in every 221 housing units receiving a foreclosure filing. For more information, visit www.realtytrac.com.
intended for: Credit companies; REITS, mortgage REITs and investment funds; and Commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other asset-backed security (ABS) conduits. $15.9 billion of multifamily loans were closed for Fannie Mae, a 32 percent decline from 2008. $15.2 billion of multifamily loans were closed for Freddie Mac, a 24 percent decline from 2008. $5.8 billion of loans were closed for the Federal Housing Administration (FHA)/Ginnie Mae, a 168 percent increase from 2008. Loans for Fannie Mae and Freddie Mac accounted for 85 percent of the total reported multifamily volume in 2009.
compliant business systems There are many references to Responsible Individuals or branch managers, but there is no information on what a Responsible Individual’s actual responsibilities are. The RI is pretty much responsible for everybody involved in all loan transactions that happen in the branch. The parties can include originators, processors, customers, appraisers, lenders, attorneys, title companies, vendors, landlords and the list continues. They must be responsible for the application of the laws, and for the prevention and detection of fraud. They must be responsible for reports required by state banking departments, and most importantly, notifying the banking department about key changes and actions by originators, including felonies and other events, such as bankruptcies or other conditions.
continued from page 9
In Part II of this series, “Compliant Business Systems,” I will cover the requirements of a Responsible Individual to know the key components in implementing a compliant system. Don DeRespinis is a certified public accountant (CPA) and a Certified Residential Mortgage Specialist (CRMS). He and his wife Deb Killian have operated Charter Oak Lending Group LLC, a mortgage broker and correspondent lender with licenses in Connecticut, New York and Florida for the past 15 years. They have also developed a comprehensive and integrated business operating system used to operate all aspects of a mortgage origination branch, including integrated document management, communication management, accounting, compliance and controls. For more information, visit www.mortgagecenter.net or e-mail firstname.lastname@example.org.
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a result, mortgage broker business channels have all but dried up. Some in the industry were even predicting the end of broker originations less than a year ago. Given an overall economic malaise and the near decimation of their livelihood, it shouldn’t be any wonder that many surviving brokers did not emerge personally unscathed, although their practices and their loan performance stats were high. Taking these circumstances into account could help persuade a potential wholesale partner that a broker’s personal credit score is not wholly, or even largely, indicative of trustworthiness. In other words, it is incumbent on brokers to come to their own defense, to professionally explain their record and to persuade wholesalers to take a more balanced perspective on subjective trust indicators, such as credit score when, in fact, objective trust indicators such as licensing and loan performance are more reliable measures. Another useful strategy for countering wholesalers’ reliance on brokers’ personal financial information is for brokers to shift attention instead to their business credit report. Clearly, a broker could contend, a business credit report illustrates the financial stability of the enterprise and is more likely relevant to the wholesale lender’s TPO risk management strategy. Regardless of their personal financial profile, brokers have a vested interest in the standardization of TPO due diligence criteria and need to advocate for fairness. One way to turn the conversation to the broker’s business credit would be to provide wholesalers with their business credit report. Does this mean suggesting to wholesalers that they completely ignore a broker’s personal credit report? Absolutely not, that is no way to earn credibility. A broker’s strategy to establish trust must include acknowledging personal credit history as a viable source of clues as to a particular broker’s fidelity. However, it must also include making a persuasive argument to wholesale partners that placing too much weight on personal credit history and failing to take business credit into account could prevent lenders from engaging in relationships with reputable brokers. “Trust but verify” just may be a quality broker’s best advice to wholesale mortgage bankers. Greg Schroeder is president of Comergence Compliance Monitoring. To learn more about how the Comergence Compliance Trusted Mortgage Professional program can help, call (714) 495-4720.
department of labor’s reversal
continued from page 10
One problem created by treating loan offi- hire additional loan officers or supportcers as overtime-eligible employees is that ing employees in order to spread the commissions and certain other incentive work over a larger number of employcompensation will generally be included ees. Increased staffing, of course, comes in the employees’ “regular rate” in calcu- with its own costs and may lead to dislating their overtime pay. This may create satisfaction among current employees unpredictability in loan officers’ compen- who may see their total individual comsation and the profitability of the loans pensation reduced. that they close. Common sense and expeIn view of the challenges posed by rience reflect that loan officers generally decreasing the number of overtime hours sell and close more loans in that mortgage loan officers the weeks during which work, some lenders may they work the most hours. consider measures that This can create a multiplythey can take to design a ing effect on the cost of compensation program for overtime pay by driving up loan officers that preserves the hourly rate of pay durthe profitability of the ing weeks in which loan lender’s operations and officers are also working the increases the predictability largest number of overtime of overtime compensation hours. This means that loan costs, while complying with officers’ compensation for the DOL’s new position each loan closed during regarding overtime pay high volume weeks may be requirements. “Even those lenders artificially inflated, and the One measure that will that have loan offiprofitability of those loans reduce the cost of includto the lender may decrease cers who spend a siging commissions in overnificant amount of as a result. This dynamic time pay is to provide a may be amplified by the their time in the field significant level of hourly fact that the lending indus- find themselves in an compensation to loan offitry is inherently cyclical and cers that is independent of uncertain position prone to periodic lulls and loan volume, in addition because the exact surges in activity, with the to some commissions on amount of time that result that a lender’s entire loans sold or closed. This an employee must workforce will often be approach would reduce busy at the same time. spend outside to meet the multiplying effect of the exemption Having all employees including commissions in become busy at the same remains unclear.” overtime pay for busier time may, in addition to working weeks. The exact Barry Miller, Associate, creating a companywide balance between hourly Labor & Employment spike in overtime cost, limit compensation and comDepartment, Seyfarth the lender’s ability to use mission rates that best Shaw LLP creative or adaptive schedserves to control overtime uling of employees to limit costs, while preserving the number of overtime hours worked. appropriate incentives for employees, Given that profit margins on mortgage will vary based on the nature of each loans have decreased in the current econ- lender’s operations. omy, many lenders view these aspects of More innovative employers that are paying overtime to loan officers as a seri- willing to more fundamentally redesign ous business challenge. the way that loan officers are paid may There are many changes to a lender’s move away from traditional commission business operations that may lessen the formulas tied directly to production of impact of treating loan officers as over- loan volume and calculated on a weektime eligible. One such measure is to by-week basis. For example, a lender manage loan officers’ working hours and might adopt a quarterly incentive comattempt to reduce the number of over- pensation program that takes into time hours worked. Lenders that have account a variety of performance factors, always treated the position as exempt such as quality of customer service, capmay have had no reason to analyze or ture rates, timely documentation of manage those employees’ efficiency in transactions, and promotional activities, the past and allowed them to set their in addition to overall level of production. own schedules without much direction or If properly constructed, such a compenoversight. Those employers may find that sation program would allow employers there are efficiencies to be gained by hav- to spread out incentive compensation ing managers more actively engaged in across factors that will have less weekthe supervision of loan officers’ day-to- to-week variation than simple producday activities. However, employers must tion and also to average incentive combe mindful that this approach may pensation over the weeks in each quarthreaten to decrease a loan officers’ level ter in a way that blunts the multiplying of production or encourage them to effect of the week-to-week variations in improperly under-report their working activity. The design of such programs hours, creating additional potential legal exposure. Another approach would be to continued on page 15
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even during times of massive origination volumes.” The top fraud incident type in 2009— representing 59 percent of all reported fraud types—was application misrepresentation. This is the sixth year in a row it has topped the list. In second place were frauds related to appraisal and valuation misrepresentation, which increased from 22 percent of reported misrepresentation in 2008 to 33 percent; with an 11 percent increase, this is the most notable increase in reported fraud types in 2009. Additional documented fraud types included, in order of volume, verifications of deposit, verifications of employment, escrow or closing costs, and credit reports. Overall there has been a slight downward trend in total application fraud and misrepresentation moving from a high of 67 percent in 2005 to 59 percent in 2009. “Lenders are facing hurdles with compliance, loss mitigation and staving off additional financial losses due to poor loan performance,” said Denise James, LexisNexis Risk Solutions director of real estate solutions and co-author of the report. “This is not to say that mortgage fraud is going away; it is still a serious problem, and new trends continue to emerge. It remains critical for those in the mortgage industry to reassess their processes, work together by sharing information and reporting incidents of fraudulent activity, and ready themselves for more complex schemes in order to continue the fight against mortgage fraud.” “These results are further evidence that lenders need to reconsider who they engage to perform appraisal assignments,” said Appraisal Institute President Leslie Sellers, MAI, SRA. “The best way to mitigate real estate valuation fraud is to hire a comcontinued on page 20
department of labor’s reversal
compensation practices are well-aligned with their business objectives. Tim Watson is a partner in the labor and employment department of Seyfarth Shaw LLP in Houston, Texas. He may be reached by phone at (713) 860-0065 or e-mail firstname.lastname@example.org. Barry Miller is an associate with the labor and employment department of Seyfarth Shaw LLP in Boston. He may be reached by phone at (617) 946-4806 or e-mail email@example.com.
1—Many states have their own wage and hour statutes that have more onerous overtime requirements. For example, in California, employers must pay overtime to non-exempt employees for each day an employee works in excess of eight hours.
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
involves the balancing of a number of competing factors, including ensuring that features designed to control overtime costs do not create undue cash flow problems for employees or jeopardize the employer’s ability to recruit and retain top performers. Employers can take some of the guesswork out of the process of redesigning compensation programs through statistical analysis of historical compensation and productivity data, in order to better understand their employees’ working patterns and compensation expectations. Employers that are proactive in responding to the DOL’s reversal in its position regarding loan officers and overtime compensation will be in the best position to avoid costly litigation and may also find themselves at a competitive advantage in the marketplace by ensuring that their
continued from page 12
the U.S. are continuing to climb and increased by seven percent from 2008 to 2009, according to a new report released by the Mortgage Asset Research Institute (MARI), a LexisNexis service. While the pace has slowed since the 2007-2008 increase of 26 percent, the continued increase is believed to be attributed to better industry reporting and policing. The 12th Periodic Mortgage Fraud Case Report examines the current state of residential mortgage fraud and misrepresentation in the U.S. committed by professionals, based on data submitted by LexisNexis MARI subscribers. Florida, ranked number one in 2006 and 2007, has moved back into first place in the country for mortgage fraud and misrepresentation after being displaced in 2008 by Rhode Island. Florida also has close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume. Rhode Island is not ranked on the top 10 list for 2009 because the state’s sample size did not meet the minimum requirements set for the survey. New York moved into second place, followed by California, Arizona, Michigan, Maryland, New Jersey, Georgia, Illinois and Virginia. This is the first appearance on the LexisNexis Mortgage Asset Research Institute Report top 10 list for New Jersey and Virginia. “The data suggests that in 2009 there was a seven percent increase in the number of incidents of fraud reported to the LexisNexis Mortgage Asset Research Institute on top of the 26 percent increase reported in 2008,” said Jennifer Butts, LexisNexis Mortgage Asset Research Institute manager of data processing and co-author of the report. “While this is a noticeable increase, we believe that mortgage fraud is significantly understated,
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A Look Back at the Past Year in NAMB Certification? Certainly! A Message From NAMB President Jim Pair, CMC
As I approach this, my last article as Certification Committee Chair of the National Association of Mortgage Brokers (NAMB), I am amazed at how quickly time seems to fly by in our daily lives. As we have all been preparing for SAFE Act Licensing and watching events in our industry unfold, time seems to be moving more for us than we may expected. Reflecting on the basic priorities this past year or two has strengthened some individuals, saw others leave our industry, and still has everyone evaluating what we should continue to do. I have seen 33 years of change, but yet one thing has remained constant and that is the passion I see in those who still fight to maintain the professional independence to service consumers. It seems that many, especially in our government, view the past few years as something that could occur again, but they would be wrong in my opinion. The circumstances of unlicensed, educated and certified individuals coupled with the magnitude of greed from Wall Street and lenders is now so tightly regulated that those individuals have moved on. I believe that the majority of us still here hold our experience and knowledge as a great importance and are extremely proud of what we do for families and our communities. It is also now more important than ever to keep our reputations and businesses above the rest. The integrity and trust mortgage brokers and their loan originators have displayed is the backbone of what continues to be of great importance in the financing of the American dream of homeownership. Now, more than ever, the voluntary certifications and required licensing of our profession sets us apart from others. Set time aside today to become certified. I have seen a difference from it and I believe you will too. Thank you for the opportunity to serve you this past year! Pava J. Leyrer, CMC, CRMS, is president and owner of Heritage National Mortgage Corporation in Grandville, Mich., and Certifications Committee chair for the National Association of Mortgage Brokers. She may be reached by phone at (616) 534-4993 or e-mail firstname.lastname@example.org.
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Jim Pair, CMC is with Mortgage Associates Corpus Christi and is president of the National Association of Mortgage Brokers. He may be reached by e-mail at email@example.com.
A Message From NAMB Certifications Committee Chair Pava J. Leyrer, CMC, CRMS
I cannot believe that 12 months have passed so quickly. It seems like yesterday that I took the oath of office as president of the National Association of Mortgage Brokers (NAMB). During this last year, we have faced many challenges, but these challenges have presented us with many opportunities to build a better future. Many of you have stepped forward as volunteers and worked tirelessly to ensure our industry remains a viable channel of distribution for the consumer. Through your efforts, you have built a stronger relationship with Congress and the regulatory agencies. Our relationship with them is better than ever thanks to the dedication of our volunteers and staff. I wish I had the space to name all of the volunteers who have worked so hard this past 12 months. I do want to thank Harry Dinham, Government Affairs Committee CoChair and Mike Anderson, Government Affairs Committee Co-Chair, for their work this past year. It has been a very busy year in Congress and with the regulatory agencies, and both Harry and Mike have lead us through this regulatory maze, volunteering long hours to protect our interests and that of the consumer. George Hanzimanolis has worked tirelessly with NAMB Enterprises to find new companies that will not only provide benefits to our members, but will be a source of new revenue for the association. John Councilman, chairman of the FHA/VA Committee, has been a star working with the U.S. Department of Housing & Urban Development (HUD) and the Federal Housing Administration (FHA) on all the changes that have occurred this last year. If you ever have a question about HUD or FHA, John is the expert. His knowledge and expertise has built a close working relationship with these two governmental agencies. Olga Kucerak, chair of the Membership Committee, stepped in to take over the committee early in my term. She immediately picked up where she left off from serving as chair last year, and has guided us through many changes over the past year. There are so many others who should be recognized, but space just does allow me the opportunity to give you the credit you each so richly deserve. We all know who you are and what you have done for the association. The glue that has held our association together this past year has been the staff of NAMB, lead by Chief Executive Officer Roy DeLoach. Roy, along with Assistant Director of Government Affairs Jon Otto, Director of Membership and Marketing Paul Niermann, Finance Coordinator David Breedlove, and Director of Certification Anika Sallinas need special recognition for all they have done and under some very difficult changes that NAMB has experienced this year. They are truly dedicated to the mission of NAMB and our industry. Roy has provided the leadership and cohesion that was needed to see us through this year. Last June at our annual meeting, I presented Roy with the Energizer Bunny Award. This year, he should receive at least three Energizer Bunnies as he has done the work of three people and has managed to be everywhere at the same time. We are very fortunate to have such a dedicated staff. When you see them, please give them a big thank you for all they do for us. Congratulations to Bill Howe, our incoming president, and NAMB’s 2010-2011 officers and directors as they take office at the annual meeting in June. It will be an exciting time for all of us as we work with Bill to implement his plans and objectives for the coming year. Again, I thank you for the opportunity to have served as your president. It has been difficult for all of us these last few years. I know there are better times ahead for us. Reading this means you have survived the worst and proven that you are a true professional. Our channel of distribution is needed by the industry and the consumer. We will continue our efforts to strengthen our industry and protect the consumers we serve every day.
Michael Maida, National Sales Director, GSF Mortgage Corporation pending legislation and is influential in implementing legislative changes within the company. Michael also has been actively involved with local banks and credit unions to help them with their mortgage divisions and implement quality control within their organizations.
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
18 Each month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at firstname.lastname@example.org for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Michael Maida, national sales director of GSF Mortgage Corporation. Michael has a long history of working in the mortgage industry, with nearly 20 years invested in the industry. His background includes working with some of the largest wholesale brokers in the Wisconsin area. He then went on to serve in the capacity of an account executive for lenders such as Countrywide. His expertise in both the sub-prime and conforming arena made him one of the leading AEs in his region, helping loan originators in expanding their customer base and knowledge of the industry. He earned several awards for his accomplishments of reaching new highs in production levels and closing ratios. Having been able to not only originate business, but teach others how to do the same, along with his vast knowledge of the industry guidelines and regulatory issues continuing to change, led him to his current position as national sales director for GSF Mortgage Corporation. At GSF, he directs a staff of AEs, as well as gets involved with all
Please tell us how you first got into the mortgage business. In 1992, I entered the industry as a loan originator. After a year or so in the industry, I was then given the opportunity to manage branch development. Being involved with retail for approximately six years, I then entered the wholesale arena, starting with a regional lender, which gave me the opportunity to hone both my personal underwriting and loss mitigation skill sets that have proven to be one of the best things I’ve learned from my wholesale experience. As my experience grew, I was given the opportunity to work for one of the largest wholesale lenders at that time. That experience taught me best practices in employing analytics to measure business partner performance from a profitability standpoint. Give us a brief history about GSF Mortgage Corporation. GSF Mortgage was created in 1995. The principals of the company, as well as most of the branch management team, have worked together over 35 years, going back to a finance company that exited the lending arena. GSF Mortgage opened GSF Funding to fund and source FHA, FNMA, FLMC, USDA, VA and conforming products for its retail division. GSF Mortgage manages ancillary companies that compliment the retail platform, from real estate, title and funding, along with real estate development. GSF now offers various solutions for mortgage companies of all sizes, from branch management opportunities, to wholesale programs, to correspondent programs.
ing both wholesale, delegated and nondelegated correspondent lending to our funding platform. Our successes in those arenas were contributed to the development of stewardship programs for both wholesale customers developing FHA lending sponsorship and mortgage bankers developing robust correspondent platform. Over the last two years, our wholesale business partners have suffered substantial headwind from both regulatory and market-driven challenges. Being quick to react to environmental and economic challenges, we added the Professional Branch Opportunity to our product suite. We are welcoming both existing wholesale customers who we have matured along the years, as well new business partners to our retail branch environment. That has been extremely successful for both GSF and the business partners new to banking.
“My philosophy in getting the most out of our sales staff is to compensate commissioned employees on the higher end of the scale.”
What role does your wholesale sale account executives play in managing these platforms? One of the roles our AEs provide is to initiate the first line of defense in risk mitigation, by holding the business partner to the highest standard of submission. They also assist operationally through aggressive pipeline management. GSF also provides our account executives with a professional marketing and public relations team to assist in vetting potential clients. My philosophy in getting the most out of our sales staff is to compensate commissioned employees on the higher end of the scale. Although our comp expense percentage may seem higher than what we deemed acceptable in the past, what we gain is an increase in operational effectiveness due to a higher What was the genesis for this all- quality product entering our system. You take out most of the loan level challenges encompassing platform? In 2007, we had a vision of encompass- most AEs typically deal with, thus freeing
up more time to train our business partners on GSF’s policy and procedural efficiencies that help maximize the overall velocity of submission to consummation. The end result is this greatly reduces your cost to produce, which in turn, results in lower margins necessary to maintain profitability. Training our AEs in managing multiple customer groups (wholesale, correspondent and retail branch management) insulates our sales force from a changing landscape that threatens their livelihood, or secondary market appetite which, from time to time, impacts each business channel. What are your current efforts given the unstable environment of mortgage lending today? We have, until most recently, focused on our existing wholesale customers for branch opportunities, reaching out through normal prospecting measures to deliver the message from our AEs. We now provide our AEs with a professional marketing and PR team to assist in vetting potential clients. We have also expanded our outreach through various vehicles, including advertising in National Mortgage Professional Magazine and other outlets. This message we are trying to deliver again is to say: “No matter what you are, you have a home with GSF Funding and we are going to properly back your loan and provide the tools necessary to be successful in today’s industry.” At GSF, we are able to offer things that are not typically available on the secondary market for the smaller mortgage brokers and mortgage bankers. For a small correspondent who does $2-$3 million per month in funding, to be provided live security pricing, bid ask pricing and bulk trade transactions is unique and not often an option for that size of customer. As we look to increase our servicing portfolio, we have accomplished that goal through hedging strategies typically reserved for the most robust of customers. No matter what division it is, wholesale, retail or correspondent, I think each one of those provides a very unique structure that is different than what our competitors do.
“I find our success in beneficially melding with our business partners.” Are there any books that have guided your business philosophy? I can sum all of our philosophy up with two great books. One of them is Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne, which we use as our company mantra ... the simultaneous pursuit of differentiation and low cost. To summarize the Blue Ocean Strategy or “BOS,” all of our competitors are sharks, and we are competing for the same customer. You can resort to lowering your profitability or increase operational staffing to accommodate faster turn times. You can compare this competition between like companies to sharks who are out there biting each other. Pretty soon, we all compete right into a non-profitable product. One company will perform a transaction for a quarter of a point less, while one will do same-day closings ... all of those things take away from profitability within your company. You tend to follow the leader, so to speak, when it comes to defining a business-partner relationship. We thought that moving outside of this “bloody, shark infested ocean” and into “the blue ocean,” swimming away and doing something unique, would be the key to our success. The second book would be The Fred Factor by Mark Sanborn, a great book that defines customer service. If you can adopt a business model that works around the BOS and can provide customer service, similar to what is described in The Fred Factor, you are really guaranteed success.
Do you feel that brokers are more loyal these days than they were during the times of the industry boom? Brokers are much more loyal nowadays. From a competition standpoint, there is less out there. You can earn business, buy business or scare someone into doing business with you. Some of the larger aggregators employ the scare tactic, rather than earn business from a service standpoint. The fact that there is less competition is the number one reason contributing to the loyalty factor.
“No matter what you are, you have a home with GSF Funding and we are going to properly back your loan and provide the tools necessary to be successful in today’s industry.”
“Innovative Rural Financing since 1993” Lending in TX, NM, and OK 19
MONTANA MORTGAGE PROFESSIONAL MAGAZINE JUNE 2010
What specifically does GSF Funding do to implement a partnership strategy versus just “having brokers?” We continually take care of our business partners by giving them a hand up. Whether it is creating collateral pieces they can distribute to their referral sources, to developing hedging strategies that allow them to offer more aggressive pricing in a longer-term lock period. In a purchase transaction, you are typically dealing with a 35-40 day lock, and we develop hedging practices that allow them to fit more comfortably into that scenario. Our ratio of purchases to refis is extremely high. As a company, we do more purchases than refis. We’ve had a higher purchase concentration over refis by helping our business partners in developing their purchase money marketing strategies. I think that by doing more of a bulk style transaction, this allows the business partner the ability to spend more quality time processing the file and less time waiting for an underwriter to make a decision on the file. They know that when they deliver the file to us, they have guaranteed service they can expect. That all lends to a better customer, higher pullthrough ratio, thus contributing to our success and it takes out the environmental roller-coaster of highs and lows. For those looking to join a growing company through our professional branch opportunity, we adopt the philosophy that you can be in business for yourself … not by yourself.
1. Go to www.ruralhomeloan.com 2. Pick a low ﬁxed rate for your borrower 3. Enjoy an easy closing, and then relax!
Having worked at one of the country’s top wholesalers, how have you taken those experiences and business environment, and moved it over to the day-to-day operations of GSF Funding? I was always in the top five percent nationally from a production measure while working with my former employer. The successes that we had as a wholesale branch directly resulted from a customer service standpoint. Being a self-proclaimed “workaholic,” I felt the entire team shared the same dedication to success as I did. We built our company from the ground up, with customer service being paramount to everything else. If we could duplicate the service and had increased flexibility and maneuverability, success was inevitable. To be honest with you, the only thing I left behind was the challenge of making change when change was due. Whether it is environmental or economic, something always changes in the mortgage industry. The only thing consistent is change. As these issues came up, such as downpayment assistance going away, USDA capitalization issues, the 2010 Good Faith Estimate (GFE) ... those types of things that are radical changes to the industry and to be able make changes operationally on a dime and quickly disseminate the new policy or producer to our customer quickly.
To what do you attribute the success of GSF Funding? I find our success in beneficially melding with our business partners. We learned a lot from the successes of the large national aggregators, and offered a lot of the tools we have earned to our business partners, we liken our company to a speedboat, large aggregators are too big to adopt flexibility in policy, they are the ocean liner that is very slow to move and adapt to change. On a dime, we are able to create policies and procedures that aid in our success and to the success of the wholesaler market. For that, we feel that we earn some form of loyalty out of the broker industry.
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petent, ethical appraiser. Regardless of how many of these disciplinary actions were fraud-related, these figures further drive home the point that appraiser competence and ethics are vital.” For more information, visit www.lexisnexis.com or www.marisolutions.com.
Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting.
Phoenix Airport Marriott® 1101 North 44th Street Phoenix, Arizona 85008 USA 20
Rooms are $99 per night, and will be honored at the same rate if you wish to extend your stay.
MONTANA MORTGAGE PROFESSIONAL MAGAZINE
Hotel Toll-Free: 1-800-228-9290
Federal Reserve to consider changes to HMDA The Federal Reserve Board has announced that it will hold four public hearings, beginning in July, on potential revisions to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The act requires mortgage lenders to provide detailed annual reports of their mortgage lending activity to regulators and the public. Consumers, community and consumer organizations, mortgage lenders, and other interested parties will be invited to participate in the hearings. The hearings will serve three objectives: The Board will gather information to evaluate whether the 2002 revisions to Regulation C, which required lenders to report mortgage pricing data, helped provide useful and accurate information about the mortgage market; the hearings will provide information that will help the Board assess the need for additional data and other improvements; and the hearings will help identify emerging issues in the mortgage market that may warrant additional research. The hearings will take place at the Federal Reserve Bank of Atlanta on July 15, the Federal Reserve Bank of San Francisco on August 5, the Federal Reserve Bank of Chicago on Sept. 16, and the Federal Reserve Board in Washington, D.C. on Sept. 24. All hearings will include panel discussions by invited speakers. Other interested parties may deliver oral statements of five minutes or less during an open-mic question and answer period. Written statements of any length may be submitted for the record. For more information, visit www.federalreserve.gov.
munity organizations. The questions will also be published in a Federal Register notice requesting public comments, and information on the process for submitting comments will be included in that notice. “A well-functioning housing finance system is critical to the long term stability of the housing market,” said U.S. Department of the Treasury Secretary Tim Geithner. “Hearing from a wide variety of perspectives as we embark on this process is an important part of establishing a more stable and sound housing finance system for the American people.” The Obama Administration will seek input in two ways. First, the public will have the opportunity to submit written responses to the questions published in the Federal Register online at www.regulations.gov. Second, the Administration intends to hold a series of public forums across the country on housing finance reform. Together, these opportunities for input will give the public the chance to deepen the federal government’s understanding of the issues and to shape the policy response going forward. “This open process will help shape the future of our housing finance system,” said U.S. Housing & Urban Development (HUD) Secretary Shaun Donovan. “The Obama Administration is committed to engaging the public as we consider proposals for reforming the housing finance system in the context of our broader housing policy goals, and the best steps to get from where we are today to a stronger housing finance system.” This effort is both in keeping with this Administration’s commitment to openness and transparency and the President’s Open Government Initiative. This initiative represents a major change in the way federal agencies interact with the public by making agency operations and data more transparent and creating new ways for citizens to have an active voice in their government. For more information, visit www.regulations.gov.
Your turn Obama Administration seeking public input on housing reform
www.NAMB.org for details.
The Obama Administration has released questions for public comment on the future of the housing finance system, including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy. The questions have been designed to generate input from a wide variety of constituents, including market participants, industry groups, academic experts, and consumer and com-
National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of:
NMP News Flash column Phone #: (516) 409-5555 E-mail: email@example.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
heard on the street
For more information, visit www.lendersone.com or www.allregs.com. continued from page 10
example, the borrower and co-borrower can no longer e-sign simultaneously. Once one borrower completes and is confirmed for the e-signing process, the co-borrower(s) will then be able to start the next e-signing process. Before borrowers can view loan disclosures and documents, they must review an e-disclosure agreement. This ensures that the borrower consents to receiving certain disclosures in electronic format rather than in paper form. Borrowers are also required to review each page of Wells Fargo Funding’s disclosure package before they can e-sign and accept the terms of the documents. “Borrowers must click on a signature point at the bottom of each page before they can proceed to the next one, and if they try to skip a page, there are error prompts that inform the borrower that a signature or initial point was missed,” said Corr. “This helps ensure that borrowers review each and every page of the disclosure package.” For more information, visit www.elliemae.com.
Lenders One and AllRegs partner for compliance solutions
CMPS Institute and Mortgage Coach create Certified Mortgage Coach certification The Certified Mortgage Coach certification course was recently created as a joint venture between the CMPS Institute and Mortgage Coach to help loan originators stand out from their competition and make more effective sales presentations to clients, prospects, and referral partners. “This is the all-inclusive online training, testing, and software solution that the mortgage industry has been wait-
e h t e k a T Become part of GSF Mortgage’s Professional Branch Network
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BBecoming ecoming a GSF Pro-Branch Pro-BBranch grants access many gr ants yyou ou ac cess ttoo m any of mayy not the services services that that ma n be obtainable in yyour our ccurrent urrent environment. environment. GSF o eers ttotal otal support: suppport: PPayroll ayroll Accounting Accounting Compliance Compliance Marketing Marketing PProcessing rocessing Lead Lead Generation Generation State Artt Techno Technology State of the Ar Te ology Free Free Education Education & Licensing Licennsing Live Live SSecurities ecurities Pricing Pricing On On Sta Sta LLegal egal CCounsel ounnsel Mortgage approved GSF Mor tgage appr oved e for: FHA VVAA USDAA USD FFreddie reddie Mac FFannie annie Mae Seller Seller Servicer Serrvicer Jumbo Non-Conforming Non-Conform ming Reverse Mortgages Rev erse Mor tgagees 203k
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moree sta state AAdding dding mor te licensing lic ensing monthly. monthlyy.
(Absolutelyy NO fil (Absolutel file fi e fees, fe NO O splits)
licensed GSF is lic ensed in DE, DC, D IA, MA, MD,, MN, IL, IN, KS, KY, KY, M A, MD MO,, NC, ND ND,, NE, NH, PA PA, SD,, MO A, SD TTX, X, VVA, A, WI, WV
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Be in business for fo yyourself, ourrself, but not bbyy yyourself. ourself. JJoin o GSF Mortg oin Mortgage’s age’s Pr Professional ofess fe sional Branch Network! freedom stability… Network! k Enjoy oy fr eedom and sta bilitty… and reap reap the rewards! rewards!
Lenders One Mortgage Cooperative, a national alliance of independent mortgage bankers, correspondent lenders and suppliers of mortgage products and services, has announced a partnership with AllRegs, an information provider for the mortgage industry, as its newest preferred vendor. “Compliance training and education are a vital part to the success of any mortgage banker in this market,” said Scott Stern, chief executive officer of Lenders One. “Consistent modifications to state and federal legislation, as well as recurring new regulation, can threaten the profitability and the effectiveness of any lender if not proactively confronted. Teaming with AllRegs, our members have access to the comprehensive knowledge and preparedness tools they need to be well-informed and compliant with guidelines at any level.” AllRegs provides a searchable, online information resource of federal and state statutes, with analysis, commentary and how-to manuals. Lenders One members will benefit from AllRegs’ diverse compliance training programs and the ability to access a central repository for single and multifamily underwriting and insuring guidelines, as well as federal compliance laws and regulations. AllRegs Academy’s compliance training programs focus on issues such as the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), Home Mortgage Disclosure Act (HMDA), Federal Housing Administration (FHA) updates and other
federal topics regulations. Courses are delivered via instructor-led and selfstudy online learning courses, classroom programs, audio conferences, certifications and more. “We are very excited to partner with Lenders One and help its members meet their compliance, underwriting and training needs,” said Dan Thoms, senior vice president for AllRegs. “The companies comprising the Lenders One membership want to stay apprised of federal and state regulatory changes. AllRegs’ tools, services and resources support this mission-critical requirement in the industry.”
ing for,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. The new Certified Mortgage Coach program is the mortgage industry’s latest solution to help homeowners and buyers better evaluate their mortgage options and make smart financial choices. “Today’s consumer does not want to be sold; they want to be educated,” said Nicholas. CMPS Institute provides the training and testing, and Mortgage Coach provides the software and real-time market information to help mortgage professionals better educate their clients. “Our goal is to help homeowners
NATIONWIDE FHA LENDER
heard on the street
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and buyers create more wealth by integrating the mortgage decision into their financial plan,â€? said Dave Savage, chief executive officer of Mortgage Coach, a technology and information services provider for the mortgage industry. â€œAll originators seem to be selling the same products with the same guidelines, and the industry is rife with confusion in light of new regulations and turbulent market conditions,â€? said Nicholas. â€œCertified Mortgage Coach Graduates are equipped to help their clients cut through the confusion and make informed financial decisions. A mortgage professional who dedicates the time and effort to properly educate themselves is much more qualified, committed, and equipped to serve the complex needs of todayâ€™s homeowners and buyers.â€? â€œThe mortgage is most peopleâ€™s single largest debt, and their home is often their single largest asset,â€? said Savage. â€œA Certified Mortgage Coach is uniquely trained to indentify the challenges that consumers are facing, and clearly demonstrate solutions that motivate those consumers to take action.â€? For more information, visit www.cmpsinstitute.org or www.mortgagecoach.com.
HOPE LoanPort comes to terms with Bayview and Ocwen HOPE LoanPort, the Webbased housing counselor tool that streamlines submission of completed loan modification applications, has announced that Bayview Loan Servicing LLC and Ocwen Loan Servicing LLC have agreed to use its proprietary technology. The signing of Bayview and Ocwen moves HOPE LoanPort closer to its goal of having more than a dozen mortgage servicers using the Web portal by the end of 2010. The two companies join charter members American Home Mortgage Servicing Inc., Chase, GMAC, PNC Mortgage, Saxon Mortgage Services and SunTrust Mortgage Inc. The portal also has commitments from more than 100 counseling organizations across the country. â€œWe have been a member of HOPE NOW since the beginning and have been very active in borrower outreach,â€? said Jamie Holland, community relations manager of Ocwen. â€œWith the introduction of HOPE LoanPort into our arsenal, we will have another way to communicate with borrowers and counselors in order to reach decisions on loan modification documents.â€? â€œI have personally worked with both companies for several years and I am happy that they have given HOPE LoanPort their support,â€? said Larry Gilmore, chief executive officer of HOPE LoanPort. â€œWe truly believe that HOPE LoanPort is the next generation of effective loan modification solutions. We hope that other mortgage servicers
follow the example of Bayview, Ocwen and the six other member servicers in adopting the HOPE LoanPort technology to further their loan workout solution efforts.â€? For more information, visit www.hopenow.com.
Wells Fargo expands its RMBS platform and authorizes Encompass360 as technology partner Wells Fargo has announced that it has expanded its Residential MortgageBacked Securities (RMBS) platform. The RMBS group now provides a full suite of advisory, structuring, research, distribution and trading services to our residential origination and investing clients and to Wells Fargo Home Mortgage (WFHM), the countryâ€™s largest residential mortgage originator. The group has added a number of key hires to oversee the business. Mike Buttner has been appointed head of Residential Mortgage Backed Securities. A 19-year veteran of Wells Fargo, Buttner was most recently responsible for managing the hedging activities of WFHMâ€™s servicing rights and pipeline/warehouse assets. He reports jointly to Tim Mullins, head of fixed income trading and Julie Caperton, head of asset-backed finance and securitization, two divisions within the securities and investment group. Reporting to Buttner are Doug Lucas, head of residential mortgage trading, and Dash Robinson, head of residential mortgage finance structuring & lending. Lucas has more than 20 years of experience managing residential risk and most recently ran structured products trading in London for Bear Stearns, where his team set up a mortgage company in Europe. Robinson was previously responsible for the execution, surveillance and restructuring oversight of Wells Fargoâ€™s structured finance transactions. â€œWells Fargoâ€™s dominance in mortgage origination combined with strong investor demand for all types of residential product made this an obvious area to expand within Wells Fargo Securities,â€? said Mullins. â€œWe are excited to have the in-house capabilities in place to offer these services to our mortgage company in addition to our external originating and investing clients.â€? For more information, visit www.wellsfargo.com.
Byte names 10 new providers to BytePro and integration with LSSIâ€™s doc prep software Byte Software has added 10 new service providers to BytePro, its flagship loan origination softcontinued on page 24
• Multiple National Lenders • RESPA/Compliance Training
• Weekly Production Training • Multiple Warehouse Lines
"Every time we had an issue during our migration, it was immediately attended to and resolved in a most professional manner." - Chuck Murphy, Lewisville, TX
"Greg came out and helped me recruit, just like he said he would. My numbers are up by 35%." - Ed Kampf, Bellaire, TX
"We felt that the Frost/PRMI business model was the most competitive out there, as we planned to transition from brokering to banking. So far, everything has been, as advertised. Very strong training and branch support.” - Ronnie Ray, Greenwood Village, CO
"I've known Greg since 1992. After an exhaustive search, I found the Frost/PRMI business model to be the very best. I should easily double my income in 2010." - Robert Shaffer, Lancaster, CA
I've never worked for a lender with such a hard working closing department. I really appreciate all they do to help keep my business running smoothly. - Ryan Morrow, Palmdale, CA
"I've already recommended Frost Mortgage to a former colleague. He agrees with me that this business model works." - Dan Sampson, Jupiter, FL
A PRMI Company
If you would like to learn more about our BranchPartner business model, please inquire:
http://FrostMortgage.com/NMP Regulation and Licensing Department, Financial Institutions Division #621 • Branch License #00621
heard on the street
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ware solution. The new service providers offer a range of real estate settlement services, from credit reporting to appraisal services to flood determination. The new service providers in BytePro are: Accurate Financial Services (credit reporting), AppraiserLoft (appraisal valuation), Cal Coast Credit Reports (credit reporting), KCB Information Services (credit reporting), Credit Information Systems (credit reporting), Credit Data Corporation (credit reporting), Document Express (flood determination), LPS Flood (flood determination), StreetLinks National Appraisal Services (appraisal valuation) and 1 Source Data (credit reporting). The new partner interfaces were added using ByteLink, Byte Software’s partner program, which uses standardized Mortgage Industry Standards Maintenance Organization (MISMO) transactions to communicate information from BytePro to the service provider. The interfaces allows for twoway communication so that the completed documents, such as appraisal reports, are accessible directly from within BytePro. ByteLink also allows for instant deployment of newly developed interfaces to the BytePro user base, eliminating the need for the end user to manually update their software. Byte also announced a partnership with
Lender Support Systems Inc. (LSSI) to offer mortgage document preparation services. “This strategic alliance with Byte Software assists us in delivering on the promise of service-oriented architecture,” said Cary Burch, president and chief executive officer of LSSI. “The soon-to-be-released integration of our loan document preparation services in BytePro will provide seamless communication between our companies and full value-add for our shared clients.” LSSI offers its clients multiple solutions for mortgage closing documents and preliminary disclosures. All documents are compliant in all 50 states and the Virgin Islands. LSSI’s next generation for document preparation solution is termed “Docs3D.” It was developed with the latest technologies in ASP.NET and C# to create a robust, easy to manage Web-based application. Docs3D will seamlessly interface within BytePro by utilizing such standards as XML and MISMO. Once Docs3D is interfaced with BytePro, LSSI’s customers will have full access to compliant loan documents that can be completed 24 hours a day, seven days a week, and 365 days a year. The easy “one-click” access will simplify the process and benefit mutual customers. For more information, visit www.bytesoftware.com.
ServiceLink expands to accommodate growing loss mitigation operations
Valligent announces new appraisal consulting division
ServiceLink, a provider of origination and default services and Fidelity National Financial’s national lending platform, has announced the opening of one new office in Rancho Cucamonga, Calif. and the expansion of an existing operation in Buffalo, N.Y. to support their growing loss mitigation operations. Outfitted with ServiceLink’s leading technology and top-level talent from across the mortgage servicing industry, both locations will provide flexible, specialized loss mitigation services to ServiceLink’s lending clients. “ServiceLink’s new facilities in Buffalo and Rancho Cucamonga demonstrate ServiceLink’s commitment to expanding our loss mitigation services,” said Jeff Coury, ServiceLink president and chief executive officer. “This expansion has doubled our loss mitigation capacity and allows ServiceLink to focus on assisting its clients in managing their troubled assets as the market continues to stress the capacity of lenders and servicers.” ServiceLink also has existing loss mitigation operations in Kansas and Virginia that provide outsource loss mitigation services including Home Affordable Modification Program (HAMP) processing, HAFA, short sales, and deeds in lieu. For more information, visit www.servicelinkfnf.com.
Valligent, a provider of property valuation and risk management solutions, has launched a consulting division aimed at helping lenders develop strategies for providing accurate, compliant, and cost-effective valuation solutions. The new division will be headed up by Valligent Chief Executive Officer and Chief Valuation Strategist Jeremy McCarty, a valuation expert with extensive experience providing regulatory compliance, technical, and marketing advice in the fields of appraisals and appraisal management. McCarty is a Residential Certified Appraiser and holds an SRA designation from the Appraisal Institute. “Lenders today are looking for more comprehensive answers to their valuation needs, and they’re reaching out to companies like ours for help,” McCarty said. “Our new consulting practice is a direct response to this demand. Whether or not a lender chooses our company’s products, we can help create and implement collateral strategies that enable them to quickly choose the correct valuation solution for every property, every time. We can also help lenders take their existing collateral strategies one step further, protecting them against loan failures, noncompliance and wasted resources.” Valligent’s new consulting services are available for collateral policy and process improvement; identifying
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Exhibitors and Sponsors
SAVE THE DATE!
Join the 2010 NAMB/WEST Conference December 4-6, 2010 at the MGM Grand Las Vegas! Stay tuned for more information in July and visit www.NAMBWEST.com for updates.
Exhibitors will receive a complimentary ad in the December issue of the National Mortgage Professional
For more details on Exhibiting and Sponsorship, please contact Kinsley at 303-798-3664 or email@example.com
appropriate risk tolerance; collateral underwriting; fraud detection and prevention; automated valuation (AVM) product analysis, testing and implementation; vendor management; nonperforming loan evaluation; portfolio evaluation; and regulatory, HVCC and USPAP compliance. For a limited time, Valligent will provide initial off-site consultations with lenders and servicers, including a brief report of its findings, at no cost. For more information, visit www.valligent.com.
Mortgagebot forms referral alliance with MortgageFlex
FHA to accept DocuSign for real estate contracts nationwide DocuSign, an on-demand electronic signature solutions, has announced that e-signed third-party documents, including real estate contracts, are now
being accepted by the Federal Housing Administration (FHA). DocuSign spearheaded an industry-wide effort to move the FHA to formally recognize esigned third-party documents. The April 8, 2010-dated FHA Mortgagee Letter is the first in what is expected to be a series of responses to this initiative. With this policy statement from the nation’s largest mortgage insurer, real estate professionals can use DocuSign to get real estate contracts, addenda and other documents signed electronically, and their buyers can apply for FHA insurance with confidence. “We commend FHA’s action today. By clarifying its position on electronic signatures, the process of buying, sell-
ing and financing of homes across the country will be greatly improved,” said Ken Moyle, chief legal officer at DocuSign. “Buyers, sellers and agents can use DocuSign’s online process to eliminate the time, expense and environmental impact of printing, delivering and signing large stacks of paper documents, and mortgage lenders can take comfort in knowing that DocuSign’s e-signature process is designed for legal compliance in all 50 states and is fully evidenced by a comprehensive audit trail.” Real estate agents can quickly access the DocuSign e-signing service from any laptop with Internet access, drag continued on page 26
These days, not many mortgage companies are talking product. Naturally, REMN has FHA, 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 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. It’s time to get to know our people.
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Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third parties. Information is accurate as of date of printing and is subject to change without notice.
* Same-day decisions guaranteed if file is received by 11 a.m. EST.
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The difference is we care.
Mortgagebot LLC has announced a new referral alliance with MortgageFlex Systems Inc., a provider of loan origination software (LOS) systems to mortgage lenders nationwide. Under the terms of the agreement, MortgageFlex will recommend Mortgagebot’s integrated, multichannel mortgage origination platform to its clients and prospects as a preferred solution. “Mortgage lenders are increasingly looking for ways to increase lending volume and reduce costs all while delivering a better borrower experience,” said Dan Welbaum, chief marketing officer for Mortgagebot. “And they’re finding that our advanced mortgage point-of-sale solutions deliver those results. Our alliance with MortgageFlex gives their customers more convenient access to the advanced technology they need to grow their businesses in today’s competitive mortgage market.” “As an industry veteran, MortgageFlex has a unique business perspective,” said Craig Bechtle, executive vice president and chief operating officer for MortgageFlex. “We’ve seen many vendors come and go, so we choose our partners carefully. We’re confident that this alliance will benefit both of our organizations.” The new alliance gives MortgageFlex clients ready access to mortgage POS tools from Mortgagebot that can help them serve borrowers better, increase application volume, and maintain full regulatory compliance—which of are all mission-critical business requirements in today’s turbulent marketplace. In addition, MortgageFlex clients that license PowerSite have the option to further boost efficiency by implementing automated integration software, which enables PowerSite application data to be automatically transferred to the LoanQuest Residential Lending System—also known as LoanQuest.NET. “We consider our clients long-term partners,” said John McCrea, vice president, director of business development at MortgageFlex. “This alliance gives them room to grow and a way to extend their reach through a consumer-facing solution that requires minimal time and effort to set up and maintain. Our alliance with Mortgagebot helps us fulfill our clients’
expectations for flexible and comprehensive functionality. PowerSite is very userfriendly, and it can be tightly integrated with LoanQuest—which eliminates redundant data entry. Ultimately, PowerSite helps our clients position themselves to expand their market share.” For more information, visit www.mortgagebot.com or www.mortgageflex.com.
heard on the street
continued from page 25
and drop familiar yellow StickEtabs onto the contract and send the envelope. The recipient immediately receives an email notification that can be accessed through a computer or any Web-enabled mobile device, including Apple iPhone, RIM BlackBerry, Google Android, Windows Mobile, adopts an esignature and signs the document. Once completed, an e-mail notification is sent to all parties with a link to the final executed document. The result is a legally binding, fully ESIGN-compliant document supported by a comprehensive audit trail. As on-demand software-as-a-service (SaaS), DocuSign requires no additional software or hardware purchases and no downtime for training. For more information, visit www.docusign.com.
Retreat Capital implements AnswerMine’s analytic software for loss mitigation
Mortgage Professionals to Watch Luanne Cruse has joined Georgia Mortgage Professional Magazine, the Official Publication of the Georgia Association of Mortgage Professionals (GAMP) as a regional account executive. Rene F. Rodriguez has been named
Fannie Mae Revises Quality Control Requirements Fannie Mae has announced revisions to its Selling Guide for Lender Quality Control Standards1 by issuing an update on March 29, 2010 as part of its Loan Quality Initiative (LQI).2 The LQI identified policies, processes, and technological enhancements involved in originating mortgage loans to Fannie’s underwriting and eligibility standards, with the further goal of mitigating repurchase risk. One consequence of the LQI was a substantial revamping of Fannie’s quality control (QC) policies specified in Part D of the Selling Guide.3 The ostensible purposes of the revisions are primarily to update outdated policies and create more comprehensive audit findings.4 The new quality control requirements affect all lenders that deliver mortgage loans to Fannie Mae for purchase and therefore, by extension, virtually all residential mortgage originators that originate conventional mortgage loans.
Effective: July 1, 2010 Highlights of changes There are eight areas that have undergone change: 1. Lenders must have written procedures for approving third-party originators and management procedures for third-party originations (TPOs). 2. Revisions have been made to the QC process and the QC plan. 3. Revisions have been made to outsourcing the QC audit. 4. There is a new requirement for a pre-funding QC review. 5. Revision to the sampling methodology and the timing of selection and completion of the post-closing QC audit. 6. Revision to the post-closing review process.
7. Update to Fannie’s Mortgage Loan File Document Submission Requirements. continued on page 29
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8. New requirement pertaining to the QC audit process.
Mortgage Brokers and Loan Originators
Retreat Capital Management Group, a provider of loss mitigation and portfolio management products and other services for lenders, servicers, asset managers and investors, has deployed AnswerMine’s analytic software to power its predictive modeling services for mortgage lenders and servicers. By utilizing the company’s powerful predictive modeling service, lenders and servicers can proactively determine risk levels for mortgage loans and take decisive action to prevent delinquencies, defaults and foreclosures, rather than reactively responding to troubled loans after the loan is already at risk. “There’s been a huge shift in the way mortgages are evaluated—we’ve moved from a property-centric approach to focusing much more on the borrower, which is exactly why lenders need to use the appropriate analytics” said Stuart Cornew, managing director for AnswerMine. “Whether evaluating entire portfolios or individual loans, AnswerMine provides ‘bottom-up’
information that incorporates borrower data as well as property and economic data to more accurately predict loan performance.” Retreat Capital Management’s predictive modeling services were created for lenders and servicers that want to implement targeted mortgage restructuring, retention and originations. This service, which is fully configurable, integratable and flexible, offers improved service scoring and early warning indicators for mortgage valuation models, while ensuring that any chosen alternative solution is successful on a net present value basis. “One of the big problems in loss mitigation is that lenders and servicers have been relegated to a reactive, wait-andsee stance when it comes to delinquencies and foreclosures,” said Arvin Wijay, chief executive officer of Retreat Capital Management. “Accessing the risk level of mortgages gives lenders the power to determine the appropriate solution. This type of proactivity would make a huge impact on not only the number of defaults and foreclosures, but also the speed in which cases get handled.” For more information, visit www.retreatcapital.com.
Let’s take a brief look at these important requirements.
Outline of LQI requirements
SAVE THE DATE! Attend the 2010 NAMB/WEST Conference December 4-6, 2010 at the MGM Grand Las Vegas. Stay tuned for more information in July and visit www.NAMBWEST.com for updates.
1. Accountability for third-party originations5 Written procedures for the approval of third-party originators Review of specific documents (i.e., financial statements, licenses) Quarterly reviews of third-party-originated loans 2. QC process and plan6 Defines standards and establishes processes, as well as controls, for originations Provides a higher level of specificity 3. Outsourcing the QC audit7 Establish a process to review the QC auditor’s work and procedures Determine the QC auditor’s knowledge and competencies Codify policies and procedures of the auditor’s review methodologies continued on page 30
Entitle Direct releases new guide for comparison shopping Entitle Direct has created an informational guide to help consumers benefit from the new Good Faith Estimate (GFE). This is the first in a series of guides from the industry innovator to help demystify real estate financing and empower consumers to take control of the mortgage closing process. The new GFE, which went into effect on Jan. 1, 2010, encourages consumers to first shop and then compare fees from various lenders before choosing a mortgage. It helps consumers understand what services they can shop for, so they not only receive the lowest interest rate and best terms, but save significantly on their closing costs as well. “We published The Smart Consumer’s Guide because we want
borrowers to aggressively compare fees from different lenders and third-party service providers, including title insurance companies, before choosing a mortgage,” says Timothy Dwyer, chief executive officer of Entitle Direct Group and founder of Entitledirect.com. “Our guide will help consumers shop for a mortgage, and then compare, analyze and finalize. This important process will help borrowers avoid overpaying in closing costs what they might save with a lower interest rate.” The Smart Consumer’s Guide provides a step-by-step explanation of the new GFE, including clear definitions of the document’s financial jargon and layout. It walks readers through each section of the GFE, highlighting ways consumers can compare and lower their financing and closing costs. For more information, visit www.entitledirect.com.
Generation Mortgage offering new zero origination and servicing fee reverse product
Flagstar to offer Job Loss Protection product on low downpayment mortgages
Generation Mortgage Company has announced the introduction of a new fixed-rate reverse mortgage product with no origination fee and no servicing fee to provide senior clients more upfront loan proceeds at a lower cost. The new Home Equity Conversion Mortgage (HECM) loan offering is now available in Generation Mortgage’s retail and wholesale channels. “Generation Mortgage is pleased to support our senior community by ensuring we evolve as our industry evolves with improved product options,” said Scott Peters, president and chief executive officer of Generation Mortgage. “We are very happy to provide access to more equity to our senior clients with these new changes.” The new zero origination fee, zero servicing fee product applies to Generation Mortgage’s Federal Housing Administration (FHA)-insured HECM fixed-rate product and allows qualified borrowers age 62 and older to receive additional, upfront loan proceeds of up to $10,000 or more, depending on the equity in their home. For its wholesale channel, as of April 1, Generation Mortgage began offering its brokers and correspondents a fixed-rate HECM loan product option with no servicing fee and no origination fee. For more information, visit www.generationmortgage.com.
Flagstar Bank has announced a new low downpayment mortgage benefit designed to cover a homebuyer’s mortgage payments if he or she becomes involuntarily unemployed. Called “Job Loss Protection,” the benefit is available at no charge on new loans with mortgage insurance provided by Genworth Financial. Mortgage insurance is required on loans with downpayments of less than 20 percent. “We’re happy to work with Genworth to offer this enhancement to our low downpayment loans. It will protect what is often a person‘s single largest investment—their home,” said Bill Robinson, executive vice president of Flagstar’s home lending division. “The job loss insurance will provide peace of mind for buyers concerned about the employment situation in today’s volatile economy.” The program covers a borrower’s mortgage payment (principal, interest, taxes and insurance) of up to $2,000 a month for up to six months during their benefit period, with a maximum of three monthly payments per job loss occurrence in the event of involuntary unemployment. Benefits are paid directly to the mortgage company just continued on page 28
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The Wild Ride: Just the Beginning?
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Last month, we talked about the Fed pulling the plug and pondered what would happen with regard to the markets. Of course, predictions about the future are all but impossible in any market. However, we were quite comfortable letting everyone know to be prepared for a higher level of volatility. Despite this level of comfort, we were not prepared for what we will now dub “Scary Thursday.” Who could have foreseen the Dow plummeting 400 points in a matter of minutes? Who predicted that the 10-year Treasury would move from almost four percent to under 3.5 percent in just a few weeks? What is behind all this volatility? Well the European debt crisis certainly was the spark and focal point. But I would say that this goes deeper than that. There were additional factors that came into play: For one, we don’t think that it is an accident that the Fed has exited from the markets just before this wild ride began. It may be illogical to some that rates actually headed down after the Fed quit purchasing, however, the Fed’s actions had provided more stability in the markets. We should also note the fact that mortgage rates did not move down as quickly as Treasuries, widening the spread. Also, though the Treasuries have provided a flight to quality during this crisis, it is interesting to note that our debt levels are not so significantly below the levels of countries such as Greece. Could the markets be thinking not that the European crisis may stall our recovery, but that our debt could be next? Again, quite illogical thinking because of the flight to quality, but where else was the money going to go? Let us not forget that the stock market had rallied substantially in the past year. For many, stocks were due for a correction for quite some time. Actually, overdue for such a correction. We cannot really label stocks as a bubble because the highs reached this year are still substantially below where they were just a few years
ago. However, let us not forget that stocks were still up well over 50 percent from their bottom reached not long ago. What does our resident secondary expert, Eric Holloman, chief executive officer of RateLink, have to say about all of this? Eric’s insight on the “Wild Ride” and “Scary Thursday:”
“Expect more volatility as a residual effect from the fiscal crisis. We will not recover in a straight line and the curves are potentially steep.”
If the markets don’t have our economy to worry about, then those who are perpetual “sky is falling” characters must find another focus. Does that mean we are out of the woods yet? It is a stretch to argue that the markets’ wild ride is really a vote of confidence with regard to our economy. I will go back to what I said at the beginning of this column. Expect more volatility as a residual effect from the fiscal crisis. We will not recover in a straight line and the curves are potentially steep. Our own debt levels are a burden we will carry for a long time. It may take two to four years for the shadow inventory of homes to go away, but it will take many, many more years for the shadow of the debt we have run up to disappear. Not that I am not optimistic. A stronger economy will cause tax receipts to go up and will also cause the need for stimulus to go away. But we have several deep holes to dig out from. They are so deep that they are best described as huge craters.
new to market
Another word of caution … consider the fact that our economic recovery was forcing rates and oil prices up before the markets became fixated on the European Debt Crisis. That means we are subject to big swings in the opposite direction if and when the panic quiets down. These moods can turn so fast that it is likely we may see such a swing or two back between the time I finish this column and you read this article. It will interesting to see if I get feedback (firstname.lastname@example.org) on this issue? Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at www.webinars.originationpro.com. If you would like to stay ahead of what is happening in the markets, visit ratelink.originationpro.com for a free trial or e-mail email@example.com.
continued from page 27
as if the borrower had made the payment. The borrower vesting period is 60 days after closing, and payments begin 30 days from the date of involuntary unemployment. Coverage stays in place for up to three years after the loan closes and the mortgage insurance remains in place. Most unemployment events covered by state unemployment benefits are covered under the new Flagstar Bank program. Seasonal, temporary and voluntary jobs or self-employment are not covered, however. For more information, visit www.flagstar.com.
As we have been saying for months, the situation in Europe is not going away any time soon. Greece is just the beginning, as Spain, Portugal and Ireland are also under pressure and may be facing defaults as well. Of interest is the size of the economies in question, Spain is much larger than Greece. If you take a look at all the turmoil surrounding both the dollar and interest rates in the United States Ellie Mae launches on the Greek crisis, a larger economy new Encompass such as Spain could cause the volatility Compliance Service Ellie Mae has seen in late April and early May look announced tame. The real concern here is how the Encompass quickly the news affects rates. A loan Compliance officer must let borrowers know the potential for volatility is VERY HIGH and Service, a comprehensive compliance service that provides automatic complitake steps to protect themselves. ance checks for each and every mortYes, this all sounds scary, but we also gage in an originator’s pipeline, think there is good news to be found throughout the entire mortgage cycle, here. If the focus is Europe, it means via the user’s Encompass360 system. By that the focus has been taken away creating the Encompass Compliance from our economy. Could it be that the Service, Ellie Mae is moving forward markets are now satisfied as to where with its initiative to provide users of the recovery is headed? They seemed to Encompass360 with an integrated set of be more concerned that Europe could capabilities aimed at helping promote derail our recovery, as opposed to the total loan quality. The Encompass Compliance Service real estate marketplace. Indeed, in the past 30 days, we have had good news is powered by an automatic compliance with regard to the first quarter econom- engine from Mavent, which was ic growth, jobs growth, factory orders, acquired by Ellie Mae in December inflation, personal spending and more. 2009. With the integration of Mavent’s The first economic report of May technology into Encompass360, users showed jobs being added at the highest get the convenience and security of rate in four years in April. The employ- seamless, automated compliance ment rate increased because more checks from point of sale through workers “returned” to the workforce investor delivery. The services can be and even that is considered a good sign. accessed via any Encompass360 system,
and can run at preset points in the cycle or configured to accommodate other loan stages, according to each company’s needs. “Automated compliance checks are becoming a standard part of the mortgage origination process—a progression that’s been underscored by the regulators’ use of compliance technologies in their review and audit processes,” said Jonathan Corr, chief strategy officer for Ellie Mae. “Ellie Mae supports the regulators in their choice of compliance solutions. In fact, Encompass360 will be able to easily export files in formats that are compatible with the compliance technologies used by the regulators. I’m sure our users will find that Ellie Mae’s originator-specific compliance solutions are just as easy, if not easier, for originators to use as those used by the regulators.” The Encompass Compliance Service is Ellie Mae’s next move in its strategy to expand the capabilities of Encompass360. “Ellie Mae is focused on total loan quality, and that’s something that does not occur in a vacuum,” said Corr. “There are capabilities outside of traditional mortgage origination system functions that are integral to originating high quality loans. The more of those capabilities we can automate throughout the mortgage cycle, the easier it will be for our customers to be transacting high integrity loans.” For more information, visit www.elliemae.com.
New Xerox services to assist in paperless transition Xerox Corporation is making the mortgage industry’s transition to paperless easier than ever with new on demand services that help industry participants overcontinued on page 31
heard on the street
named Moshe Majeski as the firm’s managing director, and Marty Lanigan as senior managing director of origination and strategic initiatives.
continued from page 26
new chief executive officer of MortgageDashboard.
Chuck Wells director of compliance and Greg Vincent as account executive, sales and marketing.
Rene F. Rodriguez
Iwayloan LP has named Jonathan W. Fowler as its new director of national production.
Jonathan W. Fowler
Chicago Bancorp Direct, the directto-consumer lending platform for Chicago Bancorp, has named Jeffrey Walker as its new president. The StoneHill Group has named
Phil Deol has joined Paramount Residential Mortgage Group (PRMG) as chief strategy officer. Adolfo Carrion has been named regional director for New York and New Jersey by the U.S. Department of Housing & Urban Development (HUD). Meridian Capital Group LLC has
The Mortgage Bankers Association (MBA) has promoted Josh Denney, AMP to the position of vice president of public policy and has named Gail Cardwell senior vice president of commercial/multifamily. Mike Landon has joined the Dallas loan origination office of Berkadia Commercial Mortgage as a senior vice president. Reverse Mortgage Solutions has announced the hiring of Marc Helm as president, Michael Clendennen as chief financial officer and Michael Kent as senior vice president of portfolio retention. Bruce Van Fleet has been named senior vice president of real estate sales for PHH Mortgage Corporation. Loan Value Group LLC has named Craig Lipsay as managing partner. Steve Bailey has joined Private
National Mortgage Acceptance Company (PennyMac) as chief servicing officer. GMAC has named Jeffrey Lemieux senior vice president of fee-based servicing. Equator has announced the hiring of John Vella as chief operating officer. Expert Group Inc. has announced the addition of five new loan officers: Jorge De Los Rios, Jose Hernandez, Martha Irias, Parnell Peace and Vendora McPherson. Chase has named three new senior lending managers for retail mortgage, including Bernadette Catanzano for the Long Island, N.Y. region; Kerry Dawson for the New York City/Manhattan area; and Darin Lugat for the New Jersey region.
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management should reduce to writing the appropriate revisions affecting Fannie loan originations, including:
regulatory compliance outlook
continued from page 26
4. Pre-funding QC reviews8 Pre-funding reviews established Provide senior management with findings Determine appropriate selection methods Review to provide information to detect and prevent: Misrepresentation Inaccurate data Inadequate documentation 5. Post-closing QC timing and loan sampling9 Selections must be made within 30 days of closing Reviews completed within 60 days Notification to Fannie if QC is not done within 30 day cycle Statistical sampling now available, versus 10 random sampling 6. Post-closing QC review process and data integrity10 Owner occupancy verification Red Flags from Desktop Underwriter or other sources 7. Mortgage loan file document Submission Requirements11 The 2007 Selling Guide form listing the document requirements for submitting loan files for QC auditing is reactivated 8. QC reviews and audit review of the QC process12 Within 30 days after the review, findings must be reported to senior management QC process must ensure that QC audit â€™s procedures are followed and that assessments, conclusions, and findings are consistent and accurately recorded Management responses and corrective actions must be documented and implemented
Compliance Considerations 30
Ratifying written procedures governing the approval of third-party originators, which should include, at a minimum, an annual review of their financial statements, current licenses, rĂŠsumĂŠs of principal officers, background checks, and the TPOâ€™s quality control procedures. Precise, clearly defined procedures for monitoring loan quality through quality control auditing. Written policies and that document the loan selection process, the verification of data, and the reporting process with respect to pre-funding quality control. Affirming senior managementâ€™s responsibility to ensure that the quality control auditor is meeting all requirements as set forth by FNMA by reviewing all findings reported by the auditor and at least annually reviewing the auditorâ€™s Operating Procedures. Affirming that loans selected for audit: (1) will be made within 30 days of closing; (2) will be completed by the quality control auditor within 60 days of the selection; and (3) will be reported to senior management in the quality control findings within 30 days after the completion of the audit. Re-verification in quality control of the borrowerâ€™s credit history by obtaining a new in-file credit report for all loans selected for audit, including manually underwritten loans and loans underwritten through DU or any other automated underwriting systems. If a borrowerâ€™s credit history was evaluated by using a nontraditional credit process, the quality control auditor should re-verify a nontraditional mortgage credit report, or written references from creditors, for each of the credit references on the report and each credit reference. Enumerating Red Flags and incorporating them into the auditorâ€™s process documents and quality control audit procedures. Affirming that all loans selected for a quality control audit will be checked to ensure the execution of all loan origination documentation, information, and verifications. Recite particularly all forms, disclosures, and procedures relating thereto, as well as specifically state the compliance review procedures for any federal or state laws subject to quality control audit.
Prompt action The revisions will require mortgage loan originators to change their quality control plans. The substantial rewriting of Part D of the Selling Guide affects several areas of the Loan Quality Initiative, including pre-funding, post-closing, sampling
Given the above-outlined updates and requirements to QC, there are certain measures that should be reviewed in the quality control plan and, where required,
continued on page 33
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weâ€™re committed to brokers! Markets may be volatile, but thereâ€™s one thing you can always count on, the total commitment of our Mortgage Team. Loyalty, continuity of service and our dedication to protecting the integrity of our relationships are just a few of the things that set us apart. Ridgewood understands the needs of its communities and develops speciďŹ c product beneďŹ ts to meet those needs.
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Call Bijan Farassat at 917-731-4870 or email email@example.com
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most recent legislative and regulatory changes. For more information, visit www.mrgdocs.com.
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come the hurdles of eMortgage adoption by requiring little set up and upfront investment. Xerox Mortgage Services’ eVault is a virtual repository that directly connects to the Mortgage Electronic Registration System (MERS) eRegistry system, giving loan participants instant access to information related to the status of an eMortgage. EVault users have the ability to securely store and manage electronic promissory notes (eNotes) for funding, postclosing, servicing and custodial purposes. The MERS integration also allows loan stakeholders to verify the authenticity of the eNotes, resulting in secure and legally enforceable transactions. Xerox currently stores more than 35,000 eNotes in its eVault, making it one of the largest eVaults in the industry. The eVault leverages industry standards and platforms, including the Mortgage Industry Maintenance Standards Organization (MISMO) and the MERS eRegistry, making the system agnostic to document provider or closing platform. In addition, the eVault has undergone integration testing with Fannie Mae’s eMortgage Delivery system, offering Fannie Mae sellers a streamlined approach to delivering eMortgages. “By introducing the eVault, with established connectivity to MERS, we’re accelerating the move to eMortgages and delivering the mortgage industry access to the technology it needs without a major capital investment,” said Greg Smith, vice president, Xerox Mortgage Services. For more information, visit www.xeroxxms.com.
MRG to offer guaranteed compliant reverse mortgage documentation
ISGN and EquityRock partner on loss mitigation product ISGN Corporation, a provider of mortgage services and technology products, has partnered with EquityRock, a residential real estate equity sharing company, to create RESET, a unique loss mitigation solution that helps lenders reduce losses from properties in imminent danger of foreclosure, while also keeping the borrower in the property. The
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MRG Document Technologies (MRG), a provider of mortgage technologies to banks, credit unions and other lenders, has announced that it now offers reverse mortgage documents in compliance with federal and state regulations for all 50 states. Recent concern regarding the potential for predatory lending within the reverse mortgage market has led many states to adopt new laws and regulations governing reverse lending. The Federal Housing Administration (FHA) has also responded to demands for increased consumer protection by tightening up its reverse lending requirements. MRG’s mortgage documents are designed to carry the compliance burden associated with these consumer protections. “With the Baby Boomers rapidly approaching retirement age, we expect to see an increase in reverse mortgage lending,” said Marsha Williams, an attorney at MRG. “As both federal and state regulations governing reverse mortgages continue to evolve, lenders must ensure that their documentation
is fully compliant with all changes. MRG’s staff of attorneys constantly monitors the regulatory landscape and automatically updates the forms, providing our clients full compliance with reverse mortgage laws and regulations now and in the future.” MRG offers a browser-based system for the preparation and delivery of compliant document packages, electronic disclosures, loan modifications and other services for mortgage lenders, banks and credit unions nationwide. MRG guarantees that its products are in compliance with the
solution provides a viable alternative to outright principal forgiveness, and offers borrowers a way to erase negative equity. RESET (Real Estate Shared Equity Transaction) gives a borrower who is qualified for a loan modification a principal reduction in exchange for a share in equity with their lender. With RESET, in addition to modifying or refinancing the borrower’s mortgage, the lender writes down the borrower’s principal balance so that the borrower no longer owes more than the property is worth, therefore ensuring they have equity in their property. As part of the transaction, the lender will gain a stake in any
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future appreciation should the property be sold or refinanced. When the transaction is complete, the borrower gets to stay in the home and keeps a monetary stake in the property. As is typical in a corporate debt restructuring, the essential feature of the RESET modification is a fair, debt-for-equity exchange that benefits both the lender and the homeowner. â€œRESET provides lenders and borrowers with a much needed win-win solution to negative equity,â€? said Niraj Patel, group president of ISGN. â€œBorrowers get to stay in their homes
and have pride of ownership. And lenders have an alternative to the losses associated with short sales and foreclosuresâ€”they finally have a way to recoup at least some of the deficit that results from addressing the seriously delinquent or underwater loans in their portfolios.â€? RESET was created by combining ISGNâ€™s automated NPV (net present value) technology, call center capabilities, and loan modification processing centers with EquityRockâ€™s equity sharing product technologies. The result is a turnkey, innovative set of solutions that
keep homeowners with troubled loans in their homes, while also maximizing value to the lender. â€œRESET is a natural evolution of a technology we developed, which provided the first introduction of pure real estate equity as an investable asset class to institutional investors in the United States,â€? said James Riccitelli, cochief executive officer of EquityRock. â€œRESET supports public policy, as it is focused on permanent loan modifications and home retention, whereas REO and short sale result in home abandonment. We believe the majority of underwater mortgages that are fixed with RESET will stay fixed.â€? For more information, visit www.ISGN.com.
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Wolters Kluwer releases StateLink tool for compliance Wolters Kluwer Financial Services has added new functionality to its StateLink tool to help mortgage lenders prepare to comply with pending state and federal regulatory changes. StateLink, which provides actionable information on enacted and pending legislation, will now offer lenders additional clarity about legislative changes before they take effect. A Web-based compliance knowledge base, StateLink monitors regulatory requirements surrounding first mortgages and closed-end second mortgages, such as those tied to disclosures, fees and recordation. It offers continuously updated information for all 51 U.S. jurisdictions and now also provides text highlights to emphasize upcoming regulatory revisions. StateLink reported 53 regulatory updates in 28 states through March. Mortgage lenders receive e-mail alerts from StateLink about upcoming rule changes in the states where they do business. This can help them adjust their compliance policies and procedures before new requirements take effect. In addition, StateLink enables lenders to see how regulatory changes will affect their mortgage documents. StateLink provides links to sample versions of Wolters Kluwer Financial Servicesâ€™ electronic VMP Mortgage Solutions documents to illustrate the changes that will be made. Built upon more than 40 years of industry experience and expertise, VMP Mortgage Solutions forms are regularly updated to reflect regulatory revisions. â€œFinancial institutions are working to address increasingly complex and rapidly changing regulatory challenges with far fewer resources and shorter turn times than in the past,â€? said Jason Marx, vice president and general manager of mortgage for Wolters Kluwer Financial Services. â€œAs a comprehensive electronic resource on current and pending legislation, StateLink helps lenders plan for and meet regulatory requirements and manage their compliance research more effectively.â€? For more information, visit www.wolterskluwerfs.com/statelink.
Prudential Mortgage Capital launches program for multifamily properties Prudential M o r t g a g e Capital Company has launched the Agency Gateway program, a new shortterm loan program for multifamily property owners seeking to refinance or acquire properties that do not currently qualify for a Fannie Mae or Freddie Mac permanent loan. Under this new program, the company will target loans of $5 to $25 million secured by fullyconstructed or renovated multifamily continued on page 41
regulatory compliance outlook
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methodologies, QC reporting and outsourcing, timing, TPO reviews, document requirement forms, and other specific, auditing aspects of mortgage quality control. Review and implementation of Fannie Mae’s new quality control policies and procedures, along with updating quality control plans, must be arranged now and ratified by senior management.
Submit your questions … Do you have a regulatory compliance issue that you’d like to see addressed in the Regulatory Compliance Outlook Column? If so, e-mail your issue or concern to Jonathan Foxx at email@example.com. Jonathan Foxx, former chief compliance officer for two of the country’s top publiclytraded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at firstname.lastname@example.org.
Footnotes 1—Fannie Mae, Announcement SEL-2010-03, “Selling Guide Updates for Lender Quality Control Standards,” 03/29/10. 2—Fannie Mae, Lender Letter LL-2010-03, Lender Letter, “An Introduction to Fannie Mae’s Loan Quality Initiative,” 02/26/10. 3—Selling Guide, Part D, Ensuring Quality Control. 4—A copy of Fannie’s Announcement SEL-2010-03 may be obtained from my firm’s Fannie Mae section in our Web site Library at www.lenderscompliancegroup.com or Fannie’s Single Family Guide’s 2010 Lender Announcements and Letters section of www.efanniemae.com. 5—Selling Guide A3-3-01: Outsourcing of Mortgage Processing and Third-Party Originations; D1-1-02: Lender QC Process. 6—Selling Guide D1-1-02: Lender QC Process.
7—Selling Guide D1-1-03: Lender QC Staff and Outsourcing of the QC Process. 8—Selling Guide D1-2-01: General Information on Lender Prefunding QC Review Process. 9—Selling Guide D1-3-02: Lender Mortgage Selection Process for Post-Closing QC Mortgage Reviews.
11—D2-1-02: Fannie Mae QC File Request and Submission Requirements; E-2-07: Post-Closing Mortgage Loan File Documentation. 12—Selling Guide D1-3-08: Lender Post-QC Review Reporting, Record Retention, and Audit.
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Lykken on Lending is a weekly 60-minute show hosted by mortgage veteran of 37 yrs, David Lykken, along with special guest Alice Alvey & Joe Farr as well as featured special guests. Each week we provide our listeners with up-to-the-minute information of what is happening in mortgage and housing industry.
10 Selling Guide D1-3-03: Lender Post-Closing QC Review of Underwriting Documents; D1-3-04: Lender Post-Closing QC Review of Data Integrity; D1-3-07: Lender Post-Closing QC Review of Closing Documents.
Successful Seminar Marketing Through Social Media By Gibran Nicholas
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One of the best ways to use social media is placed in both the “Local” and “Realtor” to add value to your target audience in a categories. LinkedIn also allows you to filclassy, non-threatening way. Endless status ter your contacts by geographic location. updates about miniscule details of your life or sending out mass invites to non-first- Step 2: Pick a hot topic that is importime homebuyers about your first-time tant to your target audience homebuyer workshops is not classy. In fact, Assume that you want to earn more referit can be annoying. Your rals from financial advisors. social media contacts will Your target referral is somequickly tune you out and one with credit scores over “hide” your status 700 and a 50 percent LTV. updates—effectively cutWhat are the issues that are ting off your ability to comimportant to financial advimunicate important messors right now? What are sages that may be relevant the strategies that are to them. Remember the important to their clients story of the man who cried with credit scores over 700 “wolf” too many times? and a 50 percent LTV on On the other hand, their home mortgage? there are tasteful ways to One hot topic that a lot harness the power of of financial advisors could “Oftentimes, trade social media to market use some help with right associations like your events and services. now is Roth IRA conversion CPA/financial planner groups or Realtor opportunities. You see, Step 1: Establish your there are some unique tax groups have their target audience benefits this year (2010) for own Facebook ‘Fan One of the greatest tools high net worth clients to of social media is the Pages’ or group pages convert a lot of their retireon various social ability to group your conment savings into Roth IRAs media sites.” tacts and friends into cat(the limits on conversions egories. For example, you are lifted in 2010). Most could create groups for your Facebook people aren’t aware of these opportunifriends such as: ties. The exciting thing is that low mortgage rates present a unique opportunity Family for you to team up with financial advisors Friends in order to help their clients use a mort Financial advisors gage today to pay the taxes on the conver Realtors sion. This will save the clients tens of thou Business associates sands of dollars (if not hundreds of thou Local sands of dollars) when compared with not converting and paying hefty taxes later For example, assume you want to con- when they need retirement income. duct a workshop for Realtors. You could For example, assume a client in a 25 send an event invite to your Facebook percent tax bracket has a retirement friends in the “Realtor” category. If you account worth $200,000. This is down want to conduct a client appreciation from a peak of $300,000 when the marevent or networking mixer for all your ket was higher. If they convert these contacts, you could send out an invitation funds into a Roth IRA in 2010, they will to all your “Local” Facebook friends. You be subject to approximately $50,000 in can place your friends in more than one taxes. They can pay half the taxes on category. For example, all the Realtors their 2010 tax returns, and half the who are local to your marketplace can be taxes on their 2011 tax returns. You can
bump up their mortgage by $50,000 in order to pay the tax bill. For example, if their current mortgage is $200,000, you could refinance it into a $250,000 mortgage and pull $50,000 of cash out to pay the taxes. This way, they will have the full $200,000 from the conversion left in their new Roth IRA. When the financial market recovers and the retirement account grows back to $300,000, the clients can withdraw the entire amount without paying a dime’s worth of taxes! In this example, you were able to help the client save literally over $25,000 in taxes, plus the opportunity cost of $50,000 that they were able to reinvest due to your strategy of using a mortgage to pay today’s tax bill on the conversion. The bigger the retirement account, the bigger the savings from the conversion (and the bigger mortgage balance needed to pay the taxes today). In other words, clients with higher balance retirement accounts save the most money. And what types of clients have high balances in their retirement accounts? Clients who are likely to have credit scores over 700 and a 50 percent LTV on their home mortgage! In short, this presents a tremendous opportunity in 2010 to conduct a joint workshop with a financial advisor who is knowledgeable in this area for everyone who has a retirement account. You could invite your social media contacts and the financial advisor could invite their contacts. Step 3: Develop an effective marketing strategy You could consider inviting the media (newspapers, radio, TV) and splitting the costs of the event if you are conducting an event with a referral partner—such as a joint workshop with a financial advisor for people with retirement accounts (as outlined above) or a first-time homebuyer workshop with a Realtor. If you are conducting a workshop for potential referral partners, such as a seminar for financial advisors or a seminar for Realtors, you could collect everyone’s business card at the event and then you could add these individuals as social media contacts. You could also team up with your local trade associations and have them post a link to the event on their Web sites and social media pages. Oftentimes, trade associations like CPA/financial planner groups
or Realtor groups have their own Facebook “Fan Pages” or group pages on various social media sites. It’s a smart idea to tap into these resources when available. A few successful people I know frequently conduct client appreciation events at unique locations across town—such as museums and local hot spots. Part of the event is networking and fun (wine and cheese tasting, for example) and part of the event is a short market update (45 min. discussion or so) on topics of interest to clients and the target audience. You could team up with referral partners such as CPAs, financial advisors and Realtors, and organize events like this to generate some more business for both you and the referral partner. You could also get local establishments to sponsor or support the event (such as a wine distributor supplying the wine for the wine tasting). Your commission on one mortgage origination should more than cover your costs. Step 4: Implement! It’s one thing to read articles like this and say, “Wow that’s a good idea.” It’s another thing to actually take some action and make it happen. If you don’t take any action, you won’t make any money. CMPS certification equips you with unique knowledge, training, tools, PowerPoint slides and marketing resources to help you implement these ideas and more to make your events a smashing success! Gibran Nicholas is the founder and chairman of the CMPS Institute, which administers the Certified Mortgage Planning Specialist (CMPS) designation. The CMPS Institute has enrolled more than 5,500 members since its founding in 2005. Gibran is also the chairman of Published Daily, a customizable online magazine, newsletter and marketing service that helps professionals transform their clients and prospects into a referral-generating sales force. He may be reached at (888) 608-9800, ext. 101 or e-mail email@example.com. Visit author Gibran Nicholas’s blog at http://gibrannicholas.com where he shares his insights on economics, real estate and financial issues, including the current mortgage and credit crises.
A View From the C-Suite Social Media … “So Show Me De Money!” By David Lykken
Okay, let’s face it, more and more of us have become addicted to one or more social media Web sites than we care to admit. Social media sites have gone way beyond something of a fad or a passing fancy. I believe it represents the biggest shift since the industrial revolution … seriously! There’s real tangible value to social media Web sites and it is time that you get on board with this train before it leaves the station. Our industry hasn’t been known as the “early adopters” of technology … far from it. But if you will invest the time reading this article and doing some research on the Internet, you will discover an immense number of people are already participating in social media Web sites … it is astounding, and the numbers are increasing exponentially. As a result, an increasing number of mortgage companies are waking up and beginning to incorporate social media plans into their core business strategies. Why? Because it is the future! Not yet convinced, consider the following two dozen facts:
16. 17. 18.
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If you send me an old fashion passé e-mail, I’ll be happy to provide you the source for each of the above statistics. The above statistics tell the story, social media isn’t a fad, and it’s a fundamental shift in the way we communicate. It may make the difference in your business expanding or contracting, and as the old saying goes, “Adapt or die!” Consider this innovative approach selling airline tickets at a time when the airline industry struggling for survival. Last year, United Airlines found a new way to use Twitter to reward customers and fill empty seats. In May, the
1. By 2010, Generation Y will outnumber Baby Boomers … 96 percent of them have joined a social network. 2. Social media has overtaken porn as the number one activity on the Web. 3. One out of eight couples married in the U.S. last year met via social media. 4. Years to reach 50 millions users: Radio (38 years), TV (13 years), Internet (four years), iPod (three years). Facebook added 100 million users in less than nine months. iPhone applications hit one billion in nine months. 5. If Facebook were a country, it would be the world’s fourth largest between the United States and Indonesia (note that Facebook is now creeping up, having recently announced 300 million users. 6. A 2009 U.S. Department of Education study revealed that, on average, online students outperformed those receiving face-to-face instruction. 7. One in six higher education students are enrolled in online curriculum. 8. The percentage of companies using LinkedIn as a primary tool to find employees—80 percent. 9. The fastest-growing segment on Facebook is 55-65 year-old females. 10. Generation Y and Generation Z consider e-mail passé. In 2009,
Boston College stopped distributing email addresses to incoming freshmen. The number two largest search engine in the world is YouTube. Wikipedia has more than 13 million articles. Some studies show it’s more accurate than the Encyclopedia Britannica and 78 percent of these articles are non-English. There are more than 200 million active blogs. Because of the speed in which social media enables communication, word of mouth now becomes world of mouth. Thirty-four percent of bloggers post opinions about products and brands. Seventy-eight percent of consumers trust peer recommendations. Only 14 percent of consumers trust advertisements. Only 18 percent of traditional TV campaigns generate a positive return-on-investment (ROI). Ninety percent of people that can TiVo ads do so. Twenty-four of the 25 largest newspapers are experiencing record declines in circulation because we no longer search for the news, the news finds us. In the near future, we will no longer search for products and services they will find us via social media. More than 1.5 million pieces of content (Web links, news stories, blog posts, notes, photos, etc.) are shared on Facebook on a daily basis. Successful companies in social media act more like Dale Carnegie and less like David Ogilvy … listening first, selling second. Successful companies in social media act more like aggregators and content providers than traditional advertisers.
Chicago-based airline began offering a LinkedIn has been quietly refined and limited number of Twitter-exclusive shaped into a very impressive platform. fare deals, or “t-wares,” to domestic and international destinations. The last- How to use LinkedIn minute specials are sent out once or 1. LinkedIn Groups twice a week and typically expire within A “Group” can be established around one or two hours. United said that most almost any topic related to your business, but keep in mind, you want to sell out in seconds! In an interview with a United attract “members” to your group to make Airlines executive, they said that, “We sure your “group” is centered on a comwant to give our followers something pelling topic that will draw members. Begin adding discussions special that no one else and news items to make can get,” while allowing sure there is always worththe airline to fill seats while content available to that might otherwise go those who have or interestunoccupied. ed in joining. At some Harnessing social media point, based upon the tools can give a huge boost compelling nature of the to your business by connectgroup, your group will just ing with potential customers grow and grow on it’s own. in new ways. Also, it will help increase your mortgage 2. LinkedIn Q&A company’s brand recogniOnce you start getting tion which has become connected to people (I standard operating proce“There’s a saying have more than 1,000 dure in Corporate America. that (in the world of LinkedIn connections), More than 60 percent of technology) if you’re you can start polling Fortune 1,000 companies standing still, you’re them to get all kinds of with a Web site will connect actually moving valuable information. to or host some form of backwards.” Just don’t go overboard online community to build on creating a long list of customer relationships, according to Gartner Inc., a Connecticut- questions. It is better to just write one based information technology research carefully worded question. You will get company. There’s a saying that (in the world a far greater number of respondents. of technology) if you’re standing still, you’re 3. Sharing Web content via LinkedIn actually moving backwards. The three social media tools I am going You can share content from your Web to recommend you consider using imme- site via LinkedIn. It is a way to draw diately are LinkedIn, Facebook and people to your site, as well as a way to Twitter. Whether you are an individual increase your ranking in many leading working as a loan originator, a small mort- search engines. gage company or a large financial institution, my recommendation is for you to 4. Advertising on LinkedIn start creating “your community” via these In a sense, simply using LinkedIn in the ways I’ve described above already prothree social networking platforms. LinkedIn is, in my opinion, the most vides some free advertising, but you important business-oriented social net- can also set up paid, targeted advertiswork on the web. While Facebook and continued on page 36 Twitter have been more in the limelight,
ing on LinkedIn. This allows you to target your audience by various means.
How to use Facebook 1. Manage your profile First and foremost, fill out your profile completely to earn trust. Set up a business and a personal profile and use common sense in what you have in your business profile. Being “personable” is different than being too “personal.” Create lists, such as “Work,” “Family” and “Limited Profile” for finer-grained control over your profile privacy. It goes a long way to connect with people when you post professional or business casual photos of yourself. It reinforces “your brand” (you)! Depending on the type of photos you post, you may want to consider limiting your business contacts seeing your personal photos.
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2. Connect and share with others Obtain a Facebook vanity URL so that people can find you easily. Add your Facebook URL to your e-mail signature and any marketing collateral (business cards, etc.) so prospects can learn more about you. Post business updates on your Facebook Wall. Focus on business activities. Share useful articles and links to presentation and valuable resources that interest customers and prospects on your Wall, to establish credibility. Combine Facebook with other social media tools like Twitter. Find experts in your field and invite them as a guest blogger on your blog. 3. Use Network, Group and Fan Pages Start a Group or Fan Page. Add basic information to the Group or Fan Page, such as links to a company site, newsletter subscription information and newsletter archives. Post upcoming events, including Webinars, conferences and other programs where you or someone from your company will be present. Update your Group or Fan Page on a regular basis with helpful information and answers to questions. Join networking, industry and alumni groups related to your business. Use search engines to find Groups and Fan Pages related to your business.
How to use Twitter 1. Start “following” people Most of us want to be leaders and not followers, but when it comes to Twitter, following the right people is really the key. Following people is really easy, but following the right people is so important in the Twitter world. You might say, “You will be known by the people you follow” more so than the company you keep! 2. Get “followers” Getting others to follow you, especially the right ones, is a whole different
game. That is where combining Twitter with LinkedIn and Facebook can be of value. Your objective is to get your past and present customers following you. The key to getting them to follow you is one thing. Keeping them following you is all about content and regular posts where you are providing them information.
How to get started Start with a plan Determine your goals and objectives and what role social media will play in your overall marketing plans. Then, find ways to share content and bring communities together. Market and promote your company’s blog, Twitter contacts, Fan Pages, YouTube channels, and any other media to targeted prospects and clients. Be strategic and purposed.
back to you which is the primary goal and objective of developing an effective and sustainable social media initiative. Content in a Web site that isn’t updated regularity has about the same “shelf life” as fresh bread … very short. When I started my social media journey, it was slow going at first. I didn’t see any of the benefits for almost a year. But slowly and surely, my efforts are paying off. Now, I am a believer and have caught the vision. My efforts to learn how to use LinkedIn, Facebook and Twitter (more are being considered as they become proven) are beginning to pay big dividends. I encourage you to do get involved and adapt to this rapidly expanding digital world in which we live. As a C-Level executive, it is the right thing to do for your business!
David Lykken is president, mortgage strategies and managing partner with Mortgage Banking Solutions. David has more than 35 years of industry experience and has garnered a national reputation. David has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 101 or e-mail firstname.lastname@example.org. To listen to author David Lykken’s online radio show, log on to www.blogtalkradio.com and type in “Lykken on Lending” in the “Search” box on the right-hand side of the page.
Identify which social media sites your customers are using Search for your brand name, your competitors names, keywords or industry. On Twitter, tools such as Advanced Search, Twitter Grader and Twellow can help you find people who may be interested in what you have to say. Join Facebook, Flickr or By Josephine Nicholas LinkedIn groups relevant to your business Consider, for a moment, your next clients and me, and I look forward to and become part of the conversation. Facebook, Twitter or other social media watching as they help you in your mortRegister your name on as many social status update declaring: “[Your name gage practice. here] was featured on CNN today!” media sites as possible A seed of excitement that they know Establish celebrity status It doesn’t matter whether or not you someone famous is now planted in the through media exposure plan to use them. Oh, and be sure to brains of whoever reads that post; that We are all a celebrity in our own way; use the same name on each Web site. seed will sprout one day you need to believe and and find itself growing into embrace that concept in Don’t chase technology order to make social Social media changes rapidly and it’s a conversation they may be media work for you. hard to keep up with. Don’t chase every having with a co-worker, As a mortgage profesnew social media Web site out there. friend or family member of theirs. Picture this person sional, there is something This is NOT in conflict with the point talking to their friend sayyou know that no one above. Registering with every social else does … that unique media site is different than chasing ing, “A mortgage lady knowledge can make you every social media site. Use only that friend of mine, [your name famous. Others may even which your customers use. Instead, com- here], was just featured on be exposed to the same mit to one or two social media sites and CNN … how cool is that?” education and tools as work on creating regular content. Picture their friend being you, but there is one subReaders, viewers and search engines will impressed with this infor“It’s important to note mation and responding, ject or tool that you better recognize your expertise if you’re that you want to be “No kidding; wow, do you understand or use from consistent. And you can very quickly that information which overextend your capacity by being in too have her number? I need a cautious about being no one else uses. Your many places and not doing it effectively. mortgage, maybe I should too ‘businesslike’ in call her. You think she’ll your social media sta- first job in integrating take my call?” Generate compelling content tus updates and posts. your media campaign The above scenario isn’t with your social media It all comes down to having compelling After all, it is called outlets is to find out what content. You don’t have to write it … too off the wall, and this is “social” media for a the celebrity status image that niche is that sets you simply reference it. Besides, there is so reason. ” you could build by simply completely apart from much info available on the Internet that the rest. Once you capyou don’t need to be creating content … using your social media use what is already out there and readi- presence wisely. I have been a social ture this, you need to go out and capily available, and most importantly, what media geek and a public relations agent talize on your social media presence by for quite some time now. In this article, I talking about that topic or niche to is compelling to your target audience. will share some tips to help you inte- your social media database and gaingrate your media exposure campaign ing the celebrity status you deserve. Post regularly and frequently At the same time, your celebrity staThis, combined with the point made with your social media outlets. These tips have stood the test of time for my tus will create and feed upon itself if above, is key to getting people coming
Why is Social Media Integral to Your Media Campaign?
you go out with your “one thing” and gain media exposure through traditional media outlets, then take that exposure and broadcast it to the masses through your social media platform. Everyone likes to be affiliated with a celebrity, and pretty soon, your social media and traditional media platforms will feed off of each other, creating an unstoppable force in your benefit. Quick tip: Start one small step at a time. Talk to a media expert or public relations agent who will help you sort through your knowledge and find out what will appeal to the media and the general market. The media expert will see things that you may not automatically think of and the personalized attention the PR expert provides will give you the confidence you need to jumpstart your celebrity status. Or, start by writing a note to the editor of your local paper about how the mortgage market is affecting your own city. When that gets printed, post it on your social media profiles—the attention you will get from that will inspire you to do more the next time and continue on your celebrity status journey.
Use social media to dispense your opinion on the market Take a minute and answer the following questions:
Did you know that most social media sites integrate with search engines in such a way that you can use to your advantage? While many are complaining about privacy in relation to social media, and I understand that is a major concern, I have chosen to use social media’s public nature to mine and my client’s advantage. Not many people know that, frequently, when you post to a group page, and then search your name later on a search engine, your post comes up in the search results. The exposure you gain from this has a number of benefits. A couple examples of the benefits are:
Quick tip: A good way to stay engaged with your social media contacts is to interact with them; you can keep those interactions short and sweet. Make sure you reply to their comments, questions, and most importantly, to their own posts, blogs, status updates, etc. Imagine if your favorite celebrity commented on any of your social media platforms—how would you feel?
Josephine Nicholas runs her own public relations agency, icheadlines.com. She specializes in helping map out individualized media campaigns, and offers a comprehensive array of services to handle the diverse PR needs of her clients. Josephine’s clients have also appeared in other national and local media outlets, including, but not limited to, MSNBC, Fox Business News, CNN, NPR; in The Wall Street Journal, Reuters, The New York Times, The Washington Post, Financial Advisor Magazine, Financial Planner Magazine, CPA Magazine, and various entertainment and lifestyle outlets. She may be reached by e-mail at email@example.com.
Social Media: A New Pillar of the Mortgage Business By William C. Reichard, MBA
A prospective client who searches for you online (and, believe me, the majority of them are doing so) will come across your information, see your celebrity status, and that will increase their desire to do business with you; or A consumer who has never heard of you before, but is searching for a mortgage professional in your area, will come across your post in those search engine results and that will have a positive affect on their decision. Quick tip: For a group page, some of my suggestions would be to post links to places in the media where you’ve been featured, upcoming events where you will be speaking, and a paragraph from your blog, with a link to the rest of the blog post.
Mix it up
1. Social media are ideal for B2C (business to consumer) applications Much of the growth of social media is driven by the mass market, making it a perfect place to address the general mortgage shopper. The best companies to watch in this space are the big automakers, all of which have strong teams of social media practitioners, many of whom are leading the way in best practices.
2. Social media are conversational
In the past, organizations had to get lucky to get media coverage. Today, information is a free market, and as a result, the mortgage industry is able to communicate directly with consumers. When you consider that thousands of people in our communities each day are making the most important decisions of their lives, you’ll agree it’s pretty important information that traditional media haven’t done a great job of explaining to the consumer.
“Much of the growth of social media is driven by the mass market, making it a perfect place to address the general mortgage shopper.”
Salespeople “get” social media intuitively, recognizing that they are simply a new channel for communications, enabling them to reach out to more people than ever before, more quickly than ever before. Feedback is often instantaneous, allowing them to hone their pitch quickly.
4. Social media allow originators to react faster Search tools make it possible to monitor conversations in real-time so issues can be addressed quickly and effectively and trends discovered and understood.
5. Social media are measurable Hits, visits, comments—everything in social media can be automatically tracked, meaning information can be studied and can become the basis for productive experimentation.
3. Social media let organizations send their message to supporters
6. Social media is at work for you 24/7 and tap the power of trusted networks
In what is increasingly being called “brand journalism,” social media allow organizations to craft their own messages.
When you gain supporters to your cause, continued on page 38
It’s important to note that you want to be cautious about being too “businesslike” in your social media status updates and posts. After all, it is called “social” media for a reason. If you are always posting about why interest rates are low, how you used an industry tool to save your client money, or even that you were on TV yesterday, you will quickly lose the interest of your social media contacts. It’s a very fine line between what qualifies as enough “celebrity status” information and what qualifies as enough “day to day” information in order to keep your databases engaged. You will need to gauge your particular database to find out what appeals to them; however, just remember, now that you’ve established the celebrity status, you’ll want to mix up your status updates and posts. Just as the masses are fascinated about the details of their most
Among leaders in the mortgage industry, social media are quickly becoming an integral part of almost every aspect of operations. The change is happening for a number of reasons, including:
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Now, take a moment and think about how much your social media database would benefit and/or be impressed with the answers you just gave. When you pause to think about the vast array of knowledge you have inside of you, it is truly amazing, especially as compared to the average person in your social media database. Social media is such a non-threatening, yet relatively untapped, way to get that information out to people. Experts in any industry who are familiar with how the media works are outputting value on a daily basis through all outlets— they recognize it is only by communicating this knowledge to the masses that they will earn the media exposure and presence in the market that will ultimately bring in more clients.
Post on group walls
beloved celebrities, when your social media contacts find out they know someone famous (you), they will be looking for the fun details about your life, too. Keep them entertained with stories about other things happening in your life.
What is your opinion on the current state of the market? What are you already writing about, via a blog, newsletter, about the market? What is going on in the market today that you personally feel smarter by knowing? What tools are you using in your business today that saved you or your clients money?
Quick tip: If you are uncomfortable posting business-related status updates to your personal social media profiles, create a fan page on any of the social media sites. Just don’t become one of those annoying social media users who constantly invite people to their fan page, even after that person has decided not to join.
they’ll be selling for you all the time, not just when you’re physically at work. And sales via trusted connections—what we once might have called “word of mouth”— are the most effective kind there is.
7. Social media are how recruiting is done today If you want to stay connected with the best and the brightest in the business as you hunt for, say, branch partners, you have to find them online and engage them in conversation through social media.
8. Social media allow remote teams to work together more effectively With teams of brokers, partners and loan officers across the country, a company can use intranets to build cohesion, share best practices and celebrate wins.
There are many more reasons that social media are quickly becoming a pillar of the mortgage industry, but the biggest difference in comparing social media with traditional forms of communication such as telephones, advertising and direct mail is simply the speed and the scope with which they take place.
So, how are organizations adapting? The best advice is to approach it as you would any other management problem: What are your goals? What’s the right strategy to achieve them? What are the right tactics to carry out those strategies? How do you know if you’re making any progress? Social media generally work at a tactical level, supporting larger communications strategies. For instance, a mortgage company looking to achieve its goal of higher revenue may as a strategy target upwardly mobile families. A variety of tactics could support this goal—family-friendly events, articles in the local newspaper, sponsorship of school activities. Or, the organization may target families who are online in social networks talking about life decisions. The key is matching tactics to strategies, which requires deep research and careful consideration at each phase. Who are your target audiences, for instance? Do you thoroughly
Thursday, June 24, 2010 Friday, June 25, 2010
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understand the ways they consume information? Can you successfully become part of their conversations? As tactics, though, social media are clearly great new tools for the mortgage industry. And like any new tool, they require new skills—and lots of practice. After all, content creation for instance is a new competency for organizations whose work has been primarily business transactions. Some fear that social media will consume large amounts of time, for example. What’s becoming clear in the field, though, is that the new communications channels must be approached much as you have the existing ones: by budgeting time and energy. Social media are a lot of work, but they’re really not optional, any more than getting out and meeting people is optional. This is where today’s customer is. Facebook is nearing half a billion users, half of whom log in on a given day and who spend an average of 55 minutes each on the site. It’s not a question of “if” any longer. “ROI” or “return on investment” is another term that frequently crops up when considering social media. Yet, no one asks what the return on investment of his or her telephone is, it’s simply a communications tool one uses to reach particular audiences. Once upon a time, the telephone was a new invention that was called a toy with no useful application. So, what are some of the ways the mortgage industry can apply these new tools? You’re bounded only by your creativity, ultimately. For instance: You can use LinkedIn for professional networking, prospecting, recruiting and education. You can create a Facebook fan page to keep fans updated on educational news, such as homebuyer tax credits or to run special offers. You can share photos of special events that followers will then share with each other, extending your reach. You can use Twitter accounts for shorter, more conversational material and to alert followers to news. Videos—both at YouTube and in many other locations—are soaring in popularity, and we see many clients successfully using them. YouTube is now the world’s number two search engine. A blog can be regularly stocked with new information for both consumers and mortgage professionals, and a blog’s content is easily repurposed for other uses. You can use the search function of most social media networks (e.g., http://search.twitter.com) to watch how conversations take place before you leap in. In addition to work on search engine
optimization (SEO), you can also practice “SMO,” or “social media optimization,” which means that social elements (such as a “Bookmark & Share” button or the “Like” button on Facebook) are incorporated into all of your company’s efforts. The final piece of the puzzle is measurement. Fortunately, social media are more quantifiable than anything we’ve seen before in marketing terms. Today, we can track which social networks drew visitors, how long they stayed, whom they recommended the information to and a myriad of other data that can help create a fuller picture of your customers. Measurement also enables new means of integrating traditional and new media. For example, Frost Mortgage Lending Group’s ad in National Mortgage Professional Magazine includes a link to a landing page, http://frostmortgage.com/nmp, that is personalized to the magazine’s readers. This enables the company to see exactly what traffic the ad is driving, and adds to the effectiveness of the landing page in “converting” viewers. Visitors will also find links to the company’s various social outlets. From my vantage point as a social media and communications practitioner, I can vouch for the fact that mortgage companies practicing social media are securely on the cutting edge. I recently had the opportunity to speak as part of a panel at the Crittenden National Conference, which gave me a chance to meet a number of leaders in the mortgage and real estate industries and see the current state of the art. The interest level in social business (a broader term than “social media” that includes such things as “social customer relationship management,” or “SCRM”) is enormous, and a very few companies have quickly seized the high ground in these areas. There is still tremendous opportunity. The best advice ultimately is the simplest … just get started and don’t get left behind! William C. Reichard, MBA, president of Albuquerque, N.M.-based CrossCut Communications LLC, helps develop, implement and manage social business strategy for industry leaders, such as Frost Mortgage Lending Group. Reichard has a broad background in social media, strategic communications and marketing, public relations, development, fundraising and business management and has become a sought-after speaker and adviser on the field of social media and business. He writes a blog on social media, public relations, marketing and technology. He may be reached by phone at (505) 796-8184, e-mail info@ CrossCutCommunications.com or visit http://CrossCutCommunications.com.
A Bit About Social Media
Here are some tips to get you started with LinkedIn:
By Brian Bluff
Remember that LinkedIn is a professional place. Use a professional headshot, not one that your colleague took at the last happy hour. Take the time to fill-in all of the blanks. Every bit of information is important. Recommendations are required, not optional if you want to do this right. You’re good at what you do and let other people vouch for that. Ask colleagues and clients alike for their recommendations, and be sure to return the favor. When building your connections, do a double take on each person. Make sure that you do actually know them and that you are okay with your reputation being associated with theirs. Join groups and participate in discussions. This will help you build your confidence in the social media world and help you become a “thought leader” in your industry. Make use of the apps. If you write for a blog for instance, install one of the blog apps. It’s another free way to push out your content and build your following.
The gist of it The moral of the story is not to get so caught up in everything that’s happening in the social media world all at once. Instead, do your research and find out which elements of social media are relevant to you and your industry and move in that direction. LinkedIn and Twitter are two musts in the mortgage industry, maybe use this as a starting point. At my company, our sales team has seen great results out of these two Web sites, both from a lead-generating standpoint and from a purchasing standpoint. Many of our vendors, partners and clients were discovered through conversation on Twitter, and many of our testimonials reside on the LinkedIn profiles of our employees. We have found a way to make social media our own, and so will you. Social media is nothing to fear. It can be overwhelming in the beginning, but all you need to do is focus on one thing at a time. Don’t try and jump in with both feet. There is a lot out there and even more coming with each passing day so it is important to pick a path and stay the course. Brian Bluff is president and co-founder of New Hartford, N.Y.-based Site-Seeker Inc., an Internet marketing firm that has been recognized as being one of Central New York’s fastest growing small businesses. Site-Seeker specializes in SEO, SEM, social media and Web development, with a strong focus on the B2B and manufacturing arena. For more information, call (315) 732-9281 or email firstname.lastname@example.org.
First things first, observe the conversation. Visit www.wefollow.com and do a search for the term “mortgage.” Are you surprised at how many users
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Founded on the principles of text messaging and blogging, Twitter has quickly become a 140 character powerhouse of Web content. Its messages are not localized, contained or personal. They have become legitimate sources of information that are broadcast internationally through other news sources, mobile phones, and of course, search engines. Why then are some people so reluctant to “Tweet?” Twitter, from a business standpoint, should never be 100 percent self-promotion. People don’t care about your trip to the dentist unless you are recommending a good one. Think of Twitter as a way for you to get personal with the leaders of your industry, and in exchange, become a leader yourself. In the mortgage business nowadays, there are all kinds of bits and pieces of information floating around out there, and much of it is being discussed on Twitter. Find a way to get in on the conversation. Here are some tips to get started with Twitter:
In an age where the act of being “social” sonal brand, and which ones will leave actually does happen in the comfort of you spinning your wheels. When I travel throughout the your own home, office or car, the opportunity for business growth is increasing- Northeast helping audiences of people ly more obtainable. Today, more than find their success story online, it never ever, the sales and marketing field has a ceases to amaze me how many profesreal opportunity to take public relations sionals are afraid of social media. There to the next level, the individual level. are always excuses: The days of group catego “I don’t have time for rization by way of one all that Tweeting.” brand are long gone. In “I’m not looking for a our current economy, we, job, so I don’t need as sales professionals, repLinkedIn.” resent our company’s “Facebook is a place for brand along side our own. college kids to make For those of you curfools of themselves.” rently utilizing social media, do a quick search Comments like this typfor your name in Google, ically come from people and make sure that who have not invested the you’re sitting down. Are time into growing their you surprised at the “Each social media own personal brand. They interest that the world’s outlet has its own are comfortable with largest company has influence in the marthings just the way they taken in you? You, as a social media participant, ketplace, and in order are and they are afraid of the consequences change are contributing to the to start developing can bring. But what they news, promotion, debate your own success neglect to realize is that and other forms of constory, you have to sometimes not changing tent that circle the globe know which ones will can have more harsh conby way of the Internet work for you and your sequences than the latter. today. Social media gives personal brand …” To help guide you down us as users, the ability to the right path, I suggest contribute to nearly taking some time to build on two of the everything happening in the world. For those of you who are not cur- most popular social media sites currentrently utilizing social Web sites like ly out there, LinkedIn and Twitter. LinkedIn and Twitter, it’s about time you considered it. Some people may LinkedIn recall the “dial and smile” days. It was a time in the careers of nearly all sales professionals when they spent all of their day on the phone calling countless numbers of random people in an For nearly every professional out effort to establish a pipeline. Back there, my first recommendation is to then, “Google” wasn’t a verb, in fact, it build out a LinkedIn profile. It is not was nothing more than a misspelled just a place for job hunters, LinkedIn mathematical term. In this technology- is a credibility statement for you and driven environment, the dreaded gate- your company. Those of us who are in the business keeps of yesterday should be the least of your worries. For sales professionals world today, understand that credibilitoday, not having your own online pro- ty is one of the most crucial elements fessional brand is like never picking up in the sales process. A product or servthe phone. You can not expect to build ice can be a perfect match for your your pipeline if you are not engaging consumer, but if the company name is one that no one has heard of, you are with your prospects. It is all well and good to say that you going to have to work much harder on need to be participating in social building confidence in it than you are media, but it is not enough to leave it the product or service you are trying to at that. Each social media outlet has its sell. Because so many decision-makers own influence in the marketplace, and are doing research online now before in order to start developing your own meetings, LinkedIn is a great way to success story, you have to know which build that credibility before you even ones will work for you and your per- step in the door.
are listed under that term? Now go through that list and start “following” people who are active participants in the mortgage conversations. Think of it like job shadowing. Go to Google and do a search for “mortgage blogs.” Find a few blogs that you like and subscribe to their RSS feed. Use this as a way to start a conversation. Build out your Twitter page the same way you did your LinkedIn profile, making sure all the blanks are filled in. Start Tweeting and re-Tweeting! People like when other people push out their message. If you read a blog that is relevant, Tweet about it. If you read a Tweet that is relevant, reTweet it. But make sure you are Tweeting in your own voice, not theirs. Make use of the tools that are out there. Third-party tools, like Hootsuite for instance, allow you to stay current on multiple conversations at once through the use of search columns, allow you to shorten links and schedule Tweets all from one dashboard.
Social networking stats Facebook (facebook.com/ConnectWithChris): 1,635 friends Twitter (@Chris_Brown_): 2,580 followers Why you should connect with Chris? Chris dominates the FHA landscape in Orlando though a mix of high-quality blog posts and dangerously powerful Facebook pages. He’s a wonderful person who shares the ideas that have helped him become so successful with his peers.
Social networking stats Facebook (facebook.com/khaimcbride): 1,562 friends Twitter (@KhaiMcBride): 581 followers Why you should connect with Khai? Khai is a time-management master who shares the secrets of his success as a mortgage professional through Tweets and Facebook updates.
Social networking stats Facebook (facebook.com/NaomiTrower): 1,717 friends Twitter (@NaomiTrower): 15,337 followers Why you should connect with Naomi? Naomi provides a fresh stream of mortgage, real estate and social media content.
Tim Davis Social networking stats Facebook (facebook.com/timwdavis): 1,410 people Twitter (@MKTGEvangelist): 354 followers Why you should connect with Tim? Tim is a sales trainer who offers advice on building your business including lots of great tips on working with real estate agents.
Naoma Doriguzzi Social networking stats Facebook (facebook.com/ndoriguzzi): 1,587 friends Twitter (@NaomaDoriguzzi): 5,835 followers Why you should connect with Naoma? Naoma shares updates from other mortgage industry insiders and is just an all-around great person to connect with.
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Brian Stevens & Frank Garay of Think Big Work Small Social networking stats Facebook—Brian (facebook.com/TBWSBrian): 864 friends Facebook—Frank (facebook.com/profile.php?id=100001147785190): 324 friends Twitter (@TBWSD): 1,760 followers Why you should connect with Brian and Frank of TBWS? Are you serious? Do you now know why you should connect with them? Love them or hate them, they provide fresh news with a dose of real world mortgage originator experience and opinion.
Dan Green Social networking stats LinkedIn (linkedin.com/in/mortgagereports): 426 connections Twitter (mortgagereports): 3,777 followers Why you should connect with Dan? Dan has been blogging for a long before it was cool to blog (back when they called it a “Web log.” Between his relevant blog posts, timely interest rate indicators and funny movie references, he is, as us tweeter folks like to call “follow-worthy.”
Tom Vanderwell Justin McHood Social networking stats Facebook (facebook.com/jmchood): 473 friends Twitter (@jmchood): 1,966 followers Why you should connect with Justin? Justin is a mortgage guy who also really gets search engine optimization.
Mike Mueller Social networking stats Facebook (facebook.com/MikeMueller): 3,427 people Facebook Page (facebook.com/MikeMuellerConsulting): 1,857 people Why you should connect with Mike? Mike shares his secret sauce on how to build powerful Facebook pages. He’s got a really powerful Facebook landing page at Facebook.com/MikeMuellerConsulting.
Social networking stats Facebook (facebook.com/mortgageporter): 750 friends Twitter (@mortgageporter): 2,818 followers Why you should connect with Rhonda? Rhonda’s updates includes insights to her local Seattle marketplace, real live quotes she is giving to her borrowers (great idea to let her real estate partners know she is active and has decent pricing) and amazing recipes!
Social networking stats Facebook (facebook.com/MasterMindRetreat): 1,277 friends Facebook Page (facebook.com/MortgageMarketingAnimals): 7,325 people Why you should connect with Carl? Carl has been sharing with thousands of mortgage professionals, foolproof methods of turning Facebook into a lead generating machine.
Chik Quintans Social networking stats Facebook (facebook.com/teamcq): 101 people Twitter (@chikquintans): 8,198 followers Why you should connect with Chik? Chik shares with his news, economic updates and his special brand of humor with his followers. Plus, he’s got a really slick company page.
Scott Schang Social networking stats Company Twitter (@HomeBuyerEd101): 187 followers Personal Twitter (@scottschang): 1,174 followers Why you should connect with Scott? Scott uses Twitter as an educational platform to teach potential and existing homeowners.
Social networking stats Facebook (facebook.com/annyhavland): 1,443 friends Twitter (@annyhavland): 728 followers Why you should connect with Anny? Anny shares relevant articles, with a mix of family and fun with her company and around her local market.
Social networking stats Facebook (facebook.com/LendingExpert): 755 friends Twitter (@ShashankTweets): 486 followers Why you should connect with Shashank? Shashank has been killing it, showing users of social media how to connect with first-time homebuyers and referral partners to invite them to his Webinars.
Mark Madsen Social networking stats Facebook (facebook.com/mark.madsen1): 593 friends Twitter (@mark_madsen): 1,481 people Why you should connect with Mark? While Mark claims not to be an expert on social media, there are many of us who strongly disagree. His strategies have helped countless mortgage professionals build their business through social media.
Social networking stats Facebook (facebook.com/tom.vanderwell): 473 friends Twitter (@tvanderwell): 2,167 followers Why you should connect with Tom? Tom has a deep understand of the mortgage market from Main Street to Wall Street. The insights he shares on Twitter can be very helpful in keeping you well informed.
Steve SchraderBachar Social networking stats Facebook (facebook.com/MortgageMinute): 1,714 people Twitter (@MortgageMinute): 8,204 followers Why you should connect with Steve? Steve shares great quotes, progress of his loan files and his blog posts on his Facebook and Twitter accounts.
Social networking stats Facebook (facebook.com/jwean): 1,486 friends Twitter (@JWean): 945 followers Why you should connect with Jeremiah? Jeremiah shares updates from other mortgage industry insiders and is just an all-around nice guy and great person to connect with.
And five more important Twitter feeds … @NatlMortgagePro Official Twitter account of National Mortgage Professional Magazine. @NAMBLive Official Twitter account of the National Association of Mortgage Brokers. @MortgageJobs Get Tweets of mortgage jobs. @HUDNews Official Twitter feed for the U.S. Department of Housing & Urban Development (HUD). @REALTORS Main Twitter account for the National Association of REALTORS® (NAR).
new to market
continued from page 32
properties that are well-located but have not yet reached stabilized occupancy levels. Prudential Mortgage Capital is the commercial mortgage lending business of Prudential Financial Inc. “We are excited to offer this new source of financing for multifamily properties which addresses a clear need of multifamily owners and investors in today’s market,” said David Durning, senior managing director of Prudential Mortgage Capital Company. “In addition to offering our multifamily borrowers more flexibility for financing higher-quality properties, we believe this program compliments Prudential’s existing Fannie Mae DUS Lending Program, as well as our Freddie Mac Program Plus program offered through Prudential Johnson Apartment Capital Express.” Prudential Mortgage Capital has provided more than $16.4 billion in multifamily mortgages over the last five years, originating more than $2.4 billion in 2009. For more information, visit www.prumortgagecapital.com.
Del Mar DataTrac adds new options to its ExTrac product
GMAC Mortgage announces launch of its Virtual Sales Network
GMAC Mortgage LLC has announced that it has launched a Virtual Sales Network (VSN) to market its suite of mortgage products. This innovative new sales channel is expected to attract more home buyers to GMAC’s mortgage lending services by offering a more flexible alternative to traditional branches. The VSN will consist of a team of seasoned sales managers and loan officers operating on a remote, mobile basis in order to quickly enter markets and adapt to shifting industry conditions, while keeping occupancy costs low. The team will cultivate and leverage existing relationships with realtors within their regions to generate originations. “We are excited to introduce this innovative new platform, which is the first of its kind among larger lenders,” said Steve Abreu, president of GMAC Mortgage Operations. “With the Virtual Sales Network, we are able to better accommodate how customers chose to do business with us. We see the network as a catalyst to diversifying our mortgage lending revenues and introducing more prospective home buyers to GMAC.” GMAC will initially launch the VSN in California, North Carolina, South Carolina, Pennsylvania and Arizona. The company is exploring expansion opportunities in other states across the country with a goal of building the team to 200 associates by the end of 2010. For more information, visit www.gmacmortgage.com.
Valligent and Global DMS join forces for new valuation service
So far in 2010, we are seeing exactly what we expected to see. The big numbers are with violations with the final Truth-in-Lending and annual percentage rates (APRs). In 2009, this category did not register in the top 10. In 2010, it ranks number three with a 183 percent increase from 2009 which includes all loan types and loan purposes.
Federal Housing Administration (FHA) In the FHA loans department, Truth-in-Lending/APR violations rank fourth with a 138 percent increase from 2009. It appears the problem with FHA is coming from loan purchases and not from refinances. The FHA refinance does not register any final Truth-in-Lending violations in the 10 category yet.
Conventional Conventional loans rank higher. Truth-in-Lending/APR violations ranked third with a 270 percent increase from 2009. It appears the conventional purchases are not sharing with refinances because it is not registering within the top 10 categories with conventional loan refinances.
Non-supervised mortgagee vs. supervised mortgagee (non-bank lenders vs. bank lenders) Violations by non-bank lenders ranked sixth in its top 10 categories with a 69 percent increase from 2009. Bank lenders jumped to 154 percent in the same category.
Non-supervised loan correspondents vs. supervised loan correspondents (brokers vs. bank brokers) Brokers have the largest numbers of all. Brokers have a 413 percent increase in final Truth-in-Lending violations since 2009. Bank brokers have a 160 percent increase since 2009. This means that violations with the final Truth-in-Lending/APR calculations will continue to grow for all mortgage entities. This category did not register in the top 10 for anyone and has spiked considerably. Also, we are only seeing part of the story. There are many who have not performed their post-closing quality control checks for the first quarter of 2010. The mortgage professional may see steep fines from the state and other oversight agencies if these issues are not resolved quickly. Quality Mortgage Services is only auditing 10 percent of the FHA files and 10 percent of the conventional loans of seller/servicers. The problem could be a lot worse based on the small sampling that is has viewed in quality control. The FHA has announced a grace period for the first quarter in order for its correspondents and mortgagees to get used to the new regulatory reform. The first quarter is over and those who have not performed their post-closing QC checks will be overcome by events due to APR miscalculations and steep fines from the state. I recommend that principals or QC managers take control of this problem very quickly. Those who are current on the post-closing QC checks are putting policies and procedures in place based on the Q1 of 2010 quality control reports and will weather the storm and come out stronger. Those who have a weak QC program will be surprised when they are hit by the state or other agencies audits.
Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528 or e-mail email@example.com. You may also visit Quality Mortgage Services LLC on the Web at www.qualitymortgageservices.com.
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What is the biggest trend you see in quality control audits for 2010?
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Valligent, a provider of collateral valuation and risk management solutions, and Global DMS, a provider of appraisal process management solutions, have jointly announced an end-to-end valuation service for ordering, managing and delivering a full range of valuation products in MISMO-sanctioned XML data format— all in full compliance with the Home Valuation Code of Conduct (HVCC), Federal Housing Administration’s (FHA) appraisal guidelines, and Fannie Mae and Freddie Mac’s Collateral Data Delivery (CDD) program that is scheduled to be in effect as of July 1, 2010. This collaborative service, called MISMO-Connect, provides companies with the valuation services of Valligent and additional select valuation providers,
By Tommy A. Duncan, CMT
Del Mar DataTrac Inc. (DMD), a provider of affordable end-to-end mortgage lending automation solutions, business intelligence, document imaging and management, and loan process workflow tools, has added four new DataTrac ExTrac options. These ExTracs facilitate the extraction, quality control and exchange of mortgage loan data between mortgage bankers and warehouse lenders or servicing vendors. In Q1 2010, the DataTrac ExTrac was developed by DMD to streamline the funding process with Comerica, Texas Capital Bank and FiservWireXchange; and to support the servicing process with Dovenmuehle Mortgage Inc. The funding ExTracs are designed to send data from the DataTrac central database to the warehouse lenders before funds can be disbursed. For servicing, ExTracs are designed to transfer loan data to a servicing system used to manage the servicing of loans. DataTrac ExTracs perform many functions: capture required DataTrac data; perform a quality control check against defined vendor requirements; and translate the data in a required format to the other system. This results in a seamless transfer of information eliminating data integrity issues. “Avoiding data errors is the single most important component to the risk management strategy for a mortgage banker,” said DMD Vice President for Client Services Sue Sroka. “DMD always strives to share information with other
services to eliminate rekeying of data and streamline the process.” For more information, visit www.dmdinc.com.
new to market
PLATINUMdata announces update to REALview Plus appraisal tool
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and is powered by technologies from Global DMS. The service streamlines the entire valuation process and all products are delivered in the MISMO-sanctioned format. Rather than ordering and managing various individual valuation products, mortgage companies can create their own custom valuation workflow seamlessly integrated with their loan management system in a format fullycompliant with the new GSE requirements and all other major guidelines and regulations. “This is much more than a one-stop service that covers valuation reports for the full spectrum of lender needs,” says Jeremy McCarty, chief executive officer and chief valuation strategist of Valligent. “It’s also a way for lenders to ensure that their valuation processes are fully compliant with all of the related regulations, including the Collateral Data Delivery requirements set forth by Fannie Mae and Freddie Mac.” For more information, visit www.valligent.com or www.globaldms.com.
Valuation Partners launches appraiser proximity certifications Valuation Partners, a national real estate valuations provider,
announced that it is providing certifications on all new orders that provide proof that the appraiser chosen for each particular assignment has the local knowledge and expertise to complete the assignment. The company will provide these certifications, called an Appraiser Proximity Certification, on every order at no additional cost. Using geocoding technology, each Appraiser Proximity Certification includes an automatically generated map showing the location of both the subject property and the appraiser’s place of business. Prior to accepting the order, the appraiser will acknowledge the distance between his or her office and the property is correct, which helps ensure that the appraiser has sufficient knowledge of the area to provide an accurate valuation. “In the current environment, we believe it’s extremely important to fully certify the local expertise of our fee appraisers,” said Bill Fall, chief executive officer of Valuation Partners. “Our Appraiser Proximity Certifications will provide lenders extra piece of mind and assurance that the right expert is on the job.” For more information, visit www.valuationpartners.com.
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Helping you do more.
PLATINUMdata, a collateral solutions provider to the financial industry, has announced the update of its automated appraisal review product, REALview, to REALview Plus to better assist lenders and investors in scrutinizing the valuation accuracy of their appraisals. REALview is an automated underwriting and quality control appraisal review tool that checks appraisals for compliance, completeness and accuracy while integrating public record and MLS data to benchmark the value on the appraisal. In addition to providing the capabilities of REALview, REALview Plus is an enhanced version that provides an automated method of “best comparable” selection and an appraisal quality score, based on sales comp relevance, which can be used for bump logic workflow applications. “In the current market, lenders and investors know that they can’t just look at property appraisals,” said Rocky Donathan, president of PLATINUMdata. “REALview Plus enables reviewers to be more confident in an appraisal, because our technology allows them to cost-effectively and efficiently improve appraisal quality with a standard methodology that objectively evaluates their valuation results.” REALview Plus offers an automated quality score that accelerates the appraisal review process with less risk by providing a probability that an appraised value is accurate. It performs a sales comparables check that ensures fewer valuation issues by utilizing the most relevant sales comps near the subject property. The product uses multisourced public record data and MLS data when available to automate due diligence, cutting down on research time while still providing a diverse and thorough review of data points. For more information, visit www.platdata.com.
Appraisal Institute releases new book on the appraisal review process A new book published by the Appraisal Institute provides practical instruction on the appraisal review process and helps promote greater understanding between reviewers and appraisers. Appraising the Appraisal: The Art of Appraisal Review, second edition, is written by Richard C. Sorenson, MAI. In his book, he describes common deficiencies in appraisal reports and offers tips for preparing careful and constructive appraisal reviews that can be applied by appraisers, lenders and other professionals. The guide includes updated information on scope of work and data verification, real-world examples that high-
light the qualities of both effective and ineffective appraisal reports, a new case study, handy checklists and sample review forms. Sorenson is the principal of Appraisal Management Consultants, a firm that assists financial institutions with appraisal review, real estate valuation management and training. Sorenson was previously with First Chicago Bank (1958-1996), now Bank One, in various appraisal and management positions and was the 1995 national president of the Appraisal Institute. He teaches appraisal courses and commercial and residential review seminars and has published numerous articles in appraisal and banking journals. For more information, visit www.appraisalinstitute.org.
Blueberry Systems announces integration with CRMnow’s Mortgage iQ Blueberry Systems LLC has announced that it has integrated its loan production platform, RELAY, with Photo credit: John Foxx Mortgage iQ customer management technology developed by CRMnow. The integration lets Mortgage iQ users access customized views of realtime loan data within the RELAY system, allowing them to manage both customer relationships and loan production from one system. “We are excited to offer our users such an enhanced workflow,” said CRMnow President Chris King. “With RELAY, our users now have uniform business rules in place from application through production. This allows them to be more efficient, have tighter control over loan data, and be of greater assistance to borrowers than ever before.” RELAY offers a complete loan origination system featuring a universal data model, providing the most accurate data in the industry. In contrast to most systems that present an outdated ‘database of record,’ the universal data model combines the various systems and applications involved in the production process, eliminating data silos and the need for duplicate or staggered data entry. And whereas most systems only make available the most recent data, the combined systems allow RELAY’s data audit framework to see a true side-by-side comparison of the various states of a loan as it evolves, in real time, and highlights the discrepancies. The bottom line is much higher data quality that prevents costly pricing variances and buybacks. “This integration is another validation of our commitment to data integrity, and it’s great to see CRMnow shares that commitment,” said Blueberry Systems President Lloyd Booth. “Combine that with user efficiencies, and the dollars saved really start to add up.” CRMnow previously purchased and
embedded Blueberry Systems’ financial calculations engine into Mortgage iQ, enabling users to calculate various annual percentage rate (APR) scenarios at their point of sale. For more information, visit www.blueberrysystems.com or www.crmnow.com.
New service from ClosingCorp assists lenders with accurate GFEs
New to Market column Phone #: (516) 409-5555 E-mail: email@example.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
Plus Postage & Handling
Think Reverse! Table of Contents Part I: The new pillar of retirement security Part II: Marketing reverse mortgages: It’s all about education Part III: Originating reverse mortgages Part IV: Enhancing freedom: The essence of reverse mortgages Part V: A new frontier in mortgage lending
“Atare Agbamu is one of only a handful of people in the reverse mortgage arena who possesses a commanding understanding of the reverse mortgage industry. As an originator, he has hands-on experience educating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing the unique insights and experience of an ardent reverse mortgage expert into a wider business context. “This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information on marketing and originating reverse mortgages. “Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skillfully woven into this book. If you plan to succeed in this industry, this book is the place to start.” —Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLA’s Board of Directors “When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu has set down an impressive amount of information ... And he delivers it in an easy-to-read, simple-to-understand style that will make this book essential reading for all reverse mortgage professionals.” —from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom Senior Funding Corporation, and former four-term Co-Chair of NRMLA’s Board of Directors “The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and acceptance of reverse mortgages among us laypeople. They are very compelling ...” —Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends of the Elderly “This book should be required reading for all new loan consultants originating reverse mortgages and is recommended for experienced ones as well. This book provides excellent insight and information on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan process and shorten the time to closing. Most of the problems caused in the processing and closing of reverse mortgages come from inadequate preparation.” —Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company
Altisource Portfolio Solutions has announced the launch of its enhanced property inspection report which offers servicers and asset managers detailed information to enable more targeted marketing efforts to expedite the sale of
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:
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Altisource announces enhanced property inspection report
Closing Corp has announced the launch of its the SmartGFE Service. The SmartGFE Service provides real-time fees from local, regional and national vendors in nine categories such as title insurance, settlement services, closing attorneys, home inspections, pest inspections, appraisers, and more, as well as local taxes and recording fees calculated specifically for each transaction to help create GFEs that meet the U.S Department of Housing & Urban Development’s new mandated tolerance limits. The SmartGFE Service is currently integrated with Calyx Point 7.2, one of the nation’s leading loan origination software (LOS) platforms, with more LOS integrations in development. Non-Calyx Point users can access the data at the newly-launched SmartGFE.com Web site. New Real Estate Settlement Procedures Act (RESPA) regulations require mortgage originators to provide borrowers with binding GFEs for loan origination costs, fees and taxes, which cannot vary from the final costs on the HUD-1. Estimates for required thirdparty services such as title insurance or closing attorney fees have a 10 percent tolerance limit. Estimates must be provided within three business days of a loan application and lenders must, subject to certain changed circumstances, make up the difference if final costs exceed the GFE tolerances. “SmartGFE helps solve many of the widespread problems originators have encountered with the new forms and regulations. Now lenders can create estimates that are competitive because they are based on the most up-to-date data available,” said Paul Mass, president of ClosingCorp. “We utilize sophisticated technology and vast databases of fees for closing service providers combined with recording fees and transfer tax county record data to produce a broad, extremely accurate cost estimate that is, in our opinion, unparalleled in the industry.” For more information, visit www.closingcorp.com.
residential properties. Unlike a traditional property inspection report which provides a general evaluation of the property’s condition, Altisource’s enhanced property inspection report includes a description of any physical aspect that may significantly affect the sale of the property. Details include the existence and working condition of major appliances, condition of the carpets or flooring and information, such as whether electrical outlets and light switches are properly working. “There’s a big difference in the approach to marketing properties that need minor cosmetic work as opposed to those that need major repairs and replacement of appliances,” said Tara Williams, vice president of field services for Altisource. “By getting detailed information about the properties’ condition upfront, servicers and asset managers are able to market the properties to the right buyers from the start and avoid the surprises that can lead to the property falling out of escrow.” As an example, Williams explained the Federal Housing Administration (FHA) maintains certain standards for the property’s condition. If the buyer seeks to obtain FHA financing, sellers of residential assets typically cover the costs of necessary repairs to bring the property up to FHA standards. “Servicers and asset managers can leverage the detailed information provided in our enhanced property inspection report to support their marketing efforts. If the property needs extensive repairs, sellers may choose to target cash buyers or investors who are less likely to make repair demands,” said Williams. The enhanced property inspection report also includes periodic updates from on-site inspectors as frequently as every two weeks. The report is completed by a real estate professional independent from any other party providing services in support of the property sale. Altisource’s property inspection and preservation services are nationwide and is led by a team of professionals averaging 15 years of real estate disposition experience. Altisource manages a large scale distributed network of vendors and performs tens of thousands of inspections monthly. For more information, visit www.altisource.com.
MRev Orlando, FL July 8-9 Brian and Frank from TBWS, Carl White, Chris Brown, Sue Woodard, Todd Duncan, Tim Davis and lots more!
Visit MRev.org for more details.
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 firstname.lastname@example.org. JUNE 2010 Thursday-Friday, June 24-25 National Association of Mortgage Brokers 2010 Mid-Year Meeting Phoenix Airport Marriott 1101 North 44th Street • Phoenix, Ariz. For more information, call (703) 342-5900 or visit www.namb.org. JULY 2010 Wednesday-Saturday, July 7-10 Florida Association of Mortgage Professionals 50th Anniversary Annual Convention & Trade Show “From FAMB to FAMP … 50 Golden Years” Rosen Shingle Creek 9939 Universal Boulevard • Orlando For more information, call (850) 942-6411 or visit www.famb.org.
Abacus Mortgage Training and Education .......... www.getyoured.com ......................................4 & 27 ACC Mortgage .................................................. www.weapproveloans.com ....................................16 BankFinancial.................................................. www.bankfinancial.com ......................................42 Calyx Software ................................................ www.calyxsoftware.com ........................................19 CAAMP ............................................................ www.mortgageconference.ca ................................13 Comergence Compliance Monitoring, LLC .......... www.comergencetrustedmember.com ..............7 & 32 Credit Mastery Event ........................................ www.creditmasteryevent.com ..............................11 Emigrant Mortgage Company ............................ www.emigrantmortgage.com ................................17
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Entitle Direct Group.......................................... www.entitledirect.com ..................Inside Front Cover FindMortgageJobs.com .................................... www.findmortgagejobs.com ..............................MT3 First Source Capital Mortgage, Inc. .................... www.fscmortgage.com ..........................................19 Flagstar Wholesale Lending .............................. www.paperless.flagstar.com ......................Back Cover Freedom Mortgage .......................................... www.fmbranch.com ......................Inside Back Cover Frost Mortgage Banking Group .......................... frostmortgage.com/nmp ........................................23 Gateway Mortgage Group, LLC .......................... www.gatewayloan.com ........................................38 GSF Mortgage Corporation ................................ www.gsfprobranch.com ........................................21 Guaranteed Home Mortgage.............................. www.joinguaranteed.com ....................................31 iServe Residential Lending, LLC ........................ www.iservecompanies.com ..................................29 Mortgage Concepts .......................................... www.mortgageconceptsonline.com ........................22 MortgageProShop.com...................................... www.mortgageproshop.com ..................................43 NAMB.............................................................. www.namb.org ....................................MT2, 20 & 38 NAMB/WEST .................................................... www.nambwest.com ............................MT4, 24 & 26 NAPMW .......................................................... www.napmw.org ..................................................33 PB Financial Group Corp. .................................. pbfinancialgrp.com ..............................................10 Quality Mortgage Services ................................ www.qcmortgage.com ..................................35 & 41 REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ....................................25 Ridgewood Savings Bank .................................. www.ridgewoodbank.com ....................................30 Shore Financial Services, Inc. ..........................................................................................................9 Titan Lists and Mailing Services, Inc................... www.titanlists.com ..............................................15 United Northern Mortgage Bankers Ltd. ............ www.unitednorthern.jobs .............................. 5 & 14 Xetus Mortgage Corporation.............................. www.xetus.com ....................................................22
Wednesday, July 14 “Let’s Make a Deal” Tri-State Wholesale Lending Fair Trump Taj Mahal Casino Resort 1000 Boardwalk • Atlantic City, N.J. For more information, call (973) 379-7447 or visit www.mbanj.com. SEPTEMBER 2010 Thursday, September 9 Minnesota Mortgage Association 2010 Convention & Exhibitor Showcase Sheraton Bloomington Hotel Minneapolis South 7800 Normandale Boulevard Bloomington, Minn. For more information, call (952) 345-3240 or visit www.themma.org. Thursday-Saturday, September 9-11 Texas Association of Mortgage Professionals 2010 Annual Convention & Marketplace “All Roads Lead to Texas!” The Hilton Austin Hotel 500 East 4th Street • Austin, Texas For more information, call (800) 850-8262 or visit www.ttamp.org. Thursday, September 16 Iowa Association of Mortgage Brokers 2010 Annual Convention White Oak Vineyards 15065 Northeast White Oak Drive Cambridge, Iowa For more information, call (515) 210-4675 or visit www.iowamortgagebrokers.org. Monday-Wednesday, September 20-22 Second Annual Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (973) 379-7447 or visit www.mbanj.com.
Tuesday, September 21 New York Association of Mortgage Brokers 22nd Annual Convention The Melville Marriott 1350 Old Walt Whitman Road • Melville, N.Y. For more information, call (914) 315-6644 or visit www.nyamb.org. Tuesday-Wednesday, September 21-22 Illinois Association of Mortgage Professionals 21st Annual Fall Conference Location to be determined For more information, call (630) 916-7720 or visit www.iamp.biz. OCTOBER 2010 Thursday-Friday, October 14-15 Kentucky Association of Mortgage Professionals 2010 Annual Convention Location to be determined For more information, call (270) 929-2836 or visit www.kyamp.net. Tuesday-Wednesday, October 19-20 Utah Association of Mortgage Brokers 2010 Annual Expo Location to be determined For more information, call (801) 787-6611 or visit www.uamb.org. Sunday-Wednesday, October 24-27 Mortgage Bankers Association 97th Annual Convention & Expo Atlanta Georgia Congress Center 285 Andrew Young International Boulevard NW • Atlanta For more information, call (800) 793-6222 or visit www.mortgagebankers.org. NOVEMBER 2010 Monday-Wednesday, November 8-10 Mortgage Bankers of Pennsylvania Conference Wyndham-Conference Center 95 Presidential Circle • Gettysburg, Pa. For more information, call (973) 379-7447 or visit www.mba-pa.org. DECEMBER 2010 Saturday-Monday, December 4-6 NAMB/WEST 2010 MGM Grand Las Vegas 3799 Las Vegas Boulevard South • Las Vegas For more information, call (703) 342-5900 or visit www.namb.org. APRIL 2011 Sunday-Wednesday, April 3-6 2011 National Association of Mortgage Brokers 2011 Legislative & Regulatory Conference Hyatt Regency Washington on Capitol Hill 400 New Jersey Avenue NW Washington, D.C. For more information, call (703) 342-5900 or visit www.namb.org.