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PROFESSIONAL M ortgage WAMB-Political Action WA S H I N G T O N


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


Washington Association of Mortgage Professionals State Office P.O. Box 2016 O Edmonds, WA 98020-9516 Phone: (866) 425-7250 O Fax: (425) 771-9588 E-mail: Web site:

Become a member of WAMB-PAC! Become an active part of WAMP’s government affairs program. WAMP-PAC contributions are used to support pro-industry candidates and causes in the state of Washington. Contributions to WAMP are voluntary and not deductible for federal income tax purposes. You may refuse to contribute without reprisal. Guidelines are merely suggestions and you may contribute more or less than the amounts offered. WAMP-PAC will not favor or disadvantage anyone by reason of the amount contributed or a decision not to contribute. *WAMB-PAC ‘49’ Club members

Thanks to WAMB-PAC Contributors

2010 BOARD OF DIRECTORS Phone # E-mail President (206) 601-9824 President-Elect (206) 718-0852 Vice President (253) 383-2024 Secretary/Treasurer (206) 947-2767 Past President (425) 649-8844, ext. 110

Craig Goebbel George Charles Marty Lough Ken Wynne Jason Bloom Marge Bearman Scott Fletcher Lisa Goldsmith Jane Hostvedt Chik Quintans Jason Ramos

Broker Director Broker Director Affiliate Director Affiliate Director Loan Officer Director Loan Officer Director

(425) 649-9100 (206) 254-9292 (425) 503-4826 (253) 988-4896 (425) 771-2095 (425) 818-2076

CHAPTER PRESIDENTS Eastern Washington Chapter (509) 754-3099 King County Chapter (425) 697-5955 South Sound Chapter (253) 835-7771 Southwest Chapter (360) 636-5803

Gary Bracht Mike Young Susan Lipston Jeff Rauth

(as of 02/03/10)

WAMP ADMINISTRATION Executive Director (866) 425-7250 Assistant Director (866) 425-7250 admin@wamb


MAY 2010 Thursday, May 13 WAMP 2010 South Sound & King County Spring Golf Tournament Eagles Pride Golf Course I-5 Exit 116 Fort Lewis, Wash. $99 per player/$349 per foursome

For information on all WAMP events, call (866) 425-7250 or visit

O APRIL 2010

For more information on WAMP’s PAC, call the WAMP state office at (866) 425-7250 or visit

Dana Murphy-Love Jackie Troyer


*Lisa Joliffe Ted Klumb Ernie Kroll Paul Kuzmich *Jeffrey Lorsch Martin Lough *Sean McCluskey Greg McKim Rob McLaughlin Keane Ng Mel Patterson Brett Pierce Carl Porter John Porter Rhonda Porter *Jeffrey Rauth Carol Rudd Tryg Satterlee Jerry Simonson George Spano Lowell Whiteman Sue Wright Michael Young O

*Marge Bearman Jason Bloom Stephen Bozick Arthur Buhrer *Gary Bracht Pennie Carey *Brian Carlsen Jeffrey Carr George Charles Don Chase Kathy Corey Steve Daley Dan Draper Grace Dyer *Ann George Kristi Gerling Mick Gillispie *Mike Hogan Jane Hostvedt Roger Ingalls Ivan Jensen Kevin Jensen Roland Jensen

COMMITTEE CHAIRS Nicole Christy Affiliate (888) 343-7199 Craig Goebbel Bylaws (206) 601-9824 Tracy Chavez, CRMS Education (253) 208-9695 Kevin Rickels Education Jason Bloom Executive (425) 649-8844, ext. 110 Craig Goebbel Finance (206) 601-9824 Craig Goebbel Government Affairs (206) 601-9824 Mike Young Government Affairs (425) 697-5955 Steve Heaney Membership (253) 874-1111 Tammy Scarlett Craft Membership Mark Armstrong Mortgage Lenders Conference (425) 644-9900 Jeff Slyter Mortgage Lenders Conference (360) 695-2251 Adam Stein Nominations Pennie Carey Standards and Best Practices (360) 403-0888 Rhonda Porter Social Networking (206) 718-9488

WA 1

HOPE NOW Servicers Assist 1,300-Plus Pacific Northwest Families

$99 per player/$349 per foursome Includes 18 holes of golf, range, golf cart, lunch, dinner, contests and raffle prizes. Additional meal tickets: Dinner tickets are $20 each and lunch tickets are $10 each. Entries will be accepted until the field of 72 players is filled, but no later than Saturday, May 8.

Sponsorship opportunities Presenting sponsor—$1,000 O Only one available O Includes lunch, dinner and golf for four O Call Brett Pierce at (360) 709-9191 or e-mail for details

Dinner sponsor—$500 O Only one available O Includes lunch, dinner, and golf for two

More than a dozen HOPE NOW servicers, including Bank of America, Chase, Citi, GMAC, Suntrust, Wells Fargo and others, assisted more than 1,300 homeowners from across the Pacific Northwest, during three homeownership preservation events held recently in the area. In March, 532 at-risk families were in attendance at the Doubletree Hotel in Portland, Ore. to meet with mortgage servicers and U.S. Department of Housing & Urban Development (HUD)-approved housing counselors. A two-day event in Bellevue, Wash. (Seattle area) on March 25-26 saw an additional 796 homeowners. The second day of the Bellevue event was specifically held for the purpose of collecting missing documents needed for Home Affordable Modification Program (HAMP) applications. “HOPE NOW has now held 69 total events since 2008, assisting over 59,000 families in a safe, confidential and free environment,” said Faith Schwartz, executive director of HOPE NOW. “In 2010 alone, we have already hosted 10 events across the country. The industry has reached out aggressively and collaborated with the government and the non-profit communities to make these events successful. We are pleased that at-risk homeowners in the Portland and Seattle areas made the effort to come out and work towards solutions to their mortgage issues. Our servicers are committed to face to face outreach as one of their many tools for keeping as many borrowers as possible in their homes.” At the Bellevue, Wash. event, Tim and Rae Engebretson from Tacoma, Wash. were among several homeowners who received results on-site. “When I first got the letter from GMAC, I was sure it was a scam, but my husband convinced me to come to the event. We are facing an unemployment situation and are determined to keep our home. Showing up today was well worth the effort as our lender was able to reduce our monthly payments by almost half for the next six months. This will help us greatly as we try to get ourselves back into the workforce,” said Rae Engebretson. “GMAC supports the goal of preserving homeownership, and was pleased to work with HOPE NOW and its partners at these events in order to help at-risk homeowners find solutions. We made our skilled loss mitigators available so that we could reach a decision on-site wherever possible. In all cases, we will continue to work with the borrower to reach a resolution,” said Dana Dillard, senior vice president of mortgage initiatives at GMAC,” said Dana Dillard, vice president at GMAC.

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For more information, visit

WA 2

Hole-in-one sponsor—$400 O Only one available O Includes Hole-in-One Insurance

Putting contest sponsor—$300 O Only one available O Includes prize

Lunch sponsor—$300 O Only one available O Includes lunch, dinner, and golf for two

Longest drive sponsor—$150 O Only two of available O Includes prize for winner

Closest to the pin sponsor—$150 O Only two of available O Includes prize for winner

Hole sponsor—$200


newest members Please join the Washington Association of Mortgage Professionals in welcoming its newest members. We look forward to their active participation in the association.

Affiliate Associate Member Susan Hanauska of Pacific Northwest Title, Tacoma, Wash.

O Only 17 available O Includes lunch and dinner for two

Professional Member

Please note the reduced prices for sponsorships this year. WAMP has made it even more affordable to get your business noticed! This is a great value for the money! For additional details, contact Brett Pierce at (360) 709-9191 or e-mail

Professional Loan Officer Members

For information on all WAMP events, call (866) 425-7250 or visit

Seth Raddue of TriStar Finance Inc., Redmond, Wash.

Sandy Hanson of Golf Savings Bank, Bellevue, Wash. Ken Lindberg of Mortgage Master Service Corporation, Kent, Wash.

Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting.

Phoenix Airport Marriott® 1101 North 44th Street • Phoenix, Arizona 85008 USA Rooms are $99 per night, and will be honored at the same rate if you wish to extend your stay.


Visit for details. O

Hotel Toll-Free: 1-800-228-9290

WA 3

Branch Manager Business Analyst Business Development Manager Commercial Loan Officer Corporate Sales Credit Analyst Inside Sales Legal Assistant

Advisor Asset Protection Management Bank President

Client Relationship Manager Client Relationship Specialist Collateral Asset Manager

Licensing Assistant

Mortgage Loan Processor Mortgage Originator National Account Manager National Sales Rep PC Support Admin Post Closing QC Expert Processor Regional Vice President REO Closer Retail Branch Manager Retirement Planner Reverse Mortgage Specialist Sales Manager

Loan Administration Manager

Secondary Marketing Analyst

APRIL 2010 O



• • • •

WA 4

Loan Originator

Senior Loan Officer

Senior Underwriter

Senior Vice President Software Engineer

Job Seekers Post your anonymous resume free Sign-up for free job alerts Free career management tools Geographical and job type searches Use coupon code NMP0551 to take advantage of this special offer!


Vice President

Wholesale Account Executive

Employers • Responses from highly-qualified candidates • Your ad can also be posted on Indeed and SimplyHired as a Featured Job, on Craigslist (most cities), Googlebase, Oodle, Juju, CareerMetaSearch, TopUSAJobs, Jobalot, and more! • Pay-per-use resume bank

Post your resume. Find a job.

Be happy.

40% Discount on Job Postings and Subscriptions for all National Mortgage Professional Magazine Readers This offer expires April 30, 2010.

Value Nation: The Mortgage Meltdown and Appraiser Selection By Charlie W. Elliott Jr., MAI, SRA


Regulatory Compliance Outlook: April 2010—Escrow Requirements for Higher-Priced Mortgage Loans


By Jonathan Foxx

SAFE Smart … Testing, Education and Licensing: The Test in the Bar By Paul Donohue, CRMS


The Secondary Market Overview: Predictions By Dave Hershman


The NAMB Perspective


FDIC Finds Fair Lending Violations Under ECOA for Credit Reporting Fees By Terry W. Clemans


Trend Spotter: Why Tax Knowledge Matters By Gibran Nicholas


Half-Empty? Half-Full By Donald E. Fader, CRMS


Ask Tommy: Your QC Expert By Tommy A. Duncan, CMT


Forward on Reverse: Reverse Mortgages for First-Time Homebuyers By Atare E. Agbamu, CRMS


A View From the C-Suite: Redefining “Going Green” By David Lykken


Will the Mortgage Industry Witness Another Influx of NonTraditional Lenders By Ed F. Wallace Jr., Ph.D.


Going Green and Stamping Out Fraud


By Tommy A. Duncan, CMT

Paperless Lending Offers Fraud Risk Mitigation By Sharon Matthews


Paperless or Just Less Paper? By Erik Wind


Pieces of the P.I.e: Paper, Imaged and e-Documents By Greg Smith


Eight Reasons Why E-mail Marketing Works for Mortgage Brokers By Wendy Lowe










NMP Mortgage Professional of the Month: Steven A. Milner, President and Chief Executive Officer of Mortgage Concepts




O APRIL 2010


April 2010 Volume 2 • Number 4



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

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site: STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 Domenica Trafficanda Art Director Karen Krizman Senior National Account Executive (516) 409-5555, ext. 326

APRIL 2010 O

ARTICLE SUBMISSIONS/ PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail The deadline for submissions is the first of the month prior to the target issue. SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail or visit Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements of fact and opinion in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply an opinion on the part of NMP Media Corp. National Mortgage Professional Magazine reserves the right to edit, reject and/or postpone the publication of any articles, information or data. MO






ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Senior National Account Executive Karen Krizman at (516) 4095555, ext. 326 or e-mail




Jennifer Moeller Billing Coordinator (516) 409-5555, ext. 324




National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2010 NMP Media Corp.

A Message From NMP Media Corp. Executive Vice President Andrew T. Berman Going green? Paperless? So when we thought of doing a special section on “Going Green/Paperless,” I assumed we’d be reporting on some great companies that have gone green and have experienced great savings and an increase in productivity. Instead, I have been hearing nightmarish scenarios about $50 million-per-month mortgage operations spending in upwards of five figures on paper and related dead-tree technology expenses. I am even hearing stories about so-called “paperless” offices, where specific employees insist on printing out PDFs so they can view their documents “offline.” However, most companies are trying to make the push towards paperless. It seems that the benefits, such as savings, the ability to market yourself as a “green company,” increased productivity, better control over your processes and document management, far outweigh the negatives. In our “Going Green/Paperless” section, you will learn from Tommy Duncan, CMT that going paperless is of great concern when it comes to fraud detection. The loss of “wet signatures” leaves room for wouldbe fraudsters to take advantage of the system. Sharon Matthews shows how lenders are using technology to analyze the data behind what you and I see on the screen to mitigate fraud. In the contribution by Erik Wind, he shares with us how many are finding that while “paperless” might not be possible, there are a great many benefits of “just less paper.” The section wraps up with a piece from Greg Smith of Xerox where he shares information on his company’s P.I.e (Paper, imaged documents and electronic documents) program.

What business does a “print publication” like National Mortgage Professional Magazine have featuring a section on going green? Are we hypocritical? Let’s face the facts, while we are all getting more and more news from the Internet, the magazine format still provides a medium that educates us about areas that we didn’t know we should be “in the know” about. This is evident by our increasing paid subscriber base (that’s you and thank you!). Furthermore, more than 70 percent of our readers choose to read our publication online (yes, even though 25 percent of those choose to print it out).

On the road again … My first conference of this year was the recent Regional Conference of Mortgage Bankers Associations in Atlantic City, N.J. and all I can say is, “Wow!” What a turnout! More than 1,400 attendees were on hand to share in this magical experience. I am not talking about the plastic-fabricated magic that we were surrounded by at The Trump Taj Mahal, but an organic magic created from the collaboration and networking going on with the industry’s best. The mortgage industry has filtered out the garbage and is left with the proverbial cream of the industry’s crop. And they were all there at The Trump Taj. Here’s a shocker … new wholesale lenders! Overall, it was a great event that gave the feeling of a renewed sense of pride about being a mortgage professional in 2010. I hope you enjoy yet another edition of National Mortgage Professional Magazine. We are on the verge of the one-year anniversary of this undertaking, and so far, have received nothing short of rave reviews. The proof is in you, our readership, who turns to us for the latest in industry news, through both our monthly print edition and our daily updated Web site, I’m happy to report that our blogger community is growing, as is the number of registered users on our site each day. Again, I thank you for your support of our publication over the past year, and I raise my glass to toast many more years to come. Sincerely,

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

The National Association of Mortgage Brokers

National Association of Professional Mortgage Women

7900 Westpark Drive, Suite T-309 O McLean, VA 22102 Phone: (703) 342-5900 O Fax: (703) 342-5905 Web site:

P.O. Box 140218 O Irving, TX 75014-0218 Phone: (800) 827-3034 O Fax: (469) 524-5121 Web site:

NAMB Board of Directors Officers President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 President-Elect—William Howe, CMC, CRMS Howe Mortgage Corporation 9414 E. San Salvador Drive, #236 Scottsdale, AZ 85258 (602) 200-8100 Vice President—Michael D’Alonzo, CMC Creative Mortgage Group 1126 Horsham Road, Suite D Maple Glen, PA 19002 (215) 657-9600 Secretary—Ginny Ferguson, CMC Heritage Valley Mortgage Inc. 5700 Stoneridge Mall Road, Suite 150 Pleasanton, CA 94588 (925) 469-0100

Directors Joe Camarena The Mortgage Source 10120 Southwest Nimbus Avenue, Suite C-7 Portland, OR 97223 (503) 443-1060 O

Olga Kucerak Crown Lending 8700 Crown Hill Boulevard, Suite 804 O San Antonio, TX 78209 (210) 828-3384 O Walt Scott Excalibur Financial Inc. 175 Strafford Avenue, Suite 1 O Wayne, PA 19087 (215) 669-3273 O

Senior Vice President Sharon Patrick, MML, CMI (386) 985-1620 Vice President/Northwestern Region Jill M. Kinsman (206) 344-7827 Vice President/Western Region Tim Courtney (760) 792-5620

Vice President/Southeastern Region Jessica Edmonston (919) 414-3028 Secretary Laurie Abisher, GML, CMI (661) 283-1262 Treasurer Kay Talley, MML (919) 846-4294 Parliamentarian Hulene Bridgman-Works (972) 494-2788

Vice President/Central Region Candace Smith, CMI (512) 329-9040

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

2010 Board of Directors Marty Flynn—President (925) 831-3520, ext. 224 Tom Conwell—Vice President (248) 473-7400 Daphne Large—Treasurer (901) 259-5105 William Bower—Director (800) 288-4757

Sanford (Sandy) Lubin—Director (805) 481-3155 Judy Ryan—Director (800) 929-3400, ext. 201 Tom Swider—Director (856) 787-9005, ext. 1201 Donald J. Unger—Director (303) 670-7993, ext. 222

NCRA Staff Mike Brown—Director (800) 285-6691

Terry Clemans—Executive Director (630) 539-1525

Susan Cataldo—Director (404) 303-8656, ext. 204

Jan Gerber—Office Manager/Membership Services (630) 539-1525

Nancy Fedich—Director (908) 813-8555, ext. 3010

O APRIL 2010

Don Starks D.C. Starks Mortgage Associates Inc. 141 South Main Street O Bourbonnais, IL 60914 (815) 935-0710 O

President-Elect Gary Tumbiolo, CMI (919) 452-1529

Vice President/Greater Northeast Region Colleen-Therese McKeever, CMI (646) 584-8332


John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road O Fallston, MD 21047 (410) 557-6400 O

President Liz Roberts-Fajardo, GML (702) 498-8020 O

Treasurer—Don Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355

National Board of Directors


APRIL 2010 O



Columbia Law School study finds: Federal action resulted in more defaults and riskier lending


Federal action to exempt national banks from state anti-predatory lending laws resulted in more defaults and riskier lending compared to other banks, found a study funded by the National State Attorneys General Program at Columbia Law School. At the same time, the study found antipredatory lending laws enacted by some to protect consumers from abusive and unfair mortgage practices saved many people from losing their homes to foreclosure. “The implications of these results are extraordinarily important,” said James Tierney, director of the National State Attorneys General Program. “This report proves that that vigorous state consumer protection laws make a positive difference for consumers throughout the country. The federal government must respect that clear fact.” The study, titled “The Preemption Effect: The Impact of Federal Preemption of State Anti-Predatory Lending Laws on the Foreclosure Crisis,” was conducted by researchers at the UNC Center for Community Capital. It found foreclosures and risky lending increased as a direct result of the preemption order enacted by the Office of the Comptroller of the Currency (OCC) in 2004. “Our research confirms that state consumer protection laws worked, but that when one group of lenders is handed a regulatory free pass, they are going to take advantage of it,” said Center for Community Capital Director Roberto G. Quercia. “In this scenario, unfortunately, we see preemption shifting the activities of federally insured banks to riskier activities than they would otherwise have pursued.” The research findings are the result of two companion reports that offer the first comprehensive look at loan quality and performance following the federal preemption of state laws in states with and without strong anti-predatory lending laws. “This research shows the need for

strong, consistent mortgage laws in North Carolina and across the country,” said North Carolina Attorney General Roy Cooper, who wrote the nation’s first comprehensive state law combating predatory lending as a state senator. “While our laws kept more homeowners from risky loans than other states’, our communities are still suffering from too many foreclosures. Washington needs to let states set high standards and hold unfair lenders accountable.” The order exempted nationally chartered banks and their subsidiaries from most state laws regulating mortgage lending, including stricter laws that had been passed by some states to curb abusive, “predatory” mortgage lending. The center analyzed data from 2.5 million mortgages before and after federal preemption in states with and without anti-predatory lending laws. The mortgages examined were issued from 2002-2006, and represent about 30 percent of U.S. mortgages rated subprime or Alt-A and about five percent of all U.S. mortgages during the period. “We believe these results provide strong support for policy proposals that will prevent regulatory loopholes, so that borrowers can rely on the full protection that state laws afford them,” said Quercia. For more information, visit

California tops Interthinx mortgage fraud risk index for Q4 of 2009

Interthinx has released its quarterly Mortgage Fraud Risk Report, covering data collected during the fourth quarter of 2009. The report includes an analysis of national mortgage fraud and indices for the four most common types of mortgage fraud. It indicates that most fraud types are on the rise, with increases in the risk index for occupancy fraud, employment/income fraud, and property valuation. The latter is up more than 100 percent from two years ago. The study finds that California now has the highest mortgage fraud risk, continued on page 6

By Charlie W. Elliott Jr., MAI, SRA

The Mortgage Meltdown and Appraiser Selection Within the past couple of years, we have Before determining the answer, we experienced a complete meltdown of must consider the fact that our entire our economy, the mortgage industry financial system was in danger of going and our banking system. As a result, we down the tubes as a result of the morthave witnessed wholesale changes in the gage meltdown. Practically everyone in way appraisals are purchased. Mortgage our society was damaged in one way or brokers, loan officers and anyone else another by the collapse of the system, with a financial interest in a transaction and, like it or not, most of the problem are unable to purchase appraisals. stemmed from toxic mortgages. Due to This requirement has this catastrophic failure been imposed by Fannie of the system, our politiMae, Freddie Mac and cal leadership cannot and the Federal Housing will not take this problem Administration (FHA) on lightly. While there is sufall loans, either purficient blame to go chased or made by them. around, the consensus of In today’s market, that opinion is that inflated represents most, if not appraisals were largely to all, of the mortgage loan blame for the crack in the market. In the past, Wall monetary system. It will Street was buying loans, not be easy going forward but that practice has for regulators and politiground to a halt due to cians to relax appraisal “While there is all of the bad loans. As a sufficient blame to go procurement rules set in result, federally-backed place by Fannie, Freddie around, the consensus mortgages are practically and the FHA. Specifically, of opinion is that the only game in town. what may we expect in inflated appraisals There has been much this regard? complaining by mortgage were largely to blame For starters, there is for the crack in the brokers, loan officers likely to be a tightening and even Realtors and of the mortgage system in monetary system.” appraisers over this new months to come like we practice. Unfortunately, the change have never seen. Interest rates are comes at a time when loan volumes are going to increase, mortgage qualificain the gutter, property values are in the tion requirements will continue to be tank, home foreclosures are at an all- rigid for many would-be borrowers, time high, and the overall economy is and appraisal scrutiny will be tougher, on the ropes. When we combine all of not lighter. these factors, it makes the origination of The powers that be are currently saya marginal loan difficult, to say the ing that the root of the problem is least. Some say that these marginal appraiser pressure being imposed by loans should not be made; others say those selecting appraisers, purchasing that these circumstances make apprais- appraisals and reviewing appraisals ers less accountable. and that these are the very people Many have complained about this standing to gain by collecting fees from new process and the new rules. Is it the closing of the loan transaction. likely to change, or are we stuck with a Further, appraisers, in some cases, are system where lenders and Realtors are accused of collecting fees on appraisals, not going to be able to select and or which they inflate just to insure that communicate with appraisers in the continued on page 7 future?

lender must set up an escrow account for loans subject to the HPML escrow requirements. Escrow mandates only affect first lien transactions. (Exception: Escrow is not required for a condominium, if the condominium association maintains a master policy that covers the individual condominium units for items such as homeowner’s insurance and property taxes.) The HPML origination’s escrow account must be set up to pay items such as property taxes and premiums for mortgage-related insurance (such as homeowner’s insurance) that the lender has required.

RESPA requirements Escrow requirements under federal law, such as under the Real Estate Settlement Procedures Act (RESPA), must be implemented. RESPA provides detailed escrow requirements, escrow account calculation methodologies, and also some model forms.2

Escrow Requirements for Higher-Priced Mortgage Loans In July 2008, the Federal Reserve Board approved a final rule, which amends Regulation Z (the Truth-in-Lending Act) and was adopted under the Homeownership and Equity Protection Act (HOEPA). The new rule addressed and defined “higher-priced mortgage loans” (HPML), a new category of mortgage loans, while also providing additional protection to consumers.1 Most requirements of the rule were to be implemented on Oct. 1, 2009. Four key protections were provided to consumers: O Borrower Ability: Lenders must take a borrower’s ability to repay the loan from income and assets other than the home’s value into account when making the loan. O Verification of Income/Assets: Lenders must verify the income and assets they rely upon to determine repayment ability. O Prepayment Penalty: Prepayment penalties are prohibited if the mortgage payments can change in the first four years; and, for other higher-priced loans, a prepayment penalty period cannot last for more than two years. O Escrow Accounts: Lenders must establish escrow accounts for property taxes and homeowner’s insurance for all first-lien mortgage loans.

Some salient RESPA requirements for escrow accounts O Disclosure of the initial escrow account statement at the time an escrow account is established. O Annual escrow account disclosure. O Certain limitations on how the escrow account is funded, ensuring that the account is not “overfunded” with the borrower’s money.

State requirements State law places further requirements on escrow accounts. Some states exceed RESPA’s mandates in limiting the amount of the “escrow cushion.” Additionally, state law might require the lender to pay interest on the amount in the escrow account.

Submit your questions … Do you have a regulatory compliance issue that you’d like to see addressed in the Regulatory Compliance Outlook Column? If so, e-mail your issue or concern to Jonathan Foxx at Jonathan Foxx, former chief compliance officer for two of the country’s top publiclytraded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at

Footnotes 1—Compliance with the new rules, other than the escrow requirement, is mandatory for all applications received on or after Oct. 1, 2009. The escrow requirement has an effective date of April 1, 2010 for site-built homes, and Oct. 1, 2010 for manufactured homes 2—See 24 CFR 3500.17, RESPA’s Escrow Requirements section, for further information on RESPA escrow requirements. The U.S. Department of Housing & Urban Development (HUD) publishes a number of Public Guidance Documents that illustrate the proper way to fund and manage an escrow account.

Determining if a loan is an HPML origination requires a calculation using a specific “survey-based index,” as follows:

Survey-Based Index

The rule’s definition of an HPML origination captures virtually all loans in the sub-prime market, but generally excludes loans in the prime market.

Effective date: April 1, 2010 The escrow account requirement must be implemented on April 1, 2010. This deferral of the requirement until April 1, 2010 was given in order to provide originators sufficient time to set up escrow account procedures. Lenders must become familiar with federal and state escrow account requirements.

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Implementation dates O Effective April 1, 2010, the lender will be required to set up an escrow account for residential real estate-secured HPMLs.

Escrow requirements Effective with the dates indicated above for the respective types of HPMLs, the

Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.

O APRIL 2010

O Effective Oct. 1, 2010, the lender will be required to set up an escrow account for non-real estate-secured (principal dwelling) HPMLs (i.e., manufactured homes).

“My loan officers have been closing more loans by running credit reports through PCS’s credit scoring services”


The rule establishes a category of “higher-priced mortgage loans” secured by a consumer’s principal dwelling, defined as a first lien mortgage that has an annual percentage rate (APR) that is 1.5 percentage points or more above the “average prime offer rate,” or, if the loan is a subordinate lien loan, 3.5 percentage points above this Survey-Based Index. The average prime offer rate index is based on a survey published by Freddie Mac, and can be found on Freddie Mac’s website at the following tab: Weekly Primary Mortgage Market Survey. O

HPML calculation


news flash

The Test is the Bar It made no sense to me. When I heard you could take the national test before sitting for the 20 hours of pre-license education (PE), I’m thinking what a regulatory boondoggle. How could they draft up something this illogical? Then I learned it wasn’t a mistake; this disconnect was quite purposeful. Rich Madison, the NMLS Director of Education Programs explained to our education working group that, “it is not pre-testing education, it is pre-licensing education.” He added, “there is no connection between the education requirements of the SAFE Act and the national test.” This seemed curious to me. I knew it needed further exploration. What were they up to?

Education Minimized, the Test Emphasized The twenty hours of required PE is designed to satisfy a bare minimum of MLO competency requirements. The twenty hours only requires 8 hours of core education; the remaining twelve hours is elective. Each state is allowed to use as many of these elective hours for any state education it deems appropriate. It began to dawn on me that education, though important, was not the focus of MLO competency validation. Clearly, the bar of entry is the national test. It supplies the true “capability measurement” for MLO’s. The national test is designed to be both broad and deep. The test covers 146 different areas of study. The test questions are interpretive in nature, requiring a firm conceptual understanding of these subjects in order to score well. The test is the bar and it is set quite high.

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Test Break Down


The national test component entails 100 questions that include 10 un-scored questions used for developmental purposes. The questions are all multiple choice and you will have 150 minutes for completion. The test is broken down into the following four categories. O Federal mortgage related laws (35%) O General mortgage knowledge (25%) O Mortgage loan origination activities (25%) O Ethics (15%) My concern for brand new students of the mortgage industry is the MLO activities section, which covers more that 62 separate subjects. A new person with no contextual understanding of the business will naturally struggle in this area. My concern for an experienced mortgage veteran is the federal law and the ethics sections, which explore 14 different federal laws and consumer protections. How long has it been since you studied the HOEPA prohibitions? Do you understand the difference between providing ECOA based adverse action vs. FCRA based adverse action notices?

A “SAFE Smart” Approach Don’t think you are going to waltz into this test and ace it. The questions are filled with double negatives and trip words designed to throw you off. This is first a reading test and second, a knowledge bar. The industry’s new bar of entry is the 100-question national test. My SAFE Smart advice to you is take a test specific 20-hour PE course first, then get a good exam prep tool and buckle down to study. Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.

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with an index value of 222. Nevada, which had the highest index for the previous five consecutive quarters, drops to second place with an index of 220, and is closely followed by Arizona with an index of 211. Florida remains in fourth place with an index of 179, while Colorado is in fifth place at 153. The occupancy fraud risk index rose 16 percent since last quarter— the first significant increase in the index since the fourth quarter of 2006. The magnitude of the quarteron-quarter increase suggests that occupancy fraud risk will be a serious issue going forward, as continuing price declines and get-rich-quick schemes lure investors back into the market and as builders face continuing difficulty in moving unsold inventory. Despite a slight (four percent) quarter-on-quarter decrease, the property valuation fraud risk index is up 40 percent over last year and up more than 100 percent from two years ago. Schemes involving short sales, real estate-owned (REO) inventories, wholesale flipping, and refinancing by borrowers whose equity has been impaired by falling real estate values continue to drive this index. Interthinx analysts expect lenders to focus more closely on fraud risk mitigation as they work to emerge from the downturn. This will help guard against the potential for fraud as a large number of adjustable rate mortgage loans—especially “option” ARMs with negative amortization features— reset between now and the first quarter of 2012. “Lenders have expressed their appreciation for our investment to provide a more detailed analysis of the data we’ve been collecting,” said Kevin Coop, president of Interthinx. “Our most recent report provides data that lenders can use to anticipate and prepare for trends that will impact their risk mitigation strategies. The report can ultimately make them more successful at identifying fraud before loans are funded.” “The Interthinx Mortgage Fraud Risk Report is fast becoming the primary source of information about fraud risk in the mortgage industry, and with good reason,” added Mike Zwerner, senior vice president for Interthinx. “Interthinx has the depth of data to identify, categorize, and help lenders effectively mitigate mortgage fraud risk. Using our own proprietary data along with outside public data resources, the quarterly report reveals where mortgage fraud risk is occurring, where it is migrating, and how schemes are changing. We’re pleased that more institutions are relying on our reports.” For more information, visit

CSBS and AARMR reach settlement agreement with CitiFinancial The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) have announced a 35-state settlement, in which CitiFinancial agreed to remit a $1.25 million penalty. The agreement between state mortgage regulators and CitiFinancial was executed following an examination conducted by the Massachusetts Division of Banks to determine compliance with state and federal consumer protection laws. The examination found that CitiFinancial had failed to report 91,127 residential mortgage loans to the federal government as required by the Home Mortgage Disclosure Act (HMDA). The residential mortgage loans that were omitted from CitiFinancial’s HMDA Loan Application Register were originated between 2004 and 2007. The failure to report the loans was apparently caused by an internal systems error at CitiFinancial that went undetected until the Massachusetts Division of Banks examination. “HMDA remains the primary tool we utilize to ensure compliance with fair lending laws and regulations,” said Steven L. Antonakes, Massachusetts Commissioner of Banks. “By failing to accurately report all required transactions, CitiFinancial hampered our ability to complete that assessment. Therefore, this agreement will ensure that the systems, training, and appropriate oversight and controls are in place to avoid a similar occurrence in the future.” Major terms of the agreement include: O CitiFinancial already resubmitting corrected and complete HMDA reports to the Federal Reserve System for the years 2004-2007; O CitiFinancial engaging an independent consultant to conduct a thorough fair lending review to ensure the data from the previously unreported 91,127 mortgage transactions does not in any way demonstrate a pattern or practice of discriminatory lending practices; O CitiFinancial will thoroughly review and substantially modify its internal control procedures to ensure all reportable HMDA transactions are accurately compiled and reported; and O CitiFinancial will remit a penalty totaling $1.25 million to the 35 states that are party to this agreement. “This settlement highlights the value of state enforcement of federal consumer protection laws,” said Mark continued on page 9

Predictions One word … that says it all. We are constantly trying to “predict” the future. When you go on the street and meet with real estate agents, they ask you, “What do you think will happen with rates?” When you set up your business plan, it is all about know what will happen within several areas of the markets, such as refinances versus purchases. Consider this prediction released recently: “Refinances in 2010 will be down 52 percent and purchase mortgage volume will be down five percent from 2009, according to the latest projections from iEmergent, a Des Moines, Iowa-based market research firm.” Others have predicted rising rates this year and cite the following factors: O The Federal Reserve Board withdrawing from the mortgage-backed securities (MBS) markets

“Refinances in 2010 will be down 52 percent and purchase mortgage volume will be down five percent from 2009, according to the latest projections from iEmergent, a Des Moines, Iowa-based market research firm.” However, I do know the factors in play that could change the time frame significantly. Even the value of the dollar becomes important because if the dollar stays weak, this increases demand from foreign investors. Basically, American real estate is on sale. And the sale is really great if you are from a country with a strong currency.

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the loan closes and of continuing to get business from the people who hired them. Even when it is not true, the perception is there, and, because of this, it will be hard for regulators and legislators to allow business as usual. In conclusion, it is not fair to any of the self-respecting professionals concerned, including lenders, appraisers and Realtors, to be subjected to the temptation to commit fraud or to be positioned where the perception would be that they are acting in a less-than-professional manner. Neither is it fair to the taxpayer for there to be a door for industry participants to practice business in such a way that the taxpayer is on the hook to cover the cost of avoidable bad loans. Nor is it fair to the borrower to pay for an appraisal and a loan whereby he or she is exposed to foreclosure due to unscrupulous business practices. Finally, it is not fair to the regulators, who must enforce rules, to be put in a position where there is opportunity for fraud on their watch. Given all of the reasons above, stricter rules are not only likely to be implemented, but they are also necessary to protect a system from which we all benefit from as professionals.

If these rules eliminate a few bad apples, so be it. In the past, the bad apples had the advantage of siphoning off business from those who follow the rules. Under today’s new system, the playing field is level and the ethical professionals will enjoy the business provided by our industry, without being put in a position of their having to subscribe to the same underhanded tactics of the less-than-ethical practitioners in order to earn a living. Yes, stricter rules will come at a price, but it is worth the investment. It is a necessary cost of doing business and it will serve to protect all of society from the type of catastrophic events that we have experienced and are experiencing. Going forward, appraisers must continue to be insulated from the pressure of those having a financial interest in loan transactions. Charlie W. Elliott Jr., MAI, SRA, is president of Elliott & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889, email or visit his company’s Web site,

• Tax Return Verification (4506 tax transcript done in less than 24 hours in most cases) • Flood Certification Report • Automated Valuation Model (AVM) Reports • Verification of Employment (VOE) Here’s what our customers are saying: “By using PCS’s VOE service, I was able to move the cost onto the HUD1 and virtually get the VOE’s done at no cost to my company” “PCS’s high level of customer service ensures that my loans close on TIME!”

Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.

O APRIL 2010

Here is the problem. We cannot predict the future. One event tomorrow could change everything. That is why I have never been a believer in technical charts. It is the fundamentals which are important. Fundamentally, we are heading into an economic recovery, and if all goes well, rates will rise, but not drastically. If the economy gets too strong too quickly or steps back into a recession, all bets are off. These factors are so entwined that we never know how they will come out. For example, if the recovery is stronger, that means higher rates because of the risk of inflation. But a stronger recovery also means that the deficit will start to diminish more quickly and that could translate into lower rates. Finally, if the

Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at If you would like to stay ahead of what is happening in the markets, visit for a free trial or e-mail


O The markets getting spooked by large government deficits which will fuel the threat of inflation. As the government borrows more, this forces rates up because of increased supply in the bond markets.

value nation

when something goes wrong, it is being thrown back in their face. It is not only about rates, it is about how someone will have to navigate the process to achieve the American dream of homeownership. O

O The Fed also starting to tighten monetary policy as the economy recovers. The Fed has already increased the Discount Rate as a “symbolic” gesture.

recovery is stronger, people will have more jobs and buy more houses, which makes it more likely that housing prices are not falling and mortgages become a favored investment again. Confused yet? Your job as an originator is to stay on top of what is happening. Today, that means every hour. You need not be able to predict the future. However, you should know what factors are in play and what events are on the horizon that could impact the markets. For example, if you don’t know that the employment report is being released the first Friday of every month, you cannot stay on top of the markets. I get a text message on my phone from RateLink ( that provides upcoming events, as well as changes in the markets. Once again, predictions are not only about rates. The economy itself provides much suspense for us. For example, I am surprised at how many originators are starting loan modification efforts now. I have often said that loan mods might be a great service from one to four years. It is now almost two years after I started saying that. Some see predictions of five million foreclosures to come on a market and predict that loan mods will be going strong five years from now. But the fact is that a stronger economy, along with low rates and a tax credit, could shorten this period to 18 months. And that would be good for all of us. Do I know the answer? No.

So … what’s the answer? Be knowledgeable. That is why we teach the secondary markets as part of the Certified Mortgage Advisor Program. Hedge your bets. Make sure your business model is diversified. Putting all your eggs in one basket is never a good idea. I asked Eric Holloman, our secondary expert and the chief executive officer of RateLink, about his view of the future. He says that it is important to watch the national news. For example, many loan officers are trying to figure out why their loans are getting underwritten to death right now when the crisis should be easing. Yet, if you read about Fannie Mae repurchases and what lenders are going through in this regard, it makes perfect sense. If the loan is not perfect,


For more information on the National Association of Mortgage Brokers, visit

NAMB Setting the Bar on Professionalism in the Mortgage Industry

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A Message From NAMB President Jim Pair, CMC


If you did not attend the 2010 National Association of Mortgage Brokers Legislative & Regulatory Conference in February, you missed one of the very best conferences NAMB has sponsored that I have ever attended. Every panel covered a topic that was crucial to our industry, and the panelists were experts on the topics presented. There was plenty of time for the attendees to address the panelists with questions that were answered in a straightforward manner. The highlight of the event was the luncheon where Federal Housing Administration (FHA) Commissioner David H. Stevens spoke to us. He provided us with some important information, including discussing the important role the mortgage broker plays in the mortgage distribution channel. Many of the attendees came up to me or expressed in e-mails, the same impressions I had of the conference. Much of the credit for such a successful conference must be given to Jon Otto, NAMB’s director of government affairs. Jon and the staff of NAMB were responsible for the organization of the conference, selecting the topics for the various panels, arranging for the panelists to speak and locking up Commissioner Stevens as our luncheon speaker. Many thanks to Jon and his team for a conference that was well-planned, well-coordinated, and as I said previously, one that was very informational on all the current issues impacting our industry. The Legislative & Regulatory Conference is just one of the many benefits for NAMB members. It is the only conference NAMB holds that is restricted to NAMB members only. As a member attending the conference, you are receiving information before anyone else, as evidenced by Commissioner Stevens’ announcement at our luncheon. In the current market environment, there are two more very important benefits for NAMB members. The Lending Integrity Seal of Approval sets you apart from all the other loan originators. As a NAMB member licensed under the SAFE Act and certified by your state association, you are qualified to use the Seal. By using the Seal, you have pledged to abide by a strict Code of Ethics, Professional Standards and Best Lending Practices, and a NAMB grievance review process. The Seal should be used in all in your advertising, business cards, stationery, etc. You can go to and learn how to download the Seal for use in radio ads, print ads, press releases and letters to your customers and prospects. There is even a video that you can use in presentations to Realtors, business groups or other groups that tells the story of the Lending Integrity Seal of Approval. The Seal will truly set you apart from loan originators who do not qualify. Besides qualifying for the Lending Integrity Seal of Approval, a NAMB member may go one step further and obtain a designation. NAMB offers the Certified Mortgage Consultant (CMC), the Certified Residential Mortgage Specialist (CRMS) and the General Mortgage Associate (GMA) designations. Anyone receiving their

designation has distinguished themselves from other originators, even those qualified to use the Lending Integrity Seal of Approval. Obtaining a NAMB-certified designation means you have passed a rigorous test, have experience in the industry and met the necessary qualifying points to earn the designation. Go to and click on the “Certification” tab and learn more about how you can achieve the highest level of professionalism and really set yourself apart from all other loan originators. These are only a few of the benefits available to you when you become a NAMB member. To learn more on how to become a member, go to and click on the “Membership” button, scroll down to “Join Now” and click to join. You will find all the information needed to join the only association working to protect our industry and the consumer. Jim Pair, CMC is with Mortgage Associates Corpus Christi and is president of the National Association of Mortgage Brokers. He may be reached by e-mail at

Certification? Certainly! How Do You Know? A Message From NAMB Certifications Committee Chair Pava J. Leyrer, CMC, CRMS I am sure everyone is buzzing with licensing requirements that all loan originators for non-depositories have to complete in the next two to four months. Whether we agree or not, it is the law and we must comply with it to be licensed. The reason I bring this up is because of standards and a basic thought process. Do you know just the basics to do your job, or are you above the curve and make it part of your profession to excel? To be licensed, you have the required minimum in each state and must follow those. To receive a certification, it is now your choice and opportunity to excel above the basics to a higher level and set yourself apart from everyone else. How do you know though which to choose? I have personally seen different offerings for distinction and there are even more coming out now for various topics. When I was reviewing those options and trying to decide, I looked at what credentials and knowledge was needed. As I reviewed the NAMB certifications and the goals set for them, I realized that this was more than just a “pay for paper” certification. I was not buying the right to have the CMC (Certified Mortgage Consultant) or CRMS (Certified Residential Mortgage Specialist) titles. I had to work for them and know my profession and then prove it through a test to gain those honors. I have always been passionate about my industry and profession. It has been an area that the experienced train and share with those wanting to break into our industry. I believe that those of us still fighting for what we believe in and what we have to offer our valued customers and communities, can also recognize the importance of defining our knowledge and taking the next step to becoming certified and maintaining these certifications. Take time today to know where you want to stand in this industry and how becoming NAMB-certified can benefit you and your business. Pava J. Leyrer, CMC, CRMS, is president and owner of Heritage National Mortgage Corporation in Grandville, Mich., and Certifications Committee chair for the National Association of Mortgage Brokers. She may be reached by phone at (616) 534-4993 or e-mail

news flash

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Pearce, president of AARMR and Chief Deputy Commissioner of the North Carolina Office of Commissioner of Banks. “State regulators supplement existing federal efforts and help ensure consumer protections are rigorously enforced. This settlement demonstrates the ability of state regulators to work together effectively to address our systemic compliance concerns with a large national lender.” State regulators have significantly enhanced multistate cooperation in recent years through projects such as the development and launch of the CSBS/AARMR Nationwide Mortgage Licensing System (NMLS) and the creation of the Multi-State Mortgage Committee to provide seamless supervision of mortgage companies operating in more than one state. For more information, visit or

Bank of America completes 12,700 permanent HAMP modifications

NAHB poll shows Americans firmly support government housing initiatives

FICO finds disturbing trends in consumer credit behavior FICO, a provider of analytics and decision management technology, has announced new findings uncovered in the latest analysis offered by its subscription service for businesses, FICO Score Trends. Reversing a long historic trend, mortgage default risk for consumers with high FICO scores now exceeds their credit card default risk, even though most credit cards are unsecured credit and mortgages are secured by real estate. The company observed a parallel rise in mortgage delinquencies for higher-scoring U.S. consumers. According to the analysis in FICO Score Trends, recent repayment behavior across the financial services industry has shifted significantly from historical trends. In 2008-2009, bankcard accounts were just 1.6 times more likely to become 90 days delinquent than were mortgage loans. By comparison, in 2005 bankcard accounts were more than three times more likely to become 90 days delinquent. And for borrowers scoring high on the FICO score’s 300-850 score range, the level of repayment risk actually has become greater for real estate loans than for bankcards. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on bankcards. continued on page 17

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O APRIL 2010

Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.


Americans remain strongly committed to federal support for homebuyers, according to a recent survey of U.S. households conducted by the National Association of Home Builders (NAHB) by RT Strategies. Roughly 68 percent of those polled said the government should continue to support housing, and 65 percent believe the government should be doing more to keep families from losing their homes to foreclosure. RT Strategies, is a non-partisan public opinion polling firm based in Washington, D.C. RT Strategies interviewed a representative sample of 1,000 adults nationwide by telephone using live interviewers on Jan. 29-31, 2010. The sample included 170 interviews with respondents from cellphone-only households. Among those polled, some key groups said the government should continue to play a vital role in maintaining a healthy housing market. For example, 78 percent of all potential homebuyers, including 81 percent of renters intending to buy a home in the near future, said the government should continue to support housing. Roughly 65 percent of homeowners said the government also needs to do more to keep families from losing their homes. Support for more foreclosure protection was not confined merely to current homeowners. Among renters, 84 percent said the government needs to do more to helped strapped borrowers. This issue is particularly important to women, with 71 percent supporting

among current home owners who aspire to buy a new home, seven percent feel trapped by a mortgage that exceeds the value of their current home, 14 percent fear that the value of a new home might fall after they make the investment, and 13 percent say home prices are just too high to allow them to buy a new home at this time. Forty percent of respondents said their home is their most valuable investment, twice the number who cite any other single investment—401k accounts, savings accounts and CDs, stocks and bonds, or mutual funds—as their leading family investment. For more information, visit O

Bank of America has realized significant gains modifying mortgages through the government’s Home Affordable Modification Program (HAMP). At the reporting deadline for the U.S. Department of Treasury’s February 2009 monthly servicer progress report, Bank of America had quadrupled the number of completed modifications for its customers since the previous month’s report. More than 12,700 Bank of America customers now have a permanent Home Affordable modification, up from nearly 3,200 a month earlier. Another 13,700 permanent modifications are pending, meaning final modified loan terms have been approved and documents have been sent for the customers’ signatures, which will be their final step to a completed modification. “In the past month, our concerted customer outreach initiative has driven a substantial increase in the rate of conversions from trial to permanent modifications, as we anticipated in our recent reports of HAMP progress,” said Jack Schakett, credit loss mitigation strategies executive for Bank of America Home Loans. “These results are attributable to the resources— including expansion of our default management staffing to more than 15,000—and focus we have placed in support of this and other homeownership retention programs.” Since January 2008, Bank of America has helped 700,000 customers with a loan modification through our own programs and with trial and completed modifications through the Administration’s Home Affordable Modification Program (HAMP).

“Bank of America is a strong proponent of the home retention goals of the Making Home Affordable program, and we have placed HAMP at the center of our broad-based mortgage modification efforts,” said Schakett. “Recently, we became the first servicer to formally agree to participate in the HAMP second-lien modification program, further demonstrating our commitment to putting as many financially struggling homeowners as possible into a more affordable and sustainable situation.” Bank of America is also a leading lender-participant in the Home Affordable Refinance Program (HARP). Nearly 152,000 Bank of America customers have benefitted through the enhanced loan-to-value and streamlined provisions of that prong of the Making Home Affordable initiative. In total, Bank of America helped more than 1.1 million customers refinance their home in 2009. For more information, visit

greater foreclosure protection, compared to 58 percent of men. Keeping families in their homes is also particularly important to first-time homebuyers, as 78 percent of young adults under age 30 support greater foreclosure protection. And 69 percent of adults who are 30-44, the prime age range for move-up buyers, said they support more foreclosure protection. Overall, roughly two-in-three respondents said they own their home. Among renters, about two-in-three intend to buy a home in the near future. In addition, 15 percent of current home owners intend to buy a home in the near future. The poll asked respondents for their views regarding the Worker, Homeownership, and Business Assistance Act of 2009 that extended a tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence. The legislation, which was signed into law by President Obama in November 2009, also authorized a tax credit of up to $6,500 for qualified repeat homebuyers. Overall, eight percent of those surveyed said they intend to take advantage of that credit, while another 24 percent who might have been interested in using the tax credit said they cannot afford to purchase a home at this time. Of the 33 percent of respondents who said they are planning to buy a home (both renters and current home owners), roughly 17 percent said they intend to use the tax credit. Financial concerns continue to be the greatest barrier to growth in the housing market. Among renters nationwide who aspire to own their own home, 39 percent simply don’t have the money to buy a home at this time, and another 20 percent said the primary obstacle is that they feel they cannot qualify for a loan. Larger economic issues also play a role, as 18 percent said that job security is the greatest obstacle they face in trying to buy a home. Weakness in the housing market itself may be blocking some home owners who would like to buy a new home, as 29 percent of current homeowners said their greatest obstacle to purchasing another home is their inability to sell their current home. Beyond that,


APRIL 2010 O



Steven A. Milner, President and Chief Executive Officer of Mortgage Concepts


Each month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Steven A. Milner, president and chief executive officer of US Mortgage Corporation d/b/a Mortgage Concepts, a company he founded in 1994. Milner has been a retail loan officer since 1981. He was born in Los Angeles, and at the age of 12, moved to the East Coast and his family settled in New York. They moved around the state a bit, moving from the Bronx, and then on to Bayside and eventually, out to Long Island, settling in Brentwood. He graduated from Brentwood High School in 1967 and went to college at Farmingdale State College, where he focused on engineering. Steven eventually switched over to the field of education, where he became a school teacher in the Brentwood School District on Long Island.

In 1986, he formed Mortgages Unlimited Inc., a New York State-registered mortgage broker. In September 1994, Mortgage Concepts became operational, and in 1997, became a New York State-licensed mortgage banker. Steven is actively involved with the day-to-day operations of each department in the company, and is in constant communication with each department manager who represents a team of dedicated, highlyskilled mortgage banking professionals. Currently, Mortgage Concepts is a licensed mortgage banker and is an FHA/VA Direct Lender, in 18 states and growing, providing retail mortgage lending and reverse mortgage lending. How did you first get started in the mortgage industry? As the Vietnam War began to escalate, the federal government was giving deferments to school teachers, so in 1969, I changed my major from engineering to education. I enrolled in the teaching program at Stony Brook University and finished my degree there. Ironically enough, I did my student teaching at the elementary school originally attended in Brentwood, N.Y. I was in the education field for about 18 years, provisionally certified to teach kindergarten through sixth grade. In 1973, I got married, and at the time, I was making $25,000 as a school teacher and my wife was also making around $25,000 annually as a teacher. In 1978, my son, Scott, was born and we immediately went from making $50,000 a year to $25,000 a year, as my wife became a stay-at-home mom. The single income stream necessitated that I start hustling around, continuing to go to school at night and

work part-time jobs, including a basketball coach, intramural coach, football coach and student council advisor. By 1981, I had tried every part-time job just to make a few extra bucks, including selling Amway products, while continuing my education at CW Post, studying school supervision, as my goal was to become a principal. That same year, I went to refinance my home. When we went for the refi, the salesperson who took the application also happened to be a teacher in the Huntington School District on Long Island. I said, “Gee … if you can do this, I can do this too!” I thought it was a good idea to do loans part-time, giving up all my other part-time jobs to focus on just one thing. I asked if I could set up an interview, and the following week, came back and sat down to learn what it was all about. I was told that they did not do any training, and that I would have to teach myself the business. I was given a copy of the Fannie Mae/Freddie Mac Seller/Servicer Guide, which was about four inches thick, and was told to go home and read it. I came back the following week, after reading the guide, and asked exactly what the position entailed. At that time, the 1003 was a one-page document, front and back, not four pages. I figured it seemed pretty easy, as you had to be detail-oriented, which I was already as a teacher. I said, “Show me the money! So, he offered me 125 percent commission. I could not believe that I was going to be paid $125 for originating a $100,000 loan. What people forget is that the 1003 was never designed for a loan officer to complete … it was designed for the borrower to complete. It’s not rocket science. Unfortunately, we have made it into rocket science, but it was always designed for a borrower to complete with respect to their income, assets, credit, liabilities and so on. To me, it

was just a matter of establishing a relationship with a borrower, interviewing them and collecting the information. I decided to give up all of my parttime jobs in 1981-1982 to just focus on mortgages in a part-time capacity. In life, we often come to a fork in the road and must choose which side to take. Sometimes, it’s the right fork and sometimes it’s the wrong fork, and in my case, I know I made the right decision. In deciding to give up all of my part-time jobs, it created a great financial strain on my family income.

“To me, it’s not about making millions, it’s about getting loans closed the right way, assuring to the best of our ability that the loan is going to get repaid.” How did you find your newfound interest in the mortgage arena in the beginning? Being that I didn’t recieve any training, I had to approach Realtors, attorneys, financial planners and accountants the old-fashioned way and hit the streets. I did this from 2:30 p.m.-5:00 p.m. each day, after I left teaching. I didn’t give up teaching because I had to still make a living. So I started to take applications and go to school at night because my objective was still to become a principal. The first 24 applications that I took never closed in my first six months. It was getting brutal, as I had lost my part-time income and now was making nothing in the mortgage field. I was actually losing money because I was incurring expenses bringing in coffee, bagels and donuts and all that stuff … trying to establish relationships with my contacts through networking.

What was it that kept you in a field where you were losing money in? I’ve always believed that persistence overcomes resistance, and I knew that money was to be made in the mortgage

“Mortgage Concepts is doing in the neighborhood of $30-$35 million per month consistently.” marketplace. I just lacked the proper direction due to the absence of training. I vowed, at that point, that if I were to ever have my own mortgage company, I would train my salespeople and provide them some direction. I had a tremendous desire to succeed in this business. One day in school, I was giving a test and took out some of my mortgage paperwork. One of the students asked if I was into real estate, and he suggested I meet his father who was also in the real estate industry. My student’s father had an office in Queens, so we set up a meeting and discussed some opportunities. He was a real estate broker in Florida and what he wanted to do was sell me properties in Florida. I wasn’t interested in that, but he did introduce me to his sales manager who was running the mortgage brokerage division. She offered me a 50 percent commission. I signed on and was

finally starting to close loans. I would solicit real estate agents, attorneys and financial planners, primarily to do purchase money business in the Brentwood, Long Island, N.Y. area I taught in. I would take applications in local libraries, diners or wherever I could meet clients. In 1986, I received my doctorate in mathematics and supervision, and was ready to move on to the next step in my career as a school principal. I was making $45,000 as a teacher and $115,000 selling mortgages. In those days, we didn’t have cell phones, and fax machines were a novelty. The only real form of advanced communication that I had was a pager. In my recorded pager message, I said that I would return their call in five minutes. That became my trademark, to call back within five minutes … no matter where I was. That’s how I ended up developing my business, going from five loans per month, to 10 loans, to 15 with nothing more than a stack of business cards and the reputation of working hard, being responsive and delivering on my word. Did your success in the mortgage field and the opportuni-

ty you saw to make money in this field lead you to quit teaching? Yes, I came to yet another fork in the road, and in 1986, I had the opportunity to open up a mortgage company with two other partners in Bayside, N.Y. When I left teaching, I gave up 60 percent of my pension. If I had taught another two years, I would have received my full pension, but I had to evaluate what was right at the time and made my decision to go full-time into the mortgage industry. My two partners worked the the Five Boroughs, and I worked Nassau and Suffolk Counties on Long Island. At any given time, I would have $30-$50 in quarters in the glove compartment of my car and I knew the location of every pay phone on Long Island! Cell phones did not exist. Our primary business was purchase money, all Realtor-based. I would hand-deliver the commitments to the attorneys, the selling agent, the listing agent, and market myself to everyone involved in the transaction. It became a strictly referral-based business. I did not know how to do consumer-direct telemarketing or how to buy leads. We eventually opened up a satellite

office on Long Island in Hauppauge, N.Y. in 1991 and another larger office in Bohemia, N.Y. in 1992. We dissolved that corporation in 1994, due to a difference in opinion. I wanted to become a mortgage banker and my partners wanted to remain mortgage brokers. We weren’t processing our loans the way mortgage brokers processed their loans, as we were using the Citibank Mortgage Power Program, the Williamsburg Power Program and GreenPoint. Basically, we’d fax the info over to them and they would do the loan. We were doing 125 loans per month with one or two employees, making a lot of money with very little overhead, but I felt the industry was changing and that we should become mortgage bankers. I formed US Mortgage Corporation in 1994, with the intent of opening up and getting my mortgage broker registration approved by Oct. 1, 1994, which I ultimately did, and during that time period, I developed the logo for US Mortgage Corporation or USMC. The USMC name looked too much like the United States Marine Corps, and I didn’t think I was getting the right message across, so we made it d/b/a Mortgage Concepts. We developed a unique selling proposition, which was “Helping You Make It Home,” the slogan we used on all of our business cards, Web site, literature, etc. continued on page 12

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Why did you want to make that change from mortgage broker to mortgage banker? I felt that I needed to control more of the process, specifically, the underwriting of the loans. Additionally, I felt that the future was in mortgage banking and not mortgage brokering. We stayed a broker until 1997, and then received our banker license in 1988. I developed a nice tight knit group of retail referral-based loan officers, dong business exclusively in Nassau and Suffolk Counties, primarily receiving business from the Realtor community. Our business was consistently 90 percent purchase money transactions. I have always worked very hard at this business, working 16-18 hours every day. I have always told my staff that I am like a Motel 6 … ”I will always leave the light on for you.” I started to see a change around the last quarter of 2004, a very unusual drop in originations that had progressed into 2005 that got much worse in 2006. I eat, sleep and breathe this business. In 2004, there were no FHA [Federal Housing Administration] loans on Long Island to speak of because of the high loan amounts, and the loan limits were very low on FHA loans I had my MiniEagle, but did not use it very often. The one decision I made that saved the company was that I never put one sub-prime loan on my warehouse line. I could have made a lot more money like many other people did, but I would rather make less and stay in business. I’ve always had the philosophy that bigger is not better … better is better. I think that philosophy has transcended through everything I do with Mortgage Concepts. To me, it’s not about making millions, it’s about getting loans closed the right way, assuring, to the best of our ability, that the loan is going to get repaid. We’ve always consistently done 80-120 loans per month, with an average size of $400,000 per loan, and keeping the economies of scale in place. Mortgage Concepts is closing approximately $30-$35 million per month consistently. In 2006, I felt that I had to change my business model because I saw a tremendous decrease in values in the Long Island, N.Y. market, which is where we are focused. Values were decreasing, and it was affecting the purchase money business. I love what I do and I felt like I really needed to reinvent Mortgage Concepts, which required that I change from having a one-dimensional business model, which was primarily purchase money out of Nassau and Suffolk Counties, to a multi-dimensional mortgage company doing business in other states.

continued from page 11

What is Mortgage Concepts’ current minimum FICO score? It’s 620 across the board, but it’s probably going to go to 640. I think that you are going to see that scores under 640 will have some very serious performance issues. There is a higher degree of a borrower’s unwillingness to pay, so we are probably going to have to migrate and have our own credit overlays and transition to scores of 640. One of my objectives is to obtain Ginnie Mae approval by the end of the year. I’ve seen companies get Ginnie Mae approval and use it to their disadvantage. They adapted a sort of “kid in the candy store” type mentality. Certain companies take their Ginnie Mae approval and use it to do loans they know are not going to perform. It inevitably catches up with you when you approve loans that should not be approved.

In changing your model, how did you attract new salespeople? I changed and expanded my business model and basically applied the J. Paul Getty theory where I’d rather have one percent of 100, than 100 percent of one. To do that, I decided to become licensed in as many states as I possibly could, starting in 2007. This way, I could attract salespeople from all of the states we were becoming licensed in. I felt that I was strong on the operational side, from origination through closing. In terms of sales, I had to create an opportunity in different states by opening up corporate branches. Many states still allow loan officers to work out of their home, while others require brick and mortar locations. We are currently Do you have any licensed in 18 states, and particular business have our FHA and USDA philosophy you like [United States Department to impart upon of Agriculture] approval. your salespeople? We allow our loan offiI’ve always felt that the cers to originate from needs of the corporation their homes or from their exceed the needs of the brick and mortar offices, individual. The needs but we process and and longevity of the corunderwrite all of the poration are more imporloans in our Bohemia, tant than what a Realtor “I eat, sleep and N.Y. headquarters. I canneeds, a loan officer not allow off-site processneeds and what a borbreathe this busiing and underwriting. ness … working 16- rower needs, because Everything has to flow without the corporation, 18 hours each day. none of those aforementhrough here, and now I’m like the Motel with technology, that goal tioned entities have anyis much simpler to accomthing. We do not need to 6, I will always plish. Currently, we have sit here and talk about all leave the light on approximately 140 salesthe mortgage companies for you.” people licensed in 18 that are left with nothing states, but within just a but some desks and few weeks from now, we will be licensed paperclips in their drawers. My objecin 20 states. My goal by the end of the tive has always been to stay in business, year is to be licensed in 35-30 states and and that means that if we are going to not to expand without control. You have stick around in the mortgage banking to be able to control the quality of the business, we have to make good loans. origination and maintain integrity of That is what we offer salespeople all the files which is challenging with a 10 over the country the fact that we will be percent unemployment rate. in business. They have a future with us Our loan officers do a compilation of at Mortgage Concepts. We are not going everything, including purchase money to say “yes” to every loan, but you will and refinances on a referral basis, or make a good living. they do lead-based where they purchase their own leads, but we do not do What do you consider the any direct response marketing. Direct next big thing for the response marketing can create an mortgage industry as a whole underlying pressure from the loan offi- that mortgage professionals cer through the underwriter to close will need to embrace? loans, to meet the economies of scale Being an ex-educator, I have always and to meet the budgetary require- been a proponent of education. I think ments of running a mortgage company. it is imperative that any loan officer Let’s face it, if you are spending who speaks to a borrower must comply $300,000-$500,000 per month on with state-specific registration, educaadvertising, you have to close a lot of tion and testing requirements. I think loans. That means you are going to be that is huge, and it says a lot to any putting a lot of pressure on salespeople future employer. When we get out of and on management to essentially high school and we go to college, we close loans without any regard for the pay to go to college and generally work willingness of the borrower to repay, harder while at college. There should and I think that philosophy has caused be no difference when it comes to the the demise of many of the larger mort- mortgage business. If you are going to gage companies. enter this profession, then you should

“The needs and longevity of the corporation are more important than what a Realtor needs, a loan officer needs and what a borrower needs because without the corporation, none of those aforementioned entities have anything.” know the profession. You have to be able to look somebody in the eye and deliver what you say you are going to deliver. I think this requires a change in attitude, and a change in behavior with respect to where business is coming from. Over the last four or five years, I was never, quite frankly, a proponent of the consumer-direct model, because I felt there was a level of integrity missing. Loan officers have to get that back and have to re-establish that. I still feel that as values begin to stabilize, there will be tremendous opportunity for loan officers to obtain business the old-fashioned way of walking into the offices of Realtors, attorneys, financial planners and accountants, and be their purchase money source for their borrowers. I think that the loan officer who is technologically advanced and educationally advanced will capture more business going forward and that goes with the infrastructure of mortgage companies as well. On the origination side, Mortgage Concepts is 100 percent paperless. I think it really enhances our ability to be more efficient. I think loan officers need to do that. With education comes knowledge and confidence, and I think that is the primary focus I would like to see loan officers take. LOs cannot have this dumping ground mentality that they had years ago. If the borrower fogged a mirror, they got a mortgage. That no longer works and it is going to take some behavior modification over the next few years to change that mentality. How do you use technology to make sure that process of vetting a loan does not slow down the process? What kind of technology does Mortgage Concepts have in place to make sure the process runs smoothly? Your first step is to communicate and educate your loan officers on your philosophy of doing business, and that is where behavior modification comes into play. They have to understand that we are partners, and are all in this together. As a loan officer, you have a responsibility to listen and provide a service for your borrowers to the best of your ability. Step two is from an internal infrastructure standpoint. We use many different layers of services that are provided to us on a technological basis regarding the integrity of the file … from evaluating continued on page 15

FDIC Finds Fair Lending Violations Under ECOA for Credit Report Fees





By Terry W. Clemans



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continued on page 22



one case created a $32 difference when the fees are passed along to the consumer, as a settlement services charge at closing. That fee difference discriminates against the unmarried co-applicants based on marital status and is a violation of the ECOA sections cited above. From a processes perspective, unmarried co-applicants were also found by the FDIC examiners to have some discriminatory issues. One of the banks the FDIC noted on the violations was due to the requirement that unmarried co-applicants complete separate applications, while married co-applicants completed a single application. This requirement is a violation of the “same standards� regardless of marital status provisions of the above sections. While correcting the pricing issue for ECOA compliance is fairly simple: Make sure that whatever the price a “joint� credit report is, the cost of two individual credit reports equals that same amount. Correcting the application processes issue is something more complex. The National Credit Reporting Agency Inc. (NCRA) has discovered that some loan origination systems (LOS) have requirements that split unmarried coapplicants into two separate applications for processing. This varies from system to system, and can even also vary pending the current address status of the coapplicants. On some systems, if the coapplicants are currently residing at the same address, they can be entered on a single application. However, this is more of a problem when the co-applicants are residing at different locations at the time of the loan application. Some LOS do not have the ability to enter different addresses for co-applicants on a single application, regardless of marital status. This can also be problematic with the transfer of that data from the workflow of the LOS, to the mortgage credit reporting agency, to the national credit repositories and back with the credit report. Of course, with several different systems O

In March, some New England area banks received notice from the Federal Deposit Insurance Corporation (FDIC) New York Division of Supervision and Consumer Protection that a recent examination found potential violations of the Equal Credit Opportunity Act (ECOA) for Fair Lending violations pertaining to the fees and processes imposed upon consumers for the credit reports related to their mortgage loans. The credit reporting practices in question have been found to violate ECOA Section 202.4 (a) of Regulation B which prohibits a creditor from discriminating against an applicant in any aspect of the credit transaction on the basis of marital status. Further, Section 202.2(m) of Regulation B defines a credit transaction broadly to include “every aspect of an applicant’s dealings with a creditor regarding an application for credit or an existing extension of credit (including, but not limited to, information requirements; investigation procedures; standards of creditworthiness; terms of credit; furnishing of credit information; revocation; alteration or termination of credit; and collection procedures).� The preliminary findings continue with citations from Section 202.6(b)(8) of Regulation B which requires that “a creditor shall evaluate married and unmarried applicants by the same standards; and in evaluating joint applicants, a creditor shall not treat applicants differently based on the existence, absences or likelihood of a marital relationship between the parties.� So, why are these credit reporting practices setting off so many alarms? From the fee structure perspective, it is the difference in the price of the credit reports that some banks have negotiated with their credit reporting agencies that give a price reduction to co-applicants that are traditional “joint� credit files (typically a husband and wife) which is not available to non-traditional co-applicants that are unmarried. This discounted credit report fee, which in


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nmp mortgage professional different mortgage applications that a borrower has to avoid potential for simultaneous applications for evaluating if the borrower is paying their rent on time.. If the borrower goes from paying $1,000 per month in rent to $3,000 per month for a mortgage with almost an identical

“I’ve always believed that persistence overcomes resistance, and I knew that money was to be made in the mortgage marketplace.” income, they experience sort of a payment shock, and this is the type of thing we train our salespeople to look for. We have always verified the authenticity of income through a 4506-T Form, even when it was not “trendy” to do so. There is a lot of technology available, and you must be willing to spend the time, money and energy to implement these technologies into your systems so that you can ascertain any inconsistent information in the file. Very often, we find some inconsistencies perpetuated not by the loan officer, but by the borrower. Borrowers are becoming more sophisticated these days with technology in regards to bank statements, pay stubs and appraisals.

How have you managed with the lack of warehouse lines that exist right now? My warehouse lines have a good understanding of how I operate, from the origination of the loan to the closing of the loan. I think the longest period of time I had a loan on the line was 32 days. I personally monitor my warehouse aging report every night. I go home with the report under my pillow

“My goal by the end of the year is to be licensed in 35-30 states and not to expand without control. You have to be able to control the quality of the origination and maintain integrity of the files which is challenging with a 10 percent unemployment rate.”

continued on page 16

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basically and when it hits 12 days, it’s symptomatic of a problem in the back office. I question why a particular loan is on the line for 12, 14 or even 16 days. I think it is our whole operation that has created a comfort level for our warehouse lines. Not only did I obtain a new warehouse in 2009, but my existing line was increased. Mortgage Concepts is currently using approximately 70 percent of our warehouse capacity, so we are well positioned for growth.


How are you adapting to changes with the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) and licensing requirements? How do you feel about the fact that depositories do not have to conform to SAFE Act require-

ments the way non-depository lenders have to? I am in total disagreement with that. I think that loan officers, whether they work for depository lenders or nondepository lenders, should have the same responsibilities. They have to meet with the borrower, they have to conduct an interview with the borrower and they have to qualify the borrower the proper way. Whether you are in Mississippi, North Dakota or New York, they should be required to take the 20hour SAFE Act course and the test. Additionally, they should meet all registration, testing, education and financial responsibilities that are state-specific … no different than any loan officer in a non-depository bank. They are performing the same tasks and responsibilities in originating loans. I have taken the 20-hour SAFE Act course, and I work 18 hours a day. I have taken the test and got a 97 on the test, and I have taken every state education requirement for every state that Mortgage Concepts is licensed in. It is an arduous and long process, but you need to do it. I try to set the example for my employees, along with Lenny Ramirez, my vice president. O

What is your opinion of the Home Valuation Code of Conduct (HVCC)? We have never let our loan officers order appraisals. We have to ensure that there is no contact between the borrower and the appraiser, and the loan officer and the appraiser. When we open the loan in accordance with the MDIA [Mortgage Disclosure Improvement Act] and HVCC, we order the appraisal ourselves from our approved appraiser list internally or an appraisal management company. When the appraisal comes in, it is immediately underwritten, but we view an automated valuation model [AVM] and we use what is called a LARA Report [LandSafe Appraisal Risk Analyzer] and use a company out of Pittsburg that does a reconciliation of values. We use all three on every single appraisal to ascertain not only the authenticity and the accuracy of the value, but the accuracy of the comparable sales as well. By having these measures in place in our post-appraisal process, loan officers who work for Mortgage Concepts know we are going to use accurate appraisals.

continued from page 12


nmp mortgage professional What lies ahead for the independent mortgage banker? I think that there are some challenges and hurdles that the independent mortgage banker will face in the future. Liquidity is a big issue with mortgage bankers. I think the independent mort-

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“The one decision I made that saved the company was that I never decided to bank subprime loans … I never put one sub-prime loan on my warehouse line. I could have a lot more money like many other people did, but I would rather make less and stay in business.” gage bankers are going to potentially have a liquidity issue because investors are going to look for reimbursement from the independent mortgage banker. I think that’s a serious problem, and I think we are just starting to see the beginning of that now. Mortgage insurance companies have sent out investigative teams in an attempt to avoid paying claims to an investor that an independent mortgage banker sold the loan to, and they are denying these claims. That is one issue with regard to push-backs. Another issue regarding push-backs is with Fannie Mae and Freddie Mac. They are going to be pushing back over $21 million this year in buybacks for loans that closed three or four years ago due to their investigative reports. Many of those are being pushed back because borrowers have filed for bankruptcy and their tax returns are inaccurate. Yet, at the time, the loans were originated and closed, tax returns were not needed. If they were fraudulent acts, that’s one thing, but these push-backs are not due to fraud. A majority of mortgage bankers have a tremendous amount of investment in their business … emotionally, financially … from an infrastructure standpoint, from a responsibility standpoint and they take that very seriously. A good, responsible mortgage banker does not think just about closing the loan. They think about what happens before the loan is closed and what happens after the loan is closed. I think those challenges and hurdles become more and more difficult to maintain because it is becoming increasingly costly to run a successful independent mortgage banking operation. I think that sometimes, in their zest and zeal to meet those requirements, they ultimately close loans with some disregard for the ability and willingness of the borrower to repay because it becomes a financial issue. I am always looking to do things the right way, and sometimes, it’s at the expense of developing sales. There is always that balance of sales and operations, sales and operations … that con-

continued from page 15

stant balance that you look for and that’s the challenge a good independent mortgage banker has. Any closing comments? I think that there is still tremendous potential for independent mortgage bankers to stay in business and to do good business. I think that, with respect to Mortgage Concepts, we offer the ability to become valuable partners with us. We have a department that recruits teams of highly-qualified loan officers and mortgage brokers who are interested in partnering with us. We are very detailed-oriented about the entire hiring flow and educational flow that these partner branches or teams will have to follow in order to integrate into our system. We offer tremendous support. Our rates are extremely competitive, so we give them the tools and support to succeed. We have zero tolerance for fraud … zero, and I stick to that like glue. That’s very important to us and they must understand that. One quote I often use, is “The future ain’t what it used to be.” I think Yogi Berra said that and people have to get out of that mentality. They have to know that we do things the right way and if they are willing to do that, then there is an opportunity for them at Mortgage Concepts. From a partner branch standpoint, the industry needs to know that we have a very expeditious opening, underwriting and processing loan flow process. The loan is opened within 24 hours and is underwritten within 72 hours. Commitments go out immediately. Some lenders open the loan, the processor works on the file for 30 days and then the file is given to the underwriter for approval. We do it the other way around. We open, underwrite, give it back to the processor and they gath-

“LOs cannot have this dumping ground mentality that they had years ago. If the borrower fogged a mirror, they got a mortgage. That no longer works and it is going to take some behavior modification over the next few years to change that mentality.” er the conditions and then we clear the loan for closing. My staff at Mortgage Concepts is second to none. Most of my employees have been with me over 15 years, and they are very important to me. We are a growing company, but we operate as a family unit. I look forward to the challenges and hurdles that lie ahead for Mortgage Concepts and the industry as a whole. This is a wonderful business and as I always say “Life is not about having what you want … it is about wanting what you have got.”

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The Board of Governors of the Commercial Mortgage Securities Association (CMSA), a trade organization dedicated to the commercial real continued on page 19

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The Mortgage Bankers Association (MBA) has announced that it has developed a concept for a new forbearance program that would allow qualified borrowers who had lost their jobs to remain in their

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MBA proposes forbearance program to help unemployed borrowers

homes while they seek new employment. According to the proposed program, loan servicers would reduce the borrower’s mortgage payment to an affordable amount for up to nine months while the homeowner looked for employment. “The vast majority of new distressed borrowers we are seeing involve the loss of income,” said John A. Courson, MBA president and chief executive officer. “This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.” Under the MBA’s proposal, loan servicers that participate in this program would reduce monthly payments to an affordable level based on household income. Borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be re-employed within nine months of losing his or her job at 75 percent of the borrower’s previous salary. The borrower would be reevaluated as to employment and income status every three months for a total forbearance of nine months. Once reemployed, the borrower would be evaluated for a modification under the Obama Administration’s Home Affordable Modification Program (HAMP). “Recent statistics show that the average unemployed U.S. worker stays unemployed for between six and seven months,” added Courson. “That is a long time for a borrower with a dramatic drop in income to stay current on their mortgage. Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job.” MBA suggests that some participating servicers would need access to special loans through the U.S. Treasury to supply funds to servicers so they could continue to advance payments to investors during the extended forbearance period. The program would need to be voluntary and flexible due to financial accounting considerations. MBA created this program through a special task force of its members. MBA also consulted with Fannie Mae and Freddie Mac. Recently, MBA representatives met with officials from the White House, the Department of Treasury and the Department of Housing & Urban Development (HUD) to present the proposal. For more information, visit O

“We’re identifying lending industry situations in FICO Score Trends that to our knowledge have never been seen before,” said Dr. Mark Greene, chief executive officer of FICO. “Economic instability is creating unknown risk in lenders’ credit portfolios as well as counter-intuitive trends in consumer behavior. While the FICO 8 score continues to prove its unprecedented power in rank-ordering consumers for risk, even low-risk consumers are changing the value they give different credit lines. As the CARD Act goes into effect next week, it likely will create additional, unhelpful pressures on the banking business.” In FICO Score Trends, company experts found new evidence that lenders tightened their criteria for new loans in 2008-2009 and began “cherry picking” the kinds of borrowers to whom they would extend credit. Mortgage loans opened last year between April and October reflected significantly tighter standards than in prior years. In 2005, nearly 46 percent of consumers who opened a new mortgage had a FICO score less than 700. In 2008 this percentage had dropped to just 25 percent of the newly booked mortgage population. Other industry sectors experienced similar shifts. In the bankcard sector in 2005, 51 percent of consumers with a new credit card had FICO scores less than 700. That percentage dropped to just 38 percent in 2008. As lenders tightened their credit standards, it became correspondingly more difficult for consumers with delinquencies in their credit histories and lower FICO scores to qualify for additional credit. FICO also examined FICO Score Trends to learn how credit risk of real estate loans and bankcards varied across U.S. regions. The company found the most dramatic shift in the Pacific region. In 2005, bankcards were 6.4 times more likely to default than were mortgage loans. That percentage dropped to only 1.3 times riskier in 2009. Consumers in the midwest region demonstrated the smallest relative change. Bankcards were 2.5 times more risky of default than were mortgages in 2005, but bankcards were just 1.5 times more risky of default by 2009. Borrowers in the Northeast continue to present the least amount of default risk nationally for real estate loans. For more information, visit

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Why Tax Knowledge Matters


Many loan originators take the viewpoint that knowledge of the federal mortgage and housing tax laws is not necessary to successfully originate loans. I completely disagree. In fact, there are specific opportunities for you to generate more business by understanding various mortgage and housing tax concepts. After all, the mortgage is inherently a financial transaction. While mortgage originators should not act as tax advisors, they should structure loans that are suitable for the borrower by understanding the tax consequences of various mortgage and housing strategies. At the very least, borrowers should not be placed in a worse tax or financial situation after dealing with an originator than they were prior to dealing with the originator. This is consistent with the goal of long-term, sustainable homeownership, is it not? Consider these two examples where a working knowledge of federal mortgage and housing tax laws would be necessary for you to avoid committing loan origination “malpractice:”

Example #1: Financing the purchase of a second home O The consumer currently owns a primary home worth $500,000 with a $100,000 mortgage. O The consumer wants to purchase a second home for $200,000. O Many, if not most, loan originators would structure the transaction in a way that involves pulling equity out of the borrower’s primary home for use as either a large downpayment or to purchase the second home for cash ($100,000-$200,000 of cash out). The problem: In this example, there would be three main problems if a borrower pulls $200,000 of equity out of their primary home and refinances the mortgage to say, $300,000: O The borrower would not be able to deduct the interest on any portion of the $200,000 of cash-out as acquisition indebtedness. O If the borrower is not one of the six million-plus Americans subject to the Alternative Minimum Tax (AMT), they

would only be able to deduct the interest on up to $100,000 of the cash-out as home equity indebtedness, and would not be able to deduct the interest on the remaining $100,000 of cash-out proceeds. O If the borrower is one of the six-plus million Americans subject to the AMT, they would not be able to deduct the interest on any of the $200,000 of the cash-out.

indebtedness rules is also helpful in these situations: O Determining whether the mortgage on a borrower’s primary residence is recourse or non-recourse in states that have anti-deficiency statutes, such as California and Arizona. O Determining whether a short sale or loan balance reduction through refinance or modification would be taxable by the IRS as income to the borrower. O Determining whether private mortgage insurance (PMI), Federal Housing Administration’s mortgage insurance premium (FHA MIP) or the Department of Veterans Affairs (VA) funding fee is tax deductible to the borrower.

Assume the mortgage carries a six percent interest rate, and the borrower “At the very least, is in a 25 percent federal borrowers should not income tax bracket. The be placed in a worse inability to deduct the tax or financial situmortgage interest would ation after dealing cost the borrower $3,000 with an originator While I am not suggestper year or $250 per ing that you give tax or legal than they were prior month. Put differently, advice, I am suggesting that this would be equivalent to dealing with the a working knowledge of to putting the borrower in originator. This is acquisition indebtedness a “high-cost loan”— consistent with the and other tax rules can help defined by the Federal goal of long-term, you avoid placing borrowers Reserve Board as 1.5 persustainable homein loans that are not suitable cent higher than the or otherwise defined as Freddie Mac average rates ownership, is it not?” predatory lending. on first lien mortgages. Putting the borrower in a high-cost loan when lower cost alterna- Example #2: tives are readily available is traditionally Downpayment funds for a first-time homebuyer defined as predatory lending. O A husband and wife are gifting $25,000 to their first-time homebuyThe solution: er daughter for use as a downpayDon’t pull equity out of the primary ment on her new home. home, and instead, place the mortgage on the second home that is being purchased. In that case, 100 percent of the O A daughter can qualify for a better rate on her mortgage if one or more of her mortgage interest would be deductible parents co-sign on her mortgage. to the borrower as acquisition indebtedness. In this example, the borrower would save $3,000 per year or $250 per O The daughter is willing to purchase a home after the expiration of the month. $8,000 first-time homebuyer credit Loan originators who are familiar because she doesn’t think she will be with the acquisition and home equity able to qualify for it if one or both of indebtedness rules can avoid commither parents co-sign. ting “malpractice” and predatory lending as outlined above. This is a prime example of why it is important for orig- O A husband and wife are also in the process of purchasing their own inators to understand certain federal home. They are willing to purchase mortgage tax laws. after the expiration of the $6,500 Knowledge of the acquisition

long-time residence homebuyer tax credit because they think they won’t be able to qualify for it because they are co-signing for their daughter’s mortgage. O Parents are unsure of where to get the money for the $25,000 in gift funds because they don’t want to liquidate their own cash reserves due to their own homebuying situation. The problem: Many, if not most, loan originators are unfamiliar with gift tax and homebuyer tax credit rules and are likely to lead the borrowers down a path of misinformation or making mistakes in structuring either one or both of the transactions in this example. The solution: By simply giving the borrower information relating to the gift tax and homebuyer tax credit, the loan originator can literally save the borrowers more than $20,000. O The daughter can qualify for the $8,000 first-time homebuyer tax credit even if there are co-signors. O The parents can qualify for the $6,500 long-time resident homebuyer tax credit on the purchase of their home even if they co-sign for their daughter on the purchase of her home. O The parents can save $5,400 in gift taxes by writing two separate checks for the $25,000 in gift funds to their daughter. O The parents can preserve their cash reserves by pulling funds out of their IRA without penalties to help their daughter buy her first home (tax rules allow you to pull $10,000 per account holder out of an IRA, prior to age 59and-a-half, without penalty, to buy your first home or help an immediate family member purchase their first home). Again, I am not suggesting that you give tax or legal advice. I am simply suggesting that you help borrowers avoid loan situations that are more costly or otherwise not suitable for their situation by having a working continued on page 22

continued from page 17

The National Council of La Raza (NCLR), one of the largest national Hispanic civil rights and advocacy organizations in the United States, and the University of North Carolina at continued on page 24

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Mortgage Contracting Services (MCS), a national field service company providing property preservation, inspections and real estate-owned (REO) asset maintenance to the finan-

Study finds Latino families deeply impacted by foreclosures O

Mortgage Contracting Services contributes to Haitian relief

cial services industry, has announced its collaboration with a local Haitianborn doctor to support the families of Croix-des-Bouquets, Haiti, a town of 8,600 on the Northern outskirts of Portau-Prince, and the rebuilding of its Petit Chaperon Rouge School. Dr. Fred Guerrier, a physician now residing in the Tampa Bay area, has returned there twice each year for the past decade to provide free medical treatment to individuals in Croix-des-Bouquets. Severely damaged in the January earth-


estate capital markets finance industry since 1994, has transformed CMSA into a new organization that will serve all constituencies within commercial real estate finance. CMSA is now the CRE Finance Council. The creation of the Commercial Real Estate (CRE) Finance Council reflects the growing changes in global commercial real estate finance, and the importance its participants play in furthering the mission of this market. CRE Finance Council, created by and for its members, will help drive a vibrant, transparent and accessible commercial finance market, an integral part of the commercial real estate industry that serves a central role within the U.S. and global economies. â&#x20AC;&#x153;Our intention always is to be responsive to our members and to the marketâ&#x20AC;&#x2122;s changing course, and the CRE Finance Council is a natural and logical extension of this new course,â&#x20AC;? said Dottie Cunningham, chief executive officer of the CRE Finance Council. The CRE Finance Council initially will include five â&#x20AC;&#x2DC;Forumsâ&#x20AC;&#x2122;â&#x20AC;&#x201D;CRE market participants that drive the global commercial real estate industry: investment-grade bondholders, multifamily lenders, portfolio lenders, servicers, and securities and loan investors. Each of the Forums will interact and address issues critical to its business sector and work to achieve solutions that serve a common purpose. As these specialized Forums collaborate, the CRE Finance Councilâ&#x20AC;&#x2122;s objectives will be to represent all Forum participants, manage disparate and converging views, advocate the consensus of positions to policy and lawmakers on behalf of the industry, educate members, continue developing best practices, and work toward the betterment of the entire commercial real estate finance market. â&#x20AC;&#x153;We will always attempt to foster a consensus on issues that are important to our various stakeholders,â&#x20AC;? said Patrick C. Sargent, president of the CRE Finance Council and partner with Andrews Kurth LLP. â&#x20AC;&#x153;Where the CRE Finance Council finds consensus, it will advocate; where it finds differences of opinion, the Council will educate. Our members want an adaptive, expanded organization, forged by the successes of its predecessor, but one that serves all constituencies for our changing industry. And we are very excited to address the industryâ&#x20AC;&#x2122;s challenges and to advance our membersâ&#x20AC;&#x2122; objectives.â&#x20AC;? For more information, visit

protected and preserved communities all across the U.S. for 25 years, and is grateful for the opportunity to assist this community in need as well.â&#x20AC;? For more information, visit


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quake, the Petit Chaperon Rouge School serves this community to educate its 475 elementary students and to additionally supply them with a daily lunch. American physicians and nurses also use the schoolâ&#x20AC;&#x2122;s clinic to give medical care to these families. In a joint effort between MCS and The Steans Family Foundation, an affiliate of MCS Holdings LLC, more than $35,000 has been raised to assist Dr. Guerrier in his actions to restore the schoolâ&#x20AC;&#x2122;s functionality. All donations are directed at specific, local needs. â&#x20AC;&#x153;Our goal is to not make a single gift, but rather to foster an ongoing relationship with the people of Croix-des-Bouquets,â&#x20AC;? said Mike Carroll, chief financial officer of Mortgage Contracting Services. â&#x20AC;&#x153;MCS has


ner for accounting services with MBS. â&#x20AC;&#x153;She has truly â&#x20AC;&#x2DC;cracked the codeâ&#x20AC;&#x2122; to offer outsourced bookkeeping. MBS is the only firm that offers both expert mortgage consulting and hands-on bookkeeping. I am confident that the integration of Abacus into MBS will give us the ability to better serve our mortgage lending customers and expand our outsourced bookkeeping service nationally.â&#x20AC;? For more information, visit

ize. Given the increasing role of the internet in mortgage lending, lenders need to provide consumers with a sales experience that is dynamic and meets their heightened expectations.â&#x20AC;? The combined capabilities of Leads360 and PriceMyLoan allows lenders to drive their sales process more effectively by receiving and distributing leads in real-time, instantly checking every lead for loan eligibility and pricing, and providing an optimized customer service experience. Lenders can then provide an instant and targeted sales offer, one that closely matches what the consumer is looking for. â&#x20AC;&#x153;We want to streamline the sales process and increase the number of sales leads that become funded loans,â&#x20AC;? said Jeff Solomon, founder and senior vice president of Leads360. â&#x20AC;&#x153;The robust integration that we created with PriceMyLoan works towards this goal by seamlessly embedding a powerful automated underwriting and pricing engine into the front end of the sales process to enable our mutual clients.â&#x20AC;? For more information, visit or

PriceMyLoan (PML) and Leads360 partner for lead management solution Abacus Accounting merges with Mortgage Banking Solutions

APRIL 2010 O



Mortgage Banking Solutions (MBS) has announced their union with San Diegobased Abacus Accounting Services. Abacus offers comprehensive bookkeeping services to mortgage banks in the western United States. Warehouse lenders have increased their requirement for all mortgage banks to quickly produce financial statements. â&#x20AC;&#x153;Most owners of mortgage banks are not great accountants and need help,â&#x20AC;? said David Lykken, managing partner for strategic services at MBS. â&#x20AC;&#x153;This will be a tremendous service for mortgage banks that are under increasing pres-


sure from warehouse lenders as well as investors to get their numbers right.â&#x20AC;? â&#x20AC;&#x153;I am delighted to join forces with MBS,â&#x20AC;? said Shelly Rogers, president of Abacus Accounting Services. â&#x20AC;&#x153;They are the top mortgage banking advisory firm in the country.â&#x20AC;? Rogers has extensive experience in accounting. She holds a bachelorâ&#x20AC;&#x2122;s degree in accounting and was an auditor with a CPA firm. She is an expert in accounting systems, as well as a veteran in the mortgage business. She was an owner of a mortgage lender, a senior executive of a national mortgage bank, and a consultant supporting the bookkeeping, accounting and audit needs of mortgage banks. â&#x20AC;&#x153;Shelly has done an amazing job creating a â&#x20AC;&#x2DC;best practicesâ&#x20AC;&#x2122; bookkeeping platform for mortgage banks,â&#x20AC;? said Andy Schell, CPA, CMB, managing part-

PriceMyLoan (PML) and Leads360 have announced the completion of a bidirectional integration between their respective solutions. The integration combines PriceMyLoanâ&#x20AC;&#x2122;s automated underwriting and loan pricing engine with Leads360â&#x20AC;&#x2122;s lead management software to provide mortgage lenders with a powerful platform for tracking, managing and qualifying mortgage leads. â&#x20AC;&#x153;Lenders are looking for more effective ways of generating business, and lead management is a crucial part of their growth strategy,â&#x20AC;? said Gigi Campbell, national sales director for PriceMyLoan. â&#x20AC;&#x153;But lead management is more complex than most lenders real-

Mortgage Contracting Services partners with HomeTelos Mortgage Contracting Services (MCS), a nationwide property preservation and inspection services provider, announced that it has partnered with Dallas-based

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Embrace Home Loans expands to accommodate growth Embrace Home Loans, a direct lender for Fannie Mae and Freddie Mac, approved by the Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs continued on page 26

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O APRIL 2010

ServiceLink and PartnerFirst LLC have announced an agreement where both companies have combined resources to provide a “one-stop shop” solution to national mortgage servicers and homeowners through the ServiceLink Short Sale Agent Network. ServiceLink’s clients can confidently refer defaulting homeown-

including providing its clients with a homeowner-friendly searchable network of certified short sale agents,” said Son Nguyen, chief operating officer with PartnerFirst. “This partnership is truly a first of its kind. We are setting the standard within the real estate industry in how mortgage servicers and default service providers connect with defaulting homeowners through a nationwide agent based solution.” “The key to streamlining a short sale is to have an educated and well-trained agent network. Teaming up with PartnerFirst allows ServiceLink to leverage PartnerFirst’s extensive knowledge of the real estate community and thorough understanding of the short sale process,” said Scott Thompson, vice pres-


ServiceLink and PartnerFirst join forces for short sale solution

ers to select a certified real estate agent from the Short Sale Agent Network to help them streamline the short sale process. PartnerFirst provides national mortgage servicers and default service providers an outsourcing solution called the Agent Management Services (AMS) Platform. The AMS platform provides agent training and Pre-Foreclosure Specialist Certification (PSC), custom client education modules, short sale lead distribution management, a brand neutral agent database, a “Find an Agent” homeowner referral database, a Minority Outreach Initiative (MOI), and a multitude of homeowner contact solutions. “We are pleased to be handling agent fulfillment services for ServiceLink O

HomeTelos to streamline communication between servicer clients and their investors. The relationship involves MCS’ integration with HomeTelos’ Property Preservation/Field Services Web-based platform for managing assets in pre-foreclosure through real estate-owned (REO) that automates workflow resulting in real-time communication. This platform includes an electronic bid submission system that houses mission critical preservation data for investors, such as photo documentation, damages and approvals. “The default servicing sector is very time sensitive, so any opportunity to shorten the time frame in the preservation approval process—while not also jeopardizing accuracy—is paramount,” said Caroline Reaves, chief executive officer of Mortgage Contracting Services. Previously, MCS would send contractors to a property for obtaining a bid to make repairs, which then involved manual entry into MCS360, the company’s automated workflow application. A processor would next review the information for accuracy and, once validated, enter the data—line by line—into the HomeTelos system to be approved or denied by an investor. The enhanced solution eliminates the duplicity of entering information into two distinct platforms. Once obtained and reviewed for accuracy, the bid automatically flows from MCS360 to the HomeTelos system for the processor to validate and then transmit to the investor for approval. “HomeTelos is proud to team with MCS on this strategic project so that together we deliver more value to our shared clients,” said president of HomeTelos, Stephen Polley. “This economy is presenting new challenges to our industry daily, and the open design of our platform enables us to respond quickly to integration opportunities that improve transaction quality, transparency and accuracy, while enabling a more efficient and scalable workflow solution.” The integration enables MCS to now submit bids to investors in real-time, as opposed to the previous 24-hour delay in processing. In eliminating manual entry, accuracy of the information provided is improved, as are overall workflow efficiencies and associated costs. And just as MCS maintains a scalable infrastructure to support the needs of any client, the HomeTelos platform has the flexibility to respond to varying demands in volume. For more information, visit or


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knowledge of the gift and homebuyer tax credit rules. By understanding the federal mortgage and housing tax rules, you could share generic information with borrowers that is helpful to their situation. After all, in the first example above, why would originating a loan that costs the borrower an extra $250 per month not be considered predatory lending, while other origination practices that have exactly the same high cost to the borrower would be considered predatory? My personal opinion is that loan originators have a moral and ethical obligation to spot these issues, share this information with their borrowers, and then refer the borrowers to a tax and/or legal advisor for specific advice pertaining to their situation. As a consumer, wouldn’t you much rather deal with an originator who is properly educated in this area than one who is not? As a CPA, financial advisor or Realtor, wouldn’t you feel more comfortable referring your clients to a loan originator who is familiar with these rules as opposed to one who is not? Certified Mortgage Planning Specialist (CMPS)

fair lending violations involved, this is not as simple of a fix as just making sure married couples no longer receive a few dollars discount on their credit report verses unmarried coapplicants. Mortgage originators should take notice of this action and review their credit report fee structures for this issue, as well as their application processes. While the spirit of the law has not been violated, no one is being denied credit based on marital status, the law is clear and the FDIC seems intent on pushing it to the letter with regards to the equal treatment for




continued from page 18

certification equips you with unique knowledge about these and other federal tax rules that can help you stand-out from your competition, avoid predatory lending situations, and generate more business from clients, prospects and referral partners. Gibran Nicholas is the founder and chairman of the CMPS Institute, which administers the Certified Mortgage Planning Specialist (CMPS) designation. The CMPS Institute has enrolled more than 5,500 members since its founding in 2005. Gibran is also the chairman of Published Daily, a customizable online magazine, newsletter and marketing service that helps professionals transform their clients and prospects into a referral-generating sales force. He may be reached at (888) 608-9800, ext. 101 or e-mail Visit author Gibran Nicholas’s blog at where he shares his insights on economics, real estate and financial issues, including the current mortgage and credit crises.

continued from page 13

“any” aspect of the loan transaction since they have referred some banks to the U.S. Department of Justice for a “Significant Violation” of the ECOA. Terry W. Clemans is the executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail Visit the National Credit Reporting Association Inc. (NCRA) on the Web at

Are you connected?

Visit for details.

We are now accepting nominations for our upcoming feature, The 25 Most "Connected" Mortgage Professionals ... If you or someone you know has a high number of relevant Twitter followers, seems to be connected to everyone in the mortgage business (with lots of recommendations) on LinkedIn or is extremely active networking through Facebook, log on to and send in your nomination today.

We are the lender, and final decision maker, not a broker. WE ARE NOT CREDIT SCORE DRIVEN, We look for loans that improve a client’s situation, in fact we recently increased our funding capacity. No Credit Score Minimum -- NO DOC and STATED Welcome In Certain Situations! Residential & Commercial Loan Amounts $50,000 to $2,000,000 Debt Consolidation, Foreclosure and Bankruptcy Buy-Out First and Second Trust Mortgages

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O APRIL 2010

1.Loan must show tangible net benefit to borrower 2.Borrower must demonstrate some capacity to repay 3.Is the appraisal accurate? We are going to verify, not low ball your appraisal. O

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news flash

continued from page 19

Chapel Hill’s Center for Community Capital have released a report titled “The Foreclosure Generation: The Long-Term Impact of the Housing Crisis on Latino Children and Families,” which uses interviews with Latino families who have suffered a foreclosure to shed light on the damage inflicted by the loss of their home. The report is the first to provide a glimpse into the far-reaching impact that record-high foreclosures are likely to have on the millions of American families and children expected to lose

their home in the coming years, and it calls for a bold response from federal policymakers. “An estimated 1.3 million Latino families will lose their homes to foreclosure between 2009 and 2012,” said Janet Murguía, NCLR president and chief executive officer. “This represents a shocking loss of wealth and a major blow to community stability. This study brings to light the human and social costs of foreclosure and the urgent need for stronger government intervention to help homeowners, including those who are unemployed.”

“The Foreclosure Generation” documents the experiences of families who are forced to leave their homes due to a foreclosure. Families interviewed generally had exhausted all available resources in an effort to keep their homes, were unable to secure assistance from their mortgage servicer, and often relied on relatives and friends for shelter and assistance. Marital discord, anxiety, depression, children’s poor performance in school, financial loss, and strained relationships between parents and children were among the consequences reported. “Our findings on the impact of home foreclosures on families are disturbing,” said Roberto Quercia, director, Center for Community Capital, University of North

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Carolina at Chapel Hill. “Children in particular experience problems in school and are deeply affected by instability in the home. More research is needed to better understand the long-term impact of foreclosures on our communities and to find the best interventions to meet those needs.” “The Foreclosure Generation” offers policy recommendations to stabilize the housing and financial situations of families affected by foreclosure and reestablish homeownership as a wealth-building tool for Americans of modest means. In particular, the report points to the shortcomings of current federal efforts and calls on federal policymakers to take bold steps to stop the loss of wealth through home loss. Interviews for this study were conducted by five non-profit community organizations that belong to the NCLR Homeownership Network and provide housing counseling to Latinos: Southwest Housing Solutions in Detroit; Visionary Homebuilders in Stockton, Calif.; Tejano Center for Community Concerns in Houston, Texas; the Housing Education Alliance in Tampa, Fla.; and the DaltonWhitfield Community Development Corporation in Dalton, Ga. For more information, visit

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of:

NMP News Flash column

APRIL 2010 O



Phone #: (516) 409-5555 E-mail:


Wells Fargo Wholesale Lending is well positioned to help you and your borrowers take advantage of today’s market opportunities with a suite of products and programs, including:

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

• FHA loans • VA financing—larger loan amounts and assumable loans • Reverse mortgages—Wells Fargo handles your processing1 • Home OpportunitiesSM program • Guaranteed Rural Housing program (brokers do not need to be FHA-approved) • High Balance Conforming loans and High Balance FHA/VA loans • Our PerformanceWorksSM plan helps put you in control of your continued business success And at our Broker’s First® website, you can register loans, price/lock, obtain credit, submit for Direct ExpressSM feedback – now upload imaged documents – all in one convenient online location.

Contact us today to learn more. 1. Borrowers must be at least 62 years or older. Prior Wells Fargo Home Mortgage review and broker approval are required to originate FHA loans. Additional approval requirements apply to originate reverse mortgages. Please contact Wells Fargo Wholesale Lending for details. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or other third parties. Information is accurate as of date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All rights reserved. #68212 12/09-3/10

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"We felt that the Frost/PRMI business model was the most competitive out there, as we planned to transition from brokering to banking. So far, everything has been, as advertised. Very strong training and branch support.” - Ronnie Ray, Greenwood Village, CO

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O APRIL 2010

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continued from page 21

(VA), and an issuer for Ginnie Mae, has announced it is expanding to accommodate current and future growth. The company is moving its Internet origination division, which is currently comprised of 50 employees, to an 18,000-sq. ft. building in Providence, R.I. “As a company, Embrace Home Loans has experienced significant growth,” said Kurt Noyce, president of Embrace Home Loans. “Most recently, we’ve added several new retail branches along the eastern seaboard and completed a substantial acquisition to further increase our geographic footprint.

We are proud of the work we’ve accomplished and are pleased to be able to add additional office space right here in our local economy. The addition of a new building in Providence not only provides a space for our growing Internet origination division, but also provides the ability for our company to add more local jobs in the future.” Currently, the company employs more than 500 employees and has been recognized for its excellence in the workplace and devotion to community service through numerous local and national awards, reflecting the

LPS opens office in Washington, D.C. Lender Processing Services Inc. (LPS), a provider of integrated technology and services to the mortgage and real estate industries, has announced the opening of its newest office in Washington, D.C. The office’s location is in the heart of the nation’s capital, which gives LPS the ability to quickly respond to the needs of its government clients and to increase its

Why some Mortgage Professionals fail in Credit Repair while others Make Serious Money Mortgage Professionals make money in credit repair while getting borrowers Mortgage Ready!

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APRIL 2010 O



You don’t have to spend tens of thousands of dollars for start-up costs for your own Credit Repair Company


Once you are set up in our system, you will get access to software and tools that HTDI has spent over $1 million on research and development. You don’t need to spend an arm and a leg to start building your own credit repair business. Here is a quote from a mortgage company located in upstate New York who spent months of research before choosing HTDI:

“Until last year, I owned a large mortgage company in upstate NY with over 125 employees. We got hit hard during the mortgage industry crash and had to close our doors. I was stuck in a position with thousands of leads and customers that couldn’t get qualified for anything. I decided to start looking for a way to capitalize on my left over resources and help people in the process. I called many other credit repair companies and was very unimpressed. One west coast based company was charging $15,000 and had nothing but negatives written about them on the Internet. Then I found HTDI. They helped me to get started at the beginning of this year and it has been great. I have not only made great money helping people to repair their credit, but I have refinanced 8 of them and helped 6 buy houses that would have never qualified with the new guidelines. The software is very user friendly and all of my clients, affiliates and Brokers have increased business because of it.”

Get those impossible to close deals CLOSED! As the number of loan programs are shrinking, the bar on credit scores keep rising. This program will allow your borrowers to become “Mortgage Ready” as soon as 45 days. As one of our CSO stated:

“I have many loan officers that are now able to send their clients through the credit repair, raise their scores, and then close the client’s loan that

officers. Even better than that, it is very rewarding to be able to help a client regain their credit and be able to get the loan they need.”

Industry Leading Results 46.95%

Get started in a business that is booming and shows no signs of slowing The credit industry, as a whole, is one of the most powerful and profitable industries in existence. With loans, insurance and even employment taken into consideration individuals’ credit picture, the credit industry is getting bigger every day. Inside the credit industry, Credit Services is helping by assisting consumers with getting back on track by removing unverifiable and inaccurate negative items from their credit reports. As a CSO, you can benefit in being in a profitable industry and helping clients with their futures.

“I’ve been in the mortgage business over 22 years. A year ago, as the mortgage crisis worsened, I began trying to find a way to help clients who needed a better credit profile in order to get a mortgage. Fortunately for both me and my clients, I stumbled on HTDI. After a year of experience, I can honestly say the success rate is 100% and client satisfaction is through the roof. All of my clients have seen significant improvements, and some have experienced breathtaking jumps in their credit scores, even on the first round! From Day One you can be sure your “back office” (HTDI) has you covered. They will execute their part of the job seamlessly, with precision, on time, and with total consistency. All you have to do is SELL the service! Just sign people up, collect the money, and send HTDI the paperwork they need to get started. If you simply focus on selling the service, you will make lots of money, the work will get done, and you will never have to worry about unhappy customers. Although I got into it as a part timer, I now realize this is an excellent full time business opportunity. (Frankly, these days it’s probably a better business than the mortgage business!) You could easily make six figures in the first year with a minimal investment of money. How many opportunities like this exist these days? What you must invest is your time – SELL, SELL, SELL & SELL some more! Ultimately, what you are selling is the professionalism of HTDI, which is why this really rocks as a business opportunity.”

20.44% 17.32% 14.21%

Round 1 Round 2 Round 3 Round 4 We average one of the highest fix/deletion rates in the industry for the first 45 days of service. Shown below, in real-time, is the average percentage of fix/deletes per round.

If you are going to get involved in Credit Repair, be VERY CAREFUL First you have “Fair Credit Reporting Act” (FCRA). The FCRA holds credit bureaus and creditors to their reporting methods and has guidelines they must comply with. There are numerous techniques that are used along with similar laws to maximize results for each client. You must know these laws inside out. You can’t forget “Credit Repair Organizations Act.” (CROA). Just like the FCRA, the CROA hold credit repair companies to specific guidelines as well. If you choose HTDI Financial for your backend processing, we will ensure you maintain compliance. Lastly, you have applicable State Laws. Depending on the state you wish to conduct business in, you may have a state Credit Services Organizations act to comply with. As an active member in good standing of the National Association of Credit Services Organizations, you can be sure that we take our job very seriously, making sure you stay compliant and your clients.

FREE demo available

There is only one step you need to take; visit or call us at 877-877-4834 option 5.

presence by pursuing opportunities with new government partners. LPS currently has significant contractual relationships with a number of federal agencies. “In today’s challenging economic environment, government agencies need expert support and data to make the most informed decisions, mitigate risks and operate at peak efficiency,” said LPS Co-Chief Operating Officer Eric Swenson. “LPS’ proven, robust technology solutions and extensive governmental expertise can help agencies quickly adapt to changing market conditions and regulatory requirements for optimal performance.” LPS’ services for the Washington, D.C. market include mortgage consulting, technology, data analytics and risk management for portfolios, benchmarking, due diligence and valuation. For more information, visit

Byte Software announces StreetLinks integration in BytePro Appraisal Category Byte Software has announced a partnership with StreetLinks National Appraisal Services to offer a full suite of compliant and warranted valuation products to their customers. StreetLinks is a national appraisal management company (AMC), meeting all Home Valuation Code of Conduct (HVCC) and Federal Housing Administration (FHA) compliance requirements and all state and federal appraiser independence regulations. The integration in BytePro software speeds the process of ordering an appraisal by connecting directly with StreetLinks and eliminating duplicate entry. StreetLinks is the only national AMC that offers a 100% Loss Warranty of Appraisal Quality and a Performance Guarantee that actually pays if service and quality levels fail. StreetLinks offers industry-first Certificate of Compliance and TILA-Trigger technology, and performs a manual quality control review of every appraisal to ensure underwriter-ready reports. When Byte Software customers order an appraisal report through StreetLinks, they will find a new prepayment processing system allowing upfront payment for appraisals within BytePro. “This integration is fully operational today in BytePro and ready for Byte Software’s customers to order appraisals,” stated Tony Ebeyer, StreetLinks chief operating officer. “We look forward to providing Byte users with easy access to our industry-leading, fully compliant appraisal solution.” For more information, visit or

Verisk Analytics acquires Strategic Analytics Verisk Analytics Inc. has announced the acquisition of Strategic Analytics, a provider of credit risk and continued on page 28

By Donald E. Fader, CRMS

By Tommy A. Duncan, CMT Will the borrower’s credit score and ratios make any difference in my overall quality control performance?

Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528 or e-mail You may also visit Quality Mortgage Services LLC on the Web at

Sponsored by


The credit score and ratio may affect the risk you or the lender takes when funding the loan, but as long as you stay within the underwriting requirements, you will be fine. However, your quality control may be graded on how well the loan is packaged. Let’s compare non-bank lenders (non-supervised mortgagee) and bank lenders (a supervised mortgagee). As of the writing of this article, non-banks’ average credit score was 731 for 2009 and 732 for 2008, with ratios 23/33 percent for 2009 and 24/38 percent for 2008. Non-banks improved their “Excellent” risk ranking from 12.06 percent in 2008, to 24.48 percent in 2009, an improvement of 94.69 percent. Non-bank lenders were able to decrease their credit score average by one point and continue to improve significantly in an “Excellent” risk ranking. The only noticeable change was lowering the back-end ratio from 38 percent to 33 percent. The front-end ratio only decrease by one percent from 2008 to 2009. Banks, on the other hand, had an average credit score of 764 in 2009 and 748 in 2008, with a ratio of 24/33 percent in 2009 and 28/40 percent in 2008. Banks required an average 16-point increase in their average credit score. This resulted in significant improvements in loans meeting the “Excellent” risk ranking that went from 29.81 percent in 2008, to 41.76 percent, an increase of 40.09 percent. Granted, the non-banks had a larger increase; however, they had fewer loans at 23.48 percent where banks had 41.76 percent of loans meeting the “Excellent” risk ranking. Banks significantly decrease their front-end and back-end ratios to obtain such high numbers. Banks had ratios at 28/40 percent in 2008 and 24/33 percent in 2009. As the numbers show, banks reduced their risks by requiring higher credit scores and lower front- and back-end ratios which resulted in higher percentages (41.76 percent) of their loans ranking “Excellent” in risk. Let’s compare non-bank brokers (non-supervised loan correspondents) and bank brokers (supervised correspondents) in the same area of risk. A broker’s average credit score for 2008 was 725 and 721 for 2009, with ratios of 27/38 percent in 2008 and 25/36 percent in 2009, improving their “Excellent” risk ranking from 15.18 percent in 2008 to 26.31 percent in 2009. This is a 73.32 percent improvement in “Excellent” rankings. Brokers were able to achieve this by reducing their credit requirements, rather increasing the credit score and decreasing the front-end ratio to from 27 percent to 25 percent, and reducing the back-end ratio from 38 percent to 36 percent. Brokers performed exceptionally well as compared to other mortgage entities. The bank broker average credit score increased from 749 in 2008 to 761 in 2009, a 12 point rise for getting a loan. The average qualifying ratio went from 24/36 percent in 2008 to 22/33 percent in 2009, and saw very low improvement in the number of loans qualifying for the “Excellent” ranking. Bank brokers had 27.62 percent in 2008 and 28.85 percent in 2009 of their loan ranking “Excellent,” only a 4.45 percent improvement. Therefore, brokers prove that a higher credit score does not necessarily mean that the risk is reduced. However, ratios appear to be where your loan will fall as it comes to risk. This data is available to the mortgage industry to study. You may compare the performance of different mortgage banking operations and compare overall industry reviews by going to The data may change as Quality Mortgage Services continues to close out 2009 quality control reviews and audits. O O APRIL 2010

We have all heard that a quick and easy unrestrained and enthusiastic legislatest to determine a person’s general tive and regulatory atmosphere which outlook is to show them a glass half is robbing the system of badly needed filled with water and ask them to capacity. Let’s face it, regulators need describe whether the glass is half to regulate and they have not escaped empty or half full. It seems that those the crisis unscathed. Products and prowith an upbeat and optimistic outlook grams came into the marketplace that generally tend to describe the glass as should have never seen the light of day half full, and those with a darker and because some regulators failed to idenmore pessimistic view tend to describe tify the market risk associated with the the glass as half empty. “originate to distribute” Just how accurate this model adopted by large test is remains to be seen, financial institutions and but perhaps it is time for Wall Street. They have us in the mortgage indusbeen called to testify try to assess our present about their shortcomings situation with a hopeful on this issue and the eye to the future. This response has been to supmay be difficult, given port a complex system of the surge of proposed overregulation. legislation and expansion Now the pendulum of regulations on both has swung too far in the the state and national other direction, leaving level, but the fundamen- “No responsible orig- “Joe Six Pack” and other tals of the industry have inator wants to see a Americans like him with not changed. return to the lending little or no access to credWhen I began my it, further exacerbating policies that precipicareer in the mortgage the problem. Regulators tated the housing industry, rates were in the continue to demonize and economic crisis, double digits and the originators for delivering nation was in the grips of but there is a balance products that we had that needs to be a recession fueled by every reason to believe rampant inflation in the achieved between the had been vetted by induslate 1970s compounded try watchdogs. While it is mortgage industry by high unemployment. apparent that a small and its regulators.” However, in the midst of contingent of bad actors these market conditions, originated inappropriate people were still buying homes. It was products, by and large, the crisis was also during this period that the mort- precipitated by faulty programs. This gage broker channel began to develop was a crisis of product, not producers. in earnest, ultimately becoming the The real question is when will a primary channel of origination responsible regulator or legislator throughout the country. stand up and say, “Clearly we have Today, the industry is facing differ- overcompensated and our conent challenges. While the country is stituents are suffering because of experiencing high unemployment, this?” While we have never been both inflation and the rate environ- unregulated, there is such a thing as ment remain low. We have a presi- too much regulation and it appears dent who is calling on banks to lend, that we are well past the tipping point while his regulators are applying the in that regard. The rise of the nonbrakes. No responsible originator depository origination channel was wants to see a return to the lending based on service and choice. There is policies that precipitated the housing little evidence that banks and nonand economic crisis, but there is a profits are ramping up production balance that needs to be achieved capacity to serve the mortgage needs between the mortgage industry and of Americans. Instead, service has its regulators. declined and depository lenders are The housing industry has led the eager to serve the top of the mortgage United States out of more than one chain with little concern for the falterrecession and our industry is well-posi- ing middle class. tioned to assist now in that regard. continued on page 30 Unfortunately, originators are facing an


heard on the street

Reverse Mortgages for First-Time Homebuyers Taiwan has seen the future of retirement security: There are reverse mortgages in it. And it plans to help its first-time homebuyers think reverse early, a notion I have been pushing here for years. Addressing a national conference on reverse mortgages in December 2009, Chang Chin-oh, a professor of land economics at National Chengchi University in Taipei City, Taiwan, mentioned an intriguing aspect of an evolving Taiwanese reverse-mortgage model:

APRIL 2010 O



“The program will also encourage young people to start planning a home purchase early for retirement [my emphasis].”* Let me repeat: Plan a home purchase early for retirement!


In Think Reverse! (2008) and in several articles I wrote before the book was published, I argued that, in an era of uncertain retirement cash flow sources, our home equity, thanks to reverse mortgages and other equity take-out products, has become a new pillar of retirement security. The long-term solvency of Social Security is in doubt as is Medicare. Companies are bailing out of their pension obligations and pushing employees to take responsibility for their own retirement finance through 401(k)s and other vehicles. And 401(k)s are tied to the vagaries of financial markets. From 1998-2008, we experienced at least four significant financial crises, with the mother of all financial crises in 2008. As we slowly dig ourselves out of the rubble of the 2008 financial earthquake, fresh thinking in retirement finance is needed. Reverse capacity, through reverse mortgages, has to be a part of a new retirement finance calculus. A recent fact sheet from the Center for Retirement Research at Boston College left no doubt about the emerging role of reverse capacity in retirement: “Given the bursting of the housing bubble, it is tempting to forget how impor-

tant housing is to the portfolios of older Americans. Indeed, housing prices did collapse. …. However, even after the decline, housing equity remains a crucial component of the assets of most households.” ** For decades, the retirement planning industry and policy leaders have been urging Americans to save for retirement. That is sound traditional advice. And to that, I add a complementary new call: Build reverse capacity! So, what is “reverse capacity” in the context of retirement cash flow planning and management? I propose three related definitions: O First, it is the net home equity that is convertible into cash via reverse mortgages. O Second, it is the cash and non-cash value inherent in a reverse mortgage loan. O And third, reverse capacity is the life-planning and estate management value peculiar to reverse mortgage loans. A full study of reverse capacity and its implication for retirement finance in the 21st century will be the subject of my next book. For now, to build reverse capacity, young families should plan their home purchase early and not use their home as a “piggy bank” to pay for non-emergency pre-retirement consumption. Using the tax code, Congress should create incentives to support reverse capacity building. It is good public policy. As a nation, the earlier we embrace this idea (that is, reverse mortgages for first-time homebuyers and intentional reverse capacity building), the more secured retirement cash flow will be for most homeowners who may not have enough disposable cash for direct traditional savings. Knowing that there is a reverse mortgage in their future, first-time homebuyers can plan to aggressively continued on page 30

continued from page 26

capital management solutions to consumer and mortgage lenders. As part of the Interthinx business unit of Verisk Analytics, Strategic Analytics will provide customers advanced solutions and professional services critical to loss forecasting and the stability of the U.S. residential mortgage market. “The Strategic Analytics solution and application set will allow our customers to take advantage of state-of-the-art loss forecasting, stress testing, and economic capital requirement tools to better understand and forecast the risk in their credit portfolios,” said Kevin Coop, president of Interthinx. “These tools are applicable and are currently deployed in all verticals of consumer lending, including automotive, credit card, and student loans, and mortgages.” Through Strategic Analytics, Interthinx will offer various mortgage risk analytics products. The Mortgage Risk Model (MRM) gives retail lenders access to a comprehensive mortgage loan-level database—incorporating the vast majority of non-agency loans for the residential mortgage-backed securities (MBS) market. Forecasting technology is available to incorporate significant measures of origination quality, maturation effects, and environmental factors into analytics tests that traditional roll-rate modeling methodologies cannot effectively capture. The acquisition will also provide Interthinx customers access to the mortgage-backed securities/assetbacked securities (MBS/ABS) Securities Forecasting Service (SFS), as well as accurate cash flow, conditional payment rate, conditional default rate, and loss severity projections for lenders and investors to price and trade mortgage assets with high efficiency. “Strategic Analytics advanced modeling software uniquely transforms data from one of the largest repositories of loan-level mortgage data into usable business intelligence,” said Joe Breeden, president of Strategic Analytics. “We are excited to become part of the Verisk Analytics and Interthinx team. This affiliation will significantly boost our objective of providing mission-critical credit risk management solutions to our customers worldwide.” For more information, visit, or

Essent Guaranty approved by GSEs as qualified MI provider

Essent Guaranty Inc., a mortgage insurer, has announced that it has been approved as a qualified mortgage insurer by Fannie Mae and Freddie Mac. The two government-sponsored enterprises (GSEs) are chartered by Congress with a mission to provide liq-

uidity, stability and affordability to the U.S. housing and mortgage markets. Fannie Mae is ready to accept loans with notes dated on or after Feb. 18, 2010 with mortgage insurance from Essent. Freddie Mac anticipates being ready to accept business from Essent by April 1, 2010. Both GSEs will be communicating directly to lenders regarding the timing and process. “The GSEs’ approvals officially launch our entry into the mortgage insurance business and enable us to begin supporting qualified borrowers,” said Mark Casale, president and chief executive officer of Essent. “We’ve heard from lenders, borrowers and state regulators that there is a real need for a strong, new mortgage insurance company, and we’re pleased to support this critical segment of the housing finance market.” “We appreciate the efforts that Essent has made during the past year to meet our eligibility requirements and obtain their qualified mortgage insurer approval to serve Fannie Mae’s seller/servicer network,” said Carlos Perez, Fannie Mae vice president of risk management. “We are pleased to have a new mortgage insurance partner to offer much needed capacity to our market.” “Freddie Mac is pleased to have approved Essent as a new qualified mortgage insurer,” said Daniel Kelly, director of mortgage insurer relations for Freddie Mac. “Essent’s entry comes at a time of real need in the market for mortgage insurance capacity.” The charter of the GSEs requires that loans with a loan to value ratio in excess of 80 percent have additional credit support to protect the GSEs against losses. The most common form of this credit support is private mortgage insurance, which pays an insurance benefit to the lender, or investor in a mortgage loan, in the event of a foreclosure or certain other circumstances arising from a default and resulting in loss to the insured. Mortgage insurance is backed by private capital, and is subject to strict state regulation. By providing mortgage investors with protection from credit losses, mortgage insurance from Essent helps families purchase or refinance a home when they cannot afford a large downpayment. For more information, visit

StreetLinks QC team becomes fully USPAP certified

StreetLinks National Appraisal Services has announced that its entire quality control team, consisting of more than 100 staff members, has successfully

date our REO assets,” said Rudy Krupka, vice president of real estate-owned (REO) at Specialized Asset Management. “Our strategic partnership with RealtyTrac will assist our agents in promoting the properties to interested buyers across the country.” Homebuyers and investors using RealtyTrac can easily make online offers or inquiries on the SAM-provided REO properties. Users can click on the “Bank-Owned” tab on any RealtyTrac search results page and look for properties with the “Request Info” button. “Many of our users are specifically interested in purchasing bank-owned properties, and we want to give those users every opportunity to find and purchase those properties,” said Rick



Sharga, senior vice president of RealtyTrac. “This exciting new partnership with Specialized Asset Management does just that by delivering a new pool of REO properties that our users can more easily purchase.” In 2009, a record 2.8 million homes received a foreclosure filing. This represents a 21 percent increase in total filings from 2008. The number of foreclosures is expected to increase significantly in 2010 as millions of option adjustable-rate mortgages (ARMs) and Alt-A mortgages reset in the next 12 to 18 months and double-digit unemployment plagues the national economy this year. For more information, visit or


Catalizador Private Equity Fund, a team of venture capitalists that includes Jim McMahan, Stewart Hunter and Bryan Harlan of Benchmark Mortgage, has announced the completed acquisition of MortgageDashboard, an on-demand loan origination software system enabling paperless mortgage processing for lenders, credit unions and banks. Catalizador took control of continued on page 31


At REMN, we understand that mortgage companies perform best when they focus on what’s important: their customers. We are

Specialized Asset Management partners with RealtyTrac on foreclosure listings line

industry veterans and FHA specialists who understand that every application is precious.

It’s about time.

We treat each file with the respect – and urgency – it deserves. Even better, at REMN, same-day approvals are guaranteed.*

Learn more at

Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third parties. Information is accurate as of date of printing and is subject to change without notice.

O APRIL 2010

* Same-day decisions guaranteed if file is received by 11 a.m. EST.


Specialized Asset Management LLC (SAM), a provider of asset marketing and disposition services to mortgage lenders, servicers and investors, has announced that it has partnered with RealtyTrac, an online foreclosure marketplace for default, auction and bank-owned properties. The partnership gives additional market exposure for foreclosed property listings provided by Specialized Asset Management, displaying them prominently to RealtyTrac’s three million unique monthly visitors. “Marketing our REO assets to RealtyTrac’s three million unique monthly visitors provides us with additional marketing visibility to help liqui-

Catalizador finalizes acquisition of MortgageDashboard O

completed the 15-hour 2010 Uniform Standards of Professional Appraisal Practices (USPAP) training course. “StreetLinks has 10 times the number of QC staff as I had when I managed one of the country’s largest captive appraisal management companies,” said StreetLinks Chief Executive Officer Steve Haslam. “We focus on delivering the highest quality ‘underwriter-ready appraisals’ that shorten our clients’ application to funding time. This simply cannot be achieved by using automated QC scrubbers deployed by traditional AMCs.” USPAP is the generally accepted performance and ethical standards for the appraisal profession. It is administered by the Appraisal Foundation, a Congressionally-authorized non-profit organization that fosters professionalism among appraisers by setting qualifications and standards. “Manual QC review of each appraisal is unique in our industry,” said Mike Floyd, StreetLinks chief corporate appraiser. “Most of our competition relies on automated scrubbers which are incapable of assessing the appraiser’s commentary and logic. StreetLinks performs an intensive line by line examination of each report for conformity with Freddie, Fannie, FHA, USPAP and lender specific underwriting guidelines. Our goal is to deliver underwriter-ready reports to our clients the first time, resulting in more efficient operations, faster loan approvals and superior loan performance.” StreetLinks provides appraisals nationwide that are fully compliant with Federal Housing Administration (FHA), Home Valuation Code of Conduct (HVCC) and all other current and pending regulations. An innovator in the appraisal management marketplace with its industry-first Certificate of Compliance and TILA-Trigger technology, StreetLinks performs manual quality control review of every appraisal. For more information, visit


half empty? half full?

continued from page 27

At one time, seven out of every 10 loans was originated by an independent originator. That number is closer to two out of 10 loans today. Is there a continuing role for the non-depository mortgage loan originator? To quote Sarah Palin, “You betcha.” The quality of the current product will hasten the day when mortgage-backed securities (MBS) will not be considered toxic assets and the depository lenders will once again recognize the value that independent originators can and do provide. Effective and efficient service is prized by every industry, and that is what we do by giving our customers what they expect and deserve. Our size makes us nimble in the marketplace, allowing us to react more rapidly to changes and our knowledge base creates value for depositories looking to grow a production and servicing platform. I heard an airline pilot give a talk to a civic group years ago, and he ended by taking questions from the group. One member asked him about flying in bad weather that dictated instrument flight rules. His response was this, “It may sound strange, but I am more comfortable in those conditions than a clear sunny day when everyone is out flying. When the weather turns bad, you know that you

are up there with professionals … seasoned men and women with the skill it takes to fly and land a plane in all kinds of conditions.” The weather has turned bad in the mortgage arena and many have turned back, but today, I am proud to be flying with professionals … men and women who give their best to serve their customers. These professionals share a commitment to the industry who serve their customers with integrity. We are not asking for a pass. We don’t want an atmosphere of zero regulation. We just want the opportunity to help our borrowers, neighbors and friends make the right choice when it comes to the largest financial decision they are likely to make in their lives. Is the glass half full? Is the glass half empty? You have to decide, but I encourage you to drink deeply from the well of optimism and confidence. Donald E. Fader, CRMS of Kinston, N.C.based SMC Home Finance. He has served on the board of directors of the National Association of Mortgage Brokers, and has served the North Carolina Association of Mortgage Professionals as president. He may be reached by phone at (252) 523-5800 or e-mail

APRIL 2010 O



Gateway Mortgage Group is seeking more leaders to run a retail branch office.


Qualified Candidates with a proven track record will get: • Guaranteed Salary • Full Benefits Package • Bonus based on profitability of branch office. • Assistance with recruiting and training team.

Call Dane Basham today 888-544-0034 “If I was in the market to become a branch manager or work as a loan officer, Dane would be on the short list of friends I would contact. His positive attitude is infectious. You cannot have a conversation with Dane and NOT be motivated.” November 28, 2006 Andrew Berman, Executive Vice President, The Mortgage Press was a consultant or contractor to Dane at Gateway Mortgage Group LLC

Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting.

Phoenix Airport Marriott® Rooms are $99 per night, and will be honored at the same rate if you wish to extend your stay.

Hotel toll-free: 1-800-228-9290

Visit for details.

forward on reverse

continued from page 28

build reverse capacity by attacking mortgage principal balance every month with little extra payments. Some would argue that keeping principal robust to generate interest deductions to reduce income and taxes is a good thing in a person’s high-earning years. It is a very persuasive argument and it has merits. But tell your firsttime homebuyers to attack principal relentlessly with small extra payments and build reverse capacity because their retirement security some day might depend on it.

“…young families should plan their home purchase early and not use their home as a “piggy bank” to pay for non-emergency preretirement consumption.” As intentional reverse capacity building becomes widespread, it may also encourage non-homeowners to view homeownership differently and more favorably because it can be shown that homeowners can amass a six-figure nest egg via home equity faster than through traditional savings methods. The circumstances of two couples I served in August 2003 convinced me of the power of this idea. In an October 2003 article I wrote, “The Fate of the Glenns: Your Equity or Your Freedom” in The Mortgage Press, I told their stories. Here is the gist: Paul and Paula Glenn*** were at a very low point physically and financially. To save their home, their loan officer sent them to me for a reverse mortgage solution. Because of their large forward lien and the lower county-by-county FHA (Federal Housing Administration) loan limits at that time, I couldn’t help them. They probably lost their home. By contrast, John and Abbie Stevens***, also weighed down by financial and health problems, had sufficient home equity. We were able to pay off their creditors and leave them with $20,000 in a growing HECM (home equity conversion mortgage) line of credit. They had sufficient cash for groceries and for their medications in the comfort of their home. My experience with the Glenn and the Stevens families persuaded me that home equity, tapped judiciously through reverse mortgages and other equity take-out products, will play a critical role in retirement cash flow management in this century and beyond. If you can buy a home with the understanding that it is also a pillar of your retirement security and you plan to hold on and build home equity one mortgage payment at a time, you will be fine, even if Wall Street goes off the cliff again. The Taiwanese seem to have

grasped this idea from the get-go, and they plan to put it into their reverse mortgage model, slated for rollout later this year. On Dec. 16, 2009, Taiwan held a major reverse mortgage conference in Taipei City. Invited were many reversethinking folks from government, business and academia. One of the designers of our 20-year-old HECM program was invited to share the American experience. The Taiwanese are thinking more holistically about reverse mortgages. To encourage Taiwan’s growing elder population to use reverse mortgages, they may be subsidizing their program more generously than we have ever done here in the U.S. They believe its social and economic benefits will more than pay for the subsidy their government will provide. Again, Professor Chang: “If the policy [reverse mortgage] is carried out successfully, it will ease the government’s financial burden and have a positive impact on the local real estate industry.”* Taiwan’s approach contrasts with our government’s tepid support for our HECM program, as shown by Congress’s refusal to give the FHA $800 million subsidy it asked for in June 2009 to shore up the HECM insurance fund because of falling home prices. For 20 years, the HECM program has been a success, without a need for public subsidy, thanks to hefty mortgage insurance premiums, conservative actuarial assumptions and robust house prices for much of that period. When our financial system broke down in 2008 and property values crumbled, HECM insurance risk managers figured an $800 million subsidy will help maintain the program. Congress’s knee-jerk turn-down forced FHA to slash HECM cash advances by 10 percent in October 2009, as well as recent principal limit cuts and an insurance premium increase. These cash advance cuts and insurance premium increases are sapping demand for HECMs and depressing origination activities in an industry that could supply cash to help Congress deal with escalating entitlements and mounting national debt. It is penny smart, dollar dumb. You do not have to be a rocket scientist to understand that if we encourage more seniors to use their reverse capacity through reverse mortgages, just as Taiwan plans to do, they will be using their own assets. If we discourage them, as Congress seems to have done by refusing a small subsidy relative to the multi-trillion-dollar bailout of Wall Street, they will turn to far more expensive public sources for supplecontinued on page 32

heard on the street


continued from page 29

Sarah Hulbert

Carleen Swanson

O Sarah Hulbert has been appointed senior vice president, reverse mortgages for Seattle Mortgage Company.

O Doug Criscitello has been sworn in as chief financial officer for the U.S. Department of Housing & Urban Development (HUD). O Ted Tozer has been sworn in as the newest president of the Government National Mortgage Association (Ginnie Mae). O Primary Capital has hired Jan



continued on page 32

You've Decided to Make a Move... 5 Questions You Must Ask! 1. Have they been branching for nearly 2 decades or did they just start yesterday? 2. Are they more concerned with replacing fallen retail origination than in working with you to expand your business? 3. Will they support your marketing efforts or simply wish you luck? 4. Are they going to license your branch in multiple states or simply tell you to refer your out-of-state loans to home office? 5. Will they pay you next day or are you going to hear, "we'll get back to you"?

Call Louis Tesoriero or Kelley Berkheiser today and find out why Professionals Join Guaranteed.

Branch Program for Professionals IT'S ALL WE DO.


108 Corporate Park Drive, Suite 301, White Plains, NY 10604 CALL: Kelley Berkheiser at (443) 418-7213 or Louis Tesoriero at 888-329-GHMC.

O APRIL 2010

O Advanced Data has announced the addition of Carleen Swanson as



Mortgage Professionals to Watch

leader of its New York Metro sales team. O

MortgageDashboard last fall when the technology firm lost an important line of credit and was on the brink of insolvency. MortgageDashboard was as a Webbased mortgage banking software solution for loan originators by Jorge Sauri almost a decade ago. At one point, the company was serving a user base of over 3,000 customers nationwide. “We were attracted to MortgageDashboard when a group of private investors with significant mortgage industry backgrounds introduced us to the technology and called it the best completely online, Web-based loan origination software on the market,” said Jim McMahan, managing partner of Catalizador. “Our fund looks to the future of the housing finance industry and this web based loan software is the way loans will be originated going forward.” Catalizador Private Equity Fund stepped in to recapitalize MortgageDashboard to allow it to continue operations and began the acquisition process. Now that it has been completed, MortgageDashboard has become one of the few mortgage technology firms operating today that has its flagship product in use as a mission critical application at the institution run by its primary investors. Sauri has remained with the company he founded and is now the company’s chief developer and chief information officer, where he continues to provide breakthroughs in innovation and works to simplify the technology required by mortgage brokers and bankers alike. David Childers has been tapped as a primary strategist and the company’s vice president of sales. He has 10-plus years of experience working with mortgage brokers and bankers, assisting them with developing their businesses, creating winning strategies, and executing their visions to become successful organizations. “We’re seeing tremendous adoption in this market for three primary reasons,” Childers said. “First, lenders appreciate the comprehensive audit trails we provide our customers, which allows them to remain in full compliance with all FDIC, GLB and Sarbanes Oxley requirements for data security and borrower privacy. Secondly, we maintain a SAS-70 secured environment monitored and controlled by an independent third party for the industry’s best disaster recovery solution. Finally, our SaaS mortgage banking software puts our customer’s data in a secure online environment that they can access anytime from anywhere. MortgageDashboard is the solution our customers are looking for now.” For more information, visit

Davidson as branch manager of the company’s Cornelius, N.C. branch. Stephen Staid has been named executive vice president of customer relationship management for Saxon Mortgage Services Inc. Robert Griffith has been appointed chief operating officer for mortgage insurance business for Radian Guaranty Inc. First American CoreLogic has announced the hiring of Susan Allen as vice president of strategic relationships, responsible for AVM development, cascades and valuation strategies. Robert J. Voll has been named


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national director of sales and marketing for The StoneHill Group. O Taylor Capital Group Inc. has announced several new hires for its new Cole Taylor Mortgage division, including Phillip M. Miller, group senior vice president, secondary marketing; Daniel J. Ervin, senior vice president, national sales manager; Rebecca J. Bussineau, senior vice president, director of credit; and Alan Holsztynski, senior vice president, information technology director. O The National Groups, parent company of National Default Servicing LLC, has announced the addition of Mitchell Oringer as senior managing director of real estate-owned and loss mitigation operations, and Richard T. Fikani as managing director of default services. O CCG Catalyst has named Thomas D. Switzer as a partner and senior consultant.

forward on reverse

O Berkadia Commercial Mortgage has hired Matthew Case as an assistant vice president for the company’s Los Angeles office.

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.

continued from page 30

mentary income. At a time of rampant national, state and local governments’ debts, approving FHA’s HECM subsidy request was the rational option, but Congress blew it. We may have the most advanced reverse mortgage program in the world, but we have something to learn from Taiwan.

Notes *“Cabinet will finish reverse mortgage study next year” by Ted Yang, Taipei Times (Dec. 17, 2009, page 12 or s/2009/12/17/2003461169). ** NRRI Fact Sheet No. 1, March 2010 ( 0the%20Facts/nrri_fact_sheet.pdf). ***Names made up to conceal identities.

Author and columnist, Atare E. Agbamu, CRMS is director of reverse mortgages at Minneapolis-based AdvisorNet Mortgage LLC. A member of the BusinessWeek Market Advisory Board, Agbamu is author of Think Reverse! and more than 130 articles on reverse mortgages. Through his advisory firm, ThinkReverse LLC, Agbamu advises financial professionals, institutions and regulators across the country. In a 2007 national report on reverse mortgages, the AARP cited Agbamu’s work. He can be reached by phone at (612) 203-9434 and e-mail at Visit author Atare E. Agbamu’s blog at for his thoughts and insights on the reverse mortgage marketplace.

d rne Lea s n o ess rida t of Flo s: L me: Ou Bos e h c r S e d v Frau erco ortgage Und Texas M t s a E Major 203(k) Rehab Loan Program: Foreclosures Present Challenges, Opportunity NMLS and St ate Testing fo r Mortgage Pr ofessionals

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By David Lykken

Redefining “Going Green” There’s more than one way for a company to “go green.” In this month’s article, I would like to redefine what “going green” should mean to every C-Level executive. To set the stage for what I am talking about, ask yourself the following questions:

It is a calming and refreshing color. Isn’t it interesting that our U.S. currency is shades of green. Green symbolizes nature, and studies show that it is the most conservative color and one that implies wealth.

O Beyond having a profitable business, what else is important to you? O How would you define the ideal environment for your business (and I am speaking of an internal business environment)? O Do you enjoy what you are doing and the way you’re doing it?

O Green is the easiest color on the eye and reportedly can improve vision.

On a side note … would you agree with me if I said any company like that would not be considered “green?” They usually are marginally profitable or not profitable at all. They are not fun to go into every day of each week and none of the employees are relaxed, calm or feeling refreshed. It is more like the life is being drained out of them. Heck, most of us have worked at a place like that and never would go back to that kind of existence because that is all it is … a bare bones existence. When I get a call from a business owner like this telling me they want to sell their business for one of the above

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O Black is the color of authority and power. It is popular in fashion because it makes people appear thinner and therefore more attractive. It is stylish and timeless. Likewise, operating a business “in the black” is considered “stylish” by any standard.

O “I have been struggling with my business, and I am tired and want out.” O “I don’t own this business, this business owns me, and I want my life back!” O “This has ceased to be fun … I want to do something different.”

continued on page 36


O Red is the most emotionally intense color, red stimulates a faster heartbeat and breathing. One thing that is sure to get any C-Level executive’s heart beating fast is to see their company’s profit and loss statement that depicts the business losing money or operating “in the red.” It is an attention-getting color which is why the color “red” is used for depicting losses.

For many in the mortgage industry, last year was a very good year financially, but not many operated “in the green” … it was not an enjoyable journey. And, as we look into what the rest of 2010 has in store for us, we know the business environment is growing increasingly challenging. We are dealing with higher capital requirements, higher interest rates, decreasing home sales, fewer refinances and a tsunami of new regulations coming at us … and now, an increase in healthcare costs! Yet, with all of that (and I am going to suggest because of all that), I see more opportunity than ever to be outrageously successful in the months and years ahead. Keep in mind what I have been saying for the past six months … “more money will be made in the next five years (by the few that survive) than was made by all the companies that have operated in the previous 25 years.” And, I will add to this bold statement, that the vast majority of those companies O

When we work with our clients, we stress the importance of not only being profitable, but also enjoying the journey. When there is profitability, plus a sense of purpose and enjoyment in our business, we create an environment where most of our employees will love coming to work. For me, that is what “going green” is all about. Before I get too far into this article, I need to establish a basis of understanding related to the “psychology of color” for those who may not be aware of this. Consider the following:

While there are numerous other colors included in the “psychology of colors,” these are the only ones of importance as it relates to this article. We all know what it means when a company is “in the red” and when a company is “in the black.” But what I want to introduce to you as you read this article is another dimension of how to think about your business in the financial sense of the word. It is a dimension beyond just “operating in the black.” It is the concept of operating your business in the “green” “When there is profitability, plus a sense … beyond just being profitable each month. of purpose and enjoyAs a leading national ment in our business, business management conwe create an environ- sulting firm with a promiment where most of nent mergers and acquisition (M&A) division, we regour employees will ularly receive calls from love coming to work. business owners wanting to For me, that is what sell their businesses. When ‘going green’ is all we probe the reasons why about.” they want to sell, we commonly hear things like:

reasons, I always recommend that we first start working on the business to get the business turned around at least enough so the business is attractive to someone looking to purchase a company. This is classic “turnaround management” stuff that we do, day-in and day-out with our consulting business. What is amazing is that as soon as we get the business turned around and operating in the black, and even “operating in the green,” the business owner who retained us is no longer interested in selling the company. Hey, who can blame them! Anyone that has owned and operated a business that is operating beyond just being “in the black,” but is now operating “in the green” can tell you that it is fun to come to work each and every day and it is something you want to keep. Few things are as rewarding as owning and operating a business at which you are making money, living life to the fullest and creating an environment where there is great “quality of life” for yourself, and hopefully, for your employees.


Will the Mortgage Industry Witness Another Influx of Non-Traditional Lenders?

APRIL 2010 O



By Ed F. Wallace Jr., Ph.D.


And these were just two of the The mortgage business has undergone some odd changes. For a long time, it notable events. All in all, in 1995, the was viewed as the irrevocable turf of mortgage industry witnessed either the entrance or newly-initiated major the thrifts. That is no longer true. Mortgage lending has also usually growth plans of a large national retailer, been profitable, but never a perfect busi- two large automakers, a huge part of the ness. Portfolio lenders had a fairly high life insurance industry, the two largest profit potential, but also fairly high risk. container manufacturers, and the two largest independent conMortgage bankers had less sumer finance companies. risk, but also less potential At the time, this was an to build gross dollars of invasion to beat any others profit, and therefore, less we had ever seen in any potential to grow. Today, industry. Never, to our these fundamentals have knowledge, had companies changed, partly because of of such differing base indusan active secondary martries or companies of such ket and the array of high huge combined size gone yield, high-risk loan proafter a single industry seggrams placed into the marment in so short a time. It is ket over the past few years. astonishing, and should be Finally, the mortgage so recorded in business hisbusiness was seldom one “In the heyday of U.S. business expansion, tory books, that the mortto attract “outsiders.” It was regulated and frag- the allure was in man- gage business in one year drew in K-Mart, GM, Ford, mented. Government con- ufacturing and selling Prudential, Metropolitan, trolled who could create a the products that American Can, Owensmortgage loan and where, would fill a home, not Illinois, Household Finance and who could own a supplying the funds to and Beneficial. lending institution. Every buy the empty shell. At the time, American town and village usually Can’s mortgage chief Ken had an ample supply of Now these fundamentals have changed Berg said, “The industry is lenders. In the heyday of most of all. ” just now being recognized. U.S. business expansion, When we first went to Wall the allure was in manufacturing and selling the products that Street, people said, ‘What’s a mortgage would fill a home, not supplying the banker?’ I think today they’ve found out.” Indeed, as they find out most things, funds to buy the empty shell. Now these fundamentals have changed most of all. Wall Street discovered mortgage bankChanges in the mortgage business ing most pleasantly by collecting fees have been part of the overall change in and most recently by the collapse of the the financial services industry. In fact, mortgage industry. In many areas reviewing the past the mortgage business has been affected more than any other financial industry may give us a light on the future. As was segment by the half-steps that deregula- the case in 1995, non-traditional tion took, as well as laws and guidelines lenders entered a fragmented market. which seemed at times to change with Likewise, could a new group of non-trathe wind. Because of those changes, ditional lenders be in the stages of capfinancial service companies have scram- turing market share and taking over bled to use every available loophole in where banks, savings and loans, and the law that would allow them to put in credit unions have either exited the place a nationwide delivery system, to business, purposely reduced their marget a jump on the competition. Mortgage ket share, or tightened credit requirebanking, unregulated by the federal gov- ments, thus limiting the borrower’s ernment as banks and thrifts were, ability to obtain a mortgage? In a recent Wall Street Journal artibecame one of the most popular loopholes for traditional lenders in the early cle, Karen Tally identified one such and mid-1980s. In 2010, loopholes may non-traditional banking company that be becoming most popular among non- is filling the void left by these financial institutions. Walmart expects a 50 pertraditional players. Abruptly, the action among the non- cent increase this year in the number of traditional players heated up in 1995. K- the company’s stores offering bank-like Mart made clear some of its intentions to services. This increase would give the become a very big mortgage company. retailer 1,500 “money centers” which is General Motors Acceptance Corporation a little less than one for every two made two acquisitions which, by year- Walmarts in the country. end, made its servicing portfolio the continued on page 37 largest in the United States.

MIAC’s new site offers easier access to asset valuation info Mortgage Industry Advisory Corporation (MIAC), a provider of FAS 157 fair market valuations, mortgage risk hedging and accounting solutions, has announced the rollout of the first phase of its new corporate Web site,, a tool the company says will make it much easier for mortgage market participants to find information critical to their success. Valuation experts at MIAC have been publishing a wealth of information and posting it online for over a decade. The new site will make this material more accessible to the industry. “We are making it easier for people to find the information they need to be successful,” said Younes Aouad, a senior vice president in MIAC’s technology strategies group, who is heading up the Web effort. “The new site brings mortgage industry news and information to them rather than making them go in search of it, and puts forward our best content.” The new site separates content areas by business channel, making it easier for customers to navigate directly to the news or commentary they are interested in. For example, MIAC’s Generic Servicing Assets (GSAs) are available for download into MIAC Analytics and viewable on the Web site. Industry news is also provided in real-time from the industry’s largest publications, making the site a clearinghouse for upto-date information. In particular, MIAC’s solutions are focused on addressing and managing interest rate risk identified in the recent Interagency Advisory on Interest Rate Risk Management press release. For instance, professional commentary from industry experts on industry topics can now find this information on the MIAC Web site. MIAC brings more than 20 years of experience as the industry’s leading independent pricing specialist and software solution to bear on the issues that are of critical importance to banks and other holders of illiquid assets. “For those working in the mortgage space, the MIAC Web site allows you to follow one link and find everything you need,” said MIAC Principal Paul Van Valkenburg. “Our site is now one of the

industry’s leading resources for CFOs facing challenges with asset valuation and risk management.” For more information, visit

LoyaltyPrint 2.0 adds premier closing gifts to site enhancement

LoyaltyExpress has announced its LoyaltyPrint Version 2.0 site release, dramatically empowering loan officers and real estate professionals with an enhanced collection of high-quality closing gifts. Now when users customize greeting cards and postcards for direct mailings to customers, prospects and partners—closing gifts can be selected to powerfully convey distinguishable appreciation. LoyaltyPrint site enhancements include: Personalized address stamps with attractive and practical homeowner’s address stamp packaged in a wooden box with engraved logo; magazine subscriptions with personalized 4” x 4” mailing labels (on cover of each issue); gift card sets of either 24 postcards or 15 premium cards (birthday, thank you, holiday, moving, and other events); brownies, cookies and a mix of each from market-leading confectioner; candles; household items and tools, including gardening, barbecue and highway kits; and calendars (hanging, desk, and journal formats). “LoyaltyExpress has distinguished itself on high-quality standards and methodologies in the one-to-one mortgage-marketing industry,” said Chief Executive Officer Jeffrey Doyle. “Our market-leading programs and services allow our clients to cost-effectively incorporate world-class communications. I’m especially delighted to rollout the magazine subscription gift. It’s a great product to generate long-lasting appreciation—and referrals—with every edition.” LoyaltyPrint users can select from popular magazine titles in the home and personal finance categories. On every magazine cover, a four-by-fourinch mailing label features the loan officer’s/agent’s photo, company logo, contact information and a short greeting. For more information, visit and

Visionary Apps launches new lead generation tools for iPhone, iPad and iTouch

AllRegs announces new NMLS-approved courses to fulfill SAFE Act requirements

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O APRIL 2010

CitiMortgage has announced the Citi Foreclosure Alternatives Program, a new pilot initiative that will allow distressed CitiMortgage borrowers to avoid foreclosure and remain in their homes for six months by agreeing to sign over their property deeds to CitiMortgage at the end of that period. In addition, Citi will provide relocation assistance to aid the borrowers’ transition to another residence at the end of the program. This expanded deed-in-lieu-of-foreclosure program, the latest in CitiMortgage’s series of initiatives to help distressed borrowers, is being piloted in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. “At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, chief executive officer of CitiMortgage. “The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. The Foreclosure Alternatives Program is another tool in our ongoing efforts to find creative, inno-


AllRegs has announced the approval of four continuing education courses by the Nationwide Mortgage Licensing System & Registry (NMLS). These new NMLS course approvals follow the approval of AllRegs’ PreLicensing course, the 20-Hour Mortgage Originator SAFE Comprehensive (Course Number 1013). AllRegs became an Approved Education Provider (#1400024) by the NMLS on July 7, 2009. The following AllRegs courses have been approved for continuing education: One-Hour SAFE Elective: Fair Lending— The Essentials (ID#: 1255); Two-Hour SAFE Ethics: Fraud and Fair Lending— Consumer Protection (ID#: 1256); TwoHour SAFE Non-Traditional Mortgages: FHA and Guaranteed Rural Housing (ID#: 1257); and Three-Hour Safe Federal Law: ECOA, HMDA, TILA (ID#: 1258).

Citi to pilot Foreclosure Alternatives Program to assist distressed borrowers O

With the new lead generation feature of Visionary Apps’ Complete Foreclosures and Complete Homes apps for the iPhone, iPad, and iPod touch, real estate professionals can obtain featured advertisements targeting potential homebuyers, sellers and those searching for foreclosures. This new targeted lead generation program puts qualified real estate professionals into the direct referral database of both the Complete Homes and Complete Foreclosures apps, which have been ranked in the top 10 most downloaded Free Business Apps in the iTunes App Store. By purchasing zip codes for regions of interest, real estate professionals immediately receive exclusive advertisement space on the Complete Foreclosures and Complete Homes apps. When the app users search for foreclosures and homes in a certain zip code or by GPS location, they will also see an advertisement from the real estate agent who purchased that zip code, positioning the agent as the local expert and giving them qualified leads. According to Daniel Burrus, founder of Visionary Apps, the Complete Realty Suite will “drive a revolution in how people shop for, buy, and sell real estate using the ever-evolving features of their smart phones.” Only one agent is displayed per zip code for each app, creating exclusive referral territories that enable real estate agents to effectively “lock out” the competition. Complete Realty app users see full details on the participating agents, including their picture, profile, e-mail address, phone number and Web site address. For more information, visit or

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) mandates a minimum of 20-hour pre-licensing (PE) and eight-hour continuing education (CE) courses in every state. In order to satisfy these requirements, courses offered to state-licensed mortgage loan originators must be approved by the NMLS. Continuing education courses must include at least: Three hours of federal law and regulations; two hours of ethics, to include instruction on fraud, consumer protection and fair lending issues; two hours of training related to lending standards for the non-traditional mortgage product marketplace; and one hour of elective credits. “We are happy to announce that AllRegs has received NMLS Approval for eight hours of SAFE Act continuing education courses,” said Dan Thoms, senior vice president for AllRegs. “These courses have been added and made available to all AllRegs Education Package subscribers. Now organizations have more reason to invest in education through AllRegs.” The NMLS has established six criteria that a course must satisfy to gain approval. These criteria dictate that a course must possess learning objectives, have sufficient material, be of sufficient difficulty and length, be delivered in an environment conducive to learning and have a defines start and end time. AllRegs’ arsenal of NMLS approved courses has successfully met all criteria. For more information, visit


a view from the “c” suite



new to market

continued from page 35

vative ways to help our customers across a variety of difficult financial situations.” In exchange for the deed on their property, CitiMortgage will allow borrowers to stay in their homes for a period of up to six months. At the end of the six months, the borrower will turn over the 1. Get a plan for what is property deed to CitiMortgage, and coming CitiMortgage will provide a minimum of I am sure that you’ve heard the expres$1,000 in relocation assistance to the sion, “A failure to plan is a plan to fail.” borrowers. Citi will also provide relocaWhat is coming at our industry is going to require diligent planning. My recom- 5. Manage to your strength, tion counseling by trained professionals and will cover certain monthly property mendation is for you to not do this in a hire to your weakness vacuum, but rather, hire industry Focus on that which you do well. If your expenses if Citi determines that the borexperts that have a good understanding strength is originating loans, why not rower can no longer afford them. of the “lay of the land” to help you hire someone to do your bookkeep- Payment of utilities costs will be the chart your course. While there are plans ing/accounting? Hire someone to han- responsibility of the borrower. Other that everyone should adopt, each plan dle that which you either don’t enjoy costs incurred by the borrower, such as is unique to each company based upon doing or you are not good at … usually homeowner’s association and escrow their business model. they are one and the same. However, fees, will be determined on a case-bydoing so will not abdicate your respon- case basis considering the borrower’s 2. Manage by the numbers sibility for you to “manage by the num- specific financial circumstances. As part of the agreement, borrowers must mainWhether a business is expanding or bers (see number two above). tain the property in its current condition contracting, any successful business owner will tell you that it is essential 6. Make sure your business and agree to bi-monthly meetings during which trained relocation professionthat you know your numbers, your is on a secure foundation income and expense numbers, on a There are stormy days ahead for our als will help the borrower prepare for month-to-month basis. Borrowing from industry, and for our economy. Invest the next chapter of their lives. Before a borrower enters the a religious bumper sticker I saw, consid- the time now to make sure your busier this: “Know (your) numbers, know ness is on a solid foundation, so when Foreclosure Alternatives Program, they (your) business” and conversely “No the climate turns ugly, you and your must first be evaluated for a permanent numbers, no business.” You would be company will be “operating green” … mortgage modification. For those who do not qualify for a modification or surprised how few business owners safe, calm, relaxed and secure. another solution, CitiMortgage will truly know their numbers, much less manage by their numbers. Don’t make David Lykken is president, mortgage strategies explore the possibility of a short sale in that mistake with your business. Don’t and managing partner with Mortgage which the company might accept a be afraid to get consulting firms like Banking Solutions. David has more than 35 buyer’s offer for less than the outstandours involved with you to help you years of industry experience and has garnered ing amount of the mortgage. If a short focus on the right numbers. a national reputation. David has become a sale is not feasible, then the borrower frequent guest on FOX Business News with Neil may be considered for the deed-in-lieu 3. Keep your costs variCavuto, Stuart Varney, Liz Claman and Dave program. In addition, in order to be eliable as much as possible Asman with additional guest appearances on gible, homeowners must hold first Fixed costs can kill your business in a the CBS Evening News, Bloomberg TV and mortgages with a clear title owned by contracting or volatile market. The more radio. He may be reached by phone at (512) CitiMortgage, occupy the property, and elastic you can make your expenses, the 977-9900, ext. 101 or e-mail dlykken@mort- be at least 90 days delinquent on their mortgage payments. easier it will be to manage your prof- As it evaluates the progress of the pilot itability. Remember your income has always been the variable number. Make To listen to author David program, CitiMortgage will assess whether sure your expense numbers are as well. Lykken’s online radio show, or not to expand the program to other parts Outsourcing aspects of your operations log on to www.blogtalkra- of the United States. The initial pilot is like bookkeeping/accounting or even and type in “Lykken expected to help as many as 1,000 families. “We hope others in our industry will back office fulfillment can make such a on Lending” in the “Search” box on the join us in helping distressed borrowers difference in bottom line. right-hand side of the page. across the country,” said Das. “By helping avoid the foreclosure process, which can be very stressful and distracting, and keeping people in their homes long enough to make an orderly transition to the next stage of their lives, we are also supporting neighborhood revitalization and stabilization efforts, which are cru• Daily updated mortgage industry news cial to the nation’s economic recovery.” For more information, visit • Industry blogs will not just be operating “in the black,” but will be operating “in the green.” So, how does a business owner start operating in the green? Here are six basic essentials necessary to do so.


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4. Stick with your strengths

A wise person knows their strengths and an even wiser person knows their weaknesses. Unless you are an accountant, you probably didn’t start your business because your strength was bookkeeping and accounting. You most likely started your business because you enjoyed originating loans, helping people get into homes and, yes, making money.

• Write your own blog • Find loan programs • Discover local and national events • Get access to video

Interthinx unveils its Conditioned Valuation Model product

Interthinx, a provider of risk mitigation, fraud detection and regulatory compliance tools for the residential mortgage

industry, has announced the launch of its Interthinx Conditioned Valuation Model (CVM) product, automated valuation technology and analytics tempered by a professional property inspection. This new approach to property valuation will provide lenders and servicers with a powerful choice that is more accurate than an AVM (automated valuation model) and less expensive than BPOs (broker price opinions). “AVMs have become an industry standard and a valuation tool many rely on without question. Unfortunately, excessive AVM usage may have contributed to an epidemic of overvaluation fraud,” said Kevin Coop, president of Interthinx. “And valuation fraud is not diminishing. Our Mortgage Fraud Risk Report from the third quarter of 2009 confirmed property valuation fraud risk is up 46 percent from a year ago. With the new CVM, Interthinx can deliver affordable, real-time condition-based property values to the lending and servicing communities.” The Interthinx CVM is strategically positioned along the continuum of existing property valuation products between AVMs and BPOs. At a cost lower than a standard BPO, the Interthinx CVM allows for more reasonably priced and comprehensive due diligence for businesses requiring more information than a conventional AVM can offer. The CVM starts with an AVM that uses MLS (Multiple Listing Service) and public data to factor current market conditions for the greatest accuracy. Then, the CVM applies an adjustment based upon an exterior inspection of the property and neighborhood by a professional third-party inspector. The CVM report includes photos of the subject property, neighborhood condition, a condition-adjusted value, and market price trends. “The CVM promises to advance mortgage due diligence to a new level,” said Mark Chapin, chief valuation officer for Interthinx. “The CVM combines powerful valuation analytics that factors property condition by an objective third-party to produce an accurate, transparent property valuation at a cost-effective price.” For more information, visit

FNC releases new appraisal review technology

FNC Inc. has released a new product designed to make appraisal review more efficient. The Web-based workflow software, GAAR Viewer, works hand-in-hand with one of FNC’s flagship products, the Generally Accepted Appraisal Rules (GAAR)—software that

scours appraisal reports for any regulatory compliance violations, as well as inconsistencies and excessive adjustments—possible indicators of unsupported values and/or fraud. “This thorough, automated review tool serves as an assistant to the underwriter or reviewer, providing instant results of potential issues,” said Gwen Magrisso, GAAR project manager. Designed to save time for reviewers and cut costs for banks, GAAR Viewer presents an on-screen view of the appraisal report with any rule firings and related fields on the appraisal report form highlighted in red. Reviewers, underwriters, QA professionals—any users of GAAR Viewer— can hover their cursor over the highlights to reveal the rule reference number and description of the potential violation. “The result of using GAAR Viewer is a more accurate appraisal review and ultimately a more reliable appraisal report,” said Karen Mogridge, FNC’s product manager for collateral data and analytics. “For lenders, that means greater confidence in the property valuation on which their loans are supported.” FNC’s GAAR is a first-level, total collateral review system that can enable users to review all appraisals pre-closing to help ensure well-documented valuations. “Where QC once stopped at minimal compliance guidelines, reviewers can now use this state-of-the-art technology to automate a much deeper review faster than ever before,” said Kathy Coon, FNC’s chief appraiser. “GAAR is critical because its risk rules allow QC to go far beyond the minimal compliance and risk guidelines of years past.” For more information, visit

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of the country are underserved in these areas which could open the door for non-traditional companies to enter a market. It will be interesting to see who may or may not enter the mortgage industry over the next few years. I would estimate the character of any entrant will be that of bigness. This, in part, is due to the capital it takes not only to start an operation, but to also maintain it until production levels can be reached, which sets the company into a self-sufficient mode. With all that has happened in the financial sector and the new proposed regulations, it could possibly be another cycle that will place non-traditional companies at the forefront of the industry as it did in the 1990s. Ed F. Wallace Jr., Ph.D. is the chief integration officer for Docu Prep Inc., a nationwide provider of closing documents and initial disclosure services, including secure electronic delivery tools, loan analysis testing, and dynamic selection of documents, bar coding, secured and certified eSignatures and eMortgages via LOS interfaces, Web services and standalone systems. He may be reached by phone at (801) 574-2919 or e-mail

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Visit UnitedNorthern.Jobs, email info@UnitedNorthern.Jobs or call (888) 600-8808 ext 1. United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender

O APRIL 2010

a la mode inc. has released the first public edition of The Appraisal Fee Reference (AFR). The AFR is the authoritative national analysis of independent appraisal fees, and is just one of the monthly data sets published as part of a la mode’s Appraisal Industry Analytics practice. Using the data from hundreds of thousands of verified and validated appraisals, the AFR reports the median appraisal fees for each of the 3,221 counties and districts in the 50 states, the District of Columbia, Puerto Rico and Guam. For compliance with the U.S. Department of Housing & Urban Development’s (HUD’s) new 2010 RESPA rules and the revised Good Faith Estimate (GFE), the AFR gives a lender a defensible basis for estimating closing costs on a GFE for loans using independent fee appraisers. Lenders utilizing the Mercury Network also receive additional data sets for GFE compliance. “Knowing what’s customary or commonly expected is only the first step. As in any business, only the person performing the actual work would be able to say what is reasonable or required for a specific request,” said Dave Biggers, a la mode’s chairman. “In real estate that’s especially true since every property is different. The key is that the AFR provides lenders and appraisers alike a logical, legally defensible starting point for that fee discussion and for GFE estimation.” As for the actual report, the February 2010 edition of the AFR reveals several interesting fee statistics. For example, the most expensive counties to get an appraisal were not in the major cities. Instead, the 50 most expensive locations were dominated by counties in Alaska, Hawaii, and Wyoming. Of the locations with the

The primary focus of these money centers is to attract the lower-income customers who do not have a significant banking relationship, which the federal government estimates to be one in four U.S. households. In Talley’s article, she quotes Jane Thompson, president of Walmart Financial Services in saying, “We think banks are not as interested in this customer and have a lot of other things on their plates, so we see a lot of space to service customers’ basic financial needs.” At the present time, the Walmart money centers generate three million to five million transactions per week. Although Walmart has tried and failed to obtain a bank charter in the past, fearing the company could force the bank it controls to lend to preferred parties and not to its competitors, who is to say that times will not evolve to let Walmart, as well as other non-traditional powerhouses, into the mortgage arena if for nothing more, but to try and serve a segment of the population which otherwise is starting to be culled out of the mix despite superior credit scores and the ability to repay a mortgage. As we all know, financial institutions must comply with federal, state and local requirements for lending, as well as banking services. However, many areas

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The Accurate Title Group LLC has announced the release of its TAG Good Faith Estimate Calculator (TAG GFE). This exciting new product comes in response to the Real Estate Settlement Procedures Act (RESPA) and its revisions to the Good Faith Estimate (GFE) and HUD-1 Settlement Statement. The TAG GFE provides instant, accurate calculations for purchase, refinance and home equity transactions in all 50 states and all counties for title insurance premium, endorsements, CPL fees, search, closing fees, recording costs and transfer taxes. “We quickly assessed the available market and saw an opportunity to divert our IT priorities to leap frog the competition on fee disclosure,” said ATG’s Chief Information Officer Mike Cullen. “It is exciting to streamline the development of technology to provide more accurate, detailed and comprehensive fees faster than any other prod-

a la mode releases National Appraisal Fee Reference to meet compliance needs

influx of non-traditional lenders? O

The Accurate Title Group releases GFE Calculator

uct available today. We see this as a step towards a fully automated, instant HUD-1.” The TAG GFE is a user-friendly tool that is helping ATG quickly grow its national market share by simplifying GFE and HUD-1 preparation for high volume mortgage and home equity processors. It also ensures GFE compliance and advises lenders of how fees are customarily split between sellers and buyers throughout the country, enabling lenders to confidently quote and close purchase transactions nationally. When ATG provides the settlement services in combination with the TAG GFE, a lender is assured of accurate disclosures. For more information, visit


Going Green and Stamping Out Fraud

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By Tommy A. Duncan, CMT


The quality control and fraud detection Think of it like a social security number, arena is excited about the “going green” account number or a bar code that idenconcept for the mortgage industry because tifies you. The digital signature is more it is leading the way for a decrease in mort- secure than an electronic signature gage fraud, such as identity theft and for- because the identity is already validated gery. The problem with going paperless is and verified through the vetting process the fact that so many documents require of issuing the security certificate for the signatures known as “wet ink.” There are digital signature. Also, to use a digital sigtwo types of signatures other than wet ink: nature requires other passageways, Electronic signatures and digital signatures. including log in accounts to networks and An electronic signature software, in order to sign a is merely signing a digital document digitally, thus pad or screen that capadding more layers of secutures an electronic signarity and identity verificature, trying to replicate a tions. The digital signature wet ink signature and is usually installed on an place it on a document. electronic tape on a card We have all done this at like a hotel key or credit the store when we make card. When the digital sigpurchases with bank nature is used, it usually cards and credit cards. requires a PIN (personal The advantage is that it is identification number) in convenient and easy to order for it to activate as a “The digital signature use. The disadvantage is legal signature, yet another is more secure than that the signature pad layer of security that elechas a low pixel ratio and an electronic signatronic signatures do not does not provide a ture because the iden- require. Therefore, every smooth read/write as wet tity is already validat- page of a document leaves ink, the electronic signaa digital thumbprint as ed and verified ture can be stored in a documents are accessed. through the vetting database and can be capThis is a fraud investigator’s process of issuing the tured or stolen, the elecdream. tronic signature rarely security certificate for The disadvantages are matches a wet signature, the digital signature.” many because of the host and a person’s identity is of technology support rarely validated prior to signing and sig- and technology staff to make it work. natures are not compared. Digital signatures requires the producBecause of the primitive technology tion of card keys and the hardware to of the electronic signature, it is difficult burn the binary code to the electronic for the forensic auditor when looking tape. If you lose the card, you cannot for forgery or identity theft. Electronic sign digitally until a new card is issued. signatures, however, will be short-lived, The advantages are that it is the most because of other technologies on the secure identity protection available. A horizon that are more secure and less thief will have to utilize a host of techprone to identity theft. nologies and electronic intrusion hardA digital signature is different from an ware and systems in order to commit electronic signature because there is no fraud using a digital signature. signature. A digital signature is issued I know of one incident of fraud that from a secure platform involving other involved a digital signature. technologies that produces an individual Someone with similar access was number for a person that represents that able to access documents already digiperson’s legal signature and identity. tally signed via a network and software

access. The individual copied and pasted a different digital signature and placed it on other documents. This means that the digital signature can be lifted, however, the date could not be changed. If a document required dual digital signatures, the dates would have to match or be within tolerance for the execution of the document. Also, the documents left a digital thumbprint and were traced back to the theft. Even though, the digital signature was lifted, the electronic trail was made. The future of signatures could possibly come in the form of fingerprints or retina scans. In Iraq, pictures of one’s ears and digital voice capturing were used as a means of identity verification for verifying individuals. Technology will make the

wet signature obsolete at this point, the demand for signatures other than wet signature will only come as demand is made and as technology becomes less expensive and more available. Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. He may be reached by phone at (615) 591-2528, ext. 124 or e-mail Visit co-author Tommy A. Duncan, CMT’s Quality Mortgage Services LLC Web site at for more information on quality control programs and compliance solutions.

Paperless Lending Offers Fraud Risk Mitigation By Sharon Matthews

The mortgage industry has embraced paperless lending, bringing a somewhat unexpected, but critical benefit to the market—another line of defense against mortgage fraud. The benefits of going electronic, saving time, reducing costs and improving accuracy are being realized by lenders across the industry. This is evidenced by their increased reliance on electronic documents. Today, more than 80 percent of the loan documents volume flowing through the pipelines of the largest lenders is electronically enabled, meaning that if the borrower chooses to keep it electronic, the documents will never paper out. That compares to about 40 percent just a few years ago. Those benefits are what drew lenders to the technology, undoubtedly, but they are not the only catalysts for the hefty adoption rates. Lenders have learned to manage and track their performance based on the critical metricsbased data from their electronic data streams and the associated transaction data. Banks are sending more data electronically, and that makes the data much more accessible to applications their service providers offer to protect against fraud.

An increased focus on fraud risk mitigation Fraud risk mitigation-related due diligence is no longer considered overkill, especially in the wake of the mortgage fallout of the past few years. It is a matter of business self-preservation, a defense against losses. In addition, it is not just a single department that has embraced electronic documents, but several departments, all across banks. Mortgage executives now realize that paperless lending makes fraud harder to commit, and easier for lenders to identify. There can be no doubt that mortgage fraud is on the minds of executives and about the important role e-documents play in fraud risk mitigation. Many lenders acknowledge that they are taking steps to mitigate fraud risk. To that end, several companies have released products designed to help lenders mitigate risk without hampering loan origination volumes at a time when every loan is valued at a premium by the institution. These products are working. However, until recently, there has not been a solution to address settlement agent fraud.

Where fraud still hides in the mortgage transaction

that lenders and their business partners are charged with adhering to, the stakes are higher and the need for a solution is more pressing. Technology solutions are now available to help lenders deal with this environment and succeed. They were enabled by the hard work of mortgage technology professionals, but also by the lenders who had the courage to

begin sending those first documents out electronically instead of on paper. Sharon Matthews is president and chief executive officer of eLynx in Cincinnati, Ohio. She has more than 20 years of executive experience running profitable large technology and software companies. She may be reached by e-mail at

Paperless or Just Less Paper? By Erik Wind


As the owner of a software company, backed up off-site (a very easy thing to I’ve created systems for a variety of do these days), it is completely protectclients designed to automate their daily ed in the event of a fire, flood or other operations. Prior to moving into the damaging events. Even if an organization succeeds in 21st century (or 20th, for some), I’ve seen organizations try to solve prob- going completely paperless (a rarity indeed), they cannot control varilems with rooms of filing ables outside of their own cabinets, or having a “log organizational unit. Here book” for just about every are some examples: scenario you can think of. For most, building a O A real estate company case for computerizing a that negotiates short sales paper system is pretty uses a system I designed to easy, since those mired in produce all of the paperpiles of paper realize, “this work needed for a short isn’t going to work much sale proposal that gets sublonger.” When I start talkmitted to the lenders. If a ing to a new client about lender also uses a papernew technologies availless system, documents able to them, I never men“The reality is, can be sent electronically tion the word “paperless,” automation and from their office directly to I’m a bigger fan of the better technology are the lender. What if a lender words “automation” and not synonymous with requests the documents to “efficiency,” but going paperless.” be mailed with an original paperless is often more handwritten signature? hype than anything else. How about the buyer or seller who “This is great, we’re going paperless!” doesn’t have Internet access and needs I’ll often hear. These are the ones so to receive the documents in a more excited because they’re moving into a traditional format? science fiction environment where everything is brought “on-screen.” They often just returned from a conference O Another system I designed is used by firms who try to reduce property where some self-proclaimed expert distaxes on behalf of the homeowners cussed the benefits of a futuristic, they represent. The system produces green, utopian society. They’re looking all the necessary documents electo run before they crawl. tronically. However, most taxing On the other hand, there are those authorities (school districts, towns, who get nervous when hearing the counties, etc.) are far away from word “paperless.” Ironically, they’re such automation. One appeal nervous because they picture the same process requires the tax reduction environment as the excited ones. But firm to produce five copies of the they don’t see themselves being able to same document to be distributed to fit into an environment with no paper. various different taxing authorities. The reality is, automation and better In an effort to improve this, an “e-filtechnology are not synonymous with ing” system was created. This system paperless. Online storage of documents made a number of programmers and data is a great idea for various reahappy by giving them work to do sons: It creates a central unit of storage (for the tax reduction firms and taxso that no one is searching for a lost ing authorities), but only resulted in document or updated log book. the elimination of one set of the Duplication of documents and double entry is eliminated. It also guards against physical disaster. If a system is continued on page 40 O

ment agent partners, it is possible to automate due diligence on every docuStatistics indicate that fraud is almost ment that flows into the loan file from always perpetrated with collusion from third parties, as long as those docuparties inside the institution, either ments are electronic. The move to paperless has made it posemployees of the bank or other parties who work with the bank. With dozens sible to access the data beneath the docuof participants involved and virtually ments and use it to perform diligence unlimited opportunities for ill-gotten checks that absolutely reveal fraudulent gains, mortgage lending is particularly activity related to third party partners. Vendors are realizing this, and I expect the vulnerable to scams. I have been impressed with the technol- industry to see more collaborative soluogy that has begun to reach the market— tions in the future. These new process workflows, like eLynx’s several are adept at sniffing Electronic Closing Network out fraud related incidents (eCN) offering, address the to third-party originators or need by providing transby collateral valuation parency between a lender providers. Missing in the and every approved vendor process, however, were the they work with. This makes closing agents, the people it easy to see exactly who lenders trust to bring the the lender partners with transaction to fruition. and what is happening to Having consulted with the HUD-1 as the process many of our clients, it progresses, aiding in regulaappears that lenders tory compliance. assumed that because “Today, more than 80 Electronic mortgage they maintained control percent of the loan lending has led to the creof the closing documents, documents volume ation of an industry-wide the risk from fraud was infrastructure that enables low. That perception has flowing through the proven to be wrong. Our pipelines of the largest closing documents to be analysis shows that the lenders is electronical- exchanged among the borrower, lender, title underrisk is high, even very late ly enabled, meaning writer, settlement agent in the loan origination that if the borrower process, right up to the chooses to keep it elec- and other business partners, flawlessly, seamlessly closing table. That’s tronic, the documents and transparently. That because once loans go to will never paper out. makes it very hard for the closing agent, lenders That compares to fraud to hide. yield control and subject about 40 percent just It’s also making it posthemselves to risk from a few years ago.” sible for lenders to take several sources. For back control of the closinstance, mistakes in data entry or unconventional business ing process in a way that centralizes all practices often undermine the closing of the information and connects the partners with an online hub. process, jeopardizing lenders. As more lenders utilize such systems, Too often, the lender finds out about the fraud after the deal has closed and, they’ll find it easier to run automated occasionally, after it is funded. The clos- analytics prior to a loan closing. They ing process, most of us would agree, will know who is responsible for closing each loan and connect with closing partlacks transparency. Recognizing the vulnerability of ners in a secure fashion. Internal syslenders, the U.S. Department of tems will connect, sharing data seamHousing & Urban Development (HUD) lessly and collaborating to reconcile the has handed down rules governing set- HUD-1 and re-disclose as necessary as tlement services agents. Lenders have the loan moves through the pipeline. Over time, settlement agents will build been tasked with scrutinizing these players. This will uncover some bad reputations that are backed by performplayers, but identifying a source of ance data and lender partner grading sysfraud that late in the process is, by no tems that will allow originators who use these systems to benefit from each other’s means, a best practice. experience. Fraudsters would be marked once and blocked by all, at the same How electronic time, the best agents would get effortless documents have made promotion across the industry. it easier to spot fraud Few would question that technology To prevent settlement agent fraud, the lender has to monitor the whole process platforms that are intuitive, help lendin the overall loan origination workflow. ing institutions remain vigilant in the To do that effectively requires automa- fight against fraud, and are transpartion. While it’s not possible to task a sys- ent, have a place in the mortgage busitem with 24-7 surveillance of settle- ness. But with the regulatory scheme


documents. Case in point, the firms are still required to print the same documents, but now have an additional requirement with the e-filing. If your office’s system is not computerized to the extent where all documents and data are centrally stored and securely backed up, find a way to do so sooner than later. “Off the shelf software” may suit your needs for surprisingly less than what you’d expect. If you need something developed specifically for your organization, software developers (like any other business) are likely to charge less now than what they’d charge in previous years simply because their business is slow too. Don’t wait for disaster in the form of a

fire, flood or gross inefficiency to motivate you to make the move. But if you already are at that point, and you want to go paperless because that’s the buzzword at a recent conference, think again. In fact, think three or four times and make sure it’s going to benefit you in the end. Erik Wind is the president of EWDC, a software company based in Farmingdale, N.Y. Erik has created various software applications for the real estate industry for the purpose of short sales, property tax reduction, and is one of the developers of GeoData Plus, a leading real estate data company in New York State. He may be reached by phone at (516) 882-6930, e-mail or visit

Pieces of the P.I.e: Paper, Imaged and e-Documents

APRIL 2010 O



By Greg Smith


It’s no question that the mortgage industry any case, it is no mystery what makes is in a state of transition. To overcome the paper so difficult to manage. obstacles and survive market turmoil, Loans consist of multi-page documents lenders must face the realities of the market and forms—such as applications, earnings and evolve their processes to become as effi- verifications, statements, tax forms, credit cient and cost-effective as possible. In recent reports, appraisals and contracts—that years, an increasing number need to be prepared, of mortgage companies accepted and processed. As have committed to going this process occurs, paper “paperless.” Companies are piles up—filling cabinet moving toward paperless space, requiring additional offices at different speeds postage fees and taking a and are often working with toll on the environment. In a combination of paper, the end, traditional paper imaged and electronic doculoan folders can generate ments—or “P.I.e.” an excess of $100 each to By having a holistic view maintain for just two years. of the entire mortgage loan Even worse, as the loan process and a better undermatures, even more costs standing of each component “According to a recent can mount with archiving of the P.I.e, organizations and retention fees. survey of mortgage can streamline processes As lenders continue to lenders conducted by and ensure their outsourced become aware of the Xerox Mortgage partners will meet the increased costs associated demanding needs of the cur- Services, 31 percent of with paper, they realize the survey participants rent market environment need to reduce the paper and make their operations believe it will take less portion of the P.I.e. In an than five years for the effort to do so, organizaas efficient as possible. mortgage industry to tions are leveraging online Paper process more than 50 collaborative technologies The mortgage industry percent of all loans as to share loan information. has long recognized that an e-mortgage.” mounds of paper fill Imaging offices and overflow On-demand imaging servdesks. These paper files are, at times, ices and capabilities can be used in a necessitated by government regula- variety of ways to evolve organizations tions, such as the Electronic Signatures to a “paper-free” office environment. in Global and National Commerce (E- From origination to post-closing, files SIGN) Act. At other times, they are can be quickly and easily shared online required by lenders who have not yet to drive efficiency, increase productivity evolved to paperless processes and rely and reduce costs. on hard copy files to get work done. In Once paper files are received, organiza-

tions can image or scan the files into an electronic loan folder, or they can outsource this step to a third-party vendor that can also extract relevant, necessary data from the files. Once the data is extracted, lenders can manage the imaged files in a more organized fashion further increasing efficiency. In addition, online imaging capabilities enable a collaborative, all-access view of the loan files where other mortgage loan constituents can quickly review and accept documents, thereby improving turnaround. A recent imaging technology being used by the mortgage industry is the DataGlyph, which is very similar to a barcode tag. By using a sophisticated tag, placed on the first page of the paper stack that is scanned into an electronic loan folder, files can be indexed quickly and automatically. For example, Wisconsin Mortgage Corporation is using this new technology as a way to reduce labor and paper costs. The tags can store important data and offer redundancy when damaged or tampered. They also ensure the document is stored in the proper location within the electronic folders so Wisconsin Mortgage can upload documents without the use of a scan cover sheet.

Electronic documents As the final piece of the P.I.e, a true electronic mortgage (or e-mortgage) would require that the loan files are never signed on paper. From the outset of the loan process, with the initial application, to the final step of sending the loan folder for archiving, files are living documents within the electronic loan folder. With a true e-mortgage solution, files within a loan document can be tagged with meta data, which enables system comparisons and greatly reduces costly processes of comparing image docs to data systems. E-mortgages more securely complete loan transactions, thereby protecting consumers’ personal financial information, in accordance to federal regulations. With today’s collaborative loan processing technologies, security measures have been put in place to guarantee financial data remains confidential and safe. For example, some e-mortgage technology providers offer a secure, personal electronic signing room for loan documents to be signed. Rather than a typical disclosure or closing process where borrowers sign a significant amount of paperwork to finalize the loan, an electronic signing room enables them to view the files electronically in the closing room and sign with an electronic signature. By providing each individual party with unique authentication credentials, these e-mortgage technologies can lock down documents and track changes while ensuring only designated parties are able to view and sign the documents.

Get your piece of the P.I.e According to a recent survey of mortgage

lenders conducted by Xerox Mortgage Services, 31 percent of survey participants believe it will take less than five years for the mortgage industry to process more than 50 percent of all loans as an e-mortgage. Another 44 percent believe it will take five to seven years. These survey results confirm that the market is striving for a paperless solution to improve efficiencies and reduce costs. Until the mortgage industry is ready to go completely paper free, which, due to regulations, may not be for some time, “paper light” loan processing can be achieved by using various components of the P.I.e. Imaging and scanning technology that transforms hard copy files into electronic documents allows documents to be instantly circulated to necessary parties to streamline processes and turn loans faster. Guild Mortgage Company, headquartered in San Diego, Calif., is one organization that has already taken the emortgage leap, beginning the process of a secure, convenient way to deliver, sign, store, access and manage the lifecycle of its loan documents. The solution is targeted at helping Guild decrease costs associated with storing, printing and mailing hard copy loan documents and has increased pullthrough rates. The e-mortgage process also allows Guild to comply with the Real Estate Settlement Producers Act (RESPA) that mandates the tracking and management of disclosure documents within 72 hours.

Make your checklist Lenders already working with the P.I.e, or those considering advancing their organization through new technology purchases, need to consider their technology roadmap when selecting a vendor. Companies can easily create a checklist of requirements that should include support for future paperless strategies, such as e-mortgages, e-signature and e-vaults. Solutions must be flexible to incorporate other pieces of the P.I.e, such as imaging and DataGlyphs. With these requirements in hand, an organization can be prepared to make a long-term decision on its vendor partners. By understanding the components of the P.I.e, an organization can focus on its next steps for going paperless—without being overwhelmed with the need to move straight from traditional loan processing to pure electronic loan processing. As they say, “the pie is ready.” Greg Smith is vice president and general manager for Xerox Mortgage Services, formerly Advectis Inc., provider of BlitzDocs, a widely-used solution for electronic mortgage document collaboration. He can be reached at or visit

new to market

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lowest fees, appraisers in Ohio were represented disproportionately, with 18 of the bottom 50 slots being taken by counties in the state. Four nearby states—Pennsylvania, Kentucky, Illinois, and Wisconsin—also had three to four counties each in the bottom 50. The East North Central census division, comprising Illinois, Indiana, Michigan, Ohio, and Wisconsin, ranked at the very bottom of the nine divisions nationally, with a median fee of $300. The Pacific division was most healthy overall for appraisers, with a median of $400. When looking at the larger census regions, the West and South fared best for appraisers with median fees of $375 and $350, respectively. The Midwest and Northeast did more poorly, with both showing medians of $325. Nationwide, the median observed appraisal fee was $350, with an average of $351. For more information, visit

Stewart Lender Services now offering short sale and deed-in-lieu services

DocuSign launches Version 10.1 SaaS eSignature Service with iPhone functionality

New income verification services from LPS Applied Analytics added to the RealEC Exchange RealEC Technologies Inc., a provider of collaborative network solutions to the

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O APRIL 2010


DocuSign has announced the release of the DocuSign version 10.1, the latest release of the company’s e-signature service. This version offers unique features and functionality designed to support workflow and productivity including automation of form fields and other workflow enhancements to simplify the user experience. This feature set is further extended through the release of ESIGNControl, a custom DocuSign application specifically designed for Apple iPhone users by Smart Mobile Solutions. DocuSign, combined with ESIGNControl, supercharges sales teams, real estate professionals, mortgage brokers, and business development and operational professionals who rely on the DocuSign e-signature service to close deals online in minutes. Gartner predicts that worldwide Software-as-a-Service (SaaS) revenue will exceed $14 billion for the enterprise application markets by 2013, up from $7.5 billion in 2009. Organizations of all sizes are deploying affordable, on-demand solutions like DocuSign to automate core business functions, reduce costs and increase employee productivity. Whether it’s a simple NDA or a complex global sales agreement requiring multi-party signatures, DocuSign helps companies operate greener, faster and more profitably by removing the hurdles associated with the signing process and by offering more ways for users to access and complete their transactions online. “This release of DocuSign version 10.1 adds more sophisticated capabilities that make it faster and easier than ever to get documents signed online, and to share data with other core business applications,” said Tom Gonser, founder and vice president of product strategy at DocuSign. “DocuSign is creating an e-signature ecosystem that makes it possible for organizations across all industries to close deals in the cloud and operate more efficiently.” “The iPhone is quickly becoming a must-have business productivity tool and

mortgage industry, has announced the addition of new income verification services to its RealEC Collaborative Partner Network (CPN), the RealEC Exchange. The income verification suite, provided by Lender Processing Services’ (LPS) Applied Analytics group, enables lenders to validate a borrower’s identity and verify the accuracy of income information provided during the application process. The borrower’s income is confirmed directly with the Internal Revenue Service (IRS) by uploading the signed IRS 4506T form (Request for Transcript of Tax Return) electronically through the RealEC interface. LPS Applied Analytics then securely delivers a report from the IRS. The integration into RealEC will continue to advance efficiencies and delivery timelines within the income and identity verification process. “Lenders are facing all sorts of challenges today with increased regulations, growing fraud and changing best practices,” said Ted Jadlos, senior managing director of LPS Applied Analytics. “We make it easy to verify identity and income—a necessity before funding a loan. Now, it’s even easier to access these solutions via the RealEC platform, the leading collaborative vendor platform to access origination services.” “Income verification services have O

Stewart Lender Services (SLS), a wholly-owned subsidiary of Stewart Title Company, has announced a comprehensive solution to help mortgage servicers meet the requirements of the Home Affordable Foreclosure Alternatives (HAFA) program. HAFA provides additional options and incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu to avoid costly foreclosures. “SLS is an industry leader—offering mortgage servicers an effective alternative to costly in-house processing,” said Jason Nadeau, SLS president and chief executive officer. “Our Home Retention Services group has now developed a solution for mortgage servicers seeking an efficient means for complying with HAFA requirements. Using an experienced and proven FDCPA-compliant Borrower Contact Center and fully integrated workflows, we can handle properties throughout the distressed asset continuum—loan modification, short sale, deed-in-lieu, foreclosure, asset management and disposition—improving communication among all parties and accelerating transaction completion.” Borrowers can transition from the failed loan modification to a short sale option, and further on to a deed-in-lieu of foreclosure in the event the short sale is unsuccessful. To compress the time for completing a short sale, or implementing a deedin-lieu, SLS title and settlement teams work up front to identify any potential title issues and necessary third-party payoffs to immediately begin curative title work. This assists in investor and

mortgage insurance negotiations and ensures that hurdles in the transaction are cleared prior to the receipt of an offer to purchase the property or transfer of deed. The SLS Short Sale Management Center combines experienced professionals and proven technology to improve the speed and effectiveness of short sale transactions. The Center relieves servicers of the time-consuming, labor-intensive short sale process, moving it into the hands of an experienced real estate transaction management company. For more information, visit

ESIGNControl makes it easy for DocuSign clients to maximize efficiencies when away from the office,” said Tony Tonchev, founder of Smart Mobile Computing and creator of the ESIGNControl application. “ESIGNControl was developed for the iPhone and thoroughly tested for performance. This new application offers a fast, convenient and mobile method to use DocuSign from any iPhone.” ESIGNControl is a DocuSign transaction remote control that lets users manage documents sent for e-signature from any iPhone. ESIGNControl offers a rich feature set that makes it fast and easy for DocuSign users to: Send a document for signature straight from your iPhone; view, track and access sent documents; send, revise and resend documents for eSignature; access document signing status, envelope details, archived documents and history; share graphical reports that even shows transaction times; electronically sign a document from anywhere, anytime; and remotely log in to the DocuSign Console. For more information, visit or





Eight Reasons Why E-mail Marketing Works for Mortgage Brokers

sage. Opening e-mail is the activity your customers and prospects are engaged in when they see your message. If you’ve done a good job of building that relationship, they’ll actually look forward to seeing what you have to say.

By Wendy Lowe

E-mail marketing works. According to the DMA’s research, e-mail marketing generated a return on investment of $43.62 for every dollar spent on it in 2009. You’re unlikely to find that kind of ROI (return on investment) out of any other form of marketing or advertising. That, of course, is the best reason of all to launch an e-mail marketing campaign.

Mention e-mail marketing to fellow E-mail marketing is targeted. mortgage brokers and you may find Most forms of advertising are based upon that many are still hesitant to move the concept that, if you hit thousands of away from their tried and true snail people with your message, even though it mail methods. Others, however, are means nothing to most of them, a few are rapidly discovering that e-mail market- likely to respond. E-mail marketing, ing is just about one of the most effec- though, is based on the idea of sending the right message directly to the right peotive means of generating business. ple based on their preferWant proof? When ences, local market surveyed retailers tions and other factors. You for their “State of Retailing can build one master list, Online 2009” report, they and then segment it by geofound that e-mail was the graphic location, marital most-mentioned successful status, gender, age, income, tactic overall. The Ad seasonality, etc. It elimiEffectiveness Survey, comnates a lot of the guesswork missioned by Forbes Media that makes other forms of in February/March 2009, marketing so inefficient placed e-mail marketing and ineffective. second only to SEO (search engine optimization) for “And unlike paperE-mail marketing progenerating conversions. based mail or door vides data. And, research conducted in 2009 by the Direct hangers, e-mail gives If you’re using an e-mail Marketing Association (DMA) them the opportunity marketing application or demonstrated that e-mail to contact you direct- service designed for small business, you can run outperforms all other forms ly to get a quote or reports that show which eof direct marketing. more information by mails or messages worked, The bigger question, of simply clicking a as well as which didn’t, so course, is why? Out of all mouse.” you can improve upon the hundreds or even your next campaign. You thousands, of messages consumers are exposed to each day, can even run split tests, sending one offer or message to half your list and a differwhy is e-mail marketing so effective? There are several reasons, and mort- ent one to the other half, so you can get a gage businesses who embrace these better feel for exactly what makes cusprinciples will quickly find themselves tomers and prospects buy from you. with more customer relationships. Those buyers are likely to remember E-mail marketing allows you to engage. you as they narrow the field of choices It’s nice to get the immediate reaction from a buyer who sees your e-mail just for mortgage origination. as he or she decides to make an offer on a property. But, your real goal is to build E-mail marketing has a broad reach. It’s tough to find anyone who doesn’t a relationship with a broader base of have at least one e-mail address these prospects so they think of you whenever days, which means you can reach out to it’s time for them to refinance or considyour entire customer and/or prospect er mortgage services. E-mail marketing base. Just be sure to get their permis- allows you to do that by bringing them sion first by asking if you can add them community and market news, current rates, timely tips (such as how to comto your mailing list. pare debt instruments), and more on a regular basis. It’s a great way to engage E-mail marketing is proactive. Many mortgage professionals—espe- them and keep them engaged. cially those running a small business— start promoting their services by taking E-mail marketing has a low cost of entry. out ads in a phone directory, a real Most forms of advertising or marketing estate guide, a local community news- require a big upfront investment before paper, a billboard or by sending direct you see any results. That can get expenmail and placing door hangers. The sive for a mortgage broker trying to problem is your customers and keep expenses down. E-mail marketing prospects have to stumble across the has very little upfront cost, allowing ads in order to see them. E-mail mar- you to market effectively without havketing goes directly to a place they are ing to stop your core business work for already looking—their e-mail inbox. long periods to get it done. And unlike paper-based mail or door hangers, e-mail gives them the oppor- E-mail marketing is less intrusive. tunity to contact you directly to get a Unlike a lot of advertising, such as telequote or more information by simply marketing calls, e-mail marketing doesn’t interrupt a prior activity to deliver a mesclicking a mouse.

Done correctly, e-mail marketing allows you to become (and remain) visi-

new to market

ble to your customers and prospects with highly-targeted messages at a minimal cost … all while delivering outstanding, measurable results. Wendy Lowe is director of product marketing for Campaigner, an e-mail marketing solution that enables organizations to have personalized one-to-one e-mail dialogues with their customers, measure how they respond, and analyze those responses. Campaigner is provided by Protus, provider of Software-as-a-Service (SaaS) communication tools for small-to-medium businesses (SMB) and enterprise organizations, including my1voice virtual phone service and MyFax. She may be reached by e-mail at or visit

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become critical to lenders’ operations to enable effective underwriting, and to ensure that loan quality standards are met,” said Dan Sogorka, president of RealEC Technologies. “The addition of the LPS suite of income verification services to the RealEC platform and business model offers our clients the most efficient method of accessing these services available in the marketplace today.” For more information, visit or

New book from NAHB offers social media tips Builder Books, the publishing arm of the National Association of Home Builders (NAHB) has released a new resource for builders and residential construction professionals that will teach them how to use social media tools such as Facebook, Twitter and YouTube, to increase their visibility and improve their sales results. Social Media for Home Builders: It’s Easier Than You Think, a new book by Carol M. Flammer, CAPS, CSP, MIRM, demonstrates how builders and developers are effectively using two-way communication via the Internet and social media outlets to attract consumers, follow up on leads and improve customer service. This is the only book that speaks specifically to the needs of the real estate industry, and teaches home builders how to build a social media presence. The book is now in its second print-run and will also be available in electronic format on Kindle. In the book, Flammer outlines the power of social media through case studies and online outlets created specifically for the home building industry. The book is designed to help readers understand social media and construct a strategic plan for using it to attract new homebuyers. Readers learn how to use social media sites to: Build

a brand, engage new and existing consumers, manage online reputation and how to sell more homes. “With the recent explosion of social media on the scene, this new book by Carol Flammer is a timely resource, offering those in the building industry an excellent introduction into the world of social media,” said NAHB Chairman Bob Jones. “This guide walks readers through the different online resources, teaching them how to use these tools to increase the visibility of their own businesses.” Flammer is a public relations and social media marketing expert, strategist and consultant. With 20 years of experience, Carol has established herself as an expert on real estate and construction products public relations and social media. Carol is the founder of the online Atlanta Real Estate Forum, president of Flammer Relations Inc., and managing partner of mRELEVANCE LLC, an Internet marketing, social media and public relations firm with offices in Atlanta and Chicago. For more information, visit

Equator launches PRO REO Equator, a provider of software to the default servicing industry has announced the launch of its new professional real estate-owned (REO) solution. PRO REO encompasses all the power and best practices of Equator’s enterprise REO application in an affordable, quick and easy to adopt solution. Equator has long been the standard for many of the nation’s largest lenders and servicers. “Now Outsourcers and Servicers can be up and running in less than a day,” said Chris Saitta, chief executive officer of Equator. “They receive all the benefits of our best-practices along with the ability to immediately transact with over 665,000 agents and 18,000 vendors electronically.”

Foreclosure moratoriums have lifted and the REO industry is preparing for increased volumes. “Many of the Sellers adopting PRO REO are converting from existing systems to gain the efficiency and scalability they’ll need to handle post moratorium REO volumes,” said Saitta. Sellers also gain the potential to establish Midsourcer relationships with the large lenders and servicers using Equator. More than 58 servicers nationwide, including seven of the top 10, rely daily on Equator’s platform to automate their various loss mitigation strategies. By launching REO PRO, Equator has made definite in roads into the middle market. For more information, visit launches next generation platform has announced the launch of their “Next Generation BPO (V3)” platform, capable of evaluating data quickly through the use of progressive technology and current local market information. For nearly two decades, has delivered critical valuation data with industryleading broker price opinions (BPOs) and appraisals. is focused on supporting client decisions by providing accurate and reliable information. The (V3) platform represents a shift in philosophy behind information systems of its type, focusing on data analysis, rather than data capture and delivery.

“At, using the latest technology means designing, building, growing, and maintaining a state of the art valuation platform,” said Walt Coats, president of “Our software automatically evaluates and scores all comp sale and listing data provided by the broker. It was designed to analyze the data for accuracy and/or fraud, and to provide immediate feedback for brokers and analysts.” Phase II (V3) is expected to launch in the second quarter of 2010. Scheduled enhancements developed in house by will access local market data and incorporate it into both new and existing products. Clients will be able to gain valuable insight into local markets and make better, more informed business decisions, adding to increased profitability. For more information, visit





Plus Postage & Handling

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.

Mortgage Revolution in San Francisco on Thursday, May 6 and Friday, May 7, 2010. We're featuring a first rate education from over 20 speakers on a variety of hot topics - all in a "spam-free" environment.

This is an event being hosted for mortgage professionals by mortgage professionals. We feel that now, more than ever, we need to come together as an industry.

Just The Facts: Where: Hyatt Regency SFO – San Franciso, CA When: May 6-7, 2010 Price: $199 (special 10% discount for National Mortgage Professional Magazine readers using code NMP)

(remember, save 10% with discount code NMP) Would you like to lend a hand to the Revolution? If so, please email us at or volunteer online.

“When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu has set down an impressive amount of information ... And he delivers it in an easy-to-read, simple-to-understand style that will make this book essential reading for all reverse mortgage professionals.” —from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom Senior Funding Corporation, and former four-term Co-Chair of NRMLA’s Board of Directors “The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and acceptance of reverse mortgages among us laypeople. They are very compelling ...” —Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends of the Elderly “This book should be required reading for all new loan consultants originating reverse mortgages and is recommended for experienced ones as well. This book provides excellent insight and information on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan process and shorten the time to closing. Most of the problems caused in the processing and closing of reverse mortgages come from inadequate preparation.” —Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company

O APRIL 2010

Learn more and register at

“Atare Agbamu is one of only a handful of people in the reverse mortgage arena who possesses a commanding understanding of the reverse mortgage industry. As an originator, he has hands-on experience educating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing the unique insights and experience of an ardent reverse mortgage expert into a wider business context. “This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information on marketing and originating reverse mortgages. “Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skillfully woven into this book. If you plan to succeed in this industry, this book is the place to start.” —Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLA’s Board of Directors


The kicker - we're donating all profits to charity. Our goal for Mortgage Revolution San Francisco... $70,000.

Part I: The new pillar of retirement security Part II: Marketing reverse mortgages: It’s all about education Part III: Originating reverse mortgages Part IV: Enhancing freedom: The essence of reverse mortgages Part V: A new frontier in mortgage lending O

Come network and learn at

Think Reverse! Table of Contents


APRIL 2010 O

MAY 2010 Monday-Thursday, May 3-6 Tennessee Association of Mortgage Professionals 2010 Convention & Trade Show, “Tried, Tested & True” The Hotel Preston 733 Briley Parkway Nashville For more information, call (615) 3020001 or visit

Sunday-Wednesday, April 25-28 Mortgage Bankers Association National Technology in Mortgage Banking Conference & Expo Hyatt Regency Chicago 151 East Wackler Drive • Chicago For more information, call (800) 793-6222 or visit

Wednesday, May 12 Florida Association of Mortgage Professionals 25th Annual Trade Show “Turning Up the Heat” Don Shula’s Hotel & Golf Club 6842 Main Street Miami Lakes, Fla. For more information, call (305) 3925414 or visit




Abacus Mortgage Training and Education .......... ......................................6 & 17 ACC Mortgage .................................................. ....................................23 Calyx Software ................................................ ........................................16 Comergence Compliance Monitoring, LLC .......... ....................19 Elliott and Company Appraisers, Inc................... ..............................................32 Emigrant Mortgage Company ............................ ................................32 Entitle Direct Group.......................................... ..................Inside Front Cover .................................... ..............................WA4 First Source Capital Mortgage, Inc. .................... ..........................................16 Flagstar Wholesale Lending .............................. ......................Back Cover Franklin First Financial .................................... ............................33 Freedom Mortgage .......................................... ......................Inside Back Cover Frost Mortgage Banking Group .......................... ..............................................25 Gateway Mortgage Group, LLC .......................... ........................................30 Guaranteed Home Mortgage.............................. ....................................31 HTDI Financial ................................................ ........................................26 Mortgage Concepts .......................................... ........................13 Mortgage Revolution ........................................ ....................................................43 ..................................43 NAMB.............................................................. ....................................WA3, 22 & 30 NAPMW .......................................................... ..................................................35 Platinum Credit Services, Inc............................. ............5, 7, 9 & 11 Presidents First Mortgage Bankers .................... ......................................21 Quality Mortgage Services ................................ ..................................27 & 32 REMN (Real Estate Mortgage Network)................ ....................................29 Ridgewood Savings Bank .................................. ....................................20 Titan Lists ....................................................................................................................................15 United Northern Mortgage Bankers Ltd. ............ ............................ 14 & 37 Wells Fargo Home Mortgage.............................. ............................................24 Xetus Mortgage Corporation.............................. ....................................................13

Sunday-Wednesday, May 23-26 Mortgage Bankers Association National Secondary Market Conference & Expo 2010 Hilton New York 1335 Avenue of the Americas New York, N.Y. For more information, call (202) 557-2790 or visit JUNE 2010 Monday-Wednesday, June 14-16 CRE Finance Council 2010 Annual Convention The Waldorf-Astoria 301 Park Avenue (50th Street) New York, N.Y. For more information, call (212) 509-1844 or visit Thursday-Friday, June 24-25 National Association of Mortgage Brokers 2010 Mid-Year Meeting Phoenix Airport Marriott 1101 North 44th Street Phoenix, Ariz. For more information, call (703) 342-5900 or visit JULY 2010 Wednesday-Saturday, July 7-10 Florida Association of Mortgage Professionals 50th Anniversary Annual Convention & Trade Show “From FAMB to FAMP … 50 Golden Years” Rosen Shingle Creek 9939 Universal Boulevard Orlando For more information, call (850) 9426411 or visit AUGUST 2010 Wednesday-Friday, August 18-20 California Association of Mortgage Brokers 2010 Annual Convention & Grand Exposition Hyatt Regency Long Beach 200 South Pine Avenue Long Beach Convention Center 300 East Ocean Boulevard Long Beach, Calif. For more information, call (916) 4488236 or visit

OCTOBER 2010 Thursday-Friday, October 14-15 Kentucky Association of Mortgage Professionals 2010 Annual Convention Location to be determined For more information, call (270) 929-2836 or visit Tuesday-Wednesday, October 19-20 Utah Association of Mortgage Brokers 2010 Annual Expo Location to be determined For more information, call (801) 787-6611 or visit Sunday-Wednesday, October 24-27 Mortgage Bankers Association 97th Annual Convention & Expo Atlanta Georgia Congress Center 285 Andrew Young International Boulevard NW Atlanta For more information, call (800) 793-6222 or visit APRIL 2011 Sunday-Wednesday, April 3-6 2011 National Association of Mortgage Brokers 2011 Legislative & Regulatory Conference Hyatt Regency Washington on Capitol Hill 400 New Jersey Avenue NW Washington, D.C. For more information, call (703) 342-5900 or visit





APRIL 2010 Sunday-Monday, April 18-19 North Carolina Association of Mortgage Professionals 2010 Annual Conference The Pinehurst Resort & Spa 80 Carolina Vista Drive Village of Pinehurst, N.C. For more information, call (919) 783-0767 or visit

Monday-Tuesday, September 21-22 Illinois Association of Mortgage Professionals 21st Annual Fall Conference Location to be determined For more information, call (630) 916-7720 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

Sunday-Wednesday, May 23-26 Mortgage Bankers Association Commercial/Multifamily Servicing and Technology Conference 2010 Sheraton New York Hotel & Towers 811 7th Avenue New York, N.Y. For more information, call (202) 557-2790 or visit

SEPTEMBER 2010 Thursday, September 16 Iowa Association of Mortgage Brokers 2010 Annual Convention White Oak Vineyards 15065 Northeast White Oak DriveCambridge, Iowa For more information, call (515) 210-4675 or visit


Thursday-Sunday, May 13-16 National Association of Professional Mortgage Women’s 46th National Education Conference & Annual Meeting Marriott South Austin 4415 South IH-35 Austin, Texas For more information, call (800) 8273034 or visit