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Your source for the latest on originations, settlement, and servicing

Ohio Association of Mortgage Professionals P.O. Box 64  Milford, OH 45150 Phone#: (513) 602-1852  Fax #: (513) 965-0016 Web site:  E-mail:

Shane Marzullo Mark Vogel James Nabors Kimberly Limes Duy Vu Rob McGeorge Dennis Fisher

OAMP BOARD OF GOVERNORS Phone # E-mail Board Chairman (419) 861-9008 Executive Director (614) 761-1200 Board Member (419) 627-4531 Board Member (419) 353-9819 Board Member (513) 771-7177 Board Member (513) 965-0015 Board Member (937) 748-8888

OAMP 2012 Sponsors OH 1

For more information on becoming an OAMP Sponsor, please contact Executive Director Mark Vogel at (614) 419-3323 or e-mail

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 MARCH 2012

MARCH 2012 


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The Ohio Association of Mortgage Professionals We’re working to keep you in business! As a member of the Ohio Association of Mortgage Professionals (OAMP), you are recognized by peers and clients as a leading resource who stands for integrity, ethics and professionalism. Membership in OAMP connects you with the National Association of Mortgage Brokers (NAMB) network of the nation’s leading mortgage professionals. The support and benefits of OAMP membership pays for itself—authorized use of the OAMP/NAMB logo on your marketing collateral gives you an edge over the competition—clients will trust your ability and expertise because they understand the high standards required of OAMP/NAMB members. OAMP is the mortgage industry’s voice in Ohio. NAMB represents OAMP members in Washington, D.C. Make sure your voice is heard. We’re working to keep you in business.

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Check out the many benefits of joining OAMP below, and be sure to visit us online at:  Recognition as a respected industry professional.  Increased visibility and support by affiliating with our national member network.  Assurance that your interests as a mortgage broker or banker are represented at the state and federal levels.  Enhanced skills through discounted education courses led by industry SMEs.  Discount vendor programs save you money and improve your bottom line.  Convenient, SAFE-compliant continuing education courses.  NAMB membership.  Qualify for use of the Lending Integrity Seal of Approval and differentiate yourself from the competition.

JOIN TODAY! | (513) 602-1852

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Delinquencies in Ohio Drop to 9.2 Percent in Latest Survey

MARCH 2012 


OH 4

Headlines and breaking news from

Headlines and blogs from around the web.

The delinquency rate for mortgage loans on residential properties in Ohio was 9.2 percent at the end of the fourth quarter of 2011, a decrease of nine basis points from the third quarter of 2011, according to the Mortgage Bankers Association (MBA). The delinquency rate excludes loans in the process of foreclosure. The percentage of loans in Ohio on which foreclosure was started during the quarter fell three basis points to 1.08 percent, while the percentage of loans in the foreclosure process at the end of the quarter rose two basis points to 4.94 percent. These rates are not seasonally adjusted. Mortgage delinquency rates normally increase from the third to the fourth quarter of the year due to a variety of seasonal factors, for example, holiday spending and heating bills. As noted in recent quarters, the percentage of loans in the foreclosure process is significantly affected by the foreclosure regime of the specific state. Overall, states with a judicial foreclosure system are seeing a buildup of loans in the foreclosure process, while most states with a nonjudicial process are seeing declines. This is despite a relatively even distribution of increases in new foreclosures started across all states, judicial or non-judicial. The delinquency rate for prime adjustable-rate mortgages (ARMs) decreased 58 basis points to 8.43 percent and the rate for prime fixed rate mortgage loans decreased seven basis points to 4.89 percent. The delinquency rate for the sub-prime ARMs decreased 83 basis points to 24.82 percent, while the rate for sub-prime fixed rate loans increased five basis points to 22.77 percent. The delinquency rates for FHA and VA loans were 13.93 percent and 8.69 percent, respectively—up 35 basis points for FHA loans and up 25 basis points for VA loans. The foreclosure starts rate for prime ARMs in Ohio increased 13 basis points to 1.5 percent, while the rate for prime fixed rate loans decreased two basis points to 0.74 percent. The foreclosure starts rate for sub-prime ARMs decreased 103 basis points to 3.14 percent, while the rate for subprime fixed rate loans decreased 22 basis points to 2.14 percent. The percentage of prime ARMs in foreclosure decreased six basis points to 6.36 percent and decreased nine basis points to 3.18 percent for prime fixed rate loans. The rate for sub-prime ARMs decreased 40 basis points to 19.63 percent, while the rate for sub-prime fixed rate loans increased three basis points to 9.8 percent. The percentage of FHA loans in foreclosure increased 42 basis points to 5.42 percent. The percentage of VA loans in foreclosure increased 17 basis points to 4.43 percent. Among the 50 states and the District of Columbia, Ohio ranked 12th in delinquencies and 12th in foreclosures started. Mississippi ranked first in delinquencies with a rate of 13.13 percent and Florida ranked first in foreclosure starts with a rate of 1.68 percent. On a national level, the delinquency rate for mortgage loans on oneto four-unit residential properties was 8.15 percent on a non-seasonally adjusted basis, down five basis points from 8.20 percent in the third quarter of 2011. The seasonally adjusted delinquency rate on residential properties was 7.58 percent in the third quarter, down 41 basis points from last quarter’s seasonally adjusted rate. The non-seasonally adjusted percentage of loans on which foreclosure was started during the quarter decreased nine basis points to 0.99 percent, while the non-seasonally adjusted percentage of loans in the foreclosure process at the end of the quarter decreased five basis points to 4.38 percent.

National Mortgage Professional Magazine

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March 2012




Volume 4, Number 3


Web Site



America’s Choice Home Loans .......................... ............................................27 Benchmark Mortgage ...................................... ......................................5 Best Rate Referrals, LLC .................................... ..............................19 Calyx Software ................................................ ......................................18 CBC National Bank .......................................... ................................Back Cover Elliott and Company Appraisers, Inc................... ..............................12 Equity Loans LLC .............................................. ..........................................15 Freedom Mortgage .......................................... ......................Inside Back Cover Frost Mortgage Lending Group .......................... ..............................41

A Special Look at “Community Lending”

Hometown Lenders .......................................... ................................21

Getting the Word Out: Leveraging Public Relations and Social Media to Promote Your Expertise Locally By Bob Zeitlinger ..................................................................36

Hondros College .............................................. ..OH1 Icon Residential Lenders, LLC ............................ ..............................10 & 17 Land Home Financial Services .......................... ....................................26


Loyalty Express ................................................ ......................................35

The Secret to Better Marketing By Mary Beth Doyle ............4

Menlo Park Funding ........................................ ................................33

FHA Insider: Unfair! By Jeff Mifsud ......................................4

Mortgage Brokers Network Corp, Inc. ................ ......................29

CFPB Begins Process of Defining “Larger Participants” in Non-Bank Supervision By Terry W. Clemans ..............................................................8

NAMB.............................................................. ..............................20

The NAMB Perspective ..................................................12

PB Financial Group Corp. .................................. ......................................10

Regulatory Compliance Review: The Fannie and Freddie New Appraisal Portal Uniform Collateral Data Portal By Jonathan Foxx ............................14

Polaris Home Funding Corp. (Branches).............. ....................9

For Managers Only: Do You Have Enough Time to Manage? By Dave Hershman ..................................18 The Elite Performer: Feedback Fuels Your Business By Andy W. Harris, CRMS ......................................20

Tablets: The Future of Mortgage Technology By Andrew Weiss-Malik ..........................................................24 Lykken on Leadership: It’s Time to Come Together By David Lykken & Jon Traver ......................26

Dreaming of an LOS By BJ Bounds ....................................31 Loan Servicing: Current and Future Business Process Assessment By Frank Tibbs ........................................34 Anti-Money Laundering Debuts for Non-Banks

By Jonathan Foxx ................................................................................40

Columns Heard on the Street ........................................................6 NMP News Flash: March 2012 ......................................16 NMP Mortgage Professional Resource Registry ..........44 NMP Calendar of Events ................................................48

REMN (Real Estate Mortgage Network)................ ......................................7 Shortsale Speedway.......................................... ................38 Streetlinks LLC ................................................ ..................Inside Front Cover TMS Funding.................................................... ..........................................11

 MARCH 2012

New to Market ................................................................28

Polaris Home Funding Corp. (Wholesale) ............ ............................................25


HARP 2.0: Direct Marketing Outlook By Raymond Bartreau ............................................................28


NMP Mortgage Professional of the Month: Raymond Bartreau, Founder/CEO of Best Rate Referrals and

NAPMW .......................................................... ..................................................6

March 2012 Volume 4 • Number 3

A Message From NMP Media Corp. Executive Vice President Andrew T. Berman Who are the people in your neighborhood?

STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 Joey Arendt Art Director Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 Beverly Koondel Marketing Assistant (516) 409-5555, ext. 316 Tara Cook Billing Coordinator (516) 409-5555, ext. 324 ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Senior National Account Executive Karen Krizman at (516) 409-5555, ext. 326 or e-mail 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 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 or visit Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Credit 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.







National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2012 NMP Media Corp.

And we’re not done yet … This issue continues with its regulatory- and compliance-heavy focus as Jonathan Foxx provides us with two separate pieces this month, one on page 14 looking at the new Uniform Collateral Data Portal (UCDP) used by the government-sponsored enterprises (GSEs) and on page 40, Jonathan gives a very detailed synopsis of the new anti-money laundering program for non-bank mortgage lenders and originators. On page 8, Terry W. Clemans discusses the CFPB and their process of defining “larger bank participants” in the financial services marketplace, and on page 28, Raymond Bartreau provides tips on how to capture your market share of those eligible for the HARP 2.0 program.

And speaking of Mr. Bartreau … Our March 2012 Mortgage Professional of the Month on page 22 happens to be the aforementioned Raymond Bartreau, founder and CEO of Best Rate Referrals and We learn how Ray got his start in a call center for Direct TV and took his knowledge to grow his direct marketing firm to become a two-time member of the Inc. 500 list by keeping the client in the spotlight. All of that and much more can be found in this issue of National Mortgage Professional Magazine, so sit back and enjoy the ride! Until next month ...

Andrew T. Berman, Executive Vice President NMP Media Corp.






The National Association of Mortgage Brokers 2012 Annual Legislative & Regulatory Conference in Washington, D.C. is upon us. From March 18-20, mortgage professionals will have the opportunity to meet with their elected officials to discuss a number of industry-pertinent topics. In addition to actually visiting with your senators and representatives, NAMB has assembled a day of education on the legislative process on Monday, March 19. Among those on hand will be Bart Shapiro, former director of the U.S. Department of Housing & Urban Development’s (HUD) mortgage settlement office and current senior advisor for the Office of Community Banks and Credit Unions for the Consumer Financial Protection Bureau (CFPB), as the luncheon keynote speaker. Also from the CFPB, Allison Brown, program manager of mortgage supervision for the Office of Non-Bank Supervision, will be on hand to discuss loan originator examination guidelines. Attendees will also get a rare opportunity to take part in a panel discussion on the future of the housing market, focusing on QM, the three percent rule and the QRM issue. NAMB Government Affairs Committee Chair John Hudson will moderate the panel featuring Ken Trepreta Esq., director of real estate services for the National Association of Realtors (NAR); Ken Markison, associate vice president and regulatory counsel for the Mortgage Bankers Association (MBA); and Jim Tobin, senior vice president for government affairs and chief lobbyist for the National Association of Home Builders (NAHB). Closing out the event is a chance to network and engage even further with some key Congressional members as Rep. Gary Miller (R-CA), Rep. Spencer Bachus (R-AL), Rep. Mary Landrieu (D-LA) and Rep. Maxine Waters (D-CA) are among the invited guests at a closing reception to round out the event. For more information on the Legislative & Regulatory Conference, see pages 12-13 of this issue or visit



D.C. … here come the mortgage pros!


1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site:

Are you the face and voice of your local mortgage market? Are you the “go-to” guy in your local community when it comes to all things related to the mortgage industry? If not, you should be, and this month we take a look at various methods as to how you can become that name and face synonymous with mortgage financing in your surrounding area. Our focus on community lending is highlighted by a piece from Bon Zeitlinger of B to Z Communications on page 36, highlighting various methods to utilize social media and the local media to your advantage. After a read of Bob’s article, you will have the tools necessary to become a key source for local reporters on real estate- and industry-related issues, and a pro on how to leverage your expertise in the world of social media.




The Association of Mortgage Professionals

National Association of Professional Mortgage Women

2701 West 15th Street, Suite 536  Plano, TX 75075 Phone #: (703) 342-5900  Fax #: (530) 484-2906 Web site:

P.O. Box 451718  Garland, TX 75042 Phone #: (800) 827-3034  Fax #: (469) 524-5121 Web site:

NAMB Board of Directors

National Board of Directors 2011-2012

OFFICERS President—Donald J. Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355 Vice President—Donald Fader, CRMS SMC Home Finance P.O. Box 1376 Kinston, NC 28503-1376 (252) 523-5800 Treasurer—John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road Fallston, MD 21047 (410) 557-6400 Secretary—Olga Kucerak, CRMS Crown Lending 222 East Houston, Suite 1600 San Antonio, TX 78205 (210) 828-3384 Past President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987

DIRECTORS Rocke Andrews, CMC, CRMS Lending Arizona LLC 1996 North Kolb Tucson, AZ 85715 (520) 886-7283

Kay A. Cleland, CMC, CRMS KC Mortgage LLC 200 South Wilcox Street #224 Castle Rock, CO 80104 (720) 810-4917

Linda McCoy Mortgage Team 1 Inc. 6336 Picadilly Square Drive Mobile, AL 36609 (251) 610-0494

President-Elect Candace Smith, CME (512) 329-9040

Vice President-Eastern Region Christine Pollard (607) 656-5005

Senior Vice President Jill Kinsman (206) 344-7827

Secretary Katheryn M. Farrell (509) 528-0349

Vice President-Northwestern Region Nita Cook, GML, CME, CMI (360) 705-5053

Treasurer Jeanne Evans, CME (918) 431-0155

Vice President-Western Region Lyman King III, CME, CMI (916) 967-4653

Parliamentarian Hulene Bridgman-Works (800) 827-3034

National Credit Reporting Association Inc. 125 East Lake Street, Suite 200  Bloomingdale, IL 60108 Phone #: (630) 539-1525  Fax #: (630) 539-1526 Web site:


2012 Board of Directors & Staff Donald J. Unger President (303) 670-7993, ext. 222 Daphne Large Vice President & Treasurer (901) 259-5105 Tom Conwell Ex-Officio & Legislative Chair (800) 445-4922, ext. 1010 Nancy Fedich Director–Conference Chair (908) 813-8555, ext. 3010 Judy Ryan Director-Strategic Alliance Chair (800) 929-3400, ext. 201

Mike Brown Director–Technology Chair (800) 925-6691, ext. 4350 Maureen Devine Director–Education & Compliance Co-Chair (413) 736-4511 Renee Erickson Director–New Membership & Elections Chair (800) 311-1585, ext. 2101 Terry Clemans Executive Director (630) 539-1525 Jan Gerber Office Manager/Membership Services (630) 539-1525

 MARCH 2012

Susan Cataldo Director–Education & Compliance Chair (404) 303-8656, ext. 204

William Bower Director–Tenant Screening Chair (800) 288-4757


Deb Killian, CRMS GMAC 246 Federal Road, Unit C-24 Brookfield, CT 06804 (203) 778-9999, ext. 103

Vice President-Central Region Lisa Puckett, CME (405) 741-5485 

Fred Arnold, CMC American Family Funding 24961 The Old Road, Suite 101 Stevenson Ranch, CA 91381 (661) 284-1150

President Laurie Abshier, GML, CME, CMI (661) 283-1262

The Secret To Better Marketing by Mary Beth Doyle, Founder Aristotle once said, ‘We are what we repeatedly do. Excellence, therefore, is not an act but a habit.’ This is especially true when it comes to marketing. It takes a consistent approach to turn your book of business into closed loan production. But with a busy spring ahead, you may not have enough time to stay in touch with clients, partners & prospects in a meaningful way. Fortunately, there’s a simple methodology that can save time and money. LoyaltyExpress provides comprehensive, high-impact marketing solutions that continuously capture new, repeat, and referral business. Here’s why we’re the #1 choice of top-producing loan officers & executives across the country: t Our wide selection of targeted programs consistently reaches recipients through cross-media formats and channels. By combining high-quality direct mail, 4

e-mail, and on-demand marketing pieces, you’ll be able to engage & energize a broader audience than ever before.

MARCH 2012 


t Our proprietary technology automates high-impact communications that motivate recipients to take action. Intelligent data mining quickly identifies and promotes new opportunities. By reaching contacts at the right time, you can significantly increase your response rate. t Our solutions are easy to use. With a few clicks of the mouse, you can send targeted marketing campaigns that achieve exceptional ROI. Our industry-leading client services team is available to answer questions and help you make the most of these powerful resources. Simply put, LoyaltyExpress can help you maximize closed loan production with the most efficient, effective marketing tools in the industry. Take a few minutes to learn more about the benefits of working with us. It will definitely be worth your time.

LoyaltyExpress is the leading mortgage marketing company in the nation. For more information: call 877.938.1175 or visit

Unfair! FHA Reserves Fall and New Borrowers Are Forced to Bear the Burden of Recovery


hile the mass media and the general public seem to focus on the fact that the reserves of the Federal Housing Administration (FHA) may fall below the mandated amount in 2013 (due to FHA loans defaulting), I have yet to hear a voice that speaks for the new FHA borrowers—the innocent homebuyers who will be the ones forced to pay for it! New borrowers’ monthly housing expense will increase due to another expected increase in FHA mortgage insurance (MI) premiums! You will notice that in this article, I will be departing from my usual more “matter of fact” style, and you will also notice a thread of sarcasm because I cannot believe the FHA does not see how their changes will negatively impact the exact people they were established to help: The hard-working American wage earner. For any officials of the U.S. Department of Housing & Urban Development (HUD) that may be reading this please forgive me for pointing out the incongruity, but we have to get the focus back on the low- to middle-income American workers. Read on… The HUD budget for fiscal year 2013 states that: “This Budget includes the recently enacted increases in FHA premium levels (April 2011). These increases (in premiums) will boost FHA’s capital reserves—to better protect taxpayers against the risk of credit losses by the program— and, as a result, increase federal revenues.”

In a Feb. 13 issue of Bloomberg Businessweek appears an article wherein acting Housing Commissioner Carol Galante is quoted regarding the FHA’s loan guarantee request from the treasury. She justifies the premium increase, in order to keep up the FHA reserves, saying: “It’s (the mortgage insurance premiums) more than enough to compensate for the negative estimate for the draw on Treasury. The Agency also plans to announce another premium increase in the coming days.” Let’s follow the logic (a term I use very loosely here) of the government in this regard: “With the great losses we have incurred because of the high rate of foreclosures due to people not being able to afford their payments, we are going to recover our losses by increasing new borrowers’ house payments by raising the mortgage insurance premiums.” Let’s see if we’ve got this right ... people cannot afford their mortgages and hence are foreclosing. As a result, the FHA reserves have plummeted. So FHA will hike their premiums to make it even more difficult for people to afford their payments! Brilliant! Here are some more direct quotes from the 2013 HUD budget: “Giving Hard-Working, Responsible Americans a Fair Shot ... There is more work to do to ensure that more Americans have the opportunity to enter the middle class, and that the economic security of middle-class Americans does not continue to erode.” That brilliant government logic at work once again: We need to help more Americans enter the middle class, and keep the existing middle class from further erosion. Thus, we’ll increase the house payments through MI premiums, continued on page 14

Andrew Paul California Branch Partner






Positive Attitude 



MetLife’s Warehouse Business Acquired by EverBank

Why W hy NAP NAPMW? M MW? Three T hree Simple Reasons Reaso ons Education E d duccation Organized ffor Organized or the pur purpose pose of providing providing education education tto o pr professionoffe essionals in all phases off the mor mortgage industry, NAPMW offers educa-tgage industr y, NAP N MW off ers educa tion via man enues – seminars and w orkshops k ound the manyy vvenues workshops held ar around on-line,, and National Conference ccountry, ountry, on-line a at at its Na tional EEducation ducation C onference held May. each hM ay. NAPMW NAP MW membership membersship gives gives you you exclusive exclusive access a cess to ac to timely educaeducaaffecting career tion regarding regarding the e regulations regulations aff ecting yyour o car our eer such as a webinar FREE TO TO MEMBERSS monthly monthly w ebinar on industry ind dustry updates updates AND education class offering our 8 hour NMLS continuing continuing educa tion cla ss off ffe ering (NMLS Provider 1400309) P rovider # 140030 09) 6

Leadership p Leadership IIff you you believe believe in helping helping to to elevate elevate the educational edu ucational standards standards of this industry, industry, or assisting asssisting in developing developing the e most competent competent industryy w work industr ork force, force, then you you believe believe in NAPMW. NA APMW.

MARCH 2012 


NAPMW Butt sinc since women NAP MW is not a women’s women’s organization. organization. Bu ew omen make majority profesup the major ity off professionals professionals in the mortgage/banking morrtgage/banking pr ofession, our purpose business,, personal personal,, purpose is to to help them advance advance in business and leadership development. de evelopment.

Net wo ork king i Networking NAPMW is a ccommunity NAPMW omm munity of near nearly ly 2,000 professionals prof o essionals acr across oss the Country engage mortgage banking industry. C ountry who eng age in the mor tgage / ba anking industr y. Men Men and w omen from from all backg rounds have have joi ned NAP MW because women backgrounds joined NAPMW excel whatt they do do.. Emplo Employers want they want want tto oe xcel e aatt wha yers who w ant eexcelxcellenc e from from their employees emplo e yees engage eng NAP N MW for for up-to-date up-to-date lence with NAPMW education. educa tion. B Both oth pr professionals p ofessionals and emplo emp employers yers e have have found found there there is a plac e ffor or them in n NAP MW W. place NAPMW.

National E National Education ducation Na tional T raining National Training National Networking Na tional N etworking

To T o Join NAPMW NAPMW W visit: w ww.napmw.o org or ccall: all: 1-800-827-3034 1 800 8 1-800-8 827 3034 827-3034 Have Ha ve Q Questions? uestion ns? Please ffeel eel free free to to e e-mail -m mail us a at: t: napm w1@aol.c . om

Coas Coast oast to to C Coast oas A oast Associations ssociations D iscoun un nted Services Serrvic v es Discounted IIndustry ndustrry Updates U Updatess

EverBank has agreed to acquire MetLife Bank’s Warehouse Finance business. Financial terms of the transaction were not disclosed. The acquisition, which is expected to close in the first half of 2012, will leverage EverBank’s residential lending expertise and increase EverBank’s assets by approximately $400 million. The acquisition has been approved by both parties’ boards of directors and remains subject to regulatory approvals. “We’ve been interested in entering the warehouse lending business for some time,” said Rob Clements, chairman and chief executive officer of EverBank. “The MetLife Warehouse Finance business represents a natural business line expansion for EverBank and diversifies our lending platform with high quality asset generation capabilities.”

Total Mortgage Services Now Licensed in Arkansas Total Mortgage Services LLC has announced that it has received its Arkansas Combination Mortgage Banker-Broker-Servicer License from the Arkansas Securities Department and is now able to originate and service residential mortgage loans in the state of Arkansas. Total Mortgage is licensed as a mortgage banker, broker and servicer in Arkansas and holds License Number 103968. “Signs of stabilization in the housing market are beginning to appear and with rates near record lows it is an opportune time for borrowers to move forward and consider purchasing or refinancing a home,” said John Walsh, president of Total Mortgage. “All of our fully licensed loan officers are very excited to help responsible borrowers throughout the state of Arkansas find the right fixed-rate or adjustable-rate mortgages to meet their financing needs.” Total Mortgage is now licensed in 26 states, including: Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Maryland, Maine, Michigan, Mississippi,

New Jersey, New York, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont and Virginia, West Virginia and the District of Columbia, and has four additional state licenses pending.

Byte Software and BuildFax Announce Building Permit Data Collaboration Byte Software and BuildFax have announced a partnership to provide building permit data to mortgage professionals, allowing mortgage industry professionals the ability to quickly verify property improvements through an interface between Byte Software’s loan origination system (LOS) and BuildFax’s national building permit database. The integration to Byte Software allows lenders to access BuildFax’s property intelligence, which delivers the additional layer of documentation needed to enhance loan quality, reduce transactional risk, and approve loans with greater confidence. Byte Software’s LOS offers time-saving automation of these due diligence efforts. BuildFax provides insight into pending and completed property improvements and condition not found in tax assessor data. This information can be highly beneficial to lenders as they work to validate loan value. More than 400 lenders already use BuildFax data in their loan approval and quality control (QC) processes. The government-sponsored enterprises (GSEs) acknowledge permit data as a trusted source for independent, third-party verification of property improvements and condition. In addition, the access Byte Software provides to the BuildFax database enables lenders to easily comply with emerging Uniform Appraisal Dataset (UAD) requirements. “We are pleased to partner with BuildFax to offer our clients access to this incredibly rich dataset,” said Joe Herb, general manager of Byte Software. “The interface will help lenders complete these essential validations quickly, enhancing underwriting and improving their customer’s experience.”

AHMSI’s Expansion and Focus on Residential Prompts Name Change

DocuSign and Cartavi Agreement to Streamline Cloud-Based Doc Management DocuSign has announced that Cartavi, the simple document sharing continued on page 10


 MARCH 2012

Stewart Title has announced the integration of its online ordering platform, Orders Gateway, powered by PropertyInfo Corporation, a Stewart company, into Calyx Point, a leading mortgage origination provider. The

GSF Mortgage has announced that it has formed a partnership with ARG Interactive, a marketing technology company offering automation and interactive Web site solutions to mortgage companies, banks and credit unions. “We are consistently looking for ways to engage and get closer to our customers,” said GSF Mortgage Chief Operating Officer Chad Jampedro. “And we are extremely pleased to develop this business relationship with ARG Interactive as part of this concerted effort.” Jampedro said ARG’s proprietary cus-

tomer retention management (CRM) system, marketing automation and lead generation technologies are the best in acquiring new customers and retaining existing customers. “ARG’s customized solutions suit our needs specifically for the mortgage industry,” said Jampedro. “Having a solution to parallel our needs is just what we were looking for.”


Stewart Title and Calyx Partner on Order Speed and Efficiency

GSF Mortgage Announces CRM Partnership with ARG Interactive 

American Home Mortgage Servicing Inc. (AHMSI) has announced that the company will change its name to Homeward Residential to reflect its expansion into residential lending and other real estate finance-related businesses. The full transition to the new name, Homeward Residential, is expected to be completed in the second quarter of 2012. AHMSI’s portfolio of services was expanded in October 2011 with the opening of the company’s correspondent and warehouse lending operations. During the past 12 months, AHMSI has added new businesses to support the needs of customers in a challenging marketplace, including loan closing services, real estate-owned (REO) management, home valuation, special servicing, sub-servicing and asset management consulting. “This announcement is not simply a name change. Over the past 12 months we have built a full-service mortgage banking enterprise with a broad spectrum of offerings and expertise in lending, servicing and a variety of related services,” said Dave Applegate, president and chief executive officer of AHMSI. The name Homeward Residential evolved after employee and customer input, followed by additional research, analysis and audience testing. “We believe that homeownership remains a significant part of the American dream, and ‘Homeward’ is the ideal identity to support the aspirations of our customers,” said Applegate. “Our exceptional and talented employees played significant roles in helping us rename our company, and their input was valued among the entire organization. Homeward’s ultimate success rests on those same employees who are passionate about the work they do and remain steadfastly committed to finding the best possible solutions for homeowners.” AHMSI is currently ranked as the 13th largest mortgage servicer in the country, managing nearly $71 billion in loan servicing, representing approximately 374,000 customers. Since its inception in April 2008, AHMSI has modified over 195,000 mortgage loans, including over 32,000 under the U.S. government’s Making Home Affordable Program. AHMSI’s more than 3,000 associates work each day with the mission of helping families preserve their dream of homeownership.

integration of the two systems enables Point users to quickly and securely place and track orders with Stewart Title from within Calyx Point, simplifying the ordering process and enhancing the customer experience. Orders Gateway offers 24/7 availability, eliminates the need to re-enter information and provides a convenient office selection. “Both Stewart and Calyx Software are committed to streamlining and optimizing the loan origination process for our lender customers,” said Glenn Clements, group president, direct operations for Stewart Title Company. “Now, with this integration, it is easier than ever for Calyx Point users to place title orders with Stewart Title.”

CFPB Begins Process of Defining

“Larger Participants” in Non-Bank Supervision

First up … credit reporting and collection agencies By Terry W. Clemans

MARCH 2012 



On Feb. 17, 2012, the Consumer Financial Protection Bureau (CFPB) issued its first proposed rule specifically defining who falls into the “larger participant” category in the “non-bank” financial services markets for future regulation. The first industries of focus for the CFPB are consumer (credit) reporting and debt collection. This proposed rule-making is required by Section 1024 of the Dodd-Frank Financial Reform Act of 2010. The CFPB’s announcement in the Federal Register states: “This proposal is the first in what the Bureau intends to be a series of rules to define “larger participants” in specific markets for purposes of establishing, in part, the scope of coverage of the Bureau’s nonbank supervision program.” In the proposed rule, the CFPB suggests establishing a test for each market to determine whether a non-bank entity is a larger participant of that market. For the consumer credit reporting and debt collection markets, the Bureau is proposing a test that measures the “annual receipts” of the firm for potential inclusion into the “larger participant” category. The definition of “annual receipts” was adapted from the definition of the term used by the Small Business Administration (SBA) for purposes of defining small business concerns. The proposed threshold for the consumer

“… all non-bank entities, regardless of size, are subject to the CFPB regulatory and enforcement authority for compliance with any applicable Federal consumer financial law …” debt collection market is more than $10 million in annual receipts and, for the consumer reporting market, is more than $7 million in annual receipts. Though looking to the SBA for a universal financial designation to create the “larger participant” category provides a quick and easy divider to monitor, it may create difficulties in its application. The consumer credit reporting industry has already been segregated into “larger participants” by its primary federal law, the Fair Credit Reporting Act (FCRA). FCRA has split the industry into two basic segments based on primary business models and assigned some specific regulations for each model. The national credit bureaus or repositories are defined in FCRA Section 603(p): “Consumer Reporting Agencies (CRA) whose manner of business includes assembling or evaluating, and maintaining for the purpose of furnishing consumer reports to third parties, both “(1) [p]ublic record information (and) (2)[c]redit account information from persons who furnish that information regularly and in the ordinary course of business.” FCRA Section 607(e), provides for credit reporting agencies that are known as resellers (who are the producers of all mortgage reports), and defines resellers as those who “procure a consumer report for purposes of reselling the report …“

Despite the fact that the same laws cover both the Repository CRA and Reseller CRA, the business models are very different and proper regulations and auditing for them would need to have much different focuses to assure each business model is compliant. For example, the repository CRA batch processes tens of millions of pieces of information into its database from creditors on every consumer in the country with a credit file, on a daily basis. Resellers, on the other hand, individually process information a single piece at a time, after the accuracy or completeness of that particular report has been questioned. Further, the reports in the resellers’ databases are only on the consumers for whom they have had a report requested, and that report is for that specific transaction only. In addition to the difference in business models, there is another major difference in these two entities that directly ties to the CFPB’s desire to define the industry by revenue. Each of the three national repositories has annual revenue in the billions. All resellers, even the very largest in the industry, have annual receipts in the millions. The smallest repository is at least 10 times larger than the largest reseller. In whatever manner the CFPB determines who is a “large participant,” they

are authorized to supervise these larger non-bank entities by requiring them to submit reports and undergo examinations to: “(1) Assess compliance with Federal consumer financial law; (2) obtain information about such persons’ activities and compliance systems or procedures; and (3) detect and assess risks to consumers and to the consumer financial markets.” This proposed rule only pertains to defining how to determine the larger participants in certain markets for purposes of the CFPB’s non-bank supervision authority and does not impose any new substantive consumer protection requirements. The announcement also serves as a reminder that all non-bank entities, regardless of size, are subject to the CFPB regulatory and enforcement authority for compliance with any applicable federal consumer financial law, and that the CFPB is planning on being an active regulator over the industries in its jurisdiction. For more information, or to provide the CFPB with a comment (comments are due by Tuesday, April 17) on this proposed rule, log on to Terry W. Clemans is executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail


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platform for real estate, has integrated with DocuSign to help real estate professionals close more deals faster in the cloud. “We’re very excited to provide Cartavi subscribers the opportunity to close real estate transactions completely in the cloud as a result of our integration with DocuSign’s eSignature solution,” said Glenn Shimkus, co-founder and chief executive officer of Cartavi. “Our users asked for this and we’re proud to now give them fast and easy access to DocuSign, the real estate industry standard for electronic signature.” Cartavi’s cloud-based solution lets real estate professionals and those related to a transaction securely manage and share documents with everyone involved—from any computer, iPad, iPhone or Android device. DocuSign is now available from within Cartavi’s user-friendly document management platform, allowing Cartavi users to send real estate documents for signature with a single click. Integrated with DocuSign, Cartavi expedites real estate transactions from start to finish—so all parties involved can keep the transaction moving to close faster. “Cartavi provides real estate agents and brokers with state-of-the-art technology to better manage the end-to-end process,” said Tom Gonser, founder and chief strategy officer at DocuSign. “Cartavi will help real estate professionals leverage the power of the DocuSign Global Network to streamline real estate transactions and create a better experience for their clients.” Current DocuSign customers need only enter their DocuSign credentials the first time to begin using DocuSign directly within Cartavi. No additional setup is required.

LendingQB and FirstClose Title Announce GFE Quoting Partnership LendingQB and FirstClose Title have announced a partnership that combines instant “cash to close” quotes with realtime automated underwriting and loan pricing all within a unified loan origination platform. The integration enables mortgage lenders to reduce closing costs for borrowers and simultaneously populate guaranteed GFE data within the LendingQB loan origination system (LOS). “We actively seek out best pricing among major underwriters to deliver pure, unaltered comparative rate quotes,” said Cynthia Waterman, president and chief executive officer of FirstClose Title. “This allows us to present quotes which average $500 to $1,000 below competing GFE quotes, providing lenders with a ‘cash to close’ advantage that makes their offer more competitive and secures a relationship with a potential borrower more quickly.”

The integration between LendingQB and FirstClose Title makes it easy for lenders to generate a Good Faith Estimate (GFE) quote directly within the LendingQB loan origination system. Lenders can quickly retrieve quotes for title insurance, settlement charges, recording charges, and transfer taxes and automatically populate the data to the GFE on their loan file. Lenders can save between 15 and 30 min. per loan file using the integration. But more importantly, FirstClose Title guarantees the accuracy of the GFE data, which protects lenders from having to cover costs due to poor GFE data entry. “As a loan origination system, our goals are to increase a lender’s efficiency and maintain data integrity,” said Binh Dang, LendingQB’s managing partner. “The integration with FirstClose actually goes beyond these goals and has a direct impact on a lender’s ability to drive revenue. It makes lenders more competitive by improving point of sale pricing and increasing consumer selection. When you combine FirstClose Title’s best-execution rate quotes with our automated underwriting and loan pricing technology all wrapped up in a web-based loan origination system, you’ve got a topline technology platform that will have an immediate impact on a lender’s bottom line.”

Loan Resolution Corporation Announces Acquisition of KeyLink Asset Management LRC Asset Management, a majorityowned company of Loan Resolution Corporation, has announced the acquisition of KeyLink Asset Management. KeyLink will now be known as LRC Asset Management. Originally founded by Damien Chiodo and Ty Reed, KeyLink has been known for their unique real estate-owned (REO) management model. “KeyLink has been doing some very innovative things in REO asset management that caught our eye. We have always said that we wouldn’t get into any line of business unless we felt we could do it better than the next company, and KeyLink was doing it better than the next company,” said Travis Hamel Olsen, chief operating officer of Loan Resolution Corporation. The acquisition of San Diego-based KeyLink establishes LRC Asset Management as one of the leading nationwide REO management companies in the industry. KeyLink bolsters LRC Asset Management’s ability to exceed any forecast of volume and brings with them a history of providing results that exceed industry performance standards. “Damien and I are excited about the opportunity to broaden our industry footprint and introduce our inventive


WFG National Title and ClosingCorp Partner on Title Insurance Initiative


 MARCH 2012

Integra Group Real Estate LLC, a brokerage firm specializing in the marketing and sale of real estate-owned (REO), U.S.

continued on page 30


Integra Group Real Estate Launches Short Sale Division

Professionals (MAMP), has been named 

ClosingCorp has announced that WFG National Title Insurance will provide its independent title agents access to ClosingCorp’s suite of products for the delivery of title insurance rates. WFG’s rates will be included in ClosingCorp’s SmartGFE service to deliver timely, upto-date rates directly to lenders for good faith estimates (GFEs) that they provide to mortgage loan applicants. WFG will recommend that its independent title agents post ClosingCorp’s SmartGFE Calculator on their Web sites to instantly quote title insurance rates to their real estate agent and lender clients at any time. Additionally, WFG’s title insurance rates will be available to consumers through ClosingCorp’s, enabling individuals to shop for residential closing services and rates. “When the new GFE/HUD-1 makes its way into our industry, as we believe it will, later this year, the SmartGFE will be a real boon to agents. WFG National Title and ClosingCorp are offering our agents access to a powerful and flexible tool allowing their lender customers to accurately complete the GFE based on the new rules, with the agents’ fees and title premiums pre-loaded,” said Joseph Drum Esq., executive vice president for WFG National Title Insurance Company. WFG National Title’s independent title agents will now receive discounts on the SmartGFE Calculator, which instantly generates title and settlement rates, as well as transfer tax and recording fees. “WFG is dedicated to supporting its independent title agents and providing them with the tools they need to both adapt and succeed in a changing marketplace, which aligns with our goal of providing the most accurate data to clients in the fastest method possible,” said Paul Mass, president of ClosingCorp. “Our nationwide network of more than 10,000 real estate service providers allows us to deliver the most extensive, current rates and fees available to all parties involved in the real estate transaction. The combination of our data and technologies will enable WFG to better serve agents, lenders and consumers.”


Department of Housing & Urban Mortgage Professionals Development (HUD) and distressed to Watch properties, has officially introduced  Real Estate Mortgage Network Inc. its short sale department to assist (REMN) has named Kathryn Paige as homeowners with the resale of mortgage loan originator for special homes nearing foreclosure. The projects. department will led by Ofelia Lichtenheld, designated broker for Integra, and provides the specialized expertise and skill sets that are needed in order to more successfully process a short sale transaction. “The short sale department enables homeowners to sell the property with the appropriate valuation in the short-  Barry Habib has joined Residential est time and avoid the ramifications of Finance Corporation (RFC) as chief having a foreclosure on their credit hismarketing strategist. tory,” said Eric Lichtenheld, president of  Brooks Bosley, current president of the Integra Group. Maryland Association of Mortgage


model to LRC’s broad base of contacts” said Reed, formerly of KeyLink and now managing partner of LRC Asset Management. “The model produces the execution and performance that industry leaders are so desperately searching for today.”

The President’s Corner: March 2012 ime is a measurement and let me tell you, the months just seem to be flying by. It has been an amazing winter and it seems like just yesterday we were talking about NAMB/WEST. I don’t know about you guys, but my office has seen business really pick up and we are starting to see more purchases than refinances. However, more than ever, the FHA Streamlines seem to be coming out of the woodwork. I wish we could refinance them with their old mortgage Insurance (MI) because they would be saving a lot of money then. It looks like the Secretary of the U.S. Department of Housing & Urban Development (HUD) is looking into Streamlines using a different method on the MI. At the time this article went to press, nothing has happened, but we should look for something by the middle to the end of March. Keep calling your past customers and get them ready. By the time that you read this, we will have had two of our leaders involved in the Small Business Panels for the Consumer Financial Protection Bureau (CFPB). I hope to update all of you at about these panels on March 18-20 at the 2012 NAMB Legislative & Regulatory Conference in Washington, D.C. We have a great program scheduled there and some interesting guests. This is, by far, the best get together that we have and to


MARCH 2012 



be able to take our voice up to the Hill and let your legislators know what is going on is fantastic. Some of the speakers are going to make attending this conference worth the price. Our membership continues to grow, but not at the rate that it should. I find that many members are joining, but are not asking their fellow brokers to join. It is a proven fact that those who join their association become better at what they do and how they do it. It must be because they are better informed and understand that this professional organization that they belong to makes them better at what they do, day in and day out, as a mortgage professional. I personally tell every customer that I belong to NAMB, and I have a designation, the Certified Residential Mortgage Specialist (CRMS), and I use that as a reason of why I am better qualified than the bank’s mortgage originator. I also display the NAMB logo on my desk. I feel that it sets me apart from the competition, especially when they ask me about what I had to do to be in this business. So “brag” about yourself a little because you deserve it. Just make sure that you don’t go overboard. Give your customer the facts on what you have done to make sure that if this customer is dealing with you, he knows why you are a step above. Are you a person that would like to step up to the plate and help NAMB? We are getting ready to start asking members to nominate other members to be on our Board of Directors. We are looking for those who are not only good at what they


do, but want to make a difference. I know that when I was on my local state association Board, I helped out on some NAMB committees and thought that I can help make a difference in not only the mortgage business, but in the association. One of the requirements you need is that you need to be certified with a CRMS or Certified Mortgage Consultant (CMC) designation. The by-laws state that only two members can be on the Board without a designation, however, to move up into the Executive Board, you need a professional designation. So if you do not have one, go get one. It not only makes you eligible to serve on the Board, but it also stands you out in front of mortgage originators who are not designated. I know that there are many of you who are sitting on the sidelines reading this article and saying, “Why do they keep asking for people to join?” Because I have been in Washington and I have been asked, “How many members do you have?” It is a little embarrassing that we tell them approximately 5,100 members, and when they ask, “How many originators are there out there nationwide,” I want to hide. We only have 4.5 percent of all mortgage originators as members, and I don’t think that it is because of the dues. Platinum Membership is $120 and Silver Membership is just $50 annually. I have been a mortgage broker since 1988 and there are times that we spent that much at dinner or a night out on the town. I see many of my fellow originators out at the bar, and I know that they spend that much on drinks and food, so the cost is not the problem. I know that some of the originators are making a lot more than what they made two years ago and they still are not members. So why is it? What makes these people just sit around and not join? What makes them sit by the sidelines and let other people handle it? I have spoken with many of you, and some of you reply, “Why should I join, you are going to represent me anyway! I can be a member of the SILENT MAJORITY and I will reap the benefits of what you do!” What would you do if it became mandatory that you join a professional trade association? Realtors now require this. If you want to use the term “REALTOR,“ you have to be a member of the National Association of Realtors (NAR). Any idea how many members there are in NAR—

try 1.2 million! Yes 1.2 million! If you want to list your houses on the Multiple Listing Service (MLS), you have to be a member of that local service. And let me tell you, almost all of them are members. So, why aren’t you a member of NAMB? Maybe you don’t know what the goals are of our association. Here are just a few for you: 1. Our main goal is to serve our members. To promote professional growth and quality of life. To make available programs and services that makes you a better originator or mortgage professional. 2. To improve our profession. Promote the highest quality education and professionalism. Promote competence and ethical conduct. 3. Provide public understanding of our profession, the role of the mortgage professional in the public. 4. To abide by a Code of Ethics and the Best Practices of our Profession. 5. To keep you up to date with changes in the Law and Common Practices. NAMB works directly with our Government Affairs team to make sure that you have first-hand knowledge of new rules and laws that affect you every day. We provide you with a strategy to make sure that everything you do every day is compliant with the law. 6. To work with our states to improve membership and keep them informed. So again, I ask you, why do you not belong to NAMB? Now that you have an understanding of what some of our goals are, I don’t think that you can truthfully stand by and not join. So take three min. and log on to and join today. The person that will get the most out of this is YOU! You have nothing to lose and everything to gain! I look forward to seeing your name in the New Member section. Sincerely,

Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals

2012 NAMB Legislative & Regulatory Conference Sunday-Tuesday, March 18-20 Capitol Skyline Hotel • 10 “I” Street, Southwest • Washington, D.C. Sponsored by

Schedule of events (Subject to change)

Sunday March 18, 2012 1:00 p.m.-5:00 p.m. ......Registration 5:00 p.m.-7:00 p.m. ......NAMB Board of Directors Meeting

Monday, March 19, 2012 7:00 a.m.-6:00 p.m. ......Registration 7:30 a.m.-8:30 a.m. ......Breakfast

1:45 p.m.-2:45 p.m. ......Loan Originator Examination Guidelines, Presented by Allison Brown of the Consumer Financial Protection Bureau (CFPB)


3:00 p.m.-4:00 p.m. ......Ten Things You Should Know Before You Get Examined by the CFPB, Presented by Larry Platt, a partner with K&L Gates 4:10 p.m.-5:00 p.m. ......Advocacy and Your Lobbying: Tips and Tools for Effective Advocacy, Presented by NAMB Lobbyist Roy DeLoach of DC Strategies Group

 MARCH 2012

For more information on the NAMB 2012 Legislative & Regulatory Conference, visit


6:30 p.m.-8:30 p.m. ......NAMB 2012 Legislative & Regulatory 8:45 a.m.-10:15 a.m.......Opening Session: Working Together for Housing Conference Opening Reception Panel Discussion … The Future of Housing (QRM, QM, the Three Percent Rule, G-Fees and Tuesday March 20 Beyond), Moderated by John Hudson 7:00 a.m.-Noon ............Lobby Day Registration  John Hudson of the National Association of Mortgage Brokers (NAMB) 9:30 a.m.-5:30 p.m. ......Lobby Day Hill Visits  Ken Trepreta of the National Association of Realtors (NAR)  Ken Markinson of the Mortgage Bankers Association (MBA) 5:30 p.m.-8:30 p.m. ......Capitol Visitors Center: Come Meet Key  Jim Tobin of the National Association of Home Builders (NAHB) Congressional Members  Welcome from NAMB President Don Frommeyer 10:30 a.m.-11:45 a.m.....Helping Today’s Homeowners: Refinance Pro California Rep. Gary Miller (confirmed) grams, Presented by Faith Schwartz of HOPE  Alabama Rep. Spencer Bachus NOW  Louisiana Rep. Mary Landrieu  California Rep. Maxine Waters Noon-1:30 p.m. ............Luncheon & Keynote Speaker: Bart Shapiro of the CFPB 9:00 p.m.-11:00 p.m. ....Lobby Day Debriefing 

8:30 a.m.-8:45 a.m. ......Opening Remarks From NAMB President Don 5:00 p.m.-6:00 p.m. ......NAMB Blog/State Blog, Presented by NAMB Frommeyer & Herman Churchwell of Provident Communications Chair Fred Arnold, CMC Funding, NAMB Legislative Conference Sponsor

fha insider

continued from page 4

assuring that those hard-working Americans we’re claiming to help cannot buy a home or stay in one. Again, sheer brilliance. Now a quote from HUD’s Mission Statement: “HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.” And the way they will fulfill that mission is to make such a reality more impossible by increasing the cost of being a homeowner through MI premiums and make homes less affordable for all FHA homebuyers. But wait, it gets better: In FHA’s move to make homes affordable, they plan to reduce the amount a seller can contribute toward buyer closing costs from six percent to three percent of the purchase price. I think these folks left their thinking caps at home. Another quote from the budget: “The economy lacks a vibrant housing sector—and a balanced housing policy—that enables families to rent or own a high-quality, affordable home ...” And from HUD’s Mission Statement: “HUD is working to strengthen the housing market to bolster the economy ...”

MARCH 2012 



Here are some historical facts about MI premiums for the standard 30-year fixed loan with less than a five percent downpayment which accounts for nearly all of FHA’s loans:  July 2008: Housing and Economic Recovery Act in 2008, authorizes FHA to increase Upfront Premiums to three percent.  April 2010: Upfront Premium increased from 1.5 percent to 2.25 percent.  April 2011: The Annual Premium increased from 0.90 percent to 1.15 percent.  October 2010: The Annual Premium increased from 0.55 percent to 90 percent.  October 2010: The Upfront Premium

• • • • • •

is decreased from 2.25 percent to one percent. What we see from these facts are increases in the Annual Premium of over a 100 percent, which increases a house payment significantly. In addition, we see a decrease in the Upfront Premium of over 100 percent, which increases the mortgage amount because it’s financed, but only slightly affects the house payment. What this means to a homeowner is that with a $150,000 loan amount the monthly insurance has increased from $69 to $144; a $75 increase. Now this may not seem like a lot for a family with a higher net disposable income, but for many families, $75 is significant, and it also decreases the purchase price they can afford. Now let’s look at these changes from another perspective and we will see how many new borrowers are being taxed and essentially bearing the whole burden of helping the FHA recover. Prior to the October premium changes, using rounded figures, and staying with the $150,000 example, a homebuyer would pay $3,400 in the Upfront Premium and assuming they kept that loan for 10 years, another $8,000 for a total of $11,400. With the current premium amounts, the Upfront Premium would be $1,500 and 10 years of payments would be $17,000 for a total of $18,500. So in this example, the homebuyer today is paying the FHA $7,000 more than before. While I understand that FHA is legislated to be a self-sustaining agency, it seems grossly unfair to make the new homebuyers bear the burden of the housing crash. I think it is time for the FHA to look for new ways to cut costs and streamline their operational costs in order to get back to their commitment to helping the hard-working American in earnest.

Regulatory Compliance Review The Fannie and Freddie New Appraisal Portal Uniform Collateral Data Portal By Jonathan Foxx

A critical appraisal requirement deadline approaches!1 The requirement went into effect on Dec. 1, 2011. The deadline is March 19, 2012. On and after March 19, 2012, Fannie Mae and Freddie Mac (GSEs) will mandate compliance with their new Uniform Mortgage Data Program (UMDP Program).2 The UMDP Program has been developed under the direction of their regulator, the Federal Housing Finance Agency (FHFA). The UMDP Program implements uniform appraisal and loan delivery data standards that are meant to support data accuracy and integration of mortgage data. Actually, the UMDP Program implements two of Fannie Mae’s Loan Quality Initiative (LQI) objectives: Electronic submission of appraisal data and collection of additional loan data in an updated format. Thus, the UMDP Program is an intrinsic part of the LQI requirements. The UMDP Program includes:  Uniform Appraisal Dataset (UAD): Standardizes key appraisal data elements.  Uniform Collateral Data Portal (UCDP): Electronic collection of appraisal data.  Uniform Loan Delivery Dataset (ULDD): Leverages MISMO Version 3.0 standard.3

Jeff Mifsud is founder of Michigan-based Mortgage Seminars LLC, a former FHA underwriter with 15-plus years of experience originating FHA loans, an FHA expert for and creator of The FHA Originator, a monthly FHA newsletter. Jeff In this article, I will pay particular may be reached by phone at (248) 403-8181 attention to the Uniform Collateral Data or visit Portal (hereinafter, UCDP Portal).4 The UCDP Portal was activated in June 2011. This is a single portal for submitting data electronically of an appraisal file. Lenders must use the UCDP Portal to those data files, including the Uniform Appraisal Dataset (UAD),5 when applicable, before the delivery date of the Daily updated mortgage industry news mortgage to Fannie Mae and Freddie Mac. Industry blogs Appraisal report forms for all convenWrite your own blog tional mortgages delivered to the GSEs on Find loan programs or after March 19, 2012 must be transmitted through the UCDP Portal (prior to the Discover local and national events delivery date of the mortgage) under these Get access to video two conditions:  The loan application is dated on or after Dec. 1, 2011, and  An appraisal report is required.

Variances and waivers will not be given to a lender from either GSE for the subject data, if a lender is not able to submit an appraisal before a single delivery or is not ready by the announced effective dates. The loans subject appraisal data upload to the UCDP Portal at this time are conventional loans sold to Fannie and Freddie. FHA, VA, and Rural Development mortgages are excluded from the UCDP Portal requirement. Mortgage brokers cannot register for UCDP Portal.6 There are three user categories that will access the UCDP Portal:  Lenders that have an existing Fannie Mae Seller/Servicer Number  Correspondents that do not have an existing Fannie Mae Seller/Servicer Number  Agents (Appraisal Management Companies, Appraiser Vendors)

Overview There are many “moving parts” to the UMDP Program, but we will highlight the UCDP Portal. The rule of thumb is, as follows: If an appraisal is required, the appropriate appraisal report form should be transmitted via the UCDP Portal for all conventional mortgages with application received dates on or after Dec. 1, 2011 for loans delivered to the GSEs on or after March 19, 2012.

Starting the registration process It is not possible to submit to the UCDP Portal unless the lender sets up a “primary lender administrator” with Fannie Mae and/or Freddie Mac. This administrator must be the same individual for both Fannie and Freddie. So-called “backup” lender administrators are permitted, if the lender chooses to delegate certain administrator responsibilities to other lender employees; however, the initial set-up must be established by the primary lender administrator. There is a rather simple, four step process to registering for and setting up the UCDP Portal, consisting of:7  Step 1: Registration;  Step 2: Completing the UCDP Set-up Form; continued on page 16


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 MARCH 2012

If you are an experienced loan professional that wants to build a dynamic future, call David Gowen @ 877-255-3554 x 144 or email . Also, Visit us on the web at or on Linkedin and Facebook.


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regulatory compliance review  Step 3: Accessing the UCDP registration URL; and  Step 4: Completing UCDP registration by clicking on the registration URL (see Step 3). Fannie Mae and Freddie Mac have separate registration processes for UCDP Portal. Registration with Fannie Mae:  Fannie Seller/Servicers and NonSeller/Servicers.  Download and review Getting Registered for UCDP.  Seller/Services: Use their current Fannie Mae User ID.  New users and Non-Seller/Servicers: receive their User ID in an e-mail from Fannie Mae. Registration with Freddie Mac:  Download and review Getting Registered for the Uniform Collateral Data Portal.  The Freddie Mac UCDP Authorization Code is e-mailed from Freddie Mac.

Accessing the UCDP Portal

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The UCDP Portal is accessed via Appraisals must be submitted to the GSEs prior to the mortgage’s delivery date of the mortgage and must include the applicable required appraisal report forms for all conventional appraisal reports.8 The appraisal data remains in the UCDP Portal, even if the loan is not delivered to a specific GSE. The GSEs have provided several means by which lenders may access the UCDP Portal, both through a Web-based URL and also vendor-based technology. At this time, the following are the accessing methodologies:  Web-based:  Accessing the URL allows users to browse and upload files in XML or PDFs.  Vendor-based:  The GSEs have a published list of vendors that provide integrated systems into the UCDP Portal.9 There are no transaction fees charged by the GSEs for using the UCDP Portal, either through the web-based or the vendor-based methods. However, if the appraisal requires conversion from the PDF to the XML format, there is a per transaction fee charged by Veros Real Estate Solutions, the technology provider selected for the UCDP Portal.10

Using the UCDP Portal Through the UCDP Portal, the lender submits the electronic appraisal data files. A maximum of 10 appraisal data

continued from page 14

files are permitted per upload request, file size permitting.11 But the data also is given a status by the GSEs and findings. These occur due to the fact that the uploaded appraisal data go through an internal review, which includes UAD Compliance Check. Appraisals that “pass” are given the status “Successful.” A failed review, dubbed “Not Successful,” indicates that the submission is in some way not compliant, perhaps signifying errors that require an appraisal to be corrected by the appraiser. There is a Submission Summary Report (SSR) for each appraisal upload. The SSR contains a summary of the appraisal submission for each loan, the status of the submission, and an identifier tagged by the UCDP Portal, termed the Document File Identifier (or Doc File ID). Each Doc File ID is assigned per loan and must match that loan’s delivery data provided to the GSEs. The status of “Successful” must be output from the UCDP Portal prior to the loan being delivered to the GSEs. Appraisals cannot be transferred within the UCDP Portal from one entity to another (i.e., from a correspondent to an aggregator). Therefore, lenders and their correspondents must develop a process to ensure that the aggregator receives the Doc File ID after appraisal date upload and prior to loan delivery. An appraisal that receives a Doc File ID will be accessible for viewing within the UCDP Portal for up to three years. If the appraisal is modified after the original submission date and the submission needs to be updated, the lender may replace the original submission or add another appraisal, if appropriate (i.e., such as may occur on appraisals that support a new construction loan or for new construction where the original appraisal is no longer valid because of its age). It is important, therefore, that the lender is in a position to review and, where necessary, correct the appraisal data. Consequently, the lender is able to access the UCDP Portal and receive the status and findings, correct and/or revise appraisal file submissions, and request overrides when the appraisal is not accepted by the UCDP Portal. There is a Search function and also a report feature, each of which makes it easier for the lender to review uploaded data.

Training Training manuals are available for the UCDP Portal. These most important training guides are recorded tutorials, called Using the Uniform Collateral Data Portal and Submitting Appraisal Data Files to the Uniform Collateral Data Portal Tutorials and a General User Guide. Furthermore, Fannie Mae and Freddie Mac have a joint UCDP Support Center, which can be reached by calling (800) 917-9291. continued on page 21

MARCH 2012 Landmark $25 Billion Agreement Reached With Top Five Servicers U.S. Attorney General Eric Holder, U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers have announced that the federal government and 49 state attorneys general have reached a $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the U.S. Department of Justice (DOJ), HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country. The joint federal-state group entered into the agreement with the nation’s five largest mortgage servicers: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial Inc. (formerly GMAC). “This agreement holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers,” said Holder. “As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.” The joint federal-state agreement requires servicers to implement new mortgage loan servicing standards and to commit $25 billion to resolve violations of state and federal law. These violations include servicers’ use of “robosigned” affidavits in foreclosure proceedings; deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court. “A final agreement can play an important role stabilizing and providing certainty and confidence to the housing and mortgage markets,” said David H.

Stevens, president and chief executive officer of the Mortgage Bankers Association (MBA). “With all the rumors and speculation surrounding these negotiations behind us, it is now imperative that policymakers, lenders, servicers and other stakeholders work together on policies and initiatives that will allow us to get the housing market on the road to recovery.” Under the terms of the agreement, the five servicers are required to collectively dedicate $20 billion toward various forms of financial relief to borrowers. At least $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth. At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth. Borrowers who meet basic criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates. Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, antiblight programs, short sales and transitional assistance, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs. Because servicers will receive only partial credit for every dollar spent on some of the required activities, the settlement will provide direct benefits to borrowers in excess of $20 billion. The servicers are required to fulfill these obligations within three years. To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months. Servicers must reach 75 percent of their targets within the first two years. Servicers that miss settlement targets and deadlines will be required to pay substantial additional cash amounts. In addition to the $20 billion in financial relief for borrowers, the agreement requires the servicers to pay $5 billion in cash to the federal and state governments. $1.5 billion of this payment will be used to establish a continued on page 24


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Do You Have Enough Time to Manage? By Dave Hershman

 Producing loans;  Recruiting loan officers and operations personnel;  Hiring and on-boarding successful recruits;  Supporting those supervised— including marketing and processing support, training and coaching;  Handling administrative tasks, which can include anything from compliance tasks, to reports to fighting fires. That’s a great deal for one person.

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Let me make an assumption here. You are a producing manager or owner. This is a pretty good bet because more than 80 percent of the production managers and owners in this industry also produce themselves. And the majority of the income earned by these producing mangers or owners is derived from personal production. The final number may vary, but typically more than 50 percent of the income comes from originating loans, rather than base salaries, overrides and/or profits. As I mentioned last month, a producing manager has about five fulltime jobs. What are they you may ask:

That is exacerbated by the fact that more than 50 percent of a manager’s time is likely to be taken up by personal production. It makes sense that if more than 50 percent of their income comes from personal production, they are going to dedicate more than 50 percent or more of their time to this task. Thus, this is how the numbers shake-out—20 percent to 50 percent of their time is focused upon four very important jobs. All of which could be full-time jobs for an ordinary citizen. What does this all mean? For the average manager, it likely means that four of these jobs are not going to get accomplished adequately. Let’s take an example such as recruiting. The average manager will not recruit the number of loan officers they would like to have. Even more important, the loan officers they do recruit are not likely to be the quality necessary because there is not enough time dedicated to the recruiting and hiring process. What makes this so onerous is that if the quality of the loan officer coming in is less than what is expected and there is not enough time for coaching and training, the results will not be there. That leaves even more time to be spent in the “fighting fires” category, which could mean anything from rescuing poorly originated deals to firing inept and poorly supported originators. Does this sound like you? If it does,

you are probably thinking: “Dave, I know all about this problem. You have told me nothing.” The issue is ... how do I get better at the other tasks? That is a reasonable question. And it is very important for me to help guide you so that there is some sort of light at the end of the tunnel. I certainly am not going to solve the issue in one column, but we will work our way towards solutions, bit-by-bit. All goals are achieved one step at a time, and this will be no different. Basically, there are a few keys that will help you get more accomplished in a world in which you have a finite amount of time and too many things to accomplish correctly ...

Planning If you don’t know where you are going, you will not know when you get there. So, first you need to make some decisions regarding what you want to accomplish. If your goal is to hire more quality loan officers, are you willing to move this objective up in priority? I cannot lie to you here ... while I may give you tips regarding how to be more effective with your time, you cannot move something up in priority without sacrificing somewhere else. There is only a limited amount of time in each day. With this balance in mind, only you can make this decision. If you are happy spending 70 percent of your time in personal production and limiting the results elsewhere, then so be it.

Delegation Making decisions regarding prioritization leads you to another very important question. You not only need to decide what is important, but what is more insignificant. It is not a matter of just eliminating personal production in favor of recruiting or coaching. What areas within the production process represent the best use of your time? What areas can be performed by another entity? Delegating actions can include everything from hiring a loan officer assistant to employing a marketing firm to make sure your entire sphere is reached with value on a regular basis. Are you spending time obtaining conditions? Can someone else be accomplishing this task instead of you? Anything you can hire out at a low salary may be a ripe area for an evaluation. This does not mean that you hire everything out, but it does mean that you can make more intelligent time management decisions.


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Synergy is an overused word. However, if you want to accomplish more in less time or with less monetary resources, the implementation of synergistic principles is absolutely essential. There are so many examples of these principals and we will be examining these in upcoming columns. In my book, Maximum Synergy Marketing, I give seven rules of synergy marketing. One which is very important to take note of: Every task you accomplish should

“If you don’t know where you are going, you will not know when you get there.” achieve another objective. This is the rule of “multi-tasking.” If you look at the five separate jobs listed above, there is no doubt that the list is onerous, especially if you consider these completely separate jobs. But if you understand that accomplishing one task can also move you closer to another objective, the equation changes significantly. For example:  Thinking about hiring an assistant? Is it possible that your assistant could be trained at the same time to become your next loan officer recruit?  Spending a lot of time marketing for loans? Is there a way to also market for loan officers also using the same advertisements? The examples we could present are limitless, but these two should give you a general idea.

The elimination and prevention of mistakes This is a very important and difficult task. Mistakes cost you time fighting fires and accomplishing other unnecessary tasks. You will find most of these are caused by issues existing within the “front end” of the system. Many times, these issues are exacerbated by the fact that you do not have enough time to do things right the first time.  Don’t have enough time to take a thorough loan application? The things you miss might very well cause explosions on the other end.  Don’t have enough time to train loan officers on the importance of a great loan application? Again, the results are likely to be fires and more fires.  Have a loan officer that is taking too much of your time with little or no results? The longer you stay with that mistake, the more it can hurt the other aspects of the process. Some of these areas will definitely be focused upon in future columns. But for now, we have laid the issues out on the table. The solutions are simple. However, they are not easy to implement. It takes discipline and a plan. Hopefully, this discussion has you thinking about possible solutions to the “five jobs” dilemma. I would love hear your reaction, suggestions and comments. Just e-mail them to me at Dave Hershman is a top author in the mortgage industry with seven books published, as well as hundreds of articles. Dave has delivered hundreds of keynote speeches, seminars and schools for the industry as well. He may be reached by e-mail at or visit



 MARCH 2012

Sunday-Tuesday, March 18-20, 2012 Capitol Skyline Hotel Washington, D.C. Be prepared to go to the Hill!

MARCH 2012 



Includes Advocacy 101 training: General synopsis and "Question & Answer" on the best ways to communicate NAMB's talking points with your congressional leaders in an effective manner. The number one reason you should attend this event is the satisfaction of knowing you are doing your part to ensure that mortgage broker issues are heard on Capitol Hill. You are the best spokesperson for our issues. Your participation benefits you, the industry and your clients as a whole, by strengthening the broker’s presence in the halls of Congress. Highlights Will Include: I Mortgage industry trade association panel discussion featuring representatives from NAMB, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) I A closer look at the powers of the Consumer Financial Protection Bureau (CFPB) and what they will be looking for in their audits I Loan originator (LO) compensation and the impact of HR 2509, the Preserving Consumers’ Mortgage Origination Choices Act of 2011, sponsored by Rep. Gary Miller (R-CA)

Hotel Accommodations Capitol Skyline Hotel 10 "I" Street, Southwest • Washington, D.C. 20024 Phone #: (202) 488-7500 Special "NAMB" rates will be available for a limited time only. Book early! You must be registered for the conference in order to book your room.

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Feedback Fuels Your Business Over the last decade I’ve spent in this industry, I’ve found that the greatest reward and growth for my business has been from the feedback of clients and testimonials. Being in an industry which offers a service rather than just a product means we must always strive to make our level of service excellent. After all, we have control over our actions and reactions, and how we handle our clients during the loan process ... do we not? We also have the ability to create systems and adapt to the needs of our clients under any lending climate, don’t we? The quality of our service can only be determined by our clients through their experience with us during the application and loan process. There is absolutely no doubt that communication is the most important factor in what we deal with on a daily basis. This is not a skill you should have, it’s simply a requirement. Having consistent and accurate communication will allow you to gain customer loyalty, trust and respect. In addition, it will allow you to get the most beneficial feedback available to customize your services for the very clients you’re working to attract and retain. Feedback helps you build, while testimonials help you grow. You might think things are going fine in your business, but it really doesn’t matter what you think. It only matters what your clients or potential clients think. Obtaining vital feedback will help you improve or update sections of your loan processing systems in order to create the most favorable client experience possible. Our industry and lending climate is constantly changing, and we must always be prepared to listen to clients and implement change in order for them to successfully understand and navigate through the process. Testimonials are extremely powerful and a free source of marketing. Nothing promotes your services better than testimonials from past clients. You are almost guaranteed that if someone is

willing to provide you with a testimonial they are also referring you to family and friends. You must ask for testimonials, not just referrals. Each loan closing should include a closing package with handwritten thank you, business cards and promotional materials. It should also include a customer survey and request for both written and online testimonials. Use these client testimonials in your marketing and to attract new clients, but never attempt to use self-generated or fraudulent testimonials. Another added benefit of testimonials is that they are extremely motivating. They help remind you to be thankful and appreciative for the clients you’ve met and been able to assist. It also allows you to confirm you are making a difference by meeting personal goals in customer satisfaction by exceeding their expectations. Always remember that most consumers are doing their research on service providers, especially in the mortgage industry. Let them find something special when researching you!

Tip of the month If you are a mortgage loan originator (MLO) looking for a company to partner with, take the same approach as your clients do. Before even interviewing with a company, check their ratings and customer feedback online and through any and all channels available. If you see a consistent negative trend or complaints, don’t even bother interviewing. There is no excuse for repeat offenders. Do yourself and your clients a favor by just moving on and working by reputation and referral when considering a new home base. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 20102011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or e-mail or visit

regulatory compliance review What to expect from lenders Lenders will require, at minimum:  The Submission Summary Report (SSR) from the UCDP Portal must state that the submission status was “Successful.”  The UAD Compliant Appraisal must be submitted to Fannie Mae and Freddie Mac and must be “Successful” for each.  The Appraisal must clearly state on the bottom of the appraisal the following UAD “indicator,” UAD Version 9/2011.

Important dates


3—At this time, MISMO Version 3.0 does not provide a framework for appraisal report data. Fannie Mae and Freddie Mac are transitioning their single-family loan delivery file formats to the industry standard MISMO Version 3.0 Reference Model and changing the data elements required at the time of loan delivery. 4—See Lender Letter LL-2010-15. 5—UAD forms indicate a version date of “UAD Version 09/11,” in addition to the current March 2005 form date, while the previous form will have a March 2005 form date. An appraisal report is considered to be UAD compliant if it is completed in accordance with Appendix D, UAD FieldSpecific Standardization Requirements of the UAD Specification. 6—While mortgage brokers are not responsible for submitting the appraisal to the UCDP Portal, they must be aware that if the lender submits the appraisal and does not receive a “Successful” submission status from both Fannie and Freddie, the loan is not likely to be eligible for funding/purchase by the lender. 7—For registration instructions, see Uniform Collateral Data Portal Reference Series for the Lender Admin: 1- Lender Admin. 8—GSE appraisal forms include: Uniform Residential Appraisal Report (Fannie Mae 1004/Freddie Mac Form 70)-UAD; Manufactured Home Appraisal Report (Fannie Mae 1004C/Freddie Mac Form 70B); Small Residential Income Property Appraisal Report (Fannie Mae 1025/Freddie Mac Form 72); Individual Condominium Unit Appraisal Report (Fannie Mae 1073/Freddie Mac Form 465)-UAD; ExteriorOnly Inspection Individual Condominium Unit Appraisal Report (Fannie Mae 1075/Freddie Mac Form 466)-UAD; Exterior-Only Inspection Residential Appraisal Report (Fannie Mae 2055/Freddie Mac Form 2055)-UAD; Individual Cooperative Interest Appraisal Report (Fannie Mae Form 2090); and Exterior-Only Inspection Individual Cooperative Interest Appraisal Report (Fannie Mae Form 2095). 9—Vendor lists are available at and 10—See 11—The maximum size per appraisal data file is 12 MB for a PDF-only and 15 MB for an XML file format that contains an embedded PDF. For multiple appraisal files at one time, the total combined file size limit is 100 MB. 12—SEC Rule 15G(a)-1.

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 MARCH 2012

1—The following Fannie Mae and Freddie Mac documents were amongst those issuances consulted in preparation of this article: FHFA Announcement, 12/14/11; Lender Letter LL-201109, Extension of the Uniform Loan Delivery; Dataset; Implementation Date; Uniform

2—See the Uniform Collateral Data Portal page:

“A Better Home For Your Branch”


Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at

Mortgage Data Program, Registration Checklist, UCDP 11/11; Reminder: Key UMDP Requirements Go Into Effect on December 1, 2011, 11/29/11; Uniform Collateral Data Portal (UCDP), FAQs, 10/25/11; Uniform Collateral Data Portal Reference Series for the Lender Admin: 1-Lender Admin Registration, 08/11; Uniform Collateral Data Portal Reference Series for the Lender Admin: 2-Managing Business Units, 05/11; Uniform Collateral Data Portal Reference Series for the Lender Admin: 2-Managing Users, 05/11; Uniform Collateral Data Portal Reference Series for the Lender Admin: 4-Managing Lender Agents, 05/11; Uniform Collateral Data Portal, Overview, 11/17/11; Getting Ready for UCDP Job Aid, 10/24/11; and Uniform Collateral Data Portal (UCDP), General User Guide, 08/11. 

 Dec. 1, 2011 (loan application date): Lenders must deliver fully UAD-compliant electronic appraisal report data (if appraisal required) and expanded loan delivery data.  March 19, 2012 (loan delivery date): Lenders must submit fully UAD-compliant electronic appraisal report data (if appraisal required) to the UCDP Portal.  July 23, 2012 (loan delivery date): Loan delivery data must be provided in industry-standard ULDD format (unless manually entered in Loan Delivery). All loans delivered to Fannie Mae on or after July 23, 2012 with an application date on or after December 1, 2011, must meet the ULDD requirements.  Nov. 26, 2012: Additional XML Data Requirement for Delivery: pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) issued a rule which requires all securitizers, including the GSEs, to publicly disclose information regarding ABS loan repurchase requests.12 One of the requirements of this rule is to disclose the identity of the entity funding the applicable loan. Therefore, to comply with the SEC rule, the GSEs will require lenders to deliver these additional data points.

continued from page 16

Raymond Bartreau, Founder/CEO Best Rate Referrals and ach month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at to be considered for a future “Mortgage Professional of the Month” feature article. This month, we had a chance to chat with Raymond Bartreau, current president and chief executive officer of Best Rate Referrals. A resident of Las Vegas, Nevada, the 30-year-old Bartreau’s Best Rate Referrals has been in business for more than seven years, specializing in direct marketing services, ranging from mortgage leads, loan modification leads, mailing lists, mortgage mailers, and much more. Best Rate‘s team of marketing professionals has more than 30 years experience in creating profitable marketing campaigns for brokerages nationwide. Raymond is also the chief executive officer of Raymond has made the Inc. 500 list on two separate occasions with Best Rate Referrals and has also been named to National Mortgage Professional Magazine’s 40 Under 40 list on two occasions.


MARCH 2012 



How did you first get involved in the mortgage business? I got started in the industry in 2002 as a call center manager. While attending Northern Arizona University, I managed a large outbound call center for Direct TV. It was there where I gained a great deal of experience and was recruited by a mortgage company in Vegas to run a small call center. When I first started, I barely knew what an “interest rate” was. During that time, were you seeing any great opportunities that others may have been overlooking? Not really. The broker that we had at that time ran a chop shop of loan officers. They were using an old school approach. They weren’t using any media, just their outbound call center. It wasn’t that I saw what everyone else was missing, I saw what they were missing. They were paying loan officers well under what I thought they should be paid, and I wasn’t allowed to grow within the company and become a loan officer. That is what catapulted me to look and see what else was out there.

“There is competition out there and you have to strike quickly, and do everything professionally and what is right for the client.”

How valuable do you think your time spent on the frontlines is to your clients? I started initially by seeing what it took to get a client in the market. I really know what it’s like to reach out to the consumer and know how to have a long-standing relationship. Once I left the call center gig, I took what I learned and began originating loans for a local bank. I was able to hire my own telemarketers to originate leads for me. That’s really what I learned there, and of course, doing loans for the next three years thereafter. From the middle to the end of the recent refi boom, I was able to really connect with homeowners. When I transformed into marketing, loan officers were marketing themselves, and I really could connect to what they were doing. I think it helped a tremendous amount. How important is a first impression? Very important. Any time you are going to market your brand or service to a consumer or buyer, depending on what that product is, you often only get one impression. There is competition out there and you have to strike quickly, and do everything professionally and what is right for the client. I think if you do that, not only do you stand a better chance of landing that targeted client, but you’re also going to get a long-term relationship and referrals from that client as well. For me, it’s all about longterm relationships and they don’t start long term—they start with the first

impression. You don’t get a long-term relationship without making a good first impression. What do you think is an acceptable response time for Web leads and direct mail leads? There are many factors to consider when discussing Web leads and direct mail leads, and there are many options when you are looking at both verticals. With direct mail, you have standard versus first-class postage. You’ve got different types of databases, different types of response methods, whether it’s driving them through the phone or through the Internet. There are a lot of different options on the mail side. I suggest they send first-class on a Friday so their phones will be ringing on Monday. MondayWednesday is when your mail is going to be hitting within two to five business days. That’s a good response time with mail. On the Web side, the only factors you have to consider are if the lead was exclusive or if it is from a shared source. And then, above and beyond that, how high is the quality of the lead so when you are considering response ratios from the Internet, they can vary. If it’s your own organic traffic or if it’s from leads coming from an organic place, you can expect the response time immediately because there are people doing work to get them. You have to act on those leads right away. As you move into more of a shared platform, and a lower type of lead quality, you typically see a lower response and less revenue

per loan as well. There are choices in the Internet space, when you find a good provider, stick with them even if they have a rough period (quality can dip for a number of reasons), give them feedback often (which helps them catch any issues that can drive that quality dip) and never put all of your eggs in one basket (try multiple sources). How do you inspire your employees to deliver such great customer service? Since day one, I have wanted to make every single client happy. I think as I brought in people and trained them, they took that philosophy on and they really care. It’s really a fun time in our office when we get re-orders. Our perimeters are set around our client retention percentages. Revenue is number two. Client retention percentages remain first and foremost for us. Lastly, my crew does not get paid unless they retain clients. If you are a marketing agent on a very small base and you are paid primarily on your performance, client retention determines how much you will be paid. If you just pay large salaries, those employees will not care about their clients. We’ve lost salespeople with great potential because they wanted salary and lower commissions, but we really believe that people can make a lot of money in the marketing industry by retaining relationships. I have people doing that right now on low to no salaries. So you just offer incentives by not paying them salaries and pay them based upon client retention. It’s a pretty smooth running engine over here now, and I’m pretty happy about it. How are you helping your clients prepare to market with the advent of HARP 2.0? There is a lot of education we’re trying to put out. In addition, there is a lot of research that we’re doing, including data analysis and trying figuring out the best ways for these guys to market themselves. There are various channels and a lot of options. We really have a solid platform put together on the direct mail side for the HARP program, whereas, we have several pieces in place that are compliant that we feel from our past has gotten great responses from other products the way they’re

How has direct response changed over the past 10 years? The landscape has changed drastically. From the time I got into it, things were hectic. There was a lot of call center action. There were some TV and radio spots, and direct mail was predominant. Ten years ago, the Internet was really just getting going in terms of serious traffic and volume, and people were just starting to figure out how to generate leads online. Things have changed quite a bit, with technology leading the way. There are still some old-fashioned ways of marketing, such as putting ads in newspapers, cold calling and utilizing direct mail that are still in play. But technology has partnered with these old-fashioned ways and has allowed for a better response ratio with a targeted accurate marketing campaign so that your dollars are spent more wisely. Ten years ago, lead management systems were not too well-known. Now, if you are generating leads to a group of loan officers or branches on whatever level you’re on, it’s almost unheard of to not have a lead management system to make sure that your agents are staying in front of those leads repeatedly. Not only does it let you keep all of your agents in front of you, but it also tracks what your agents are doing as well. Everything has become more efficient with technology. Outbound call options are more limited now. Ten years ago, you could pretty much call anybody, but now you are limited to 10 to 12 percent of anybody good for the criteria for your product. Your approach “back in the day” of mailing to entire neighborhoods, and things of that nature, is pretty ineffective these days. For example, in California, Arizona and Nevada, there are too many people in neighborhoods riddled with foreclosures. You are wasting a lot of money just marketing to entire neighborhoods. Targeted marketing has become more predominant and more updated.

another client re-order and they say to us, “That last campaign was great … we spent $5,000 and made $40,000 … let’s do it again!” There’s a big satisfaction when a client keeps coming back to you week after week, month after month. That’s what keeps me up … the fear of not having that client retention. We have a system in place that will keep us doing this for a very long time. We are going to continue to grow and acquire more companies and are going to continue to take more real estate in this business because the engine is just set up properly with the right staff in place to run it.

Are you big on setting goals and establishing a business plan? If you are not goal-oriented, you are never going to get to where you want to be. If you don’t know where you want to be, you’d better figure it out. It’s a dog eat dog world out there, and you’re about to see the big gold rush in the mortgage industry, so set yourself some

When you’re not working to help mortgage professionals, what do you do in your spare time? I’m a single, full-time dad. When my daughter Lexy is with her mother, I like to just get out and enjoy life. I like to travel, take in sporting events, and am just a normal guy that really likes business, loves life and lives for being a dad. Any closing comments? Don’t sell yourself short, the next 12 to 18 months is going to be a lot of fun in this industry, so enjoy it. A lot of you have been waiting for this mini-boom, so take advantage of it. However, also think long-term and make sure that your balance of refi versus purchase sways to purchase when the HARP program has only a few months remaining! If you follow that formula, you will be in business for a long time.


 MARCH 2012

What are some of the issues that keep you up at night? I don’t really have a lot of concerns. The things that keep me up at night are just the thought of growth … our exponential growth. I really enjoy helping other companies grow in addition to my own. That may be why my company is still around … we really care. When we get

Has any book or person had a profound impact on your life? I was never really motivated by books or motivational speakers. I’ve never been a big “rah rah” guy. There have been a few people whom I’ve met in working at call centers who have given me the framework for a great work ethic. You don’t work if you’re not going to give 100 percent. If you’re not, you’re in the wrong job and you should move on to something else. I don’t come from old money and want to retire early to take my daughter around the world, build a family and see all the places I want to see, that’s what drives me. That’s what influences me … it’s the places I want to go. For some, the past motivates them. For me, it’s the future that gets me excited!


When you look back at your career, what do you feel is your greatest accomplishment? I have been very fortunate to reach a lot of the milestones I’ve set. Overall, I guess just taking my company from a start-up and within three years, making the Inc. 500, and then duplicating that feat again a year later is a big accomplishment. The fact that we continue to grow ourselves is probably the biggest accomplishment that I can tell my kids about when they get older. I have been able to grow at a consistent basis and have retained my client base during a very difficult and low time in the industry we service.

Of all the different areas you cover related to marketing, what has the highest return-on-investment (ROI)? If you are just looking at a CPA (Cost Practice Acquisition) basis, it has to be aged Internet leads. From a direct mortgage standpoint, you can buy a set of aged Internet data for under $1 per lead and you can call through 100 leads and get two to five or seven or eight deals out of the new HARP 2.0 program if you targeted the leads properly. Worst-case scenario … if you are paying $1 or $2 per lead, and get one deal our of 100, the cost difference is $100. Aged Internet leads are the cheapest form, but it does require some effort. You must put in the work involved. If you want to look at what is the absolute cheapest way to market yourself, it is simply building relationships. Outside of direct marketing for a second, just building relationships with real estate agents is vital. Real estate agents all have goals. You can help them reach their goals and they can help you reach yours. Financial advisors, CPAs … you have to build relationships with the people who are dealing with current and potential homeowners on a day-to-day basis. The better you treat your referral partners, the more you are going to retain them, the better you are going to be and the more business you are going to get. Just be selective on who you want to work with because your time is valuable and what you give out is valuable … that is always going to be your cheapest acquisition. What we are doing as a company for our clients is building platforms and we have some built that are generating leads for people looking to buy a house or sell a home. Our mortgage partners are buying this traffic for themselves and then work to see if they can qualify anyone from this data to work with their real estate partners. I have some guys sharing their data with three different real estate guys, thus leveraging their marketing dollars to really build relationships all over town.

goals to reach. In our company, our goal is client retention, and then revenue. If our client retention ever dips below the 70 percent mark, then we’ve got big issues! I don’t even look at revenue and don’t care about revenue until the retention numbers go back up to a comfortable 75 to 85 percent. I do marketing for a living, and building relationships is my bread and butter. You should look at your business no different. Your referral partners should be happy and 70 percent of your referral partners should be sending you business every month. If they are not, something’s wrong. Either you have the wrong referral partners, or you’re not treating them how they should be treated. Fix it. Make sure that 70 percent of those you associate with are sending you a deal every month—outside of your friends and family. In the business world, 70 percent of the people you are working with should be sending you a deal each month, or whatever percentage you feel comfortable with. Just set a goal because that way, you are eliminating the riff raff and the time wasted. Only focus and spend your time on the people who are going to build your business and help you make money. In terms of a business plan, figure out how many units of business you want to do per month and set minimum goals. 

laid out. We feel we can get a great response now where the current mortgage rates are. Educating our clients about direct mail and all of direct mail’s pros and cons is the best way to do it. We are primarily handling their job from A to Z to keep things flawless. Along with data analytics, there is the callable side for everybody in the universe that fits the HARP 2.0 criteria. Approximately 10 to 12 percent of those people have phone numbers after a Do-Not-Call scrub, and you can actually reach out to those folks by phone. We have a dialer company that we can get to our clients, and then we train them on how to make the call. We utilize scripting, dispositions and rebuttals … just different things that can help them to be successful with a HARP-related call because a lot of people like direct mail, but never call the list they’re mailing to as they don’t realize they can call. We try to train our clients to get over that hurdle of the “un-fun“ factor and realize that there is money to be made there. There is a big audience that has yet to realize this program. We in the mortgage industry know it’s coming, but the consumers don’t and it will start being talked about and it will get hot. We train our clients on how to filter their databases and train them on how to hit their current and referral client bases and referral partners with educational pieces. We do it quickly because this is going to spread fast and the first person who gets referred to a homeowner as a professional is probably going to be the one who gets the loan. If you want to get the market share you desire, get out to your clients and referral partners, and provide your referral partners with information that they can get out to their people. If you get materials out there and send these materials to your circle of contacts, you will get business back from it. You must also create a Web presence. There are a lot of lender-direct companies marketing for HARP 2.0 candidates that can help you. In fact, we have a couple of Web property directories that will be ranking very high on Google. Lender directories are a good place to be. They are cheap to be on, and are limited in terms of how many people are let on per state. Get aggressive and get your name out there. There are many channels to explore: Direct mail, social media, free networking, outbound call centers, the media, your own circle of friends, TV and radio … there are so many apples across the board that you kind of have to do a combination of things. I believe your current past client database is the most important. Hit them first, and educate them with materials that they can share with their friends. Don’t make your goal just to educate them one on one. Make it your goal to educate them so that they can pass that knowledge along to the people they know. Don’t work twice—let them work for you and then combine that with some additional marketing if you can stand doing more loans every month, whether it’s direct mail or Internet traffic.

nmp news flash Tablets: The Future of Mortgage Technology By Andrew Weiss-Malik

MARCH 2012 



Many of today’s mortgage professionals have come to expect paperless technology as a given when maneuvering through the sometimes arduous process of completing a loan application. From online chatting to e-mail updates, much of what takes place within the mortgage industry can now be tackled from the comfort of our own computers, but despite all these tech advancements, we still have a lot of catching up to do. This is because just as it seems we have tackled the latest tech products with ease, new products come in to play and take predominant use over anything that is even the slightest bit slower or more timeworn. One product that seems to be overtaking laptops as of lately is the tablet. In the simplest of terms, tablets can be considered a hybrid of laptops and smartphones. From the angle of today’s computer capabilities, tablets allow for a touch-screen keyboard and can imitate both PCs and Macs. At the same time though, tablets can also be synced with the user’s phone contacts and can contain downloaded smartphone-like apps, the latter of which offers nearly endless capabilities. The tablet is quickly growing in popularity, and it is clear that the new product is here to stay, but despite its positive and innovate influence within the tech world, most industry professionals have yet to adopt the tablet for their daily use of mortgage technology. And with a lack of presence from mortgage tablet apps, today’s mortgage leaders are unable to take full advantage of helping to refuel a housing market sill in recovery. Fortunately, On the Go Technology LCC is helping to pave the way for the next step in mortgage technology with the release of the first mortgage system designed from the ground up solely for tablet usage: MobileLO. MobileLO is the first true tablet-based 1003 application system available within the mortgage industry. This application allows the originator to pull and review a borrower’s credit report directly on the device. The software also features the ability to export a FNMA 3.2 file directly to any loan origination system. Further, the MobileLO tablet application allows the loan originator to generate compliant federal and state-specific disclosures. Lastly, the borrower can sign using their finger, or a stylus, and that signature will transpose on to the disclosure set generated on the device. Unlike computer-based or even smartphone-based mortgage applications, there is no need to be online and best of all, the application is immediately available for download from the iTunes store at NO COST. Originators who have not made the leap to tablet computing can still use this system via their Web browser at MobileLO offers a free membership with basic services and a premium membership for those originators that want to experience all that mortgage tablet computing has to offer. While MobileLO offers a revolutionized way of completing mortgage applications and pushing the industry further into the 21st Century, there is still a long way to go to catch up to today’s tech offerings. Tablets are the future of technology. Envision all the tablet-based apps that have yet to be created, which will further modernize mortgage technology. Taking this into consideration, the mortgage industry will certainly have its place in the forefront of ground-breaking business advances for years to come. Check out the future of mortgage technology at

Andrew Weiss-Malik, chief operating officer at 360 Mortgage Group LLC, is recognized as an industry leader in mortgage-technology innovation. He utilizes his experience in capital markets, mortgage-product development and efficient operations to expand the capabilities of mortgage bankers. At 360 Mortgage Group, Weiss-Malik has developed the most advanced wholesale technology platform in the industry. He may be reached by phone at (866) 418-2997 or e-mail SPONSORED EDITORIAL

continued from page 16

Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. This program is separate from the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment. The remaining $3.5 billion of the $5 billion payment will go to state and federal governments to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.

FinCEN to Require SAR Filing and AML Programs for Non-Bank Lenders and Originators

Federal Home Loan Banks—to develop AML programs and file SARs with FinCEN. Taken together, the final rules issued and the proposed rules issued in November provide additional tools for financial institutions and law enforcement to hold scammers accountable for their fraud and other financial crimes. Among the many mortgage-related scams FinCEN has identified in its reports are false statement, use of straw buyers, fraudulent flipping, flopping, and identity theft. The new regulations likely will significantly increase the number of mortgage related SAR filings; give law enforcement and regulators more comprehensive data on specific crimes; and provide government and industry a more complete perspective on mortgage related crime trends nationwide.

Fixed Rates Remain the Dominant Choice Among The Financial Crimes Refinancing Borrowers

Enforcement Network (FinCEN) has finalized regulations that require non-bank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs), as FinCEN requires of other types of financial institutions. “FinCEN is closing a regulatory gap by requiring non-bank mortgage lenders and originators to develop antimoney laundering programs and file suspicious activity reports with FinCEN,” said FinCEN Director James H. Freis Jr. “Suspicious activity reports are a critical source of information to law enforcement and regulatory agencies in their investigation and prosecution of mortgage fraud and a wide range of other financial crimes.” Based on FinCEN’s ongoing work directly supporting criminal investigations and prosecutions, including in connection with the Financial Fraud Enforcement Task Force and recently the Residential Mortgage-Backed Securities Working Group as well as other anti-fraud efforts, FinCEN believes that the new regulations will help mitigate some of the risks and minimize some of the vulnerabilities that criminals have exploited in the non-bank residential mortgage sector. Analysis of SARs reported in FinCEN’s annual, quarterly and special fraud reports, shows that independent mortgage lenders and brokers originated many of the mortgages that were the subject of bank SAR filings. In a further step to combat fraud in the residential mortgage markets, FinCEN issued a proposal in November 2011 that would require the government-sponsored enterprises (GSEs)— Fannie Mae, Freddie Mac, and the

In the fourth quarter of 2011, fixed-rate mortgages (FRMs) accounted for more than 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report. An increasing share of refinancing borrowers chose to shorten their loan terms during the fourth quarter of 2011 as well. Of borrowers who paid off a 30-year FRM, 43 percent chose a 15- or 20-year loan, the highest such share since the first quarter of 2003. “Fixed mortgage rates averaged four percent for 30-year loans and 3.30 percent for 15-year product during the fourth quarter in Freddie Mac’s Primary Mortgage Market Survey (PMMS), well below long-term averages,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.2 percent during the fourth quarter of 2011. It’s no wonder we continue to see strong refinance activity into fixed-rate loans.” Fifty-eight percent of borrowers who had a hybrid adjustable-rate mortgage (ARM) transitioned to an FRM during the fourth quarter, while the remaining 42 percent chose to refinance into the same type of product. “For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term,” said Nothaft. “Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.7 percentage points lower during the fourth quarter. And for borrowers who plan to remain in their current home for only a few years, the hybrid ARM allows for even a greater interest-rate

savings. The initial interest rate on a 5/1 hybrid ARM was about 1.1 percentage points lower than on a 30-year fixed-rate loan.”

FHFA Launches Pilot Program to Sell Fannie Mae REO Properties for Rentals

Lender Processing Services Inc. (LPS) has announced that its LPS Applied Analytics division has updated its home price index (LPS HPI) with residential sales concluded during November 2011. The LPS HPI summarizes home price trends nationwide by tracking sales each month in more than 13,500 ZIP codes. Within each ZIP code, the LPS HPI tracks five price levels from low to high. continued on page 33


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 MARCH 2012

Fiserv Inc. has released an analysis of home price trends in more than 380 U.S. markets based on the Fiserv Case-Shiller Indexes. The indexes are owned and generated by Fiserv, a leading global provider of financial services technology solutions, and data from the Federal Housing Finance Agency (FHFA). The double-dip in home prices that began two years ago continued to take home prices lower through Q3 of 2011, during which the average price of a U.S. single-family home fell to a new

Home Prices Slow Rate of Decline to 0.6 Percent in November

Wholesale Lending


Average Home Price One-Third Below Peak 2006 Levels

A Bright Spot in 

The Federal Housing Finance Agency (FHFA) has announced the first pilot transaction under the Real EstateOwned (REO) Initiative, targeted to some of the hardest-hit metropolitan areas in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida. With this next step, pre-qualified investors will be able to submit applications to demonstrate their financial capacity, experience and specific plans for purchasing pools of Fannie Mae foreclosed properties with the requirement to rent the purchased properties for a specified number of years. “This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,” said FHFA Acting Director Edward J. DeMarco. In order to ensure compliance with applicable securities laws and regulations, details of the sales announcement will be sent to prequalified investors per FHFA’s Feb. 1 announcement. Subsequently, investors who post a security deposit and sign a confidentiality agreement will gain access to detailed information about the properties. At that stage, interested investors must submit a comprehensive application, which will be reviewed by an outside firm. Only investors who are qualified through this rigorous process will be eligible to bid. “We believe that this initiative holds promise for providing support to local neighborhoods that were especially hard hit by the housing crisis and will help meet the rising demand for rental housing in many communities,” said Michael Stegman, counselor to the Secretary of the Treasury for Housing Finance Policy.

post-bubble low, declining 3.9 percent compared to the year-ago period. Current average home prices are now 33 percent below the 2006 peak, with broad weakness across the U.S. Over the past year, home prices fell in 337 of the 384 metro areas tracked by Fiserv CaseShiller. This trend in home prices was in line with the forecast made by Fiserv one year ago, which projected a yearover-year drop of 5.5 percent. Despite continued price erosion, some metro areas saw significant home price gains in the past year including markets that were deeply affected by the housing bubble and recession. Examples include Detroit, Mich. (11.1 percent); Buffalo, N.Y. (6.7 percent) and Fort Myers, Fla. (2.8 percent). “While prices continued to fall in most markets, sales activity picked up at the end of 2011, setting the foundation for price stabilization in 2012,” said David Stiff, chief economist at Fiserv. “We stand by our projection that average U.S. home prices will move sideways in 2012. But we do anticipate that increasing sales activity will begin to drive small increases in prices in as many as half of U.S. metro areas. Some larger metro areas that escaped the worst of the home price bubble, such as Houston, Fort Worth and Salt Lake City, can expect increases of one to three percent. Many smaller metro areas, such as Boise and Albuquerque, are forecast to see increases of 4 to 6 percent.” The recovery in such markets, however, is not expected to be broad enough to move the national average this year. Fiserv Case-Shiller projects that average U.S. prices will decline another 2.7 percent by the third quarter of 2012, compared to the year-ago period, before rising 3.8 percent by the third quarter of 2013. “The other big story is the continued improvement in housing affordability,” Stiff said. “The monthly mortgage payment for the median-priced U.S. home fell to $640, nearly 45 percent lower than the housing bubble peak of $1,150. That represents the lowest level since 1994. Similarly, mortgage payments now account for only 14 percent of monthly median family income, as households made more progress in repairing their balance sheets.”

By David Lykken & Jon Traver

It’s Time to Come Together here was a song, “United We Stand,” written by Tony Hiller and Peter Simons that was made popular by The Brotherhood of Man and Sonny & Cher in the 1970s. Based upon all that we have gone through over the past two to three years in our industry, there is a greater awareness how we need to stand united together more than ever before. We have endured much … the implosion of the sub-prime world, new regulations (loan originator [LO] compensation, appraisal management companies [AMCs], the 2010 Good Faith Estimate [GFE], call reports, etc.), heavy media criticism, and a mass exodus of some top level talent, we have taken quite a hit. While 2012 is just getting going, we are still fighting the “good fight” on many fronts, both in an out of Washington, D.C. So what does the future hold for the industry we all love so much? Before we can move forward, it is


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MARCH 2012 



important to look back and understand where we have been. Only through self-reflection and understanding both our successes and failures, can we really grow and succeed in the future. With the focus this month on legislative issues, shining a spotlight on our entire industry becomes necessary to fully grasp the challenges we have faced and will continue to face in the future. For the last 10-plus years, our industry has been divided, fighting amongst ourselves. There is a reason why, throughout this entire crisis, Realtors have largely been left alone, and the mortgage industry has come under intense scrutiny with ever increasing efforts to “rein us in.” Let’s take a quick look at some of the legislative challenges we are already having to manage. As we go through these, try to look at everything, not from your own personal perspective, but through the eyes of someone who is simply “A Mortgage Professional.”

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1. The 2010 GFE In an effort to make the homebuying purchase easier for the client, we were given a new, fourpage document. I think anyone who has ever originated a loan will agree, that this not only didn’t help matters, it hurt. Where is the total payment? Where is the total cash to close? Seller concessions? And let’s not talk even start to talk about the fact that a document that is supposed to help people “shop around” cannot be given out until a complete application is received, including a contract! Now to be fair, there are a few helpful parts to the document, but by in large, I think we all can agree it has not achieved its stated goal.

already underpaid, took a big hit. Appraisers now have to split their money with management companies that are simply a “buffer.” Appraisers now must split their money with the companies which mean they must perform more to make the same living. We have lost so many of the top appraisers and the ones who have chosen to stay simply don’t have the time to do as thorough a job as is needed to determine a property’s real value.

“So, why are we sitting here today, fighting through all of these issues, and devoting so much time and money to future compliance problems? We simply refuse or fail to work effectively 3. LO compensation together, and that has Okay, this section could, and probably will, to change.”

become its own article very soon. Whether you simply want to talk about how this rule takes capitalism out of the mortgage industry, has hurt 2. AMCs and the small business (both brochanges in the kers and small bankers), appraisal industry or has harmed the level of With both a real and perservice that can be given ceived problem with to a client, most everyone appraisals and pressure agrees this has damaged from the origination our industry. With a very level, an attempt was well-intentioned goal of made to clean this part of protecting the homebuyour industry up. Yes, we “If we all give a little, er, the exact opposite has have been able to clean we can all gain a lot.” turned out to be true. All up any issues with of us working at the origi—Jon Traver regards to pressuring nation level can see how appraisers to give value where it did not this has hurt the consumer and yet supexist. But at what cost did this come and port outside our industry for this and so what new issues did we create? A seg- many other past and future efforts to ment of our marketplace that was “control” us remains high. —David Lykken

banks … everyone needs to understand that if we don’t, there will be nothing left to fight about. The finger-pointing must stop and the hand shaking and real ideas must begin. Our consulting firm has been fortunate enough to work with many successful companies and individuals in the market. Let’s wrap up with a little challenge for everyone … the next time you are involved in a conversation about the great industry, try talking through the issue, not from your point of view, but the point of view of the consumer. If we all give a little, we can all gain a lot. The alternative is to continue down this path of fighting for our own selfinterests and the outsiders continue to try and clean up our mess. It is time to come together! David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail or Jon Traver is production consultant—branching, recruiting and LO training for Mortgage Banking Solutions. Jon has spent 12 years forging referral relationships with builders and realtors for his own mortgage company. He has extensive experience working with branch companies to grow their businesses through branch and LO acquisition, as well as building long-term business development plans. Jon trains executives, branch managers, and loan officers how to redefine who they are and what they do. He then helps them build a game plan for taking that new knowledge to the streets, including the execution. He may be reached by phone at (512) 977-9900, ext. 112, (972) 4673990 or e-mail

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To listen to David Lykken’s online radio show, “Lykken on Lending,” log on to


Dan Palumbo 

It would not be fair to characterize every change we have endured as a failure. There have been some successes and improvements, even though many of us still complain about those as well. The Nationwide Mortgage Licensing System (NMLS) was long overdue and needed in our industry. We hold so much responsibility and power within the real estate community. Is it too much to ask that we are properly trained, licensed and tracked? Many loan products, that we all delivered to the marketplace are now gone. No doc loans, 100 percent stated/stated, option ARMs, etc., were completely misused by so many and needed to go. And while there should be room for select secondary products, (self-employed, statedincome, with 20 percent down and a 700-plus credit comes to mind), we continue to struggle helping anyone who doesn’t fall within our tight little box. So, why are we sitting here today, fighting through all of these issues, and devoting so much time and money to future compliance problems? We simply refuse or fail to work effectively together, and that has to change. While each market segment has slightly different agendas, we are still playing the same game. We must come together to make this industry better, putting aside our differences, and show those who are putting these constraints on us that we can, and more importantly, will, police ourselves. Consider the National Basketball Association (NBA) players as a group and how they stick together. Do you think the 12th man on the end of the bench, making the league minimum has the same agenda as Kobe Bryant? Of course not, they each have a completely different set of problems and concerns. What about how small market and large market National Football League (NFL) teams, who must compete with each other every day, week, year, are able to put that competition aside and put rules in place that protect all teams? As an industry, we must come together and work as a team. Tomorrow we will compete for the same loan, the same referral source, the same dollar. But today, we have to agree to work together to improve the homebuying process for all consumers. Trying to protect our own self-interests has simply not worked. It is time for a change in leadership, and it must come from within and from all levels and channels. We must come up with our own ideas to improve things, and then stand together committed to helping the customers we all serve. Let this article serve as a plea to everyone who reads it, from all corners of the mortgage world, it is time to work together! Brokers, bankers,

CoreLogic Launches Residential Evaluation Reporting Tool

By Raymond Bartreau

MARCH 2012 



Once you have exhausted all of your past clients, contacts and referral partners with the new Home Affordable Refinance Program (HARP) product, what’s next? You will want to start thinking about other forms of generating new business in the marketplace with this program. There are more than 27 million Fannie Mae and Freddie Mac loan holders nationwide who have no idea about HARP 2.0. The goal here is to find your audience within this large group and get yourself in front of them, or better yet, get them to come to you. The best way to do this is direct marketing, which consists of a few different options and avenues: Radio, TV, cold calling, direct mail and the Internet. As we all know in the mortgage industry, lenders have guidelines on pretty much every loan product on the market. If you are going to use direct marketing in the mortgage industry, the first thing you want to do is find the amount of homeowners that fit within your lending capabilities, in this case, we are talking about HARP 2.0. Some recent count studies were ran with three of the industry’s leading database compiler/managers of mortgage and here is what we came up with:  There are more than 27.5 million Fannie Mae and Freddie Mac loans in America right now.  There are currently more than 11 million Fannie Mae and Freddie Mac homeowners that are upside down on their mortgage (more than 100 percent LTV).  Two states have more than 1.8 million, four states have more than 475,000, and another 31 states have 45,000-plus homeowners who can be helped.  Of those 11 million, nearly 60 percent of these homeowners are current right now on their mortgage.  The other 40 percent-plus could get current and potentially be helped before the end of 2013 if they are educated soon and make the efforts for the next six to 12 months. Depending on your specific lender requirements for this program, you would take these massive databases, and filter them down based upon the criteria you are looking to lend to. FICO, LTV, loan amount, origination date, late(s), no bankruptcies, and many more filters are available when you are looking to create your perfect audience. After extreme HARP 2.0 overlay filtering, we end up with a total of 2.3 million marketable (outbound with addresses) homeowners who may qualify for HARP 2.0. Of those, more than 215,000 homeowners are available to be called after we do a Do-Not-Call (DNC) scrub on the database. Since most of these folks have not seen a mortgage offer over the last two to four years, you should see a pretty good response on any direct mail continued on page 39


CoreLogic has announced a new data-enhanced, appraiser-certified evaluation tool to help mortgage lenders and servicers address new requirements issued in the 2010 Interagency Appraisal and Evaluation Guidelines (IAG). The Residential Evaluation Report from CoreLogic provides an alternative for federally-related mortgage transactions in instances where the IAG permits utilizing something less than a full appraisal, but requires more than a broker price opinion (BPO) or automated valuation model (AVM). The Residential Evaluation Report from CoreLogic provides six perspectives to arrive at the property’s estimated market value including a certified evaluation of property value with an appraiser’s opinion of value, a summary BPO, two Automated Valuation Models (AVMs) and two Indicated Value Approaches (IVAs). The new offering helps servicers meet criteria set forth by the IAG, which were issued by the five federal financial regulatory agencies—the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the National Credit Union Administration (NCUA). The product also meets the Uniform Standards of Professional Appraisal Practice (USPAP) as a Restricted-Use Appraisal. The IAG was established to set the standards for property valuation, differentiating and clarifying the appropriate use of individual assessment methods in determining estimated property value, and further defining “Evaluations” as an approved alternative. Appraisals, which are time consuming and cost intensive, are not always necessary; and BPOs and AVMs, without additional information, do not meet the new guideline requirements for certain federally-related transactions. The new product from CoreLogic offers an alternative that saves lenders time and money by leveraging the vast proprietary data available from CoreLogic to enhance and clarify its results. “We developed the Residential Evaluation Report in direct response to

requests from lenders and servicers for a solution to help them meet the new standards set by the interagency guidelines,” said Kevin Wall, senior vice president of CoreLogic Default Services. “Evaluations are not new, but the guidelines have now officially established this option as a step to bridge the gap between BPOs and appraisals. Utilizing the vast CoreLogic property database allows us to offer a dataenhanced valuation tool that few can match.”

Zillow Launches New Android App Zillow has announced the launch of its free Zillow Mortgage Marketplace Android App giving home shoppers on-the-go access to the loan shopping experience of the Zillow Mortgage Marketplace. Also available for the iPhone, the Zillow Mortgage Marketplace provides personalized loan quotes, lender ratings, real-time rates and mortgage calculators all in one place. “Since we brought Zillow Mortgage Marketplace to mobile in June 2011, the Zillow Mortgage Marketplace app financial calculators have been used more than 1.5 million times, proving people want access to mortgage and financing information when they are out looking at homes,” said Erin Lantz, director of Zillow Mortgage Marketplace. “With the Android app, we were able to take advantage of the unique menu functionality that enables users to easily share information, such as mortgage rates and loan quotes, from every page.” The Zillow Mortgage Marketplace Android App gives home shoppers access to: A payment calculator that helps consumers estimate what their monthly payment will look like for a particular home; an affordability calculator that helps shoppers narrow their home search to homes within a specific price range, based on income, downpayment and monthly debt information; a refinance calculator that allows consumers to compare their current loan and new loan quote to estimate potential savings if they refinance; a mortgage shopping experience that enables users to request and receive personalized loan quotes, read lender reviews and connect with a lender;

sharing functionality that allows shoppers to share current mortgage rates, calculator results and loans requests via e-mail, Twitter or text message; and Zillow Mortgage Marketplace apps are available for download for free in the Android Marketplace and iTunes App Store.

Nationwide Appraisal & Settlement Network Introduces PanelPlus Vendor Management Solution

Fannie Mae Announces Expansion of Its Online Offers System

continued on page 30


 MARCH 2012

QuestSoft has announced an upgrade to its HMDA RELIEF software in preparation for the 2011 submissions. The upgrade implements new geocoding tools, including integrated support for both 2000 and 2010 Census tracts and adds additional quality control (QC) audits to prepare for regulatory exams. The primary benefit to lenders using the upgraded HMDA RELIEF is higher quality data scrubbing tools and more efficient tools for analyzing the file. “Lenders must do more with their HMDA data than just submit an annual report,” said Leonard Ryan, founder and president of QuestSoft. “HMDA RELIEF has been enhanced to provide the additional analysis needed to interpret the data, identify potential errors and better prepare for regulatory exams.” Ryan also said the addition of regulations, such as the Nationwide Mortgage Licensing System (NMLS) quarterly call reports, means that lenders are required to use HMDA-related data year-round. Ryan said HMDA RELIEF has also introduced new and upgraded LOS interfaces, bringing the total number of integrations to the industry’s top loan origination systems to 42. New interfaces include FIS’ FLO and ISGN’s Catapult, along with enhancements to fair lending data imports for BytePro and Ellie Mae Encompass. HMDA RELIEF offers lenders a compliance solution with enhanced features to accurately prepare and submit HMDA data. Features include summary performance reports and rate spread analysis reports by race, ethnicity and gender. Fair lending fields are also collected and available for analysis, espe-


Fannie Mae has announced the expansion of its Online Offers system to collect and manage real estate purchase offers for Fannie Mae-owned properties across the country. Real estate professionals will now submit offers online on behalf of clients, receive receipt confirmation and track the status of submitted offers through the Web site. Fannie Mae launched the Online Offers pilot in November 2010 in Orlando, Fla.; San Diego, Calif.; and in Wayne County, Detroit, Mich. to develop the platform and make any necessary improvements. The Online Offers feature is now available for all properties on across the nation.

QuestSoft Adds Geocoding Auditing and Lending Analysis to HMDA RELIEF 

Nationwide Appraisa l & S e t t l e ment Network (NASN) has announced the launch of its PanelPlus service. PanelPlus allows clients to maintain their existing relationships by letting NASN take over approving, managing and maintaining their preferred vendor profiles in a compliant manner. The PanelPlus service can work in two different ways. Clients can choose from either a customized version of this service or select the standard service. The customized options allow the client to create their appraiser panels in a compliant manner by having NASN manage the panel with respect to Appraiser Independence guidelines. In cases where the client prefers to customize this feature, NASN will register and approve appraisers for addition to the panel, manage and track performance, and report back to the client, quarterly, with results. Performance management and tracking is provided so clients are able to maintain standards and reach new goals with regards to quality and efficiency. Should a less hands on approach be desired, NASN’s network of appraisers will be utilized. This is the PanelPlus standard option. NASN’s team of account managers work with the appraisers building a solid rapport and maintaining a successful working relationship with each of them. They coach their appraisers on performance, communication and quality by staying in tune with their files and their client’s individual needs.

“Collecting offers online through will provide greater transparency for homebuyers and their agents,” said Jay Ryan, vice president of real estate-owned (REO) properties at Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.” George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, Fla., has been using Online Offers since the pilot launched in 2010. “As an agent, I believe Online Offers is efficient, informative and user-friendly,” said Philbeck. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.” HomePath homes are owned by Fannie Mae and include a wide selection of properties, including single-family homes, condominiums, and town houses.

New CoreLogic Tool to Assist Servicers Adapt to Default Process Changes

MARCH 2012 



CoreLogic has released a new default servicing platform to the mortgage industry that will streamline the way mortgage servicers manage loans through all stages of the default lifecycle. The new platform, named DefaultView, opens pathways between previously disconnected servicing functions, allowing a dynamic exchange of information across multiple departments. The platform offers nine modules that interconnect within its architecture to help provide a more efficient and transparent default servicing operation. DefaultView uses a master-loan architecture that offers a singular view of a loan. This design enables end users across a default enterprise to easily see a complete transaction history including workflow steps, resulting data, outcomes and all related documents and messages. By enabling top-down transparency across all relevant default departments and functions, the platform simplifies reporting and strengthens management oversight. “DefaultView is one of the most transparent and cohesive solutions for managing default,” said Kevin Wall, senior vice president of default services for CoreLogic. “This platform is unique in that it uses a unified approach to give servicers an unprecedented level of visibility into the path of a loan in default from beginning to end. All modules can be used together as an end-toend solution, or in configurable combinations suited to specific needs.” Built on an open-architecture foundation, this fully integrated, web-based platform brings together servicing data and functions to unify default servicing efforts. From loan modification decisioning through claims processing, DefaultView provides a single user interface (UI) accessed through a

secure, role-based logon to the platform portal. Users with role-specific permissions can transition between functional modules without ever leaving the platform. DefaultView also provides the ability to track specific historical activity throughout the loan default lifecycle, from creation to conclusion. “The beauty of DefaultView is that servicers can define their workflow and business rules,” said Chris Howard, vice president of technology solutions for CoreLogic. “The platform can be adapted to integrate a servicer’s existing technology, so there’s no need for expensive programmers to rewrite code or manage configurability. This product will be key to remaining nimble in a very dynamic default market.” Seamless integration coupled with the comprehensive scope of the platform will allow servicing businesses to address a wide spectrum of concerns. “DefaultView will not only shrink bottom-line costs by boosting accuracy and efficiency, but also improve shortand long-term operations for servicers of all sizes and with all loan volume levels, which will ultimately support the health of the servicing industry as a whole,” said Howard.

ServiceLink Releases HOA Management Solution ServiceLink has announced the availability of HOA Resolve, its proprietary system dedicated to homeowners association (HOA) management. ServiceLink has years of proven, dedicated experience in HOA management and that level of knowledge and first-hand experience is reflected in HOA Resolve. HOA Resolve prevents closing delays and mitigates lenders’ and servicers’ risk of overpayment by quickly identifying HOAs through direct access to information from Fidelity National Financial’s network of more than 5,000 local title agents and working with them to bring any outstanding fees current. This is accomplished through ServiceLink’s review of existing mortgage or title documents and verification against an internal database, as well as other drivers. ServiceLink then contacts the HOA regarding the status of the account to confirm all charges are within legally required limits and, if possible, negotiates the terms to reduce its client’s financial exposure. Once finalized, ServiceLink handles payments and processing to ensure there are no outstanding HOA title curative issues when the property goes under contract. The issue of HOA fees is a significant one for lenders in today’s market. When a financial institution takes possession of a property through foreclosure or through a bulk sale, for example, it may also assume the responsibility for any outstanding HOA fees or penalties tied to that property. ServiceLink’s HOA Resolve helps lenders by coordinating all open accounts associated

heard on the street

Real Property Decisions Releases Tool for Improved Diligence on Non-Performing and REO Assets Real Property Decisions has released its new Default Reconciliation Report, a valuation analysis service which provides mortgage servicers and investors with critical valuation information to supplement a broker price opinion (BPO) or appraisal. The Default Reconciliation Report meets the growing industry demands for a higher level of valuation diligence for non-performing and real estate-owned (REO) assets. continued on page 32

continued from page 11

an account executive for the Maryland territory for Interbank Mortgage Company.  Mortgage Returns has named Jim Blatt as its new chief executive officer.


cially important with the Dodd-Frank legislation looming. QuestSoft’s HMDA RELIEF managed the submission of roughly 25 percent of all funded applications in 2010. QuestSoft also offers Compliance EAGLE, an automated compliance review tool that helps financial institutions evaluate loan files for adherence to the full range of mortgage lending regulations, including Real Estate Settlement Procedures Act (RESPA), HMDA, Truth-in-Lending Act (TILA), Community Reinvestment Act (CRA), flood determination requirements and other consumer and predatory lending laws. The company also offers CRA RELIEF, which provides banks and other lenders specific tools designed to ease the collection, analysis and reporting of CRA data.

 Paul Chevez has been named director of finance for Bay Equity Home Loans.


continued from page 29

 LenderLive Network has named Patrice Power as its new senior vice president of marketing.

 The Mortgage Bankers Association (MBA) has announced the following five individuals have received their Commercial Certified Mortgage Banker (CMB) designation: Thomas Bernaciak of First Housing Development, Cristofer Brown of Summit Investment Advisors, Thomas Cooley of CB Richard Ellis, Bradley Joyner of Mississippi Home Corporation, and Jay Pittard of EaseCap Holdings Inc.  HomeStreet Bank has announced the addition of several former MetLife Home Loans team members, including Rose Marie David, Anthony Grasst, Natalie Overturf and Jeff Schaller.  PrimeLending has announced the addition of Karyn Wilson as senior vice president, regional manager of the mid-Atlantic region.  Inlanta Mortgage has added Branch Manager Mark Schulenberg to its Oak Brook, Ill. office.  Greenlight Financial Services has named Michael Petree as president of its consumer direct mortgage platform.

Your turn


new to market

with a foreclosure and ensuring that they are closed upon finalization of the transaction. In doing so, ServiceLink is saving its lender customers, on average, more than $3,100 per foreclosure. “Lenders understand and expect to fulfill HOA obligations tied to their portfolio properties and in working closely with HOAs and their attorneys, we help ensure that those obligations are met and that the fees and dues are not above and beyond what is supported by the legal statute,” said Stacey Bayley, senior vice president of asset management and disposition for ServiceLink. “Through HOA Resolve, our lender customers are better positioned to quickly identify properties with HOA commitments and determine the correct settlement amount prior to closing.”

 StreetLinks Lender Solutions has added a number of new additions, including: Shane Martin as vice president of national sales, Tony Gioia as vice president of external sales, Mark Tague as AVP of national sales for LenderX, Joel Munn as AVP of national sales, and Geoffrey Helmen as national account manager.  Kevin Wall has been named senior vice president of the default services division for CoreLogic.  Ryan P. Menery has joined the wholesale lending team as an account executive for ReverseIt!

National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of:

Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

Dreaming of an


31 By BJ Bounds

It also wouldn’t be an effective tool for your business if it didn’t work the way you wanted it to. We often depend on technology that dictates to us how we should run our processes, and inevitably, our businesses. To adequately support mortgage professionals, your systems need the flexibility to change as your needs change. Your compliance requirements change constantly. You need to be able to enforce certain behaviors of your end users through your technology.

Securing accountability To enforce the behaviors that your business needs for compliance and efficiency, you must have rules and the technology to implement them. Restricting access is the first step in securing your business and ensuring process accountability. If your LOS isn’t providing the simplest access restrictions, your business is vulnerable to security leaks, lost sensitive data, or inadvertent data manipulation. You need to be able to determine who in your business has access to certain fields, screens or files. And you need to be able to change restriction levels at any time. continued on page 33

 MARCH 2012

But it’s not always the feature, it’s how it gets to you that often matters more. It’s a Un-complicate matter of deliverables versus delivery. your business We are a very Web-focused culture now Utilizing advanced technology designed and so many of the things we do are on to help you become more efficient and

Make it your way

The ability to create your own rules inhouse, either action-based or field/screen level, is important. But again, if the process is too complicated or requires a special team of IT experts to develop the rules you need, it’s not going to be an effective tool for you in your quest for efficiency and profitability. When we talk about configurability, we must include a significant integration with flexibility. To be able to configure your own system with rules and process stops is to have the flexibility to work the way you want to. Your software should have the flexibility to conform to your way of doing business, not the other way around. Configurability comes into play when the flexibility you need is managed by you, not your technology vendor.


Delivery and accessibility

productive doesn’t mean your life has to become more complicated. If you are trying to go paperless, or at least reduce the amount of paper and clutter in your office, why would you want to deal with cluttered technology? If your system is complicated to use and your learning curve is longer than you would prefer, it’s probably not going to be the best tool for your business. Technology is supposed to make your life simpler, not scare you with its obscurity. There’s nothing wrong with being advanced on the inside, but simple to use on the outside. It’s a concept that Microsoft doesn’t always get right when they put out a new version of the programs we use every day. Remember having to learn Office products all over again when 2007 came out? To be the right tool for you, your system needs to have the features and functionality you need without the complexity you don’t. 

Do you know what you want in your loan origination system (LOS)? If you’ve been in the industry for awhile, you have a pretty good idea, and you may have spent months finding just the right system for your company. Perhaps, though, there is a slight nagging concern that your system may not be as efficient as it could be, or as easy to use as you’d like it to be, or even able to fit your needs as they change. Do you lie awake at night wishing you could take a quick peek into your pipeline? Is your LOS time-intensive or complicated to learn and use? Would you like the peace of mind knowing that only certain employees of your choosing can make changes to loan data? Can you make sense of the files in your system? Would you like to? If these questions sound familiar to you, you are not alone. Features such as ease-ofuse, security, accessibility, organization, and accountability are extremely important to organizations that originate and process mortgage loans.

the Internet: Social media, e-mail, searches, marketing and games. The beauty of the Web for the mortgage businesses is that it allows professionals to be connected to their pipeline 24/7, wherever there is a secure Internet connection. For the mobile mortgage professional, having access to your LOS remotely is vastly convenient. Even for small offices, having the ability to stay on top of your business gives you greater flexibility with your time. You no longer have to be tethered to your office computer to give your clients the attention they deserve. But beyond convenience and flexibility, setting up your LOS in this way also gives you greater security over your sensitive data. In order to accommodate remote Internet access to your LOS system, all of your data is stored on a centralized server. This server system means that your files are all stored in one secured location. You no longer have to worry about your computer crashing with all your data or your laptop being stolen with your client’s sensitive data along with it. Additionally, if you or somebody else in your office works on a file offline, it is automatically uploaded to the server the next time it connects, making sure the file in the server is the only file for that client—clearing the way for instant and easy oversight.

new to market

continued from page 30

“This innovative new valuation analysis service is powered by a unique combination of geographically optimized third party data and desktop appraiser expertise,” said Eric Taylor, president of Real Property Decisions. “It delivers an accurate and defensible means for residential property servicers and investors to make better acquisition, pricing, and disposition decisions.” Desktop value reconciliation services are performed against two client-supplied baseline property valuations, which may include any combination of listing BPO, independent BPO, or real estate appraisals. Two additional automated data sets are also incorporated into the analysis and reconciled accordingly. They include a cascading Intelligent Valuation Report and an advanced property rental report from RentRange. These key additions deliver a wealth of new knowledge to the appraiser and the end user, effectively bridging the information gap present in traditional valuation products. The Default Reconciliation Report is a Uniform Standards of Professional Appraisal Practice (USPAP)-compliant product that supports retrospective and complex reconciliation requests, and can be easily modified to incorporate additional data and analytics into the decisioning process.

MARCH 2012 



Genworth Streamlines MI Site to Speed Up Loan Submission Process The U.S. Mortgage Insurance (USMI) unit of Genworth Financial Inc. has announced enhancements to its customer-facing Web site that will reduce the data required to submit a loan and give customers a single Web portal to deliver all loans submitted to Genworth for mortgage insurance (MI) coverage. The enhancements also allow customers to submit contract underwriting and Home Affordable Refinance Program (HARP) loan submissions through the same Web portal, using a single user name and password. “We know our customers prefer going to one Web site for all their loan submissions,” said Neale D’Rozario, chief information officer for Genworth’s USMI unit. “These enhancements are part of the company’s efforts to continually improve and make it easy for customers to do business with us.” In addition to providing a single portal for customers to submit all their loans to Genworth, the enhancements give customers the ability to perform one-step document uploads, and to view and track their loan status.

Quandis Integrates Military Search Service With Case Management System Quandis Inc. has announced that it has integrated its military search service with

KMC Information Systems LC’s (KMCIS) CaseAware solution that is utilized by law firms and trustees in default servicing. The new integration is seamless and allows users to quickly initiate searches from within KMCIS CaseAware application to identify borrowers in default that are active military personnel, helping adhere to the Servicemembers Civil Relief Act (SCRA) of 2003. The SCRA requires that servicers and foreclosure attorneys follow certain processes before foreclosing on an individual who has active status in the United States military. “Our integration with CaseAware adds an efficient check and balance to the foreclosure process workflow,” said Scott Stoddard, chief executive officer of Quandis. “There are a number of moving parts and parties involved in the proper completion of a foreclosure; making sure servicers and law firms comply with the SCRA is critical. In recent months, companies have been hit with steep fines for incorrectly foreclosing on active military personnel. By and large, companies fail to comply with the SCRA because most searches are performed manually on the Department of Defense’s Web site, which is tedious, time consuming and prone to exposure.” With the click of a button, CaseAware users can initiate an automated status search directly from within their existing workflow that instantly returns accurate results along with event triggers that determine the next task. Quandis imports detailed reporting on all searches back into CaseAware that time and date stamps the official status report provided on the Department of Defense’s Web site. “We have been told by the many industry law firms we serve that not complying with the Servicemembers Civil Relief Act sets the stage for lawsuits and the potential to rescind foreclosure transactions,” said Dan Cannon, COO at KMCIS. “When searches are done manually by processors, an element of risk is introduced due to the potential for user errors. With our new interface to Quandis’ military search service, however, KMCIS’ clients now have the ability to process their Department of Defense searches in an automated fashion, thereby reducing the time and effort to complete searches and the potential for inaccuracies. An integration with Quandis simply made a lot of business sense to deliver these efficiencies to our customer base.” Combined, the integration between Quandis and KMCIS bridges the risk gap of improperly foreclosing on borrowers in default who are active military service members and are thus protected from foreclosure by the SCRA. In addition to law firms, servicers and banks can also utilize Quandis’ military search service to perform automated bulk searches on loan portfolios. Clients can use the service as a standalone solution or as integrated with their existing servicing platform.

GSF Mortgage to Offer Credit Repair Assistance to Vets Seeking VA Loans

the site is now a one-stop source for producing, editing and approving a HUD-1.

GSF Mortgage Chief Operating Officer Chad Jampedro has announced that GSF Mortgage is offering to pay for credit repair services for any veteran who would be eligible for a U.S. Department of Veterans Affairs (VA) Guaranteed Home Loan. “In today’s tumultuous economic climate, consumer credit has taken a hard hit,” Jampedro said. “There are many military veterans who are already suffering financially so we wanted to do something that could help give them a fresh start. Credit repair services are designed to do just that by helping to remove negative credit information and improve their credit score.” VA guaranteed loans are made by private lenders, such as savings and loans, banks or mortgage companies to eligible veterans for a home purchase—which must be for their own personal occupancy. Veterans can apply for a certificate of eligibility by submitting a completed VA Form 26-1880, request for a certificate of eligibility, along with proof of military service. “Not only can veterans leverage the benefits of a VA home loan, but now they can also take advantage of this valued service through our company,” said Jampedro.

Vantage Media Launches Mortgage Rate Pay-Per-Click Listing Product for Lenders

Nations Lending Services Launches New Site Nations Lending Services has announced the launch of its new Web site with innovative functionality and brand new tools. The new site launch includes new user tools such as an online HUD editor, a Good Faith Estimate (GFE) calculator, and a rate estimator for homeowners. “We have a large variety of customized technology solutions for clients that have been developed internally over 20 years,” said Kelly Kern, president of Nations Lending Services. “Known as a leader within the real estate information industry by most major national real estate technology firms, we have had many long time working partnerships with companies like Encompass, RealEC, OTX, FNN, Calyx, EPass, and more. Our initial Web site rollout 12 years ago was cutting-edge. Over the past decade, several competitors have copied our online solutions. We feel that our new initiatives will again revolutionize the industry and that they will be the benchmark all industry providers will use for years to come.” Nations’ new Good Faith Estimate Calculator will allow customers to obtain a quote in a matter of seconds for no charge. The information provided, including taxes, closing fees and recording fees, is guaranteed. The Rate Estimator will provide homeowners with an estimate on their basic title, closing and property search rates in a fast, easy-to-use, and free manner. Of the new features, there is also an online HUD editor, that will allow Nations Lending’s clients to gain free access to edit bank and lender fees, expedite approvals with the click of a button, and to download a copy of the final HUD instantly. This function also removes the need for e-mail, as

Vantage Media has announced the launch of Mortgage Rate Listings, an addition to its BrokersWeb premium pay-per-click (PPC) marketing network for insurance and financial services. The Mortgage Rate Listing is a premium costper-click (CPC) advertising unit for mortgage lenders and brokers marketing to new customers. Mortgage Rate Listings build upon the company’s existing BrokersWeb textbased CPC advertising platform to create a vertical-specific ad unit that integrates lenders’ respective rate details alongside text-based advertising. This new offering is the first of the enhanced customer acquisition solutions planned to further accelerate the vertical expansion and products that BrokersWeb and Vantage Media developed separately prior to their 2011 merger. For advertisers, the BrokersWeb platform features an auction-based marketplace where lenders can bid based on loan type (purchase or refinance), loan principle categories, and geographies. The BrokersWeb platform offers back-end tools and reporting to track conversions from click-to-loan request, and ultimately to funded loan. Advertisers are charged when a prospective borrower clicks on its respective Mortgage Rate Listing, signifying a specific interest in the advertiser’s published rate(s) and messaging. For Web publishers, Mortgage Rate Listings will also be a premium revenue vehicle for targeted mortgage website publishers capable of delivering high-quality clicks to Vantage Media advertisers. Vantage Media is launching Mortgage Rate Listings with placements on ultra-targeted publisher websites such as, and Web sites. “This new product allows us to demonstrate to a new category of marketers our commitment to delivering our advertisers the right product, exceptional service and top-notch results,” said Michael Foster, vice president of Vantage Media. “We look forward to offering to our mortgage advertisers this expanded platform and the same expertise in traffic acquisition and dedication to advertisers’ online conversion goals that is behind our success in the insurance, education and home verticals.”

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: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

nmp news flash

dreaming of an los

continued from page 25

Property Valuation Fraud Risk Sees Eight Percent Quarterly Jump

DocMagic Teams With U.S. Army to Distribute Sergeant Doc Bunny

continued on page 35

The visibility into your pipeline you get from having a server-based system gives you the benefit of oversight and management of your processes. But it’s not just about having a centralized file location or visibility into your workflow, it’s also important that you have the ability to package your loan documents in any number of orders to accommodate the needs of your lenders and vendors. By also having the ability to drop in documents from your desktop or e-mail, your processes run smoother and organizing your workflow is a breeze. Another important aspect of organizing your loan pipeline is simplifying and automating your document and services ordering. With often hundreds of available vendors to choose from, ordering directly

End the nightmare At the end of every rainbow is a pot of gold, and at the end of every dream is an awakening. If you’ve ever wondered if you can achieve a higher level of productivity without spending countless hours learning new software and reading convoluted manuals, now is your chance to wake up and explore your options. Your technology does not have to keep you up at night. It’s meant to enhance your business, not create additional stress and worry. An LOS can be extremely diverse in delivery method and functionality. When you find reliable delivery, flexibility and robust security packaged in an easy-to-use and easy-to-manage platform, you’ve found the LOS you’ve been dreaming of. B.J. Bounds is senior marketing communications specialist for Calyx Software. In addition to media relations and copywriting, BJ is a contributing author to the Calyx Software blog, CalyxCorner. She has more than 10 years of experience in sales and corporate marketing with a focus on technology that spans several industries. She may be reached by phone at (800) 362-2599 or visit


 MARCH 2012

DocMagic Inc. has announced that it has teamed with the 315th U.S. Army Tactical Company to distribute this year’s new DocMagic Bunny “Sergeant Doc” to local children and their families. The bunny is dressed


from your LOS saves time and effort as there is no re-keying of data that could result in errors and time-consuming returns.


Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected in the fourth quarter of 2011. According to the most recent analysis, certain regions of the New York Tri-State area have moved into the “very high risk” category, due primarily to the increase in property valuation fraud risk. For the purposes of the report, the New York Tri-State area is defined as the New York City metro along with the Connecticut metros of Bridgeport and New Haven and the New Jersey metros of Atlantic City and Ocean City. Across the United States, the Property Valuation Fraud Risk Index increased nearly eight percent in Q4 of 2011 over the previous quarter. The rise follows a period of decline and stability in valuation-related fraud. Other results uncovered in the most recent Interthinx Mortgage Fraud Risk Report include:  The national Mortgage Fraud Risk Index was up 1.4 percent over the last quarter and 3.6 percent from a year ago to 145. Overall, the index has remained at the upper end of the narrow band (140-145) over the last seven quarters.  Although Income/Employment Fraud Risk is only up one percent since Q3 of 2011, the index has jumped nearly 14 percent since a year ago and 46 percent over two years ago, putting lenders at high risk for this type of fraud.  With an index value of 247, Arizona overtook Nevada (with an index value of 242) as the nation’s “Riskiest State.” Nevada had held the top spot since the first quarter of 2010. Florida is the third riskiest state for mortgage fraud and is home to ZIP code 33993, currently the riskiest ZIP code in the nation. “Valuation fraud continues to be a problem for lenders intent on mitigating overall fraud risk,” said Mark Chapin, chief valuation officer for Interthinx. “Lenders must take great care with their collateral valuation process in this environment, as many areas around the country are still experiencing home value declines. Technology—linked with the honed skills of qualified appraisers—produces the most credible results in our constantly moving marketplace.”

For those who have the access required for their role in the process, ensuring that they follow your rules while working with client files is extremely important for compliance and pipeline control. This is where the importance of configurability comes in. The rules you create will dictate the appropriate course of action for each step in the process and for each role in your company. These rules govern both compliance and effective workflow and give you the gift of accountability throughout your organization. 

“Since the post-bubble drop in home prices eased in January of 2009, we’ve generally seen that prices for homes in the lowest 20 percent of local markets in the metropolitan areas covered by the LPS HPI now differ by more than the highest 20 percent from their levels 10 years ago,” said Kyle Lundstedt, managing director of LPS Applied Analytics. “In those metropolitan areas where lowest-priced homes have increased in value, the differences between the high and low ends of the market have usually shrunk; where they have decreased in value, the differences have grown.” The LPS HPI national average home price for transactions during November 2011 was $199,000—a decline of 0.6 percent during the month relative to October 2011, reaching a price level not seen since October 2002 (see chart below). This is the fifth consecutive month of price decreases. The partial data available for December suggests further price declines of approximately 0.8 percent. LPS reported partial data from November transactions in its December release, which proved a reasonable indicator for November’s performance showing a preliminary 0.5 percent estimated decline, compared to the 0.6 percent for the full month’s data. LPS HPI average national home prices continue the downward trend begun after the market peak in June 2006, when the total value of U.S. housing inventory covered by the LPS HPI stood at $10.8 trillion. Since that peak, the value has declined 30.6 percent to $7.5 trillion. During the period of most rapid price declines, from June 2007 through December 2008, the LPS HPI national average home price dropped $56,000 from $282,000, which corresponds to an average annual decline of 13.8 percent. Since December 2008, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. During this period of more slowly declining prices, the national average home price has fallen approximately $26,000 from $226,000. Twenty of the MSAs with average price increases were in Florida, with the remainder in Arizona, Tennessee and New York. Phoenix was the best-performing MSA, as it was in October, with an increase during November of 1.1 percent. The other four of the top five MSAs with increases (greater than 0.6 percent) were in Fort Lauderdale, Miami and Orlando, Fla. and in Lake Havasu City-Kingman, Ariz. The five MSAs with the greatest declines in November were all in Georgia. Columbus, Macon, Gainesville and Augusta (in addition to Atlanta) declined more than two percent. MSAs that declined more than 1.5 percent were on the “Middle Coast,” in Chicago; Lake County, Ill.; and Kenosha County, Wis. One hundred and five MSAs declined more than one percent.

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Loan Servicing: Current and Future Business Process Assessment By Frank Tibbs

he most severe economic recession since The Great Depression has dramatically impacted all sectors of the financial markets. The effect on the mortgage market and on loan servicers specifically, forced a paradigm shift in the business model. Large volumes of non-performing loans, multiple and complex loan modification programs, increased scrutiny and regulation and a heightened awareness by customers and the general public are the new reality. A thorough review and assessment of loan servicer business operations is imperative and must address compensation, staffing and training, data management, compliance and reporting, default servicing improvement, technology infrastructure and effective application of software solutions.



Current state

Since 2007, revenues are down and expenses are up. The private label residential mortgage-backed securities (RMBS) market is essentially frozen. Hard costs are up, delinquency rates are at four-to-five times historical levels, fewer loans are being originated, loan balances on the new loans tend to be lower, and demand for specialty servicers is at an all-time high. Servicing fees can range from 25 bps to 50 bps direct servicing costs can range from 15 bps to 20 bps. Corporate allocations add two to four bps. Higher rates of servicer errors, Increased un-reimbursed foreclosure and REO expenses, property inspection and preservation costs, and advances due to higher delinquency rates and longer foreclosure time lines put pressure on profitability.

MARCH 2012 

 Transactional processes: Routine, standardized and generally referred to as reporting and remittance.  Have been readily automated and are scalable.  Administrative processes: Collections, foreclosure processing and real estate-owned (REO) disposition.  Requiring decisioning and “hands-on” interaction.  Have been more limited in automation and are not easily scalable.


Servicers are not the root cause of current problems, but they are an important part of the solution. The deluge of delinquencies and high volumes of foreclosure were unanticipated and unforeseen consequences of a housing bubble. Servicers weren’t expecting it and their operating models weren’t designed to handle it. The results are higher costs and lower productivity over the last five years. Loan servicing is essentially two distinct business processes: Transactional and administrative.

Future state Increased reliance on technology will require higher levels of expenditure. Future state will include national serv-

icing standards, increased legal and legislative involvement, and changes to servicer compensation. Investors and rating agencies will stipulate more stringent requirements. Regulators will mandate compliance. Issuers and guarantors will implement performance metrics and fees and penalties for poor servicer performance. Regulation will increase: Dodd-Frank and the Consumer Financial Protection Board regulations, Federal Housing Finance Agency (FHFA) Servicing Alignment Initiative (SAI) and government-sponsored enterprise (GSE)-revised servicer performance metrics (STARS for FNMA and SSP for FHLMC). Changes include specific performance measures and monetary penalties for non-compliance, increased repurchase demands and limiting or in some cases terminating servicers.

Business process assessment Costs and efficiencies will be achieved through refined and/or redesigned business processes. Servicers will employ new technology to leverage personnel and increase productivity. An emphasis will be placed on capability, capacity and cost. Individual recommendations should be documented and a formal implementation roadmap prepared and executed. An effective assessment supports recommendations to refine and redesign policies, processes and procedures, effectively manage staffing needs, enhance automation and leverage technology. Servicers need to conduct a thorough business process and technology assessment:  Identify areas of improvement to existing processes and systems.  Encompass all loan servicing functions.  Include all internal and external service providers and consumers.  Technology assessments should include software, hardware and personnel.  Focus on current high-cost/high visibility issues for performing and non-performing loans. The business assessment process should constitute:  Discovery: Reviews existing policies and procedures.  Current state assessment: A holistic view of all departments, systems and personnel.  Risk assessment: Specific risks are identified relative to each process,  Gap analyses: Differences or deficiencies between the desired state and current state.  Recommendations and an implementation road map. Frank Tibbs works in the mortgage and fixed-income practice of Actualize Consulting. Most recently, Tibbs served as project manager and business lead for the Servicer Scorecard development and implementation of the Servicing Success Program at Freddie Mac. He may be reached by phone at (703) 489-6973 or e-mail

nmp news flash

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in regulation military clothing as a tribute to the men and women who serve this country and the families that eagerly wait for their return. Each year, DocMagic delivers thousands of bunnies to its customers. The DocMagic Bunny is a staple of the company’s brand and every year the employees at DocMagic participate in a contest to pick the theme. For 2012, the employees overwhelmingly chose to show support for our country’s troops by outfitting Doc in regulation military fatigues proudly displaying the American flag and equipping him with a GPS device. “Sergeant Doc was specifically created to honor the men and women who serve in the armed forces,� said Dominic Iannitti. “They and their families make enormous sacrifices and we wanted to show our appreciation. We are pleased that the 315th U.S. Army Tactical Company was able to help connect us with the families of those who serve. We are additionally gratified by the enthusiastic response from our customers, who have phoned and written to thank us for honoring our nation’s true heroes.� With the help of the 315th, Sergeant Doc is being distributed to schools, youth organizations, churches and parks as well as the children and families of those deployed. These contributions are in keeping with the finest military traditions of the United States Army, which greatly appreciates the support of companies like DocMagic. The campaign began during the holiday season and is now continuing into the New Year.

continued on page 38


Leading the Industry with

Intelligent Marketing Solutions — the industry’s leading marketing company.


 MARCH 2012

The Mortgage Bankers Association (MBA) has released its year-end ranking of commercial and multifamily mortgage servicers as of Dec. 31, 2011, and at the top of the list of firms is Wells Fargo with $437.7 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $355.1 billion, Berkadia Commercial Mortgage LLC with $176.5 billion, Bank of America Merrill Lynch with $115 billion, and KeyBank Real Estate Capital with $108.2 billion. Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in U.S. CMBS, CDO and other ABS; PNC/Midland, MetLife, GEMSA Loan Services LP, Prudential Asset Resources and Northwestern Mutual are the largest servicers for life companies; and PNC/Midland, Wells Fargo, Deutsche Bank Commercial Real Estate, Berkadia and GEMSA Loan Services are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension fund, REIT, and investment fund servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for loans held in warehouse facilities; and PNC/Midland the top for other investor type loans. A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not doublecount loans for which a single servicer performs multiple roles. MBA also asked firms to provide infor-

The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the fourth quarter of 2011, a decrease of 41 basis points from the third quarter of 2011, and a decrease of 67 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased five basis points to 8.15 percent this quarter from 8.20 percent last quarter. The percentage of loans on which fore-


HOPE NOW has released its final 2011 loan modification data, which shows that an estimated 1.05 million homeowners received permanent, affordable loan modifications from mortgage servicers in 2011. The reported data for December shows that, for the 2011 calendar year, mortgage servicers completed approximately 695,000 proprietary loan modifications for homeowners and 353,677 Home Affordable Modification Program (HAMP) modifications as reported by the U.S. Department of the Treasury. Over the two year period since December 2009, nearly three million permanent loan modifications have been completed for homeowners. For the month of December, there were approximately 80,000 loan modifications completed, including 56,000 proprietary loan mods and 23,374 loan mods completed under HAMP.

Wells Fargo Ranks as Top Commercial Servicer in Volume in 2011

Mortgage Delinquencies Drop to 7.58 Percent in Q4

closure actions were started during the fourth quarter was 0.99 percent, down nine basis points from last quarter and down 28 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.38 percent, down five basis points from the third quarter and 26 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.73 percent, a decrease of 16 basis points from last quarter, and a decrease of 87 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 12.63 percent on a non-seasonally adjusted basis, a 10 basis point decrease from last quarter and was 107 basis points lower than a year ago. “Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy. The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago,� said Jay Brinkmann, MBA’s chief economist and SVP of research and education. “A major reason is that the loans that are seriously delinquent are predominantly made up of loans originated prior to 2008 and 

Loan Mods Outpace Foreclosure Sales Nationwide as 1.05 Million Mods Completed in 2011

Additionally, the data show that loan modifications outpaced foreclosure sales for the fourth consecutive year. In 2011, there were approximately 843,000 foreclosure sales completed for the year. This represented a significant drop from the 1.07 million reported in 2010. “Since 2007, more than five million permanent, sustainable solutions have been offered and in the past two years, almost three million have been done,� said Faith Schwartz, executive director of HOPE NOW. “While HOPE NOW’s data shows that total loan mods for 2011 were less than the number completed last year, it is important to note that foreclosure sales dropped by more than 21 percent from 2010.�

mation about loans on which they are the named special servicer—that is, where the firm stands ready to service the loan should special problems develop, such as delinquency. The largest named special servicers were LNR Partners, Inc., CWCapital LLC & CWCapital Asset Management and C-III Asset Management LLC. The MBA survey also collected servicing volumes for loans on commercial/multifamily properties located outside the United States. Hatfield Philips International, an LNR Property Company ranks as the largest master and primary servicer of non-U.S. commercial/multifamily mortgages, followed by Deutsche Bank, PNC/Midland, Manulife Financial/John Hancock and GEMSA.

Getting the Word Out: Leveraging Public Relations and Social Media to Promote Your Expertise Locally By Bob Zeitlinger eferrals are the lifeblood of any successful mortgage firm and mortgage professional. Do right by a homebuyer, illustrate expertise in navigating the mortgage system, and credibility is built with the client. “Use my guy,” says the client to family, friends and co-workers. “He really knows his stuff.” Sometimes, though, referrals are not enough to keep the number of leads coming in, especially in this economy. It can be frustrating for hard-working and conscientious mortgage professionals, whose knowledge and expertise blows away others in the industry, yet loses business to these same less qualified competitors. More often, smart mortgage executives are leveraging the media and social media in order to display their knowledge and drive business. Some call it public relations, media relations or publicity. These folks are easy to spot. They seem to be quoted in the local paper discussing trends in mortgage applications or home-buying, and/or the movement of interest rates. If you “Google Search” their names, you will probably see their mortgage-oriented Facebook pages, Web sites, Twitter accounts and/or blogs. Any knowledgeable mortgage professional with a good sense of what’s going on in the local market can do it as well—it just takes time, effort and a little understanding of the process. Remember, though, that it doesn’t need to be an all or nothing effort. Many mortgage professionals are active in social media, while others rely on traditional public relations to build their “brand” and show off their expertise.


MARCH 2012 



Public relations Mortgage professionals expend a great deal of time and effort learning regulations, understanding the local marketplace and how to solve problems for their clients. It almost seems a waste not to share that knowledge with as

wide an audience as possible. Because homebuying is the largest purchase most people make in their lifetime, there is an ongoing appetite for this type of information. And a variety of media—newspapers, Web sites, and television and radio news outlets—have and will continue to feed that appetite by covering the topic of homebuying. Some deride public relations or publicity as shameless self-promotion. And it can be if the entire effort promotes only yourself and your firm. Profile stories are great, and can point out your success, and how that success is based on helping clients. But a profile is a one-time story. Once the local paper runs a profile on you or the firm, it could be many, many years before it would even consider another one, if ever. The mortgage firms and advisors which leverage the media the best are the ones who promote not themselves, but their expertise. The expertise shows up in stories that address challenges that homebuyers are facing. At a time when the potential homebuyer is reading about how to secure the lowest interest rate, he or she reads a mortgage executive’s commentary, and has that executive has just been added to a short list of mortgage pros they will call. Successful mortgage pros view themselves as important advisors in the homebuying process. Most reporters, and just about all firsttime home buyers, don’t have the same intimate knowledge. Even second-time buyers or those refinancing have generally not kept up with changes since their last mortgage application. Not only are you promoting your firm and your individual expertise, but you are actually doing a favor for the reporter. If done correctly, mortgage advisors can be a valuable resource to them over time. The real estate or personal finance reporter’s job is to provide their readership with useful information that enables them to save time and money. It’s easy to see how that

overlaps with what the mortgage firm and mortgage professional’s goals as well.

versation doesn’t result in an interview or meeting: As you come across interesting information, forward it on to the How to get reporter. If you notice a trend or any changes in started  Determine the local the local marketplace, media outlets where send that as well. If it is real estate and homean important developbuying issues are disment, suggest that it may cussed: Typically, this list make a good story for the includes the local and reporter’s readers. Regular “Mortgage regional daily newspa- professionals expend a communications—at least pers, weekly newspapers, great deal of time and once a month, but not and any local, news-orimore than once a week— effort learning ented Web sites. Also, to is vital. Help set the agenregulations, be considered are busi- understanding the local da for reporters. It’s okay ness publications are any marketplace and how to suggest stories, but just local TV or radio news as often, your role as to solve problems for outlets. If increasing their clients. It almost source is to provide an referrals among accountupdate on what’s going seems a waste not to ants and attorneys is a share that knowledge on in the market. Help goal, regional trade pubthe reporter connect the with as wide an lications reaching these audience as possible.” dots. Here’s an example: audiences can also be “You may have seen staincluded. tistics about falling mortgage approvals. I’ve noticed a drop as  Read or watch these media outlets: well, and attribute it to new conReview their Web sites, and search straints put on lenders because of terms such as “real estate,” “homepressure from federal financial regubuying” and “mortgages” on these lators. My firm is still doing solid volsites. See which reporters have covume, but the approval process is ered these areas and what types of much more labor intensive these stories they write. In most cases, condays. If you are interested in a story tact information for reporters can be along these lines, I can provide furgathered on the media’s Web site. At ther commentary.” the larger media outlets, there Don’t be surprised if the reporter should be a reporter who covers real doesn’t response to your offer right estate or personal finance. away. I’ve had reporters call six months after suggesting a story to  Introduce yourself: Whether it’s via say that they’re now ready to work phone or e-mail, simply state your on it. Even if the reporter doesn’t firm, who you are and your credenwant to pursue a story suggestion tials. Provide background on your for whatever reason, he or she may firm and on yourself. If representing be working on a different story and a mortgage firm, offer information looking for insight or perspective. “I on individual mortgage professionals just happen to be working on a and areas of specific expertise. Some story about the right time to refimay specialize in home mortgages; nance,” a reporter might say. “Do others in commercial lending; others you work with homeowners on this in Federal Housing Administration often? What kinds of advice do you (FHA) loans; or some on refinances. give them?” If you don’t specialize Offer to be a “source” to the reporter in refinancing, refer the reporter to and list the topics upon which you or someone in your network who can your firm can comment. You can answer the questions. Part of being even suggest an introductory meeta valuable source is helping ing. Aside from an initial phone call, reporters find appropriate sources. it is typically best to e-mail reporters They know that no one mortgage with ideas and information. professional will have expertise in all areas. The reporters appreciate  Stay in touch, even if the initial conyour helpfulness.

 Know what a reporter considers newsworthy: Following a reporter’s coverage of the local real estate market should provide a sense of what is worthy of coverage. Usually it can be summed up in one word: Changes. Anything that deviates from the norm (think “man bites dog”) is a candidate for a story. Think changes in laws, regulations, interest rates, fees, and types of mortgage options available.  Provide examples of newsworthy information that is available monthly: Every month, real estate and personal finance reporters write on the current state of mortgage rates. This provides an opportunity to contact these reporters at least once a month to let them know your thoughts on changes to available rates and their effects on would-be homebuyers and refinancing plans.  A client’s problem may also illustrate an issue of interest: Here’s an example: “I’m working on more FHA applications than ever before. Many of these folks are now self-employed or under-employed, and are going the FHA route.”

Social media

 After the interview, follow up with the reporter to make sure he or she has everything they need. It’s okay to guide or redirect the interview, especially if the reporter is basing their line of questions on an incorrect assumption.  Answer the question directly, and then provide details. Don’t make the reporter listen to an answer for three minutes to get the answer to a question. “The short answer is ‘yes,’ and here’s why …”  Speak from experience. The interview is more genuine when you answer questions in the context of a real client challenge. And they don’t need to mention the client by name to do this. “I have many clients who face that same problem, and here is what I tell them.”


 Don’t answer any questions, with just an “It depends.” Reporter: “What type of mortgage is best for a first-time homebuyer?” Mortgage pro: “It depends.” While that’s accurate, it’s not helpful to the reporter. It’s better to say, “That’s not a simple question to answer. For some, a 30-year fixed is best. For others, an adjustable-rate mortgage (ARM) is best. Here’s the type of person best suited for each …”  Avoid speaking off the record. If you don’t want it in print, don’t say it. There are exceptions, but in general, it’s best to abide by this rule.  If possible, point out what is new or different about the topic being discussed. Here’s an example: “Banks may have been reticent to approve certain types of mortgages, but are now being pressured by regulators to reinvest in their communities.”  Avoid the use of jargon or technical terms. If it’s unavoidable, make sure you explain what they mean right away.

logues and share information. YouTube has the ability for mortgage firms and mortgage professionals to create their own “Channels.” While “boy coming home from dentist” videos still dominate, more and more businesses are creating channels to convey useful information. With a task as important and personal as securing a mortgage, providing a prospect the opportunity to see and hear directly from the mortgage firm via video can be a big boost. Like YouTube, more companies and business professionals are using Facebook to provide information and communicate with past clients and prospects. Having former clients “Friend” you and your business is a tremendous marketing tool. Having them post photos of the home

you helped them finance is even better. Like the public relations effort, this can take a great deal of work. The good news again is that you don’t have to use every social media tool available. You can focus on Facebook, or a blog or whatever one you believe is most useful. Bob Zeitlinger is the founder and managing director of B to Z Communications, a full-service public relations firm in northern New Jersey. Zeitlinger has more than 20 years media relations and marketing experience for a variety of clients in the financial and professional services industries. He may be reached by phone at (201) 244-1213 or e-mail

 MARCH 2012

Back in the day, a daily newspaper, TV station or magazine used to be one of the few ways to communicate to large audiences. The advent of the Internet, and more recently, the popularity of social media allows for just about anyone to be a publisher of online information. There are many social media outlets available to mortgage professionals, including Facebook, LinkedIn, YouTube and blogs. The “social” part of social media is that these sites encourage a conversation and allow for interaction. These sites provide a way to push content out—whether it was created by the mortgage firm or by someone else. Remember, content used on social media sites should be similar in nature to information used in the public relations efforts. It’s okay to provide content on you and your firm, but you need to engage site visitors with information that captures their interest. How many people will come back repeatedly to read about you and your products? LinkedIn, primarily for business, has “Groups” such as real estate attorneys and accountants, designed for foster dia-

 Prior to an interview, draft brief message points that provide reminders of the key points to be made. Any singular topic can have many facets. There’s nothing wrong with a “cheat sheet” that reminds you of the different aspects of an issue to be discussed. Although you may know the general topic or thrust of the reporter’s story, you may be unsure of other areas will be covered in the interview. Don’t be shy about asking the reporter. Reporters are used to this question and don’t mind answering it. Remember … you want to be prepared. It makes the interview time more productive.


 15-year, 30-year, ARM? Deciding the best mortgage for you  New rules, more documentation: Stricter standards means more paperwork for buyers  Top five tips for ensuring a smooth mortgage

 Be cognizant of a reporter’s deadlines: The scene from the movie of the reporter rushing to finish a story on deadline is not Hollywood makebelieve. These folks are on deadline just about every day or every week. If you don’t have time to speak with a reporter immediately, ask when their deadline is, and try your best to meet it. If you can’t, refer the interview to someone else in your network.

Interview Do’s and Don’ts 

 Alert reporters to changes in regulations, or proposed changes in regulation: Reporters are busy and may not be aware of a major piece of regulatory reform being proposed. Let them know what’s being suggested, the impetus for it, and the expected ramifications. If you have a position for or against this, great. If not, that’s okay as well. As long as you can put the proposed rules in context. Will it have an impact on homebuyers and their ability to get a mortgage? Will it increase costs? These are just some of the questions a reporter will have. The more you can answer them, the quicker you’ll rise in their rank of “go-to sources.” Some opportunities will be based on news, such as drops or increases in interest rates. Some will be more feature-oriented and less timely. Here are just three examples.

 When working with reporters, etiquette and ethics are important: There are several unwritten rules for working with reporters. When offering ideas and information, don’t send one mass e-mail to them. Ideally, you are fostering individual relationships with all of these reporters. Some will devote more time and space to real estate issues; some only cover news-related items; others write features on homebuying. Sending one e-mail to all guarantees that a good portion of the e-mails will be inappropriate. If one reporter calls to get comments for a specific story, don’t share this with competing reporters. Reporters at different media outlets are very competitive with one another. Disclosing what one reporter is working on to another is a series breach of trust.

nmp news flash

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this pool is steadily growing smaller as a percent of total loans outstanding. In addition, employment is the key driver of mortgage performance and the mortgage delinquency rate is actually falling faster than the unemployment rate is declining.”

Delinquency Rate Hits Highest Mark Since 2009


Why Is It Easy to Trap Real Estate Agents with ShortSaleSpeedway™?

MARCH 2012 


Many real estate agents shy away from short sales because of the complexity involved in doing it themselves. When they refer the work to an attorney or third party negotiator, they risk losing a great chunk of their commission. ShortSaleSpeedway™ automates the short sale process, by creating all of the documents a real estate agent needs to create the superior short sale proposal exactly how banks want to see them.

How Can ShortSaleSpeedway™ Help YOU Trap Real Estate Agents? Your company can have your very own, private labeled version of ShortSaleSpeedway™ that you offer at no cost to your real estate agents. They will now have the tools provided by your company to be a true short sales specialist. Now they can negotiate short sales with ease and not have to give away their commission to someone else. You’re providing them with a tool that puts more money in their pocket.

What Do We Provide You? When you have your own ShortSaleSpeedway™, we provide you with the following: Q Your own customized private labeled ShortSaleSpeedway™ site Q Access to reporting on all borrowers being put into the system Q Training for you, your real estate agents and a dedicated support team Q Marketing materials to promote your ShortSaleSpeedway™ to real estate agents In many cases, the setup for the private labeled site costs you nothing!

For a free demo, contact Erik Wind, at (800) 262-3783, ext. 701 or visit

According to TransUnion, the national mortgage delinquency rate, defined by TransUnion as the rate of borrowers 60 or more days past due, increased for only the second time since the end of 2009, edging upward to 6.01 percent at the end of the fourth quarter in 2011. Between the third and fourth quarters of 2011, all but 13 states experienced increases in their mortgage delinquency rates. On a more granular level, 64 percent of metropolitan areas saw increases in their mortgage delinquency rates in the fourth quarter of 2011. This is the same percentage as found in Q3 2011, but up from Q2 2011 when only 21 percent of MSAs experienced an increase. TransUnion’s forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values. The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices fall more than expected. “To see that, quarter over quarter, fewer homeowners were able to make their mortgage payments is not welcome news,” said Tim Martin, group vice president of U.S. housing in TransUnion’s financial services business unit. “However, it was not unexpected. First, there tends to be a natural seasonality, evident well before the recession, of higher delinquencies in the fourth quarter; perhaps explained by borrowers balancing holiday spending versus debt payments. Secondly, on the economic front, house prices continued to deteriorate in the fourth quarter and unemployment remained stubbornly high. This combination leads to more negative equity in homes and reduced real personal income that can affect borrowers’ ability and willingness to pay their mortgages.” Many see the economic environment beginning to brighten, although modestly. Therefore, TransUnion’s forecast predicts mortgage borrower delinquency rates to drift downward marginally in 2012, but in the meantime we may still see a quarter or two of slightly elevated nonpayment rates as some consumers are not able to, or decide not to, repay their mortgage debt obligations in light of the uncertain economic outlook. “The more encouraging news is that, when looking year over year, more

homeowners are making their mortgage payments and the delinquency rate dropped over six percent since Q4 2010,” said Martin. “While it is certainly good to see the rate dropping, at this pace it will take a very long time for mortgage delinquencies to get back to normal.”

830,000 Foreclosures Completed in 2011 CoreLogic has released its first national Foreclosure Report which provides monthly data on completed foreclosures, foreclosure inventory and 90plus delinquency rates. Completed foreclosures for all of 2011 totaled 830,000 compared with 1.1 million in 2010. In December 2011, there was a monthover-month decrease in completed foreclosures to 55,000 from 57,000 in November 2011. The December 2011 completed foreclosures figure was also down from one year ago when it stood at 67,000. From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures. The new data from CoreLogic also shows that nationally 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011. The foreclosure inventory is the stock of homes in the foreclosure process. A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed. The foreclosure inventory is measured only against homes with an outstanding mortgage, rather than against all homes. Nationwide, roughly one-third of homeowners own their homes outright. Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011 compared to December 2010, a decline of 130,000 properties nationwide. The number of loans in the foreclosure inventory decreased by 5.3 percent in November 2011 compared to November 2010 as well. The share of borrowers nationally that were 90 days or more delinquent on their mortgage payments, classified as seriously delinquent, improved to 7.3 percent in December 2011 compared to 7.8 percent in December 2010. “The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” said Mark Fleming, chief

economist with CoreLogic. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”

FHFA Issues Its Plans for the GSEs to Congress

(D-AK) and John Thune (R-SD) have introduced SB 2054, the Stop the Outrageous Pay (STOP) at Fannie Mae and Freddie Mac Act, and act which prevents the distribution of undisbursed bonus money and moves all Fannie Mae and Freddie Mac employees onto a structured pay scale similar to that of other federal financial regulators. The BegichThune bill follows a series of events from November of 2011, when reports surfaced that the Federal Housing Finance Agency (FHFA) approved nearly $13 million in bonus pay for 10 executives at Fannie and Freddie. In response, Sens. Begich and Thune spearheaded a bi-partisan letter, signed by a total of 60 senators, to FHFA Acting Director Edward J. DeMarco and Treasury Secretary Timothy Geithner expressing outrage over the excessive pay. “Our goal is to make sure the reckless and outrageous bonuses issued to Fannie and Freddie execs last year are never repeated and remain a history lesson on abuse of taxpayer money,” Sen. Begich said. “The two agencies have received over $150 billion in taxpayer funds since 2008, and those executives should not be living like fat cats while many Alaskans and other Americans are struggling to pay their bills, send their kids to college, and make the mortgage payment.” The Begich-Thune STOP Act suspends the current compensation packages of Fannie and Freddie executives and limits the pay for all employees. Specifically, SB 2054:  Places all employees of Fannie Mae and Freddie Mac on the pay scale used by the federal financial regulators such as the FDIC and the SEC, as established by the Financial Institutions Reform, Recovery, and

harp 2.0

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: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

continued from page 28

page or through a company that can help you capture those leads. Second, the above numbers also let us know how many people you can market to through direct mail campaigns, as well as cold calling campaigns. If you set up your direct marketing programs correctly with the right partners, HARP will be bigger than you could have imagined! Raymond Bartreau is chief executive officer of BestRate Referrals, and founder and chief executive officer of He may be reached by phone at (800) 811-1402 or e-mail

 MARCH 2012

or outbound call campaign. We are currently seeing more than 2.5 percent responses with marketing campaigns to current Fannie Mae and Freddie Mac loan holders. Once this new plan launches in full force and major news outlets begin reporting on the program, the excitement should drive direct mail responses up well over the three percent mark. The above-stated numbers provide us with a couple important things to consider. First, there will be at least 11 million homeowners (that you can help) that may be searching online for HARP rates at any given time from now until the end of 2013. It is your job to capture that search, either by your own



Illinois Attorney General Lisa Madigan has filed a lawsuit against Standard & Poor’s (S&P) for its fraudulent role in assigning its highest ratings to risky mortgage-backed securities (MBS) in the years leading up to the housing market crash. Madigan filed her suit in Cook County Circuit Court, alleging that S&P compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share. The Attorney General’s lawsuit alleges that S&P ignored the increasing risks posed by MBS, instead giving the investment pools ratings that were favorable to its investment bank client base and S&P’s profits. “Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue,” AG Madigan said. “Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgagebacked securities that helped our market soar—and ultimately crash— could not have been purchased by most investors without S&P’s seal of approval.” AG Madigan’s suit cites numerous internal e-mails and conversations among S&P employees in the run up to the housing market’s crash that demonstrate the company misrepresented its ratings as objective and independent. In one such exchange, in April 2007, an online conversation via a companybased instant messenger application revealed employees discussing S&P ratings compared to the reality of risk involved, with an employee stating an investment “could be structured by cows and we would rate it.” Madigan said investors relied on S&P ratings because they were historically rooted in the agency’s purported independence and objectivity. S&P’s internal code of conduct states its goal to “promote investor protection by safeguarding the integrity of the rating process.” But, the Attorney General’s lawsuit cites congressional testimony by a former managing director of S&P who revealed that “profits were running the show,” with ratings being assigned to risky investments to help drive profit margins for their clients. S&P, a subsidiary of McGraw-Hill Companies, is one of the nation’s largest credit ratings agencies responsible for independently rating risk on behalf of clients and investors. Madigan said in the run up to the financial crisis, S&P consistently misrepresented the risk of MBS, assigning these securities its highest seal of approval—or AAA rating. This misrepresentation spurred investors to purchase securities that were far riskier than their ratings revealed.

Enforcement Act (FIRREA) of 1989. Under this pay scale, Fannie Mae and Freddie Mac employees would be prohibited from being paid more than employees of other federal financial regulatory agencies (currently capped at $275,000 annually);  Prevents any future pay or bonus payments for 2011 and beyond that are in excess of this new pay cap and that have not yet been disbursed. These funds would be used to pay down the national debt; and  Requires the FHFA to make Fannie Mae and Freddie Mac salary disbursements data available to Congress and the public without compromising the privacy of individual employees. “It is unbelievable that Congress needs to step in and end these outrageous salaries for Fannie Mae and Freddie Mac executives,” said Sen. Thune. “The American taxpayers have already bailed out these agencies to the tune of over $150 billion and should not be on the hook for millions of dollars in exorbitant salaries.” The House Financial Services Committee passed similar legislation to suspend the bonuses and limit future compensation packages by a vote of 524 on Nov. 15, 2011. 

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco has issued a strategic plan for the next phase of the conservatorships of the governmentsponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to Congress. The plan builds on DeMarco’s February 2010 letter to Congress on the conservatorships and sets forth objectives and steps that the FHFA is taking or will take to meet its obligations as conservator. Fannie Mae and Freddie Mac were placed into conservatorship on Sept. 6, 2008 and have since received more than $180 billion in taxpayer support. “MBA welcomes FHFA’s proposal for the next phase of the conservatorship of Fannie Mae and Freddie Mac,” said David H. Stevens, president and chief executive officer of the Mortgage Bankers Association (MBA). “We have been out front on GSE reform issues, and our Council on Ensuring Mortgage Liquidity outlined many of these same types of changes in its September 2009 proposal on the future of the government’s role in the secondary mortgage market.” The FHFA identifies three strategic goals for the next phase of the conservatorships:  Build a new infrastructure for the secondary mortgage market;  Gradually contract the GSEs’ dominant presence in the marketplace while simplifying and shrinking their operations; and  Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages. “With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said DeMarco. “FHFA is contemplating next steps to build an infrastructure for the secondary mortgage market that is consistent with existing policy proposals and will support any outcome of the leading legislative proposals. FHFA looks forward to working with Congress and the Administration on a resolution of the conservatorships and a comprehensive review of the nation’s housing finance system.” Stevens continued, “Uncertainty, wherever it exists, must be removed and a clear path forward must be laid out, in order for the housing market in this country to be strong and vibrant. This proposal that FHFA is putting forth shows a strong commitment to doing just that.”

Illinois AG Madigan Files Bill Introduced to STOP Suit Against S&P for Risky Excessive GSE Bonuses MBS Ratings U.S. Sens. Mark Begich

Anti-Money Laundering Debuts for Non-Banks By Jonathan Foxx

MARCH 2012 



A new era in filing requirements is about to begin. For the first time, the Financial Crimes Enforcement Network (FinCEN) will require non-bank mortgage lenders and originators to implement an Anti-Money Laundering program (AML Program) and file Suspicious Activity Reports (SARs) for certain loan transactions.1 FinCEN is establishing this AML program in accordance with the Bank Secrecy Act (BSA).2 The guidelines relating to the AML requirement become effective on April 16, 2012, and the AML Program’s effective compliance date is Aug. 13, 2012.3 The AML program and SAR filing regulations, which I will refer to as “FinCEN’s rule,” are considered to be “the first step in an incremental approach to implementation of regulations for the broad loan or finance company category of financial institutions.”4 The Bank Secrecy Act defines the term “financial institution” to include, in part, a loan or finance company. This terminology, however, can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses. Thus, non-bank residential mortgage lenders and originators, and mortgage brokers, are grouped into the “loan or finance company” category.5 However, the term ‘‘loan or finance company’’ is actually not concisely defined in any FinCEN regulation, and there is no legislative history on the term itself. Nevertheless, FinCEN is applying this term to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses.6 Therefore, residential mortgage lenders and originators (RMLOs) are covered by the scope of the “loan or finance company” term. I will use the acronym “RMLO” in this article, inasmuch as my principal focus herein relates to residential mortgage lenders and originators. FinCEN can issue regulations requiring financial institutions to keep records and file reports that are determined to have a high degree of useful-

ness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism. Federally-regulated depository institutions have been required to have AML Programs,7 and now, as of the aforementioned effective compliance date, RMLOs must also comply with FinCEN’s regulations relating to implementing an AML Program and the filing of SARs. Over the last few years,8 FinCEN has issued studies and analyses that used SARs to discover suspected mortgage fraud and money laundering that involved both banks and residential mortgage lenders and originators.9 According to FinCEN, these reports “underscore[d] the potential benefits of AML and SAR regulations for a variety of businesses in the primary and secondary residential mortgage markets.”10 Residential mortgage lenders and originators, the RMLOs, are considered to be the primary providers of mortgage finance, and have a unique position with respect to direct contact with the consumer. Thus, they are presumably able to assess and identify money laundering risks and fraud.11 At this time, FinCEN is not proposing a definition of “loan or finance company” that would encompass other types of consumer or commercial finance companies, or real estate agents and other entities involved in real estate closings and settlements. In this article, I am going to unpack the AML Program for you in a way that will give you some familiarity with its scope, while perhaps also making its implementation a bit less daunting than it might otherwise seem to be. Nevertheless, many RMLOs will find that setting up the AML Program will be a challenging endeavor. Information, issuances, and relevant documentation are available in the FinCEN section of my firm’s Web site Library at Please keep in mind that, as is the case with many applications of legal and regulatory compliance, there are aspects and nuances that will require recourse to a competent risk management professional to obtain comprehensive guidance and reliable information.12

AML Program Residential mortgage lenders and originators, the RMLOs, are required to establish an AML Program that includes, at a minimum: 1. Development of internal policies, procedures, and controls. 2. Designation of a compliance officer. 3. Ongoing employee training program. 4. Independent audit function to test for compliance. To effectuate the AML Program, FinCEN has given a definition of an RMLO that is broad in scope and covers most non-bank residential mortgage originators. The AML Program covers any business that, on behalf of one or more lenders, accepts a completed mortgage loan application, even if the business does not in any manner engage in negotiating the terms of a loan. Also covered are businesses that offer or negotiate specific loan terms on behalf of either a lender or borrower, regardless of whether they also accept a mortgage loan application. Note that the word “accept” is intended to differentiate the FinCEN rule from the SAFE Act. FinCEN is ensuring that persons who either accept an application or offer or negotiate the terms of a loan are covered. Furthermore, the AML rule applies to residential mortgage originators, regardless of whether they receive compensation or gain for acting in that capacity. Obviously, these changes create differences between the definitions in the FinCEN rule and those used in the SAFE Act and other federal mortgage-related statutes. Clearly, this was done intentionally to differentiate the FinCEN requirements from those other statutes, so that FinCEN’s interpretation is not based on the interpretation of those statutes.13 Moreover, FinCEN has taken the position that the registration and training requirements under the SAFE Act are not sufficient to address all of the concerns and accomplish all of the goals related to AML and SAR programs. In any event, FinCEN has announced that it intends to dialogue with the

Conference of State Bank Supervisors (CSBS) to coordinate the identification and examination of mortgage originators subject to FinCEN’s rule.14 The AML Program applies to businesses, including sole proprietorships, but does not contemplate coverage of an individual employed by a financial institution.15 To state this precisely: FinCEN’s rule does not incorporate any exceptions for businesses based on their form of organization. There are no exceptions for a certain arbitrary number of employees or net worth, nor is there a “small business” exclusion or exception for businesses with fewer than five employees, or for businesses that satisfy some other arbitrary size, net worth or similar criteria. Similarly, there is no “de minimis” exception for businesses that lend or broker loans under a relatively low value, or low aggregate volume of transactions within a set time period. The only exclusion is given to individuals financing the sale of their own real estate. Generally, purchase money mortgage loans and traditional refinancing transactions facilitated by RMLOs are covered in the AML Program. Yet, because any transactions conducted by the RMLO could reasonably be considered to be extending a residential mortgage loan or offering or negotiating the terms of a residential mortgage loan, within the meaning of the definitions of “residential mortgage lender” and “residential mortgage originator,” as provided in FinCEN’s rule, the AML Program would seem to apply to transactions involving funds or programs under the Troubled Asset Relief Program (TARP) and similar federal programs, or any similar state housing authority or housing assistance program. However, to the contrary, FinCEN’s rule does not directly apply to the federal or state housing authorities and agencies administering such programs. Therefore, excluded from the AML Program is any federal or state agency or authority administering mortgage or housing assistance, fraud prevention or foreclosure prevention program, though RMLOs participating in such programs must comply with

FinCEN’s rule to the extent that any transactions could reasonably be considered to be extending a residential mortgage loan or offering or negotiating the terms of a residential mortgage loan.16 Interestingly, the AML Program does apply to foreclosure prevention actions and counseling services performed by legitimate, non-profit organizations, to the extent any such organizations may reasonably be deemed to be extending a residential mortgage loan (including a short-term mortgage loan), or offering or negotiating the terms of a residential mortgage loan. However, FinCEN’s rule does not require implementation of the AML Program rules for non-profit organizations that: 1. Limit their activities to assisting with the preparation of loan applications or referral of prospective borrowers to qualified lenders, for free or for a fee; 2. Provide short-term, non-mortgage loans to qualified borrowers or homeowners, or 3. Otherwise “facilitate” the extension of a residential mortgage loan (but do not make the loan or offer or negotiate the terms of the loan).

There are some features of filing a SAR that have stirred controversy and provoked litigation over the years, especially in the areas of the “Safe Harbor,” limitation on liability, and notification to the suspect of a subject SAR being filed. There is a “Safe Harbor” under federal law22 that provides complete protection from civil liability for all reports of suspicious activity transactions made to appropriate authorities, including supporting documentation, regardless of whether such reports are filed pursuant to the SAR’s instructions or are filed on a voluntary basis. Specifically, the law provides that a financial institution, and its directors, officers, employees and agents, that make a disclosure of any possible violation of law or regulation, including in connection with the preparation of suspicious activity reports, “shall not be liable to any per-

Notifying the suspect of suspicious activity Notification to the suspect is prohibited under federal law24 and a financial institution, and its directors, officers, employees and agents that, voluntarily or by means of filing a SAR, report suspected or known criminal violations or suspicious activities may not notify any person involved in the transaction that the transaction has been reported. continued on page 42


 Part I: Reporting Financial Institution Information  Part II: Suspect Information  Part III: Suspicious Activity Information  Part IV: Contact for Assistance  Part V: Suspicious Activity Information Explanation/Description Completing the SAR correctly is essential to compliance with FinCEN’s rule. A whole cottage industry of independent auditors has built up over the years to review a bank’s compliance with respect to SAR filings. This auditing is essential, however, as there is a requisite independent testing component to any valid AML Program, whether bank or non-bank. For an example of meticulous due diligence in completing a SAR, the SAR’s Part V section itself requires careful explanation and/or description of “known or suspected violation of law or suspicious activity” and the care with which it is completed may make the difference in whether or not the described conduct and its possible criminal nature are clearly understood and recorded. Thus, the SAR form’s preparation and filing, although conducted by the RMLO’s employees, often requires independent auditors to determine and report on the enforcement of the AML

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Before we move on to an outline of the AML Program, let us take a close look at the form that must be filed with FinCEN. This form is called the Suspicious Activity Report, known as a SAR. FinCEN had considered requiring RMLOs to use Treasury SAR Form TD F 90-22.47, the form presently used by banks and other insured depository institutions.18 For FinCEN’s purposes,

Safe Harbor

son under any law or regulation of the United States, any constitution, law, or regulation of any state or political subdivision of any state, or under any contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.” An RMLO, and any director, officer, employee, or agent of any loan or finance company, that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or makes a disclosure pursuant to FinCEN’s rule or any other authority, including a disclosure made jointly with another institution, is protected from liability for any such disclosure, or for failure to provide notice of such disclosure to any person identified in the disclosure, or both.23


Suspicious Activity Report

Program and the accuracy, completeness, and timeliness of the SAR filings. My firm conducts such audits, and I can attest to the wide range of understanding on the part of our clients regarding, among other things, the comprehensiveness of the AML Program, what information requires a SAR filing, the obligation of filing a SAR in a particular instance, how and when a SAR must be or should have been filed, and the extent to which employees are adequately educated in Bank Secrecy Act mandates. 

Apparently, mortgage servicers are in a grey area with respect to complying with the FinCEN rule. Although FinCEN seems to agree that the typical activities of mortgage servicing companies do not fall within the definition of residential mortgage originator, FinCEN will not make a “blanket exclusion or exception” for mortgage servicers. That is, because the broad definition is based on the activity in which an entity is engaged, as long as a mortgage servicer does not extend residential mortgage loans or offer or negotiate the terms of a residential mortgage loan application, it will not fall under of the definition of residential mortgage loan originator. Loan modification programs, such as the Home Affordable Modification Program (HAMP) are covered by FinCEN’s rule only to the extent that the modifications do not involve extending new residential mortgage loans or offering or negotiating the terms of a residential mortgage loan application. Such programs nonetheless are vulnerable to fraud and money laundering; in fact, since 2009, FinCEN has warned financial institutions and consumers about the fraud and money laundering risks associated with foreclosure prevention and loan modification programs.17

the information required for a SAR from an RMLO would be substantially the same as that required of banks and other depository institutions that make mortgage loans and use SAR Form TD F 90-22.47.19 The Federal financial institutions’ regulatory agencies, the U.S. Departments of Justice, and the Treasury, may use and share the information collected on a SAR. In my experience with bank clients, the time required for collecting information averages 30 to 45 min. per SAR response, and that includes the time to gather and maintain data in the required SAR report, review the instructions, and complete the report’s fields. I think the same time frame will likely apply to non-bank SARs. However, FinCEN is modernizing its SAR filing system and intends to establish a uniform electronic form for use by all financial institutions with a SAR filing obligation.20 Accordingly, FinCEN promulgated the aforementioned, effective compliance date for SAR filing in order to allow time for the non-bank industry to implement programs and systems and for FinCEN to implement the new filing system using a uniform SAR. In addition, FinCEN intends to phase out the manual filing of paper SAR forms.21 Therefore, RMLOs will be required to use FinCEN’s electronic, Web-based E-Filing system, which is currently under development, for the filing of the SAR form. The E-Filing system will be Web-based and will not require automated systems to be integrated into the loan origination systems. The current SAR consists of five parts, as follows:

anti-money laundering


Indeed, any RMLO, and any director, officer, employee, or agent of an RMLO, if subpoenaed or otherwise requested to disclose a SAR or any information that would reveal the existence of a SAR, must decline to produce the SAR or any information relating to the subject SAR. The required response of the RMLO to such circumstances is to notify FinCEN of any such request and reporting to FinCEN the response thereto made thus far by the RMLO.25 Furthermore, there is a prohibition to sharing by an RMLO, or any director, officer, employee, or agent of the RMLO, of a SAR, or any information that would reveal the existence of a SAR, within the RMLO’s own corporate organizational structure.26 There are even prohibitions involving government entities with respect to SAR disclosure. A federal, state, local, territorial, or tribal government authority, or any director, officer, employee, or agent of any of the foregoing, may not disclose a SAR, or any information that would reveal the existence of a SAR, except as necessary to fulfill official duties consistent with the Bank Secrecy Act.27 Official duties, however, do not include the disclosure of a SAR, or any information that would reveal the existence of a SAR, in response to a request for disclosure of non-public information or a request for use in a private legal proceeding.28

continued from page 41

es. Policies, procedures, and internal controls developed and implemented by an RMLO must include provisions for complying with the applicable requirements29 of integrating the company’s agents and brokers into its AML Program, and obtaining all relevant customer-related information necessary for an effective AML Program.

BSA officer Designate a compliance officer who will be responsible for ensuring that: 1. The RMLO’s AML Program is implemented effectively, including monitoring compliance by the company’s agents and brokers with their obligations under the program; 2. The AML Program is updated, as necessary; and, 3. Appropriate persons are educated and properly trained.


I propose now to provide an overview of the components of the AML Program, as mandated in FinCEN’s rule. Please keep in mind that each component contains numerous integrative subsets and various compliance elements that must be coherently and logistically enforced, each of which is subject to independent testing and verification. The AML Program for RMLOs requires, in the first place, a written anti-money laundering program that is reasonably designed to prevent the RMLO from being used to facilitate money laundering or the financing of terrorist activities. Senior management must approve the AML Program and, upon request, a copy of it must be made available to FinCEN (or its designee). The following four components constitute the core requirements of the AML Program. Failure to comply fully with implementing these components on and after Aug. 13, 2012 may constitute a violation of the Bank Secrecy Act. I have titled each component to reflect its essential significance.

Internal control plan Incorporate policies, procedures, and internal controls based upon the RMLO’s assessment of the money laundering and terrorist financing risks associated with its products and servic-

2. Is designed, whether through structuring or other means, to evade any requirements of this part or any other regulations promulgated under the Bank Secrecy Act.31 3. Has no business or apparent lawful purpose or is not the sort of purpose in which the particular customer would normally be expected to engage, and the RMLO knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction. 4. Involves use of the RMLO to facilitate criminal activity.

Training Provide for ongoing training of appropriate persons concerning their responsibilities under the AML Program. An RMLO may satisfy this requirement with respect to its employees, agents, and brokers by directly training such persons or verifying that such persons have received training by a competent third party with respect to the products and services offered by the RMLO.

Independent testing AML Program— Components

assets derived from illegal activity (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any Federal law or regulation or to avoid any transaction reporting requirement under Federal law or regulation.

Provide for independent testing to monitor and maintain an adequate AML Program, including testing to determine compliance of the company’s agents and brokers with their obligations under the AML Program. The scope and frequency of the testing must be commensurate with the risks posed by the RMLO’s products and services. Such testing may be conducted by a third party or by any officer or employee of the RMLO, other than the person designated as the BSA officer.

Filing the SAR Commencing with the compliance date of Aug. 13, 2012, every RMLO is required to file a SAR with FinCEN, pursuant to the FinCEN’s rule. An RMLO may also file a SAR that it believes is relevant to the possible violation of any law or regulation, but whose reporting is not actually required. The AML Program should provide clear and unambiguous procedures to identify such instances. A transaction30 requires reporting if it is conducted or attempted by, at, or through an RMLO, it involves or aggregates funds or other assets of at least $5,000, and the RMLO knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part): 1. Involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or

It should be noted that more than one RMLO may have an obligation to report the same transaction, and actually other financial institutions may have separate obligations to report suspicious activity with respect to the same transaction pursuant to other FinCEN provisions. In those instances, no more than one report is required to be filed by the RMLO and other financial institutions involved in the transaction, provided that the filed report contains all relevant facts, including the name of each financial institution involved in the transaction, the SAR complies with all instructions applicable to joint filings, and each institution maintains a copy of the filed SAR, along with any supporting documentation. The SAR must be filed no later than 30 calendar days after the date of the initial detection by the reporting RMLO of facts that may constitute a basis for filing a SAR. If no suspect is identified on the date of such initial detection, an RMLO may delay filing a SAR for an additional 30 calendar days to identify a suspect, but in no case may the reporting be delayed more than 60 calendar days after the date of the initial detection. There are mechanisms in place to handle urgent circumstances. In situations involving violations that require immediate attention, such as suspected terrorist financing or ongoing money laundering schemes, an RMLO is required to immediately notify by telephone an appropriate law enforcement authority, obviously in addition to the timely filing of a SAR. And voluntary notification to FinCEN of suspicious transactions that may relate to terrorist activity may be directed to FinCEN’s Financial Institutions Hotline at (866) 556-3974; and, of course, such notification would still require the RMLO to file the subject SAR in a timely manner.

Record Retention Record Retention provisions must be included in the AML Program. The RMLO must maintain a copy of any SAR filed by the RMLO or on its behalf (including joint reports), and the original (or business record equivalent) of any supporting documentation concerning any SAR that it files (or is filed on its behalf), for a period of five years from the date of filing the SAR. Supporting documentation should be identified as such and maintained by the RMLO, and would in any event be deemed to have been filed with the SAR. The RMLO is required to make all supporting documentation available to FinCEN, or any Federal, state, or local law enforcement agency, or any Federal regulatory authority that examines the RMLO for compliance with the Bank Secrecy Act, or any state regulatory authority administering a state law that requires the RMLO to comply with the Bank Secrecy Act or otherwise authorizes the state authority to ensure that the RMLO complies with the Bank Secrecy Act, upon request.

Examinations Federal prudential regulators have delegated authority to examine certain financial institutions they oversee for compliance with FinCEN’s regulations.32 The Internal Revenue Service (IRS) has also been delegated the authority to examine for compliance with FinCEN’s regulations those financial institutions that are not examined by a federal functional regulator.33 SARs filed pursuant to FinCEN’s regulations go into a database that is accessible to regulatory agencies and law enforcement on the federal, state and local levels. FinCEN has been considering various options for delegating complete or partial examination authorities over RMLOs for compliance with the AML Program. In addition to the IRS authority, some entities under consideration that may have delegated supervision, examination, and enforcement authority are state regulatory agencies, the Consumer Financial Protection Bureau (CFPB), and the federal banking agencies (particularly with respect to RMLOs affiliated with banks or insured depository institutions and their holding companies). A regulatory issuance from FinCEN is forthcoming on the designated authorities. FinCEN has announced that it plans to work with other relevant regulatory agencies in the development of consistent compliance examination procedures, and in the future it will provide public notice of other agencies that will exercise delegated compliance examination authority with respect to certain classes of RMLOs and other loan or finance companies.

Preparation and readiness It is important to develop a reliable understanding about when an RMLO should be required to file a particular

SAR. In my view, a determination as to whether a SAR is required must be based on all the facts and circumstances relating to the transaction and customer of the RMLO. Different fact patterns will require different judgments. Some examples of red flags are referenced in previous FinCEN reports on mortgage fraud and money laundering in the residential and commercial real estate sectors. There are many identifiers and special information procedures that FinCEN has provided to identify suspicious activity.34 Most RMLOs, in order to remain viable, already have in place policies and procedures to prevent and detect fraud, insider abuse, and other crimes. Established antifraud measures should assist RMLOs in reporting suspicious transactions. The techniques of money laundering and mortgage fraud are continually evolving, and there is no way to provide an exhaustive list of suspicious activity transactions. A strong AML Program should be sufficiently comprehensive in its understanding of the RMLO’s organizational structure, business practices, products, services, affiliates, consumers, and vendors, to be able to monitor for suspicious activity that may involve fraud, money laundering, and other financial crimes, without becoming a burden to the effective and costefficient operations of all affected departments throughout the loan flow process. Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at


19—For a copy of SAR Form TD F 90-22.47, visit 20—See 75 FR 63545, 10/15/10. 21—See 76 FR 57799, 09/16/11. Paper SARs may be filed at this time through the Detroit Computing Center, P.O. Box 33980, Detroit, Ml 48232-0980.

26—Title II of the Bank Secrecy Act as determined by regulation or in guidance. 27—Idem. 28—Including a request pursuant to 31 CFR 1.11. 29—See United States Code: Subchapter II, Chapter 53, Title 31. 30—Op. Cit. 1, Final Rule, Subpart C-Reports Required To Be Made by Loan or Finance Companies. 31—Public Law 91–508, as amended; codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311–5314, 5316–5332. 32—See 31 CFR 1010.810(a).

7—A depository’s AML Program, as now constituted, is more robust with respect to BSA mandates than that required for nonbanks. For instance, included in a bank’s FinCEN Compliance is the filing of a Currency Transaction Report (CTR). It is FinCEN’s view that filing a Currency Transaction Report (CTR) is unnecessary for loan or finance companies. Therefore, RMLO’s do not need to adopt CTR filing requirements into their AML Programs.

22—See 31 U.S.C. 5318(g)(3). 33—See 31 CFR 1010.810(b)(8). 23—Such limitation on liability is granted to the full extent provided by 31 U.S.C. 5318(g)(3). 24—See 31 U.S.C. 5318(g)(2). 25—In declining a request for SAR information, an RMLO may cite the FinCEN rule itself as well as 31 U.S.C. 5318(g)(2)(A)(i) in its defense for not pro-

34—See Subpart E of 31 CFR Part 1010. Also Mortgage Loan Fraud Update (SARs April 1-June 30, 2010), December 2010; Commercial Real Estate Financing Fraud (SARs by Depository Institutions, Jan. 1, 2007 to Dec. 31, 2010) March 2011; Advisory: Activities Potentially Related to Commercial Real Estate Fraud (March 30, 2011).

8—FinCEN commenced in 2006 its reporting on mortgage fraud and RMLO money laundering. 9—See, for instance, Mortgage Loan Fraud Update (SARs Jan. 1-March 31, 2011), June 2011; Mortgage Loan Fraud Update (SARs Jan. 1-Dec. 31, 2010), March 2011; Mortgage Loan Fraud Update (SARs July 1-Sept. 30, 2010), January 2011; Mortgage Loan Fraud Update (SARs April 1-June 30, 2010), December 2010; and, Mortgage Loan Fraud Update: SAR Filings Jan. 1March 31, 2010.


10—Op. Cit. 4. 11—FinCEN’s position is that the new regulations will help mitigate some of the risks and minimize some of the vulnerabilities that criminals have exploited in the non-bank residential mortgage sector, based on FinCEN’s criminal investigations and prosecutions, other anti-fraud efforts, the Financial Fraud Enforcement Task Force, and recently the Residential Mortgage-Backed Securities Working Group. 12—For more information, visit the FinCEN section of my firm’s Web site Library at or contact us for assistance. 13—FinCEN has stated that it intends the definitions in the its rule and subsequent amendments thereto to be “consistent with definitions in the SAFE Act and other federal mortgage-related statutes, only to the extent deemed appropriate to advance FinCEN’s mission, strategic goals, and policies.” Op. Cit. 1, Final Rule, 8152. 14—Op. Cit. 1, 8151. 15 Some individuals covered by the SAFE Act definition of ‘‘loan originator,’’ pursuant to 12 U.S.C. 5102(3)(A)(ii), would not be covered by the AML Program. 16—FinCEN’s proposed definition of ‘‘loan or finance company’’ has been revised to exclude ‘‘any Federal or state agency or authority administering mortgage or housing assistance, fraud prevention or foreclosure prevention programs.” 17—See Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Home Equity Conversion Mortgage Fraud Schemes, FIN2010-A005, 04/27/11; Guidance to Financial Institutions on Filing Suspicious Activity Reports regarding Loan Modification/Foreclosure Rescue Scams, FIN-2009-A001, 04/06/09. 18—This report is required by law, pursuant to

National Mortgage Professional Magazine recognizes the support of those Mortgage Professionals who have stepped up to pay tribute to the men and women who have fought to preserve freedom for our great country. We will be featuring these Mortgage Professionals in our Mortgage Heroes feature in National Mortgage Professional Magazine. We want to hear from you if you:

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3—See 31 CFR 1029.210.

6—The definition of “loan or finance company” initially includes only these businesses, but is broad enough to permit the addition of other types of loan and finance related businesses and professions in future rulemaking. Though not included in the definition of “loan and finance companies,” FinCEN has also proposed AML and SAR reporting rules for the GSEs. Where fraud is suspected by a GSE, there is an established procedure, currently set forth in a Memorandum of Understanding between FinCEN and the Federal Housing Finance Agency (FHFA) for the GSE to report to the FHFA, which then reports the suspicious activity to FinCEN.

viding information contained in or even admitting the very existence of the SAR.


2—“Bank Secrecy Act” is the name that has come to be applied to the Currency and Foreign Transactions Reporting Act (Titles I and II of Public Law 91–508), its amendments, and the other statutes referring to the subject matter of that Act. These statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311– 5314 and 5316–5332, and notes thereto.

5—31 U.S.C. 5312(a)(2)(P).

authority contained in the following statutes. Board of Governors of the Federal Reserve System: 12 U.S.C. 324, 334, 61 1a, 1844(b) and (c), 3105(c) (2) and 3106(a). Federal Deposit Insurance Corporation: 12 U.S.C. 93a, 1818, 1881-84, 340122. Office of the Comptroller of the Currency: 12 U.S.C. 93a, 1818, 1881-84, 3401-22. Office of Thrift Supervision: 12 U.S.C. 1463 and 1464. National Credit Union Administration: 12 U.S.C. 1766(a), 1786(q). Financial Crimes Enforcement Network: 31 U.S.C. 5318)(g). 

1—See Federal Register sources for this article: Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators, Financial Crimes Enforcement Network, Department of the Treasury, 31 CFR Parts 1010 and 1029, Final Rule, Federal Register, Vol. 77, No. 30, 02/14/12; Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators, Financial Crimes Enforcement Network, Department of the Treasury, 31 CFR Part 103, Notice of Proposed Rulemaking, Federal Register, Vol. 75, No. 236, 12/09/10; Anti-Money Laundering Program and Suspicious Activity Report Requirements for Non-Bank Residential Mortgage Lenders and Originators, Financial Crimes Enforcement Network, Department of the Treasury, 31 CFR Part 103, Advance Notice of Proposed Rulemaking, Federal Register, Vol. 74, No. 138, 07/21/09.

4—FinCEN Requires AML Program and SAR Filing for Non-Bank Mortgage Lenders and Originators, News Release, Financial Crimes Enforcement Network, 02/07/12.

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calendar OF EVENTS

Calendar of Events, please e-mail the details of your event, along with contact information, to MARCH 2012 Sunday-Thursday, March 11-15 29th Annual Regional Conference of Mortgage Bankers Associations Trump Taj Mahal Casino Resort 1000 Boardwalk at Virginia Avenue Atlantic City, N.J. For more information, call (732) 596-1619 or visit

Wednesday-Friday, March 21-23 National Association of Hispanic Real Estate Professionals (NAHREP) 2012 Real Estate & Policy Conference Four Seasons Hotel 2800 Pennsylvania Avenue Washington, D.C. For more information, call (858) 922-9046 or visit Monday-Tuesday, March 26-27 National Reverse Mortgage Lenders Association (NRMLA) 2012 Eastern Regional Meeting and Reverse Mortgage Securitization Forum The Grand Hyatt New York 109 East 42nd Street at Grand Central Station New York, N.Y. For more information, call (202) 939-1760 or visit

Sunday-Wednesday, April 22-25 2012 National Technology in Mortgage Banking Conference & Expo Arizona Biltmore 2400 East Missouri Avenue Phoenix For more information, call (800) 793-6222 or visit Sunday-Wednesday, April 22-25 2012 National Fraud Issues Conference Arizona Biltmore 2400 East Missouri Avenue Phoenix For more information, call (800) 793-6222 or visit MAY 2012 Sunday-Wednesday, May 6-9 2012 National Secondary Market Conference & Expo New York Marriott Marquis 1535 Broadway New York, N.Y. For more information, call (800) 793-6222 or visit

Sunday-Wednesday, May 20-23 2012 Legal Issues/Regulatory Compliance Conference La Quinta Resort & Club 49-499 Eisenhower Drive La Quinta, Calif. For more information, call (800) 793-6222 or visit

OCTOBER 2012 Sunday-Wednesday, October 21-24 Mortgage Bankers Association 99th Annual Convention & Expo The Hyatt Regency 151 East Wacker Drive Chicago For more information, call (800) 793-6222 or visit

JUNE 2012 Sunday-Wednesday, June 3-6 Mortgage Bankers Association’s 2012 Chairman’s Conference The Breakers 1 South County Road Palm Beach, Fla. For more information, call (800) 793-6222 or visit JULY 2012 Wednesday-Saturday, July 11-14 Florida Association of Mortgage Professionals (FAMP) 2012 Convention & Trade Show “Stay on Track” The Grand Hyatt Tampa Bay 2900 Bayport Drive Tampa, Fla. For more information, call (850) 942-6411 or visit




MARCH 2012 

Sunday-Tuesday, March 18-20 2012 National Association of Mortgage Brokers (NAMB) Legislative & Regulatory Conference Capitol Skyline Hotel 10 “I” Street, Southwest Washington, D.C. For more information, call (972) 758-1151 or visit

APRIL 2012 Wednesday-Thursday, April 18-19 2012 National Policy Conference Hyatt Regency on Capitol Hill 400 New Jersey Avenue Northwest Washington, D.C. For more information, call (800) 793-6222 or visit

Sunday-Wednesday, May 20-23 2012 Commercial/Multifamily Servicing & Technology Conference Hilton Anatole 2201 North Stemmons Freeway Dallas For more information, call (800) 793-6222 or visit

SEPTEMBER 2012 Monday-Wednesday, September 10-12 2012 American Mortgage Conference Raleigh Marriott Crabtree Valley 4500 Marriott Drive Raleigh, N.C. For more information, call (919) 781-7979 or visit




Wednesday, March 14 Florida Association of Mortgage Professionals Broward Chapter 2012 Annual Trade Show Broward County Convention Center 1950 Eisenhower Boulevard Ft. Lauderdale, Fla. For more information, call (850) 942-6411 or visit

Thursday, March 29 Maryland Association of Mortgage Professionals 2011 March Mortgage Madness Convention Martin’s Crosswinds 7400 Greenway Center Drive Greenbelt, Md. For information, call (410) 752-6262 or visit

Friday-Wednesday, May 18-23 2012 Mortgage Bankers Association of Georgia Education Forum & Expo Sandestin Hilton Golf Resort & Spa 4000 South Sandestin Boulevard Destin, Fla. For more information, call (478) 743-8612 or visit


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