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FFirst irst G Guaranty uaranty Mortgage Mortgage Corporation Corporation isis an an FHA FHA Approved Approved Lending Lending Institution, Institution, a and nd iiss nnot ot a acting cting oonn b behalf ehalf ooff oorr a att tthe he d direction irection of of HUD/FHA HUD/FHA or or the the federal federal g government. overnment. First First Guaranty Guaranty Mortgage Mortgage Corporation Corporation Headquarters Headquarters isis located located at at 1900 1900 Gallows Gallows Road, Road, Suite Suite 800, 800, Tysons Tysons Corner, Corner, VA VA 22182 22182 (800) (800) 296-2275. 296-2275. Company Company NMLS# NMLS# 2917. 2917.

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OCTOBER 2014 Tuesday-Thursday, October 14-16 Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. 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, contact Monica Cedeno by phone at (908) 852-2498, e-mail or visit



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10 Mortgage Vet Ted Grose in the Hunt for California Assembly Seat By Phil Hall


26 Lykken on Leadership: How Great Leaders Face Compliance By David Lykken

table o N A T I O N A L

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Staying Compliant While Computing in the Clouds By Phil Hall ....................................................................................58 Compliance Regulations: How Do They Impact Mortgage Marketing? By Brent Emler ........................................60 How to Build a Compliant Appraisal Desk That Even LOs Love By Jennifer Miller..........................................................62 The Road to Compliance By Tony Weick ..................................64 Happy Father’s Day By Eric Weinstein........................................65 Will UDAAP Bankrupt the Banking Industry and Third-Party Vendors? By Jennifer Hamby ......................................................66 Size Does Matter By Michael Simmons ......................................68

30 The CFPB’s Pursuit of Fair Lending By Jonathan Foxx

Lions and Tigers and Bears … Oh My! By Laura Burke............69

FEATURES Online Reputation & Influence By Rene Rodriguez ....................8 The Elite Performer: Follow Up or Fall Down By Andy W. Harris, CRMS ..............................................................8 Combining Valuation Technology With Data Analytics Takes Appraisals to New Heights By Vladimir Bien-Aimé ........16 The Ultimate Guide to Handling Sales Objections By K. Justin Restaino ....................................................................18 NAMB Perspective ......................................................................20 Education is the APMW Foundation: Build on It! By Katherine L. Venters, GML ......................................................22

48 Vacation Homes Sizzle as Investment Homes Fizzle By Phil Hall

54 NMP Mortgage Professional of the Month: Carl Markman, Director of National Sales, REMN Wholesale By Phil Hall

VA Issues Interim Final Rule on Qualified Mortgages By Melanie A. Feliciano Esq. ........................................................28

V I S I T Company

Web Site


A Page

AllRegs.............................................................. ..........................................................35 American Financial Resources ............................ ......................Inside Back Cover American Pacific Mortgage ................................ ................................................29 Appraisal Nation, LLC ........................................ ..............................................3 ...................................... ..........................................37 Bradford Technologies........................................ ..............................................63 Brokers Compliance Group.................................. ..................................21 ...................................................... ............................................................61 Calyx Software .................................................. ................................................47 CAMP ................................................................ ....................................................44 Carrington Mortgage Services, LLC ...................... ..............................39 & 60 Continental Home Loans, Inc. ............................ ......................................5 Document Systems, Inc./DocMagic ...................... ................................................7 & 80 Easy Mortgage Apps............................................ ..........................................44 FAMP ................................................................ ..........................................................43 First Guaranty Mortgage Corp. ............................ ..............................Inside Front Cover & 26 Fortune Title Agency .......................................... ..................................................PA4 Global DMS........................................................ ......................................................33 GraceChurch Intermediaries................................ ..............................17 Lykken On Lending ............................................ ............................................70 Matchbox, LLC .................................................. ..................................................43 Maverick Funding Corp....................................... ............................................13

f contents








NMP’s Economic Commentary: No More Excuses By Dave Hershman........................................................................32 Tales From the Closing Table By Andrew Liput ........................34

Act Now Before It’s Too Late … By Vincent Spoto ..................36 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ............38 Summer Marketing Tips..............................................................42 The Long & Short: The Business of Short Sales By Pam Marron..............................................................................46 Two Commission HECM Misconceptions By Ralph Rosynek ..50 NAPMW Report: June 2014 By Jill Kinsman ..............................50 The Insured Closing Letter is Obsolete By Andrew Liput ........52 The Reverse Mortgage Domino Theory By Robert Ottone ......52 Lack of Inventory Equals Long-Term Growth for Your Pipeline By Tom Ward ........................................................56 The Viability of GSE Recapitalization By Robert Ottone ..........70 AllRegs Launches Consumer Complaint Policy Manual ........72 MBA’s Mortgage Action Alliance By Amy Swaney....................72 New Study Examines Sacrifices in Pursuit of the American Dream By Robert Ottone ............................................73

Fostering the Intangible Asset: Corporate Culture By Cal Haupt ................................................................................78


D V E R T I S E R S Company

Web Site


MBA-NJ/NJAMB .................................................. ..................................................PA3 & 71 Menlo Park Funding .......................................... ....................................................15 Mortgage Bankers Association ............................ ............................................73 NAMB National .................................................. ................................................57 NAPMW ............................................................ ..........................................................53 NAWRB ............................................................ ............................................................55 New York Community Bancorp, Inc. .................... ................................................62 Paramount Residential Mortgage Group, Inc. ...... ................................................25, 45 & 77 Path2Buy .......................................................... ................................................1 & 66 PB Financial Group Corp..................................... ..............................................71 Prime National Credit Repair .............................. ................................................35 Radian Guaranty ................................................ ............................................................19 REMN (Real Estate Mortgage Network) ................ ........................40 & 41 Reverse Mortgage Solutions, Inc. ........................ ..........................................................70 Ridgewood Savings Bank .................................... ..............................................51 Secure Settlements Inc. ...................................... ..........................................11 TagQuest .......................................................... ................................................23 & 67 The Bond Exchange............................................ ..........................................32 Titan List & Mailing Services, Inc. ........................ ..........................................................9 Ultimate Mortgage Expo .................................... ....................................49 United Northern Mortgage Bankers, Ltd. ............ ............................27, 30 & 31, 59 United Wholesale Mortgage ................................ ................................................Back Cover

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

Will SCOTUS Take Up Spokeo v. Robins and Address the No Harm, No Foul Claim? By Terry W. Clemans ................76


JUNE 2014 Volume 6 • Number 6


Compliance does matter!

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

In this month’s edition, we take a closer look at the topic of compliance. This topic in itself is far from exciting, and to be honest, is basically both boring and uninspiring. In fact, just the sound of the word “compliance” reminds me of the school teacher that caused the chalk to squeak as she wrote on the blackboard. Let’s face it, ever since we were kids, we never liked our parents telling us what to do, and when we could, we tested those boundaries whenever we could. Well I hate to tell you all in the mortgage profession that our parents are back! They have the acronyms we’ve learned to live with … CFPB, OCC, FRB, NCUA, SEC, FDIC, FHFA, FHA, VA, and USDA just to name a few. But unlike our parents, these new guardians of the regulatory environment are not going to be cool and say, “Johnny, don’t do that again” when you do wrong and go on with their day. Compliance is here, and as I’ve said numerous times in my past columns, “The cost of compliance may be a lot … however, the cost of non-compliance can be more expensive if not fatal.” Every month, exclusive editorial contributions from individuals such as Jonathan Foxx, president and managing director of Lenders Compliance Group (LCG) and Brokers Compliance Group (BCG), fill the pages of National Mortgage Professional Magazine with guidance on a hot topic involving compliance. His message is both clear and simple, yet often complex. Compliance can be demanding! Spend less time on trying to figure ways around compliance and spend more time on understanding the requirements of compliance and infusing them in your business. Compliance involves implementing systems and committing your team to using it. Most of you don’t have the financial resources to have a full-time compliance officer on your staff to orchestrate the systems needed for compliance. Luckily, there are companies in the mortgage profession that you can engage either on an “as-needed basis,” or even better, on an “ongoing basis,” to assist you with your compliance needs. These companies and their teams have spent time developing compliance programs, systems, manuals, tools and procedures to get you both compliant and maintain an ongoing compliance presence. One more thing on compliance … the regulatory agencies overseeing the mortgage profession do sometimes impose compliance requirements that are not good for the mortgage industry and/or the consumer. In many instances, the trade associations serving the mortgage profession address these issues, such as NAMB—The Association of Mortgage Professionals, Mortgage Bankers Association (MBA), National Association of Professional Mortgage Women (NAPMW), and the Association of Residential Mortgage Compliance Professionals (ARMCP). Please be sure you lend your voice to the many compliance requirements we are asked to implement, and if possible, join in the membership of these organizations that serve your industry. A collective and unified voice can have the power to change! Oh wait … I have to go now … my mom wants me to get off the computer! I only wish she was still here to tell me that, but remember our new parents, the CFPB and all the others are still here to keep us on track!. Sincerely,

STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312

Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310

Joey Arendt Art Director (516) 409-5555, ext. 307

Beverly Bolnick National Sales Manager (516) 409-5555, ext. 316

Scott Koondel Operations Manager (516) 409-5555, ext. 324

Phil Hall Managing Editor (516) 409-5555, ext. 312

Richard Zyta Social Media Ambassador (516) 409-5555

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

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

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

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

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


publisher’s desk

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

Joel M. Berman, Publisher-CEO NMP Media Corp. • é ational Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2014 NMP Media Corp. N


EDITORIAL CONTRIBUTORS Featured Editorial Contributors Terry W. Clemans

Andrew Liput

Laura Burke

Jennifer Miller

Katherine L. Venters, GML

David Lykken

Brent Emler

K. Justin Restaino

Tom Ward

Pam Marron

Melanie A. Feliciano Esq.

Rene Rodriguez

Tony Weick

Robert Ottone

Jennifer Hamby

Ralph Rosynek

Eric Weinstein

Amy Swaney

Cal Haupt

Michael Simmons

Jill Kinsman

Vincent Spoto

Jonathan Foxx

Donald J. Frommeyer, CRMS

Phil Hall

Andy W. Harris, CRMS

Editorial Contributors Dave Hershman

Vladimir Bien-Aimé


n Pennsylvania Mortgage Professional Magazine n JUNE 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:

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: 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: 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:

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


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

National President Christine Pollard (607) 226-1046

Vice President–Western Region Anna Mackovska (323) 321-2222

President-Elect Kelly Hendricks (314) 398-6840

Secretary Cynthia Nutter (360) 258-2206

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

Treasurer Kimberly Rozell, CME (607) 229-5008

Vice President–Eastern Region Cathy Kantrowitz (845) 463-3011

Parliamentarian Dawn Adams, GML, CMI (607) 329-4622

Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 200 South Wilcox Street, #224 l Castle Rock, CO 80104 Office: (720) 810-4917 l Cell: (720) 670-0124 E-mail:

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

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:

National Consumer Reporting Association

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:

701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site:

2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511

William Bower Resident Screening Committee Liaison (888) 316-4242

Mike Brown Vice President/Treasurer (801) 925-6691, ext. 3777

Judy Ryan Strategic Alliance Committee Chair (410) 747-9551

Daphne Large Ex-Officio (901) 259-5105

Sharon Bieszk Director (262) 542-1700

Nancy Fedich Conference Committee Chair (908) 813-8555, ext. 3010

Mary Campbell Director (701) 239-9977

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:

Julie Wink Education Committee Liaison (901) 259-5105

Dean Wangsgard Director (801) 487-8781

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:

Tom Conwell Legislative Committee Liaison (800) 445-4922, ext. 1010

Terry Clemans Executive Director (630) 539-1525

Renee Erickson Membership & Elections Chair (866) 932-2715

Jan Gerber Office Manager & Member Services (630) 539-1525

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: 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: 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: 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:


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Online Reputation & Influence Why Is Communication So Hard? By Rene Rodriguez Before we dive into what needs to change, we must understand the problem better. Webster’s Dictionary defines “Communication” as “A process by which information is exchanged between individuals through a common system of symbols, signs or behavior.” Okay, so by that definition, we are communicating all the time. I get it, but it doesn’t help me understand the problem. We need to look further. I found a definition for “Excellent Communication” that states “A communication that is managed strategically, meets its objectives, and balances the needs of the organization and the needs of key people with two-way symmetrical communication” (Grunig & Grunig). Though I love that definition, it still doesn’t help me understand why it is so hard to be (and be perceived as) an effective communicator. George Bernard Shaw wisely observed, “The single biggest problem in communication is the illusion that it has taken place.” The biggest threat to good communication lies in our perceptions tricking us into feeling that we have communicated effectively or that we have understood clearly. The worst part about this is that our perceptions form our reality—which is to say that if we are not diligent in maintaining a high sense of awareness, we will never know when we communicate poorly.

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


How do we fix something that we are not even aware of? First off, let’s remember that the things we take for granted in life (i.e., how we communicate) are often very complex processes when analyzed. For example, anytime we communicate something, there are six checkpoints that our message must pass through before it is fully transmitted. At any of these points, our message can either pass through in its intended form, or become distorted. The six checkpoints are: what I want to say, what I actually say, what the other hears, what the other understands, what the other wants to say in response, what the other actually says in response. Personal filters Let’s assume that Bill is an excellent communicator and can translate what he “wants” to say into what he “actually” says. That information still has to pass through John’s (the listener’s) “personal filters.” These filters form an invisible barrier that can distort even a seemingly clear message from Bill. Common filters include one’s emotional state, cultural background, situational context, personal beliefs and the stress level of the listener. These filters will influence the perception and interpretation of Bill’s message, resulting in either a clear communication or a distorted one. With the seeming transparency we have today online, there is a new player in the game of influencing filters—online reviews. With reviews, consumers are empowered to tell other consumers what it is like to do business with you. Whether we want to face it or not, this is a reality in today’s business world and each day more and more people are turning to reviews to guide their decisions. To learn more about taking control and managing your online reputation, please visit Rene Rodriguez is founder and CEO of, 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.



elite performer

Follow Up or Fall Down In the mortgage business, we put a lot of effort into gaining prospects through marketing and market share exposure. As many know, it can take a lot of time and effort building and reworking a marketing platform, and it requires consistent effort. I believe with technology, social media and embracing the importance in online and offline exposure, many in our field have done a good job. What I believe things lack with most loan originators is in converting a prospect to a client. This is predominantly a result of no follow-up and no consistency. I often see this when program options or rates are presented to a borrower either in person or electronically. The loan originator spends a great deal of time working on their presentation (hopefully) to try and perfect the experience of the viewer and awareness of financial benefits and options. After this process, they fail to schedule a follow-up meeting or have a clear call to action to formalize the loan application and commitment to services. There are many stages when a prospect or even a borrower with a formal preapproval with your company require communication and follow-up in order to sustain the relationship. Here are a few tips in order to convert more prospects to borrowers: l Prior to (or immediately following) the presentation of loan options and information, always schedule a follow-up appointment by phone or in person 24 hours (or no more than 48 hours) from that time with a call to action. It is vital that you have a specific time and day that you will call or meet the prospect to discuss the details and answer more questions after they have had time to review. Failure to do this, along with the time that passes, will significantly reduce the chance for conversion. Be accountable and hold them accountable to the appointment time. l If you have not yet had the chance to present options to a prospect, follow-up diligently by phone and e-mail until you make contact and take all vital notes to remember the details. Remember, the goal is to close more loans, not take more loan applications. Information for the consumer upfront saves time for all parties and builds rapport by providing information upfront without any hassle and sales tactics to get applications that rarely convert. Follow-up is the key. l Save the prospect’s information in your database and be organized to track every time you have called or e-mailed them before converting them to a client. Make sure you know who you have presented to and who you have not. Once a formal application is started, it is important to keep your borrower updated and in touch with them with regards to the bond market and scenarios while searching for a home. l Don’t be hesitant or assume that they will get back to you. We are all busy and time should be mutually respected. If a consumer is in the market to buy or refinance a home, then it is your job to effectively communicate with their request timely and often until a formal decision is made. Remember, educated consumers shop for information and data when it comes to programs and interest rates. Even with a strong referral and immediate application, you always have to ensure that a borrower is committed to the process and clear on their options and benefits working with you and your firm. Don’t be naïve in thinking you don’t have competitors. Not taking the steps to promptly follow-up and organize communication can easily result in a competitor taking the once potential client from your pipeline. 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 or visit


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Mortgage Vet Ted Grose in the Hunt for California Assembly Seat

By Phil Hall For many people in California, Ted Grose is among the most prominent professionals in the state’s mortgage industry. With more than three decades of experience in his field, Grose founded, co-founded or led four real estate finance companies. He currently runs Los Angeles-based 1st Mortgage Advisors Inc. and has also served as statewide president of the California Association of Mortgage Professionals (CAMP) and as a board member of NAMB—The Association of Mortgage Professionals. Now, Grose is becoming a notable new face in the world of California politics. He recently made his entry into this arena by seeking election to the State Assembly from California’s 62nd Assembly District, which includes the prominent Los Angeles County communities of El Segundo, Gardena, Inglewood, Marina del Rey and Venice Beach. Relatively, a few mortgage professionals have found their way into elected office. However, California voters have a history of voting for people from eclectic professional backgrounds, ranging from a Hollywood action hero to a San Francisco

madam, to Cher’s ex-husband. But are they ready to give Ted Grose, the mortgage professional, the respect that he has earned after years in the mortgage field? National Mortgage Professional Magazine recently had the opportunity to chat with Ted about his entry into the political world and what has led him to his interest in politics.

tion, what was your campaign strategy? By flying low, staying under the radar and targeting voters. It was also a midterm election, where the turnout is low. This was an open primary, with the top two vote-getters winning the race. There were six opponents in the Democratic Party, and they were basically running against each other.

Your first foray into politics resulted in being part of the ballot line-up for the June 3 primary. How did that turn out? Ted Grose: I won the primary. It’s pretty huge and pretty miraculous. I’m a registered Republican and my district is 61 percent Democrat. The hand of God was in it, quite frankly.

Did you come in first or second? I came in second.

In addition to possible divine interven-

When and why did you decide to seek elected office? I started thinking about running a year ago. The way California has been working is through single party control, essentially since 1970. There is not a lot of dialogue on issues … it is a mono-

logue. I felt that everyone needs to have a voice at the table, but the state was turning into a one-party state. But hasn’t California elected several Republicans–including a couple of prominent movie stars–to become governor? Yes, and California has also given the country a couple of Republican presidents. But the legislature, where the laws are made, has been controlled by the Democrats. With the exception of 1995 and 1996, the legislature has pretty much been controlled by one party. So why did you decide to become the person to change the equation? I thought to myself, if not me, then who? Everything in the world begins with “me.” What platform did your campaign focus on? I focused primarily on jobs, education and community. The state legislature should get out of parenting and stick to the foundational issues. What about housing? California has seen a lot of tumult in its housing

market … from the evaporation of affordable housing, to the eminent domain controversy. Jobs drive the housing market. In order to create jobs, we need to make sure that young people have an education that gives them the skill-sets that match the job market. A critical factor to a healthy home market is financial literacy. When someone comes out of school, they should know how credit cards work, how to balance a checkbook, and how to do a stick figure budget. What kind of jobs are you eager to generate? We need to look at what kind of talent we’re importing from overseas and provide incentives for young people to be directed toward those fields. I feel that we should also build up community colleges—not only as a channel to the university system, but also for the vocational system. And when I refer to vocational, I am not talking about being a basic welder. Sophisticated, high-tech, specialty welding is now required in many industries. How did your background in the mortgage world help shape your campaign? I discussed sustainable homeownership. The recession we are presumably coming out of right now was very much the making of a broken financial system that encouraged homeownership churning, but not long-term, healthy and sustainable homeownership. When we were in the bubble and everyone was speculating on their neighbors’ houses and money was essentially free … that was not a healthy housing market.

How are your chances for getting elected in November? I have a very fair chance of getting elected. However, if elected, I will have 79 other people to work with. I am not a party ideologue–I am open to conversation with any point of view. I believe in opinions based on information, rather than advancing an agenda. At the risk of being flippant, would a seat in the State Assembly be a stepping stone to bigger opportunities?

Still, this must be quite an experience for you. So far, doors have been opening for me that were totally unexpected.

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


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Very few mortgage professionals have sought out elected office. Why do you feel that your peers have not thrown their hats into the political ring? The piece of the mortgage business I am from is in the mortgage broker space. That is traditionally a very, very labor intensive–usually a small business. Most mortgage brokers don’t have ability to put business aside to go on vacation or to be philanthropist or engage in the political system.

Maybe in Congress or even the White House? The White House? No! I wouldn’t live long enough for that!

Editor’s note: According to the Web site, Around the Capitol, the primary results for the 62nd California Assembly District found Autumn Burke scoring 41.2 percent of the vote to Ted Grose’s 20 percent. Third place finisher Gloria Gray snagged 16.6 percent of the vote. However, Grose’s second place finish was a triumph of targeted campaigning over extravagant financing. Burke spent $184,463 on her campaign, while Grose spent only $12,801. In stark comparison to Grose, fourth place finisher Simona Farrice invested $167,063 into her losing campaign.

Are you still running your firm, 1st Mortgage Advisors? I have put my business on hold, pending the results in November. If elected, I don’t plan to shut it down–there are a couple of brokers in the community who have expressed interest in opening up a dialogue.

“Jobs drive the housing market. In order to create jobs, we need to make sure that young people have an education that gives them the skill-sets that match the job market.”

Secure Settlements Launches QuickCheck Upgrades

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Secure Settlements Inc. (SSI) has announced the launch of an enhanced version of its popular QuickCheck closing agent vetting tool designed for warehouse banks and wholesale lenders. Version 2.1 is a fully automated tool accessible by lenders through the SSI Web site, The redesigned and upgraded site allows lenders who only find out about the closing agent late in the process to order a closing agent vetting report at the push of a button. Results are then delivered in one business day or less, and include risk analyst review and verification of public data for reliability and accuracy. PDF reports are made available for audit and tracking purposes as well. “Our latest version of QuickCheck was created in response to a request from some of our largest wholesale lending clients who desired an even more efficient tool to manage closing agent risk with their large volume of monthly TPO closings,” said SSI President Andrew Liput. “This new version meets and even exceeds the expectations of our clients in its ease of use, quick turn-around time, and accurate and reliable reporting. We continue to research and develop new and better ways to assist lenders in meeting all of their third party risk evaluation, monitoring and reporting needs. Look for more exciting product announcements in the very near future.”

Carrington Mortgage Services Launches Broker Marketing Portal The Wholesale Lending Division of Carrington Mortgage Services LLC has announced the launch of, a broker marketing portal available exclusively to Carrington Approved Brokers as a value-added service. Carrington Approved Brokers can now market themselves to new and existing customers with professional, targeted materials covering the loan products most needed in their respective mar-

kets—regardless of whether or not Carrington currently offers those loan products. From Carrington’s online portal, brokers can access, customize, order and purchase marketing materials covering a wide variety of loan types, including FHA purchase and refinance, VA purchase and refinance, USDA, jumbo, conventional, low down payment, coop, and programs focused on the needs of first-time homebuyers. Having access to tools like this allows brokers to focus on other aspects of their business— most importantly, closing loans. “Carrington’s broker network plays a significant role in our overall business strategy, and so we take the partnership we have with our brokers very seriously,” said Ray Brousseau, executive vice president of Carrington Mortgage Services’ Mortgage Lending Division. “By providing our brokers with access to effective tools to support their customers and grow their respective businesses, Carrington is able to further extend its reach to meet the unique needs of prospective borrowers—particularly those in the underserved market.”

LoanLogics Unveils Index-Based Automated Valuation Model LoanLogics is offering clients an affordable index-based automated valuation model through Home Junction, a provider of real estate and mortgage data, as part of its LoanHD AppQ Network. The result is the availability of Home Junction AVM data through the LoanHD life-of-loan performance management platform, a single source solution designed to gauge and monitor risk in mortgage portfolios. “Our clients now have access to accurate valuations that are affordable enough for them to perform an AVM on every mortgage loan they are originating,” said Don Smith, LoanHD senior product manager for LoanLogics. “We wanted to provide clients with a lowcost option to value properties, while still providing a sophisticated, accurate

valuation, and we have done that.” Lenders have the option to rely solely on the valuation from Home Junction, or they can order an additional valuation from multiple other vendors through the LoanHD AppQ Network. “LoanLogics sees this offering as a way to ensure that clients can value the homes in a mortgage transaction with precision. That has always been important, but is of particular importance in the new regulatory environment,” said Smith. “Costs are increasing for many lenders, so it is great to find a way to minimize expenses and still provide a superior service to the mortgage industry.”

further understanding of TILA-RESPA requirements and the analysis of how they are impacting businesses. The Resource Center also provides access to solutions and compliance services available to help lenders meet the wide array of challenges presented by the TILA-RESPA requirements. “A key to understanding the real scope and complexity of these new rules is to have access to information,” said Kris Stewart, senior manager of professional services at Wolters Kluwer. “Lenders need a trusted source to turn to and the tools available in our Resource Center will help them understand nuances of the requirements and determine the impacts to their business.”

Wolters Kluwer Launches New TILA-RESPA Requirements Resource

MCT Trading Unveils MCTlive

Wolters Kluwer Financial Services has launched a new online resource center designed to better inform lenders and help them prepare for the broad impact of the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) requirements, which go into effect on Aug. 1, 2015. “The introduction of this new resource center answers a call by our customers to provide them with more information and clarity around these regulations,” said Art Tyszka, general manager of residential lending at Wolters Kluwer. “Our compliance experts have invested thousands of hours in deep analysis of the rules, which puts us in a unique position to contribute meaningful guidance and help alleviate some of the burden faced in preparing for these changes.” The TILA-RESPA Resource Center will help lenders become more informed about the regulation and stay up-to-date with changes as they occur. Educational videos and links to relevant conversations taking place in the industry provide useful tools for

MCT Trading Inc. (MCT) has announced the formal launch of MCTlive, a secondary marketing technology platform designed for capital markets trading and pipeline management. MCTlive provides lenders with a browser-based software solution, robust online tools and real-time analytics for secondary marketing departments. “We took a lot of time to carefully engineer and perfect MCTlive over the last two years,” said Curtis Richins, president of MCT. “The team at MCT has extensive experience in capital markets, which in conjunction with input from clients, has honed MCTlive into a superior secondary marketing platform. Unlike most commercially available secondary marketing software offerings, MCTlive was truly built by the secondary marketing people in the trenches for secondary marketing people.” A big part of MCT’s overall value proposition is its hands-on, highly service-oriented secondary marketing support and guidance that makes lenders more profitable while carefully managing risk. MCT provides a dedicated team of actual traders for all hedging and

continued on page 18

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EWSFLASH l JUNE 2014 l NMP NEWSFLASH l JUNE 2014 l NMP NEWSFLASH l Habitat for Humanity Partners With eLEND

standing of how to improve the functioning of the team and its members.

CFPB Reports on Harmful Impact of Medical Debt has announced a partner- on Credit Scores

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


ship with Habitat for Humanity. “We are pleased and proud to partner with the Morris Habitat for Humanity,” said Corey Dubnoff, president of eLEND. “We are eager to support the terrific efforts of this non-profit. The partnership between eLEND and Morris Habitat promises to be a big success. Both organizations share similar philosophies about the importance of helping families and individuals achieve homeownership—especially in the communities in which we live and work.” eLEND initiated the partnership with Morris Habitat and sponsored the Hammer for Habitat event that took place June 7. “Put on your work clothes and come join your neighbors for just a few hours to build walls. Enjoy music, food, crafts, face painting and fun for all ages” said Shaun Hamman, senior vice president of the residential mortgage division. Additionally, eLEND has scheduled a series of on-site group builds for Morris Habitat; the first is scheduled for Sept. 11, 2014. The effort serves on many levels designed to improve teaming and leadership skills while increasing community involvement. The exercise will deliver a four-part structured team-building program that helps project teams and their leaders become better communicators and more productive. One aspect of this unique program involves taking the team through hands-on activities at a Habitat construction site. Imagine what a team can discover while building a wall, installing a fence or hanging doors. Consider the problem solving, communications, leadership and planning that goes into building a house for someone in need. Teams will be briefed on safety, construction quality and task details before putting new skills into action. Participants will end the work day with a feeling of accomplishment and pride and a clear under-

The Consumer Financial Protection Bureau (CFPB) has released a research report that found consumers’ credit scores may be overly penalized for medical debt that goes into collections and shows up on their credit report. According to the study, credit scoring models may underestimate the creditworthiness of consumers who owe medical debt in collections. The scoring models also may not be crediting consumers who repay medical debt that has gone to collections. “Getting sick or injured can put all sorts of burdens on a family, including unexpected medical costs. Those costs should not be compounded by overly penalizing a consumer’s credit score,” said CFPB Director Richard Cordray. “Given the role that credit scores play in consumers’ lives, it’s important that they predict the creditworthiness of a consumer as precisely as possible.” According to a study by the Federal Reserve Board, over half of all collections on credit reports are associated with medical bills. The vast majority of medical debt reflected on credit records is reported by third-party collection agencies. In some instances, the consumer may not even be aware of a debt that has been sent to collections or that it is on their credit record. A collection account generally can stay on a report for up to seven years. Many current credit scoring models do not differentiate between medical and non-medical debt in collections. This is true even though medical debt is different than other unpaid bills reported by collection agencies, such as unpaid phone or utility bills. Medical debt can result from an event that is unpredictable and costly. Sometimes

the debt is caused by billing issues with medical providers or insurers. Complaints to the CFPB indicate that many consumers do not even know they have a medical debt in collections until they get a call from the collections agency or they discover the debt on their credit report. The study considered five million anonymous credit records from September 2011 to September 2013 to assess how well a common credit score predicted a consumer’s future likelihood of paying back debt. To do that, the study looked at the credit histories and scores of consumers in September 2011 and then examined their actual loan payment patterns over the next two years. The study found that credit scoring models have not been considering medical debt as well as they could be. It found that if the credit scoring models accounted differently for medical debt in collection and medical debt that is repaid by the borrower, the models could be more precise.

Indie Bankers’ Profit-PerLoan Down Nearly $1,000 Year-Over-Year in 2013 Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,242 on each loan they originated in 2013, down from $2,199 per loan in 2012, the Mortgage Bankers Association (MBA) reported in its Annual Mortgage Bankers Performance Report. “Full-year 2013 net production profits were respectable,” said Marina Walsh, MBA’s vice president of industry analysis. “In fact, they were the second highest recorded since inception of the Performance Report in 2008. However, net production profits in the second half of 2013 were substantially lower than those in the first half of 2013. While secondary marketing gains remained relatively strong throughout

the year, per-loan production expenses escalated in the second half of 2013.” Among the other key findings of MBA’s Annual Mortgage Bankers Performance Report are: l In basis points, the average production profit (net production income) was 61 basis points in 2013, compared to 108 basis points in 2012. In the first half of 2013, net production income averaged 80 basis points, then dropped to 27 basis points in the second half of 2013. l Total loan production expenses– commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations–increased to $5,948 per loan in 2013, up from $5,137 in 2012. In the first half of 2013, total production expenses averaged $5,743 per loan, then rose to $6,539 per loan in the second half of 2013. l Personnel expenses averaged $3,910 per loan in 2013, up from $3,285 per loan in 2012. l The “net cost to originate” was $4,298 per loan in 2013, up from $3,323 in 2012. The “net cost to originate” includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. l Productivity was 2.6 loans originated per production employee per month in 2013, down from 3.7 in 2012. l Secondary marketing income declined slightly to 254 basis points in 2013, from 260 basis points in 2012. l Average production volume was $1.75 billion (7,857 loans) per company in 2013, compared to $1.72 billion (7,699 loans) per company in 2012. On a repeater company basis, average production volume was flat at $1.81 billion (8,083 loans in 2013 and 8,098 loans in 2012). l The purchase share of total originations, by dollar volume, increased to 57 percent in 2013, up from 44 percent in 2012. For the mortgage industry as a whole, MBA estimates

the purchase share at 37 percent in 2013, up from 29 percent in 2012. l For those companies in mortgage servicing, net servicing income per loan increased to $257 per loan in 2013, from $27 per loan in 2012. In basis points, the average servicing profit was 14 basis points in 2013, compared to 3 basis points 2012. l Including all business lines, 91 percent of the firms in the study posted pre-tax net financial profits in 2013, down from 97 percent in 2012. In the first half of 2013, 95 percent of reporting firms posted pre-tax financial profits, compared to 69 percent in the second half of 2013.

Commercial/Multifamily Delinquency Rates Slide in Q1

include loans backed by owner-occupied commercial properties.

NAR: Employment Hampering New Home Construction New home construction activity is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation, according to new analysis by the National Association of Realtors. The labor market, which is a key to overall economic health, has recovered all of the eight million jobs lost

since the recession. NAR measured whether new home construction has kept up with job creation to determine the impact of construction on housing supply. The findings reveal that new home construction is underperforming in 32 states and the District of Columbia. Lawrence Yun, NAR chief economist, says there’s a strong relationship between new jobs and an increase in demand for housing. “Historically, there’s one new home construction for every one-and-a-half new jobs,” he said. “Our analysis found that a majority of states are constructing too few homes in relacontinued on page 16


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n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Delinquency rates for commercial and multifamily mortgage loans continued to decline in the first quarter of 2014, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. During the first quarter of 2014, the 30-plus day delinquency rate for loans held in commercial mortgagebacked securities (CMBS) decreased 0.69 percentage points to 6.16 percent. The 60-plus day delinquency rate for multifamily loans held or insured by Fannie Mae was unchanged at 0.10 percent. The 60-plus day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.05 percentage points to 0.04 percent. The 60-plus day delinquency rate for commercial and multifamily mortgages held in life company portfolios were unchanged at 0.05 percent. The 90-plus day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.13 percentage points to 1.57 percent. “The last two quarters marked the largest percentage point declines in CMBS delinquency rates ever,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research. “We also see continued improvement in the performance of commercial mortgages held by banks and very low delinquencies in loans held by life insurance companies and the GSEs. With property incomes and values rising, loan performance should continue to benefit.” The first quarter 2014 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.48 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.77 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The delinquency rate for multifamily loans held by Fannie Mae was 3.52 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The rate for commercial and multifamily mortgages held by banks and thrifts was 5.01 per-

centage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The rate for loans held in CMBS was 2.86 percentage points below the series high (9.02 percent, reached in the second quarter of 2011). Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do

Combining Valuation Technology With Data Analytics Takes Appraisals to New Heights By Vladimir Bien-Aimé

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Most lenders understand that having a sound collateral risk program is essential component of sound credit administration and is mandated by the Dodd-Frank Act. However, there are many aspects that may be overlooked in the actual implementation. For example, reviewing appraisals and evaluations thoroughly before engaging in a loan transaction is critical exercise. This process ensures the value conclusion is reliable and enables informed credit decisions, minimal credit risk, and compliance to supervisory requirements. A comprehensive review process would allow lenders to assess the reasonableness of their appraisals or evaluations, including whether the valuation methods, assumptions, and data sources are appropriate and well-supported. This requirement may be difficult for lenders or appraisal management companies (AMCs) to meet if there using expensive manual processes that are resources intensive. Using automated workflow technology, an appraisal can easily be ordered, tracked, reviewed and compliantly delivered to the Uniform Collateral Data Portal (UCDP) via lender’s in-house appraisal department or an AMC. But in addition, the advancement of sophisticated data analytics can also be incorporated with appraisal technology to deliver even more information and value. Specifically, the utilization of rich data analytics tools can be applied to the collateral review process. These tools rapidly analyze appraisals for compliance, completeness and consistency based on industry guidelines. Further, subject property details are verified for accuracy to help warn against fraud. Data analytics also renders highly accurate valuations via the use of property area metrics, trending and other factors that are not typically looked at when loans are underwritten. This type of market intelligence takes into account things like data from multiple listing services (MLSs), house price indices (HPIs), housing inventory levels, sales figures, foreclosures and more. These systems conduct a detailed analysis of the comparable sales and listing data provided in the appraisal report. This information is then compared to independent public records and local market data to determine whether the report used the most proximate, similar, and recent available comparable sales and listings. Using data analytics, reviewers and underwriters are now able to quickly identify potential issues regarding estimates of value and the supporting data provided by appraisers to determine that estimate. Many lenders using these types of tools have seen a significant reduction in review time and errors by as much as 60 percent. When a lending entity has a need to extrapolate hard-to-find information within the appraisal report, they should look at leveraging a valuation management software solution that is seamlessly integrated with data analytics technology. These review findings can provide insight to monitor and evaluate the competency and ongoing performance of appraisers and persons who perform evaluations. This is a powerful combination of robust technologies that maximizes reporting, minimizes risk, ensures accuracy, and provides the highest quality appraisal possible. There are many factors that must be taken into account in order to determine highly effective property valuations and reporting in today’s mortgage market. Depending on needs, the combination of valuation management technology with data analytics tools delivers intelligence that takes appraisals and collateral review to new heights. Vladimir Bien-Aimé is president and chief executive officer of Global DMS. Since cofounding Global DMS in 1999, Bien-Aimé has grown the company into a leading provider of Web-based valuation management software solutions catering to lenders, AMCs, appraisers and other real estate entities. He may be reached by phone at (877) 866-2747, e-mail or visit


nmp news flash continued from page 15

tion to local job market conditions. This lack of construction has hamstrung supply and slowed home sales.” NAR analyzed jobs created in every state and the District of Columbia over a three-year period ending in the first quarter of 2014 relative to new single-family housing starts over the same period. Indicating lagging new home construction, 33 states (including the District of Columbia) have a ratio greater than 1.5–the long-term average. The full graph and analysis can be seen here. The disparity was the greatest in Florida, Utah, California, Montana and Indiana, where job creation has been particularly strong. Yun cautions that these states could face persistent housing shortages and affordability issues unless housing starts increase to match local job gains. Additionally, Realtors’ home price growth expectations in the first quarter of 20141 was generally strongest in states facing housing shortage conditions. Lack of inventory has pushed prices up and put pressure on affordability – especially for first-time home buyers. “Realtors have an intuitive sense of how fast prices are likely to rise from on-the-field observations,” said Yun. “Their price outlook largely shows gains to be the strongest in states with slow home construction in relation to job growth.” On the contrary, home price growth looks to be manageable in states with strong job gains and near commensurate increases in new home construction. Housing starts are seen as more than adequate to local job growth in Mississippi, Arkansas, Connecticut, Alabama and Vermont. Inventory of homes sale and new construction drives supply. Although the number of existing-homes for sale increased in April, it remains historically-low, averaging six months or less for 20 consecutive months. Looking ahead, Yun says homebuilders will have to produce amidst the current challenges facing the building market. Limited access to credit for smaller builders, rising construction costs, concerns about the re-emergence of entry-level consumers to the market in the face of student debt and a tight credit box, and the general decline in affordability and purchase power over the last year is causing hesitation among builders. “It’s critical to increase housing starts in these states facing shortage conditions or else prospective buyers may struggle with options and affordability if income growth cannot compensate for rising home prices,” said Yun.

CFPB Report Highlights Illegal Actions in Payday, Debt Collection and Consumer Reporting Markets

The Consumer Financial Protection Bureau (CFPB) issued a Supervisory Highlights Report demonstrating illegal actions uncovered by the Bureau’s supervision of the payday, debt collection and consumer reporting markets. These markets are being federally supervised for the first time. The report also notes that recent non-public CFPB supervisory activities overall have resulted in more than $70 million in remediation to approximately 775,000 consumers. “For the first time at the federal level, non-bank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers,” said CFPB Director Richard Cordray. “The CFPB’s oversight of banks and non-banks alike is exposing risky practices and getting results for consumers. We are pleased that our supervision program has been able to return more than $70 million to consumers in recent months.” Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB has authority to supervise certain non-banks, including mortgage companies, private student lenders, and payday lenders, as well as non-banks the Bureau defines through rulemaking as “larger participants.” To date, the Bureau has issued rules to supervise the larger participants in the debt collection, consumer reporting, and student loan servicing markets. The CFPB often finds problems during supervisory examinations that are resolved without an enforcement action. Recent non-public supervisory actions and self-reported violations at banks and non-banks resulted in more than $70 million in remediation to approximately 775,000 consumers. These non-public actions have occurred in areas such as deposits, consumer reporting, credit cards, mortgage origination, and mortgage servicing. This report generally covers supervisory activities between November 2013 and February 2014. In the three nonbank markets highlighted in the report, examiners found that many companies had systemic flaws in their compliance management systems, such as consistently failing to have a system in place to track and resolve consumer complaints. The CFPB expects companies to respond to customer complaints and identify major issues and trends that may pose broader risks to their cuscontinued on page 25


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The Ultimate Guide to Handling Sales Objections By K. Justin Restaino Poor handling of leads can account for as much as 60 percent of fallout. “Objection handling” is searched more than 6,600 times per month on Google, showing this as a main area of concern for sales professionals. Developing strategies to handle objections can increase your earnings while improving your skills. We identified four core reasons that a prospect is likely to object and strategies for overcoming them. Complacency is an objection often encountered. For example, you can overcome the “I’ll think about it” objection by creating a sense of urgency. Mentioning that rates are subject to change or that you cannot guarantee the same offer later on will help. You can dig deeper by asking, “What can I provide that will help you make your decision?” You will also want to follow up with your prospect early on by asking, “What day this week would be good for me to check back with you?” Another frequent objection is financially-related. This occurs often where people are subject to fluctuating rates. Brokers commonly encounter the phrase, “I got a better deal elsewhere” or “The interest rate is too high.” Let’s take a look at how to respond to each objection. “I got a better deal elsewhere.” This isn’t a deal-breaker. Recognize that the prospect is still shopping for the best deal. Get more information by asking questions like, “Do you have a rate lock elsewhere?” or “Is there a Good Faith Estimate (GFE) you can show me?”

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


“The interest rate is too high.” In this case, your prospect doesn’t see how the value to merit accepting the interest rate. Ask questions that will illustrate how it can be beneficial. You might start by asking, “What was the reason that motivated you to consider refinancing your home?” or “How do you think that refinancing will help you to achieve your goals?” Suggesting how the transaction adds benefit to the prospect you can minimize concerns. You may also find that your prospect lacks the authority to make decision without approval from a partner. “Let me talk to my wife” or “My partner is still undecided” are quite common. Address these objections by asking, “Would you like me to speak with them and explain this in greater detail?” or “When would be a good time to follow up after the two of you have had a chance to speak?” Sometimes prospects won’t see the value of your offer. If you hear, “Getting a loan is too much for me to deal with right now” or“ There isn’t enough benefit for me in what you’re suggesting,” then you’ve failed to sell your client on how your service is useful. Instead, frame your response by highlighting the benefits of the loan in question, while emphasizing the ease of the lending process. Consider the following responses: “Getting the loan is a fairly simple process—you only need to provide me with documents that verify your income and assets, and I’ll take care of everything else.” Closing deals can be simpler than you think. However, it requires brokers to carefully listen to their prospects’ objections, address them early on in the process, and respond with well-thought-out strategies designed to counter a clients’ resistance. 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


new to market continued from page 12

loan sale activities. The addition of MCTlive takes MCT’s offering a step further by empowering lenders with realtime online tools, automation, analytics and reporting that gives them enhanced visibility and control over their secondary marketing functions. “We have over 100 clients and growing that count on us daily to provide ongoing education and advice in order to implement effective hedging strategies,” said Phil Rasori, MCT’s COO and chief architect of MCTlive. “With MCTlive, we further differentiate ourselves by combining a highly interactive approach to advisory services with realtime online tools, delivering the best possible secondary results for lenders.”

Fannie Mae Expands HomePath Communication Tool Functionality

Fannie Mae has announced the expansion of the HomePath for Short Sales Web site, a communication tool created to help real estate professionals efficiently complete short sales and resolve challenges directly with Fannie Mae. The new functionality will allow agents to contact Fannie Mae sooner in the short sale process and preempt potential challenges, decreasing the need to escalate concerns further down the road. The website is open to any real estate professional working on a short sale involving a Fannie Mae-owned loan. “This is an important step in continuing to build a strong relationship with the real estate community, which will ultimately contribute to the stabilization of neighborhoods,” said Tim McCallum, vice president of short sales for Fannie Mae. “Allowing real estate professionals to negotiate an offer directly with Fannie Mae is the next step in streamlining the short sale process. Our goal is to provide transparency throughout these transactions and arrive at an agreement that benefits all parties involved.”

Equifax Launches New Targeted Marketing Product for Lenders

Equifax Inc. has announced the availability of Prescreen Direct with Property, which helps to improve the accuracy of targeted marketing campaigns for lenders, enabling them to better match and offer mortgage and home equity products to consumers who are most likely to make a purchase. According to Equifax, more than 63 percent of consumer finance loans today are high risk, so accurately targeting prospective borrowers and making

appropriate offers is more critical than ever. Additionally, rising interest rates have caused mortgage refinance rates to drop, and as a result, lenders are looking for more effective ways to generate new revenues in order to help overcome lost margins from the shrinking refinance market. By leveraging comprehensive property and consumer credit data, Prescreen Direct provides lenders with valuable insight that enables them to seek out and secure new business. “By targeting the right people at the right time with the right offer, lenders can improve response and conversion rates and consistently fill their pipelines with healthy loans,” said Rosie Biundo, senior director of product marketing for Mortgage Services at Equifax. “As a fully configurable solution, Prescreen Direct provides lenders with the flexibility to tweak marketing campaigns so that they can offer consumer-specific products and capitalize on their home equity business.”

WFG’s New Compliance System Goes Live

WFG National Title Insurance Company agents are now using the company’s Compliance Management System, an electronic platform allowing those agents to educate themselves about key compliance requirements as well as assisting them in the design of new compliance policies and procedures. According to WFG National Title’s Executive Vice President Joseph Drum Esq., the company has made the rollout of the system a priority over the past several months. The project has been spearheaded by, WFG’s Chief Compliance officer Donald O’Neill, Rick Diamond, SVP of IT and agency operations and Kelley Shellhaas, assistant Midwest underwriting counsel for WFG. The CMS is an online platform WFG agents can use to educate themselves about compliance requirements and to develop the comprehensive compliance management programs lenders and their regulators are requiring. “We are serious about supporting our agents, in ways large and small, to help them succeed,” said Drum. “WFG exists for that purpose and the CMS reflects our commitment to both priorities—strengthening compliance and supporting our agents.”

Capital One Bank Unveils Multifamily Finance Division Capital One Bank has introduced Capital One Multifamily Finance, a commercial real continued on page 46

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NAMB PERSPECTIVE The President’s Corner: June 2014 have thought a lot about what to write this month and because of my own personal production, I have chosen to write about VA loans. With all of the news about the VA Medical Centers and the problems that they are having with their hospitals and the veterans who need medical care, we as mortgage professionals need to help these men and women to the best of our ability. Not being a veteran myself, I make it a point to make sure that I treat these people above and beyond to help them with the complex situation of buying homes and refinancing. After all, we would not be the country we are without the sacrifice of these fantastic men and women on a yearly, monthly, daily and hourly basis. It has even been proven that VA loans have a lower delinquency rate and are an overall better loan for the


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investors. And if your veteran has a disability, they can get by with no upfront funding fee. We need to go out of our way to help these people achieve their goals and reach for the stars to accomplish and reach their ideal situation. For those of you who do not know, you can finance 100 percent of the purchase price, and in most cases, get 100 percent cash-out refinances to do things around the home and even refinance for home improvements. You can do several types of terms on your loan, as it is a government loan, and the rates are lower than conventional loans and are about the same as FHA loans. Most lenders do not charge any additional fees for these loans, and that is why they are really attractive for veterans. There are classes that you can take that will make you a better originator for these VA Loans. I personally hold my Certified Military Housing

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Specialist (CMHS) designation that shows to the military client that I have passed the class that helps you understand the VA loan and the military applicant. You can do the same by contacting Beverly Frase with Boots Over America and they have the Military Housing Program available. So make it something special and go out and inform yourself on this loan program. Just like we do for all of the other programs that we offer, each of us needs to be educated on these loans to be able to understand what needs to be done in order to help these customers with their loan. As we are turning the corner for the month of June, now is the time to start making your plans to attend the NAMB 40th Anniversary Conference in Las Vegas, set for Sept. 13-15 at the Luxor Hotel. Go to to see everything that is going on and to register and make your hotel reservations now. There are great speakers, programs and parties planned, and you will not want to miss this event, so make you plans now. Get your friends and colleagues together and come

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How to Apply for your National Lending Integrity Seal 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 e-mail and click log-in and the system will send you a password. If you have any issues, please call (972) 758-1151 or email

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learn, get your continuing education and join in the fun of the greatest party NAMB has ever put on. Join me and the NAMB Board of Directors for the time of your life, getting updates from NAMB on Government Affairs, Membership, and all of the NAMB Committees. Also attend the NAMB Delegate Council Meeting and the Board Meeting. Come to learn, encounter the knowledge of what we do at NAMB and become involved in your national trade association and be a participant. I look forward to seeing you there and be ready to see what NAMB has in store for our anniversary. Please stay involved with each of your state affiliates, and I thank all of you who are members of NAMB. We still need more members, so if you know someone who is not a member of NAMB, get them to OPT IN today!

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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


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Education is the APMW Foundation:

Build on It!

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


BY KATHERINE L. VENTERS, GML hile the National A s s o c i a t i o n o f Professional Mortgage Women celebrated its Golden Anniversary, The APMW Foundation, an independently chartered 501 (c)(3) corporation, has served not only the members of NAPMW, but also non-members from the mortgage finance field for more than 20 years.


We began with The Institute of Mortgage Lending First there were three long year years of work by a group of dedicated women, who richly deserve to be acknowledged. With a budget that allowed for minimal face-to-face meetings and an era when fax machines were at the height of telecommunications, Creta Bloxom of Alaska, Judy Everett of California, Pat Gamble in Washington, Stella Martinez in Utah, Lisa Schuldt in Wisconsin and Arlene Spinks in Louisiana worked with Maureen McKovich in Florida. This project culminated in granting our first

Graduate of Mortgage Lending (GML) designations at the 1991 Convention in Dallas. In 23 years, the Institute has granted hundreds of designations to professionals who work in all phases of mortgage lending.

Realizing the goal of affordable education Many education programs had long been available to management and executive personnel. Establishing The Institute moved us toward the goal of creating a well-educated workforce at all levels of our industry. However, the Institute of Mortgage Lending (IML) program also required a financial commitment that was prohibitive for professionals at many levels in the industry. Bob Dart, then president of VMP Mortgage Forms, had provided material support for the IML project and he encouraged the idea of creating a new entity to provide scholarships for mortgage finance students, including the IML students. VMP provided a $5,000

grant, and in March of 1992, the APMW Foundation was officially recognized as a tax-exempt corporation. The goals of The APMW Foundation have remained clear. And to fulfill these goals, the Foundation provides financial aid for education programs in all facets of mortgage finance. Since its inception, The APMW Foundation has granted more than 80 scholarships totaling more than $75,000. The Foundation is a corporation, with its principal office in the state of Washington. The Foundation is not a part of NAPMW, and it is important to point out that donations to the APMW Foundation reach far beyond the borders of NAPMW. We also fund non-members who pursue programs offered by industry-related organizations, as well as those who attend traditional colleges and universities. One of our earliest grants funded a then innovative computerized dictation program for a young non-member, a quadriplegic studying to become a property appraiser.

Donations to the APMW Foundation are tax deductible and we rely upon your support to continue our mission. We appreciate the generous donations local NAPMW associations have provided from the beginning, as well as donations from individual members and non-members who share our mission. Through the Web site,, donors are invited to donate via PayPal or to support the Foundation’s work through their partnership with The Amazon program provides a donation for each book sold from the APMW Foundation Web site. The APMW Foundation has proudly supported the goals of NAPMW, and continue its support of the association’s Golden Anniversary Educational Conference as Sapphire Sponsors. Katherine L. Venters, GML is director of The APMW Foundation. She may be reached by phone at (713) 899-9989 or email


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

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.

REMN Wholesale Opens Southern California Operations Center

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REMN Wholesale is continuing its nationwide expansion with the addition of a new West Coast operations center in Southern California. The new operations center will further enhance REMN Wholesale’s ability to work on a national level with brokers and bankers in dire need of a reliable wholesale mortgage partner they can trust, regardless of their time zone. A team of industry veterans are joining REMN Wholesale in Newport Beach to further support the company’s growth in the western parts of the country. Christopher D’Auria has joined REMN Wholesale in the role of division sales manager and will lead a team of seasoned and strategic experts that includes regional sales managers Christine Lacy, Kati Waller and Ann Stockberger. They have been joined by a team of nearly 20 underwriters and account executives, each one dedicated to REMN Wholesale’s customer service driven approach to lending, which includes an industry leading commitment to same day turn times on new files and a progressive renovation lending department. “REMN Wholesale’s operation center in Newport Beach is concrete proof of our commitment to being the best nationwide resource for the broker channel. We’ve been providing same day turn times since 2002 and this new facility in California is only going to improve the level of service that the REMN name has been synonymous with for the last 25 years,” said Carl Markman, director of national sales for REMN Wholesale.

Equity Loans Changes Name to Equity Prime Mortgage

Equity Loans has announced that it has changed its name to Equity Prime Mortgage. The new name reflects Equity

Prime Mortgage’s recent expansion into the wholesale and correspondent lending markets, as well as the company’s plans for future growth. Equity Prime Mortgage is licensed in 41 states and will continue to operate as Equity Home Capital in New York. “While the name Equity Loans has served us well, the transformation to Equity Prime Mortgage was sparked by our company’s expansion into new markets and our plans for the future, as we want our name to reflect that change and new divisions of the company,” said Kunjan “KP” Patel, CEO of Equity Prime Mortgage. “After evaluating this decision with several of our customers and employees, we know this is a step in the right direction. We look forward to this new chapter and while our name has changed, we assure our customers that Equity Prime Mortgage will continue to serve them as the same lender they have come to know and trust.” The name Equity Loans was established when the company was founded in 2008, and over the years, the lender has grown from just a few branches to one of the top residential lending institutions in the country. The company entered the wholesale market in June 2013 and the correspondent lending market in December 2013. In addition to establishing a dedicated wholesale team for this new channel, Equity Prime Mortgage established two new executive positions, naming Brian Gillespie and Felix Ortiz as vice presidents of the Third Party Originator (TPO) Production Channel.

Ellie Mae to Offer Mortgage Insurance Through National MI Partnership

National Mortgage Insurance Corporation has announced an integration with

Ellie Mae’s Encompass mortgage management solution, offering mortgage lenders who use Encompass as their loan origination system (LOS) to be able to order National MI’s mortgage insurance directly within the application in a simple and time-saving process. “National MI offers its customers the ability to efficiently order private mortgage insurance through Ellie Mae’s Encompass solution,” said Pete Pannes, chief sales officer of National MI. “The integration streamlines the process for our customers who use Encompass as their loan origination system by allowing them to order National MI mortgage insurance without having to leave the application. Additionally, the document upload and two-way document exchange feature give our customers a more efficient way to trade information in support of our delegated review process. Ellie Mae is a leading LOS provider in the country, and we believe this integration will be a benefit to our many mutual customers.” “Ordering mortgage insurance is a vital part of the mortgage process, as is providing seamless access throughout that process, which is why we are pleased to offer our clients the ability to order National MI’s products efficiently and securely in Encompass,” said Joe Tyrrell, Ellie Mae senior vice president of client management and business development.

Guaranteed Rate Purchases Assets of San Francisco-Based Guarantee Mortgage Guaranteed Rate has announced that it has reached an agreement to purchase the assets of the San Francisco SOMA branch of Guarantee Mortgage, an independent mortgage company based in Northern California. The branch has more than 25

employees and was responsible for more than $435 million in loan production in 2013. The office is led by managing partners Dean Rizzi, C.J. Kerls and Stephen Barber. Rizzi, Kerls and Barber are among the top loan originators in the nation, and their team has averaged between $400 and $500 million in loan production over each of the past five years. “We’re very excited to be bringing Dean, C.J. and Stephen’s team aboard,” said Victor Ciardelli, president and CEO of Guaranteed Rate. “They are a perfect fit for our strategic growth strategy, as their team is among the top producers in California and they believe strongly in our value proposition of making the mortgage process simpler and more transparent for customers. Their addition will further solidify Guaranteed Rate’s already strong presence in San Francisco.”

360 Mortgage Commits to Seven-Year Deal With Black Knight for Servicing Platform Black Knight Financial Services has announced that 360 Mortgage Group LLC has signed a seven-year contract to implement MSP, Black Knight’s industry-leading mortgage and consumer loan servicing platform, to support its expanding business. MSP is a single, comprehensive system used by financial institutions to manage all servicing processes, including loan boarding, payment processing, escrow administration and more. The system gives servicers the ability to meet all mortgage and consumer loan servicing needs for any size portfolio. Initially, 360 Mortgage is bringing its mortgage loans in-house from its subservicing provider to be serviced on MSP and expects the number of loans to

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tomers. Examiners also identified additional problem areas within each specific market.

Responsibility of Mortgage Too Risky for 20 Percent of Poll Respondents

CoreLogic released its April National Foreclosure Report, which provides data on completed U.S. foreclosures and foreclosure inventory. According to CoreLogic, for the month of April 2014, there were 46,000 completed foreclosures nationally, down

FHFA: Refi Volume Slips in Q1 The total volume of mortgage refinances continued to decline through the first three months of 2014, according to the Federal Housing continued on page 42


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Foreclosures Decline Nearly 20 Percent Year-Over-Year in April

lowest level since the Great Recession began in 2007,” said Sam Khater, deputy chief economist for CoreLogic. “At the current pace of completed foreclosures, and given the current foreclosure inventory, it will take 14 months to move all of the foreclosed inventory through the pipeline.”

In recognition of June as Homeownership Month, the National Foundation for Credit Counseling (NFCC) has released the results of a recent poll revealing that close to one in five respondents do not believe that taking on a mortgage is worth the risk. This attitude is consistent with the U.S. Census Bureau’s current report highlighting the declining rate of homeownership. The present rate of 64.8 percent representing the first quarter 2014 is the lowest homeownership rate in almost 19 years. “The housing crisis, recession and continued economic instability appear to have shaken the confidence of many Americans, particularly when it comes to big-ticket items such as a house” said Gail Cunningham, spokesperson for the NFCC. “However, the unwillingness to take on a mortgage loan may be a smart decision for some, as many borrowers have learned the hard way that homeownership does not come with a guarantee of continually increasing equity.” Although the benefits of owning a home are many, until a person is fully prepared to assume responsibilities such as a mortgage payment, home and lawn maintenance, improvements, and taxes and insurance, renting may be right for them. Homeownership is about much more than buying a home. Renting until they are in a position to buy can help a person avoid a costly mistake, including the negative ramifications of foreclosure. Cunningham noted that it is critical to remember that buying a home represents a large financial obligation extending over a long period of time and is usually a person’s largest investment. Consumers should consider homeownership only after careful deliberation and when the timing is right for their unique situation.

from 56,000 in April 2013, a yearover-year decrease of 18 percent. On a month-over-month basis, completed foreclosures were down slightly, by 0.4 percent, from the 47,000 reported in March 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September

2008, there have been approximately five million completed foreclosures across the country. As of April 2014, approximately 694,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.1 million in April 2013, a year-over-year decrease of 35 percent. The foreclosure inventory as of April represented 1.8 percent of all homes with a mortgage, compared to 2.7 percent in April 2013. The foreclosure inventory was down 4.7 percent from March 2014, representing the 30th month of year-over-year declines. “Over the last 12 months, completed foreclosures fell to 599,000, the



How Great Leaders Face Compliance By David Lykken s the mortgage industry becomes increasingly more burdened by regulation, there is a growing fear among lenders that they are going to inadvertently


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fall out of compliance. Rather than focusing on growing their businesses, they are weighed down with keeping their businesses in check. More and more, instead of asking, “What can I do?” We’re left asking, “What can’t I do?” Is this all that’s left for us? As lead-



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ers, is this all that we can offer? Has strategy boiled down to checking off a list of things that keep us from failing? Is there still a way to turn our focus toward things that not only keep us from failing, but also launch us toward success? Yes, I think there is...and it all boils down to principles. Now don’t get me wrong … I think keeping up with regulatory changes and staying within compliance is absolutely essential. It’s more important than ever to cross our “T’s” and dot our “I’s.” However, I don’t think that should be our driving force. As leaders, we must go beyond compliance. Indeed, staying within compliance should be less of a tactical measure and more of a natural outgrowth of our guiding principles. I have written before about the “Seven C’s” that separate the companies, which succeed from those which fail. In this article, I would like to discuss how these principles of leadership relate to compliance. As a leader in the mortgage industry, possessing the proper principles will take compliance issues from being an utter headache to an absolute no-brainer. When it comes to compliance, if there is one trait leaders need above all else, it is character. Great leaders have an internal set of ethical standards that guide them apart from the external rules that are forced upon them. Chances are, if you’re faced with a new set of regulations to work through, a strong sense of moral character will make it so that you don’t have to make all that many changes. The obvious benefit of strong character is that it keeps you out of trouble. But the more lasting benefit is that it sets a precedent for the industry. Do you know when regulation will stop increasing? At least in part, regulation

will stop increasing when people in the industry cease to engage in unethical behavior. As a leader with a strong sense of character, you can set an example for others to follow. And when they follow your lead, it will keep future unnecessary regulation from taking place. When it comes to dealing with compliance, character is certainly the foundation of all principles. Conviction is all about sticking to your guns, no matter what obstacles come your way. When faced with increased regulatory changes, maintaining a strong sense of conviction can help you make the transitions without feeling like you’re losing your footing. If you have you know who you are and where you stand as a leader and as an organization, regulatory changes will seem like minor inconveniences rather than major overhauls. Conviction keeps you focused on what matters and allows you take compliance issues with more grace. When you are convicted, you are grounded. You have a fixed set of principles that cannot be shaken by the relatively petty new rules you encounter. Being convicted about who you are and what you do is a rudimentary step in dealing with compliance. Confidence is all about how you respond to adversity. It’s about the demeanor you adopt in the face of challenges. When your organization must adapt to new regulations, maintaining confidence as a leader can help you push forward with your business goals without being discouraged by the extra work. Confidence comes from the Latin term “confidere,” which means “To have full trust or reliance.” In other words, being confident means approaching potential setbacks with the assurance that things will work out

David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail or


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

what was discussed. All of these things are far too common in our organizations. A core component of great leadership is taking the time to clearly and effectively communicate with your people. When it comes to dealing with compliance, clear communication is essential. When you are a communicative leader, your people will know and understand the rules, as well as your plans to adjust to them. If you are lacking in communication skills, you may want to sharpen them. No matter how great of a leader you are, you’ve got to be able to effectively discuss issues with your team. For all intents and purposes, if you didn’t communicate it, it didn’t happen. The final “C” in my list is compassion. Being a compassionate leader is all about having empathy for your people. When it comes to facing changes in regulation, it means expressing a deep, emotional understanding of their struggles. When you practice compassion, you let your people know that you share in their frustrations and that you’re doing your best to find a way for them to work around the changes. In dealing with compliance, possessing compassion is essential for boosting morale. With all of the changes that must be made, the workplace can become very frustrating very quickly. As a leader, it is your job to validate your team’s concerns and work with them to adjust to the new regulatory environment. Showing compassion with your team in dealing with compliance can mean the difference between an organization that pushes through to success and an organization that simply gives up. There you have it, folks: character, conviction, confidence, charisma, clarity, communication and compassion. I don’t think it a coincidence that “compliance” also begins with the letter “C.” But, we don’t need an eighth “C,” now do we? As long as you as a leader possess the seven characteristics discussed in this article, you will be a compliant leader. Your organization will be able to keep pace with the regulatory changes and, at the same time, focus its efforts on development and growth. Compliance is, by its very nature, an external thing. But great leadership comes from within. If you only focus on trying to follow the rules, you miss the point. But if you instill in your core being these guiding principles for success, being in compliance will come perfectly natural.

just fine. There is perhaps no are more in need of confidence than in compliance. If you are lacking confidence because you are engaging in questionable activities, that’s one thing. In that case, you may need to reassess your character. However, if you are founded in the right principles and are guided by a strong sense of ethics, there is no reason that you should panic and fall to pieces when faced with new regulation. Having confidence will permit you to lead your people through the changes instead of being overcome by them. Whereas confidence is about how you carry yourself in the face of adversity, charisma is all about how you carry your people in the face of adversity. When new regulations go into effect and everyone in the industry begins to panic, your people are going to be looking to you as their leader for direction. When you are charismatic, you give off a sense of energy that your people become infected by. Charisma means transferring your confidence to everyone else around you. If anything can kill the passion of your people for doing great things in the industry, it’s probably going to be regulation. When you possess charisma as a leader, you spread your enthusiasm for accepting compliance as part of the job and pushing forward with a relentless drive for growth. When more and more regulatory agencies are telling your people what they can’t do, they’re going to need someone to remind them all that they can do. Charisma can help you be that person. Many people become so frazzled by increasing regulation because they lack a cohesive vision for their organizations. As a leader, maintaining a sense of clarity can help you navigate the sea of changes with ease. Having a clear understanding of your organization, your team, and your plans for growth enables you to see solutions you might not otherwise notice. Of course, being compliant with new regulations disrupts how your organization functions. However, the clearer your understanding of your business before the regulation takes effect, the more easily you will be able to find a way to work around it. Having clarity as a leader is also important for the sake of your people. The clarity of your vision—whether it’s murky or crystal clear—will trickle down to your people. Their understanding of your business, like many things, is a reflection of your understanding of the business. When facing regulatory changes, possessing a clear understanding of your organization and its goals is absolutely essential. Many times, failure to comply with regulation has little to do with character flaws of the organizations’ leaders. Nor does it have to do with the clarity with which the organization operates. Oftentimes, it boils down to simple errors in communication. A policy is not explained very thoroughly. Somebody misses a memo. A conversation takes place and each party comes away with a different understanding of

VA Issues Interim Final Rule on Qualified Mortgages By Melanie A. Feliciano Esq. On May 9, 2014, the U.S. Department of Veterans Affairs (VA) issued its interim final rule on qualified mortgages (QMs) for VA-guaranteed loans. The Dodd-Frank Act required the VA, the U.S. Department of Housing & Urban Development (HUD), the U.S. Department of Agriculture (USDA) and the Rural Housing Service (RHS) to prescribe regulations for QMs that each will insure, guarantee or administer. The VA’s interim final rule provides that any guaranteed or insured loan by the VA other than Interest Rate Reduction Refinance Loans (IRRRLs) will be classified as safe harbor QMs. This list includes all VA direct loans made pursuant to 38 U.S.C. 3711, Native American direct loans made pursuant to 38 U.S.C. 3761, and vendee loans made pursuant to 38 U.S.C. 3720 and 3733. VA IRRRLs are only classified as safe harbor QMs if the following conditions are met:

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1. The loan being refinanced was originated at least six months before the date of the new loan's closing, and the veteran has not been more than 30 days past due during such six-month period; 2. The recoupment period for all fees and charges financed as part of the loan or paid at closing does not exceed 36 months; 3. The IRRRL is either exempt from the income verification requirements in 38 CFR 36.4307 or complies with the income verification requirements in 38 CFR 36.4340 as well as the Truth-in-Lending Act (TILA) (15 U.S.C. 1639C) and its implementing regulations; and 4. All other applicable requirements of Subpart B of 38 CFR Part 36 are met. A VA IRRRL that does not meet any of the above requirements will be considered a rebuttable presumption QM if it satisfies the requirements in bullet points three and four above. The VA interim final rule also incorporates, without change, the Consumer Financial Protection Bureau’s (CFPB) category of exempt transactions in 12 CFR 1026.43(a)(3), other than reverse mortgages, which are omitted because the VA does not guarantee, insure or make these types of loans. This interim final rule, which became effective May 9, 2014, replaces the CFPB's temporary QM definition for VA loans. 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


heard on the street continued from page 24

double next year. The company will also use two additional Black Knight solutions that are integrated with MSP: Electronic Loan Interface, which automates the loan setup and boarding process, and Customer CareNet, which gives 360 Mortgage Group borrowers instant online access to their mortgage information. The company will also deploy TeleVoice, an interactive voice response system that is fully integrated with MSP and provides borrowers with immediate and secure access to loan information at their convenience. “MSP offers a more robust servicing technology to better support our expanding mortgage business,” said Norton Wells, VP of servicing operations for 360 Mortgage. “The combination of MSP’s innovative technology and attention to regulatory detail will give us the ability to provide accurate information and services more quickly to the borrowers we serve. The Black Knight suite of products and services supports 360 Mortgage Group’s commitment to being best-in-class.”

GMH Mortgage Establishes Wholesale Lending Division GMH Mortgage Services LLC has announced the opening of its wholesale lending division, spearheaded by Penny Smith, newly appointed senior vice president of wholesale lending. Smith was most recently SVP of operations with GMH. “The launch of GMH’s wholesale platform provides an opportunity for us to highlight to the underserved broker community the same five-star service and product suite that our retail division has experienced,” said Joseph Macchione, GMH’s president and chief executive officer. Offering a wide array of products and a state-of-the-art technology platform, GMH Wholesale provides brokers with a streamlined process all accessible via a Web portal and a fully-integrated loan origination system. GMH Wholesale’s Web portal gives broker partners access to daily pricing, a diverse loan product suite, loan document submittal through a secure data exchange and the ability to track loan progress and receive up-tothe-minute reporting. “We spent a significant amount of time developing our processes, testing our technology systems and working with a small group of test pilot brokers to fully ensure we were launching the wholesale division with our GMH’s branded level of quality and service,” said Smith. “In listening to many of my closest broker relationships, we recognized the aspects of the business where the brokers were not being afforded what they deserved. That was the reason for our platform launch and we are

already finding a great deal of success in giving our broker partners a new option in the wholesale market and we’re looking forward to growing our footprint nationwide in the months to come.”

LoanLogics and VirPack Announce Tech Partnership LoanLogics and VirPack have announced a technology partnership that combines the mortgage industry’s premier document management and delivery offering with the most advanced loan performance analytics, management and monitoring platform. “This partnership is all about removing the friction of delivering loan files for quality assurance and quality control by providing the significant benefits of two of the mortgage industry’s top service and technology providers, providing a seamless exchange between VirPack’s technology and the LoanLogics loan quality management platform, LoanHD,” said Brian K. Fitzpatrick, CEO and president of LoanLogics. “This is another example of how we are expanding our LoanHD AppQ Network, an ecosystem of service and technology providers that enable us to provide enterprise-level loan quality management from pricing to payoff.” “VirPack and LoanLogics completed this integration because it supports the ability of lenders, origination service providers and mortgage investors to simplify document management for loan quality audit reviews, improve efficiency and ensure accurate loan file shipments,” said Cy Brinn, VirPack’s COO. “Through integrations such as with LoanLogics, VirPack is providing lenders with expanded service provider options, more efficient service ordering, file preparation, delivery, tracking and results review.”

CMG Financial Expands Into Missouri

CMG Financial has announced that it has expanded to the state of Missouri where the firm will continue to focus on providing customers with loan products designed to fit their unique financial situation. Aligning with the CMG Financial values, the expansion will deliver a highly personalized lending experience through a business platform based on integrity and loyalty. Dave Puzniak, branch manager, joins the CMG Financial team with 19 years of experience in the mortgage industry and will lead this new branch in bringcontinued on page 35




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The CFPB’s Pursu By Jonathan Foxx y now, it is a known fact that one of the most important features of an examination conducted by the Consumer Financial Protection Bureau (CFPB) is a rigorous review of fair lending compliance. So, given its importance, it behooves us to learn about what the CFPB has found out about fair lending and what actions are needed to ensure its compliance. In this article, I provide an analysis of the CFPB’s most recent findings in the mortgage space as well as practical actions to be taken that help to build a vibrant fair lending initiative, gleaned from both the Bureau’s own issuances and actions, as well as my firm’s experience in assisting institutions with their CFPB fair lending examinations. On April 30, 2014, the Bureau issued an Annual Report, entitled “Fair lending Report of the Consumer Financial Protection Bureau.”1 Richard Cordray, Director of the CFPB, stated in the Report’s preamble:


“Far too many consumers still must navigate a financial marketplace laden with

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deceptive marketing, debt traps, dead ends, and discrimination. At the Consumer Bureau, we are fierce advocates for a consumer financial marketplace that allows all Americans to pursue a path to greater opportunity. To that end, we are working to remove the unnecessary obstacles too many Americans face in the consumer financial marketplace. This includes ferreting out discrimination in credit markets, including the markets for home mortgages and auto lending.”2 The Report generally covers the period from July 21, 2012 through Dec. 31, 2013. In addition, there is Interagency Reporting on the Equal Credit Opportunity Act (ECOA) and Home Mortgage Disclosure Act (HMDA) contained therein, which conveys information on the CFPB’s and other administrative agencies’ functions under ECOA and HMDA, as required by those statutes, for the period of Jan. 1, 2012 to Dec. 31, 2013. Patrice Alexander Ficklin, the CFPB’s Director of Fair Lending and Equal Opportunity, offered this overview of the Report: “In this report we describe our steady focus on ensuring that consumers have

fair, equitable, and nondiscriminatory access to credit by using all of the tools at our disposal—including research, supervision, enforcement, consumer education and outreach, rulemaking, and interagency engagement.”3 The Bureau issued the Report to Congress “in fulfillment of its statutory obligation and continued commitment to accountability and transparency.”4 In this regard, the Bureau is relying on its claimed efforts to fulfill its fair lending monitoring mandate, and provides additional reporting required by the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA).5 Dodd-Frank established the Office of Fair Lending and Equal Opportunity within the CFPB, and charged it with “providing oversight and enforcement of federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau,” including ECOA and HMDA.6 The Office of Fair Lending is required to coordinate “Fair lending efforts of the Bureau with other Federal agencies and

state regulators, as appropriate, to promote consistent, efficient and effective enforcement of federal fair lending laws,” and works “with private industry, fair lending, civil rights, consumer and community advocates on the promotion of fair lending compliance and education.”7 Since the Bureau’s last report to Congress in December 2012, the Bureau has built fair lending tools and materials and engaged in public dialogue in order to educate, inform, and learn from consumers, advocates and industry. It introduced a Home Mortgage Disclosure Act (HMDA) Database, which allows the public to study trends in the mortgage market across the nation and in their own communities. Additionally, the Bureau has published a bulletin on lending discrimination to help consumers and industry stakeholders recognize fair lending and access to credit risks in the home mortgage and auto lending markets.8

Report’s conclusions We can derive certain salient observations about the Report’s findings. In the first place, the Bureau has noted increasing efficiencies in fair

uit of Fair Lending lending activity. Thus, they have “created, refined, and implemented a riskbased fair lending prioritization process” to ensure that their supervisory procedures focus on the “areas presenting the greatest fair lending risk to consumers.” The approach, dubbed “risk-based prioritization” by the Bureau, uses the collection of both quantitative and qualitative data to assess fair lending risk to consumers as well as assessments of risk in order to prioritize enforcement actions.9 Importantly, with respect to providing guidance on its examinations, the Bureau publicly released information about the three methods its examiners use in fair lending supervisory reviews: (1) ECOA Baseline Reviews, (2) ECOA Targeted Reviews, and (3) HMDA Data Integrity Reviews. In the period subject to the Report, the CFPB has completed dozens of examinations on ECOA and HMDA compliance.10 Through these examinations, the Bureau detected some violations of ECOA and HMDA. However, it also found that many lenders have instituted and maintained strong fair lending Compliance Management Systems (CMS) and had no violations of ECOA or HMDA. With

respect to self-assessments, the Bureau has issued guidance describing how to conduct them, so as to be in compliance with ECOA and HMDA. Guidance has been provided through the Bureau’s Supervisory Highlights and Bulletins discussing fair lending topics. The Bureau has used the collection of data to analyze its supervision and enforcement priorities and determine two key priorities: Mortgage lending and auto finance. With respect to mortgage lending, the CFPB conducted fair lending supervisory reviews of a number of mortgage lenders, finding that many lenders have strong fair lending compliance management systems and no violations of ECOA or HMDA. However, the Bureau did allege some instances of fair lending non-compliance. Consequently, it took enforcement action against two mortgage lenders for violating HMDA, which resulted in assessments of civil monetary penalties and other relief. It is important to note that, in addition to jointly investigating certain matters with the United States Department of Justice (DOJ), the CFPB also made several referrals to the DOJ for violations of ECOA, one of which actually resulted in

a recent enforcement action. The interagency coordination and collaboration is a critical feature of the Bureau’s pursuit of violations. The CFPB continues to coordinate with the Federal Financial Institutions Examination Council (FFIEC) agencies, as well as the DOJ, the Federal Trade Commission (FTC), and the U.S. Department of Housing & Urban Development (HUD), in enforcing fair lending statutes. In fact, in 2012, the CFPB formalized its fair lending enforcement relationship with the DOJ via a Memorandum of Understanding (MOU).11

Complaints, whistleblowers and priorities The CFPB uses input from a variety of external and internal stakeholders to inform its fair lending prioritization process. Thus, it considers fair lending complaints received by its Office of Consumer Response or brought to the Office of Fair Lending’s attention by advocacy groups, whistleblowers, and other government agencies (at the local, state, and federal levels). As part of the prioritization process, the Office of Fair Lending also considers public and private litigation. The Bureau uses risk-based prioriti-

zation to consider many qualitative and quantitative factors at the institution, product, and market levels to determine what, where, and how fair lending risks to consumers should be addressed. These are the factors constituting the risk-based prioritization:12 1. Complaints and tips from consumers, advocacy groups, whistleblowers and other government agencies; 2. Supervisory and enforcement history; 3. Quality of lenders’ Compliance Management Systems; 4. Data analysis; and 5. Market insights. The Office of Fair Lending integrates all of the forgoing information into the fair lending prioritization process, which is then incorporated into the Bureau’s larger risk-based prioritization process, and then the Bureau allocates its fair lending resources to the areas it considers of greater risk to consumers. Furthermore, the Bureau utilizes information gathered from its own and other regulators’ prior fair lending continued on page 33


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M A G A Z I N E ’ S

economic commentary

NO MORE EXCUSES By Dave Hershman ver five years ago, we suffered the worst recession since the Great Depression almost 100 years ago. Since then, our economic recovery has been the weakest of all recoveries in history. There are many reasons for the weak recoveries. The fact that our real estate market was devastated and needed years to recover was certainly a main factor. But there were other reasons for the stops and

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starts which were external. We had domestic and worldwide natural disasters from hurricanes and super storms, to tsunamis. We will not get into a debate as to whether global warming is causing these extreme weather events, but we will acknowledge that they were very, very extreme and caused major damage to populations and property. There were events that were not weather-related, of course. There was the fiscal crisis in Europe and political crises at home. We had wars being fought and terrorist events.

Many of these events prolonged the recovery and made us wonder whether we would suffer a double dip recession, which never came. The year 2014 has certainly not been smooth sailing with our famously cold winter and the crisis in the Ukraine. However, we believe our economy has recovered to the point that we no longer talk about slipping back in recession. The drop in the economic growth in the first quarter is a testament to that confidence. Economists shrugged off the down quarter almost universally. So what comes next?

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 sun is shining and there is no more cold winter. We are running out of excuses for the economy being so lackluster during a recovery period. The May employment report released on June 6 showed continued progress in that regard. The last two months has seen a significant pickup in hiring but the employment report also shows how far we need to go. We have recovered all the jobs lost during the recession, but accounting for population growth during the past six years, we have seven million jobs to go. Economists surveyed by CNN/Money indicate that it would take two years or more at this pace for the unemployment rate to reach 5.5 percent and wage growth is still anemic. The good news? A slow recovery continues to support low interest rates and hopefully the Federal Reserve Board agrees with that assessment when they meet as this edition is published. There is little hope that the Fed will slow down their tapering of stimulus but recently the hawks are making more noise about raising rates. The Beige Book released by the Fed in early June also showed the recovery continuing. But there was enough concern about the housing sector in the report that the Fed should be hesitant to take a stronger stance on rates. 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 or visit

the cfpb’s pursuit of fair lending continued from page 31

work, including any supervisory or enforcement actions. At the institutional level, the Bureau considers results from past reviews, the extent and nature of any violations previously cited, and remediation efforts. Additionally, the Bureau considers selfidentified issues and whether the institution took appropriate corrective action when it identified those issues. The CFPB also closely monitors institutions’ compliance with any administrative orders arising from previous enforcement actions pursued by the CFPB or, in some cases, by other federal government agencies.

institution’s fair lending CMS, the higher the institution’s fair lending risk.”14

HMDA and ECOA: New rules I have discussed above the importance of data analysis and the quantitative approach; indeed, the Bureau’s fair lending prioritization process is driven by quantitative data analyses that evaluate developments and trends at the institutional and market levels. The quintessential example, in the housing finance marketplace, is the Home

Mortgage Disclosure Act (HMDA) data, which allow regulators to assess a specific institution’s risk as well as risk across the market in order to identify those institutions or segments that appear to present heightened fair lending risk to consumers. The Dodd-Frank Act expanded the scope of the data that lenders are required to collect and submit under Regulation C, the implementing regulation of HMDA. Specifically, Section 1094 of Dodd-Frank amended HMDA to require the collection and submission of additional data fields, including: l The age of the applicant or borrower l Rate spread (for all loans) l Collateral value

l l l l l l l l l

Credit score Non-fully amortizing payment features Total points and fees Prepayment penalty term The period after which a rate may change Loan term Origination channel As appropriate, identifiers for loan originators, loans, and parcels “Such other information as the Bureau may require”15

At the time the Report was issued, the CFPB’s efforts to implement these changes were in the pre-rulemaking stage. However, the Bureau is going to continued on page 47

Fair lending in Compliance Management Systems A Compliance Management System consists of many moving parts, one critical piece of which includes information the Bureau obtains through its examinations vis-à-vis the quality of an institution’s fair lending CMS. This is a key factor in the fair lending prioritization process. While the appropriate scope of an institution’s fair lending CMS will vary based on its size, complexity, and risk profile,13 common features of a well-developed CMS include:

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Here is the Bureau’s rudimentary, but incisive point: “The key consideration is that the lower the quality of an


l An up-to-date fair lending policy statement; l Regular fair lending training for all employees involved with any aspect of the institution’s credit transactions, as well as all officers and board members; l Ongoing monitoring for compliance with fair lending policies and procedures, and appropriate corrective action if necessary; l Ongoing monitoring for compliance with other policies and procedures that are intended to reduce fair lending risk (such as controls on loan originator discretion), and appropriate corrective action if necessary; l Review of lending policies for potential fair lending violations, including potential disparate impact; l Depending on the size and complexity of the financial institution, regular statistical analysis, as appropriate, of loan-level data for potential disparities on a prohibited basis in pricing, underwriting, or other aspects of the credit transaction, to include both mortgage and nonmortgage products such as credit cards, auto lending, and student lending; l Regular assessment of the marketing of loan products; and, l Meaningful oversight of fair lending compliance by management and where appropriate, the financial institution’s board of directors.

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 … lender profits down (just in case we needed confirmation of the obvious) The Mortgage Bankers Association (MBA) issued a report in late May documenting lender profits and comparing the first and second half of 2013. In the first half of 2013, the MBA reports that 95 percent of small mortgage banking firms were profitable. In the second half, only 69 percent of those surveyed lenders posted pretax financial profits. The report also reflected the average profit per newly originated loan was $1,660 in the first half of the year, falling to only $517 in the second half. Most lenders are desperately seeking ways to cut costs, increase margins and be competitive … not an easy task except for a contortion artist.

Regulators to investigate so-called “gag orders” A recently published Reuters article revealed what many homeowners have realized for quite some time, that loan modification settlement agreements are starting to contain “non-disparagement” clauses, prohibiting them from saying or writing anything negative about their lender/servicer. This is included as a condition of the settlement. Lawyers have asked for these types of clauses for eons in civil litigation, but the practice in consumer mortgage settlements has raised the ire of regulators. After the story was published, New York State Superintendent of Financial Services Benjamin Lawsky said he is investigating use of these clauses. Sources indicate that the Consumer Financial Protection Bureau (CFPB) is also looking into the matter to determine whether this is an unfair and abusive consumer practice. The need to continually CYA from lawsuits has created a complex and confusing lending process and until lenders and servicers get some relief, more and more disclaimers, waivers and releases will encumber the loan packages and all other mortgage agreements.

You can’t make this stuff up! l In Illinois, six individuals are facing federal charges for allegedly engaging in a $22.8 million mortgage loan fraud scheme. The defendants allegedly caused buyers to fraudulently obtain approximately 60 mortgages from various lenders to purchase condominiums. Included in the indictment were attorneys who handled the closing of loans and created false closing statements and mishandled closing funds. All that education down the drain. l A Florida developer, his attorney and others who conspired with them, were indicted for illegal flipping scams using straw buyers that resulted in nearly $3 million in mortgage fraud losses. The perpetrators face up to 30 years in prison. That’s a long time to sit and think about what might have been. l A Connecticut attorney pled guilty to defrauding a lender by drafting fraudulent HUD-1s, and thereby, covering up multiple straw buyer fraud schemes resulting in nearly $4 million in losses. Lawyers never commit fraud , do they? l A Tennessee attorney was jailed for two years for her part in stealing more than $200,000 of her client’s mortgage proceeds, and then covering up the fraud with fake documents and altered HUD-1s. She used the money to buy properties for herself before she was caught and sentenced. Those pesky HUD-1s are so darn confusing.

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heard on the street



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ing much needed mortgage solutions to the area. “The level of enthusiasm and passion for CMG Financial was evident in everyone I spoke with. The past, present, and future opportunities for growth of the company are incredibly empowering and motivated me to join this exceptional team. I look forward to contributing to the expansion of the company and its values in the St. Louis area,� said Puzniak.

MortgageKeeper and LenderLive Partner on Servicing Initiative

Vantage Production LLC announced it will integrate Equifax’s consumer trimerge credit data into its Vantage

Mortgage Connect has announced the expansion of its operations with the opening of its Dallas, Texas office. This centrally located operational center will enable Mortgage Connect to service growing demand and to better serve its national clients. “The closing process is crucial to loan quality, brand protection, and expanding the consumer relationship downstream,� said Jeff Coury, chief executive officer of Mortgage Connect. “Delivering a reliable, compliant, scripted process supported by highly seasoned and certified signing agents has allowed us to grow quickly and organically, creating the need for a centrally located operational center.� Mortgage Connect attributes much of its growth to its closing process that elevates the closing experience through transparency, consistency and communication. The company’s clients leverage Mortgage Connect, along with its enhanced process and proprietary technology, to ensure compliance and bring superior levels of service back into the closing process by dictating everything from agent qualifications to scripted communications. continued on page 44


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Vantage Production and Equifax Partner to Deliver Real-Time Info to Prospective Borrowers

Mortgage Connect Expands Into Dallas


MortgageKeeper Referral Services Inc. has announced an agreement with LenderLive to enhance its client servicing offerings. LenderLive’s customer service representatives and customer Web site will now offer high quality, well-vetted community services via two products: MKDesktop and MKDirect. Both products help borrowers who are struggling to make mortgage payments find financial solutions to balance their household budgets, enhance customer experience and increase loan performance. The MKDesktop application provides LenderLive employees with access to MortgageKeeper’s database of 7,000-plus best-in-class non-profit and government services. Employees will type in the borrower’s ZIP code, and choose from 20 different service categories—like “job training,� “food assistance,� and “utility payment assistance.� The representatives can then create a custom referral summary of local organizations best suited to a borrower’s needs—a list that can help customers pursue options that reduce their household expenses. This same data will also be available via MKDirect at— allowing borrowers to access the data on their own, 24/7. “LenderLive is committed to offering their servicing clients a custom, results-focused approach. Our products enhance this strategy,� said Rochelle Nawrocki Gorey, president of MortgageKeeper. “With the addition of MK’s technology—LenderLive’s customers will have additional tools available that will help keep more borrowers in their homes.�

Integrated Production (VIP) platform. VIP is an all-in-one marketing, sales and CRM solution that delivers unique enterprise-class capabilities to lenders desiring compliant, automated marketing and CRM for vastly improved loan origination results. The integration of Equifax’s Credit*Hi-Lite with VIP enables mortgage loan originators (MLOs) to optimize their sales workflow, provide borrowers with immediate eligibility decisions, and present loan options in an easy-to-understand manner. Instant access to credit information allows lenders to approve applicants faster, reduce the risk of application fraud, decrease time-consuming manual verifications, and deliver a better experience for consumers. “We are very pleased to enter into a relationship with Equifax for several reasons,� said Paul Zoukis, CEO of Vantage Production. “Equifax is among the premier information solution providers in financial services, and passing their stringent Security Risk Assessment process further validates the safety and integrity of our services. Most importantly, Credit*HiLite allows our VIP platform clients to substantially improve their efficiency and profitability.�

Act Now Befor

Developing Third-Party Legal Service Provider Surveillance Guidelines By Vincent Spoto uidelines and standards developed by the Consumer Financial Protection Bureau (CFPB), specifically those contained in Section 1024.38 of the Real Estate Settlement Procedures Act (Regulation X), require mortgage servicers to have policies and procedures reasonably designed to achieve the objective of facilitating periodic reviews of thirdparty vendors, the purpose of which is to evaluate and monitor overall performance effectiveness and compliance. CFPB guidelines further indicate that vendors utilized must have the


requisite financial strength, organizational capacity and policies and procedures in place to maintain full compliance with applicable laws and regulations, including (but not limited to) those developed by the CFPB, Federal Housing Finance Agency (FHFA) and Office of the Comptroller of the Currency (OCC). Given the surge in defaults that have occurred within the past decade, the roles servicers play in the loss mitigation and foreclosure process has significantly increased. As such, servicers have placed greater reliance on the use of outside vendors to handle the resulting large workload and volume increases. Accordingly, the use of third-party legal service providers has dramatically

increased across the industry. Quite often, servicers will engage outside vendors to perform a myriad of activities including appraisals, property valuations, property inspections, skip tracing, property management, collection calling and a host of legal services including foreclosure processing, loss administration and default management actions, title administration, bankruptcy processing and real estateowned (REO) management. The recent introduction of strict standards and compliance guidelines established by the CFPB over foreclosure and other legal protocols make it imperative for servicers to ensure that any such legal functions outsourced to vendors are

performed in accordance with applicable guidelines and standards. As these services directly impact and touch consumers, it is critical that third-party legal service providers: (i) Appropriately comply with all legal, CFPB and other regulatory guidelines; (ii) Act in accordance with the underlying contractual guidelines and specific directives given by the mortgage loan servicer, and (iii) Be both financially and operationally sound. Specific areas to be reviewed when performing assessments of third-party legal

re It’s Too Late ‌ l Detailed audit programs for use in conducting field audits; and l Other CFPB and government-sponsored enterprise (GSE) default administration guidelines (as applicable). Critical in the selection process used by servicers should be the identification of an independent advisory and consulting firm that offers a full range of surveillance activities covering all outside vendors, including those services offered by third-party legal


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Loan servicers frequently utilize the services of external consulting and advisory firms to perform or to augment the surveillance of selected vendors. To the extent external consulting and advisory firms are considered, servicers should base their selection on firms that utilize a comprehensive set of standard tools when conducting surveillance routines. While approaches will vary depending upon the size and sophistication of the surveillance firm selected, experience shows that the most optimum results are achieved by surveillance firms that generally deploy the following tools: l On-boarding checklists to be completed by the vendors in advance of an onsite field audit; l Annual/semi-annual surveys to be completed by the vendors, with information provided subsequently validated;

continued on page 51

service providers may include a variety of items, including but not limited to: l Core competencies and services performed; l State presence and state-specific industry references; l Adequate and relevant litigation experience within the state (including prior and current litigations); l Prior volume experience; l Attorney licensing, staff experience and oversight; l File oversight and file maintenance standards; l Ethics and professional standards; l Timelines, information privacy and capacity; l Technology infrastructure, staffing and reporting capabilities; l Insurance coverage, financial strength and business continuity; l Quality control processes and employee training; l Conflicts of interest, disclosures and diversity data; l Current and prior audit/regulatory issues noted, fines or penalties that may have been assessed and the current status of corrective actions taken; and l Other general matters of compliance and quality control.

service providers. A review should be performed to ensure that the selected surveillance provider does not have any economic or business affiliations with any of the vendors used by servicer. Specifically, servicers should seek firms that utilize the following approach in conducting surveillance reviews of external vendors and third-party legal service providers: l Preparation: Prior to arriving on-site, vendors and third-party legal service

providers should be supplied with the full scope of document information requests to be utilized when conducting any subsequent on-site audit review. Specific items provided may include: (i) An on-boarding checklist; (ii) An informational survey or questionnaire to be completed inadvance by the vendor to facilitate the subsequent on-site field audit review; (iii) A formal and comprehensive set of audit programs for use in conducting on-site surveillance reviews, and (iv) Other CFPB, FHFA, OCC and GSA

Just As

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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 to voice any questions or problems. We are here for you!

Our first question … I am a small one-man mortgage broker shop in Pennsylvania. I work with my wife who handles the administration end. We have two kids ages, 19 and six. I do about 15 loans a month which I generate by myself and have two processors. I get the loan, disclose and they take it from there. One year, I did 360 loans or about

30 a month. I was pulling his hair out, but he made a lot of money. I have not taken a vacation in 10 years, because I like to control everything. I have never hired another loan officer because I don’t want the hassle. With the new loan officer payment laws, I am worried about how to pay them. What advice can you give me? —Lonnie in PA

Eric … It sounds to me like you need “The Good Enough” speech. As great as your model was, it was limited. After all, there are only so many hours in a

day, so many weeks in the year. At some point, as you grow, you will reach the maximum earnings he could make, as big as that is. You will make a lot of money, but who wants to be the richest man in the cemetery. Life is to live and enjoy; if not for you, then your family. My first bit of advice is to see if your 19-year-old has any interest in the mortgage business. If not, find someone you can train from the ground up. Your problem is you don’t have enough spare time to enjoy life. Try to learn to delegate and trust in someone else. If not your son, then you

k Eric & Laura must find someone else. You have to find your “mini-me.” This will allow you to expand your business or conversely maintain your level of business with more free time for you and your family The business may not run exactly the way you want, but it may be “Good Enough” for you to spend quality time enjoying the fruits of your labor. We are often so busy chasing the almighty dollar that we lose track of why we do it. Money is not the goal, but the means to a goal. You earn it to provide for the happiness of you and your family. Take a vacation, coach your son’s little league team, enjoy your family on a Saturday. These are things that are far more important than money.

Laura …

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 ewe- 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

Eric & Laura welcome your questions, please send your inquiries to








On-Time Closing Promise for FHA loans – 15 Day Clear to Close on qualifying purchase or refinance loans, or your borrower receives a $500 closing cost credit.* Plus, get a prequalification letter and enjoy our early disclosure service. Submit with no AUS. Restrictions apply. FICO minimums to 550 on government programs and expanded FHA guidelines that include manufactured housing and use of non-traditional credit. Expanded Operations Support. Multiple operations centers offering support across all time zones provides outstanding service and fast turn times.

*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: 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 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 Pennsylvania Mortgage Professional Magazine n JUNE 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.


If you are asking about the loan originator rules, you need to pay anyone originating loans, as an employee, using a W-2 as income. Therefore, if your son is originating loans for you, he needs to be paid as an employee, earning your state’s minimum wage for the hours he works, you can then offset the hourly wage with commission earned. I agree with Eric’s response, he is spot on, all work and no play makes a very tired and worn out person. You need time for yourself to rejuvenate and feel life. If you are uncomfortable with long breaks or vacations, take short ones to start, maybe one or two days or an extended weekend. They say that a good leader is only as good as the team they lead. Train someone to assist and learn to originate the way you do. It is your chance to take someone under your wing and show them what you know, mutually benefiting both of you. Remember to let them fly. Lastly, from a tax perspective, if you hire someone, you will have an additional deduction to claim at the end of the year. There are also some nuances to hiring your children, allowing you to shift some of your taxable income directly to your child at their tax bracket. It gives you a true business write off, and your child earns an income at a much lower tax bracket than you may be at. The caveat is you need to W-2 loan originators, so they will pay (FICA) Social Security and Medicare. If your child is under the age of 18, then you would not have to pay FICA for them. FICA for tax purposes doesn’t include services performed by a child under the age of 18 while employed by a parent.

There are always exceptions, so see a tax professional. Thanks for asking!

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n



n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Summer Marketing Tips: What’s Going to Produce the Best Results This Summer?

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Summer is here, and there are particular items to take into consideration when planning your marketing strategy. Spend some time thinking about your prospects and what they might be doing when contacted before sending your marketing materials to them. In the summer months, it’s more important than ever to take your prospect’s lifestyle into consideration before putting together your campaign. Consumers with families are more likely to be on vacation during the summer months, so your marketing efforts can be an intricate part of your growth over these months. Here is a quick look at some effective planning techniques that can produce higher return-on-investment (ROI) throughout the summer season. To affectively plan your marketing at any time, it’s important to think about your prospects and what they will be doing when they receive your marketing collateral. Whether you market via direct mail, telemarketing or online marketing like SEO, Google AdWords or Internet leads, it’s important to know what the person might be doing when initial contact is made. Are they on vacation, at work or at home? Each of these scenarios will play out differently through the sales process. Thinking through your sales process and having multiple topics geared toward their situation ahead of time will create a more effective campaign time and time again. The summer has proven to be a lucrative time of year in mortgage industry. Make sure you are spending time thinking through your own demographic research, marketing campaign and sales process. How do they fit together? Can you use a different sales approach to make the conversation easier with a smoother transition to closing? Most importantly, what’s going to bring you the highest ROI during the summer? People on vacation don’t always leave their homes. For this reason, direct mail marketing is a consistent provider of qualified interested leads all summer long. Response rates have been on the rise all year, and this summer is shaping up to produce higher response rates than the previous three years! TagQuest Inc. Client Spotlight … Jeff A., Pennsylvania, Mortgage Lender Each month, we like to speak with our clients and find out how their campaigns are going. Here is what we heard from one of our mortgage professionals, Jeff A. in Pennsylvania. Direct Mail Campaign Targeting Refinance l Five thousand pieces sent out each week (20,000 per month) l Average response rate over the last year: 1.51 percent Highlights of the campaign that work well for Jeff … “Inbound calls are how we built our company. Mail is the best way to produce them.” Highlights that could appeal to other loan officers or offices … “Works better than live transfers or other leads because we get to pick who’s calling us.” 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 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.


nmp news flash continued from page 25

Finance Agency’s First Quarter 2014 Refinance Report. Total refinance volume for the first quarter topped 370,000 while refinances through the Home Affordable Refinance Program (HARP) stood at just under 77,000. This marks the fourth straight quarter in which total refinances and HARP refinances have declined. The report notes that refinance volume was down in March as mortgage interest rates rose. Over the last five years, more than 19 million refinances have been completed, including 3.1 million through HARP. As announced recently by FHFA Director Mel Watt, efforts are underway to retarget HARP outreach to reach approximately 750,000 remaining eligible borrowers who could still benefit from the program. Also in the first quarter 2014 report, HARP volume represented roughly 21 percent of total refinance volume in the first quarter of 2014. Through the first quarter, 23 percent of HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent) were for 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages. HARP continued to account for a substantial portion of refinance volume in certain states. Through the first quarter, HARP refinances represented 41 percent of total refinances in Georgia and 38 percent of total refinances in Florida, nearly double the 21 percent of total refinances nationwide over the same period.

HUD Announces $40 Million in Grants for Foreclosure Prevention Counseling The U.S. Department of Housing & Urban Development (HUD) has awarded more than $40 million in grants to hundreds of national, regional and local organizations to help families and individuals with their housing needs and to prevent future foreclosures. HUD’s housing counseling grants, and the additional funding they help to leverage, will assist more than 1.5 million households find housing, make more informed housing choices, or keep their current homes. “These grants are an essential tool to help families find suitable housing or to keep the homes they have,” said HUD Secretary Shaun Donovan. “HUD-approved counseling agencies use this funding to support a wide range of services from assisting lower income persons to locate an affordable apartment to helping first-time homebuyers avoid unsustainable mortgages.”

More than $38 million will directly support the housing counseling services provided by 29 national and regional organizations, seven multistate organizations, 22 State Housing Finance Agencies (SHFAs) and 232 local housing counseling agencies. In addition, HUD is awarding $2 million to three national organizations to train housing counselors who will receive the instruction and certification necessary to effectively assist families with their housing needs. National and regional agencies distribute much of HUD’s housing counseling grant funding to communitybased organizations that assist lowand moderate-income families to improve their housing conditions. In addition, these larger organizations help improve the quality of housing counseling services and enhance coordination among counseling providers. Read a summary of each grantee, organized by state.

Metro Markets Begin Return to Normalcy in June Of the approximately 350 metro markets nationwide, 56 returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI). This represents a net gain of nine metros year over year. The Index’s nationwide score of 0.88 held steady from the previous month. This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity. Meanwhile, 30 percent of metro areas saw their score rise this month and 83 percent have shown an improvement over the past year. “Markets are gradually returning to normal levels of housing and economic activity,” said NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Del. “When we see more sustainable levels of job growth, this will unleash pent-up demand and bring more buyers into the marketplace.” Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.4 - or 40 percent better than its last normal market level. Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas and Houston. Rounding out the top 10 are Los Angeles; San Jose, Calif.; Harrisburg, Pa.; Pittsburgh and Salt Lake City - all of whose LMI scores indicate that their market activity now equals or exceeds previous norms. “Of the three components in the

home in the past 10 years—and 43 percent of those who did so within the last two years—required mortgage insurance (MI). Of those who required PMI (private mortgage insurance), 65 percent said that the addition of a mortgage insurance premium left them paying a higher monthly mortgage payment than they originally expected. The study, which is an extension of the 2014 TD Bank Mortgage Service Index, surveyed more than 2,000 Americans who have purchased a home in the past 10 years. The findings indicate the growing impact PMI has on mortgage payments, which is often required when homebuyers are unable to make a 20 percent downpayment to purchase a home. With average PMI costing approximately $100 per month, mortgage insurance can become a significant expense for many borrowers before they reach 20 percent equity in their property. Further, FHA loans now require PMI for the life of the loan which considerably increases the total cost of home ownership for borrowers who cannot make a 20 percent downpayment. “PMI has had a definitive impact on many homebuyers–including making them rethink or delay the purchase of a home in light of not being able to meet monthly mortgage payments,” said Michael Copley, executive vice president of Retail Lending, TD Bank. “While FHA loans may be available, home buyers, especially first time buyers, may not realize the options available to them that don’t require PMI insurance.”

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:

Research released by TD Bank revealed that 37 percent of those who purchased a

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

calendar of events N A T I O N A L



see page 79


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n Pennsylvania Mortgage Professional Magazine n JUNE 2014

NMP News Flash column Phone #: (516) 409-5555 E-mail:

Study Finds 37 Percent of Homebuyers Purchased MI Over Past Decade


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LMI, the one lagging is single-family housing permits, which is only 43 percent of the way back to normal while home prices are 26 percent above their last normal level and employment is at 95 percent of its previous norm,” said NAHB Chief Economist David Crowe. “In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered.” “Well over one-third of all markets are operating at a level of at least 90 percent of previous norms, and this bodes well for a continuing housing recovery in the year ahead,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report. Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D., respectively. The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

heard on the street continued from page 35

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Mortgage Professionals to Watch




l Mortgage Master Inc. has announced the hiring of Brian Moggan as its new Northern California regional manager.

l Pandora Nomikos has joined WFG National Title Insurance Company as an agency sales consultant serving the Southeast region of the Agency Division. Brenda Craley has also joined WFG National Title Insurance as an agency sales representative for the company’s Midwest region.

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l First Guaranty Mortgage Corporation (FGMC) has announced that Brian T. Burke has joined the company as account executive–New England,


Call Easy Mortgage Apps today so you can start off 2014 with a bang! Contact Michael @ 888-987-6842 ext 700 CROSS

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n

Resolve to attract more realtor partners in 2014

l Paramount Residential Mortgage Group Inc. (PRMG) has named David D. Davis branch manager for PRMG’s latest retail branch in the metropolitan region of Washington. PRMG has also named Michael Thomas retail branch manager of the firm’s Hesperia, Calif. branch.



Fay Servicing has announced the formation of a Mortgage Origination Division, which will focus on retail and correspondent loans, and has selected Steve Szpytek as president of originations to lead the division. Szpytek has more than 25 years in the mortgage and financial services industry. He has previously held executive positions at numerous mortgage companies including director of strategic planning at Performance Home Loans, COO and director of lending at Elderlife Financial Services, COO and chief lending officer at ECC Capital Corporation/Encore Credit and EVP and chief credit officer at New Century Mortgage. At Fay Servicing, Szpytek’s initial focus is developing the mortgage origination division by creating a retail sales and operations platform, which will establish call centers and a network of retail branches. The division will also work with lenders establishing correspondent relationships with Fay Servicing. “Steve’s experience in the financial services industry will enable Fay Servicing to successfully build out our origination division, a very complementary business line and key step in becoming a more diversified mortgage company that is well-positioned for long-term growth,” said Ed Fay, chief executive officer of Fay Servicing. “His impressive track record for launching origination platforms as well as his proven ability to design and execute new lending strategies and programs make him an integral part of our team here at Fay Servicing.”

TPO. FGMC has also named Bryan Cross as Northwest regional manager–TPO.


Fay Servicing Announces Formation of Mortgage Origination Division

l LenderLive Network Inc. has announced that Marcy MacDonnell


l l




announced that Michael Borodinsky has joined the company as vice president of retail lending for the East Region. l Stewart Lender Services has announced the appointment of Dan Gallery as group executive over its Capital Markets Group and David Cooper as managing director of sales for the Capital Markets Group. l Visionet Systems Inc. has announced that Bill Moody has joined the firm as president of the Mortgage Services & Technology Division. l LRES has announced that Selene Nunez has been named vice president of valuations.

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


n Pennsylvania Mortgage Professional Magazine n JUNE 2014


joined the company as vice president of the data solutions team. l DocuTech Corp. strengthened its product management team with the addition of Anthony Williamson as product developer and the assignment of Judy Lysaght to the role of mortgage lending product manager. l Ellie Mae has announced that Harry A. Gardner, a former executive of the Mortgage Bankers Association (MBA) and long-time leader of the Mortgage Industry Standards Maintenance Organization (MISMO), has joined the company as vice president of eStrategies. l Caliber Home Loans Inc. has


has joined the firm as regional account executive covering the southwest region for the company’s Correspondent Lending Division. LenderLive has also announced that Stephen J. Kolimaga has joined the firm as vice president of national sales for the company’s outsource services division. LenderLive has named Mark Hughes senior vice president of review services, leading the company’s due diligence and loan review business. HomeBridge Financial Services Inc. has announced the additions of Bruce Miller in Allentown, Pa.; Cecilia Sensenig in Chambersburg, Pa.; Christi Tollinger, Lisa Warner and Thomas Berridge in York, Pa.; Anthony DePietro in Iselin, N.J.; Josh Diaz in Orlando, Fla.; Rebecca McClellan in Denver, Colo.; Mark O’Sullivan in Parsippany, N.J.; Doni Arrington in Peachtree City, Ga.; Tim Irvin in Overland Park, Kan.; Matt Cox in Denver, Colo.; and Judy McKovich in Lee’s Summit, Mo. Jonathan Yellon has been named branch manager of Mortgage Master Inc.’s new Rye, N.Y. office. Carrington Mortgage Services LLC announced the opening of its fifth retail lending branch in Virginia and the appointment of Terry Rowland as branch manager. AFR/eLEND has announced its core marketing and marketing technologies, team assembled to operate as an in-house agency, including Jonathan Brandao as market-ing/graphics assistant, Fredrick C. Zerilli as director of eCommerce, Alex Kelly as digital strategist, Anthony Dykstra as marketing/Web designer, Joe Cullinan as Web developer, and Mark Feegrade as Web marketing specialist. W.J. Bradley Mortgage Capital LLC has announced that Mark Simon has returned to the company’s Newport Beach, Calif.-based team as an originating vice president of sales. 360 Mortgage Group has named Nancy Pedone national reverse branch manager. GSF Mortgage has announced that Jeremy Sheppard has joined its branch in Sacramento, Calif. and will work under Jonathan Greene, branch manager. GSF has also welcomed Chris Robards as branch manager to the firm’s new Fridley, Minn. branch. GSF has also announced the addition of Kim Bos as branch manager in the company’s Naples, Fla. branch. Keave Slomine has been named branch manager of GSF’s Bela Cynwyd, Pa. office. GSF has also added Michael Mazursky as branch manager in Baltimore, Md. where we will join GSF with 10 years in the industry. RealtyTrac has announced that veteran licensing and business development executive Jeff Mattice has

The Long & Short: The Business of Short Sales

Two “Fixes” to Use for Past Short Sellers Who Receive a Foreclosure Code on Past Short Sale Credit By Pam Marron

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Past short sellers who are now eligible to re-enter the housing market again are stunned to learn that their past short sale is credit coded as a foreclosure. The problem is typically seen for the first time in both Fannie Mae and Freddie Mac automated underwriting systems (AUS). Fannie Mae’s Desktop Underwriter (DU)/Originator (DO) notates in the findings which account is flagged as a foreclosure. Freddie Mac’s Loan Prospector (LP) system that was presumed to provide an automated approval four years after the short sale does not, and the LP findings do not notate the specific account, only stating “significant derogatory/foreclosure” in their findings. Additionally, when more than one mortgage existed for the short sale account in question, it is not uncommon to see one or both of the two mortgages listed with an adverse foreclosure comment. Also, the “date reported” is causing added conflict, showing up as a more current date within the last 24 months after the date of the short sale when the short sale is disputed or when a deficiency required by the short sale lender is paid off. Costly rapid rescores don’t seem to help. On Nov. 16, 2013, Fannie Mae was supposed to make changes within their automated system that would allow lenders to alert the Fannie Mae DU/DO systems that the foreclosure code was an error and to gain entry to make a correction. Instead, the Fannie Mae system must see the error first and then provide a message giving entry to make the change to the lender. This fix has frustrated hundreds of lenders who are attempting to provide new conventional mortgages for past short sellers now coming back into the housing market. Here are two fixes found by accident that appear to be working. Try both as soon as the foreclosure code for a past short sale is found. You will need to have the short sale HUD-1, the short sale approval letter(s) from the lender(s), and the paid off letter for any deficiencies where payments were made to the short sale lender after the short sale. First, go to the Consumer Financial Protection Bureau (CFPB) Web site at and file a complaint. This is a computer generated complaint and a resolution is typically sent back to the consumer via e-mail within 15 days. However, if the lender was a credit union or a banking institution with less than $10 billion in assets, the CFPB will not be able to intervene, though where to go for help is given within their email upon resolution. This has been the quickest method of resolution, and dialogue can be reopened if the consumer is not satisfied. Also, there is a complaint phone number on the website for those who still have questions. Second, contact the short sale lender for a Lender Letter that specifically states when the short sale closed, and that the loan closed as a short sale and not a foreclosure. If there was a deficiency paid, a second letter will be needed for that account as well. Most lenders provide this letter through an “Executive Complaint Escalation Department” and getting that phone number from each lender can be tricky. This letter can take up to three weeks to receive and is sent directly to the past short seller. Past short sellers should provide the emailed CFPB Complaint resolution and the Lender Letter to the new lender upon receipt, and the lender should pull a brand new credit report and then new findings from DU/DO or LP. Often, credit seen in raw data after these two processes appears to be downgraded, resulting often but not always in a loan approval. If an “Approve/Ineligible” appears on a Fannie Mae finding, it can also be from the “date reported” showing within the past 24 months. Credit reporting agencies with the Sharper Lending platform seem to have remedied this specific problem, so check with your credit agencies. For specific directions on the CFPB Complaint and the Lender Letter, please visit and click on each fix under “Short Sale Credit Fixes.” Pam Marron is senior loan officer with Innovative Mortgage Services Inc. She may be reached by phone at (727) 375-8986 or e-mail

new to market continued from page 18

estate organization that combines Capital One’s balance sheet and agency lending groups into a single entity. The announcement marks the next stage in Capital One’s integration of Beech Street Capital, the agency originator and servicer acquired by Capital One in November 2013. “These teams are already working closely together to offer our clients the best of both organizations,” said Rick Lyon, head of Commercial Real Estate Banking for Capital One. “Bringing them under a single banner enhances our ability to serve clients more efficiently, while signaling to the marketplace that we intend to become an even greater force in the multifamily business.” Capital One Multifamily Finance will also be distinguished by its growing national platform. Beech Street has nine offices around the United States, while Capital One offers balance sheet financing in key East Coast markets as well as Louisiana and Texas. The combination sets the stage for Capital One to expand its balance sheet financing to the West Coast and other regions.

Collateral Analytics Announces New Automated Decisioning Tool

Collateral Analytics has launched the CA AVM Cascade, an automated decisioning tool that enables clients to customize and order the most appropriate automated valuation models (AVMs) based on their particular valuation requirements and risk metrics. The CA Cascade logic ensures the fastest and most cost-effective delivery of AVMs and offers direct access to a number of nationally recognized AVM models. “CA is excited to offer lenders and investors a powerful platform that will incorporate their credit policies and risk factors in an accurate and economic way,” says Michael Sklarz, president and CEO of Collateral Analytics.

Caliber Launches New Non-Agency Mortgage Program

Caliber Home Loans Inc. has announced the launch of its new NonAgency Mortgage Program, which adds four new products to the company’s diverse portfolio of mortgage solutions. The product line expansion allows Caliber to help more consumers achieve their goal of homeownership by expanding the options available to eligible and qualified borrowers. “At Caliber, we recognize that there are qualified, creditworthy borrowers with home financing needs that are not being served by the agency and government

programs that are currently available in today’s marketplace,” said Joe Anderson, chief executive office of Caliber Home Loans. “Our goal is to increase the opportunities available to borrowers to expand the boundaries of homeownership and allow more qualified borrowers to enter the market. We are confident that our prudent underwriting guidelines, coupled with the way we have structured each of these products, creates a winning combination for both Caliber and the customers we serve. As one of the industry’s leading mortgage lenders, we are thrilled to be able to offer more home financing choices to even more customers.” “We take the Ability-to-Repay (ATR) requirements very seriously and want to ensure that all of the products and programs we offer are a good fit for our borrowers at the time of their application,” said Anderson. “By conducting in-depth Ability-to-Repay analysis on every loan we underwrite, we give customers the peace of mind that they are purchasing a property that they can afford.”

ICBA Announces New Jumbo Fixed-Rate and ARM Product

ICBA Mortgage Solutions has announced the recent addition of a jumbo fixed-rate and ARM product to its correspondent lending loan products menu. Product highlights feature loan amounts up to $2 million with 15- and 30-year fixed or 5/1 and 7/1 ARMs. Community banks that participate in the program enjoy no cross-selling guarantees and in-house underwriting. Ron Haynie, executive vice president of ICBA Mortgage, says that this product allows community banks to better serve customers—especially those in high-priced housing markets. He adds, “While this segment of the housing market is small, it continues to gain strength and community banks are always looking for products that best serve their customers and enhance the overall customer relationship.” “As a community bank, we pride ourselves in offering a convenient, full-service banking experience for customers,” says Jill Castilla, president and CEO of Citizens Bank of Edmond in Edmond, Okla. “This new product offered by ICBA Mortgage Solutions streamlines the process for us to service customers’ highvalue mortgage needs.”

ReverseVision Launches New Reverse Online University

ReverseVision Inc. has announced the launch of RV University (RVU), an online continued on page 49

the cfpb’s pursuit of fair lending continued from page 33

continue to research, consider, and evaluate what changes it may propose to Regulation C. Section 1071 of the Dodd-Frank Act amended Equal Credit Opportunity Act (ECOA) to require financial institutions to collect and report to the CFPB data on lending to small, minority-owned and women-owned businesses, in order to “facilitate the enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women owned, minority-owned and small businesses.”16 The Dodd-Frank Act also directed the Bureau to prescribe rules and guidance as necessary to “carry out, enforce, and compile” data pursuant to that section. So, in April 2011, the CFPB issued guidance stating that the data collection and submission obligations arising under these ECOA amendments do not arise until the CFPB actually promulgates implementing regulations.17 Nevertheless, the CFPB has begun to explore the issues that its rulemaking will need to address. In particular, the Bureau is looking to how the Bureau might work with other agencies to, in part, “gain insight into existing small business data collection efforts and possible ways to cooperate in future efforts.”18

Reviews, reviews and more reviews

ECOA Baseline Reviews

ECOA Targeted Reviews If the Bureau’s risk-based prioritization process reveals that a particular institution’s business model, policies, or procedures present fair lending risks that warrant an in-depth review, the Bureau may conduct an ECOA Targeted Review of that institution. Generally, these reviews focus on a specific line of business, such as mortgages, credit cards, or auto finance. ECOA Targeted Reviews typically include statistical analyses and, in some cases, loan file reviews in order to evaluate an institution’s compliance with ECOA and Regulation B within the specific business line selected.20 Statistics play a significant role in the ECOA Targeted Review, because the CFPB uses data analysis and testing to detect and assess disparities in an institution’s treatment of applicants and borrowers, by analyzing whether similarly-situated applicants and borrowers were treated differently because of a prohibited basis. If, during an ECOA Targeted Review, the Office of Fair Lending preliminarily determines that similarly-situated borrowers and applicants were treated differently or received different outcomes because of a prohibited basis, the Bureau will send a letter stating its preliminary findings and request the institution to provide additional information for consideration as the CFPB deliberates whether the institution has violated the ECOA.

C Count ount o on nC Calyx alyx Compliant Compliant • Efficient Efficient • Reliable Reliable • Affordable Aff ffo ordable

F or m ore tthan ears, For more han 20 yyears, tthe he preferred preffer e red loan loan o origination rigination p platform latform

HMDA Data Integrity Reviews Permit me to admonish you as strongly as possible: Accurate HMDA data is critical to understanding fair lending risk at both the institutional level and across the home mortgage market. A CFPB examination team will call for the continued on page 53


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n Pennsylvania Mortgage Professional Magazine n JUNE 2014

ECOA Baseline Reviews facilitate the identification of ECOA and Regulation B violations and impact the Bureau’s fair lending prioritization decisions. When an ECOA Baseline Review is scheduled, examiners work with the Office of Fair Lending and with CFPB regional management to determine the appropriate scope of the review, depending on the nature of the institution’s business model and the level of known fair lending risk at the institution. On July 19, 2013, the Bureau issued a set of ECOA Baseline Review Modules, which are used by CFPB examination teams when conducting ECOA Baseline Reviews.19 These modules are used to assess fair lending risks particular to three specific product lines–mortgage lending, mortgage servicing, and auto lending–but can generally be utilized to evaluate fair lending risk at any supervised institution and in any product line. When using the modules to conduct

with QM ((A-t-R) A-t-R) A

Brief synopses of the types of reviews conducted by the Bureau are in order. Recall the three types of fair lending supervisory reviews: (1) ECOA Baseline Reviews, (2) ECOA Targeted Reviews, and (3) HMDA Data Integrity Reviews. Each of these has specific characteristics and goals. Let’s explore each of them.

an ECOA Baseline Review, Bureau examiners review an institution’s fair lending supervisory history, including any history of fair lending risks or violations previously identified by the CFPB or any other federal or state regulator. Then they collect and evaluate information about an entity’s fair lending compliance program, including board of director and management participation, policies and procedures, training materials, internal controls and monitoring and corrective action. In addition to responses obtained pursuant to information requests, the examiners may also review other sources of information, including any publicly available information about the entity as well as information obtained through interviews with institution staff or supervisory meetings with an institution. The ECOA Baseline Review may produce administrative actions, since the review definitely can detect violations of ECOA. Targeted reviews may follow in the wake of adverse findings.

Vacation Homes Sizzle as Investment Homes Fizzle The median investment home price was $130,000 in 2013, up 13 percent from $115,000 in 2012. The median vacation home price was $168,700 in 2013, up 12.5 percent from $150,000 in 2012. 47 percent of investment homes purchased in 2013 were distressed properties. 42 percent of vacation homes purchased in 2013 were distressed properties. 38 percent of investment properties purchased last year was in the South, 25 percent in the West, 18 percent in the Northeast and 19 percent in the Midwest. 41 percent of vacation homes purchased last year was in the South, 28 percent in the West, 18 percent in the Northeast and 14 percent in the Midwest. Investment home buyers in 2013 had a median age of 42, earned $111,400 and bought a home a median distance of 20 miles from their primary residence.

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Vacation home buyers in 2013 had a median age of 43, had a median household income of $85,600 and purchased a property that was a median distance of 180 miles their primary residence. There were 8 million vacation homes and 43.7 million investment units in the U.S. in 2013, compared with 74.7 million owner-occupied homes. Source: National Association of Realtors 2014 Investment and Vacation Home Buyers Survey

By Phil Hall f the National Association of Realtors (NAR) 2014 Investment and Vacation Home Buyers Survey is any indication, the expression “Selling like hotcakes” could easily be replaced with “Selling like vacation homes.” According to NAR, vacation home sales jumped 29.7 percent to an estimated 717,000 last year, up from 553,000 in 2012. Vacation home sales accounted for 13 percent of all real estate transactions in 2013, their highest market share since 2006. But while vacation home activity was reaching new heights last year, investment home sales sank: an 8.5 percent drop to an estimated 1.10 million, down from 1.21 million in 2012. The market share for investment sales fell to 20 percent in 2013 from 24 percent in 2012. The circumstances behind this real estate seesaw ride are wide and varied, according to mortgage industry experts. Heidi Frigano, executive vice president of marketing and business development at Levittown, N.Y.-based United Northern Mortgage Bankers Ltd., points out that the concept of vacation homes


has become more attractive as travel costs continue to spike. “A vacation home is less expensive than traveling abroad,” Frigano explained. “You can go on vacation without worrying about the cost of hotels and travel expenses.” Indeed, the NAR data confirms that observation: Lifestyle factors were cited as the primary motivation for vacation homebuyers, with 46 percent of vacation homes located within 100 miles and 34 percent more than 500 miles. Eighty seven percent of the survey respondents stated that want to use the property for vacations or as a family retreat, while 31 percent planned to use it as a primary residence in the future. However, not everyone purchasing a vacation home has the idea of using it for a holiday getaway. Andy W. Harris, president of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and treasurer of NAMB–The Association of Mortgage Professionals, has noticed that too many people are trying to disguise their investment properties as vacation homes. “There is an issue of occupancy fraud,” Harris said. “We see a lot of consumers trying to buy rental properties and skew

them as vacation homes. We get an average of one client a week trying to do this. We are stern with them and let them know that these have to be structured as investment properties.” On the investment home side, rising prices have helped to put the kibosh on enthusiasm for this sector. The NAR survey found that the median investment home price was $130,000 in 2013, up 13 percent from $115,000 in 2012. “It is a sellers’ market now,” said Harris. “With new home prices are going up, investors do not have as much of an appetite as they did before.” Rocke Andrews, NAMB vice president and a mortgage specialist with Tucson, Ariz.-based Lending Arizona LLC, believes that continued uncertainty over the stillfragile economy is keeping many wouldbe investors on the sidelines. “They will not take a risk about buying homes if they don’t know where economy is going,” said Andrews. Yet John Stevens, Utah area manager for ENG Lending, notes that some of the harsh lessons of the recent past resulted in many investors seeking other opportunities. “A lot of people watched HGTV and thought they could make a quick

$20,000 by flipping,” Stevens said. “Back in 2006 and 2007, everyone thought they could be a millionaire by flipping homes.” Indeed, the NAR survey confirms that flipping activity has slowed as only seven percent of homes purchased by investment buyers last year have already been resold, while another 10 percent are planned to be sold within a year. As for mortgage originators watching these trends, large downpayments were typical for both sectors: Vacation homebuyers typically put 30 percent down and investment buyers typically put 26 percent down. But all-cash purchases were not uncommon, as 46 percent of investment buyers and 38 percent of vacation homebuyers paid in cash during 2013. The 2014 Investment and Vacation Home Buyers Survey was conducted in March and included answers about 2,203 homes purchased during 2013 from a representative panel of 2,008 U.S. households. Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at

new to market continued from page 46

FirstClose has announced the expansion of its Portfolio Review Service for current home values, liens and

New Brooks Systems Product to Assist With QM Standards Mystic, Conn.based Brooks Systems has announced that it is now offering electronic testing to help lenders meet Qualified Mortgage (QM) standards set forth by the Consumer Financial Protection Bureau (CFPB). “Our goal is to make compliance continued on page 52

Ultimate Mortgage Expo Making you the Ultimate Mortgage Sales Professional Hotel Monteleone | New Orleans | July 7-9, 2014 The mortgage industry is going through significant change. For mortgage origination professionals, it’s a struggle to keep on top of all the changes, and to keep your sales strategies and marketing initiatives at their peak. You need to keep your pipeline filled, and you need the tools and directions to stay profitable, efficient and effective. So join the company that produces the NAMB National Conference, and scores of industry partners for this ultimate conference to keep you on the cutting edge.

The ULTIMATE MORTGAGE EXPO provides an exceptional opportunity to showcase your solutions, while networking with hundreds of mortgage industry leaders, brokers and lenders. To contact us: Vincent M. Valvo, CEO Agility Resources Group LLC Direct: (860) 922-3441 Email:


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

FirstClose Expands Portfolio Review Service

encumbrances. Lenders can now access a detailed asset valuation that meets compliance requirements, but also exceeds expectations with a summary of the featured properties’ transactional histories. The result is a comprehensive solution for lenders that documents the strength of their portfolios through additional data. An expanded review process is available on first and second mortgages, as well as HELOC-specific portfolios. FirstClose’s Portfolio Review Service includes detailed information about factors that negatively or posi-

accurate, up-to-date and critical to making short term and long term decisions.”

education platform created to teach mortgage professionals about the reverse mortgage industry. Many of RVU’s courses will offer continuing education credits from the Nationwide Mortgage Licensing System (NMLS) and the National Reverse Mortgage Lenders Association (NRMLA) for its coveted Certified Reverse Mortgage Professional (CRMP) distinction. “RVU is a fantastic tool for reverse mortgage professionals built as a direct response to challenges being experienced throughout the industry,” said Rachel Smith, product manager at ReverseVision. “We were repeatedly told how expensive and time-consuming it is to train new LOs and fulfillment people new to the industry. RVU will replace the need for in-house, HECM-specific training for both new and experienced staff. Compared to live training, RVU is more convenient and consistent, and far less expensive,” Smith said. RVU courses are also essential for companies looking to ensure their staff members are speaking the same language with respect to reverse mortgages. By utilizing RVU, companies will build a team of knowledgeable reverse mortgage experts who can better serve their borrowers, and best position themselves to avoid any training-related issues that may arise from a CFPB audit. “We are excited to finally have an on-line training platform that specifically addresses the needs of the reverse lending space,” said Marta Harder, COO for Colorado based 1st Reverse Mortgage USA. “For years, there have been web-based schools for traditional lenders, but until now our industry was being ignored,” continued Harder. “We are growing rapidly, and being able to get all of our staff aligned in their knowledge of the industry is key to our success.” RVU’s premier course is Reverse Mortgage Fundamentals, a two-hour class that educates participants on the key laws and principles that comprise the HECM program. Reverse mortgage professionals looking to brush up on the newest changes and sharpen their understanding of complex topics will appreciate the course’s simplicity, while forward mortgage professionals looking to break into the reverse space will find the material comprehensible and thorough.

tively influence the assets’ value or negatively affect the lender’s lien position such as new liens, judgments, foreclosures and other encumbrances. Lenders submit property addresses in a simple spreadsheet format; the spreadsheet is then reviewed and annotated within 48 hours. Additional information, such as changes of ownership and property tax history, can also be provided. “What sets apart FirstClose’s Portfolio Review Service is the unique level of detail that’s all-encompassing,” said Tedd Smith, FirstClose CEO. “That roundtrip history of the assets reviewed underscores the true value of lenders’ portfolios with data that’s

Two Common HECM Misconceptions


2 0 1 4

By Ralph Rosynek As loan originators, our ability to overcome objections is key to successful transaction completion. In the formative years of the reverse mortgage industry, it became very apparent that this is a product which cannot be sold. The HECM (Home Equity Conversion Mortgage) is a product which must be delivered with an educational component from loan origination professionals who also understand the concerns of a class of borrowers who have been targeted over time past due to their lack of information and resources. Significant consumer education and information efforts over the past years by industry professionals, U.S. Department of Housing & Urban Development (HUD) counseling resources and reverse mortgage media discussions has greatly improved reverse mortgage loan acceptance by HECM borrowers. Two of the most common misconceptions addressed by today’s product focus are: 1. The bank owns my home: The bank does not own the home. A reverse mortgage is secured by a primary lien on the property, no different than a forward traditional mortgage, with one minor difference. Upon recordation of the lender’s interest, a second mortgage instrument (not a second mortgage facility) is recorded against the property subsequent to the lender’s first lien position. This second mortgage instrument is in favor of the Secretary of HUD, and allows for the seamless transition of loan control should the first lien holder lender become impaired and unable to be responsible for continuing to service and support the loan.

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


2. Reverse mortgages are expensive: In the past, the costs, expenses and fees associated with a HECM transaction were greater than the products being offered today. The more “expensive” years were, in part, due to lesser options, features and benefits; lesser loan volume which restricted potential secondary and investment banker interest; and less vendors and resources that were familiar with the product. Today, the costs, fees and expenses associated with the reverse mortgage transaction have been greatly reduced due to greater secondary market investor opportunities recognizing the quality of the product, the restructure of FHA/HUD Initial Mortgage Insurance Premium (IMIP) based upon the initial proceeds use, and the offering of lender credits resulting in additional borrower proceeds. The HECM product may not be the right fit for all eligible borrowers, however, as industry resources continue to whittle away at these and other product misconceptions. The commitment to preserve HECM for use as a viable choice for eligible borrowers to remain in their home, maintain financial independence and assist with retirement planning options has not changed over the years since product introduction in 1989. Now is the time to look at this growing opportunity to reach more borrowers. Your market entry can be very scalable and requires an initial sales commitment to product education and addressing the needs of this class of borrowers. Most importantly, your most efficient market entry should be partnered with the strengths of a recognized lender with a support system and training program for the guidance and assistance needed to achieve your 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 or call (281) 404-7970.

NAPMW Past Presidents at the association’s 2014 National Education Conference in Seattle—(Front row): Frances Reinhardt, Mary Ellen Heathcote, Hulene Works, Georgene Peterson Lee, Lucy Collier, Ann Galla Kluge, (second row): Maureen McKovich, Sharon Decker, Jennifer Walton, Pat Hamilton-Bell, Libby Stivers, Stevie Kellogg, Katherine Kosicki Venters, Jackie Nelson, (back row): Candace Smith, Lola Kinzie, Paula Berg, Laurie Abshier, Sue Barnett, Dawn Adams and Iva Deobald

Celebrating 50 Years of NAPMW in the Emerald City By Jill Kinsman n May 15, the National Association of Professional Mortgage Women (NAPMW) came together to honor and celebrate 50 successful years of providing highquality education to people in our industry, and the women and men who worked so hard to make it happen. Seattle put its best foot forward and provided beautiful weather for the entire week, with nary a rain drop in sight! Seattle is the place where NAPMW came to be. Our first national president, Georgene Peterson Lee, joined together in 1964 with eight other women to promote and foster educational opportunities for women in the field of mortgage lending, and we continue to focus on that as our primary goal today and as we look to the future of NAPMW. We were so honored to have Past National President Lee with us at our Opening Ceremonies, along with 23 other past national presidents. Each past national president was recognized with white roses and a golden pashmina as a remembrance of this special event, along with special PowerPoint presentations provided by National Secretary Cynthia Nutter. On the evening of May 16, there was a trade show and reception that helped NAPMW to showcase our generous sponsors, as well as other businesses from the Seattle area. There were 27 vendors and sponsors that participated and our members were able to have a great evening of networking to support them. Our National Conference Committee Chair Debbie Tofte, GML worked diligently with Nita Cook, CME, CMI, our Education Committee chair, along with her Conference Committee members to provide education for our attendees that was outstanding in every way. Keynote Speaker Mary Ann McGarry, president and CEO of Guild Mortgage Company, helped start the day by sharing inspirational insights with her presentation, “Leadership in Mortgage Lending: Past, Present and Future.” Other classes available covered topics such as technology, personal and professional develop-


continued on page 57 SPONSORED EDITORIAL

act now before it’s too late ... continued from page 37

default administration guidelines, as applicable.

l Staffing size: On-site audit visits would generally be staffed with anywhere from two to five professionals (again, actual staff resources engaged would depend upon the size, complexity and processing volumes of the vendor or third-party legal service provider);

(ii) Experienced legal experts familiar with specific state and local default administration guidelines (i.e. those relating to foreclosures, bankruptcies, asset maintenance and administration, etc.); (iii) Seasoned servicing professionals intimately familiar with the various facets of default management services; (iv) Experienced compliance professionals familiar with federal, state and local guidelines who are fully capable of assessing the completeness and adequacy of written policies and procedures; and (v) experienced technology professionals intimately familiar with technical infrastructures relating to default management practices, workflow protocols and continuity of business planning.

l Staffing competency: Seasoned mortgage professionals should be allocated to perform on-site audit visits. Specifically, staffing selections should consist of: (i) Trained financial accounting and servicing operations professionals capable of reviewing, analyzing and opining on the financial viability and processing capacity of each vendor or third-party legal service provider;

Servicers should be careful not to select a surveillance firm that utilizes a “one-size-fits all/cookie-cutter� approach. Instead, consideration should be given to the size of the vendor or third-party legal service provider in relation to their geographic location, years of experience and the volume of transactions being processed. A flexible review approach should be taken by the surveillance provider (for example, the small four-person vendor in a remote geographic loca-

l Site visit: An on-site audit visit of the vendor or third-party legal service provider should be performed within approximately two to three weeks of receiving the requested information. On-site audit visits will generally range between three and five business days; however, timing may vary depending upon the size and processing volumes of the vendor or thirdparty legal service provider.

tion having a proven history of strong performance should likely be assessed differently than a larger, more complex vendor/third-party legal service provider having a broader footprint across a more diverse constituency or geography). Upon completion of the on-site field audit, a sit-down closing meeting should be held with senior management of the vendor or the third-party legal service provider to discuss the results of the review performed, specific findings noted and any preliminary performance grading assessment that may be provided. Generally, within 30 calendar days of the completion any on-site field-audit, a written report should be prepared that supports the evaluation performed. Specific findings and issues should be presented, applicable recommendations for corrective actions discussed, associated implementation target dates identified and timeframes for performance of a followup review agreed to. Generally, servicers should select surveillance firms that formally rate vendor performance (i.e. those that are fully acceptable, those that are acceptable with some concerns noted, or those that are not acceptable). In assigning such ratings, any subjectivity would be eliminated or minimized to the greatest extent possible. As such, servicers may consider using surveillance firms having a formal scoring model that utilizes individual numerical grading assignments opposite a comprehensive set of questions/processing routines within a series of weighted performance attributes and categories.

Any supporting written reports that are prepared by the surveillance provider should be treated in a highly confidential manner and should only be shared with the servicer and the vendor/third-party legal service provider upon receipt of specific and mutual approvals/consent agreements. Surveillance firms should collaborate closely with each mortgage servicer and the respective third-party legal service providers, and should modify their review approach as necessary. By following the suggested protocols discussed, servicers can more comfortably ensure that surveillance providers selected have the essential tools and approaches in place to evaluate and monitor overall performance effectiveness and compliance of vendors and third-party service providers. Servicers will also be secure in knowing that selected vendors and third-party legal service providers are performing optimally and in a fully compliant fashion. In doing so, servicers will also be well positioned to undergo any regulatory scrutiny requiring them to have policies and procedures reasonably designed to achieve the objective of facilitating periodic reviews of vendors and third-party legal service providers. Vincent Spoto is partner and managing director of New York, N.Y.-based RRMS Advisors LLC. He has more than 25 years experience in the financial services sector. He may be reached by phone at (212) 843-9159 or e-mail

Markets may be volatile, but there’s one thing you can always count on, the total commitment of our Mor tgage Team. Loyalty, continuity of ser vice and our dedication to protecting the integrity of our relationships are just a few of the things that set us apar t.

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n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Ridgewood understands the needs of its communities      



The Insured Closing Letter is Obsolete

The Reverse Mortgage Domino Theory

By Andrew Liput A recent panel on fraud issues I attended included a healthy debate about the extent to which a lender can rely on the insured closing letter as a means to offset risk at the closing table. Advocates felt that the American Land Title Association’s (ALTA) Best Practice Initiative backed by the letters should give lenders sufficient assurances that any bad act at the closing table would be deterred or insured. Others felt differently. One audience member asserted that the insured closing letters were woefully inadequate to offset the type of risks that lenders care about most. A careful reading of these letters exposes their limited applicability to a lender’s critical compliance and risk concerns. In an era of heightened consumer protections, data security and risk monitoring what exactly do these letters, which are not an insurance product, offer? Not enough to rely on them unconditionally. Here are some of the key features of the standard insured closing letter issued nationally by various underwriters. The language is similar, if not identical, no matter who is issuing the letter: “We agree to reimburse you for an actual loss incurred when the issuing attorney or closing agent … fails to follow your written closing instructions to the extent that (a) title is impaired or liens not properly recorded, or (b) the agent commits fraud with your funds or misapplies your funds, or (c) commits fraud in handling your documents.” Exclusions to the letter include: l Where the closing instructions vary from the title protection ordered in the title report; and/or l Failure of the agent to deposit the mortgage proceeds into the bank which you designated by name;

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n

52 Some issues not covered by these letters include: l Agents who conspire with others to commit fraud; l Agents who steal or misuse a consumer’s personal and financial data obtained at the closing; l Agents who fail to report the fraud of others at the closing table; l Agents who comply with closing instructions, but are complicit in straw buyer, short sale, fraud, foreclosure rescue fraud, and undisclosed intervening flips; l Agents who steal a borrower’s deposit or cash to close; and/or l Agents who permit cash outside the closing. In addition, because these letters are not an insurance product, they are not uniform nationally (several states prohibit them, notably New York), not regulated like insurance, and are invoiced as a title charge not an insurance premium. Finally, because the letters are not insurance, disputes regarding coverage are relegated to the courts, where litigation costs are expensive. There is no insurance commissioner to complain to and no regulatory authority to help mediate disputes and investigate bad claims acts. Quite simply, reliance on the insured closing letter as risk management is misplaced confidence in a document that was never intended to protect lenders from all of the types of risks they face when closing loans, risks that can ultimately result in repurchases and fraud losses. More importantly the insured closing letter, when collected in the mortgage process, does not excuse a lender from conducting the type of due diligence it must perform to meet Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), U.S. Department of Housing & Urban Development (HUD) and Fannie Mae requirements for vendor management and consumer protection. Until a suitable replacement can be implemented nationwide lenders should view these letters for what they are worth: One small part of a larger enterprise risk management obligation to protect consumers and assure loan quality. 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 email at


By Robert Ottone Back during the Vietnam conflict, many politicians subscribed to what was called “The Domino Theory,” which was, essentially, the notion that should Vietnam fall to Communist rule, so would the rest of Asia. It never happened. There’s concern in the mortgage industry of another kind of “Domino Theory” ... one that would require banks, both large and small, perhaps banks without the necessary means, to hire an individual to handle all reverse mortgage counseling duties face-to-face. That’s what’s apparently happening in Massachusetts, so, it’s not entirely implausible that it could happen across the rest of the nation. Beginning Aug. 1, low-income lenders will be required to make face-toface appointments with clients, reportedly in an effort to better serve those seeking reverse mortgages. While the industry has been fighting this particular regulatory shift for a few years, change is looming. “There are homebound seniors, transportation issues, language issues and a host of restrictions,” said George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass. “The bottom line is it effectively will shut down reverse mortgage lending as we have known it in Massachusetts.” “Lenders may be overreacting. Since the mandate is targeted at vulnerable segments of the reverse mortgage market in Massachusetts, the wisest course for lenders and the industry is to welcome and embrace it,” said Atare E. Agbamu of Think Reverse LLC. “‘Either or’ thinking is not helpful here. What is good for reverse mortgage consumers can be good for lenders and the industry.” Could Massachusetts be the start of something new and frustrating for the reverse mortgage industry? While it seems a bit premature to automatically assume that one state’s mandate will eventually lead to national adoption, there are legitimate concerns. Only time will tell when it comes to this new bit of legislation. Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by email at

new to market continued from page 49

easy and pain-free for lenders,” said Taylor Heal, director of sales and marketing at Brooks Systems. “By offering high-cost loan analysis with QM testing, we help lenders obtain confidence that their loans comply with new requirements and qualify for sale to the GSEs.” Brooks Systems’ Web-based application, BrooksWebCalcs embedded with HCLA (High-Cost Loan Analysis), ensures that loans are 100 percent compliant with all federal, state, and local lending regulations. The product saves lenders time and money by reducing errors and increasing cost controls.

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

the cfpb’s pursuit of fair lending continued from page 47

HMDA-LAR and carefully review its data. If there are data integrity concerns, the examiners will immediately have a problem with all manner of other aspects of the fair lending review, since they cannot rely on the HMDA data to conduct the review adequately. The CFPB’s HMDA Data Integrity Reviews evaluate the accuracy of institutions’ HMDA data and assess whether institutions have adequate HMDA compliance management. Obviously, if there are substantive data integrity findings, the Bureau may determine not only that the examination has been unduly hampered but also that management is responsible for having caused the data integrity concerns. If management discovers that it had data integrity problems with the HMDA-LAR and did not correct them, perhaps through a refiling (if necessary), the Bureau will factor that lack of appropriate action into its overall findings. The Bureau has conducted HMDA reviews at dozens of mortgage lenders, both bank and nonbank. Through these reviews, it detected some violations of HMDA. It also found that many lenders had instituted and maintained strong CMS procedures and had no violations of HMDA. To prepare for this type of review, the Bureau published its HMDA Resubmission Schedule and Guidelines, in early October 2013, which provides instruction and additional detail on the HMDA Data Integrity review process.


2—Idem, page 2. 3—Op. cit. 1, page 4. 4—Op. cit. 1, page 8. 5—12 U.S.C. § 5493(c)(2)(D); 15 U.S.C. § 1691f; 12 U.S.C. § 2807. 6—§ 1013(c)(1)–(c)(2)(A), 124 Stat. at 1970. 7—§ 1013(c)(2)(B)–(C), 124 Stat. at 1970. 8—Lending Discrimination, CFPB Bulletin 2012-04 (Fair Lending), April 18, 2012. 9—Op. cit. 1, page 6. 10—Op. cit. 1, page 9. 11—Memorandum of Understanding Between The Consumer Financial Protection Bureau and The United States Department of Justice Regarding Fair Lending Coordination (Dec. 6, 2012). pb_doj-fair-lending-mou.pdf. 12—Op. cit. 1, page 13. 13—Further information may be obtained from: Consumer Financial Protection Bureau, Equal Credit Opportunity Act Baseline Review Modules (July 19, 2013),; Consumer Financial Protection Bureau, Supervision and Examination Manual (October 31, 2012), pb_supervision-and-examination-manualv2.pdf; Consumer Financial Protection Bureau, Supervisory Highlights: Fall 2012 (October 31, 2012), 14—Op. cit. 1, page 14. 15—12 U.S.C. § 2803(b). 16—Dodd-Frank Act, § 1071(a). 17—Letter from Leonard Kennedy, CFPB General Counsel, to Chief Executive Officers of Financial Institutions Under Section 1071 of the Dodd-Frank Act (April 11, 2011), Cletter-re-1071.pdf. 18—Op. cit. 1, page 16. 19—Consumer Financial Protection Bureau, ECOA Baseline Review Modules (July 19, 2013), oa_baseline-review-module-fair-lending.pdf. 20—Op. cit. 1, page 20. 21—Op. cit. 1, page 20.

Why NAPMW? Three Simple Reasons

Education Organized for the purpose of providing education to professionals in all phases of the mortgage industry, NAPMW offers education via many venues – seminars and workshops held around the country, on-line, and at its National Education Conference held each May. NAPMW membership gives you exclusive access to timely education regarding the regulations affecting your career such as a FREE TO MEMBERS monthly webinar on industry updates.

Leadership If you believe in helping to elevate the educational standards of this industry, or assisting in developing the most competent industry work force, then you believe in NAPMW. NAPMW is not a women’s organization. But since women make up the majority of professionals in the mortgage/banking profession, our purpose is to help them advance in business, personal, and leadership development.

Networking NAPMW is a community of nearly 2,000 professionals across the Country who engage in the mortgage / banking industry. Men and women from all backgrounds have joined NAPMW because they want to excel at what they do. Employers who want excellence from their employees engage with NAPMW for up-to-date education. Both professionals and employers have found there is a place for them in NAPMW. • National Education • Coast to Coast Associations • National Training • Discounted Services • National Networking • Industry Updates

22—15 U.S.C. § 1691c(a)(9); 12 U.S.C. § 2804(b)(1)(B), (d); §§ 5563–5564. 23—12 U.S.C. § 5562. 24—Idem, § 5562(c). 25—Op. cit. 20, § 5563. 26—Op. cit. 20, § 5564. 27—Op. cit. 20, § 5565. 28—Op. cit. 9. Also see 15 U.S.C. § 1691e(g).


To Join NAPMW visit: or call: 1-800-827-3034

n Pennsylvania Mortgage Professional Magazine n JUNE 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) 442-3456, by e-mail at, or visit or

1—Fair lending Report of the Consumer Financial Protection Bureau, issued April 30, 2014 (

The CFPB has several tools at its disposal, as it has openly stated, to “promote fair, equitable, and nondiscriminatory access to credit,”21 including its authority under ECOA, HMDA, and the DoddFrank Act to bring public enforcement actions.22 For instance, as part of its enforcement authority, the CFPB may conduct investigations23 and issue civil investigative demands.24 Furthermore, the CFPB may conduct administrative hearings25 or, through its independent litigating authority, commence a civil action in a federal or state court.26 In any such action, the CFPB may seek appropriate legal and equitable relief, such as restitution, payment of damages or other monetary relief, limits on the activities or functions of the person, and civil money penalties.27 When appropriate, the CFPB also refers “patterns or practices” of lending discrimination to the DOJ.28



Carl Markman

Director of National Sales, REMN Wholesale


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hen you walk through REMN Wholesale’s new offices in Iselin, N.J., it is difficult not to notice the rows of empty desks. But Carl Markman, the company’s director of national sales, offers a calm assurance that these empty desks were not the workspaces of previous employees that were let go. It is quite the opposite … these spaces are soon to be filled by new employees being hired to help the company keep up with its constantly percolating business. At a time when many players in the mortgage world seem to be struggling, REMN Wholesale is growing. According to Markman, the company’s holistic approach to customer service and positive corporate environment has helped to spur REMN Wholesale to bigger and better goals. In this interview, our June 2014 Mortgage Professional of the Month Carl Markman will share the secrets to REMN Wholesale’s success, as well as his own odyssey through the mortgage industry.


So … how’s business? Carl Markman: It’s funny you should ask that because I’ve been traveling across the country, speaking with customers


AND competitors, and when we talk, most of my competitors tell me that they are either flat or slightly down. We are unique and fortunate in that we are quite busy. In fact, when you walked in, you saw some empty desks—those are all filled at this point in order to support all of the account executives we have hired—many of which are new underwriters. Those aren’t some empty desks … those are a lot of empty desks! We have about 20 or 25 out there right now. The only way we can grow is to hire new operations people, which are the underwriters. In fact, we just opened up a new sales and operations hub out in Newport Beach, Calif., that is primarily sales, but we also hired some underwriters out there.

Let’s turn the clock back a bit. How did you get started in this business? It was well over a couple of decades ago, when I applied for a mortgage. The person with whom I applied for a mortgage was just horrendous. A month-and-a-half passed, and even I knew the process shouldn’t have taken that long without getting a decision, I went somewhere else and connected with a gentleman who got me interested in this industry. He said, “Carl, if you can do a better job, you should get into the business.” At the time, I happened to be working for a Wall Street firm and wanted a change, so, I got into the business as a loan officer for a bank. Within my first year, I became one of the top originators in the country … with no experience! I worked for the same company, Wachovia, for 15 years. I am fortunate that the day after I left my

previous company, I started here with REMN and that was about six years ago. How has the business changed since your days at Wachovia? We sold portfolio products, so it is much different, but the regulatory oversight is significantly different. In the six years I have been here, we probably had one-third of the staff doing twice as much volume. You are sitting in our corporate headquarters here in Iselin, N.J., which is 52,000-square-feet, and that has grown significantly spacewise because we need to house departments that we never had before. Many of those departments are connected to new regulatory requirements and oversight. Do you believe that these regulatory changes have made it a better industry? Yes and no. It has protected the consumer in a lot of different ways. But I also believe that because of some of the regulatory issues that have come up, it makes it more difficult, not to mention more expensive, for the consumer to obtain financing. How have the regulatory changes impacted the mortgage brokers? Due to all of these changes, many of


Actually, the board on your wall also says, “Activities=Submissions=Funding=$ucce$$” and underneath that is the quote that says, “Because We Care.” Where did that come from? It’s something I believe in. The prob-

Speaking of jobs, what advice would you give to newly-minted college graduates considering the mortgage industry as a career path? That’s a great question! I don’t think anyone has ever posed that to me before. We think about it all of the time. We go to trade shows and speak with our broker partners, and find that there aren’t many people in their 20s or 30s left in this business anymore. It’s mostly all of us in our 40s, 50s and 60s now since no one new is getting into the business. This is a terrific business to get into, from a monetary standpoint, and it is a make-you-feel-good job because you get to help people get into the homes of their dreams. You get the best of both worlds. Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at


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How does your company work with brokers, compared to how your competition works with brokers? Well you can see on that board on my wall, which says, “Because We Care.” We still look at the broker as our partner. I don’t care if you are funding one loan every couple of months or funding $20 million in loans, every loan counts. Our promise to same day turn times since 2002, exemplifies our commitment to our broker and mini correspondent partners.

This sounds like a fascinating company to work for. With REMN, it’s not about having someone join the company, do a great job for a year and then move on to another company. We really invest in our employees and work hard to motivate them to grow with REMN Wholesale. In fact, I have several account executives that have been here well over a decade. On the sales end, we have minimal turnover. Our top producers are our top producers because they’ve been here for a long time. In the last six to nine months, we hired several new account executives because we wanted to target different regions across the country and concentrate on building out the West Coast to balance out the business nationally.

them aren’t in the business anymore. I remember in the beginning of my career that I used to drive up to large broker shops–they were more of the boiler room type operations. Outside in the lot were rows of beautiful cars, and you would walk inside and there were a bunch of twenty something’s talking on the phones, just selling, selling, selling. Today, many of those same people are now out of the business. I think the word “professional” has come back to the broker and banker business. It is a different environment indeed. You have to know your products and services and the different lenders out there in order to help your customer get that loan best suited for their needs.

lem that managers have is that they tell their sales team what they want their end result to be, rather than focus on the tools they need to get them to their goal. So, the first process is that you need the activities as you cannot just e-mail a customer and expect them to respond with business. You asked me how I got in the business. I came from Wall Street and was very analytical, so when I started, I drew a pie chart and wrote down real estate agents, attorneys, financial planners, accountants, builders and worked all the way around. I said to myself, “If I continually call on every single one of these resources, I will always be busy.” If you go through the process and you perform the activities all of the time and not just when things are slow, you will always be busy.

Lack of Inventory Equals Long-Term Growth for Your Pipeline By Tom Ward As I travel across the country, the words I'm starting to hear are "We have a shortage of inventory here.” This is not isolated to any particular area as it's happening almost everywhere. Recently, I was asked to speak at an office meeting. The sales manager let me sit in on the first 15 minutes where he covered the previous month's production numbers and addressed how the originators were faring compared to their goals. Every one of them was short of achieving their goal. Now store that thought until I finish my next part. As I am delivering my presentation, I begin to discuss our Path2Buy Program and the research I did when interviewing 318 renters, how 317 of them said they would want to own a home … just not right now. Then, I talked about how our program helps get renters off of the sidelines. When I got to the Q&A portion, a very respectful gentleman challenged my information and said, "The market here is very hot right now, but there is just a shortage of inventory.” I said with all due respect, if the market is so hot, how come no one made their goal last month? Silence filled the room. I then explained what I call "The False Positive.” The market appears to be hot because the amount of buyers exceed the number of sellers. The issue is inventory. Sellers aren't putting their houses on the market for a couple of reasons: 1. They don't have enough equity to move up … just yet. Even if they wanted to move up, they cannot get enough cash out of their existing house to put down on the next house, so they are staying put.

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2. They're afraid to take on more debt due to the uncertainty of the economy in general. They're still gun shy after the drop in values from a few years back. So what happens to this potential first-time homebuyer is they get frustrated looking at houses, making numerous offers and coming up empty, in turn, driving them back to the sidelines to continue to rent. The first time I saw this was in the Phoenix market when the renter was competing with institutional buyers, like Blackstone, that were making offers of 105 percent of list with no contingencies. As an originator, you used to count on your pre-approved buyers being the ones who were "on deck" to write a contract. Today, it's a different world. The advice I can give any originator is to change your way of thinking … start thinking about a longer incubation time than what you're used to. Stay in front of this potential buyer and keep in touch. Make sure you have a system to do this. In our Path2Buy system, the incubation strategy is one of the cornerstones of its success. My research shows that the bitter taste of renting will re-appear a few months down the road and the originators who had a system to incubate will reap the benefits of the changing market. I learned a long time ago that whether the reason is saving for a downpayment or waiting for inventory, the renter will eventually buy their first home, the only question is from whom and where will they get their mortgage. Tom Ward is founder of the Path2Buy Homeownership Coaching Program ( He may be reached by phone at (847) 340-4295 or e-mail



HMDA REPORTING MANAGEMENT ith heightened regulatory and media focus on Home Mortgage Disclosure Act (HMDA) data, more lenders will find themselves the subject of fair lending exams, according to Mortgage TrueView, a provider of data-driven business intelligence services. In a new independent study, the company found that many lenders are leaving themselves vulnerable to fair lending exams and significant penalties by not properly monitoring and managing HMDA reporting. Mortgage companies and banks are not taking full advantage of the insights offered in HMDA data, said Mortgage TrueView President and CEO David Moffat. Additionally, Moffat said the company’s 2013 HMDA survey showed that many lenders are submitting their data with formatting errors, which could lead to non-compliance issues with regulators. HMDA Survey and Case Study, Volume II: 2013 HMDA Data Insights details Mortgage TrueView’s findings based on 2013 HMDA date collected from nearly 400 of the country’s lenders, including seven of the top 10 lenders and 15 of the top 20 lenders. Among the key findings:


l 2013 regulatory risk indicators show a 13 percent year-over-year increase in loan denial rates l Denial rates for white applicants increased from 17 percent to 21 percent, while denial rates for nonwhite applicants increased from 23 percent to 28 percent l Denial rates for Hispanics increased from 25 percent to 30 percent. Denial rates for non-Hispanics increased from 18 percent to 21 percent l Denial rates for female applicants increased from 21 percent to 26 percent. Denial rates for males increased from 17 percent to 21 percent For its survey, Mortgage TrueView requested the 2013 public loan application register (LAR) filings from the top


1,160 mortgage originators in the country. Notably, a sizable number of the 388 respondents had critical errors in their filings, including missing data fields, incomplete data fields, incomplete records and incorrect data formats. “Regulators have made it clear that lenders face significant fines and penalties for non-compliance with HMDA reporting requirements,” Moffat said. “Our survey shows that problems with the way the data is reported could raise that risk. We strongly recommend that lenders’ senior management get more involved in monitoring and managing HMDA reporting, as well as other regulatory reporting requirements.” Mortgage TrueView’s flagship product HMDA Analytics helps lenders identify trends in loan application data, compare their data to other lenders, and calls attention to risks that increase the likelihood of a fair lending examination. It also helps lenders find new business opportunities, according to noted industry expert Becky Walzak, executive vice president, director of regulatory compliance with Mortgage TrueView. The company’s advanced analytics offer an in depth and meaningful view of lending activities that can help reduce potential risk and financial exposure, and can ultimately lead to increased revenues, she said. “The purpose of HMDA isn’t to point fingers,” Walzak said. “The intent is to show lenders where they may not be fulfilling minority needs. A good analysis of the data also tells lenders where there may be missing opportunities.” By integrating other public data elements, such as U.S. Census data, into its HMDA analyses, Mortgage TrueView is able to offer additional insights into lending practices, both by company and for the industry as a whole. “Lenders need to be more aware of how HMDA data is being used,” Moffat said. “A lender should know more about their own data than the regulators know, and right now, that’s clearly not the case.”

napmw report: june 2014 continued from page 50

ment, and subjects specific to the mortgage lending industry. On May 16, an Industry Panel was presented with speakers from the U.S. Department of Veterans Affairs, Federal Housing Administration, Freddie Mac and the Consumer Financial Protection Bureau, which provided some lively and thoughtprovoking discussions. The NAPMW Annual National Meeting was also held to discuss the association and what we envision for our future goals. Other educational offerings over the course of the Conference included a session on leadership development as well as NAPMW-specific officer training. Along with the education and the meetings, we did plan time to let loose and have some fun! There were many who were able to take the Seattle Duck Tour and enjoy a land and sea excursion around the Puget Sound region which proved to be highly entertaining. The theme for our Campaign Night was “No Place Like Home” and our “Wizard of Oz” characters were out in force! Great music, good food and dancing made

it a night to remember for years to come. After participating in a conference full of education, meetings and some fun, we came together to formally celebrate the successes of our year past and to honor once again, 50 years of providing education and value to our peers in the industry. We congratulated our 2013-2014 PNPAC Spirit Award winner, Cynthia Nutter, for setting a shining example to others in the association, her dedication and hard work. The outgoing National Board was recognized for a year well done and we started off the new year with the installation of the new board under the leadership of our new 2014-2015 National President, Christine Pollard. I know she will do a fantastic job leading our association to a bright future and our next 50 years as she “Breaks New Ground” for NAPMW. Jill Kinsman of U.S. Bancorp was NAPMW past national president, 20132014. She may be reached by phone at (206) 344-7827 or e-mail


tales from the closing table continued from page 34

Einstein dies and goes to Heaven only to be informed that his room is not yet ready. “I hope you will not mind waiting in a dormitory. We are very sorry, but it’s the best we can do and you will have to share the room with others,” he is told by an angel dressed in white. Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the angel leads him to the dorm. They enter and the great

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

n Pennsylvania Mortgage Professional Magazine n JUNE 2014

On the lighter side …

man is introduced to all of the others waiting there. “See, here is your first roommate. He has an IQ of 180!” ”That’s wonderful!” said Albert. “We can discuss mathematics!” “And here is your second roommate. His IQ is 150!” ”That’s wonderful!” said Albert. “We can discuss physics!” ”And here is your third roommate. His IQ is 100!” ”That’s wonderful,” said Einstein. “We can discuss the theater!” Just then, another man reaches out for Albert’s hand and shakes it. “I’m your last roommate and I’m sorry, but my IQ is only 80.” Einstein smiles back at him and said, “So, where do you think mortgage rates are headed?”

Regulatory updates … The CFPB, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA) and the Federal Housing Finance Authority (FHFA) are jointly proposing a rule to establish uniform registration and supervision of appraisal management companies (AMCs) throughout the United States. The proposed rule also anticipates the establishment and administration of a new national registry of appraisal management companies (AMC National Registry or Registry), as well as the adoption of new appraisal regulations for State nonmember banks and State savings associations.

“Data management is a shared responsibility between lender and vendor, and both parties are subject to audits and oversight if questions arise on the quality of the data.”

Staying Compliant While Computing in the Clouds By Phil Hall

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Cloud computing is hardly a new idea. The original concept for cloud computing can be traced back to the 1950s, and for a period of time, it was referred to as “time-sharing.” But today, despite its popularity, many mortgage professionals are still in a fog when it comes to the compliance considerations relating to cloud-stored data. The value of cloud computing has grown, in large part, because of the cost savings associated with the quantity of data being stored in this set-up. For companies that store large amounts of data in the cloud, the cost effectiveness increases. “Cloud computing has an interest cost curve to it—it requires volume,” explained Eric Robichaud, CEO of Woonsocket, R.I.-based 401 Consulting, and a longtime tech industry developer. “So for small setups and few customers, cloud computing can be prohibitively expensive. But as volume rises, costs come down. High volume users, or services with lots of users, can see terrific cost savings versus owning and operating everything yourself, in-

house. Cloud computing is enabling businesses to ‘do more with less’ because they can launch advances services—CRM, accounting, marketing automation, and more—without having to have IT staff, infrastructure costs and skill-sets in-house.” While primarily seen as a data storage strategy, cloud technology can also be used in a more proactive manner. For example, Coester Valuation Management Services launched Cloud Control in 2012 as a technology that included updates on regulatory changes and compliance reviews. “We built in a lot of stuff: TILA triggers, security reviews, QC proceedings, reviews of audit files, breakdowns of reviews by state,” said Brian Coester, chief executive officer of the Rockville, Md.-based company. “It is constantly being updated, almost on a monthly basis.” According to Jonas Moe, vice president of product strategy at Pleasanton, Calif.-based Ellie Mae, data storage via cloud computing enables easier access to information, which is always wel-

come during compliance reviews and audits. “Our customers have complete visibility over all data, even if their branches are 3,000 miles apart,” Moe said. “There is no disconnect or separate data silos. By storing all data and documents in a cloud solution, it makes the process of going through an audit a lot more palatable.” But within the mortgage industry, the cloud raises more than a few thunder rumbles when it comes to regulatory compliance. Ben Sizemore, chief information officer at McLean, Va.based First Guaranty Mortgage Corporation (FGMC), pointed out that the Consumer Financial Protection Bureau (CFPB) has yet to extend its regulatory reach to include the compliance aspects of cloud computing—thus leaving many mortgage professionals with more than a little uncertainty. “We don’t have any special compliance or regulatory framework to do the due diligence,” said Sizemore. “I have not seen anything from the CFPB mandating anything yet. I’d love to hear some input, and our compliance and legal department are keeping an eye out for that.” But Keven Smith, president and CEO at the Southfield, Mich.-based software vendor Mortgage Builder, noted that the CFPB hasn’t completely forgotten about the industry. “We work with CFPB, but we are not audited by them,” Smith said, adding that other regulatory entities are more proactive in conducting audits. “The FDIC comes in, the OCC comes in, the state of Michigan comes in—typically on an annual basis. None of them come in at a pre-scheduled time—they call up out of the blue and we make room for them.” Another vendor, Rob Katz, executive vice president at San Diego-based ReverseVision, acknowledged that today’s cloud computing providers have to be cognizant of the different regulatory requirements facing the diverse number of financial institutions within their client bases. “Every type of business has different types of regulation oversight and every

agency has different perspective on what is important from a regulatory standpoint,” Katz said. “When one of our clients goes through an audit, we go through an audit because we’re managing their data.” And this has been one of the more appealing factors of cloud computing: Data management is a shared responsibility between lender and vendor, and both parties are subject to audits and oversight if questions arise on the quality of the data. “The lender power shifts burden from their IT group to us,” explained Katz. “This seems to be a value to our customers, for them not to worry and think about it so much.”

Safety in the cloud? Many in the financial services world are worried about cybersecurity—and with cyber intrusions into the computer networks run by the Federal Reserve and the major Wall Street entities, it is no surprise that some mortgage professionals are concerned about storing data in a system that is controlled by others. “Once you go into the cloud, it is a bit out of your control,” said FGMC’s Sizemore, noting that the traditional set-up of shared resources and multiple users within the cloud might seem like a recipe for trouble. Yet Sizemore added that cloud computing is not a one-size-fits-all environment and solutions can be tailored to meet individual needs. “In software as a service (SaaS), there is not much control at all and you rely on the vendor providing the application,” Sizemore continued. “With infrastructure as a service (IaaS), you control the servers and operating system.” There is also a third option, platform-as-a-service (PaaS), in which users can create an application or service with a vendor’s tools and/or libraries; the user also controls software deployment and configuration settings while the vendor provides the hardware and services needed to host the application. On the flip side, however, it would appear that storing data locally is even

more dangerous. Ellie Mae’s Moe observed that a non-cloud approach can lead to serious problems if the computing device is compromised. “What I think of in terms of cloud computing in cybersecurity is ‘data in flight,’” Moe said. “Loan officers are in the field with a laptop or tablet. But if data stored locally on the laptop or tablet is lost or stolen, this non-cloud situation automatically puts that data in flight. With cloud computing, data is not in the laptop, tablet or even desktop—it is in secure servers at a data center. We have clients that went through a hurricane and lost offices, but were up and running the next day in another branch because their data was stored in the cloud.” For Coester, the acute focus on server protection at cloud computing data

center makes it much more impenetrable to hacker assaults. “Cyber-attacks are easier to do in a local environment,” Coester said. “You have to be hell-bent for leather to get into those systems. Local lenders are not often able or willing to invest heavily in firewalls. Of course, you’re still vulnerable to an attack. The only difference is that offsite servers have a lot more control and security—it is a bluechip way of doing things, versus having a server next to the CEO’s desk.” Still, not every cloud computing vendor can automatically guarantee that data is securely stored. “Some take it very seriously to protect data, while others have cheaper prices but do not have the check and balances to make it work,” said Mortgage Builder’s Smith. “If they get

hacked, it will end up on you.” ReverseVision’s Katz agreed and noted that prospective clients inquire about whether his company’s cloud set-up is compliant with Statement on Standards for Attestation Engagements No. 16, also known as SSAE 16, which was put into effect in 2011 by the Auditing Standards Board of the American Institute of Certified Public Accountants to replace the Statement on Auditing Standards No. 70 (SAS 70), which was first enacted in 1992. “Our clients will hit us up and ask us to provide proof that our platform is SSAE 16 compliant,” said Katz. “This means that we are doing all the things that those standards say we should do.” Robichaud of 401 Consulting warned that mortgage bankers need to do their

due diligence before choosing a cloud computing vendor. “It largely comes down to the vendor you’re dealing with, and their retention policies,” Robichaud said. “Hacking happens, and nobody is immune. Some of the biggest names, from Apple to Google to Yahoo!, have been hacked at one time or another. The key is choosing vendors that do everything they can, and are smart about limiting exposure points. The other issue is determining what data is kept online. If your system were hacked, would anything truly awful result, or would it be just an inconvenience?” Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at 59

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“Marketing departments have had to change their entire approach; implementing new, comprehensive process and policy.”

Compliance Regulations: How Do They Impact Mortgage Marketing? By Brent Emler The downtrend in overall profitability in the mortgage industry is, in part, attributed to the current compliance regulations. To find out just how these regulations have impacted mortgage marketing departments, we hit the streets and conducted interviews with the marketing directors of some of the

largest mortgage companies in the nation. What we have found is interesting. Marketing departments have had to change their entire approach; implementing new, comprehensive process and policy. There is far more time spent evaluating potential vendors and far

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© 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: 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 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. All rights reserved.

more resources utilized to the end of carefully reviewing each marketing design. Minute details must now be considered, from the “calls to action” to the content of disclaimers and the positioning of U.S. Department of Housing & Urban Development (HUD) logos. A great idea is only great if you can actually implement it and marketing managers are finding these additional processes burdensome. The attention to detail required and the responsibilities of being prepared for an audit have added numerous steps to the process. Unfortunately, all the preparation in the world still leaves uncertainty. We were recently contacted by a customer who is facing an audit by the Federal Deposit Insurance Corporation (FDIC). The FDIC is checking to see if our client is redlining in the marketing department. They were asked to produce a report to show every marketing piece sent out over the last six quarters. The report had to show not only who the bank is marketing to but also which zip code in which those clients live. Then there’s the idea of “interpretation.” Each company interprets these compliance regulations in a unique way. There’s an underlying insecurity about the level of scrutiny and even possible punitive outcomes should there be an audit. To handle the legalities of their marketing strategy, larger mortgage companies have employed entire teams of compliance specialists, adding to company overhead, and adding multiple steps to the overall process. Some companies are even taking the dramatic approach of shutting down segments of their marketing department. We recently spoke to a company who has decided not to allow their loan officers to disseminate any outbound marketing collateral to their past clients. With 200-plus loan officers and only two people in their marketing department, they don’t have the bandwidth to produce their own content and their compliance department has decided not to allow the use of thirdparty content unless the third-party will indemnify the bank from fines or litigation. This is obviously a drastic

approach, but it’s one we can all relate to. The compliance department has indicated that once the marketing department has been audited, they will have a better understanding of the rules. Imagine that, waiting for a government agency to audit you before you feel comfortable reaching out to your past clients … meanwhile the competition is busy pursuing your loan officers’ past clients. As frustrating as these requirements can be for marketing departments, loan officers face mounting frustration with their marketing teams because of the amount of time it can take to have a piece reviewed, approved and then finally made available. Generally, people have a difficult time adjusting to new rules and processes. Marketing departments are having to become more efficient and responsive to accommodate their originators. How are they doing this? What are the successful mortgage companies doing to mitigate the pain of the newly required processes? More and more companies are investing in either proprietary or outside software development to create a marketing platform that incorporates contact management, auto campaigns, print and email libraries, and approval/audit modules. While this can be a costly investment up front, what it pays in saved resources is proving to make a difference. Without software to combine both the creative and legal considerations of mortgage marketing, companies are struggling to provide timely, compliant content to their originators. The more power they can put back in their originator’s hands, while maintaining the controls necessary from a branding and compliance standpoint, the more everyone is free to do what they’re great at. This means doing more business and spending less time being concerned about the next audit. In our conversation with Trey Rigdon, art director at Movement Mortgage, he outlined a few compliance-related changes that they’ve made to ensure their marketing is above legal reproach. First, the marketing system they’ve implemented has an approval module. This means that the loan offi-

cer can order and customize a large variety of marketing materials. Any aspect of the piece that might be sensitive where compliance is concerned, is locked down. Once the order is placed, it is automatically sent to an “approver”. The approver then reviews the piece in its entirety and releases it for fulfillment if it passes all compliance guidelines. Along with that, Movement has implemented a unique identifying number which can be found on each marketing piece that goes out. That number identifies the compliance officer who approved the piece. These are the kinds of checks and balances larger companies are putting in place to manage the day to day challenges of keeping hundreds, even thousands of loan officers compliant and most importantly, marketing. While compliance regulations do sig-

nificantly affect marketing, in general, the impact is greater on the origination side of the business. These companies can market all they want but they’re having a harder and harder time finding qualified mortgagees due to the qualified mortgage (QM) regulations. You can market all day long, but if you cannot find qualified borrowers, or make much margin on the borrowers you do qualify, you have a harder time keeping the doors open. This is where database marketing becomes so valuable. When you can market to existing customers who have proven already to be qualified mortgagees, you eliminate that concern. They are a known quantity. Statistics show that people either buy, sell, or refinance every seven years. They are an incredible resource for repeat and referral business. Database driven mar-

keting is more contained, pointed, and cost effective. So then the conscious effort is around developing a customer retention strategy; making the home financing process a pleasurable and memorable experience – one that your customers are excited to talk about. Staying in contact with your database with relevant, timely pieces ensures that you are the first name that comes to mind and makes you an easy referral. You could spend years marketing to a prospect but if you’ve created a raving fan out of one customer, you could experience an influx of referrals just from your contact with that one person. The balance of an originator’s marketing energy should be heavily to the side of database and referral marketing vs. marketing to new customers. Why? Because statistics clearly show that the

resources and collateral required to market to new customers is almost double that of marketing to existing customers. Additionally, these statistics show quicker and greater return on the investment in relationship marketing with existing clients. You have a wealth of potential business at your fingertips. Don’t miss out on business because of the added compliance considerations. Research, invest, and implement a marketing system that takes the compliance piece into consideration and facilitates your loan officer’s success. The health of your company depends on it. Brent Emler is director of sales and marketing at, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at 61

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â&#x20AC;&#x153;You can still be in compliance with appraiser independence requirements, while giving your production staff a far better appraisal process and experience.â&#x20AC;?

ence. A few large lenders have already successfully done it, so itâ&#x20AC;&#x2122;s nothing new or secret. The key is to thread the needle between compliance and honoring your production staff with the tools they need to be in the loop when it By Jennifer Miller comes to the appraisals on their loans. As competition continues to heat up Since the first regulations started zero control over one of the most criti- for top producing LOs, an LO-friendly rolling in to separate production staff cal components of the deal. But we appraisal desk will be more important from appraisal operations, most loan have to keep the LO out of it for com- for all competitive lenders. Letâ&#x20AC;&#x2122;s take a originators have had a love/hate pliance, right? Not necessarily. look at how you can do it. (emphasis on hate) relationship with You can still be in compliance with their appraisal desks. The appraisal is appraiser independence requirements, Navigating the one of the biggest risks to closing, and while giving your production staff a far regulations LOs have complained they now have better appraisal process and experi- We all know that production staff cannot influence the appraisal. Several regulations have already been implemented, and many investors have their own guidance on the separation of production from collateral valuation. To steer clear of any perception of wrongdoing, many lenders built a great $%##%" $ !  $%##%" $ ! $%$"$ % $%$"$ % $ %$ ! 

$ %$ !  wall between production and the appraisal desk by outsourcing the entire function to appraisal management companies (AMCs) or doing it in-house with staff that operate completely independ$ $ $ $ $ $ $ ently with no communication with LOs. This approach has definitely contributed to LO frustration because theyâ&#x20AC;&#x2122;ve been removed from the entire process, and have zero input or knowledge. Itâ&#x20AC;&#x2122;s as if the appraisal order goes into a black box, a value comes back from the black box and thatâ&#x20AC;&#x2122;s the end of the story. No won        der they are frustrated! to mortgage companies, community banks and credit unions. It doesnâ&#x20AC;&#x2122;t have to be that way.         Production cannot influence an appraiser, but thereâ&#x20AC;&#x2122;s no reason they Client focus by offering speed, ease, control, and risk mitigation cannot be kept in the loop on the featuresâ&#x20AC;Śall from our award-winning, proprietary (Gemstone) appraisal process with status updates web platform. and appraisal vendor quality assur            ances. They cannot influence value, but LOs can be aware of the specific details Portfolio and FHA solutions. of an appraisal such as when the inspection is scheduled, when the &%$#"! $%$%$!$$#"$#"" !$"$""$% report is delivered, and they can even our model email ask the appraiser questions.

How to Build a Compliant Appraisal Desk That Even LOs Love

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This information is for use by current and prospective Clients of NYCB Mortgage Bank only, and should not be distributed Company, LLC and New York o Community Co to or used by consumers or other third parties. Š 2014 New York o Community Bank. B All Rights Reser ved.

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Giving LOs what they want A few years ago, Natalie Baguley joined Plaza Home Mortgage and her first major project was to replace their appraisal ordering system with a plat-

form that was more user-friendly for their brokers, employees and AMCs. After months of research, Plaza replaced their old platform across all branches and everyone raved about the decision. The new platform dramatically improved their appraisal operations. The new system offered several benefits to LOs: l It was a fool-proof way to place the appraisal order: Forget the mile-long order forms. LOs donâ&#x20AC;&#x2122;t have time to fill in all that data when theyâ&#x20AC;&#x2122;re supposed to be selling. Long, complicated order forms also result in more errors that throw wrenches the process, thus delaying appraisals and endangering closing dates. l A simple way to request changes: There are many legitimate questions that come up during the appraisal process. The platform used by Plaza Home Mortgage allows LOs to enter comments, questions and suggestions so they are included in the process and their concerns are taken into account. l A voice in the process: While they cannot influence an appraiser, they can and should be kept in the loop during the process. With the new platform, Plaza brokers (and employees) are able to send messages, view and attach documents, edit FHA case numbers, view an entire appraisal order history, and edit property contacts. They can also place or remove an order on hold, duplicate orders or cancel orders. Itâ&#x20AC;&#x2122;s critical to include production in the workflow, since itâ&#x20AC;&#x2122;s one of the primary risks to a deal closing. l Fewer delays, questions, and stress: The easier ordering system prevents errors that commonly slow down the appraisal process. â&#x20AC;&#x153;The new system validates the type of appraisal they need to order, and it displays the appraisal fee upfront,â&#x20AC;? said Baguley. â&#x20AC;&#x153;That way, weâ&#x20AC;&#x2122;re preventing wasted time and we donâ&#x20AC;&#x2122;t have to hassle the LO with questions after they place the order.â&#x20AC;?

Ideas for LO happiness Your appraisal desk’s primary purpose is to provide high-quality collateral valuations to justify your lending decisions. When you implement a platform, take a look at all the features they offer, but there are a few important considerations that are often neglected if you have larger volume or have multiple branches. l Make sure your platform can provide you with stats on appraisal vendor performance: One of the most common complaints from production staff is that the appraisers or AMCs used weren’t experienced enough or didn’t know the area. Make sure your platform has flexible and intelligent vendor selection algorithms so you can choose the best providers for each assignment.

Also, make sure you can take a look AMCs the like to be added to your deals. As more top producers learn at individual vendor (whether fee panel. Listening and acting on about appraisal desks that work with appraiser or AMC) performance so their requests will go a long way to LOs rather than against them, more of you can substantiate or dispute an instilling confidence, so make sure the larger lenders competing for talent LO complaint. With performance your platform makes that process will adopt technology that strikes a sucstatistics, you can quickly provide easy for you. cessful balance between compliance insight to an LO. Actual data goes a and LO involvement. lot further in reassuring an LO that When the regulations started coming you’ve chosen the best vendors. down, many lenders panicked and Jennifer Miller is president of the wanted an iron-clad firewall. But you Mortgage Solutions Division for a la l hoose a platform that lets you add can have an effective compliance fire- mode inc. She may be reached by phone and remove vendors easily and wall and still involve your sales staff in at (800) 434-7260, ext. 110 or e-mail jenquickly: Whether you use appraisers one of the most critical stages of their directly, AMCs, or a mix of both, you’ll need the technology infrastructure to quickly add new vendors and remove them if you aren’t satisfied with performance. An LO cannot recommend a specific appraiser for a particular assignment, but they can recommend appraisers they know and trust and 63

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• •

“Certainly the road of compliance is not always a smooth or straight path, and helping consumers understand the changes is not an easy task.”

The Road to Compliance: Staying Ahead of Regulatory Changes in a Post-Recession Economy By Tony Weick

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The Great Recession and subsequent Dodd-Frank Wall Street Reform and Consumer Protection Act have brought on the most significant changes to financial regulation in our nation since the reform that followed the Great Depression. These changes affect all federal financial regulatory agencies as well as every part of the nation’s financial services industry. For a company like mine, Bell Mortgage, the changes have brought on new pressures and challenges. But, as with every challenge, there is the opportunity to attack it head on, even if the battle requires relearning and tweaking how you do business.

Staffing resources Probably the most significant change we have made in the current regulatory environment is adding as well as reassigning staff to evaluate, implement and not only stay current, but stay ahead of new regulations. One of the biggest challenges is that new regulations don’t always come with clear and concise definition or details causing some confusion across the industry due to varying interpretations. It takes an extreme amount of time and effort vetting the specifics and working with experts and investors to insure everyone is doing it right. This puts a great deal of strain on our business analysts to effectively and efficiently implement the required procedures and associated training required. These are all extra steps that require additional resources. The new rules have implications from the very beginning and are interwoven throughout the entire

loan process, all the way through servicing. Because of this, it takes key resources and seasoned professionals that have deep mortgage DNA to be involved and contribute to the implementation of these additional steps and procedures. This includes hiring new managers and staff or forcing existing staff to redirect their focus.

Optimizing technology and outside resources There are some aspects of compliance that are entirely supported by technology. For these measures, we’ve learned the importance of enhancing technology and incorporating it whenever and wherever possible to build efficiencies, insure integrity, and meet the needs and deadlines required by our clients and our business. Outside industry resources are also critical. We regularly engage business consultants, regulators, outside counsel and various third-party vendors (many on speed dial) to aid our internal experts in a system of checks and balances which start before origination and continue on throughout the life of that loan. All of these resources, whether it is staffing, technology and external guidance, add to the cost of doing business. Much of it is absorbed by the business. Industry-wide, the Mortgage Bankers Association (MBA) reported total loan production expenses increased from $5,743 per loan in the first half of 2013 to $6,539 in the second half. A portion of the per-loan increase is attributable to the reduction in volumes during the second half of 2013, but the

onslaught of new compliance regulations certainly had an effect as well. This has and will continue to increase costs to the borrowers as well, which national data also has shown. There are certain regulations already in effect which force delays in the loan process, and there are additional regulations around the corner which will add even more. Our staff has been able to develop effective solutions to meet the requirements while not delaying the client or process unnecessarily. Certainly the road of compliance is not always a smooth or straight path, and helping consumers understand the changes is not an easy task. It seems not long ago the industry transitioned to the new Good Faith Estimate (GFE) in an effort to provide greater transparency and savings for consumers. Beginning in August 2015, we will have a new and improved Loan Estimate to replace the GFE and initial Truth-in-Lending (TIL). The question is: Will it ultimately be the solution? Of course this additional change and those associated with it will come at a great cost to the industry once again. How much will it cost the consumer? These are the questions and uncertainties we deal with as part of compliance.

Our culture Without a question, my company’s history and culture have served us well during and after the mortgage meltdown. For us, being a forwardthinking, proactive sales organization is key. Another important piece of the puzzle is also doing business the right way, treating people the right way and providing the best-inclass service to our clients. We have great pride in staying current on regulation with steps in place to keep us on our toes for any changes. With the added regulations of the past few years, it has become even more imperative to stay ahead of the game to insure you can properly implement new procedures effectively so it

does not affect your culture and service standards. You remember the saying “too big to fail”? Well there is a new phrase, “too small to succeed,” with the key component being the cost of compliance. Luckily Bell Mortgage has the size and resources to allocate to compliance. It may not be so easy for other industry participants struggling with regulation and unable to dedicate resources to this side of the business, forcing tough decisions in the future.

The cost of compliance failure For us, failure to comply is simply not an option. Ultimately, there are multiple penalties for a company that does not meet set regulations, include refunding of fees, unsaleable loans, hampered secondary market relationships, audits and even fines. These are all destructive consequences and, for us, are not options. I believe that’s an industry-wide sentiment and, if not, I think you’d really have to question what your longterm plans are.

Looking ahead While being compliant will never be at the top of the list in explaining what drives success, whether or not your company is compliant is an extremely important and major benchmark. Reduced volume, increased competition, rigorous compliance standards and added costs are significant challenges for the entire industry. Those companies that can efficiently integrate the new world of compliance without impacting the company culture, or the characteristics which have set you apart, are the companies that will be able to take advantage of the opportunities this market provides. Tony Weick has been with Bell Mortgage for 10 years and serves as the company’s executive vice president and managing director. He may be reached by phone at (952) 905-5520 or e-mail

“When you own a mortgage company, you are the captain of the ship. If anything goes wrong, you are to blame.”

Happy Father’s Day By Eric Weinstein

I loved owning a large mortgage company, and I especially love my kids, but let me tell you, Father’s Day presents are just not enough to cover the aggravation. 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 email


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

the borrower was confused, but she had to go because there was a monkey on her back and Satan was at the door. I just looked at the phone. We ended up firing her and doing that loan for free. Once we had a particularly overzealous auditor from the District of Columbia who visited each of our D.C.-licensed locations. She wrote us up for having files on the floor and other such nonsense. Her quote of the day was, “If you are this big, you must be doing something illegal.” One of the branch managers she audited tried to be nice and offered her a glass of water. She then proceeded to lecture him how she is not allowed to take anything, least it be called a bribe. He said, “Well, you better unplug your laptop then, because you are costing me electricity.” During our New Hampshire audit, the examiner took the extraordinary step auditing in requesting a password into Encompass, so he could check the New Hampshire files currently in progress. Our head of compliance, an experienced litigation attorney who once argued cases in the United States Supreme Court, said we refused, because he would have access to ALL the files, including ones not in his state. These files, he explained, contained Social Security Numbers and other privileged information for transactions outside his jurisdiction. This would be a violation of federal law, he argued. The next day, we received an overnighted letter telling us our license was suspended for “interfering with an audit.” I overrode my head of compliance and gave the examiner the password five seconds after getting the letter. Here are two items that should never be mixed. Mortgage regulators have something called “Plenary Authority.” From Wikipedia, “Plenary power is a power that has been granted to a body in absolute terms, with no review of, or limitations upon, the exercise of the power.” That means, if there is ever a dispute during an audit, the tie goes to the regulator.

your teenage daughter backs into a corvette (true story), guess who pays the higher insurance bill.

Being a father of four was a great primer for running a large mortgage company. Just imagine … you have all these kids running around, and you as the father, are responsible for them when they throw a baseball into your neighbors window or run over someone’s family cat. Here are some nightmares that may or may not of actually happened to me. I plead the Fifth. Once, I was at an NAMB conference and one of my loan officers was being interviewed by a mortgage magazine. When they asked him how he generated his business, he proceeded to explain how he gave his real estate agents $100 every time they sent him a deal. Nooooooooooooooo! Luckily, they never published that part. I carefully explained to him that this was against the law and to stop doing it immediately. One day we got a call from a regulator from New York State who said here was a problem with our branch in Brooklyn, N.Y. I told him we did not have a branch in Brooklyn. When they investigated, it turns out the people running the fake office had stolen our Queen’s branch license right off the wall in our office, copied it and framed it for their “branch.” The people were prosecuted and confessed. Several months later, we were fined for “running an illegal branch in Brooklyn!” I have told this story before, but it is worth repeating … We received a borrower complaint about a loan officer for religious discrimination! I could not imagine that in this day and age. The customer said she told her that “The only way you are going to get this loan is if you come with me to church and pray.” I felt for sure the client must have misunderstood. I called the loan officer to get the full story. This, after all, was a serious complaint and grounds for termination. So I called her and asked to what happened. She explained she didn’t mean it like that,

Now mix this with, somewhere along the budget crises, where regulators were given the power to keep the fines they levied for their own budget. It used to be that all fines went to the State Treasury and then the regulators were given a budget by the state. Can you imagine if a traffic cop got to keep the citation fines he wrote? Can you imagine if anyone in your company made the slightest misstep, you are the one to fall? When you own a mortgage company, you are the captain of the ship. If anything goes wrong, you are to blame. Even if it is not your fault, you are to blame. The bigger you are, the more responsibilities you have. The more people you have, the more chances of someone screwing up. It’s just pure mathematics. If any of your loan officers makes a stupid mistake, they go after YOU, not them. If someone in administration makes a boo boo or says something they shouldn’t, you get the fine. If

â&#x20AC;&#x153;â&#x20AC;Ś the industry has seen a 13 percent increase (on average) of costs only associated with compliance.â&#x20AC;?

Will UDAAP Bankrupt the Banking Industry and Third-Party Vendors? By Jennifer Hamby UDAAP: Unfair, Deceptive or Abusive Acts or Practices Policy. Among all the changes the Dodd-Frank Act brought, many believe UDAAP will turn out to have the most significant impact on the banking industry, and all third-party vendors supplying the banking industry. Given the impact and significance

of other Dodd-Frank Act changes, combined with UDAAPâ&#x20AC;&#x2122;s broad and vague scope, it could potentially be the most dangerous weapon in the arsenal of the Consumer Financial Protection Bureau (CFPB). Recently, a number of significant UDAAP developments have elevated

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the importance of mitigating UDAAP risk in both the banking industry and all third-party banking vendors. These include the formation of the CFPB, regulatory agency focus on compliance examinations, high profile UDAAP cases, increased litigation related to mortgage servicersâ&#x20AC;&#x2122; loan modification activities and more. Like fair lending problems, UDAAP issues can result in a downgrading of the CRA rating and monetary penalties as well as negatively impact the financial institutionâ&#x20AC;&#x2122;s strategic plan. Under the Dodd-Frank Act, it is unlawful for any provider of consumer financial products or services or a service provider to engage in unfair, deceptive or abusive acts or practices. Noncompliance with this could result in hefty penalties. What can you do? First, letâ&#x20AC;&#x2122;s take a closer look into defining UDAAP. The examples described here are not exhaustive of all potential UDAAP. Later, we will touch upon the steps you can take to ensure the best practices and policies for your institution and that of your third-party vendors.

What is UDAAP? Unfair acts or practices The Dodd-Frank Act defines an unfair act or practice when: 1. It causes or is likely to cause substantial injury to consumers; 2. The injury is not reasonably avoidable by consumers; and 3. The injury is not outweighed by countervailing benefits to consumers or competition.

Deceptive acts or practices The Dodd-Frank Act defines a deceptive act or practice when: 1. The representation, omission, act or practice misleads or is likely to mislead the consumer; 2. The consumerâ&#x20AC;&#x2122;s interpretation of the representation, omission, act of practice is reasonable under the circumstances; and 3. The misleading representation, omission, act or practice is material.

Abusive acts or practices The Dodd-Frank Act defines an abusive act or practice when: 1. It materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; 2. Takes unreasonable advantage of: A lack of understanding on the part of the consumer regarding the risk, costs or conditions or the inability of the consumer to protect their interests.

The financial impact of UDAAP non-compliance In July 2012, the CFPB issued its first enforcement action, citing a major institution for deceptive marketing tactics and slapping it with a $25 million civil money penalty, plus $140 million in customer refunds. Three months later in its second case, the CFPB levied a $27.5 million civil money penalty against another large institution, again for deceptive marketing tactics, and ordered it to refund $85 million to customers. Rounding out the year was the most lenient case, with a $5,000 civil money penalty issued and $100,000 due in restitution for unfair telemarketing acts. Moving into 2013, the cases continued, as did the message that UDAAP is serious business and we must do everything we can to ensure compliance. Here is a look at some high profile incidents: l May 31, 2013â&#x20AC;&#x201C;FDIC settled case of UDAAP violations: A bank and the third-party service provider through which it was offering a prepaid debit card were both cited by the Federal Deposit Insurance Corporation (FDIC) for engaging in deceptive and unfair practices. The FDIC specified that, â&#x20AC;&#x153;A number of the representations and omissions on (the thirdpartyâ&#x20AC;&#x2122;s) Web site were deceptive, such as advertising free online bill pay, promoting certain features and services of the (third-partyâ&#x20AC;&#x2122;s) card that were not available to

cial suicide. Along with the word “abusive,” the DFA-updated version of the UDAAP regulation gives the CFPB and all other regulatory agencies vast powers to study the actions of institutions and widely interpret them as unfair, deceptive or abusive to consumers. It is quite possible to be compliant with such other regulations as Regulation CC or Regulation E, but non-compliant with UDAAP in regulators’ eyes. Keeping a tight rein on your third-party vendors, and holding them to the same compliance standards as you, will aid in mitigating risk. Jennifer Hamby is marketing project manager for Data Facts. She may be reached by phone at (901) 685-7599 or email

Ways to stay compliant l Get to know the CFPB: It is imperative to keep a close watch on the events going on at, and the announcements being made by, the CFPB, in particular those related to UDAAP and the CFPB’s enforcement actions. l Review and review your Web site: The CFPB is now responsible for administering many regulations that govern website content, including Truth-in-Savings (Regulation DD) and Truth-inLending (Regulation Z), among others. Content and online disclosures that were compliant with these regulations pre-Dodd Frank Act are being closely evaluated by the CFPB to discern if the language itself or the practices described by them are in any way unfair, deceptive or abusive to consumers. If you have not reviewed your Web site recently, you must make it a priority to thoroughly review every page, link and disclosure on it. Your institution also needs to set up a schedule for regular, ongoing Web site reviews. Depending on the size of your site, this can be a monumental task. l Test your marketing and advertising materials: In addition to your Web site, your institution needs to review all of its other marketing collateral and advertising materials. This includes everything from brochures to branch signage and, of course, paper-based disclo-


TagQuest Timeline 2004 • TagQuest was Born offering data for marketing campaigns 2005 • Opened the first call center • First time to offer Credit Data 2007 • First to offer Guaranteed Direct Mail 2013 • Recognized by NMP Magazine as a “Visionary Organization” showcased in NMP’s Inside Look • Launched our online mail portal • Launched Proprietary Data Merging Software 2014 • Developing our own internet lead distribution system with integrated ping post • Celebrating 10 Years In Business Thanks To Our Customers

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These events make clear that UDAAP is a top priority for the CFPB, and this focus is filtering to other regulatory and law enforcement agencies as well. Several of the CFPB’s enforcement actions were issued jointly, with such other agencies as the Office of the Comptroller of the Currency (OCC), the FDIC, state agencies and state attorneys general. The other eye-opening fact to note is that while all of the CFPB’s enforcement actions cited UDAAP, none of them claimed “abusive” practices, leaving this amorphous term’s definition still elusive to institutions. One does wonder, though—given the charges in the CFPB’s enforcement actions—if the expansion of UDAAP with the word

“abusive” added weight to the origisures. As you test your materials, nal two—unfair and deceptive. pay close attention to those prodThe CFPB released a study in ucts and services whose inherent December of 2013 on the impact of nature puts them at particular risk compliance costs in the mortgage for perceived deceptive practices banking industry since the onslaught such as mortgage loans. of rules and regulations over the past l Train, train and train your staff: It five-plus years. According to their is vital that you train your staff and study, the industry has seen a 13 perany third-party providers on all cent increase (on average) of costs products and services that they only associated with compliance. sell, manage or service, as well as So what does this mean? It means on your UDAAP policy and proceimmediate actions must be taken to dures—and that your staff adheres minimize your risk of UDAAP and to the policy and procedures. ensure compliancy for your institution, as well as the vendors who pro- Remember: Policies + vide, manage or service your con- Processes + Training + sumer products. It is imperative that Actual Actions = you require all third party vendors Compliance have the same compliance standards To deny the impact that UDAAP is havas you require. ing on the industry is potential finan-

cardholders, and charging fees that were not clearly disclosed.” Note that the bank was held more liable than the third-party service provider, as its civil money penalty was $600,000, while the latter’s was $100,000. Both agreed to jointly pay restitution of approximately $1.1 million to affected customers. l June 27, 2013–CFPB filed fourth enforcement action: The CFPB cited a large institution and its non-bank partner for misrepresenting the true cost and coverage of its add-on products. Between the two entities, they are responsible for returning $6.5 million to customers affected by the situation. Remember, misrepresentation falls under UDAAP’s definition for deceptive, as it encompasses any material representation, act, practice or omission that misleads or is likely to mislead consumers. l Sept. 19, 2013–CFPB issued fifth enforcement action: The CFPB’s fifth enforcement action was settled with a major financial institution for unfairly billing customers for an identity theft protection product supplied by a third-party vendor. The institution was ordered to refund $309 million to its customers. Never before has the assurance that your thirdparty vendor is going above and beyond all that is necessary to practice compliant policies, procedures and actions, been more important than now.

“While all of us are responsible for operating in a fully compliant manner, it is the lender who has the ultimate responsibility for our acts.”

Size Does Matter By Michael Simmons

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Let’s start with a bit of historical perspective. The Declaration of Independence, the document that announced to England our intent to reject the Crown’s rule and create our own nation, was contained in a single page. To be fair, it was a very large single page. What’s not commonly known is that after Thomas Jefferson completed drafting the Declaration, Congress actually shrunk the length of the document by a fourth of its size. This, by the way, may have been the only time in our hallowed history when Congress ever reduced the size of any legislative proclamation! What followed next was the United states Constitution. It filled four handwritten pages . There were two additional pages; page five was the letter of transmittal and page six was the Bill of Rights which contained the first 10 Amendments. Include the other Amendments added over the years, and it’s a couple of more pages. These documents constitute (if you’ll pardon the expression) the rules that govern us as a nation. Concise and powerful in their brevity. Now let’s fast forward to today. In 2010, Congress passed the Dodd Frank Act. This is, for better or for worse, perhaps the preeminent piece of legislation of our generation in so far as establishing and refining rules of conduct for business. The Act contains some 2,300 pages and is so complicated that a significant number of rules have yet to be developed or implemented nearly four years later. It did have one immediate effect though; it elevated the term ‘compliance’ to the daily lexicon for all of us who touch the lending industry. Allowing that all aspects of the industry is tasked with being consumer-centric and making ‘best practices’ merely a starting point, what does it entail, specifically, for those of us in the appraisal management company (AMC) world? There are multiple ways in which compliance shapes the life of an AMC. We need to incorporate all the following into our daily affairs; state registration

requirements, appraiser independence, defining, managing and monitoring customary and reasonable fees we pay to our appraisers, IT security, tracked and transparent communications between parties, Uniform Standards of Professional Appraisal Practice (USPAP), Uniform Collateral Data Portal (UCDP), Equal Credit Opportunity Act (ECOA), internal audits, disaster recovery plans, establishment of performance metrics and service levels … and the list goes on. Currently, 34 states have enacted legislation that requires AMCs to be registered. Each state has their own fee schedule associated with registration. They include fees for applications, background checks, fingerprinting, bonds, and for annual or bi-annual renewal fees. In the aggregate, those fees total approximately $120,000. Since there’s a distinct lack of uniformity from state to state, one needs to maintain sufficient staff to monitor for expirations, renewals, review requirements, appraiser requirements, state requirements and the reporting of appraiser removal to state boards. And then, of course, constant monitoring for updates or changes and tracking of the remaining states to capture when (and what) they’ll require by way of regulations in the near future. However, trying to measure the economic impact of compliance in all the daily routines is impossible. Suffice it to say that compliance is interconnected in every aspect of our lives as an AMC. Just for fun, let’s take a look at the granular costs of one state. Let’s look at Texas since they have a somewhat involved process and ask ourselves what it would mean for an AMC. Here are the basic costs and regulatory rules: l $3,399 initial registration fee for two years l $10.30 for each addition or deletion of an appraiser to the panel at any time l $3,419 plus $10.30 times the number of appraisers on the panel renewal fee every two years and evidence five percent standard three reviews which cost a minimum of $100 each

And from their legislation: a) A registrant shall review the work of appraisers performing appraisal services on one- to four-family unit properties collateralizing mortgage obligations by performing a review in accordance with Standard 3 of the Uniform Standards of Professional Appraisal Practice (USPAP) of: (1) One of the first five appraisals performed for the registrant by each appraiser, prior to making a sixth assignment; and (2) A total of five percent, randomly selected, of the appraisals performed for the AMC for each 12-month period following the date of the AMC’s registration. Texas is a big state, and one would need a large panel to manage orders throughout it. Even a modest company would require 400 appraisers to handle 4,000 orders over two years. Here’s what the real costs might be for what amounts to 5.5 appraisal assignments a day under this scenario. l $3,399 first registration fee l $4,120 to add 400 appraisers at initial law l $257.50 to remove 25 appraisers l $40,000 to review one order of each of the 400 appraisers orders at $100 each l $3,419 registration fee renewal at two years l $3,862.50 renewal fee for the remain 375 appraisers l $55,058 total for working in Texas for two years and one day Those costs are both sobering and a potential disincentive for an AMC to participate in the Texas market–and Texas is not alone in imposing these types of requirements. In fact, per Dodd-Frank, the Appraisal Subcommittee (ASC) is going to be charging AMCs $25-$50 per appraiser they contract with over the previous year. While this isn’t expected to occur until 2016, that’s of small solace. Although the industry experienced a proliferation of AMC’s entering the market as a result of the Home Valuation Code of Conduct (HVCC), the exact opposite will likely occur as a result of intensified regulation. Currently, there are 525 duly registered AMCs. However, of those

525, only 25–and my firm, AXIS Appraisal Management Solutions, is one of the 25– are registered in all 34 states. As a result of the burdens of compliance, lenders may be compelled to significantly cut back on the number of AMCs they contract with and most of the work will go to the AMCs that have the financial resources and ability to keep up with all of the regulatory costs and requirements. While all of us are responsible for operating in a fully compliant manner, it is the lender who has the ultimate responsibility for our acts. We are viewed as an extension of the lender. Regulators refer to this as third-party oversight (TPO). Since lenders are now required to audit their TPO vendors and make actual site visits to insure that an AMC has the physical resources to meet their obligations on behalf of their lender-partners, we may very well see a reduction in the number of AMCs that are eligible to perform work for a lender’s correspondent channel as well. In fact, it raises the very real question of the responsibility of the correspondent banker/broker to audit and conduct site visits given that they’re viewed as the lender. As a result of the increased complexity of regulatory compliance, we spend a considerable amount of time and expense to attend regulatory conferences, valuation conferences, industry seminars, meetings, classes—all to stay ahead of industry changes. We believe too that our role requires that we make the time to share what we know and believe with our lender-partners. We also believe that we have a responsibility to help our panel appraisers understand the changes in appraising and in lending. As a service provider, we have embraced a ‘community of learners’ philosophy and believe in our role as a resource to those in and around us. In spite of what many of us believe is regulatory overreach by Dodd-Frank, they did get one thing correct: Best practices is a great starting point. Michael Simmons is a principal and founding director of AXIS Appraisal Management Solutions, a national AMC. He may be reached by phone at (415) 408-5851 or email

“As a lender or mortgage brokerage firm, you should consult with legal counsel or your compliance officer for in-depth interpretation and rulings for your company.”

Lions and Tigers and Bears ... Oh My! By Laura Burke So many rules and regulations … how do you follow the Yellow Brick Road to Compliance? Unlike ethics, compliance is not in the eye of the beholder, nor is it open for interpretation, compliance means compliant to the rules and regulations governing your business. “Loan originator organizations” have been dealt an immense set of rules that they must adhere to on a multitude of levels. Those levels consist of: l l l l

Regulatory compliance (federal) Individual state compliance Corporate policy and procedure policy Corporate security policy

A transaction “term” is any right or obligation of the parties to a credit transaction, except for the amount of credit extend (CFPB, 2014). The final rule constitutes a “proxy” concerning the prohibition under the existing rule against basing compensation on a loan term or a proxy for a loan term. The Act also goes

Laura Burke is an author and trainer with 20-plus years of experience in the mortgage arena. . She may be reached by email at


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

l A term of a single loan transaction l The terms of multiple transactions by originators l The terms of multiple transactions by multiple loan originators, combined in an aggregate amount.

ting your e-mail address within the “Email updates” box at Accurately choosing your technology and accounting platforms, pricing engines, point of sale operating systems, loan origination software and cloud storage systems are all directly related with your company’s compliance. Training is a large component when implementing the above systems, across all departments. It amazes me that in today’s technology savvy, social media world that many companies simply do not have a corporate security policy. The cost to have one prepared, designed and strategized with your C-Suite officers, directors and staff members will far outweigh the cost of any corporate security breach. Included in the corporate security policy, I recommend having a strategy for crisis management in place. There are a number of crisis situations that can arise, some may be weather-related, a disgruntled employee, or an act of terror. Let’s say that a disaster hits the community, as well as the company. You need your key managers to be at the corporate office site or any other location important to managing the crisis, and implementing plans of action. But what if their families are at risk? Do you think they will show up as planned? Most likely not, but by having a strategy already in place that relocates key employees’ families to nearby hotels, or housing quarters will allow the employee to rest easier by attending to their duties within the corporate structure, will make your disaster plan work better. Most fraud occurs in small- to midsized companies, often between friends, relatives and longtime employees. One of the most widely used fraud trick in accounting is ghost employees. Who is monitoring your list of employees … are you paying a ghost? These are two simple plans to put into place, there are many more.

Lots of rules and regulations … every company, regardless of size, should have at least one compliance officer. For larger companies operating in multiple states, a director of compliance for every state the corporation is operating in; or a director with knowledge of multiple state rules and regulations. The director should be trained in all legal aspects of the current state’s rules and regulations, and be able to articulate such rules on a monthly or bi-monthly time frame to all company CEOs CFOs, CIO and corporate directors, to be shared with all personnel, with an option for immediate action when required. All loan officers should both understand and be aware of all rules and regulations, including federal, state, corporate rules and regulations, along with those of the corporate security policy. A corporate security policy is equally as important to have in place as a corporate policy handbook. Both corporate policies, along with security policies, should be re-disclosed and resigned by each employee annually. Which is not to say that each policy should be reviewed annually. My suggestion would be to review the corporate policy handbook biannually with enough preparation time to create any necessary changes prior to each employee’s annual resigning and acknowledgment of past policies along

with the new ones. The corporate security policy should be reviewed no less than quarterly, if applicable, bi-monthly. Technology, operating systems and the Internet are continuously changing. Fraudsters are abundant in this arena, therefore, added security measures to monitor your company’s security policy are imperative. The Consumer Financial Protection Bureau (CFPB) issued final rules to be incorporated into the Dodd-Frank Act’s old rules with the new rules having taken effect Jan. 10, 2014. One of the concerning rules relating to loan officer compensation gives greater detail, along with demonstrations and examples. One of the key elements of the old rule was that a loan originator is prohibited from receiving compensation from both a borrower and the creditor. Gone are the days of charging a point and getting yield-spread premiums (YSPs) as well. The existing compensation provisions within the Dodd-Frank Act were created to eliminate some of the most common incentives that LOs had historically used to increase their income at the expense of the consumer, by steering them into less advantageous loans. As per Dodd-Frank’s new ruling, an LO, for the purpose of compensation (including table-funding creditors), generally cannot receive commission that is based on:

into detail to explain what factors are proxies for this rule. In plain English, an LO has to be consistent in their fees to all consumers purchasing the same type of home in the same state. Different fees may apply to different states. The loan originator can no longer get paid 150 bps on one loan and 200 bps on another. The overage must stay with the branch, or maybe used to pay the consumers closing costs. All loans from that said branch must be priced similarly. Adding overage simply because you can is not an option, according to the Dodd-Frank Act. I have heard of branches allowing individual LOs to choose their bps, for example, one loan originator may be getting 225 bps and another, one from the same company, may choose to get 175 bps. But that determination must stay with each loan originator for, at a minimum time period, in this case, this company is using a quarterly opportunity for change. This particular company sets the pricing engine for each LO based on what they chose for their market. Once the choice is made, that is the only pricing the LO may offer their clients. It is not my intention in this article to rehash all of the compliance issues spelled out in detail in the lengthy ruling, but simply to mention a few key points. Disclaimer … I am neither an attorney nor am I interpreting the law, merely stating how I perceive the new rules to be. As a lender or mortgage brokerage firm, you should consult with legal counsel or your compliance officer for indepth interpretation and rulings for your company. Your company may have a different business model, so rules need to be interpreted correctly based on your situation. Implementing a compliance plan is one of the first steps in achieving a successful business model. Remember to keep all records relating to LO compensation for three years after the date of payment or receipt of compensation. You may review a copy of the Act on the CFPB’s Web site at You may obtain additional facts at You may also request e-mail updates by submit-

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JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


By Robert Ottone uring a recent National Housing Conference Annual Policy Symposium in Washington, D.C., Treasury Undersecretary Mary Miller discussed the uncertain future of the governmentsponsored entities (GSEs). She also covered the basics of the post-economic disaster and its meager, slow-moving recovery. â&#x20AC;&#x153;The uncertain future of the GSEs contributed to lendersâ&#x20AC;&#x2122; reluctance to serve all credit-worthy borrowers, and this has effectively shut many Americans out of the purchase market,â&#x20AC;? said Miller in her remarks. â&#x20AC;&#x153;The crisis also made it significantly harder to find affordable rental units as the demand for rentals has increased, while at the same time new affordable multifamily rental properties have become more difficult to finance.â&#x20AC;? Throughout her remarks, Miller highlighted the difficulties of potential recapitalization. One of the major points of contention, as Miller referenced, is that the process would take 20 years of adequate funding, which would also leave taxpayers on the hook. â&#x20AC;&#x153;Critics of reform would suggest that we can simply recapitalize the GSEs and


avoid difficult decisions around creating a new system,â&#x20AC;? Miller said. â&#x20AC;&#x153;Even if truly rehabilitating the GSEs were possible, recapitalizing them adequately would take at least 20 years.â&#x20AC;? Miller also referenced the drop in home prices in the years immediately following the financial collapse. The disparity led to many individuals defaulting, leading to multiple foreclosures across the nation. Many parts of the country are still suffering from waves of defaults on their mortgages, as well as a number of blighted neighborhoods riddled with foreclosures and real estate-owned (REO) properties. â&#x20AC;&#x153;The GSEs will not be able to replicate the levels of revenue they achieved over the past two years,â&#x20AC;? Miller said. As recent as last month, the Web site VOX published a street-level look at Fannie and Freddie and the potential hedge fund money that could be generated by allowing the GSEs to go into recapitalization. The basic argument was that the hedge fund(s) in question would assume the responsibility for the money that is being used to stimulate the GSEs, with no risk to the U.S. Department of the Treasury. At the same time, the Treasury would no longer retain any potential positive equity from the GSEs themselves. Miller also put an emphasis on a


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Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by e-mail at

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that the new housing finance system is fairer and more open than the one we have today. The Bill includes a marketbased incentive fee assessed on all guaranteed securities to support affordable housing by funding new and existing housing programs and making it economical for market participants to pursue underserved borrowers. The Bill also requires that multifamily guarantors ensure that 60 percent of the rental units they finance are affordable to lowincome families at origination,” Miller said in her testimony. “An often overlooked element of the Bill extends the benefit of a government guarantee to a host of loan originators who have not been part of the GSE-centric system. If this Bill were to become law, state HFAs and community development financial institutions, among others, would be able to originate eligible mortgages thereby granting them access to the secondary market. This, in and of itself, would make it significantly easier for mission-oriented entities to provide affordable mortgages to historically underserved borrowers.”

renewed effort to ensure financing be available for affordable rental housing and repeated the call of the administration to allow Ginnie Mae to securitize loans made under an FHA program. “Our ongoing efforts within the Administration, and those of FHFA, are critical to continuing the recovery of the housing market and access for borrowers and renters. However, these measures do not eliminate the need for comprehensive housing finance reform,” said Miller. “Everything we are doing administratively is directed towards ensuring better outcomes for renters and homeowners, but these efforts attack only the symptoms of an unhealthy housing finance system.” The Johnson-Crapo Bill also popped up in Miller’s testimony. One of the primary tenets of the Bill is the formation of the Federal Mortgage Insurance Corporation (FMIC), a new government entity that will serve a number of purposes. Six moths after enactment of the Johnson-Crapo Bill, the FMIC will become the new federal regulator of the mortgage industry, monitoring the safety and soundness of various financial institutions. In turn, the Federal Housing Finance Agency (FHFA) would become an independent agency within the FMIC. “The Johnson-Crapo Bill offers important measures to help make sure

AllRegs Launches Consumer Complaint Policy Manual The Dodd-Frank Act provides authority to the Consumer Financial Protection Bureau (CFPB) to prevent financial harm to consumers. One of the CFPB’s strategies to accomplish this goal is to handle complaints and inquiries regarding challenges that consumers face in the financial marketplace, including mortgage products and services. The CFPB monitors and shares the complaint data it collects with other regulators for investigation and enforcement of consumer protection laws. Are you looking for a source to guide development of your company’s consumer complaint process? The AllRegs Consumer Complaint Policy Manual is designed to aid mortgage brokers, lenders and originators in the development of a consumer complaint process. In today’s lending environment, a consumer complaint policy is integral to establishing a compliance management system called for by the CFPB. This document reviews the need for a consumer complaint policy and the risks of non-compliance; identifies existing complaint portals managed by industry regulators; outlines the framework of a consumer complaint process; and provides training protocols and best practices to effect process implementation. This Policy Manual features the following: l Federal regulations surrounding consumer protection laws l The risks associated with non-compliance l The differences in customer communications relating to feedback, inquiries and complaints l The requirements surrounding Consumer Complaint Management l A Consumer Complaint Policy that can be adjusted or tailored to the needs of your organization

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Several federal offices require implementation or access to this manual, including: l l l l l l

The Consumer Financial Protection Bureau (CFPB) Fannie Mae Freddie Mac Federal Trade Commission (FTC) Office of the Comptroller of the Currency (OCC) U.S. Department of Housing & Urban Development (HUD)

AllRegs Policy Manuals are offered for a one-time purchase price per company. The templates are delivered in an MS Word document and can be personalized by the customer, using their company brand by performing a simple find and replace function, or customized to include their own internal policy and procedures. Additionally, AllRegs provides a variety of services to help mortgage professionals implement their new policy. Services include: Regular manual updates to follow recent policy changes, customization of manuals to match an organization’s brand and internal policies through Make It Mine, or publishing policies online in the same online database as their federal and state regulations. Additionally, the AllRegs Professional Services Team offers a comprehensive analysis of an organization’s policy manual library to ensure compliance of all the latest federal or state regulations and guidelines. These services help mortgage businesses rest assured that their policy library and business practices are ready for their next audit. To learn more, visit us at or contact your dedicated account executive at (800) 848-4904, Monday through Friday, between the hours of 8:00 a.m. and 6:00 p.m. CT.


MBA’s Mortgage Action Alliance MAA Members Carry the Torch on State Advocacy A Message From MAA Chairwoman Amy Swaney he real estate finance industry is in the midst of an exceptionally busy time considering the breadth of legislative activity in our realm this year. As we continue to implement and adjust to the regulations mandated by the Dodd-Frank Act, Congress has also started to debate government-sponsored enterprise (GSE) reform, and earlier this month, the Senate Banking Committee finished the mark-up of a bill that would reauthorize Terrorism Risk Insurance. While we continue to fight battles on the national stage, issues that are important to the mortgage business are being discussed at the state level too. As advocates for the mortgage industry, we often seek national solutions to national problems, but we cannot forget that the battles we fight locally are just as vital to our industry. In 2014, Mortgage Action Alliance members have already sent more than 2,000 communications to elected officials in response to seven Calls to Action (CTA). While we have asked our members to weigh in on housing finance reform, flood insurance and points and fees with our federal officials, this year, MAA members have been just as active in state capitals. In my home state of Arizona, several hundred Arizona-based MAA members rallied to solicit support for legislation that would positively impact our state-regulated loan originator licensing requirements. Also this year, our colleagues in Rhode Island have been fighting to convince legislators to push the “pause” button on legislation that would change the definition of “mortgagee” and result in added costs and title concerns for Rhode Island homeowners. Our members in California have been working to defeat a tax bill that would increase the cost of doing business within their state. Most recently, our New York MAA members continue to fight for support


of legislation that would codify emergency regulations that have been necessary to ensure access to Federal Housing Administration (FHA) loans in New York. MAA is a crucial portion of the Mortgage Bankers Association’s (MBA) advocacy efforts as it connects real estate finance professionals with their representatives in a collective voice. Our ability to unite and organize on both the state and local level is what makes the Mortgage Action Alliance such an effective tool for individual members of our industry and state MBAs as well. Our battles are far from over and active participation is needed from everyone, from chief executive officers to receptionists, to underwriters and originators. I encourage you to continue to engage with MAA on the federal and local level to help move the needle and amplify your voice with others in our industry. Are you speaking up? Are you making your voice heard? Don’t wait for someone else to advocate for you. Join the Mortgage Action Alliance today and unite with mortgage professionals all around the country. Enrollment in MAA is easy … simply fill out an online form at Your membership is always free and lasts for one calendar year. We need you. Your voice matters and it is critical that you use it. Together, we can make a difference on Capitol Hill and in state capitals across the country. The larger the group, the louder the voice … add yours today. Amy Swaney, CMB is governmental relations officer and branch manager with Scottsdale, Ariz.-based Citywide Home Loans. Amy is also chair of the Mortgage Action Alliance (MAA), a voluntary, nonpartisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). Amy may be reached by phone at (480) 822-6262, ext. 2164, e-mail or visit nAlliance.

New Study Examines Sacrifices in Pursuit of the American Dream By Robert Ottone

Rick Lazio, former U.S. Representative from New York, and current leader of law firm Jones Walker’s affordable housing and housing finance practice. “While I am not sure what the ultimate solution is, I am very glad to see the issue gaining traction as a national debate,” said Hudson. “Perhaps a great place to start is with basic financial literacy in our education system to prepare consumers for buying their first home and putting them on a path for wealth creation.” Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by e-mail at


ATR/QM A TR/QM in in 90 90 M Minutes inutes 73

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.

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n Pennsylvania Mortgage Professional Magazine n JUNE 2014

fully understand how to originate and underwrite within the new QM requirements.

Some alarming numbers coming out of the MacArthur Foundation highlight that 52 percent of all Americans have had to make at least one major sacrifice in order to achieve their current level of housing, whether that’s as a renter or homebuyer. Whether it’s paying one’s mortgage or purchasing a home, more than half of the American population has had to cut back on one major aspect of their lives. For some, that’s furthering their education, for others, it’s getting married or having kids. These are major life developments that are now being stunted due to the horrific economic climate. “There is no question one of the largest challenges this country faces is housing affordability, which is commonly mistaken for only impacting low income Americans,” said John H.P. Hudson, VP of regulatory affairs for Premier Nationwide Lending and Communications Committee Chair for NAMB—The Association of Mortgage Professionals. “The problem is multifaceted with everything from rising municipal developer impact fees, cost of materials and labor, regulations promoting tight credit, students loans, litigation risk, home prices ... the list is endless.” One of the more troubling statistics from the “How Housing Matters Survey” indicates that 70 percent of those polled feel that we are currently in the worst of the economic climate or that the worst is yet to come. Another staggering statistic is that both renters and owners are spending roughly 30 percent or more of their income on housing. While for some, that number is clearly lower, for many, it’s much higher. While politicians and economists are cheering that the economic downturn is behind us, many of the respondents stated that they aren’t feeling any semblance of relief. More than six in 10 adults believe it is at least fairly likely for a family that is struggling to keep their housing to have to take on an additional job or hours at work (82 percent said “very/fairly likely”), stop saving for retirement (73 percent), accumulate credit card debt (72 percent), or cut back on healthcare (62 percent). A majority of adults (55 percent) believe it is at least fairly likely that such a family will have to cut back on healthy, nutritious food, and just fewer than two in five believe such a family will likely move to a neighborhood that is less safe or has worse schools. Some 62 percent of distressed owners and three in four distressed renters (74 percent) have made at least one of these tradeoffs listed previously in the past three years. Among

those indicating distress in paying their rent or mortgage, 27 percent have stopped saving for retirement, 23 percent have cut back on healthcare, and 23 percent have accumulated credit card debt. “While homeownership continues to be the dream for most renters, this year’s How Housing Matters survey confirms our initial findings from last year: Americans want a more even-handed approach to housing policy,” said Geoffrey Garin, president of Hart Research Associates, the firm who con-

ducted this research. Fascinatingly, even amid all of this negativity towards housing, nearly 70 percent of those polled still hold out hope for owning a home one day. Of that same pool of individuals, twothirds no longer believe in homeownership as a means through which to build wealth. Half of adults polled believe that owning a home isn’t anywhere near as attractive a proposition as it once was. “Housing insecurity has become a fact of life for tens of millions of low and modest wage workers. We need the onetwo punch of a comprehensive bipartisan fiscal plan and a vigorous housing agenda. Key public leaders need to step up and show political will and skill,” said




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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 today.


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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

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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.

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JUNE 2014 n Pennsylvania Mortgage Professional Magazine n


Will SCOTUS Take Up Spokeo v. Robins and Address the No Harm, No Foul Claim? By Terry W. Clemans Several interested parties, including the National Consumer Reporting Association (NCRA), have filed amicus briefs in the U.S. Supreme Court urging it to hear the case of Spokeo v. Robins and reverse the Ninth Circuit’s conclusion that “the violation of a statutory right” in itself is “a sufficient injury in fact to confer standing” under Article III [Robins v. Spokeo Inc., 742 F.3d 409, 412 (9th Cir. 2014)]. The Ninth Circuit found that “the statutory cause of action does not require a showing of actual harm” (id.), and held that the plaintiff had sustained injury-in-fact under Article III by virtue of the bare statutory violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. The importance of this issue has a broad impact far beyond the FCRA claim it specifically addresses. There are many federal and state statutes that provide statutory damages that arguably may be recovered in the absence of any showing of actual consumer harm. By holding that causation is effectively automatic in statutory damages cases, the Ninth Circuit’s rule makes it very easy to certi-

fy a class of plaintiffs: if a statute was violated, then every consumer was hurt. That rule raises a defendant’s exposure in class-action statutory damages cases to a level that is not survivable by most businesses. In order for a federal court to be able to hear a case, Article III of the U.S. Constitution requires a plaintiff to have standing. Basically, they need to have suffered a concrete, particularized harm. In Spokeo v. Robins, the plaintiff filed a class-action suit based on a “bare allegation” that the defendant had violated FCRA by issuing consumer reports in willful violation of that statute. Spokeo is a Web site that offers information on consumers, claiming to have searched social media, criminal records, and public filings to put together estimates of their wealth and character. The named plaintiff found his profile on Spokeo, but never lost a job or was denied credit. In fact, Spokeo’s Web site listed him as having more wealth than he actually did. The issue in the Spokeo case is whether an allegation of a willful violation, standing alone, is enough of a “harm” to justify the exercise of federal jurisdiction. This issue is particularly important under FCRA, which creates statutory

damage liability for willful violations ranging from $100 to $1000 per consumer. Even a small consumer reporting agency issues reports on thousands of individuals per month, and a small disclosure mistake that goes unnoticed for only a couple of months could result in a liability that would eliminate the company’s ability to survive. It would also outstrip any actual harm caused by the award. This is not news to the class-action bar, which is showing an increased interest in filing these kinds of suits and is filing growing numbers of them. This Supreme Court has attempted to rein in the excesses of class-action litigation through, for example, enforcing arbitration clauses that prohibit classaction suits and tightening pleading standards so that defendants cannot be forced to endure discovery or to enter in terrorem settlements based on a naked claim that a violated a statute that affected the plaintiff and a few thousand of his closest friends. In fact, last year, the mortgage industry was at the center of another case important to this one, that of First American Financial v. Edwards. That case took a very similar issue involving the presence of conflicts of interest in real estate transactions. The Court dismissed that appeal as improvidently

granted, meaning that a majority of them thought that the facts of First American presented a bad vehicle to decide the question presented. Spokeo, however, represents a better vehicle due to the fact that there is no question of whether or not this plaintiff was harmed (he wasn’t), and if the Supreme Court were to review this decision, there is a good chance that they would reverse it. As the Supreme Court, however, hears very few cases, amicus participation at the petition stage is critical. NCRA joined with the National Association of Professional Background Screeners (NAPBS) and PreCheck, a background screening company, to retain the Washington, D.C. law firm of Meyer, Klipper & Mohr PLLC (thank you to Chris Mohr of the firm for assistance with this article) to file a friend-of-thecourt brief explaining the harm that these suits are doing to this industry, and urging them to take the case. For a copy of the NCRA brief, visit Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

Fostering the Intangible Asset:

Corporate Culture 78

JUNE 2014 n Pennsylvania Mortgage Professional Magazine n

By Cal Haupt very organization strives to be highly efficient, effective and achieve better results. Meticulous business strategies, created through endless hours of meetings, brainstorming sessions, e-mails and research help to define and align those strategies with a company’s objectives. Studies show, however, that many businesses oftentimes fail to see the big picture. Quite often, the intangible assets of a firm such as employee loyalty and engagement, shared values and beliefs, internal relationships and problem-solving are passed over as either unimportant and irrelevant or given moderate attention only to be pushed aside as more pressing issues take priority. The fact is, these intangible corporate assets, defined as culture, have a profound impact on a company’s success. Some reports suggest that happy, engaged employees lead to increased success and even improved profits. Though the subject is debatable, there’s certainly enough evidence out there to suggest that happy employees, in fact, do correlate to increased profits. Last year, revenues increased by an average of 22.2 percent for the “2014 Fortune 100 Best Companies to Work For.” If happy employees really do foster success and improve profits, how can an organization establish an interlocking set of goals, values, attitudes and com-


munication that are actively encouraged and reinforced? Sometimes you have to throw the rule book out and get back to basics.

the firm. Make a point to always recognize and reward employees for their input, insight, effort and contribution. Humanize your approach to business and make your employees feel connected, important and valued. Make employees feel that they can talk and relate to management and clearly communicate what is expected of them and encourage their voices to be heard.

respect one another’s opinions and contributions to the firm–no matter how insignificant they may seem from the top. Expectations for employees respect and interaction must be clearly defined and communicated with employees being held accountable for a breakdown. As Albert Einstein was quoted as saying, “Let every man be respected as an individual and no man idolized.”

3. Foster the character of your firm

5. At the end of the day … have fun

2. Believe in your employees

Have you ever walked into a company and clearly felt upon entering the character (personality or temperament) of the firm? Right off the bat, you could tell employees seemed engaged and happy or, conversely, particularly detached or serious. Depending on the nature of your business and demographic make-up of your firm, the character of a firm will oftentimes be defined by its employees. The culture (way of life, traditions), in turn, will reflect the character of your firm. Therefore, to foster a winning culture, a firm must first strive to understand and embrace its character and cultivate a way of life that is in sync with its personality and people.

One of the first steps to create a winning culture in any firm is to believe in your employees. Establish a level of trust that begins at the top. Engage with employees, encourage them and, most importantly, empower them to make a difference and become a part of the vision of

It’s time to walk away from office politics and the corporate rat-race and make work fun again. Companies need to find ways to reduce stress and build enthusiasm back into in the workplace and that strategy may involve a few non-traditional ideas of “employee engagement.” What makes a company fun to work for involves not only understanding what your employees need, but also what they want including such things as flexible schedules, great employee benefits, unique perks or services or opportunities to enhance and develop their careers. Taking a step back and viewing “fun” from an out-of-the-box perspective may help you better strategize ways to put the enthusiasm and fun back into your organization.

Clearly, the fastest way to break down corporate culture is to disregard the importance of respect within an organization. Regardless of status, position, title, wage or salary, employees must

1. Refrain from outside influence Defining and building a winning culture sounds pretty simple right? Just pick up a book, read an article or seek outside advice, and you’ll be an expert in no time. The truth is there isn’t a book out there that can specifically define the best culture that will work for your firm. A great corporate culture is masterfully blended from within a company. And, because each firm is unique with diverse management beliefs and styles and employees from entirely different walks of life and skill levels, it would be nearly impossible to “cookie cut” a corporate culture. Sure, there are always a few lessons to be learned from the experts, but to be truly effective, a culture must be defined by its management, its people and the systems and reinforcements put in place to foster the corporate values and beliefs.

4. Respect one another Cal Haupt founded Southeast Mortgage in 1993, currently serving as the company’s chief executive officer. He may be reached by e-mail at

calendar of events N A T I O N A L


JULY 2014

Monday-Wednesday, July 7-9 Ultimate Mortgage Expo 2014 Hotel Monteleone 214 Royal Street New Orleans, La. For more information, call (860) 922-3441 or e-mail Wednesday, July 16 “Let’s Make A Deal” Tri-State Wholesale Lending Fair Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit

Thursday-Saturday, September 4-6 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 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 or visit

MARCH 2015

Tuesday-Thursday, October 14-16 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

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

Wednesday-Saturday, October 15-18 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 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

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 * Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.


n Pennsylvania Mortgage Professional Magazine n JUNE 2014

AUGUST 2014 Thursday-Friday, August 7-8 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



Thursday-Friday, July 17-18 California Association of Mortgage Professionals 2014 Summer Convention Thunder Valley Casino & Resort 1200 Athens Avenue Lincoln, Calif. For more information, call (916) 448-8236 or visit

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


JUNE 2014 n Pennsylvania Mortgage Professional Magazine n



Y YOU OU ORIGINATE, ORIGIN NATE, T W WE EC CLOSE, LOSE, ITâ&#x20AC;&#x2122;S THA THAT AT S SIMPLE. IMPLE. 877.552.8737 www 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

Pennsylvania Mortgage Professional Magazine June 2014  
Pennsylvania Mortgage Professional Magazine June 2014