New York Mortgage Professional Magazine November 2015

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NEW YORK EDITION

Association Resources New York Association of Mortgage Brokers 100 Mamaroneck Avenue, Suite 303 v Mamaroneck, NY 10543 Phone: (914) 332-6233 v Fax: (914) 630-0959 Web Site: www.nyamb.org

NYAMB Officers & Board Martin Pfeiffenberger Irene Amato Deborah Robertson Bonnie S. Nachamie William Mason Louis Borsellino

President President-Elect Vice President Treasurer Secretary Immediate Past President

Phone # E-mail (518) 782-1202 martyp@mapletreefunding.com (914) 736-9230 amatoirene@aol.com (516) 393-5976 drobertson@plazahomemortgage.com (516) 678-7110 bonnie@nachamie.com (516) 739-3090 billmason@masonandmason.net (845) 279-2379 pcsmortgage@aol.com

Robert Moulton Martin Hackford John Commons Lorne Becker Robert Russo

Director Director Director Director Director

(516) 627-0200 (716) 565-1500 -------(516) 264-7040 (516) 599-2600

amermtg@aol.com martyhackford@mfninc.net jlcommons@optonline.net lorne.becker@yahoo.com mortgagemanager@optonline.net

Empire State Mortgage Bankers Association 800 Veterans Memorial Highway Suite 300 v Hauppauge, NY 11788 Phone #: (631) 885-5654 v Fax #: (631) 382-8214 Web site: www.esmba.org ESMBA Board of Directors President Chairman Co-Chairman Secretary Treasurer Accountant Counsel Ex-Officio

Phone # (516)-334-0200 (516) 356 8747 (800) 540-8838 (516) 526-8610 (800) 540-8838 (516) 293-3999 (212) 201-1173 (212) 850-4848

E-mail zjafri@lynxmortgageny.com jp@firstnationalcompliance.com mmchugh@cccmtg.com denise.bond@genworth.com rtschernia@aol.com mitch.k@hirshfieldkantor.com ngarfinkel@agmblaw.com ------------

Christina Bianco Michael Bizenov Steven A. Milner Donald Moran Michael Moskowitz Bonnie S. Nachamie Walter Stashin Marc Stone

Director Director Director Director Director Director Director Director

(917) 971-3604 cbianco@flcb.com (516) 487-0018 michael.bizenov@sterlingnational.com (631) 580-2600 steven.a.milner@usmortgage.com (516) 394-1420 dmoran@ambmortgage.com (800) 692-5363 mmoskowitz@equitynow.com (516) 678-7110 bonnie@nachamie.com (800) 924-6336 wstashin@financialequities.com (631) 475-9800 mstone@mcsmortgagebankers.com

Robert Katz William Hirschfeld Larry Smith Jeffrey Zwerling

Charter Board Member Charter Board Member Charter Board Member Charter Board Member

(516) 625-3950 (718) 488-9900 --------(800) 263-7337

---------------------------------jzwerling@zsz.com

P.O. Box 7361 v Hicksville, NY 11802-7361 Phone #: (516) 997-3707 v Fax #: (516) 997-1979 Web site: www.mbany.org MBA of NY Officers Frederick A. McDonald, Jr., President MRICS David Soares Vice President Gregory Nuber Treasurer Brenda L. Kenny Secretary/Executive Secretary

Phone # (646) 313-4877

E-mail fmcdonald@doralbankusa.com

(212) 897-0005 (201) 407-6038 (516) 997-3707

dsoares@lexdencapital.com gregory.nuber@hsh-nordbank.com mbaofny@verizon.net

MBA Board of Directors Eugene Belli, REPA, CHMM Thomas A. Berkenkamp Richard T. Carr Jack V. Confusione Mark Davis Karen M. Kozlowski Lawrence J. Longua Thomas Miller Diane Papsidero John C. Ricchezza Brian Scesney Jonathan Stern

(732) 414-2720, ext. 1401 gbelli@aeiconsultants.com (973) 376-7700 tomberkenkamp@brgrealty.com (208) 577-5008 rcarr@a10capital.com (973) 301-7623 jack.confusione@ml.com (646) 705-2066 markpdavis80@gmail.com (212) 908-3937 karen.kozlowski@thompsonhine.com (917) 544-0121 caveanas@gmail.com (917) 621-6462 tjmiller10023@yahoo.com (718) 512-2986 dpapsidero@flushingbank.com (914) 712-3302 jricchezza@signatureny.com (212) 409-1217 bscesney@bankunited.com (212) 972-3600 jstern@meridiancapital.com

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Mortgage Bankers Association of New York Inc.

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Zahra Jafri Jonathan Pinard Michael McHugh Denise Bond Richard Tschernia Mitch Kanor Neil Garfinkel Michael J. Jackson

NewDay to Pay Out $1M Over Test Cheating New York

calendar of events DECEMBER 2015 Wednesday, December 2 MBA of NY Presents “Real Estate Mezzanine Lending– Documentation and Deal Structuring” NYU Schack Real Estate Institute 11 West 42nd Street, Room 1027 New York, N.Y. 8:00 a.m.-10:30 a.m.

For more information, contact Brenda Kenny by e-mail at mbaofny@verizon.net or call (516) 997-3707.

JANUARY 2016 Thursday, January 21 ESMBA Annual Holiday Party Union Prime Steak & Sushi 661 Northern Boulevard Great Neck, N.Y. 7:00 p.m.-10:00 p.m.

For more information, visit ESMBA.org.

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2016 MARCH 2016 Sunday-Thursday, March 13-17 Regional Conference of Mortgage Bankers Associations Harrah’s Resort Waterfront Conference Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

New York State Leads in August Home Price Appreciations Home prices inched up 0.3 percent from July to August, according to the new Home Price Index (HPI) released by the Data & Analytics division of Black Knight Financial Services Inc. On a yearover-year measurement, home prices were up 5.5 percent. The August HPI of $253,000 was 5.3 percent below the June 2006 peak of $268,000.

But the most surprising story from August involved New York, which led all states at 1.8 percent monthly appreciation. Metropolitan areas in upstate New York occupied all of the spot in the August top 10 list for market appreciation, with three areas–Utica, Glens Falls and Watertown–tied for first place at 1.9 percent each. New York City dominated for large market appreciation, recording a 1.3 percent month-over-month ascension.

Nine of the nation’s 40 largest metro area saw new peaks in August, but San Jose backtracked from 11 consecutive months of new peaks with an unexpected 0.4 percent drop. And Illinois registered the most negative movement, down 0.5 percent, while seven Illinois metro areas were included among the nation’s 10 worst performing markets.

NewDay Financial LLC has agreed to a $1 million settlement with the New York State Department of Financial Services (NYDFS) and will surrender its mortgage banker’s license to do business in New York after it was determined that its employees were part of an effort to cheat on state-required continuing education courses and exams.

The NYDFS charged that at least 20 New Day mortgage loan originators failed to take the mandated continuing education courses and exams, with the company’s compliance staff taking the required courses and exams for them. The cheating scheme involved the full knowledge and participation of the company’s executives, the NYDFS added.

“These exams are important because they help ensure that loan officers know and follow the law, and do not abuse homeowners,” said Acting Superintendent of Financial Services Anthony J. Albanese. “The type of dishonest conduct uncovered in this case is simply unacceptable and will not be tolerated in New York.”

The NYDFS also charged the company with compliance failures, including the improper issuance of sub-prime home loans and the misrepresentation of loan terms.

This is latest settlement by the Fulton, Md.-based company to charges of inappropriate business actions. In February, the Consumer Financial Protection Bureau (CFPB) fined NewDay $2 million for deceiving consumers about a veterans’ organization’s endorsement of its products and for its role in a scheme to pay kickbacks for customer referrals. In April, it agreed to a $5.2 million settlement with 43 state mortgage regulators related to cheating on originator testing.

Interim NY Banking Regulator Abruptly Resigns Anthony Albanese, who was named Interim Superintendent of New York’s Department of Financial Services (DFS) following the resignation of Benjamin Lawsky, is going to leave his job in December, reportedly after a clash with Gov. Andrew Cuomo’s office.

According to a Bloomberg News report that cited an unnamed source, the surprise announcement came after tension arose on the DFS exercising the right to issue subpoenas without informing the governor’s office prior to their issuances.

Lawsky, a protégé of Gov. Cuomo, was the first director of the DFS, which was created in 2011. His leadership of the DFS was notable for its high profile pursuit of major U.S. and international financial services companies, and he quickly became one of the most prominent state banking regulators. Albanese did not operate under the same high profile coverage as Lawsky, and in a press statement he tersely announced his departure without citing any specific achievements or problems during his brief period with the Department.

“After four years at DFS, I decided it was time to return to the private sector, and I have accepted another opportunity outside of government,” he said in the statement. “This was always intended to be a temporary position to help smooth the transition process.”

The transition period for the DFS is now in a state of confusion, because there is neither an interim replacement for Albanese or a full-time replacement for Lawsky—and the latter would require approval of the state’s legislature.

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The most efficient way to run your business is to to set up and manage your financial records and use resources that offer multiple services. Of course, eliminate inefficiencies, resulting in more streamlined the services provided must be as good or better than financial processes. those offered by individual companies. The Certified This level of QuickBooks® expertise, combined with our QuickBooks® ProAdvisors and full-service accounting experts extensive accounting experience, results in a relationship that at Presti & Naegele offer this level of service. will keep your books and your business running smoothly. ® By helping you leverage QuickBooks capabilities to Call Joe Romano at (646) 380-4980 for more information maximum advantage, we’ll show you the most efficient way or to schedule an appointment.

Sunday, March 13-Thursday, March 17, 2016 The 2016 Regional Conference of MBA’s Harrah’s 777 Harrah’s Boulevard Atlantic City, N.J. The Regional Conference of Mortgage Bankers Associations, always considered the best such conference in the country, is in its 34th year and will be held at Harrah’s new convention center in Atlantic City, N.J., March 13-March 17, 2016. The Conference will begin with two days of commercial lending followed by two days of residential lending. Once again, the Conference will have not only a great program but also outstanding networking opportunities including two cocktail receptions during the commercial lending segment and three cocktail receptions during the Residential Lending Conference.

?

are you

nominated coming in december 2015

For more information, contact Rosa A. Fernández by phone at (732) 596-1619 or e-mail rfernandez@mbanj.com.

MBA President Stevens to Keynote 2016 Regional Conference of MBAs

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The Regional Conference of MBA’s is pleased to announce that David H. Stevens, president and chief executive officer of the Mortgage Bankers Association will be the Keynote Speaker at the General Session on Wednesday, March 16, 2016, at Harrah’s in Atlantic City, NJ Prior to assuming this position, Stevens served as the Assistant Secretary for Housing and Federal Housing Commissioner at the U.S. Department of Housing & Urban Development (HUD).

Dave has more than 30 years of experience in mortgage finance and has held several executive level positions in sales, acquisition, investment, risk management and regulatory oversight.

He is well-known throughout the industry and is often quoted in the media as a key housing influential; serving as an industry authority on major mortgage finance legislative and regulatory issues. In 2013, Dave received the National Association of Hispanic Real Estate Professionals (NAHREP) Founders Award, presented to individuals that have distinguished themselves by their work in support of sustainable Hispanic homeownership to improve the quality of life for Hispanics in America. Dave received the Certified Mortgage Banker (CMB) designation in October 2015.

He currently serves on the Hope Loan Port board of directors, the board of MBA Opens Doors Foundation, and as an advisory board member of the J. Ronald Terwilliger Foundation for Housing America’s Families.

We are seeking nominations from our readers for National Mortgage Professional Magazine's "40 Under 40" feature, slated to appear in our December 2015 edition. Anyone who is under the age of 40 and has had a major impact on the industry can qualify for this feature. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on the nominee, along with a color photo and company contact info to complete the profile. To nominate yourself or someone else, visit https://nmpmag.wufoo.com/forms/nmps-40-under-40-2015/.

NMP Media Corp.

www.nationalmortgageprofessionalmagazine.com

1220 Wantagh Avenue Wantagh, New York 11793-2202 p 516.409.5555 f 516.409.4600 e advertise@NMPMediaCorp.com w www.NationalMortgageProfessional.com

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N A T I O N A L

M O R T

NMP’s 2015 Mortgage Technology Providers Directory

N O V E M B E R

76 What Most of You Are Selling Is All Wrong

By Ralph LoVuolo Sr.

2 0 1 5

l

V O

A SPECIAL FOCUS ON “MORTGAGE TECHNOLOGY” Living on the Web By Brandon Simmons ................................................50 Exploring a New World of Mortgage Sales By Chris Backe ................52 Social Media Compliance Technology: How to Safely Grow Your Business By Brian Orlando & Ryan Smith ............................54 Strengthening Partnerships With Data Integrity Solutions

By Jack Nunnery........................................................................................56 2016: The Year to Innovate By Alice Alvey ............................................58 Using Modern Training Technology to Improve Compliance

By Mike McNulty........................................................................................60 Proven Data, Proven Loans By Wes Miller ............................................62 Using Automation Technology to Address New

78 Has the CFPB Really Improved Things for the Consumer?

By Becky Walzak

Industry Regulations By Paul Sewell ......................................................64 How Cybercrime Influences E-mail Encryption, TRID Compliance By Fred Touchette ......................................................65

FEATURES Expand Your Non-Agency Product Offering By Tom Hutchens ............8 The Elite Performer: The Benefits of Gratitude

By Andy W. Harris, CRMS ..........................................................................8 Why Lenders Should keep Their Feet on the Pedal This Winter By Bubba Mills ......................................................................10 An Alternative to Marketing Service Agreements ................................16 Millennials Prefer Direct Mail By K. Justin Restaino ..............................18

80 A Conversation Around the Mortgage Market

By Ezra Becker

81 Step Inside Ginnie Mae

By Ted W. Tozer

V I S I T Company

Web Site

O U R

A Page

Academy Mortgage ............................................ www.academymortgage.com ..........................................43 Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................62 American Financial Resources Inc. ...................... www.afrwholesale.com/wd-benefits ....................Back Cover Angel Oak Mortgage Solutions ............................ www.angeloakms.com ..................................................73 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................88 Caliber Home Loans.............................................. www.caliberwholesale.com ..............................................67 CallFurst.com ...................................................... www.callfurst.com ............................................................57 Calyx Software...................................................... www.calyxsoftware.com ....................................................39 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................29 & 50 Comergence Compliance Monitoring, LLC ............ www.comergencecompliance.com ..................................51 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7 Equity Prime LLC................................................ www.equityprime.com ..................................................52 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 60 Flagstar Bank .................................................... www.flagstar.com/ae ....................................................17 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ............................11, 54 & 71 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................13 J&M Student Loan Services.................................. www.studentloansvc.com ..........................................NY10 Law Offices of Richard Lovell .............................. www.lovelllawnewyork.com ........................................NY7 LendingHome .................................................... www.lendinghome.com/nmp ............................................1 Long Island Tennis Magazine .............................. www.litennismag.com ................................................NY5 Lykken On Lending ............................................ www.lykkenonlending.com ............................................63 M&M Exterminating ..............................................................................................................................NY8 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................75

T G A G E

O L U M E

P R O F E S S I O N A L

7

N U M B E R

1 1

NAMB Perspective ..................................................................................20 Doing Good Is Good for Business By Adam Kessler ............................26 Turning Trash Into Treasure By Jeffrey Tesch ......................................28 Industry Updates: November 2015 By Melanie A. Feliciano Esq. ..........32 NMP’s Economic Commentary: Real Estate Boom on the Horizon By Dave Hershman..........................................................36 Has Collateral Really Made a Comeback By Keith Bilodeau ................38 The Long & Short: The Business of Short Sales By Pam Marron ........42 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ........................48 Using Data to Drive Performance By Joni Pilgrim ................................68 The Perils of TRID By Andrew Liput ........................................................70 People Don’t Buy What You Do … They Buy Why You Do It

By Brent Emler ..........................................................................................72 OrigiNation: By Originators, For Originators By Andy W. Harris ..........74 Turn Challenges Into Positive Possibilities: The Three-P Method By Kerry Elam........................................................82

COLUMNS New to Market..............................................................................12 News Flash: November 2015 ......................................................14 Heard on the Street ....................................................................40 Outstanding Places to Work ......................................................84 NMP Calendar of Events ............................................................85 NMP Resource Registry..............................................................86

D V E R T I S E R S Company

Web Site

Page

Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ..............................34-35 MortgagePlannerMarketing.com.......................... www.mortgageplannermarketing.com ............................55 NAMB+ ............................................................ www.nambplus.com ......................................................23 NAMB PAC ........................................................ www.namb.org ..............................................................27 NAPMW ............................................................ www.napmw.org ....................................................49 & 74 NAWRB ............................................................ www.nawrb.com ............................................................83 Nationwide Appraisal Network............................ www.nationwide-appraisal.com ......................................58 New England Mortgage Expo .............................. www.nemortgageexpo.com ..................................NY9 & 53 New York Community Bancorp, Inc. .................... www.nycbmortgage.com ................................................77 New York Tennis Magazine ................................ www.nytennismag.com ................................................NY5 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 61 & Inside Back Cover PB Financial Group Corp..................................... www.calhardmoney.com ................................................41 Presti & Naegele ................................................ www.prestinaegele.com ..............................................NY3 RCN Capital ...................................................... www.rcncapital.com ......................................................19 REMN Wholesale ................................................ www.remnwholesale.com ......................................NY1 & 5 Residential Home Funding Corp. ........................ www.rhfbranch.com ......................................................47 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................59 Secure Insight....................................................www.secureinsight.com ..................................................33 TagQuest .......................................................... www.tagquest.com ........................................................69 The Bond Exchange............................................ www.thebondexchange.com ..........................................56 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..............................79 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Wholesale Mortgage ................................ www.uwm.com ..............................................................37

NOVEMBER 2015 Volume 7 • Number 11 FROM THE

Technically it’s time to party!

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com

Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com

Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com

Beverly Bolnick VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com

Scott Koondel VP of Operations (516) 409-5555, ext. 324 scottk@nmpmediacorp.com

Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com

Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com

Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@nmpmediacorp.com.

ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.

SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.

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publisher’s desk

Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations.

Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations.

National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

This month, the focus is on mortgage technology, but it is also the edition of National Mortgage Professional Magazine that will be distributed at the launch of NMP’s Holiday Networking Parties on Tuesday, Dec. 8 in Irvine, Calif.; Thursday, Dec. 10 in Dallas, Texas; and Tuesday, Dec. 15 in Orlando, Fla. Before we go into the “party update,” let’s talk about technology and the mortgage industry. TRID launched on Oct. 3, and if technology was ever needed in the mortgage industry, TRID demonstrated the crucial role that tech plays in compliance. The impact of technology in every facet of the mortgage process is both clear and crucial to the origination process and to assist in the fully-compliant outcome of the multi-step process from application, processing, underwriting and closing.

The success of the lender community’s transition to a TRID-compliant pipeline resulted from the advance training of their personnel and the research and development of new technology. Concurrent with these efforts, the lenders that reached out to their brokers and correspondents to both train them on TRID and the new technology to meet the new guidelines are the ones reporting a smooth transition. I hope that the examples of those success stories is received by others who didn’t plan as well and that they get their act together quickly in understanding the value of planning, training and technology to navigate this complex compliance climate.

Simply put, after the smoke clears and the grace period expires, the CFPB will react to TRID non-compliance with fines and penalties (or as is more often the case with the CFPB the “excessive settlement” without admission of wrongdoing).

These fines will most certainly exceed the cost of what pre-planning for the TRID transition would have been.

Technology is not a luxury or a tool for efficiency anymore. It is a vital component to keep you in business today. If you do not have the capacity either via personnel or capital to develop the technological tools that will help you, there are many technology providers in the mortgage industry that can provide you with the tools to meet both your needs and deliver them compliantly. See page 44 for NMP’s 2015 Mortgage Technology Providers Directory.

Now on to the aforementioned “parties.” Is the only thing better than a closed loan a free party? National Mortgage Professional Magazine thinks so, and we are launching the biggest FREE Holiday Networking Party in years. So big, we need Texas, California and Florida to host it! Each party starts off with the “Next Gen Mortgage Professionals Rally.” This is the launch of an initiative to “Recharge the Mortgage Profession” and college students, veterans and individuals interested in changing careers are invited to attend. With the NMLS reporting the average age of a loan originator at 54-years-old, we need to recharge this industry with programs to train and mentor the next generation of mortgage professional. These rallies will showcase recent entrants into the profession with their success stories.

This will be followed by business-building workshops from industry leaders such as Greg Frost from PRMI, Barry Habib from MBS Highway, and Frank Garay and Brian Stevens from National Real Estate Post. These workshops will be followed by a party atmosphere where you will have the opportunity to mix and mingle with other successful mortgage loan originators, lenders and tech providers with music, food, prizes and a heavy dose of holiday cheer!

MLOs with an NMLS number, college students and veterans can attend these parties for free. Register for FREE, and view the day’s agenda at NMPHoliday.com. Let’s get ready to party!

Sincerely, Joel M. Berman, Publisher-CEO l NMP Media Corp. l joel@nmpmediacorp.com

National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2015 NMP Media Corp.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Rocke Andrews, CMC, CRMS

Editorial Contributors Alice Alvey

Andy W. Harris, CRMS

Ezra Becker

Dave Hershman

Keith Bilodeau

Pam Marron

Chris Backe

Linda McCoy, CRMS

Kerry Elam

Ted W. Tozer

Brent Emler

Melanie A. Feliciano Esq.

Wes Miller

Paul Sewell

Tom Hutchens

Bubba Mills

Brandon Simmons

Adam Kessler

Jack Nunnery

Ryan Smith

Andrew Liput

Brian Orlando

Jeffrey Tesch

Ralph LoVuolo Sr.

Joni Pilgrim

Fred Touchette

Mike McNulty

K. Justin Restaino

Becky Walzak

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NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

2701 West 15th Street, Suite 536 l Plano, Texas 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org

2015-2016 NAPMW National Board of Directors

NAMB 2015-2016 Board of Directors OFFICERS Rocke Andrews, CMC, CRMS—President Lending Arizona LLC 3531 North Pantano Road l Tucson, AZ 85750 Phone: (520) 886-7283 l E-mail: randrews@lendingarizona.net Fred Kreger, CMC—President-Elect American Family Funding 28368 Constellation Road, Suite 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com John Stevens, CRMS—Vice President Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com Rick Bettencourt, CRMS—Secretary Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l E-mail: rbettencourt@mortgagenetwork.com Andy W. Harris, CRMS—Treasurer Vantage Mortgage Group Inc. 15962 SW Boones Ferry Road, Ste 100 l Lake Oswego, OR 97035 Phone: (503) 496-0431, ext. 302 E-mail: aharris@vantagemortgagegroup.com John Councilman, CMC, CRMS—Immediate Past President AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com

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Donald J. Frommeyer, CRMS—NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A l Carmel, IN 46032 Phone: (317) 575-4355 l E-mail: donald.frommeyer@gmail.com

DIRECTORS Kay A. Cleland, CMC, CRMS l KC Mortgage LLC 2041 North Highway 83, Unit CPO Box 783 l Franktown, CO 80116 Phone: (720) 670-0124 l E-mail: kay@kcmortgagecolorado.com John H.P. Hudson, CRMS l Premier Nationwide Lending 1202 W. Bitters Road, Bldg. 1, Suite 1205 l San Antonio, TX 78216 Phone: (817) 247- 4766 l E-mail: jhudson@pnlending.com Olga Kucerak, CRMS l Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS l Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS l Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Nathan Pierce, CRMS l Advanced Funding Home Mortgage Loans 6589 South 1300 East, Suite 200 l Salt Lake City, UT 84121 Phone: (801) 272-0600 l E-mail: npierce@advfund.com Valerie Saunders l RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com Robert Sweeney, CRMS 600 East Carmel Drive l Carmel, IN 46032 Phone: (317) 625-3287 l E-mail: bob.sweeney46@yahoo.com Michele Velez, CMC l WJ Bradley Mortgage Capital LLC 1300 South El Camino Real, Suite 505 l San Mateo, CA 94402 Phone: (650) 409-2850 l E-mail: michelle.velez@wjbradley.com

1851 South Lakeline Boulevard, Suite 104, Box 303 Phone: (800) 827-3034 • E-mail: napmw@napmw.org Web site: www.napmw.org

National President Kelly Hendricks (314) 398-6840 president@napmw.org

Treasurer Judy Alderson (918) 250-9080, ext. 300 nattreasurer@napmw.org

President-Elect Nikki Bell (678) 442-3966 preselect@napmw.org

Parliamentarian Frances Reinhardt (678) 331-1384 freinhardt@firstservicetitle.net

Vice President Cathy Kantrowitz (845) 463-3011 nvp1@napmw.org

Vice President Laurel Knight (425) 412-6787 nvp2@napmw.org

Secretary Windee Falla (281) 556-9182 natsecretary@napmw.org

National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org

2014-2015 Board of Directors Mike Brown President (908) 813-8555, ext. 3020 mbrown@cisinfo.net

Judy Ryan Director Credit Plus (800) 258-3488 judy.ryan@creditplus.com

William Bower Vice President (800) 288-4757 wbower@continfo.com

Mike Thomas Director (615) 386-2285, ext. 285 mthomas@ciccredit.com

Maureen Devine Ex-Officio (413) 736-4511 mdevine@strategicinfo.com

Dean Wangsgard Director (801) 487-8781 dean@nacmint.com

Julie Wink Treasurer (901) 259-5105 julie@datafacts.com

Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org

Renee Erickson Conference Chair (866) 932-2715 renee@zipreports.com

Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org

Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com

Scott Ledbetter Director (801) 375-5522 sledbetter@propertysolutions.com

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1.800.649.1362

Expand Your Non-Agency Product Offering

By Tom Hutchens Since the housing crisis, we’ve seen some of the most stringent lending guidelines in history, but that’s changing. Many borrowers who don’t meet agency financing guidelines can receive funding for a home thanks to a re-awakened nonagency market that had been dormant for nearly a decade.

However, one size does not fit all when it comes to non-agency loans.

There are several product offerings available that cater to borrowers’ unique situations: Non-Prime Jim hit hard times in 2013 and wasn’t able to make mortgage payments.

He sold his home, but wasn’t able to cover the balance of his mortgage.

This isn’t the first time he’s been in this predicament. During the housing crisis, Jim’s home went into foreclosure. His credit score of 540 reflects this. Shortly after the 2014 short sale, Jim got a promotion at work and is now back on his feet. l Available one day after credit event; scores down to 500; up to 85 percent CLTV; up to 50 percent DTI. Portfolio Select Rebecca also had her home foreclosed on during the housing crisis, but she rebounded strongly afterwards. She was able to build her credit score back to 680 and has saved enough to put down 15 percent. The only thing stopping her from getting an agency loan is her prior foreclosure. l Available two years after credit event; scores down to 640; up to 90 percent CLTV; up to 50 percent DTI.

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Bank Statement Jane is self-employed as the sole owner of her graphic design business.

Her tax returns do not reflect her true income due to business write-offs.

Since her reported income does not accurately reflect her financial status, she’s found it difficult to qualify for an agency loan, even with a credit score of 700. l No tax returns required; 24 months bank statements; scores down to 660; up to 80 percent LTV; up to 50 percent DTI. Foreign National Miguel lives and works in Venezuela, but frequently travels to the U.S. for business. His favorite place for a weekend jaunt is Miami. He’s there so often, he’d like to buy a condo. He’s got enough money to put more than 25 percent down, but since he’s not a citizen, he doesn’t have a U.S. credit score. l No U.S. credit required; up to 75 percent LTV; up to 50 percent DTI. Investor Cash Flow Three years ago, Kevin purchased a rental property in cash and has found renting it to be quite lucrative. He wants to leverage his property management skills and buy another rental to fix up. He can’t get a loan from the bank because his income isn’t high enough, but he knows he’ll collect enough in rent on the new property to cover the mortgage. l Qualification on property cash flow; up to 70 percent LTV; no DTI restrictions.

Borrowers that cannot check every box to qualify for an agency loan can look to alternative programs available to fit their individual needs. It’s just a matter of finding which product nest fits their individual situation.

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 info@angeloakms.com.

SPONSORED EDITORIAL

THE

elite performer

The Benefits of Gratitude

By Andy W. Harris, CRMS t’s that time of year again when we think about giving thanks.

Although we have a national holiday around the celebration of our historical roots and being thankful for many different reasons, how often do you find yourself giving thanks during the year? I’m pretty confident that every one of us is very thankful to many others in our lives for things they have done to make a positive impact on our own lives. Giving thanks should be an all-year habit for many reasons, and gratitude can produce rewards to those on both the receiving and giving end.

Amy Morin, a psychotherapist and author, recently wrote an article featured in Forbes about the seven scientifically-proven benefits of gratitude. She listed them as follows:

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1. Gratitude opens the door to more relationships.

2. Gratitude improves physical health.

3. Gratitude improves psychological health.

4. Gratitude enhances empathy and reduces aggression.

5. Grateful people sleep better.

6. Gratitude improves self-esteem.

7. Gratitude increases mental strength.

“Gratitude is not only the greatest of virtues, but the parent of all the others.”

—Cicero

Looks like some pretty great benefits for a little bit of effort. If you have ever experienced someone truly thanking you for just being you, it’s very motivating and humbling. If you have ever thanked another person for just being who they are, the same benefits apply. Be grateful for the people and things you may take for granted. We all need to give and receive gratitude in regular doses. Let’s not just dish out gratitude once a year, but embrace being thankful all year long.

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

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Why Lenders Should Keep Their Feet on the Pedal This Winter

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By Bubba Mills he summer is getting smaller and smaller in your rearview mirror, and with it goes, as some lenders believe, the best part of the mortgage lending season. But before you believe them, you might want to take another look through your windshield and see what’s right in front of you: Fall.

It turns out that the fall may pad your bank account just as well as summer–maybe even better. But don’t just take my word for it. RealtyTrac, the real estate analyst, conducted a study and analyzed more than 32 million sales of single family homes and condos since 2000. The findings: The month where buyers landed the best deal on average is October. Of the 2.7 million sales closed in October over the last 15 years, the average sales price was 2.6 percent below the average estimated full market value at the time of sale.

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1. Less competition

We all know they eventually will–it’s just a matter of time And when they do, purchasing power will take a dive.

Many real estate agents are realizing a lot of their competition takes their feet off the accelerator in the fall, and that leaves room for them to close sales.

Remember the bidding wars from this past summer? Analysts say that craziness is less likely this fall.

The fall gets people thinking about the holiday season. We all know emotions run high during the holidays. The idea of celebrating the holidays in a new home can add fuel to those emotions.

Why is this? A few reasons:

2. Tax breaks All real estate agents know buyers save money on taxes with the mortgage interest and property tax deductions.

Many are now using those deductions to get buyers off the fence in the fall. Help them get the word out.

3. Interest rates Consumers got some good recent news– the Fed will not be raising interest rates– for now. Lenders and real estate agents should be using this news to their advantage and explain now is the time to buy before the Fed actually does raise rates.

4. Emotions

So, yes, the fall is a great time of the year to keep the gas pedal down. But here’s another message I want to get across: Mortgage lending is a yearround business. You don’t have to travel through the high peaks and deep valleys that so many lenders complain about. You can even things out with the right mindset and actions.

First, the mindset: You have to truly believe that you can close deals in any month of the year. And believe me … it’s true. I coach clients who often bring in steady amounts of money throughout the entire year.

Second, the actions: Behave in a way that matches your new mindset. That means talking mortgage lending with prospects–you guessed it–throughout the year. I’ve read stats that say one in five people will make a change in their housing over the next three years. That may or may not be true. What is true is this: home sales happen year around.

So now it’s up to you to get that business. First believe, and then act by getting in front of prospects. The secret is no secret at all. Go sell.

Share what you’re thinking. Are you stuck in the mindset that summer (and summer alone) is the best part of the year for lending? If so, are you willing to look at the possibility that you might be able to do well in other parts of the year? What can you start doing today to make fall a more productive time of year for you?

Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 9578353 or visit www.corcorancoaching.com.

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Nationwide Appraisal Network Launches NAN Software

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Nationwide Appraisal Network (NAN) has announced that it has formed NAN Software in order to launch its flagship product AppraisalQPM, a cloud-based application designed to reduce cycle times, operating costs and risk associated with the appraisal order and review processes. In addition, the application will provide the data and analytics to manage performance and communication amongst all parties. The product has attracted Jim Cutillo, founder and managing partner of Next Level LLC, a private equity and strategic advisory firm as an investor.

“It’s not often that you see disruptive technology in its early stages, before it can potentially transform an industry, but when you do, it is impossible to not get involved,” said Cutillo, founder and former CEO of Stonegate Mortgage. “Cari Burris and Joni Pilgrim have built a great business, and I am looking forward to working with them to build an industry leading software application and expand NAN’s appraisal management business.”

NAN started developing AppraisalQPM when company founders Burris and Pilgrim identified a gap that currently exists in the industry for an integrated platform that connects all the players in the appraisal process, provides transparency, control and increased certainty while reducing operating cost and risk.

“Nothing is more exciting than driving cutting-edge technology initiatives,” said Pilgrim. “We have combined data, analytics and process with industry knowledge and technology to deliver a solution that enables our clients make better data driven decisions. We are excited to start our partnership with Jim, his wealth of industry knowledge is unparalleled and combines effectively with NAN’s commitment to move the appraisal process light years ahead.”

Secure Insight Announces TRID Enhancements to Its Settlement Agent Vetting Tool Secure Insight, the brand name of Secure Settlements Inc., has announced a new

enhancement to its Closing Guard tool.

All Secure Insight clients will now be able to access settlement agent license details on the Closing Agent Search Engine results page. This enhancement provides lenders with agent license numbers by state and profession, so that they may populate the new Closing Disclosure with that information for compliance purposes.

Lenders generally do not have access to this data, although Secure Insight has been collecting the data from thousands of agents nationwide for the past four years. As a result of the new TRID effective industrywide, lenders must deliver a properly completed, full disclosure closing statement to borrowers three days prior to the closing date. The form requires lenders to disclose, among other details, the settlement agents name, contact information and state licenses. Lenders have never been required to request and capture license data in the past.

“We are pleased to offer our lender clients access to this critical information, which we have been collecting and verifying on tens of thousands of attorneys, notaries, escrow officers and title agents nationwide since 2012,” said Secure Insight President Andrew Liput. “Our robust database, utilized by many lenders throughout the country, already offers comprehensive information and risk ratings for these professionals. By including license numbers in our search results we are now offering even greater assistance to lenders to help make the transition to TRID somewhat easier. This enhancement is only one of several we expect to announce between now and first quarter 2016 as we maintain our reputation as a thought leader in vendor management issues.”

CIS Credit Announces Integration With ReverseVision CIS Credit is now integrated with reverse mortgage platform, ReverseVisions’ RV Ex-

change. This integration provides banks, investors, brokers and lenders with increased efficiency and expanded options in qualifying reverse mortgage applicants. CIS provides consumer credit reports from Experian, Equifax and TransUnion, the three national trade bureaus. CIS clients can take advantage of the cost and operational efficiencies gained with the expanded platform integration. CIS provides all documentation needed to qualify mortgage applicants.

In addition to tri-bureau consumer credit, CIS processes 4506T Tax Return Verifications, Verification of Deposit/Asset, SSA-89, Undisclosed Debt Notifications, property searches, tax monitoring and a host of other tools that assess ability to repay, identify fraud and mitigate risk.

“With the increased due diligence required for Financial Assessment under the Home Equity Conversion Mortgage program, reverse mortgage originators need access to the same information used in underwriting traditional mortgages, a market CIS has been a national leader in for 30 years,” said Nancy Fedich, CIS CEO. ‘’The CIS integration with ReverseVision adds efficiency to the underwriting process which ultimately results in a better customer experience and more successful closings.”

CIS Credit is available to all RV Exchange users who set up a CIS account.

LenderLive Introduces FACTCheck Tax Transcript Analysis

LenderLive has announced that its GuardianDocs unit has introduced a new module to its FACTCheck suite: FACTCheck Tax Transcript Analysis. The new tool enables lenders to receive the FACTCheck tax transcript report as part of their IRS transcript order from select Income Verification Express Service (IVES) providers.

The FACTCheck tax transcript report returns the proprietary FACTCheck rules engine analysis on all income sources in a detailed, interactive report that contains both calculated qualifying income and messages of explanation and instruction. These rules are designed to test for GSE compliance, as well as a borrower’s ability to repay (ATR) under Appendix Q. Because the new solution delivers a full fact-checked report, underwriters can focus their time on “gray areas” and more difficult situations. It also allows document collection to be done by processors and assistants. Lenders can upload tax transcripts to FACTCheck Tax Transcript Analysis in either HTML or a variety of PDF formats, so there is no need to manually input information.

“In the event of a default, an incorrect or unsupportable ATR calculation suddenly becomes a target on the lender’s back,” said Jonathan Kunkle, president of GuardianDocs. “We’ve designed FACTCheck Tax Transcript Analysis to reduce the risk of manual errors and inconsistently applied processes, as well as improve both accuracy and productivity by empowering exception-based underwriting.

Dodd-Frank is about transparency. With FACTCheck, we are on a mission to bring the same transparency to income analysis that credit reports have brought to debt analysis. Ultimately, our goal is to protect both the borrower and the lender, while making the underwriter’s job easier and speeding up the loan process.”

ClosingCorp Launches Lumen Snapshot Quality Assurance Tool

ClosingCorp has announced that it has launched Lumen Snapshot, a new tool that enables lenders to provide prospective borrowers with realistic closing cost data in real-time during the “shopping” and/or pre-qualification stages of getting a loan. Additionally,

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EWSFLASH l NOVEMBER 2015 l NMP NEWSFLASH l NOVEMBER 2015 NMP NEW PRMG Cares to Donate VA on mortgage kickbacks and referral date. The payment of improper kickfees, and describes examples from the backs and referral fees has been the Loan Proceeds to Wounded Warrior Project Bureau’s enforcement experience, as basis of almost all of those actions. As

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Paramount Residential Mortgage Group Inc. (PRMG) opened its doors during the very same week of the New York World Trade Center tragedy of 9/11. The opening of PRMG, coupled with the reality of this horrific event, has always remained close to the hearts of PRMG and is a significant part of the patriotic fabric that shapes the culture at PRMG. Fast-forward to 2014 when Paul Rozo, president and CEO, decided to channel the power of PRMG’s nationwide platform by engaging philanthropic efforts through the 501(C)3 Non-Profit Foundation known as PRMG Cares. Therefore, it was only natural that the Wounded Warrior Project be the first charity chosen subsequent to the inception of the foundation. At that time, PRMG was honored to have retired U.S. Naval Lieutenant Kevin Shaeffer share his compelling story with PRMG’s sales team of how he courageously survived the traumatic 9/11 terrorist attack when the hijacked airliner flew into the southwest wing of the Pentagon.

The main initiative of PRMG Cares is the Wounded Warrior Project which aims to support and give back to our wounded veterans and their families nationwide. As part of this initiative, PRMG will donate $50 to the Wounded Warrior Project with every VA Loan funded. We are also challenging our brokers to match or beat us by making their own donations.

CFPB Issues Guidance on MSAs and Kickbacks

The Consumer Financial Protection Bureau (CFPB) has issued a bulletin providing guidance to the mortgage industry regarding Marketing Services Agreements (MSAs). The bulletin offers an overview of the federal prohibition

well as the risks faced by lenders entering into these agreements. During the course of supervising mortgage lenders and enforcing federal law, the Bureau has found that marketing services agreements carry legal and regulatory risk for lenders.

“We are deeply concerned about how marketing services agreements are undermining important consumer protections against kickbacks,” said CFPB Director Richard Cordray. “Companies do not seem to be recognizing the extent of the risks posed by implementing and monitoring these agreements within the bounds of the law.”

The bulletin explains that while marketing services agreements are usually framed as payments for advertising or promotional services, in some cases the payments are actually disguised compensation for referrals. Any agreement that entails exchanging a thing of value for referrals of settlement service business likely violates federal law, regardless of whether a marketing services agreement is part of the transaction.

The bulletin describes a number of legal violations the Bureau has encountered in investigations involving kickbacks and referral fees. For example, the CFPB found a title insurance company that entered into marketing services agreements where the fees paid by the company were based in part on the number of referrals it received, as well as the revenue generated by those referrals. In another case, a settlement service provider did not disclose its affiliate relationship with an appraisal management company and did not tell consumers that they had the option of shopping for services before directing them to the affiliate.

The CFPB’s enforcement actions against companies and individuals for violations of the Real Estate Settlement Procedures Act (RESPA) have resulted in more than $75 million in penalties to

the bulletin notes, the CFPB intends to continue actively scrutinizing the use of such agreements and related arrangements in the course of its enforcement and supervision work.

Fannie Mae’s Q3 Profit Half of Q2 Returns Fannie Mae reported $2 billion in net income and $2.2 billion in comprehensive income for the third quarter, a profit but still a hefty drop from the second quarter’s net income of $4.6 billion and comprehensive income of $4.4 billion. The government-sponsored enterprise blamed its third quarter result on “fair value losses … due primarily to decreases in longer-term interest rates negatively impacting the value of the company.”

Fannie Mae emphasized its positive net worth of $4 billion as of Sept. 30, which resulted in a dividend obligation to Treasury of $2.2 billion, which it expects to pay in December.

Fannie Mae’s desultory third quarter results follow Tuesday’s disastrous numbers from Freddie Mac, which reported a net loss of $475 million for the third quarter, down substantially from the $4.2 billion in net income for the second quarter. Freddie Mac also a comprehensive income of $501 million for the third quarter, far below the $3.9 billion level from the second quarter.

In a statement announcing its third quarter results, Fannie Mae President and CEO Timothy J. Mayopoulos conspicuously avoided any mention of the decline in profits.

“I am proud of Fannie Mae’s leadership in bringing positive change to the housing finance system,” Mayopoulos said. “We are delivering innovative technology to lenders to help them

originate loans with greater certainty and deficiency, while we continue to transfer a significant amount of credit risk to private capital to better protect taxpayers. Our strong financial results punctuate the ongoing improvements we have made to give our partners the clarity they need to lend with confidence and help more families get a mortgage they can afford.”

While neither Freddie Mac nor Fannie Mae are in need of a Treasury draw at this time, Federal Housing Finance Agency (FHFA) Director Mel Watt created more than a few jitters earlier this week when he stated that such an action may be on the horizon.

“Volatility in interest rates coupled with a capital buffer that will decline to zero in 2018 under the terms of the senior preferred stock purchase agreements with Treasury will likely make both Enterprises increasingly susceptible to the possibility of quarterly losses that could result in draws going forward,” Watt said in a statement.

More Than $700,000 Raised for MBA’s Opens Doors Foundation

Mortgage Bankers Association Opens Doors Foundation has announced that it has secured more than $735,000 in pledged donations at, or associated with, MBA’s 2015 Annual Convention.

“Opens Doors is thrilled at the incredible outpouring of support from so many different corners of the real estate finance and housing industry,” said Debra W. Still, CMB, chairman of the MBA Opens Doors Foundation and president and CEO of Pulte Mortgage.

“Eight of the nation’s largest homebuilders, along with large depository institutions, community banks, independent mortgage bankers, residential firms, commercial/multifamily firms, and many more companies and individuals all made generous contributions to our efforts. Because of our success at MBA’s 2015 Annual Convention, Opens

While the autumn and winter months are traditionally not the most frenetic

resolved in the warmer weather.

“Inventory isn’t likely to be higher in March and April than it is now,” Smoke continued. “And while inventory should grow in late spring and into summer, it won’t grow as fast as the seasonal demand. So, if you are ready, consider getting in the market now instead of early spring. You will have more choices and less competition, and you can lock in today’s rates rather than risk rates being 25 to 50 basis points higher.”

Without mentioning Janet Yellen and friends by name, Smoke also hinted that a potential Federal Reserve rate hike would make homebuying somewhat costlier after Dec. 16.

“A 50 basis-point increase in rates … would cause monthly payments to be

six percent higher,” Smoke said. “And that increase would not only affect your monthly cash flow but could also affect your ability to qualify.”

Q3 Commercial/Multifamily Originations Up 12 Percent Year-Over-Year

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Economist Calls for OffSeason Home Purchasing

in terms of sales volume, one prominent housing economist is calling on people to break with tradition and consider residential home purchasing during this chilly off-season.

“If you qualify for a mortgage and have the funds for a downpayment and closing costs—and if you intend to live in a home long enough to cover the transaction costs of buying and selling—you will be better off financially if you buy as soon as you can,” said Jonathan Smoke, chief economist at Realtor.com. “After all, if you are tired of your current home now, you won’t feel better about it in six months.”

Smoke noted that one of the problems facing many housing markets—the lack of inventory—holds no promise of being

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Doors will begin its new fiscal year with an opportunity to help many more families in need. When we join together, we send a very strong message that all members of the real estate finance community are committed to sustainable housing and giving back.”

Eight of the nation’s largest homebuilders and their in-house lending companies contributed a total of $170,000.

These include PulteGroup and Pulte Financial Services, CalAtlantic Homes and CalAtlantic Financial Services, K. Hovnanian Homes and K. Hovnanian American Mortgage LLC, Lennar Homes and Universal American Mortgage Company (UAMC), Taylor Morrison and Taylor Morrison Home Funding, Meritage Homes and MTH Mortgage, D.R. Horton Inc. and DHI Mortgage Company, and Richmond American and HomeAmerican Mortgage.

Companies represented on MBA’s Board of Directors contributed a total of $380,000.

These include CMG Foundation, Bank of America, Cornerstone HomeLending Inc., CoreLogic Inc., FNF: Fidelity National Financial/Black Knight Financial Services/ServiceLink, First American Title Insurance Company, M&T Bank, Quicken Loans Inc., Radian Guaranty Inc., SunTrust Mortgage Inc., U.S. Bank Home Mortgage, Wells Fargo Home Mortgage, CBRE Capital Markets, Colonial Savings, EverBank, McLean Mortgage Corporation, Alliance Home Loans, HomeStreet Bank, VantageScore Solutions LLC. Additional members of the real estate finance community including SWBC Mortgage Corporation, Guild Mortgage Company, Pingora Asset Management LLC, Wallick & Volk, Genworth, MGIC— Mortgage Guaranty Insurance Corporation contributed a total of $140,000.

Individual and corporate attendees of MBA’s Annual Convention and Expo contributed over $45,000 by making donations and pledges at the Foundation’s donor reception and the Tuesday morning general session, bidding in an online auction, purchasing extra tickets for special convention events, and bidding on a guitar signed by musician Sheryl Crow, who performed for convention attendees.

Opens Doors is currently able to pass 100 percent of the donations it receives on to families in need of assistance. The Foundation’s ongoing relationship with Washington, D.C.’s Children’s National Medical Center and more recently Children’s Hospital Colorado, provides partner organizations to help identify potential grant recipients.

An Alternative to Marketing Service Agreements

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October was a huge month for the mortgage and real estate industry, sweeping changes took effect regarding Marketing Service Agreements (MSAs). The widespread talk among people in the mortgage and real estate industries about what they are going to do is the hot topic. For many, the MSA has been key to a business model you have relied on heavily to keep marketing costs low and may no longer exist. For these people, having to completely change their marketing model seems like a daunting task, and being RESPA compliant adds even more stress to the process. Rest assured there are alternatives to MSAs. You do not have to try and beat the system. You can work within the new guidelines and still be successful.

An MSA, as we know it, most often outlines marketing agreements between real estate companies and lenders to exchange customers for a predetermined fee. The fees associated with MSAs can amount to thousands of dollars. Whether a real estate company pays the lender for the ability to share in marketing costs or the other way around, MSAs are a serious threat to an age old business model.

As mortgage professionals, you have access to extremely sensitive information. Use the tools you have at your disposal as a lender to create specific marketing campaigns. Pre-qualify your leads based on credit scores, income, LTV, and hundreds of other criteria. As a lender, whether you are a banker or a broker, you have access to credit data to target consumers for your marketing and to generate new business. Only very few industries can access credit information for the purposes of marketing and generating new business. You are lucky to be in one of them. Utilize credit data to help you pre-qualify your leads and personalize your marketing campaigns in many different ways.

Mortgage direct mail responses are back over one percent. Combine credit data with the traditional direct mail campaign and create your own leads. Loans that are generated by traditional marketing techniques, like direct mail, have a higher retention rate than loans that are generated from the internet. The Internet gives people options, and those options turn into competition in the mortgage business. Couple that with the lack of loyalty we’ve seen in recent years, and all signs point to you generating your own leads. Proactive marketing with compliant campaigns will ensure your success by filling up your pipeline and make it easy to stay within the new guidelines.

TagQuest Customer Spotlight: Gary D. Hayes, Branch Manager, Mi Mutual Mortgage Each month, we talk with our clients to see how their campaigns are going.

Here’s some feedback we received from Gary D. Hayes, branch manager at Mi Mutual Mortgage (NMLS#: 198774, AZ License#: LO-0914546) Marketing method: Direct mail voice l Volume: 5,000 pieces targeting VA loans l Results: More than 80 calls yielding a 1.67 percent response rate, 72 leads generating with qualifying data, with 2.1M in potentially closed loans!

Highlights of the campaign that worked well …

“The automated voicemails … my staff was completely surprised and caught off guard by how successful this approached worked, and how well it was received by the borrowers. Honestly, this was part of the campaign that I wrote of a somewhat of a gimmick, and I am now a believer as I have seen how this works firsthand.”

Highlights of the campaign that might appeal to others in the industry …

“I think this approach would work well for any mortgage professional who has experience in working leads, or has strong support or sales training that will help them capitalize on these call-ins.”

Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 717-8980 or visit www.tagquest.com.

SPONSORED EDITORIAL

nmp news flash continued from page 15

Commercial/Multifamily Mortgage Bankers Originations, third quarter 2015 commercial and multifamily mortgage loan originations were 12 percent higher than during the same period last year and three percent higher than the second quarter of 2015.

“Commercial mortgage borrowing and lending continued to grow during the third quarter,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “Every major investor group and property type except one has seen increases in year-to-date lending volumes, and we expect year-end numbers to continue that trend.”

Increases in originations for retail and office properties led the overall increase in commercial/multifamily lending volumes when compared to the third quarter of 2015. The increase included a 39 percent increase in the dollar volume of loans for retail properties, a 17 percent increase for office properties, an 11 percent increase for multifamily properties, a 10 percent increase for industrial properties, a nine percent decrease in hotel property loans, and health care property loans decreased 30 percent year-over-year.

Among investor types, the dollar volume of loans originated for commercial bank portfolio loans increased by 93 percent from last year’s third quarter. There was an 18 percent increase for life insurance company loans, a three percent decrease for government-sponsored enterprises (GSEs) loans, and an eight percent decrease in dollar volume for Commercial Mortgage Backed Securities (CMBS) loans.

Third quarter 2015 originations for office properties increased 37 percent compared to the second quarter 2015. There was a 27 percent increase in originations for retail properties, a five percent increase for health care properties, a one percent decrease for industrial properties, an eight percent decrease for multifamily properties, and a 29 percent decrease for hotel properties from the second quarter 2015.

Among investor types, between the second and third quarter of 2015, the dollar volume of loans for CMBS increased 22 percent, loans for life insurance companies increased 13 percent, originations for commercial bank portfolios increased nine percent, and loans for GSEs decreased by 28 percent.

FHFA Announces Expansion of Neighborhood Stabilization Initiative

The Federal Housing Finance Agency (FHFA) has announced an expansion of its Neighborhood Stabilization Initiative (NSI) to 18 additional metropolitan areas around the country. Effective Dec. 1, local community organizations will be

given the opportunity to review and purchase foreclosed properties owned by Fannie Mae or Freddie Mac in these 18 additional metropolitan areas prior to these properties being made publicly available for purchase. Sales prices will vary from market to market.

The NSI was jointly developed by FHFA, Fannie Mae and Freddie Mac and involves a partnership with Fannie Mae and Freddie Mac and the National Community Stabilization Trust (NCST). The pilot, launched initially in Detroit, Michigan in May 2014, was extended earlier this year to Cook County, Illinois. Based on the lessons learned from the pilot, Fannie Mae and Freddie Mac will continue their work with NCST to focus on disposition of real estateowned (REO) properties in ways that place a priority on stabilizing neighborhoods.

“The number of REO properties that Fannie Mae and Freddie Mac hold continues to decline nationwide, but there are still some communities in which the number of REO properties remains elevated,” said FHFA Director Melvin L. Watt. “Our goal is to take what we learned in Detroit and Chicago and apply it to these additional communities as quickly and efficiently as possible. Giving local community buyers an exclusive opportunity to purchase these properties at a discount, taking into account expenses saved through a quicker sale, is an effective way to give control back to local communities and residents who have a vested interest in stabilizing their neighborhoods,” Watt said.

Foreclosure Inventory Shrinks, Rental Market Surges

The U.S. foreclosure inventory in September witnessed a 24.3 percent yearover-year decline, while the number of completed foreclosures declined by 17.6 percent compared with September 2014, according to new data from CoreLogic.

CoreLogic determined that the national foreclosure inventory consisted of approximately 470,000, or 1.2 percent of all homes with a mortgage; one year earlier, the inventory consisted of 621,000 homes, or 1.6 percent with a mortgage. September saw 55,000 foreclosures, down from 67,000 a year earlier.

Furthermore, the number of mortgages in serious delinquency—defined as 90 days or more past due—fell 21.2 percent in September on a year-over-year basis, 1.3 million mortgages, or 3.4 percent, in this category. This is the lowest serious delinquency rate since December 2007.

The five states with the highest number of completed foreclosures for the 12 months ending in September—Florida continued on page 26

Your lender should be your strongest link.

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Connect with us. Visit flagstar.com/ae to find an account executive near you.

Some restrictions may apply. All borrowers are subject to credit approval. Programs subject to change. The information provided herein is for dissemination to and for real estate and financial business entities only and is not an advertisement for the extension of credit to consumers.

n New York Mortgage Professional Magazine n NOVEMBER 2015

Warehouse lines up to $100 million • Agency/government products • Multi-channel delivery Underwriting flexibility • TRID-ready • Local account executives—direct point of contact

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With decades of industry know-how, Flagstar is a partner you can rely on.

Millennials Prefer Direct Mail

By K. Justin Restaino Before starting an advertising campaign, it’s important for a marketer to define their target market—essentially, the people they wants to reach with this advertising. As we move into a new year, home purchases are expected to climb. A great amount of these potential new owners are Millennials. Millennials are a fantastic market for mortgage lenders to tap. People between the ages of 18 and 34 are predicted to become the largest homebuying group by the end of 2016. Dr. Stan Humphries, chief economist at Zillow, reports that, “Roughly 42 percent of Millennials say they want to buy a home in the next one to five years.” This is compared to only 31 percent of those in Generation X holding this desire.

Ironically, the common notion that most people have of Millennials is that they are strongly tied to digital media, and while this is true to an extent, by and large, Millennials prefer direct mail. l Seventy-five percent of Millennials believe that the direct mail they receive is valuable. l A whopping 92 percent of Millennials are influenced to make a purchasing decision as a result of direct mail they received, as compared to only 78 percent for e-mail. l When asked whether they would prefer to receive promotions via email or direct mail, 90 percent of Millennials stated a preference for direct mail.

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Fortunately, it’s easy to reach this very specific group of people with direct mail. This means that your direct mail can directly reach those who are most likely to be interested in your services, making this an attractive option for mortgage brokers who don’t have a lot of money to spend on advertising and want a greater guarantee of a high return-on-investment (ROI).

Unfortunately, the financial services industry is one that consumers view with a great deal of distrust. As such, it is increasingly important that mortgage brokers put forth their best efforts to be viewed as honest and credible by potential leads. One thing that can help accomplish this is the use of direct mail. A physical, tangible piece of mail conveys a sense of legitimacy that a mass-produced e-mail cannot. While any fly-by-night financial service provider can send out an e-mail, direct mail takes significantly more time and effort. We would argue that it is this effort that conveys the legitimacy that is so important in the financial industry.

Direct mail offers the aspiring mortgage lender many benefits: It increases desirability of mortgage services, generates an emotional reaction in the recipient, works well with Millennials, allows for creativity, conveys a sense of legitimacy, and has an excellent ROI. For this reason, mortgage brokers who want to expand their businesses would be well-advised to consider direct mail. A well-thought-out direct mail campaign can yield fantastic results by maximizing ROI, reaching prospects, generating new leads and ultimately, increasing revenue.

K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 15 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.

SPONSORED EDITORIAL

new to market continued from page 12

Lumen Snapshot can be used to help determine loan program suitability and as a quality assurance tool pre- and post-close.

Lumen Snapshot uses pre-calculated median closing cost data based on geographic area and loan scenario to deliver estimates to consumers in seconds.

The database is powered by the company’s proprietary repository of fully managed, vendor-verified rates and fees from nearly 20,000 unique real estate service providers across the nation. As an API, the solution can be integrated into lenders’ consumer direct Web sites, loan calculators, product and pricing engines and loan origination systems to better educate borrowers and increase loan pull-through rates.

“Lumen Snapshot is designed to help lenders engage and inform prospects in the early stages of a mortgage decision.

It can enhance the functionality of consumer direct channels and increase the effectiveness and credibility of retail LO presentations,” said Brian Benson, chief executive officer at ClosingCorp.

“Moving the conversation about closing costs up earlier in the sales cycle will potentially improve the quality of lead conversion rates and customer satisfaction. Using our unique database built from a nationwide inventory of actual rates and fees as a foundation also demonstrates a lender’s commitment to the principles of ‘Know Before You Owe’ to regulators and auditors.”

Wolters Kluwer Financial to Integrate With Black Knight Financial’s LOS

Wolters Kluwer Financial Services (WKFS) has announced that it plans to make its Expere integrated document solution available with Empower, Black Knight Financial Services’ (BKFS) loan origination system, early next year. The integration will deliver Wolters Kluwer Financial Services’ compliant residential lending content from Expere to Empower to enable lenders to quickly implement their own loan documents to match their origination workflows.

The Expere integration with Empower, will be available for both Empower’s ASP and lender-hosted offerings, will help lenders address the critical challenge of staying compliant with continually evolving regulations across their residential loan portfolios.

Expere’s dynamic content library is maintained and warranted by Wolters Kluwer Financial Services to help lenders generate accurate and compliant loan documents. Additionally, the integration will allow lenders to transfer data securely between both systems and customize documents to their origination workflows.

“Black Knight and Wolters Kluwer Financial Services have enjoyed a close, long-term relationship in support of our many mutual clients, and this integration further enhances our joint capabilities,” said Jerry Halbrook, president of the BKFS Origination Technologies Division. “Lenders will be able to make document changes as they are released and put them into production immediately.”

The integration will eliminate vendor change requests that are often required when capturing new document data. Now, lenders will be able to update documents through simple click-to-configure functionality, leveraging Black Knight’s data mapping tree tool. Once the documents are configured to a lender’s origination workflow, they will seamlessly integrate with Empower.

ComplianceEase Now Offering InsuranceBacked Warranty Program

ComplianceEase has announced that it is offering a comprehensive insurancebacked warranty program for loans that have been audited by its ComplianceAnalyzer solution. The program, AssureCert, provides a warranty for compliance defects, including the new TILA-RESPA Integrated Disclosure (TRID) and Qualified Mortgage (QM) rules, as well as federal and state consumer lending and high-cost laws and regulations.

This versatile program may be used as compliance repurchase relief for secondary market transactions.

The program provides a maximum benefit of up to $50,000 per loan for a seven-year period, and is backed by an A.M. Best A-rated insurer. Under the new policy, there is no per claim minimum or deductible, and the warranty is transferable to secondary market investors or servicers.

A wide range of loan products are eligible: First and second liens; purchase, refinance and equity transactions; conventional, FHA and VA loans; and all property types. The warranty does not require minimum credit scores or place limits on loan-to-value.

AssureCert provides protection to lenders and investors for financial losses from fines, penalties, restitutions, judgments, defense costs and reasonable plaintiff’s attorney fees from actions brought against the financial institution for specific regulatory compliance violations that are not reflected on the ComplianceAnalyzer report for a covered loan. AssureCert also covers lack of marketability of an affected loan continued on page 32

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n New York Mortgage Professional Magazine n NOVEMBER 2015

NAMB PERSPECTIVE The President’s Message: November 2015 My term as president of NAMB—The Association of Mortgage Professionals has begun, and NAMB National at The Luxor in Las Vegas was a huge success. Now is the time to share our goals and for our membership to jump in and join a committee if you feel the urge.

Here are a just a few topics that I am looking at over my term as NAMB president: l Membership: Our goal is to increase our membership totals to 6,000 members and our new Membership Committee Chair Kimber White of Florida has many exciting ideas. If you

would like to help Kimber with this initiative, please contact him at Kimber.LMT@gmail.com. l Government Affairs: We react to regulatory and legislative actions and our main push is to remove the mortgage broker entity from the three percent LO cap as reflected in the original Dodd-Frank legislation. Valerie Saunders has already started a Government Affairs blog and is putting together a software package that allows calls to action so that members can easily forward their concerns to their individual legislators. l Education: Our goal is to provide sales,

The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer, CRMS

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Wow … What a strange feeling I had just recently when I attended Rocke Andrews’ first NAMB Board Meeting. This was the first time in eight-plus years that I am not on the Board of Directors. And you know what … this Board is going to be fantastic. They are all about growth, membership, government affairs, doing what is right for the membership and taking care of membership.

The three new members of the Board are really ready to jump in, and the executive group of President Rocke Andrews, President-Elect Fred Kreger, Vice President John Stevens, Treasurer Andy W. Harris and Secretary Rick Bettencourt bring a new excitement to running NAMB. Hold

onto your hat, as they have come in with some new ideas and an aggressive approach to making this year successful.

What a great idea to all of those who joined or renewed their NAMB membership in Las Vegas at NAMB National. The Membership Committee handed out wireless mice for your computers with the NAMB logo. They really were neat. The Legislative Action Fund was really on the move selling tickets for your chance to win door prizes. The drone was a great prize!

And I also want to say thank you to John Porter, Jim Nabors and John Stevens for the great PAC function that they put on in Vegas. I have to tell you that it was a good time had by all and it was for a great cause.

The PAC Committee has instituted some new categories of giving in the coming year

NAMB East: Coming to South Carolina in 2016

By Linda McCoy, CRMS For those of you who have not heard about NAMB East 2016–The Conference for Loan Originators, it will be held Tuesday-Friday, March 8-11 at the Westin Hilton Head Island Resort in Hilton Head, S.C. When I first went up through the ranks and became president of NAMB’s state affiliate in Alabama (AMPA) years ago, we had the Greater Gulf States Mortgage Convention, which included

many of the middle southern states. It was held in New Orleans every year, with many great stories coming of New Orleans. We all looked forward to going and learning a lot because we had great speakers, classes and great vendors to choose from in the Exhibit Hall. I had no idea that NAMB West was for all NAMB members until NAMB bought out the Greater Gulf States Mortgage Convention around 2005 when Hurricane Katrina hit.

We barely got out of there when the storm hit and the dam broke.

After that, we started going to NAMB West and eventually NAMB just changed

compliance and loan originator training through an NAMB Education portal. Kay Cleland is working on several big education initiative, and if you have ideas or wishes on the education front, contact Kay at kay@kcmortgagecolorado.com. l Communication: NAMB’s Communications Committee Chair John H.P. Hudson is working on consolidating all our member and public communications to lessen duplications and keep all informed of actions and benefits available. l Veterans Affairs: NAMB Secretary Rick Bettencourt is actively promoting the VA Benefit program to our veterans and active duty servicemembers. This is a great program and NAMB is happy to be a supporter. l FHA: NAMB Immediate Past President

John Councilman is always looking for help in keeping communication with the FHA ongoing and providing the originators input to the staff. l Technology: This is a subcommittee of the Communications Committee, but we are always looking at ways to benefit our members and improve our Internet presence.

If any or several of these interest you, please contact the chair and get involved with NAMB’s committees. This is your organization and we need your help.

Sincerely, Rocke Andrews, CMC, CRMS, President NAMB—The Association of Mortgage Professionals randrews@lendingarizona.net JOINNAMB.com

and you should be able to see that in their article in this magazine. But I want to thank all of the new members of the PAC Diamond Level. All of you are to be commended for your dedication and support of NAMB. Again … I thank you. And I want to mention a thank you also to the Platinum, Gold and Silver Levels as well because the PAC would not exist without all of you and your donations.

And just a mention of the award winners at NAMB National. The Mortgage Professional of the Year Award went to John G. Stevens of Utah. John has continued for over the last several years to not only be involved with NAMB and, everything that goes with it, but he is instrumental in the state of Utah association and helping the membership there.

The Kathy Love Volunteer of the Year Award went to Valerie Saunders from Florida for all of her work with NAMB and also the state of Florida.

NAMB is very lucky to have people like John and Valerie not only helping both the national and state memberships, but also

working close to the NAMB Board.

Congratulations to both of you.

The first award of the night, the Affiliate of the Year Award, was given to National Mortgage Professional Magazine and its Publisher Joel M. Berman. NAMB is lucky to have the NMP as their Official Magazine and their partnership to get the word out to our members.

If you are not a member of NAMB, you need to join now. There are going to be a lot of things coming down the pipe this year that you are going to need NAMB to help with and you need to become involved. Don’t let yourself down. Join today!

Go to JoinNAMB.com now and become a member. And let me be frank … we need YOU. So come and help us and be part of a great organization that believes in you and what you do … no questions asked!

the name to NAMB National because it was for all NAMB members. As I have traveled across the country, I have had many people ask me why we do not have any NAMB conventions in the east. Well, now we do.

We have heard your requests and are excited to tell you that it is not just for originators in the east. NAMB East is for all originators, brokers, lenders and anyone in the mortgage business. We are having a great new location to have a NAMB Conference and it happens to be in the east this spring. Pack your bags and come to a great vacation spot for you and your family, while you enjoy the event. Bring your golf clubs to the NAMB PAC Golf Tournament at the Port Royal Golf Club, which is attached to the Westin Hilton Head Island Resort. The weather should be perfect this time of the year.

Get ready for an exciting time with two or three great keynote speakers, a panel headed by Andy W. Harris on “What it means and what it takes to be a successful broker today,” and an Exhibit Hall packed under one roof, so you can find that perfect company to do business with. Our plan is for you to come and enjoy the Resort and leave fired up to be in the mortgage business for years to come. We will have our agenda and the conference registration posted soon on NAMB.org.

Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at namb.ceo@namb.org.

Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a member of the NAMB Board of Directors and serves as NAMB East Committee Chair. She may be reached by phone at (251) 650-0805 or e-mail linda@mortgageteam1.com.

NAMB PERSPECTIVE

NAMB 2015

award winners

2015 NAMB Mortgage Professional of the Year: John G. Stevens, CRMS The Award of the night in Las Vegas was the announcement that the winner of the NAMB Mortgage Professional of the Year was John G. Stevens, CRMS from Utah. Not only does he devote timeless hours working with/for NAMB, but he also works just as hard in his state association in Utah. John is an avid supporter of getting people involved to do things for Utah, working on the Membership Committee and Government Affairs Committee, but he has lent a big hand every year in Utah’s Annual Conference, one of the largest state conferences of all of NAMB’s state affiliates.

He gives of himself in his home state by putting together Movie Nights for people to go see a movie for free and then gets some help from additional companies

2015 Kathy Love Volunteer of the Year Award: Valerie Saunders, CRMS

2015 NAMB Affiliate of the Year Award: Joel Berman

2015 NAMB President’s Awards of Merit At the end of the NAMB Awards Gala during NAMB National, NAMB President John Councilman gave out two awards to those people that helped him in his year as president of the association. The first Presidential Award of Merit went to Valerie Saunders, CRMS for all of her work in re-working all of the association’s by-laws and working to establish Webinars for members to help

2015 NAMB National Committee Award In the final award of the night, the NAMB National Committee awarded a President’s Ring to Past President Jim Nabors, CMC, CRMS. The committee has made an effort to recognize past presidents of NAMB who continue to

NAMB hits him in the core of his demeanor. He is always thinking about how he can make life easier for them and not more difficult.

Joel joined the NAMB+ Board as a director and his goal is to make sure that all companies that participate in NAMB+ utilize their marketing efforts and get the word out to all members of benefits to make their life easier.

As part of his role with National Mortgage Professional Magazine, Joel continues to give every member of NAMB a free subscription to National Mortgage Professional Magazine and has started a new video production company, Mortgage News Network, to offer free videos to help originators do their job better each and every day. Congratulations Joel!

each member get better at what they do.

Mr. Councilman awarded the Distinguished Industry Service Award to Jim Pair, CMC for all of his work with the Policy and Procedures Committee to completely update the Board Policy and Procedures. Jim’s efforts, in chairing this committee, brought all of the association’s policies up-to-date and has set his focus on returning the association back to where it was in the early 2000s.

work closely with the association to continue their efforts to make NAMB the driving force of the mortgage industry. Jim continues to work with the PAC to collect donations just as he did when he was PAC chair back in the early 2000s.

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This year’s winner of the NAMB Affiliate of the Year award goes to someone who has been associated with the mortgage business for more than 20 years. This person started in the mortgage business and was president of the New York Mortgage Brokers Association in 1987. Ever since that time, he has been hooked on helping people in the business. This year’s winner is National Mortgage Professional Magazine Publisher Joel Berman.

Joel was involved with the New York Association of Mortgage Brokers where he got the bug. His devotion to making originators successful and being involved with

serves as chair of the Government Affairs Committee, and just completed her time of duty re-writing the NAMB Bylaws as chair of the Bylaws Committee.

Valerie has also served as part of an NMLS Course Provider Working Group, participated on a CFPB SBREFA panel regarding loan originator compensation and, most recently, was appointed as a subject matter expert to the State Regulatory Registry (SRR) Job Analysis Advisory Committee, a committee of industry professionals and state regulators formed every four to six years to re-validate the content outline of the SAFE MLO National Test with Uniform State Content.

Her time and dedication to working with NAMB and her state to make life easier for members has always been here desire and inspiration. NAMB is excited to give this award to Valerie.

NationalMortgageProfessional.com

The 2015 winner of the Kathy Love Volunteer of the Year award is Valerie Saunders, CRMS from Florida. Valerie has been actively working in the mortgage and title industry for over 20 years. She has actively served on the board for the Florida Association of Mortgage Professionals (FAMP) since 1999 and is currently immediate past president of the association.

In addition, she is the president of the Florida Association of Mortgage Brokers Education Foundation. She also is an instructor, as well as course writer, most recently authoring the Foundation’s current eight-hour continuing education course.

In addition, she has served as a director for NAMB since 2012, and currently

so that they have popcorn, soft drinks and some type of handout for everyone who attends. His desire is to continue to help make his state an outstanding association, both in membership and in attendance to NAMB National.

His inclusion into NAMB National continues to stay strong working inside the committee to make each and every attendee have a positive feeling while they attend the show.

NAMB Plus has also continued to get bigger and better each year as the profit side of NAMB continues to grow each and every month with new companies being found to help the membership of NAMB. He continues to give up countless hours by attending most state association functions where he brings the excitement of NAMB and the Legislative Action Fund to those events. He has done an excellent job getting the voice of NAMB out there, informing people of what they need to do to stay informed about Government Affairs and the PAC. But most of his time is spent working on NAMB+, the for-profit side of NAMB that continues to bring benefits to all NAMB members to make their life easier. John was the initial president of NAMB+ and he has definitely gone over and above to make this part of NAMB very successful.

Congratulations, John!

NAMB PERSPECTIVE

getting toknow Kay Cleland, CMC, CRMS NAMB Director B Y

NOVEMBER 2015 n New York Mortgage Professional Magazine n

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22 Kay Cleland, CMC, CRMS has been part of the mortgage industry since 1982, and she has been active in two state trade associations—the Indiana Association of Mortgage Brokers (INAMB) and the Colorado Association of Mortgage Professionals (COAMP)—and with NAMB—The Association of Mortgage Professionals. She runs KC Mortgage LLC, based in Castle Rock, Colo.

National Mortgage Professional Magazine spoke with Cleland about her work in the mortgage field and in the trade groups serving the profession.

How did you get into the mortgage profession? Was this your original career choice?

Kay Cleland: I went to school to be a paralegal, and was working for a real estate company at the same time. One of the attorneys decided to open up a mortgage company and asked me if I wanted to go with him. I said yes and here I am, 30-plus years later.

P H I L

I have been involved in almost every phase of this business, including secondary, processing, underwriting, closing/funding, sales and sales management. At a later date, I went back to school and received my business degree in addition to my paralegal certificate, and I opened up my own mortgage company.

How did you first become involved with NAMB? I had an absolutely amazing mentor so many years ago, and she told me to join the state and national association. She said, “If I wanted to be the best and an expert in my field, then I would have to join the state and national associations, get involved, and continue to be a member throughout my mortgage career, no matter what.”

She also said, “Give back to the industry that is giving to you, and help as many people as you can.” I guess that just stuck with me. I have an extensive career in retail and wholesale, and that was probably the best advice I ever received.

H A L L

What positions have you held with NAMB and the state associations, and what were your responsibilities?

For NAMB, I am currently a director on the board of directors, a past secretary, as well as Membership Committee chairwoman. My new title is education director.

For COAMP, I have been a director, and I held a couple titles including the positions of president, and education director. For INAMB, I held the title of the education director and a trainer.

Why do you believe it is important for mortgage professionals to become involved with NAMB? If you are going to be in the mortgage business, be in it all the way. Believe in it, feel it and do not take it for granted. We have been given an amazing gift, which is to educate and help the consumers and the communities that we live in, and I believe that we should not waste this gift.

Being a member simply makes us better, which, in turn, makes everyone that we come in contact with better. If you can give back, that is the right thing to do.

What do you see in 2016 for the mortgage profession?

I am a fully owned and operated local mortgage broker shop. I think that it is the best choice for the consumer. I see more mortgage loan originators switching back to the broker model. And I see more education, more legislation, more consumer protection, and more business.

I hope that I also see more mortgage loan originators getting involved in their state and national association. In my opinion, it is an absolute shame when an industry has given them so much and they have not given back.

What can the industry do to attract more young people into mortgage careers?

Educate! Educate! Educate! In my new role as the education director

NAMB PERSPECTIVE for NAMB, I plan on working with all of our resources to build a program for the new MLO. I want to get them excited about the industry and help them understand what our industry is all about.

We all need to get the word out! We have to tell the amazing stories that we see every single day with regard to the American dream of homeownership. I am passionate about what I do and it is my job to share that.

What is the housing market like in your state of Colorado?

There is definitely a housing shortage in Colorado. We have many consumers who have a difficult time buying, because there are several offers on each home and the homes are generally selling as soon as they go on the market. We have seen our values increase. But there is also a lot of construction going on in our market.

Outside of work, how do you spend your leisure time?

By spending time with friends, family and the cutest dog ever, Bear. I love to travel to my favorite place, Lake Havasu, Ariz., where I can do boating, jet skiing,

swimming, rafting, and really anything on the beach or water. I am a sunshine girl. I also enjoy country music, dancing and working out. And, yes, I also crochet.

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

NAMB+ is an independent, wholly-owned, for-profit marketing subsidiary of NAMB, The Association of Mortgage Professionals.

Dear Mortgage Professional, I hope you have all had a chance to recover from the whirlwind month of October! Between TRID, NAMB National, and the MBA Annual Convention and Expo, I know we all had quite a lot on our plates.

On a personal note, I am very excited to announce that October also marked the start of my tenure as NAMB+ President.

We have a fantastic new Board of Directors and we are poised to introduce many new initiatives and new Endorsed Provider relationships over the next several months. Please feel free to contact me if you have any questions about NAMB+ or would just like to learn more about us. You can also follow NAMB+ on social media for the latest updates, and you can always visit NAMBPlus.com for the most up-to-date information.

Finally, I want to extend a big and heartfelt “thank you” to John G. Stevens for his leadership and service as NAMB+ President over the past two years! I look forward to growing NAMB+ and expanding the benefits we are able to make available to NAMB Members.

Sincerely,

Nathan Pierce, CRMS, CMP, President NAMB+, Inc. npierce@advfund.com See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information.

23 Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15

BetterLoanOfficers.com is free to get started with the option to upgrade if you’d like. As an NAMB member optional upgrades are discounted by 10%.

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NAMB members receive a discount off Brokers Compliance Group compliance support programs.

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NAMB members get a $300 discount on coaching. NAMB members receive exclusive discounts training events, including live seminars and internet-based web shops

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Exclusive NAMB Members offer to try MBS Highway FREE for 30 days. Visit MBSHighway.com/registration/namb-plus-registration

Mortgage Currentcy is a subscription-based ezine that interprets the mortgage underwriting and compliance rules in plain, easy-to-understand language and how they affect your files in process. NAMB Members save $70 on annual subscription option. Visit the Website at www.mortgagecurrentcy.com/tour.php

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For more information visit WarmWelcomeLLC.com.

NAMBPLUS Login Instructions Simplii VOIP business phone solutions include all the features and functionality of a high end business phone system without the high costs. We offer all NAMB members a 10% discount off their phone services. For more information please e-mail stevew@simplii.net

Username = Member Number Password = First initial of your first name capitalized and your last name with the first letter of the last name capitalized (example = JStevens) *If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many benefits NAMB members receive!

n New York Mortgage Professional Magazine n NOVEMBER 2015

Looking back on your career, what do you see as you greatest accomplishments?

Being a female business owner, opening my own company with no assistance from the SBA or the banks–they did not want to lend to a small mortgage company during the rough times, even though I ran and opened divisions and regions for other major companies. I am also proud of my professional designations: The CMC, CRMS and Lending Integrity Seal of Approval with NAMB, and the

What goals do you have for the year ahead?

I want to continue my journey to

be the best mortgage professional in our business, and help as many people as I can through education.

NationalMortgageProfessional.com

What are the challenges facing KC Mortgage in today’s market?

We are a small company, but we face the same issues that big companies face in terms of compliance and legislation, and all of the extra added costs. We need to focus on marketing and getting the word out to the consumers that it is more costefficient and time-efficient for them to work with a mortgage broker.

Military Specialist Designation with USA Cares.

Also, being the president of CoAMP and on NAMB’s national board. And, of course, educating and mentoring so many people inside and outside of our business.

NAMB PERSPECTIVE

scenes

NAMB NAT October 17-19 at The Luxor Hotel in Las Vegas

NAMB CEO Don Frommeyer with an NAMB President’s R Committee

Joel Berman of Mortgage News Network interviews Phil Shoemaker of Caliber Home Loans during NAMB National

Christopher Plonta of RE Financial Services, stops by the NAMB booth for a visit with Kimber White, Kay Cleland, John Stevens

NAMB Mortgage Professional of the Year John Stevens with NAMB Director David Luna during the Awards Gala

NOVEMBER 2015 n New York Mortgage Professional Magazine n

NationalMortgageProfessional.com

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Members of the NAMB Board: John H.P. Hudson, Linda McCoy, Michelle Velez, David Luna, Kay Cleland, Rick Bettencourt, John Councilman and Fred Kreger (back)

Reps from MB Financial pause for a photo

Freedom Mortgage reps greet attendees on the exhibit hall floor of The Luxor

NAMB PERSPECTIVE

s from

TIONAL 2015

(right) recognizes NAMB Past President Jim Nabors Ring for his work on behalf of the Political Action NAMB CEO Don Frommeyer welcomes Immediate Past President John Councilman to the stage

Reps from Land Home Financial were on hand in Vegas to detail their company’s product offerings

25

NationalMortgageProfessional.com

Jonathan Foxx of Lenders Compliance Group (right) stops by the Freedom Mortgage booth in the exhibit hall

The King stops by the MGIC booth to learn about the company’s array of programs

The crew from Best Rate Referrals was on hand to discuss their direct mail offerings

n New York Mortgage Professional Magazine n NOVEMBER 2015

Reps from REMN smile for a photo in Las Vegas

Doing Good Is Good for Business

By Adam Kessler Corporate Social Responsibility (CSR) is defined as a business practice that involves participating in initiatives to benefit society. For companies experiencing success, many want to give back to the communities who have contributed to their achievements. Other companies may believe they have a responsibility to actively play a role in shaping the welfare of society and improving the quality of life of others.

Whatever the belief system behind a CSR platform, the important part is that beliefs turn to actions. Building business and building people can go hand-in-hand. Good business and good deeds are not mutually exclusive, but are mutually beneficial when focused on building capacity, selfreliance and sustainability.

In a business with the noble purpose of helping as many individuals and families as possible attain sustainable homeownership, the opportunities to be of service in our communities are many. There are numerous housing-related non-profit organizations that are in need of assistance and partnership. The types of opportunities they present vary from participating in home construction in underserved areas, to donating resources to help the homeless or simply educating single-parents on how they can become homeowners.

These actions will have an impact in the communities that we serve.

They will also have a significant impact within the walls of our offices.

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Contributing to society is an opportunity, not just a responsibility CSR initiatives can promote both purpose and profit. At Academy Mortgage, one example of how we attempt to pursue both of those objectives is through our President’s Club Service Expeditions. We recognize our very top producers with a Service Expedition every other year. Loan officers at Academy Mortgage strive to achieve qualifying production levels in order to participate in this life-changing experience. They are driven to higher performance levels by the chance to participate in an “off the map” service adventure.

Qualifiers travel to communities in need across the world to work sideby-side with local people on projects related to education and homeownership. This fall a group of more than 100 loan officers, managers and employees went to Amaru, Peru, where they provided labor and resources to build a much-needed reservoir and production center for a community of artisan weavers, and they assisted in providing healthcare services for people in need.

This experience often requires loan officers and their families to work together (and live together in a tented community) in a way that creates a much deeper bond with their peers than they might have formed at a sales conference on the beach. These types of experiences and other CSR initiatives often unite an organization, building camaraderie and providing a common cause to get behind. Effective CSR initiatives also provide a more productive means for attracting like-minded originators, employees and partners who want to be affiliated with a company that cares about something more than making a profit.

While the primary motivation for being involved in these types of initiatives should always be focused on assisting those who are in need, the additional benefit of providing culture-building experiences for employees that help them engage and connect in a meaningful way is perhaps as significant in the lives of those who participate. In that sense, CSR is really an opportunity as opposed to a responsibility.

Adam Kessler was appointed president of Academy Mortgage in January 2009. Under Adam’s leadership, Academy has grown from a small regional provider to one of the nation’s largest independent mortgage lenders. He can be reached by e-mail at adam.kessler@academymortgage.com.

SPONSORED EDITORIAL

nmp news flash continued from page 16

(91,000), Michigan (45,000), Texas (32,000), Georgia (26,000) and California (26,000)— accounted for almost half of all completed foreclosures nationally.

“The rate of delinquencies continues to drop back closer to historic norms powered by improved economic conditions and tighter post-recession underwriting standards,” said Anand Nallathambi, president and CEO of CoreLogic. “As we head into 2016, based on almost every major metric, the fundamentals underpinning the housing market are healthier than any time since 2007.”

While the foreclosure inventory shrank, the level of multifamily originations grew.

The latest data from the Mortgage Bankers Association (MBA) recorded an 11 percent year-over-year growth in third quarter in the dollar volume of loans for multifamily properties; on a quarterly basis, however, there was an eight percent decline from the second quarter. Nonetheless, commercial and multifamily mortgage loan originations came in 12 percent higher in the third quarter from a year ago and were three percent higher from the second quarter.

“Every major investor group and property type except one has seen increases in year-to-date lending volumes, and we expect year-end numbers to continue that trend,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell, referring the health care properties as the sole commercial real estate sector that lagged behind the others.

The vibrancy of the multifamily sector is fueled by the unabated interest by my Americans to pursue rental housing rather than homeownership. With that in mind, HomeUnion, an Irvine, Calif.-based online real-estate investment management firm, issued a new ranking of the top 10 markets in where investors can “affordably and prudently” buy single-family rental (SFR) properties.

Focusing on non-owner occupied properties and a combination of economic factors – including median prices of investment properties, year-over-year job growth, gross rental yield and housing affordability—HomeUnion named the Charlotte, N.C., metro area as the best SFR investment market. Rounding out the top 10 were the metro areas based in and around Orlando, Fla.; Baltimore; Cincinnati; Jacksonville, Fla.; Birmingham, Ala.; Florida’s Tampa-St. Petersburg-Clearwater corridor; Indianapolis; Milwaukee; and Nashville.

“Places like San Francisco, Miami or Brooklyn are not on our list, because homeowners—who have different motivations than investors—have driven up prices in those markets to the point where cap rate and gross yield calculations simply don’t make sense for investors,” said Don Ganguly, CEO of HomeUnion. “Likewise, many of the sand state markets, like Las Vegas and Phoenix aren’t on the list because institutional investors have absorbed much of the distressed inventory and raised the barriers of entry for smaller, retail players.”

Midwest States Reign in Mortgage Health Survey North Dakota has received much attention lately for its booming energy industry. But a new survey from the NerdWallet Web site gives North Dakota new attention as the state with the best mortgage health.

In determining the definition of mortgage health, NerdWallet combined current data on the levels of serious mortgage delinquencies and foreclosure inventories along with credit scores and the monthly homeowner costs as a percentage of income.

“Residents in North Dakota, which is at the top of our list, saw their income grow 11.2 percent from 2009 to 2014, compared with a 2.8 percent decrease for the rest of the country,” observed Kamran Rosen, senior marketing analysis at NerdWallet. “The state currently has the lowest mortgage delinquency rate.”

Rosen also noted that the top six states in the ranking—North Dakota, South Dakota, Nebraska, Iowa, Wyoming and Minnesota—affirmed that the Midwest was the region where “homeowners have healthy mortgage profiles.”

Other regions, however, were much less fortunate.

“Residents in the Southeast struggled the most with credit, recording four of the five worst credit score averages by state,” Rosen continued. “There was a 66-point variance between the most creditworthy state, Minnesota, and the least, Mississippi.”

As for the states with the worst mortgage health, New Jersey came in last place, while seven East Coast states plus the District of Columbia occupied the bottom 10 ranks.

“The one-third rule holds true,” Rosen stated. “You’ve likely heard that you shouldn’t spend more than about a third of your income on housing. Data appear to support that—the bottom five states on our list have among the highest percentage of residents who spend 35 percent or more of their annual income on housing. Income growth—or lack of it—was a big indicator of mortgage health. Homeowners in Rhode Island, Nevada and Connecticut saw a high mortgage delinquency rate as residents also experienced major income contractions.”

Distressed Home Sales Hit Lowest Point Since September 2007

Distressed home sales, which include real estate-owned properties (REOs) and short sales, accounted for 9.3 percent of total continued on page 38

Dear Mortgage Professional, I want to take this opportunity to thank everyone who has so generously contributed to NAMBPAC thus far this year! As I’m sure you know, this is an incredibly important election cycle for our country and our industry. Thanks to the continued support from the dedicated mortgage professionals listed below, NAMBPAC is poised to be a very active participant in 2016 campaigns.

Additionally, I want to specially thank and acknowledge those mortgage professionals who have stepped-up and contributed the maximum allowed under FEC regulations already this year. These individuals were recently recognized at NAMB NATIONAL as inaugural members of the NAMBPAC

Diamond Contributors Club, in recognition of their incredibly generous support for our industry.

• John Councilman, CMC, CRMS • Ginny Ferguson, CMC • Andy Harris, CRMS • Fred Kreger, CMC • Olga Kucerak, CRMS • Shane Lester, CMC, CRMS • David Luna, CRMS • Nathan Pierce, CRMS • John Porter • Lisa Severseike • Michelle Velez, CMC • Kimber White

NAMBPAC is stronger than it has been in over a decade, and that is thanks to every mortgage professional who has continuously supported us through the years. Please accept my sincerest and most heartfelt THANK YOU for all that you have done for your Association and our industry!

Sincerely,

John G. Stevens, CRMS 2015-2016 NAMBPAC Committee Chair

A very special thank you goes out to all who have contributed to NAMBPAC already this year! contributions received through 10/26/2015 James Dorney Jeffrey Drawdy George Duarte Dorothy Dumnich Tammy Engel Jim Ezell FAMP FEDERAL PAC Antonina Friedland Don Frommeyer Mary Jane Galbiso Jill Gallagher Rick Gilbert Gregory Graham Victoria Greer Scott Griffin Martin Hackford Steve Hakes Kelly Haney Mark Harcrow Andy Harris Melissa Hayes Lisa Hernandez Howard Howland John H. P. Hudson Marvin Hudson David Hughson Ed Irwin Erik Janeczko Peaches Jensen Ryan Jones Jon Kaempfer

David W. Kane, Jr. Jason Kauffman Michael Kanuka Mike Kelso Kevin Kennedy Jonathan Kimura Edmund King Linda Knowlton Michael Kopiecki Marci LaBorde Laura Lawson Cathy Lee Kim Lewis Bobbie Lindner Anthony Lombardo Daniel Loughborough Lisa Lund Kelly Lynch Angela MacKinnon Paul Marsh Wanda Martin Steve Matthews Linda McCoy John McCully Ashby McDonald Howard Miselman Joe Moody Marshall Moody Jim Morris Vernon Morrison Vicki Murphy

Roberty Murray Jim Nabors Elena Neis Gary Ogami Matt Oliver Donald Opeka William Ormond Dennis Oshiro Raymond Oshman Sean O'Sullivan Norm Ottley Jim Pair Carrie Panacek Carlos Pazos Chris Peck Dawn Pemberton Richard Petano Jill Pfeiffer Claude Phillips Dean Rathbun Kathy Raven Donald Rizzo Jeanine A. Robbins Heather Rose Joan F. Ruth Hartley Sappol Valerie Saunders Gary Schiller Julia Schloss Guy Schwartz Jeff Shealey

Chris Shedd Mark Sheridan Ann Shipley Shawn Sidhu Timothy Simko Kane Smeltz Chris Smith Lynette Staley Mitch Stam Marc Starr John G. Stevens Marvin Stockert Bob Sweeney Diana Tardif Donald Thomas Douglas Turner Forrest Van Benthuysen Casey Van Winkle Dan Van Winkle Debbie Villarreal Bryan Ward Irving Webb Charles West James Wilson Edward Zadeh Benita Zimmerman

For additional information about NAMBPAC, please feel free to contact me or visit namb.org.

John G. Stevens, CRMS • 2015-2016 NAMBPAC Chair JohnGStevens@Gmail.com * Federal Election Law requires NAMBPAC to use its best efforts to collect and report the name, address, occupation and employer of everyone who contributes $200 or more in a single year. If your contribution to NAMBPAC in 2015 is less than $200, your name may not appear on this list, but NAMBPAC is still very grateful for your generous support!

27

n New York Mortgage Professional Magazine n NOVEMBER 2015

Matt Brown Tina Broyles Andrea Buck George W. Burkley III Michael Burroughs Mark Cahoone Kenneth Campbell Joseph Cannarozzi Terry Casey Dana Chahidi Jim Chapman Eric Chauhan Arturo Chavez Charles Chedester David Chellel Alan Cicchetti Kay Cleland Brent Coleman Ruben Concepcion Ronald Crary John Crowell Dawn Cychner Tom Cychner Brady Day Keith DeLatte Michael Delzer Ray DeMar Donald DeRespinis Michael DeSantis Harry Dinham Bruce Dittmer

NationalMortgageProfessional.com

Richard Abazia Tanner Allen Todd Allen Chuck Anderson Rocke Andrews Mike Aon Joseph Archer John Ardito Joe Ashton Mark Atanasoff James Bagnell Nick Barayuga Karen S. Barnes Roshe Barooni Jim Barry Dave Beach Alexander Beadle Angel Bell Allycyn Bennett Joel M. Berman Rick Bettencourt Jr. Chris Bettis Jeannine Bland Kenneth Blaudow Audrey Boissonou Jessi Bostic Douglas Braden David Bradley Tiffany Bradley Andy Brikho Jim Brown

Turning Trash Into Treasure

How Brokers Can Make Money Through Private Lending

By Jeffrey Tesch

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Lean in! We’re going to let mortgage brokers in on a little secret: There’s a ton of money to be made in private lending, and brokers today have a unique opportunity to cash in on this interesting scenario.

At a time when the Dodd-Frank Act is putting the squeeze on traditional bank lending, private lenders are proving to be a much more viable and reliable option for developers and investors, and those who are tapping this unknown resource are experiencing a boon in taking advantage of a new profitable stream of income.

With limited funding options in today’s real estate market, private lending is leading the path forward. But rest assured, the broker is always protected, and very well compensated in these transactions.

The key to success, however, is to first establish a relationship with a private lender, before the customer comes in looking for a loan. This can be a real game-changer.

While no lending scenario is the same, the mortgage broker is always the liaison.

The bottom line is that with every different lending scenario, private lending provides a myriad of options to create an innovative financing solution.

It may be all the same in a residential deal, but in a private lending scenario, for commercial loans on residential homes, every deal is different.

For example, a mortgage broker may have an investor who owns all kinds of properties and wants to buy another property. Or, the broker may have an investor who just wants to buy a property to fix and flip it.

Then there’s how to qualify the borrower: Some have a lot of cash on hand; others have very little, but have great equity. It’s all about working with that borrower to find the right solution for a private loan.

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Traditional vs. private lending First, let’s review the differences between traditional bank lending versus private lending …

We begin with the purchase of an owner-occupied house, i.e. homeowner is moving into the house. This of course is not a deal that private lending underwrites. However, if the purchase is a nonowner-occupied home, while some banks may like it, private lending lives on it.

And when it comes to the purchase of a home that’s in foreclosure, some banks may approve it, depending on whether the home has a certificate of occupancy; private lenders do these types of deals all day long.

For traditional bank financing on mixed-use properties, it depends on the bank’s appetite. Some banks in more urban areas are comfortable with mixed-use. Private lenders on the other hand covet the opportunity to finance mixed-use properties. It’s a win-win scenario for private lenders, brokers, and developers with rents downstairs of a commercial nature and apartments upstairs for residential living. It’s a perfect situation for the diversity of income.

Even for borrowers who have filed for bankruptcy, while lots of banks are turning these customers away, private lenders are a viable solution, especially if the borrower is coming out of bankruptcy better than ever.

With traditional banks, it’s all about fitting that borrower into a box. Private lenders take into account a series of outside variables. We don’t know exactly how the borrower’s poor credit score is going to impact the loan. However, if the borrower has cash, and is making money, then a private lender will do that loan. If the borrower’s score got beat up because of foreclosures or short sales in 2009, 2010 or 2011, it’s not an issue for private lenders.

We want to know exactly what’s going on today with that borrower—not what happened in the past.

For distressed properties, i.e. if the property is beat up and has the opportunity to be repaired, private lending is exactly where it can help investors succeed.

And for investors with multiple properties, while many banks will place a cap on the amount of properties a borrower can have on their books, private lenders do not have a cap. It’s all about track record. We want to know that the borrower is churning through those properties and making money.

Advantages of using a private lender l Intelligent lending criteria: Private lenders can establish their own lending criteria, which gives an investor a greater opportunity to qualify for a loan. This means there’s nobody in Washington, D.C. telling me what my rate is going to be, or telling me what the credit score has to be on my borrower. It’s our money,

so in the commercial world, we’re going to set the rate and we’re going to set the term. So if we don’t get paid, it’s our problem, not the taxpayers’ problem.

A borrower can receive funding for a distressed non-owner occupied property, rehab property and new construction.

When traditional lenders cannot provide investors solutions, private lenders have more room for negotiating and can come up with creative answers. For example, if a borrower owns a home with a lot of equity that they’re renting out, and they don’t have cash, we will be happy to put a mortgage on that existing property, pull out some cash, and put that towards a new home that they would like to purchase.

It’s these creative solutions that private lending does all the time.

Broker fees are memorialized on the HUD and a transaction-specific agreement is provided. There’s no ambiguity. A check is sent directly to the broker at closing

Basic loan qualifying factor Traditional rules apply in the world of private lending, and the common sense approach works every time when it comes to underwriting. It all comes down to income, credit, and equity. If they have two out of the three, then we’re going to do that deal. If the borrower only has one, then we’re going to have a problem.

Exit strategy is at the top. The first question is how will the borrower pay us back?

Since most loans are only 12 to 18 months, exit strategy is key. We want to know how we’re going to get paid back.

Experience and background are fundamental. We like to know that the people we’re dealing with know what they are doing. As great as the HGTV shows are when it comes to fix and flip, it’s not the real world education that we’re looking for when it comes to making private loans.

Existing leases also help when qualifying a loan. This shows good solid income upfront, and typically comes to play when buying a multifamily home or small apartment complex.

Of course, cash reserves cure all problems. When a borrower with a poor credit rating comes to us after declaring bankruptcy, but has a great track record of fixing and flipping homes, and has $200,000 in cash, we’re going to make that loan.

Private loans are not for everyone, but

can be a financial game-changer for those with poor credit or those who are selfemployed. Mortgage brokers have a unique opportunity to grow and expand their own business through this creative funding source as well. Rather than disregard private lending as cumbersome or out of reach, brokers should embrace the chance to make money outside traditional forms of bank financing.

Jeffrey Tesch is managing director of RCN Capital LLC, a national, direct private lender. He is responsible for the day-to-day operations of RCN, including sales growth initiatives, underwriting review with compliance oversight and leadership of senior level strategic planning. He may be reached by email at Info@RCNCapital.com.

l Alternative loan to value: A private lender may lend a higher loan to value than a traditional bank. l Quick loan closing time: Private lenders will typically respond to all loan inquiries within the same day.

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© Copyright 2007-2015 Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suites 110 & 200A, Anaheim, CA 92806. 800-561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access website: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File 413 0904. CO: Check license status of your mortgage loan originator at www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Supervised Loan License SL.0000313.

KY: Mortgage Loan Company License MC21112. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department.

NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA, DE & VA automatic loans only) OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC5382. WA: Consumer Loan License CL2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, LA, ME, MD, MS, MT, NM, NC, OK, SC, TN, TX, UT, WV and WI. NOTICE: All loans subject to credit, underwriting and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions and programs are subject to change without notice.

This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any government agency. All rights reserved.

n New York Mortgage Professional Magazine n NOVEMBER 2015

Some brokers like to have minimal involvement, while others like to have heavy involvement. The amount of compensation earned depends on the broker’s level of involvement and the loan scenario. It’s just that simple.

On the minimal side, maybe a broker’s business is booming and he/she doesn’t have time to deal with a private loan, then he/she would hand it off to the private lender. Once the deal is final and we close, we send the broker a point, and the check gets cut at closing.

If the broker wants to be actively involved in the private loan, and wants to control the deal, we will ask the broker to help collect documents and put the package together, and then split the points at closing.

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This is precisely where private lending really shines over traditional bank lending. Most private lenders will provide short-term, bridge financing for straight acquisition, acquisition/rehab (fix and flip), refinance, cash-out and lines of credit.

The flexibility and ability to close quickly can provide borrowers with a clear business advantage and afford them a competitive edge based on speed.

While a traditional loan can take up to 90 days to close, private lenders can often close a loan in as little as two weeks, or even a few days. This can give the borrower a greater sense of security early on in the loan process.

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Industry Updates: November 2015

By Melanie A. Feliciano Esq. Fannie Mae Issues TRID FAQs (10/15/15) Fannie Mae has published FAQs for lenders regarding its policy or eligibility requirements relating to the TILA-RESPA Integrated Disclosure (TRID) Rule.

CFPB Releases Compliance Bulletin 2015-05 Regarding RESPA Compliance and Marketing Services Agreements (10/08/15) On Oct. 8, 2015, the Consumer Finance Protection Bureau (CFPB) issued Compliance Bulletin 2015-05 to remind industry participants in the mortgage industry of the prohibition on kickbacks and referral fees under the Real Estate Settlement Procedures Act (RESPA) and describe the substantial risks posed by entering into marketing services agreements (MSAs).

U.S. House of Representatives Passes Bill to Delay TRID (10/07/15) On Oct. 7, 2015, the U.S. House of Representatives passed HR 3192, which would provide a safe harbor from the new TILA-RESPA Integrated Disclosure Rule (TRID) for a period of five months. The hold harmless period is proposed to last until Feb. 1, 2016, to give lenders time to use good-faith efforts to comply with the TRID Rule, which went into effect Oct. 3, 2015.

The Bill now makes its way to the Senate.

Department of Veterans Affairs Servicer Handbook M26-4 Released (09/30/15) On Sept. 30, 2015, the Department of Veterans Affairs (VA) published Circular 26-15-22 to establish that all servicers participating in the VA Home Loan Program have until Nov. 1, 2015, to review the VA Servicer Handbook and ensure compliance with its policy and guidance.

San Francisco County Recorder Updates Real Property Recording Requirements (10/19/15) Effective Oct. 19, 2015, the City & County of San Francisco, Office of the Assessor-Recorder, will require the Assessor Parcel Number (APN) and the commonly-known situs (i.e., street name and number) of the real property to be displayed on the face of the first page of the recorded document.

Accordingly, lenders should update their California deeds of trust, riders and assignments of deeds of trust to include the APN and common property address if the security real property is located in the County or City of San Francisco.

Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail melanie@docmagic.com.

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new to market continued from page 18

in the secondary market, due to compliance defect-related repurchases from investors. ComplianceEase noted that the per-loan AssureCert fees are only a small fraction of the potential liability in the event of a defect.

AssureCert offers significantly broader coverage than traditional warranty coverage for software products, which typically only assure that the software functioned as designed, and do not guaranty the quality of the results.

“The new QM and TRID rules have exposed lenders and investors to civil lawsuits, as well as fines and repurchase risk,” said John Vong, president of ComplianceEase. “Our insurancebacked AssureCert warranty will offer our clients—both large and small— additional protection and peace of mind. Over time AssureCert may also come to be used in the secondary market as a credit enhancement for structure transactions. Finally, the amount and scope of the coverage further attests to the reliability of the complete suite of ComplianceEase’s solutions.”

Mortgage TrueView Launches New ConsumerOriented Web Site

Mortgage TrueView has announced the launch of LenderScores.com, a new Web site designed to help consumers identify and choose the best lender for their circumstances. The tool, which is available to consumers at LenderScores.com, was created to address the limitations of the Home Mortgage Disclosure Act (HMDA) data.

“There are a number of overlooked issues with HMDA data,” said David Moffat, president of Mortgage TrueView.

“We are using Mortgage TrueView’s business intelligence and data management capabilities to ensure that consumers have the tools they need to pick the lender that is best for them.”

LenderScores.com provides easy to understand scores to help home buyers evaluate a lender’s performance in key areas, including decisiveness, affirmativeness, engagement with non-traditional borrowers and denial rates for traditional borrowers versus non-traditional borrowers.

“HMDA data is generated by lenders to allow regulators to monitor Fair Lending activity, but the size of the data set has made it prohibitive for use by consumers,” said Becky Walzak, executive vice president, director of regulatory compliance with Mortgage TrueView.

“The HMDA data provides a tremendous amount of information but trying to make sense of it is nearly impossible for an ordinary consumer. Using the scoring and comparison information provided by LenderScores.com, consumers can identify which lender in their area is best-suited to fulfill their needs.”

Arch MI Releases New Risk-Based RateStar Pricing Program

Arch Mortgage Insurance Company (Arch MI), a wholly-owned subsidiary of Arch Capital Group Ltd., has introduced Arch MI RateStar, the company’s new riskbased pricing program. RateStar uses a combination of loan characteristics and other risk factors to determine the most precise premium rate for each loan.

“Since its inception, Arch MI has encouraged its customers to expect more from mortgage insurance providers as we established our reputation for new and innovative product offerings,” said David Gansberg, president and chief executive officer of Arch Mortgage Insurance Company. “Today, Arch MI continues down the path of innovation and product development with the introduction of RateStar—our new risk-based program for pricing mortgage insurance coverage. We are excited to introduce RateStar. This innovative and dynamic solution will bring a wide range of benefits to loan originators and their customers.

RateStar provides a more targeted approach than the conventional rate sheets used for decades in the industry.

Instead of loans being grouped in large risk buckets, each loan will be priced based on its individual risk attributes.”

With RateStar, lenders can compete more effectively, seek out fresh opportunities and open up new markets.

“RateStar will not require any new data attributes so the transition to RateStar will be seamless and easy for lenders,” said Gansberg. “With its intuitive design and ready access, our customers will find RateStar is an easy-touse tool to access competitive mortgage insurance rates.”

ISGN Releases Construction Loan Servicing System Borrower Portal ISGN Corporation has announced that it has released its latest LoanMomentum construction loan servicing system borrower portal, providing borrowers with loan-level insight through a more intuitive user interface and workflow design. ISGN’s LoanMomentum is a software system developed for the new demands of servicing residential and commercial construction loans.

LoanMomentum’s borrower portal provides online access to loan information including transaction history, billing history, sources of funds detail and loan budget status, all within a more seamless dashboard that can be accessed anytime, anywhere.

Borrowers can also initiate requests

for loan draws, new loan/new starts, inspection information, budget change orders and update contact information.

Automatic email notifications are available for borrowers regarding billings and draw requests, as well as notifications for builders/contractors regarding dual approved draws. Not only will borrowers have more control, but providing them with online access to their loan information helps reduce calls and faxes into the servicer’s customer service call center.

“The construction market is making a gradual comeback. In fact, markets in 75 of the approximately 360 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in Q2 2015 according to the latest National Association of Home Builders/First American Leading Markets Index (LMI),” said Don Gaspar, CTO for ISGN. “However, to capitalize on these tailwinds, construction lenders and servicers must keep pace with borrowers’ demands for convenient, informative dashboards they can access online. LoanMomentum’s enhanced borrower portal provides borrowers with complete control over their loan information, which will help improve customer service while increasing efficiencies—giving construction lenders and servicers a distinct competitive edge in a growing market.”

financial advisors to exchange loan data, documents and pricing information in order to buy and sell whole loans. The platform allows secondary marketing professionals to scale more quickly by automating many activities currently supported through spreadsheets. This combination of secondary operations support with connectivity between buyers and sellers is believed to be unique in the mortgage industry.

In a seller-controlled auction format, the online platform will enable sellers of mini-bulk or specified pools of loans to structure offers while buyers either respond directly or build their own pools based on investment criteria. The system allows multiple buyers and sellers to offer, bid and transact simultaneously,

and includes an easy-to-use trade settlement process. The Resitrader platform will initially emphasize Community Reinvestment Act-eligible loans but expects to quickly expand into other types of loans.

“With the rise of mini-bulk transactions and active price negotiation taking such a prominent role in today’s market, a platform like Resitrader is long overdue, and not just for CRA-eligible loans,” said Bill Dallas, CEO of Skyline Home Loans. “Longterm, this might transform the way loans are priced with real-time market data.”

“We’re starting with CRA as that seems like a natural first step, given their geographic emphasis,” said John Ardy, CEO of Resitrader. “Buyers can search by census tract, income or other criteria to meet

their investment needs. Resitrader provides the perfect context for offering, finding and purchasing loans needed to meet CRA audit findings. We’re also seeing jumbo and expanded criteria loans loading onto the platform, so we know the process will work for those loan products as well.”

RES.NET Launches Loss Mitigation Portal

RES.NET has announced the introduction of its Loss Mitigation Portal, supcontinued on page 36

Black Knight Introduces New Loan Lifecycle Offering 33

Resitrader Inc., a Calabasas, Calif.based provider of whole loan mortgage trade management software, has announced that it has launched an online marketplace that will enable loan originators, banks, servicers, brokers and

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Resitrader Launches Online Marketplace to Sell Whole Loans

ClosingGuard™ closing agent risk rating tool with unlimited vetting, monitoring, risk reporting and 24/7 access to our watch list and shared closing agent database which includes the agent’s license number.

NationalMortgageProfessional.com

Black Knight Financial Services (BKFS) has announced the introduction of LoanSphere, a platform of integrated technology, data and analytics that supports the mortgage and home equity loan lifecycle—from origination to servicing to default. Black Knight’s LoanSphere platform will significantly change the traditional business model by fully integrating all origination and servicing functions for mortgage, home equity loans and lines of credit (HELOCs) through business process automation, workflow, configurable rules and integrated data.

“No other company can deliver LoanSphere’s proven, innovative solutions and insightful data across every aspect of the loan lifecycle,” said Black Knight CEO Tom Sanzone. “Integrating our comprehensive capabilities under LoanSphere offers our clients tremendous possibilities for enhancing efficiency, reducing risk and improving financial performance through cost savings and business growth.”

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economic commentary

REAL ESTATE BOOM ON THE HORIZON: CAN IT SOLVE THE EMPLOYMENT DILEMMA?

By Dave Hershman his year has been an exciting time for the markets when meetings of the Federal Reserve Board’s Open Marketing Committee (FOMC) occur. When the markets get excited, stocks, rates and more all seem to get more volatile. The interesting thing about all of this is that the Fed has not done much this year. They have discussed raising rates and said they were going to raise rates, but they haven’t. That is why we keep saying that the Fed’s words are so important.

As a matter of fact, the release of the minutes of the Fed meetings a few weeks after the meeting are just as entertaining as the meeting itself. As expected, the markets saw no action by the Fed in October. There is no meeting in November and that means that 36 if the Fed does not raise rates, they have only one last meeting in December to fulfill their prediction of a rate increase in 2015. However, that prediction does not make an increase a certainty. The Fed’s words always leave them an alternative path.

This is why the economic data released this month will be so important, because it comes before the Fed meets again in December. Of special note will be two jobs reports, a revision of the first reading of economic growth for the third quarter and several reports from the real estate sector. All the while, the Fed will also be watching political and economic developments overseas.

While the release of the minutes of the Fed’s meeting will garner a great deal of interest, this data will carry more weight with regard to the Federal Reserve’s next move than the Fed’s words. After all, aren’t actions supposed to speak louder than words? This data is real economic action With regard to the employment data, as our unemployment rate has fallen with millions of jobs being created each year, many have complained about the level of the jobs being created. Too many of these openings are for lower paid and part-time workers. We think the slow recovery of the real estate market has had something to do with that. The real estate industry is not only a great job creator, but also a creator of higher paying jobs, from construction workers to bankers and lawyers.

Judging by the strength of the real estate market this year, it is possible we will see the growth of better jobs soon. And based upon a recent report by the Mortgage Bankers Association (MBA), things are only going to get better in the real estate market in the future.

Nearly 16 million new households are expected in the U.S. housing market by 2024, which MBA economists said should lead to much greater demand for both renter- and owner-occupied housing,” said MBA Vice President of Research and Economics Lynn Fisher. “With an average of 1.6 million additional households per year, housing market growth over the next decade could be among the strongest the U.S. has ever seen.”

If we are right, then real estate could bring us to the final stages of our recovery and make it complete. We may not see a reflection of this theory recent jobs reports, but it does explain why the Federal Reserve Board keeps holding off on raising rates, while still telling us to be prepared because a rate hike is coming. Builders are already talking about a shortage of skilled laborers. To put these numbers in perspective, it took our country almost 250 years to grow to 125 million households. Now we will see 16 million added in 10 years, and that does not even include the housing stock which will have to be replaced because of age.

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Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit OriginationPro.com.

new to market continued from page 33

porting customers in efficiently managing their loss mitigation pipelines by automating activities to improve productivity and compliance.

The Loss Mitigation Portal creates a secure, transparent environment for all principals involved to execute and complete loss mitigation options in a timely manner. The portal includes Short Sale and Deed in Lieu modules, giving customers the flexibility to run individual or dual paths.

“For our customers managing tight timelines and the abundance of compliance requirements, it is critical to have a single tool to implement multiple loss mitigation options,” said Keith Guenther, co-founder and CEO of RES.NET and its parent company, U.S. Real Estate Services (USRES). “We provide our customers and third party providers with much more than a technology solution; RES.NET also gives them a better means to interact with the homeowner and a stronger resource for managing compliance needs. Our products are built to provide transparency and close communication gaps that can sometimes arise during a transaction; we created the Loss Mitigation Portal to further promote efficiency and eliminate untimely delays.”

The Loss Mitigation Portal integrates enterprise features such as tasking, messaging, reporting, and document sharing with RES.NET’s Custom Workflow functionality to create a system that is tailored to serve each customer’s unique needs. Customers can define and create new tasks, fields and reminders on their own as their needs changes without having to rely on typical software development timelines.

Fannie Mae to Introduce Equifax’s Trended Data and Verification Services

Fannie Mae has announced that in mid2016, it will begin incorporating Equifax trended credit data, as well as the company’s verified employment and income data via The Work Number database, into its automated underwriting platform, introducing important changes to help strengthen the home mortgage market for both consumers and lenders. Fannie Mae’s inclusion of trended credit data in its underwriting platform will provide lenders access to additional insightful data, helping them more accurately assess risk through more advanced analytical tools.

Integrating The Work Number’s employment and income verification data into Fannie Mae’s underwriting system is expected to make the process simpler for consumers and reduce the potential for fraud.

“With these two dramatic steps, Fannie Mae is helping to make the

home mortgage market smarter, safer, and open to more consumers,” Craig Crabtree, general manager of Equifax Mortgage Services said.

“Increasing the use of trended data will help improve the evaluation of risk and reward the responsible use of credit, while incorporating Equifax verification services will help streamline the underwriting process. These moves are a win-win for consumers and the industry.”

Equifax trended data expands the credit information used for evaluating a home loan applicant, supplementing the traditional moment-in-time snapshot of an applicant’s credit balances with a more dynamic two-year picture of the applicant’s history managing revolving accounts. With 24 months of historical data like payment and balance history, lenders will be able to examine and consider how consumers are managing their credit accounts over time. Trended credit data will help lenders to differentiate between “transactors” and “revolvers.”

A home mortgage applicant with a large credit card balance who has a history of paying in full every month is typically considered to be a better credit risk than an applicant with a large credit card balance who only makes the minimum required payment. Existing credit reports, however, cannot always differentiate between those two consumers.

“For some consumers who don’t have a large amount of available credit, but pay their balances every month, trended data may potentially improve their ability to obtain a mortgage by providing lenders with a more complete picture of their credit behavior over time,” Crabtree said.

Fannie Mae’s announcement that it plans to begin incorporating The Work Number’s employment and income verification data will have a significant impact by providing independent, third-party verification of employment and income for a larger portion of the mortgage market, reducing the potential for fraud.

Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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Has Collateral Really Made a Comeback?

By Keith Bilodeau It does not seem that long ago when there was an abundance of product choices. We could fit almost any customer with a pulse into a product. No matter the LTV, a wholesaler could match that loan profile and close the loan. There were even 125 percent LTV loans, making the sky the limit and proving that collateral, not cash, was king.

Then it happened. Home equity took a nasty fall, loan products diminished, and we began to see products like the FHA and Fannie Mae loans require 640plus credit scores and the virtually non-existent jumbo loan wither away. Limited collateral resulted in reduced product offerings, intense underwriting scrutiny and restrictive overlays and underwriting guidelines that hampered our business.

All to leave us wondering: “Where did collateral go?” We leaned on collateral so hard that it lost its bearing. Housing prices dropped and caused our abundance of product choices to become obsolete in a blink of an eye.

Today, collateral is recovering. With home values increasing, we now see product offerings becoming more available, but this time with reasonable guidelines. This wake-up call has caused us to operate in a new type of normal.

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What does this mean to the loan originator?

When products were few, the loan originator had the job of pairing the borrower to the lender with the rate and overlays that worked for the borrower.

Today, with sufficient collateral, there is flexibility that allows the borrower and the loan originator more suitable options. For example, many lenders can offer conventional loans up to 97 percent and with mortgage insurance.

FHA products are available for those borrowers with less than perfect, or in some cases, no credit. Jumbo products are back and available at a 90 percent LTV with no mortgage insurance. DTI is available to FHA and VA products without overlays. Loan originators no longer need to be “creative” in order to fit a borrower into a wholesale lender’s product offering. They get to focus on their expertise as a broker loan originator and lead their customer through the home buying process.

What is a loan originator to do with all of these choices?

Loan originators should learn the rules of engagement in this new normal environment and consider the following: l Stay connected and informed of new offerings, policies, procedures, including TRID, to gain a competitive edge. l We know that transactions are local, so work to cultivate your relationships with real estate professionals, builders, etc., in order to match the best product to your mutual borrower’s need. l Leverage the expertise and experience offered by your wholesaler’s account executives and make sure you thoroughly understand that lender’s product choices and process. l Maintain a strong relationship with your customers, keep them informed, and manage their expectations.

Understanding the value of collateral, product choices, and the borrower’s needs can make all of the difference in closing and funding a loan; all of the difference in a loan originator’s future growth; and all of the difference in truly fostering homeownership.

Keith Bilodeau is senior vice president of Wholesale Production at Freedom Mortgage. With more than 30 years of experience in capital markets, operations and production, Keith offers unique expertise in helping mortgage professionals grow their business by leveraging Freedom Mortgage’s technology and programs. He may be reached by e-mail at keith.bilodeau@freedommortgage.com or visit www.freedomwholesale.com.

Lender NMLS ID: 2767. Freedom Mortgage Corporation, 907 Pleasant Valley Avenue, Suite 3, Mount Laurel, NJ 08054.

SPONSORED EDITORIAL

nmp news flash continued from page 26

home sales nationally in August 2015, down 2.3 percentage points from August 2014 and down 0.4 percentage points from July 2015.

Within the distressed category, REO sales accounted for 6 percent and short sales made up 3.3 percent of total home sales in August 2015. The REO sales share was the lowest since September 2007 when it was 5.2 percent. The short sales share fell below four percent in mid-2014 and has remained in the 3-4 percent range since then. At its peak in January 2009, distressed sales totaled 32.4 percent of all sales, with REO sales representing 27.9 percent of that share.

While distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, they can pull down the prices of non-distressed sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about two percent. If the current year-overyear decrease in the distressed sales share continues, it would reach that “normal” two percent mark in mid-2018.

Maryland had the largest share of distressed sales of any state at 20.8 percent in August 2015, followed by Florida (20.3 percent), Michigan (19.9 percent), Connecticut (19.1 percent) and Illinois (18.7 percent).

North Dakota had the smallest distressed sales share at 2.7 percent. Nevada had a six percentage point drop in its distressed sales share from a year earlier, the largest decline of any state. California had the largest improvement of any state from its peak distressed sales share, falling 58.7 percentage points from its January 2009 peak of 67.4 percent. While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are close to their pre-crisis numbers (within one percentage point).

Of the 25 largest CBSAs based on loan count, Orlando-Kissimmee-Sanford, Fla. had the largest share of distressed sales at 23.4 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (21.9 percent); Miami-Miami Beach-Kendall, Fla. (21.9 percent); Baltimore-Columbia-Towson, Md. (21.2 percent); and Chicago-NapervilleArlington Heights, Ill. (21.1 percent). Las Vegas-Henderson-Paradise, Nev. had the largest year-over-year drop in its distressed sales share, falling by 5.9 percentage points from 21.8 percent in August 2014 to 15.9 percent in August 2015. Riverside-San Bernardino-Ontario, Calif. had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3 percent in February 2009 to 11.4 percent in August 2015.

YoY Home Prices Up 6.4 Percent

increased 0.6 percent month-over-month, according to the latest CoreLogic Home Price Index. These figures include the sales of distressed properties.

At the current rate of activity, CoreLogic forecasts home prices to rise an additional 4.7 percent by September 2016, but the company warns there could be a slight drop when the October 2015 data is announced.

“After nearly 10 years of very high home price volatility, home price increases have been remarkably stable for the last 15 months, ranging between a 4.8 percent and 6.5 percent year-overyear increase,” said Sam Khater, deputy chief economist for CoreLogic. “Home price volatility is now back to the longterm trend prior to the boom and bust which is a good barometer of the market’s stability and health.”

Among major metro areas, the Dallas-Plano-Irving market in Texas saw the greatest year-over-year home price increase (8.5 percent), followed by the New York City metro area (7.2 percent) and the Houston-The WoodlandsSugarland market (seven percent).

While most major markets are experiencing home price increases, many Americans are looking to smaller cities for more affordable homeownership options.

A new analysis by WalletHub compared 1,268 U.S. cities with a population between 25,000 and 100,000 with a 22-part measurement metric that involved housing costs, school-system quality and even the number of restaurants per capita.

As a result of this analysis, WalletHub named Princeton, N.J., as the Best Small City in America. The other small cities in the top 10 reflect geographic diversity: Littleton, Colo.; Dublin, Ohio; Brookfield, Wis.; Leawood, Kan.; Southlake, Texas; Westfield, Ind.; Northampton, Mass; Ankeny, Iowa; and Crystal Lake, Ill. But there was no geographical diversity among WalletHub’s 10 Worst Small Cities in America – all of these markets were based in California, with the city of Bell coming in dead last. But California did have one small city that could claim some degree of achievement: The number of coffee shops per 100,000 residents in Santa Monica, Calif., is 118 times higher than in Pharr, Texas.

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com

Home prices increased by 6.4 percent in September on Note: Submissions sent via e-mail are prea year-over- ferred. The deadline for submissions is the year basis and 1st of the month prior to the target issue.

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Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.

Easy Mortgage Apps Partners With FormFree Holdings

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FormFree Holdings Corporation has announced an integration with Easy Mortgage Apps that enables loan officers and underwriters to verify mortgage applicants’ financial asset data through mobile devices, allowing for a more streamlined lending process for customers.

FormFree’s flagship product, AccountChek, is a Web-based platform that enables users to order, analyze, and certify a borrower’s bank statement data electronically, rather than borrowers having to produce paper documents. By pulling data directly from the financial institution, loan officers and underwriters can verify the applicant’s deposits and assets in minutes instead of days. The result is a report that makes lending decisions easier and more secure. By partnering with Easy Mortgage Apps, lenders will now be able to use AccountChek securely through a mobile device.

“Easy Mortgage Apps looks forward to partnering with FormFree to offer consumers a mobile-centric and more efficient way to instantly provide integral banking documentation,” said Michael Kelleher, president and founder of Easy Mortgage Apps. “The result is a streamlined lending process. This relationship demonstrates our promise to offer new technologies and services designed to enhance the experience and allow our clients to effectively market to the Millennial homebuyer’s behaviors. These potential home buyers require efficient, real time and on-demand access to their loan file. With seamless tracking, quick updates and real-time communication, clients will be empowered anytime, anywhere.”

Parkside Lending Subsidiary Joins the Federal Home Loan Bank of Cincinnati

Parkside Lending has announced that its insurance subsidiary, PSL Insurance Company LLC, has been approved to become a member of the Federal Home Loan Bank (FHLB) of Cincinnati.

Through its FHLB membership, Parkside Lending will provide leverage to its affiliate, Parkside Mortgage Trust, a Real Estate Investment Trust (REIT). Both institutions are looking forward to a mutually beneficial relationship with the FHLB. With this membership, Parkside Lending has access to a stable financing source to enhance Parkside’s short-term and long-term value propositions.

“We’re honored to be joining the ranks of this small group of distinguished financial organizations that comprise this well-regarded and important lending institution and look forward to a mutually beneficial relationship with the FHLB,” said Matthew Ostrander, chairman and CEO of Parkside Lending. “By virtue of our membership and having access to this flexible source of funding, Parkside will be able to safely deploy and leverage innovative financing that will make a positive difference for mortgage professionals and consumers in all markets we serve nationwide.”

New Penn Signs Up With FormFree Holdings’ Asset Verification Services

FormFree Holdings Corporation has announced that New Penn Financial

will join the ranks of over 200 other lenders by using FormFree’s AccountChek automated asset verification solution to verify the financial statements of its mortgage applicants.

AccountChek is accepted by the government-sponsored enterprises (GSEs), replaces the need for borrowers to submit paper bank statements that show they have the financial resources to qualify for a mortgage. Named one of American Banker’s “Top 10 Tech Companies to Watch in 2015” and winner of the 2013 Mortgage Technology Fix-It Award, AccountChek is used by thousands of mortgage loan officers, underwriters and processors to collect data directly from virtually any financial institution and generate reports in just minutes, creating enormous time savings for both borrowers and lenders.

“We are anxious to use FormFree’s AccountChek solution,” said Jerry Schiano, president and chief executive officer of New Penn. “We will now be able to verify our applicants’ bank statements digitally, rather than on paper, which will enable us to improve our customer service as well as get more accurate information faster.”

By eliminating the need for paper bank statements, AccountChek also helps significantly reduce buyback exposure and fraud, while also providing lenders with an easy solution for complying with new “ability-to-pay” rules.

“We are thrilled that New Penn Financial has agreed to use AccountChek to verify their applicants’ assets with our patented solution. Jerry is a forward thinker who is raising the bar and leading the way in the digital evolution of lending,” said Brent Chandler, CEO of FormFree. The underlying technology behind AccountChek was awarded a U.S. patent in 2014 for its proprietary process of electronic certification of a borrower’s bank account data.

SimpleNexus Announces Integration With Microsoft Azure

SimpleNexus, a creator of branded mortgage apps for loan officers, has announced its integration with Microsoft Azure. Using Microsoft Azure, SimpleNexus implemented Single Sign On (SSO) using Security Assertion Markup Language (SAML), allowing users enhanced security features when logging into the application.

SimpleNexus has already applied this feature for more than 800 loan originators by working with Academy Mortgage.

“We work tirelessly to provide our clients with secure solutions,” said Matt Hansen, SimpleNexus’s chief executive officer and founder.

“Integrating with Microsoft Azure evidences our concern for security and offers increased assurance that our users’ personal information will be safeguarded.”

By using Azure’s SSO service, mortgage companies and their employees can use their company username and password to log into SimpleNexus. Users simply visit the customized mortgage company page on the SimpleNexus Web site, and they are logged in. If they need to sign in, the users are redirected to Azure’s “Federation” server to authenticate. The process seamlessly connects loan officers with the SimpleNexus application while affording added protection to personal information.

“Loan originators need convenient access to the multitude of tools they use each day. Academy mortgage recognizes the need for originators to be efficient,” said Kate Pettique, senior manager of marketing communications at Academy Mortgage Corporation. “We appreciate how quickly SimpleNexus was able to integrate with Academy’s secure Single Sign On Solution.”

FormFree Holdings Forms Partnership With Financial Apps

Ellie Mae to Acquire CRM Provider Mortgage Returns

Ellie Mae has announced that it has signed a definitive agreement to

acquire Mortgage Returns, a provider of on-demand customer relationship management (CRM) and marketing automation solutions for the mortgage industry. Mortgage Returns offers a database-driven automated marketing solution to help mortgage originators maximize profitability from clients, prospects and referral partners.

Through the TRUE CRM system, Mortgage Returns enables compliant and automated one-to-one marketing that delivers bottom-line results.

“Mortgage Returns was founded to help mortgage originators improve their results through a truly automated solution and today they serve nearly 200 financial institutions,” said Jonathan Corr, president and CEO of

Ellie Mae. “CRM and marketing automation remain a key value proposition in our industry and with the acquisition of Mortgage Returns we are responding to the needs of our customers by adding a robust CRM solution for lenders of all sizes. This acquisition enhances our marketing platform and furthers our mission of automating the entire end-to-end mortgage process for our customers.”

The transaction is expected to close in the fourth quarter of 2015. Ellie Mae will provide additional details on the expected synergies when the company reports its third quarter results.

“We’re thrilled to join Ellie Mae at continued on page 42

We are California’s Premier Direct Private Money and Bridge Lender

41

Apartments and units (5+ residential units) •Up to 70% on refinance and purchases •Stated but verified rental income of property •Loan terms: 1 year, 3 year, 5 year, 7 year and 10 year; fixed IO or fully amortized •Rates from 8.00% and up •Programs with no PP available depending on LTV, term and prepayment penalty •We have 2nd position loans available for our commercial products up to 60% CLTV •5-7 days closing available

Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.)

•Up to 55% on refinances •Up to 60%-65% on purchases •Term 1 to 5 years Land loan (max LTV 35%, refinance, 50% purchase) call for details

877-686-6565 Office 866-318-4471 Direct Fax

www.calhardmoney.com • e-mail scenarios to: info@calhardmoney.com PB Financial Group Corp. NMLS #357614/PB Financial Group Corp BRE #01522495 Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums. This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614

n New York Mortgage Professional Magazine n NOVEMBER 2015

Stated Business Purpose Loans on Residential Properties •Refinances up to 65% LTV, min loan amount 50K to 5 million •Purchases up to 70% min. loan amount 50K to 5 million •Loan term, 6 months, 3 year, 5 year, interest only or fully amortized available •Programs with no PP available •Rates from 8.50% and up depending on LTV term and prepayment penalty •We have 2nd position loans available for n/o/o and investment properties up to 55%-60% CLTV •5-7 days closing available

NationalMortgageProfessional.com

FormFree Holdings Corporation, a provider of automated asset verifications for the mortgage industry, has formed a strategic partnership with Financial Apps, a data analytics technology provider, that will enable FormFree to enhance its product offerings in the mortgage space as well as expand its reach into other types of consumer loans. By integrating their technologies, FormFree and Financial Apps will be able to create more comprehensive financial reports on a wider variety of consumer loans and assets.

FormFree’s AccountChek is a patented solution delivering automated asset verification data and reports.

The AccountChek solution consolidates, analyzes, and verifies assets directly from their source. It then applies thousands of proprietary algorithms to generate asset reports on demand. AccountChek is currently used by more than 200 leading lenders, and is the only patented, third-party asset verification acceptable to the GSEs and leading investors.

By eliminating the need for paper bank statements, AccountChek also helps significantly reduce buyback exposure and fraud, while also providing lenders with an easy solution for complying with new “ability-to-pay” rules. The underlying technology behind AccountChek was awarded a U.S. patent in 2014 for its process of electronic certification of a borrower’s bank account data.

“This partnership really creates additional opportunities for both companies,” said Bob Sullivan, president of Financial Apps. “We’re working with FormFree to introduce them to other consumer lending verticals, whether it be auto lending, installment loans, or leasing—anywhere lenders need to examine a customer’s bank statement, cash flow and propensity to repay. We believe that the combination of our two entities through this partnership creates a unique product opportunity in the marketplace. It’s a situation where one plus one equals three.”

Sullivan, a mortgage industry veteran for more than two decades, helped lead Mortgage.com and ABN AMRO and is the former CEO of OpenClose, a loan origination system (LOS).

Additionally, he founded Powerwallet.com, a personal financial management (PFM) platform in the consumer fintech space.

“Bob has an impressive record in lending with deep domain experience, great relationships and tremendous credibility,” said Brent Chandler, founder and CEO of FormFree.

“Financial Apps provides an infrastructure and relevancy engine that will

quickly help us incorporate new data elements like income, employment, and identity data to our growing suite of products. With their rules-based relevancy engine, we can produce new and complex analytics on the fly, enabling us to enter new markets quickly. Our systems complement one another and together create a powerful combination to help take FormFree to the next level.”

The Long & Short: The Business of Short Sales

heard on the street continued from page 41

such an exciting time and to come together to provide a CRM solution for mortgage lenders,” said Jim Blatt, president and co-founder of Mortgage Returns. “Together, we are poised to deliver a complete solution to our customers that will fuel change, enable massive efficiencies and provide a truly complete CRM offering.”

Florida Mortgage Broker Launches Petitions to Assist Responsible Underwater Homeowners

Mortgage Master Opens Silicon Valley Branch

Support from mortgage professionals is needed

By Pam Marron

NOVEMBER 2015 n New York Mortgage Professional Magazine n

NationalMortgageProfessional.com

Petitions were launched at a Nov. 10 “Back From the Housing Brink” Seminar in Tampa Bay, Florida that promotes solutions for homeowners impacted by the housing crisis. The seminar showed loan originators and real estate agents how to team up services for the benefit of clients.

Two of three petitions launched highlights two problems that continue to plague underwater homeowners, or those who owe more on their mortgage than the home is valued for.

Lender policy that continues to destroy credit and a lack of attention to “no refinance option available” for the betterment of millions who are trying to “stay put” has pushed the need for these petitions.

Many underwater homeowners are making payments on time and are simply seeking a better interest rate. If you are underwater and have a non-Fannie Mae or nonFreddie Mac conventional first mortgage, second mortgage or home equity line of credit (HELOC), you cannot get a refinance. Instead, the only option for these underwater homeowners who pay their mortgage on time is to go delinquent and prove a hardship!

This is not a new problem and there are still 6.9 million underwater homeowners 42 across the U.S. as per the data collection firm, RealtyTrac. We as mortgage professionals need to address a refinance solution and create a path that does not require mortgage delinquency. These folks are helping to stabilize real estate markets that are still underwater.

The underwater homeowner problem is not new territory. In 2013, I helped work on credit issues when it was found that the credit of short sellers was being coded as a foreclosure, resulting in a mortgage loan denial for past short sellers who were eligible to buy a home again. The foreclosure code on short sale credit meant a seven-year wait to get a new conventional mortgage, rather than the two-year wait requirement after a short sale.

The problem stemmed from the required mortgage delinquency by the lenders who approved short sales. Mortgage delinquency that exceeds 120 days is coded as a foreclosure. Because most short sale transactions exceeded 120 days, short sellers received the foreclosure code and were unaware of the problem until they received a loan rejection after applying for a new mortgage again.

It took three years to get this problem realized and fixed. We took the problem to the Consumer Financial Protection Bureau (CFPB), U.S. Sen. Bill Nelson (D-FL) and U.S. Rep. Gus Bilirakis (R-FL), and with a great deal of help from the National Consumer Reporting Association (NCRA).

Good credit is central and key for the mortgage industry, and a known problem that was affecting these consumers had to be addressed. The problem was ultimately corrected on Aug. 16, 2014 in the Fannie Mae automated underwriting system, but is still problematic in the Freddie Mac system.

Now, we see the same problem with a no-win outcome for responsible homeowners who have stayed put and continue to make their mortgage payments on-time. If these underwater homeowners have no mortgage refinance for betterment and the only option is to go delinquent to get help, what are mortgage professionals teaching this nation about the value of good credit?

More short sales is a big problem in the state of Florida. According to RealtyTrac data, the Sunshine State leads the nation with the highest number of homeowners at 1, 238,761 who are seriously underwater at 125 percent or more. Pockets across the U.S. continue to improve in value, but there are still many areas that values have not come up enough to avoid short sales.

Log on to HousingCrisisStories.com to be directed to the petitions and stay tuned to future editions of National Mortgage Professional Magazine on updates.

Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail pmarron@tampabay.rr.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.

Mortgage Master, a national mortgage lender and division of loanDepot Inc., America’s lender, has announced the opening of its newest branch in Burlingame in San Mateo County, Calif., an enclave of Silicon Valley and one of the country’s most diverse markets, serving many high-tech, bio-tech and startup companies and the region’s responsible borrowers. With more than 30 years of experience, Branch Manager Arton Chau is leading a seasoned team of lending professionals committed to delivering excellent customer service and competitively priced, high-quality financing options from Mortgage Master including personal, purchase, refinance, traditional, high-balance and jumbo loans.

“At Mortgage Master, we understand each borrower has specific needs in one of the country’s hottest real estate markets, and we’re ready to help them make their dreams a reality,” said Chau.

“Homeowner interest in the San Francisco Bay area is unprecedented. We remain committed to helping meet the needs of the communities where we live and do business by providing a simple, straight-forward financing experience.”

The Burlingame Mortgage Master team of lending professionals includes Chau, Kitty Lee, Judy Chen, Jed Thibodeau, Kelly Trueb, Sally Yip and Luis Alberto Wong.

“Our newest branch in Burlingame has seasoned and experienced loan officers ready to assist responsible borrowers in the San Francisco bay area,” said Mortgage Master President Paul Anastos. “When considering loan options, especially for Millennials interested in buying a home in the growing Silicon Valley area, experience and versatility matter. Mortgage Master’s financial professionals offer a broad range of product lines to accommodate most every lending need.”

Mid America Mortgage Expands in Kansas and Missouri

Mid America Mortgage Inc. Owner and Chief Executive Officer Jeff Bode has

announced the firm has expanded its operations into Missouri, Iowa and Kansas with its newest branch locations in Kansas City, Mo. and Overland Park, Kan. “Mid America Mortgage is committed to helping consumers throughout the nation to achieve their homeownership goals,” Bode said. “With our Kansas City branch, we have further extended our reach into the Midwest and look forward to providing borrowers in this area with a wide range of home financing products and a superior level of service.”

Mid America Mortgage recently announced its intent to begin originating eMortgages, which was one of many initiatives that attracted technology-driven Midwest Sales Manager Jeffrey Layne to move his mortgage business and join the company.

“I have to consider where to service my personal clients first,” said Layne.

“As a loan originator, I love Mid America’s wide range of product offerings and its extremely competitive interest rates. In addition, when the loan is closed, there’s a high probability my customer will ultimately make his or her mortgage payment to my company. That is part of creating lifelong relationships.”

Due to state licensing rules in Missouri, the company will do business as Mid America Lending in that state.

ClosingCorp Announces Integration With INTEGRA Software Systems

ClosingCorp has announced that its Loan Estimate Service is now integrated with INTEGRA Software Systems’ Webbased Epic and Destiny Loan Origination Systems (LOSs).

ClosingCorp’s Loan Estimate Service currently provides users with validated fee information to populate the new Loan Estimate (LE) mandated by the TILARESPA Integrated Disclosure (TRID) rule.

Additionally, the solution still delivers the required RESPA-compliant Good Faith Estimate (GFE) data for applicable loan types.

The service incorporates client-specific business rules to deliver correct fee and tax information in each estimate and notifies users should transfer tax, recording fees or vendor estimates change. It also provides a complete audit trail, Settlement Services Providers List (SSPL) support and an ability to flag estimates from affiliates that must be managed to the new zero variance requirement.

“ClosingCorp and INTEGRA are dedicated to providing solutions that help automate and streamline the residencontinued on page 68

Time for a Change?

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Experience rience Academy’ Academy’s ’s Service Se Expedition for yourself. Join the Academy team today today.. Contact John Owens, National Recruiting gerr, at (801) 541-7456 or visit www Manager, Manager www.academymortgage.com. .academymortgage.com.

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NationalMortgageProfessional.com

Academy Mortgage rewards our top producers with unique opportunities to make a difference.

NMP’s 2015 MORTGAGE TECHNOLOGY PROVIDERS DIRECTORY

Actualize Consulting

DocMagic Inc.

Phone #: (703) 727-2356 Web site: ActualizeConsulting.com

Phone #: (800) 649-1362 Web site: DocMagic.com

Why techies love the company: TRIDenTool and TransformX: Navigating the Mortgage Manufacturing Process.

Why techies love the company: Integrated security infrastructure, processing power, scalability and storage.

Why clients love the company: Actualize provides a high level of mortgage market expertise to our clients.

Why clients love the company: DocMagic is dedicated to serving its customers and keeping them compliant.

Description of products offered: TRIDenTool seamlessly produces compliant Integrated Disclosure Regulation forms. This user-friendly tool performs required calculations and guides you through creation of the Loan Estimate and Closing Disclosure forms.

TransformX is a smart data utility that can handle all TRID investor needs, providing quick, easy and cost-effective compliance with GSE UCD requirements. The utility creates UCD XML and the PDF version of the form in MISMO 3.3.1 format. Actualize services support clients with Capital Markets, Mortgage and Fixed Income business needs.

Description of products offered: For more than 25 years, DocMagic has been the leading provider of end-to-end document preparation, delivery and compliance solutions for the mortgage industry. We provide the tools and technology for survival in today’s complex regulatory environment, DocMagic continues to advance innovative products and eService solutions for over 10,000 customers nationwide. With the development of an automated collaborative closing portal and TRID-compliant solutions, DocMagic continues to build a reputation for innovation, quality, and customer service.

NOVEMBER 2015 n New York Mortgage Professional Magazine n

NationalMortgageProfessional.com

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Capsilon

Global DMS

Phone #: (800) 660-7183 Web site: Go.Capsilon.com/NMPDIR

Phone #: (877) 866-2474 Web site: GlobalDMS.com

Why techies love the company: Our award-winning technology uses two U.S. patents for document recognition.

Why techies love the company: Global DMS’s eTrac is the most robust appraisal management platform available.

Why clients love the company: DocVelocity can eliminate up to 80 percent of labor costs and ensure compliance.

Why clients love the company: Global DMS’s configurable workflow automation allows more efficient process management.

Description of products offered: Capsilon provides comprehensive cloud-based document and data management solutions that enable mortgage lenders, investors and servicers to increase productivity and lower costs, while ensuring compliance. The company’s flagship product, Capsilon DocVelocity, is a document imaging and data capture platform built specifically to address the needs of large mortgage companies. Capsilon Professional Services helps to implement DocVelocity to meet each customer’s unique business goals, and for ensuring that every customer realizes the full potential of DocVelocity.

Description of products offered: Global DMS’s flagship product, eTrac, is a Webbased, single-source valuation management platform that centralizes and compliantly automates all aspects of the valuation process from vendor management to orders, assignments, tracking, accounting, delivery, reviews and sells. Global DMS’s companion products include MARS, Global DMS’s proprietary automated review system, Global Kinex, Global Communicator, AMCmatch.com, AMC State Regulations, AVM/data analytics products, BPO management solutions and eTrac ATOM mobile applications.

D+H

Hallmark Home Mortgage

Phone #: (800) 815-5592 Web site: DH.com

Phone #: (260) 469-0900 Web site: HallmarkHomeMortgage.com

Why techies love the company: SaaS efficiency … D+H does the regulatory updates and software enhancements for you!

Why techies love the company: Virtual Loan Officer demystifies the loan application process.

Why clients love the company: Streamlined implementations, responsive service with zero hardware costs.

Why clients love the company: Hallmark Home Mortgage’s communication tools and local decision-making gets clients to closing faster.

Description of products offered: D+H’s end-to-end Mortgagebot online lending and origination solution helps you sharpen your competitive edge to attract borrowers, simplify compliance to minimize risk, and optimize back-office processing through post-closing to boost profitability. D+H works with the customer to configure a solution to your lending footprint and will help you achieve quick success through a proven implementation process.

Description of products offered: Virtual Loan Officer puts the loan officer in front of the customer in a virtual setting to guide them through the application process.

This advantage works to reduce the possibility of delays so we can get straight to closing. With products ranging from conventional and FHA, to investment and new construction, to VA and Dr. Loan Programs, Hallmark’s technology and products help the company stand out in a crowd.

NMP’s 2015 MORTGAGE TECHNOLOGY PROVIDERS DIRECTORY

Ignite Integration Solutions Inc. Phone #: (516) 802-7170 Web site: IgniteIntegrationSolutions.com

MortgageLeads.Loans Phone #: (510) 663-7016 Web site: MortgageLeads.loans

Why techies love the company: Ignite Integration Solutions develops custom integrations for the Encompass system utilizing the SDK.

Why techies love the company: Real-time, new customer mortgage leads right into your CRM system, email/text.

Why clients love the company: Clients appreciate Ignite Integration’s mortgage expertise and custom development combination.

Why clients love the company: MortgageLeads.Loans delivers real-time, highquality new customers mortgage leads that close.

Description of products offered: The company’s suite of products include: Data Replication Tool, Data Import Tool, Auto Folder Transfer, Warehouse Export Tools, Data Warehouse, Reporting Database, Servicing Integrations, Network Performance and Custom Integrations.

Description of products offered: MortgageLeads.Loans is a leader in generating Web, mobile, social media and pay-per-call mortgage leads.

45

Why techies love the company: All the cool pricing engine tools from mobile mortgage Web shopping to lock desk.

Why techies love the company: NAN Software is transforming an industry with its disruptive technology.

Why clients love the company: LoanTek turns leads into loans and bundles all the services you use for one low price.

Why clients love the company: NAN Software designs solutions to drive performance for its clients.

Description of products offered: LoanTek offers: Best execution pricing, lock desk management, CRM, lead management and custom Web site integrations. Attract and convert new clients using interactive consumer facing pricing applications. LoanTek’s applications present interactive mortgage shopping experiences in CRM responses, Web site plug-ins, mobile apps and lead management. The end result … ‘sticky’ consumer experiences that build trust and validation online. Visit LoanTek.com.

Description of products offered: AppraisalQPM is NAN’s flagship product, which not only provides the platform to place and manage appraisal orders, review appraisals and track performance from end to end, but will digest and leverage data and advanced analytics to allow appraisers, originators, lenders and investors the ability to drive operational and financial performance improvements in a compliant manner.

MortgageFlex Systems Inc.

Protelus

Phone #: (800) 326-3539 Web site: MortgageFlex.com

Phone #: (800) 585-0207 Web site: Protelus.com

Why techies love the company: MortgageFlex offers the latest, most secure technology available today.

Why techies love the company: Protelus does everything … installs, configures and operates a complete CRM system.

Why clients love the company: MortgageFlex’s sole focus is the mortgage industry and is dedicated to its customers.

Why clients love the company: Protelus costs less and makes them more than any attempt to do it themselves.

Description of products offered: MortgageFlex’s loan origination system, LoanQuest, provides lenders a cost-effective, compliant lending solution that is easily accessible for branch personnel, remote originators and consumers. One system and one database with three access portals, guarantee lenders and borrowers all get the same information at the same time. Founded to simplify lending in 1980, MortgageFlex holds true to that course 35 years later. Find out today how MortgageFlex can help you focus on your real business—Lending.

Description of products offered: Protelus provides a complete turn-key marketing system and can help your operations department with process automation. Protelus created and is still the only company that can do fully-automated real-time loan status updates. Protelus builds a complete and accurate client database for you from your LOS. The company can move your LOS data in realtime. Protelus automates and operates your sales campaigns for you, and write the materials for every campaign and personalize every piece of content for each loan officer.

n New York Mortgage Professional Magazine n NOVEMBER 2015

NAN Software Phone #: (813) 749-8849 Web site: SoftwarebyNAN.com NationalMortgageProfessional.com

LoanTek Inc. Phone #: (888) 562-6835 Web site: LoanTek.com

NMP’s 2015 MORTGAGE TECHNOLOGY PROVIDERS DIRECTORY

?

are you

nominated TagQuest

coming in december 2015

Phone #: (866) 376-5540 Web site: TagQuest.com Why techies love the company: TagQuest can integrate with any system, any time anywhere.

Why clients love the company: TagQuest is a one-stop shop for all direct marketing needs.

Description of products offered: TagQuest offers call tracking, lead tracking, lead posting, direct mail, Internet leads, pre-screened credit data, mortgage trigger leads, mortgage insights, custom data lists, live transfers, online marketing, e-mail marketing and custom printing … all under one roof.

46

Titan List & Mailing Services Inc.

NOVEMBER 2015 n New York Mortgage Professional Magazine n

NationalMortgageProfessional.com

Phone #: (800) 544-8060 Web site: TitanLists.com Why techies love the company: For the ability to offer turn-key direct mail programs under one roof.

Why clients love the company: For Titan List & Mailing Services’ commitment to integrity and customer service.

Description of products offered: Complete data, direct mail facility and marketing consultants.

TitleClose Phone #: (844) 222-1266 Web site: TitleClose.com Why techies love the company: TitleClose is disruptive technology for the title and closing industry.

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Just Ask

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By

Eric Weinstein & Laura Burke nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you.

This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal

K

counsel or the advice of a tax professional.

Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!

Stop! Before you read this, look in this month’s magazine for Eric’s other column, “Can You Help a Brother Out?” Read that first. This column will make more sense if you do it in order.

Mia Ledge from Detroit asks …

I have a tax client who is trying to get a home loan in Illinois who has good credit score, good downpayment, but wrote off a lot of mileage

from his income, thus reducing his income on paper. Do you know any lender FHA or standard that would look at it differently?

Eric’s reply to Mia …

If you have a borrower who writes off mileage as a matter of business expense, you can add back the depreciation portion of that mileage deduction. Here are the annual rates …

For automobiles, a taxpayer uses for business purposes, the portion of 23 cents per mile for 2012 and 2013, 23.5 cents per mile in 2014.

See Section 4.04 of Rev. Proc.

2010-51 at IRS.gov/irb/2013-

52_IRB/ar12.html.

Here’s the direction from the FHA manual, specifically, 4155.1 4.D.2.l.

If the borrower uses the standard per-mile rate in calculating automobile expenses, as opposed to the actual cost method, the portion that the IRS considers depreciation may be added back to income.

I learned this particular tidbit from Stearns, so I know for sure they follow it. I am also positive that any FHA lender without this particular credit overlay would do it, if you send them these FHA guidelines and the Internal Revenue Bulletin 2013-52.

k Eric & Laura Laura’s reply to Mia …

Eric, I am impressed—a combination of tax law and mortgage rules, definitely hit the answer right on the head.

I have nothing to add, other than to confirm I just recently had a client in this same situation and yes they did exactly this, added back the proper amount for the year used.

Jim from Dubuque asks …

I was wondering if you could tell me more about the companies offering to pay us for getting our clients to sign up for a bi-weekly payment program, are they legit and how does that work.

Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recom-

mend seeking legal counsel or the advice of a tax professional.

Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage marketplace. She may be reached by email at lauralynnburke@gmail.com.

Eric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com.

calendar of events N A T I O N A L

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Eric’s reply to Jim …

Personally, I think bi-weekly is for the weak and feeble-minded. I used to sell them, but now I think they are a rip off. As Laura explained, you are basically making and extra monthly mortgage payment once a year. That is the true savings, not that the bank gets it 14 early as many people believe. Why pay for something you can do yourself?

As for “borrowers who don’t typically stay on track when doing it themselves,” like I said, yes, it is for the “weak and feeble-minded.”

Explain it like this to your borrowers and you make more money on referrals then you ever would on a

bi-weekly commission.

Please send us your questions relating to starting a business, managing a business, training, networking, tax related issues, corporate security policy, fraud alerts, and compliance.

NationalMortgageProfessional.com

Laura’s reply to Jim …

Yes, I am familiar with a couple of them. The ones I know of are legit and work like this: A borrower would sign up with their company to have bi-monthly debit withdrawn from their bank account by the Bi-monthly company, (BMC). The BMC would in turn pay the borrowers lender every two weeks with their money for them. By making a payment every two weeks, since twice a year two months have five weeks, you are actually paying an extra bi-weekly payment two times, equaling one month extra payment a year. So basically the borrower is paying 13 payments (via 26) instead of standard 12 monthly mortgage payments. The BMC company may or may not make bi-weekly payment or monthly payment for the borrower it is the fact that they are collecting the extra payment to make for the borrower.

Depending on the interest rate and time of the loan, a borrower can save a rather hefty amount of interest, reducing their end balance significantly, arriving at an earlier date in time to have their mortgage paid off sooner. It is a way for a borrower to increase their equity position in their home, car or boat. I have had clients use the program on their car loan, and it works for that just the same way.

The BMC will charge a onetime set up fee to process the loan, so let’s use an example of $195, they will also charge a nominal bi-monthly payment fee of $5-$10, and then you can be paid either by charging the borrower an upfront fee of what you determine, typically anywhere from $100–one-half of the whole monthly mortgage payment, or some BMC will pay you out of the first extra payment they take in from the borrower. The

borrower is aware of the fee and that it will be taken out of their payment.

You ask why a borrower would want to do this, and pay the fees.

Because borrowers don’t typically stay on track when doing it themselves, it’s easy to use the extra funds for something else. They would need to be very disciplined to do this themselves, or some lenders do offer this option. However, the lender also may charge some fees as well.

A borrower could also accomplish the same or similar benefit by making one extra payment a year themselves. They could also divide up the extra payment by 12 months and pay extra with each monthly designating it to go towards principle.

The fact that it accelerates equity build-up, I like a lot, as for paying BMC to do it or doing it yourself, is a matter of choice. If you know you won’t stick to it, then pay the fees, if you know you can stick to your own plan then don’t pay the fees. It’s really that simple in my mind.

But if you have a borrower with a very small downpayment, I would encourage doing this one of the ways, to help accelerate their equity build up. By accelerating their equity build up they may remove their monthly PMI sooner, increasing the benefit.

Here is an example of a 30-yearfixed rate mortgage of $250,000, with a five percent interest rate mortgage at a 26 percent tax rate paid off early using a bi-weekly payment: This is a free tool for public use at http://goo.gl/IWRIyG. Being the tax person that I am, I did use the comparison with the tax savings vs. the tax loss to give a complete and accurate picture of the true savings.

“Many people see social media as something strictly for lighthearted use as oppose to business-oriented.

However, the latter is quickly becoming the norm for a lot of companies.”

Living on the Web: Building Your Online Presence as a Mortgage Professional

By Brandon Simmons

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Today, people live in both a physical world and digital world. The days of using the yellow pages or newspaper to find a restaurant, store or new home are long gone. Now consumers run straight to the internet and look up

their options by which one is either the best or closest. That is why, even for a conservative field such as mortgages, Web presence is a must. Online presence is the standard of how we judge places and people. Some employers

NOVEMBER 2015 n New York Mortgage Professional Magazine n

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Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File 413 0904. CO: Mortgage Company Registration 2600 and Supervised Lender’s Licenses 989668 and 989668-001. To check license status of your mortgage loan originator, visit www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Kansas Supervised Loan License SL.0000313. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MS: Licensed by the Mississippi Department of Banking and Consumer Finance. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. NC: Carrington Mortgage Services, LLC is licensed under the North Carolina Agency Permits 102107 & 103455 and North Carolina Secure and Fair Enforcement Mortgage Licensing Act. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA, DE & VA Automatic loans only). OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender and Broker. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600 & Mortgage Broker License MB-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, KY, MD, MT, NE, OK, SC, SD, TN, TX, UT, WV, WI, WY. All rights reserved.

use it as a means of making hiring decisions on job prospects. The regular consumer can use it to make decisions on where they would like to eat, shop or live. The National Association of Realtors (NAR) reported that 92 percent of buyers used the internet in some capacity of their homebuying process. Instead of taking a traditional weekend drive to browse some homes, potential buyers are finding what they need through a few clicks without even putting the keys in the ignition.

When it comes to web presence, the best place to start is obviously creating a Web site. It used to be, you would have to slave over a million hours of code to create your own site or you would have to spend a large sum of money to get a Web designer to accomplish such task. These days, while that may hold true sometimes, it is not necessarily the case. There are platforms, such as Wordpress or Bootstrap, that can help you create your own site to your liking, regardless of your digital skill level. These online tools allow you to choose from several customizable templates that fit the needs of what you want for your clients when they visit your site. There is nothing wrong with going this route for your particular business as it is a very popular method used by many Web sites, especially ones that are for local businesses.

Once your Web site is created, it is time to enhance it so it can leave the confines of your desktop and become visible to all. Search Engine Optimization (SEO) is a method of having your Web site show up in the top results of search engines. The idea of SEO is to allow your content to put you higher in these online searches. This method heavily relies on the use of keywords, as users can sometimes type in very narrowed and meticulous searches. While your site title may include the words “home loans,” you might not show up right away if someone types that in the search engine.

However, if they type in that phrase in addition to your location, it could bring you higher on their results, provided you have listed your location

somewhere in the content on your Web site.

Content is vital for propelling your site across the Internet and expanding your online presence. It is great to have a Web site started, but there still needs to be something within it to keep a potential customer engaged in your site. In the case of mortgage lenders, you might want to have a page on your site where the customer can fill out the application. This could be useful when you are working with a borrower that is moving to the area and unable to meet in a regular manner as needed. Other ideas for content can include an “About” section which explains everything about what services you offer or what loans you originate. This section can also contain the location lenders should also look to the use of blogs as a great content tool. Everybody reads blogs of some sort whether it is to be entertained or get some vital information. There is only so much that you can say about what a USDA loan is and what it can do for you, but you can incorporate a current event in your article about USDA loans and how they’re being used or if there are any new regulations surrounding them.

The other aspect of an online presence is social media. Many people see social media as something strictly for lighthearted use as oppose to businessoriented. However, the latter is quickly becoming the norm for a lot of companies. According to Adweek, roughly nine out of 10 companies use social networking sites for marketing. Social media pages are intended to revolve around Web sites. Think of it as your site being your body, while social media serves as your arms and legs for “reaching out” and moving you to different places on the Web. Social networking sites share a common function of connecting with all types of people but the capacity in which they do so will differ. More than likely, you are not going to post on LinkedIn with the same random thoughts that you would post on Twitter or even at the same frequency.

LinkedIn is a social media platform

intended for professional and career use; Twitter is used to offer quick meaningless thoughts on everything from football games to the Kardashians. Google+ is an underused social media site, but it encourages local businesses to set up pages and that could be useful in terms of being found on search results. For those that are into visuals, there is the Instagram platform, where you can share pictures in which your followers view them as a regular feed like Twitter or Facebook.

Another visual social media platform is YouTube. This particular site serves as somewhere content is created and uploaded by users. Instead of the content being “shared” within the platform, many times it is shared across other social networks such as Twitter, blogs and Facebook.

Facebook is one of the more recognizable social media platforms. It grew

from a Web site that only connected Harvard students, to one of the most widely used ways that we communicate. One of the biggest Facebook features is the Fan Page, in which celebrities, public figures and businesses have established their Facebook presence without having to use a personal profile. The limitations with a personal Facebook profile involve adding a limited number of people as well as getting tagged into something totally inappropriate or deemed offensive.

With a Fan Page, Facebook allows you to add an unlimited number of people to “like” your page and they do not have to be Facebook friends with you.

The Facebook business pages allow you to add “Likes” through any e-mail you submit.

If you want to expand your presence even further, look into going on review Web sites. Yelp and Merchant

Circle are two online platforms that display consumer reviews to other potential customers to influence their decision. Usually these show up pretty high on search results when a borrower is searching your name, and you might not have enough traffic on your other platforms.

The last and important key to building your web presence is patience. You are not going to shoot to the top of the search engine in one day. It takes time by building your audience through likes and followers, as well as developing content. In addition to patience, you must be consistent with your platforms. As a mortgage professional, your schedule can be stuffed full of closings, meetings and paperwork so it is hard to keep up with your Web sites and platforms. Research strategies, such as timing and types of content to manage your time most effectively.

Every day more and more people are flocking to the Internet for a variety of uses and it is important to get in the mix while you still can. The people in their mid-30s to early-50s are using the Internet as a daily tool and will soon be using it for guidance on a reverse mortgage if they need one.

Position yourself now so you will be able to advance your strategy down the line and not when you are at the end of your line.

Brandon Simmons is digital manager for Open Mortgage LLC, where he manages Web sites and social media. A native of Houston, Texas, Brandon attended Texas State University where he earned a bachelor’s degree in electronic media and a master’s in new media. He may be reached by e-mail at brandonsimmons@corp.openmtg.com or visit BrandonSimmons.biz.

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“By leveraging technology innovations, the mortgage industry’s sales force can find and connect with borrowers with greater speed and effectiveness.”

Exploring a New World of Mortgage Sales

By Chris Backe

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From a technology standpoint, much more time, money, and effort has gone into streamlining the mortgage production process than has ever been spent on sales and marketing.

And why not? Technology doesn’t sell loans—people do.

However, recent advances in marketing automation, dialer technology,

and lead management have turned the selling of consumer financial service products into a science. By leveraging technology innovations, the mortgage industry’s sales force can find and connect with borrowers with greater speed and effectiveness. The challenge is being able to merge these innovations with the mortgage pro-

duction engines lenders use to create and sell loans, thus providing ultimate efficiency for any mortgage operation, whether a small brokerage shop or a large mortgage banker.

I believe the mortgage industry is on the verge of finally overcoming this challenge. In fact, some lenders are already beginning to explore what I call a “New World” of technology adoption.

I use the term New World because connecting an organization’s marketing, sales, and origination technology can open up new frontiers of profits and efficiency that lenders have only been able to dream about—until now.

Being able to see what lies on the horizon of this New World, however, requires an understanding of how the opportunity came to be.

Today’s mortgage assembly line Twenty years ago, Freddie Mac and Fannie Mae released software that revolutionized residential mortgage lending as we knew it. Loan Prospector and Desktop Underwriter were not the first nor the last solutions of their kind, but they had such a profound impact on how mortgage loans were created and sold that they influenced other innovations, from online mortgage applications to automated product and pricing engines, credit reports, electronic disclosures, secondary market delivery, and warehouse loans.

With the exception of a few outstanding obstacles, today’s mortgage transaction is mostly a paperless endeavor, and growing more so by the day. Every year, more mortgage borrowers fill out preapproval applications online and sign their initial loan documents electronically. And every year, more lenders access their loan origination systems through the cloud, and thus rid themselves of the hassle, cost and maintenance of in-house IT departments, racks upon racks of servers, printers and fax machines and the extra office space to house such items.

With new obstacles such as the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA (TRID)

Rule, technology is also being used to help lenders stay compliant. For example, automation is now being leveraged to handle everything from red-flagging missing or inaccurate data in loan files—as the loan files are being put together—to overseeing third party compliance. In doing so, it’s also saving lenders an extraordinary amount of money at a time when per-loan costs are near all-time highs.

Automation can also be used to track and maintain loan quality as new information is added into loan files as well as to reduce manual processes, which lead to mistakes and erode loan quality.

Yet, compared to the enormous investments that have been made in mortgage production, there has been relatively little investment in the very front end of the mortgage transaction, where consumers and lenders connect, and where sales and marketing take place. That is, until recently.

Innovations in sales technology Until several years ago, the way mortgages have been sold in the U.S. hasn’t changed a great deal. The vast majority of homebuyers and homeowners looking to refinance typically used the mortgage broker or loan officer that a friend or family used, or one recommended by their real estate agent, bank, or financial institution.

Today, however, more than half of all borrowers are searching for rates and lenders online, according to recent statistics. And Internet leads— once ignored by all but the most desperate mortgage professionals—have matured to the point where some lenders are using them to double and triple sales. This is thanks to the more detailed borrower leads cultivated by third-party websites such as Zillow and Lending Tree, as well as the advent and implementation of new sales automation tools, which allow lenders to respond to leads with previously unheard of speed.

For example, lenders can now import borrower leads from multiple sources, prioritize them based on any

personalized to the individual borrower and can include multiple channels—e-mails, mailers, online ads, posters, gifts and newsletters—in addition to pieces that are enhanced for mobile devices and can be used to measure click-through rates and capture online leads.

particular set of borrower characteristics or other factors, and distribute them automatically to loan officers— who are then able to call borrowers up using an Internet-based dialer in less than a minute. In fact, the time between a prospective borrower submitting a request for loan information online and the time a lender is talking directly to that borrower by phone can happen in as little as 10 seconds.

Likewise, technology is transforming the mortgage marketing space by allowing lenders and even individual loan officers to create automated and customizable marketing materials in an instant. I’m not talking about the type of automated e-mail drip campaigns that have become standard equipment in the dime-a-dozen CRM tools on the market. I’m referring to professional-grade marketing for all kinds of formats and purposes that is

Bridging the gaps In my opinion, the innovations that have taken place in marketing and sales technology, while more recent, are equally sophisticated to the innovations in mortgage production technology. Yet the traditional gaps between marketing, sales, and mortgage production operations have made it difficult to bring these two sides together. Unfortunately, this has created a situation that is fraught with waste and risk for lenders.

Loan officers today are often

The great part about this New World I’ve referred to is that it is relatively unchartered. Lenders that strive to bring cradle-to-grave fluidity to their mortgage operations will likely vault ahead of competitors in multiple areas—better efficiency, higher closing rates, and happier workforces. The lenders that don’t, on the other hand, will likely miss the proverbial boat.

Chris Backe is director of financial services at Velocify, and a sales automation expert with more than 20 years of experience offering technology solutions to multiple industries. He can be reached by e-mail at cbacke@velocify.com.

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JANUARY 8AM-3PM

credit, loan products, and disclosures are automatically generated.

As I mentioned earlier, some lenders are setting sail toward this New World I’ve described.

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responsible for all of their own sales and marketing activities, which invariably leads to poorly executed efforts on both fronts. In worse-case scenarios, loan officers can go broke paying for ineffective sales campaigns and run afoul of regulators for marketing that is not just ineffective but noncompliant.

All three operations have traditionally been disjointed. But what if they were not—what if all three were integrated through technology, and worked in harmony? For example, one platform that could allow lenders to create automated yet professionalgrade marketing pieces that could capture a borrower lead, funnel them to the loan officer best suited to convert that borrower into loan application, and then import the borrower’s information into the lender’s cloudbased origination system, in which

“A technological solution can bring policies and procedures to life and help ensure representatives are abiding by them.�—Brian Orlando

Social Media Compliance Technology: How to Safely Grow Your Business

By Brian Orlando & Ryan Smith

NOVEMBER 2015 n New York Mortgage Professional Magazine n

often lead to a negative impression of a brand. While serving to reinforce your brand persona, a robust social media strategy will not only foster engagement within your community, but will set the foundation for thought leadership. A LinkedIn and TNS study of small- and medium-sized businesses (SMBs) with revenue

Grow Your Business

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As the world continues to adopt social media as a means to communicate with one another, non-participation for businesses is no longer an option.

Given the abundance of information readily available at one’s fingertips, today’s consumers want to educate themselves at their leisure. A non-existent or stagnant social presence will

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between $1 million and $50 million showed a real correlation between a corporation’s social media engagement and their financial performance.

For mortgage institutions, a robust social media strategy should simultaneously look to engage future clients while maintaining strict compliance with state and federal regulations. The challenge of scaling a compliant social media strategy to hundreds or thousands of loan officers can be a daunting task. The FFIEC clearly states in their guidelines that “A financial institution should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media.� The following is an outline detailing how technology can be used to help manage and control the compliance requirements faced by mortgage lenders today including account discovery, monitoring, and archiving.

The consumer-oriented nature of social media creates an environment ripe for creative self-expression while promoting a self-starter mentality.

Social media networks offer platforms that are extremely intuitive and user friendly; ultimately making it easy for an individual with little technical skill or knowledge to set-up a social media profile and distribute impulsive branded messages in a heartbeat. Unlike traditional communication verticals like e-mail, anyone can create a social media account without the knowledge of their organization. With that said, organizations are still held liable for communications by loan officers or brokers conducting what is commonly referred to as “social selling�—even if done without their knowledge.

For SMB to Fortune 100 organizations, managing profiles and content manually becomes a cumbersome task requiring tedious amounts of time that ultimately proves inefficient at best— if not impossible—and poses a large compliance risk while diluting brand messaging. Savvy compliance and social teams leverage technology to automate and expedite the discovery of these accounts. With minimal input organizations can reduce the days of

manual searches to minutes while simultaneously increasing visibility from periodic audits to 24/7 oversight.

The automation of social account discovery provides a mechanism that persistently scans the social Web for accounts associating with your brand while mitigating the risks presented by rogue loan officers.

After implementing ongoing discovery for account tracking, organizations need to define and enforce a clear set of policies and procedures that speak to the acceptable use of social media on behalf of the brand, including the addressing of laws and regulations governing social media in specific correlation to the internal policies a mortgage company has in place. It is additionally recommended that an organization provide clear examples outlining common mistakes and best practices associated with each of the given laws and regulations. The FFIEC’s Social Media Guidance suggests an organization’s policies and procedures should â€œâ€Ś provide oversight and controls commensurate with the risks presented by the types of social media in which the financial institution is engaged.â€? In other words, an organization’s social media policy and procedures should be proportional to their perceived risk based on their participation in social media. Even if your organization doesn’t allow branded personal social media use, it is recommended social media policies and procedures are developed to ensure the overall brand’s reputation is protected from outside risks.

Drafting a policy is easy, but as organizations scale their social selling teams manual oversight and enforcement becomes difficult. A technological solution can bring policies and procedures to life and help ensure representatives are abiding by them.

Content policies offering automatic classification and enforcement of posts help compliance and social media managers sift through thousands of dynamic communications while ensuring brand representatives are acting within the guidance of your policies and procedures. It is important to implement technology that classifies both inbound and outbound content

“For mortgage institutions, a robust social media strategy should simultaneously look to engage future clients while maintaining strict compliance with state and federal regulations.”—Ryan Smith

for compliance and other violations per your corporate communication policy.

Today’s solutions are designed to be intuitive and comprehensive while making monitoring content an easy step-by-step process easily incorporated into the daily work flows of content managers. Specific content enforcement solutions range in functionality, depth, and features. Essential capabilities include the ability to define acceptable content via predefined parameters, flag unacceptable content, and report or notify violations. It can also be helpful to provide a “library” of content that a representative can pull from. Regardless of features and func-

tionality of content classifiers or notification policies, an ongoing record of communications should be archived for legal and compliance purposes.

Today’s technology offers a superior solution for archiving content as each post is reviewed against content classifiers and saved with the appropriate META tags allowing you to easily query and search for content risks. Compared to the traditional methodology of archiving content and conducting periodic audits, today’s offerings provide a proactive approach vs. reactively reviewing portions of content. It allows compliance and legal teams to 100 percent review content—in real-time—

instead of incomplete audit methodologies that leave organizations open to legal and compliance violations.

The growth and customer interaction offered by social media in financial services should not be overlooked, as trends continue to show a well-executed social plan plays a critical role in driving growth.

The challenges of scaling a compliant social team are easily supported using today’s leading compliance technologies.

By being able to automate the discovery of rogue employees, enforce your corporate communication policy in real-time, and archive data while simultaneously not interfering with the productivity of marketing; organizations are finally able

to confidently launch social media programs without the worry of being at risk for compliance violations.

Brian Orlando works with organizations to deploy and scale social technologies aimed at protecting social media infrastructures. He is currently working at Nexgate, a division of Proofpoint. Brian may be found on Twitter @Brian_J_Orlando. Ryan Smith is the public relations and communications director for Land Home Financial Services Inc., a privately held mortgage banker headquartered in Concord, Calif. Ryan may be found on Twitter @SmithMRyan or e-mail ryan.smith@lhfs.com.

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“While data integrity has always been important, the consequences associated with getting it wrong have become more costly in the current regulatory environment.�

Strengthening Partnerships With Data Integrity Solutions

By Jack Nunnery

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In this digital age, new forms of technology are being developed at a rapid pace and re-shaping the way that businesses operate. As mortgage bankers become more dependent on advanced technology to increase accuracy and efficiency, there is an opportunity for correspondent lenders to use these programs to help sellers reduce repurchase risk, as well as the risk of incurring regulatory fines.

As lenders, data integrity is one of our biggest challenges. If you take into account the sheer number of documents that a borrower is required to submit throughout the mortgage loan process, it is easy to understand how data integrity can vary. The opportunity for mistakes

can seem endless: Letters or numbers could be transposed, some of the reported information may be inconsistent with supporting documentation, and even signatures can vary from one document to another.

While data integrity has always been important, the consequences associated with getting it wrong have become more costly in the current regulatory environment.

Organizations with moderate-tocritical loan data defects may face significant fines as well as the cost associated with repurchasing loans sold containing data errors.

Helping originators identify and correct data defects may help them avoid costly regulatory mistakes, as

well as other financial losses that could place the organization in a difficult economic position. For an organization with limited liquidity, this could place undue pressure on the balance sheet and possibly limit the future of the business. In a worst case situation, the seller could face litigation over the defective data on the grounds that the information provided was misleading.

As a correspondent lender, there are many ways to process and review loans for purchase, and as a new entrant to the market we certainly spent time weighing the pros and cons of each method. The first method is good old-fashioned file review, where the aggregator simply reviews a combination of keyed data and an indexed loan file. There are several reasons why this method is not effective or efficient. Data input is subject to error, so the lender cannot be certain that the underwriter is reviewing the correct data when making a purchase decision.

Moreover, it takes a great deal of

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time for an individual to review hundreds of pages of documents typically associated with each file and relying upon a person to catch inconsistencies across the file is problematic.

A second, and more technologically advanced option, is using optical character recognition technology (OCR) to extract key information from loan documents for review. Some versions of this technology work like a GPS or mapping system in that it is programmed to look at a specific location for data on a document, and return the value for review. While it sounds like a reasonable solution, OCR technology relies on the quality of scanned images. If the scan is not high resolution, or if the page is slightly skewed, the program will report the page as having a null element. This may also happen if the page has been compromised in some way, such as a crease, staple or tear in the space that the program is trying to read. In addition, these systems tend to utilize only one document in the file to retrieve each value and populate the information, meaning that if the information is not consistent throughout the loan file, the inconsistency will go unnoticed.

A third method uses a more recent form of OCR to retrieve information based on context, and adds the power of comparative analysis to detect inconsistencies across multiple documents throughout the loan file. Data points from a set of standard file documents such as the deed of trust, mortgage application, title insurance binder, property appraisal and pay stubs are used to compare extracted values. Within a matter of hours, the program matches the text data points from the designated data fields and provides the user with a notification of each inconsistency, as well as the name of the file from which the error was extricated. The user can then immediately view the source documents to determine the nature

of the conflict and determine the correct value. By quickly extracting key data from the file, the data can be presented in a clear and concise manner, indicate if there is conflicting information in the loan file, and increase the efficiency of the reviewer by better utilizing their time in the actual review of information instead of wasting time searching for it. After a detailed vetting process, Texas Capital Bank selected this technology for its newly launched correspondent lending program, and has found that it simultaneously reduces the review time while improving the quality of the review itself. This provides a critical feedback loop in which we are able to advise the seller of any issues sooner rather than later, so that they can be cor-

rected upfront. This decreases the long-term repurchase risk and regulatory blow-back for sellers.

While using technology to help sellers identify and rectify loan defects before they have potential to incur financial losses is certainly one way to enhance the relationship, deploying this technology directly into the hands of the seller in the future will reap even greater long-term benefits for both parties. By doing so, they will be empowered to correct mortgage data at a time when the borrower is most cooperative.

Historically, mortgage banking is an industry that is built on relationships. The most successful companies are those that provide the highest level of service and who strive to maintain long-stand-

ing relationships. Using technology to help partners reduce financial risk and become more efficient is an ideal way to forge long-lasting bonds. And, as technology continues to advance there will be even greater opportunities to strengthen those ties.

Jack Nunnery is executive vice president and director of Correspondent

Lending at Texas Capital Bank, previously serving as its national production manager for warehouse lending.

Jack has broad experience in the mortgage industry across different mortgage origination platforms and in a variety of roles, including counterparty risk management, mortgage technology, underwriting, post production, and managing a mandatory trading desk.

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www.callfurst.com

“Keep in mind though that pain relievers might only solve a symptom and may not offer a cure for the real problem. The answers become clear when you know exactly what’s happening with every loan and every associate, every day, and recognize that not all of the details are found in the loan origination software (LOS).”

2016: The Year to Innovate

By Alice Alvey

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This is the moment we have been waiting for! We are waking up from the dazed and confused walk that began when the Dodd-Frank Wall Street Reform and Consumer Protection Act hit the books. Loans are closing using integrated disclosure forms and the Home Mortgage Disclosure Act’s (HMDA) rule has been published.

Dodd-Frank for mortgage lending is on the table and the toughest parts are

implemented or at least known.

Congress is turning its attention elsewhere and mortgage lending is no longer the center of attention. It’s a classic scene from many disaster movies when people who have survived a cataclysmic event walk out of the caves, cover their eyes from the bright sunlight, and look around to see what’s next.

Since July 21, 2010, every opera-

tional and technological resource has been consumed by a battle to execute against a ticking clock. Solutions were designed out of necessity to solve specific problems with the new laws, while many great ideas were pushed to the side. With resources tapped out, innovative ideas barely made it onto a whiteboard. A good idea didn’t even get a backburner.

Innovation and people Innovation didn’t stop, it just wasn’t happening within the average lender’s shop. With a quick walk around the exhibit hall at the October MBA Annual Convention & Expo in San Diego, it was easy to see that vendors with resources continued to find new and better ways to solve problems in the loan process.

But what features and benefits really make a difference to the bottom line?

Generally, people attempt to answer this question by trying to identify the pain points and then look for a feature or benefit that fixes that issue. Keep in mind though that pain relievers might only solve a symptom and may not offer a cure for the real problem. The answers become clear when you know exactly what’s happening with every loan and every associate, every day, and recognize that not all of the details are found in the loan origination software (LOS).

The mortgage business is still a people-driven process. People push data into and through various software support tools designed to save time, improve accuracy, and track results.

Then they go back and improve the process again. The process relies on people seeing and understanding the information, and clicking faster, with every loan. Thus, seeing information correctly is the first step to accuracy.

This brings us to the role of Optical Character Recognition (OCR) solutions.

Maximizing the benefits of OCR OCR-supported tools can solve many steps in the mortgage process. OCR goes beyond typical form identification and converts the typed or handwritten text into coded text. This allows the system

to see what people see and take steps to handle the data. Already using it you think? Think bigger. OCR is already assisting in income calculations, identifying red flags, and answering checklist questions. The application of OCR in pre- and post-closing quality control checks adds efficiency for loan reviewers and provides faster detection of errors and reporting of results.

Further enhancing the value of the information pulled with OCR is the ability to compare the form data to system data from multiple systems. This is critical in correspondent loan reviews, warehouse lending, and for any investor acquiring loans that were not processed in their system. The OCR and data comparison for many fields is a mundane task. Did you ever wonder how an airport security guard can look at hundreds of driver’s licenses and faces and still notice any difference after a few hours? OCR offers a better solution. It learns with every document. And it doesn’t get tired either.

Once the forms and systems have been compared by the OCR system, it’s back to people driving the process more efficiently and focused.

Surprising ways to innovate the loan process can be found in systems with robust reporting. Good reports from an LOS will indicate the amount of time taken in each step and help zero in on the bottlenecks and slow spots. This isn’t innovative; it’s basic LOS and process management that must be in place before taking on anything else.

The LOS can also leverage vendors to run much needed checks on compliance data, but the LOS does nothing to measure underwriting quality or provide information to ensure it is error free. At the core however, underwriters need continuous feedback on the errors they make, whether procedural or agency defects. Errors that may be considered minor or moderate are indicators of the underwriter’s overall attention to detail and understanding of guidelines. The only way to get this information is through a comprehensive pre-funding review process in a system that provides real time feedback, a rebuttal process, and the right

reports. Already have pre-funding reviews in place? Think again.

Changing workflows New designs and organization of information in workflows, checklists, and reports are changing the way managers operate. This in turn changes the monitoring, coaching, and development of underwriters (or any associate for that matter!). Manager reporting should be summarized, but provide easy access to detailed information down to every error detected during a pre-funding loan review. Reports are the most useful tool to identify ways to improve a process. Classification of errors by severity allows managers to catch potential trends early and provide targeted training. Customizable executive dashboards ensure leadership has the right information to weigh all the facts necessary to stay on course.

Perhaps you need a system and the manpower. Blended solutions with Software as a Service (SaaS) and Business Process Outsourcing (BPO) are not new ideas but have become more seamless. The tools built by mortgage technology firms in the last year offer lenders new ways to leverage more resources to complete any of the steps in the loan process faster than before.

A primary example is the review and preparation of the Closing Disclosure (CD). Many companies expected the LOS to prepare the form like a magic wand floating over the screen. Instead they were surprised to see the number of human decisions required to ensure that the form was in compliance and captured all of the costs correctly. The expertise needed to complete this form has escalated and so have the risks.

Adding a business partner or SaaS product with the latest reporting and

workflow features at both the initial and final CD preparation steps provides transparency into ways to improve the human element that will always exist.

Bringing efficiency into the process Cost is often a concern when the word “change” or “innovate” get tossed around. Many solutions are scalable.

Look for a business partner with mortgage and technology as a core and in its leadership. This speaks volumes about the way the product was designed and the consideration given to the user interface. You should expect consultation and education as an integral part of the product to enable easy adoption.

This type of partnership approach ensures the solution will be the right fit at the start and for the long term.

The year 2016 is time to wake up and resolve to bring efficiency and

reporting to the loan process and to your customers. Technology providers can offer tangible information to illustrate the cost savings and benefits.

While you were doing the Dodd-Frank zombie walk, others were finding new ways to originate, process, underwrite, close, post close, QC, and deliver loans.

Every step has evolved into a new way of thinking and with solutions that don’t require a substantial investment.

Get out the whiteboards and set up the brainstorming session! Regulatory implementation overload is behind us.

Alice Alvey, Master CMB, is senior vice president of Mortgage Learning at Indecomm–Mortgage U, responsible for Kaizen risk management and Income Analyzer product development and internal quality assurance. She may be reached by e-mail at alice.alvey@indecomm.net.

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“Employees in the financial services and mortgages sectors are in particular need of ongoing training because these industries have come under increased scrutiny from federal regulators since the financial crisis of 2008.”

Using Modern Training Technology to Improve Compliance

By Mike McNulty

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The mortgage industry today is facing a variety of new challenges, including new regulations from the Consumer Financial Protection Bureau (CFPB) and other agencies, as well as growing cyber threats and the potential for high-profile security breaches that can cause permanent damage to a

company’s reputation.

In recent decades, more firms have begun to embrace e-technology and advanced learning management systems (LMS) as a means of providing compliance training.

According to a 2014 survey of U.S. corporations by Training Magazine,

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about 72 percent of organizations do at least some of their mandatory or compliance training online, and 29 percent of companies completely outsource their LMS operations/hosting.

This modern training technology can be particularly valuable to the mortgage and financial services industries, where regulations are constantly changing and employees must keep up-to-date with the latest licensure and certification requirements.

E-learning capabilities An LMS is a cloud-based application used in the planning, administration, delivery, reporting and documentation of e-learning courses or training programs. A robust LMS allows companies to set up comprehensive training programs composed of required courses in a self-paced learning environment, versus the expenses of coordinating time, schedules, classroom training and potential travel.

Financial institutions and mortgage companies see many advantages to using an LMS for their compliance training. Jodi Johnson, vice president/compliance officer for WaterStone Bank based in Wauwatosa, Wis., said the bank has more than 100 employees and operates more than 11 branches scattered throughout the Milwaukee area, which makes it logistically challenging to manually train all of their employees. Using an LMS system that is continually being updated by a third-party partner and specializes in providing relevant and timely content allows the bank to train a large number of employees, without having to spend countless hours of inperson classroom training or significant travel expenses.

“If you have a large volume of employees, it obviously takes the burden of training off of you,” Johnson said. “With all the changes in regulations that are happening now, there’s no way we could keep up with that training content. I think the system makes the management of training much easier.”

The use of LMS technology to train employees provides efficiencies over

manually training all employees, according to Andrew Hall, assistant vice president of licensing for the compliance division of Royal United Mortgage, based in Indianapolis. He said the mortgage company has approximately 350 employees, a number of which are scattered throughout the country. “With live training alone, it’s kind of hard to accomplish training objectives,” Hall said. “We’re not going to fly them in for one hour of training.”

LMS technology also is more convenient for employees, who can take training sessions on their own computers when they have free time in their work schedules, Hall said. The system sends out automatic reminders or e-mails to employees about the specific type of training that’s required and when they need to complete it. The system tracks employee progress and reports results.

“The technology piece allows us to make sure they get it done,” Hall said. “It leaves our controls where they need to be.”

Regulatory issues Employees in the financial services and mortgages sectors are in particular need of ongoing training because these industries have come under increased scrutiny from federal regulators since the financial crisis of 2008.

“There have been more (regulatory) changes in the last seven years in our industry than there were in the previous 50,” Hall said. “There’s been a massive amount of change that has happened since 2008.”

A robust LMS with relevant and updated content gives companies the ability to keep their employees up-to-date on the latest regulations, such as the new TRID rule, a 1,888page document by the CFPB that covers new regulations governing the mortgage and banking industries. An LMS also offers testing features to ensure employees comprehend the regulations.

“It provides valuable reports that

we can provide to regulators for proof of compliance with the training rules,” Johnson said. “It also helps us identify who is understanding the content and who is not. That way we can focus on particular groups of employees who need more help.”

A robust compliance training program that uses an LMS also can make sure that employees are knowledgeable about anti-money laundering laws and the Bank Secrecy Act, and how to identify and report potential suspicious or illegal activity.

Many companies use hybrid or blended learning methods that incorporate e-learning technology with more traditional classroom training methods. With the new TRID mortgage rules, for example, Johnson said their bank held several in-person introductory training sessions for their employees. It then followed up those live sessions with more detailed and ongoing training sessions about TRID through the LMS.

OnCourse Learning Corporation, where he maintains complete financial and operational responsibility

for OnCourse Learning’s mortgage, insurance, bank and credit union, and money services compliance prod-

ucts. He may be reached by phone at (443) 391-5210 or e-mail mmcnulty@oncourselearning.com.

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Mike McNulty is executive vice president of financial services for

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Robust LMS vehicles include userfriendly course authoring tools. The best systems give companies the ability to incorporate PowerPoint presentations, Microsoft Word documents, Adobe PDFs, employee handbooks, handouts, policies and procedure manuals and links to web pages, all while combining them with other course content in a visually engaging way to keep employees engaged in learning. A high-quality LMS also enables a company to include interactive videos and eye-pleasing colors, fonts and templates to transform mundane corporate training to an engaging educational experience for employees. Using course authoring tools with these features appeals to younger workers, who have grown up with technology, gaming and the Internet as part of their learning.

The best learning technology platforms are easy to use and applicable across multiple industries.

They give companies the tools needed to create engaging, timely and applicable course content, deploy training, measure learning outcomes, transfer knowledge and meet regulatory challenges.

“… because TRID provides a mechanism for the CFPB to collect data on every loan, increasing transparency and lender liability, it is more important than ever for lenders, mortgage brokers, real estate brokers and settlement agents to collaborate on every Closing Disclosure Form.”

Proven Data, Proven Loans

By Wes Miller “‘Data! Data! Data!’ he cried impatiently. ‘I can’t make bricks without clay.’”—Sherlock Holmes Many in the mortgage industry can relate to the above quote from the brilliant fictional detective, Sherlock Holmes. Lenders, loan officers, title agents, real estate agents and other industry professionals can all attest that problems with loan closings most likely start at the

granular level with incorrect or insufficient information.

The mortgage crisis of 2008, for example, really began in 2005 and 2006, when sparse and sub-standard loan data contributed to the housing bubble.

Since then, the industry has seen many changes. The Dodd-Frank legislation created the CFPB. The CFPB instituted major changes with

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Qualified Mortgage rules, and now there’s TRID, which creates additional buyback risk and civil liability.

And because TRID provides a mechanism for the CFPB to collect data on every loan, increasing transparency and lender liability, it is more important than ever for lenders, mortgage brokers, real estate brokers and settlement agents to collaborate on every Closing Disclosure Form. The importance of getting the data right is greater than ever. TRID creates additional buy back risk and now adds the element of civil liability and class action lawsuits.

Bad data, however, still exists. A recent survey found 11 percent of QM loans were mis-categorized across a 700,000 cross-section audit, and another 4.5 percent failed Safe Harbor tests. Is it any wonder that private investors are still hesitant to put their faith in residential mortgage-backed securities (RMBS)?

Many financial institutions might say, “Loan production isn’t perfect; it’s the nature of the beast; erroneous or missing data is inevitable,” Or, “There are too many moving parts. Not every loan is the same.

Participants in the transaction use their own processes and systems.

Investor guidelines are open to interpretation, and CFPB rules are too vague.”

A typical RMBS investor, for example, looks at buying a pool of 1,000 loans. He cannot analyze every data and document on every file to be sure they are all qualified mortgages and are compliant with regulations. He’ll perform a random audit to identify potential issues.

Here’s the problem, however: Just because he picks 10 that are QM doesn’t mean that the other 990 are QM as well.

It’s not really until the money stops coming in that people take a real hard look at the data.

In the end, the lender may be able to prove that most of the loans in an RMBS are complete and error-

free. But the assumption that some errors are inevitable is overly general in itself, and dangerously inductive reasoning fraught with its own inaccuracies. Consider the following inductive argument: l I leave for work at 7:00 a.m. l I am always on time. l I will always be on time if I leave at 7:00 a.m.

The problem with inductive reasoning is that specific instances cannot prove a wider set of experiences. Here’s what inductive reasoning looks like with a mortgage loan: l That loan is a Qualified Mortgage (QM). l That loan will not contribute to buyback risk. l Therefore, no QM loans will contribute to buyback risk.

Broad generalizations based on specific instances allow for error.

However, deductive reasoning, the opposite of inductive reasoning, can prove that something is always true. For example: l All cows are mammals. l That is a cow. l Therefore, that cow is a mammal.

Instead of hoping for something to be true based on a few, or even hundreds of instances, deductive reasoning starts with a proven fact, and narrows the focus to a particular instance. An example with mortgage terminology would look like this: l All the loans in this RMBS have been proven as QM. l That is a loan inside the RMBS. l Therefore, that loan is proven as QM. As Sherlock Holmes would say, “Any truth is better than indefinite doubt.”

Of course, for deductive reasoning to be sound, the original statement must be true. And there’s the rub! Proving every loan to be a QM

2. No version control Different industry professionals use different systems to input the homebuyer’s information; so several versions are often generated. If the consumer’s home address is entered one way on the lender’s system and another way on the title agent’s system, there is no way of

3. Lack of transparency attracts mortgage predators It’s an unfortunate fact that in the digital age, companies have trouble safeguarding non-public personal information (NPPI). When data in the mortgage process is not protected, it is easy for fraudsters to use it in any number of schemes. Wire fraud, straw buyers, stolen identities, escrow theft, hacked e-mails—the list goes on.

The above three points are just some of the problems that continue to plague the mortgage process, and they can all be traced back to one root issue: incorrect, insufficient and unprotected data.

But technology can help fix these issues. Instead of hoping each individual working on a loan is a reputable professional based on a referral (inductive reasoning), a network where all participants are vetted and verified can provide a list of professionals who truly are who they say they are.

Instead of mile-long e-mail threads and using separate systems to input borrower data, appropriate parties— including the homebuyer—could collaborate on one document in one online vault. This will help to verify the loan as it is being created, and eliminate the problem of separate versions floating around.

Technology can even proactively automate the comparison of data from lenders, settlement agents, real estate brokers, appraisers and borrowers, ensuring the data is correct prior to close.

With technology that connects all parties and provides for accurate, transparent sharing of data, each loan in a RMBS pool can meet investor and regulatory demands—it can be deductively proven.

There’s a big difference between looking at something as an investment and looking at it as loss mitigation. If industry professionals could view everything through the lens of loss mitigation then there wouldn’t be as much risk involved.

Proven data equals proven loans, and technology can take us further than ever in making them an everyday reality.

Wes Miller is CEO and co-founder of ATS Secured, a new technology category for the real estate closing industry. He has

cial products. He may be reached by email at wes.miller@atssecured.com.

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1. The homebuyer is minimally involved Isn’t it odd that the consumer, the one the whole loan file is about, does not have access to the systems where their data is filed? Is it any wonder that data is sometimes incorrect or missing? The homebuyer needs to be much more involved in the creation of their loan— instead of just viewing it after the fact. They need to be able to verify the information during the process, so they can catch inconsistencies and errors as they occur.

knowing because they cannot easily extensive experience in developing and marketing both core and ancillary finanshare data.

NationalMortgageProfessional.com

seems impossible. Too complicated, too many moving parts, and too little time to verify every loan packaged into a RMBS pool. There is always a chance that incorrect or insufficient data will slip through.

With new technology, however, this can change. In fact, it’s already happening.

The TRID Rule that went into effect on Oct. 3 is supposed to make the mortgage process more transparent to homebuyers, so the industry will create better, safer loans. The rule takes four forms (the Initial TIL, GFE, Final TIL and HUD) with overlapping, inconsistent messaging and combines them into two new forms: the Loan Estimate and the Closing Disclosure. It also stipulates that the new forms have to be in the homebuyer’s hands at specific times to avoid last-minute changes in the loan file.

Helping borrowers understand the process is a step in the right direction, certainly. However, the homebuyer isn’t the only one who contributes information to the loan file. The information is, for the most part, about them and the property, but the rest of the loan participants are the ones compiling the data.

There are several problems with this process:

“In addition to meeting regulatory compliance, automation can empower employees to deliver improved levels of customer service.

By removing the need to navigate complex systems, employees can focus more on high-value tasks and spend more time to build more profitable customer relationships.”

Using Automation Technology to Address New Industry Regulations

By Paul Sewell

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Whenever new regulations are implemented in the financial industry, a potential side effect is a substantial increase in the effort needed to evaluate and process individual loans. For example, the recent implementation of new TRID regulations for processing loans is putting pressure on many financial institutions to beef up their resources and systems. This has meant adding staff, investing in costly new technologies and putting more strain on the employees they already have.

There is an alternative, however.

Automation solutions provide financial institutions a cost-effective way to streamline and simplify work processes. By eliminating repetitive jobs and simplifying manual input tasks, automation solutions enable employees to focus on performing higher value activities. By ensuring adherence to a process, automation improves regulatory compliance and risk management.

Robotic and desktop automation can help a company achieve compliance more effectively than any other

method, including the addition of new staff or more complex processes. Using desktop automation to eliminate redundant, manual tasks and streamline key business processes, financial institutions can also enforce process governance to ensure employees adhere to required protocols to ensure compliance. This increased efficiency makes it much easier to meet TRID regulatory needs.

Robotic and desktop automation bring many advantages, including:

Timely business process completion Robotic automation can reduce the time needed to process loans and other business transactions. In fact, fully automatable tasks—those actions that require no human decisioning—can be removed from the desktop completely.

This enables employees to focus on higher value activities.

Real-time data validation As employees begin dealing with tighter deadlines, there is a significant-

ly higher likelihood of human error.

Robotic and desktop automation can remove that variable by validating data across different systems as an added checkpoint. This can include validating addresses and credit scores from external agencies in real-time.

Triggering automated restrictions and reports As soon as prohibited actions are detected within specific applications, the automation can trigger real-time alerts or launch automated processes to drive or restrict workflows. For example, a system can be set up to identify when Payment Card Industry Data Security Standard (DSS) restricted data, such as validation codes, are used and prompt employees to review.

Non-invasively restricting screens and fields Using automated systems, employers can improve existing security by selectively restricting or modifying what is displayed on their employees’ computer screens. For example, personal financial data can be easily removed from bank teller interfaces, reducing the chance of malfeasance or accidental information leaks.

Improving documentation or provisioning workflow initiation Physical letters or forms can be automatically generated, printed, emailed, faxed or mailed to the customer, in compliance with existing and new regulations. Based on specific desktop activity, robotic and desktop automation solutions can trigger fulfillment actions within documentation fulfillment systems.

Synchronizing data between desktop applications and enterprise systems Using robotic and desktop automation, companies can ensure that every application and independent computer station is using the most current and accurate information possible. If an agent updates information in one

system, these changes can be automatically updated across other disparate applications.

Monitoring account interfaces and providing management alerts Finally, automation systems can give management critical alert notices of or even stop potential compliance violations from being executed by the user, regardless of whether these actions are accidental or deliberate.

In addition to meeting regulatory compliance, automation can empower employees to deliver improved levels of customer service. By removing the need to navigate complex systems, employees can focus more on highvalue tasks and spend more time to build more profitable customer relationships. Customers looking for something unique or more valuable are much more likely to do business with companies who take these extra steps.

Whenever the industry or government introduces new regulations or guidelines, there is always the potential of dramatically increasing the cost of doing business in that market.

Automated solutions can provide a cost-effective alternative to costly options, such as hiring new staff.

These solutions not only provide better oversight, but also help improve efficiency and profitability.

In today’s fast-paced, competitive business environment, there are many issues that can hold a company back. The banks and financial institutions that quickly adapt to these challenges and implement solutions that improve other key aspects of their business will be the industry leaders of tomorrow.

Paul Sewell is senior director of communications and intelligence for OpenSpan, a provider of desktop automation and desktop analytics solutions that improve performance, drive revenue and increase efficiencies in contact center, back office and retail storefront environments. He may be reached by e-mail at info@openspan.com.

“A good rule of thumb is to remember that wherever you have a device connected to the Internet, you have a potential point of entry for cyber criminals.”

How Cybercrime Influences E-mail Encryption, TRID Compliance

By Fred Touchette mail encryption. As recommended by ALTA’s Pillar III for best practices, e-mail encryption can protect consumers’ personally identifiable information, including Social Security Numbers and financial account numbers, and other sensitive information.

For many land and title companies, particularly smaller ones, finding the right e-mail encryption solution may seem daunting. Many may not have a full grasp on how it can help protect their customers.

What exactly is e-mail encryption?

continued on page 66

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Standard e-mail is like a postcard. It has no envelope to conceal its contents. The further it must travel, the more stops it must make along the way at different post offices (aka servers, which are often housed next door to each other in large datacenters). This might be okay if you are just sending your kids a postcard while on a business trip telling them about all of toys you are going to bring them back, but you would not exactly want your social security number on a post card.

Encrypted e-mail is your envelope.

Instead of your e-mail traveling from server to server on its way to its final destination, it is zipped and travels only between secure servers. With many encryption solutions, the encryption solution will only use one, secure server for email travel.

This further minimizes the risk of an e-mail falling into the wrong hands, since there are fewer hands on the e-mail.

With most encryption solutions, the recipient will receive a “key” to unlock the e-mail. This key will typically take him to the secure server where he can view the e-mail, but if the e-mail has a forwarding freeze enable, will prevent him from sharing the message with unauthorized viewers.

To begin with, you would never include personally identifiable information, like credit reports and bank account numbers, on a postcard. This would make it too easy for a hacker, or even a disgruntled employee to steal the information and cause your customers and your business financial and reputation harm.

Encrypting e-mails that contain this information protects your customers and your business.

Additionally, all covered entities in the land and title industry are now required to comply with TRID to ensure client con-

fidentiality be kept intact. The consequences of violating these and other applicable encryption requirements can lead to fines, public embarrassment, loss of business privileges and client trust.

Land and title companies deal with personally identifiable information daily, but it only takes one incorrect email address for this information to fall into the wrong hands, causing your business to fall out of compliance with TRID. One of the simplest ways to mitigate this risk is for your business to adopt email encryption when handling personally identifiable information.

NationalMortgageProfessional.com

Cyber criminals are becoming far more sophisticated as technology evolves and new and better tools become available.

Another disturbing trend is that attacks are increasingly more targeted and aimed specifically at smaller organizations. Well-publicized security breaches of major corporations capture the public’s attention, but the truth is that smalland mid-sized businesses (SMBs) can be—and are—lucrative targets.

It is an unfortunate coincidence that many SMBs have a mindset that is helping the crooks do their jobs. Some SMBs, for example, believe that they are too small for hackers or data thieves to bother with. Others play the odds, assuming that it can never happen to them. Still others are convinced that a single layer of protection—a firewall for example— will prevent an attack.

Some SMBs falsely believe that since they are not a big bank, a hacker would never target them. Or that since their employees are loyal, they would never deliberately mishandle confidential information, such as consumers’ personally identifiable information, including nonpublic information.

However, history shows that all of these are dangerous misconceptions.

SMBs often handle large volumes of personally identifiable information that can be very valuable or destructive if it falls into the wrong hands. Technology has made it possible for hackers to extend their reach to vast numbers of potential victims through a wide variety of attack vectors.

New TRID laws help protect consumers’ personally identifiable information from many types of misuse, including hacking attempts.

The American Land and Title Association (ALTA) recommends best practices for organizations in the industry to comply with TRID. One step in becoming TRID compliant is to adopt e-

Why is e-mail encryption important to the mortgage industry?

using automation technology

What further steps can my organization take to protect its network, and consequently personally identifiable information?

taining viruses were filtered by AppRiver’s servers, or 81 percent of all e-mail messages. Clearly, hackers are not slowing down their attempts to phish or pilfer nonpublic information.

To combat hacking attempts, it’s critical to understand all the points of vulnerability in your organization when you are evaluating your company’s security posture. A good rule of thumb is to remember that wherever you have a device connected to the Internet, you have a potential point of entry for cyber criminals: l Computers: Desktop, workstation and kiosks l Mobile devices: Smartphone and tablets l Network: On-premise and/or cloudbased servers l Users: Every employee, contractor or visitor who has Internet access

Hacking attempts via e-mail and Web are on the rise. AppRiver’s Q2 Global Security Report, which highlighted online threats between April and June of 2015, noted that 4.7 billion e-mail messages containing spam and 165 million messages con-

To protect your company and customer information, it is crucial to build layered security that covers each area of vulnerability. Common examples include: l Antivirus, antispam solution

continued from page 65

What does the ideal e-mail encryption solution look like?

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Picking the solution that is the best for your organization is imperative. It is not enough to simply have e-mail encryption, you want to ensure that your employees are using it to. That means you need a solution that fits your needs. E-mail encryption that can only be used with one browser, or that cannot be plugged into your current e-mail solution will likely be too difficult to use regularly and easily forgotten. Features that your organization should seriously consider are: l Secure, fast and easy to use l Protects confidential information and helps ensure regulatory compliance l Provides delivery slip and registered mail options l Features centralized management and reporting

l Enables large file attachment encryption and delivery l One-click encryption l Includes Outlook plug-in, Windows and Mac desktop agents, browser plug-ins l Full-featured functionality for mobile devices including iPhones, iPads, BlackBerry, Windows Phone, Android and more l Accessible and affordable support

l l l l l

Firewall protection End-to-end encryption Data Leak Prevention (DLP) E-mail archiving Web protection

While there is no “silver bullet” that can make your organization 100 percent safe from attack, protecting your network (and consequently maintaining regulatory compliance) with layered IT security can greatly diminish your organization’s risk. Having multiple, redundant safeguards in place, such as a combination of e-mail encryption, and Web protection, and spam and virus filtering, will help prevent weak areas where a hacker would normally attempt to enter your network and steal your data, or even that unhappy employee looking for revenge.

Fred Touchette, CCNA, GSEC, GREM, GPEN, Security+, is manager of security research at AppRiver, responsible for evaluating security controls and identifying potential risks. He may be reached by e-mail at ftouchette@appriver.com.

NMP Daily is the mortgage industry's source for news, insights, trends and tips.

It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.

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Wholesale Lending

For more infformation, o visit us online at www.caliberwholesale.com or send an email to NewClientInf ientInffo@caliberhomel o o@caliber oans.com. *Source: *Sour ce: Inside Inside Mortgage Mortgage FFinance inance ve used our services services in some way. way. However, However, they they are are life have TTestimonials estimonials are are individual experiences, experiences, reecting reecting rreal eal lif e experiences experiences of those who ha necessarily representative representative of all of those who will use our services. services. This do vary. individual rresponses, esponses, and rresults esults d o var y. The testimonials testimonials are are not necessarily 701 R egent Boul evard, Ir ving, TX 7506 15622). 1-80-04011-80-0401advertisement from Regent Boulevard, Irving, 750633 (NMLS # #15622). is an adv ertisement fr om Caliber Home Loans, Inc. Caliber Home Loans, Inc., 33701 6587.

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658 7. C opyrightŠ2015. All Rights Reserved.

Reserved. Equal Housing Lender.

Lender.

Let’s face it … there are valid concerns that every lender has when it comes to appraisal quality, and the options for lenders to purchase data to aid in the decision-making process is endless.

Is there a clear solution on how to use this data in order to drive performance? Does merely having access to data really help in making better lending decisions quicker and with more confidence? How much time is spent digesting the information in order to make these decisions?

Everyone agrees that there is a real need to reduce risk, increase efficiency and improve quality in the lending universe. So how can the use of data help lenders address these concerns on an ongoing basis?

1. In today’s highly regulated environment, reducing risk is a must. This is especially true for lenders who outsource to multiple AMCs. Lenders have to ensure that each AMC has policies and procedures in place to ensure 100 percent compliance on every transaction, every time. The decision of “appraiser selection” becomes critical for lenders who understand the need for a real solution that mitigates risk, allowing lenders to place orders that are automatically assigned to an appraiser based on location and past performance. A solution that has a trusted performance-tracking algorithm built into the back-end that will ensure compliance with appraiser selection without having to manage multiple AMCs.

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2. Increasing efficiency and reducing cycle times means cost-savings to lenders per loan/transaction. As it stands, there are many touches on an appraisal report throughout the loan process. The appraiser, AMC and underwriter all perform the same quality control (QC) review, which results in redundancies and increased costs. The ultimate solution would allow the underwriter to trust the QC review already performed and focus solely on the collateral review. A solution created through collaboration of data through public records, MLS and prior appraisals, which allows the UW to easily compare and contrast information to make a decision. The benefits to this solution? Review appraisals are quicker, use reliable data you can trust to complete more reviews in a day, and increase your confidence in decision-making.

3. Improving quality can be in the form of appraiser selection, quality of appraisal report and even the quality of data used to make a lending decision. With the right technology application, Reducing risk, increasing efficiency and improving quality can all be addressed in one solution. Lenders need technology where they can easily place and track appraisal orders, leverage the best appraiser automatically for the assignment, as well as access meaningful and reliable data that enhances the decision-making process.

How is your data working for you? I'd like to hear from you. Let's talk at JPilgrim@Nationwide-Appraisal.com Joni Pilgrim is the founder and director of sales and business development at Nationwide Appraisal Network. For more information, visit NationwideAppraisal.com or call (888) 760-8899.

SPONSORED EDITORIAL

tial real estate transaction, helping its lender clients remain compliant while improving efficiencies and control,” said Brian Benson, CEO of ClosingCorp. “The ability for our clients to quickly access and accurately quote multiple fees from a range of service providers in real time is essential to streamlining the application disclosure process and is critical for compliance with TRID.”

MortgageKeeper Rebrands as SpringFour

MortgageKeeper Referral Services Inc. will now operate under a new brand identity, SpringFour. SpringFour anticipates continuing the trend of making more than one million consumer referrals annually with its core legacy products.

“We created MortgageKeeper in 2005 as a way to help lenders and mortgage servicers connect troubled borrowers with local resources to prevent foreclosure,” said Rochelle Nawrocki Gorey, cofounder and CEO of SpringFour. “Our new name reflects our growth into other markets such as student loan servicing and employee assistance programs.

Regardless the industries, forward thinking companies want to ensure that their customers and employees have every opportunity to achieve financial health. We’ve already proven the efficacy of our products within the loan servicing and housing counseling industries and know SpringFour reduces household expenses and increases cash flow for any consumer.”

Because SpringFour’s suite of products can help increase on-time payments, improve loan performance and increase savings opportunities, its applications are used daily by more than 2,000 customer service representatives, non-profit financial counselors, coaches and case managers.

SpringFour will introduce its mobile app, LifeKit in early 2016.

Altisource Acquires RentRange and Investability

analytics to allow real estate investors to access the estimated cash flow, capitalization rate, net yield and market value on properties for sale in the United States.

Together, the acquired businesses will add to Altisource’s real estate capabilities by providing customers— including users of its Hubzu and Owners.com online real estate sales and auction platforms—with accurate pricing information about rental home investments and access to valuable investment property inventory.

“These acquisitions squarely support our real estate and mortgage marketplace strategy and enable us to provide valuable analytics to the home rental, renovation, sale and origination markets,” said William B. Shepro, chief executive officer of Altisource.

“RentRange and Investability, when combined with Altisource’s services, offer investors the data and information they need to make well-informed decisions about the homes they’re buying, renting and managing. We are thrilled to add the RentRange and Investability teams to the Altisource family.”

“Altisource brings a forward-looking approach to the real estate marketplace that we’re very excited to join,” said Walter Charnoff, chief executive officer of RentRange and Investability.

“Our vision has always been to develop the most comprehensive residential property rental data repository in the country, along with a powerful and unique search and transaction engine for rental homes. Together with Altisource, we will quickly realize this vision in a much broader and more impactful way.”

Mortgage Professionals to Watch

PANNES

By Joni Pilgrim

continued from page 42

l LenderLive has announced that Pete Pannes has joined the company as its first chief revenue officer.

Altisource Portfolio Solutions has announced the acquisitions of both RentRange and Investability—expanding Altisource’s offerings, reach and data capabilities in the real estate services market. RentRange is a provider of rental home data and information to the financial services and real estate industries, delivering an assortment of address and geography level data, analytics, and rentbased valuation solutions for single and multi-family properties. Investability is an online residential real estate search and acquisition platform that utilizes data and

TRAVAYIAKIS

Using Data to Drive Performance

heard on the street

l Mortgage Network Inc. has announced that it has opened a new branch office in West Roxbury, Mass., which will be managed by Sofia A. Travayiakis. continued on page 70

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ALVAREZ

The Perils of TRID: How to Manage the New Closing Disclosure

heard on the street N.M., to be led by Kyler Breen, a 10year mortgage industry veteran.

Castle & Cooke Mortgage has announced the opening of a branch in the greater Olympia, Wash. region, to be led by Michael Frazier.

BREEN

PETERSON

l Marissa Sandridge has joined Equity National Title in the role of vice president, national sales executive.

Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@securesettlements.com.

SPONSORED EDITORIAL

l Castle & Cooke Mortgage LLC has announced that Jeff Peterson has joined the company as controller, working out of the company’s headquarters in Salt Lake City, Utah.

Castle & Cooke has also announced its newest branch in Las Cruces,

ROTH

l ComplianceEase has announced that company Co-Founder Jason Roth has been named chief technology officer for the company.

WALSH

IMBIMBO SANDRIDGE

l First Guaranty Mortgage Corporation (FGMC) has named Kathleen Alvarez as its TPO national underwriting director. FGMC has also named Jane Gershman as its national servicing director. FGMC has named Nicholas Imbimbo as its director of TPO Operations.

FRAZIER

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Unless you have been living under a rock you know that effective Oct. 3, 2015, all lenders are required to use the new Closing Disclosure form in lieu of the long-standing HUD-1 Settlement Statement.

Traditionally settlement agents assisted lenders in preparing the HUD1 by populating the form with the appropriate closing costs such as title fees, legal fees, real estate commission splits, recording fees and taxes and assorted other costs that are included together with lender fees and POCs. In the past, most lenders would require the HUD-1 to be e-mailed or faxed the day of the closing for review and approval by the closing department before receiving the wire and proceeding to close. The bane of post-closing departments was the effort to go back to an agent to correct HUDs or to try and decipher the final HUD from various signed drafts all executed and returned with the closing package.

With TRID, there are serious consequences for managing the closing process the old way. For one, a finalized Closing Disclosure must be provided to the consumer at least three business days prior to consummation. For another, the Disclosure cannot be modified at the closing table (with certain exceptions) because material changes that impact the cost of the loan may cause the three day period to restart. For example, if fee and cost adjustments change the APR, then the consumer may need to receive a new form and an additional three-business-day waiting period. Perhaps most concerning for lenders is that they must verify that a settlement agent disburses all funds at closing exactly as set forth in the Closing Disclosure.

Underpayments, overpayments, and payments to undisclosed parties can create serious regulatory consequences for lenders. Asking a lender to actually monitor how a settlement agent performs at the closing table is a tall order. Because a settlement professional can mean a wide variety of people, with varying levels of licensure, training, oversight and insurance, this makes the task complicated and fraught with potential perils.

Some lenders have a process whereby agents complete a fee spreadsheet seven to 10 days before the closing is scheduled which provides the lender with the details of all costs which are needed to populate the new form. This gives a lender time to review, verify and finalize the Closing Disclosure before the three-day delivery requirement. In addition, in order to address the disbursement issue, lenders are including a disbursement checklist in the closing package which requires the settlement agent to list all checks, payees and check amounts. Copies of all checks disbursed must be appended to the checklist. Clearly, adequate preparation and documentation is required to supervise agent performance before, during and after a closing.

One last item: Collect the agent license data. The new Closing Disclosure requires that you to report the agent name, contact information and state licensing information. This data is being gathered and monitored by the Consumer Financial Protection Bureau (CFPB) to study lender, real estate agent and settlement agent relationships. Don’t have it? Secure Insight provides it as part of its database search results!

GERSHMAN

By Andrew Liput

l LERETA LLC has appointed current president, John Walsh, to the role of CEO. He assumed responsibilities earlier in September 2015 and succeeded Jim Thornton as he retires after 25 years with LERETA. l Mid America Mortgage Inc. has announced that John Rhode has joined the company as an account executive in the Wholesale and Correspondent Lending Division. l Scott Edgin has joined Academy Mortgage as its Colorado regional manager where he will be responsible for directing the growth and development of Academy’s 14 branch offices located across the state of Colorado. l LenderLive has announced that Jeffrey Lewis has joined the firm as regional account executive in New Jersey and Eastern Pennsylvania for the company’s Correspondent Lending business line. l Norcom Mortgage has appointed John Luddy as vice president of reverse lending. Luddy joins Norcom with 30-plus years of mortgage origination experience. l Primary Residential Mortgage Inc. (PRMI) has announced the addition of Christopher Jensen and Jim Hoggan, the working duo of 20-plus years to its hometown of Salt Lake City, Utah. Jensen will serve as division manager, production growth and expansion throughout the Utah area for PRMI, while Hoggan will serve as division manager and production growth in Salt Lake. l HomeBridge Financial Services Inc. continues to expand with the additions of Lisa Arlette, Cindy Barrera and Sammy Cropper in San Antonio, Texas; Keith Russell, and continued on page 75

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n New York Mortgage Professional Magazine n NOVEMBER 2015

a strong resource and referral network.

NationalMortgageProfessional.com

We are committed to helping you increase your client base

71

People Don’t Buy What You Do … They Buy Why You Do It

By Brent Emler

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The great thing about principles is their ability to transcend time. There will be new, exciting technologies to help loan officers leverage the power of the Internet to capture new customers, but the principle that people buy based on emotion and justify with logic will never change.

People don’t buy what you do, they buy why you do it.

Recently, I watched a TED talk by Simon Sinek, who created a very simple way to explain why some leaders, and some companies, are wildly popular and effective. He calls it “The Golden Circle.”

In short, The Golden Circle concept shows the distinction between promoting your product or service through showing what it is or how it works instead of why it exists or its purpose.

Simon’s TED talk provided great examples of leaders like Martin Luther King, who was able to create a movement by rallying people behind a common belief, one that aligned with the very foundation of our great nation; that all people are created with inalienable rights to life, liberty and the pursuit of happiness. He said we believe that a man must be judged by the content of his character, not the color of his skin.

Doctor King’s speech was not entitled “I Have a Plan,” which is a how or a what.

Instead, he said it was titled “I Have a Dream,” which is the why.

There’s a biological reason why people make decisions based on emotions.

The neo-cortex (Simon calls it our newest or homo sapien brain) provides all of our rational, analytical and language capabilities. This is the area of a prospective customer’s brain that salespeople normally try to appeal to. We offer facts, statistics, features and benefits of a product. We offer all of the rationale a prospect should need in order to make a well-informed, “intelligent” decision.

Instead, we should appeal to the limbic brain which manages feelings like trust and loyalty. The limbic brain is also responsible for all human behavior and all decision-making, and it has no capacity for language. This is why we must

communicate from what Simon calls the inside out … start with appealing to the part of the brain in charge of behavior and decision-making, and then provide tangible reasons to support their obviously wise decision.

We have all had sales opportunities where the facts clearly demonstrate the prospect’s answer will be “yes,” but we still get a “no,” with the explanation that “it just doesn’t feel right.” If you’ve ever been in this situation (we all have … haven’t we?) and you were completely flummoxed, you can now take comfort in knowing why your prospect did not move forward.

People don’t buy what you do, they buy why you do it.

Emotional intelligence If you don’t know and cannot convey just why you are in the mortgage business, then you are missing the most important aspects of a concept known as “Emotional Intelligence,” self-awareness and self-management. Over the last several years, this concept of Emotional Intelligence has become ubiquitous.

What is Emotional Intelligence?

The psychological theory behind Emotional Intelligence was developed by Peter Salovey and John Mayer, who proposed that Emotional intelligence is the ability: l To perceive emotions l To access and generate emotions so as to assist thought l To understand emotions and emotional knowledge l To reflectively regulate emotions so as to promote emotional and intellectual growth To put it very simply, Emotional Intelligence is the ability to relate to and empathize with others within the context of a clearly defined and thoughtful belief system. When you have a clear and concise purpose like “We believe our customers deserve to feel comfortable during the loan process,” you demonstrate that you understand how your customers feel going into a mortgage transaction:

Anxious, nervous, expecting the worst.

Before a single piece of paper is exchanged, before the “What’s my rate” question is asked, you’re establishing a common purpose—to have the loan process be comfortable and safe. You’re building trust and a common ground that you can always fall back on even if the transaction has some speed bumps.

Since trust is really the essence of what you’re selling, everything about you, your brand and your business must evoke trust. It seems like it ought to be simple to get and keep a customer’s trust. It isn’t.

Customers are quickly disheartened and become distrustful when there isn’t that common purpose. They begin questioning your motives. They start shopping around for a better rate and they certainly don’t end up being a client who refers their friends and family to you.

Now that we understand the science of emotion as a driving force behind how people spend their money, how does it apply to marketing? Specifically, how does it impact your marketing effort? If you’ve applied Emotional Intelligence correctly, you are on friendly, fairly personal terms with your clients. In turn, they are a walking, talking advertisement for you. That’s advertising that can’t be purchased, but it’ll work wonders for your business.

The power of Relationship Marketing Relationship Marketing emphasizes customer retention and satisfaction. These are principles that will always be around. The whole strategy behind Relationship Marketing is to develop open communication and a connection with customers by providing them with information that best suits their needs and interests. However, the thing that binds the relationship is the thing that binds any relationship—emotion. Even when people make high-end purchases, the decisions are based upon emotion and they justify their purchase through reasoning and logic.

Once you have established an emotional connection with your customers within the bounds of relationship marketing, use that relationship to your advantage. Nobody will ever argue that

the most effective advertising a business can have is word-of-mouth advertising.

So, let your customers do some of your marketing for you. If you ask for their help in the right way, your customers will gladly advertise your business. This can happen in one of two ways: either your customer tells others about you, or gives you referrals to people and allows you to use their name as an endorsement.

Either way, the persuasiveness of their endorsement is what word-of-mouth advertising is all about.

The logic is simple. If you have a database of 300 past clients, friends and family, and just 10 percent of them refer a client to you, that’s 30 more loans this year. Looking at it that way, your client database is one huge referral partner. If you’ve done a good job for your clients and you ask them for referrals, they will provide them. Going off of an informal survey we did here at Velma.com, 40 percent of our staff all used the same loan officer for our personal mortgages. Not only has he done all of our mortgages, but he’s also done mortgages for all of our family and friends. Amazing? Not really. He’s just exceptionally good at staying in contact with us. He uses our automated system to send us birthday cards and monthly newsletters. Even though we know the secret to his uncanny ability to know all of our birthdays (he added us to his birthday card auto campaign), and we already know the content of his newsletters, we still look forward to them and read them.

With Relationship Marketing, what you do revolves around your community–customers, employees, etc. You will gain the reputation and loyalty that keeps your business alive and thriving.

You will have the kind of connection with your customers that is the key to success for your company. Forget about profits and focus on the cultivation and care of the relationship, because in the end, what’s really going to drive your sales?

Relationships.

Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.

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Setting Realistic Expectations: The Closing Date

By Andy W. Harris, CRMS

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I would assume the majority of us in the mortgage industry understand the importance in setting realistic expectations with all parties upfront when it comes to contractual closing dates in a non-cash purchase. If this is not done, we all know the avoidable issues that can arise later where we have to ask for an “extension,” when in reality, it is a “correction” to the original unrealistic closing date set usually by the real estate agent(s). The goal for everyone should be to under-promise and over-deliver, yet the majority of our industry does just the opposite.

With TRID now in place, as well as appraisal delays we’re seeing in most areas, I believe all should suggest a 45-day minimum contractual closing date and rate lock. This doesn’t mean that you cannot close in less than 30 days, but it does mean that you should not use speculation and unethical sales tactics over protecting your clients best interests. I believe the buyers and sellers are always much happier when you discuss closing on-time or earlier versus discussing an extension to closing or rate lock.

I wanted to share the letter I send to all parties anytime we receive a contract from the real estate agents that are around or under 30 days. It has helped us avoid many issues by correcting any mistakes upfront, even if that shorter closing date is possible. If you’re a mortgage loan originator, I urge you to use this or something similar should you also see closing dates outside of best practices. Feel free to amend however you wish, and I would be happy to send you letter in Word format if you e-mail me at aharris@vantagemortgagegroup.com.

Closing Date: Understanding Best Practices Closing dates are determined during mutual acceptance in a residential real estate purchase agreement. It is imperative that homebuyers and sellers have realistic and accurate expectations for the best and most enjoyable outcome. It is the duty of licensed professionals (i.e., the real estate broker and mortgage loan originator) to ensure the closing date chosen is in line with industry best practices.

Due to increased appraisal turn-times and significant overhaul to updated loan disclosure forms and regulatory waiting periods, best industry practice is to add 15 days to standard 30day timelines for non-cash buyers that require mortgage financing (i.e. contractual closing date of approximately 45 days if no additional contingencies or requirements).

The National Association of Realtors (NAR) has been pushing this message (http://goo.gl/fgCtng) to the real estate community since early 2015 and beyond.

In addition, the Consumer Financial Protection Bureau (CFPB) has been sending this message to consumers and the mortgage community by creating an interactive timeline (http://goo.gl/dsXkNK) for today’s consumer to prepare for changes and contractual protection. n Any hired professional ‘selling’ shorter timelines is doing so outside of industry best practices which can harm the clients they represent. Speculation or using assumptions should be an unacceptable practice. Closing early is possible in many cases, but homebuyers and sellers must be contractually protected with realistic expectations set for moving plans. n If we receive a purchase agreement outside of best industry practices or without our counsel, we will determine how this date was chosen and provide notice to all parties. “If” a correction is needed to a closing date originally set outside of these suggestions, then we will do what is necessary to protect our clients from any added costs or changes to terms.

We look forward to working with all parties for a smooth and enjoyable transaction.

Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at aharris@vantagemortgagegroup.com. These can be confidential or your name and company can be referenced if you wish.

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

heard on the street continued from page 70

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Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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l Advantage Systems has named Drew Foy as its newest customer support representative. l Fay Servicing has named Dave Siegel to join as the firm’s chief information officer, where he will be responsible for developing and implementing plans for enterprise technology strategy, data architecture and business intelligence, application development and platform support, information security, infrastructure and program management. Fay Servicing has

Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of:

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Amy and Rob Ellis in Marble Falls, Texas; Joshua Heape in Phoenix, Ariz.; Anne Mayer in Prescott, Ariz.; and Charles Rutt in Sugarland, Texas.

Mike Certo has joined Fairway Independent Mortgage Corporation as a branch manager serving the Chandler, Ariz. area.

Ellie Mae has also announced that Piper Neal Beveridge has joined the company as vice president of government and strategic relations.

WFG National Title Insurance Company has named Thomas Klein Esq. to continue the company’s growth and momentum by overseeing its relationships with the nation’s largest independent title agencies, as senior vice president, overseeing the company’s National Agency Division.

Embrace Home Loans has added 27-year industry veteran Paul Laprade as its newest Northeast regional executive, responsible for the management and achievement of all mortgage lending sales objectives across the New England States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

The Mortgage Bankers Association (MBA) has named Kim Newell associate vice president of Meeting and Advertising Sales.

Stearns Lending LLC has announced the appointment of Thomas W. Neary to the position of chief investment officer, with senior executive level responsibilities for the company’s capital markets, secondary marketing, portfolio investment and valuation, MSR optimization and product strategies and liquidity management.

Velocify has appointed Chris Backe as business development director, financial services.

New American Funding has announced the appointment of Ellen Skaggs as national reverse production manager, where she plans to expand the company’s Reverse Mortgage Division nationwide.

Dallas-based residential mortgage originator PrimeLending, a PlainsCapital company, has announced the addition of Jason Oelrich as a production manager and Kirsten Oelrich as a loan officer at the PrimeLending office in Tulsa, Okla.

Apollo Residential Mortgage Inc. has announced the board of directors has appointed Gregory W. Hunt to the positions of chief financial officer, secretary and treasurer of the company, effective March 15, 2016.

The American Land Title Association (ALTA) has announced that John Hollenbeck has been named president of the association for the 2015-2016 year.

also selected Patrick Norton as the new president of its Origination Division, Fay Mortgage Services, and Greg Reed to replace him as senior vice president of account management. l GSF Mortgage has added Dean Machikas as mortgage loan originator in Baltimore, joining GSF with more than 20 years of experience as a selfemployed subcontractor for new homes. GSF has also added Kim Calvert as mortgage loan originator in the company’s Kent Island, Md. branch location. l Mortgage Guaranty Insurance Corporation (MGIC) has hired Steve Cox as lead account manager for the state of Georgia.

What Most of You Are Selling Is All Wrong

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By Ralph LoVuolo Sr.

O

kay … it’s time to come on out and say it … you’re selling the wrong thing. Your approach to sales is wrong-headed. Your daily activities are so backward and wrongminded that all you are doing is perpetuating the failed activities of the last 60 years. What amazes me is that I cannot find that anyone is presenting, perpetuating or pushing a different way of thinking and acting with regard to their marketing initiatives.

I’m truly blessed to be in this position to be an observer of the entire ball field of the mortgage industry. Being someone who has been a coach at all levels of business within the mortgage industry, allows me to comment as an over viewer with no obligation to anyone but myself. With fingers in every nook and cranny, I come into contact with a diverse and highly interesting group of leaders.

About three or four months ago, I was given the opportunity to view a series of interviews that were commissioned by Joel Berman, executive producer for Mortgage News Network and publisher of National Mortgage Professional Magazine, a publication that reminds me of McClure’s Magazine that was published at the turn of the 19th and 20th Century. McClure’s had a far-reaching effect on the minds and hearts of the U.S. population. It spurred Teddy Roosevelt and many other pro-

gressive politicians, at all ranks of society, to direct their thinking and actions to protect the public from the monopolistic companies that abused the public everywhere.

Joel’s videos should bring that sort of challenge to the minds, hearts and actions of every CEO down to every salesperson and ops member in America. The interviews are quite revealing in their simplicity, I’m plainly amazed that there has not been anyone I can find who has offered an interpretation. I posit that what is marketed is the same old stuff that our parents sold and after reading countless papers, books and periodicals, nothing is changing, nothing is even contemplated. Most mortgage companies still believe that they need to compete with each other by trying to convince their referral sources that they have the best rates, points and programs. That their fabulous service is beyond comprehension or comparison.

I recently had the privilege of reading a paper, “The Trillion Dollar Letter” written by Gibran Nicholas, chairman and CEO of the CMPS Institute (CMPSInstitute.org/files/Public/TheTrilli onDollarLetter.pdf). The letter is written in the year 2035 and concerns itself with the leader of a mega-sized and mega-successful mortgage company writing to the employees about the changes they instituted to their business model back in 2015. This is when the company decided to change their basic business philosophy and put the homeowner/homebuyer first in their

thoughts and actions. By making this change, they achieved success that drove the company to become so successful it took over the entire market.

By operating within the laws and combining the thoughts and emotions of sales, operations and compliance, they created a company that outstripped every other company at all levels.

This brought to mind my unsuccessful attempt to create a business a couple of years ago. There was serious consideration that it would overwhelmingly change the mortgage industry and thereby change the world. The business, “Integrity Certification,” would require every employee or applicant for employment at every mortgage company to take a test measuring their level of integrity. Great idea, right? If a certain level would not be achieved, the applicant/employee would be barred from working at any company.

Putting aside the failure of integrity testing, Gibran’s letter, along with Joel’s interviews, are so on-target in revealing that nothing is left to any observant eye or any imagination that our sales techniques are wrong, absolutely and irrevocably. I’m looking for us to see the obvious: Loan officers need to put the mind of the borrower first, and in order to do that, the needs of the loan officer and their company need to be put in a subservient position. So what should the loan officer be talking about to their referral sources? Too simple to avoid: How to help the referral source be more productive by becoming the source of ideas that assist the source to be more

productive, more proactive, and more sensitive to the needs of the borrower.

Mr. CEO, don’t let this chance pass.

Pick up the baton of change that is at your feet and grip it firmly as you carry it in your race to the top. Stop your salespeople from trying to garner business by selling/marketing the wrong things. Don’t sell rates, points or programs, because every company says they have the best rates and points, because everyone claims to have the most diverse or unique programs.

Finally, to all salespeople, try to test an untestable position that they can and do offer the best service to the referral source.

To summarize, the leadership of every mortgage company needs to look more carefully at what their salespeople are doing. What they market to the public and their referral sources is old and wrong. There hasn’t been much of that examination in the last 50 years and I personally can attest to that, having spent more than that time “in the business”.

Help others do better by allowing “The Law of Reciprocity” to become your byword.

Ralph LoVuolo Sr. has more than 50 years in the mortgage Industry, with the last 30 as a coach. He is past president and founder of the New York Association of Mortgage Brokers, and long-time member of NAMB—The Association of Mortgage Professionals. He can be reached by phone at (917) 576-1230 or email ralph@mortgagemotivator.com.

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Has the CFPB Really Improved Things for the A consumer-centric approach by the mortgage industry wo

By Becky Walzak When the Consumer Finance Protection Board (CFPB) was legislated into existence in 2010, its goal was to empower consumers to take more control over their economic lives. This included protecting the consumer against flawed and dishonest lending practices. Since then, any number of new requirements have emerged from the CFPB offices, many of which were, and continue to be, aimed at the mortgage industry. The latest, the TILA-RESPA Integrated Disclosure (TRID) went into effect on Oct. 3.

By the uproar emanating from the offices of real estate agents and closing attorneys, and the changes required to ensure compliance with TRID are second only to the changes that took place when the Big Bang occurred.

Yet with all of the current focus and worry about complying with the new regulations, I think the industry and the CFPB are missing a key point. The main question should not be “Can we get the rules implemented correctly?” but instead be “Will these new disclosures and timing requirements really benefit the consumer?”

Perhaps an even better question is “How, if at all, have the efforts of the CFPB improved the clarity of the mortgage lending process for the consumer?” Sure, the CFPB has implemented a complaint line, but what does that do to help consumers before

they become obligated on a debt?

Based on my discussions with consumers, lenders, consumer attorneys and other key parties, the answer is “not much.” For example, a friend of mine was applying for a refinance, but was denied due to excessive debt obligations.

In other words, his debt-to-income (DTI) was too high. He was confused about why the lender denied the loan because he had even more debt when he got the original mortgage. I spent some time talking to him and discovered that his DTI ratio was 45 percent. According to the lender, I explained, it had to be 43 percent or less. I asked if the lender explained that regulations now required lenders to make sure every approved borrower had the ability to repay the debt and, from the regulator’s perspective, that was a DTI of 43 percent. “Never heard about that,” my friend said.

Another friend who is a consumerfocused attorney expressed frustration about the disclosures that were sent to the borrowers. “There is no way the average person can understand what these disclosures are saying!” he exclaimed.

“But,” I responded, “These disclosures were put in place to help the consumer.”

His response, “What a joke!”

I’m sure that the readers of this article can sympathize with these individuals, as we all continue to struggle with the industry’s new requirements and standards. We know that in addition to the confusing disclosures, tightened credit guidelines and three-day holds on closing, there are examinations and new

requirements headed our way as the CFPB struggles with saving the consumer from the evil clutches of dishonest mortgage lenders.

Confused and disappointed borrowers Unfortunately, what the CFPB has done to date has been futile and has only succeeded in creating a decline in the number of mortgages made and in more confused and disappointed borrowers. The bottom line is that the CFPB is failing. The ideal vision that consumers would be armed with the expertise to read and understand these disclosures—as well as the knowledge to understand the intricacies of the mortgage lending credit criteria—is no further along that it was in 2010.

What is the solution?

One obvious solution to this problem is for the CFPB to go away. While many would support that idea, the reality is that the CFPB is not going anywhere.

Since the financial crisis, the mortgage industry has been treated as the biggest bully on the block, and that deserves to receive the majority of the CFPB’s attention.

Instead of focusing all of our efforts on what the CFPB tells us to do, we need to focus on making our industry irrelevant to the oversight of the CFPB. We need to get to the point where there are so few complaints about mortgage lending that we are basically ignored by the CFPB. So how do we do that? By turning the mort-

gage lending world upside down and making consumers an equal party within the mortgage processes.

Here is my proposed action plan to start the transformation: 1. Create an expectation that consumers come first in our industry: One idea would be to declare a “National Consumer Quality Lending Month.”

During this time period, we could focus on doing what the CFPB has failed to do, and determine what steps or actions that occur in the origination and servicing processes that consumers don’t understand or find confusing. Specifically, what gives the consumer a “quality lending process?”

This information could be collected and compiled into a comprehensive checklist for the industry.

Based on these findings, a review of the issues could then be conducted by lenders at previously identified parts of the process and the results housed in an industry database. This would give consumers a chance to evaluate lenders based on the criteria that are important to them. Furthermore, if a lender is dissatisfied with their consumer quality rating, they can take steps toward improving the elements of their process that fall below the industry averages, or take steps to enhance their performance.

2. Identify and re-establish products that actually help the consumers buy a home: Products such as sub-prime lending and no-income documenta-

e Consumer?

uld eliminate many problems take the necessary time to answer questions. That’s the only way to ensure that consumers understand the attributes of their loans, as well as the processes.

Having such a resource for each company would be extremely expensive and cumbersome.

Instead, we should consider a common industry-supported resource such as a call center. A call center

best at assisting consumers with getting a mortgage and the facts to back it up.

At the end of the day, the mortgage industry needs to address its problems. The choice facing us is either: Have a regulator dictate changes that are expensive and burdensome and which do not address the underlying issues, or take charge ourselves to ensure that all brokers and lenders who are willing to develop alternatives are successful in a consumer focused lending environment.

Becky Walzak is the president of rjbWalzak. She may be reached by e-mail at becky@rjbwalzak.com.

They'll never be caught.

They're on a mission from God.

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tion were held up as the underlying cause of the meltdown. However, as we have looked back at these loans, it becomes apparent that the meltdown had as much or more to do with fraud and misrepresentation of how the loans were actually produced. The question that needs to be answered is: Are these products viable if they were originated properly and fully explained to the consumer?

A recent article on The Motley Fool listed various types of loan programs that are making a comeback and looked at how the criteria for approving these loans has changed.

The article even goes so far as to say that we really do need a sub-prime market, which was readily proven by the 2014 HMDA results. These results showed a significant decline in new originations in metropolitan statistical areas (MSAs) with high minority populations. For example, the Philadelphia MSA had a 69 percent year-over-year decrease in mortgage applications.

However, in order to demonstrate benefits to the consumer, the industry needs to have a much deeper understanding of whether or not it is the product or the process that is associated with poor performance.

While there is a risk model that conducts this type of analysis, it has never been used on a wide-scale basis in order to provide a comprehensive understanding of what or how processes are related to performance. If we want to offer these products, as it is quite apparent we need to, then the industry should undertake such a study. This information should then be used to transform these so-called risky products in a way that protects the consumer.

3. Develop industry supported resources to provide insight and guidance to consumers: One of the most obvious flaws in the CFPB’s approach is that their new requirements have done little, if anything, to explain the fees, loan terms or understanding of the transactions for the borrowers. While loan officers and processors have a comprehensive understanding of the loan programs, they do not necessarily have the time or expertise to answer multiple questions about the disclosures, the underwriting process or the closing.

After all, their job is to originate loans.

The time spent on this would add significant cost to each origination due to the lost volume. This task should be placed in the hands of individuals who have a comprehensive understanding of the origination and servicing processes, as well as the ability to

with staff available even on nights and week-ends would go a long way to address the real issues surrounding the consumers’ need for a quality lending experience. The question is: Would the industry support it financially as well as operationally?

One of the benefits of such an undertaking would be the ability to collect data on the types of questions consumers ask, the underlying issues that are causing confusion for the consumers, and where brokers can do a better job in providing the consumers with a better quality lending experience. Furthermore, a call center could be a valuable tool to promote your organization as one of the

A Conversation Around the

Mortgage Market

By Ezra Becker t is rare that people in the mortgage industry can attend a cocktail party without someone asking the question, “So what is your perspective on the mortgage market?” For many, this question is a cue to quickly find a different conversation circle, believing that there are few topics more snooze-worthy than mortgage lending. Yet there is a certain train of thought one might follow from this question that can provoke some interesting conversation—although admittedly that’s more likely if there’s at least one other lender at the party. Even so, to prepare you for your next social event, let us consider three points that conversation might touch upon.

Most lenders would agree that the biggest challenge lately in the mortgage market has been regulatory scrutiny and the efforts needed to maintain regulatory compliance. That in itself could monopolize the entire evening’s conversation (and this entire article), so we skip lightly over it with an acknowledgement that is clearly front and center on the “ToDo List” for lenders across the board.

Once beyond regulatory compliance, the next immediate topic is the impact of inevitable rate increases.

There is concern among borrowers that rate increases might make mortgage financing prohibitively expensive. On the lender side, there is concern that rate increases will dry up

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mortgage volumes. We suggest that these concerns might be mitigated when one considers the historical perspective.

Let’s first consider the borrower

the Federal Reserve Bank of St. Louis,1 the average 30-year fixed-rate mortgage rate for 2015 through the end of September was 3.83 percent. In the six-plus years since the recession

side of the issue. Mortgage rates have bounced around all-time lows for several years now. The Federal Open Market Committee of the Federal Reserve (FOMC) did consider rate increases this past September, and many pundits are placing bets that the Fed will begin implementing rate increases in December. According to

ended (June of 2009), the average rate has been 4.22 percent. In contrast, the 30-year rate peaked at a whopping 18.63 percent in October of 1981. It did not drop below double digits from November 1978 through March 1986.

Broadly, the average 30-year mortgage rate from December 2007 all the way back to April 1971 (the beginning of

the reported data series) was 9.20 percent, almost three times the 2015 average. So even moderate rate increases would still remain far below historical levels.

The general consensus among FOMC watchers is that rate increases would come 25 bps at a time—it would take 26 such increases to bring us up to the historical average. So while rate increases would indeed make mortgage financing more expensive, it is likely to happen only gradually, and even then it should remain less expensive than what consumers have paid over the historical long-term.

On the lender side, it is true that rate increases can make mortgage financing more expensive, which in turn can reduce mortgage originations.

But what level of originations would be considered “unusually low?” The measure of “normal” originations was much different in the boom years of 2003-2007 than it was for the preceding 13 years. According to data from the Mortgage Bankers Association (MBA), 2 quarterly origination volumes averaged $293 billion from 1990-2002. In the boom years of 2003-2007, that quarterly average skyrocketed to $732 billion. From the first quarter of 2008 through the second quarter of 2015, the average dropped to $412 billion—not as high as the boom years, but still almost 40 percent above the pre-boom average. So if originations do drop, they would have a long way to go to get below the historical norm. Most lenders would agree that the halcyon days of the

Ezra Becker is vice president of research and consulting for TransUnion. He can be reached by e-mail at ebecker@transunion.com.

Footnotes 1—Research.StLouisFed.org/fred2/graph/?g=NUh# 2—MBA.org/News-Research-and-Resources/Forecasts-Data-and-Reports/forecasts-and-Commentary 3—Zillow.com/Research/Data/ 4—SPIndices.com/Indices/Real-Estate/SP-Case-Shiller-20-City-Composite-Home-Price-Index 5—Research.StLouisFed.org/fred2/series/HOEREPHRE/ 6—Board of Governors of the Federal Reserve System (U.S.), Households; Owners’ Equity in Real Estate as a Percentage of Household Real Estate, Level [HOEREPHRE], retrieved from FRED, Federal Reserve Bank of St. Louis (Research.StLouisFed.org/Fred2/series/HOEREPHRE/ 7—Lim, Michael & Ezra Becker. “Understanding HELOCs: Facts Versus Fear.” The RMA Journal, May 2015, pages 32-39 8—U.S. Bureau of Labor Statistics, Average Hourly Earnings of All Employees: Total Private[CES0500000003], retrieved from FRED, Federal Reserve Bank of St. Louis (Research.StLouisFed.org/Fred2/series/CES050000

Step Inside Ginnie Mae Managing Business Growth

By Ted W. Tozer Let me discuss a recent business decision that Ginnie Mae has made. Namely, during fiscal year 2016, which began last month, we will be focusing our resources on how to ensure that issuers already in the program are successful, rather than looking to grow the number of issuers of Ginnie Mae mortgage-backed securities (MBS).

Since 2010, the number of active issuers in Ginnie Mae MBS has grown by 50 percent to now, 433 approved issuers nationwide. While not all issuers are active, we still must monitor all of them actively. Our ability to absorb this growth has enabled the primary mortgage market to have the liquidity needed to support the housing needs of Americans. But, as with any growth cycle, we have reached a point where we must take stock of our program, and determine how we can best use our limited resources going forward.

In the last couple of years, the issuers participating in our MBS program have shifted from being primarily depositories, to independent mortgage bankers, whose transactions involve more counter-parties than traditional banks, and thus require more extensive oversight, surveillance and support from Ginnie Mae. And all of this costs money. Unfortunately, Ginnie Mae’s budget for staffing is currently flat, so we need to make some trade-offs.

81 Given our limited resources, we are placing the success of current MBS issuers ahead of the further growth in our issuer base. Thus, we are reducing resources that are designed to attract more issuers, and are increasing resources that will support current issuers and their transactions. We will be focusing our program on active issuers, and closing access to inactive issuers.

Further, Ginnie Mae will screen any new issuer applicant according to the best practices we have observed over time to work best: A business line fully committed to the Ginnie Mae business; in-house operating and financial capabilities; regular MBS issuances; a diversified book of business that includes new, as well as seasoned, loans; and direct management of mortgage servicing rights (MSRs). We will encourage current issuers to adopt these business practices over time.

These actions are designed to strengthen our two primary goals: To protect our explicit government guarantee, and continue to run our single securitization platform in the most efficient way possible. De-emphasizing issuer growth will reduce risks to taxpayers. Enabling current issuers will deliver more on our mission, supporting military veterans and families of modest financial means, and advancing best practices will raise the quality of the overall program.

We will continue to work on modernizing our risk management system, and hiring staff who are up-to-date on the business models and risks in our issuer base. Only through sound risk management can we fully deliver on our mission, enable the private market, and protect taxpayers. That is where we now turn our attention.

Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.

n New York Mortgage Professional Magazine n NOVEMBER 2015

reignite their HELOC programs. And while some are concerned that existing HELOCs hitting end-of-draw over the next few years drive material risk in the marketplace, TransUnion research7 indicates that any such risk can be identified, anticipated and measured at the individual consumer level—in other words, it can be managed effectively.

Rising home prices might not be all good news, however, which leads to our third point. There is some concern in the marketplace that home prices may be outpacing income growth, leaving many consumers with reduced access to affordable housing. Indeed, the HPI increases discussed above are materially higher than the (remarkably) steady two percent average yearover-year increases in hourly wages reported by the Federal Reserve Bank of St. Louis since November 2009.8 Housing stock in certain markets and at certain price points has been sparse—this is not just a matter of consumers having grandiose expectations after years of low housing prices and cheap financing. The potential lack of affordable housing, combined with the greater mobility consumers maintain by renting, can drive the rent-own equilibrium toward the former. Of course, where housing stock is available at accessible price points, the tax advantages and investment nature of homeownership (assuming continued home price increases!) do present a powerful lure.

Not surprisingly, this article raises at least as many questions as it answers; with so many moving parts, it’s difficult to forecast the particulars of how the mortgage market will unfold over the next three to five years. Yet, that same market complexity—with changing interest rates, home values, movement in earnings growth, the relative attractiveness of renting versus owning, housing stock shortages or gluts, unemployment trends, consumer credit risk, household formation and more—guarantees to hold the interest of lenders across the consumer credit spectrum.

However, the mortgage market moves, it is bound to be interesting—and should provide you with enough scintillating conversation material to fill your social calendar.

NationalMortgageProfessional.com

boom are unlikely to be repeated in the foreseeable future; where they’ll wind up is, of course, a topic for further discussion.

Which brings us to our second point: Rising home prices are driving increases in home equity. According to one industry watcher,3 the percentage of consumers with “negative equity”—that is, borrowers who owe more than their homes are worth—dropped from over 30 percent in the second quarter of 2011 to 14.4 percent in the second quarter of 2015.4 The CaseShiller Home Price Index (HPI) has risen from 142 in June 2009 (the end of the recession) to 181 in Q2 of 2015—a 27 percent increase, which translates to more overall home value. And of that value, consumers hold more equity: according to the Fed, the amount of home value consumers hold as equity (as opposed to in the form of mortgage loans) rose from 37 percent in Q2 of 2009 to 56.3 percent in the second quarter of 2015.5 This is great news for consumers, since the return of home equity provides a source of liquidity which virtually disappeared in the recession—to wit, home equity loans and lines of credit.

According to TransUnion data, HELOC lending dropped over 95 percent from its peak in 2006 to the postrecession period. But with rising home values, HELOC lending has entered a resurgence, rising from about 170,000 lines booked in Q1 2010, to 223,000 booked in Q1 2015.

That is still far below the volumes produced in the heady pre-recession period 2004-2006, but it is an encouraging increase. Interestingly, a comparison of equity growth versus equity line balances shows an interesting divergence. Home equity grew 70 percent between Q1 2010 and Q1 2015.6 In that same time period, TransUnion data indicates that HELOC balances dropped by 30 percent—originations, while growing, have not yet been sufficient to offset paydown rates. To many lenders, that gap spells opportunity. The HELOC product is particularly attractive to borrowers, since associated interest rates are generally much lower than those available on unsecured lines (like credit cards). As well, interest paid on HELOCs is usually tax-deductible, since the lines are secured by real estate. We anticipate a renaissance in HELOC lending over the next few years, as borrowers continue to build equity and lenders

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Turn Challenges Into Positive Possibilities:

The Three-P Method

By Kerry Elam f we encountered every day filled with peace, love and harmony, what a beautiful world we would live in. The reality is that no matter how smoothly life is going, we will face challenges during our journey.

The opportunity for growth is in how we navigate the twists in the road. As Maya Angelou said, “If you don’t like something, change it. If you can’t change it, change your attitude.” This article “challenges” us to view difficult events and people as a life puzzle with

I

useful lessons at each turn. We will explore how to pause to pivot to positive possibilities.

Science Learning Center in Utah explains how cells communicate during fight or flight.

Step 1: Pause to conquer negativity

“When our senses perceive an environmental stress such as danger or a threat, cells in the nervous and endocrine systems work closely together to prepare the body for action. Often referred to as the fight or flight or stress response, this remarkable example of cell communication elicits instantaneous and simultaneous responses throughout the body.”

How many times a day do you catch yourself immediately thinking a negative thought? How many times do you say to others: “Don’t be so defensive?”

As humans, our natural tendency is a bias toward negativity caused by parts of our brains that are quickly triggered to “avoid harm,” while slower to react to “pursuing rewards.” The Genetic

The point of this data is to remind us that negativity is part of our composi-

tion. The challenge we face, then, is how to shift our focus. We will explore an example of how my team traversed our negative emotions to take the higher, more positive road.

One of my internal team’s key responsibilities is to recruit and hire talent. Being in a niche market, we take pride in our abilities to equip our client-facing team with the best resources. Therefore, when we heard the following statement from that team, our fight response came to the surface. l “I have no confidence that your

“… no matter how smoothly life is going, we will face challenges during our journey.” team can provide us with the resources we need.”

What if the following would have been said instead? l “I want to help your team devise a solution to ensure we have the resources we need.”

Step 2: Pivot

l Our side: We were not clear on the exact resources the client-facing team needed, nor the timing or the urgency as we were getting direction from multiple sources. l Outsider’s perspective: The current client-facing team was working overtime and submitted a job requirement; they thought they had done what was needed. l Why a challenge: Both sides thought they were doing the right thing, but without fully

Step 3: Positive possibilities As we wrapped up our call, we identified the opportunities to move forward in finding the appropriate people to fill our resource needs. Since then, we have been having more regular calls to ensure both sides are briefed on the daily changes in project needs. Henry David Thoreau said, “We are always paid for our suspicion by finding what we suspect.” This is the basic message great leaders portray: we see what we expect to see. If we expect to see the negative, we will see it; if we instead look for the positive, then that’s what we will see.

By changing our focus, we can discover the silver lining in any scenario. In our situation, the positives now shine bright as we are expanding into exciting new areas of growth together. We want to live by our byline of “our expertise and commitment driving your success.”

The recipe to success is held together with teamwork and accountability.

Playing the blame game is never productive.

In summary, the next time you are faced with a challenge, use The ThreeP Method: Pause to identify how you can navigate the terrain with solid and steady actions pivoting to a positive viewpoint. And remember to feel the negative emotion, as allowing and diffusing those natural tendencies enables us to clearly see the positive possibilities.

Kerry W. Elam is managing director of operations and human resources with Actualize Consulting. She may be reached by phone at (703) 868-1506, email kelam@actualizeconsulting.com or visit ActualizeConsulting.com.

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n New York Mortgage Professional Magazine n NOVEMBER 2015

When we are consumed with our feelings, many times moving to the positive is the mountain to climb. In order to pivot out of the negative spiral, it is essential to take time to explore what happened. What is your side? What would an outsider’s perspective be? Can you identify why there was a challenge?

Let’s take a moment to go back to my team and the initial negative comment: “I have no confidence that your team can provide us with the resources we need.”

In this scenario, do you think either side really wanted to fight or fail the other? That possibility might sound ridiculous, but since that negative tendency is part of our composition, it is extremely important to acknowledge it and practice pausing before we react.

Once my team got over the initial fight response, and remembered we are all on the same larger team, we were all able to have the difficult—and clarifying—conversation of walking through the above exercise. Both sides left feeling relief at being heard and a repaired compassion toward each other.

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Which one feels better? Notice how you immediately feel different simply with a change in verbal messaging.

Have you ever realized you respond rapidly to problems more so than possibilities (remember fight or flight)?

When we are stuck on the negative, we fail to notice the positives, and a tornado of feelings may spiral out of control.

In our team example, the first statement was made and immediately put us on the defense, since we strive for team satisfaction and didn’t realize we apparently hadn’t delivered. Both sides dove right into a nasty battle of blame, which did not feel good and was not best for our team. We reacted when we should have paused.

Allowing the negative feelings without reacting is certainly not easy. It takes time to remember that negative tendencies are natural, and practice to realize that bottling up those feelings is not healthy. When the blood is boiling, make an effort not to react. Instead, PAUSE to settle your feelings and allow the tension to pass.

communicating to each other.

When there was finally a discussion, both sides were already frustrated and hence all the negative emotions.

outstanding

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Although REMN Wholesale is part of a large corporation, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential. As a national company, REMN provides many opportunities for employment from coast to coast.

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calendar of events N A T I O N A L

M O R T G A G E

P R O F E S S I O N A L

DECEMBER 2015 Wednesday-Friday, December 2-4 MBA 2015 Independent Mortgage Bankers Conference Omni Nashville 250 5th Avenue S Nashville, Tenn.

For more information, call (800) 793-6222 or visit MBA.org.

MBA’s 2016 CREF/Multifamily Housing Convention & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org.

Tuesday, December 8

FEBRUARY 2016

Wednesday, March 16

2015 California Holiday Networking Party Atrium Hotel 18700 MacArthur Boulevard Irvine, Calif.

For more information, contact Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

Tuesday, February 9

American Land Title Association (ALTA) Social Media Summit JW Marriott Indianapolis 10 South West Street Indianapolis For more information, call (202) 296-3671 or visit ALTA.org.

Sunday-Wednesday, January 31February 3

NAMB Wholesale Summit Hyatt Regency 123 Losoya Street San Antonio, Texas For more information, call (860) 922-3441 or visit http://conta.cc/1OjkFIK.

Sunday-Thursday, March 13-17

AUGUST 2016

2016 Regional Conference of Mortgage Bankers Associations Harrah’s Resort Waterfront Conference Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-7642 or visit MBANJ.com.

Wednesday-Saturday, August 17-20

Wednesday-Friday, March 16-18 Tuesday-Friday, February 16-19 MBA’s 2016 National Mortgage Servicing Conference & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org.

American Land Title Association (ALTA) Business Strategies Conference JW Marriott Indianapolis 10 South West Street Indianapolis For more information, call (202) 296-3671 or visit ALTA.org.

APRIL 2016

Saturday-Tuesday, April 9-12

Thursday, March 3

2015 Florida Holiday Networking Party The Holiday Inn Hotel & Suites 5905 South Kirkman Road Orlando, Fla. For more information, contact Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

Florida Association of Mortgage Professionals (FAMP) Broward Chapter 2016 Trade Show Bonaventure Hotel & Conference Center 200 Bonaventure Boulevard Weston, Fla. For more information, call (954) 986-0808 or e-mail dmiller8@prodigy.net.

NAMB 2016 Legislative & Regulatory Conference Hyatt Place National Mall 400 East Street SW Washington, D.C. For more information, call (860) 719-1991 or visit NAMB.org.

JANUARY 2015

Thursday, January 21 Mortgage Bankers Association Mergers and Acquisitions Workshop 2016 Hilton Phoenix International Airport 2435 South 47th Street Phoenix, Ariz.

For more information, call (800) 793-6222 or visit MBA.org.

Tuesday-Friday, March 8-11 NAMB East 2016 Westin Hilton Head Island Resort & Spa 2 Grasslawn Avenue Hilton Head, S.C. For more information, call (860) 719-1991 or visit NAMBEast.com.

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events?

Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

MAY 2016

Monday-Wednesday, May 16-18 American Land Title Association (ALTA) Federal Conference & Lobby Day Renaissance Downtown 999 9th Street NW Washington, D.C. For more information, call (202) 296-3671 or visit ALTA.org.

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SEPTEMBER 2016

Saturday-Monday, September 24-26 NAMB National 2016 The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com.

OCTOBER 2016

Tuesday-Friday, October 4-7 American Land Title Association (ALTA) 110th Annual Convention Fairmont Scottsdale Princess 7575 East Princess Drive Scottsdale, Ariz.

For more information, call (202) 296-3671 or visit ALTA.org.

Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street Boston, Mass.

For more information, call (800) 793-6222 or visit MBA.org.

n New York Mortgage Professional Magazine n NOVEMBER 2015

MARCH 2016

Tuesday, December 15

Thursday-Friday, August 18-19 Louisiana Mortgage Lenders Association 2016 Annual Education Conference New Orleans Riverside Hilton 2 Poydras Street New Orleans, La. For information, call (225) 590-5722 or visit LMLA.com.

NationalMortgageProfessional.com

Thursday, December 10 2015 Texas Holiday Networking Party DoubleTree by Hilton Hotel Dallas– Campbell Centre 8250 North Central Expressway Dallas, Texas For more information, contact Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

Florida Association of Mortgage Professionals 2016 Annual Convention Omni Orlando Resort at ChampionsGate 1500 Masters Boulevard ChampionsGate, Fla. For more information, call (850) 942-6411 or visit MyFAMP.org.

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WHOLESALE LENDERS

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REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time.

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