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Firstt Guaranty Firs Guaranty Mortgage Mortgage Co Corporation rporation is an FH FHA A Ap Approved proved Le Lending nding Inst Institution, itution, and an d is not not ac acting ting on behalf of or at the the di direction rection of HUD/FHA HUD/FHA or the the fe federal deral government. Firs government. Firstt Gu Guaranty aranty Mo Mortgage rtgage Co Corporation rporation Headquar Headquarters ters is lo located cated at 1900 1900 Gallows Gallows Road, Road, Suite Suite 800, 800, Tysons Tysons Corner, Corner, VA 22182 22182 (800) (800) 296-2275. 296-2275. Co Company mpany NM NMLS# LS# 29 2917. 17.

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This information is solely for mortgage professionals and should not be provided to consumers or third parties. Information is accurate as of 6/26/14 and is subject to change without notice. First Guaranty Mortgage Mortgage Corporation is licensed as follows. For our branch licensing information, please visit http://www.nmlsconsumeraccess.org/. Alabama: Licensed by the Alabama Banking Department, Licensee No. 21332; Arizona: Licensed as an Arizona Mortgage Banker under the Arizona Department of Financial Institutions, 4347 West Bell Road, Road, Suite 1, Glendale, AZ 85308, Licensee No. 0907158; Arkansas: Combination Mortgage Banker-Broker-Servicer, Licensee No. 11884; 11884; California: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, Licensee Licensee No. 6037237; Colorado: Regulated by the Division of Real Estate in the State of Colorado; Connecticut: Licensed by the Connecticut Department of Banki Banking, ng, Licensee No. 10162; Delaware: Licensed by the Delaware State Bank Commissioner, Licensee No. 2403; District of Columbia: Licensed Licensed by the District of Columbia Department of Insurance, Securities and Banking, Licensee No. MLB2917; Florida: Florida Mortgage Mortgage Lender Licensee No. MLD333; Georgia: Georgia Residential Mortgage Licensee, No. 13967; Idaho: Licensed by the Idaho Department of Finance, Lice Licensee nsee No. MBL-5032; Illinois: Illinois Residential Mortgage Licensee No. MB.0005484; Indiana: Indiana First Lien Mortgage Lending Lending License under the Indiana Department of Financial Institutions, Licensee No. 11058; Iowa: Licensed by the Iowa Division of Banking, Banking, Licensee No. 2004-0309; Kansas: Kansas-Licensed Mortgage Company, Licensee No. SL.0000212; Kentucky: Licensed by the Kentucky Department of Financial IInstitutions, nstitutions, Licensee No. MC16957; Louisiana: Residential Mortgage Lending Licensee No. RML-1421; Maine: Supervised Lending Licensee Licensee No. NLC649592; Maryland: Maryland Mortgage Lender Licensee No. 1731; Massachusetts: Massachusetts Mortgage Lender and Broker Broker Licensee No. ML 2917; Michigan: 1st Mortgage Broker/Lender/Servicer Registrant Licensee No. FR0714; Minnesota: Minnesota Reside Residential ntial Mortgage Originator License No. MN-MO-20399083, This is not an offer to enter into an agreement under Minnesota law. Any such offer may only be made pursuant to the requirements in Minn. Stat. Section 47.206 (3) and (4); Mississippi: Licensed by the Mississippi Department of Banking and Consumer Finance, Licensee No. 000282/2008; Missouri: Licensed by the Missouri Division of Finance, Licensee No. 14-2178; Nebraska: Nebraska Mortgage Banker Licensee No. 1470; Nevada: Licensed by the Nevada Division of Mortgage Lending to make loans secured by liens on real property, Licensee No. 1047, First Guaranty Mortgage Corporation, 1489 West Warm Springs Road, Suite 215, Henderson, NV 89014, Phone No. 702-454-4212; New Jersey: Licensed by the N New ew Jersey Department of Banking and Insurance, Licensee No. 9700530; New Mexico: New Mexico Mortgage Loan Company License No. 01085; 01085; New York: Licensed Mortgage Banker - N.Y.S. Banking Department, Licensee No. B500800 (d/b/a FGMC In Lieu of True Corporate Name First Guaranty Mortgage Corporation); North Carolina: North Carolina Mortgage Lender Licensee No. LL-100362; -100362; North Dakota: Licensed in North Dakota as First Guaranty Mortgage Corporation dba FGMC, Licensee No. MB101924; Ohio: Ohio Ohio Mortgage Broker Act Mortgage Banker Exemption No. MBMB.850010.000; Oklahoma: Oklahoma Mortgage Lender Licensee No. MB001318; Oregon: Oregon Mortgage Lending Licensee No. ML-2634; Pennsylvania: Licensed by the Pennsylvania Departm Department ent of Banking, Licensee No. 20768; South Carolina: South Carolina Mortgage Lender/Servicer Licensee No. MLS-2917; Tennessee: Tennessee Tennessee Department of Financial Institutions Mortgage Licensee No. 791; Texas: Licensed by the Texas Department of Savings and Mortgage Lending, Licensee No. 43786; Utah: Utah Mortgage Entity Licensee No. 5491155; Virginia: Licensed by the Virginia State Corporation Commission as a Lender and Broker, Licensee No. MC-436; Washington: Washington Consumer Loan Company, Licensee No. CL-2917; West Virginia: West Virginia Mortgage Lender Licensee No. M ML-20742; L-20742; Wisconsin: Licensed Wisconsin Mortgage Banker, Licensee No. 26835BA; Wyoming: Licensed by the Wyoming Division of Banking, Banking, Licensee No. 1831.

OREGON EDITION

Oregon Mortgage Association 16055 SW Walker Road, Suite 224 v Beaverton, OR 97006 Phone #: (503) 670-8586 E-mail: info@oamponline.com Web site: www.oamponline.com EXECUTIVE BOARD Phone # Matt Jolivette President (503) 221-0064 Chris Bettis Treasurer (541) 543-7333 Curt VanderZanden Immediate Past President (503) 517-2432

Ginger Bell Andy Harris Brooke Morrow Ryan Nelson Larry Unger Eric Wiley

Director Director Director Director Director Director

E-mail matt@associatedmortgage.com chris@gallicfinancial.com cvanderzanden@mtgxps.com

BOARD OF DIRECTORS (503) 318-6152 ginger@go2training.com (503) 880-2427 aharris@vantagemortgage.com -----------------(503) 905-4979 ryan.nelson@pacresmortgage.com (503) 807-7222 lunger@nwmortgagegroup.com (503) 905-4902 eric.wiley@pacresmortgage.com

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table o

26 Lykken on Leadership: Four Ways to Demonstrate Adaptability By David Lykken

N A T I O N A L

M O R T

V O L

A U G U S T

30 Consumer Complaint Database and Public Narratives By Jonathan Foxx

2 0 1 4

A SPECIAL FOCUS ON “THE WHOLESALE & CORRESPONDENT MARKETS”

The Future of the Mortgage Broker and Correspondent Markets (Part V) By Andy W. Harris, CRMS ....................................................58 If You Only Live Once, Why Not as a Homeowner? By Brian Koss......................................................................................60 Wholesale Lending: Relationships Matter By Brent Emler ............62 Wholesale Market Exodus: What Will You Do to Capture Potential Business? By Phil Collins ..................................................64 Gladiator! By Eric Weinstein ..............................................................65

42 Legends of Lending: United Northern Mortgage Bankers Ltd. By Phil Hall

FEATURES Mortgage Loan Originator Uniform State Testing By Ray Hagan ..8 The Elite Performer: Interpret and Invest in Your Ideas By Andy W. Harris, CRMS ....................................................................8 Renovate Your Refi Business By Carl Markman ............................10 The Nine Major Obstacles to Sales Accountability By Rene Rodriguez ............................................................................16 Thinking Outside the Realtor: Other Ways to Find Purchase Leads Without an Agent By K. Justin Restaino ..............................18 NAMB Perspective ............................................................................20 FHA Insider: Should Lenders Stop Offering FHA? By Jeff Mifsud ....................................................................................23 Mortgage Marketing: Video Can’t Wait By Matthew Dunn Ph.D. ..28 NMP’s Economic Commentary: Why Are Rates Not Rising? By Dave Hershman ............................................................................32

52 Who’s Who in the 2014 Wholesale Marketplace?

Tales From the Closing Table By Andrew Liput ..............................34

V I S I T Company

Web Site

O U R

A Page

AllRegs.............................................................. www.allregs.com ..........................................................51 American Financial Resources ............................ www.afrwholesale.com/wd ................................Back Cover BetterLoanOfficers.com ...................................... www.betterloanofficers.com ..........................................57 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ....................................1 CallFurst.com ...................................................... www.callfurst.com ............................................................67 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................11 & 61

70 2014 Mortgage Mastermind: Growth and Expansion in Today’s Mortgage Marketplace

Continental Home Loans, Inc. ............................ www.continentalhomeloans.com ......................................5 Credit Plus, Inc. ................................................ www.creditplus.com ......................................................29 Document Systems, Inc./DocMagic ...................... www.docmagic.com ................................................7 & 49 Easy Mortgage Apps............................................ www.easymortgageapps.com ..........................................62 FAMP ................................................................ www.myfamp.org ..........................................................51 Fast Forward Stories .......................................... www.fastforwardstories.com ..........................................39 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 63 Flagstar Bank .................................................... www.flagstar.com/ae ....................................................13 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................17 GraceChurch Intermediaries................................ www.gracechurchintermediaries.com ..............................80 Lykken On Lending ............................................ www.lykkenonlending.com ............................................69

f contents

T G A G E

L U M E

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

N U M B E R

FALLING FORWARD

The Intersection of Social Media and Mortgage Professionals By Mike Lewis ....................................................................................36

And End to One “I’m Sorry” Situation By Ralph Rosynek ..............38 DocMagic’s Regional Compliance Updates By Melanie A. Feliciano Esq. ..............................................................44 Mortgage Community Shows Its Support for Our Troops By Phil Hall ..........................................................................................46 Working Your Network ....................................................................48 The Interaction of Best Practices, Vetting and Insurance as the Ultimate Vendor Management Solution By Andrew Liput ..50 The Long & Short: The Business of Short Sales By Pam Marron ..................................................................................50 Where Smart Mortgage Lenders Should be Investing Right Now By Doug Rossbach ..........................................................55 The Challenge in Boosting Minority Homeownership Rates By Phil Hall ..........................................................................................56 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ..................66 2014 … A Year of Successes for FAMP By Valerie Saunders ........68 Step Inside Ginnie Mae ....................................................................76

SEPTEMBER 2014 School Is Back In Session: Certification, Education & Industry Compliance Special Feature: Leading Education Providers

The Strange Case of the Shrinking Mini-Correspondent: A Primer on Forensics By Jonathan Foxx ........................................77 Scenes From the Ultimate Mortgage Expo 2014 ..........................78

COLUMNS New to Market..............................................................................12 News Flash: August 2014............................................................14 Heard on the Street ....................................................................24 NMP Resource Registry..............................................................74 NMP Calendar of Events ............................................................79

D V E R T I S E R S Company

Web Site

Page

Matchbox, LLC .................................................. www.matchboxllc.com ..................................................64 Maverick Funding Corp....................................... www.maverickfunding.com ............................................19 Mortgage Bankers Association ............................ www.mbaeducation.org/qm ..........................................37 NAPMW ............................................................ www.napmw.org ..........................................................45 NAWRB ............................................................ www.nawrb.com ............................................................77 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 31 & Inside Back Cover

OCTOBER 2014 The Future of Mortgage Banking Special Feature: Featured MBA Convention Exhibitors

Path2Buy .......................................................... www.path2buy.com ......................................................60 Radian Guaranty ................................................ www.radian.biz ............................................................59

THE SOURCE FOR TODAY’S TOP ORIGINATORS

REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com ......................................40 & 41

PRINT MAGAZINE • ELECTRONIC MAGAZINE • DAILY NEWSLETTERS

Reverse Mortgage Solutions, Inc. ........................ www.rmsnav.com ..........................................................58

BREAKING INDUSTRY NEWS WEB SITE • SOCIAL MEDIA ENGAGEMENT

Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................25

EDITORIAL SERVICES • WEBINARS • VIDEO • EVENTS

PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................69

Simple Nexus .................................................... www.simplenexus.com ..................................................27 TagQuest .......................................................... www.tagquest.com ........................................................35 The Bond Exchange............................................ www.thebondexchange.com ..........................................32 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Wholesale Mortgage ................................ www.uwm.com ..............................................................33

CALL 516-409-5555 EXT 4 TO LEARN ABOUT CUSTOMIZED MARKETING PROGRAMS

AUGUST 2014 Volume 6 • Number 8

FROM THE

This month, we focus on the state of the wholesale and correspondent markets. Wikipedia defines wholesalers as being “Closer to the markets they supplied than the source from which they got the products.” Growing up as a kid, my parents would frequently trek to Belmont Avenue in the heart of Brooklyn, N.Y., the home of numerous manufacturers of clothing and streets filled with peddlers and their push carts. My parent’s objective was simple … go to the source and you will save money. The memories of those days are fresh in my mind, complete with tailors with bad breath breathing on me as they measured me for coats in the barren factories that created the coats my parents were purchasing. Their objective was accomplished. They saved money, and I was kept warm. The wholesalers in the mortgage industry operate the same way. They provide a conduit for the mortgage industry, for both bankers and brokers, that provides them and the consumers they serve, with being closer to the markets. The role that the wholesalers provide for the mortgage industry should never be underestimated. Their presence through the difficult days of the past and their ability to survive and thrive to this day is a true testimony that this channel of the mortgage industry is vital to this economy. Wholesalers provide much more than just loan products at competitive pricing. Wholesalers offer technology and marketing resources that exceeds the sources of the loan products they deliver. Throughout each issue of National Mortgage Professional Magazine, we feature the nation’s top wholesalers in both ads and editorial content. We are proud of our relationship with this sector of the industry and enjoy how they share their “secret sauce” of origination with our readers. Through their editorial contributions and supplemented by their Web sites, wholesalers provide a strategy for their client base to capture more originations. Last, but certainly not least, is the assistance that wholesalers provide to their clients regarding compliance. Many share compliant marketing tools with their client base. In addition, wholesalers provide a process for their clients that helps insure the origination, processing, underwriting and closing is all completed in a compliant manner. While the “Big Four” continue to lose interest in the residential mortgage sector of the industry, I am happy to report that the wholesale and correspondent markets both continue to thrive and grow. This direction is not only good for the industry, but for the consumer that has a viable and competitive alternative to the Big Four. As I close this column, I remember the last coat my parents bought me on Belmont Avenue and wonder where it is today. Luckily with wholesale mortgage banking, you don’t have to worry. Just look at the smiles on the faces of the consumers that the clients of wholesale mortgage bankers made happy and you will know why this sector of the industry will continue to thrive. Sincerely,

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

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

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

Beverly Bolnick National Sales Manager (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com

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

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

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

Robert Peter Ottone Executive Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

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

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

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Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Rocke Andrews, CMC, CRMS

Dave Hershman

Phil Collins

Mike Lewis

Ralph Rosynek

John H.P. Hudson, CRMS

Matthew Dunn Ph.D.

Carl Markman

Valerie Saunders

Andrew Liput

Brent Emler

Jeff Mifsud

Eric Weinstein

David Lykken

Melanie A. Feliciano Esq.

K. Justin Restaino

Pam Marron

Ray Hagan

Rene Rodriguez

Brian Koss

Doug Rossbach

Richard M. Bettencourt Jr., CRMS, CMHS

Jonathan Foxx

Donald J. Frommeyer, CRMS

Phil Hall

Andy W. Harris, CRMS

Editorial Contributors Laura Burke

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n Oregon Mortgage Professional Magazine n AUGUST 2014

NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

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

2014-2015 NAPMW National Board of Directors

NAMB 2013-2014 Board of Directors OFFICERS Donald J. Frommeyer, CRMS (t/e 2014)—President MSI, III 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net John Councilman, CMC, CRMS (t/e 2014) President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 2041 North Highway 83, Unit C l P.O. Box 783 Franktown, CO 80116 Phone: (720) 670-0124 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com

AUGUST 2014 n Oregon Mortgage Professional Magazine n

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Jim Pair, CMC (t/e 2014)—Immediate Past President Mortgage America Corpus Christi Inc. 22800 Bulverde Road, Apt. 1402 l San Antonio, TX 78261 Phone: (361) 774-7314 l E-mail: jlpair@aol.com

DIRECTORS Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com

P.O. Box 451718 l Garland, TX 75045 Phone: (800) 827-3034 Web site: www.napmw.org

National President Christine Pollard (607) 226-1046 president@napmw.org

Vice President–Western Region Anna Mackovska (323) 321-2222 westernregion@napmw.org

President-Elect Kelly Hendricks (314) 398-6840 preselect@napmw.org

Secretary Cynthia Nutter (360) 258-2206 natsecretary@napmw.org

Vice President–Central Region Judy Alderson (918) 250-9080, ext. 300

Treasurer Kimberly Rozell, CME (607) 229-5008 nattreasurer@napmw.org

Vice President–Eastern Region Cathy Kantrowitz (845) 463-3011 easternregion@napmw.org

Parliamentarian Dawn Adams, GML, CMI (607) 329-4622 dawnvadams@live.com

Vice President–Northwestern Region William “Bill” Sanderson, CME, CMI (360) 713-9264

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

2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511 mdevine@strategicinfo.com

William Bower Resident Screening Committee Liaison (888) 316-4242 wbower@cicreports.com

Mike Brown Vice President/Treasurer (801) 925-6691, ext. 3777 mike.brown@ncogroup.com

Judy Ryan Strategic Alliance Committee Chair (410) 747-9551 judy.ryan@creditplus.com

Daphne Large Ex-Officio (901) 259-5105 daphnel@datafacts.com

Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com

Nancy Fedich Conference Committee Chair (908) 813-8555, ext. 3010 nancy@cisinfo.net

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

Julie Wink Education Committee Liaison (901) 259-5105 julie@datafacts.com

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

Tom Conwell Legislative Committee Liaison (800) 445-4922, ext. 1010 tconwell@credittechnologies.com

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

Renee Erickson Membership & Elections Chair (866) 932-2715 renee.erickson@acranet.com

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

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Mortgage Loan Originator Uniform State Testing By Ray Hagan More states have adopted, or will adopt, the use of the Uniform State Test (UST) for compliance with education requirements under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act requires mortgage loan originators (MLO) to pass a “qualified written test” before they can be licensed. A “qualified written test,” as defined under the SAFE Act, should include material regarding: ethics, federal and state laws and regulations covering mortgage origination, and other federal and state laws and regulations, including instruction on fraud, consumer protection, nontraditional mortgage marketplace and fair lending issues. Under the new UST, an applicant for licensing who passes this test will not need to take any additional state-specific tests to hold a license with those states participating. So far 38 states and territories have formally adopted the UST. In addition, New York, Ohio and Oklahoma plan to formally adopt the UST on the dates shown below.

AUGUST 2014 n Oregon Mortgage Professional Magazine n

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State adoption The following states have formally adopted the UST as of this writing: Alabama, Alaska, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Texas, Utah (DFI only), Vermont, Virgin Islands, Virginia, Washington, Wisconsin, and Wyoming. New York, Ohio and Oklahoma will formally adopt the UST on Sept. 2, 2014, Sept. 15, 2014 and Oct. 1, 2014, respectively. The remaining state agencies which elect not to adopt the UST will require applicants to take and pass the current state specific test components up until the actual date that the state agency adopts the UST. Test components Overall, the National Test Component with Uniform State Content consists of 125 questions, of which 25 new questions have been added to the UST as a separate section. According to the Nationwide Mortgage Licensing System and Registry (NMLS), the UST will test applicants on their knowledge of high-level state-related material from the SAFE Act and the CSBS/AARMR Model State Law. Ray Hagan is senior regulatory compliance analyst at AllRegs. First introduced in 1989, AllRegs is used by virtually all of the top 100 lenders as well as throughout numerous governmental agencies, including Fannie Mae, Freddie Mac, the FHLBs, FHA, VA, RHS, Ginnie Mae, and more. AllRegs is the exclusive electronic publisher of the Fannie Mae and Freddie Mac Single and Multi-Family Seller/Servicer Guides and the Federal Home Loan Banks’ MPF Program Guidelines. Products include single and multifamily underwriting and insuring guidelines as well as federal compliance laws and regulations, state compliance laws and regulations with plain-language analyses, contract publishing services, and a library of historical guidelines. The educational division, AllRegs Academy, offers virtual and live training, as well as designation and online guides. The Professional Services Group develops custom guides, policy manuals, and other documents on a contract basis. For more information, call (800) 848-4904 or visit www.allregs.com.

THE

elite performer Interpret and Invest in Your Ideas By Andy W. Harris, CRMS

Like they say, everything in life starts with an idea. Ideas are defined and construed as mental representational images of some object. They can also be abstract concepts that do not present as mental images. The capacity to create and understand the meaning of ideas is considered to be an essential and defining feature of human beings. That brings up a good point. “The capacity to create and understand the meaning of an idea.” I believe many of us as humans certainly have the capacity to create an idea, but do we all truly focus on understanding what our ideas actually mean? Or better yet, do we actually act on and take advantage of our good ideas? Another definition for an idea is a thought or suggestion as to a possible course of action. The word that stands out to me is “possible.” Certainly fear or doubt can get in the way of a good idea, especially if it creates a vision that may seem impossible. Marketing and businessbuilding ideas come to mind as it pertains to our industry and any entrepreneur or small business owner. One good or unique idea, if acted upon, could make your year. One great idea, if acted on, could make your career. The biggest road block in acting on an idea is created by the same brain that produced the idea in the first place. So next time you have an idea, or begin forming an idea, write it down. Build on that idea and any additional thoughts that are triggered —Albert Einstein by daily activities or experiences. Some studies done by UCLA claim that we have 48 thoughts per minute, which equates to the average person having 70,000 thoughts per day. That amount divided by 24 hours and then by 60 minutes per hour, results in 48.61 thoughts per minute. How much time do you spend paying attention to your thoughts? How many of those thoughts could make you a fortune? You’ll never know until you start paying attention, writing them down, and acting on good ideas.

“If at first, the idea is not absurd, then there is no hope for it.”

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.

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Renovate Your Refi Bu

By Carl Markman The mortgage world is a funny place. Depending on who you listen to, things are either on an upswing or we couldn’t be further away from a recovery. Through my role with REMN Wholesale, I’m in a unique position to watch it all unfold on both sides of the wholesale/retail equation. I’m hearing firsthand from the good and the bad. While the national media may sometimes dwell on the bad, what I’m seeing on the front lines is very different. What I’m seeing is that even with refis going away and rates climbing, many people in the retail channel aren’t just surviving, they’re THRIVING! How? They’re renovating their entire business to adapt to the changing the market. With that in mind, I wanted to share what I’ve been learning from some of the top brokers and bankers that do business with us.

Upgrade your marketing First, it starts with marketing. You can

no longer sit back and hope a refi is going to come through your door. You need to actively market to a new customer. The good news here is that advances in technology have made it easier than ever to market yourself. The bad news is that these advances have made it harder than ever to break through the noise and get the customer’s attention. Advertising and PR campaigns leveraging TV, radio, newspapers, bus shelters, etc. all still hold value when it comes to marketing your business. Of course, social media is the hot topic now and incredibly popular with the new generation of home buyers, so I’ll explore that area more here. If you’re going the social media route, simply posting on Facebook isn’t

enough. You need to engage your followers, have conversations and post about things people will actually want to discuss. Do not use social media as you would traditional advertising. Social media is intended to be social! You need to give your followers a reason to read your post and talk about it, either online or in the offline world. On top of that, if you haven’t kept up with the latest in social media marketing, it’s all changing. With Facebook, for example, even though you may have thousands of fans, your posts may be seen by less than 100 because of the changes to the way Facebook’s Newsfeed works. As I’m writing this, and it could change before you read it, your best bet on Facebook to have compelling content and also pay to have your posts augmented.

“What I’m seeing is that even with refis going away and rates climbing, many people in the retail channel aren’t just surviving, they’re THRIVING!”

Adapt to the marketplace In addition to marketing, you have to have the right product mix. What good is it to have people come through your door if you don’t have what they’re looking for? Having the right mix of products is Retail 101. Take a look at Ford. I’m not saying Ford is the best at this, but they have a mix of different SUV’s, hybrids, fuel-efficient small cars and pick-up trucks. Ford has a diverse enough product for the majority of the consumers out there, regardless of if they’re looking for an SUV or fuelefficient car that costs less than $18,000. Most of us can probably remember when SUVs dominated the auto industry. Later, with rising gas prices, there was a major shift towards hybrids and overall fuel efficiency. If you still want an SUV, Ford has a few for you to choose from, but they’ve changed their mix to accommodate the current trends and what new buyers are looking for. If you want to continue to succeed in this industry, you need to be able to offer something to the major-

usiness ity of the people that come through your door. Look at refis as the SUVs of our industry. The refi business is slowing down and it’ll probably be slow for a while. They were extremely popular for years, like those hulking SUVs were. But times change. If you were a dealership killing it selling Hummers in 2005, you’ve changed what is on your lot and adapted to the new consumer. Otherwise, you’re no longer in business. For those Hummer dealers that survived, it took effort to adapt to the marketplace, and I’m sure it wasn’t easy. Do you want to stay in business or do you want to wait and hope gas prices drop tomorrow?

Renovate your inventory

how these changes can add incredible value to their home right now and down the line when the time is right for them to sell. Real estate agents need to be on board too and realize that this house, which hasn’t been remodeled in 30 years, can be converted into a young couple’s dream home. Not only that, they need to know that you can make this happen for them.

So why aren’t you originating more renovation mortgages? Truth be told, renovation mortgages are a little more involved than … well, than pretty much anything else

in our industry. I’m not going to sugarcoat it. Depending on the specific product, they each come with a unique set of hoops and hurdles that can bog down the process, cause delays and ultimately, leave a bad taste in the borrower’s mouth. And when the borrower is upset, the real estate agent gets upset. The borrower goes on Yelp to complain and the agent never takes your call again. How can you prevent this tragedy? You need to commit to customer service and that means renovating your business to adapt to the needs of today’s customer. continued on page 51

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*Carrington will process any qualifying loan from the time a loan file is submitted to underwriting to the time it funds within 15 business days of appraisal receipt or the company will apply a closing cost credit of $500 to the loan once the loan closes. In order to receive the closing cost credit, any delay that causes the loan to close more than 15 days after appraisal receipt must be due to Carrington’s independent processes. If the delay is due to the broker, borrower’s or third party’s action or inaction or any other circumstances outside of Carrington’s control, the closing cost offer will be void. This offer excludes some loan programs, such as VA loans, USDA loans, 203K Loans Short Sales, New Construction loans, loans requiring property repairs, inspection, or re-inspection prior to closing, loans requiring condo approvals and flips. Offer is subject to revision or cancellation at any time. The appraisal received date is recorded in Pipeline Manager for all qualifying loans. Some loans may require additional information and be returned. Exclusions apply; contact your Account Executive for details. © Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. NOTICE: All loans are subject to credit, underwriting, and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions, and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any office of the federal government. All rights reserved.

n Oregon Mortgage Professional Magazine n AUGUST 2014

Growing your business with the right partner has never been easier. Get started today with Carrington Mortgage Services.

At Carrington Mortgage Services, we are committed to meeting the financing needs of those who are underserved throughout America. We have loan programs specifically tailored to credit-challenged borrowers, so there’s no need to turn away those borrowers with low FICO scores. We are your government lender of choice with loan programs, service, technology and national support to grow your business today, tomorrow and beyond.

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When you renovate your business, you don’t have to offer something for everyone, but you should offer something for most, as well as what’s popular right now. I’m going to go out on a limb and say you can originate VA loans. Depending on your location, they may not be the most popular item on your menu, but I don’t think I’ve ever heard of someone saying “We’re not going to do VA loans.” They may not be big in your area, but chances are you offer them because that’s what you need to do. Are you going to turn down a VA loan if someone from our nation’s military walks through your door? I can hear some of you saying now, “Carl, VA loans aren’t going to cover the drop in our refi business,” and you’re right, for many of you they won’t be. So what else is there? With the amount of dated inventory on the market right now, the easy answer is renovation lending. Simply put, renovation lending is a huge opportunity for many of the markets across the country. How huge? In March, I was a part of a Webinar with the team at National Mortgage Professional Magazine that was the second highest attended Webinar in their history. I also know a few originators in key markets that have been producing seminars for Realtors the last two years that routinely are standing room only. At the least, our real estate agent friends have an interest here. So what’s the next step? First and foremost, borrowers and real estate agents need to be educated. Around the country, the cars on the lot … I’m sorry, the homes on the market, are dated. They don’t fit the needs of today’s borrower, especially the first-time homebuyer that cannot fathom moving into a house that has the appearance of the one their grandparents lived in. At the same time, they can’t afford to live in a home that

matches their personal style, needs and location preference. So instead, they wait and that doesn’t help anyone in this industry. What these buyers don’t realize is we can convert these outdated homes, aka these gas guzzling SUVs, into the hybrids and crossovers of their dreams! As an industry, we need to start pushing renovation lending to the same level of name recognition that VA loans have. Borrowers need to know the power of these ‘fixer upper mortgages’ they tend to be called on Internet searches. They need to understand that the opening up the floor plan or remodeling an outdated kitchen can be built into their mortgage. They need to know

SSI Partners With RFIB Group and Lloyd’s of London on Mortgage Settlement Insurance

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Secure Settlements Inc. (SSI) has announced a new program enhancement in association with RFIB Group Ltd. and certain underwriters at Lloyd’s of London for Mortgage Settlement Insurance (MSI), an insurance policy that covers lenders utilizing SSI’s ClosingGuard service against losses arising at the closing table. The MSI Policy, which launched in April 2014, was designed to protect retail mortgage lenders that utilize SSI’s ClosingGuard closing agent vetting product against losses arising at the closing table from such perils as fraud, theft and documentation error. Coverage extended to warehouse banks and secondary market investors including GSEs, and certain consumer losses at the closing table. “In talking with our lender clients around the country, we realized that they have concerns about settlement agent risk that extends beyond theft of proceeds to other types of harm that they face today,” said Andrew Liput, CEO of SSI. “Nearly everyone we spoke to has seen significant focus by auditors and regulators on consumer data management by third parties. A settlement agent has access to nearly all of a consumer’s personal and financial information; the risk of loss in that area is one that needed to be addressed. The enhanced MSI now does just that for SSI vetted agent transactions.” The Closing Agent has access to vast amounts of highly personal identity and financial information of the borrower that is disclosed during the closing. The enhanced MSI Policy now protects the Lender against the fraudulent use of this information and consequential losses they become liable for. “With banks facing increased pressure from regulators in the area of data security and privacy, we realized that the MSI program needed to address this within the coverage. The SSI vetting process ensures that only

upstanding professional closing agents have access to the personal information provided on the 1003 application form, which includes a complete consumer personal and financial history,” said Jeremy Brasier of RFIB. “Working with SSI and our Lloyd’s syndicates we have crafted what we believe is a notable enhancement to coverage that will make MSI broader in scope and extend its value to the market.”

Credit Plus Unveils New Fraud Prevention Tool

Credit Plus has announced the introduction of FraudPlus, a tool to help mortgage lenders verify applicant information, minimize risk, and comply with new regulations. FraudPlus makes it easy for lenders to quickly perform a thorough risk assessment on applicants and identify problems with applications. “FraudPlus simplifies lenders’ jobs by eliminating the need to check multiple sites or sources for different verifications,” said Greg Holmes, national director of sales and marketing for Credit Plus. “By providing all the third-party verifications lenders need, FraudPlus helps lenders streamline the verification process and make informed lending decisions.” Lenders can customize FraudPlus to provide exactly the types of data they want. Three separate, easy-toread reports are generated, each with a Summary of Findings page that highlights areas of caution and shows at a glance whether an applicant is a risk. The Borrower Detail Report validates an applicant’s identity, including name, address, Social Security Number, birthdate, phone number, as well as other custom information. The Property Detail Report verifies that the property actually exists, con-

firms characteristics of the dwelling, substantiates previous ownership, determines whether the property is at risk for flipping, and other custom data. The Mortgage Participant Detail Report provides the results of a comprehensive examination of appraiser licensing data and industry watch lists. “Mortgage fraud is getting more complex and, sometimes, even ordinary applicants make mistakes on their applications,” said Holmes. “FraudPlus is just one more way Credit Plus is proactively working to help lenders ensure they stay in compliance with new regulations and make smarter, safer loans.”

AllRegs Launches Mortgage Training Package for Depositories AllRegs has launched a mortgage training package designed to address the state and federal training needs now facing depositories. Clarifications in Reg G placed new emphasis on the education of registered mortgage loan officers as it relates to both federal and state laws. The guidance suggests that not only must training be ongoing; it must now match the specific origination activities of mortgage employees. “Providing periodic training for mortgage employees is no longer optional,” said Dan Thoms, executive vice president for AllRegs. “We’ve worked with banks across the country for years. This product is a natural extension of the NMLSR mortgage training we currently offer to licensed loan officers.” AllRegs Depository CE Library consists of over 25 self-study courses covering both federal and state laws as they relate to activities surrounding mortgage employees. Content licensing is available, allowing companies to access training within their

internal systems. Individual employee achievement certificates and auditor-ready reporting options round out the offering. “The Library is actually growing based on feedback from clients. It’s a case where our clients’ needs are so specific; they’re practically shaping the product for us,” said Thoms.

LenderLive Deploys Comergence’s REALM for TPOs

Comergence has announced that LenderLive Network Inc. has selected and deployed its REALM for Third-Party Originators. REALM for Third-Party Originators, a proprietary platform offered exclusively by Comergence, is the most comprehensive, up-to-date, and accurate database of mortgage originators in the industry. Updated in near realtime, REALM’s unique capabilities aggregate critical data such as licensing, criminal and civil records, financial sanctions, as well as bankruptcies and foreclosures and a host of additional important information. Also, the platform enables clients to stay informed of the status of its third-party originators, and maintain compliance with federal regulations. “LenderLive saw a way to gather the information it needs to make more informed approval decisions about the third-party originators that it does business with and that’s why it chose to license REALM. In addition, it speeds the TPO approval process and improves the quality of those decisions,” said Greg Schroeder, president of Comergence. “As we collect new information, we send instant alerts to LenderLive, ensuring it can monitor the activities of the TPOs it does business with and stay compliant with the plethora of regulations our lender clients face today.”

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EWSFLASH l AUGUST 2014 l NMP NEWSFLASH l AUGUST 2014 l NMP NEWSFLA Ginnie Mae Goes Electronic black-owned businesses in the United ahead, U.S. home values are expected year-over-year in the second quarter, to

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Ginnie Mae has announced that it is moving from a paper-based Issuer application process to an electronic system. Beginning Sept. 1, 2014, applicants will be required to file applications for Ginnie Mae Issuer approval electronically via Ginnie Mae’s new Application Connection. The new Application Connection, which will be located on Ginnie Mae’s Web site, will be available starting Sept. 1, 2014. Due to the transition from a paper-based to an electronic application process, Ginnie Mae will not accept paper-based (hard copy) applications after July 31, 2014. “We want to do everything that we can to ensure that our process is smooth, efficient and responsive for all parties,” said Ginnie Mae President Ted Tozer. “This includes creating a more efficient application process, becoming more responsive to applicant concerns and helping prospective Issuers clearly understand our issuer eligibility criteria and what it means to become a participant in our program.” Applicants are strongly encouraged to complete the following two courses through Ginnie Mae Online University: “Ginnie Mae 101” and “Applying to Ginnie Mae” before starting an application for Ginnie Mae MBS Issuer approval. Ginnie Mae’s Online University is accessible from Ginnie Mae’s website and provides free access to training about Ginnie Mae, the role and responsibilities of a Ginnie Mae Issuer, and how to apply for Ginnie Mae approval. Once an applicant has registered on Application Connection, the applicant will have thirty days in which to complete the application. “This new process, which will also allow applicants to check their application status online, will make the process more transparent,” Tozer said.

Urban Lending Solutions Recognized as Top BlackOwned Business Black Enterprise Magazine’s 2014 BE 100 list of the largest

States has once again named Urban Lending Solutions (ULS) in the Magazine’s Top 100 list. ULS, a provider of residential mortgage products and services, was listed 19th, with $168,602 million in revenue. “The key behind success is what you do with it. When I see ULS getting recognized in Black Enterprise Magazine, I’m very proud,” said Chuck Sanders, founder and CEO of ULS. “I’m proud because the kids growing up in my neighborhood could say, ‘we can do that, too. We can be the owner of the next multi-million dollar company!’ I’m very proud of the jobs we’ve created in America and of Chuck Sanders’ Charities.” The BE 100 list measures companies based on employee growth and revenue, and ULS joins the ranks of the widely-admired companies that have made the BE 100 list this year, including Oprah Winfrey’s Harpo Inc. and World Wide Technology Inc. The BE 100 is one of the most respected measures of black-owned business performance in the U.S. A company must be at least 51 percent blackowned and fully operational for the previous calendar year to be eligible for inclusion on the BE 100 list. In addition, the company must manufacture or own the products it sells or provide industrial or consumer services.

Zillow Forecasts Three More Years of Home Price Recession Home values in half of the nation’s 100 largest metro areas will not reach their pre-recession peak levels again for another three-plus years, according to the second quarter Zillow Real Estate Market Reports, proof that the recovery is still very much in its middle stages. Nationally, home values remain 11.3 percent below their 2007 peak. Looking

to rise another 4.2 percent through the second quarter of 2015, according to the Zillow Home Value Forecast. It will take 2.7 years for national home values to re-achieve their pre-recession levels, assuming a steady rate of appreciation at the forecasted level. Locally, in 50 of the nation’s 100 largest metro markets, it will take three years or more for home values to reach prior peaks. Notable large metros where full recovery in home values will take longer than a decade include Minneapolis (14.5 years), Kansas City (12.5 years) and Chicago (11.7 years). “In dozens of markets, homeowners that bought at the peak of the market in 2006 or 2007 will have to wait until 2017 or later to get back to the breakeven point on their home, a lost decade in which they will have built up no home equity. This is reflected in stubbornly high negative equity and effective negative equity rates, with more than a third of Americans with a mortgage lacking enough equity to realistically list their home for sale and buy another,” said Zillow Chief Economist Dr. Stan Humphries. “But there is a silver lining as we navigate these tricky middle innings of the recovery. Because home values remain so far below their peak levels in so many areas, it is still possible for buyers to find bargains. This will be critical to maintaining home affordability over the coming years, especially as mortgage interest rates rise.” U.S. home values climbed 6.3 percent year-over-year in the second quarter to a Zillow Home Value Index (ZHVI) of $174,200, the slowest annual pace of appreciation recorded so far this year and a sign that the market is returning to more normal levels. In a more normal market, home values appreciate at roughly three percent per year. Home values nationwide were up one percent compared to the first quarter and 0.5 percent from May. Nationally, rents rose 2.5 percent

a Zillow Rent Index of $1,310 but fell 0.3 percent compared to the first quarter. The quarterly decline was the largest recorded since Zillow first began publishing the Zillow Rent Index in late 2010. U.S. rents were flat month-overmonth.

Austin and Salt Lake City Named Top Cities for Millenial Homebuyers

First-time homebuyers have been largely absent from the housing market in the current economic recovery, but some metropolitan areas—particularly in the Midwest and West—are well positioned to see increases in homebuying from the Millennial generation in upcoming years, according to new research by the National Association of Realtors (NAR). NAR analyzed current housing conditions, job creation and population trends in metropolitan statistical areas across the U.S. to determine the best markets for aspiring, leading edge Millennial homebuyers. Austin, Texas and Salt Lake City were identified as top standouts for Millennials for having a young adult population with solid job growth rates and still relatively affordable home prices. Seven of the 10 metro areas recognized are in the Midwest and West. Lawrence Yun, NAR chief economist, says the homeownership rate for young adults under the age of 35 peaked in 2005 (43 percent) and fell to 36 percent in the first quarter of 2014. “Limited job prospects, student debt and flat wage growth have combined with tight credit conditions and low inventory to price Millennials out of some of the top cities such as New York and San Francisco,” he said. “However, NAR research finds that there are other metro areas Millennials

are moving to where job growth is strong and homeownership is more attainable. These markets are well-positioned to soon experience a rise in first-time buyers as the economy improves.” NAR analyzed 100 metro areas that have a large Millennial presence, solid local job market conditions and strong migration patterns of young adults moving to that particular area to determine the best purchase prospects for young buyers. Housing affordability and inventory availability were also considered.

duct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, is said to have contributed to the financial crisis. Citigroup is often among the usual suspects accused of misrepresenting the quality of mortgages in the days before the 2008 crisis.

Smith Releases Initial Report Regarding Chase RMBS Settlement

Citi Agrees to Shell Out $7 Billion for Bad RMBS Joseph A. Smith Jr. has released his Initial Report as Monitor of the JP

relief, and my team and I have confirmed that Chase has provided approximately $6 million in credited consumer relief,” said Smith. “Prior to submission, Chase informed me that it would transfer 100 loans to its internal review group as a trial to ensure its testing procedures were appropriately designed. I consented to this approach. Chase further advised me that it had provided creditable relief to borrowers on additional loans through March 31 that were not included in the group of 100 initially tested. This additional activity will be reported to me in midAugust.” Chase is required to report to the continued on page 16

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Citigroup has announced that they’ve agreed to pay around $7 billion to the U.S. government regarding bad mortgagebacked securities (MBS), with $4.5 billion to be paid in cash with an additional $2.5 billion paid in “consumer relief.” Even with Citigroup’s shares rising 3.6 percent in the second quarter, this news is still devastating to Citi’s Q2 bottom line. The agreement also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in highcost areas. The settlement does not absolve Citigroup or its employees from facing any possible criminal charges. “This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said U.S. Attorney General Eric Holder. “The bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008. Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business. Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.” The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors. Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects. As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects. In one instance, a Citigroup trader stated in an internal e-mail that he “went through the Diligence Reports and think[s] [they] should start praying ... [he] would not be surprised if half of these loans went down ... It’s amazing that some of these loans were closed at all.” Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting residential mortgage-backed securities (RMBS) to investors for billions of dollars. This con-

Morgan Chase residential mortgagebacked securities settlement (Chase RMBS Settlement). On Nov. 19, 2013, the federal government, five states and JPMorgan Chase reached a $13 billion agreement to settle claims regarding the packaging, marketing, sale and issuance of residential mortgagebacked securities (RMBS) by Chase, Bear Stearns and Washington Mutual to investors before the financial crisis. Smith was appointed by the settlement parties to monitor Chase as it distributes $4 billion in credited consumer relief. Under the settlement, Chase is required to provide relief to borrowers within essentially a four-year period ending Dec. 31, 2017. “Chase has begun to provide this

Online Reputation & Inﬂuence The Nine Major Obstacles to Sales Accountability By Rene Rodriguez I was asked recently to put together a sales management training workshop for a bank. The desired outcome was to train managers how to manage an office of mortgage loan originators to a desired level monthly production through accountability, training and coaching. I was excited to see this because the mortgage industry is the only sales profession that hires external coaches to hold their sales people accountable. It is a very unique dynamic that lies that the heart of underperformance in our industry. Every other sales profession utilizes sales managers for that that function, so I was happy to see that this bank was taking the steps to bring this skill in-house. The focus of this session should be on creating a culture that believes and is hungry for accountability. For that to happen, we need “re-frame” accountability and “knowing your numbers” in a safe, fun and energizing way. They need to believe that accountability is the missing ingredient or pathway to help them reach their goals. They need to believe that they are better managers/producers through accountability, and finally, they need to see and feel the value on all levels that accountability brings. As a result, my brain immediately went to the question, “What is stopping that from happening now?” That question led me to create this list.

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The challenges and obstacles to accountability l Urgency: Those who don’t feel the pressure or urgency (lack of motivation) to improve or produce more, those who are comfortable, will not want to be held accountable. l Trust: Those who don’t trust their managers will see this as a threat or power struggle or a way of controlling them … and will most likely leave. l Self-esteem: Those who don’t believe in themselves will see accountability as a mirror of truth that they don’t want to face. l Underperformance: Those who are flying under the radar, and know it, will see accountability as a way to expose their underperformance. l Clarity: Managers who lack clarity of expectations will not know where to start … the number of closed loans or volume is not enough. l Ownership: Managers who lack the courage to take responsibility or ownership for underperformance will fight this l Conflict avoidance: Managers who avoid conflict will not have what it takes (the inner strength) to confront the truth. l History: Most people have a negative association to any form of accountability because it was poorly executed and not clear. l Entitlement: If no accountability systems have been in place, then this change will be met will the resistance that stems from entitlement. The only way to get them “there” is to tap into their voluntary energy, getting them excited and helping them see the vision of what is possible. Once the energy is there, the knowledge transfer, training of tools and accountability meetings will be easy. Rene Rodriguez is founder and CEO of BetterLoanOfficers.com, a powerful and easy-to-use online loan officer review management system. Loan officers can collect, manage and promote their reviews in order to build trust, secure more referral relationships and close more deals. He has been named to National Mortgage Professional Magazine’s “40 Under 40 Most Influential Mortgage Professionals” for five consecutive years.

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Monitor quarterly on its consumer relief activities. After Chase’s internal review group tests and confirms the eligibility of these activities, it submits a report to the Monitor. Smith and the professionals he works with then thoroughly review this work and determine the amount of credit to which Chase is entitled. “I look forward to sharing additional results in my next public report on Chase’s consumer relief activity before the end of the year,” said Smith. “I am honored to have been chosen to monitor this settlement, and my colleagues and I will do our very best to justify the faith the parties put into our work.”

CFPB Proposes New Consumer Complaint Database

the consumer updated on its status. To date, the Bureau has handled more than 400,000 complaints. The CFPB’s Consumer Complaint Database is the nation’s largest public collection of consumer financial complaints. It includes basic, anonymous, individual-level information about the complaints received, including the date of submission, the consumer’s zip code, the relevant company, the product type, the issue the consumer is complaining about, and the company’s response.

MBA Foundation Opens 100th Door for Family in Need The MBA Opens Doors Foundation announced it had made its 100th grant to a family in need. The Foundation is the Association’s philanthropic entity dedicated to providing financial assistance to families with a critically ill or injured child by awarding grants toward a mortgage or rental payment. “I am very proud that Opens Doors has reached this 100th grant milestone,” said Debra Still, Chairman of the MBA Opens Doors Foundation. “Now that our program has expanded to include rental payments as well as mortgage grants, we are even better positioned to assist families in times of great financial stress, when parents need to be completely focused on the care of their children. With nearly a half million dollars in donations collected, Opens Doors is a wonderful way for the real estate finance community to give back to those in need and demonstrate our commitment to sustainable housing.” Buoyed by more than 250 individual and corporate donors from the real estate finance community, and with MBA’s in-kind donations for all of the Foundation’s operating costs, Opens Doors is able to pass 100 percent of the donations it receives on to the families it supports. The Foundation’s ongoing relationship with Washington, D.C.’s Children’s National Health System provides a partner health care organization to help identify potential grant recipients.

The Consumer Financial Protection Bureau (CFPB) is proposing a new policy that would empower consumers to publicly voice their complaints about consumer financial products and services. When consumers submit a complaint to the CFPB, they would have the option to share their account of what happened in the CFPB’s publicfacing Consumer Complaint Database. Publishing consumer narratives would provide important context to the complaint, help the public detect specific trends in the market, aid consumer decision-making, and drive improved consumer service. “The consumer experience shared in the narrative is the heart and soul of the complaint,” said CFPB Director Richard Cordray. “By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole.” The CFPB began accepting complaints as soon as it opened its doors three years ago in July 2011. It currently accepts complaints on many consumer financial products, including credit cards, mortgages, bank accounts, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, and payday loans. When consumers submit a com- Foreclosure Activity Hits plaint to the Bureau, they fill in infor- Lowest Point Since 2006 mation such as who they are, who the RealtyTrac recomplaint is against, and when it leased its Midoccurred. They are also given a text year 2014 U.S. box to describe what happened and Foreclosure can attach documents to the comMarket Report, plaint. The Bureau forwards the comwhich shows a plaint to the company, allows the total of 613,874 U.S. properties with company to respond, gives the consumer a tracking number, and keeps continued on page 25

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Thinking Outside the Realtor: Other Ways to Find Purchase Leads Without an Agent By K. Justin Restaino After the positive feedback we received from our article last month, we thought we’d continue our conversation of creative ways to bring in new business. Marketing to real estate agents can be very beneficial for helping grow your career. However, it should not be overlooked that there are other ways, outside the agent, that can help develop new business. Financial planners Creating a relationship with a financial planner can put you in front of a demographic that is looking for more. A demo that already has assets are typically looking to purchase larger homes, vacation homes, or perhaps investment properties. Referrals from this source will be better qualified and more likely to close. Human resources managers According to government surveys, homeowners make better employees because they are less likely to job-hop and more likely to establish roots in their communities. This is a great angle for you to present to human resources managers. Volunteer your help, through the form of an employee program, which offers your services to help more of their employees become homeowners. Ensure the HR managers that you will handle all the work included with this program, and that your interaction with their employees will happen outside of the working day.

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Renters Many renters don’t realize they could buy their own home for the same monthly payment or don’t know the facts about how to qualify for a home. Target credit qualified renters via direct mail, offering free consultation and steps to prequalify for a home. If the renters you hear from don’t qualify—don’t give up. You can now help them prepare for the homebuying process and be there for them when they are ready to purchase a home. Builders Builders are typically focused on building homes and don’t want to worry about the selling and financing of their homes. By partnering with a builder, not only can you help buyers with their financing, but you can also become a resource for those buyers who aren’t interested in that particular home, but are in the market to buy. Past customers Don’t forget the power of your past customers, it’s important to nurture them often. These customers may be in the mindset of wanting to purchase more real estate, but their need may not be so demanding to make them call you yet. A helpful checklist could be a nice addition to remind them why they may need financing help: l Buying a vacation property l Purchasing a smaller home l Purchasing a larger home l Buying an investment property In conclusion, referral marketing is powerful, with plenty of opportunities outside of real estate agents alone. If you take the time to develop relationships with industry players, you can expand your referral base exponentially. The real estate agent is still an important part of your marketing, but don’t be afraid to think outside the box. As Steve Jobs once said, “Get closer than ever to your customer … so close that you tell them what they need well before they realize it themselves.” K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.

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new to market continued from page 12

UFA Expands Business to Hawaii

Urban Financial of America LLC (UFA) has announced that it is now licensed to conduct its retail and wholesale reverse mortgage business in the state of Hawaii. Reverse and traditional “forward” mortgage companies licensed in Hawaii can now offer UFA’s competitively priced reverse mortgages, which allow those age 62 and older to convert a portion of their home equity into tax-free funds for greater financial flexibility while remaining in their homes. UFA is consistently ranked as the nation’s top wholesale reverse mortgage lender, providing wholesale and correspondent lenders with best-in-class operational support and reliably quick turn times. Homeowners in Hawaii also can contact UFA directly to work with a licensed Reverse Mortgage Specialist. “UFA is pleased to bring a new reverse mortgage option to Hawaii,” said Steve McClellan, president of UFA. “Our underwriting team and locally-based account executive have a deep understanding of the valuations, environmental zoning, landscaping requirements and other unique aspects of the Hawaii real estate market, as well as the needs of brokers and correspondent lenders. With our years of expertise, reputation for making the process easy, and our highly competitive pricing as one of the largest GNMA issuers, UFA is an excellent partner not only for Hawaii’s current reverse mortgage providers but also for forward mortgage companies looking to expand into the reverse mortgage business.”

Employment and Income Verifications Now Available Via SharperLending

base of more than 241 million employer-direct payroll records, the SharperLending platform enables resellers and settlement services providers to deliver the most comprehensive and largest employment and income database in the nation to their lender customers. “The shift from a refinance market to a purchase market has created a renewed emphasis on reliability and accuracy in verifying a borrower’s information,” said Equifax Senior Vice Presidents Michael Kuentz and Craig Crabtree. “Enhancing SharperLending with The Work Number makes verifications accessible to a larger pool of lenders and subsequently strengthens our industry as a whole.”

Mortgage Returns Unveils Prospect Manager Tool

Mortgage Returns announced an addition to its CRM called Prospect Manager, which provides mortgage originators with an end-to-end solution to manage prospective borrowers throughout the entire loan process. Prospect Manager is a bolt-on Web site for loan originators that allows Mortgage Returns clients to submit 1003 loan apps online. The product provides mortgage originators with an online portal to effectively track the details of a prospective borrower’s account and loan application while delivering relevant, automated marketing. The product also offers lenders with complete automation and integration between the LOS and CRM system. “This new product provides lenders with a complete, automated way to manage prospective borrowers and keep customers engaged throughout the loan process,” said Jim Blatt, CEO of Mortgage Returns. “As part of Mortgage Returns CRM, Prospect Manager gives lenders a competitive advantage that positions them to grab market share.”

Your turn Equifax Inc. has announced that SharperLending LLC is now offering employment and income verifications through Equifax’s The Work Number for customers using its SharperLending Settlement Services platform. The Work Number is a proprietary database of employment and income information owned by Workforce Solutions, a business unit of Equifax Inc. The SharperLending Settlement Services platform is an online pointof-sale service that enables lenders to order and pay for all of the products and services needed to close a loan. Leveraging The Work Number data-

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

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NAMB PERSPECTIVE The President’s Corner: August 2014

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I was really excited this past month to be able to go to the Consumer Financial Protection Bureau (CFPB) and discuss certain topics with them at a time we thought was going to be a controversy-free time and we could present our items with no additional distraction. Then, to find out that on Friday before we were going, the CFPB released their guidelines on mini-correspondents … whew! However, we were there at the right time. It was a very good dialogue, and we were invited back to do a deeper dive into our suggestions and topics. And they want to talk deeper in depth on the mini-corr issue. It was an excellent meeting and I look forward to the next meeting with them. As I reflect over the past two and three-quarter years, my only dismay is that we have not increased membership to about 15,000. NAMB’s Membership Committee and the new way we do this I thought would have us up there in those numbers. The one item that I felt would make the biggest impact was making our Board of Directors more involved in the Membership Committee. Well I can tell you that the Chairman of this committee, Kay Cleland, has literally worked her butt off trying to increase the numbers. She has done a fantastic job, and I could not be more proud of what she has done. We have had almost a near-500 member increase this year over our numbers from Jan. 1st of the year. Great job! And some of those working with Kay have also accomplished a great deal. But this is

an ongoing procedure that will take a long time to see results. UNLESS if you are one of our dues-paying members. Have you convinced any of your nonmember friends to join NAMB? I am not looking for miracles, just results. I cannot believe that I have spoken with some non-members and the excuse I got was “Why should I join, you are going to represent me even if I don’t join.” Just to let you know, I was furious when I heard that. It took every ounce of strength that I had not to jump all over him. I casually said, “I am really sorry to hear you say that. Anyone who doesn’t believe enough in your job to belong to your trade association is nothing more than a taker and is only about themselves. They do not care about the profession or their comrades in arms. They don’t even really care about their customers and all of those people are simply paychecks, not customers. All they care about is themselves and not their referrals.” This past year, I have even resorted to checking online to see if an individual who is requesting something of me is or isn’t an NAMB member. I was approached by two originators that wanted money from NAMB to help them with their run for Congress. Not a state seat, but a seat in Washington, D.C. When I called them back to ask why they were not a member, both replied back to me that they just never got around to it. They said that they were representing the originator in their run for their office, and that should not make a difference. I told them that I could not support them in this endeavor because after being an

A Message From NAMB Vice President Rocke Andrews, CMC, CRMS Is Dodd-Frank hurting smaller mortgages? A lot of mortgage brokers used to do small mortgages as a sort of a lossleader. I remember doing many lower loan amounts and making one point which was not a great deal; you could make more on the bigger loans, especially those that were harder to do, such as investors with many rentals or complicated tax returns that had

been turned down at the bank. You would do the smaller loans at a fair price or sometimes basically for free in hopes they would refer you to others, as well as come back when they were ready to move up. This worked pretty well. It seems now fewer originators are willing to spend the time on smaller loans. Most loan originator compensation plans do not pay a great deal on small loan amounts. In addition, all loans now take a greater amount of

originator for all those years, it wasn’t important enough for them to be an active member until they needed money. Both of these situations did not merit anything further. Why did I just tell these stories? Just to make a point that membership does have its privileges. Just like the credit card commercial says, it pays to be a member of NAMB. Just $50 per year is nothing to an originator. If you cannot afford to be involved in your trade association at $4.17 per month and be active in the only non-profit association that cares about you 24 hours a day, seven days a week and works tirelessly to make sure that you still have a job, and fights to make sure that you don’t have to pay through your nose to work for a living. An association that makes sure you are treated like a human being in your job and in what you do, to make sure that you can meet with customers every day. An association that goes to Washington, D.C. and fights for your rights each and every day. An association that puts together programs that help you do your job, and the fact that you still probably make more money today than you ever have for doing something that you love to do … you need to get out of this business. You need to go take a job that you have no freedom to work among the masses, to make your own schedule to do things with your friends. This is truly a brotherhood of both men and women that is professional and visible. You need to become part of the solution and become a member and need to join now. Go to www.joinnamb.com today. Show me that you can get your friends to join. Make them understand what you stand for … MEMBERSHIP! I have one more of these messages to write as your president. It has been a great ride and I will remember all of

you that I have met over my three years in office. I am going to turn the reigns over to John Councilman in September, but first, I would like to express my sincere appreciation to Mr. Jim Pair, our immediate past president. He has held this position longer than anyone else in the history of NAMB. What should have been a oneyear term, turned into a five-year term, three of them with me as president, and he has never said he didn’t want to be involved. He was always there when I needed something, always offered his time and always treated me with the ultimate respect of a president. I cannot say we didn’t have a difference of opinion, but we always worked it out. He will be in Las Vegas for the 40th Anniversary of NAMB and the NAMB National Conference. If you see Jim in Vegas, please take a minute to thank him for his service and thank him for all of the hours he has spent working for you, our members. NAMB National is set for SaturdayMonday, Sept. 13-15 in Las Vegas. Please attend and celebrate with us. It is important that we all enjoy this celebration. We estimate that we will have more than 2,000 people on hand for the event and we have room for all of you. Register today. Please stay involved with each of your state affiliates, and I thank all of you that are members of NAMB. We still need more members, so if you know someone who is not an NAMB member, get them to opt-in today. Sincerely,

time so it is a more substantial investment now to help a new borrower repair their credit or prepare to buy a home. The new regulations and compliance requirements make it a lot of work to help a new borrower repair their credit or prepare to be a homebuyer. The penalties for making a mistake are far greater than the reward for completing the transaction. This is reflected in the advice all the highpriced mortgage coaches give: “Don’t waste your time on small loans or problem buyers—Concentrate on the easier conforming buyers with higher mortgage amounts.” Of course we know that there are no easy loans now, but if you are going to spend a considerable amount of time just to get a loan properly originated, you want those with the normal amount of work

and a more reasonable amount of compensation. Loan costs have increased, primarily due to the high cost of compliance. These higher fees directly impact the lower loan amounts to a higher percentage. Administrative fees and fixed costs more severely impact lower loan amounts. Several types of loans cannot even be done at par with large lender loan level adjustments—try a cash-out investment duplex on a $30,000 loan. Now, some sort of reform was needed, but it is time to take another look at the high-cost of compliance that is actually hurting the consumer it was meant to protect. Consumers may not be getting the bad toxic loan products of days gone by, but now, they are just getting no loans in many cases.

Donald J. Frommeyer, CRMS NAMB President president@namb.org www.joinnamb.com

NAMB PERSPECTIVE Proposed changes by the CSBS to pre-licensure education requirements The Conference of State Bank Supervisors (CSBS), through their State Regulatory Registry (SRR), has issued a proposed policy for public comment. This was e-mailed out and is available on the NMLS Web site (www.mortgage.nationwidelicensingsystem.org). On the NMLS Resource Center Home page, there is a box on the middle left called “NMLS News.” Currently, it is the second item down and has a highlighted link to the proposal for comments. The proposal is: Proposed Pre-Licensure Education Expiration Policy “An individual who: (1) Fails to acquire a valid license or federal registration within three years from the date of initial completion of any approved pre-licensure education (PE) course; or (2) Has obtained a license or federal registration but subsequently did not

maintain an active license or federal registration for at least three years must complete 20 hours of PE in order to be eligible for state licensure.” Presently all the SAFE Act states is that you must pass the 20 hour prelicensing class. Time limits vary by state. The SRR believes all would benefit from a uniform policy. Proposed PE Course and Compliance Expiration Rules The following rules are required to implement the proposed pre-licensure education policy outlined above: PE Course Expiration Rules (for individual courses when PE compliance is not yet achieved): 1. A PE Course Expiration clock begins from the course completion date when the course is banked to the individual’s record in NMLS. 2. When the individual becomes PE Compliant, the PE Course Expiration clock stops.

NAMB’s Government Affairs: A Mid-Summer Update

PE Compliance Expiration Rules (for after when PE compliance has been achieved): 1. A PE Compliance Expiration clock starts on the later of: a) The PE Compliance effective date or b) The date the individual no longer holds: (i) A renewable state license requiring SAFE compliance or (ii) an active federal registration. 2. If within three years after the clock starts, the individual submits an application for a renewable state license requiring PE compliance or obtains an active federal registration, the PE Compliance Expiration clock stops and resets to zero. 3. When the PE Compliance Expiration clock reaches three years, PE

Basically what this means is you would have three years from completing the pre-licensing class to get licensed or registered. If not, then you would have to take the class again. If for whatever reason your license or registration is no longer active, you have three years to become licensed or registered again without having to retake the class. As long as you are licensed or federally-registered, your education requirement is secure assuming you are taking the annual continuing education classes.

numerous complaints pertaining to brokers, actually had a number so small that it was barely 0.50 percent of complaints were from brokers. Many of those institutions were actually depositories or other creditors that were mistakenly identified as brokers. The debt-to-income issue has always been a question since it was announced in 1026.43 of Regulation Z that it would be capped at 43 percent. There’s obviously data that supports no statistical difference in mortgage delinquencies for DTI variations between 31 percent and 45 percent. So, we’ll see how this issue manifests itself over the next six and a half years. Remember, our DTI’s are set by Automated Underwriting Systems (AUS) such as Desktop Underwriter (DU) and Loan Prospector (LP) for the next six and a half years or until the governmentsponsored enterprises (GSEs) are

reformed, whichever comes first! The CFPB was very gracious to ask for a follow up meeting and hopefully we’ll be able to report back to you over the coming months! Well, that’s about it … but, I am hoping to provide a much more detailed synopsis on our work at NAMB National in Las Vegas this coming September. So, if you’d like to hear more about what’s going on, what we’re doing, and where we are going, I need you to attend NAMB National at the Luxor! Please join us for our 40th Anniversary!

Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is vice president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or email randrews@lendingarizona.net.

Richard M. Bettencourt Jr., CRMS, CMHS of Danvers, Mass.-based Mortgage Network is Government Affairs Committee Chair of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (978) 777-7500 or e-mail rbettencourt@mortgagenetwork.com.

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NAMB Testifies Before Congress NAMB Works With the CFPB NAMB Participates in Multiple Regulatory/CFPB Panels NAMB Webinars Full-Time NAMB Lobbyist on Capitol Hill NAMB Protects Your Business NAMB Forms Industry Coalitions NAMB Education

For detailed information, visit www.namb.org.

n Oregon Mortgage Professional Magazine n AUGUST 2014

Well, I hope everyone is having a GREAT summer! The market is still hot and heavy up here in New England and let’s all keep our fingers crossed it continues this way through the rest of the year! This is NOT going to be a long article. There have only been a few significant activities since my last article. The most exciting development was our recent meeting with the Consumer Financial Protection Bureau (CFPB) on July 15. NAMB President Donald Frommeyer, President-Elect John Councilman, Lobbyist Roy DeLoach and I had the pleasure of spending a good hour with representatives of various divisions within the CFPB. To be quite honest, it was probably one of our most productive meetings since the CFPB’s inception. I want to take this minute to personally thank the CFPB’s Assistant Director of the Office of Financial Institutions & Business Liaisons Dan Smith and the other members of the CFPB who attended the meeting. I speak on behalf of NAMB—The Association of Mortgage Professionals and all of our members when I say we appreciate the CFPB’s willingness to attend and hold these ongoing meetings.

We primarily focused on broker compensation and its inclusion in the three percent points and fees cap, and the recent guidance the CFPB issued on brokers converting to the mini-correspondent model. As is the case with many of our meetings, the substance and results of our meetings have to be kept close to the chest. But, the CFPB has asked us back for a follow-up meeting to look deeper into the issues surrounding the broker compensation issues and concerns surrounding mini-correspondent lending. For the record, NAMB is not in any way supportive of the elimination or adverse modification of the mini-correspondent model. We recognize that there are some entities that function well in this capacity. We have a responsibility to our members to ensure that they are receiving adequate and accurate information so they are able to make sound financial decisions as it pertains to their own business operations. To simply jump into a pond without knowing the depth of the water can have catastrophic results! At the meeting, we also discussed consumer complaints and how those complaints are received and disseminated to the public. When the CFPB released their initial consumer complaint list during the middle of last year, there were many irregularities in the definitions that were used. A list that appeared to have

Compliance expires for the individual. 4. When PE Compliance expires, any PE course taken more than three years before the date of expiration will also expire and cannot be counted toward PE Compliance.

NationalMortgageProfessional.com

By Richard M. Bettencourt Jr., CRMS, CMHS

3. When the PE Course Expiration clock reaches three years, the course expires and may not be counted toward PE Compliance in the future. When the individual becomes PE Compliant, the PE Course Expiration clock stops.

NAMB PERSPECTIVE Are You an NAMB Lending Integrity Seal of Approval Holder?

NAMB Wants to Hear From You!

(No additional costs to NAMB members)

How to Apply for your National Lending Integrity Seal www.lendingintegrity.org Click on EARN the Seal NAMB members ONLY–Log in to the Lending Integrity site with your NAMB User ID and Password (If you do not know your User ID and Password, type in your email and click log-in and the system will send you a password. If you have any issues, please call (972) 758-1151 or e-mail membership@namb.org).

Lending Integrity Requirements

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The Lending Integrity Seal of Approval is awarded only to mortgage originators who meet specific requirements. To earn the privilege to display the Seal, mortgage brokers and loan officers must: Be an NAMB member Meet the requirements of the SAFE Act Pass a national criminal background check Attend eight hours (or equivalent) of professional development education each year Attend two hours (or equivalent) of ethics training every other year or each license renewal cycle Provide professional references Subscribe to NAMB’s Best Business Practices Agree to NAMB’s Code of Ethics Must be renewed annually

By John H.P. Hudson, CRMS In order for the NAMB Communications Committee to be effective, we must know what is happening within the NAMB community. For this reason, my Call to Action for you will be ongoing. I want to hear your success stories, your accolades and awards, your community service efforts … and even your concerns. One of my goals is to create a page within the NAMB Web site to publish to positive stories, testimonials, stories, etc. In addition, NAMB will take the great news from our members and post them on the NAMB Facebook page. Not only will you receive some free press as an NAMB member, but the entire NAMB and mortgage professional community will have an opportunity to pound our chest a little bit about the positive news and

stories about our industry. So, who is with me on this? The major news outlets still want to talk about all the wrongs of the industry … and many of you are still paying the price for the wrongs and/or perceived wrongs of the past. So let’s work together to make sure the media, consumers, regulators and consumer groups know that us mortgage professionals do the right thing and help those in our own communities across this country every day. And remember, I don’t care if you are a mortgage broker or a mortgage banker … you are a mortgage professional. Send your stories to communications@namb.org John H.P. Hudson, CRMS of Premier Nationwide Lending in Flower Mound, Texas is NAMB Communications Committee Chair. He may be reached by phone at (817) 247-4766 or e-mail jhudson@pnlending.com.

SHOULD LENDERS STOP OFFERING FHA? By Jeff Mifsud

FHA Commissioner needs to make it a top priority to repair the relationship it has with lenders. The FHA should strive to create a healthy working relationship with lenders that is focused on creating housing opportunities for all the hard-working folks out there who dream of owning their own home. In addition, if FHA is really concerned about the success of FHA homebuyers making their mortgage payments, it needs to lower the mortgage insurance premiums (MIP) (see my article in the March 2012 issue of National Mortgage Professional Magazine, titled “Unfair! FHA Reserves Fall and New Borrowers Are Forced to Bear the Burden of Recovery” where I discuss how new FHA buyers are being penalized with higher MIP for past bad loans). FHA MIP rates are, in many cases, 60 percent higher than conventional rates! Needless to say, this translates into significantly higher payments, making it more difficult to handle a monthly payment. Given this reality, borrowers

who can, will continue to choose conventional financing. With Julian Castro taking over this month as the new HUD Secretary, I hope he will listen to lenders and real estate agents across the country and come to the quick determination that lowering insurance premiums to make FHA a more viable loan product will help more of the people that FHA strives to help. I am also optimistic that Secretary Castro will work hard to restore a functional, mutually beneficial working relationship with lenders as service providers whose mutual goal is to help people buy and refinance homes with affordable payments. 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 LoanToolbox.com and creator of The FHA Originator, a monthly FHA newsletter. Jeff may be reached by phone at (248) 4038181 or visit www.MortgageSeminars.com.

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In the wake of the housing crash, many banks have been forced to pay billions of dollars in fines for what they feel are largely minor administrative mistakes on loans. This has caused many lenders to question whether it makes financial sense to continue originating a high volume of FHA and risk heavy handed fines … or whether to do FHA at all. For example, in mid-July, Reuters quoted JP Morgan Chase CEO Jamie Dimon who commented that the bank’s experience with FHA loans was so bad that “The real question to me is should we be in the FHA business at all … and we are still struggling with that.” FHA, as far as I know, remains the only government agency that does not rely on tax payer funding, but is supported by the insurance premiums it collects on the loans it insures. Given this, FHA needs to operate like a business, relying on cash flow and thus will change its guidelines to control volume—just as lenders do. Chase knows this and has been bold enough state publicly that it is considering pulling out of FHA lending. I think if Wells Fargo were to apply the same pressure, FHA might be compelled to reconsider its usage of penalties charged to lenders as a means of generating cash flow. I have been following the relationship of FHA to the lending community for 20 years, and I must say it has had a lot of ups and downs. On the one hand, we’ve seen lenders blatantly abuse the FHA program and commit outright fraud in the hopes they wouldn’t get caught. On the other hand, there are companies that are honest, but may make administrative mistakes on loans. Some examples of the past fraudulent abuses: The lender that that was shut down because it colluded with appraisers by providing FHA single-family home financing … on vacant lots! Pictures of homes would be added to the appraisals of the lots, and no one was the wiser … until someone started looking closely at the pictures of the homes to see what the address on the home was (note that this

was prior to the use of digital pictures). It was during this time as an FHA underwriter that I was trained to use a magnifying glass to match the address seen on the picture to other file documentation. Further examples included, of course, the companies that would make up fake Social Security cards for immigrants so they could get FHA loans–a practice that spawned the Social Security Number verification requirement. A lot has changed, and in today’s culture of compliance, the lenders that remain standing are ones that strive in earnest to deliver the most compliant loans and have no intention on committing fraud or abusing the FHA program. It is these lenders that FHA should work with as partners in helping create a viable loan program to help homebuyers acquire affordable homes. The era when Brian Montgomery was Housing Commissioner was a great one for lenders. He did a lot of outreach to lenders, really listened to what the lenders had to say, and made changes based on what he heard. Lenders felt as if they were partners in housing with FHA during that period. Today’s FHA-lender relationship is largely an adversarial one, and for everyone’s benefit, this needs to change. FHA is, at times, like an abusive spouse that has a facade of welcoming charm, but strikes out when the other crosses a line that was not well-defined. In the same way FHA publishes guidelines that lack clarity, the lender originates loans based on these guidelines...and then FHA punishes the lender for not following the guidelines! To FHA’s credit, Mortgagee Letter 14-02 did attempt to provide more clarity on manually underwritten loans, but this is not enough. We all await the publishing of the new HUD Handbook 4155 that has been talked about, and all lenders hope that it provides the clarity needed for lenders to confidently originate FHA loans without the fear of unwittingly doing something wrong (and being unjustly punished for it). So, should lenders simply stop offering FHA? Absolutely not. The program has a lot of flexibility and it benefits many underserved borrowers. However, the

heard street ON THE

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

Zillow to Purchase Trulia for $3.5 Billion

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Zillow Inc. has announced that it has entered into a definitive agreement to acquire Trulia Inc. for $3.5 billion in a stock-forstock transaction. The boards of directors of both companies have approved the transaction, which is expected to close in 2015. The combined company will maintain both the Zillow and Trulia consumer brands, offering buyers, sellers, homeowners and renters access to vital information about homes and real estate for free, and providing advertising and software solutions that help real estate professionals grow their business. At closing, Trulia CEO Pete Flint will remain as CEO of Trulia reporting to Zillow CEO, Spencer Rascoff, and will join the board of directors of the combined company. In addition, at closing, a second member of Trulia’s board of directors will join the board of the combined company. Further operational and organizational details will be announced at closing. “Consumers love using Zillow and Trulia to find vital information about homes and connect with the best local real estate professionals,” Rascoff said. “Both companies have been enormously successful in creating compelling consumer brands and deep industry partnerships, but it’s still early days in the world of real estate advertising on mobile and Web. This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry.” Both Zillow and Trulia are primarily media companies, generating the majority of revenue through advertising sales to real estate professionals. Despite continued growth as public companies, significant opportunities of scale remain as the majority of advertising dollars in the real estate sector have yet to migrate online or to mobile. For example, the two compa-

nies’ combined revenue currently represents less than four percent of the estimated $12 billion real estate professionals spend on marketing their services to consumers each year. By combining resources, the companies expect to accelerate innovation on mobile and Web to provide more valuable tools and services to consumers and professionals. The companies also expect to share real estate market data, housing trend analysis, and forecasts to make more free data available to consumers and real estate professionals to empower people to make more informed decisions. As part of the agreement, Trulia shareholders will receive 0.444 shares of Class A Common Stock of Zillow for each share of Trulia, and will own approximately 33 percent of the combined company at closing. Current Zillow holders of Class A Common Stock and Class B Common Stock will receive one comparable share of the combined company at closing, and will represent approximately 67 percent of the combined company. The transaction assumes Trulia’s convertible notes will be assumed by the combined company at closing. The value of the deal represents a premium of 25 percent to Trulia’s closing price on July 25, 2014. The agreement is subject to the satisfaction of customary closing conditions, including the expiration of U.S. antitrust waiting periods and shareholder approval of both companies. Zillow co-founders Rich Barton and Lloyd Frink, who control a majority of the shareholder voting power of Zillow, have agreed to vote in favor of the transaction. In addition, Trulia directors holding 7.4 percent of Trulia stock have entered into voting agreements with Zillow to vote in favor of the transaction.

Urban Lending Solutions Named an Approved AMC by Flagstar

Urban Lending Solutions Appraisals (ULSA) has been named an approved appraisal management company (AMC) to Flagstar Bank. As an approved AMC, ULSA is currently providing appraisal services to both Flagstar’s retail and correspondent channels. “We are very excited to offer our high quality appraisal services to Flagstar Bank and their customers,” said Scot Rose, president and chief valuation officer of ULSA. “As a fully integrated partner within Flagstar’s order management system, ULSA can now easily be selected for nationwide services and their partners can experience working with a premier AMC.”

industry’s top service providers. “The addition of Mortgage Builder’s loan origination, servicing and electronic document management software enhances Altisource’s current portfolio which provides customers with one of the most comprehensive real estate and mortgage lifecycle management platforms and services marketplaces available,” William B. Shepro, chief executive officer of Altisource said. “Mortgage Builder will join the Altisource family of businesses and operate within our Technology Services segment. Together, we will continue to develop innovative technology solutions that meet the evolving needs of the real estate and mortgage marketplaces.”

VA Renews VALERI Contract With Black Knight

Altisource Acquires Mortgage Builder Solutions Altisource Portfolio Solutions SA has announced that it has entered into a definitive agreement to acquire Mortgage Builder Software Inc. Combined with the recent acquisition of Equator LLC, this addition will extend Altisource’s position as a market leader for real estate and mortgage lifecycle management technologies and marketplace services and will further diversify its customer base by providing software solutions to leading mortgage banks, credit unions and financial institutions in the U.S. The acquisition is expected to close within 30 days and is subject to customary closing conditions. Mortgage Builder, which offers a full suite of Software as a Service (SaaS)based mortgage solutions, has been consistently recognized as one of the

Black Knight Financial Services (BKFS) announced that the U.S. Department of Veterans Affairs (VA) has signed a contract renewal for the Web-based reporting application “Veterans Affairs’ Loan Electronic Reporting Interface” (VALERI), which the VA has used since 2007. VALERI is built upon Black Knight’s Process Management technology, a highly efficient workflow, imaging and communication management system that provides real-time connectivity between lenders, service providers, vendors and portfolio investors. VALERI enables mortgage servicers to report “significant events,” through either the servicing system or the servicer’s Web portal user-interface within VALERI, eliminating many processes that were previously done manually, as well as email and verbal reporting for both the servicer and VA.

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foreclosure filings—default notices, scheduled auctions and bank repossessions—in the first half of 2014, a 19 percent decrease from the previous six months and down 23 percent from the first half of 2013. The report also shows that 0.47 percent of all U.S. housing units (one in 214) had at least one foreclosure filing in the first six months of the year. The report also includes new foreclosure activity data from June, when a total 107,194 U.S. properties had a foreclosure filing, down two percent from the previous month and down 16 percent from a year ago to lowest level since July 2006, before the housing price bubble burst. Total foreclosure activity in June was the lowest since the housing bubble burst in August 2006 in 10 states, including Texas, Georgia, Colorado, Tennessee, Arizona and Nevada. “Nationwide foreclosure activity in June reached an important milestone, dropping to levels not seen since before the housing price bubble burst in August 2006,” said Daren Blomquist, vice president at RealtyTrac. “Over the next six to nine months nationwide foreclosure numbers should start to flat line at consistently historically normal levels.

the Professional Risk Managers International Association (PRMIA), also looked at common concerns that arise during the underwriting process across all types of consumer loans. Most bankers surveyed (59 percent) cited “high debt-to-income ratio” as their top concern when approving loans. The second and third most common concerns were “multiple recent applications for credit” (13 percent) and “low FICO Score” (10 percent).

Survey respondents throughout the U.S. and Canada were more optimistic this quarter than last when asked about small business lending. Twenty-six percent of those polled in the most recent survey said they expected delinquencies to increase on small business loans in the next six months. In the previous survey, 34 percent expected delinquencies to rise. In addition, only 28 percent of respondents in the latest survey were concerned that the supply of credit for small businesses would fail to meet demand over the next six months. Last quarter, 40 percent of respondents believed supply would fall short of demand.

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

FICO Warns of Inflating Housing Bubble NationalMortgageProfessional.com

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Mortgage bankers fear another real estate bubble, according to the latest quarterly survey of North American bank risk managers conducted for FICO, a leading predictive analytics and decision management software company. In the survey, 56 percent of respondents directly involved in mortgage lending expressed concern that “an unsustainable real estate bubble is inflating.” “The home loan environment has bifurcated,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Six million homeowners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33 percent. Yet with home prices soaring in many cities, total homeowner equity in the U.S. is at its highest level since late 2007. That doesn’t feel like a healthy, sustainable growth situation. No wonder many lenders in both Canada and the U.S. are concerned about the risk in residential mortgages.” The survey, conducted for FICO by

LYKKEN ON

leadership

Four Ways Leaders Demonstrate Adaptability By David Lykken

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s we discuss the various changes taking place in the wholesale and correspondents markets, I’m of what I believe is one of the most overlooked and under-appreciated characteristics of great leadership: The ability to adapt. As more and more mega banks exit the wholesale channel and lenders scrabble to find ways to capture new business, the ability to adapt to any environment is more important than ever before. The leaders who survive these frequent changes in the market will be those who have demonstrated extreme levels of resiliency and flexibility. There is no question that wholesale and correspondent markets are shrinking dramatically in number. And I am of the opinion that these

channels are absolutely vital to the survival of independent mortgage bankers as well as to the overall health of the industry. But times are changing, and we are going to have deal with new norms when it comes to secondary markets. I offer no silver bullet; there’s no magic potion that I can give you that will guide you through these changes. I can only offer a mindset. If you are going to make your way through this changing landscape and come out a great leader, it’s going to be through an “adaptable” mindset. So, what does it mean to be adaptable? It’s easy to talk about somewhat fuzzy concepts like this without really understanding what we mean. So, I’m going to give some examples of what it means to be adaptable in our industry. What does an adaptable leader look like? Let’s discuss … First, adaptable leaders consider a

broad range of alternative markets. Are wholesale markets or correspondent markets right for your organization? Who should originate the loans for your customers—you or an outside third party? When you lose a channel through which you have been accustomed getting your loans, how do you respond? Do you throw your hands up in defeat? Do you seek out another third party from the same channel? Do you seek another channel? There is no right answer. But there is, I think, a wrong answer—the status quo. If you stick with what you’ve always done simply because it’s the way you’ve always done it, you will shut yourself off to new opportunities. When you have tunnel vision, you can miss market opportunities that can save your business and free it up to thrive in a tough economy. Great leaders are able to see the whole field. They are able to see, not just the trees, but the whole forest. It’s only when you are able to see all available alternatives that you can make the best decision possible. Keep your options open—it can make all the difference between success or failure as the markets continue to change. Secondly, adaptable leaders experiment with a diverse range of technologies. If you’ve spent any amount of time with me or have read anything else I’ve written, you’ll know that I’m a big fan of technology. In modern times, we’ve come to equate technology with IT or anything surrounding computers. But, fundamentally, technology is about improving productivity. The word technology comes from a

combination of Greek words meaning “the study of an art, craft, or skill.” So, at its heart, technology is about honing your trade. Anything that makes you better at what you do is technology worth adopting. How often do you experiment with new technologies? Oftentimes, the decision to adopt or ignore a new technology can make or break your organization. If your competitors are using the technology and their businesses are improving, you’re going to be left in the dust unless you adopt it as well. Great leaders are on the lookout for new technologies that will make their organizations more efficient and effective. Again, it’s all about keeping your options open. Thirdly, adaptable leaders put the right people in the right places to get the job done. As with many things, if you’re going to stay nimble and resilient in a rapidly changing marketplace, it all starts with your people. Are you putting your people where they best fit and freeing them up to do their best work? Are you hiring the right people in the first place? Recruiting is a huge area in which small improvements can make huge differences in productivity. What is the screening process like when you do your hiring? Do you hire highly qualified candidates … or just anyone who can fill a seat? Do you hire people with the right attitudes, values, and work ethic? Or, do you simply make the decision based on how many years they’ve been in the business or how many initials are behind their names? Once you hire the best possible people, are you doing everything you can to make it easy for

you cannot go wrong. David Lykken is 40-year industry veteran who has been an owner operator of three mortgage banking companies and a software company. As co-founder

and managing partner of Mortgage Banking Solutions, David consults on virtually all aspects of mortgage banking with special emphasis executive leadership development, corporate strategic direction and imple-

mentation, as well as mergers and acquisitions. A regular contributor on CNBC and Fox Business News, David also hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. Recently, he started producing one-minute videos called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites daily across America. He may be reached by phone at (512) 977-9900, ext. 10, or email dlykken@mortgagebankingsolutions.com or dlykken@mbs-team.com.

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them to succeed? Even great people need direction. Are you steering them toward the optimal tasks, so that you aren’t wasting any of their potential? Finally, are you making the tough calls when you need to? If someone isn’t performing or is slowing the rest of your team down, how long do you stall before you show them the door? Don’t get me wrong; high turnover is never a good thing. You don’t want to be constantly reshuffling your entire team. But you should be willing to make the changes that need to be made. Hire the right people, after all, and you will never need to let anyone go. But the point is that you need to have the flexibility to move your people around where they can do their best work. That’s how productivity happens. Fourthly and finally, adaptable leaders relentlessly pursue education. First, leaders pursue self-education. They try to strengthen their own attitudes and personality characteristics. While some cynical executives may shrug off “self-help” as hogwash, great leaders are humble enough to know that they need help improving themselves. Effective leadership starts from within and, if you aren’t developing yourself internally, how can you expect to develop anything outside of yourself? But, above and beyond educating themselves with a positive mindset, great leaders educate themselves about their industries. In the mortgage business, this cannot be truer. With the constant fluctuations in the market and unending changes in regulation, staying educated is the only way to survive. Are you keeping up on all the industry news and trends? How often do you read industry publications like the one you’re reading now? Do you listen to audio programs? Watch news programs? However you get the information, it’s important that you’re getting it. You cannot know how to respond to the changes if you aren’t aware of the changes in the first place. Being adaptable requires knowledge of what you are adapting to? Do you know what you are up against? Are you staying educated? Of course, there are many other ways in which being a leader requires the characteristics of adaptability. I have only covered a few. To recap, being an adaptable leader means considering alternative markets, experimenting with new technologies, arranging employees in the most productive manner, and staying educated on industry news. If you do all of these things, you will be well on your way to navigating the complex changes occurring in the secondary markets and beyond. There is no magic bullet, but there is a magic mindset. Be an adaptable leader, and

“Effective leadership starts from within and, if you aren’t developing yourself internally, how can you expect to develop anything outside of yourself?”

Mortgage Marketing: Video Can’t Wait By Matthew Dunn Ph.D. If video content keeps getting pushed to next month in your mortgage marketing strategy, you may want to consider this … 17.78 hours (nearly one full day) of the average online viewer’s month was spent watching online video this May, according to comScore data. Viewers only watched 1.09 hours of video ads in the same month. In other words, 94 percent content, and six percent ads. Still think video content can wait? Mortgage is a ripe space for video content marketing because of its complexity and volatility. The terms, ratios and policy language that challenge pros to keep up are overwhelming to consumers. But there’s a solid datadriven point that you have to consider, right there in the first paragraph. The numbers say “We want content, not ads.” (I’ll go out on a limb here and guess that the ad number would be even lower than six percent without all the technological tricks used to insert video ads in our collective faces.)

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Why video, and what kind of video? Last month I touched on the key advantages of visual media (including video). They boil down to time, really; visual media convey more information more quickly. Visual media also fit the way people focus and engage now; short moments of concentration, multitasking and interruptions are becoming the norm, like it or not. Skimming is the new reading (admit it, you’re just skimming this column!) and really getting our attention for a minute or two is tough. What kind of material does get our attention for a minute or two … more specifically, what kind of video? The answer may surprise you. My company had the opportunity to analyze years of data on two comparable sets of video assets for a client. They’d created a library of standard “executive studio interview videos” and commissioned a set of animated “explainer” videos at about the same time. Both sets were handled the same way - posted without any fanfare or promotion. The animated explainer videos outperformed the live interviews 100 to one on view counts. The least-effective explainer bested the best-performing studio interview, and the explainer videos continue to gain viewers years later, where the live interviews flatlined relatively quickly. The lesson here, I think, is less about style than substance. Intent drives content. If your aim is to help, explain or inform, viewers will know. If your intent is to sell or persuade in the guise of helping, viewers will go away and (by the numbers) refuse to do you the favor of sharing your ad. If you’re considering video content versus articles or blogging, divide video costs by at least 10 to compare. Video is viewed more, shared more and ranked better in search results. It’s also (unlike articles or blog posts) relatively protectable. Copying an article takes about two clicks; copying a video takes time and knowledge. Video also yields far more valuable marketing dataor at least it can - but we’ll take that up in detail next month. Matthew Dunn Ph.D. is CEO of Fast Forward Stories, a video content service for the mortgage and real estate industries. He may be reached by phone at (888) 618-9088 or e-mail matthew@fastforwardstories.com.

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Since implementing VALERI in 2007, Black Knight has made multiple enhancements to its servicing systems, including enhancements that support the Servicemembers Civil Relief Act (SCRA) and the Helping Heroes Keep Their Homes Act of 2010. VA technicians flag loans to help servicers further identify and process protected loans with greater ease and confidence. SCRA prohibits mortgage servicers from foreclosing or seizing property from active-duty military personnel unable to meet their mortgage obligations. The protection from foreclosure lasts up to nine months after active duty has ended, and service members also qualify for interest rate limits and other shields under the law. “VALERI allows us to establish clear, standardized business rules, which ensure that every veteran borrower receives every possible opportunity to retain their home, or exit home ownership with dignity. Since implementing this technology, VALERI has enabled servicers and VA to help more than 380,000 veterans and service members avoid foreclosure, saving taxpayers more than $12 billion,” said Michael J. Frueh, Director of the U.S. Department of Veterans Affairs Home Loan program. “We appreciate Black Knight’s commitment to ensuring this technology meets our requirements and supports our mission to help veteran homeowners.”

RealtyTrac Announces Partnership With RE/MAX

RealtyTrac and RE/MAX LLC have announced a new agreement that allows RE/MAX agents and their clients to have real-time access to RealtyTrac’s nationwide foreclosure database of default, auction and bank-owned properties, as well as comprehensive neighborhood and housing data from RealtyTrac’s proprietary Homefacts data. The strategic data enhancement agreement allows remax.com and its affiliated Web properties to leverage RealtyTrac’s Homefacts local information to enhance current for-sale listings with neighborhood data points, including school information, neighborhood points of interest, crime statistics, demographics and environmental data. Additionally, RealtyTrac will allow an integrated search and subscription access to its comprehensive database of 1.1 million properties to RE/MAX users. The RealtyTrac foreclosure data is now live on the Remax.com Web site as a first phase of implementation, with the Homefacts neighborhood and local information to follow. “This is an exciting relationship between RE/MAX, LLC and RealtyTrac,” said RealtyTrac Vice President Alan J.

Mao. “We believe that a complete perspective is essential in making a truly informed real-estate decision. Now, at Remax.com, clients and agents will have access to a comprehensive view of the property marketplace, including 1.1 million foreclosures and soon the neighborhood and local characteristics that truly drive real estate decisionmaking.”

Mortgage Master Becomes First NonDepository Lender to Join Massachusetts Home Ownership Compact

Mortgage Master Inc. has announced that it has become the first non-depository lender to join the Massachusetts Home Ownership Compact to provide affordable mortgage solutions to lower income first-time homebuyers. As a signatory of the Home Ownership Compact, Mortgage Master has committed to make a good faith effort to provide Mass Housing mortgage loans to borrowers below the median household income in 2014. “Mortgage Master is proud to call Massachusetts its corporate headquarters and we are committed to serving our local state community,” said Paul Anastos, president of Mortgage Master. “The recovery of the housing market, the dream of homeownership and the overall economic success of our local communities are things that are extremely important to us at Mortgage Master. We are excited to support the governor’s initiative and do our part— as a collaborative community member—in helping borrowers and working toward strengthening Massachusetts.” “The Homeownership Compact is a great example of how government, lenders and non-profit agencies can work together to make affordable mortgages available to first-time homebuyers across the Commonwealth. We welcome Mortgage Master to the Compact,” said Aaron Gornstein, Undersecretary, Department of Housing and Community Development of Massachusetts. Massachusetts Gov. Deval Patrick announced the Massachusetts Homeownership Compact in 2013 with the goal of providing 10,000 mortgage loans over the next five years to firsttime homebuyers with household incomes below the area median income. In the second year of the Compact, Mortgage Master is paving the way as the first non-depository mortgage lender to sign on. “We hope many more lenders join in by signing the Compact,” said Anastos. “We have 10,000 mortgages to originate continued on page 48

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Consumer Complaint Database By Jonathan Foxx Lou Holtz, the renowned football coach, is reported to have quipped “Never tell your problems to anyone … 20 percent don’t care and the other 80 percent are glad you have them.” Leaving aside the pleasure of Schadenfreude when competitors get their comeuppance, lingering in the shadows is our own fear that we just might be the next recipient of some imputation of blame! Indeed, lest we fall into the downward drift of reputation risk, the general modus operandi has been to resolve controversial issues affecting consumer complaints as quickly as possible. So, we are usually able to avoid hanging out our dirty laundry to dry in the acidic air of public opinion. Until now! Before I jump into the deep pool of consumer complaint machinations of the Consumer Financial Protection Bureau (CFPB), I would like to offer a definition of a word. That word is “allegation.” Here’s my definition of an “allegation,” liberated from its legalistic moorings: ‘An accusation that someone has done something illegal or wrong, which may be true or may be false, typically made without proof, or sufficient proof, and eventually may or may not

lead to somebody being found innocent or guilty of doing something illegal or wrong.’ Please keep my definition in mind as we explore together the Bureau’s new Proposed Policy Statement regarding consumer complaints, issued on July 16, 2014.1 For some time we have known about the Bureau’s “Consumer Complaint Database.” The Bureau’s new proposal would expand the “public-facing database” to include “unstructured consumer complaint narrative data” (Narratives). The Bureau promises that only those Narratives for which an optin consumer consent has been obtained and a “robust personal information scrubbing standard and methodology” applied would be subject to disclosure. The expansion, therefore, supplements and extends the Bureau’s existing Policy Statements that established the Database.2 The Database actually had the Narratives feature associated with it from the start. The Bureau planned to include Narratives from as far back as the original announcement of the Database on Dec. 8, 2011, when it notified the public about its plans to disclose certain data about the credit card complaints that consumers submitted to the Bureau.3 Its final policy statement was issued on June 22, 2012.4 At the

time that this policy became official, it also announced its plans to disclose data from consumer complaints about financial products and services other than credit cards.5 Finally, the Bureau rendered its final policy statement for these other financial products and services on March 25, 2013.6 In effect, the July 16, 2014 supplements the CFPB’s existing Policy Statements. Here is the timeline: l Credit Card Complaints: z Dec. 8, 2011: “December 2011 Proposed Policy Statement” z June 22, 2012: “June 2012 Policy Statement”

ments in response to including the such Narratives was “significant:” There were consumer, civil rights, and open government groups, supporting disclosure “on the grounds that disclosing narratives would provide consumers with more useful information on which to base financial decisions and would allow reviewers to assess the validity of the complaints; and privacy groups wanted an opt-in, because of concerns about the risk of publishing “non-identifiable” data; but trade and financial industry groups “nearly uniformly” opposed the disclosure of consumer complaint narratives.8

l Financial products and services other than credit cards: z June 22, 2012: “June 2012 Proposed Policy Statement” z March 25, 2013: “March 2013 Policy Statement” l Supplement to credit card and financial products and services other than credit cards: z July 16, 2014: “July 2014 Proposed Policy Statement”7

Responding to these comments, the Bureau noted in the March 2013 Policy Statement that it would not post public Narratives to the Consumer Complaint Database–at least not until it could assess whether there were “practical ways” to disclose narrative data submitted by consumers without undermining consumer privacy.9 The stage was now set to determine how and when to expand the policy to include these Narratives.

It should be noted that the June 2012 Proposed Policy Statement did not propose the inclusion of public Narratives in the Database. The volume of com-

The Bureau believes that there are three areas of interest that need to be considered in order to implement its

Areas of interest

e and Public Narratives plan to include the Narratives: (1) the direct and indirect benefits to consumers, (2) the benefit to the Bureau, and (3) the advancement of open government principles. Permit me to provide a synopsis of each of these vectors.

continued on page 38

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l Indirect benefits to consumers: The marketplace will be more responsive to consumers, because the effect of the Narratives will be to influence consumer purchasing decisions. The Bureau claims that research shows that “consumer word of mouth (which includes consumer reviews and complaints) is a reliable signal of product quality that consumers consult and act upon when making purchasing decisions.”13 While the Bureau does not provide such research, it is a rudimentary premise of economic theory that, through their purchases, consumers signal competitive information to market participants. However, the device of a Database with Narratives is not itself the market. As the eminent semanticist, Alfred Korzybski, said, “the map is not the territory.”14 Or, as mathematician Eric Temple Bell said, “the map is not the thing mapped.”15 The signal is not coming from within the market itself but mysteriously from a contrived database. This is what I would call the “Angie’s List Fallacy,” the notion that a list of pros and cons about vendors can substantially move the overall pricing and

ful first person voice of the consumer talking about their (sic) experience,” and the “ability for local stakeholders to highlight consumer experiences in their community,” and empowerment provided “by encouraging similarly situated consumers to speak up and be heard.”17 Given the direct and indirect benefits to the consumer, the Bureau seems to have arrived at the following algorithm: the aforementioned

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l Direct benefits to consumers: Consumers may share their experience with other consumers. Complainants would be able to provide information they deem useful to others who may be considering doing business with a particular financial institution. Or, the Narrative would be a means of letting others know about a company, offering and experiencing similar situations, thereby letting them “know that they are not alone.”10 The Bureau contends that the public is not served if it only discloses the non-narrative portions of the complaint. It seems to me that the Bureau is crossing into the realm of the Confidence Fairy11 when it opines that “some consumers may choose to submit a complaint only if they will have the opportunity to share their story and other consumers may overcome their reticence to submit a complaint by reading the experiences of others.”12 The Bureau believes that this direct benefit may expand the number of complaints submitted to the Bureau, thereby improving the value of the Database.

enhance customer service across a huge market. The theory seems wonderful; the practice does not deliver. Yet, the Bureau believe that the Narratives will be “responsive to the effect word of mouth can have on sales, adjust prices to match product quality and improve customer service in order to remain competitive.”16 The Confidence Fairy reappears, when the CFPB asserts the indirect benefits of the “power-

increase in benefits and utility leads to an increase in consumer contacts, which leads to a positive effect on Bureau operations, which leads to a “critical mass” of complaint data being achieved and exceeded, which leads to the representativeness of Bureau complaint data increasing. The July 2014 Proposed Policy Statement provides no information in support of effectiveness of this process nor does it offer how the “critical mass” will be sliced and diced, except to claim that the “complaint data” will be used by the Bureau’s Offices of Supervision, Enforcement, and Fair Lending,

N A T I O N A L

M O R T G A G E

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

M A G A Z I N E ’ S

economic commentary

WHY By Dave Hershman fter a good hike in long-term rates during the second half of 2013, just about every analyst in the country seemed to be sure that this was just the first phase of rate increases to come. After all, rates were the lowest in a generation and the increase we witnessed last year still put rates in very, very attractive territory. Jobs growth started accelerating during the second half of the year and the systems were ready to fire on all cylinders while the recovery finally got into full gear. Then came the long, cold and hard winter. So we understand that factor. Once

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ARE

RATES

again, the recovery halted and rates came down. But this factor has passed. Job growth has heated up again and the stock market is at an all-time high. The Federal Reserve has been slowing their purchases of Treasury Bonds and home loans in an effort to slow down fiscal stimulus, and now the Fed’s meetings address the question of not if, but when they will raise rates. The question remains, why are not rates going up in response to all of these factors? We could take the easy way out by saying that predictions of the future are futile and while this is true, we believe there are other factors at work. Certainly one factor encompasses the

NOT

RISING?

political tensions around the world. Ukraine, Syria, Libya, Iraq and Gaza are all areas of conflict right now. The tragedy of a passenger jet being shot down just demonstrates how dangerous these situations are. When the world erupts, while our economy has not been as stable as we would like—it is still a haven of safety compared to the rest of the world. When there is unrest, Treasuries are still a choice for those who are looking for safety in a world of conflict. While this factor does not completely explain why rates are not rising right now, there is no doubt that this factor is important and it also explains why predictions are futile. Another factor concerns the issue of inflation. We have not had really high inflation in

We have them! Do you? Because we bond thousands of mortgage companies across the country we use our buying power and leveraged competition among multiple surety companies to offer underwriting parameters and lower rates that other bond agencies only wish they had. Don’t wait for your bond’s expiration. Trade in your overpriced bond for a new bond – And start saving money today!

the United States for some time. For example, in the past 20 years the retail inflation rate has averaged approximately 2.25 percent with an even lower number for the past decade. Two points about this. First, even low inflation rates can cause increases in the cost of living. For example, a 2.25 percent inflation rate over 20 years will increase the cost of living over 50 percent. Secondly, though low inflation rates can create issues in the long run, those who are older remember a U.S. inflation rate of near 10 percent per year from the period of 1973-1982. That was real “old fashion” inflation. The real reason we have had really low interest rates for the past 10 years is the lack of inflation we have experienced. And if we really want to know when rates are going to go up significantly, we need to watch the data on inflation more closely. The reason rates trend up when we get good economic news is the fact that the markets feel that the Federal Reserve Board will raise short-term rates in response to the threat of inflation. There are actually two stages here. The Fed has kept short-term rates near zero in response to our deep financial crisis and lackluster recovery. So the first move is to move rates to a low inflation normal. The second move is the one we should worry about in the long-term. That is a move to head off inflationary expectations if the economy heats up. We expect the first move and should worry about the second move. For right now, the sale on money to finance cars, houses and investments continues. Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.

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TALES FROM THE CLOSING TABLE By Andrew Liput The mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This monthly column addresses the good, the bad and the ugly …

Top industry news … the CFPB plans to open complaint process and name names In early July, the Consumer Financial Protection Bureau (CFPB) announced that it intends to open the Agency’s complaint process, publicly listing complaints and identifying them by subject and lender. Given that anyone can log onto the CFPB Web site and file a complaint against any lender for any reason whatsoever, this is expected to open the door for something akin to a Better Business Bureau (BBB) Web site on steroids. Not only will the CFPB site publicly list the complaints and the lenders being complained about, they will also list the lender’s response. Some of us remember when the Mortgage Asset Research Institute (MARI) was widely used as a public forum to criticize industry players, many times without any substantiation. Also the Mortgage Implode Web site was a gathering place for disgruntled former employees bashing companies as they went out of business and spilling insider secrets. While transparency is important and public complaints must be taken seriously, the notion that lenders will need to have a full time staff person responding to a flood of public complaints (legitimate or not) is hardly being cheered right now with the skyrocketing cost of compliance.

You can’t make this stuff up! l An Illinois title company owner was sentenced to 21 months in prison followed by three years of supervised release as a result of her convictions for wire fraud in a scheme to steal escrow funds to support a gambling habit. Gambling is an addiction and prison is a strong price to pay to get cured. l An Ohio real estate agent was sentenced to more than 10 years in prison for his role in a $3.3 million mortgage fraud scheme involving six properties in Medina, Ohio. He was sentenced to 125 months in prison and ordered to pay more than $3 million in restitution. Ten years is a long time to think about “what if” and “what might have been.” l A Georgia church pastor was sentenced to a year in prison for acting as a straw buyer in a scheme with multiple parties to defraud a bank into granting an $800,000 mortgage. He has been required to pay $100,000 in restitution and forfeit his home. The last time I checked, ‘Thou shall not steal’ was still one of the Ten Commandments! l A New Jersey attorney admitted he conspired to participate in a scheme that caused lenders to release $40.8 million based on fraudulent mortgage loan applications and conspired to launder the proceeds of the fraud. The lawyer and his conspirators recruited straw buyers, created false documents, including fake W-2 forms, income tax returns, investment statements, and rental agreements, to make the straw buyers appear more creditworthy than they actually were. For massive fraud it truly takes a village.

Regulatory updates … On July 11, the CFPB entered a consent order under which ACE Cash Express Inc., a payday lender, agreed to pay $10 million to settle allegations of improper debt collection activities. Half of the payment is for consumer redress and half is a civil penalty. In the ACE continued on page 45

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“Educating prospective customers about how mortgages work can not only make them better-informed, it can reduce staff time significantly.”

The Intersection of Social Media and Mortgage Professionals By Mike Lewis In recent years, Web sites such as Twitter, Facebook, and Google+ have been adopted by astute marketers who recognize a new, powerful portal for reaching the consumer public. The mortgage finance industry, however, has been reluctant to fully utilize this new channel of communication. This may be due to the chaotic condition of the industry following the collapse of the mortgage security sector, the hostile political environment for financial firms, and uncertain regulations applying to the new media. In remains undeniable, though, that the Internet has drastically changed the face of American business in the last two decades—and real estate, like every other industry, is not immune. Currently, there are a variety of opinions on the value and risk of a social media strategy—but the fact is, our society is undergoing a change in how consumers acquire, process and submit information throughout the commercial process. Just what is the future convergence of social media and mortgage

professionals going to look like?

The power of social media In 2013, the National Association of Realtors (NAR) indicated that 92 percent of homebuyers used the Internet for some portion of their search. If you’re not using social media to reach this group of prospective customers, your company is at a major competitive disadvantage—and one that’s only going to worsen, as two-thirds of the Millennial Generation are likely to continue this trend. There are a great many ways mortgage companies can use social media to reach this broad consumer contingent: l Define your brand: Social media allows you to present any image you want to your potential customers. You can build a reputation around your values, expertise, the benefits of your services and the competitive advantages you offer over others in the industry. l Identify potential customers: Since social media is an interactive process, your presence allows you to

learn a lot about your prospects. An ongoing dialogue over these platforms can be more illuminating than paid market research, if handled appropriately. Become an online authority: Having a significant social media base creates instant credibility and can transform you into an authority in your market. As you become more visible, other opportunities for exposure and partnerships may arise, as well, such as media interviews and joint venture opportunities. Market your service: Repeated exposure is essential to building a strong customer base. Using social media properly can provide multiple outlets for such exposure, allowing you to constantly repeat your message in different formats for maximum effectiveness. Reduce administrative costs: Educating prospective customers about how mortgages work can not only make them better-informed, it can reduce staff time significantly. Gain a competitive advantage: Many mortgage firms are reluctant to use social media due to the per-

ceived legal and compliance risks— even though other regulated financial firms are actively developing social media programs. Managers should recognize that it is simply another “communications channel,” as William C. Reichard, MBA advised in his article, “Social Media: The New Pillar of the Mortgage Business” in the June 2010 issue of National Mortgage Professional Magazine, “Just get started and don’t get left behind.”

The “Big Three” sites Facebook Facebook’s 1.3 billion users make it the world’s largest social media site. 48 percent of users log in every day, and available analytics on them rival search engine optimization packages, as they allow you to hone your message and use targeted tactics. As with all social media platforms, content quality on Facebook is key. Write concise, useful posts, and avoid doing so too frequently. Just like your Web site, visitors are more interested in what you can do for them than what they can do for you. It is especially

important to create a great Fan Page, as these have the potential to generate more traffic than company Web sites. In addition to these opportunities, Facebook allows for paid advertisements. These can be restricted by subject, region and time of day. You may also pay to promote posts. Twitter Twitter has an estimated 645 million active users with 135,000 new ones signing up each month. Forty percent of users do not tweet, but actively watch other tweets, making this platform an incredible opportunity to reach a wide audience. Using hashtags to highlight subjects allows you to group tweets of the same topic together and thus provide a path for new followers to find you. Keep in mind, though, that experts advise limiting hashtags to no more than two per tweet, since they can be difficult to read and may be considered spam.

about users interacting with friends and more about their harnessing social data to navigate and discover the world around them. Google has indicated that Google+ profiles are going to factor more in search rankings over time. This makes it a critical platform for businesses to explore. Pinterest Pinterest has approximately 70 million users, with non-U.S. users now the majority of those signing up. Like YouTube, Pinterest features visual media (images and videos) and emphasizes active user involvement. Accounts can be linked to other social media platforms, as well.

LinkedIn LinkedIn is a business-oriented social media site. It’s used primarily for professional networking by its approximately 296 million users. There is already a significant industry presence on LinkedIn. A recent search indicated more than 3,000 groups associated with the term “mortgage.” This includes the Mortgage Bankers Association’s 49,681 members; 35,345 general mortgage professionals; and 373 groups dealing specifically with “home mortgages.” Groups are generally open to anyone, and include postings, discussions, and resumes of LinkedIn members.

Web pages and blogging Virtually every business in the mortgage industry maintains one or more proprietary websites generally providing information about the history of the company, its employees, and services. Some of these Web sites consist of static pages that are changed infrequently, while others maintain a blog or a section with regular updates or posts on subjects of interest to targeted customers and prospects.

Compliance and social media While institutions may be concerned about unknowingly violating rules and regulations with their social media campaigns, those violations are not likely to be extraordinary or unmanageable. All that is required is a thorough understanding of laws relating to social media, and an active risk management program. The Federal Financial Institutions Examination Council (FFIEC) will be issuing guidance to ensure that firms adequately address compliance and reputation risks for social media activities. Before continued on page 45

MBA COMPLIANCE ESSENTIALSSM

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H ow much do you know about Q ualiﬁe d M or tgages? The C FPB has state d on seve ral occ asions that they will assess the knowle dge of f ront- line mor tgage lending staff on this rule.

D Don’t on’t ge gett c caught aught unprepared. unprepared. The new ATR / QM Rule Web Course from MBA Compliance Essentials, is a must-take for all loan officers, underwriters and front-line lender personnel to fully understand how to originate and underwrite within the new QM requirements. Features include: • Led by mortgage

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n Oregon Mortgage Professional Magazine n AUGUST 2014

YouTube YouTube boasts more than one billion visitors, and six billion hours of video watched each month. Free to view by all members, videos range from simple to elaborate, produced by teenagers using mobile phone video cameras and major studios and television networks alike. A recent query on the term “mortgage” produced 730,000 results, such as “Introduction to Mortgage Loans,” with 26,135 views, and “How to Pay Off a Mortgage Quickly” with 72,369 views. A strong, informational video can build and enhance your brand with minimal updates, but quality of content and presentation are essential. In November 2013, Google announced that anyone using YouTube had to use their Google+ user names. This move set the stage for the development of YouTube as a social media platform.

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Other important social media sites

Google+ With 343 million active users, Google+ is the second largest social network, trailing only Facebook, according to Forbes. At least one social media industry observer believes that the future may be less

According to Pew Research data, the number of Pinterest users is slightly greater than Twitter or LinkedIn users. Women users outnumber males almost two-to-one on the site.

An End to One “I’m Sorry” Situation ... By Ralph Rosynek

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How many times have you been asked about reverse mortgages and, unfortunately, had to admit to a prospective borrower, “I am sorry, but we do not offer the Home Equity Conversion Mortgage (HECM) at this time.” Recent changes in the reverse mortgage program providing greater benefits and features, combined with lower costs and fees, has significantly increased the focus on the HECM product. Once thought of as a product only for desperate senior borrowers to remain in their homes, the new reverse mortgage product has come a long way in terms of borrower, consumer and overall media acceptance. The coming of age 62 by baby boomers has also created new opportunities and needs for the government insured FHA product to address this ever growing segment of new borrower prospects. With market penetration of approximately less than two percent of eligible seniors currently accessing the reverse mortgage product, the opportunity to gain market share is significant. Using a HECM for the purchase of a new primary residence home or utilizing equity in the borrower’s primary residence to provide another retirement planning component of a financial longevity strategy, are two significant changes in perspective and use of this product. Yes, the new reverse mortgage still provides the same comfort and security for eligible borrowers seeking to remain in their homes and maintain financial independence. However, the new reverse mortgage also provides much greater possibilities for today’s senior seeking more choices to address specific financial and retirement needs. Basic HECM program fundamentals have not changed. All eligible borrowers must be at least 62 years of age, occupy the subject property as their primary residence and have equity in the property to meet proceeds calculation requirements and extinguish all liens against the property. The reverse mortgage does not require monthly payments and borrowers are able to occupy the property for life providing at least one borrower occupies the property as their primary residence. Borrower qualifications are less restrictive than a traditional “forward” mortgage. Currently, no income, no employment, no FICO score, no medical and no asset verification are generally attributed to the reverse mortgage. Exceptions in cases of purchases, the need for cash to close, and completion of government monitoring and reporting information are but a few of the areas requiring a more in-depth knowledge of the program guidelines by loan originators. Now is the time to look at this growing opportunity to reach more borrowers and avoid apologizing for not having a complete product menu for all ages of potential borrowers seeking your assistance. Your market entry can be very scalable to your structure and requires an initial sales commitment to product education for both you and the prospective borrower. Most importantly, efficient market entry should be partnered with the strengths of a recognized HECM lender support and training program for the guidance and assistance needed to achieve your business plan success. Ralph Rosynek is senior vice president and director of marketing and communications and a seasoned HECM Direct Endorsement Underwriter. For additional information, he can be reached at rrosynek@rmsnav.com or call (281) 404-7970.

consumer complaint database continued from page 31

Consumer Education and Engagement, and Research, Markets, and Rulemaking. l Benefits to the Bureau: The Bureau sees itself as a vehicle to open and transparent government. As such, it takes the position that the expansion of the Database is needed in order to “further establishing itself as a leader in the realm of open government and open data.”18 In support of this mission, it mentions the “Open Government Directive,” issued on Dec. 8, 2009 by the Office of Management and Budget (OMB), which requires agencies to “take prompt steps to expand access to information by making it available online.”19 The Bureau indulges in a bit of spin when it asserts that “agencies have historically withheld data from the public due to privacy and cost controls, (but) with new technology comes new opportunities for openness without significant increases to privacy risk and costs.”20 I think it is fair to observe that agencies have withheld data from the public for numerous reasons, though the least of which seem to have been due to “privacy and cost controls.” l Advancement of open government principles: In developing its thesis, the Bureau provides a list of agencies that are seeking to be more open and transparent, such as the Department of Health and Human Services, the Federal Trade Commission, and projects like HealthData.gov and Regulations.gov. These efforts are rooted in the OMB’s call for a “presumption of openness” standard.21 The OMB’s position is that this “presumption of openness” can be applied in utilitarian and economic terms.22 The premise is that information should be considered “a valuable national resource and a strategic asset to the Federal Government, its partners, and the public,” and that “[m]aking information resources accessible, discoverable, and usable by the public can help fuel entrepreneurship, innovation, and scientific discovery–all of which improve Americans’ lives and contribute significantly to job creation.” While acknowledging that openness is “always subject to legal obligations such as those to protect privacy and confidentiality,” the government believes “public value” is created by treating information as a public asset, when made available to its public owners.23

Minimizing (but not eliminating) risks The Bureau admits that publishing SPONSORED EDITORIAL

Narratives is not without risks. A principal risk of publishing Narratives is the potential harm associated with the possible re-identification of actual consumers within the Consumer Complaint Database. The term “reidentification” means removing personal information from a dataset, thereby obscuring individual identities. Re-identification generally occurs when separate datasets are combined to reestablish some number of individual identities. Individuals with personal knowledge of events described in a Narrative may also be able to identify consumers using de-identified narratives. Research has shown that the sufficiency of de-identification suggests that the risks generally outweigh the benefits of sharing data. 24 But, glossing over the risks, the Bureau opines that “many researchers espouse the sufficiency of de-identification and highlight the extremely low risk of actual re-identification and potential harm–suggesting a cost-benefit analysis where the benefits outweigh this risk.” 25 Supporters of de-identification methodologies argue that modern scrubbing standards reduce risk, with the exemplar being the Health Insurance Portability and Accountability Act (known as HIPAA), in its Privacy Rule, which forms the basis of the Bureau’s own scrubbing standard for Narratives. This view holds that it is possible to decrease re-identification risk to acceptable levels and the number of known, successful attempts to re-identify publicly available datasets are de minimus. We are now at the juncture where the Bureau must take on the allegations engendered by and embedded in the Narratives. It is this second risk that poses significant concerns to any financial institution unlucky enough to be impaled on the spike of misleading information. The Bureau realizes that the Narratives “may contain factually incorrect information as a result of, for example, a complainant’s misunderstanding or misrecollection (sic) of what happened.”26 Here is the Bureau’s view of such risk: “If consumers were to rely without question on all narrative data, it is possible that subsequent purchasing decisions may be based on misinformation. To the extent this risk may be realized, both consumers and the financial institutions that lose business due to misinformation would be disserved. Indeed, even absent any effect on consumer decision-making, there is a risk that financial institutions could incur intangible reputational damage as a result of the dissemination of complaint narratives.”27

And here is the Bureau’s own reflection on the risks: “To a large extent, this risk is inherent in any release of complaint data.”28 In effect, in deciding to release the structured complaint data, the Bureau believes that it has addressed this risk concerns and concluded that, while there is always a risk that market participants will draw erroneous conclusions from available data, the Bureau maintains that the “marketplace of ideas”29 would be able to determine what the data shows and, mutatis mutandis, the Bureau believes that is true, as well, with respect to the complaint Narratives. Procedurally, the CFPB claims to be able to mitigate this risk by providing for the public release of the financial institution’s response, side-by-side and scrubbed of any personal information, to the consumer’s complaint. According to the Bureau, this process is supposed to ensure that, to the extent there are factual disputes, both sides of the dispute can be made public. Modern technology used to scrub public disclosure of unresolved disputes and allegations–what could possibly go wrong?

Consumer narratives Consumers share their individual stories with other consumers and the marketplace by consumer complaint narratives published in in the Database. Consent is first obtained from the consumer. Consumer consent to disclose Narratives–opt-in The Bureau to disclosure Narratives (1) for which informed consumer consent has been obtained, and (2) that have been scrubbed of personal information. Consumers who submit a complaint will be given the opportunity to check a consent box giving the Bureau permission to publish the Narrative. The opt-in consent will state: (1) Whether or not consent is given will have no impact on

how the Bureau handles the complaint, (2) if given, the consumer may thereafter notify the Bureau to withdraw consent at any time and the Narrative will be removed from the Database, and (3) the Bureau will take “reasonable steps” to remove personal information from the complaint to minimize (but not eliminate) the risk of re-identification.

public-facing response, and the Bureau will take reasonable steps to remove personal information from the response to minimize (but not eliminate) the risk of re-identification. The Company Portal will include a data field into which companies have the option to provide narrative text that would appear next to a consumer’s narrative in the Database.

Company response Where the consumer provides consent to publish the Narrative, the related company will be given the opportunity to submit a narrative response for inclusion in the Database. The company will be instructed not to provide direct identifying information in its

Personal information scrubbing standard and methodology The publication of Narratives involves risks, so admits the Bureau, including the potential harm associated with the re-identification of actual consumers continued on page 44

Feasibility

Scrubbing standards A synopsis of the scrubbing standards follows, based on the foregoing procedures.

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(1) Consent for publication is obtained from the consumer; (2) Narratives are scrubbed of consumer personal information consistent with a robust standard and methodology: (a) that substantially meets government best practices for re-identification risk; (b) as written, results in a low risk of re-identification; (c) as applied, maintains a low rate of operational error; and (3) an independent, third party privacy expert conducts a review and operational test of the standard and methodology in support of the above conditions.30

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Is the Bureau’s “open government” plan to release Narratives even feasible? Actually, the Bureau does not really know for sure! In deciding to release certain structured data, the Bureau stated that it would not disclose Narratives unless it is operationally feasible to do so without compromising consumer privacy. In November 2013, its Consumer Response unit began piloting a comprehensive program to scrub all personal information from copied Narratives, using a scrubbing standard based on “government best practices.” This pilot is ongoing and the scrubbing standard is continually improved as lessons are learned and implemented. The scrubbing process calls for the following standards:

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legendsoflending

BY PHIL HALL

UNITED NORTHERN MORTGAGE BAN

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on Giorgio has a very simple goal for United Northern Mortgage Bankers Ltd. (UNMB). “We don’t want to be the biggest,” said UNMB President Giorgio about his Levittown, N.Y.-based company. “We do want to be the best.” Indeed, companies take on the status of being legendary because of their ability to be the best at what they do. And it is not just a question of operations, or even policy—instead, it is a philosophical determination to aim for and achieve excellence. At United Northern, the results of this effort can be seen in an unusually strong level of team loyalty. “We are more of an organization than a shop,” explained Mike Gannon, United Northern’s vice president of retail lending. “We have people who have been here 15, 20 and even 30 years. Our CFO has been here 30-plus years. This is the kind of place where you can come and hang your hat and build a book of business.” Gannon added that anyone seeking input from the company is treated with a level of respect that is often elusive in today’s business world. “Everyone here is accessible,” Gannon continued. “Many companies say that you can call and e-mail someone, but you don’t get an answer. Here, everyone from president of company all the way down the ladder is available to give you an answer to your question. It may not be the answer you want, but we will answer you truthfully.” Treating people with honesty and sincerity is the foundation on which the company was established. Back in 1979, a Long Island, N.Y.based contractor named Anthony Giorgio became concerned on how other contractors were charging on sales finance papers. This was during an era when contractors did doubleduty and could handle the sales finance papers for their clients. Believing that

he could offer customers a cost-effective alternative to what his peers were presenting, Giorgio founded A to Z Funding Corporation. Don Giorgio, the founder’s son, joined the company in 1982 after graduating with a business degree from Hofstra University, and took over the leadership of the company in 1995 following Anthony Giorgio’s retirement. Today’s company has become a major regional presence, but it is not seeking a 50-state footprint. “We are now in 16 states, and by the end of year, we hope to be in 25 states,” said Heidi Frigano, United Northern’s executive vice president of marketing and business development. “We are not looking to be in all 50 states. Our main goal is serving an area properly, rather than just expanding for the sake of expansion.”

The state of housing The challenge faced by the company (as well as the industry as a whole) is a housing market and a wider economy that has not completely dusted off the residue of the 2008 crash. “The market is steady,” observed Gannon. “Values are stable. Buyers are out there, but they are a little picky because they’re looking for that ‘deal.’ In markets like Long Island and in New York City, houses are moving. In more rural areas, they are not moving as much. Overall, the economy is not exactly booming. When people don’t have extra income rolling in, they do not feel it is the comfortable time to buy. However, as the employment situation strengthens, the housing market will follow behind that.” And speaking of employment, Frigano is eager to see tomorrow’s mortgage industry leaders joining the United Northern Mortgage Bankers team, adding that the industry is becoming more attractive to recent college graduates.

Mike Gannon, VP of retail lending; Don Giorgio, president; and Heidi Frigano, EVP of marketing and bu

“Five to six years ago, if you spoke to someone coming of college and said the word ‘mortgage,’ it would be a taboo subject,” explained Frigano. “But in the past three to four years, I have noticed a different response. Young people out of college see this as a great and rewarding industry to get into.” Still, Frigano is very particular about the caliber of individual that would fit into the company’s operations. “I like to take a green person with a sales background and put them through our very intensive mortgage

training,” she stated. “We will wind up with a very well rounded loan officer, one who is well-versed for today’s marketplace.” Ultimately, Frigano noted, the company’s commitment to its team members is what fuels their ability to achieve and then exceed their goals. “What makes us stand out is the overwhelming support we provide our employees,” Frigano explained. “What sets us apart is that we understand that loan officers have their own business above and beyond the company’s business.”

“We don’t want to be the biggest ... we do want to be the best.” $

—Don Giorgio, President, United Northern Mortgage Bankers Ltd.

continued, “we are not looking at it as just a mortgage. Where we can assist them in a way that is legitimate and compliant, we have to help. We cannot just turn our backs on them. Our mission is encompassing that we want to change somebody’s life—not just because they need a mortgage, but because we help them improve their lives.”

To wholesale and beyond

KERS LTD. Credit photo to Robert Ottone

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

Reaching those in need Having a holistic understanding of what people need has also helped expand the company’s product offering. Giorgio, during a May interview with National Mortgage Professional Magazine, recalled why he decided to vigorously pursue the reverse mortgage market. “We started to do reverse loans because I saw a need for it in the marketplace,” Giorgio said. “This was about nine years ago. But it became more of a sensitive issue because my father, who was aging, had a quadruple bypass and

then had some other health issues. And very quickly, he felt the signs of Alzheimer’s. As we were reaching out to what was available, we found it was a really hard path. In dealing with insurance companies over something like a wheelchair for someone who could not walk anymore—because he had forgotten how to walk—I realized that seniors need someone to help them. The least I could do, through mortgage financing, was to offer reverse mortgage to help fulfill that need and literally change lives. “In doing reverse mortgages,” he

“We saw the mom and pop brokers not getting the service they needed.” —Andrew Russell, Director of Wholesale Lending, United Northern Mortgage Bankers Ltd.

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usiness development at United Northern Mortgage Bankers Ltd.’s offices in Levittown, N.Y.

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Also filling a void in the market is the company’s recently launched wholesale platform, which was viewed as being the right offering at the right time. “Loan quality is at an all-time high,” said Gannon. “But despite that, many of the bigger players that were doing wholesale banking have been stepping out of the market. This has increased the need for someone doing wholesale.” Andrew Russell, United Northern’s director of wholesale lending, reported that the company rolled out its reverse loan wholesale platform last fall and introduced the forward loan wholesale platform earlier this year. “Forward has a lot of moving parts,” Russell said, explaining the gap between the introduction of the platforms. “We did not want to roll it out at half-speed.” Russell pointed out that the driving force behind the creation of the platform was to aid the company’s smaller brokers. “We saw the mom and pop brokers not getting the service they needed,”

Russell explained. “They were on the normal conveyor belt, while the larger companies were on the fast track. We wanted to give them the exceptional service that the ‘high volume’ brokers were getting.” Gannon added that changing attitudes and industry oversight should help the company’s efforts. “The word ‘wholesale’ used to be like a dirty word,” Gannon said. “But with the increased scrutiny on mortgage banking and the regulations in place on mortgage bankers like us, our confidence that the loans we are making are going to perform.” For Giorgio, the shrinking number of companies in the residential mortgage space is not something he savors. “Less competition is not better for companies,” Giorgio noted. “Going up against more competition makes you stronger and smarter. Less competition is a bad thing for the market as it creates more stress.” Nonetheless, Giorgio remains cautiously optimistic on the market’s nearterm prospects. “I have confidence in the marketplace returning to pre-2006 levels,” he said. “But as for how the market will be able interpret all of the new qualified mortgage (QM) rules, we don’t know yet. It looks good, but at this point, we’re really not sure.”

DocMagic’s Regional Compliance Updates By Melanie A. Feliciano Esq. Update to Florida’s high-cost test and disclosures The Governor of Florida signed into law Senate Bill 1012, which amends, among other provisions, the requirements under Florida Statutes of Chapter 494, including the Florida Fair Lending Act, removes disclosure requirements, and revises the definition of loan origination fee. Part IV of Chapter 494 of the Florida Statutes, (the Florida Fair Lending Act), which defines “high-cost home loan,” has been repealed. Accordingly, lenders need not run their Florida High-Cost Test for Florida loans with application dates of July 1, 2014 or later. Additionally, a number of disclosure requirements have been repealed. As a result, the following disclosures are no longer required for loans with application dates on or after July 1, 2014 (note that the titles of the following forms may vary from the below): l l l l l l l

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Florida Mortgage Broker Agreement Florida Loan Fee Sheet Florida Notice of Material Change of Mortgage Loan Terms Florida Lender Application Disclosures Florida Notice to Borrower Florida Notice to Purchasers and Assignees Florida Prepayment Fee Disclosure

Also, please note that, FL Stat. 494.001(15) previously required that any payment for processing mortgage loan applications be included in the loan origination fee and paid to the mortgage broker. The definition of “loan origination fee” has been revised to remove this requirement, effective July 1, 2014. Virginia recording requirements revised again Virginia House Bill 763, which is effective July 1, 2014, amends and reenacts various sections of the Virginia Code relating to the recordation of deeds and deeds of trust. Specifically, the bill amends Va. Code Ann. §17.1223(A) to require additional information on the first page of any document submitted for recording. The additional information includes: l The actual value of the property l The names of the parties to the transaction, identified as grantor, grantee or both, as applicable Although the information is not required to appear on the first page of the document if a cover sheet containing the information is submitted with the document, lenders may wish to update the first page of its Virginia security instruments to include the information. Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail melanie@docmagic.com.

consumer complaint database continued from page 39

within the Consumer Complaint Database. So, in order to minimize the risk of re-identification, the Bureau will apply to all publically-disclosed Narratives, a “robust personal information scrubbing standard and methodology.”31 The Bureau believes it can exercise discretion, modifying data when privacy risks clearly and substantially outweigh the benefits of disclosure. Based on the foregoing “scrubbing standard” the Bureau believes the risks can be minimized (but not eliminated), with the result that publicly releasing “redacted narratives,” subject to consumer consent, will best protect all consumers without harming the protected privacy interests of any individual consumer. As to protecting the company whose reputation has been damaged by a factually inaccurate or misleading allegation, the Bureau provides no conclusory observation.

Comments and proposal In the June 2012 Policy Statement and the March 2013 Policy Statement, the Bureau addressed comments received in response to the December 2011 Proposed Policy Statement and the June 2012 Proposed Policy Statement, respectively. The Bureau believes that it has sufficiently addressed comments concerning the Consumer Complaint Database generally, as well as comments regarding the current data fields, in the June 2012 Policy Statement and the March 2013 Policy Statement. These comments ranged from the very general, such as the Bureau’s authority to disclose consumer complaint data of any kind and the impact the database would have on consumers and covered persons, to the more specific, such as the impact of specific proposed data fields (i.e., company disposition) and the inclusion of other data fields (i.e., Narratives). In both Policy Statements, the Bureau asserted that it was following its “open government” mandate, and, because of that, there would be forthcoming the inclusion of additional data fields. Consistent with the commitment, and in response to comments that urged the disclosure of Narratives, the Bureau has decided to propose the inclusion of Narratives in the Database. Broadly, the Bureau now seeks comments that are related to the proposed extension of the policies to include the Narratives. It is worth noting that the July 2014 Proposed Policy Statement constitutes an agency statement of general policy and is exempt from notice and public comment.32 Notwithstanding this procedure, the Bureau is inviting public comments on the July 2014 Proposed Policy Statement. But because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act do not apply.33 Jonathan Foxx is president and managing director of Lenders Compliance Group

SPONSORED EDITORIAL

and Brokers Compliance Group, mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 4423456, by e-mail at jfoxx@lenderscompliancegroup.com, or visit www.LendersComplianceGroup.com or www.BrokersComplianceGroup.com.

Footnotes 1—Disclosure of Consumer Complaint Narrative Data, Notice of Proposed Policy Statement with Request for Public Comment, Bureau of Consumer Financial Protection, July 16, 2014. I will cite extensively from the Proposed Policy Statement, mirroring references therein as best as possible in the context of this article. 2—Idem. Summary. 3—Op. cit. 1, 76 FR 76628, Dec. 8, 2011. 4—Op. cit. 1, 77 FR 37616, June 22, 2012. 5—Op. cit. 1, 77 FR 37616, June 22, 2012. 6—Op. cit. 1, 78 FR 21218, April 10, 2013. 7—The Bureau’s terminology is “Proposed Policy Statement.” 8—Op. cit. 1, p 3. 9—Op. cit. 1, p 4. 10—Ibid. 11—The “Confidence Fairy” has been around a long time, casting fairy magic with its supernatural powers; most recently popularized by Paul Krugman, the economist and Noble Laureate. 12—Ibid. 13—Op. cit. 1, p 5. 14—Alfred Korzybski coined the expression in “A Non-Aristotelian System and its Necessity for Rigour in Mathematics and Physics”, a paper presented before the American Mathematical Society at the New Orleans, Louisiana, meeting of the American Association for the Advancement of Science, Dec. 28, 1931. The paper may be read in Science and Sanity, 1933, p. 747–61. 15—Numerology: The Magic of Numbers, Bell, Eric Temple, Williams and Wilkins, Baltimore, 1933. 16—Op. cit. 1, p 5. 17—Ibid. 18—Op. cit. 1, p 6. 19—Open Government Directive, Office of Management & Budget, Dec. 8, 2009 , Peter Orszag, Director. 20—Op. cit. 1, p 6. 21—Op. cit. 19. 22—Open Data Policy-Managing Information as an Asset, OMB Memorandum M-13-13, May 9, 2013. 23—Op. cit. 1, p 7. 24—Broken Promises of Privacy: Responding to the Surprising Failure of Anonymization, Ohm, Paul, 57 UCLA L. Rev. 1701 (2010). 25—Op. cit. 1, p 7. 26—Op. cit. 1, p 8. 27—Ibid. 28—Ibid. 29—Ibid. 30—Op. cit. 1, p 9. 31—Op. cit. 1, p 11. 32—5 U.S.C. 553(b). 33—5 U.S.C. Chapter 6.

the intersection of social media continued from page 37

and after those guidelines are announced, however, all dealings with the public should be truthful, transparent, and beneficial to the community. Not everyone agrees that a social media marketing approach is worthwhile, considering the risks involved. Mark Madsen, vice president of online consumer education for national mortgage direct marketing firm Best Rate Referrals, claims that the number of potential risks is overwhelming if you take into consideration the full digital marketing sales and conversions funnel. “I can tell you with 100 percent confidence that a simple less-risky Internet marketing strategy will produce more revenue for your mortgage company than worrying about a multi-channel social media advertising campaign,” Madsen advises. He also suggests that consumerdirect marketing strategies and niche Web sites focused on consumer education are not only less risky, but more effective. The rule-of-thumb for any marketing campaign, Madsen cautions, whether consumer-direct or social media-based, is consistency,

inclusiveness and transparency in your writing and publication.

Final thoughts The use of social media by the mortgage industry is not a brand new phenomenon, but it is still in its infancy. Steven J. Ramirez, in his article, “Social Media Analysis in Lending: The New Frontier for Growing Business and Satisfying Customers,” in the February 2014 issue of National Mortgage Professional Magazine, was clear about the benefits: “Bottom line … when used correctly, social media can be one of the most valuable business tools readily available to lenders today.” Social media is not going away, despite attempts to regulate or hinder its use. Smart mortgage professionals are going to develop new strategies consistent with pending regulations and move quickly to gain market advantage—others are going to be left behind. Where will your company stand?

Helping Y You oou G Get et Plugged Into Your oour Busi Business ness Into Y

Mike Lewis is a retired business executive and personal finance columnist. He may be reached by e-mail at mlewis@moneycrashers.com.

tales from the closing table continued from page 34

A rich, dying man, laid on his deathbed, requested to be joined by his priest, his investment banker and his lawyer. He instructed them that he wished to be buried when he finally passed away

Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years. He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at aliput@securesettlements.com.

If yo u believe in helping helping tto o eleva te the the you elevate educa tional standards standards of of this industry, industry y, oorr educational aassisting ssisting in developing developing the the most most competent competent indus try work work k fforce, orce, tthen hen NAPMW is for for industry YO U! YOU! NAPMW is a co mmunity ooff m ortgage and community mortgage ba nking iindustry ndustry professionals professionals across across the the banking Co untry; men men an dw omen from from all Country; and women ba ckgrounds have have joined joined NAPMW NAPMW W because because backgrounds they want want to ex cel at what what they do. do. excel NAPMW membership membership ggives ives you you exclusive exclusive aaccess ccess to ti mely education the education regarding regarding the timely rregulations egulations affecting affecting your your career careerr such s as FREE T O ME MBERS webinars webinars on on industry industry TO MEMBERS upda tes. updates. Too Jo T Join in NAP NAPMW MW vvisit. isit. w www.napmw.org ww.napmw.org oorr call 11.800.824.3034 .800.824.3034

n Oregon Mortgage Professional Magazine n AUGUST 2014

On the lighter side …

along with all his money. He gave each of them $100,000 in cash and asked them to throw the money on top of his coffin at the burial ceremony. A couple of days later the old man died and was buried within the week. At the wake, the three men were chatting and the priest was suddenly overcome with guilt. He confessed to the other two that he had only thrown only half of the money onto the coffin, as the church needed roof repairs. The investment banker thought, “What the heck if we are having a confession,” and told the other two men that he had also only thrown half the money in, as the “down economy” was hitting hard and he needed to cover cash flow expenses. The lawyer jumped up and said to the other two, “I think that is a shameful act on both of you. I threw a check in for the full amount!”

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action, the CFPB’s claims rested on allegations of violations by both firstparty collectors and third-party collectors that ACE had engaged as service providers. While nothing in the consent order indicates whether the CFPB believes that financial institutions should be held to a strict liability standard for the acts of their service providers, or to a negligence standard or even a standard that actually requires the financial institution to know that the service providers engaged in wrongful conduct, the order does state that the company’s “compliance monitoring, vendor management, and quality assurance did not prevent, identify, or correct instances of misconduct by some third-party debt collectors.” As a result, the CFPB seems to have reiterated its position that financial institutions that use service providers to deliver or support their services must evaluate and monitor those third parties or face potential financial penalty risks.

Stop Selling Reverse Mortgages: The Need to Become a True Consultant

Mortgage Community Shows Its Support for

Our Troops

By Phil Hall During the past few months, several controversies relating the challenges facing active duty military personnel and veterans dominated the mainstream media’s news cycle. In a way, this was unusual because the problems facing current and previous military members—and, by extension, their immediate families—has often been downplayed by media outlets. But if the media has not always been diligent in paying attention to this subject, the mortgage industry has kept it front and center. Among the most prominent recent efforts in this area involved a pair of companies that took different approaches to calling attention to the military community’s hardships.

A place to call home In late April, Dallas-based Fairway Independent Mortgage Corporation

A scene from the film “The Hornet’s Nest,” which had eight screenings sponsored by Wingspan Portfolio Advisors LLC

launched its first Military Boot Camp Tour. The company billed this endeavor as a “domestic USO-style” tour that would educate loan officers and real estate brokers across the nation on how to better serve the home financing needs of veterans. For Louise Thaxton, director of the Fairway-sponsored American Warrior Initiative and a Fairway branch manag-

er based in Leesville, La., calling attention to the needs of military personnel—especially those still serving in and recently returned from Afghanistan—is a priority mission. “America is not at war,” said Thaxton. “America is at the mall. Our warriors are at war. Most Americans are clueless at what our vets are facing. Someone needs to take America and

shake its shoulders and say, ‘Wake up and look around—people are suffering all around here.’” As part of Fairway’s Military Boot Camp, mortgage and real estate professionals attend special courses that run from three to four hours. These course offer information on the mortgage programs offered through the Department of Veterans Affairs while detailing the distinctive needs that veterans face in meeting homeownership requirements. At the end of the course, loan officers receive Military Mortgage Specialist (MMS) designation while real estate agents earn the Certified Military Residential Specialist (CMRS) designation. Joining Fairway at several of its Military Boot Camp presentations has been Sean Parnell, a retired Army Ranger and Purple Heart recipient and who detailed his experiences serving in Afghanistan in the best-selling book Outlaw Platoon. Parnell’s first-person input, coupled with the data relating to veterans’ financial housing needs, has

Steve Jacobsen, founder and chief executive officer of Fairway Independent Mortgage (second from left), and Louise Thaxton (far right) join members of the military during a Military Warriors Support Foundation’s Homes 4 Wounded Heroes program event

created an eye-opening experience for many mortgage and real estate professionals. “I’ve received hundreds of testimonials from real estate agents that said, ‘I didn’t know—I wish I had known soon-

A big screen view Another Dallas-area mortgage industry company, Wingspan Portfolio Advisors LLC, has also been supportive of the military community. Through its Wingspan Gives Back charitable arm, the company has provided funding to help veterans organizations and activities. “This is not a business development strategy, per se,” said Steve Horne, Wingspan president and CEO. “We are a continued on page 69

coming in december 2014

We are seeking nominations from our readers for National Mortgage Professional Magazine's "40 Under 40" feature, slated to appear in our December 2014 edition. Anyone who is under the age of 40 and has had a major impact on the industry can qualify for this feature. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on the nominee, along with a color photo and company contact info to complete the profile. To nominate yourself or someone else, visit https://nmpmag.wufoo.com/forms/nmps-40-under-40-2014/.

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

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Sean Parnell, a retired Army Ranger, Purple Heart recipient and author of the book Outlaw Platoon, joins Louise Thaxton, Fairway Independent Mortgage Corporation branch manager, at one of Fairway’s Military Boot Camp presentations

nominated

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er,” Thaxton said, adding Fairway has trained nearly 1,500 mortgage and real estate professionals since the program began in 2012. The new tour also includes a continuation of Fairway’s home giveaway program, in which a wounded veteran receives a mortgage-free home. Fairway works with the non-profit Military Warriors Support Foundation’s Homes 4 Wounded Heroes program to coordinate this endeavor. “They’re foreclosures,” said Thaxton of the homes that are acquired for this program. “Initially, the non-profit pays the taxes, insurance and the costs of retrofit, repairs and upgrades. Another non-profit, the Boots Campaign, funds the repairs to these properties. The Military Warriors Support Foundation also has financial counseling, because the last thing you to give to a wounded warrior is a liability.” To date, more than 15 mortgage-free homes have been given to qualified military veterans. Thaxton stressed the input of the partnering nonprofits in this mission. “Fairway is not a non-profit,” she said. “We need to work with non-profits to do this work. We wanted a way to give back to everyone and inspire Americans to do the things we are doing.” However, Fairway actively encourages its employees to become involved in these efforts. The company’s Give a Day/Get a Day program encourages employees to donate one day’s pay to fund the veterans’ programs in return for a free day off. The Fairway employees have responded with gusto. “So far, approximately $750,000 donated to these nonprofits,” Thaxton said.

are you

Turn your efforts away from industry partners and towards your clients Your real estate agent knows a dozen other lenders. Your clients may not know any other lenders. Next time you send a birthday card to a client, include an invite for coffee. Offer to take them golfing, lunch, some other activity you know they are interested in. Everyone sends birthday cards. No one is inviting their clients to meet in person. This will separate you from your competitor and keep you at the top of mind of your clients. Grow personal relationships with your clients Get to know them. They know as many or people than you do. You will successfully grow your network exponentially. Who’s your favorite doctor? Have they ever asked you out for coffee? Even if you declined, wouldn’t you be more inclined to go back to them if they put the offer out there? We live in a world with no interpersonal relationships with our clients. Though we still go through the same old tactics as if we did. Ask your clients out for some fun and you will turn your customers into champions.

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Champions are those “raving fan” clients The ones that are out promoting your business for you. Yes, grassroots. These champions will send you more business than any realtor or industry partner ever could. Tap into this age old method because your competitors aren’t doing it. Your clients will be receptive. Even if they decline your offers they will remember you and be your champion as they bring you more new clients month after month. TagQuest Customer Spotlight Each month, we like to talk with our clients and find out how their campaigns are going. Here’s what we heard from one of our mortgage professionals, Alex W. in Oregon. Semi exclusive purchase Internet leads … l Five percent close ratio Highlights of the campaign that worked well for Alex … “My leads are delivered in real-time, allowing me to wow my potential clients with fast contact times.”

MCS Mortgage Bankers Opens Five New Branches Nationwide MCS Mortgage Bankers Inc. has announced the grand opening of five new retail branch offices located in King of Prussia, Pa.; Geneva, Ill.; and Clark, Fairfield and Cherry Hill, N.J. The King of Prussia branch office will serve clients in the Greater Philadelphia area, as well as Wilmington, Upper Darby and other nearby communities. A long-time local resident and seasoned mortgage veteran Michael White will lead the operations at the new location. The Geneva branch office will serve clients in West Chicago, Naperville, Aurora and other nearby communities in Illinois. The opening of the location in Geneva is supported by the strategic growth plans into the Midwest region led by Michael P. Farrell. The Clark, Fairfield Branch and Cherry Hill Branches are located throughout Union, Essex and Camden Counties, and continue to expand the MCS footprint throughout the Garden State. “MCS is seeing a steady rate of growth and expanding healthily into various markets across the country from its traditional base in the Northeast,” said Taylor Stork, executive vice president of MCS. “We are fortunate to have the opportunity to attract great talent to our organization. Our tremendous growth can be credited to our employees and local leadership.”

Guaranteed Rate Agrees to Purchase FirsTrust Mortgage Assets

Highlights that could appeal to other loan officers or offices … “In my experience these leads are delivered faster than leads purchased from some of the major players in the mortgage lead industry” Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit Tagquest.com. VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser. http://www.youtube.com/watch?v=coBEsmEVOgo

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Guaranteed Rate has announced that it has reached an agreement to purchase the assets of FirsTrust Mortgage of Overland Park, Kan. FirsTrust has been one of the top lenders in the Kansas City area since its founding more than 20 years ago. It has consistently been one of the top 10 lenders by volume in the Kansas City metro and does business in seven states. FirsTrust is also a three-time honoree on the Inc. 5000 list of fastest growing companies, and have become one of the most recognized mortgage banking brands in their market.

“We’re thrilled to have FirsTrust Mortgage become a part of the Guaranteed Rate team,” said Victor Ciardelli, president and CEO of Guaranteed Rate. “They have built their business and reputation on outstanding customer service and helping buyers to better understand the mortgage process, which meshes perfectly with our founding principles.” Guaranteed Rate has grown from their inception in 2000 to become one of the 10 largest retail mortgage companies in the U.S., funding nearly $16 billion in loans in 2013 alone.

Mortgage Professionals to Watch

SWOPE

Think outside the box Your competitors are trying to grow their network too. In many cases these are the same people in your network. How many real estate agents do you know? They all know other lenders besides you. It’s the classic industry conundrum. Who are you going to refer your clients to? Who’s referring clients to you? What separates you from your competitors?

and no time to waste. Mortgage Master is eager to focus its capabilities towards such an important initiative that will help citizens of Massachusetts by strengthening our communities and keeping young families in the state as a solid economic foundation for the future.”

l Primary Residential Mortgage Inc. (PRMI) has promoted A.J. Swope to senior vice president of secondary marketing.

BLINN

Your network is your biggest profit center. Even if you do a lot of direct marketing to generate new business, you could be earning more referrals from your network of current and past clients. Are you doing everything you can to get as many referrals as possible from the people in your network?

continued from page 28

l First Guaranty Mortgage Corporation (FGMC) has announced that Robert Blinn has joined the company as production manager, servicing center division.

CRISANTY

Working Your Network

heard on the street

l JMAC Lending has announced that Al Crisanty has joined the JMAC team as vice president of national wholesale production. l David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), announced the promotion of two current staffers, Meghan Sullivan and Rob Van Raaphorst, from director to associate vice presidents. l Marita Bankhead has joined the operations of American Financial Resources Inc. (AFR) as CDE production manager. eLEND/AFR has also announced the hiring of Craig Chapman as the senior vice president of global affinity and strategic alliances, and Jay Patel as the vice president of global affinity and strategic alliances. continued on page 76

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The Interaction of Best Practices, Vetting and Insurance as the Ultimate Vendor Management Solution

The Long & Short: The Business of Short Sales

By Andrew Liput

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In July, the Consumer Financial Protection Bureau (CFPB) entered into the first consent order affecting third-party service provider violations. ACE Cash Express Inc., a payday lender, agreed to pay $10 million to settle allegations of improper debt-collection activities. While nothing in the consent order indicates whether the CFPB believes that financial institutions should be held to a strict liability standard for the acts of their service providers, the order does state that the company’s “compliance monitoring, vendor management, and quality assurance did not prevent, identify, or correct instances of misconduct by some third-party debt collectors.” As a result, the CFPB seems to have reinforced its position that financial institutions that use service providers must evaluate and monitor those third parties or face potential financial penalty risks when consumers are harmed. In light of this action, and those that will inevitably follow, lenders can no longer wait to address third party service provider risk. Auditors, regulators, investors, warehouse banks all are concerned about how lenders are managing vendor risk and are increasingly seeking evidence that appropriate plans and policies are in place and working. So what is the best approach? Vetting and monitoring are minimum requirements to meet CFPB Bulletin 2012-3 directives. Lenders must have a plan to evaluate third party risk, monitor it over time and report it when audited. However, those being vetted and monitored need to have internal controls and standards and that is where best practices such as those promulgated by the American Land Title Association (ALTA) are important. Large companies generally have internal controls, corporate governance rules, data privacy and security measures in place. Smaller firms and solo practitioners generally do not. Uniform standards for good business operating rules help to create a baseline for measurement, as well as a uniform expectation of professionalism to give comfort to a vendor’s clients. When vetting (background evaluation and monitoring) and best practices meet, lenders can have reasonable assurances that high quality vendor management is taking place. However, even the best laid plans sometimes go awry. All the vetting in the world and even the most comprehensive best practices cannot stop all fraud. That is where insurance comes into play. Our company was honored in April when certain syndicates of Lloyd’s of London endorsed our vetting and monitoring program with Mortgage Settlement Insurance (MSI). The MSI policy stands behind low risk agents vetted through our platform. Whether it is MSI or some other insurance product (fidelity, errors and omissions or a combination product), lenders do well to seek out a solution to vendor management that incorporates all three elements: Best business practices, vetting and insurance. When these three critical tools interact, lenders thrive and consumers achieve the highest level of protection. The lapses in risk management and loan quality control that resulted in the 2008 collapse and the ensuing passage of the Dodd-Frank Wall Street Reform Act have to be addressed. The confluence of best practices, vetting and new forms of insurance answer the call for better controls, better counterparty relationships, and greater consumer protections. Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.

SPONSORED EDITORIAL

Mortgage Delinquency Policy at Root Lender-required delinquency to short sell a home still required By Pam Marron I recently visited friends who relayed their story of how they dealt with an underwater property in Florida. The husband’s work territory had been realigned and the family needed to move. My friend had a first and second mortgage, and contacted the bank to discuss selling the home and paying the second mortgage separately, literally agreeing to a full deficiency payoff, but their lender would not agree. Their lender stated that until my friends were two months behind on their mortgage payment, there was no help available. For what seemed like the millionth time, these folks expressed disbelief that delinquency was the only way out when they had “been taught to pay bills on time all of their lives.” My friends stayed in this home until years later, when an inheritance to pay the difference became available. Mortgage delinquency required by lenders in order to proceed with short sale assistance is the most common thread heard from hundreds of past short sellers over the last three years. Why is lender required mortgage delinquency to proceed with a short sale such a big deal? Once the delinquency goes past 120 days, the mortgage credit of unsuspecting short sellers is coded as a foreclosure, resulting in a future conventional mortgage denial even when they are eligible again. In March 2014, I agreed to assist two underwater homeowners who wanted to stay current on their mortgage through a short sale. In both cases, these sellers had to go delinquent. As recently as May of 2014, lenders still require underwater homeowners to go delinquent in order to short sale a home. Many have criticized why I hold lenders accountable. After all, underwater homeowners are asking their lender to take less than a full debt owed. Understood. But, knowingly requiring damage to the same credit that had to be exemplary to get the mortgage in the first place is wrong. There are other known ways to process short sales without requiring delinquency. But until lenders see the worth financially, this policy will not be corrected at their level. Requirements put forth by the Federal Housing Finance Agency (FHFA) for conventional Fannie Mae and Freddie Mac loans1 that allow for short sellers to proceed while staying current on their mortgage payment were published and effective Nov. 1, 2012. There are also rules in place for non-Fannie Mae and Freddie Mac mortgages to proceed with a short sale while staying current in Making Home Affordable (MHA) Home Affordable Foreclosure Alternatives (HAFA) for more than 200 participating lenders on individual lender HAFA matrices2 linked on the MHA Web site. Each matrix provides written criteria that details how each lender will allow current payments to be made under imminent default, and many actually require payments to stay current through a short sale process. Yet, in almost every case, the “investor” has not allowed homeowners to proceed with the short sale until delinquency of the mortgage payment occurred. The mortgage industry has always relied on written guidelines that those of us in the business must follow. Credit is the most important factor taken into consideration for a mortgage loan approval and can trump other factors for a mortgage consideration. Defined timeframes for a new mortgage after a short sale can be found in both Fannie Mae3 and Freddie Mac4 Seller/Servicer Guides and for the Federal Housing Administration (FHA)5 under Mortgagee Letter 09-52. Only verbal clarification is available for both Veterans Administration (VA) loans

of a two-year wait and for United States Department of Agriculture (USDA) loans of no wait after a short sale. On Aug. 16, 20146, Fannie Mae will change their Desktop Underwriter system6 to allow lenders to correct inaccurate foreclosure information, allow a loan after a foreclosure if there were extenuating circumstances and extend the waiting period for a past short sale from two years to four years. Further, a four-year wait will be applied after a charge-off. Keep your fingers crossed. The same problem exists in Freddie Mac. Stay tuned for the results next month. Pam Marron is senior loan officer with Innovative Mortgage Services Inc. She may be reached by phone at (727) 375-8986 or e-mail pmarron@tampabay.rr.com.

Footnotes 1—FHFA Announces New Standard Short Sale Guidelines for Fannie Mae and Freddie Mac (www.fhfa.gov). 2—HAFA Eligibility Matrix, 01/08/14 (www.makinghomeaffordable.gov). 3—B3-5.3-07, Significant Derogatory Credit Events—Waiting Periods and Re-establishing Credit, 05/28/13 (www.allregs.com/tpl/Main.aspx). 4—Single-Family Seller/Servicer Guide, Bulletins and Industry Letters/Single-Family Seller/Servicer Guide, Volume 1/Chs. 37-38: Credit Underwriting/Chapter 37: Underwriting the Borrower/37.7: Evaluating Borrower credit reputation, 02/14/14 (www.allregs.com/tpl/Main.aspx). 5—Short Sales and Short Payoffs, 12/16/09 (www.portal.hud.gov/hudportal/documents/huddoc?id=09-52ml.pdf). 6—Desktop Originator/Desktop Underwriter Release Notes DU Version 9.1 August Update (www.fanniemae.com).tes/du-do-release-notes08162014.pdf).

renovate your refi business continued from page 11

Elevate your customer service

Your elevated customer service needs to match this new borrower’s expectations

Carl Markman is director of national sales for REMN Wholesale. He has no ill will against anyone that drives an SUV. He may be reached by phone at (866) 933-6342, ext. 343 or e-mail cmarkman@remn.com.

n Oregon Mortgage Professional Magazine n AUGUST 2014

Auto-respond e-mails saying that you received their original e-mail just aren’t enough right now. You, or someone from your team, needs to follow-up with them right away. You need to let them know you’re working on their request, when to expect an answer or what you need from them to get started. You can’t be pushy though. It only takes a few taps on a smartphone for someone to find out about Option B online. Okay, so you’ve done all this, you’ve won the borrower’s trust and started the origination process. Now you have to keep them in the loop. Be clear and set expectations on time, check in with them to see how things are going and squash molehills before they turn into mountains. Sound fun? No, I’m sure it doesn’t. Know what’s also not fun? Same day turn times on new files. Don’t take my word for it, just ask any of my underwriters. Regardless, we’ve committed to them and our underwriting team makes them happen. Why? For us, this commitment to cus-

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In reality, everyone at the retail level has access to the same products. What sets the best apart from the rest is their commitment to customer service and that also needs to change to meet the needs of the new buyers. We have a new consumer out there now, one that wants your response yesterday. They’ve grown up with the Internet. They’re mobile, shop online for everything and expect an immediate response. This new consumer is already buying cars online and would probably buy a house through Amazon.com if it were possible.

tomer service brings in more business, probably a greater amount than all of our marketing efforts combined. But as our customer service helps us grow, we have to continually hire new associates across the country to handle the demand. We’re living the cliché “you have to spend money to make money,” but I know that if our own customer service starts to fall short, the rest of our business won’t be far behind. Let me leave you with this. I know I’ve dwelled on renovation lending, but from what I’ve seen, the good loan officers are constantly renovating their overall business. They don’t care if it’s a purchase market, a refi market or a renovation lending market. The good loan officers are always looking ahead, segmenting the way they bring in new customers and making improvements to their own business’ foundation. When they’re not meeting with real estate agents and marketing to potential borrowers, they’re connecting with other referral sources. Attorneys, financial planners and estate planners are all on their radar to touch base with and market to. They may not be the biggest piece of the pie, but two small pieces could easily take the place of that big piece that fell off your plate last year. If you’re not seeing success in the current housing market, you need to renovate the way you’re doing business. You can’t just show up and hope people walk through your door. If this all sounds too hard, then you can sit back and keep waiting for Hummers to come back into style. Gas prices should drop eventually.

Who’s Who in the

2014 Wholesale Marketplace

Company Name

Web site

Specialty or Niche

State(s) Licensed In

ABC Capital Corporation

www.abcmortgage.us

No income check commercial/multifamily mortgage

38 states

[INSERT: AFR_Logo]

www.afrwholesale.com

#1 203k lender for sponsored originations–government loans

50 states

[INSERT: Amerisave_Logo]

www.amerisavetpo.com

Pre-Approvals, Conventional, Jumbo, Government Loans

[INSERT: AMX_Logo]

www.amxloans.com

Jumbo, Jumbo I/O, Unwarranted Condos, FHA, VA, Agency, Alternative Income, USDA, MH, 203k, Reverse Mortgages, Purchase Specialist, Condotels, one-year out of foreclosure, more than 10 financed properties

Nationwide and D.C. (except, KS, MO & NJ)

[INSERT: BayEquity_Logo]

www.bayequitypcg.com

Agency, FHA and Super Jumbo

AZ, CA,CO, HI, OR, TX, UT & WA

Nationwide

W H O â€™ S

W H O

Company Name

I N

T H E

2 0 1 4

W H O L E S A L E

M A R K E T P L A C E

Web site

Specialty or Niche

State(s) Licensed In

[INSERT: Carrington_Logo]

www.carringtonwholesale.com

Government Lender

Licensed in 33 states (see Web site for details)

[INSERT: Ethos_Logo]

www.ethoslending.com

Agency Paper, Non-QM

AZ, CO, DC, ID, IN, IA, NC, OK, OR, SC, TN & UT

First Allegiance

www.firstallegiance.com

Field Services Company

Nationwide

[INSERT: FGMC_Logo]

www.fgmcwholesale.com

National approved Single Family Issuer for Ginnie Mae; an approved FNMA MBS Issuer; approved by HUD; an FHA approved lending institution; approved for VA; and approved by USDA

[INSERT: Florida_Capital_Logo]

www.flcbmtg.com

Wholesale and Correspondent Lending

Nationwide (except for Alaska and Hawaii)

[INSERT: HomeBridge_Logo]

www.homebridgewholesale.com

Conventional, FHA, VA, USDA, Jumbo, Mini-Corr, 203(k), 24-Hour Underwriting, Same Day Docs

Nationwide (except MA, NE & NV)

[INSERT: JMAC_Logo]

www.jmaclending.com

FHA, VA, Jumbo and Non-QM products

AZ, CA, CO, OR, TX, UT, VA & WA

Approved in 43 States

Wholesale/Correspondent, Agency, Jumbos, FHA, Seconds/HELOCs

25 states (from CA to NY)

[INSERT: Maverick_Logo]

www.maverickwholesale.com

FHA, VA, USDA, Conventional, Reverse, HARP, 203K, Jumbo

Licensed in 32 states (see Web site for details)

Omega Financial Services Inc.

www.ofsmortgage.com

FHA-203k, Conforming, Jumbo

NJ, NY, CT & PA

[INSERT: PRMG_Logo]

www.prmg.net

Jumbo, FHA/VA & Conventional AL, AK, AZ, AR, CA, CO, CT, products with a high-focus on DE, DC, FL, GA, ID, IL, IN, purchase, pricing and customer IA, KS, KY, LA, ME, MD, MA, service MI, MN, MS, MO, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, VT, VA, WA, WV, WI & WY

[INSERT: PB_Financial_Logo]

www.pbfinancialgrp.com

Direct Residential & Commercial Hard Money Lender in California; First, Second & Third position loans; Stated/Stated and Stated/ Verified Loans for Fix and Flip Borrowers; Owner-Occupied SFR for Business Purpose Cash-Out and Commercial Property Owners

California

n Oregon Mortgage Professional Magazine n AUGUST 2014

www.loankinection.com

NationalMortgageProfessional.com

[INSERT: Kinecta_Logo]

W H O ’ S Company Name

W H O

I N

T H E

2 0 1 4

W H O L E S A L E

M A R K E T P L A C E

Web site

Specialty or Niche

State(s) Licensed In

[INSERT: Premier_Logo]

www.learnaboutpremier.com

FHA, USDA, VA, Agency, Taking Care of Mortgage Professionals

[INSERT: REMN_Logo]

www.remnwholesale.com

Renovation Lending

[INSERT: Ridgewood_Logo]

www.ridgewoodbank.com

Jumbo Loans ($3.5M+), New York State (Suffolk, Condominiums, Co-operatives, Nassau, NYC and all boroughs, No FICO Score (unless PMI loan), Westchester, Rockland, Orange) One Appraisal (no matter what and Connecticut (Fairfield) loan amount), Cash-Out Up to $1.5M (no seasoning), LLCs and Trusts (approved by RSB)

RRMS Advisors LLC

www.rrmsco.com

Advisory

[INSERT: Stearns_Logo]

www.stearnswholesale.com

FHLMC, FNMA (including HomePath), FHA (including FHA Streamline–no AVM required), VA, USDA, HARP, LPM to 95% LTV

Licensed in all states except New York

[INSERT: SunWest_Logo]

www.swmc.com

FHA, VA, USDA, HECM, Jumbo & Conventional

Nationwide (except for Massachusetts)

[INSERT: UNMB_Logo]

www.unmbwholesale.com

Wholesale product offerings include full menu of forward and reverse mortgages

[INSERT: UWM_Logo]

www.uwm.com

Purchase Loans, Elite Loans, Instant M.I., Pay Advantage (Lender-Paid M.I.), Instant Funding, Technology

TX, NM, CO, OK, AR, LA, TN, MN, FL, GA, PA & More

Nationwide

New York

NY, CA, NJ, CT, PA, NC, SC, FL, TN, CO, TX, MD, MA, AL & WA

NMP Daily is the mortgage industry's source for news, insights, trends and tips. It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.

WWW.NATIONALMORTGAGEPROFESSIONAL.COM

All 50 states

Where Smart Mortgage Lenders Should be Investing Right Now By Doug Rossbach

platform of imortgage. Banks are also thinking more strategically about their balance sheets and customer relationships. Some banks with balance sheet capacity are aggressively putting non-QM loans on their books to attract and retain high value customer relationships. Finally, lenders that think longer term are becoming very strategic about servicing. As interest rates have increased, the value of performing MSRs (mortgage servicing rights) has also increased. Some lenders are selling MSRs to invest in building other capabilities. Others are holding on to servicing to use as a hedge against a further drop in origination revenues. And we are beginning to see a few banks come back into the market for servicing and actually buy MSRs. SunTrust, for example, recently announced that they had purchased $3 billion in MSRs from HomeStreet. Jack Welsh, one of the greatest business leaders of all time once said, “You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is.” While lenders must do what it takes to survive the short-term, they must also consider the impact of the decisions they make today on the longer term. Doug Rossbach a vice president with the North Highland Company. He has 30 years of experience in mortgage and financial services with expertise in strategic planning, marketing, and loss mitigation. For more information, visit www.northhighland.com.

n Oregon Mortgage Professional Magazine n AUGUST 2014

during periods of tight credit. So what should a lender do when faced with these challenges? Our view is that lenders who take the longer term view will be rewarded. At North Highland, we are currently observing a real dichotomy in the market. While some of our clients are slashing costs and putting development projects on hold, others are taking advantage of the market slowdown to make progress on projects that are difficult to execute when volumes are high. They are investing in new origination systems, process improvements, and data management and analytical capabilities. While some lenders are shedding sales teams, others are actively recruiting because they understand that this may be the best time to enter new markets, capture new referral relationships and move market share. Many lenders are refocusing on the purchase market by expanding or purchasing branches and re-educating their sales force on how to build referral relationships with realtors and builders. They are also improving sales force effectiveness by building stronger performance-based tracking and compensation systems, providing clarity around roles and expectations, and investing in communication, training and sales tools, especially mobile technology. A number of lenders are pursuing strategic acquisitions or partnerships. The merger between loanDepot and imortgage is a great example of a strategic alliance that combines the consumer direct business of loanDepot with the real estate agent and builder branch

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The news has been bleak. According to a recent projection by the Mortgage Bankers Association (MBA), 2014 originations will drop 39 percent from 2013 levels to the lowest point in 14 years. To make matters worse, government-sponsored enterprises and Federal Housing Administration (FHA) have raised their fees just as interest rates have started to rise, making loans unaffordable for a growing segment of the market, especially first time homeowners. A recent article in The Wall Street Journal pointed out that Millennials are struggling to find good jobs and affordable home loans, which is affecting the entire housing market. With fewer young people able to buy and finance homes, older homeowners are finding it difficult to sell and trade up. Regulations are making matters worse. Lenders continue to face an onslaught of new regulations put in place since the financial crisis. The regulations causing the biggest consternation are the rules around Qualified Mortgages (QM) and Qualified Residential Mortgages (QRM), which have substantially narrowed the underwriting guidelines and types of loans that lenders can make without incurring large risk exposure. One of the unintended consequences of these regulations is that many potential borrowers are no longer able to qualify for a loan. Some of these borrowers have strong credit profiles or other mitigating factors that suggest they would be able to han-

dle a properly structured mortgage. Lenders are reacting to these challenges in a multitude of ways. They are reducing staff and expenses, especially in processing and servicing. In Q4 2013 and Q1 2014, more than 30,000 mortgage jobs were eliminated. Other lenders such as Fifth Third Bank, EverBank and BB&T are retreating from various origination channels, especially wholesale and correspondent. Many lenders have also reduced product offerings, tightened their underwriting, and/or reduced the availability of warehouse lines. A few lenders, such as Ally Bank, have dropped out of the residential mortgage business altogether. While these actions might stop some of the immediate bleeding, many of these moves may actually cause deeper damage in the long term. This is because the mortgage industry has always been and will always be a cyclical business. Unfortunately, many lenders have historically found it difficult to predict market turns. Like amateur investors in the stock market, these lenders withdraw when the markets grow turbulent and typically miss the large price recoveries which occur early in the next cycle. Mortgage lending does not have the daily swings of the stock market but lenders who pull back abruptly at the first sign of trouble can destroy long term referral sources which take years to develop and will be reluctant to come back. These same lenders may be driving away valuable consumers who have the ability to move their relationships to a bank that is willing to work with them

The Challenge in Boosting Minority Homeownership Rates By Phil Hall

AUGUST 2014 n Oregon Mortgage Professional Magazine n

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For most of this year, the level of mortgage applications made no great progress upwards. But one strategy for bumping up applications—and, by extension, stabilizing the housing market—could involve the expansion of homeownership among the nation’s minority communities. Consider the shift in demographics: The 2010 U.S. Census determined that approximately 36.3 percent of the population was part of a racial or ethnic minority group, while the Pew Research Center forecasts that non-Hispanic whites will become a minority in the United States by 2050. This is already playing out in the housing market: According to The State of the Nation’s Housing 2014 issued in June by Harvard University’s Joint Center for Housing Studies, the white share of homeowners fell from 86 percent to 77 percent between 1993 and 2013 while the Hispanic share climbed from four percent to nine percent and the Asian market share increased from two percent to six percent. The Harvard survey also found that as of 2011, 32 percent of all first-time buyers were minorities, with Hispanics constituting 14 percent of that market, while first-time homebuyers were more likely to be foreign born (16 percent) when compared with current homeowners (10 percent). But the Harvard study detailed considerable disparities in the whiteminority homeownership levels. As of last year, the difference in white-black homeownership rates stood at 29.5 percentage points while the gap in whiteHispanic homeownership rates measured 27.3 percentage points. Another study from earlier this year, conducted by Zillow and the National Urban League, further detailed homeownership data disparities. This survey determined that Whites (who make up 63 percent of the total population) filed 64.8 percent of all mortgage purchase

Racial Composition of the Conventional Mortgage Application Process

Homeownership Rates (2011)

applications in 2012, whereas AfricanAmericans (12.1 percent of the population) only filed six percent of all purchase applications and Hispanics (17.3 percent of the population) filed 9.4 percent of all applications. The Zillow-National Urban League study also found disparities in applications for Federal Housing Administration (FHA) mortgages: 57.4

percent of African American applicants and 60.3 percent of Hispanic applicants filed for an FHA loan, while only 30.1 percent of white applicants went this route. Previous efforts under the Bill Clinton and George W. Bush administrations to aggressively boost minority ownership have been cited by many housing industry experts as contribut-

ing to the housing bubble, due to acute changes in underwriting and an emphasis on the quantity of loans versus the quality of mortgages being originated—and these efforts are seen by many as having a deleterious effect on minority homeownership. “We know the mortgage crisis had a disproportionate impact on people and families of color,” says Nikitra Bailey,

their mortgages,” Pinto says, adding that the federal government should not encourage borrowers to bury themselves under debt. “We’ve spent trillions of dollars in highly leveraged risky loans to drive these numbers up. But black homeownership has barely budged.” For Pinto, the correct approach to the situation involves an older approach to lending. “In my opinion, we should go back to what we know works: lower leverage,” he continues. “The only time we had a housing policy that made sense was when there was low leverage on financing from the 1930s through the early 1960s—it was a combination of FHA and private lending, with virtually all low-risk loans. Homeownership soared from 47

percent in 1940 to 62 percent in 1960— it went up for both blacks and whites.” Of course, today’s mortgage origination procedures are vastly different from those of previous generations. Maxine Fitzgerald, executive director of Portland Community Reinvestment Initiatives Inc. in Portland, Ore., observes that because many potential minority homebuyers are new to the process, the need for financial literacy counseling is important. “The process is much more complicating than before,” she says. “It is most definitely the responsibility of the buyer to familiarize themselves with the process. And the lenders also play a role in this—they want to have successful buyers.”

But while encouraging new homebuyers is a welcome idea, Dr. Juliet Elu, chairwoman of the economics department at Morehouse College in Atlanta, points out that it was also crucial not to forget existing homeowners that are eager to acquire new residences but are currently unable to move because they have underwater mortgages. “A lot of minorities are still in houses that are worth less than what they owe the bank,” Dr. Elu says. “If banks can get to these people to refinance, that would be very, very helpful.” Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

NationalMortgageProfessional.com

n Oregon Mortgage Professional Magazine n AUGUST 2014

vice president at the Center for Responsible Lending in Durham, N.C. “Many families of color were pushed out of the mortgage market due to foreclosures. Today, mortgage credit is tight and African-Americans and Latinos are not able to access credit at the rate that would promote building a new level of homeownership.” Dr. Mark A. Calabria, director of financial regulation studies at the Washington, D.C.-based Cato Institute, is highly supportive of expanding minority homeownership rates, but he is not eager to see history repeat itself. “The objective should be closing the gap in a responsible way,” Dr. Calabria explains. “Loosening underwriting standards has more potential to destabilize the housing market in the long run.” Dr. Calabria views this challenge by identifying housing affordability as the key obstacle for expanding minority homeownership. “The single most important thing to do is look at housing costs,” he continues. “In cities where it is affordable to live and there is a decent supply of housing, there is a much higher homeownership rate for minorities across the board. But in cities where it is expensive to live, it is difficult for everyone and the gap in homeownership rates is wider.” Calabria adds that the need for a stronger economic environment and more higher-income jobs will also drive this effort further. “There are limits to substituting credit for income,” he says. But this doesn’t mean that the federal government should step away from the subject completely. Jason Madiedo, president and CEO of Las Vegas-based Venta Financial Group and president of the National Association of Hispanic Real Estate Professionals (NAHREP), called on the governmentsponsored enterprises (GSEs) to step up with a responsible strategy. “The GSEs need to reintroduce or flip the switch on their low down-payment programs,” Madiedo says. “Fannie and Freddie previously allowed loan-tovalue to be extended to 97 percent. But they pulled that off the shelf a few years ago and have it down to 95 percent. That percentage makes so much of a difference for homeowners—the difference between going to the FHA and going to conventional lenders.” Madiedo adds that this approach would help raise mortgage applications levels. “There would be definitely be more options,” he says. “Now, if people do not qualify, they have to save more money [for a down payment], and that could take many years to save that much more money.” But on the other hand, Edward Pinto, resident fellow and co-director of the International Center on Housing Risk at the American Enterprise Institute (AEI) in Washington, D.C., questions whether housing finance priorities need to be re-evaluated. “We have policy in the United Sates that promotes people not paying off

â€œThe worst part of not knowing, is not knowing that you donâ€™t know.â€?

The Future of the Mortgage Broker and Correspondent Markets (Part V) By Andy W. Harris, CRMS Itâ€™s been over five years since I started writing about the future of wholesale and correspondent lending. My theories have been motivated by my handson experience and what I believe to be an accurate perception of our industry should we remove the gibberish we are so well known for. Each article I have

been involved with follows a major shift in residential non-bank lending which requires balanced communication without special interests. This is primarily needed when countering those that were naive and claiming the end of wholesale. I believe that my predictions following these industry changes have

AUGUST 2014 n Oregon Mortgage Professional Magazine n

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been confirmed over the last several years, while others have not. The primary difference between myself and others is that I have no agenda, other than exposing common myths created in the industry and fighting those who prey on ignorance for financial gain. This is my fifth and final part of this series. I start these all off in similar fashion and this will be no exception. All residential mortgage loan originators are third-party originators to the agencies and investors that buy, insure, or guarantee mortgage loans. Mortgage loan originators carry a responsibility to do what they feel is best for the consumers they serve while building an ethical and profitable business. Awareness of choice, combined with overhead and operations, will determine loan execution and pricing. Where an originator chooses to place their license will be the most important decision they make. Unfortunately, many lack awareness of their options as mortgage professionals and the analytics under each channel, which is why we see so many jump around from company to company chasing short-term incentives. Those who seek a successful and sustainable career in the residential mortgage industry must focus on long-term initiatives which requires non-bias self-education and research. My past articles typically followed big changes relating to RESPA reform, net branching, death of wholesale talk with the exit of Wells Fargo, and most recently the mini-correspondent fiasco. I specifically warned against brokers setting up mini-correspondent lines, primarily because this eliminates all advantages they have as a broker and produces no benefit, only adding layers of risk and steering. This would also draw a red flag and put a spotlight on their operations by regulators clearly assuming they are trying to circumvent new rules. Sure enough, the Consumer Financial Protection Bureau (CFPB) just released their guidance and concerns with the mini-correspondent model in July. I would call this a â€œwarningâ€? issued by the CFPB to anyone thinking they can creatively circumvent the rules. If

anyone also thinks dissecting correspondent lending is not on the CFPB radar, they are naĂŻve in their thinking. Sales and recruiting pressures continue to out-perform facts and reality. This certainly needs to change for the sake of our industry and the consumers we are meant to educate and assist during such a large financial transaction. The difference between the terms â€œmortgage brokerâ€? and â€œmortgage bankerâ€? is simply the use of lines of credit and whether or not the originator is employed by the creditor. While the term â€œbankerâ€? is recklessly and continuously misused and misunderstood (similar to selling in-house underwriting or snake oil), I am going to use these terms in this article to help get my message across. It is vital to understand that you cannot effectively be both a â€œbrokerâ€? and a â€œbankerâ€? in todayâ€™s primary mortgage market. You have to draw the line in the sand and choose one or the other, and you must be educated on the analytics when doing so. Why must you draw a line in the sand? Since compensation reform, everything changed in our industry. Add fair lending and anti-steering and weâ€™ve got a party. Price and compensation flexibility is a thing of the past as it pertains to the originator. Assuming a retail lender that employs the originator is in compliance, the rate sheet to consumers must match and compensation to the originator cannot be increased or decreased per-loan (with minor exceptions), regardless if a â€œbankedâ€? or â€œbrokeredâ€? loan. With more hidden margin and revenue on loans that are funded with credit lines, retail lenders will do everything in their power to not broker loans or comply with anti-steering. As a result, the lender-paid company margins are inflated and product offerings limited to only what cannot be done â€œinhouse.â€? There are very few exceptions to this, but true brokering cannot be done if there is credit line influence. For retail correspondent lenders and their employees this can pose a challenge when competing on price and product, especially when volume and revenues are down significantly.

Everyone must execute quickly, communicate, provide an excellent service, and close on time as a prerequisite. A mortgage broker has the responsibility to compare lenders on price and execution after meeting these basic prerequisites. As a result, if an educated consumer has the choice of the same agency-backed loan offered by a banker and broker, pricing will certainly stand out and make an influence. Up-selling rate and fee simply due to using credit lines can be a challenging task, but apparently not for non-producing managers (just ask them and they will reaffirm that pricing doesn’t matter). Again, the best of the best are left in the industry. Arrogant correspondent lender owners will say “we don’t compete with brokers.” The accurate response should be “we can’t compete with brokers.”

I have worked in all retail origination channels of this industry, and many years ago, I made the educated decision to draw my line in the sand as a proud mortgage broker. That is, I choose to work for my clients exclusively and have lenders compete on pricing and execution rather than working for one creditor (or more specifically not steering my client toward lines of credit). I believe this has proven to offer my clients better pricing, faster execution, with less risk, and more profitability. Not only do I have no regrets in making this decision, but I thank God every day that I did after watching what has been going on around me and in this industry. This is the best time in history to be a mortgage broker. In my opinion, wholesale operations offers the most experienced non-originating support personnel in the mortgage industry. If done properly with strict com-

pliance, separating origination and processing from underwriting and funding is a common sense outlook for cost-effectiveness. As I discussed also in my related “Banker to Broker” articles, I pose a challenge to all the good ethical mortgage bankers out there to expand their awareness. If you are currently working with or influenced by credit lines, I challenge you do research on losing this influence for product, pricing, profitability, and execution. It’s called “true” mortgage brokering and I believe it is the most cost-effective and compliant way (if done properly) to originate residential mortgage loans. More importantly, I believe this is the only channel in which the consumer is not steered (providing the assumed requirement that margins are fixed). Wholesale lending is the most regulated and clear

channel of operation, which certainly can have its perks if done the right way. Listen, I’ve always said I support all channels of mortgage lending for consumer competition and non-bank correspondent and wholesale operations are here to stay. I also believe there are great opportunities out there for those that seek an independent perspective and want exposure to the possibilities. When you draw your line in the sand, do it confidently. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com. 59

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â€œWhen it comes to selling mortgages, we and our partners in the real estate industry need to plant the seeds of change in the minds of Milennials and their parents now.â€?

If You Only Live Once, Why Not as a Homeowner? By Brian Koss If you have kids, perhaps youâ€™ve been made aware of the acronym â€œYOLOâ€?â€“ as in, â€œYou Only Live Once.â€? The actual phrase dates at least as far back as original Hollywood screen siren Mae West, who was fond of the saying. But among todayâ€™s young people, you would think that â€œYOLOâ€? is some

brand new, earth-shattering concept. â€œYOLOâ€? is seen and heard everywhere you lookâ€”in social media (#YouOnlyLiveOnce), song lyrics, school campuses and at the dinner table. Iâ€™m reminded of YOLO every time I read about the oft-maligned and elu-

sive Millennial homebuyer. You know, the young adult born after 1980 who has a job, who might normally be a great candidate to buy a home, yet has no interest in ever actually taking the plunge. Our industry is reminded constantly that this group doesnâ€™t care about the American dream of homeownership, the message almost always being â€œwhy bother?â€? But does that mean that we, as an industry, should take their dissidence at face value? I think not. The truth is that â€œThereâ€™s money in them thar Milennials.â€? Itâ€™s just is going to take some timeâ€”and some ingenuity on our partsâ€”to mine it.

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Understanding the value of a Millennial

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By 2025, according to the Harvardâ€™s Joint Center for Housing Studies, the Milennials who are finally ousted from their parentsâ€™ basements will create 24 million new households. But thatâ€™s more than 10 years from now, and housing professionals are not the most patient bunch. Thereâ€™s also a huge disconnect between the typical mortgage professional and the typical Millennialâ€”not just in age, but in values and behaviors. The average professional in our industry is 20 years older than the average Millennial, and itâ€™s an important 20 years. A lot has happened since the 1990s, when we were in our 20s and 30s. The proliferationâ€”and increasing sophisticationâ€”of technology has had a disconnecting effect on our society not seen since the automobile. We simply donâ€™t know how to connect with each other. We arenâ€™t sure what the other generation wants, either. All we know is that it is different than what we want. The people of my generation donâ€™t understand the 30-year-old man who is still happily living with his parents. When we graduated from college, we did what we were expected to do, which was to find jobs and move out on our own. And it felt great. We loved the independence, the sense of accomplishment, the forward move-

ment of our lives and careers. Feeling like a grown-up was a good thing. Our 30-year-old Millennial, however, has experienced life differently. He grew up in a world of immediate gratification, and may have experienced more by age 14 than we did by the age of 34. For most of his life, he probably had access to the Internet, dozens, if not hundreds, of TV channels and a cellphone. While it is true that the bulk of those experiences were virtual, to him they were real. As a result, Millennials have less patience and are more focused on the end results than on the steps to get there. They think that going through those steps are â€œold school.â€? They see wealth being created almost instantly by high tech whiz kids. Meanwhile, many saw their parents were stuck with years of hard work and poured all their income into a house that wasnâ€™t a good investment, and are now burdened by a mortgage that looms hauntingly every month. Many Baby Boomers openly admit their children wonâ€™t be able to have the same financial opportunity we had. While Millennials want to live in the hometowns they grew up in, assuming they were fortunate to grow up in a town they liked, many are stuck in hometowns that are unaffordable, and where wages have not kept pace with home prices. Many also face high student loan debt, and all are facing stricter credit policies. Of course, there are affordable homes out there, just not in their home towns or near cities with the best employment opportunities. But the idea of long commutesâ€”which the Millennial views as a waste of valuable time and an injury to the environmentâ€”or living in â€œuncoolâ€? communities (no Starbucks or good burrito place) is not worth it. In the end, living at home is their only shot to enjoy the standard of living they have come to enjoy. We donâ€™t need to agree with Millennialsâ€™ values, but we do need to understand them.

Sell homeownership first

We need to be tactful in getting this message across, however. Millennials don’t want to hear from their parents “why can’t you do what I did?” Frankly, I don’t blame them. The

It’s high time to redirect this generation towards homeownership, and it serves no purpose for any mortgage professional—young or old—to remain passive toward the cause. There are no more refi booms, nor government housing handouts coming our way. If you want to survive and succeed in this profession, you need to catch this next generational wave. Let’s change the tweet to “#YouOnlyLiveOnceSoWhyNotAPlace OfYourOwn?” Brian Koss is executive vice president of Mortgage Network Inc. With more than 25 years of mortgage banking experience, Brian has trained hundreds of loan officers over this career, including many top producers. He may be reached by e-mail at bkoss@mortgagenetwork.com. 61

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Reaching the Millennial

up to speed is by partnering with younger, tech savvy real estate professionals and title agents or bringing on a younger assistant, who can help form those connections to Millennial consumers. Keep in mind too that the largest and fastest-growing majority of these Milennials living at home are minorities or the children of people who spoke English as a second language. Very frequently their parents were under-informed and harmed by the housing market, which has left a sour taste in their mouths. A concerted effort to educate, inform, and inspire young, minority buyers through social networks is vital to the long term health of the housing economy. For too long, the rental property industry has fed off the Millennial with high demand and rising rents.

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When it comes to selling mortgages, we and our partners in the real estate industry need to plant the seeds of change in the minds of Milennials and their parents now. We need to spread the message that it is truly is important for each generation to have its own space, at the right times in their life span. And Millennials need to believe it is personally enriching and financially healthy to have that experience of being in the right home at the right cost at the right time of their life. They’re going to have to believe it will feel good. To do this, we need to change the YOLO mentality that keeps kids from savings and making plans for the future, to a “You Only Live At Home Once” message of independence. In other words, don’t sell loans. Sell the empowerment and fun of homeownership. “Alright,” you might say, “but how?” The first step is to market to our databases of Baby Boomer and even Generation X parents and preach the importance of education and financial planning for their children, so Millennials can get on the road to homeownership. Encourage parents to shed their somewhat enabling position of “free landlord” in exchange for the title of “investor,” and have them make their child pay $1,000 a month towards their debt or a down payment for a house. If a parent is flush enough to match some percent of these funds as a gift when it comes time to buy, that works too. In addition to some tough love and encouragement from the parents, expert advice of trusted Realtors, mortgage bankers and financial planners can inspire these Milennials to join our improving economy and even play a role in its continuing recovery by forming households.

younger generation knows how much harder it is today, and how success in homeownership is not given in the post-crisis market. But we can deliver the message realistically, and in a way that the Millennial can hear it. The best and most cost-effective platform is social networking, particularly platforms that are both local and national in scope. Connecting those who have strong voices in social media can help you understand how to make your message more relevant and likely to be heard. Interestingly, some of the most popular shows among Millennials are on HGTV. Even if they are not enamored with buying a home, many young people love to watch others find opportunities, seize the potential and make a house their own for little money and sweat equity. Helping young buyers discover their own inner entrepreneurial spirit can turn the tide. Leverage success stories in your market, where a Millennial found a way into the housing market, and repeatedly share it with influencers who can spread the word. By being an evangelist for Millennial homeownership and inspiring others to join in, you can actually make a difference in the lives of young adults while positioning yourself as an authority. And why not? Millenials’ access to credit is the same or better—relatively speaking—than it was when their parents bought their first home. Sure, it’s tighter. But the current options— to five percent down Fannie Mae loans, to 3.5 percent down FHA loans (and a gifted downpayment), to zero percent down VA and Rural Housing loans, and four percent mortgages rates—are much more attractive than the options Baby Boomers had in the 1970s. We need to sell the fun of getting in on the ground floor of a new and upcoming neighborhood, fixing up a home (it’s 203k/homestyle time!), and building equity where people saw none. Getting customers to post videos and pics telling their story is far more powerful than hearing someone explain an annual percentage rate (APR) is, anyway (not that it isn’t important). I don’t mean to promote any type of age discrimination, but one way Baby Boomer professionals can get

“Your prospective brokers will only change their minds if they feel you can have a positive impact on what they want or provide an immediate solution to their needs.”

Wholesale Lending: Relationships Matter By Brent Emler

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Marketing is a subject that gets a lot of “air time” these days in regards to loan officers and their efforts to attract new and repeat business. Less often do we hear about the challenges faced by the wholesale lending niche. While the target audience is certainly different, the principles that result in successful originator to

consumer marketing are just as rock solid when it comes to wholesale lending. Why? Marketing, at its core, is merely an organized way to approach other human beings with a product or service. If you remove the technical differences between marketing as an originator, broker, or wholesale

lender, you are left with a common denominator: Human beings interacting with other human beings with the purpose of attracting business. Webster was a bit cold in his definition of marketing; stating that it is: “The activities that are involved in making people aware of a company’s products, making sure that the products are available to be bought, etc.” In Webster’s day, that may have certainly been the approach. Marketing was much more product centric than it was people centric. There really weren’t overwhelming numbers of options or numerous decisions to make. In today’s overstimulated and remarkably competitive climate, successful marketing is an emotional enterprise. It is the art of consciously using emotional intelligence towards the end of communicating effectively and establishing personal, lasting relationships. For the companies who market by focusing on the art of relationships, providing extraordinary customer experience, and unmatched responsiveness, the business comes as a byproduct. Being a wholesale account executive is no easy task; competition is fierce and the rules have become so tight it’s nearly impossible to offer anything of value to help broker partners promote their business and close more sales. This is where building relationships is so important. Having confidence in a wholesale lender’s ability to get the easy transactions done cheaply and efficiently while getting the difficult ones done, at least periodically, is the most important component in the relationship. Confidence is most often garnered over time. If there’s a long history of getting the job done it’s pretty difficult for a new player to come in and steal the business away - even if the broker isn’t particularly excited about the partnership. How does an account executive gain trust from a broker he or she is meeting for the first time? Just like any sale, it’s going to take some time. We’ve all seen the statistics about

how many sales calls or closing questions it takes to make a sale; generally it takes five or more calls and seven or eight closing questions. In an especially competitive business environment where every transaction matters, it’s even more difficult to break through and get that first opportunity. So commonly, this is the scenario we face: Things are going well, business is steady, customers are happy, and you think you can relax, right? Wrong. The success you are currently experiencing won’t stay that way unless you build a consistent, relationship-based marketing strategy. Recent years have proven that the mortgage and lending industry can change in an instant and as a result, your business can stall in an instant. Too many lenders view marketing as something they need to do until they start getting loans; that it’s okay to slow it down or stop altogether once they get busy. But, unless you have a good foundation in place, your pipeline will dry up and you’ll be looking desperately for deals again. Marketing is something that has to be done consistently. That means every day, even if you have a really exciting, active pipeline. Maybe your marketing efforts aren’t getting the immediate results you expected, but that doesn’t mean your marketing isn’t working. Stick with it and you’ll start to see results— successful marketers know that every effort made has a compound effect. Your marketing probably won’t make your phone ring right away, but a customer could contact you months after receiving an email from you. The great news is that if you are marketing every day, you don’t need to spend a whole lot of time on it. All you really need are a few big marketing campaigns a year and regular follow-ups. If you spend just an hour a day on e-mails and phone calls to prospective brokers, you’ll end up with extra leads each week. When you can turn those leads into loans, your business will have what it takes to make it through the slow times.

tionship will help you develop a good you are the leader in what you do. understanding of general frustrations and concerns. Make sure your con- Brent Emler is director of sales and tent is timely, focused, and provides marketing at Velma.com, a customizsolutions. Each time you touch your client with marketing material, whether it be through video, e-mail, brochure, or flyer, your content should do one of the following:

able marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.

calendar of events

Emphasize value

N A T I O N A L

Your prospective brokers will only change their minds if they feel you can have a positive impact on what they want or provide an immediate solution to their needs. You must reiterate and reaffirm that you can do that. Remind them of how you can help.

M O R T G A G E

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

see page 79

Share insights

Your prospects want to work with a person who is constantly thinking about how they can improve their lives. So, be that person. Try saying, “I’ve been doing a lot of thinking about how we can help you. You might be interested in the same solution we had for another client when they were faced with the same challenge. Do you have time for a quick conversation?”

THE

CHANGE AGENT

Educate

Do you see the difference? Dropping the “touching base” or “checking in” mentality from your vocabulary and adding real interest turns you into an asset in their decision-making process. You’re providing value. That’s when they’ll really want to work with you! In this world of constant interruption, make sure your clients and prospects know that

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OF THE MORTGAGE INDUSTRY.

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Prospects might be timid. Maybe they are uncertain and wondering if it makes sense for them to move forward or not. Of course, from the outside, you have no real way to know, but you can continue to give them more reasons that will move them toward a favorable decision. Giving them all the information they need will help. You could say, “I know this is a huge decision for you. I thought you might be interested in this article I found that addresses some of your questions. Let’s set up a time to talk through your concerns.

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The great news is that there are systems that automate relationship marketing for you. A small investment up front, and you can employ auto campaigns that will continue touching your clients in valuable ways each month, without your having to lift a finger. Once brokers decide to do business with you, what follows will set you apart from everyone else. It will differentiate you either positively or negatively. Anybody running a successful business knows that building customer loyalty isn’t an overnight effort. It’s an ongoing one that can make the difference between success and failure. Don’t let your action fade along with the immediate results. Instead of marketing only when you are slow, spend time every day sending out a dozen or so messages. A dozen messages each day in the course of a five-day work week means that you have made 60 new contacts or follow ups. Do that for a month and you’ll be at 240 contacts. Consider your efforts a success, even if you only get a couple of lunch appointments or meetings. If you stay consistent and continue to do that every day, you will get a handful of transactions that you wouldn’t get otherwise. Make marketing a habit. Results will follow. No one, not you nor your prospective broker, will get anything out of an e-mail or call that says “just touching base.” So, obviously, the trick is to make repeat contact with your prospects and customers in a way that adds value. But what is the decent alternative? It’s more than finding replacement phrases for “checking in” or “touching base,” etc. Your prospective brokers will delete generic messages like that in a nanosecond. Even worse, they’ll see you as just another pesky salesperson. Definitely not good! What’s the best way to keep sales momentum alive for a wholesale lender? Provide value with each and every interaction. Content that speaks directly to the unique needs of your prospective client is powerful. What is their pain and how can you alleviate it? Pain is a very personal experience. Understanding your individual prospects through a consistent rela-

“The bankers that are going to continue to listen to their brokers and implement changes from the feedback being given by their brokers are going to continue to be successful.”

Wholesale Market Exodus: What Will You Do to Capture Potential Business? By Phil Collins Approximately six years ago, MidIsland Mortgage Corp. set out into the wholesale lending arena during a time when a majority of big and midlevel banks were dissolving this channel of their business. We knew that brokers were going to feel the impact of having fewer options to

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close their loans with a banker who had a full product suite and a quick turnaround. With that premise in mind, we made the decision to develop our own wholesale lending channel in the hopes of providing brokers with a viable alternative for their lending needs. With a solid

platform already in place, coupled with an expansive product suite, seller/servicer capabilities, multi-state licensing and more, we now fast forward to present day where we can proudly say we accomplished what we set out to achieve six years ago. The key to any company’s success is the continual push to provide customer satisfaction on a daily basis. In this environment, mortgage brokers are now, more than ever, looking for bankers who “get it.” They are looking to cultivate relationships with bankers who understand the importance of the little things that help move their files along the process in an efficient and timely manner. The little things, such as returning phone calls and e-mails, are what set bankers apart in the eyes of the broker. Brokers want a banker that is going to listen to and respond to their needs. Bankers looking to capture potential business need to understand that being “hands on” in both operations and sales is paramount to any organization’s success in today’s banker/broker relationship. Surveys are a useful tool and something that we have used to help cultivate relationships with our existing broker base. Surveys are a great way for bankers to keep their finger on the pulse of what changes need to be implemented in the process of a file going from opening to closing. Questions such as, “Would you send us your next loan and, if not, why,” “What did you like about the process or dislike,” “How was the underwriting on your file,” and “How was the processing” are just a few of the questions that bankers should be asking their brokers after a loan closes. The feedback received from these questions can assist bankers in improving certain areas of operations that could

help a banker become more efficient. Again, giving brokers an open forum of communication will most definitely help any banker gain loyalty with their brokers. Loans being declined or withdrawn should be on the radar of all bankers, as they could lead to positive opportunities. A phone call to the broker to discuss reasons for

loans being declined or withdrawn lets a broker know that their business does matter. This type of correspondence is what brokers are looking for in today’s environment, and is going to be what separates one banker from another in the future. In the past six-plus years, mortgage markets have undergone drastic changes. Bankers have had to remain nimble and prepared for market volatility. There is no single or best strategy that can separate any banker from its competitors. The bankers that are going to continue to listen to their brokers and implement changes from the feedback being given by their brokers are going to continue to be successful. Brokers crave and look for old-fashioned customer service, which is why bankers looking to capture future market share must utilize these old fashioned, yet effective, methods of service. Phil Collins is vice president-director of wholesale lending of Westbury, N.Y.based Mid-Island Mortgage Corporation. He may be reached by phone at (516) 683-0800, ext. 698 or e-mail pcollins@mortgagecorp.com.

“As a lender you are held to a higher standard than as a broker.”

Gladiator! By Eric Weinstein

Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com.

n Oregon Mortgage Professional Magazine n AUGUST 2014

hand, I do not have to disclose my fee, worry about that lender paid versus borrower paid crap and I can make more than the 2.75 percent cap most wholesalers limit you to. Hmmmmm … it is nothing but a win for me and the people I recruit, but what about the owner? Despite all the lollipop and unicorn stories you hear about graduating from a broker to a lender, it is not such a slam dunk decision. Let’s talk about the added costs. You have to get audited financials ($9,000$15,000), more expensive licenses, bonds, E&O insurance, a line of credit, MERS, the list goes on and on. Let’s say it is about a$20,000 investment. This is not including the additional administration burden, more working capital (for when you have to front the VA funding fee, etc.) and new systems you have to create to follow the transaction and trailing documents. Let’s compare that to the financial benefit. On some loans you will be able to make more than the 2.75 percent limit most wholesalers have, but not more than the four percent where things start to get dicey with high cost loans. Let’s call it a one percent higher spread. At $20,000, you need to make $2 million more in loans JUST ON THE LOANS where you could have made more money but didn’t. Say about one loan a month at an average $165,000 loan amount. This calculation really depends on your pricing model, geography, etc. If you are in a rural area where loan amounts are lower and you can easily get more than 2.75 percent per deal, this makes perfect sense. If you are in a major metropolitan area where real estate prices are high and the pricing potential is lower due to competition, one deal a month may not seem realistic. But an owner doesn’t just want to just breakeven. If not for the self-

guesses and forecasts you can make. Try to figure out if this new trend is right for you, your business model, your typical borrower, your average loan amount and your normal pricing. You are risking your house, your car, your wife and your mistress on all this. You jocks make fun of us number crunchers, but we do serve a purpose in the ecosystem. I may not be buff, have a six pack and know what a “scrimmage line” is, but when it comes to working the numbers, I am a Roman gladiator. IN YOUR FACE to every kid who gave me a wedgie in middle school! I may have just saved your life.

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I am a gladiator when it comes to numbers, as I risk papers cuts and ink stains to figure out the best deal for my borrower or running my own business. Sometimes, you just have to “roll up your sleeves” and crunch the numbers to figure out what is best. That means taking the time, concentrating and putting amounts down in an organized way to decide what is best. It is a lost art in our ADHD, Twitter, short attention span society. Oh, look at that dog! What was I saying again? I am a loan officer in a small- to medium-sized mortgage broker shop that recently became a lender. Is this a good thing or a bad thing for me as a loan officer? And to a lesser extent, is that a good thing or a bad thing for the owner? After all, I do want him to stay in business, at least long enough until I get my next pay check. There are many different mortgage company models out there, so I can only talk about mine. The new company policy is that I can continue to act as a broker, but now I have the added option to act like a lender when I wish. As a loan officer, that is only a good thing. It is more arrows in my quiver. I am, at the least, in the same position I was in before, but now I have the potential to be in an even better spot if I need it. If the company had said I could only act as a lender now that would be a whole new analysis. Usually that goes hand in hand with a lower split or worse pricing, I would have to see how the new pricing and/or split change compared to what I was making before and calculate my lost revenue. The boss has got to make up for the extra costs somewhere. Here is the difference to me, acting as a lender, the admin fee I charge to the borrower is higher at $975, compared to most wholesalers who charge around $800. On the other

esteem for goodness sake, at the very least, you have got to cover the added risks of being a lender. More than buybacks, the biggest risk to a new lender is “re-capture.” I shiver just thinking about it. As a lender you are held to a higher standard than as a broker. Most lender agreements include a standard clause that says, if your borrower pays off his loan in say six months, eight months or even a year in some contracts, you have to pay back all the premium pricing they gave you. Now, how can anyone control that? Let’s say rates are now 4.5 percent and BOOM, there is another financial crises because Canada declares war on us again (don’t laugh, they did it in 1812, it could happen.) Dogs start sleeping with cats and rates go down to four percent. Now every broker in town starts calling your customers and offering a “no-closing cost” loan and they refinance. The day’s mail includes 42 notices saying you owe all the premiums you made in the last six months. Now that I made you excited … don’t worry. As a loan officer, I will be able to get another job somewhere else. As a business owner, maybe you should stop, take a moment and think harder about all this before jumping on the bandwagon. Halt, put some numbers to paper, make the best

Just Ask

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Eric Weinstein & Laura Burke

nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you. This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal

counsel or the advice of a tax professional. Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!

Chris in Texas asks … I am thinking about opening my own company in Texas, what advice can you give me?

Eric’s reply to Chris … When I started my mortgage company in 1995, I literally had just a pen, a piece of paper and my brain. You don’t need to be fabulously wealthy to be a mortgage broker. My advice is to

get in as cheap as possible in the beginning and roll a part of the profits into building the business. Startup costs of such things as getting incorporated, licensed and bonding are not as much as you think, if you do it yourself and don’t pay fancy lawyers to do it for you. Don’t spend money on fancy logos, advertising, office space, personnel and the like until you know you have a going concern. Start out in your home; advertise by word of mouth, fliers, emails and inexpensive ways until you get going. Process yourself, do your own bookkeeping and compliance. The number one reason companies fail in their

first year is a lack of capital. Some crises will come up where you need a bankroll. It won’t be there if you spent it paying designers for your corporate logo, or it is tied up in an expensive desk. Work by yourself in the first year and write down everything you do and how you like it done. This will be your operating manual for when you hire your first employees. It will save them the learning curve when they have to do it. Don’t hire anyone until you have the system perfect. Anything you do wrong will just be multiplied out of control when your company starts to grow. Try to write down everything

k Eric & Laura you know or learn. You may know intuitively which lender does a particular program or what to watch out for when using another lender, but the next person you hire will not know that. Knowledge is power and the more you know, the more you make. Help the next loan officer to make money and you will make money from that. Help your fellow man and the rewards will come.

Laura’s reply to Chris … I tend to take the middle road here. I understand what Eric is saying about starting with nothing and growing the business, only part of that can come back to bite you. By not initially having a small amount of capital to cover unforeseen expenses is what causes many businesses to fail in their first three years like Eric has stated. I differ to having an attorney open your incorporation and start out correctly for all of the following reasons, federal tax rules, state tax rules and mortgage compliance. You don’t need the most expensive attorney but one that will do the job properly for you. I agree 100 percent on fancy logos and non-necessities. The

essentials in my book are the following: Determine best entity type for your family/self, business cards, phone, computer, printer and a Web site. You will also need the ability to pull credit, so sign up with credit bureau and EO insurance. I will also be the one to check state regulations for becoming a broker on your own. Each state may have their own requirements, for example, minimum net worth requirements. Also keep in mind when signing up with lenders they will also ask to see your credit report and financials; personal if company doesn’t have strong assets. Here is what I was able to find on becoming a mortgage broker in Texas for you: l Texas has two regulating agencies that oversee the mortgage industry. They are the Texas Department of Savings and Mortgage Lending (TDSML), and the Office of the Consumer Credit Commissioner (OCCC). Pre-licensing requirements include approved courses that are 20 or more hours and contain three hours of Federal Law, three hours of Ethics, two hours of Non-Traditional

Mortgage Lending, plus 12 or more hours of electives. A minimum of eight hours per year of continuing education is required nationally per year, per the SAFE act. The licensing fee for NMLS for Loan Originators under the SML is $479. The licensing fee for a Mortgage Company License under the SML is $275. Check on current accuracy of fees. Mortgage company applicants must show evidence of either 36 months of previous experience in the real estate mortgage industry, or evidence of 18 months or previous experience in the real estate mortgage industry plus a copy of a bachelor’s degree from an accredited college with a major in a directly related subject, or a copy of an existing Mortgage Broker license to be used in lieu of experience (mortgagenewsdaily.com, 2014).

Deb in California asks … Any suggestions on how to handle a real estate agent who tells your client not to use you because you “are an out of area” lender and you are only

20 miles away? We really have this problem in California.

Eric’s reply to Deb … At my old company, we used to buy leads from LendingTree. Once a borrower told my loan officer he was going with another lender because they were “local” and we were just a lender off the Internet. It turns out our loan officer’s office was actually physically closer, but to the borrower, we were just a disembodied voice over the phone and computer. I personally have the opposite problem … trying to convince my neighbors to use me versus Quicken Loans that advertise on TV, but are probably located in India or somewhere else. It is all about developing a connection and trust with either the real estate agent or borrower. I make it a habit to take my agent out to lunch once in a while. Just to remind them I am here and close by in case they need anything. Sometimes an e-mail or fax won’t do it. It is comforting to a borrower or real estate agent to know that you can drive by and pick up continued on page 68

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2014 ... A Year of Successes for FAMP! By Valerie Saunders

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As president of the Florida Association of Mortgage Professionals (FAMP) for the second time, having previously served as FAMP president from January 2009-July 2010, one of my goals was to make appropriate revisions to our lending law that would benefit Florida’s consumers as well as our mortgage industry. This process was a long one, dating back to July 2013 when the Florida Office of Financial Regulation (OFR) informed us that they would be reopening FS 494, our state’s Mortgage Brokerage and Lending Law, during the upcoming legislative session. Knowing that there were soon-to-be-enacted federal lending law changes that would go into effect in January 2014 and the potential effect that these changes would have on the mortgage industry, FAMP quickly got to work. In August 2013, FAMP created an Ad Hoc Committee comprised of 10 interested board members who spent the next 30 days reviewing FS 494 line by line. Each week, the Committee held hour-long conference calls where we would review each section of the statute, discuss revisions that we would like to see, as well as additions that we felt would help the mortgage brokerage community. Next step … meetings with the Florida Office of Financial Regulation (OFR) and the Governor’s office starting in September 2013; reaching out to bill sponsors, Sen. Nancy Detert and Rep. Ritch Workman, in November 2013; meeting with staff from the Senate Banking and Insurance Committee and the House Insurance and Banking Subcommittee in January 2014; attending and speaking to legislators at various House and Senate Committees as the bill worked its way through its required committee stops in February and March 2014; lobbying in Tallahassee with fellow FAMP members in April 2014; and, finally, working with our bill sponsors as our bill language became inserted into another bill during the last days of the legislative session so that all of our hard work was for naught. And, here it is … the summer of 2014 and Senate Bill 1012 was signed by Gov. Rick Scott on June 13, 2014 and went into effect July 1, 2014. This year’s FAMP Annual Convention will be held Sept. 4-6, 2014 at the Shingle Creek Resort in Orlando, Fla. FAMP has the pleasure of having Florida’s Office of Financial Regulation as our guest speaker at Thursday’s luncheon, discussing these changes in detail. In addition, our eight-hour NMLS-approved CE course will cover the details of these FS 494 amendments. As always, our Convention is full of information and resources that all mortgage professionals would find beneficial in their day-to-day business. So now, if you ever ask yourself: “What has FAMP done for me lately as a Florida mortgage professional?” please take the time to read this article again. As president of FAMP, I can honestly say it’s been a long road with many twists and turns; however, we were successful in amending FS 494 for the benefit of Florida’s state-licensed loan originators, mortgage broker businesses and mortgage lenders, and most importantly, Florida’s consumers. I am proud of this accomplishment, and I hope that you are as well. If you’re not a member of FAMP, what are you waiting for? We need your support, and if you’re wondering who has your back in Florida, look no further than the Florida Association of Mortgage Professionals. Take a moment to join or renew today. Valerie Saunders of RE Financial Services Inc. in Jacksonville, Fla. is statewide president of the Florida Association of Mortgage Professionals (FAMP). She may be reached by phone at (904) 992-0785 or e-mail valsaun@gmail.com.

SPONSORED EDITORIAL

just ask eric & laura continued from page 67

documents if needed in a pinch. I always go to my borrower’s home to have documents signed and attend their closing. That is why I get so many referrals. We sit at the kitchen table and have coffee, talk about their wants and bond. I am their friend, not just a voice on the phone. I know it is easy now with our new electronic culture to complete a transaction start to finish over the computer. Indeed, some borrowers prefer that. Most are like me. They want a person they can trust. A personal appearance does that. As for your particular situation, the agent is probably just trying to steer their customer to their own loan officer. I would hope my realtors do the same for me. From now on, casually mention to your customers and agents that you would be happy to come to their clients home to make it easier for them to sign the documents. Remind them that you always attend your closings. Invite the agent out for coffee. All this should reinforce that YOU are their local lender.

Laura’s reply to Deb … I too, like Eric, have been in similar situations. My corporate offices have been from the East Coast to the Ozarks. I have worked out of my home for many years, and to some, the fact that I work out of a home office maybe is unsettling as a corporate office out of state. I found that building a relationship with my client helps build their trust level, but it sounds to me that your issue is more directly related to the real estate agent than with the client. So let’s tackle the source of the issue first. I am going to assume this is not one of your agents and she/he probably doesn’t know you, or if she knows of you may not really understand how you handle your business. And those are key words I would use when discussing my services with a real estate agent, “I handle my business this way, I understand that in today’s market not everyone works the same way, so I just wanted to let you know how I work, so for future clients you will feel comfortable with me as their loan officer.” I would stress the fact that you are local, and location for you doesn’t really mean much because you are willing to meet the clients in his/her office. This gives you a safe, comfortable place to meet clients that no agent should complain about. It also alleviates you from going to someone’s home that you may be uncomfortable with. I know as a woman I have been in many uncomfortable situations going to the home of an unknown client. I have a horror story about Lurch from the Adam’s Family, and the story of little boys sitting on

the flow blowing on my legs, and so on … By offering to meet any referred clients in his/her office, also gives you the opportunity to meet other agents in the office. The more often they see you there, the more they become familiar with you as well. She/he may hold out for her own referral sources, and if that is the case ask, “What will it take for her/him to give you a try? A chance? Let you demonstrate your abilities. Follow up, with the agent and client. Let your expertise and talent shine through.

Tom from Michigan asks … Do you have any ideas on how to attract more customers in a slow, competitive market?

Eric’s reply to Tom … If I knew how to do that, do you think I would have time to sit here and respond to questions in National Mortgage Professional Magazine? No, I would either be so busy working or sitting on my yacht watching my subordinates do my loans. I would say 90 percent of the hard work as a loan officer is actually attracting business. Let’s face it, you can train anyone to process a loan, the hard part is the salesman part. There are two parts to getting more business—advertising and actually doing a good job to get referrals. If you are getting a lot of business, but don’t have your customers sending their friends and neighbors, you are doing a crappy job. End of story. Advertising is merely letting people know what you do for a living and that they can trust you to do a good job. It can run the gambit from TV advertising to putting flyers on cars to posting it on Facebook. To me, I want to reach the most people at the least cost and physical exertion. I do an email to my database of past and prospective clients. I get their referrals because I do a good job. I started out doing flyers and mailers. It gets expensive. That is why you should strive to wean yourself away from this and set your goal for a 100 percent referral-based clientele. Lastly, if you have the ability, try pricing cheaper. Many people are shoppers. Simple economics will tell you, there is higher demand at a lower price.

Laura’s reply to Tom … I agree with Eric, in working with mostly referral business. But how do you get the referral business? You simply ask! So many salespeople don’t ever ask for the referral. It is imperative that your clients know and understand, “My business is based on referrals, here are my business cards, one

you can keep and one you can give away.” Always give two cards, it works like magic. I have had some real tear-jerking referral stories over my career, but one of the best was when a client had given my card to their friends who were looking to buy a house. Their friends kept their card in their wallet for a year or so. The clients found their house, wrote their offer, and told the real estate agent they had their loan officer. The agent asked, “Okay, who is it?” and they pulled out my tattered business card they kept in their wallet for a year, and said it’s her, Laura Lynn. The real estate agent choked up, and said “No way, can you find someone else, let me give you someone else.” They said “NO, we are using Laura.” So I got a call from my ex-husband, and he said, “My clients are insisting on using you as their loan officer, so here are the details.” I chuckled a bit to myself, and we closed the loan. So ask for the referral, send out bi-

monthly newsletters via e-mail with information or recipes, anything to be remembered by and to keep asking for referrals. Eric does a great job with the stories he sends out. Be personal, “High Touch vs. High Tech.”

We ar Califor e Premie nia’s r Private Direct M and Br oney idg Lender e

ric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage arena. She may be reached by e-mail at lauralynnburke@gmail.com.

Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional.

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mortgage community shows support continued from page 47

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ABC News journalist Mike Boettcher and his son embedded themselves with U.S. forces fighting on the front lines in Afghanistan in making the documentary “The Hornet’s Nest”

during the Mortgage Bankers Association’s (MBA) Mid-Winter Housing Finance Conference (Wingspan and the MBA present the annual Hall of Honor Award to individuals and companies that support the military community). “At one screening, a soldier said, ‘I never talked to my family about my experiences over there. Now I can,’” Horne recalled. “It has been very cathartic. And we have been very happy to promote the film. It has been a very powerful thing to be a part of, at every single level.” Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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B2B company, so we’re not out there to solicit consumer clients. You could put it down as producing some good karma.” Wingspan’s latest effort to call attention to the struggles facing active duty military personnel involves a new documentary called “The Hornet’s Nest,” in which Peabody- and Emmy Awardwinning ABC News journalist Mike Boettcher and his son Carlos Boettcher were embedded with U.S. forces fighting on the front lines in Afghanistan. Wingspan became involved in the film in a somewhat unlikely manner—Horne’s 16-year-old daughter, singer/actress Annika Horne, recorded the song “Little Soldier” that was used in “The Hornet’s Nest.” Horne previewed the film and was deeply impressed with the production—to the point that he agreed to have Wingspan sponsor preview screenings around the country. “It seemed like the natural thing to do,” Horne explained. “The movie is a powerful statement of our soldiers in Afghanistan and their families. It is a really neat view of this experience that you don’t get in 10 second clips on the news.” Wingspan sponsored eight free preview screenings of The Hornet’s Nest— in Melbourne, Fla.; Monroe, La.; Dallas; Columbus, Ohio; Oklahoma City; Chicago; Los Angeles; and Vail, Colo.,

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Growth and Expansion in Today’s Mortgage Marketplace National Mortgage Professional Magazine’s 2014 Mortgage Mastermind VIPs navigating the waters of an ever-shifting marketplace

Giovanni (John) Palumbo Sales Manager, Continental Home Loans Inc.

Michele Fiore Area Manager, Stonegate Mortgage Corporation

Philip Russo Branch Owner, Excelsior Mortgage LLC

Steve Grossman Owner, NJ Lenders Corporation

Bill Sohan Mid-Atlantic District Manager, Academy Mortgage Corporation

Jason Klaskin Branch Manager, Academy Mortgage Corporation

Andy Thaw 203k Expert, Mid-Island Mortgage

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Keith Binsfeld Area Manager, Huntingdon Valley Bank

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National Mortgage Professional Magazine had the opportunity to gather some of today’s top mortgage leaders for its 2014 Mortgage Mastermind VIP Panel Discussion. The event, moderated by National Mortgage Professional Magazine, was put together as a forum to share ideas and pick each other’s brains on the latest trends and innovations taking place in the market. Some on the panel, seasoned veterans who have watched their businesses grow and succeed in the ever-changing mortgage market, shared their thoughts and perspectives with others who touched upon their own growth and expansion. No matter the situation, the message remained clear: There is no right or wrong way to go about doing business in the mortgage industry, one’s work schedule and work ethic is dictated by how one defines success. The 2014 Mortgage Mastermind VIP Panel was comprised of the following:

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What is the most important quality to highlight in today’s marketplace: Price, speed or reputation? Keith Binsfeld: Reputation is number one—price is, by far, the last. I am never going to have the best rate. Price is an afterthought—and I will tell them upfront if it comes to a rate chopping, they will find something cheaper online and why. With speed, my passion is to systemize things, so speed and efficiency is a must.

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Michele Fiore: In order to get the right reputation, you have to deliver what you do in an efficient and quick manner. As far as price goes—if you are giving a decent, fair, competitive price, it will build your reputation. You can have a transaction that closes in 60 days and you can have a transaction that demands seven days, and you have to be able to know the difference between the two and work them the way the transactions demand. Steve Grossman: A customer senses when a mortgage professional is very confident and sounds like they know what they’re doing. When a customer hears you on the phone and thinks, “Hey, wait, he knows what he’s talking about,” it builds a level of confidence in you. Jason Klaskin: If you make promises, you have to keep your promises. Speed and rates are something I never advertise. I maybe lose two loans a year because of rates, and I always know who it is going to be—they were locked in and the rates improved prior to their closing. So I don’t advertise rates because somebody can always beat your rates. And speed stresses the system. I think efficiency is the

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better way to say it—can you meet your deadlines and your goals and come out a little bit ahead. Giovanni (John) Palumbo: If you think about a restaurant or a store that you like to shop at—you go there because they have a good reputation. You like the service they give you when you walk in—they treat you the right way. You’re comfortable referring friends and family to that place. It is the same thing with a mortgage company. We’re one of the top lenders in New York because we maintain a high level of reputation. However, I think pricing and speed helps to build reputation. I deal with a lot of short sales, so I’m always under the gun. Continental offers me the ability to close loans super quick. You have other instances where you have the ability to take 30 to 45 days to close a loan. Bill Sohan: I would put 20 percent of it in price, but the other 80 percent is reputation, by all means. Price is definitely very important where I am in the Washington, D.C. market. Speed, I don’t believe, is of great importance anymore, especially with the shrinking volume I see at other companies. I’m in a state that you can close in seven days. Most of the good people who are around can close in seven days. Andy Thaw: If you are going to have longevity in this business, obviously reputation is key. Your word is your word. In a purchase market, we’re not necessarily looking for speed. I prefer efficiency—especially in regard to a transaction, where it doesn’t matter if I am all approved and ready to go in 20 days but the seller’s not. If he needs 90 days, we’re ready for 90 days. We just try to fit the transaction.

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Moderator: Are you more comfortable working in a smaller company or a larger one? Or does it matter? Keith Binsfeld: Wells Fargo’s pre-approval used to mean something–it was a great place to be eight years ago. But they got so big so fast with call centers that they cannot have a culture. You cannot drive excellence to 30,000 loan officers. But if you have capital and assets to have a compliance department to keep your butt out of jail, that helps. Michele Fiore: You have to be right size. It’s not about being big or small … you just have to get it done right. You have to have coverage for all the different aspects of the file, from beginning to end. Steve Grossman: We’ve been in a market for more than 20 years. When a real estate agent or attorney sees a pre-approval, it has more value coming from us than a Chase or Wells Fargo or companies from out of the state. Having a nice footprint in one market definitely helps you. Jason Klaskin: To say size is the most important thing–look at the biggest lenders. Most of the agents I work with start pulling their hair out when they see approval letters from those lenders. With economies of scale, you get to spread the expense and overhead over a larger pool. In that sense, it helps to have those departments and pieces. Giovanni (John) Palumbo: I’ve worked with small companies and one of the things they lack is having all of the programs that fit a borrower’s particular product.

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But, on the other hand, Wells Fargo has 30,000 loan officers– are they giving the people the service they should be getting? Philip Russo: I’ve worked in large- and mid-sized companies. By owning my own company and keeping it small, I’m on top of every single loan that my processors handle. I’m a strong believer that as long as my hands are in the pot in my company, everything will run smoothly. Bill Sohan: The biggest thing with size is compliance. We’ve grown a huge amount in the last five years. Five years ago, I didn’t even know who the head of my Compliance, HR or Marketing Departments were because I was able to do all of those things on my own. Now, I won’t even talk to a radio station without calling the Compliance Department first. Andy Thaw: I went out to see a company in California a year ago. It was very impressive–they have a marketing guy that won an Emmy for the work he did. But at the end of the day, I know that I can outperform them in my marketplace because of my reputation and knowledge. Size, to me, doesn’t matter. It’s more about quality than size.

Moderator: What do you do for your clients or referral partners that sets you aside from everyone else? Keith Binsfeld: What sets us apart is that we lovingly tell our customers we won’t let them screw it up. If you give me a complete and accurate application, I will dig down and get the information. We educate the heck out of the borrower and say, “These are the things you need to be made

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aware of. If you listen and follow our guidelines, you will close on time.” For the agent, it is the same thing: “If you follow these steps and shop within the parameters we gave you …” What sets us apart is that we’re pretty blunt about it and don’t let them deviate. We say “no” more than we say “yes,” but in a loving way. Michele Fiore: My main role is like a transaction guide, and not just for the customer. You have to remember there are other people involved in the transaction as well: The real estate agents, attorneys and sellers. I like to get to know each person involved in the transaction. I tell them: This is who I am, this is what my plans are, I am here for the duration, so let’s all do this together. It’s almost like the umbrella theory– we are all under the same umbrella to get from start to finish.

opposed to another bank where they have to go through a whole process of getting an appraisal done and have to underwrite before it’s even looked at, we look at it from the first day and within 24 hours. Sometimes, we’ll look at it within a couple of hours. The underwriter will either say it’s a go or it’s a little bit too risky–but let’s see if we can restructure it. The real estate agents love the marketing we offer them–we have our print shop in-house and we’re able to do a lot of that at no cost to them, so we can market them and brand ourselves and our loan officers with the Continental Home Loans name so it helps us all out. Philip Russo: One loan, over a 10-year span, should turn into three or four. People move, they buy second homes as investment properties, the majority of people have family or friends. It’s about retaining those clients. Andy Thaw: I don’t view myself as a salesman. I view myself as an educator. In my first life before this business, I was an educator in public schools and in college. My clientele looks at me as an educator, and I am going to hold their hand. People have doctors or dentists or professionals or accountants, but they never looked at those in the mortgage industry in that manner. Because it was never considered an industry to come out of school and say “I’m going to be a mortgage professional.” It just kind of happens.

Moderator: Let’s say that you were sent to a new market where you had no contacts. How would you start to build your business? Michele Fiore: I think you need a couple of things going on at the same time. You have to know the real

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estate agents in the area because they always have their ear to the ground. You also have to get involved in the community to know their needs–you just came in and you don’t know this community, so it important to know what makes them tick. Where do they live? Are they a factory town where everyone has to live near to get to work? Either through volunteering or some other ways, you must get to know their needs and know how to get them where they need to go. Jason Klaskin: I would be reaching out to the area’s HUD office and real estate associations. I would also be talking to financial planners and accountants and insurance agents–people are asking those advisors about who to talk to first. I would also either join or start a network referral group–especially if you are new to the business. If nothing else, you will get to talk to 20 CPAs, 20 real estate agents, 20 financial planners–it is sort of an excuse to have a meeting. Philip Russo: It is all about networking. Do I join the area’s Chamber of Commerce for that? For myself, being a member of a couple of country clubs and golfing with the guys, I’ve picked up more contacts than I could ever imagine, and I have to hand them off to my guys. Andy Thaw: I think that establishing yourself as an industry expert as quickly as you can is important. I make my business as a public speaker in the industry, and I have done a lot of homebuyer education. I would probably use some of my contacts at the HUD offices I know and go to an event with one of the HUD representatives I know. If I knew where I was moving to, I would probably do my homework prior to going so I would go into the area, so I can get the knowledge of exactly who is doing what.

M a r k e t p l a c e

Moderator: Do you see yourself ever retiring from this business? Keith Binsfeld: I am retiring. I am going to get my big fat RV, drive all over this country and pick up my grandkids. My vision is to sell my business to someone that wants to come out of college and work in it and run it. Michele Fiore: I love this business, I love the customers, I love originating, and I love mentoring. I have been in it a long time. I love the business, and I will always stay in it. Philip Russo: I’ve been in the business since I was 20 years old. At 24, I had 400 guys under me. I have a small mom-and-pop shop now. Will I retire from the industry? I hope so. I don’t plan on going anywhere else. Do I say that I will own a small shop for the next 15 years? I don’t know. Bill Sohan: Look around these trade shows–you don’t see kids out of college. I don’t see kids coming out of college saying, “Oh, I’m going to be a mortgage banker someday.” That’s a little fearful for this. But that resonates in the back of my mind–where is this business going to be in 10 years? I know I am going to be originating in 10 years. Andy Thaw: The beauty of this industry, I believe, is that you can make what you want of it. Do you want to be a $1 million producer? You can. If you want to be a $200,000 producer and go home and sculpt on weekends, that’s okay. I do believe we’re in for a great ride at this juncture. I think the market right now is playing into the hands of guys like us in this room. For me, I know that I will always be originating at some point.

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Giovanni (John) Palumbo: We’re all good salespeople and we can sell someone on anything. But when my real estate brokers refer me a client, they know that I will do everything in the client’s interest. One of the things I love about what we do is that we have a committee. We can take a file from the committee and as

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Steve Grossman: There is no secret sauce. You have to be a really good technician and understand the programs out there. You have to listen. A friend told me that God gave us two ears and one mouth–sometimes you have listen twice as much as you talk. You have to listen to what the customer wants. Sometimes you have to be like a good doctor–you can’t ask five questions, you have to ask 25 questions. If I try to ask as many questions as I can, I can understand the customer’s financial needs and situation, and structure the best product for them.

E x p a n s i o n

APPRAISAL MANAGEMENT COMPANY

BONDS & LICENSING

COMPLIANCE/CONTINUING EDUCATION

The Bond Exchange www.bondedwithnamb.org (501) 224-8895

AllRegs—Your Source for Fast, Reliable Answers 2600 Eagan Woods Drive, Suite 220 Eagan, MN 55121 (800) 848-4904 www.allregs.com

LOWEST-COST STATE MORTGAGE LICENSE BONDS Support NAMB in supporting you! Online surety bond applications, instant underwriting approval, and credit card payments administered through The Bond Exchange NAMB's exclusive partner provider for state license surety bonds. The Bond Exchange is a national surety agency specializing in servicing mortgage license bonds for thousands of mortgage professionals across the country. Low prices and fantastic service. You really can have them both at the same time!

AllRegs offers mortgage professionals fast, reliable answers needed to conduct their day-to-day business. From research and reference to business intelligence, from education and training to professional services, we are your definitive source for mortgage industry information. With tools for originators like NMLSapproved CE training, regulatory content libraries for compliance staff, guidelines for underwriters, policy manuals for operations, and business intelligence for business development – we have you covered as the leading information provider for the mortgage industry. If you have a specific need, our professional services team can help with thing like policy, procedure or guideline development, as well as custom training or publishing resources. Contact us to learn how we can help you – visit www.allregs.com today.

CONTINUING EDUCATION

COMPLIANCE CONSULTANTS

StreetLinks Lender Solutions (800) 778-4920 www.streetlinks.com sales@streetlinks.com

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StreetLinks Lender Solutions provides an innovative and comprehensive suite of valuation and service solutions used by lenders, servicers and appraisers nationwide to improve everyday business operations. StreetLinks industry-leading products include LenderPlus™ full-service appraisal management, LenderX™ lender-executed appraisal management software and SCORe™ appraisal reviews and a series of valuation analysis tools for services. Our commitment to quality and service, embodied by our partnership approach to clients and appraisers, continues to set us apart as the nation’s premier lending solutions partner. For more information, visit www.streetlinks.com.

AUDIT/COMPLIANCE/EDUCATION

BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com Division of Lenders Compliance Group, BCG is the first and only mortgage risk management firm in the U.S. devoted to supporting the unique compliance needs of residential mortgage brokers. Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews

Mortgage Seminars MortgageSeminars.com 248-403-8181 Cost: Only $19.95 per month per physical office location Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained by HUD and an FHA Originator for over 15 years, is publisher of The FHA Originator, a monthly marketing newsletter which gives you… • • • •

FHA guideline news to keep you updated FHA Marketing tips and downloads that are easily customized Personal development tips to help you develop your character Full access to all previous FHA marketing downloads!

No contracts so sign up today and give yourself the tools to brand yourself as The FHA Expert in your marketplace. Cost: Only $19.95 per month per physical office location.

DIRECT MAIL

LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance. Our Compliance Team Will: Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.

Titan List & Mailing Services, Inc. 1020 NW 6th St Suite D, Deerﬁeld Beach, FL. 33442 (800) 544-8060 www.TitanLists.com Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services. The firm specializes in data lists (mail/phone), printing, direct mail, graphic and website design as well as internet and SEO marketing. Starting in 1998, the company has, since then employed highly skilled individuals who have considerable experience regarding marketing trends. The company manages the complete in-house campaign themselves including Design, Data Lists, Printing, Postage, and Mailing.

LOAN ORIGINATION SYSTEMS

RECRUITMENT

WHOLESALE LENDERS

Count on Calyx: Weâ€™re ready to help you do more 800.362.2599 sales@calyxsoftware.com www.calyxsoftware.com Calyx Software is the leading provider of affordable mortgage solutions for banks, credit unions, mortgage bankers and brokers. We design products that enable smooth bi-directional flow of data from beginning to end. Our solid, yet flexible, LOS gives you: â€˘ â€˘ â€˘ â€˘ â€˘ â€˘

5 Park Plaza, 10th Floor Irvine, CA 92614 www.HomeBridgeWholesale.com

Underwriting and secondary marketing Strong security Remote access Ubiquitous productivity with optional mobile apps Configurable business rules engine for workflow and compliance Convenient interfaces with over 200 vendors providing PPE, closing documents, compliance services and more

HomeBridge Wholesale is a national wholesale lender offering Conventional, Government, Jumbo, and Renovation Loans. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.

Lenders can take advantage of Calyxâ€™s fully integrated automated underwriting and pricing products to help them determine loan eligibility, pricing against investor or FHA guidelines while staying compliant in 2014.

MARKETING

Now Hiring Wholesale Sales Managers/Account Executives Nationwide Please send resumes to Marketing@HomeBridge.com

RETAIL BRANCH

Real Estate Mortgage Network, Inc. www.remnwholesale.com 866-933-6342

TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.

Maaverick Funding Corp. is a direct mortgage lender licensed in 30 states across the country. Haavving obttained FHA, VA A, USDA and Fannie Mae appro ovals, Maaverick is growing and seeking top talent for their expanding nationwide footprint.

Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com

Phone: 855.422.5917 ny NJ NJ,, 07054 9 Entin Rd., Parsippany Visit us at www w.Ma . averickFundingg.com Maverick Fundingg Corp. NMLS# 7706

WHOLESALE/CORRESPONDENT LENDERS

â€œThe year I started their Lender Letter and Week e klly Economic Update, my business the eW DOUBLED. Thank you, Right Side Marketing, for your excellent products and service.â€? Steve Peterson Sierra Pacific Mortgage

United Wholesale Mortgage 800-981-8898 www.uwm.com Contac t: info@afr wholesale.com

888.664.2101 AFR Wholesale ranked #1 with the most Sponsor Originated FHA 203(k) closed loans.*

CLOSE MORE LOANS WITH:

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SSee ee for yyourself ourself rrightsidemarketing.com ightsidemarke eting.com 800.456.4395

â€˘Co nvent io nal â€˘USDA â€˘Manufac tured Housing â€˘One -Time Close Construc tion â€˘Freddi e Mac Open Acces s and Fannie Mae D U R P â€˘VA and FHA, FHA 203(k) and 203(h) Rehab loans â€˘Jumbo loans up to $2,000.000 Lender NMLS:2826 - 9 Sylvan Way, Parsippany - NJ, 07054 - *See website for details: www.afrwholesale.com Equal Housing Lender. Equal Opportunity Employer. **No Lender fees by AFR. Third party fees may apply. AB071114

UWM has a full set of mortgage products to meet all of your lending needs with Conventional, FHA, USDA (Rural Development), VA, Jumbo, HARP 2.0 and DU Refi Plus. With UWMâ€™s ELITE program, you will receive the most aggressive conventional rates and pricing in the industry for your elite borrowers! Discover Lending Made Easy with United Wholesale Mortgage!

n National Mortgage Professional Magazine n AUGUST 2014

MARKETING/NEWSLETTERS

NationalMortgageProfessional.com

TagQuest www.myharpleads.com TagQuest.com 888-717-8980

REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time.

heard on the street continued from page 48

Step Inside Ginnie Mae MEYERS

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Starting this month, National Mortgage Professional Magazine and Ginnie Mae are partnering to provide you with useful and relevant information through a bi-monthly series, “Step Inside Ginnie Mae.” This series will provide insight into the housing finance industry, the secondary market, and specifically, how Ginnie Mae works to bring global capital into the mortgage market while minimizing risk to taxpayers. In addition, we will highlight many of Ginnie Mae’s leaders, including Ted Tozer, Mary Kinney and others you’ve heard from in the past. Since our creation in 1968, Ginnie Mae has played a critical role in the U.S. housing finance system by providing the financing for affordable housing opportunities for millions of low- and moderate-income households across America. We do this by providing a guaranty on mortgage-backed securities (MBS) backed by the full faith and credit of the United States. This guaranty ensures timely payment of principal and interest on MBS that are secured by mortgage loans that are insured or guaranteed by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Department of Agriculture’s Rural Housing Service, and the Department of Housing & Urban Development’s Office of Public and Indian Housing. At Ginnie Mae, we know that our guaranty matters. Without Ginnie Mae and its full faith and credit guarantee, investors from Wall Street to Asia would not have the confidence to purchase our securities. The purchase of these securities ensures that critically-needed capital flows into the mortgage industry and local markets. Without that capital, the housing crisis would have been far worse, and the economic recovery would have taken much longer. Ginnie Mae is a proven success at fulfilling a vital public mission. Since the crisis began in 2009, we’ve pumped nearly $2.2 trillion in liquidity into the market, which translates into affordable housing opportunities for more than 9.9 million households. Confidence in Ginnie Mae fueled the rapid expansion of our market share from just under ten percent to approximately 30 percent, and our portfolio grew from $1 trillion in 2010 to $1.5 trillion in just four years. Ginnie Mae’s rapid growth has been critical to stabilizing the mortgage market. But our unprecedented expansion tells just one part of the story. The growth of our portfolio is indicative of the effectiveness of Ginnie Mae’s unique business model and the corporation’s consistent financial stability, which has allowed us to generate a profit for the federal government for more than 20 consecutive years. The business model is simple. Ginnie Mae does not originate mortgage loans, nor does it buy or sell securities or loans for investment purposes. The corporation guarantees investors the timely payment of principal and interest on securities backed by loans insured or guaranteed by other federal government housing agencies. Ginnie Mae stands in the fourth loss position behind three layers of risk absorption, including borrowers’ equity, federal government loan-level mortgage guarantee programs, and the corporate resources of the lender that issues the MBS. This simple and effective business model—a public/private partnership between the private market and the U.S. government—consistently delivers top-notch securitization capabilities and operational expertise that attracts capital from global investors to America’s housing finance system. The Ginnie Mae MBS is a win-win-win for borrowers, lenders and investors. This exclusive column is produced in partnership with National Mortgage Professional Magazine and is geared toward highlighting the accomplishments and activities of Ginnie Mae. Our aim is to keep originators informed of our role in the mortgage industry and our vision for the future of the housing finance system.

MARTINDALE

l HomeBridge Financial Services Inc. has announced the addition of Mortgage Loan Originator Tammy Meyers in the firm’s Chambersburg, Pa. branch, and Tom Martindale as mortgage loan originator and sales manager in HomeBridge’s Harrisburg, Pa. branch. l Norcom Mortgage has announced the expansion of their presence in the state of Connecticut, with the opening of two new branches, one located in New Milford, Conn. to be run by Bill Granata and one in Columbia, Conn. to be managed by Jeffrey Heidtmann. l Comergence has hired Corey Przenkop as vice president for business development. l Altisource Portfolio Solutions SA has named Barbara Goose global chief marketing officer. l GSF Mortgage has added Meily Yip as branch manager in its Fremont, Calif. office. GSF Mortgage has also named Bradley Smith as branch manager in GSF’s Perry Hall, Md. branch, the company’s fifth branch in the state of Maryland. l Freedom Mortgage Corporation has appointed six new executives: David Firestone as new executive vice president of financial operations, Vice Presidents Nerissa Hochenberg and Robert Quinn, Loan Originator Roger Boone who will focus on business development on the East Coast, IT Director Ross Aseron, and Senior Product Developer David Porcelli. l Guaranteed Rate has announced management changes in its New York operations, as Richard Fedele, who currently serves as regional manager for New England, will become regional manager oversee-

ing Guaranteed Rate’s mortgage lending operations in the state of New York. Total Mortgage Services LLC has announced the opening of its new Midwest Headquarters, and the appointment of industry veteran Jim Passi as VP of the Midwest Region. WFG National Title Insurance Company has added Jacqueline Brink to serve as an agency sales representative in the company’s Midwest Region. Gateway Mortgage Group has announced its opening of a new branch in New Braunfels, Texas which will be led by Shelby Chapin, who brings more than 25 years of mortgage experience with her to lead the new retail branch. Liquid Logics has announced that New York-based DAL Group and its chief consultant, Derrick Logan, have been retained by the company to provide direct sales support for its origination technology. LRES has named Alice Sorenson, formerly LRES’ chief investment officer (CIO), as executive vice president and management advisor. OneTitle National Guaranty Company Inc. has announced that Alan Doran has joined the company as executive vice president. STRATMOR Group has hired Tim Ryan, an industry veteran with more than 25 years of mortgage banking experience. New American Funding has announced that Justin Kollman has joined the firm’s team in San Diego as a loan consultant.

Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

www.mortgagenewsnetwork.com

2014 INAUGURAL

CONFERENCE

HYATT REGENCY LONG BEACH 200 South Pine Avenue, Long Beach, CA 90802, USA

The Strange Case of the Shrinking Mini-Correspondent: A Primer on Forensics By Jonathan Foxx

White Paper

October 27-29th, 2014 Awareness. Opportunities. Access.

n Oregon Mortgage Professional Magazine n AUGUST 2014

Jonathan Foxx is president and managing director of Lenders Compliance Group and Brokers Compliance Group, mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 4423456, by e-mail at jfoxx@lenderscompliancegroup.com, or visit www.LendersComplianceGroup.com or www.BrokersComplianceGroup.com.

Accelerating Women in the Housing Economy.

NationalMortgageProfessional.com

The billowing wave of the mini-correspondent began as a trickle, intensified as lenders established “mini-correspondent channels,” and gushed into a modest torrent, its demand rising in prominence on Jan. 10, 2014. For it was on this date that the proximate cause for the new mini-correspondent channel was given its impetus, due to the Final Rule pertaining to the Ability-to-Repay (ATR) guidelines and the requirements of the Qualified Mortgage (QM) Rule. Many brokers usually seek to charge fees between two percent and three percent per loan transaction; however, under the foregoing requirements, any excess above three percent in total points and fees virtually guarantees that such loans, originated by brokers, will not be eligible for treatment as a QM. A consequence of the Final Rule, and specifically the three percent cap, was to create an incentive for many brokers to morph into a new kind of loan originator, termed the “mini-correspondent.” Due to the Consumer Financial Protection Bureau (CFPB) becoming aware of the transitioning of mortgage brokers from their traditional roles to mini-correspondent lender roles, the Bureau has become concerned that some mortgage brokers may be shifting to the mini-correspondent model in the belief that, by identifying themselves as “mini-correspondent lenders,” they automatically alter the application of important consumer protections that apply to transactions involving mortgage brokers. On July 14, 2014, the CFPB issued the “Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders.” Are we now finding that the mini-correspondent wave is running its course, shrinking in momentum, and undulating to its demise? One feature of a mini-correspondent channel is noted by the Bureau– the warehouse line provided to the mini-correspondent–since the Guidance states that the CFPB “understands that some entities may transition from being a mortgage broker to being a correspondent lender and, in so doing, may begin as a small correspondent with agreements with only a few investors.” Entities attempting to move to the role of a correspondent lender may start by obtaining a warehouse line of credit (typically from a third-party warehouse bank). The Bureau provides a broad definition of a “correspondent” by noting the requirement of the warehouse line of credit to provide the funding for the mortgage loans the entity originates and sells to a third-party investor. In my White Paper on mini-correspondents (located online at http://goo.gl/7JkFxc), we explore and provide comments on the Bureau’s new Policy Guidance and its potential effect on residential mortgage lenders and originators. The White Paper also contains a checklist in the form of a questionnaire, in order to self-assess the regulatory risks associated with transitioning to a mini-correspondent. Please visit http://goo.gl/7JkFxc to view the White Paper in its entirety.

Scenes From the Ultimate Mortgage Expo 2014 July 7-9 at the Hotel Monteleone in New Orleans Mike Tucker, CeCee Guerrero and Matthew Sweeney from Calyx Software on the exhibit hall floor

NAMB President Don Frommeyer (center) stops by the Frost Mortgage booth for a chat with Greg Frost (left) and Greg Frost Jr. (right) David Margulies, Elias Mascobi and Jay Dempsey from American Financial Resources Inc. (AFR)

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Tony Walker, Rey Maninang and Matt Evans from Carrington Mortgage Services

Matthew Hanson and Jim Harrison from Simple Nexus were on hand to demonstrate their companyâ€™s mobile app for loan officers

Jeff Lentz, Cara DeStefano and Carl Markman from REMN were on hand in New Orleans to discuss their companyâ€™s product offerings

Samantha Jungman, Joshua Frank and Kaylyn Belmore from United Wholesale Mortgage (UWM) on the exhibit hall floor of the Hotel Monteleone

Philip Giunta, Michael Grant, Guy Salisbury and Brad Smith from HomeBridge Wholesale gather for a photo

calendar of events N A T I O N A L

M O R T G A G E

AUGUST 2014

Thursday-Friday, September 11-12

Thursday-Friday, August 7-8

Mortgage Bankers Association’s (MBA) Human Resources Symposium 2014 Agenda Mortgage Bankers Association Headquarters 1919 M Street NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

2014 Louisiana Mortgage Lenders Association Education Conference New Orleans Hilton Riverside 2 Poydras Street New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.

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

Wednesday-Saturday, October 15-18

Wednesday-Thursday, September 24-25 Alabama Mortgage Professionals Association 2014 Annual Convention The Embassy Suites Hotel 2960 John Hawkins Parkway Hoover, Ala. For more information, call (205) 663-9696 or visit www.almba.org.

Thursday, August 28 Hawaii Association of Mortgage Brokers (HAMB) 2014 Annual Conference & Trade Show Japanese Cultural Center of Hawaii 2454 Beretania Street Honolulu, Hawaii For more information, call (808) 783-4442 or visit www.hamb.org.

Saturday-Monday, September 13-15 NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail vvalvo@agilityresourcesgroup.com or visit www.nambnational.com.

Mortgage Bankers Association’s (MBA) Regulatory Compliance Conference 2014 Grand Hyatt 1000 H Street NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. OCTOBER 2014

Thursday-Saturday, September 18-20

Florida Association of Mortgage Professionals 2014 Convention & Trade Show Rosen’s Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.famb.org.

National Association of Professional Mortgage Women (NAPMW) Central Region Fall Education Conference Courtyard by Marriott 2 West Reno Avenue Oklahoma City, Okla. For more information, visit www.napmw.org.

Arizona Association of Mortgage Professionals Lenders Fair & Education Event Phoenix Convention Center 100 North 3rd Street Phoenix, Ariz. For more information, call (623) 972-6180 or visit www.azamp.org.

Wednesday, September 24

Tuesday-Thursday, October 14-16

Sunday-Tuesday, September 7-9

2014 Northwest Real Estate Summit & Mortgage Expo Tulalip Resort & Casino 10200 Quil Ceda Boulevard Marysville, Wash. For more information, call (206) 484-6442 or visit www.mywamp.net.

2014 Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

Mortgage Bankers Association’s (MBA) Risk Management and Quality Assurance Forum 2014 InterContinental Miami 100 Chopin Plaza Miami, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Friday-Saturday, October 3-4

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

Sunday-Wednesday, October 19-22 MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit www.mortgagebankers.org. NOVEMBER 2014

Wednesday-Friday, November 19-21 Mortgage Bankers Association’s (MBA) Accounting and Financial Management Conference 2014 Westin St. Francis 335 Powell Street • San Francisco, Calif. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. MARCH 2015

Sunday-Thursday, March 8-12 32nd Annual Regional Conference of MBAs Trump Taj Mahal Casino Resort 1000 Boardwalk • Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

n Oregon Mortgage Professional Magazine n AUGUST 2014

Thursday-Saturday, September 4-6

Thursday-Friday, October 16-17 Virginia Association of Mortgage Brokers (VAMB) 26th Annual Convention Hilton Garden Inn Richmond Innsbrook 4050 Cox Road • Glen Allen, Va. For information, call (804) 285-7557 or visit www.vamb.org.

NationalMortgageProfessional.com

SEPTEMBER 2014

Sunday-Tuesday, September 28-30

American Land Title Association (ALTA) 2014 Annual Convention The Westin Seattle 1900 5th Avenue •Seattle, Wash. For more information, call (202) 296-3671 or visit www.alta.org.

AUGUST 2014 n Oregon Mortgage Professional Magazine n

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Addressing the needs of banks and mortgage lenders for better closing agent fraud protection l Covers You & Borrower l Covers Investors & WH Banks l Covers Fraud l Covers Theft l Covers Willful Blindness l Covers Manipulation l Covers Failure to Record l Covers Document Errors l Covers Collusion l Covers Loss Mit/Repurchase Costs l Costs Less Than $50.00* *Available in most states; call for exact price by state

Why be exposed to losses from closing agent fraud and negligence? Attorneys and other professionals who handle residential mortgage transactions are not covered for all losses by a CPL, but NOW there is an option. Real insurance, designed for you, to meet your needs. Working in conjunction with Secure Settlements Inc. (SSI), the leader in counterparty risk management solutions, certain syndicates of Lloyd’s of London® are now offering an affordable insurance program on SSI Low Risk Agents. Lenders must be subscribers to the SSI ClosingGuard™ program to qualify for the insurance.

Visit www.securesettlements.com Please call for more information:

GRACECHURCH INTERMEDIARIES LLC P.O. Box 2908, New Britain, CT 06050-9998

Phone: 888-502-1331 Roland Pike, Manager roland.pike@gracechurchintermediaries.com NY DFS License No.: BR-1181384

WHOLESALE DIRECT FREE PROCESSING - NO LENDER FEES

Y YOU OU ORIGINATE, ORIGIN NATE, T W WE EC CLOSE, LOSE, ITâ€™S THA THAT AT S SIMPLE. IMPLE. 877.552.8737 www.afrwholesale.com/wd www .afrwholesale.com/w d Lender NMLS 2826. AFR Wholesale, a division of American Financial Resources, Inc. is a nationwide wholesale residential mortgage lender and an approved lending institution. The company is a GNMA issuer, FNMA seller/servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. This information is provided to assist business professionals. This is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. - Equal Housing Lender - Equal Opportunity Employer. Corporate office located at 9 Sylvan Way, Parsippany, NJ 07054. AB020714