By Tommy A. Duncan, CMT
NetMore America breaks $1 billion production milestone
AllRegs and LoanSifter announce integrated solution
Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528, ext. 124 or e-mail taduncan@qcmortgage.com. You may also visit Quality Mortgage Services LLC on the Web at www.qualitymortgageservices.com.
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NOVEMBER 2009
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It is flat out war. There is a war raging never seen before at the corporate levels of mortgage banking. It is the survival of which corporation has the best QC department or outsource QC company. Investors have engaged their QC departments or have outsourced to QC companies to build cases against lenders for repurchase. The lenders have engaged their QC department or outsourced to QC companies to rebuttal repurchase claims. This is the most exciting time in QC history … to be competing against competitors and robust QC departments at large mortgage banking corporation based on material facts. Mortgage insurance companies are doing the same thing and trying to push toxic or potential toxic paper back down to the source of underwriting or origination. Investors and mortgage insurers have the right to seek repurchase claims base on the breach of contract. What makes this endeavor exciting is finding QC errors on a QC department or an outsourced QC company. It is relatively easy to find origination oversights and regulatory errors, which so many files going through repurchase claims have. What is difficult for some auditors is finding the material substance to justify a repurchase. Just because a loan is a default, does not mean it is automatically a repurchase. For example, a lender had a large number of files that went into default. The investor/insurer issued a repurchase letter to the lender requiring indemnification. We conducted our audit and found that every file had a borrower or co-borrower who worked for one of two corporations that had gone out of business. We obviously found minor oversights in the loan, but the minor oversights did not warrant the repurchase of the investor/insurer’s claims. In fact, the lender did not have to repurchase a single loan associated with the claim. Are investors/insurers calling fraud when there is not fraud in a file? Things that make you say, “Hmmm?” Well that is a tough question. There does appear to be some perception of desperation out there from a select few making claims of fraud in the loan in order to justify a repurchase claim to lenders that are difficult to substantiate fraud. For example, the income is documented at $130,000, but the 1003 loan application has $1,300,000, which was a typo. The fraud would have been if the borrower had provided electronically-altered documents or falsified documents or if someone in the loan origination had altered documents. I will agree that this error should have been caught and corrected somewhere in the loan process or underwriting, but the W-2s and income verification supported the amount of $130,000. The rebuttal audit showed, on material fact, to support fraud, but showed human error or oversight. The loan qualified under the $130,000 income requirement. This loan was not in default and payments were current. However, this loan audited by an outsourced QC company proclaimed fraud and working toward a repurchase on behalf of a mortgage insurance company. These are exciting times in the QC world, and we love going to battle each and every day, either finding fraud or rebutting repurchase claims. May the best QC army win!
WISCONSIN MORTGAGE PROFESSIONAL MAGAZINE
AllRegs, an information provider for the mortgage lending industry, and LoanSifter, a provider of Web-based loan product eligibility and pricing tools, have combined resources to provide an integrated solution for loan officers, mortgage bankers and secondary departments. The AllRegs LoanLibrary product, which features 2,000 products and 60 investors, is now available to all searches that LoanSifter perform on investor guidelines and loan products. The data from the AllRegs LoanLibrary application is integrated into LoanSifter via a sophisticated Web service that allows users to stay within the LoanSifter system and still access updated investor guidelines. LoanLibrary will be accessible throughout LoanSifter’s “best of breed” solutions, from loan initiation, pipeline monitoring, auto quotes provided to Zillow and Lending Tree, Web site consumer portals, LoanSifter’s online 1003 mortgage application, and wholesale/third-party originator Web portal. LoanSifter users currently perform six million searches for loan products and guidelines per month. “With the release of this integrated system, loan officers have a valuable tool on their hands that provides loan eligibility, rate and product guideline information,” said Dan Thoms, AllRegs senior vice president. “Combining our resources with LoanSifter’s unique technology provides loan officers with the ability to better manage their loan products, search them in seconds, and view all the investor guidelines they need to choose the appropriate products for their customers. The integration will help increase their productivity on a loan-by-loan basis. LoanSifter is offering a truly powerful solution to the marketplace.” “Across the board, LoanSifter users are constantly searching out loan products and
Question: What do you see happening at high levels of mortgage banking and quality control (QC)?
www.NationalMortgageProfessional.com
NetMore America Inc., an expanding next generation mortgage banker, has announced that its production volume surpassed the $1 billion milestone for its fiscal year that ended Sept. 30, 2009, a 300 percent increase compared to the same 12-month period for fiscal year 2008. The significant production increase was driven by both purchase and refinancing activity in the company’s wholesale lending platform and professional branch system. “The $1 billion mark is a milestone that we are very proud to report as it validates our model and demonstrates our commitment to building the next generation mortgage banker through profitable and sustainable relationships,” said Mark Freedle, president and chief executive officer of NetMore. “We will continue to focus on enabling our lending partners, mortgage brokers and our branch system to operate in a friction free environment optimizing the lending value chain to operate more efficiently and empower them to exceed their own expectations.” NetMore funded its first mortgage loan in October 2007 and is focused on building a mortgage banking leader through the power of the right relationships and a sustainable national platform. The company is currently able to lend in 22 states through its wholesale channel and 18 professional retail branches. At this time, NetMore is generating 60 percent of its production from its wholesale channel and 40 percent from its professional retail branch system of which, on average, 40 percent is purchase and 60 percent is refinancing activity. NetMore’s goal is to build a nationwide lending platform in a responsible and strategic manner by focusing on states with high potential for quality business. The company is currently going through the licensing process in Maryland, which, when finalized, will be its initial entry into the East Coast market. For fiscal-year 2010, the company is projecting production volume to increase to the $1.3-$1.5 billion range. “Despite the full blown reset of the wholesale channel, the high quality, better skilled and credible mortgage broker is not going away,” said Freedle. “There is a definitive need in the marketplace for experienced independent mortgage
professionals that are committed to extensive product knowledge, ethical behavior, customer service and open and honest communication to help borrowers understand the mortgage process, set and manage expectations and put them into the right mortgage.” For more information, visit www.netmoreamerica.com.
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