O APRIL 2012
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WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE NationalMortgageProfessional.com O
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National Mortgage Professional Magazine
TABLE OF CONTENTS
Volume 4, Number 4
America’s Choice Home Loans .......................... www.achlonline.com ............................................29 Best Rate Referrals, LLC .................................... www.harpmortgageleads.com ................................5 Calyx Software ................................................ www.calyxsoftware.com ......................................20 CBC National Bank .......................................... www.cbconnex.com ............................................25 Document Systems, Inc./DocMagic .................... www.docmagic.com ............................................11
A Special Look at “Leadership” The New Age of Leadership By Daniel Milstein ........................36 Vision, Integrity, Inspiration: The Foundations of Strong Leadership By John M. Robbins, CMB ......................37 What Leadership is NOT By David Lykken ..............................38 Leadership: Igniting Extraordinary Results Through Passion, Purpose and Love By Hayes Barnard........................39 Five Keys to Effective Sales Leadership in a Post-Dodd-Frank World By Erik Janeczko ............................40 Are You a Manager or a Leader? By Dave Hershman ............41
Features Grow Your Business This Spring By Mary Beth Doyle ..............4 HUD Now Requires Many Credit Report Disputes Resolved By Terry W. Clemans ..................................................4 We Walk You Home: Purpose, Production and the Power of the Consumer Conduit By Rick Roque ......................8 The NAMB Perspective ......................................................12 NMP Mortgage Professional of the Month: Danny Nicolo, President & CEO of Meadowbrook Financial Mortgage Bankers ..............................................22
Elliott and Company Appraisers, Inc................... www.appraisalsanywhere.com ..............................20 Equity Loans LLC .............................................. www.equityloans.com ..........................................15 First Guaranty Mortgage Corp. .......................... www.fgmc.com ....................................................21 Freedom Mortgage .......................................... www.fmbranch.com ......................Inside Back Cover Frost Mortgage Lending Group .......................... www.frostmortgage.com/nmp ..............................18 Hometown Lenders .......................................... www.whotookmybacon.com ................................45 Icon Residential Lenders, LLC ............................ www.iconwholesale.com ..................10 & Back Cover Land Home Financial Services .......................... firstname.lastname@example.org ....................................40 Loyalty Express ................................................ www.loyaltyexpress.com ......................................20 Meadowbrook Financial Mortgage Bankers Corp..... www.mortgagesalesjob.com ..................................27 Menlo Park Funding ........................................ www.menloparkfunding.com ................................35 Mortgage Brokers Network Corp, Inc. ................ www.mortgagebrokersnetwork.com ......................16 NAPMW .......................................................... www.napmw.org ..................................................6 PB Financial Group Corp. .................................. www.pbfinancialgrp.com ......................................10 Polaris Home Funding Corp. (Branches).............. www.polarishfc.com/TimeForAChange ....................9 Polaris Home Funding Corp. (Wholesale) ............ www.polarishfc.com ............................................31 REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ......................................7 Ridgewood Savings Bank .................................. www.ridgewoodbank.com ....................................42 Shortsale Speedway.......................................... www.shortsalespeedway.com/freedemo ................19 Streetlinks LLC ................................................ email@example.com ..................Inside Front Cover
Survival of the Mortgage Broker By Al Crisanty ..........................26
TagQuest ........................................................ www.tagquest.com ..............................................17
The End of the Refinance Era By John Walsh ........................28 Regulatory Compliance Review: The CFPB’s Treatment of Confidentiality and Privilege By Jonathan Foxx ..................30 The Calm Before the Storm By Laurie Spira ............................32
Becoming and Involved Leader By George L. Duarte, MBA, CMC ......34 New Developments in the Foreclosure Crisis By Patrick M. Roberts Esq. ..........................................................35 Finding and Attracting Good Customers is All About Preparation ..........................................................................46 Top Five Things to Improve Your Existing Business By Leif Boyd ............................................................................50
Columns Heard on the Street ..............................................................6 NMP News Flash: April 2012 ..............................................16 NMP Mortgage Professional Resource Registry ..............52 NMP Calendar of Events ....................................................56
New to Market ....................................................................32
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USA Cares Mortgage Heroes: Douglas C. Rice of Fidelity First Home Mortgage By Beverly Frase ......................33
HARP 2.0: Direct Marketing Outlook By Raymond Bartreau ....24 The Elite Performer: Laser Focus By Andy W. Harris, CRMS ....26
April 2012 Volume 4 • Number 4
From The Publisher’s Desk A Message From NMP Media Corp. Publisher Joel M. Berman Leadership: A concept that goes beyond being just a manager
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 firstname.lastname@example.org Joel M. Berman Publisher (516) 409-5555, ext. 310 email@example.com Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 firstname.lastname@example.org Joey Arendt Art Director email@example.com Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 firstname.lastname@example.org Beverly Koondel National Account Executive (516) 409-5555, ext. 316 email@example.com Tara Cook Billing Coordinator (516) 409-5555, ext. 324 firstname.lastname@example.org ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail email@example.com. ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail firstname.lastname@example.org. 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 email@example.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Credit Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
Mr. Stone, who passed away in 2002 at the age of 100, emphasized using a ‘’positive mental attitude’‘ or PMA to make money, both for himself and for the millions of people who became his disciples through the self-help books and magazines he wrote, edited and published. A line is clearly drawn between a “manager” and a “leader.” A manager maintains the organization and runs the day-to-day repetitive functions with little passion to grow. On the other hand, a leader not only manages, but inspires the organization to grow and passionately seeks ways in which to inspire the team to both succeed and exceed their goals. The effective leader embraces the concept of PMA and starts off each day refreshed with a daily plan of action. Our featured editorial contributors for this month fit well into Mr. Stone’s vision of leaders. Despite the difficulties of our economy and the mortgage industry, each and every one of these authors looked for “that secret” to take adversity and turn it into success. As we look towards the future, each of us should look to build on the attributes of a leader. Managing loses its appeal in short time, while being a leader always gives you a chance to experiment and be creative and keeps you constantly replenished. Kicking things off this in our special leadership section is a piece by Daniel Milstein of Gold Star Financial, “The New Age of Leadership,” on page 36, where Daniel discusses the traits of what makes up a great leader in today’s mortgage marketplace. On page 37, John M. Robbins, CMB of Bexil American Mortgage and former president of the Mortgage Bankers Association (MBA), discusses the building blocks of what it takes to be a leader. David Lykken of Mortgage Banking Solutions, on page 38, takes a different approach and details some misconceptions about the role of a leader. On page 39, Hayes Barnard of Paramount Equity explains what he feels are the keys to leadership in his article, “Leadership: Igniting Extraordinary Results Through Passion, Purpose and Love.” On page 40, Erik Janeczko of Maximum Acceleration lists the five keys to being a successful leader in today’s mortgage market as measures such as the Dodd-Frank Act further regulate the industry. Wrapping up this section on page 41 is Dave Hershman’s article detailing the differences between the role of a “manager” and the role of a “leader.”
NMP’s Mortgage Professional of the Month … the butcher turned mortgage banker This month on page 22, we profile Danny Nicolo, president and chief executive officer of Meadowbrook Financial Mortgage Bankers. Danny’s story is one of hard work and dedication, as his career path and entry into the mortgage arena is quite a unique story as he got his start managing and working in his family’s Italian market. From there, Danny garnered the tools needed to grow his own mortgage brokerage business through referrals and word-of-mouth, eventually making the successful transition to becoming a mortgage banker.
The voice of a few leading an industry of thousands In addition to Danny Nicolo and our section on leadership, this month, we recap the very successful National Association of Mortgage Brokers (NAMB) 2012 Legislative & Regulatory Conference held last month in Washington, D.C. The voice of the mortgage professional was heard loud and clear on Capitol Hill, as the industry’s premier mortgage broker trade association met with their elected officials to convey the message of the mortgage community. Read all about it in this month’s installment of “The NAMB Perspective” beginning on page 12. Also on the topic of having the industry’s voice heard, George L. Duarte, MBA, CMC ties in the concepts of political advocacy and taking a leadership role in his article on page 34. George authored a bill, The Homeowners Retention Act of 2012, sharing his years of industry-related knowledge and addressing loans not covered by HARP 2.0—ARMs that are owned by other than Fannie Mae or Freddie Mac that are jumbos, monthly adjustable mortgages, Alt-A and sub-prime loans. George’s bill is under review by the lobbying team of the California Association of Realtors (CAR) and may be sponsored by CAR. George took the lead and realized that he can make a difference for an entire industry, as his single concept may have a positive impact on an entire industry should his bill come to light. I thank you again for taking the time to pick up this copy of National Mortgage Professional Magazine, either in print form or electronically, and hopefully, you come away from reading this issue with a multitude of ideas that can be positively implemented into your day-to-day business plans. Sincerely,
National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2012 NMP Media Corp.
Joel M. Berman, Publisher NMP Media Corp.
“Everyone who achieves success in a great venture, solves each problem as they came into it. They helped themselves. And they were helped through powers known and unknown to them at the time they set out on their voyage. They keep going regardless of the obstacles they met.”
In this month’s issue of National Mortgage Professional Magazine, we will focus on those in the mortgage industry who have the vision to lead. A leader is defined best by W. Clement Stone in his discussion about “The Secret” where he wrote:
The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 Plano, TX 75075 Phone #: (703) 342-5900 Fax #: (530) 484-2906 Web site: www.namb.org
P.O. Box 451718 Garland, TX 75042 Phone #: (800) 827-3034 Fax #: (469) 524-5121 Web site: www.napmw.org
NAMB 2011-2012 Board of Directors
National Board of Directors 2011-2012
OFFICERS President—Donald J. Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355 firstname.lastname@example.org Vice President—Donald Fader, CRMS SMC Home Finance P.O. Box 1376 Kinston, NC 28503-1376 (252) 523-5800 email@example.com Treasurer—John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road Fallston, MD 21047 (410) 557-6400 firstname.lastname@example.org Secretary—Olga Kucerak, CRMS Crown Lending 222 East Houston, Suite 1600 San Antonio, TX 78205 (210) 828-3384 email@example.com Past President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 firstname.lastname@example.org
DIRECTORS Rocke Andrews, CMC, CRMS Lending Arizona LLC 1996 North Kolb Tucson, AZ 85715 (520) 886-7283 email@example.com
Kay A. Cleland, CMC, CRMS KC Mortgage LLC 200 South Wilcox Street #224 Castle Rock, CO 80104 (720) 810-4917 firstname.lastname@example.org
Deb Killian, CRMS GMAC 246 Federal Road, Unit C-24 Brookfield, CT 06804 (203) 778-9999, ext. 103 email@example.com Linda McCoy Mortgage Team 1 Inc. 6336 Picadilly Square Drive Mobile, AL 36609 (251) 610-0494 firstname.lastname@example.org
Vice President-Eastern Region Christine Pollard (607) 656-5005 email@example.com
Senior Vice President Jill Kinsman (206) 344-7827 firstname.lastname@example.org
Secretary Katheryn M. Farrell (509) 528-0349 email@example.com
Vice President-Northwestern Region Nita Cook, GML, CME, CMI (360) 705-5053 firstname.lastname@example.org
Treasurer Jeanne Evans, CME (918) 431-0155 email@example.com
Vice President-Western Region Lyman King III, CME, CMI (916) 967-4653 firstname.lastname@example.org
Parliamentarian Hulene Bridgman-Works (800) 827-3034 email@example.com
National Credit Reporting Association Inc. 125 East Lake Street, Suite 200 Bloomingdale, IL 60108 Phone #: (630) 539-1525 Fax #: (630) 539-1526 Web site: www.ncrainc.org
2012 Board of Directors & Staff Donald J. Unger President (303) 670-7993, ext. 222 firstname.lastname@example.org Daphne Large Vice President & Treasurer (901) 259-5105 email@example.com Tom Conwell Ex-Officio & Legislative Chair (800) 445-4922, ext. 1010 firstname.lastname@example.org Nancy Fedich Director–Conference Chair (908) 813-8555, ext. 3010 email@example.com Judy Ryan Director-Strategic Alliance Chair (800) 929-3400, ext. 201 jryan@Kroll.com Susan Cataldo Director–Education & Compliance Chair (404) 303-8656, ext. 204 firstname.lastname@example.org
William Bower Director–Tenant Screening Chair (800) 288-4757 email@example.com Mike Brown Director–Technology Chair (800) 925-6691, ext. 4350 firstname.lastname@example.org Maureen Devine Director–Education & Compliance Co-Chair (413) 736-4511 email@example.com Renee Erickson Director–New Membership & Elections Chair (800) 311-1585, ext. 2101 firstname.lastname@example.org Terry Clemans Executive Director (630) 539-1525 email@example.com Jan Gerber Office Manager/Membership Services (630) 539-1525 firstname.lastname@example.org
John Stevens Bank of England d/b/a ENG Lending 11650 South State Street, Ste. 350 Draper, UT 84120 (801) 427-7111 email@example.com
President-Elect Candace Smith, CME (512) 329-9040 firstname.lastname@example.org
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Andy W. Harris, CRMS Vantage Mortgage Group 1596 SW Boones Ferry Road, Ste. 100 Lake Oswego, OR 97035 (503) 496-0431 email@example.com
Vice President-Central Region Lisa Puckett, CME (405) 741-5485 firstname.lastname@example.org
Fred Arnold, CMC American Family Funding 24961 The Old Road, Suite 101 Stevenson Ranch, CA 91381 (661) 284-1150 email@example.com
President Laurie Abshier, GML, CME, CMI (661) 283-1262 firstname.lastname@example.org
Grow Y Your o our Business This Spri i ng ing Spring by Mary Mar y Beth Doyle, Founder said d, â€˜It is only the farmer farmer who w faithfully B.C. Forbes once said,
HUD Now Requires Many Credit Report Disputes Resolved Does this infringe on consumer rights?
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By Terry W. Clemans
Effective April 1, 2012, Federal Housing Administration (FHA) loan credit reports must be free of most credit account disputes. One of the requirements of FHA Mortgagee Letter 2012-03 is that buyers must resolve any outstanding credit disputes of more than $1,000 on their credit report if that dispute is less than two years old. Consequently, paying down balances on disputed accounts and collections to drop the balance below $1,000 is not an acceptable resolution of accounts. Cases of identity theft (like disputes outstanding more than two years), will be exempt from the new rule. For all other credit disputes, borrowers will either have to pay the remaining balance on the account, or enter into a payment plan and make at least three payments. Payment plans will need to be documented and submitted to the FHA. Fannie Mae and Freddie Mac have had even tighter dispute resolution requirements for several years. These policies came about due to the positive impact to credit scores when a consumer enters a dispute on a derogatory account. Most credit scoring models remove disputed accounts from the credit score calculation, perhaps creating an artificially high score and exposing the lender to added risk. FHA stated they also found a correlation between credit disputes and mortgage defaults in their loan performance evaluations. With the statistical evidence on questionably higher scores and historical loan performance to support these policies, FHA joining the ranks of Fannie Mae and Freddie Mac seems logical. Do these policies, however, change the power balance in consumer business transactions? There are legitimate occurrences when a consumer needs to be able to dispute a bill when they did not pay for a product or service. If the product or service does not perform as advertised, and the merchant refuses to stand behind it, the final recourse available to the consumer is to dispute the account if it shows up on their credit report. These policies remove that final shot at redemption, and perhaps infringe upon consumer rights. The Fair Credit Reporting Act (FCRA) guarantees the consumer the right to dispute erroneous information on any account in their credit files. Once a consumer challenges that information, a notation to this effect must be made on the file, which triggers most credit-scoring systems to not factor the disputed account into the computation of the consumerâ€™s score. By demanding that all disputes be resolved, merchants have been given additional leverage when dealing with consumers to make sure payment has been received. While this is not an issue for most merchants, some may take advantage of the new leverage. When Fannie Mae and Freddie Mac created these policies years ago, Evan Hendricks, author of the book, Credit Scores and Credit Reports and publisher of Privacy Times, wrote about Fannie Maeâ€™s policy, calling it, â€œExtremely unfair to honest consumers who are simply doing what they shouldâ€”challenging misinformation.â€? Unfortunately, too many credit repair firms use this tactic to rip off consumers, and the lenders who have made bad loans from data skewed by consumers disputing everything negative on the credit report. And of course, as all too often occursâ€”a tool to help consumers with legitimate problems gets lost. Terry W. Clemans is executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail email@example.com.
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First Guaranty Mortgage Partners With NAREB on Homeowner’s Assurance Program
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First Guaranty Mortgage Corporation (FGMC) will participate in the Homeowner’s Assurance Program (HAP), a non-profit partnership created by the National Association of Real Estate Brokers (NAREB) to address the impact of the mortgage crisis in a number of urban communities nationwide. The effort will revolve around the investment in and resale of real estateowned (REO) properties and non-performing loans in targeted communities. HAP participants will collaborate to acquire, manage, market, and dispose of non-performing loans and REO properties, primarily in 25 urban MSAs and first ring communities across the country. HAP will provide asset oversight and governance as well as political and social capital management. They will also spearhead efforts in strategic direction, community mobilization, and industry partnerships. The initiative will be fulfilled through the “Boots on the Ground” project, which will put NAREB Realtists in direct contact with distressed homeowners and first time homebuyers who have been locked out of the home buying process, to advance the loss mitigation effort. FGMC will be the preferred lender on all new mortgages originated through the program for homebuyers referred by NAREB. It will also provide financing options, such as 203k renovation lending, to facilitate REO sales. “HAP is a promising and practical approach to a national nightmare,” said James Cromartie, FGMC AVP of national business development. “We are offering a 360 degree solution designed to create sustainable homeownership. HAP will address social and economic barriers to homeownership and help rebuild communities, mitigating the deep costs of the crisis, while restoring dignity and empathy to a huge number of borrowers.”
Lenders Compliance Group Partners With The Bernard Law Group Lenders Compliance Group Inc. (LCG), a nationwide risk management firm, and The Bernard Law Group have announced a strategic
alliance to offer mortgage risk management guidance to the mortgage industry. The two firms will build on existing tools, processes, risk assessments, and resources to provide a “best practices” approach to residential mortgage compliance. Both firms offer regulatory guidance to members of the real estate and banking industries. LCG provides a suite of services for all areas of mortgage banking, such as loan audit analytics, mortgage compliance guidance, loan origination channel and product development, mortgage quality control (QC), legal reviews and remedies, government-sponsored enterprise (GSE) applications, due diligence reviews, and banking, Consumer Financial Protection Bureau (CFPB) and FinCEN exam readiness. Wendy Bernard Esq., named partner of The Bernard Law Group, has accepted the position of director of legal and regulatory compliance at LCG, and will work with the firm’s clients on their residential mortgage compliance needs. “Wendy Bernard has distinguished herself as an accomplished compliance professional and regulatory counsel,” said Jonathan Foxx, president and managing director of LCG. “Her deep involvement in nearly all aspects of the mortgage industry has given her a special perspective on its compliance needs. Wendy brings a unique blend of mortgage banking and mortgage brokerage experience. By becoming a director of Lenders Compliance Group, she joins our other directors and subject matter experts in support of a ‘best practices’ approach for our clients.” Bernard has unique qualifications as a compliance attorney, as she has worked in the trenches of the mortgage and banking industry for more than 10 years. Her diverse experience and range of industry responsibilities include commercial lending specialist, loan closing specialist, vice president of QC and post-closing compliance relating to the secondary market transactions and securitization. She has served not only as in-house counsel for several regional mortgage bankers and mortgage brokers, but also as a VP of compliance and secondary markets. “It is clear that Lenders Compliance Group provides a wealth of information and unprecedented access to mortgage risk management support within the mortgage banking and mortgage bro-
kerage industries,” said Bernard. “In my view, this strategic alliance between The Bernard Law Group and Lenders Compliance Group ensures that our respective clients are well-versed and represented, with respect to all regulatory compliance issues affecting their businesses. I am excited to bring together our resources and provide ‘best practices’ compliance solutions to strengthen our clients and the industry.” The Bernard Law Group advises clients concerning regulatory compliance, establishing comprehensive framework and execution plans for expansion, recruiting, mergers and acquisitions, licensing, state and Federal law, and the vast array of administrative regulations that impact consumer lending operations. In addition to Bernard’s law practice, she is a board member and organization counsel for the Connecticut Association of Mortgage Brokers (CTAMB); she teaches national and state mandatory continuing legal education as required for professional mortgage loan originators under the SAFE Act; and, she is an adjunct professor of law at Post University in Waterbury, Conn. Bernard has received a Bronze Star Medal for performance of duty in a combat zone and is a 17 year veteran of the United States Army Reserve Judge Advocate Generals Corp.
REMN Opens New California Office in Pleasanton
LPS Processes 34 MillionPlus Loans for 62 MSP Clients at Year-End Lender Processing Services Inc. (LPS) has announced that it has successfully completed year-end processing for its mortgage servicing clients
on Jan. 1, 2012. All month-end, quarterend and year-end processing for loans serviced using the MSP loan servicing platform was completed at the LPS Jacksonville Data Center early on New Year’s Day. LPS client groups service more mortgages by dollar volume with the MSP service than any other system. During this project, LPS processed and provided support for 62 clients on more than 34 million loans while maintaining standard system access to its loan servicing platform. “A well-executed, on-time year-end process is vitally important to our clients, given the rigorous internal and external reporting that is required of them,” said Dan Scheuble, chief operating officer for LPS. “Throughout 2011, we were also very
aggressive in designing and implementing new functionality to our core MSP servicing technology to help our clients address complex regulatory changes and to be more productive.” Mortgage servicers are required to report account information to mortgagors on an annual basis to meet IRS and other agency regulations. Year-end processing for LPS compiles the necessary loan information; generates exception and balancing reports; and creates the annual statements for the loans in each mortgage servicing client’s portfolio. Each year, this process is completed through a wide-ranging corporate project that involves employees from multiple departments. continued on page 10
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE APRIL 2012
Real Estate Mortgage Network Inc. (REMN) has announced the opening of its newest retail location in Pleasanton, Calif. Jackie James will be joining REMN in Pleasanton as the office’s first branch manager. An experienced mortgage professional, James was raised in nearby Fremont, Calif. and has nearly 30 years of experience in the lending industry. She has won multiple industry awards, is a member of both the Women’s Council of Realtors and the Bay East Association of Realtors. Active in the community, James was recently a member of the board of directors for the Valley Humane Society and currently volunteers with other local organizations. James will be joined by two other industry veterans, Carlyse Ford and Duane Lendahl. Both accomplished loan originators, Ford and Lendahl bring more than 50 years of combined lending industry experience to REMN’s first office in the San Francisco area. “Pleasanton is a vibrant community and not too long ago, was named one of the best places to live by CNNMoney.com,” said REMN Regional Vice President Cathy Stroud. “Simply put, it’s a great place to live. Regardless of if someone is buying a new home in the area, looking to refinance or interested in a 203(k) style loan to turn a fixer-upper into their Pleasanton dream home, the all-stars we have in this office are here to help.” REMN currently employs more than
600 throughout offices in California, Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina Tennessee and Vermont. In 2011 alone, REMN closed more than $2.3 billion in home loans, solidifying its position as one of the largest independent nonbank lenders in the U.S.
We Walk You Home Purpose, production and the power of the consumer conduit By Rick Roque
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
I’ve never closed a loan, but I get hundreds of loans closed. I don’t focus on individual units as I identify, attain and oversee a process that closes hundreds of units on a monthly basis. Do I knock on the doors of real estate agents? No. Do I cold-call consumers? No. In fact, the first generation of mortgage origination—let’s call this “Sales 1.0,” was point to point—rather, a Realtor-based relationship that was built on a local, trusted business arrangement built over time. This, I believe, is a dying breed or at least not a scalable and secure model for the future. I’m not suggesting that there are not arrangements that work where individual loan officers work closely with individual real estate agents to produce a consistent flow of business. But this isn’t the future of mortgage lending. The foundation for this is sociological, something that has happened over the last 10 years in how people relate, communicate and perceive one another … an evolution so to speak. Point to point relationships lack social value; there is no social dimension. One-tomany relationships are what drive businesses today. This article is not about social media, but it is about your stated purpose as a mortgage company and your ability to grow your production and capitalize on “mortgage conduits” to benefit from this evolution. Allow me to explain. The ability to structure your business to reach, monitor, communicate and sell your mortgage products to a target group (one to many) people is the key to future growth and success. It is not, however, as simple as broadcasting your message, that was Sales 2.0 and thrived with the dawn of the Internet, static Web pages and blogs. This was one-to-many communication, but it lacked a dynamic connection with the readers, there was no ability to measure the experience of the consumer, and lastly, there was no captured audience of people that you can retain, sustain and service over a period of time. That captured audience is the power of the consumer conduit and this is Sales 3.0 for mortgage lenders. There are three characteristics of Sales 3.0: Passion, Production and the Power of the consumer conduit. These
are all interrelated in that in order to grow your production, the passion behind your operation must be used to attract prospects from within your consumer conduits. A major obstacle to adoption of Sales 3.0 is that mortgage companies still don’t know who they are and what they do. It’s not as simple as saying they close and fund mortgages. Mortgage companies change lives, empower people, open new doors (literally and figuratively) and serve borrowers throughout the mortgage process. Some call this the “We Walk You Home” philosophy whereby a mortgage lender walks them through a vision and process that culminates in the emotional reality for consumers that they can enjoy the comforts of owning their own home. The key to success and retention of client relationships is in tapping into this basic human need through the comforts associated with homeownership. It is the downsizing family who sells a “home” through a short sale and seeks to find a smaller, more affordable home; it is a relocating family who needs to get settled into a new home so kids can get registered for school; it is the first-time homebuyer moving into their first home after renting and living a fairly transient lifestyle—in all of these cases, the process and emotional comfort associated with purchasing, moving and settling into a new home is immeasurably powerful. Your ability to provide the process and vision to a borrower, letting them know what to expect, how the mortgage process can be accomplished and what may be needed as they work toward the day they move in, is proportionate to your success. Your company needs that “We Walk You Home” philosophy, and it must be built into your company’s core vision and mission statement. So, does having this passion for helping people attain homeownership automatically give you the production you need? No. What it does do is give you something to sell. But to sell to whom? To achieve maximum success, you’ll sell this to conduits of consumers. What is remarkable about human beings, especially Americans, is that we are phenomenally social. We live in groups that form our identity. We are bound together by associations that tie people together because of their occupation, personal interests and even their race or ethnicity. This is the premise behind social networks, Facebook
Friends and Google Plus Circles; we no longer live in “networks” but we live in multi-dimensional “mesh-works” that reflect a three-dimensional component to our relationships, not just the nodal, “point-to-point” type relationships that the Internet was originally based upon. These tools have allowed us to create connection like never before. It is far easier today to discover the common interests and values we share with other people. These overlapping relationships and powerful associations are the basis for new consumer conduits that can become powerful sources of production once you connect your company’s stated mission or purpose to the similar values held by the members of a particular consumer conduit. Allow me to illustrate this further. My grandfather was superintendent of schools in Chicopee, Mass. He was heralded as one of the top superintendents in Massachusetts, having been a pioneer in distance education, labor relations, home schooling, racial integration and financial management of schools. Having served for 20 years (1945-1965) and built most of the schools that are still in operation, his presence is felt everywhere in the community of Chicopee, Mass. Even having passed away nearly 18 years ago and retired from the job nearly 50 years, “the great John L. Fitzpatrick” is still mentioned often in the halls of the schools and referenced in meetings in the central office of the superintendent. What does this have to do with mortgages and consumer conduits? If you are asking this question, you are stuck in Mortgage Sales 2.0 and you need to read on. The legacy of John L. Fitzpatrick—his passion for public schools, commitment to public school teachers and his ability to relate to all constituencies, especially parents’ committees and teachers unions, are all connected to my passion, why I am in the business and how I can serve these aforementioned consumer conduits. I am finishing my doctorate in education finance at American International College (AIC) and my ability to speak, work and support public education is part of my family heritage and central to my personal passion. As a result, I want to support public school teachers; I want to work with school unions; I want to support parents and I want to work closely with administrators, but as a mortgage professional who understands their profession and their needs.
“Your ability to provide the process and vision to a borrower, letting them know what to expect, how the mortgage process can be accomplished and what may be needed as they work toward the day they move in, is proportionate to your success.”
The ability for a mortgage firm to establish joint ventures with public schools, unions and districts is real and it represents a substantive opportunity to grow your business in a purposeful way that builds loyalty. For me, and many like me, this grows organically out of who I am, both individually and in terms of the company I am building. I’ve built relationships similar to this between mortgage firms and other consumer conduits, public education is just one of them. Before you start making phone calls to your school superintendent, you should realize that it doesn’t start there; it starts with your passion and purpose as a company. Each firm must state its purpose clearly and break down its mission into specific organizational outcomes in order to sustain a consistent consumer experience across all marketing and sales efforts. It is important to develop a new class of mortgage leadership from within your firm to articulate this with passion. Without this, any outreach will be hollow and of limited value. Your firm will be frustrated by the bureaucracy and the conduit—a school district in this case—will become suspicious of your intentions. Consumer groups don’t speak our language and they don’t trust us. Our reputation and brand as a profession has been wounded by the negative publicity in the media, much of it well-deserved due to the extent to which many people who worked in the industry took advantage of the system to drive production. We walk you home is an answer to that. So, what will define you is not what you are, but what you believe, and it is this sense of purpose that will drive your success with consumer conduits, and your production overall. Rick Roque is senior vice president of growth and strategy for PrimeSource Mortgage, the wholly-owned lending subsidiary of PSM Holdings Inc. He may be reached by phone at (408) 914-5895 or email Rroque@WeWalkYouHome.com.
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Ranieri Real Estate Partners and WL Ross Acquire Deutsche Bank Berkshire Mortgage
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Ranieri Real Estate Partners LP (RREP), a real estate financial services company, and private equity funds affiliated with WL Ross & Company LLC, has announced the completion of the acquisition of Deutsche Bank Berkshire Mortgage (DBBM), formerly a subsidiary of Deutsche Bank. Effective immediately, the company has been renamed Berkeley Point Capital (Berkeley Point). Jeffrey C. Day, who served as chief executive officer of DBBM and is an 11-year veteran with the company, and will serve as CEO of Berkeley Point. Berkeley Point originates multifamily loans for Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). It is the second largest originator of Fannie Mae loans and services a $29 billion multi-family loan portfolio. Founded in 1988, Berkeley Point has 175 employees and operates out of three primary offices: Bethesda, Md.; Boston and Irvine, Calif.; and has additional offices in Dallas, Los Angeles, Nashville and Seattle. “A high-quality acquisition of this scale within the multi-family sector is unique and rare. The new Berkeley Point provides us with an excellent inplace team, that we know well and is capable of much more,” said Jon Vaccaro, head of real estate at Ranieri Partners and founder of Ranieri Real Estate Partners. “With the benefit of the strong WL Ross and Ranieri partnership, we believe Berkeley Point is poised for growth.” James B. Lockhart III, vice chairman of WL Ross and former director of the Federal Housing Finance Agency (FHFA), said, “Berkeley Point did over $3 billion in multi-family originations last year. We look forward to working with Jeff and his strong team to help them grow in this critical part of our nation’s housing market.”
and COO of One Reverse Mortgage. “This success demands additional team members. We had 20 licensed bankers in 2007 and now have more than 130 with immediate plans to hire more. Our operations team has also grown from 16 team members in 2007 to more than 50 today. We expect to hire 20-30 additional team members this year.” ORM’s new space was designed and built to encourage creativity, communication, collaboration and motivation. One Reverse Mortgage’s culture is reflected in the bright colors, open spaces, low interior walls, and fun design combined with the latest stateof-the-art technology. “This new space accommodates our growth, which although aggressive, has been accomplished by maintaining our focus on high-quality client service,” said Richard Mandell, chief executive officer of One Reverse Mortgage. “Our licensed bankers are knowledgeable about reverse mortgages and are experienced working with seniors, which has allowed us to grow so rapidly.”
GSF Mortgage Expands Into Three Additional States GSF Mortgage has announced that it has opened three new branches in Indianapolis; Austin, Texas; and McLean, Va. “These branch openings reinforce GSF Mortgage’s commitment to providing exemplary customer service and expertise in helping individuals achieve homeownership,” GSF Mortgage Chief Operating Officer Chad Jampedro said. Jampedro added that he is pleased to have four seasoned professionals manage each of the new locations: Ronald Gardner and Nicole Lissade for the Indianapolis branch; Paula Brown for the Austin branch; and Judy Hines for the McLean branch. “We are thrilled to have them represent GSF Mortgage’s philosophy in building lasting relationships,” Jampedro said.
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has announced it has expanded and nearly doubled its headquarters to accommodate the company’s continued growth. ORM will occupy one floor and 14,000-plus sq. ft. in its new office, located at 9920 Pacific Heights Boulevard, Suite 350 in San Diego, Calif. One Reverse Mortgage was founded in 2001, operates in 48 states across the U.S. and is a Quicken Loans company. “One Reverse Mortgage is the fastestgrowing reverse mortgage company in the nation,” said Gregg Smith, president
ClosingCorp has announced a partnership with RamQuest to enable automated ordering capabilities for title and settlement services through the SmartGFE Calculator and RamQuest’s Closing Market. RamQuest, based in Plano, Texas, provides business solutions for title and settlement agents. Through the relationship, customers of ClosingCorp’s SmartGFE Calculator and continued on page 19
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The President’s Corner: April 2012
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Wow! What a great NAMB Legislative & Regulatory Conference we just held. The disappointing thing was that we only had 100 people show up, but boy, did they get their money’s worth. The morning panel discussion featuring the Mortgage Bankers Association (MBA), National Association of Realtors (NAR) and National Association of Home Builders (NAHB), along with NAMB Government Affairs Chairman John P. Hudson as the moderator, could have gone on for two more hours. All of our panelists were great. The luncheon was a great session as well, as we hosted Bart Shapiro from the Consumer Financial Protection Bureau (CFPB) as our guest speaker, and Allison Brown, also from the CFPB, as our afternoon speaker on loan originator (LO) examinations. I think the entire Government Affairs Committee did a fantastic job of putting together a very good group to help us understand some of the different things that we, as mortgage professionals, have been forced to cope with in these times. I had the pleasure to attend meetings at the U.S. Department of Veterans Affairs (VA) and at the Federal Housing Administration (FHA). I was captivated to find that we are very much looked upon as people who are able to give good, solid information that both of these agencies are interested in receiving. John Hudson will talk more about the Legislative Conference in his article to the right. He will provide a solid analysis of the event and dissect the endeavors of the trials and tribulations going through Congress today. We continue to work very hard in Washington, D.C. to get our message across. I have to admit that I was very happy to see that in almost all of my conversations with my congressmen and senators, and with most of you, that these guys are really starting to get it. They seem to have their hand on what is going on and what we are talking about. That is a direct reflection on all of you getting out there and talking to your legislators and giving them the
information required. Our grassroots efforts are again starting to work, but we have to keep it up and continue. Do not let up! By the time you see this article, you will know that we offered a Webinar to NAMB members only with the director of the CFPB, Richard Cordray. We have been working for nearly a month to get the date and time, and we finally were able to get an open time for him to be with us for an hour. I hope all of you were able to take advantage of this outstanding opportunity to listen to what he had to say and to participate with some of your questions. We plan on doing these Webinars each month with someone or on a topic that is current or has something that they can bring to us of importance in our everyday life as a mortgage professional. We are now beginning to accept nominations for the NAMB board of directors. If you personally know of someone that we should look at to be on the board, please visit NAMB.org and complete the paperwork to nominate them for a position. The most important part of this process is that the board needs people who are willing to work to get things completed. Most of the meetings are conducted via conference call, but there are three inperson meetings each year that you will need to attend. It also helps if you have a designation of the Certified Mortgage Consultant (CMC) or Certified Residential Mortgage Specialist (CRMS). This is because only two members can sit on the board as a director without these designations, which limits who is eligible. I would also like to know if you are interested in being a chair or co-chair of one of our committees, please contact me at email@example.com and let me know. I am putting together a list of all of those who are interested, so that I can begin putting together the committees for next year. Please, don’t be shy. We want volunteers and if you just want to be on a committee, let me know and I can work that out also. At the Legislative Conference, I promoted Andy W. Harris from Oregon to fill one of the open spots on the board. Andy is from Vantage Mortgage Group and has been an active supporter of the
association for a number of years. He has also been extremely active in his native state of Oregon, serving in many capacities, his latest as president of the Oregon Association of Mortgage Professionals (OAMP). I have also promoted John Stevens from Utah to complete the open board positions, as he came on board April 4. John has also been a past president of his state association, and for the past three years, has been chair and co-chair of NAMB/WEST. John will again chair the NAMB/WEST Conference this year. All of their contact information can be seen on the NAMB Web site, NAMB.org. In concluding this month’s column, I believe I should comment on the statement that I have on all of my e-mails concerning membership. Now I know that every article that is written by me or by someone else always brings out the membership question, “Why don’t you belong?” But in discussions with people, I began to think of something that had meaning. I came up with “MEMBERSHIP … BE YOUR PART OF IT!” I must admit that it is a little corny, but it is such a true statement. We cannot
be a successful association without you and your part of membership. I really don’t understand why people feel that $120 for a Platinum Membership or $50 for a Silver Membership is looked at as an astronomically high amount. I currently pay $320 per year to be an umpire. That is my dues, my membership into the umpires association, and every umpire does this because it is important enough to be a member and we are required to belong to an association because that makes us better umpires. So, maybe all of you that are not members should break down and join. What have you got to lose? NOTHING! In fact, you probably will be better-informed, better-trained and a little more knowledgeable about your profession. After all, it’s YOUR PART OF IT we are missing! Sincerely,
Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals
Mortgage Brokers’ Presence Felt in D.C. By John P. Hudson
Last month, mortgage professionals from across the country convened in Washington, D.C. to participate in the 2012 NAMB Legislative & Regulatory Conference. Not only did these industry volunteers learn the latest news on issues affecting their business, they passionately advocated on behalf of all mortgage professionals, small business and the preservation of consumer choice on Capitol Hill.
Recap On March 19, NAMB professionals got to hear first-hand from the Consumer
Financial Protection Bureau (CFPB) on how our new regulator works, what authority it has, and perhaps more importantly, what they will be looking for during the mortgage originator examination process. Additionally, NAMB members participated in a roundtable discussion with representative from the National Association of Realtors (NAR), National Association of Home Builders (NAHB) and Mortgage Bankers Association (MBA) to discuss a variety of issues such as loan originator (LO) compensation, the Qualified Residential Mortgage (QRM), Qualified Mortgage (QM), appraisals, the overall economy, fair lending laws and much more. The takeaway from this roundtable was rather amazing … all of the
The fight continues
The bottom line
NAMB Government Affairs Committee Chair John P. Hudson introduces panelists from NAR, NAHB and the MBA
NAMB President Don Frommeyer and NAMB Government Affairs Chair John P. Hudson preparing to walk the halls of Congress during Lobby Day
Rep. Gary Miller (R-CA) with members of the NAMB board during the 2012 Legislative & Regulatory Conference effective advocate for mortgage brokers and mortgage professionals, you must participate in the political process. Your involvement ensures that legislators and regulators hear a perspective that they care most about—a constituent who can communicate the impact of potential legislation on the marketplace, homebuyers and the general public. We must continue to look out for the interests of the customers we serve and for the general good of the American people.
We continue to face enormous change. You need to know the issues, learn about what’s on the horizon and what you can do to protect your interest through political action. If you are a member of NAMB, thank you for your support. If you are a future member of NAMB, we looking forward to working with you to protect and promote your profession. For more information, please visit NAMB.org or e-mail us at firstname.lastname@example.org.
Special thanks to Provident Funding for sponsoring the NAMB 2012 Legislative & Regulatory Conference. Provident Funding has once again demonstrated their commitment and loyalty to mortgage brokers and all mortgage professionals in the housing industry. John P. Hudson is 2012 Government Affairs Committee Chair for NAMB. He may be reached by phone at (817) 247-4766 or email email@example.com.
NAMB’s advocacy has been effective over the years because our members get involved. NAMB members are leaders within the mortgage business because of their experience and expertise. They are widely regarded as leaders within their communities because they recognize the importance of getting involved and making a difference. In order for NAMB to continue to be an
Bart Shapiro, Senior Advisor for the Office of Community Banks and Credit Unions for the Consumer Financial Protection Bureau (CFPB), addresses luncheon attendees
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Our Lobby Day talking points represent only just some of the issues currently faced by thousands of mortgage professionals and millions of consumers. Mortgage professionals MUST be ready, willing and able to get involved in the legislative and regulatory process along with NAMB to ensure that our industry and consumers are protected from the unintended consequences of ill-advised regulation and legislation. So what are you going to do about it?
Mike Anderson from the Louisiana Mortgage Lenders Association (LMLA) and NAMB President Don Frommeyer proudly display their flag that was flown over the U.S. Capitol
respective trade associations are on the same page. One finds it difficult to remember the last time that Realtors, brokers, builders and mortgage bankers agreed so closely on so many issues. This is a perfect example of why participation in your trade association is so important … because the impact of poorly-written legislation and regulation threatens to further weaken the overall economy by restricting consumer access to credit and consumer choice and harming small business. On March 20, mortgage professionals took Capitol Hill by storm to lobby on some of the more pressing issues which needed to be brought to the attention of our legislators. The primary focus of Lobby Day was to regain flexibility within the realm of LO compensation via Rep. Gary Miller’s HR 4163 and Rep. Barney Frank’s HR 4076. Both of these bills offer the ability to bring back competition to the market and allow mortgage professionals to help the consumer. In addition, NAMB members proudly lobbied for the protection of non-bank confidential information with reference to CFPB audits; stopping the use of governmentsponsored enterprise (GSE) credit risk guarantee fees as “pay fors;” the Medical Debt Responsibility Act which would help consumer FICO scores; and making legislators aware of the dangers of the CFPB’s rule for “Qualified Mortgages.”
Scenes From the 2012 NAMB Legislative & Regulatory Conference March 18-20 at the Capitol Skyline Hotel in Washington, D.C. Sponsored by Herman Churchwell of 2012 NAMB Legislative & Regulatory Conference sponsor Provident Funding welcomes attendees to D.C. for the 2012 Legislative & Regulatory Conference
NAMB Directors Fred Arnold and Kay Cleland discuss blogging and reaching out via social media
Housing Panel Discussion panelists Ken Markinson of the Mortgage Bankers Association (MBA), Steve Linville of the National Association of Home Builders (NAHB) and Ken Trepeta of the National Association of Realtors (NAR) field questions from the audience
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NAMB Government Affairs Chair John P. Hudson (right) with members of his Texas delegation prepare to lobby on Capitol Hill California Association of Mortgage Professionals (CAMP) President-Elect Fred Kreger with Rep. Gary Miller (R-CA)
Roy DeLoach of DC Strategies Group provides attendees with tips on lobbying on Capitol Hill
Faith Schwartz, executive director of HOPE NOW, discusses refinance programs
Rep. Raul Labrador (R-ID) (center), meets with NAMB President Don Frommeyer (left) and Chuck Anderson from the Idaho Association of Mortgage Professionals
NAMB President Don Frommeyer meets Rep. Todd Rokita (R-IN) in the streets of D.C.
Allison Brown, Program Manager, Mortgage Supervision, Office of NonBank Supervision for the Consumer Financial Protection Bureau (CFPB), discusses LO examinations
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APRIL 2012 BofA Launches Own to Rent Pilot Program
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Bank of America has begun to offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, but transition to tenant status, through a pilot program dubbed “Mortgage to Lease.” To maintain test controls, the Mortgage to Lease pilot will be conducted strictly on a solicitation basis; there will not be any opportunity for customers to volunteer or apply for consideration. Fewer than 1,000 customers will be invited to participate in the first phase of the pilot. Initial outreach has begun to preselected customers in test markets in Arizona, Nevada and New York, three states hit the hardest in the housing downturn. “When homeowners are struggling to make payments, owe more on their mortgage than their home is worth and face certain foreclosure, one of their greatest anxieties is the transition process they face in moving from their home,” said Ron Sturzenegger, legacy asset servicing executive for Bank of America. “This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support. This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.” The pilot population will include customers who meet all of the following requirements: Have loans owned by Bank of America. Are delinquent for more than 60 days. Have exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu. Have high loan balances in relation to their current property value. Face considerable risk of ultimate foreclosure. Have no junior liens. Are still occupying the home. Have adequate income to make an affordable rent payment. Pilot participants will transfer title to their properties to the bank and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below
the current market rental rate. The rental payment will be less than the existing mortgage payment, and the customer will be relieved from certain other homeowner financial obligations, including property taxes and hazard insurance. Initially, Bank of America will retain ownership of the properties, working with property management companies to oversee the rental properties. Properties in the pilot program will be transitioned to investor ownership. If the Mortgage to Lease program proves viable, it may lead to a broader program, potentially involving selected real estate investors who would purchase properties that meet their predetermined specifications and keep the previous homeowners in place as tenants. “Our priority is designing a solution that helps our customer,” said Sturzenegger. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.”
FHFA Announces GSE Exec Salary Cuts and New Conservatorship Scorecard Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco has also announced details on the new 2012 executive compensation programs at Fannie Mae and Freddie Mac. The 2012 pay program reduces top executive pay by nearly 75 percent since conservatorship, eliminates bonuses, and establishes a target for new CEO pay at $500,000. In setting this new compensation framework, FHFA concluded that further material reductions or uncertainty around compensation would heighten safety and soundness concerns. “I believe the new compensation program strikes the balance between prudent executive pay including the elimination of bonuses, with the need to safeguard quality staffing in order to protect the taxpayers’ investment and achieve the objectives in the Conservatorship Scorecard,” said continued on page 18
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nmp news flash
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DeMarco. “A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances. A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely.” The FHFA has also released a 2012 Conservatorship Scorecard, which provides the implementation roadmap for the new FHFA Strategic Plan announced in February 2012. The scorecard includes specific objectives and timetables for the government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—in support of the Strategic Plan. The 2012 compensation program, disclosed in the GSE’s SEC filings, was established by the FHFA in consultation with the boards of directors for both Enterprises and the U.S. Department of the Treasury, as required by the Senior Preferred Stock Purchase Agreements established at the time of conservatorship in September 2008.
FHA Takes Measures to Increase Its Capital Reserves As part of ongoing efforts to encourage the return of private capital in the residential mortgage market
and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante has announced a new premium structure for FHA-insured single family mortgage loans. FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will also increase by 0.75 percent. These premium changes will impact new loans insured by the FHA beginning in April and June of 2012. “After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderateincome borrowers.” The Temporary Payroll Tax Cut Continuation Act of 2011 requires
FHA to increase the annual MIP it collects by 0.10 percent. This change is effective for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500. This change is effective for case numbers assigned on or after June 1, 2012. The UFMIP will be increased from one percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or loan-to-value (LTV) ratio. FHA will continue to permit financing of this charge into the mortgage. This change is effective for case numbers assigned on or after April 1, 2012. FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month. These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan. Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes. Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.
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Mortgage Industry Vet Barry Habib Submits Housing Initiative Proposal
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As the mortgage industry and the federal government struggle to find ways to stem foreclosures, Barry Habib, vice president and chief market strategist for Residential Finance Corporation (RFC), has submitted his proposal to prevent foreclosures and strategic defaults. The proposed plan also enables homeowners to quickly rebuild equity in their homes with a monthly housing expense lower than renting. Under the proposed Homeowners Equity and Liquidity Pathway (HELP) for Housing plan, homeowners build equity in their homes after just two years without a government bailout while contributing up to $450 billion in economic stimulus to the U.S. economy over five years. Key elements of the Homeowners Equity and Liquidity Pathway (HELP) for Housing plan include: Eligible for borrowers who are current but trapped in their mortgage by not being able to refinance their mortgage or sell their home. Existing mortgage would be divided into two parts: a first mortgage— representing 80 percent of the current value of the home—on a 20year fixed payment, which takes
advantage of the historically low market rates, and a second mortgage on the remaining balance, to be securitized and held on the Federal Reserve balance sheet, much like QE1, QE2 and Operation Twist. Borrower is not be obligated to make monthly payments on the second mortgage; however, interest accrues and is payable upon the sale of the home. Significantly lower monthly mortgage payments—resulting in a less expensive alternative to renting a similar home. Borrower rebuilds equity within two years. Borrower cannot sell the home for three years after entering the program. Zero to minimal contribution from the federal government. While there are many loan programs and ideas that address the foreclosure problem, this proposal actually addresses borrowers’ current situation and underlying issues contributing to strategic defaults. For instance, with some programs, even if the borrower does refinance, he or she will end up paying more than they would for rent and still not be able to gain equity in their home. By building equity, HELP for Housing allows borrowers to see a light at the end of a tunnel of being upside down or loan trapped. The program shows them how they can create wealth in their home again by giving them “skin in the game” or a reason to continue to pay their mortgage as well as room to rebound financially. “This program would enable an average homeowner to save about $590 a month on their mortgage payment, which they would likely spend—creating enormous economic stimulus—save, or use to pay down their mortgage,” Habib said. “The bottom line is that homeowners will have a mortgage payment they can afford and once again build equity in their home while also having significant extra cash per month. This is not a bailout; there is no moral hazard; and the government benefits from significant economic stimulus without having to pay for it.” Homeowners would be required to pay back all of the loan(s) upon the sale of their home, which they would not be able to sell for three years, as a condition of the proposed program. The proposal has been submitted for consideration to the Mortgage Bankers Association (MBA), National Association of Realtors (NAR), the Consumer Financial Protection Bureau (CFPB), the House Financial Services Committee (HFSC), the U.S. Department of Housing & Urban Development (HUD) and several congressmen. continued on page 46
heard on the street
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RamQuest’s Closing Market will be able to provide online title and settlement rate quotes to their lender clients and give them the ability to instantly place orders online. “Today, efficient residential real estate transactions require timely delivery of up-to-date closing cost information,” said Bob Hart, vice president of sales for ClosingCorp. “By partnering with RamQuest, we can provide SmartGFE Calculator and Closing Market customers with the most accurate closing cost data available, as well as the ability to seamlessly and immediately receive title and settlement service orders online.” The SmartGFE Calculator is a pricing and compliance tool that is posted on a title company’s Web site and used by mortgage lenders to instantly generate title and settlement rates, as well as accurate recording fee and transfer tax costs. “Closing Market allows our clients to operate in a purely digital environment for unmatched efficiency,” said Brooks Yeager, director of Internet services for RamQuest. “Our goals perfectly align with ClosingCorp’s commitment to improving the residential real estate transaction process, and our services and technology in collaboration will prove invaluable to the productivity and business objectives of our collective client base.”
The Duncan Group and AllRegs Partner on Training Programs
LenderLive Settlement Services Expands Title Services Offerings With Acquisition of MoKan
Many real estate agents shy away from short sales because of the complexity involved in doing it themselves. When they refer the work to an attorney or third party negotiator, they risk losing a great chunk of their commission. ShortSaleSpeedway™ automates the short sale process, by creating all of the documents a real estate agent needs to create the superior short sale proposal exactly how banks want to see them.
How Can ShortSaleSpeedway™ Help YOU Trap Real Estate Agents? Your company can have your very own, private labeled version of ShortSaleSpeedway™ that you offer at no cost to your real estate agents. They will now have the tools provided by your company to be a true short sales specialist. Now they can negotiate short sales with ease and not have to give away their commission to someone else. You’re providing them with a tool that puts more money in their pocket.
What Do We Provide You? When you have your own ShortSaleSpeedway™, we provide you with the following: Q Your own customized private labeled ShortSaleSpeedway™ site Q Access to reporting on all borrowers being put into the system Q Training for you, your real estate agents and a dedicated support team Q Marketing materials to promote your ShortSaleSpeedway™ to real estate agents In many cases, the setup for the private labeled site costs you nothing!
For a free demo, contact Erik Wind, at (800) 262-3783, ext. 701 or visit shortsalespeedway.com/freedemo
continued on page 20
Why Is It Easy to Trap Real Estate Agents with ShortSaleSpeedway™?
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LenderLive Settlement Services, a wholly-owned subsidiary of LenderLive Network Inc., has announced the acquisition of MoKan Title Services LLC. MoKan, with offices in Missouri and Kansas, offers basic and specialized title insurance coverage and services for residential and commercial lenders on new loans, refinances of existing loans, foreclosure-related actions and closings for real estate-owned (REO) transactions. MoKan was previously affiliated with Martin, Leigh, Laws & Fritzlen PC, a law firm based in Kansas City, Mo., and they will continue working together as strategic partners. LenderLive Settlement Services has provided title and settlement products and services since 2006 in all 50 states, and it is now directly licensed in 36 states. The company has extensive, proven experience in assignments, substitution of trustee and loan modifications. The LenderLive division began offering title-related services for loan modifications in 2009, and with the acquisition of MoKan, has further expanded its capabilities to be an end-to-end title services provider in the default space. The acquisition is also a strong strategic fit with LenderLive’s recent
AllRegs and The Duncan Group (TDG) have announced a joint relationship to offer sales training to the mortgage industry. Together, the two companies will build on existing content, courses and resources to provide mortgage loan origination staff with the tools they need to increase loan production and improve process efficiencies. Based on mortgage sales industry expert Todd Duncan’s proven sales strategies, the Mortgage Mastery Club is a comprehensive set of online training resources that provides subscribers with necessary tools to succeed in business. “Increasing production starts with the loan origination staff, and we are excited to offer this comprehensive set of sales training resources to the front lines of the mortgage industry,” said Dan Thoms, executive vice president of AllRegs. “Todd Duncan’s world-renowned industry specific sales strategies will change the way loan originators approach their business, unlocking their potential and leading them on the path to success.” Available in three subscription levels and price points, loan officers will be able to create a solid repeatable business plan that will sustain
through up and down markets. The Mortgage Mastery Club resources will help loan originators dramatically improve their loan production, time efficiency and customer service. Todd’s two New York Times best-sellers, High Trust Selling and Time Traps are the backbone of this exciting offering In addition to audio and textbased content, key resources include motivational videos, sales strategies, objection management, how-to documents, and much more. “In over 20 years of equipping loan officers and their leaders to succeed, there has never been a time where strategy, tactics and passion matter more than right now,” said CEO and founder of The Duncan Group, Todd Duncan. “Working with AllRegs, the gold standard for mortgage industry information and leading CE training provider, creates a powerful one-two punch for lenders, banks and their sales staff to have easy access to all the tools to help close more loans in less time with less stress. In recent surveys, 61 percent of loan officers report that these methodologies help them close between one to six more units a month.”
heard on the street
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launch of its specialty servicing business in June 2011. LenderLive plans to retain all of the current staff and continue to operate from the current MoKan locations. Amy Wilson has been named vice president of default operations for LenderLive Settlement Services. In addition, Berry F. Laws III will remain as of counsel for the firm and will join LenderLive Settlement Services in the capacity of director of strategic initiatives. â€œWe understand that the needs of servicers are changing drastically as the market resets and increasing regulatory compliance is required,â€? said Rick Seehausen, president and chief executive officer of LenderLive. â€œThe addition of MoKan gives us a solid opportunity to grow our offerings, add more default-related experience to our team and become the go-to company for all title and settlement services in this and every market cycle.â€?
Gateway Mortgage Group Opens New Correspondent Division e-mail: email@example.com visit: www.calyxsoftware.com
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Gateway Mortgage Group has announced the launch of a correspondent lending division to purchase closed mortgage loans from banks, credit unions and independent mortgage bankers. Gateway brought on Scott Henley, Molly Reed Davis and Linda Garloch to spearhead the new unit. Gatewayâ€™s new division was created to acquire conforming FHA, VA and USDA loans from approved correspondents and retain servicing rights on the loans. Some of the nationâ€™s largest banks have begun to retreat from the correspondent lending channel in response to the implementation of Basel III requirements or as a strategic de-emphasis on the current mortgage market. By selling loans to Gateway, depository institutions are ensured that their primary relationships with the borrower, including deposits, personal loans and credit cards, will not be in jeopardy since Gateway is not a competitor for those products. â€œGateway is entering the correspondent lending space at a time when some major banks have scaled back or exited the channel altogether, which leaves originators with fewer options in the secondary market,â€? said Henley, vice president of national production for Gateway Mortgage Group. â€œThe limited resources have led to frustrations and delays in getting loans sold to investors. Gateway alleviates this issue by acting as an additional loan sale outlet to financial institutions and mortgage bankers.â€? Gateway hired Henley as VP of national production, Davis as chief credit and compliance officer, and
Garloch as correspondent operations manager to oversee the new division. Henley, Davis and Garloch have more than 50 years of combined industry experience with expertise in correspondent and retail lending. The new correspondent lending team has held a variety of senior level positions at companies such as Bank of America, MetLife, Citi Mortgage, Cornerstone Mortgage, Freddie Mac and Countrywide Financial. â€œOur new correspondent division not only enables Gateway to grow its servicing portfolio, but also diversify the geographic areas in which it services loans. We are confident in our new correspondent lending team and sure that Scott, Molly and Linda will bring us success in this new market,â€? said Kevin Stitt, president of Gateway Mortgage Group.
Homebuilder KB Home Signs Exclusivity Agreement With Nationstar Mortgage KB Home has announced that it has entered into an agreement with Nationstar Mortgage, under which Nationstar will become KB Homeâ€™s preferred mortgage lender. Under the agreement, Nationstar will offer a wide array of financing options and mortgage loan products to the companyâ€™s homebuyers at all KB Home communities nationwide. â€œWe look forward to working with Nationstar and its group of professionals who are dedicated to providing exceptional customer service to our homebuyers,â€? said Jeffrey Mezger, president and chief executive officer of KB Home. â€œNationstar is a national lender that is capable of serving KB Homeâ€™s homebuyers as we continue to help them fulfill the American dream of homeownership.â€? Nationstar Mortgage, headquartered in Lewisville, Texas, is one of the nationâ€™s leading mortgage services providers, and a lender offering FHA, VA, USDA, conventional conforming and nonconforming products directly to consumers. It is currently one of the largest non-bank mortgage servicers in the country with a portfolio of approximately $107 billion and 645,000 customers. KB Home builds quality homes in 32 markets across the United States with a focus on providing choice and value to its customers. The agreement with Nationstar is intended to offer KB Home customers a seamless home buying experience, from purchase and mortgage application to picking up the keys to their new home. continued on page 28
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www.fgmc.com (800) 296-2275
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Andrew Peters cer Chief Executive Offi tgage Corporation or M First Guarant y
Officer Lender/Retail Loan nt de on sp re or /C oker you may Dear Mortgage Br poration. Some of or C e ag tg or M y us for rant or have been with e to you First Gua e, uc tim od st tr fir in e to th r d fo se I’m plea stomers. ar ing our name Whether you’re he lp you help your cu . he us to ow ng kn ki y ta e ad re e’r al e steps w ll be plea sed by th ction are fa ster, years, I think you’ us on each transa ith w ns io ct ra te a better in w technology and noticed that your y ne ad ith re w al s ve es ha oc pr ay r ou ha se. You m e closing or purc ient. We’ve refined th fic re ef fo e be or e m fil d an ur smoother to touch yo ther than your cu stomer, ra fewer people need ith ng w ri k su or en w , : w st lo be kf wor what you do have time to do We want you to d troubleshooting. requires processing loans an . Today’s market rs ne rt pa r ou r py in today’s ide options fo ng hard to prov the space you occu of ss le rd ga re ns We are also worki VA lender solutio on sense FHA and m y. We’re offering m lit co bi a xi g fle in ek um se im oker or VA max are a mortgage br oducts like 203K u pr yo er ith w th s he id W . vo ce e marketpla and the fastest looking to fill th mpetitive pricing ngs; a flow seller co ri fe ith of w e r ye ch ni bu lk ith w tail loan / bu ing for a mini bulk se line relief; or a re ok ou lo eh er ar w nk or ba a w ls; flo manua lp create ca sh MC offers real the industry to he s opportunities, FG es dl en u yo w lo purcha se times in al at will r a unique home th the country. officer looking fo y for clients across da y er ev e es th g in liver s to be the options. We are de ilosophy continue ph re co ur O s. cu ted by fo changing is our serve to be evalua de be s ’t er on ow w rr at bo th at g th One thin lieve strongly e DU and FICO t we do. We still be ther than a simpl ra e, ns se on m foundation of wha m ing. We co es to mortgage lend underwriting and m l co ua it n an m he w d, e ce ns en se on ients experi customers. Your cl happened to comm r ur ve yo te ha do w as r , de at on th e score. We w homes. You deserv people into good od go t pu to ist ex t numbers. holesale.com are borrowers, no ices at www.FGMCw rv se d an es lin t uc (capit al ore about our prod w.FGMCb2b.com w m w n ); ar le nt to de u on yo sp te re We invi ent.com (cor w we can help your FGMCcorrespond ow you exactly ho sh n ca e w at (wholesale); www. th market may l) so can improve. The FGMC.com (retai e w. w w s w ay d w an on ); ts ck ke ba ed chance mar ers. We’d like the ays open to your fe w om al st e ar cu e ur W . yo d ow an gr business rtunit y for you at can mean oppo th t bu , ng gi an ch be to prove it to you.
Danny Nicolo, President & CEO Meadowbrook Financial Mortgage Bankers From Butcher to Broker to Banker “Our values are crystal clear at Meadowbrook Financial Mortgage Bankers— our communication, leadership, excellence, attitude and respect—if an LO believes in those values and works really hard, they are going to be very successful with us.”
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ach month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at firstname.lastname@example.org to be considered for a future “Mortgage Professional of the Month” feature article. This month, we had a chance to chat with Danny Nicolo, president and chief executive officer of Meadowbrook Financial Mortgage Bankers. A 1986 graduate of Xaverian, a private college preparatory high school in Brooklyn, N.Y. and worked for his family’s catering business, A&S Italian Marketplace. Danny pursued architectural engineering after high school with two years of undergraduate work at the Pratt Institute. He became more involved with the family’s catering business, and from 1989-1997, opened up several A&S Italian Marketplace locations for his family in the Tri-State New York area and Long Island. He also began investing his savings in the real estate market. His desire for a greater challenge and a chance to improve his quality of life, Danny was eventually led to the field of real estate and the housing finance
industry. Working as a loan originator in 2001, Danny was able to build relationships with his clients similar to the relationships he built with his family-owned Italian markets. In 2004, he applied for his New York State Mortgage Brokers License and in 2008, applied for his New York State Mortgage Bankers License. Danny is currently president and chief executive officer of New Yorkbased Meadowbrook Financial Mortgage Bankers, a full-service mortgage bank offering an array of products, from purchase, to refinance, to construction lending. Danny is known as the man who has made the transition from “Butcher to Broker to Banker” in the mortgage industry. How does one go from owning and operating a chain of successful Italian gourmet markets, A&S Italian Marketplace and being the entrusted butcher in the community, to owning a mortgage bank? Although the food industry is a great business, you would have to spend every day of the week in the stores to become successful. After many years and countless days in the stores, watching customers loading up their coolers
in the summer and spending time with their family added to my drive in changing careers. I decided to challenge myself and seek other opportunities to earn a better quality of life for me and my family. First, I started investing all of my savings into real estate. When going through the whole process of buying properties and meeting with originators, we would discuss mortgages and it became very intriguing to me. I started understanding the origination end of the process. I started spending many hours with clients from the store who were in the mortgage industry and took courses. My wife also started pursuing a career as a title closer at the time. It was the ideal career path for her because she was doing something she wanted, and introduced the both of us to the world of real estate, and buying and selling properties. I applied from my own broker’s license and began working out of my basement, processing and closing mortgages on my own and became very successful. I attribute much of my success to my experiences as a butcher where you establish and develop relationships with your clients and they learn to trust
you due to your service and quality recommendations. If I could build up a successful Italian butcher shop, then I could use those same fundamentals in starting up my mortgage business. How did you turn those referrals into business and maintain your mortgage business? I began building my base of referrals by telling people that I was starting a parttime mortgage business, and if they needed anyone for their mortgage needs, I was available. I used to work 70 to 80 hours a week at A&S, and never saw my family. I wanted to make a change to see my kids grow up and see my family more often. Many of my first clients were from my Italian marketplace, and I built upon that through referrals. My first six to eight months beginning in the mortgage business part-time back in 2001, my clientele was strictly customers from my Italian market. From there, through referrals and word-of-mouth, my mortgage business grew, and in 2004, I decided to obtain my New York State Mortgage Broker’s License. Taking the relationships I built from my store with my customers made it a
What moves are you most proud of that have allowed you to maintain your growth during the mortgage industry consolidation? What do you think the industry has done in order to properly survive over these past few years as regulations and underwriting standards have become more strict? At first, we started as a strictly referraltype business. Then, by aligning myself bringing in others with other platforms of the business, we were able to grow. Licensing in the mortgage industry has helped us find, create and hire better sales prospects. Also, hiring a very conservative underwriting team has created a workflow complete with several compliance checks and balances in each department to make sure that we are maintaining the highest level of loan quality. In terms of our operations at Meadowbrook Financial Mortgage Bankers, we have a full-time trainer coming on board. Education and training are the keys to making it in the mortgage business, as regulations and underwriting standards have tightened. All of our employees must take a five-day course. This business is ever-changing, as our salespeople are constantly training on new products and our investors are subjected to new regulations. In the end, open lines of communication are key.
Are there any regrets you have about the industry or any decisions you would have made differently? I regret not getting involved in the mortgage industry much sooner. I knew we’d have to start small and take baby steps. I feel we took all the necessary steps to get us where we are now. Of course I would have liked for the growth process of Meadowbrook Financial Mortgage Bankers to have gone faster, but we took things slow, aligned ourselves with the right partners and did things the right way, and I am very satisfied with where we are today. What do you feel separates a successful loan originator with a mediocre loan originator? A successful loan originator is one who must have a strong knowledge of the industry, not someone who is just a paper-pusher or someone who is consumed by making money. Marketing and networking are two factors that separate a top LO from an average LO. Our values are crystal clear at Meadowbrook Financial Mortgage Bankers—our communication, leadership, excellence, attitude and respect—if an LO believes in those values and works really hard, they are going to be very successful with us. How would you describe your management style, and do you feel any one person or book influenced your management style? I am very laid-back and trusting. I get out of the way so that successful LOs can be
successful, but I am here to offer my support to them whenever they need it. My father’s work ethic is what I’ve modeled myself after. My whole life has consisted of work. When I was 11-years-old on Dec. 23, I was working around the clock. My father would tell me not to tell other people because it was wrong, but at the end of the day, it was all about work. I learned values and wanted to thrive and succeed. I’m not that big into reading … I’m big on “doing!” How involved are you in your family life? On weekends now, I’m able to take my son to basketball games. We can go on quick vacations now as well. I was never able to really spend time with them until now. In running A&S Italian Marketplace, I just couldn’t leave to do things like that. Now, I have the flexibility to do work outside of my office. Up until I was 35-years-old, I had never been to a vacation spot like Montauk, N.Y. … I’d be behind the counter at A&S all night and then go home because I had to be in early the following day. Now, I’m at a point where I feel that we are still growing the company, but I have a life too with my family. What do you see in the future of the mortgage industry, and what are some of the big opportunities that are on the horizon? I feel a combination of call centers and the purchase business will come back continued on page 24
Looking at your career, are there any milestones and accomplishments that you are really proud of? I am very proud of the growth of Meadowbrook Financial Mortgage Bankers, both here in New York and our expansion into nine states. I am also proud of our investor involvement. Just a year ago, we had no tier investors, it took us a year or so to get approval with top investors. At Meadowbrook Financial, we have also gone completely paperless, from buying leads to shipping loans to the secondary market, it’s all done from center to center. I am proud of the expansion of our paperless system. I believe that will be a milestone that I can look back on in the future and say, “Thank God we did that!”
“I believe that trust is the most important aspect of business, especially when you’re dealing with someone’s finances. If a person can trust you, you have them for life.”
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What do you find more fulfilling, being a butcher or a mortgage banker? Being a mortgage banker is definitely more fulfilling. With my mortgage business, I wake up in the morning, put on a suit and tie and meet with clients, I feel
born again. My family fully supports me. So many people come and go in this industry, and I really have to believe in myself and what I can bring to my clients. It’s not just a case where I go into the back of the store and cut someone a steak … you really have to put in a huge effort to make sure that your clients are qualified the right way in order to get the application approved. I use the same fundamentals in my mortgage business as I did when working in the pork store.
good fit for me to change careers because they trusted me … it was a transfer of trust. There were other businesses up the block from A&S Italian Marketplace that would also give me their real estate and mortgage business. I would bring a change of clothes with me to A&S, and after working, I would make appointments to meet with them later in the day about mortgages, and then change again and go back to work at A&S. I did that for about six or seven months, and was only able to meet them nearby because I would always have to go back to the store. It was a hard push with a lot of sleepless nights, but it was to improve my quality of life with my family. Before this change of careers, I was never able to take vacation with my family—I had off one week a year—and it was never around holidays. When I first got my Broker’s License, I was afraid to leave A&S because it was “secure,” something I had done my entire life. With the urging of my father, he suggested I take six months off from the Italian market, and that I work on becoming a broker to see if I could cultivate and build my business to have a better life for my family. Within my first month, I had 10 or so deals I was working on—originating, processing and meeting investors in my basement. As I started getting busier, an old friend of mine heard that I was an approved mortgage broker and asked if I wanted to become partners, so we opened up a mortgage business. In 2005 when the economy began to take a turn for the worse, I decided to apply for my New York State Mortgage Bankers License. I realized it was a good time in the industry to make the transition from broker to banker, and changing careers was to improve my quality of life. I believe that trust is the most important aspect of business, especially when you’re dealing with someone’s finances. If a person can trust you, you have them for life. With all of my customers, I always have to meet them face to face. They need to know that I’m not just a telemarketer, I meet them face to face and get to know them personally. They begin to trust me so much that they ask me to help them with other aspects of their life. I would meet with them three or four times before I even got the mortgage, but what was important to me was how I built and established their trust.
nmp mortgage professional
“A successful loan originator is one who must have a strong knowledge of the industry, not someone who is just a paperpusher or someone who is consumed by making money.”
By Raymond Bartreau
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
continued from page 23
Once you have exhausted all of your past clients, contacts and referral partners with the new Home Affordable Refinance Program (HARP) product, what’s next? You will want to start thinking about other forms of generating new business in the marketplace with this program. There are more than 27 million Fannie Mae and Freddie Mac loan holders nationwide who have no idea about HARP 2.0. The goal here is to find your audience within this large group and get yourself in front of them, or better yet, get them to come to you. The best way to do this is direct marketing, which consists of a few different options and avenues: Radio, TV, cold calling, direct mail and the Internet. As we all know in the mortgage industry, lenders have guidelines on pretty much every loan product on the market. If you are going to use direct marketing in the mortgage industry, the first thing you want to do is find the amount of homeowners that fit within your lending capabilities, in this case, we are talking about HARP 2.0. Some recent count studies were ran with three of the industry’s leading database compiler/managers of mortgage and here is what we came up with: There are more than 27.5 million Fannie Mae and Freddie Mac loans in America right now. There are currently more than 11 million Fannie Mae and Freddie Mac homeowners that are upside down on their mortgage (more than 100 percent LTV). Two states have more than 1.8 million, four states have more than 475,000, and another 31 states have 45,000-plus homeowners who can be helped. Of those 11 million, nearly 60 percent of these homeowners are current right now on their mortgage. The other 40 percent-plus could get current and potentially be helped before the end of 2013 if they are educated soon and make the efforts for the next six to 12 months. Depending on your specific lender requirements for this program, you would take these massive databases, and filter them down based upon the criteria you are looking to lend to. FICO, LTV, loan amount, origination date, late(s), no bankruptcies, and many more filters are available when you are looking to create your perfect audience. After extreme HARP 2.0 overlay filtering, we end up with a total of 2.3 million marketable (outbound with addresses) homeowners who may qualify for HARP 2.0. Of those, more than 215,000 homeowners are available to be called after we do a Do-Not-Call (DNC) scrub on the database. Since most of these folks have not seen a mortgage offer over the last two to four years, you should see a pretty good response on any direct mail continued on page 29
again. We look at B to B … all retail, hiring virtual LOs, branch expansion, etc. Right now, a lot of the account executives did their year-end and have captured back the business, but we are on the list to be the in-house mortgage company for large groups of organizations, whether they’re union or public companies, we’re expanding into all areas of origination. We are predominately expanding in the New York Metro area, but we are becoming licensed in some areas of the South as well. In addition, we are also beginning to align ourselves with companies working with real estate-owned (REO) properties. We are also increasing our presence in the social media space through a heavy involvement with LinkedIn, Facebook and Google … Meadowbrook Financial is expanding in all areas. If a branch comes to work with Meadowbrook Financial Mortgage Bankers, what type of support do you offer these branches? We are a business in a briefcase! Literally, there is a briefcase where they can originate from any computer, laptop and login 24 hours a day, seven days a week and pull credit reports, price a loan, run Desktop Underwriter, submit a file to underwriting, or ask for help with questions or concerns with a file guideline. Users can press a button and upload documents for review, they can download docs to a real estate agent, track the submission of their loans … we provide the ability to accurately track the entire process at the touch of a button. All of this information is available via the Internet. Everyone needs to be computer savvy. We do have some people who are just frightened by IT. In fact, I have one person who calls me
every time a rate drops and wants me to price the loan. I have to pull over in my car to tell her the current rates. We also have programs that allow LOs to remain LOs and not have to be so IT-savvy. We accommodate all types of LOs. Do you feel that there a particular business that works best in this environment … what kind of branches work best for Meadowbrook Financial? We don’t cater to a call center that does lead generation or not cater to a call center that just does referrals … we treat them all the same. We have the technology in place for a consumer to log into our system and check the status of a loan. We don’t treat the branch any different than the consumer … they are all treated the same. We don’t cater to any sources of a loan … we ultimately cater to the client. LOs in sales fuel our fire, as a good LO who has a bad experience with us is like losing a client. Happy LOs bring in more clients. Where do you see yourself and the direction of Meadowbrook Financial over the course of the next five years? Currently, we are looking to expand right away, with corporate branches up and down the East Coast. Right now, we have a total of four call centers. In three years, we plan on having 35 corporate branches, and by five years from now, have 50 corporate branches under the Meadowbrook Financial Mortgage Bankers banner. We are expanding rapidly and are looking for the right people with a proven work history and prior success. We treat all of our corporate branches the same, offering them the same tools, we help them recruit, we help them with management and expansion as well. If they are doing business, we are here to help them.
Att CBC C Nationall Bank k we: I Prioritize purchase u/w times by contingency or closing dates I Provide touch points throughout the process to ensure on time closings I Encourage direct access to all underwriters, internal processors, closers & your Account Executive I Order your appraisal online without submitting the credit package â€“ no delay I Offer diverse line: Conventional loans up to 97% LTV VA loans down to 640 Agency High Balance (100% LTV/105% CLTV) FHA loans down to 640 USDA loans
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE APRIL 2012
survival of the
Mortgage Broker By Al Crisanty
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
We have heard many reasons over the last couple of years of why the mortgage broker would not and should not survive. Yet today, it is quite apparent that the naysayers missed one key factor that will not only ensure the mortgage broker’s current survival, but a factor that will also allow the mortgage broker to survive in the future: They are resilient … the quintessential entrepreneurs whose shoulders this industry was built upon. Most brokers are small business owners who work closely with real estate agents, builders and developers in order to remain connected to and active in their local community. They are in tune with local economic and market activity. Brokers also recognize that the key to their success is measured in meeting and exceeding their customers’ expectations through a clear understanding of their customers’ financial situations and goals. Although many, including the President himself, have seemingly levied the majority of the blame for our industry’s challenges on the broker, it is pretty clear to most that this is an unreasonable accusation. As is the case in most situations of this magnitude, there is rarely one person or entity that should sustain the brunt of the responsibility and continuing to point fingers proves unproductive and irrelevant. Instead, we need to focus our efforts on rebuilding trust and credibility within our industry for the future. Although new regulations imposed on the industry initially created fear and confusion for the mortgage broker community, these regulations also helped to “separate the wheat from the chaff ” as they say. In other words, the brokers who are still standing and thriving today have worked diligently to adapt to the new regulatory environment by making necessary changes to their business model and educating their team and customers. Today’s new breed of broker clearly understands the relationship between happy and satisfied customers and repeat and referral customers, which are the cornerstone of their business model. They are also aware that, although mortgage originations are down from a few years ago, there are currently fewer competitors and the opportunity to capture incremental market share and “wallet” share is very good. Because of this, brokers are extremely selective about and loyal to the lenders they choose to partner with. With the focus on building a sustainable business model through repeat and referral business, it is imperative for brokers to find a lender that can provide all of the tools necessary to help them succeed. The successful mortgage brokers I have met identify these attributes as the key criteria and characteristics of an ideal lender partner: A competitive selection of loan programs with minimal overlays, a technology and operational platform that is customer-centric (clear, consistent communication and service that exceeds expectations) and empowers the broker, and competitive pricing. Today’s broker is looking for a lender partner who they can trust and who can provide them with the tools and support needed to help them take care of their customers and ultimately succeed. Through their perseverance, hard work and desire to succeed, these brokers are survivors and can truly be recognized as the best of breed today. Most importantly, these brokers reflect the future of our industry. Al Crisanty is vice president of national wholesale production for 360 Mortgage Group and is responsible for overseeing territory sales managers as the company seeks to expand operations to all 50 states. Al has accumulated more than 25 years of management and leadership experience in the mortgage industry, holding positions in secondary marketing, retail, wholesale and correspondent lending. Formerly the national wholesale director for Caliber Funding, Al was responsible for the development and expansion of Caliber’s wholesale production channel. Additionally, Al served as executive vice president of national production for American Home Mortgage, successfully transitioning the 500-member production team from Capital Commerce Mortgage Company after its closure. Al may be reached by phone at (916) 761-1624 or e-mail email@example.com. SPONSORED EDITORIAL
laser is defined as a unit that emits light through a process of optical amplification. Could you imagine thinking of your brain through your eyes as being “optically amplified” during any given task? We always talk about time and self-management, but we never talk about how focused we are during these tasks we work so hard to find time for. How productive could we be if we learned how to “laser in” on our schedule each and every day to accomplish everything quickly and efficiently? I have found this to be one of the most challenging things for most of us, primarily in the technological world we live in. Occasionally when we commit all our time to one task we feel should be doing something else also. The thought that we’re not being productive in another area crosses the mind and at times can be challenging to manage. While multi-tasking is important for some things, I’ve found that it can also prohibit productivity if not used appropriately to complete each task before moving onto the next. While we can try to create systems in our somewhat repetitive mortgage industry, we also know there are way too many distractions in this technological world we live in. With all of the e-mails, voicemails, Internet, social media, text messages, etc., we find it hard at times to be proactive rather than reactive. This might be a greater problem for those of us in the X and Y Generations who feel the need to adapt and evolve in this rapidly changing work force. It’s hard to keep up with all of the changes and advancements in business communication and operations, but it’s imperative to comply to stay ahead. So what are some things we can do to operate with this technology while making sure we remain focused and refrain from being distracted?
“While multi-tasking is important for some things, I’ve found that it can also prohibit productivity if not used appropriately to complete each task before moving onto the next.” and quickly move through your to-do list by checking off the shorter and less time-consuming tasks.
Be cautious about multi-tasking If you are dealing with any task of importance, focus on the task 100 percent until complete. If you start the process and continue to get distracted and come back to it time and time again, you’ll find the day is over and the task is not complete. You’ve failed in your multi-tasking efforts.
Clear your mind and take a break If you need time to yourself, get out of the office. Taking a break throughout the day will help you be more productive and focused during your time spent at the office.
Concentrate and don’t procrastinate If a task is important or if it will affect something that is important later on, don’t put it off and just get it done.
Get plenty of sleep each night and eat well Getting plenty of sleep and feeling rested is vital for concentration. Eating well is equally or even more important to sustain insulin and energy levels throughout the day. Don’t feel dragged down, feel uplifted!
Avoid the Internet unless using exclusively for work We can all get caught in the Internet
Complete easy tasks first Warm up your brain in the morning
continued on page 29
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WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
heard on the street
The End of the Refinance Era
continued from page 20
By John Walsh
Mortgage Professionals to Watch
PHH Mortgage has named Smriti Laxman Popenoe as interim president.
Nathan C. Brown has been named chief legal officer and senior compliance manager of MountainSeed Appraisal Management. GSF Mortgage has announced that Rich Obermeier has joined the company as branch manager/loan originator, and that Mark Rossetto has joined the company as a loan specialist.
Joe Mowery has been named president of LenderLive Settlement Services.
Gregory Chi has joined Mortgage Guaranty Insurance Corporation (MGIC) as senior vice president and chief information officer. Loan Value Group LLC (LVG) has announced the addition of Kelly Johnson and Kim Schubert as directors of sales. Molly Reed Davis has been named chief credit and compliance officer for Gateway Mortgage Group. Cobalt Mortgage has announced the addition of Matt Eckard, sales manager of The Eckard Team. WFG National Title Insurance Company has added Robert Opdycke as an agency sales rep in the Southeast region.
Appraisal Logistics has named Dennis H. Ashcroft vice president, sales and marketing.
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
Holt Crowder and Brian Smith have joined LendingQB as sales reps to the firm’s business development team.
Platinum Data Solutions has named Phil Huff as its new chief executive officer.
Jeffrey R. McGuiness has been named chief executive officer of Lenders One Mortgage Cooperative.
Lisa Marra has been named Maryland area renovation sales manager for Real Estate Mortgage Network Inc. (REMN), and REMN has also added Matt DeCesaro as branch manager for the firm’s Duluth, Ga. location. Atlantic & Pacific Real Estate has announced the addition of Wendy Forsythe as executive vice president/head of global operations.
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: firstname.lastname@example.org Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
Are you prepared for the end of the refinance era? If not, then I suggest you get your business ready, because a change in the fundamental make-up of our industry is not far away. Recent reports and comments from the Federal Reserve and economists with major U.S. banks describe a housing sector that has fundamentally changed from historical norms, and one that will not return to those norms during our lifetimes. However, we will almost certainly see mortgage rates rise to their historical norms. The recent period following the housing bubble has seen mortgage rates significantly below historical levels. Once rates rise, they are not likely to revisit these levels—short of another monumental crisis. We need to let consumers know that now may be the last chance many in the U.S. will have to refinance for cash-flow improvement or to move to less risky mortgage products. During the aftermath of the housing bubble, the Federal Reserve has provided substantial liquidity to the U.S. economy that has helped to artificially drive and keep mortgage interest rates low. In so doing, the Federal Reserve has “lubricated” the troubled housing sector. The Fed’s “Zero Interest Rate Policy” has helped keep the mortgage industry afloat over the past few years. What will the mortgage industry look like when the liquidity ends and rates rise beyond the level of most current in-force mortgages? Simply put, it will be a much smaller industry that is overwhelmingly focused on purchase financing.
What evidence supports this conclusion? First, in early February, Federal Reserve Chairman Ben Bernanke submitted a Fed study on the state of the housing sector to Congress. In it he stated, “… restoring the health of the housing market is a necessary part of a broader strategy for economic recovery.” But he added that there were many “frictions” in the market that were preventing that recovery, including ongoing foreclosures and the resulting overhang of housing supply. Moreover, a paper by economists at JP Morgan Chase, Bank of America, and the Universities of Chicago and Wisconsin released in late February argues that the Fed should be very cautious about policy responses to those frictions. They write, “A mistake would be to adopt policies that seek to artificially boost house prices and residential investment going forward.” The authors believe that the housing bubble represented a “dramatic overinvestment” (based on historical norms) in housing
“We need to let consumers know that now may be the last chance many in the U.S. will have to refinance for cash-flow improvement or to move to less risky mortgage products.” and that it will take decades for the market to return to normal. Their proposed prescription—as painful as it might be—is to allow for the housing sector to revert to historical norms. This would include higher loan-to-value (LTV) ratios and higher average interest rates. Clearly, they would argue against any further quantitative easing from the Fed. This same paper makes another point that is the focus of this article, namely that the current low interest rate environment, brought about through a zero percent Fed Funds rate for the past three years and $2.3 trillion in asset purchases, have enabled almost everyone capable of benefitting to benefit. Commenting on this aspect of the paper, president of the St. Louis Federal Reserve Bank, James Bullard, said, “Those that can respond to the lower yields have done so already and those that cannot will not be influenced by further policy actions because they are backed up against sharply binding collateral constraints.” The implication for the mortgage industry is quite simple … even further quantitative easing including the purchase by the Fed of additional mortgage-backed securities (MBS) is not likely to significantly increase refinancing activity.
So … where does that leave us as an industry? The fact is that we could be one news story away from significantly higher interest rates. Rates have been held low by Fed action for sure, but also by a year’s worth of bad news that may be quickly improving. The ongoing weakness of the U.S. economy and job market is reversing course, the negative after-effects of the Japanese Tsunami (at least on the global economy) is waning and the impending default of Greece and the collapse of the European banking sector are delayed at worst, avoided at best. Currently, concerns over the price of gas on the U.S. economy due to tensions in the Middle East, along with the Federal Reserve’s purchase program for mortgage-backed securities, known as “Operation Twist,” are helping to keep mortgage rates near alltime lows. But these beneficial governors on mortgage rates could decline in significance, or be eliminated altogether, very soon. Operation Twist, for example, is scheduled to end by the middle of 2012. The fact is that the era of refinancing is coming to an end sooner rather than later.
What should mortgage professionals do? I have three suggestions: Be a Town Crier: If it’s truly last call for refinances, then we owe it to our former customers and communities to let them know this fact. In particular, those who have adjustable-rate mortgages (ARMs) should consider a refinance into a fixed loan to avoid interest rate risk in the future. Moreover, those with 30-year loans should consider refinances, at these lower rates, into shorter duration loans. The depressed forecast for housing values for years to come increases the financial advantages of paying off a mortgage more quickly. Re-engineer your sales process: We cannot expect that the same way we have done business in the past is going to work in the future. Marketing for purchase business is distinctively different from marketing for refinance business. The sales cycle is going to be longer and more is going to be expected of the mortgage professional in the future. We have to be
the elite performer
Listen to and engage with your customers: As every service professional knows, the ability to listen to and respond appropriately to your customers is what separates the great from the “not so great.” In the future of the smaller mortgage industry, the “not so great” will quickly be out of the business. Mortgage professionals are problem solvers and dream facilitators. That can only happen when we listen carefully to the folks with which we are privileged to have a chance to work. The end of the refinance era is upon us. Are you prepared? John Walsh is president of Milford, Conn.based Total Mortgage Services. John founded Total Mortgage Services in 1997 with a customer-centric approach and a mission of responsible lending. He may be reached by e-mail at JWalsh@TotalMortgage.com or visit TotalMortgage.com.
ﬁnally ...the freedom to
originate! America’s Choice gives you the tools you need so you can Originate, Close and Get Paid! Don’t take our word for it, read what our Rising Stars at America’s Choice Say about us!
continued from page 26
Black Hole. The “I’ll just check my messages on Facebook really quick” quickly turns into “Why am I looking at a picture of an ape wearing pajamas that Scott liked” an hour later. Think beyond time and self-management. Build your attention span, don’t restrict it. How productive you are will simply rely on how focused you are. We spend way too much time in the office so we might as well make sure we’re focused enough to justify it. Be a laser.
If you don’t have it already, get Jing (Jing.com). It’s a free program that
allows you to highlight anything on your computer screen and send it to your clients or business partners. It’s excellent for sharing market updates, information on rate sheets, simple snap-shots, anything you can see on your computer screen. Best of all, it’s free!
“This is the first company I have ever worked for where what the recruiter told me was 100% accurate!”
25 years in business
7 years in business
“Your team is ABSOLUTELY THE MOST AWESOME, EFFICIENT, HARDEST WORKING TEAM I HAVE EVER WORKED WITH. YOU ALL ARE JUST AMAZING. I’M SITTING HERE STUNNED AND DEFINITELY USING CAPS ON THIS MESSAGE!!!!! WOWSER, OPA!!!!!
“I really like this organization. My only regret is that I didn’t find you sooner!”
page or through a company that can help you capture those leads. Second, the above numbers also let us know how many people you can market to through direct mail campaigns, as well as cold calling campaigns. If you set up your direct marketing programs correctly with the right partners, HARP will be bigger than you could have imagined!
25 years in business
9 years in business
713-821-9750 to learn how you can have a better, more rewarding career
Raymond Bartreau is chief executive officer of BestRate Referrals, and founder and chief executive officer of www.harpmortgageleads.com. He may be reached by phone at (800) 811-1402 or e-mail RBartreau@BestRateReferrals.com.
Give Jonathan Fowler, Director of National Production of America’s Choice Home Loans a call at
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 20102011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or email email@example.com or visit AndyHarrisMortgage.com.
continued from page 24
or outbound call campaign. We are currently seeing more than 2.5 percent responses with marketing campaigns to current Fannie Mae and Freddie Mac loan holders. Once this new plan launches in full force and major news outlets begin reporting on the program, the excitement should drive direct mail responses up well over the three percent mark. The above-stated numbers provide us with a couple important things to consider. First, there will be at least 11 million homeowners (that you can help) that may be searching online for HARP rates at any given time from now until the end of 2013. It is your job to capture that search, either by your own
“I started with America’s Choice as State Manager at the beginning of 2011 and I’m glad I made the move. ACHL is an excellent company to be associated with. This company offers many of the opportunities we had at previous companies and even some of the same people we’ve all worked with prior to coming to ACHL.”
Tip of the month …
prepared to help our customers analyze the pros and cons of homeownership—which are no longer the same as they have been.
Regulatory Compliance Review The CFPB’s Treatment of Confidentiality and Privilege By Jonathan Foxx
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
On March 12, 2012, the Consumer Financial Protection Bureau (CFPB) announced proposed amendments to the confidential treatment of information obtained from persons in connection with its exercise of authorities under federal consumer financial law. The proposed amendments will add a new section to the rules which provide that the submission by any person of any information to the CFPB in the course of its supervisory or regulatory processes will not waive or otherwise affect any privilege such person may claim with respect to such information under federal or state law as to any other person or entity. Additionally, the CFPB is proposing to adopt a provision which provides that privileged information given by the CFPB to another federal or state agency does not waive any applicable privilege, whether the privilege belongs to the CFPB or any other person. The Dodd-Frank Act did not explicitly address whether the submission of privileged information to the CFPB in the course of the its supervisory or regulatory processes will affect any privilege a supervised entity may claim with respect to such information, even though Congress did provide that “all the powers and duties” of the prudential regulators relating to their transferred consumer financial protection functions would be granted to the CFPB, and this grant of authority encompasses the ability to receive privileged information from supervised entities without effecting a waiver. In this article, I will offer a brief understanding of this complex issue and provide an Action Plan.
The CFPB’s first official release in 2012, Bulletin 12-01, addressed the treatment and scope of confidentiality protections accorded information collected from supervised institutions through the CFPB’s supervisory process. Then, as indicated above, on March 12, 2012, the CFPB proposed the new rule, the purpose of which, among other things, is to codify protections for privileged information submitted by financial institutions that are regulated by the CFPB.
CFPB Bulletin 12-01 The CFPB asserts that “Congress intended the Bureau’s examination authority to be equivalent to that of the prudential regulators,” with respect to the statutory provision that grants prudential regulators the authority to receive privileged information from their supervised entities without there being a waiver of privilege. The CFPB reached this conclusion by claiming that in inheriting the prudential regulators’ examination authority with respect to compliance with federal consumer financial laws for supervised institutions, it was concomitantly granted “all powers and duties” vested in the prudential regulators related to examination authority. And one of the powers is the ability and authority to receive privileged information without affecting a waiver. However, it should be noted here that the statutes cited by the CFPB in support of its claim apply to federal banking agencies, not the CFPB. Thus, it seems that the CFPB is not entirely in a position to use, mutatis mutandis, the same statutory privilege protection provided for in Dodd-Frank. Bulletin 12-01 addressed two specific parts of the CFPB’s policy on confidential information.
History The CFPB first announced in October of 2010 that it would be gathering information from banks and nonbanks in its efforts to examine and supervise financial service products. Many financial institutions at the time expressed considerable concern that divulging privileged documents to the CFPB would be deemed a waiver by the courts, thereby permitting competitors and consumer groups to access the privileged documents.
It states that institutions providing privileged information to the CFPB pursuant to a supervisory request will not waive any privilege that attaches to such information. It indicates that the CFPB will treat information obtained through the supervisory process as confidential and privileged, and, importantly, it provides that the CFPB will only disclose such information to prudential
and state regulators, when necessary and/or appropriate, and to law enforcement agencies, only where justified, as determined by the CFPB. Bulletin 12-01 seeks to resolve an intrinsic issue regarding the CFPB’s lack of a statutory examination privilege such as that provided to the federal banking agencies. Although the Bulletin provides possible legal support for why similar privilege applies to supervisory information provided to the CFPB, the outline itself does recognize the absence of the same statutory protection that the federal banking agencies had been compelled to pursue in the Financial Services Regulatory Relief Act of 2006 (FSRRA), specifically Section 607. Section 607 of FSRRA was important to the federal banking agencies because several courts had diminished the existing common law examination privilege. Broadly speaking, this section was adopted in order to have statutory protection that could not be challenged. In my view, the legislative history involved in drafting Section 607 of the FSRRA suggests that supervised institutions which disclose privileged information to the CFPB should be mindful of the issues and potential risks in doing so, given the CFPB’s assertion that it has the same authority and legal protections in place as the federal banking agencies to receive privileged information without effecting a waiver of the privilege.
Proposed rule A core feature of the proposed rule is the following provision: The submission by any person of any information to the CFPB for any purpose in the course of any supervisory or regulatory process of the CFPB shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim with respect to such information under federal or state law as to any person or entity other than the CFPB. On July 28, 2011, the CFPB issued a
rule providing that the “provision by the CFPB of any confidential information pursuant to [12 CFR part 1070, Subpart D] does not constitute a waiver, or otherwise affect, any privilege any agency or person may claim with respect to such information under federal law.” In other words, the proposal would ensure that the CFPB’s transfer of privileged information to another federal or state regulatory agency will not waive any privilege that protects the confidentiality of the information. The CFPB claims that the proposed rule is substantially identical to the statutory provisions that apply to the submission of privileged information to prudential regulators, state bank and credit union supervisors, and foreign banking authorities. According to the CFPB, the rule would be comparable to the federal law that protects the confidentiality of information that is provided to other regulatory agencies. Additional language precludes claims that the rule implicitly waives any privileges if information is provided under other circumstances. The Dodd-Frank Act does actually provide that the CFPB assumed all of the powers and duties covering consumer financial protection that previously were held by the other agencies, and it also causes the CFPB to adopt rules to protect the confidentiality of information it receives. Subpart D (referenced above) makes clear that the CFPB is authorized to disclose, in “appropriate circumstances, confidential information to another Federal or State agency.” The operative words in this language are “appropriate circumstances.” It seems that the CFPB is endeavoring to provide assurances that providing privileged information will not breach confidentiality.
Confidentiality The rule provides that information obtained during the supervisory process will be treated as confidential and privileged, consistent with the policies of other prudential regulators. Furthermore, the CFPB will treat such information as exempt from disclosure under the Freedom of
Information Act (FOIA), and will not routinely share such information with government agencies not engaged in supervision. But, the CFPB will share a supervised institution’s confidential supervisory information with other prudential and federal regulators and state regulators that share supervisory jurisdiction over the institution with the CFPB. When confidential supervisory information is shared with another federal or state agency, the CFPB asserts that such information remains the property of the CFPB and may not be further disclosed or shared by the recipient without the CFPB’s permission. It is important to take note of the fact that the CFPB may share confidential supervisory information with law enforcement agencies, such as State Attorneys General. That is, the CFPB will share confidential information in these situations “except where required by law,” and/or “only in very limited circumstances and upon review of all the relevant facts and considerations.” The decision to share confidential supervisory information with state and federal law enforcement agencies depends on the significance of the law enforcement interest at stake. The CFPB may take the position that the furtherance of a significant law enforcement interest will not always be sufficient. Presumably, the CFPB may actually decline to share confidential supervisory information with law enforcement based on other considerations (i.e., such as “the integrity of the supervisory process,” and the importance of preserving the confidentiality of such information).
Identify sources of supervisory information, policies and procedures, with respect to controls imposed on the sharing of such information. Enumerate the logistical steps that should be exercised prior to providing confidential supervisory information to the CFPB. Retain risk management consultants and legal advisors to determine corrective actions needed to remediate potential weaknesses in the information sharing and compliance program. Determine the supervisory information held by related entities, such as affiliates and third-party service providers, to assess risks that may be posed by sharing such information with the CFPB, and remediate any weaknesses.
Wholesale Lending 31
When the CFPB requests confidential and privileged information, endeavor to limit the form and scope of such requests. State any claim to privileged information in a response to the CFPB; for instance, by designating in emboldened type all privileged documents as such on the documents themselves that are conveyed to the CFPB. Consult with experienced counsel before disclosing any document or information to the CFPB that might be considered subject to confidentiality and privilege. The CFPB has already begun examinations. It is incumbent on responsible management of a supervised financial institution to put in place the appropriate means to preserve the treatment of confidential and privileged information. Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at firstname.lastname@example.org.
Same owner navigating industry since 1986. Privately held.
#1 USDA RD lender in multiple states Quality FHA/VA lender Innovative technology Direct access to your underwriter Instant closing docs
www.PolarisHFC.com 616-667-9000 info@PolarisHFC.com NMLS ID#: 38072 Licensed in: AL, AR, AZ, FL, GA, IL, IN, IA, KS, KY, MI, MN, MO, MD, OH, OK, PA, NC, SC, TN, TX, VA, WV, WI
The following list is not meant to be comprehensive; however, it suggests
Conduct a self-assessment of operational, compliance, legal and other risks that may arise from sharing confidential supervisory information with the CFPB, including, but not limited to, the effects on the company for sharing such information.
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A Bright Spot in
Although existing case law favors the view outlined by the CFPB in Bulletin 12-01, and the proposed rule provides certain substantive grounds to adopt the protections that will continue to attach to confidential and privileged information shared with the CFPB, it is unsettled at this time whether a court could find that a supervised institution waived a privilege by sharing such information with the CFPB. Further, the lack of the same statutory protections afforded to the federal banking agencies infers uncertainty, particularly for nonbank financial firms providing information to the CFPB. Therefore, the most important consideration for supervised institutions and nonbank financial firms is to determine how the proposed rule will apply to their existing operations and take steps to implement policies and procedures for document review policies and procedures to minimize risks.
certain actions that a financial institution, bank or nonbank, should implement in preparation for a CFPB examination, with respect to protecting the confidentiality and privilege of its documents and information.
The Calm Before the Storm By Laurie Spira
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The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) was signed into law on July 21, 2010. More than 800 pages long, the Act requires a rulemaking process that could take as long as five years and could result in as many as 250 rules from 20 different regulatory agencies. Mortgage lending professionals are especially interested in the progress being made on implementing the requirements of Title IX, which addresses credit risk retention for asset-backed securities; Title X, which establishes the Consumer Financial Protection Bureau (CFPB); and Title XIV, the Mortgage Reform and Anti-Predatory Lending Act. Although some of the Dodd-Frank Act requirements have been implemented in the almost two years since the Act was signed, the most significant impact is likely to be felt in the next 18 months. By July 21, 2012, the CFPB is required to propose rules and model disclosures that combine the disclosures required under the Truth-in-Lending Act (TILA) and Sections IV and V of the Real Estate Settlement Procedures Act (RESPA) into a single, integrated disclosure. Consumers and the industry (including the members of DocMagic’s Compliance Department) have been actively involved in reviewing prototype disclosures through the CFPB’s “Know Before You Owe” project, which put draft disclosures online to obtain public input. The CFPB has also conducted consumer testing and is currently engaged in a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process, which will examine the impact of the proposed disclosure changes on small businesses. The prototype disclosures and the SBREFA documents suggest that the proposed rule and model disclosures will be a significant departure from the current TILA and RESPA disclosures. In addition to the requirement to combine the current TILA and RESPA disclosures, Title XIV of the Act amends TILA and RESPA to require new disclosures that must be provided in the Loan Estimate or Settlement disclosures. Title XIV also adds other new disclosure requirements that aren’t specifically included in the Loan Estimate or Settlement Disclosures. Title XIV provides that these regulations or amendments to the consumer law must be final by Jan. 21, 2013, with an effective date not later than Jan. 21, 2014. Although the CFPB has stated a belief that final regulations implementing these Title XIV disclosures simultaneously with the final TILA-RESPA rule would improve the overall effectiveness of the disclosures, it may not be possible to issue a final TILA-RESPA rule by Jan. 21, 2013. Accordingly, the CFPB is considering a proposal to use its authority to exempt lenders from the Title XIV disclosure requirements temporarily until the TILA-RESPA disclosure rule takes effect. Until the TILA-RESPA rule is proposed, though, the industry cannot know exactly what to be prepared for, and what the effective date is likely to be. Until final regulations are implemented, during this calm before the storm, those persons in operations, compliance and risk management can prepare for what might be, based on what we all know today. For example, the business of planning systems and policy updates may begin now. In addition, for those with proprietary systems, new data points that may need to be collected to complete the TILA-RESPA disclosures based on previously published prototypes could be identified. Whatever preparations you can start today will better protect you from the storm of regulations that lie ahead. Laurie Spira is chief compliance officer with Torrance, Calif.-based DocMagic Inc. She may be reached by phone at (800) 649-1362, ext. 6446 or e-mail email@example.com.
360 Mortgage Group Adds Closing Doc Functionality to Its Broker Network 360 Mortgage Group has announced the release of Broker Docs, a closing document clearing functionality now available online to all 360 Mortgage Group brokers. This new feature to 360 Mortgage Group’s suite of proprietary online origination tools is expected to shorten closing time by at least 50 percent. Developed by 360 Mortgage Group Chief Operating Officer Andrew WeissMalik, Broker Docs automatically and instantaneously delivers closing instructions to a closing agent whenever a broker submits a documentation order request and a “Clear to Close” has been issued within the file. This allows closing agents to work on a file prior having a 360 Mortgage Group closer review it, thereby reducing the time required to close a file. “Instead of having to wait on our staff to process a doc order request and deliver closing instructions to the closing agent, now the originator stays in control of the delivery of closing instructions,” WeissMalik said. “As far as we can tell, no other wholesale lender is offering this kind of tool to its brokers.” The development of Broker Docs is the latest in a series of proprietary tools 360 Mortgage Group has developed to empower its brokers to complete as much of the origination process as possible. Previous advancements include the development of FHA Connection, which allows 360 brokers to pull case numbers directly from FHA’s portal, and an online chat tool that instantly connects brokers to a 360 account executive. “360 Mortgage Group does not hire anyone it can’t explicitly trust to deliver zerodefect, salable loans,” WeissMalik said. “We have built our technology platform with an eye towards putting as much control as possible in the hands of our brokers, and our miniscule default rate demonstrates that trust has not been misplaced.”
mented Fannie Mae’s HARP 2.0 program requirements with Unlimited LTV/CLTV. UWM was one of the first lenders to implement the government’s adjustments to HARP 2.0 when it went into effect Dec. 1, 2011, and now they have effectively implemented the expansion of HARP 2.0 into their Easiest Application System Ever (EASE) broker portal. “With the heavy volume of HARP 2.0 submissions that we are receiving, UWM has not faltered in providing superior customer service, communication and consistency,” said Mat Ishbia, president at UWM. “Our swift implementation of HARP 2.0 is proof that UWM’s exceptional staff can meet and exceed broker expectations in all areas of operations and with every product offering. At UWM, we want to make it as easy as possible to do business with us; investing in resources to quickly implement HARP 2.0 for our brokers was atop the priority list. This high level of service and speed to market holds true to our companywide mantra of ‘Lending Made Easy.’” In addition to HARP 2.0, UWM recently rolled out The Big & Easy, a true jumbo loan up to $2.5 million, as well as the ability to help their brokers become bankers by issuing a correspondent line. To round out their spectrum of product offerings, USDA will be available in April 2012.
Rates in Motion Gets Web Makeover
Rates in Motion, a free daily video blog that serves as an educational resource for consumers shopping for mortgages, announced that it has renovated its Web site. “The improvements align with Rates in Motion’s philosophy to be consumerfriendly,” said Rates in Motion owner, host and mortgage expert, Mike Cox. “The Web site presents sometimes technical information in a more easy-tounderstand format. Getting a mortgage United Wholesale can be very complicated and someMortgage Unveils HARP times very frustrating so we wanted to 2.0 Unlimited LTV/CLTV improve upon the experience.” Implementation With DU Cox said the enhancements are United Wholesale Mortgage (UWM) has designed to make it more convenient announced that it has for consumers to: Subscribe to the daily successfully imple- blog easier; subscribe to comments on
a specific blog article; track replies to comments; browse through episodes with a new search functionality using keywords such as “FHA” or “VA” to instantly find videos relating to the chosen subject; navigate the site to find what they are looking for; utilize more social sharing features to share videos more easily on their favorite social platform; arrive at RatesInMotion.com and find the video of the day instantly on the homepage without having to click anywhere else; and view Rates in Motion’s approved lenders and other business partners. “At the end of the day, it is our main goal to help individuals get the best deal on their mortgage and educate them along the way,” Cox said. “Our improved Web site supports our goals with helping them consume helpful information faster.”
LPS Extends Its Streamlined Settlement Program Supporting HARP 2.0
continued on page 43
By Beverly Frase
ith 30 years of experience in real estate management and 20 years of doing mortgages full-time, Douglas C. Rice of Fidelity First Home Mortgage understands his business inside and out. He strives to ensure that his customers understand the entire mortgage transaction too. “I want them to feel comfortable every step of the way,” said Rice. “From the time of first contact, at the point of application, and before and after closing.” With a good bit of his business coming from referrals, his strategy is working. “Whether it’s helping our military personnel purchase a home or refinance, I always enjoy finding the best program to suit their financial needs,” Douglas said. “In the last 48 months, we have seen tremendous turmoil and uncertainty in the entire U.S. financial system, especially the mortgage “Our military servicemen and industry. At Fidelity First Home Mortgage, women have sacrificed ‘big time’ to I can offer my customer all the possible proserve our country. Helping them grams in the entire mortgage industry, and with their VA loan or other get them the lowest wholesale rate from our financing is just one very, very small 35 different investors.” way I can repay them for their Like all Mortgage Heroes who work with service of protecting me, my family this special military niche market, Douglas and loved ones, fellow citizens, and loves to remember those times when he country. May God bless our troops, made a big difference in the lives of his miland keep them out of harm’s way!” itary clients. —Douglas C. Rice “I helped a military family refinance their Fidelity First Home Mortgage, VA home loan and consolidate their bills at Annapolis, Md. the same time,” he recalls, “saving them $1200 a month! The savings allowed the wife to remain a ‘stay at home mom.’ That was very important for them since they had two young children.” The refinance was a life-changing event for that family. Multiply by the number of loans Douglas Rice has done for his military borrowers, roughly 2,000, and you have a good idea of how important it is to provide skilled services for our military heroes. Douglas helps his military clients become financially savvy. “There is so much misinformation out there,” Rice said, “about what it takes to either refinance a VA loan, or to purchase a home with a VA loan. Most people think their credit has to be perfect, and that is just NOT the case! It is very important to get the facts, and to make the best plan for that military servicemember and the family. I do free consultations and pull free ‘mortgage’ credit reports. Most consumers get free credit reports which are not the same scores used by VA lenders!” Doug helps servicemembers come up with the best strategy for their homeownership. If it turns out they aren’t yet in a good position to purchase, he works with them to be ready at some point in the future. “As most veterans know,” he says, “you cannot win the war without a sound battle plan!” Be a Mortgage Hero! This recognition is free to Certified Military Housing Specialists. Take the FREE Certified Military Housing Specialist course offered online by USA Cares and tell us how you are “Helping those who defend our homes, preserve their own.” Please contact Program Manager Beverly Frase at firstname.lastname@example.org to join our national team and be our next Mortgage Hero. We want to recognize you!
Fidelity First Douglas C. Rice Senior Loan Officer Office: 410-266-2544, ext. 24 Toll-Free: 866-266-2544, ext. 24 Cell: 410-991-4532 Fax: 206-202-9032 E-mail: email@example.com
Coester Appraisal Group has launched Cloud Control, its revolutionary new
Douglass C.. Rice,, Seniorr Loan n Officer Fidelityy Firstt Homee Mortgage,, Annapoliss Md.
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Coester Appraisal Group Launches Cloud-Based Appraisal Tool
USA Cares Mortgage Heroes
Lender Processing Services Inc. (LPS) has announced that its LSI Title Division is extending its Streamlined Settlement solution to help lenders meet the Home Affordable Refinance Program (HARP) 2.0 agency program guidelines. “Since 2009, LSI has been the leading provider of technology that enables lenders to quickly and efficiently close HARP loans utilizing LSI’s proprietary AQUASM title production platform,” said Ron Frazier, president of LPS’ LSI Title Division. “The combination of LSI’s settlement workflow and proven Web-based closing platform, ClosingStream, has enabled LSI to close a majority of all HARP loans processed in 2010 and 2011.” LPS has been at the forefront of providing technology that helps lenders and servicers implement HARP requirements, with functionality that enhances performance, including three to five day subordination turn-times and improved closing rates, while also reducing settlement and processing costs. “We are proud that our Streamlined Settlement technology was used to help so many borrowers refinance in the HARP program,” said Al Verkuylen, title executive of LPS’ LSI Title Division. “With an expanded focus on HARP 2.0, we expect to continue supporting our customers through our best-in-class technology and services, which leads directly to improved opportunities for homeowners.” Additionally, LPS’ core servicing technology, MSP, can identify which loans are eligible for HARP 2.0, present the loan-to-value (LTV) ratio to the servicer, show if a property is owner-occupied and provide origination data.
appraisal management technology. Cloud Control is the only appraisal management software built on the awardwining platform of Salesforce.com, which Forbes magazine designated as the most innovative company in the world in July 2011. Cloud Control enables lenders to customize their appraisal processes far beyond the levels offered by other appraisal management technologies. Cloud Control offers virtually limitless customization—users can create business rules to automate virtually any function, from protecting standards through firewalls and safeguards, to businessunique sales and marketing activities that help companies generate new business in addition to enhancing compliance and efficiency. Coester is providing Cloud Control completely free of charge to all lenders—Coester customers and noncustomers alike—without obligation to use any additional Coester valuation service, whatsoever. Cloud Control is a cloud-based, end-to-end appraisal management technology that efficiently manages the entire appraisal cycle. In addition to automating functions and tasks ranging from relaying the initial request to the lender’s desired appraisal panel to filing and storing the completed report, the system automatically extracts and converts data into UCDPcompliant formats and submits appraisal data through the Uniform Collateral Data Portal (UCDP). Cloud Control provides the property value as estimated by an automated valuation model (AVM), provides reviewers’ notes for every appraisal report, and verifies that the appraiser and property adhere to industry requirements by cross-checking resources like ASC.gov, FHA Connection and FEMA. “As an AMC, we had tried most of the appraisal management software on the market and we couldn’t find one with anywhere near the customizability we need, so we built Cloud Control,” said Brian Coester, CEO of Coester Appraisal Group. “Other technologies claim customizability but only offer minimal configurability. Cloud Control can be configured to do virtually anything you want—all the way down to the actual user level.” Cloud Control utilizes the Salesforce.com platform and provides virtually the same power and flexibility offered by Salesforce.com’s customer relationship management (CRM) software, Sales Cloud, a technology specifically designed to make it faster and easier for companies to connect with and service their customers, and to do so in a way that promotes high service levels and increased sales. With Cloud Control, users can fully automate the appraisal status notification and escalation processes at the user level, which means that users can automatically receive key information on customers and vendors, based on any trigger— such as a phone call—in real time. The system can also be set up to send cus-
Becoming an Involved Leader Contribute your time, experience and creativity towards influencing solutions By George L. Duarte, MBA, CMC
“Be an industry leader; represent consumers’ right to the American Dream, and small business by being involved and contributing your ideas to your local and state legislators.”
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efending your industry and the consumer’s right to choose service providers means that you have to remain engaged in the advocacy and legislative/regulatory process, no matter what forces or trends are operating against you. Those of us in the mortgage loan originator (MLO) business, especially as independent brokers, have seen the tidal wave of blame, recriminations and the resultant flood of knee-jerk reaction legislation and new regulations overwhelm the market. Starting with the Home Valuation Code of Conduct (HVCC), one regulation after another, layered on without considering the individual or cumulative effects, are causing the real estate market to fail to recover; causing further confusion among consumers, and creating unlimited liability for MLOs and lenders. When people get confused, they do nothing. We’ve all seen the statistics of how many potential first-time homebuyers are sitting on the sidelines, failing to take advantage of this historical juncture of the lowest rates ever, and depressed property values. Their fear of the security of their jobs in this economy is compounded by confusion of the mortgage process and extensive paperwork; with no clear assurance on the future value of owning a home. For the first time ever, there are forces inside and outside of government questioning America’s historic commitment to homeownership as the integral foundation of “The American Dream.” They say that there is nothing wrong being a life-long renter, and there are many people who just shouldn’t own homes. “They” fail to say that when you’re a renter, you’re paying the landlord’s mortgage; and that homeownership is the historically proven method for the 99 percent to build equity and savings over their lifetime. It is also not mentioned that individual homeownership has been critical to the economic advancement of African-Americans, Hispanics and other minorities in this country. Thankfully, this battle is still being waged, and “they” have not yet managed to prevail, and deprive Americans of their right to the American Dream. This is where we in the mortgage origination industry should choose to stay high profile and be more engaged
than ever. We are warriors defending the American Dream, and the rights of small businesses to survive as a viable consumer choice distribution channel against the marketplace and regulatory advantages of those entities that are “too big to fail.” We are out there in the streets every day, working and helping real people solve their problems and achieve their goals; no one knows the effects of the current economy and poorly-thought-out regulations have upon consumers and the real estate market better than us. It is easy to become discouraged and feel helpless against the flood of recriminations and resultant regulations that has occurred over the past four years, but this is exactly what our adversaries want to have happen, so that we give up the fight and quietly go away. However, it is important to understand that the wheel has again turned, and that things have gotten so bad in the real estate market in most of the country without any apparent hope for improvement, that legislators are becoming much more receptive to ideas from industry veterans; recognizing that we are in the trenches every day, and that we know what works and what doesn’t. Therefore, it is more important than ever to be engaged at every level of government, from city council to county supervisor to State Assembly and Senate to members of Congress. Remember, a famous man once said that all real estate, like politics, is local. It is impossible to underestimate the potential possibilities of establishing relationships with your local legislators, especially in these times of hyper communication. The marketplace and legislators are thirsty for positive input and good ideas. Be an industry leader, stay in the game, make sure your voice is heard as an industry expert who knows how it works; and be sure to contribute to the discussions of how to improve the real estate market. To this end, I have written a bill designed to address all the loans that HARP 2.0 does not—adjustable-rate mortgages (ARMs) that are owned by other than Fannie Mae and Freddie Mac that are jumbos, monthly adjustables, Alt-A and sub-prime loans. In California, the majority of loans in the state are not owned by Fannie and Freddie, and most Californians are not helped by HARP 2.0. The bill is called the “Homeowners Relief and Home Retention Act of 2012” and appears below for your review and thoughts. I have been around the legislative and bill-making arena for many years and harbor no illusions about the chances this bill has, or what the end product would look like. I also have no emotional investment in this bill, knowing it will be bent,
spindled and slammed, and I will take no personal offense at that process. Obviously, I think the bill has a lot of merits to benefit both consumers and the banking industry (it doesn’t require principal balance reduction or cramdowns); doesn’t require any government money; and lowers the homeowners’ payments substantially for a five-year period, pumping much needed liquidity into homeowners’ hands. This bill is designed to stimulate serious discussion about doing something different to address the housing crisis, the situation is not improving by conventional thinking. To do things the same way and expect different results is the definition of insanity. I have had discussions with several members of the California State Senate and Assembly about this bill, and they are very receptive to having it move through the bill creation and sponsorship process. Right now, this bill has been submitted to the California Association of Realtors (CAR) State Legislative Committee and on to their lobbying team for review, discussion and proposed sponsorship by CAR. We remain very optimistic about its chances, having gotten very good feedback on the idea. Here is the bill in its current and original form as of April 2, 2012:
Homeowners Mortgage Relief and Home Retention Act of 2012 Summary-Situation Report The economy continues to be stalled, unemployment remains stubbornly high and the real estate market has stabilized in some areas, but continues to deteriorate in others. Many homeowners are still distressed, causing more properties to go on the market at ever lower prices, to the point where more than half of homes for sale in any given area are short sales and foreclosures, with “regular” listings in the minority. Those who don’t have to sell, don’t, preferring to wait it out. Even those homeowners who are willing to hold on and wait it out in rapidly declining areas are losing hope, and considering walking from their properties. So far, federal efforts to stem the housing crisis have done little if any good, to the frustration of homeowners and Congress alike, look at the Hope 4 Homeowners Program—announced with great fanfare in 2008, but with no net effect at all. President Barack Obama’s latest efforts, a re-working of
his Administration’s Home Affordable Refinance Programs (HARP), HARP 2.0, will apply to only a minority of Californians whose loans are owned by Fannie Mae and Freddie Mac, it has been expanded to remove the loan-tovalue (LTV) limits. It is estimated that nearly 60 percent of all the mortgage loans in California do not qualify under HARP 2.0, limiting the benefits and impact in the state. This estimated 60 percent consists of option ARMs, subprime loans (which are ARMs), and jumbo loans, most of which are either option ARMs or intermediate ARMs. The American economy will continue to flounder until the housing market is stabilized and consumer confidence returns. Two things need to occur: Stop the decline in property values by establishing stability in mortgage payments and returning a measure of affordability to existing homeowners, encouraging and enabling them to stay in their homes. Establish credit liquidity into the market to enable and encourage firsttime homebuyers to purchase the excess inventory of homes from homebuilders, foreclosures and short sales. Homes are more affordable than any time in the past 15 years, with the home affordability rate in California now at over the 60 percent mark, up from only 16 percent just five years ago. There is a pent up demand in young families looking to establish their households and families, whose twin problems are availability of downpayment and closing cost funds, and much tighter qualifying guidelines. The only low downpayment program available now for non-veterans is the FHA program; along with the Cal HFA program that is periodically available, but unreliable due to the state’s fiscal crisis. FHA has recently increased its downpayment requirement, and raised the mortgage insurance premium (MIP) fee as well, which it will be doing again twice more in 2012. The FHA program has actually historically been of limited utility in California, with too low loan limits, which is large part of what caused the rise of sub-prime loans in the first place. The current management of FHA is very concerned for the safety and viability of the program, because its usage has increased more than 120 percent in the last year. The underwriting requirements have gotten more conservative, with requirements for higher credit scores as an example. continued on page 44
New Developments in the Foreclosure Crisis By Patrick M. Roberts Esq.
deed is void on its face. The specific holding of Lona was that the lenders failed to timely oppose the homeowner’s argument that the tender requirement did not apply due to his objection to the validity of the debt, based on unconscionability. While the case is limited in its application and is by no means resolved, this is an interesting issue which will bear observation in the future to determine if other courts refine the unconscionability
argument relating to predatory lending. If so, borrowers may have another weapon in the arsenal for opposing lender foreclosure actions. Patrick M. Roberts Esq. of Gray Duffy LLP is an experienced litigator and trial lawyer in matters including business disputes and construction related claims and defects. He may be reached by phone at (818) 907-4000 or e-mail firstname.lastname@example.org.
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The real estate market’s foreclosure crisis continues to evolve and, as it does, so does the law governing wrongful foreclosure and related lender defenses. One theory that homeowners have used to set aside foreclosures in the past, was that an improper assignment or transfer of the mortgage or Deed of Trust by the lenders rendered it invalid. Historically, whenever a mortgage or Deed of Trust was transferred or assigned, the transaction was recorded in the Real Property Records. However, in recent years, lenders have transferred Deeds of Trust or mortgages (or certain fractional shares of the same) so frequently that lenders no longer record each particular assignment. To assist with the epidemic of mortgage recordation, lenders began utilizing the Mortgage Electronic Registration Systems (MERS), a nationwide registry system which held various Deeds of Trust in its name. When an interest was transferred, the Deed of Trust stayed in the name of MERS, and a transfer was simply made in the internal records. An argument raised by homeowners in foreclosure litigation following the adoption of MERS was that MERS itself was illegal, and foreclosures under Deeds of Trust held by MERS were improper and could be set aside. Specifically, borrowers would allege that MERS was not the “true” beneficiary under the Deed of Trust, never had ownership of the promissory note, nor held an assignable interest in the note or Deed of Trust. As such, any assignment of the note by MERS to any other institution was invalid. The law is clear that any irregularity in a foreclosure is construed against the homeowner, who has the burden of proof when contending that a particular foreclosure sale is invalid because a lender lacked authority to conduct it. Lenders previously argued that showing MERS to be merely a nominee was insufficient to demonstrate that it lacked authority to make a valid assignment on a note on behalf of the original lender. Prior to 2012, there was very little California authority on this particular issue. However, three recent California Court of Appeals decisions have affirmatively rejected attacks on MERS in favor of lenders: Ferguson v. Avelo Mortgage LLC, Gomes v. Countrywide Home Loans, and Fontenot v. Wells Fargo. These decisions can be cited for the proposition that California homeown-
ers are unlikely to prevail on the arguments that MERS is not valid or that the foreclosing lender has to prove the validity of its assignment. As the cases demonstrate, a lender’s typical defense to a wrongful foreclosure lawsuit is to argue that, under the prevailing law (specifically Civil Code Section 2924), a homeowner must show that there was an irregularity in the trustee sale—an often insurmountable burden for plaintiff homeowners, as the sale is presumed to be valid pursuant to statute, but this is not a closed issue. Just last December, the California Court of Appeal in Lona v. Citibank NA determined that when a bank fails to consider the income and credit of a homeowner before issuing a loan, that loan agreement may be unconscionable. In Lona, a lender enticed a homeowner to refinance his home for $1,500,000, saddling the homeowner with monthly payments four times greater than his income. After he defaulted on payments and the house was sold at a foreclosure sale, the homeowner filed an action for “predatory lending” (i.e., lending sums of money which cannot possibly be repaid by a borrower based on their income) against the lender, the loan servicer and others, seeking to set aside the sale. Despite the homeowner’s failure to tender amounts due on his loan—usually a requirement to set aside the sale—and even though no statutory exceptions to this “tender requirement” applied, the court ultimately decided that, pursuant to Civil Code Section 1670.5, the homeowner would be allowed to proceed to trial on the issue of unconscionability based on the argument that the loan was both unconscionable and illegal because they were made to the homeowner without reasonable consideration of his ability to repay the loan given his income at the time, and further, the interest rate far exceeded what was reasonable given his credit rating at the time of the application. Lona raises an interesting issue for homeowners, who, instead of claiming one of the four historical exceptions to the tender requirement, may now be able to argue unconscionability to circumvent their obligation to tender amounts due to their lender in order to set aside a foreclosure sale. The court made note of the four historical exceptions to the tender requirement, stating that a tender will not be required if the borrower’s action attacks the validity of the underlying debt; when the person seeking to set aside the sale has a counterclaim or set off against the beneficiary; where it would be inequitable to impose such a condition on the party challenging the sale; and when the trustor is not required to rely on equity to attack the deed because the trustee’s
“The law is clear that any irregularity in a foreclosure is construed against the homeowner, who has the burden of proof when contending that a particular foreclosure sale is invalid because a lender lacked authority to conduct it.”
The New Age of Leadership By Daniel Milstein
As the mortgage lending industry continues to stabilize and regain its stature as a well-respected profession, leadership is an especially timely topic During the last few years, we have witnessed a serious exodus of mortgage industry leaders, as their firms imploded or otherwise suffered, or key executives have switched careers. Many watchdog critics and industry insiders have stressed that a lack of capable leadership was a major contributing factor to the mortgage lending industry’s “meltdown.” While that claim may be an oversimplification, it does underscore the importance that all businesses—especially those being carefully monitored by government agencies and the public—should place on developing quality leaders. Our industry’s crisis certainly has made companies reevaluate the qualities of leaders and how we prepare them for the major challenges as well as their everyday responsibilities.
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Primary traits When evaluating the essential attributes for successful leaders, I consider “visionary” to be at the top of the list. Leaders must be able to look ahead and not only plan and execute long-term goals, but ideally, how they can help enhance their company’s prominent and influential position. This requires frequently stepping out of the day-to-day operational mode to look five and 10 years into the future to anticipate the industry’s likely direction and how the organization can make a difference at many levels. Leaders have to be forecasters and creative thinkers. Other key leadership characteristics include: Knowledge: Obviously, leaders must have a thorough understanding of all facets of the mortgage (or other industry), along with a familiarity of the general business environment. Being an expert is critical to instilling confidence among your staff. Adaptable: As we have seen, true leaders are able to adapt to the inevitable changes of their industry and the marketplace. Mortgage companies that have survived and thrived throughout
the lending industry crisis have modified their operational policies and systems to address new regulations and other developments. We have all had to rethink our prior ways of doing business and make the transition to a redefined mortgage industry. It has become even more important for leaders to anticipate the primary changes so that they are usually in a proactive rather than reactive state. Work ethic: Most leaders—whether they are department heads or company chief executive officers—work hard to get to their position. It typically requires a special commitment to achieve a leadership role, which involves extra hours for training, juggling new responsibilities and charting a new course for their ongoing advancement. Most leaders do not follow the 9 to 5 schedule. I strongly believe in leading by example; it is essential that your staff sees that you are willing to work as hard as they do. I personally make it a point to arrive early, work through lunch and to stay in my office past “closing time.”
inating with their loan officers. Integrity: More than ever, leaders have to believe in and adhere to a strict code of ethical standards. Company employees must know that the people running the company are scrupulously honest in how they deal with customers, vendors and others.
“Our industry’s crisis certainly has made companies reevaluate the qualities of leaders and how we prepare them for the major challenges as well as their everyday responsibilities.”
While age can be a factor in determining if someone is ready to be an effective leader, it is not a primary consideration. There are “older” business veterans who aren’t suited to be a supervisor or company executive and there are much younger people who are ready for a top position. I know that a few competitors questioned whether I was ready to open Gold Star Mortgage 12 years ago when I was 25. But I have concentrated on refining my own leadership skills, assembling an exceptional group of other managers, and working with them to create a highly successful company. I believe the doubters have become believers.
Attracting leaders Interpersonal relations: Many otherwise capable leaders lack one fundamental trait—the ability to develop good working relationships with other employees. You must be recognized as the one in charge, but also show that you are able to work well with others. Establishing an open door policy that encourages people throughout our company to call or visit my office whenever they have a question, suggestion or problem has helped further strengthen rapport with employees. Teamwork: Growing a company is a team sport. A leader is one of the teammates, albeit a principal player. Even if you believe you know the answers to most situations, you must work with others to arrive at a consensus. Being part of the team also means that sales managers, executives and other leaders should at least occasionally work side-by-side with other employees. For example, managers who haven’t closed a loan in years should spend time orig-
There is no one way to identify and attract leaders. Some people definitely have innate leadership qualities that are ready to be developed. These “born leaders” may need a little prodding for their best traits to flourish. As human resources directors and chief operating officers know, attracting the best leader candidates requires a combination of financial incentives and other benefits. For example, along with providing competitive compensation packages, we know that some mortgage professionals are interested in joining Gold Star because of our reputation as one of the “Top Places to Work.” We’ve been fortunate to have experienced minimum turnover. In addition to hiring experienced mortgage professionals from outside the company, we like to hire younger people who have ambitions to grow beyond their initial position. We put them through our extensive training program that involves working closely with mentors and other staff. Some thrive on the challenging six-month program, while others quickly indicate that
they are not able to “make the grade.” We also watch for potential leaders by paying close attention to productivity reports, meeting presentations and other signs that someone possesses leadership qualities. We encourage people to take advantage of all appropriate training and educational opportunities so that they are comfortable and ready to assume a leadership role.
All companies invest a certain amount of money and time in developing their leaders, so they must do everything reasonable to retain them. Managers and top executives eventually become visible to others in their marketplace, including competitors who may court them to leave their current companies. We not only strive to offer the appropriate compensation structure and production incentive campaigns that include sales trips and other rewards, but also take other steps to show that we want leaders to stay. This includes providing them with a clear understanding of their potential advancement, a positive work environment and recognition of their contributions to our success. In addition, I meet frequently with top managers and others to make sure we aren’t missing any signs of dissatisfaction that might make them want to leave. Hiring, cultivating and rewarding leaders is not an exact science. Books and courses provide great insights on mastering the leadership “formula,” but individual companies are ultimately successful because they carefully match their current and future needs with the most qualified people at any given time. Then they continue to fine-tune their leadership program until it is even better. Attracting and satisfying potential leaders to your company isn’t easy, but it is one of the aspects of my job I most enjoy. Daniel Milstein is founder and CEO of Ann Arbor, Mich.-based Gold Star Mortgage Financial and the author of the award-winning The ABC of Sales, Lessons From a Superstar. He may be reached by phone at (734) 971-9900 or email email@example.com.
Vision, Integrity, Inspiration: The Foundations of Strong Leadership By John M. Robbins, CMB
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE APRIL 2012
a great wine that matures over the years, increasing in fullness and complexity. A large contributor to becoming a great leader is the accumulated knowledge and experience that one gains through a variety of market cycles which ultimately forms the basis for educated decisionmaking. It has been said that the more you know, the more you realize what you do not know. It is that accumulation of experience that helps someone become a better, stronger leader. In looking back over the years, a person must learn from their mistakes, realizing that everything is a learning process. True leaders accept responsibility for their decisions and learn from their successes or failures, and then move on to the next challenge. I believe a key principle of leadership is creating an understandable and realistic vision of what can be achieved and then motivating your team to accomplish the task or plan. I also believe, as a person grows in their career, understanding what caused others to succeed or fail becomes a fundamental element in shaping your capabilities. The goal is to develop perhaps the most important and yet rarest of leadership capabilities—the one that guides a company to success, avoiding lethal pitfalls along the way. While experience and vision developed over time are key elements of leadership, so are individual skills and traits. You only need to look at those you have considered mentors and those who have inspired you to achieve things you thought impossible! The words, “dependability,“ “trust,“ “respect,“ “vision“ and “fairness,“ all come to mind. Do not confuse fairness with a passive nature. In many cases, a highlyrespected leader is both regimented and driven. In fact, it is their dedication that inspires others to follow, as long as they feel they are part of a team and treated with dignity and respect. As previously mentioned, a leader both perspires and inspires. Yet, while Thomas Edison said that “genius was one percent inspiration and 99 percent perspiration,” leadership today typically
There has been so much written about leadership. It‘s the subject of books, articles and academic papers all defining what makes a great leader. After all of the discussion, there is one point we can all agree on: Being a leader is not easy in today’s business environment and certainly has become much more challenging for those at the top of mortgage banking companies. As the industry begins to regroup and rethink how it will operate in the future, strong leadership is essential in shaping the behaviors and decisions of those within an individual organization or those who will shape an industry. That is why today‘s leaders in the mortgage banking industry will be best served if they never again abandon the great responsibilities placed on them as providers of “The American Dream!“ Leadership is not doing what everyone else is doing better than they do it; it is about doing what you know to be right, thereby creating trust and respect. A dedication to ethical principles, integrity and customer well-being will always be the best course for your business or our industry. It is ironic that some look to recreate the very products and lack of customer focus that led our industry into the most difficult economy since the Great Depression. Hard lessons are all soon forgotten. These same people continue to ignore regulations on compensation and controlled business arrangements, paving the way for a stronger regulatory enforcement. They are the worst examples of industry leaders, and as always, they cast a bad light on all those who abide by our industry‘s regulations. Leadership within an industry or a company is based on the same principles. Clearly, it is an absence of these principles that will ultimately lead to the same fate—as it always has in the past—failure. Unlike some experts, I do not believe a person must be born with natural leadership skills nor are they all mastered by participating in a college course or MBA program. Rather, they are developed over time, not dissimilar to
involves quite a bit more Being handed a title does inspiration in terms of not make someone a motivating today‘s educatleader. This has become ed workforce. The perspieven more critical due to ration often comes in how the failure of leadership in this inspiration is achieved. the mortgage banking What creates inspiration business in the first and loyalty? Two fundadecade of the new millenmental prerequisites are nium. Bad decisions were trust and integrity. Simply made at every link in the stated, talented people business chain where typically do not remain for leaders compromised the extended periods of time best interests of customers “Being handed a with executives they canto further profit goals. title does not make not trust. Underwriting standards, someone a leader. I also believe loyalty which had stood for years and dedication are by- This has become even as a testament to a discimore critical due products of the environplined and rationale to the failure of ment we create. In successapproach to mortgage leadership in the ful organizations where lending, were cast aside. mortgage banking employees are valued, Now, as the mortgage business in the first they perform significantly banking industry regains decade of the new better and are an inspiraits footing, it is time to see millennium.” tion to other employees who can lead and reestabbecause they are encourlish customer trust and aged to be top performers and strive for confidence. In looking for leadership excellence. It is a leader‘s responsibility to material, it is important to select those provide the tools and guidance neces- who understand that the industry‘s wellsary, enabling everyone in the organiza- being is critical to our individual success. tion to raise the bar on company excel- They need to have the intelligence, vision lence and individual performance. This is and inspiration to influence their peers, especially true in today‘s lending envi- the willingness and stamina to make the ronment, which places a large premium difficult decisions, and an unwavering on creating absolutely perfect loans. dedication to always put our customers‘ Lastly, a great leader must be an hon- interests first. A person can be a boss, but est communicator, one of many areas it is entirely different to be a leader who is where integrity is essential. An organiza- respected. That comes from having tion‘s talent should be able to trust that integrity, building trust, communicating a their leader will share information, clear vision and inspiring those around whether it is good news or bad news. It you through your actions. Mortgage bankcan be said that people can stand good ing companies need true leaders at the news and bad news, but what they can- helm once again. Only then will our indusnot stand is no news. Corporate goals try help consumers make the American need to be communicated throughout all Dream of homeownership a reality. levels of the company. It is important that everyone has a basic knowledge of John M. Robbins, CMB is former chairthe overall plan and how they contribute man of the Mortgage Bankers to the accomplishment of those goals. Association (MBA) and is currently CEO Celebrate the wins but, more important- and president of Bexil American ly, stand up and share the bad news Mortgage, a company he founded in late when necessary. It has been my experi- 2011. Its wholesale business unit, ence that employees who are kept well- American Mortgage Network, is dedicatinformed pull together during difficult ed to serving the broker community. cycles and often become the difference Robbins is a 40-year veteran of the mortwhen weathering a storm. Honest com- gage banking industry. He founded munication is a must and absolutely American Residential Mortgage, which essential to the creation of trust. was sold to Chase Manhattan Bank in Credibility trumps all. 1994, and American Mortgage Network, Leadership is the ability to face which was sold to Wachovia Bank in tough challenges, make the hard deci- 2005. He may be reached by phone at sions, and not compromise on integrity (877) 255-2266 or e-mail loans@bexilthat ultimately sets real leaders apart. american.com.
What Leadership is NOT By David Lykken
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
Never has there been a time when we as Americans have been more confused about what makes for good leadership. Why is this? For years, we seemed to intuitively recognize good leadership when we saw it … so what has changed? Why the confusion? I used to think that it might be the result of a leadership deficit in our nation. However, more recently, I suspect the problem to be centered on the great ideological divide within our nation. There are “leaders” who believe that big government is a solution. Others, like me, believe less government involvement is the solution. As we ponder the question about leadership, I believe the bigger question is: “What is the right direction for our country … more government or less government?” Once that issue is decided, then I believe there will be less confusion when discussing the topic of leadership. The leader of the “bigger government” ideology is going to have a completely different style than a leader who believes in “smaller government.” For all practical purposes, we are a two-party political system. The Democratic Party seems more intent on more government involvement in every aspect of our lives and industry, where as the Republican Party seems to subscribe to less government involvement. As we prepare to go to the polls this coming November to decide the ideological direction for our country, the question becomes: “Who now is the best leader?” One thing seems certain as we face an uncertain world with serious financial problems … we must recognize what makes a great leader. As many of you know who have read my column each month throughout 2011, I have been writing extensively on the topic of leadership. In this article, I want to take a different approach. I am going to write about what leadership is NOT. But before I do, here is a brief summary of the 7-Cs (Characteristics) found in a great leader that I wrote about last year. They were as follows: 1. Character, which I described as that which make up who we really are— our inner person or what makes up our “core.” It’s what drives our every decision, and in many ways, defines who we are—good or bad. It is the
“cornerstone” in the foundation of every leader. 2. Conviction is what you have that guides your every move and causes you to not lose your direction. It is that inner compass that keeps leaders on course with what they believe is the right direction in spite of opposing opinions. 3. Confidence is the hallmark of a strong leader, and works hand-inhand with conviction and character. A leader must have an unwavering confidence in their convictions. Character clearly establishes “true North” on a leader’s compass. 4. Charisma is embodied in most great leaders. They exude genuine selfless magnetic warmth and have an amazing ability to relate to others. 5. Clarity of purpose and direction is the next essential component of every great leader. This is particularly critical and important when confusion surrounds the various options. 6. Communication of all the above is so critical. I used the example of Ronald Regan as someone who was very effective at communicating to a broad and diverse audience. Even his greatest critics admired his ability to effectively communicate. 7. Compassion while leading, especially in difficult circumstances, is a powerful component of any great leader. And several readers wrote me suggesting more “Cs,” all of which were great. If you’re interested in reading any of those articles, I would encourage you to visit NationalMortgageProfessional.com and search “David Lykken” for my archived articles. So if the above 7-Cs describe what a good leader is, what are some of the things that a leader is NOT? Here are some that come to mind immediately. As you read this list, please write down your ideas of what a leader is and is not. Then e-mail your list to me and I will include them and your name in
future articles. So let’s start with the following list of what a leader is NOT”
ally destructive to an organization. An out-of-control ego is like a cancer that must be cut out of an organization if it is to sur1. Leadership is NOT vive. Fear is the common about a position denominator amongst egoThe position or role that centric “leaders.” While fear someone has does not, in can be an effective motivaand of itself, make a person tor, it doesn’t result in a of leader. I know that may healthy organization, espeseem like an “oh duh” obvicially if the fear is generated ous kind of statement, but from within an organiza“One thing seems you’d be surprised how certain as we face an tion’s leadership. I particumany people consider uncertain world with larly like Diana Black’s someone a leader just quote, “Big egos are big serious financial because they hold a title or a problems … we must shields for lots of empty position of leadership. Let’s recognize what makes space.” The very definition get this foundational cornerof “egocentric” drives home a great leader stone in place … leader is the point, “Thinking only of not WHAT you are in terms of position … a one’s self, without regard for the feelings or leader is WHO you are internally. desires of others; self-centered.” True leadSome of you reading this article may ers are self-less not self-centered. know exactly what I’m talking about. You may be working for someone or have 3. Leadership is NOT a popularity worked for someone who has/had a contest position of leadership, but has miserably True leadership, especially in difficult failed to lead you and/or the rest of the times, rarely results in someone being organization. popular with the majority. Yet more and Another example is that most would more “leaders” in our country desire to agree that President Obama arguably “lead” by consensus than conviction? How holds the number one leadership position many political “leaders” do you know that in the world. How many would argue that formulate their “leadership” positions he has failed as a leader especially when it based on polling data? While a case could comes to leading our country out of the be made that an elected official voting on economic challenges facing our country? an important issue should attempt to gain When evaluating a leader, consider this insights via polling data as to their elec… it is rarely the good times that define a torate’s preferences, consensus-building good leader. It is typically the difficult within a company is not how good leadertimes that determine whether or not a ship works. Far too many company leaders leader is good or bad. How many industry manage their business by consensus rather “leaders” do you know who have held the than conviction. There is nothing wrong position of the chairman of the board, with getting consensus per se, but in the chief executive officer, president, chief end, a good leader must lead by their own financial officer, chief operating officer or convictions. A good leader is a consensus general manager who has failed in their builder … NOT a consensus follower. position and role as a “leader.” In terms of titles, they may be in the role of a leader, 4. Leadership is NOT a “birthright” but functionally, they are not. While “the Leadership should be viewed as a privilege clothes make the man,” a position does not earned by successfully overcoming difficult make a leader. circumstances and not the right of someone just putting in time. It’s sad when you 2. Leadership is NOT an ego trip hear someone say, “I deserved that proThe comedian Billy Crystal, when speak- motion to leadership because I’ve been ing to a group of business executives, here longer than that person.” When said, “Gentlemen, start your egos.” someone’s ascension to a position of leadWhile I have never met a good leader ership becomes more about seniority than that does not have a healthy ego, I also qualifications, then an organization is never met an effective leader who had an doomed to mediocrity, and eventually, oversized ego. When someone’s ego gets failure. Just because someone has occuout of hand and they go on a power trip, it pied space in an organization longer than can be extremely demoralizing and eventu- someone else is no reason to promote
to a leadership role. If someone wants a leadership position as a result of tenure, my advice is that they go to work for the federal government. They will be in good company. All we have to do is consider the U.S. Postal Service to discover where “birthright leadership” gets an organization—bloated and bankrupt.
with your thoughts on what leadership vulnerable, while bringing to maintain success in IS and is NOT. business and in culture. It strength to instill drive and allows you to get outside hunger within their team. David Lykken is president of mortgage This is the type of person your own four walls and strategies and managing partner with who adds tremendous see what others are Mortgage Banking Solutions. He has more value to creating and leaddoing. You can then borthan 35 years of industry experience and ing a purposeful culture. row those best practices has garnered a national reputation, and has and it gives leadership a I’ve been asked, “Are become a frequent guest on FOX Business leaders born or are they different lens to view As I close out this month’s article, I leave News with Neil Cavuto, Stuart Varney, Liz taught?” The answer is, they their world. you with one of my favorite Peter Drucker Claman and Dave Asman with additional evolve through seeing more quotes: “Management is doing things right. guest appearances on the CBS Evening and feeling more. At some Leaders must hold Leadership is doing the right things.” News, Bloomberg TV and radio. He may be point in our lives, most of us strongly to the things they “You become a real I’ll be back next month with more on reached by phone at (512) 977-9900, ext. 10, begin to have compassion do uniquely well and outleader when you are this important topic. Remember to e- or e-mail dlykken@mortgagebankingsolu- for others. We begin to think source or empower others more focused on mail me at DLykken@MBS-Team.com tions.com or firstname.lastname@example.org. to lead the other tasks. Just more in-depth about our others—when you’re legacy and it stops being willing to make their like a kite, you let the string out and bring it back in at about us and more about needs your needs.” times. If performed correctmaking an impact on the ly, the result is you get lift. There is an art in lives of others. When I was 28-years-old, someone asked when to let go and knowing when to reel it me what is my legacy going to be? In think- back in and have conversations to make sure ing about it, I wondered how I made my the team continues to fly straight. The balwork matter to really make a positive differ- ance is empowering a leadership team to By Hayes Barnard ence. How do I focus my efforts to live a ful- gain autonomy so they can make key decifilled purpose-driven life as a leader? I have sions to grow the business while knowing Through growth, adversity and achieve- team and the employees. What drives them? seen people in their 60s and 70s and they when to reel everyone in to ensure that ment, entrepreneurs wear many hats. To What is their big “why?” Why do they come still don’t get it. You become a real leader the vision and direction are aligned. successfully scale a company, business to work? Why do they do what they do? Our when you are more focused on others— There are moments when you realize leaders need to make the transition from leaders are taught to go “three deep” by ask- when you’re willing to make their needs there are too many initiatives going on “entrepreneur” to “professional,” and from ing the questions that delve through the lay- your needs. This breakthrough typically and it becomes highly distracting. In an entrepreneurial company to a profes- ers of what motivates them by asking each happens depending on your own maturity, the theory of “you can do anything, but sional company. Often, a singular leader person individually “Why?” Why they do wisdom and level of awareness. When a not everything” or “often those who try leads in a singular fashion and it’s all about what they do? This allows for deep emo- person’s efforts are focused on doing good to do too much achieve too little,” you one person’s goals. As a leader of a grow- tional connections and creates loyalty. We and contributing to the greater good of oth- must learn to guide a team to accoming group of talented individuals, I have want to hire leaders who are willing to cre- ers, you have the foundation of a leader. plish specific goals and remain aligned discovered the value of thinking and lead- ate meaningful work with their team. We to effectively achieve successful results. ing more globally. There’s a saying: look for those that are willing to go three The keys to successful A successful leader has a mindset that “Human beings hallucinate when not deep and discover in their own teams what leadership sets the stage for others to follow. Your communicated to.” As a company grows, a really drives their people. Design strategies and recipes for success: energy is their energy. Your passion is leader needs to, early and often, address Good leaders understand how to balCreate rituals and a culture of inspiring their passion. If you have no energy or any undertones or rumblings that take ance passion with pragmatic, professional fun, as well as company achievements. passion, then the organization has no place culturally within an organization. and well-thought-out business fundamenFocus on replicating things that work. To energy or passion. My constant goal is to Our leadership team developed a weekly tals. But to become an outstanding leader scale a company forward, you have to inspire people to do what they love to do, company-wide, interactive video confer- in our organization, we are searching for find the strategies that allow successful to help them find meaning or a purpose ence to connect the hearts of our team. We someone fulfilled by contribution. Most people to be successful. that motivates them to succeed in life. talk about what’s working, share informa- leaders have learned the value of leading Effective leaders enable others to discovtion and ideas, and address challenges to with integrity and hard work. Along with Be transparent and genuine: Share er themselves and what they contribute gain genuine perspective and rapport. It’s those valuable principles, we look for leadaccurate perspectives of the company … both to their own lives and the lives of a time to ask transparent questions and it ers that are driven by love and growth. and its future. For a team to make edu- others. I am inspired by the energy and allows the organization to be authentic. Those two driving forces have the purposecated decisions they have to be aware enthusiasm that our team brings to the This provides the whole group access to ful depth to really touch the hearts of our of what’s going on. communities in which we serve. Now leaders and creates trust. It reminds every team and ignite true passion. more than ever, our leadership team valone of our company’s purpose and the As an example, sales leaders can be self- Find your personal best and design ues the importance of giving back and principles that enable our customers to ish with a “What have you done for me incentives for others to find their best the power of connecting the hearts of enjoy doing business with us. lately?” mentality. We want leaders on our selves: It takes competition off the others to change people’s lives in a posiThe world and corporate America want team to come from a mindset that includes table and allows employees to design a tive way. us to treat employees like numbers, to fit teaching, coaching, inspiration and love. path to their own personal best goals. them in a box and define rigid lines. Leaders They know how to show others how to be Hayes Barnard is president of Sacramento, are faced with balancing people with prof- successful, find purpose and gratitude in Borrow best practices from other suc- Calif.-based Paramount Equity. He may be its and social value with economic value. My helping propel others forward. They have cessful companies: Engage in site visits reached by phone at (877) 290-9991 or visit mentality is to dig deep with my leadership discovered the art of being humble and and learn what other organizations do ParamountEquity.com.
Leadership: Igniting Extraordinary Results Through Passion, Purpose and Love
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE APRIL 2012
Five Keys to Effective Sales Leadership in a Post-Dodd-Frank World By Erik Janeczko
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
The Dodd-Frank Act and the Federal Reserve Board’s loan originator (LO) compensation rule, which came into effect a little over one year ago, created some serious challenges for leadership in the mortgage industry. The biggest concern we see industry leaders wrestle with now is about “shaving” or “saving” … that is, are you shaving price to save deals or are you saving profit at the expense of losing deals? And, how do you make it all work? How do you make enough revenue per loan to make a deal worth doing on $100,000 loan, without pricing yourself “out of the market” on the larger $300,000 or $400,000 loans? Can you actually “have your cake and eat it too?” In today’s environment, sales leadership, organization and volume planning have become critical keys to success. In our work as a coaching company specific to the mortgage industry, our team deals with a wide variety of loan officers in diverse markets across the nation. We’ve seen many different pricing models emerge, and many mortgage companies are finding it more important than ever to redefine their value proposition in an effort to separate their businesses from the competition. Here are five key strategies to help you build a profitable business in our current market, despite the limitations and challenges we face.
Step 1: Determine your monthly volume goals The first key is knowing where to start. The most effective sales leaders in this post-Dodd-Frank Act era have helped their LOs understand where their business is coming from, and how many loans must close each month to reach their income goals. First, define your typical market and establish pricing based on a “per loan” revenue target that is expressed as a percentage of loan amount that equals in dollars the kind of revenue and commission you want to generate per loan. Then, determine each LO’s monthly production goal, based on how much money each LO wants to make. Have each LO work out how many loans need to close each month to reach his or her individual income goal. Next, factor in the conversion ratios to determine how many leads they must generate to ensure they hit that goal. If your LOs don’t already know what their conversion ratios are, take a closer look at the previous year’s production numbers. Determine how many applications were taken and compare that to how many loans actually closed, this gives you a good ballpark figure to start with. But, to dial this in better for the future, start tracking these numbers to determine what the real
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efforts on the production, conversion ratio is for each and not the difficulties. team member. This focus and consisSo, our first step is to tent attention to producbegin with the end in mind. tion activity is a critical eleHelp your team determine ment in establishing an what they really want to effective sales process. achieve personally, and then work backwards to Step 3: Define decide what level of activity your it will take to reach that vision. value proposition In the post-Dodd-Frank Helping your team know world, it has become what your lead generation “Certainly, personality more critical than ever targets are on a weekly traits and skills are for sales teams and leadbasis, is the first critical step required to be an ers to focus on differentito success in the current effective leader, but, in ation strategies and value environment. Keep an life, there are very few propositions, and how to open line of communica‘natural born’ leaders make sure those value tion with your team and in existence.” propositions are underdiscuss the numbers, the pricing, and how to overcome challenges stood by the consumer consistently. in your specific market. This will keep your The team that truly understands the team focused on proactive business devel- company’s value proposition will clearopment, rather than reactively “doing ly and consistently articulate this value to the consumer. business by accident.” Mortgage advisors who reinforce the Step 2: Define your company’s value proposition—while they are in the process of helping the “perfect” borrower To win in today’s market, your LOs must client set up their loan structure—are exude confidence and trust in every winning hands down. transaction. Your pricing model should Sales teams that spend a significant fit both your company culture and the amount of time and energy drilling, type of borrowers you choose to work practicing and learning the art of comwith. But you should also challenge municating a stronger value proposiyour team to think seriously about how tion are able to focus on the long-term they can be more valuable to their cus- benefits of the choices that a borrower tomers and offer a level of service that makes when setting up the mortgage. goes well beyond the promises of great By focusing on the client’s long-term price and “world class” service offered financial growth and overall net worth by everyone else (whether they can real- down the road, and then dollarizing ly provide it or not). that value difference to the consumer For example, if you choose to work will offset the few dollars or cents a with high-end clientele, your LOs must month in interest rate or upfront closbecome experts at strategies to differ- ing costs offered by a slightly lower entiate themselves at a higher level. priced competitor. They need to be able to efficiently offer Though you may occasionally lose a more in-depth consideration of the the extremely high maintenance, hardlong term financial impact of the mort- core rate shopper, in the long run, your gage choices they make in real long LOs will see a significant increase in term dollars. their conversion ratio and corresponAnd, since the LO compensation rules ding income. mandate that we cannot lower our price on any one specific deal, we need systems, Step 4: Focus tools and strategies to ensure that we can on growth be confident in charging a higher profit— No single LO can win a market. It takes a even on the larger deals—if we are going whole team working together under a to be able to also make the smaller deals common brand identity to build a solid worth doing. reputation. Working together, over an Knowing your market and being real- extended period of time, on what makes istic about the type of business your your company uniquely more valuable to team wants to attract will also enable the customer will make your company the your team to focus their energy and dominant force in your marketplace.
Erik Janeczko is the head coach and chief business development strategist for Maximum Acceleration, a coaching system designed to help loan originators build their businesses by implementing proven core strategies. National Mortgage Professional Magazine readers can download Erik’s free goal planning and performance tracking tools at www.maccelcoach.com/plantools. He may be reached by phone at (573) 2984237, ext. 101 or e-mail email@example.com.
By Dave Hershman produce. This is not necesWe have thousands of mansarily the case. In addition, agers in this industry, but the production of a managonly a small percentage that er is often not of the highare actually great examples est quality. Again, the lack of leaders. I applaud of time can exacerbate this National Mortgage Professituation. However, if the sional Magazine’s focus on manager does not do a the topic of leadership this great job of bringing in high month because if we are quality loans and taking going to thrive as an induscare of business from a try in the future, we certaincomplete loan application ly need more effective leadto settlement, then they are ers. Of course, it is incum“Yes, we often have bent upon us to define the to teach and inspire as not the great example they difference between a “man- leaders, but if we don’t need to be. Even the way that a manager handles ager” and a “leader” so that listen, we will never stress is an important part our managers might recogfind out what our nize where they need employees really need.” of being a good example. When the fires hit, does the improvement. The following represent my keys to great leadership manage react to stress by fanning the fire, from my book, The Complete Mortgage or by leading others to safety? Management Kit.
Following up Having long-term vision Everyone in this industry has vision. However, because managers are typically producers, recruiters and coaches, they often do not have time to look beyond what is in front of them day-to-day. Therefore, we can say that they don’t have great long-term vision. Great leaders can see the big picture. Every action we take can affect that big picture, but we don’t necessarily see the connection because of our myopic view. For example, do you know a loan officer that needs to be coached in a particular area, but you do not have enough time to focus on that particular issue? When the issue arises, you tell yourself that you need to talk to them. But when the issue quiets down, you let it ride because you have so many other pressing concerns. What kind of long-term damage is being done? Could you perhaps cause another loan officer who is bothered by the problem to resign? What are the longterm consequences of inaction?
Is a great example A great leader is a great example for their employees. Actually, we typically select our managers as examples in one respect. The top producers become managers. Branches are typically more profitable with a top producing manager. Unfortunately, we also assume that a top producing manager will be able to show others how to
How many times have you told your loan officers that they must follow up to both convert leads and get loans closed? Well, following up is just as important for leaders. Again, because of time constraints, managers are hard-pressed to follow-up on every detail that is important. But if you don’t return phone calls and e-mail on a timely basis, how do you expect your loan officers to do the same? Again, you set the example in this regard.
Communication skills Great leadership is displayed through great communication skills. This includes not only follow-up skills, but what I will call “proactive communication.” While following up requires that we respond to problems quickly, proactive communication means that we prevent problems from happening. Perhaps it is an extra communication to an underwriter on a file or getting the word out about a program change. An example of communication skills are not limited to just calls. Leaders should have above average public speaking and writing skills. If you cannot get in front of a group of loan officers and inspire them, how do you expect your loan officer to get in front of a group of real estate agents? continued on page 42
A big part of accountability and performance management is tracking.
So, can a leader be made, or are the leaders of the world simply unique individuals who come with the right set of personality and experience? Certainly, personality traits and skills are required to be an effective leader, but, in life, there are very few “natural born” leaders in existence. They are almost always created through the crucible of effective training, practice and experiential learning. If you are a sales leader, a sales manager, or the owner of a company, I encourage you to implement these five keys to effective leadership in your business.
Are You a Manager or a Leader?
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Step 5: Establish effective accountability and performance management
The law of the Hawthorne Effect tells us that what gets measured gets done. Compare it to tracking your diet and your sugar intake. If a doctor gives a diabetic an effective tool to track sugar levels and eating habits, the disease may be managed. But, when the patient forgets to keep track of dietary intake, the sugar levels can spiral out of control fairly quickly and with dire consequences. The same goes for performance tracking. But, much more than the traditional “call report,” an effective performance tracking tool should help your loan originators sustain the volume of activity necessary to ensure they hit their desired closing numbers. Your tracking tool should also help each LO recognize what efforts are successfully working and which ones aren’t, and track the source of the lead and the specific obstacles faced in trying to capture that lead. It should make clear which lead sources are providing a 20 percent conversion rate versus an 80 percent conversion rate. This enables the LO to adjust time and energy spent on various work efforts, and adjust strategies to reach significantly higher volume levels in dramatically less time by focusing on high pay-off activities.
To get your entire team dialed in and really working as a team, you must encourage collaboration. Schedule meetings on a regular basis to brainstorm ideas, discuss the company’s branding strategy, and leverage the unique talents and strengths of your team. This consideration includes advertising, attending trade shows, an Internet presence, social media activity, e-mail campaigns, direct mail, and traditional person-to-person marketing and referral partner development. For example, if you have an LO with a strong marketing background and a passion for direct mail marketing, encourage that LO to use those skills to benefit the entire team. On the opposite end of the spectrum, if a different LO has the natural charisma and passion for meeting new people, encourage that LO to attend as many networking events and trade shows as possible, to attract new clients and at the same time connect the entire team and company to the community in a very visible way. As a team, discuss how to establish referral networks, what’s working and what are the best practices in your marketplace. Explore what opportunities you have as a team to reach a wider audience and leverage existing relationships into to multiple opportunities. A well-oiled, well-orchestrated sales team that sees the benefit of idea sharing profits tenfold what one individual can create. But, it is critical to steer the team away from internal competition and backstabbing that can very quickly kill morale. It’s important for the sales manager to be fair in these open forums. It’s natural to have one or two LOs who stand out from the rest. Help the ambitious, goal-oriented members of your team to direct that energy in a positive way towards helping the weaker members of the team. Help them understand that the greater goal is to strengthen the team’s presence in your market by sharing their insight and wisdom. The reputation and the strength of the team as a whole is how market share is captured.
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this industry, but leaders must stand very clear of this line.
need. Even in interviews, we should be asking questions and listening, rather than talking. Of course, in order to teach our salespeople to be better at converting prospects, we need to be able to teach them advanced questioning and listening skills. Selling and leading are not all that different in this regard. Great salespeople are also great leaders.
Great managers hire producers and great leaders retain those producers. Do you work harder at recruiting than you do in supporting your employees? Do you even know where they need help? This is again where following up and communication skills are essential. It is sometimes not easy to determine where our employees need help, however, spending the time and effort to find out Honesty A leader’s integrity can never be in is very important. question. Again, this brings us back to the point regarding being an example. Listening Great leaders are great listeners. Yes, we If we are not “THE” example in this often have to teach and inspire as lead- regard, how can we not expect the ers, but if we don’t listen, we will never same from our loan officers and operafind out what our employees really tional staff? Many walk a fine line in
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Leaders must be consistent in their direction. Are you someone who schedules a staff meeting when there is a catastrophe or sends out an “effective immediately” email? Or, do you schedule meetings on a regular basis to prevent these issues from arising? Can your employees count on your reaction day-to-day, or do they fear which personality will show up day-to-day?
A positive message A great leader carries a positive message. Again, we want to be the example in this regard. If you don’t carry a positive message, why should others around you do the same? This positive message should include thanking your employees and clients often. Even the way you carry your message is important. When you are “criticizing or pointing out a mistake,” it should be done in private. When you are lavishing praise, this should be accomplished in public.
Delegate Delegation by leaders is important with regard to your own time management, but also you can deliver more skills to your employees in order for them to grow. This is a key to retention and the “I do everything myself” mentality only retards the progress of those you serve.
Dave Hershman is a top author in the mortgage industry with seven books published, as well as hundreds of articles. Dave has delivered hundreds of keynote speeches, seminars and schools for the industry as well. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.
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tom e-mail messages to specified groups. For example, certain property owners can be contacted with marketing messages when specific triggers are activated, like each time rates reach a certain threshold.
Credit Plus Launches New Mobile Credit App for Mortgage Professionals Credit Plus Inc. has announced the launch of a new mobile app, Credit Plus nEXT Generation Credit (nGC), allowing mortgage professionals to access a wide range of consumer credit data on iPhones and other mobile devices. The Credit Plus nEXT Generation Credit (nGC) App provides: Consumer credit data, including actual credit scores; credit usage, including account type, balance, payment and past due amounts; adverse summary, including number of collections and charge-offs, number of accounts that are 30-60-90 days late and other information; and front-end and back end debt-to-income (DTI) ratios, as long as the user has entered gross annual income. “We developed this app with our customers in mind,” said Mike Hall, vice president of operations for Credit Plus. “Our goal is to enable mortgage professionals to securely access the information they need even when they’re not in the office.”
CoreLogic Announces HARP 2.0 Refi Data Services
CampusMBA Announces New CE Requirement for CMB Designation
ClosingCorp has announced the introduction of its SmartClosing Mortgage Calculator, which allows homebuyers to shop for mortgages and estimate closing costs for any residence in the country. San Diego-based Z57 Inc., a real estate Internet solutions provider, will implement the tool to enable its real estate agent clients to make shopping for mortgages and accurate closing costs available to homebuyers. These services will help consumers make informed decisions regarding home purchases. The SmartClosing Mortgage Calculator provides instant mortgage rate shopping, annual percentage rates (APRs), monthly mortgage payments, closing costs and cash-to-close estimates in a single tool. Real estate agents and mortgage lenders can also use the calculator to identify and capture valuable lead information for individuals proactively seeking homebuying information. Z57 Inc. will integrate the SmartClosing Mortgage Calculator with its Internet marketing products as a valuable source of content for home shoppers. By offering closing cost estimates at key stages of the property research process, a consumer can make an informed decision regarding a property. The tool also will be used to identify potential home buyers for Z57’s real estate agent clients. “While other calculators only provide monthly mortgage payments, ClosingCorp’s SmartClosing Mortgage Calculator provides accurate closing cost data that consumers need to gauge the real costs associated with buying a home,” said Ryan Whitlock, chief executive officer of Z57. “It takes local regulations and customs into account while using real, up-to-date rates to ensure the most accurate data delivery. By partnering with ClosingCorp, Z57 is able to provide yet another value-added service for our real estate agent clients to provide to their home buying clients.” The SmartClosing Mortgage Calculator uses actual costs from ClosingCorp’s proprietary, real estate service provider database, making it unique in the marketplace. It also generates property-specific recording fee and transfer tax costs, and calculates prepaid costs and reserves.
DataQuick has partnered with ValueNet to offer its customers
Mortgage Returns has announced an upgrade to its system to include additional functionality enabling lenders to more effectively communicate with referral partners and easily track and identify referral sources. With more than 300 marketing messages that are compliant with federal regulations, Mortgage Returns’ new enhancements streamline marketing, so originators can more easily assign automated and relevant marketing campaigns to customers, prospects and referral partners. “According to RE/MAX, January home-buying sales were up 3.4 percent from a year ago,” said Jim Blatt, chief executive officer of Mortgage Returns. “To make the most of the spring homebuying season, banks and mortgage companies will need to strengthen relationships with referral partners. The number of referrals a company receives in a year is often the difference between meeting revenue goals and falling short of them. Referral partners need consistent communication and a commitment that lenders are managing these important relationships. Mortgage Returns’ new features enable mortgage originators to more effectively manage referred clients.” New features enable lenders to better classify, organize and search customer data that is typically buried in loan origination systems. In addition, originators can consistently match referrals to customers and prospects, as well as give regular updates to referral continued on page 44
DataQuick Adds ValueNet USPAP-Compliant Desktop Appraisal to Suite of Tools
Mortgage Returns Announces Enhanced Database Management and Marketing Solution
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CampusMBA has announced a new Continuing Education (CE) requirement for all Commercial, Residential and Master Certified Mortgage Banker (CMB) designates. Beginning June 1, 2012, all CMB designates will now be required to complete ongoing CE to maintain their respective designation. “Since 1973, the CMB designation has been the symbol of respect, credibility, expertise and achievement within the real estate finance industry,” said Jeffrey Schummer, VP of education for the Mortgage Bankers Association (MBA). “Now, more than ever, with the industry in a period of rapid change, it is essential that industry leaders continue to advance their knowledge and build on this standard in order to set the bar for excellence in our industry.” Each CMB will be required to complete 30 hours of continuing education over an ongoing two-year period. CE credits will be available through Campus MBA online courses, at selected sessions during MBA conferences, and through special CMB events. In order to be eligible for the CMB designation, candidates must either work for an MBA member company or be a member of a recognized state MBA. Every candidate for an Executive CMB is required to have a minimum of 10 years of experience in real estate finance and hold a senior management position at an MBA member company.
ClosingCorp Launches New Mortgage Calculator
access to ValueNet’s Uniform Standards of Professional Appraisal Practice (USPAP)-compliant Desktop Appraisals. The ValueNet suite presents mortgage professionals with a more accurate and cost-effective solution, in comparison to similar products, to fulfill their appraisal needs and provides multiple benefits. “Market knowledge of local appraisers paired with property-level data and neighborhood trending information are the keys to accurate appraisals,” said ValueNet Chief Executive Officer Scott Waxman. “We are excited to integrate our ValueNet product offering into DataQuick’s Collateral valuation offering.” ValueNet appraisals include extensive property research, input from local data sources and the actual valuation of the property, while offering several variations of reports to be used throughout the lending operation. “ValueNet has established a reputation for quality, service and reliability in delivering accurate desktop appraisals,” said John Walsh, president of DataQuick. “Their proven performance and comprehensive product set is a great complement to DataQuick’s collateral valuation and appraisal solutions.”
CoreLogic has announced a new service designed to help originators identify potential Home Affordable Refinance Program 2.0 (HARP 2.0) refinance prospects. The HARP 2.0 program was introduced in late 2011 to assist qualified underwater homeowners in refinancing their mortgages. CoreLogic leverages a proprietary database, patented valuation technologies, comprehensive lien information and new patent-pending analytics to identify more than 2.3 million borrowers with a ‘strong likelihood’ of potential eligibility for refinancing through the HARP 2.0 program. “The new HARP 2.0 guidelines provide a great opportunity for homeowners with negative equity who were previously unable to take advantage of historically low interest rates and refinance their existing mortgages,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “It may not be clear to homeowners how HARP 2.0 eligibility requirements apply in their circumstance. CoreLogic is uniquely positioned to help mortgage originators identify qualified homeowners who are highly likely to be eligible for the HARP program. This will allow the originators
to focus their educational and sales efforts on homeowners who will likely be motivated to refinance.” Using a specific list of eligibility criteria, database filters and derivation techniques are used to identify potential HARP 2.0 eligible loans. The loan-tovalue (LTV) ratio information is calculated using industry-leading CoreLogic automated valuation models (AVMs). In addition, to ensure the most up-to-date information is available, CoreLogic reevaluates its HARP 2.0 eligibility database with refreshed data monthly, providing originators access to updated and/or new leads in either single prospect or batch forms. “By utilizing CoreLogic proprietary databases and analytics teams, we can provide a targeted and customized list of very high probability HARP 2.0 refinance-eligible candidates,” said Dianna Serio, chief data officer for CoreLogic. “Our ability to provide specific homeowner data, highly accurate loan-tovalue estimates, identification of lenders, current owner occupancy status, and liens associated with a property can be especially helpful to originators looking to build or defend their current portfolio.”
CMB candidates must acquire 150 points earned through a combination of professional experience, secondary education, continuing education through MBA-sponsored events and CampusMBA courses, as well as participation in MBA at the local, state and/or national level. After accumulating the required points and passing a comprehensive written exam, candidates must demonstrate industry knowledge by passing an oral exam conducted by a panel of CMBs.
becoming an involved leader The search for a solution that will actually have an immediate and substantial impact is complicated by several factors. The first is that there is a rising tide of resentment by those homeowners who are impacted by their property values decreasing, yet are able to make their payments, and who feel that it is essentially unfair that people who purchased a home they couldn’t afford are getting bailed out and “rewarded” for their imprudent behavior, at the “prudent” buyers and general taxpayer’s expense. The second is how to accomplish this assistance without the U.S. Department of the Treasury expending additional hundreds of billions of dollars. The third is how to do this in a way that doesn’t cause irreparable damage to the future home finance marketplace by creating the precedent of forced principal balance reduction, which would place future mortgage investors in a position of uncertainty that their principal investment may be at risk. If this occurred, it would have the unfortunate effect of causing a huge rise in the cost of home loans to the consumer in the future, as investors would build in the higher perceived risk into the loan pricing. So, a solution is necessary that accomplishes the following:
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1. Addresses the needs of those homeowners that current and previous attempts have missed. 2. Doesn’t force a principal balance reduction on lenders/investors. 3. Reduces monthly payments to an affordable level. 4. Eliminates the excess risk levels in current and future ARMs. 5. Re-establishes consumer confidence and price and value stability, keeping people in their homes. 6. Creating confidence in first-time and other homebuyers to get them off the fence and into the market to reduce home inventory. 7. Provides stability in the home marketplace, protecting the remaining equity or value of homeowners, allowing them to stay in their homes until the market eventually returns to normal, as it always does. The real estate market, like the stock market, is cyclical but inexorably rises over the course of time.
Preface to the solution The solution lies in the details and design of the ARM … how it works and the impact on the monthly payment. The ARM loan consists of two parts, the index and the (profit) margin. The index is that part of the loan that adjusts, and can be considered the cost of the lenders funds. The margin is what the lender adds to the index, and is the profit that is made on the loan. The margin is always a fixed figure. When the index and margin are added together, this is the actual interest rate of
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the loan. This is called “fully indexed rate,” “note rate” or “real rate of interest,” the definition depending on the lender, but the result is the same. All ARMs start with a subsidized rate lower than the fully indexed rate (“start rate,” “initial rate” or “teaser rate”) for a certain period of time, and over the course of time, all ARMs reach their full-indexed rate. Although the initial low start of the loan doesn’t pay the full amount due (the fully-indexed rate), the eventual rise of the rate to fullyindexed status ensures that the lender will eventually receive payment for both principal and interest, with the full loan amount and interest paid over the course of 30, or sometimes 40 years. ARMs have been in existence for approximately 30 years, with option ARM loans pioneered by World Savings, funded out of, and held in their own “portfolio,” who was bought out by Wachovia Bank, who in turn, was recently taken over by Wells Fargo, hence the origin of the “toxic loan portfolio.” There are several popular indexes that lenders have used, depending upon if the loan has a negative amortization feature (option ARM), is a sub-prime loan, or an intermediate ARM (fixed P & I payment for a certain period). Generally, option ARMs have COFI, COSI, CODI or MTA as their indexes; sub-prime loans usually have LIBOR, and intermediate ARMs (both conforming and jumbo) have either sixmonth or one-year CMT or MTA (for current numerical values, see appendix). To these indexes, the lenders add their (profit) margins. Over the course of the last 15 years, the margins have been creeping up, unnoticed by consumers or regulators, with the option ARMs and especially the sub-prime loans having the highest margins. Option ARMs have margins as high as 3.5 percent, and sub-prime loans as high as five percent to six percent. This is the reason they were so popular to lenders and their investors—the high profit margins on each loan made them very lucrative. When these loans with high margins become fully-indexed, the rates are high, and payment shock results with a much higher payment than the initial start rate, which is the source of the trouble that consumers find themselves in.
The proposed solution The key to immediately lowering the rates and payments of people who have ARMs, and preventing future excesses, lies in addressing the margins on ARMs with several proposals. Section 1 I. ARM MANDATORY MARGIN REDUCTION PERIOD Immediately reduce all ARM margins to 0.25 percent (quarter of a point) for everyone in California who has any ARM, for a five- or seven-year period, starting from the next monthly adjustment for those who have option ARMs, continued on page 48
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partners on the status of mutual prospects. This is what the referral partner really wants to see. This unique approach to database management enables Mortgage Returns to provide better results for more than 6,000 originators nationwide. “Stronger relationships with customers, prospects and referral partners mean more closed loans,” said Blatt. “Beyond the improvements to database management, we have also improved the communication process. For example, we have automated the process for providing referral partners with weekly rate sheets. This, combined with other efforts, will strengthen relationships with referral partners and positions the originator as a market and financial services expert.”
New Mortech Portal Opens LO to Borrower Direct Communication Mortech Inc. has released a new technology allowing loan officers the ability to exchange real-time mortgage application data directly with their borrowers. The secure consumer-facing portal, called Connect, is available completely free to users of Mortech’s MarksmanLMP platform. “Transparency and open communication are the keys to rebuilding trust with today’s homebuyer. And that’s exactly what the new Connect technology provides,” said Don Kracl, president of Mortech. “At the same time, originators are under pressure to expend fewer resources on every loan they close. The Connect platform makes that easy by opening up a communication line directly with the borrower and allowing them to provide more of the required information on their own.” Connect is powered by TheMorty.com, also owned by Mortech and is seamlessly integrated into Mortech’s MarksmanLMP platform. Each originator portal is automatically branded for individual companies. MarksmanLMP is the industry’s first Lending Management Platform for managing the complex processes that take place before the prospect completes the loan application. It includes tools for simplifying, automating and organizing the entire mortgage lending process, from lead acquisition to assessment and marketing to processing.
Cogent Road Launches New Mortgage-Specific CRM Tool Cogent Road has introduced Gravity, a mortgage-specific CRM/lead management system that helps loan officers obtain a loan commitment in a single call. Gravity is a cloud-based CRM/lead management system that fully integrates with credit, 1003, FHA Scorecard, a pricing engine
(PriceMyLoan), loan comparison tools and anti-steering disclosure, allowing loan originators to take a complete application, select and price a loan, accurately discuss financial benefits and qualify borrowers in one call. Gravity’s toolset ensures that loan officers can be confident presenting prospects with an accurate pre-qualification; ultimately resulting in significant time efficiencies and the potential of improved closing ratios. “Gravity is the result of over a decade of experience creating mortgage specific software applications,” said William DiPaolo, Cogent Road’s chief executive officer. “The outcome is a CRM/LMS that helps loan officers close faster, manage open opportunities easily and capture new leads from more sources.” After using customized Interview Wizards to capture a prospect’s basic application data, the loan originator provides a real-time comparison of the financial benefits of up to three different loan choices. Interactive charts help the applicant visualize the savings gained over specific time periods, as compared to their current loan. The prospect receives a full-color summary of the loan program options, along with the loan officer’s photo and contact information. When necessary, loan officers can also create multiple 1003s with up to five different borrowers on a single application. “Our experience working with thirdparty systems helped us integrate FHA Scorecard and the Price My Loans pricing engine seamlessly into Gravity,” DiPaolo said. “Loan officers can easily retrieve accurate FHA eligibility and loan pricing options while on a single call with the applicant. The goal is to help them gain commitment and lock up the lead as soon as possible.”
Titan Lenders to Begin Offering Loan Processing and Underwriting Services Titan Lenders Corporation has announced that it is now providing mortgage processing and underwriting services, and has also announced the hiring of underwriting expert and mortgage industry veteran Jan Conner to manage its new service offering. “Titan’s 360 degree view of the loan origination lifecycle has given us a deep insight into how minor processing and underwriting glitches can add an enormous level of risk to lenders that otherwise have high origination standards,” said Titan president Mary Kladde. “By adding processing and underwriting to our flagship fulfillment services, we help mortgage lenders close the post-application origination loop, ensuring data integrity and quality through purchasing.” Conner brings more than 20 years’ mortgage industry experience to her
new role at Titan. Previously, Conner has been involved in processing and underwriting departments for regional offices of some of the largest lenders and financial institutions in the U.S. She also has extensive experience managing underwriting and operations with small- to mid-sized lenders, giving her a broad perspective on achieving quality and superior customer service at any volume level. “Outsourcing underwriting eliminates a potential source of human error and risk for mortgage lenders—especially those that are growth oriented and risk averse,” Conner said. “My goal in leading Titan’s processing and underwriting service is to provide topshelf customer service with the highest possible quality to ensure the salability of our clients’ loans.”
New Short Sale Technology Launched by Wingspan
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: firstname.lastname@example.org
Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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Computer Science Corporation (CSC) has announced that it has teamed with Quandis to offer CSC’s EarlyResolution clients and prospects a new short sale tracking and fulfillment portal to accelerate processing cycles. This benefits consumers who wish to sell their homes instead of foreclosing and reduces losses for mortgage investors. EarlyResolution is CSC’s lending default management system, which, together with the complementary functionality from Quandis, will enhance coordination across the entire mortgage loss mitigation life cycle, including short sales, helping mortgage servicers to improve communications and provide a single point of contact (SPOC) for borrowers. Under the agreement, CSC and Quandis will build and maintain a Web-based data exchange interface to facilitate short sale offers between servicers, agents, borrowers and investors in one platform. Through the Software as a Service (SaaS) offering, users can coordinate time-sensitive information and provide a single audit trail from initial borrower contact through short sale plan completion. The interface will improve operating efficiencies and reduce short sale case cycle times, increasing the probability of short sale approval. “Short sales are becoming more prevalent as the mortgage delinquency pipeline moves from retention toward litigation,” said Scott Stoddard, chief executive officer of Quandis. “Approximately 30 percent of short sale requests conclude with the sale of the home, and we are looking to significantly increase this percentage through our collaboration with CSC, thereby reducing the likelihood of foreclosure for borrowers in default.” “This joint effort offers servicers a sophisticated and flexible short sale processing and tracking system that will improve loss mitigation decision-making and short sale results,” said John Dickson, president of CSC’s Banking and Credit Services Division. “EarlyResolution clients gain a highly secure, integrated tool to improve the short sale fulfillment ratio and enhance multi-party communication.” EarlyResolution is a leading consumer lending default management solution offered in a SaaS environment. In use by the top three U.S. mortgage servicers, EarlyResolution assists in finding effective solutions when borrowers are in default, improves collections and loss mitigation operating efficiency, and helps servicers react quickly to regulatory and other changes.
Wingspan Portfolio Advisors and Wingspan Real Estate Network (WREN) have announced the creation of Wingspan Commander, a full-featured short sale technology and service platform for real estate professionals. Powered by Elk Software’s transaction management technology, Short Sale Commander, this new initiative empowers real estate agents, brokers and franchises with fast, professional, full-service short sale facilitation, negotiation and closing services nationwide. Wingspan’s WREN affiliate has been offering short sale facilitation to the real estate community since commencing operations in 2011. The addition of the Wingspan Commander technology provides new levels of transparency, communication and ease of use for busy real estate professionals, saving them tremendous time and effort while increasing short sale success. As part of the new collaboration with Short Sale Commander, Wingspan will also offer access to the Wingspan Certified Short Sale, a precontract review service that identifies potential obstacles earlier in the process than in ordinary short sale transactions. With its Certified Short Sale and loan servicing expertise, Wingspan is able to accelerate the short sale process up to 50 percent faster than industry averages, benefiting all parties to the transactions. “As an industry, agents and homeowners often wait for weeks and months only to find out that a short sale file has been declined by a servicer based on an issue that could have been identified and remedied earlier in the transaction,” says Chris Plummer, Wingspan Portfolio Advisors vice president and managing director of WREN. “Wingspan’s experience with servicers, investors and mortgage insurance companies allows us to identify these issues and assist the homeowner and agent in resolving them before an offer is submitted.”
Quandis and CSC Partner on Short Sale Tracking System
Finding and Attracting Good Customers is All About Preparation Growing your business is essential, and finding those perfect prospects can be extremely difficult. The benefits of having a reliable marketing campaign are having the ability to grow at your own rate, and plan for the future no matter where the mortgage industry takes you. The following three factors MUST be considered before setting out to accomplish this task. 1. You have to be willing to pay for good customers To find out how much you have to pay, do the math: Total dollars spent with your company minus cost of goods sold. Then, subtract your desired profit margin. What you have left is a reasonable amount you could spend to acquire a new customer. The average acquisition cost per customer in the mortgage industry is between $600 and $1,200. If you’ve never done any marketing before, you might want to budget for the higher end of that. You can take that acquisition cost and multiply it by the amount of new customers you want per month to determine your monthly budget. Don’t worry if this number seems astronomically high. You will want to ramp up to that over a period of time. 2. Take a look at your sales approach Do you hard sell people your product, or do you wait for them to ask how they buy it? If you are salesperson, you’ll be able to keep your acquisition costs low. If not, you are going to need to come to terms with spending more money to get someone else to do it for you. Maybe it’s the marketing piece, or maybe you’ll have to hire salespeople. It is always more cost-effective to do the work yourself, but anyone can have an effective marketing campaign regardless of their own sales ability. Knowing how you best sell will allow you to find the right type of marketing campaign for your own needs.
3. Dissect your close ratio Some people know this number like they know their own birthday. Others will have to calculate it. To do so, take the number of loans you closed over the last 90 days and divide that number by the total number of “leads” (or interested prospects). That will give you a reasonable close ratio. One should find themselves anywhere from 5 percent to 15 percent on average. Don’t think that you’re going to close any leads at 80 percent just because you can close referrals at that rate. This is marketing, not networking.
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Key factors that contribute to the overall success of your campaign: I Planned growth: How many new customers you want to add every month; I Acquisition cost: How much you can afford to spend per customer; I Approach: The best type of marketing to work with your abilities and your budget; I ROI: The expected return on your investment (ROI). Now that you know where you stand, you can begin asking around about what marketing programs fit within your acquisition cost and your sales style. Talk to your colleagues about the marketing campaigns they’ve done that have worked. Direct mail, mortgage leads, live transfers, data lists, etc. … these types of campaigns are all tried and true, and will fit into most any marketing strategy. Don’t try to take this on yourself. You are a mortgage professional, not a marketing expert. So, let the pros guide you through the process: call a marketing firm, NOT A LEADS COMPANY. A marketing firm. There’s a BIG difference. You’ll want to talk with people who understand your business.There are a handful of these companies that will actually take the time to explain what works, what doesn’t and why. You’ll be able to rule out certain types of marketing and advertising because they either don’t match your sales style, or they don’t match your budget. Better to know upfront than after you’ve spent your hard earned money. Once you find the right program, test it a few times on a small level. Don’t blow your whole marketing budget on the first trial. Test, test and re-test. Once you prove that it is profitable, THEN spend every dollar you can spare on it. In fact, you might want to consider getting another credit card because you’re going to earn a lot more money than you’ll pay in interest! Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (888) 717-8980 or visit Tagquest.com.
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Treasury’s MBS Investment Nets $25 Billion Positive Return for Taxpayers
The U.S. Department of the Treasury has announced the completion of the orderly wind down of its agency-guaranteed mortgage-backed securities (MBS) portfolio, which it acquired as part of its response to the financial crisis. Overall, Treasury’s MBS portfolio generated a positive return of $25 billion for taxpayers. The Treasury invested $225 billion in MBS during 2008 and 2009 through authority provided to it by Congress under the Housing and Economic Recovery Act of 2008 (HERA). These MBS purchases helped preserve access to mortgage credit during a period of unprecedented market stress. Overall, taxpayers received total cash returns of $250 billion from this MBS portfolio through sales, principal, and interest—$25 billion more than their initial investment. “The successful sale of these securities marks another important milestone in the wind down of the government’s emergency financial crisis response efforts,” said Assistant Secretary for Financial Markets Mary Miller. “This program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers.” In March 2011, in light of improved market conditions, Treasury announced that it would begin the orderly wind down of its MBS portfolio through the gradual sale of those securities over time. Those sales were part of Treasury’s continued efforts to exit the emergency financial crisis response programs that were put in place in 2008 and 2009.
Foreclosure Inventory Surpasses the 1.4 Million Mark in January CoreLogic has released its National Foreclosure Report for the month of January, which provides monthly data on completed foreclosures, foreclosure inventory and 90-plus delinquency rates. There were 69,000 completed foreclosures in January 2012, compared to 80,000 in January 2011, and 65,000 in December 2011. The number of completed foreclosures for the previous 12 months was 860,128. From the start of
the financial crisis in September 2008, there have been approximately 3.3 million completed foreclosures. “We are encouraged by the noticeable progress we are seeing over the last several months in the mortgage industry,” said Anand Nallathambi, chief executive officer of CoreLogic. “During the last several years the industry has faced enormous challenges working through difficult and complex issues. We are hopeful that these recent improvements are early signals of revitalization in the mortgage market.” Approximately 1.4 million homes, or 3.3 percent of all homes with a mortgage, were in the foreclosure inventory as of January 2012 compared to 1.5 million, or 3.6 percent, in January 2011 and 1.4 million, or 3.4 percent, in December 2011. Nationally, the number of loans in the foreclosure inventory decreased by 145,000, or 9.5 percent in January 2012 compared to January 2011. The foreclosure inventory is the stock of homes in the foreclosure process. A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed. The foreclosure inventory is measured only against homes with an outstanding mortgage, rather than against all homes. Nationwide, roughly one third of homeowners own their homes outright. The share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and real estateowned (REO), fell to 7.2 percent in January 2012 from 7.8 percent in January 2011, but remained unchanged from December 2011. The inventory of REO assets held by servicers nationwide grew faster in January than the pace of REO sales, as measured by the distressed clearing ratio. The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures; the higher the ratio, the faster the pace of REO sales relative to the pace of completed foreclosures. The distressed clearing ratio for January 2012 was 0.69, down from 0.80 in December 2011. “The pace of completed foreclosures is gradually increasing again, but the clearing ratio is falling as REO sales have slowed in the winter months. Judicial foreclosure states1 are continuing to process foreclosures more slowly than non-judicial foreclosure states,” said Mark Fleming, chief economist with CoreLogic. “Non-judicial foreclosure states completed almost twice as many foreclosures per 1000 active loans as judicial foreclosure states in January.”
GSEs Complete 1.1 Million Permanent Loan Mods
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The Mortgagee Review Board (MRB) for the U.S. Department of Housing & Urban Development (HUD) has announced that it is immediately and permanently withdrawing approval for AmericaHomeKey Inc. (AHK) to originate and underwrite new
The Securities & Exchange Commission (SEC) has charged the senior-most executives at Thornburg Mortgage Inc. with hiding the company’s deteriorating financial condition at the onset of the financial crisis. The plan backfired and Thornburg lost 90 percent of its value in just two weeks. The SEC charges that Thornburg Mortgage Chief Executive Officer Larry Goldstone, Chief Financial Officer Clarence Simmons, and Chief Accounting Officer Jane Starrett schemed to fraudulently overstate the company’s income by more than $400 million and falsely record a profit rather than an actual loss for the fourth quarter in its 2007 annual report. In actuality, Thornburg was facing a severe liquidity crisis and was unable to make ontime payments for substantial margin calls it received from its lenders in the weeks leading up to the filing of its annual report on Feb. 28, 2008. On May 1, 2009, TMST Inc., formerly known as Thornburg Mortgage Inc. and its subsidiaries, filed for Chapter 11 bankrupt-
suant to reverse repurchase (repo) agreements. The repo agreements required Thornburg to maintain a degree of liquidity and subjected the company to margin calls if the value of its ARM securities serving as collateral for its loans fell below designated thresholds. Thornburg was generally required to pay cash to reduce its loan amount or pledge additional collateral to the lender either the same day or the day following a margin call. In the weeks leading up to Thornburg’s annual report filing, the company received more than $300 million in margin calls that severely drained its liquidity. Thornburg was late in meeting the margin calls from at least three lenders and received a reservation of rights letter from one confirming that Thornburg was in violation of its lending agreement and could be declared in default at any time. Unwilling to disclose these events and the extent of the liquidity crisis, Thornburg executives improperly determined that more than $400 million in market value losses related to its ARM securities were temporary and therefore did not need to be recognized in the company’s income statement. The SEC alleges that Goldstone, Simmons, and Starrett engaged in a scheme to deceive Thornburg’s auditor and investors into believing that Thornburg had successfully met all margin calls. Keeping the extent of its margin call crisis quiet and relying on the cooperation and forbearance of its lenders, Thornburg was able to make the final payment on its margin calls approximately 12 hours before filing its annual report. Knowing that its reprieve from outstanding margin calls was only temporary and additional margin calls were likely in light of Feb. 27 news that a large European hedge fund holding substantial mortgagebacked securities like Thornburg’s ARM securities was about to collapse, Thornburg filed its annual report at 4:00 a.m. local time on Feb. 28. The executives’ urgency to file the annual report before the negative impact of the hedge fund’s collapse was evident in an e-mail that Simmons sent to Starrett saying that he gave Thornburg’s SEC reporting manager “a 6:00 a.m. Thursday deadline to file the K. I do not want there to be any issues based on Thursday activity.” According to the SEC’s complaint, Thornburg’s financial condition and liquidity immediately continued to deteriorate after filing its annual report. By 6:00 a.m., Thornburg began to receive additional margin calls that exceeded its available liquidity by 7:30 a.m. Nevertheless, even as Thornburg’s stock price dropped in the hours and days following the annual report filing, Goldstone and Simmons continued to publicly project the same false financial condition they had presented in the annual report, and they encouraged
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AmericaHomeKey Cited by HUD for FHA Violations
SEC Charges Three Thornburg Mortgage Execs With Accounting Fraud
cy protection in U.S. Bankruptcy Court for the District of Maryland. According to the SEC’s complaint filed in federal court in New Mexico, even though Thornburg was violating lending agreements by failing to make on-time payments, the executives were unwilling to disclose the severity of their liquidity crisis to investors and Thornburg’s auditor. For example, in a Feb. 25 e-mail from Starrett to Goldstone and Simmons, she said, “We have purposefully not told [our auditor] about the margins calls.” Goldstone, Simmons, and Starrett scrambled to satisfy all outstanding margin calls and then timed the filing of the annual report to occur just hours later in order to precede additional margin calls and avoid full disclosure. As Goldstone had earlier stated to Simmons and Starrett in an e-mail, “We don’t want to disclose our current circumstance until it is resolved.” The intention was “to keep the current situation quiet while we deal with it.” The SEC alleges that the plan by Goldstone, Simmons, and Starrett to never disclose the delayed margin call payments fell through when they were unable to raise cash quickly enough to meet more margin calls received soon after filing the annual report. When Thornburg began to default on this new round of margin calls, it was forced to disclose its problems in 8-K filings with the SEC. By the time the company filed an amended annual report on March 11, its stock price had collapsed by more than 90 percent. Thornburg never fully recovered and filed for bankruptcy in May of 2009. “The truest test of corporate executives’ commitment to full and accurate shareholder disclosure comes not during times of soaring profits and doubledigit growth, but when companies are under financial stress and shareholders have the greatest need for accurate information,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “These Thornburg executives flunked that test by issuing a series of misleading statements and halftruths to conceal Thornburg’s rapidly deteriorating situation.” The SEC has now filed financial crisisrelated enforcement actions against 98 individuals and entities, including more than 50 chief executive officers, chief financial officers, and other senior corporate officers. According to the SEC’s complaint against the Thornburg executives, the company was based in Santa Fe, N.M., and considered the nation’s secondlargest independent mortgage company after Countrywide. In addition to its lending business that focused on jumbo and super-jumbo loans, and adjustable-rate mortgages (ARMs), Thornburg purchased and held ARM securities and also securitized ARM loans. In order to finance its mortgage business and investment-related activities, Thornburg needed constant access to financing, which included money borrowed from various lenders pur-
The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, completed more than 2.1 million foreclosure prevention actions since the start of conservatorship including 1.1 million permanent loan modifications. These actions, designed to help borrowers stay in their homes, are detailed in the Federal Housing Finance Agency’s Q4 2011 Foreclosure Prevention and Refinance Report. The report also shows that after nine months, fewer than 20 percent of the GSE loans modified in the four quarters ended March 31, 2011, had missed two or more payments, an improvement over prior years. With this report, FHFA releases new state data sets and launches an interactive Fannie Mae and Freddie Mac State Borrower Assistance Map, showing the number of loans owned or guaranteed by Fannie Mae and Freddie Mac, delinquencies, foreclosure prevention activities, real estate-owned (REO) properties, and refinances in each state. In addition, the report now includes a graphic showing Delinquent Loans by State and Profiles of Key States, with detailed information about states with the biggest five-year decline in house prices and the highest number and rate of seriously delinquent loans. Other findings in the Q4 2011 Foreclosure Prevention and Refinance Report: The GSE’s cumulative Home Affordable Refinance Program (HARP) refinancings increased 10 percent in the fourth quarter of 2011. Half of all borrowers who received loan modifications in Q4 of 2011 had their monthly payments reduced by over 30 percent, and one-third included principal forbearance. Serious delinquency rates for Fannie Mae and Freddie Mac loans remain below industry levels and continue to decline. Florida had the highest number of serious delinquencies at the end of the fourth quarter. California had the largest number of completed foreclosure prevention actions since the beginning of conservatorship in 2008.
mortgages insured by the Federal Housing Administration (FHA). In addition, the MRB is imposing $268,000 in penalties against the Dallas-based mortgage lender for repeated and serious violations of FHA requirements. “When we begin to see a pattern of failure to apply our standards, we will act to protect FHA’s financial health as well as consumers,” said Acting FHA Commissioner Carol Galante. “We expect lenders to meet our requirements, not just to protect the safety of our insurance fund but to make certain they don’t set up borrowers to fail by putting them into mortgages they ultimately can’t sustain.” Among more than a dozen violations of FHA standards, the MRB found AHK: Failed to adequately document the source and/or adequacy of borrowers’ funds used for closing; Failed to correctly calculate or adequately document borrowers’ income; Failed to verify the stability of borrowers’ income; Failed to ensure borrowers were eligible for an FHA-insured mortgage loan; Failed to ensure the property met eligibility requirements; Failed to comply with HUD’s property flipping requirements, including a case involving a property purchased for $14,100 that was resold approximately three months later for $125,000; and; Charged borrowers unallowable fees. Ginnie Mae also terminated AHK as an approved issuer, though AHK was not an active participant in the Ginnie Mae program having never issued Ginnie Mae securities in the past.
becoming an involved leader or in the case of people with intermediate ARMs (fixed for a certain period), for five years forward commencing upon the expiry date of the initial fixed period, whenever that may be, with the lender having no recourse to make up the lost margin income in either case. This would have the immediate impact of reducing interest rates by as much as 6.5 percent for sub-prime loans; 4.25 percent for option ARMs; and 3.5 percent for intermediate ARMs.
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II. ESTABLISH THE ARM MARGIN HOMEOWNER CHOICE PROGRAM Upon expiry of the five- or seven-year Margin Reduction Period, the homeowner would receive a statement from their loan servicer, with the following information and menu of choices: Current margin, current index rate and loan balance Three choices of margin rate: Continuing the 0.25 percent margin for another year; having a margin of one percent for one-year; or having the reduced full margin rate of 2.25 percent for one-year. If the consumer chooses either of the two reduced margins, the reduction of income to the loan servicer from the reduced margin income would be added to the loan balance payoff at the end of the loan. The choices allowed the consumer would give them the flexibility to keep their payment lower if still necessary after the initial three-year Margin Reduction Period. III.PERMANENT REDUCTION OF MARGIN AND IMPOSITION OF A MAXIMUM MARGIN CAP Impose a maximum margin of 2.25 percent on all new ARMs, and currently existing ARMs.
Results and effects of this solution
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because of the newly restored ability of consumers to make their payments in a timely manner, loan delinquency ratios should decrease dramatically, thereby restoring the integrity of the loan portfolio held for servicing and improving the balance sheet of the institution holding the portfolio. 3. Offers a solution directly to the homeowner, creating perceived and real consumer empowerment, helping to offset the resentment created by the endless multi-billion dollar bailout of the banks and big corporations. It definitively helps “the little guy” by immediately lowering their payment, giving them the
power to manage their loan more to their benefit and control, and reestablish neighborhood stability.
available properties, with the result of reducing current inventories, and further firming up property values.
4. Neighborhood stability would be restored because homeowners would be able to afford their payments at least for the next five to seven years, providing the elusive foundation that the economy needs to recover from the current recession. Homeowners would stay in their homes, greatly reducing the number of distressed properties on the market, and halting the downward spiral on property values. This would have a greatly beneficial impact on neighbors, and local municipalities, whose tax bases are eroding with property tax revenues declining. It would also provide the confidence necessary to encourage first-time homebuyers and other “fence sitters” to get out and buy
5. The money saved every month by homeowners could be used by them to reduce their onerous credit card debt and other consumer debt, helping to avert the next looming credit crisis. Also, the monthly savings could be used to revive consumer spending on pent up demand for new cars, and other items, helping the economy to recover more quickly, since consumer spending accounts for 70 percent of the American economy. George L. Duarte, MBA, CMC, CRB, CG-REP is president/broker/REALTOR with Californiabased Elite Real Estate Properties/Horizon Financial Associates. He may be reached by phone at (510) 377-9059 or e-mail email@example.com.
APPENDIX TABLE 1 Popular ARM Indexes, their October 2011 values; fully-indexed rates and payments with full margins for a $300,000 loan amount. Index 10/11 Values Usual Margins Fully-Indexed P & I Payment Rate for a $300,000 Loan One-Year CMT 0.12 2.75 2.87% $1,243.88 Three-Year CMT 0.41 2.75 3.16% $1,290.85 Five-Year CMT 0.99 2.75 3.74% $1,387.65 12-MonthMTA 2.02 2.75 4.77% $1,568.56
Option ARM Indexes Index
Fully-Indexed Rate 4.77% 3.78%
P & I Payment for a $300,000 Loan $1,568.56 $1,394.46
Sub-Prime ARM Indexes Index
P & I Payment for a $300,000 Loan
1. Upon passage of this Act, everyone who has an ARM loan would have their payment immediately reduced in half or more, not only because of reduction of margins, but also particularly because current indexes are very low due to the economic crisis. This would include homeowners not included in President Obama’s current plan, and those consumers not in trouble who may have been resentful of other efforts at mortgage relief—lower payment benefits for everyone, owner-occupied, second home, investment, conforming and jumbo.
The same indexes with the proposed reduced margins fully-indexed rate, and resulting lower P & I payments. Index Values Reduced New Lower New P & I Monthly Margins Interest Rate Savings One-Year CMT 0.12 0.25 0.37% $880.57 $363.31 Three-Year CMT 0.41 0.25 0.66% $918.78 $372.07 Five-Year CMT 0.99 0.25 1.24% $998.35 $389.30 12-Month MTA 2.02 0.25 2.27% $1,149.80 $418.76
2. Doesn’t force a principal balance reduction on loan servicers and investors, but removes their excessive profit margins fairly and permanently, while conversely eliminating the “toxic” aspect of the loan portfolios. This would be accomplished
Option ARM Indexes Index
Reduced Margins 0.25 0.25
New Lower Interest Rate 1.53% 0.526%
New P & I
Reduced Margins 0.25 0.25
New Lower Interest Rate 0.65% 0.97%
New P & I
Monthly Savings $528.88 $493.47
Sub-Prime Loan Indexes Six-Month LIBOR One-Year LIBOR
Values 0.400 0.720
Monthly Savings $861.96 $880.51
These tables clearly indicate the very substantial benefit to the homeowner in monthly payment reductions resulting from reducing the profit margins on ARMs.
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the company’s investor relations group to do the same. Privately, reflecting on the company’s stock price drop, Simmons commented in an e-mail to Goldstone soon after the annual report was filed, “I guess the recent development section did not go over well. If they only knew.” The SEC’s complaint charges Goldstone, Simmons, and Starrett with violations of the anti-fraud, deceit of auditors, reporting, record keeping, and internal controls provisions of the federal securities laws. The complaint seeks officer and director bars, disgorgement, and financial penalties.
HUD Charges Bank of America With Discrimination Against Disabled Homebuyers
75,000 Loan Mods Reported Completed in January
FHA Cuts Could Save Borrowers $3,000 Annually Acting Federal Housing Administration (FHA) Commissioner Carol Galante has announced significant price cuts to the FHA’s Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Beginning June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to just 0.01 percent and reduce its annual premium to 0.55 percent for certain FHA borrowers. To qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009. Late last month, FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500. “This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today’s low interest rates,” said Galante. “By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process.” Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHAinsured mortgages. By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting. FHA-insured homeowners should contact their existing lender to determine their eligibility. The Obama Administration recently announced a broad package of actions continued on page 51
A new study from the MetLife Mature Market Institute shows the age of those seeking a Home Equity Conversion Mortgages (HECM) has plummeted in the four years since the collapse of the housing market in the U.S. The study also finds that reverse mortgages have evolved into a way for many older Baby Boomers to help manage urgent financial needs. Boomers, age 62–64, currently represent one-in-five prospective borrowers of the product, which was once associated with a much older age group. “Changing Attitudes, Changing Motives: The MetLife Study of How Aging Homeowners Use Reverse Mortgages,” produced in conjunction with the National Council on Aging (NCOA), reports that the average age of those who have gone through reverse mortgage counseling has declined and is now 71.5 years of age. The U.S. Department of Housing & Urban Development (HUD) reports a similar decline in the average age of borrowers to age 73. Forty-six percent of homeowners considering a reverse mortgage are under age 70. The percentage of 62to 64-year-olds who are prospective borrowers has increased 15 percentage points since 1999, despite the fact that younger applicants have had lower available loan limits. Data for the study was collected by HUD-approved counselors as part of mandatory counseling for all reverse mortgage applicants. Between September and November 2010, counselors completed 21,240 of these counseling sessions. Approximately 67 percent of recent counseling clients also have a conventional mortgage that will need to be repaid if they decide to take out a reverse mortgage, the study found. About 27 percent of the respondents reported having both housing and non-housing debt. Borrowers with sizable existing debt may rapidly deplete home equity. “Consumer attitudes about reverse mortgages are changing because the recession has eroded confidence about retirement security and Americans will rely more and more on these measures,” said Sandra Timmermann Ed.D., director of the MetLife Mature Market Institute. “As reverse mortgages do not have income requirements and since other forms of credit have become less accessible, these loans will become more attractive, though it is worth noting that the Department of Housing and Urban Development stated recently that lenders may conduct financial assessments of applicants to ensure that they have the ability to meet their loan obligations.” Barbara Stucki, Ph.D., vice president
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HOPE NOW has released its January 2012 loan modification data, which shows that an estimated 74,000 homeowners received permanent, affordable loan modifications from mortgage servicers in the first month of 2012. The reported data for January shows that mortgage servicers completed approximately 56,000 proprietary loan modifications for homeowners and 17,992 Home Affordable Modification Program (HAMP) modifications (as reported by U.S. Department of the Treasury). Proprietary loan modifications continued to show characteristics of sustainability, which the majority having lower principal and interest monthly payments as well as fixed interest rates of five years or more. This trend has been consistent with data from previous months. The January data also showed that foreclosure sales slightly outpaced loan modifications for the first time since October of 2009. For the month of January, there were approximately 79,000 completed foreclosure sales. Delinquencies of 60 days or more continued to remain flat at about 2.77 million, or approximately six percent of all loans. “HOPE NOW and its members have charged full speed into 2012 in the ongoing collaborative efforts to assist at-risk homeowners,” said Faith Schwartz, executive director of HOPE NOW. “Loan modifications continue at a steady pace and proprietary mods continue to show real signs of sustainability and affordability for homeowners. This is important to note, as these characteristics are vital to housing market recovery.” Highlights of the January 2012 data includes: Total permanent loan modifications were approximately 74,000 Approximately 56,000 were proprietary 17,992 were completed under HAMP Completed foreclosure sales were approximately 79,000. Loan modifications with reduced principal and interest payments accounted for approximately 67 percent (38,000) of all proprietary modifications. Fixed-rate modifications (initial fixed period of five years or more)
Study Finds the Average Age of Reverse Mortgage Borrower on the Decline
for home equity initiatives for NCOA, added that going forward there is a good chance home equity will evolve from being an emergency measure to one that is part of a strategic retirement plan. “While the economic downturn may be a major reason borrowers have begun to use this financial option for debt management, in the future it is likely that tapping home equity will be viewed as part of the entire retirement planning process,” said Dr. Stucki. “It is likely the reverse mortgage option will be considered alongside some of the more traditional methods of saving and investment.”
The U.S. Department of Housing & Urban Development (HUD) has charged Bank of America with discriminating against homebuyers with disabilities. HUD claims that Bank of America imposed unnecessary and burdensome requirements on borrowers who relied on disability income to qualify for their home loans and required some disabled borrowers to provide physician statements to qualify for home mortgage loans. The Fair Housing Act makes it illegal to discriminate in the terms and conditions of a loan to an individual based on a disability, including imposing different application or qualification criteria, and makes it illegal to inquire about the nature or severity of a disability except in limited circumstances not applicable here. “Holding homebuyers with disabilities to a higher standard just because they rely on disability payments as a source of income is against the law,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Mortgage companies may verify income and have eligibility standards but they may not single out homebuyers with disabilities to delay or deny financing when they are otherwise eligible.” HUD’s charge is based on a “Secretary-initiated investigation,” and the investigation of complaints filed by two individual borrowers in Michigan and one borrower in Wisconsin who claimed that Bank of America required them to provide personal medical information and documentation regarding their disability and proof of continuance of their Social Security payment in order to qualify for a home mortgage loan. The charge is also being issued as part of the work being conducted by the Federal Financial Fraud Enforcement Task Force’s non-discrimination working group. According to HUD’s charge, Bank of
America allegedly asked some borrowers for proof of their disabilities and sought evidence of the continuation of their Social Security income before approving loans, after first denying them. The matter will now be handled by the Department of Justice (DOJ).
accounted for 89 percent (50,000) of all proprietary modifications. 60-plus days delinquencies for January 2012 were 2.77 million.
Top Five Things to Improve Your Existing Business
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By Leif Boyd
In the February 2012 issue of National Mortgage Professional Magazine, I wrote an article titled “The Top Five Things to Know to Start Your Career as an LO” (see page 27). Now, I want to provide some tips on how to improve an existing loan origination (LO) business. The five strategies listed below are ones that some of my colleagues and I have used to build our businesses.
1. Create a business plan In the beginning of a career, many LOs are diligent about making a plan, developing goals, creating timelines for success and creating strategies to achieve specific objectives. However, as LOs get busy, they often just keep doing the same thing day after day, year after year. Taking the opportunity to create a business plan each year is a huge opportunity for LOs. It may seem like taking a day or even a week off to create such a plan is too time-consuming, but the end result is worth it. LOs
are often stuck working in their businesses and not on their businesses; however, taking the time to refocus and build a new business plan can keep a business from growing stagnant and declining. Creating a plan means taking the time to step back, assess success, identify failures and develop goals to pave the way to a successful future. Assess success: Take a look back over the last year and see what worked. Was it meeting with clients? Utilizing new technologies? Hiring help? Constantly communicating with clients throughout the loan process? Asking for referrals? Once these successes are identified drill down into each one of them. Which clients were more likely to give the best referrals? What technologies helped the most and why? What steps during the loan process were the most important to be in contact with your clients and why? Identify failures: Everyone makes mistakes. The important thing is that we learn from those mistakes. Did a certain marketing piece not
meet expectations? Did a process fail repeatedly? Were there constant delays in loan processing? Was paperwork not collected from clients that needed to be? Were new LOs and staff not properly trained in their essential job functions? Once these failures are identified, ask if they have been corrected and if new processes have been put in place to limit similar failures in the future. Develop goals: Having goals is essential to growing an LO business. Goals can be about employee retention, developing new business leads, contacting past clients for future referrals, closing a certain dollar amount of loans for the year and so on. Dream big about both personal and business goals. Create a path: Goals are great, and creating a path to reach those goals will turn lofty ideas into reality. If a goal is to contact past clients for future referrals, then identify how many clients will be contacted each week. If a goal is employee retention, what strategies will be used? It could be con-
“LOs are often stuck working in their businesses and not on their businesses; however, taking the time to refocus and build a new business plan can keep a business from growing stagnant and declining.” tinuous training, developing incentive programs or team building activities and lunches.
2. Continuous learning If it was easy to be an LO there would be more of them. Having a successful career as an LO requires dedication—it is not a 40-hour per week career. Professional athletes play the same sport, but still train and practice regularly. Doctors may perform the same surgery countless times, but they still practice and learn new ways of doing things that make the surgery more successful, limit medical errors and reduce patient recov-
ery time. As an LO, it is our responsibility to constantly better ourselves and our business. We do this by reading articles in trade publications, attending training seminars, making sure we know about the impacts of new regulations and knowing how to best utilize new technologies. If new technology or processes are identified, it is important to determine if they would be effective for a specific office or individual LO. Take the time to learn about the technology, see how it is being used and then try it out, giving it a fair and honest review. Adapting to new technologies and new processes that work are what keeps LOs and their businesses growing and successful. Not making the necessary adaptations will put some LOs far behind their competitors and jeopardize who potential clients choose to do business with.
help the LO and/or the business succeed and achieve each of its desired goals.
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and legislative proposals to help responsible homeowners save thousands of dollars through refinancing. This includes the changes announced today that will benefit current FHA borrowers—particularly those whose loan value may exceed the current value of their home. By lowering monthly mortgage costs for home-owners, FHA hopes to help more borrowers stay in their homes, thereby decreasing the potential for future default and reducing losses to the Mutual Mortgage Insurance (MMI) Fund.
Loan Workout Wrongdoing Remains Top Choice Among Fraudsters The Financial Crimes Enforcement Network (FINCen) has released its Third Quarter 2011 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows financial institutions filed 19,934 MLF SARs in the third quarter of 2011 up from 16,567 filed in the same quarter of 2010. The report also found that 5,728 MLF SARs filed in the third quarter, 29 percent of the total, reported activity that occurred between October 2009 and September 2011. Some of the types of suspicious activity reported included: Some form of loan workout or debt elimination attempt; Questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners; and Social Security number discrepancies submitted in the original loan application and the workout request. “As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through
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their portfolios of earlier mortgages now in default,” said FinCEN Director James H. Freis Jr. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors.” Nearly 62 percent of MLF SAR filings reported in Q3 of 2011 involved suspicious activities that started four or more years ago. These filings, driving the continued rise in the MLF SAR numbers, stem largely from mortgage repurchase demands and special filings generated by several depository institutions related to mortgages originated in the height of the housing boom. This majority of filings involving past activity compares with just 24 percent of MLF SARs reported in the third quarter of 2010 where the activity started four or more years ago. FinCEN also released per capita rankings of MLF SARs subjects by state and by county. The top five counties ranked per capita and by SAR subject in the third quarter were Santa Clara County, Calif.; Honolulu County, Hawaii; Orange County, Calif.; San Bernardino County, Calif.; and Palm Beach County, Fla. The top five states ranked by per capita and by SAR subject were: Hawaii, California, Nevada, Florida and Delaware.
Networking is one of the most important parts of being a successful LO. The more people an LO interacts with regularly, the better the chance that they will receive referrals. Networking can be done in both formal and informal ways. Networking is not a scary process, it is literally getting to know new people and being interested in what they are doing first. Once you ask what they do, they are almost guaranteed to ask you what you do, giving you the opportunity to say what you do in 30 sec. to one min. Once LOs know how to network, the best ones figure out how to work networking into their everyday lives, while also attending events designed for networking. 3. Look back Informal networking can be done This goes beyond looking back at suc- at sporting events or among friends. cesses from the past year as discussed If a child plays soccer or is in gymnasin the “Business Plan” section. This is tics, do the other parents know what an opportunity to look at historical you do? Do you know what they do? If successes from an entire career as an you are on a softball team, do your LO. When speaking with new LOs, I teammates know what you do? If you always emphasize the importance of are at a graduation party or a backreferrals and putting the customer yard barbeque, did you make a point before the commission. Over time, I to meet five to 10 new people? Then suspect that some LOs get so busy there are events designed for netthat they forget the original corner- working, ranging from chamber mixstones of their success. When they ers to Tweetups, to grand opening first started, perhaps they called five galas and community fundraisers. LOs past clients a week to check in. Did can have a goal of how many new that practice stop? It is probably use- people they will meet at each event, ful to make time in a busy schedule how many events they will attend to make these calls again. Did a new each month and can make a plan of LO set aside a certain percentage of how they will follow up with each income for marketing? It may be time new contact. Building these relationto reevaluate a marketing budget ships will help create future clients and stick to it. Direct mail, print ads, and have a high likelihood of bringe-mail campaigns, social media and ing in more referrals. social networking, and digital ads all may offer opportunities to reach out Utilizing these five strategies can to potential customers. What other help many LOs add new life to their simple strategies were used in an business and careers. As with any early career to build a business? Go thing we do in life, we will only get back and review those. better by learning more, looking back and developing plans to achieve 4. Evaluate with future goals. We do this whether we know it or not, in every area of our a business coach All of the above strategies have been life. One individual might have a goal about an LO looking back at their of losing weight, so they watch what own business and finding ways to they eat and start meeting with a perimprove it. Although this works very sonal trainer regularly. Parents might well, sometimes it is necessary to have a goal of giving their child mulbring in an outside set of eyes to tiple opportunities to succeed, so accurately assess the situation. A they plan what schools a child should business coach can look at a loan attend and what extracurricular activoriginators business independently ities they should be exposed to. Just and help discover what is really hap- as individuals and parents do this, pening within the organization. This LOs can do it with their careers. second set of eyes can create accountability, not just to the busi- Leif Boyd is senior vice president of proness coach, but to themselves. duction for American Pacific Mortgage. During the evaluation with a busi- Since joining American Pacific ness coach a “SWOT analysis” may Mortgage, Leif has taken an active role also be performed. This analysis will in overseeing all aspects of mortgage point out the LO’s and/or the busi- origination, including the oversight of ness’s Strengths, Weaknesses, the production department and 114Opportunities and Threats. Taking an plus branches. He may be reached by honest look into each of the items phone at (916) 960-1325 or e-mail mentioned by the business coach will email@example.com.
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Accounting and Audit
Branch Manager United Northern Mortgage Bankers......888-600-8808 Limited room available for established Team Leaders and Licensed Mortgage Originators. Become part of an established 30-year Mortgage Banker with a proven track record and success.
Mark Wilson Certified Public Accountants 9455 Ridgehaven Ct, Suite 101 • San Diego, CA 92123 619-649-0712 www.markwilsoncpa.com A full service CPA firm specializing in the needs of the mortgage industry. Providing monthly bookkeeping services,FHA and financial statement audits , corporate tax preparation and contract CFO services. Contact us today to learn more.
Appraisal Management Company
America’s Choice Home Loans www.achlonline.com 713-821-9750
Finally - the freedom to originate! America's Choice gives you the tools you need so you can Originate, Close and Get Paid! We work as hard as you to be America’s Choice for consumers needing a home loan, and we work just as hard to be America’s Choice for top branch managers, loan originators and mortgage professionals. Call Jonathan Fowler, Director of National Production at 713-821-9750 to learn how you can have a better, more rewarding career.
HVCC Appraisal Ordering National Appraisal Management Center www.HVCCAppraisalOrdering.com Please call 866-396-6260
LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance.
We help you Meet & Exceed UMDP enforced by the GSE’s We Improve your evaluation of collateral with “REALviewTM” Appraisals submitted in a MISMO/XML or PDF format. We’ve raised the bar for Appraisal Management Services!
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Appraisal Management Company
Hometown Lenders (888) 606-8066 firstname.lastname@example.org www.hometownbranch.com
Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.
CENTERED ON YOUR NEEDS - FOCUSED ON YOUR SUCCESS
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
NO File Fee or Monthly Fees
StreetLinks Lender Solutions (800) 778-4920 www.streetlinks.com email@example.com StreetLinks Lender Solutions provides an innovative and comprehensive suite of valuation and service solutions used by lenders, servicers and appraisers nationwide to improve everyday business operations.
• Get a BPS payback from our volume incentive that your loan officers can’t see • You have the ability to control your loan officers pricing • Create, Customize and Optimize your branch’s compensation plan • Recruiting Support – Our network of recruiters place producers in your branch! • Full Eagle Lender and we’re currently looking for high-quality Producers in TX, GA, AL, TN, FL, MS, and SC
LoyaltyExpress 877.938.1175 firstname.lastname@example.org www.loyaltyexpress.com
StreetLinks industry-leading products include LenderPlus™ full-service appraisal management, LenderX™ lender-executed appraisal management software and SCORe™ appraisal reviews and a series of valuation analysis tools for services. Our commitment to quality and service, embodied by our partnership approach to clients and appraisers, continues to set us apart as the nation’s premier lending solutions partner. For more information, visit www.streetlinks.com.
Accounting and Audit
LoyaltyExpress, the leading mortgage marketing company in the nation, delivers high-impact marketing that substantially increases production levels. Direct mail, e-mail, and intelligent alerts are combined to deliver unprecedented results. Learn more today.
Mortgage Brokers Network Corp, Inc. 1-888-589-7048 The Mortgage Industry’s Matchmaker http://mortgagebrokersnetwork
• Mortgage Branch Employment Opportunities • We work with some of the top mortgage branch companies in the industry!
Freedom Mortgage Corporation www.fmbranch.com email@example.com 800.220.9498 Freedom Mortgage Corporation, The BEST Branch Solution, Period.
• With hundreds of branch employment opportunities out there, making a choice on who to sign up with is not an easy task! We are here to help! • Hiring Licensed Mortgage Originators for branch management and loan origination. • Bank and Broker status to choose from, multi-State lending and more... Visit our site or call us today to speak to one of our representatives.
Abacus Mortgage Training and Education PO Box 780 Summerfield, NC 27358 888-341-7767 • www.GetYourEd.com NMLS approved 20 hour Prelicensing Education NMLS approved Continuing Education Live Classroom Instruction, Web Delivery and Private Events The SAFE-Smart ExamCram, Powerfully Innovative Test Prep
MSS Learning Center (800) 963-1900 www.MortgageSuccessSource.com Email: info@MortgageSuccessSource.com Time is running out...are you ready? Pass the S.A.F.E. Act Test, meet your 20 hours of Pre-licensure, and complete the 8 hours of Continuing Education you need • The Ultimate Test Prep Kit and Test Prep Boot Camps – Cover everything to pass the S.A.F.E. Act Test — on your first try. • 20-hour Pre-licensure - Packed with everything to successfully complete your pre-licensure requirements. • Continuing Education - Exciting, NMLS approved courses that meet your Continuing Education needs and build your business.
DocVelocity www.docvelocity.com (877) 362-8356 firstname.lastname@example.org DocVelocity is an end-to-end paperless solution designed to simplify the loan origination experience. Imagine having all your documents in the loan process as electronic files, all online, from pre-approval to closing. DocVelocity provides: Fast and easy loan delivery to any lender … Automatic doc sorting, naming and filing … Real-time online document sharing for anyone you choose … Friendly and intuitive user interface … No start-up fees, and free training and support. DocVelocity addresses important compliance issues while giving your office the competitive advantage of being paperless. It streamlines all aspects of the mortgage process and most important, it does so in one easy-touse and inexpensive package. DocVelocity is the flagship product of Paperless Office Solutions, Inc., a wholly owned subsidiary of Flagstar Bancorp. Visit www.docvelocity.com to find out more.
Document Preparation Credit Reporting
“A Full Service Lending Information Company” A/E: Jeremy “Judge” Honor 877-MFI- DATA Jeremy@MfiCreditSolutions.com www.MfiCreditSolutions.com Credit reports • Rapid rescore • Reissue • Supplements IRS & Social verification • VOE / VOI • Title • Flood Appraisals / BPO / AVM • Fraud alerts • Red Flag • LQI MOST AGGRESSIVE PRICING!
Mortgage Banking Systems - ProClose 1360 Beverly Rd. Ste 200, McLean, VA 22101 800-783-2283 · email@example.com www.ProClose.com ProClose provides compliant closing documents and software for Residential Mortgage Lending. Created with closers in mind, we help make a lender’s staff more efficient and supported.
FHA Audit and Licensing
First National Compliance Solutions Inc. 1-800-400-4134 www.firstnationalcompliance.com Bonnie Nachamie & Jonathan Pinard have assembled a team of experts to assist Mortgage Brokers, Mortgage Bankers, Federal and State Chartered Banks & Credit Unions with their mortgage compliance needs.
LenderCity Home Loans 888.880.2489 www.LenderCity.com LenderCity Home Loans is now offering individual franchises. This is perfect for the L.O. who has always wanted to open their own brokerage but didn't know how. Benefits include: • Growing with a recognized brand • Local and National marketing and advertising • Online search engine marketing • More aggressive lender pricing based on volume incentives • A proven system that generates more revenue than average broker shops • Ability to retain your license, existing corporation, and autonomy • Lead generation
• Processing and closing services also available
Direct Mail Best Rate Referrals ............................................800-811-1402 Mortgage marketing company with decades of combined experience providing quality leads, mailers, lists and dialer products. www.bestratereferrals.com & www.mortgageleads.org
Robertson | Anschutz 800-343-7160 firstname.lastname@example.org www.radocs.com/info.html Mortgage Loan Closing Document Preparation & Compliance Services Fulfillment Services Including Pre-Funding Review & Post-Closing Interfaces with Leading Loan Origination Software Systems Foreclosure – Loss Mitigation Services
Hard Money/Private Lending
TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.
The Lykken on Lending RADIO PROGRAM
We are doing traditional subprime lending, fix & flip lending and hard money lending.
Mortgage Loan Closing Document Preparation & Compliance Software Loan Documents and Compliance – Web-based/SaaS – Easy to Use Intuitive – Secure and Reliable – Integrates with Leading LOS Free Setup and Support – Extensive Compliance Audits
Windvest Corporation ............................877-285-0777 Specializing in rehab loans for property investors in So. CA. Up to 60% ARV, 12.99% fixed rate, 3.5-5 points, 1 yr. term. Fast & professional service since '94! Visit windvestcorp.com!
NYC Real Estate Expo LLC Anthony Kazazis - Director
email@example.com • www.nycrealestateexpo.com
646.210.2545 • 914.763.8008 “The Expo for Real Estate Professionals" For ongoing Networking Events throughout the year please visit www.nycnetworkgroup.com.
AAA Refi Leads.....AAA Refi Leads.....AAA Refi Leads Learn how I went from failure to success by mailing cheap refi letters from home, closed 71 loans & made $248,954.62 last yr. I’ll show you exactly how I did it. Go to: www.Refi-Leads.NET
Sign-on weekly at
Docs on Demand 800-343-7160 firstname.lastname@example.org www.docsondemand.info
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
TagQuest www.myharpleads.com TagQuest.com 888-717-8980
ACC Mortgage, Inc. 932 Hungerford Drive #6 • Rockville, MD 20850 240-314-0399 • 240-314-0336 fax WeApproveLoans.com
Document Preparation (SaaS)
Internet’s Leading Consumer Mortgage Marketplace Attracting over 8 million unique consumers every month www.Bankrate.com • 561-630-1257 Reach affluent and creditworthy consumers who are in-market and ready to transact. Bankrate is a consumer direct Web site, NOT a lead aggregator. Qualified leads for every sized budget, and pay only for performance. No set up fees! No contracts! No risk! • Reach self directed, highly qualified consumers that are actively searching for mortgage loans • Geo-targeting – reach the right consumers in the right markets • Our proprietary Advertiser Portal gives you complete control over your campaigns, budgets, and performance reports. • YOU determine your daily/weekly/monthly budget • Pay only for consumers who click on your listing • NO cancellation fees
www.LendingForms.com Same Day Shipping (orders placed prior to 3pm et) 24/7 Secure e-Commerce Site Save 33-50% • • • •
HUD Settlement Cost Booklets CHARM Booklets Uniform Residential Loan Applications HUD Case Binders
Try us risk-free! Call 561-630-1257 or visit www.bankrate.com/cpcprogram/ for more details.
Icon Residential Lenders (888) 247-4207 www.iconwholesale.com Icon Residential, a wholly owned subsidiary of Grand Bank N.A., is one of the nation’s leading Conforming, Jumbo, FHA and VA wholesale lenders. Our strength, success and longevity is derived from delivering customers service that exceeds our valued business partners expectations. With deep industry knowledge, financial stability and innovative technology we provide the solutions for our business partners to fund loans while avoiding risk. • • • • •
Direct Access to Underwriters Competitive Pricing Innovative Technology Paperless Solution Bank Funding
Comergence Compliance Monitoring, LLC 630 The City Drive South, Suite 205 • Orange, CA 92868 Office: 714-740-9000 www.ComergenceCompliance.com Best Rate Referrals The Leading Direct Marketing Company for Mortgage Professionals 800-811-1402 • www.bestratereferrals.com
Comergence Compliance Monitoring is the mortgage industry’s only Complete broker desk management software and outsource solution for TPO management and monitoring. We can supplement lenders inhouse management and monitoring resources departments.
AMX/Land Home Financial ..................800-349-4172
Reach affluent and creditworthy consumers who are in-market and ready to transact. Bankrate is a consumer direct Web site, NOT a lead aggregator. Qualified leads for every sized budget, and pay only for performance. No set up fees! No contracts! No risk! Founded in 2005, Best Rate Referrals has grown into one of the fastest growing marketing firms in the nation. By combining new technology with traditional direct marketing methods that produce profitable results.
AMX/Land Home Financial Services Wholesale Lending Division - Great Rates, Great Programs, Great Service. Offering financing options that work in today's market.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
Best Rate Referrals is the direct marketing leader in the mortgage and banking industry. • • • •
Mortgage Direct Mail & List Services Mortgage Live Transfers Mortgage Internet Leads Mobile Marketing
Polaris Home Funding Corp. 616-667-9000 email@example.com www.polarishfc.com/timeforachange #1 USDA RD lender in multiple states with strong FHA/VA/CONV product lines as well. Don't be held hostage by a captive branch arrangement. Bank it or broker it. Have a business name/identity you don't want to give up? We allow DBAs (subject to state rules).
88 Kearny Street, 3rd Floor San Francisco, CA 94108 Phone: (415) 632-5150 • Fax: (925) 226-1938 www.bayeq.com Now • Arizona • California • Colorado
Wholesale Lending in: • Nevada • Texas • New Mexico • Utah • Oregon • Washington
Loanbright 27902 Meadow Drive, Suite 375 Evergreen,CO 80439 866-391-2709 • www.Loanbright.com Loanbright helps mortgage companies capture and close more business through its marketing and software tools. An INC. 500 awardee, Loanbright has helped thousands of companies since 1999 by providing them with well over 3 million qualified sales leads.
Loan Origination Systems
(800) LOANS-15 www.usmortgage.com Are you a broker/owner or current branch manager looking to expand your business into Mortgage Banking with FHA capabilities? Then our PARTNER BRANCH ADVANTAGE© program is perfect for you. We are offering you all the benefits of partnering with an established lender while still enjoying your independence. US Mortgage Corporation is a nationwide FHA Direct Lender with a 16 year long reputation of excellence.
Calyx Software 800-362-2599 firstname.lastname@example.org www.calyxsoftware.com Calyx Software, the #1 provider of mortgage solutions is dedicated to offering reliable and affordable software that streamlines, integrates and optimizes the loan process. Find out how PointCentral can streamline your business and create compliant processes today.
YOUR SUCCESS IS OUR SUCCESS!
CBC National Bank 3010 Royal Boulevard South, Ste. 230 Alpharetta, GA 30022 888-486-4304 CBC National Bank is one of the nation’s fastest growing wholesale lenders offering Conventional, FHA, VA, and USDA. The most important aspect of being a leader in today’s market is the ability to build and maintain a meaningful relationship with each customer. We understand that these meaningful relationships coupled with competitive pricing and efficient technology are the pillars of today’s lending environment. We are now hiring Account Executives in AL, TN, KY, VA, & MD.
For more information contact THOMAS R. SIRICO, Vice President of Business Development at (917) 923-1472 or email at email@example.com.
Contact Stu Ehrlich in our HR department at firstname.lastname@example.org for further details.
We look forward to sharing our services with you!
Big Enough to MATTER…Small Enough to CARE
Terrace Mortgage 4010 W. Boyscout Blvd., Suite 550 Tampa, FL 33607 866-934-4631 • www.terracemortgage.com We offer competitive pricing and fast turn-times for FHA, VA, Conventional, and USDA programs without having a retail presence in the industry. We are a wholesale lender with 22 years of experience and believe in exceptional service.
TMSfunding Wholesale Lending 326 W Main Street • Milford, Ct. 06460 888.371.2989 • WWW.TMSFUNDING.COM Your Partner in Success! • • • •
Paperless! Quick and Easy! Top Tier Account Executives Committed to Wholesale Operations that Earn Your Business
Veros Real Estate Solutions 2333 North Broadway, Suite 350 • Santa Ana, CA 92706 (866) 458-3767 www.veros.com • @verosres (Twitter) Veros Real Estate Solutions is a premier technology leader in the mortgage industry and proven leader in enterprise risk management and collateral valuation services. Veros combines the power of predictive technology and data analytics for advanced automated solutions.
Wholesale Reverse Mortgages
For Licensed Mortgage Brokers in NY, NJ, CT, PA and FL No HUD Approval Required – Live Help Desk Will Provide Training at Our Office or Yours 48 Hour Underwriting - Get Paid Within 48 Hours of Funding
Call 516-409-5555 ext. 4 to register your company.
The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting), affiliated services and resources that is seen by more than 191,181 active Professionals.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
If your ad was here, you would be seen by 191,181 Mortgage Professionals looking for resources to help them in their business.
Nationwide Equities Corporation 201-529-1401 www.nwecorp.com
NATIONAL MORTGAGE PROFESSIONAL
calendar OF EVENTS
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 email@example.com.
APRIL 2012 Wednesday-Thursday, April 18-19 2012 National Advocacy Conference Hyatt Regency on Capitol Hill 400 New Jersey Avenue Northwest Washington, D.C. For more information, call (800) 793-6222 or visit MortgageBankers.org.
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
Sunday-Wednesday, April 22-25 2012 National Technology in Mortgage Banking Conference & Expo Arizona Biltmore 2400 East Missouri Avenue Phoenix For more information, call (800) 793-6222 or visit MortgageBankers.org. Sunday-Wednesday, April 22-25 2012 National Fraud Issues Conference Arizona Biltmore 2400 East Missouri Avenue Phoenix For more information, call (800) 793-6222 or visit MortgageBankers.org. MAY 2012 Sunday-Wednesday, May 6-9 2012 National Secondary Market Conference & Expo New York Marriott Marquis 1535 Broadway New York, N.Y. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Thursday-Friday, May 10-11 New Mexico Association of Mortgage Professionals 2012 Real Estate & Mortgage Marketing Expo Sandia Resort & Casino 30 Rainbow Road Albuquerque, N.M. For more information, call (505) 480-8514 or visit NMAMP.org.
Sunday-Wednesday, May 20-23 2012 Legal Issues/Regulatory Compliance Conference La Quinta Resort & Club 49-499 Eisenhower Drive La Quinta, Calif. For more information, call (800) 793-6222 or visit MortgageBankers.org. Tuesday-Wednesday, May 22-23 28th Annual Mortgage Bankers Association of Alabama Convention “Staying the Course” Wynfrey Hotel 1000 Riverchase Galleria Birmingham, Ala. For more information, call (334) 260-8197 or visit MBAAL.org.
Wednesday-Thursday, May 16-17 National Reverse Mortgage Lenders Association 2012 Western Wednesday-Friday, May 30-June 1 Regional Meeting 2012 Hawaii Association of The Hyatt Regency Mortgage Brokers 17900 Jamboree Road Annual Conference Irvine, Calif. “Get Your Eight in the 808” For more information, Sheraton Waikiki Hotel call (202) 939-1760 or visit 2255 Kalakaua Avenue NRMLAOnline.org. Honolulu, Hawaii For more information, call Friday-Wednesday, (808) 783-4442 or visit HAMB.org. May 18-23 2012 Mortgage Bankers Association of Georgia Education Forum & Expo Sandestin Hilton Golf Resort & Spa 4000 South Sandestin Boulevard Destin, Fla. For more information, call (478) 743-8612 or visit MBAG.org. Sunday-Wednesday, May 20-23 2012 Commercial/Multifamily Servicing & Technology Conference Hilton Anatole 2201 North Stemmons Freeway Dallas For more information, call (800) 793-6222 or visit MortgageBankers.org.
JUNE 2012 Monday-Friday, June 4-8 MISMO June 2012 Trimester Meeting DoubleTree by Hilton Hotel 201 East MacArthur Boulevard Santa Ana, Calif. For more information, call (800) 793-6222 or visit MortgageBankers.org. Sunday-Tuesday, June 24-26 Mortgage Bankers Association Chairman’s Conference 2012 The Breakers 1 South Country Road Palm Beach, Fla. For more information, call (800) 793-6222 or visit MortgageBankers.org.
JULY 2012 Wednesday-Saturday, July 11-14 Florida Association of Mortgage Professionals (FAMP) 2012 Convention & Trade Show “Stay on Track” The Grand Hyatt Tampa Bay 2900 Bayport Drive Tampa, Fla. For more information, call (850) 942-6411 or visit FAMB.org. SEPTEMBER 2012 Sunday-Tuesday, September 9-11 Mortgage Success Source 2012 Mortgage Leadership Today Conference The Mirage Hotel & Casino 3400 Las Vegas Boulevard South Las Vegas For more information, call (800) 963-1900 or visit MortgageSuccessSource.com. Monday-Wednesday, September 10-12 2012 American Mortgage Conference Raleigh Marriott Crabtree Valley 4500 Marriott Drive Raleigh, N.C. For more information, call (919) 781-7979 or visit NCBankers.org. OCTOBER 2012 Sunday-Wednesday, October 21-24 Mortgage Bankers Association 99th Annual Convention & Expo The Hyatt Regency 151 East Wacker Drive Chicago For more information, call (800) 793-6222 or visit MortgageBankers.org.
Nationwid e FHA Lend er Looking fo r: TO P P R O D U CER
Call for De tails!
T h e B E ST B r a n c h S o l u t i o n , P e r i o d .
www.Fmbranch.com 800.220.9498 Info@Fmbranch.com This information is provided to assist business professionals and is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. Freedom Mortgage corporate office is located at: 907 Pleasant Valley Ave. Suite 3, Mount Laurel, NJ 08054. Lender NMLS ID: 2767. Licensed by the NJ Department of Banking and Insurance, License #9100861. All Rights Reserved.
ICON N SAYS S YES S TO
HARP P 2.0
NOW ACCEPTING HARP 2.0 SUBMISSIONS n No LTV/CLTV
n Appraisal Waivers Accepted
No Assets (Second Home and NOO n
n Net Tangible Benefit Required
will Require Reserves)
n No Cash Back to Borrowers
Only Current Fannie Mae Owned n Loans are Eligible
n 620 FICO Required
Reduction in Term to 20 Years or n
n Existing Loan must have Closed
Less will have Reduced Adjustors
Prior to June 1, 2009
MI Loans Allowed n
EA Levels I, II, III
For additional information regarding Conforming, Jumbo, FHA and VA lending, call us at
888-247-4207 or visit us at
www.iconwholesale.com See product guidelines for restrictions
Ranked one of the
Wholesale Lenders in the Country