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2015: A Big Year for Non-Prime By Tom Hutchens In 2013, six years after the sub-prime crisis had played out, lenders tested the waters by reintroducing a new, safer nonprime product to mortgage markets. Early uncertainty on the viability of non-prime was quickly stamped out as both borrowers and investors demonstrated a healthy demand for the products. Despite early success, non-prime lending activity was fairly tame throughout 2014. In 2015, however, the market has really started to take off. Lenders and borrowers alike are catching wind of non-prime product availability, fueling both supply and demand for non-prime products. Even though there are still only a few lenders that are exclusively underwriting non-prime loans, a handful of traditional lenders have jumped on the bandwagon in an effort to get a piece of the potentially enormous non-prime pie. Though consumer credit quality has continued to strengthen over the last few years, nearly a third of Americans with a FICO score are under 650 (according to FICO as of April 2015). It’s tough to put an exact number on just how big the non-prime market has grown. Aggregate data for the U.S. non-prime market is limited because there simply aren’t any reliable sources available that track the market. However, anecdotally speaking, things are ramping up. We feel that our in-house statistics paint a fairly accurate picture of the market. Angel Oak Mortgage Solutions’ year-over-year stats:

DECEMBER 2015 n National Mortgage Professional Magazine n


l Closed loan volume for 2015 is on pace to more than triple 2014 volume. l Our approved network of broker companies has grown by more than double, from 540 to more than 1,200. l The list of approved states in which we are lending has grown from 20 to 24. l We’ve doubled our staff of account executives to more than 30. l Our Web site traffic has tripled from an average of 67 visitors per day in January to more than 200 per day today. l We receive more than 1,000 loan scenario requests per month through the online “Quick Quote” tool. We expect 2016 to be even bigger than 2015 for non-prime. As the sour taste of the housing crisis dissipates, the general public will warm up to learning why it is truly different from the era of pre-crisis sub-prime. Two data points in particular drive this point home: The average credit score of our portfolio of loans is over 670 and we haven’t had any defaults in our non-prime program. The mortgage industry needs non-prime. There are just too many Americans who fall outside of qualified mortgage (QM) lending standards. Non-prime and non-agency loans are the key to bringing much-needed liquidity back to the U.S. mortgage market. Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail


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solutions to help streamline the loan process,” said Doug Foral, general manager at Mortech. “By aligning the Mortech and Calyx Software offerings, we are providing our customers with the mortgage automation solutions they seek to optimize their day-to-day workflow, bringing simplicity to the complex mortgage environment and ultimately, delivering a technological solution to allow our customers to close more loans more quickly.” The new integration provides instant access to Mortech pricing, including loan specific rate, profit and adjustment information, along with automating the lock request process by seamlessly transferring borrower scenario data between Marksman and Point. The enhanced integration removes manual data re-entry, reduces the possibility of human error, and improves loan-processing automation through multi-system interoperability. “At Calyx, we’re continually enhancing our software and adding quality technology partners to our network to offer a competitive edge to our mortgage banking and broker clients,” said Dennis Boggs, executive vice president of business development at Calyx Software. “Integrating Mortech’s product and pricing engine into our platform will simplify the searching process for our users and provide them access to pricing from Mortech’s extensive portfolio of supported wholesale and correspondent programs.”

Applied Business Software Launches Redesigned Web Site

Applied Business Software Inc. (ABS), developers of The Mortgage Office and The Loan Office software, has announced the launch of a revamped Web site to its signature software, The Mortgage Office. “The goal of redesigning the Web site is to provide easy navigation, while accessing rich content through desktops or mobile devices,” said Elizabeth Morales, ABS’s director of marketing and communications. “Visitors will enjoy intuitive navigation while accessing the software’s robust capabilities that have positioned it as the leading provider of loan servicing software.” The Long Beach, Calif.-based software company announced the launch of a redesigned site to offer its visitors a comprehensive overview of the company’s software. The newly redesigned site, supported by all browsers and mobile devices, with an ability to search has a refreshed simplified look and feel. It details all of the modules available for its clients’ scalable needs, company news and events, case studies, testimonials and

latest publications where Applied Business Software has been featured. “As a worldwide organization with world-class customers, we need a Web site to represent our forward-thinking mentality,” said ABS CEO Jerry Delgado. “We have been in business for almost 40 years and continue to evolve with the emergent mobile technologies and market’s current needs.”

New Black Knight Integration Boosts LOS

Black Knight Financial Services (BKFS) has announced that LoanSphere Closing Insight, a Web-based solution that automates the closing process, is now integrated with LoanSphere Empower, Black Knight's end-to-end loan origination system. This integration will help lenders gain significant operational efficiencies by providing a bi-directional communication technology to obtain, aggregate and validate fee quotes from multiple sources; direct integration with settlement agents to reconcile and finalize closing disclosure data; and seamless access to system-of-record data required for the loan closing process. Empower helps lenders electronically capture, process and close loans and is used by lenders to manage retail, wholesale and consumer-direct lending channels. Empower can be hosted by the lender or application service provider (ASP). Closing Insight is an innovative solution that supports the collaboration between lenders and their network of settlement agents to streamline the loan closing process and help them comply with their obligations under the CFPB's Integrated Disclosure (TRID) rule, which went into effect on Oct. 3, 2015. Closing Insight is delivered through RealEC's Exchange, an open technology platform that provides integration, data and workflow, and decisioning support through a 24/7 data exchange that connects more than 17,000 of the mortgage industry's service and solution providers with the top lenders in the industry. "Now that we have integrated the data and process between the Empower and Closing Insight platforms, clients can now seamlessly move between the two systems," said Jerry Halbrook, president, Black Knight's Origination Technologies division. "This integration is another example of how Black Knight can help lenders realize significant efficiency gains, while supporting timely loan closings to help lenders satisfy their regulatory obligations and provide a better borrower experience." continued on page 50

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National Mortgage Professional Magazine December 2015  

National Mortgage Professional Magazine December 2015  

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