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Issue 048 July 2011 TheNicheReport.com

Still Making Loans to Small Businesses National Direct SBA Lender

Mark Feathers, President & CEO

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Excel When Others Fail Create new strategies and embrace this downturn

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FEATURE ARTICLE! Putting People Before Profits The story you've never read about the mortgage community

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Shhh ... Frank and Brian Speak Market x Activities = Results

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CONTENTS

Issue 048

18

July 2011

Putting People Before Profits The story you've never read about the mortgage community

Rick Roque

NICHE REPORTS prime & FHA REVERSE MORTGAGE RURAL LENDERS HARD MONEY Commercial Construction/Rehab JUMBO Service Providers

pg 49 pg 49 pg 49 pg 50 pg 50 pg 50 pg 50 pg 51

FOUNDER & PRESIDENT Robert Pegg robert@thenichereport.com CO-FOUNDER & PRESIDENT David Pegg david@thenichereport.com

12 30 34 38

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Excel When Others Fail Thomas e. jandt author, your money is everything Create new strategies and embrace this downturn.

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MANAGING EDITOR Stewart Mednick stewart@thenichereport.com

Center Stage with Bank of Internet The Niche Report The Niche Report talks with Brian Swanson, Senior Vice President, Residential Lending

DEPARTMENTS

09

from the editor's desk

Shhh ... Frank and Brian Speak

10

Letters to the editor

Frank Garay Thinkbigworksmall.com Market x Activities = Results.

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What's your mortgage IQ?

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TIP OF THE MONth

54

LENDER & RESOURCE DIRECTORY

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BRINGING UP THE REAR

Man on the Hill Marc Savitt President, the National Association of Independent Housing Professionals Brokers vindicated!

July 2011

ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com Advertising Director Jessica Grizzle Jessica@thenichereport.com

Online Lead Generation Dennis Yu co-founder and CEO BlitzLocal.com What to do if you are not the big name in town.

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@thenichereport.com

Advertising sales Heather Bopp Heather@thenichereport.com Production Manager Henry Suchman henry@thenichereport.com Production Assistant Dawn Exner dawn@thenichereport.com Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Martin Andelman Karen Deis Frank Garay Thomas E. Jandt Stewart Mednick Rick Roque Marc Savitt Dennis Yu


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Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@thenichereport.com www.TheNicheReport.com

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer, or real estate professional and you do not currently receive The Niche Report, please go to www.thenichereport.com. An annual subscription is $47.95 (twelve months/twelve issues.) For additional copies being mailed to the same address please call 866.964.2695 or email us at subscriptions@thenichereport.com for multi-copy discount. Send address change requests to info@thenichereport.com. Remember to include the old address. To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to opt-out@thenichereport.com.

ADVERTISEMENTS To inquire about advertising in The Niche Report, please call 866.964.2695, or send an email to ads@thenichereport.com. Visit our website, www.TheNicheReport.com to download a copy of our Media Kit.

EDITORIALS / ARTICLES To submit an article for consideration in The Niche Report, please send an email to stewart@thenichereport.com or call 866.964.2695. We are interested in original writings relevant to mortgage brokers and other real estate finance professionals. If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to stewart@thenichereport.com.

THE NICHE REPORT POLICY The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.


From the editor's desk

It is better to give than to receive. This is a cornerstone tenet of many religions, societal ethics, corporate community relations, and mortgage companies. Excuse me, did you say mortgage companies? The same mortgage companies that, according to our mainstream press, pulled this country into a recession? The same mortgage companies that, according to our mainstream press, allegedly cheated millions of Americans out of a solid mortgage in lieu of an exotic product? The same mortgage companies that have been legislated to death because of their unethical behavior? Yes, these are the very ones. But I want to make a distinction that the bankers that cost the American public hundreds of billions of dollars are the ones living on Wall Street and not the companies mentioned here in The Niche Report. Yet, in the eye of the general public, we are all crooks. So how do the mortgage industry constituents save face? They give back. Rick Roque wrote an inspiring and very eye-opening feature article about mortgage companies that give back. This article shows that the people that run many of the mortgage companies that have been scorned and punished are truly heroes to the non-profits and charitable organizations to whom they give. Being a Navy veteran myself, I am very touched to have found out that many companies contribute to the Wounded Warrior Project and other veteran based organizations to assist veterans and their families. How can any company, public or private, be more American and more loyal to society than to assist our troops? Thank you, Rick, for the wonderful article that I hope enlightens, and inspires all who read it. With contributions by our regular cast of columnists and contributing writers, I hope you enjoy our magazine and thank you for participating in our fourth anniversary of bringing to you informative and sometimes controversial articles.

Cheers!

Stewart Mednick Managing Editor

Official

MEMBER

TheNicheReport.com

9


Letters to the editor

Letters to the editor Bringing up the Rear with Jaime Dimon by Mandelman He is still clueless on the mortgage broker! Love your articles, I always read them first in The Niche Report. L. Miller

They Once Were Lenders, June issue 2011 by Mandelman

professionals in our industry

* * *

already know, but the difference is Mr. Andelman - that was an outstanding article written by you on the Housing debacle. You hit the nail right on the head from start to finish. My only hope would be that every American politician would read your piece and learn from it! I have read many articles on our housing crisis but yours is the best! Will anyone listen or is the Banking Cartel that powerful? This nation's darkest days are here!! Nunez

part about Ameriquest. I loved the picture of the kid kissing the rapper necklace – that was extremely accurate. William

common folk will understand and have laid it out in a manner where it flows. The way it was laid out is perfect, one by one you took the time to explain in great detail what happened, why it happened, why it’s going to keep happening and what needs to be done to stop it. I think there should be some reform for Realtors. There are boatloads of those agents you described who COULD NOT pass

* * *

I enjoyed your piece in the Niche Report and I especially enjoyed the

you have put it into words that the

the NMLS and are now Realtors. It’s I just finished reading your article in this month’s edition of the Niche Report, and I have to say its dead freaking on. It’s the same thing a lot of people have already said and a lot of

Letters to the Editor may be e-mailed to info@TheNicheReport.com or faxed to 703-991-2362. Include your full name, email address, and daytime phone number. We are unable to publish all letters and may edit letters for length and clarity. Visit us online at www.TheNicheReport.com to subscribe to our magazine and/ or eNewsletter. Or call toll-free at 866-964-2695 for more information.

like almost every Realtor I talk to just became one six months ago and the first thing they say is “I used to be a loan officer, where is my approval?” Sunny Singh

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Excel When Others Fail Create new strategies and embrace this downturn by thomas e. jandt

I

n business, we are often faced with obstacles, regulations and frequent tests of our fortitude on our path to fiscal prosperity. Those whom have chosen to make a living in real estate and finance know this all too well, especially in recent years. Building a successful business can be extremely difficult when a professional’s respective industry is under fire by political adversaries, consumer protection groups and is struggling through a weak economic cycle. As is evident by the reduction in loan officers and mortgage bankers across the nation, it is clear that tough times tend to weed out those who are inefficient. In business, as in life, only the strong tend to survive. This only goes to reinforce a theory I have always believed in, which is that wealth is not lost, it is merely transferred from one person to another. Ironically, during the Great Depression more 12

July 2011

millionaires were made than during any other time in history. Although this may seem a bit counterintuitive, it makes a lot of sense if you understand why. You see, wherever there is adversity, there is always an opportunity just beyond it if you know where to look. Successful people often have one thing in common, they look for solutions to problems, they do not dwell on their misfortune, nor do they hide under their desks when things get ugly. These opportunists shift their strategies and greet difficult challenges with new and innovative approaches. During times of distress, an astute businessperson is always looking at how to use deficiencies as advantages and those whom master this are the ones that come out on top. This is how millionaires are made, empires are built and businesses are branded to last generations. In recent years it has been loan officers, mortgage brokers and real estate agents that have felt the brunt of government over-regulation. There have been a lot of good people pushed into unemployment through this


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recent crisis, but there are also many examples of those who have dug in their heels, developed creative new strategies and have embraced this downturn and grown their business while others have failed. As a young stockbroker starting out in 1993, I witnessed a similar cycle as CPAs, Attorneys, Doctors and other professionals quit their jobs to become brokers as the market peaked into the year 2000. When the market crashed from the technology bubble bust, most of these fair-weather hacks scattered back to their old jobs like cockroaches, but those of us that stayed in the game and worked twice as hard through the following three years ended up growing our businesses and building wealth for our clients when the stock market rallied straight up to new all time highs on the Dow Jones Industrial Average over the next 5 years. Those who abandoned their posts ended up financially distressed and their clients suffered severe investment losses. I suppose the point I am trying to make here is that there is a good reason that 10 percent of the population controls 90 percent of the wealth in America. In fact, if I were to conduct a poll of every American and asked them the question: “When the market crashed between 2000 and 2003, did you add to your investment positions?” I would be surprised if more than 10 percent of those polled would respond with “yes.” In fact, I bet a large percentage would have actually sold their investments at losses, rather than add new positions at those cheap prices. It might be helpful to note that the stock market rallied back to all time highs from 2003 to 2008 on the Dow Jones Industrial Average, one of the strongest rallies in history within the same time frame. After the market crash of 2008 due to the financial crisis, the exact same opportunity was presented to investors between the Fall of 2008 to March 2009 when the market hit bottom. However, how many people do you think became excited and eager to invest when the Dow Jones hit 6500 that dreary March? If you said not many, you are right! In fact, hardly any individual investors allocated new capital. Most of the buying was all by institutional investors, otherwise known as “smart money.” I should know, I contacted every one of my contacts and urged them to go “all in” between March and April of 2009, but with very little success. In fact, far less than 10 percent of all my clients added any capital at all and some even demanded to cash out their investments due to fear 14

July 2011

that things would just get worse. The reason I mention these examples of investor behavior in the stock market when discussing business opportunities and success relative to mortgage and real estate industry professionals is because the behavior and psychology between the two is almost identical. When times get tough, you need to push through and find ways to gain new clients, develop strong relationships and cultivate good will in your respective business community while others are neglecting their duties while whining about their bad luck. If you find yourself under the employ of a business that does not have a culture that is innovative and positive during times of stress, or if you are a business owner that employs anyone who is negative or complacent with just getting by, you need to change your environment immediately. Surround yourself by those who want to build and grow a strong business, with a clear focus on providing quality products, ethical business practices and constantly improving customer service standards. You will grow during weak economic times and when business recovers on a broad basis, you will be propelled into the stratosphere of prosperity. Understanding this philosophy and embracing this ideology is going to be more and more important each day, as the housing market continues to show signs of rolling back over into double dip territory. With April’s terrible housing numbers just released and new mortgage contracts signed plummeting in recent reports, there is good reason to take notice if your income depends on buying, selling and financing real estate. However, trying to use this weakness as an excuse for your business failure is not a good use of your time or imagination. Rather than sit back and wait for business to pick up, you should see these reports of a slow down as an inspiration to work harder and be creative in your marketing efforts. Based on macro economic data and historical statistics, real estate is poised to trend lower over the next three to five years before any real hope for any type of recovery in property values. In a recent article I read on May 26, 2011 on CNNMoney.com, a new report on the supply of foreclosures shows that it is going to take at least 36 months to burn through this inventory at today’s slowing sales rate. This is just to report existing foreclosures and REOs on the market, but does not even include future foreclosures, which are sure to continue to grow in the


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coming months if real estate values drop as anticipated. Now, depending on your outlook and attitude, you can view this as some pretty dreary news. But for someone that understands the idea that wealth is gained or lost during times of economic volatility, this can be interpreted as some pretty exciting news. This is not to say that we should not all be extremely concerned and take steps to make sure our financial house is in order to survive any short term periods of financial hardship that may not be avoided, but it is to say that we can all use this knowledge to prepare ourselves now to be more competitive and more productive so that when things get tough and our competitors have their spirits crushed, we will be mentally prepared to endure and prosper due to a lack of competition combined with an exemplary work ethic. A great way to sustain your growth trajectory or to generate new business is by establishing a strong businessto-business referral network. The average real estate agent will approach mortgage brokers and vice versa, but the extraordinary salesperson will create relationships within their communities that create a constant flow of new prospects and relationships. Business is still strong in many areas of real estate and finance right now, but most of this strength is through investors and institutions, as well as younger first time homebuyers whom don’t have legacy debt. Therefore, if your business is struggling to grow, I would like to suggest that you and/or your employees build strong community referral networks with CPAs, Financial Planners, Attorneys, Bankers and local business owners. Since real estate is bought and sold by people of all industries and all professions, you will want to provide some sort of benefit to the regions you serve that is relevant to the public as a whole, not just to industry participants. An example of this strategy can be found in the model

of a nonprofit organization that brings businesses and professionals together with dedicated members of various charities and encourages them to transact with each other for the mutual benefit of all, with proceeds being donated to their favorite charity. By actively sending each other business and agreeing to donate a percentage of all referral generated revenue back to the nonprofit to benefit a common cause, there is a strong incentive to send and receive business referrals which helps you to grow your business, raise money for your favorite charity and build strong business relationships that will last for years to come. Just think about it this way, if you can develop a core group of like-minded professionals, all dedicated to sending each other business referrals for a purpose greater than personal profits and advancement, you can not only generate more total revenue, but you will create an incredibly positive image in your community and will be able to help others while doing it. In addition to that, just think about how productive these new business relationships will be over the long term if everyone is thinking about how to help each other rather than just selfishly pursuing their own agendas. The bottom line is that the economy has been supported by government stimulus and careless spending, not by actual economic growth except for that exhibited in corporate profits on Wall St. created by raising prices, slashing jobs and cutting costs wherever possible, which will only slow future profit growth due to the reduction in staff and marketing as the economy slows down again. Although it has been a nice reprieve to see the markets rally if you made the tough decision to deploy capital and work hard over the past couple of years, the U.S. is still facing huge deficits and out of control spending that could result in another financial crisis just around the corner.


The bond market struggles as rates rise due to the excessive supply of new money in the system and the potential of a credit downgrade on U.S. debt by 2013, as stated is possible by Standard & Poor’s. I am hopeful that the idiots on Capitol Hill can resolve their partisan differences and control spending, but I am not willing to assume that these issues can be resolved; especially since we are talking about deficits, spending and economic woes unlike any other in history. I am concerned these issues are deeper and much more problematic than our mindless leaders are willing to admit. You need to be prepared for what is coming and if you do not have a strong foundation of clients, partners and resource providers before it hits, it will be hard to develop in the midst of future chaos, should things unravel again. Regardless of what your strategy is to grow your business and protect your wealth in the coming years as the economy recovers, it is important that you think about what “might” happen if the economy doesn’t recover and what steps you can take to be successful if the worst case scenario plays out. I encourage you to be optimistic about the economy and plan for a full recovery now because there are no guarantees in life and there is no reason to hope or plan for another full blown recession or depression; however, it is also foolish to only plan for and expect one outcome. The millionaires made through the Great Depression were made by taking full advantage of the weakness in the economy and many of them were ready to take action long before those opportunities presented themselves.

Thomas E. Jandt is author of a newly published book, Your Money is Everything, (www.yourmoneyiseverything.com) and also founded a non-profit called Champions and Heroes, that brings businesses and professionals together with dedicated members of various charities and encourages them to transact with each other for the mutual benefit of all. To contact Mr. Jandt on how to set up a chapter of Champions & Heroes in your community to leverage our technology and approved 501c3 nonprofit organization to benefit your favorite charity, You can email him at tom@championsandheroes.org. If you have a business and would like to learn how to protect your company’s assets or your personal retirement assets, call at 866-688-44449 ext. 220 for a free review.


Putting People Before Profits

T

The Story You’ve Never Read About the Mortgage Community By rick roque

here are many headlines and terms that have described the mortgage industry and our professionals over the last few years. Statements such as, We are mortgaging our future; The Loan Officer & American Greed; Taking advantage of the consumer; Predatory Lending; Loan Sharks; Car Salesmen & Loan Officers; Mortgage Fraud; Overly Leveraged; Brokers and Mortgage Lenders Passing the Buck; People in the Mortgage Industry are Unlicensed and Unprofessional; Mortgage Scams; Fees; The Mortgage Industry is Unregulated; The Mortgage Process is AntiConsumer; The Yield Spread Premium is Unfair and of course, Loan Officers Take Advantage of the Consumer - we have all heard it before and quite frankly, a stigma now exists over our profession. In light of this steady stream of news, how many of us have felt that we have needed to apologize for the fact that we have spent much of our careers in this profession? As one loan officer put it from Indianapolis, “we are paying for the mistakes of Federal policy makers; the GSEs; a poor fiscal policy that has led to a fragile economy with high unemployment and an ongoing decline in property values; poor Rating Agency practices that led to the mis-categorization of mortgage back securities, and somehow my mortgage company of 10 loan officers in Indianapolis is to blame for all that has gone wrong?” I had another state Mortgage


Association Chairman say, “being a loan officer today is as bad as a being a pedophile; we have to get finger printed - get registered in states wherever we live and if the borrower falls behind on their payments, that loan can follow us throughout our career wherever we live and work!” This is an extreme comparison and without debating its merits it reveals a valuable emotional association to our profession and the stigma that has led many mortgage professionals to virtually apologize for making an income by originating and funding mortgages. There has undoubtedly been a stigma with which we had to deal. I experienced this first hand. I do not know about many of you, however, I have never been protested before. As many of us did at the Fall 2008 MBA conference in San Francisco and the Community Banking conference in Chicago, I had the pleasant experience of being protested for clearly ambiguous reasons. I think I was protested for nothing more than looking like a banker since I was attending the conference and I wore a suit. As you can see in the picture, I had a conversation with one of the organizers of the event and she was there to protest another like minded cause and that was universal health care; she didn’t know much about what was going on in the ‘banker conference’. I asked her if she had ever purchased a home and she admitted she had not. But this does not matter, she was ‘angry’ but at just what, this was unclear. Many of the professional protesters in San Francisco were paid

for by Cindy Sheehan, a proud mother whose son sadly died while fighting for our country in Afghanistan. She camped outside of former President Bush’s ranch in Texas for many months and considered running for public office. Her staff decided to increase her ‘brand’ by protesting other issues that were consistent with her ideology; a mortgage bankers conference in San Francisco with the credit crisis as the backdrop were align-able factors that were too good to be true. So, people were paid to be bused from Berkeley over to San Francisco for a 2 hour demonstration. While we were attending seminars and attempting to determine policy and industry practices to bring the industry forward, protesters with their bull horns made a raucous; once the cameras and reporters left, so did the protesters. The same resulted when Michael Moore was filming his documentary “Capitalism, a Love Story”. He decided to hire protesters to protest that fact the banking industry’s reception of TARP funding at a Community Banking conference in the Spring of 2010. Community Banks had virtually nothing to with the credit collapse and very few of them actually received TARP funding – and many of the larger regional and national banks who did receive funds, they were forced by government regulators to do so (just ask Wells Fargo). But none of this really mattered because they were angry protesting anyone who did a mortgage and anyone with ‘bank’ in their name.

Failed Systems vs. Market Stress that broke Industry Systems It is important to make the distinction between inherently failed systems within a market and the leading factors that led to the eventual breakdown of these systems. Allow me to explain: what is it a failure in design that the Twin Towers came down after being hit by two airplanes or perhaps was it a case that the specific circumstances that led to the demise of the buildings were never assumed and therefore considered in to the design? It was an alignment of a number of rare and yet, specific set of circumstances that led to the eventual collapse of what otherwise was a well designed free standing building that lasted nearly 100 years. In the context of the mortgage industry, what do I mean by these environment circumstances? I am describing factors that indeed resulted in the unveiling of poorly designed mortgage origination practices, deficiencies in mortgage administrative practices and technology. Our


processes and systems weren’t designed to track, manage and report on such a rapid spike in loan origination volume and given the expansion of wholesale and the myriad of products that loan officers themselves did not understand, this exposed the absence of an in-depth licensing infrastructure and an industry that lacked true professional development. Loan Officers weren’t victims of the circumstances by any means and this would be a poor excuse for placing borrowers in homes they couldn’t afford. However, it is important to understand that what led to such abuses wasn’t initially the lack of regulation and oversight as it was the factors that artificially inflated a market whose systems weren’t prepared to handle such growth. The federally manufactured push toward home ownership; a public policy in 1998-2003 that rendered home ownership as a new national entitlement and a GSE push toward low interest rates were all driving factors that fueled a mortgage industry that was ill equipped in management, technology and training to handle the rapid growth and consumer demand that soon followed. When personal or economic tragedies occur, there tends to be a return “to the basics.” I do not believe borrowers understand any more today what is in the disclosures and documents they sign than they did between 2004-2007. What has changed is a return to sensible underwriting standards, a reasonable reduction in lending products and a reduction in market demand for mortgages that hovers around 1997 levels. And remarkably, back in 1997 despite the lack of government oversight, a Consumer Protection Board and the absence of the many regulatory burdens that exist today, there were not high instances of consumer default & industry fraud. How did the industry ever survive without Dodd-Frank? And if fraud did occur, there were laws and safeguards in place to track and monitor this. At 1997 levels of just under $1T, the system worked just fine; in 2007 and at nearly $3T, the system broke down. One has to be somewhat skeptical of whether or not the new restrictions, standards, reports, disclosures and licensing requirements will have any effect on the incidence of fraud and delinquency as compared to pre mortgage boom levels. So do we need more industry regulation or maybe we just need industry protections from Federal government intervention that artificially creates markets? There is a pattern of government priorities that end up doing more harm than good while the private sector partners who administered – often unwillingly at first, these priorities end up taking the blame for the environment that the government helped create in the first place. The cyclical irony of this is worthy of more study and is beyond the framework of this article. 20

July 2011

Silent Majority Despite the many reasons and what led the industry down its current path, there are and have been companies, people and associations who have risen above the fray. These companies have strong commitments to the communities around them. They are not the companies we read about when public servants and journalists criticized the ‘mortgage industry’ as being selfish, unregulated and anti-consumer. These are the silent majority; those companies who have grown despite the criticism and have remained firmly committed to community outreach and philanthropy. These are the companies who are truly emblematic of the industry that existed before the government contrived boom and who are still here after. The headlines that have mischaracterized our industry are the very reasons why this article and a few of the highlighted companies are so important to the future growth and reputation of mortgage lending. There are many companies that could be have chosen. This is simply an overview of a few companies, people and associations that define what is good about our industry and how it is important to get active in your community. It is time that these entities and many others appear in the headlines. Mortgage Companies Benchmark Mortgage http://benchmark.us/ I had a great conversation with cofounder and executive Stewart Hunter regarding Benchmarks’ commitment to the community. This is expressed in their corporate values and their focus on “Relationships” on their website. They have a strong employee and corporate culture; this is clear when talking to any of their branches and/or loan officers. These types of values are transmitted from the top down and that certain stems from Stewart and his founding partner Bryan Harlan. Benchmark supports in a number of charities and actively participates in a number of events. One in particular is the Achievement Center of Texas (http:// achievementcenteroftexas.org/) , which is a Non Profit established to teach, care and educate children with disabilities. Another effort that is close to Stewart’s heart is their organizational commitment to wounded veterans. Routinely, time, money and energy is allocated toward men and women in uniform who have experienced some type of trauma or physical disability as a result of fighting in


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Iraq, Afghanistan. Many of these service men and women have sever burns, have PTSD and have lost limbs during their respective war time commitments. When they return to the United States their largest struggle is re acclimating into normal day to day society. So, Benchmark encourages a “big brother” type relationship with these wounded veterans if only to have someone to talk to and possibly meet their psychological and emotional needs. Impressively, Stewart relayed a trip his team recently took with a number of seriously wounded special forces veterans. The executives at Benchmark decided to do something special by flying them from wherever they were around the country to South Dakota to go bird hunting. It was a great opportunity to “give back” while sharing experiences during several of their duck hunts. Lastly, branches have the opportunities to select specific charities in their local communities the office or corporate can choose to support. It is efforts like these and even better, the respective stories that made the conversation with Stewart so impressive. It is no wonder they are consistently funding between $100-$150M/ month in originations in contracting market.

Top Flite Financial, Williamston, Michigan www.toplitefinancial.com I spoke with Tim and Tracie Baise, a husband and wife team who run a strong lending platform based in Williamston, Michigan. With a strong commitment to compliance and a pro active approach to the market, they have earned national accolades as one of the top financial services firms growing in the United States, according to Inc. Magazine. During the conversation, they consistently emphasized their commitment to integrity and building

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authentic relationships with their borrowers throughout the lending process. They sponsor a number of charity outings including annual Golf events; they support local charities and they impressively organize a number of toy drives during holiday seasons to assist local families and children with toys they otherwise couldn’t afford. They support a scholarship foundation in addition to supporting a number of local Church and other local community events to demonstrate the fact that they are committed to the well being of the members of the community. It is from this positive culture, they have built a team of over 300 loan officers and with this a strong lending platform across 33 states.

Prime Source Mortgage, Roswell, New Mexico www.walkyouhome.com Another company that has long impressed me is Prime Source Mortgage. I have consulted and worked with Jeff Smith, the company’s founder and CEO for over 5 years. With one of the only publically traded mortgage companies in the United States, their motto “We Walk You Home” is centered around their core philosophy, “People Before Profits.” As a result, the public nature of the company and a servant driven mission, creates a unique company culture that avoids many of the traditional, ‘net branch’ type challenges of poor employee morale, distrust of corporate and employee retention. In fact, it is because of their corporate culture that they have one of the best employee cultures I have encountered. To take this to the next level, PrimeSource decided to start a charity called PrimeSource Gives Back. From generous donations from employees, vendors and shareholders, money is raised to drill clean water wells in Mozambique, South Africa, sustaining the lives of hundreds of not thousands of people.


How does this help so many people? Illnesses and death in Africa resulting from the consumption of contaminated water is the leading killing on the continent – above AIDS, Malaria and other illnesses combined. Their employees were so moved by this, they raised enough money to build 2 wells within a specific village in need. The mayor of the village was so impressed with their commitment he called them from Africa to thank all employees during a live tele-conference from Africa to the grand ball room while all employees sat and listened. This is one of the main reasons why I have enjoyed working with their team and like many others, remind me of what our industry is truly about. To learn more about this cause, you can go to: http://www.worldhelp.net/causelife. aspx.

Bank of Internet, San Diego, California www.bofi.com I spoke with Kristi Procopio, SVP and Chief Marketing Officer of the Bank of the Internet. With her

was Brian Swanson, SVP of Residential Lending. And titles aside, these two executives made their commitment to the community enthusiastically clear for their organization. Once again, it is difficult to communicate how important it is that a service driven mentality be transmitted to the broader organization from the executives at the top. These are efforts that when the management level support is lacking, they tend to be shallow affairs that have limited affect on the culture as a whole. They actively support 3 major non profits, among


others that are worth noting. The wounded warriors project (http://www.woundedwarriorproject.org/) began when several veterans and friends, moved by stories of the first wounded service members returning home from Afghanistan and Iraq, took action to help others in need. What started as a program to provide comfort items to wounded service members has grown into a complete rehabilitative effort to assist warriors as they recover and transition back to civilian life. A second one is Meals On Wheels where Kristi is a board member of the San Diego chapter where team members from her company hand out lunches and drive vans in various communities distributing lunches and dinners to members of the community in need. The third is Habitat For Humanity (http://www. habitat.org).

Mortgage Technology Ala Mode, Oklahoma City, Oklahoma www.alamode.com/ Industry mainstay, Ala Mode is most widely known for their $500,000 donation for Katrina relief efforts through the Red Cross. Their corporate culture is one of the strongest I’ve seen in our industry as their employees are actively involved in a wide range of community based philanthropic efforts. Efforts such as blood drives, Toys for Tots and spending time at local Regional Food Banks are additional volunteer opportunities; and, If that weren’t enough, they are also involved with the Latino Community Development Agency to provide assistance to a variety of Latino groups living in the Oklahoma City area and they support efforts to assist homeless children in a well known organization called Positive Tomorrows. It is also worth mentioning, in the effort to support troops who are deployed, the organization ‘adopts’ active duty families during Christmas and other holidays in order to provide them with some cheer and to send the message that they are fully supported while their loved ones are deployed. Working with this organization, from a mortgage technology standpoint is truly a great experience. I love dealing with companies who truly understand how to establish a strong corporate culture and to be financially successful in the process. They are firmly committed to giving back and truly, mainstream publications should be ashamed of themselves 24

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to criticize the industry as they have with companies like Ala Mode and others who are doing such wonderful things in our communities.

Calyx Software San Jose, CA www.calyxsoftware.com The broker and loan origination software provider, Calyx has had a long history as a company in giving back to the community. Through its expansion in the 1990’s from San Jose to other markets, they have brought this community centered spirit with them. Jody Collup, Director of Marketing for Calyx Software was a colleague of mine for two years. Jody is a strong voice on the management team for various volunteerism from within the company. On an annual basis they donate meal boxes each Christmas and/or Thanksgiving and they support efforts at various food shelf and non profits. Employees dedicate time and energy at various food pantries in communities around Dallas where they can donate canned goods or simply volunteer their time and energy. Calyx donates to the Soldiers Angels Charity (http://www.soldiersangels.org/) as well as sponsors clothing drives for the Genesis Women’s shelter (http://www.genesisshelter.org/) on a yearly basis.

Street Links Lender Solutions Indianapolis, IN www.streetlinks.com I had the pleasure of speaking with Paul Bradley of StreetLinks Lender Solution, based in Indianapolis, Indiana. True to their Midwest character, StreetLinks is committed to a variety of local charities around the country and in the heart of Indianapolis. Not only do they support their own respective charities, but they will support yours too – I went on to their website and found that after doing a demonstration of their product, if you weren’t thoroughly impressed with their suite of appraisal management, risk management and servicing solutions, they will donate $1,000 to your favorite charity – if you don’t believe it, I think you should check it out for yourself: https://www. streetlinks.com/products/appraisal/lenderx/demo . Not only are they listed as one of the top companies to work for in their marketplace, but they have made appearances on the Fox Business Network. Having experienced 1500 percent growth over the last 18 months, their commitment


to service and the community has translated to a strong employee culture. I always love hearing how mortgage and in this case, technology companies give back to their community and clearly Paul exemplifies this as does the rest of the senior management team.

Individuals & Associations Marc Savitt, Washington DC Independent Association of Housing Professionals http://www.naihp.org How could I not include Marc off this list. While Marc runs his mortgage company The Mortgage Center from his home state of West Virginia. For all of us who know Marc and have had the pleasure of working with him in the industry, he has a tireless approach to the needs of the consumer and of course our industry. Many of us respect Marc for fighting the good fight, and at the heart of his passion is the consumer and how important it is the consumer is protected from costly regulatory burdens placed on the shoulders of mortgage professionals. The amount of time and energy that Marc spends working on behalf of an entire industry is truly commendable and I thought his efforts were worth mentioning.

John Alexander, Budd Lake, New Jersey Mortgage Technology Consulting John is a mortgage professional, mortgage technologist and an innovator. For many of us who attended and spoke at hundreds of mortgage conferences across the country, John is an industry technologist who was largely responsible for the market growth of NYLX, a mortgage product & pricing solution. Leveraging this background, I introduced him to Costco, the big box retailer who was interested in a mortgage offering to their members. After working with him for nearly 6months on this, he took over the relationship and brought their solution and offering for their members to new levels. Today, it is one of the most innovative technology platforms for consumers in the industry; I could not be more proud of his accomplishments in this regard. As talented as John is, he is far more impressive with his commitment to the community and his family.

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Approximately 10 hours per week, John fulfills various church related obligations. Additionally, John has weekly obligations with Boy Scouts of America and once per month and once per year, he takes hundreds of boy scouts various camping trips across the country where they focus on wilderness training, archery, swimming and fishing merit badges. John is also a history buff, with a strong commitment to U.S. history; Chesterfield, Idaho was founded by pioneers in 1880’s, along the old Oregon Trail in Southeast Idaho. The town grew and was later deserted. John’s family helped restore the city where they rebuilt the homes, churches and schools back to their original architecture. It is similar to colonial Williamsburg in Virginia, where people get dressed up in date specific clothing to step back in time and understand the livelihood of those who settled out west. John and his wife have three children. And, with all of the activities that he is involved with, he is also active in youth sports: specifically basketball, baseball and softball. You probably will not meet a more genuine professional

Mortgage Revolution www.mrev.org Mark Green, Mark Madsen & Brian Larrabee Mortgage Revolution is about our industry. It’s about all of the people, the speakers, the sponsors and our fellow Loan Officers that took time out of their lives to volunteer and to help make it happen. The event is a remarkably grass roots organized series of educational conferences. The founders were motivated by the bad press the industry and its professionals were receiving. The goal of this was to organize an event that provided professional and educational support that essentially associated the small percentage of people who committed fraud with the larger percentage of mortgage professionals who remained in the business doing the good work they’ve always done. No organizers, founders or speakers / sponsors are paid. In fact, the money raised in


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their events in Atlanta, San Francisco and New York went to the hard costs of putting the event together and over $50,000 was donated to various charities. This is exactly what our industry is about: education, networking and getting together to make an impact on our community, and starting with the founders on down, this was exactly what Mortgage Revolution was all about. The impressive list of charities the Mortgage Revolution conference have supported to date are: • ALS Association • Special Olympics • Cystic Life – Cystic Fibrosis • Cheryl Duncan Foundation

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• Big Brothers Big Sisters • Angelus House • Reach Out • Sickle Cell Foundation I hope after reading these examples of service driven leadership from within the mortgage industry, more stories are told and therefore heard. As we slowly repair the damage that has been done to our industry, and rearticulate our core values that center on finding the lowest rate and the best product available that meets the monthly payment needs for all consumers, I hope we continue to be inspired to serve our communities across the nation. Our goal is to place “people before profits” and to serve our neighbors as professionally as possible. In future editions, we will be writing more about extraordinary things being done by ordinary companies from within our industry. If you have any examples about people, associations or companies who continue to raise the bar regarding what it means to be a mortgage professional, please email me and we’ll make sure to give attention to as many as we can. Rick Roque, non-operating owner of Menlo Company. If you have any comments on this article, feel free to call Rick at 408.914.5895 or by email: rick@menlocompany.com


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Mortgage Brokers - What to Do if You Are NOT the Big Name in Town

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ast Wednesday, a Milwaukee County judge ruled it perfectly legal for one lawyer to buy another lawyer's name for search engine purposes (Journal Sentinel). When customers searched for a competitor's name, this attorney showed his ad there instead. He ran Google ads that targeted people right at the point they were looking for help from his competitors. How much additional business his firm generated from this technique, we don't know in this particular case. But we can be reasonably sure it was quite effective. According to the article, this is what a lawyer involved in the case had to say about the technique; "It levels the playing field for those lawyers and firms who can't afford high-dollar TV ads and media campaigns." Rick Gass said, "They can get their credentials compared with the big advertisers,” and this helps potential clients compare. Are you a little fish in a big pond? You might not have the media budget, but you probably can afford $10 a day to show your ad next to competitor’s searches, as well as advertise when customers in your area search certain keywords that you name. And it's not hard to do with a bit of practice. Here are more advanced methods to extend this basic technique: • Buy your competitors' names in Gmail: Have you seen the ads that are alongside your message in Gmail? What Google does is "read" your mail (programs do it, not humans, of course) and match the words in your message against those words that advertisers are bidding on. Maybe you have an opportunity to talk about your firm in a

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favorable light. You could add in keywords for the loan officers and agents in your office, as well as competitors. Make sure that you are not misleading, in the sense that users are not confused that you are the competitor. You can, however, be the firm that is advertising that you have more experience or better performance than the competitor’s name you've bought. There are multiple Gmail positions you can bid on inside Google AdWords. The FUNBOX spot at the top is the most effective. Think about what you might actually say to a person if you were actually talking to them in that context-- then you'll have a Gmail-targeted message that is more effective than just inserting your standard PPC (Google AdWords) ad. •

Get more Facebook fans: What does this have to do with competitive targeting? “A lot” is the answer, due to new changes to the Bing search engine where they incorporate Facebook search results. Here is a search for "Rob Jenson Las Vegas":


online lead generation Notice how Bing has automatically added in the images of people who have liked his page on Facebook. The more folks in your community that are fans of your business on Facebook, the more automatic endorsements you get. You personally can even become a fan of related pages so that your name shows up in these search results. Bing now has 30% of the search market share, continually taking traffic away from Google every month. •

Get more +1 results on Google: Google's response is the +1 button. Here is a search on Google for "The Niche Report" :

See the blue +1 buttons? If you have the +1 beta turned on, your search results are customized to what you and your friends have clicked +1 on. It's an endorsement that is spread to anyone that you're connected with. If you have a lot of friends, that's a lot of people who are influenced by what you like. There's not much traffic on this new Google feature, given that it is brand new. However, we can be sure that Google will promote it heavily, given how much traffic Facebook has sucked from the search engine, especially with Bing's help. So what should you do? Get everyone in your office to click +1 on all the search results related to your business and put the +1 button on your site. (Read more here: http://www.google.com/+1/button/.)

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Here is another example: Here is one of a Google search results page that shows what results look like when you hit +1 on a page, share it, or have a friend +1 it. The bigger picture that ties together the examples above on brand bidding, the like button, and Google's "like" button, is that searching is now contextual. There is so much information out there now that we trust our friends’ preferences online when deciding what car to buy, Italian restaurant to eat at, or real estate agent to sell our house. The search engines and traffic portals realize this and are closely integrating social results directly into the search results. The technical term for this is "citations". This is the number of third-party references that validate your presence on the Internet. Google and Facebook are effectively taking your "fingerprint" on the web by collecting clues about your business from yellow pages listings, your website, your Facebook presence, reviews from Yahoo!, blog references, and any other place on the web that talks about you. Even when your agents check into your office on FourSquare or Google Places: that counts too. So what are you doing about the social web, knowing that the more customer testimonials you have, the stronger your presence in any type of search results, and the more likely your customers will call you over the competitors? Here is one page from my blog, where you can like and comment via Facebook or Google's "like" buttons. And on the right hand side is a like box that shows how many people like this page. If any of your friends like the page, you will see their names in there, because each of us have a personalized set of friends displaying. Cool, isn't it? Especially if someone who is looking to get a loan from you notices that a friend is also a customer.


There is no shortcut to getting your client base to like you, using whatever method of "liking" they choose: a review on your Google Places account, a “like” button that lives on your Facebook page or website, or comments on an article you posted on some industry site. Were there infinite time in the world, we could spend days chasing down each of these techniques and monitoring our online presence. Or we could hire a bunch of interns to do this work for us. But, given that we are all busy working professionals, I thought I'd hit the key points: • Set up an ad group inside one of your Google AdWords campaigns that has just the name of competitors. Make sure the ad copy is similar to what you'd say in person if that prospect asked about how you're different than Firm X. • Opt in to the Google +1 program and get co-workers to do it as well. Monitor your Google Analytics to see how many more leads you are driving because of the endorsement that comes from enhanced social search results. It may be a year before you really see something, but it's cheaper to invest now than later, when competition will be fierce. • Make sure you have like and +1 buttons on all pages of your website. Don't go crazy; you should act in moderation. If you get more traffic from Google, focus more heavily there. If you have great leads from Facebook, (the high-end folks usually do,) then have a greater proportion of your website's virtual real estate allocated to Facebook widgets. Now go forth and conquer! If you have any questions, feel free to post them to facebook.com/blitzlocal and we'll do our best to answer them!

Dennis Yu is co-founder and CEO of BlitzLocal.com, providing leading edge local search solutions for regional, national and international multi-location and franchised enterprises. Yu has been involved in web analytics and PPC since 1995 helping companies such as Yahoo, American Airlines, JC Penney, Equifax, March of Dimes, and other enterprises maximize online leads and revenue. He is an outstanding voice on internet marketing for local business chains, and has presented on local search at SMX West in Santa Clara and other venues. Citations: Vielmetti, Bruce. "Habush loses case over search engine advertising." Journal Sentinel Online. June 8, 2011. http://www.jsonline. com/news/milwaukee/123509294.html

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Market x activities = results by frank garay

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wenty Four Years. Twenty four years I have been in this business. I remember just getting started in Vallejo California, January 1987. We had no pagers, no cell phones, 8086 personal computers (for the processors) that had no hard drives and ran off of 5.25" floppy disks (some of you know what that means) and we (Advent Mortgage Co. Inc.) were the first mortgage company to get a fax machine in our area. It used big rolls of thermal paper to print and the only other company in town that had/ used one was a title company. We thought we were pretty cool. Getting started in those days was pretty simple. You got licensed, got business cards, a little training on how to hand write a Good Faith Estimate using your HP-12c calculator (now I know most of you have no idea what I'm talking about) and you were on your own. You didn't need to know too much considering that there were only three types of loans - Conventional, VA & FHA. Oh, there were some pretty fancy products like, Balloon Payment Loans and GPM's (Graduated Payment Loans - FHA & VA), and in those days FHA and VA loans were "assumable" which was pretty nifty, but for the most part it was pretty basic. If you had some money to put down you went conventional,

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if not, you were a "Govie" - end of story. The way we got business as loan officers was very different than today. A typical workday went something like this: You got to the office at about 8:00am, grabbed some coffee, checked on your files and made your morning update calls. You didn't leave voice-mails because it didn't exist. So you left messages with receptionists who wrote them down on a square pink message pad that was then stuffed into a box for the recipient. Then the fun began. You had to come up with something to deliver to the real estate offices you were calling on. Keep in mind there were no personal computers for us loan officers. We had to use electric typewriters and other creative means to produce some sort of marketing material. At our office we were especially lucky because we had just got a cutting edge copy machine that printed not only in black ink but blue! Oh yeah... couple that with some yellow paper you were a pretty kick ass marketer for sure. "Rate sheets" (as crappy as they were) were the typical hand out. Of course you lied about the rates and made them just a little lower to try and beat your competition, but so did everyone else. What the hell, in those days you could not lock loans till funding


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anyway so what did it really matter? Then the big part of the day came. You left the office at about 10:00am and went "into the field." Ahhhh... "The Field." This is probably a completely foreign term to most loan officers today. Let me explain. See, in the old days we used to get some marketing materials together, get in our automobiles and drive to real estate offices. Then... stay with me now... we actually used to get out of our car and "go into the real estate office." Okay, I know this sounds crazy but it gets even better‌ check it out. Once we actually went inside the office we would.... wait for it... wait... it's coming... we would actually "talk" to real estate agents "face to face!" Whoa... I know this sounds absolutely insane, but yes we would actually physically meet and speak to Realtors face to face! Crazy!? I know! But here is the funny thing - it worked. I remember one of my mentors, Bill Whitney, who said "Frankie, as long as you're persistent in visiting the real estate offices, it doesn't matter if you have boogers falling out of your nose - you'll get business" and you know what? He was right, because there were some pretty pathetic loan officers out there back in those days that literally had boogers falling out of their noses that were getting business, and I was one of them (less the boogers). Here is the bottom line - we rolled up our sleeves, went out and visited people face to face and asked for the business. In doing so we built rapport which resulted in getting referrals - lots of them. What that did for us was made us a little impervious to the market. It wasn't so much the rapport, although that certainly helped, it was the mindset of doing something. See, as long as we were "active" we got business. Being active in those days was physically visiting Realtors in their offices, an activity that I firmly believe in to this day. I learned through my own experience and a few mentors a secret formula. This may seem ridiculous but it is totally true, and that is: The Market x Activities = Results. See, we can't control the market, but we can control our activities, so if we want to maintain or increase our results, or our income, we simply need to adjust our activities. What are activities? Activities are the things we do that result in having conversations with people about buying real estate. It is going "into the field" and talking to real estate partners. It is picking up the phone and calling past clients, family and friends and talking to them about real estate. It is actually using the chat feature on Facebook and talking to some of those "friends" that you accepted (whom you have no idea who they are) and talking with them about real estate. It is making a blog post once a week and 36

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following up with a phone call to see what your recipients thought of it. It is going to social functions like real estate board meetings and chamber of commerce meetings where you actually engage with people and have a conversation about what you do for a living. It is finding ways to make presentations in front of small to large groups where you are the expert in your field. It is calling in on radio talk shows and voicing your opinion and subtly dropping the name of your company. It is handing out your stupid freaking business card to everyone you meet. For that matter, it is finding ways to meet people. It is promoting local small businesses to your database and grinding the business owners for referrals. The bottom line - it's "talking to people" - that is all it is. You know, it is the end of May 2011 and I just read a report that pending home sales are down 26 percent from this time last year. So what do we do with this information? Do we get all gloomy and doomy? Do we quit? Do we find some miserable co-workers to commiserate with about how bad things are? Or do we simply understand that in order for us to maintain or increase our "results" we have to increase our dog-gone activities? The market is a moving variable that we can't control, but our activities are completely in our control so let's take responsibility for our results by understanding that we do have control over them. Personally, I think that we should start fresh and get back to the good old days - the days of no cell phones or computers. Back when we used to just get our asses out "in the field" and talk to people in real estate offices. I guarantee you that if you were to visit with ten real estate offices two times a week and actually talk to the Realtors inside, you would compete with the top producer in your office or your toughest competitor. Once you have that going strong, start to introduce some cool technology into your activities. Remember... The Market x Activities = Results! Increasing your activities increases your results in ANY market! So do it. It works. Even if you have boogers falling out of your nose - trust me. By Frank Garay of Thinkbigworksmall.com (TBWS). TBWS was founded in 2007 by a group of highly successful real estate and mortgage industry entrepreneurs. Born in the most battered market in the real estate and mortgage industry history, Thinkbigworksmall.com was conceived after decades of observing how the most successful professionals always seem to work smarter not harder. Frank & Brian can be reached at tbwsdaily@gmail.com


Brokers vindicated! by marc savitt

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or anyone who actually believes mortgage brokers caused the financial crisis in this country, I have a great deal on Lehman Brothers stock for you. Several years ago, while being reprimanded during a Congressional hearing for putting “unsuspecting” home owners into bad loans, I responded with a now common response, “Mortgage brokers never developed any loan program, set guidelines for any program, nor did we underwrite or approve any loan.” Regardless of the numerous studies conducted by respected Universities and the GAO, which clearly vindicated brokers, the blame game continues. From the minute the financial markets began to collapse, you couldn’t watch any news program without hearing how mortgage brokers created all the problems. Some of those pointing fingers used anecdotal evidence and outright fabrications to create this elaborate smokescreen. If you are a certain consumer group with a three initial acronym, you know I am talking about you. The most outrageous accusations came from the big four, who saw an opportunity to mask some of their own failures. As a direct result of this well orchestrated blame campaign,

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July 2011

Congress and the regulators jumped at the opportunity to punish the brokers, all in the name of consumer protection. Let’s look at some of those “protections” and how they helped consumers:

HVCC (now Appraiser Independence): In 2007, former New York Attorney General Andrew Cuomo began investigating “some of the country’s largest banks” for appraisal fraud. Right out of the gate, he nailed Washington Mutual Federal Savings Bank (WaMu) and an unlicensed Appraisal Management Company, eappraiseit. According to Cuomo, he had emails showing that WaMu pressured the AMC to over value properties. Cuomo also discovered a serious conflict of interest, in that banks had a financial interest in many of the AMC’s. Armed with substantial evidence, Cuomo approached the GSE’s and threatened to include them in the investigation. Hoping to avoid legal problems, the GSE’s agreed to cooperate under Cuomo’s now famous and economically destructive, Home Valuation Code of Conduct (HVCC). According to Cuomo, HVCC would prevent valuation fraud, eliminate influence on appraisers and protect consumers. However, instead of placing restrictions against the banks, who were the subject of his investigation, all the restrictions were placed


against mortgage brokers. When asked why brokers were being singled out, the AG’s office stated, “…it was recommended by the banks, the Appraisal Institute and a few consumer groups. …” The HVCC guidelines have now been in place for over two years. According to MARI and other respected research firms, valuation fraud has increased over 50 percent, the quality of appraisals have gone down substantially, home values continue to fall, the average borrower now pays approximately $700 more per transaction and tens of thousands of appraisers have gone out of business. Note to Gov. Cuomo: Thanks for proving it was not the brokers!

Loan Originator Compensation: In August of 2009, the Federal Reserve Board proposed a new rule to protect consumers from certain unfair and deceptive practices. The Fed claimed these practices caused consumers to pay excessive fees. A heated comment period followed the proposed rule, which was ultimately finalized in August of 2010, after Dodd-Frank had already addressed the issue. As non-creditors, mortgage brokers were once again singled out as the “bad actors,” mainly because they receive Yield Spread Premiums (YSP). The Fed declared YSP unfair and deceptive practices. Under this rule, brokers are prohibited from receiving compensation from both the borrower and lender, or giving discounts to consumers. NAIHP filed suit to stop the rule, but was unsuccessful for reasons stated in my last article. However, the lawsuit did produce an unexpected victory. In the Fed’s answer to our suit, they admitted bank or creditor YSP was exactly the same as broker YSP. Both banks and brokers controlled their compensation and used it in the exact same manner. So, here is the question: If the Fed acknowledged bank and broker YSP was the same, why are all the restrictions placed against the brokers, who only have a 10 percent market share? Why are the banks, who enjoy a 90 percent market share and who invented all the harmful programs, free to continue what the Fed calls unfair and deceptive practices? The answer obviously has nothing to do with consumer protection. Brokers were viewed as the defenseless target, which already had a negative image created by banks and consumer groups, with the support of the media. Some have asked why the consumer groups targeted the brokers. For the answer, check out who provides some of their financial support. The Fed Rule has now been in place for two months. Originators are earning less, causing many to exit the industry. As of this writing, broker market share is down to 6.9 percent. The Fed claimed this would not happen, despite warnings from the SBA’s Office of Advocacy and several industry trade groups. Most importantly, consumers are paying more per transaction and it can not be blamed on the brokers. Unfortunately, HVCC and the Fed Rule needed to be implemented to vindicate

brokers. The question is have the regulators learned their lesson? There is a saying in Washington, “perception is reality.” Although, mortgage brokers are not the cause of the mortgage meltdown or financial crisis, we are viewed that way. Brokers and originators must come together to change that image. Is it possible, absolutely? We have already started by supporting passage of the SAFE Act. Brokers and originators have gone from being called unregulated and rogue, to the most regulated and educated in the industry. NAIHP and its coalition of industry professionals, are working hard to promote the true image of mortgage brokers, originators, appraisers and all other housing professionals. We have engaged the professional services of a public relations firm, who will assist us in this arena. However, our best hope of erasing the undeserved negative image is to build one of the country’s largest grass roots organizations. Please check out our website www.naihp.org and join us today. Become part of the solution. Marc is the President of the National Association of Independent Housing Professionals. Previously, he served as the 2008-2009 President of the National Association of Mortgage Brokers. He also held the positions of NAMB’s President-elect, Vice President, Director, Chairman and Founder of the Consumer Protection Committee and was awarded NAMB’s highest honor, Broker of the Year.

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Center sTage

Center stage with bank of internet The Niche Report talks with Brian Swanson, Senior Vice President, Residential Lending

by the niche report

The Niche Report talks with Brian Swanson, Senior Vice President, Residential Lending from Bank of Internet this month, a wholesale lender who is having tremendous success with their niche jumbo portfolio products. There has been quite a buzz about Bank of Internet in the lending community. Can you tell us a little bit more about the bank? Bank of Internet is a branchless bank with one single location, based in San Diego, CA. We are publically traded on the NASDAQ, our ticker symbol is BOFI. We are a federal savings bank, operating primarily through the internet. The key advantage of internet banking is the cost savings associated with a branchless infrastructure. Since we do not have these types of expenses, we are able to offer some of the most competitive interest rates in the nation on our suite of banking products. Bank of Internet offers a variety of consumer and wholesale banking products, everything from deposit accounts to super jumbo mortgages and multi-family financing. We have been hearing about a national expansion in the mortgage lending division. Can you speak more specifically about what’s going on there? We maintain three distinct lending groups who focus

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their production through both retail and third party origination channels. Our Consumer Direct Lending Division is focused on retail loan originations nationwide through our call center in San Diego. A vast majority of this production is originated through the internet and our affinity partnerships through member organizations such as Costco. Our Income Property Lending Division, www.apartmentbank.com, offers a nationwide platform catering to multifamily (5+ unit) lending through retail and wholesale origination channels. Within this group we arrange refinance and purchase transactions using multifamily housing as collateral which may be apartment buildings or mixed use properties. Our Third Party Lending Division, www. bofilendingpartners.com , is our wholesale and correspondent lending group which is the source of the national expansion. Within this division, we offer Jumbo and Super Jumbo portfolio ARM products on a national platform with a focus on our niche jumbo product. In each and all of these lending divisions, Bank of Internet maintains very conservative and prudent lending standards with a focus on borrowers with strong credit histories, liquidity and low loan to value ratios. This focus creates less risk exposure to the bank. You mention “niche” lending in the portfolio arena can you define ”niche” as it relates to this product offering? A: At Bank of Internet, we strive to offer nothing less than a “world class” customer experience in all of our lending divisions


Center sTage and we do not rest until we feel we have accomplished this goal. Beyond that, our TPO division maintains both wholesale as well as correspondent delivery channels, which today has become very attractive for mortgage bankers. From a pure product standpoint, our “niches” become very apparent as we offer tools like Asset Depletion underwriting which aids a borrower with substantial liquidity in qualifying while maintaining a fully documented income transaction. We also offer Pledged Asset loans that afford borrowers the opportunity to pledge assets in lieu of large down payments or principal reductions to keep LTV’s with in guidelines without the need to liquidate their assets. This program brings to the wholesale and correspondent communities a product that lets them compete with something historically only offered by the large money center banks. In addition, we allow loans made to foreign nationals and non permanent resident aliens. We are more flexible with property types and are able to facilitate loans on condo’s, co-ops, and hobby farms. At the same time we truly understand the needs of wealthy borrowers with complex financial situations. In addition, our team possesses tremendous expertise within the luxury home markets.

How is it that in the extremely consolidated Jumbo market an Internet bank is able to compete on a national platform? In the Residential Lending Division, it’s our philosophy that our business is built upon prudent but consistent lending decisions. Offering dynamic programs that truly add value to the jumbo sector gives us an opportunity to provide liquidity in an underserved segment of the market. Delivering world class customer service on a consistent basis aids in driving business to BofI as customers truly enjoy the experience. All of this is brought to market by what I believe is the most talented sales team of Account Executives in the business, all of which are physically located our key markets and have partnered with the largest and most respected lender cooperatives in the country. Doing all of these things and doing them well, day in and day out, have brought BofI national recognition which to me is testament that our strategy has merit and will continue to drive our business to the next level. How does Bank of Internet compete on price for these transactions? We don’t experience the same tremendous pricing pressure that our agency aggregating counterparts do as we are truly originating in an entirely different space. Having said that, our arena is not without a lack competition and we are seeing new entrants on a regular basis. Being a portfolio originator we require the interest rate protection that Adjustable Rate

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Mortgages afford us which allows us to be very aggressive in price for the product we offer while maintaining a solid return on equity. At BofI, we strive to differentiate ourselves from the competition by offering what they do not in the form of product and execution, with a solid emphasis on execution. Today, over 70 percent of our production is purchase business. This is because our customers understand our ability to quickly close a loan. Believe it or not, many jumbo borrowers end up paying cash for their house and the originator loses the loan all together. This is a result in premium price for execution; we feel that we have this covered on all fronts. Finally, our delivery model is paperless with file upload functionality from the originators end that populates and prepares our system on the back end for intake, disclosures and underwriting. This method of file delivery helps keep staffing costs in line and leverages technology and ease of use for our customers. What are some of the challenges that you face today and how will you address them? One of the issues we face relates to automation with growing use of PPE’s (product and pricing engines) which today have become standard for use in the originators office and are found on every loan officer’s desktop. The challenge is that the use of the PPE has all but replaced the more traditional rate sheet. Bank of Internet products are all about niches and unfortunately these niches are not properly communicated through a best efforts pricing aggregator. We are constantly educating all of our customers; from Secondary Marketing Managers, Loan Originators, Underwriters and Processors about what we do and how we do it. Another challenge that we all continue to wrestle with is home valuation and what is the “right” number. Arms length purchase money loans make up a good portion of our business and the home drives a price that the market will bear, however collateral on jumbo cash out refinance transactions may be substantially more difficult. What we have done here is partnered with what we believe to be the best suited Appraisal Management Companies, which have expertise in the luxury home markets and relationships with the appraisers that serve them. We created our own criteria as to how much experience an appraiser has, what type of licensing they maintain, how far from the subject property they reside and pressed that out to our AMC partners as BofI requirements. This process has been consistently delivering to us valuation reports that we feel comfortable with while at the same time the selection process seems to drive our customers business to only the most seasoned, talented and experienced local appraisers. Finally, we require two appraisals on all loans over $1,000,000.


WHAT IS YOUR MORTGAGE IQ?

What's your mortgage IQ? BY MortgageCurrentcy

It’s like you have to give up your first-born child to get loans approved these days. Be sure to check out Freddie’s HomeSteps Incentive program and get the word out to your real estate agents! Freddie New REO HomeSteps Incentives: What’s the brand new HomeSteps Incentive program about and what lenders do these types of loans? Freddie announced their HomeSteps new incentive program on Monday, May 16 (the First Look Initiative is pretty much a joke). First, there are no “approved” lenders for this REO program…you can do FHA, VA, Conventional at whatever interest rate and program you and the buyer decide upon. This is just like any other deal where the seller (in this case Freddie) is offering incentives to owner-occupied buyers. But remember, this property is sold in an “As Is” condition and the first hurdle to get thru will be the appraisal. Here are a couple of things (you will need to know) in the fine print! •

Freddie is paying up to 3.5 percent of the buyers closing costs—It’s based on the PURCHASE

PRICE and not the loan amount •

Freddie says they will pay up to 30 percent Appliance Discount—No they will not—it is part of the two-year Home Warranty that in included, BUT, it is only paid if the, and I quote “if the appliances are found to have a mechanical failure that existed PRIOR to the closing date…the Home Warranty company will provide a coupon for a 30 percent discount if appliances are defective.”

$1,200 Selling bonus to real estate agent—But Freddie has the right to remove homes from the promotion at any time.

Here’s the link to learn more http://www.homesteps. com/smartbuy/

Fannie/Freddie Foreign Bank Accounts - We have a borrower who has withdrawn funds from her Italian Bank for the down payment. How do you verify foreign assets? Foreign assets are not looked at any differently -- the statement must be readable and show the following: TheNicheReport.com

43


Clearly identify the borrower

include account number

include the time period covered

include all transactions

include the ending account balance

There are services that will translate statements –including online translation websites like www.Babelfish. com. You could provide the English version and in your cover letter, tell the underwriter what you did so he/she can re-verify for themselves. Or you could possibly request a VOD inlieu of the statement -- the foreign bank may be able to accommodate filling out the VOD rather than providing their statement in English.

But even in those circumstances, lenders have required rescission to be given to the borrower because the liability of rescission never goes away for the life of the loan – so I wouldn't take that chance. FHA Rent with Option to Buy: I have a client who wants to buy the home that they have been renting for the last few years. They want to use 50 percent of their rent that they have paid towards the down payment. What are the rules See the guideline below from the 4155.1 Handbook. Basically you can only allow a renter to get credit for the EXTRA money they pay above and beyond fair market rent of the property. There also has to be a rent with option to purchase agreement documenting the credit. 5.B.6.f. Rent Credit

Compliance Right of Rescission: Is there a three day right of rescission required when paying off aconstruction loan? Typically, rescission is required for a refinance of property that is occupied as a primary residence. It is not required if the borrower does not occupy the property.

The cumulative amount of rental payments that exceed the appraiser's estimate of fair market rent may be considered accumulation of the borrower's cash investment. The endorsement package must include the •

rent with option to purchase agreement, and

appraiser's estimate of market rent.

Conversely, the underwriter must treat the rent as an inducement to purchase, with an appropriate reduction to the mortgage, if the sales agreement reveals that the borrower •

has been living in the property rent-free, or

has an agreement to occupy the property at a rental amount considerably below fair market value, in anticipation of eventual purchase.

VA PUD: Vet wants to but PUD that has a swimming pool, tennis courts, and walking trails, would a VA loan be allowed? Yes. Unless there is something in the HOA documents that threatens VA's first lien position or the properties are NOT held in fee simple title you should be able to do a VA loan. PUD's do not require VA approval. Only Condominium Projects. Written and contributed by Karen Deis of Mortgagecurrentcy. com. Provided monthly by www.MortgageCurrentcy.com – Interpreting the Rules and Regulation Changes for loan officers, processors, underwriters, and owners/managers. Mortgage Talking Points TM, charts and checklists included.


Tip of the Month Walk the line by Stewart Mednick

“One step at a time is good walking.� - Chinese Proverb Quotes

W

alking is a simple function many of us take for granted. Walking is the life-line for any facet of living; we walk to the bathroom after we wake, we walk to our car, we walk to the desk, and we walk the dog. Walking is essential. Without walking, we are crippled, limited, and isolated. However, even with being able to walk, we are in danger of mis-stepping at any moment. Our feet pick up only three quarters of an inch when we stride. Any lift in a sidewalk slab, ripple in a carpet, or small incline can cause us to trip and fall. As essential as walking is to our life, the threat of disruption is equally present. Our lives are much like walking; it can be disrupted by any obstacle at any moment. And when our lives falter, the balance is no longer at equilibrium, but in havoc. So, how can we achieve our goals if we loose our balance and fall in the walk of life? Simple, we keep an eye on the line, regain our balance, and then place a foot back on that line and commence to step one foot in front of another. Losing a job, sustaining a physical injury, breaking up with a significant other, or figuring out how to pay for a broken transmission are all proverbial trips in the walk of life. These are all very real issues that are among thousands of issues that can trip us a little or a lot. Life is a measure of the balance of the walk more than the stride. Now, I can sermonize and hypothesize this philosophy

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into a book. I can quote cheesy inspiration, and I can develop a spiritual procedure. I will do none of the above. In fact, I will keep this tip very short and very focused. Here is the punch line: Did you get it? Make sense to you? Any feedback? Is it familiar to you? That’s right, there is no punch line. There is only understanding with this tip. Understand that diversity is as normal as equilibrium. Walking is a fragile procedure that requires the first year of our life to learn and the rest of our lives to perfect. Life is a walk that seldom does not meet a trip or stumble. How you regain balance and continue on that line to your goal is up to you. Just know that when things do not go as planned, it was planned for things to go that way. Walking is not perfect, but we do it because we have two legs that is how we transport ourselves. Life is as such. There is no magic formula. There is no secret method. Determination to get our collective asses out of bed in the morning is the first step of the daily walk. It is a fine line between walking tall and falling hard. Balance is everything. Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-8955122 or smednick1@netzero.net


Success

Relationship

Dynamic

Excellence

Positive Attitude


Are you sure you’re ready for the GSEs’ appraisal XML mandate?

This year, the GSEs will require full appraisals in MISMO XML 2.6 format. If you’re relying on PDF extraction to get the XML, your process will fail. It’s not a question of “if” PDF data extraction and scanning will fail. It’s how often, and how much it costs you. And the answer isn’t good. Do the math: The URAR form alone has over 1000 fields. Even at 98% fieldlevel accuracy, 20 or more fields will be corrupted. Some of those will be critical, and so your pipeline will stop due to bad data. You might not notice it today, because PDF extracted appraisals aren’t subjected to rigorous data analysis. But they will be, and many won’t pass. The solution? Demand “Native XML” appraisals. No conversion, no extraction, no excuses. Just clean XML straight from the appraiser’s desktop software. Then you get exactly what they typed, even on every kind of odd form or addendum. PDF extraction just can’t do that. We’re certain, because we create, transmit, analyze, store, and manage more appraisal data than anyone on Earth, including the GSEs. So when we tell you there’s a problem with PDF extraction, believe it. Protect yourself by downloading the free “MISMO XML 2.6 Appraisal Checklist” from our website. It’s a vendor questionnaire that helps you set policy now for the coming regulations. Whether you use an AMC or manage appraisals inhouse, it ensures a 100% native XML process free of pipeline problems — without changing vendors, or even paying us a dime.

Download the MISMO XML 2.6 Appraisal Checklist at www.MercuryVMP.com/XML

Native XML is just one of our solutions. Call us today for more.

Mercury Network 1-800-434-7260 www.MercuryVMP.com

AD CODE: MATMEMN0511 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice. Copyright ©2011 a la mode, inc.


NICHE REPORTS

Prime & FHA 360 Mortgage Group 866-418-2997

Bank of Internet

Conv, FHA, VA and portfolio products. To become an approved broker or to view a rate sheet, visit our website www.360mortgagegroup.com.

Jumbo and Super Jumbo Loans 5/1 - 7/1 and 10/1 options.

888-833-0555 ext 1508

First Cal

FNMA Direct - No Lender overlays.

707-238-3720 Retail Mortagage Banking Branch Opportunities www.gemcorp.com

GEM Mortgage 800-320-1758

Icon Residential www.iconwholesale.com

NEW

United Wholesale Mortgage (800) 981-8898

National Wholesale Lender offering a full line of Conforming and FHA products. We offer personalized customer service where our client is our primary focus. United Wholesale Mortgage specializes in FHA, VA and Conventional Wholesale Lending. UWM prides itself on having Exceptional Customer Service and an extremely efficient process from loan submission through close!

REverse Mortgages ReverseIT 888-777-3311

Reverse Mortgages, fastest turn times in the industry. Training and lead support available.

Rural lenders NEW Agfirst Farm Credit Bank

Mortgage lending for the Homeowner living in Rural America.

800-858-4651

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

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NICHE REPORTS

COMMERCIAL NEW Small Business Capital 877-253-0555

National SBA Lender offering wholesale owner user commercial property real estate loans

HARD MONEY/Construction/Rehab Windvest Corporation 877-285-0777

Specializing in Investor Loans & Rehabs, Income Property, Rentals, Probate, Cash Out Refis and now doing Owner Occ throughout CA. Direct lender offering generous broker commissions. Fast and Friendly service since 1994. We offer same day approvals and 7 day closings. Call us today or visit us online www.windvestcorp.com. NMLS # 394407 As a leader in Investment Rehab Financing, we understand and appreciate the role brokers play in the loan submission process. Brokers are protected and all commissions are paid directly from escrow.

ZINC Financial, LLC 866-376-7443

JUMBO Bank of Internet 888-833-0555 ext 1508

Jumbo and Super Jumbo Loans 5/1 - 7/1 and 10/1 options.

First Cal

80% LTV up to $2M. Call for Guidelines

707-238-3720

ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

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July 2011


Service provider classifieds

Service Provider Classifieds Technology a la mode 1-800-252-6633 ext 309

Mercury Network, the premier vendor management platform for lenders and appraisal management companies. a la mode also provides the leading mortgage websites, eSignature solutions, and mortgage marketing systems.

Applied Business Software 800-833-3343

Origination and Servicing software for hard money lenders.

Calyx 877-862-2599

Affordable software that streamlines and optimizes all phases of the loan process – from loan marketing through closing.

StreetLinks Lender Solutions 800-778-4947

Providing lenders with a suite of valuation services and robust lending technology solutions, including full-service & self-managed appraisal products

DocMagic 800-649-1362

The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges.

Appraisal & AMC NEW

a la mode 1-800-252-6633 ext 309

Mercury Network, the premier vendor management platform for lenders and appraisal management companies. a la mode also provides the leading mortgage websites, eSignature solutions, and mortgage marketing systems.

StreetLinks Lender Solutions 800-778-4947

Providing lenders with a suite of valuation services and robust lending technology solutions, including full-service & self-managed appraisal products.

Training & education MortgageCurrentcy.com 800-231-4787

Interpreting the complicated mortgage rules in plain language (Fannie, Freddie, FHA, VA, Compliance, Credit) that ONLY affect the loan origination side of the business. Help Desk. Rule Change Calendar. Automatic Face Book posts & Mortgage Talking Points™ for your real estate agents. Online e-zine published 2X month. Try for $1.

TheNicheReport.com

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Service provider classifieds

title work & insurance Entitle Direct 877-936-8485 or 877-9ENTITLE

Hundreds of mortgage professionals have saved their borrowers up to 35% or more on their title insurance by recommending Entitle Direct.

Linear Title & Closing 401-841-9991

Linear Title & Closing, Ltd., is a recognized leader and national provider of Closing, REO, Title Insurance and Settlement Services. Our streamlined RESPA compliant process utilizes flexible software tools that are easily integrated with your system.

Mortgage Insurance Agency 866-355-9944

State Licensed Surety Bonds, Errors & Omissions and Fidelity Bond coverage’s for Mortgage Bankers and Mortgage Brokers nationally.

marketing & lead Gen In Touch Today 800-433-3755

Mortgage Planner CRM 888-771-7672

NEW

Stoneybrook Publishing Inc

NEW

Titan List & Mailing Services, Inc

800-736-3632

800-544-8060

Delivering complete marketing education, valuable products to grow your business and exceptional service to make marketing an easy, enjoyable, and profitable experience. We provide full service automated marketing plans to fit your budget and business goals incorporating postcards, newsletters, greeting cards, brochures, presentations and more! Marketing consultations are available to help strategize the best marketing plan for your individual needs, whether just starting a marketing campaign, or enhancing your current plan. The ultimate contact management system for LOs. Increase your performance with automated marketing and alerts. Sync correspondence from Outlook and mobile devices to one centralized location to track contacts, leads, loan activity and referrals. Monthly client newsletters proven to generate new loans from referrals and repeat business

Over 12 years of experience catering exclusively for the mortgage industry delivers consistent results from our turn-key campaigns. Our Pre-screened data, 24 hour turn around and custom pieces design continue to lead the industry for mortgage marketing efforts

Credit Repair & Restoration HTDI Financial 877-877-4834 opt 5

Start your own credit repair company with our state of the art tracking software and dispute outsourcing options. Top notch support by a dedicated Account Expert.

SX3 Software

The most powerful windows based Credit Repair software that has taken the industry by storm!

1-855-SX3-SOFT, 855-793-7638

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July 2011


Service provider classifieds

Compliance & Audit Accurate Quality Control, Inc. 770-931-5999

NEW

Quality Control, Training, Consulting. Post Closing, Suspected Fraud, Early Default & Repurchase Reviews, Pre-Funding, Test Cases. 49 Combined Years Working for HUD. We do the right thing right! GIVE US A TRY: 2 FREE QC REVIEWS (new clients only)!

Adfitech Inc. 800-880-0456

ADFITECH, has served the Residential Mortgage Industry since 1983, providing Post Closing QC Audits, Due Diligence Reviews, Pre-Funding QC, Default Reviews, Fraud Investigations, Post Closing Fulfillment, and LOANVAULT® Imaging, of Conventional & FHA products. Clients include Community Banks, Credit Unions, Mortgage Bankers, MI Companies, and Wall Street Investors.

Certified Forensic Loan Auditors, LLC 310-432-6304

Providing Law Firms and Mortgage Professionals with premium Certified Forensic Loan Audits, Securitization Audits, Predatory Lending Lawsuits, TRO's, Lis Pendens, full service Litigation Support, Industry Training and Continuing Education MCLE.

Branch Opportunities Benchmark 972-398-7676

First Cal 707-238-3748

NEW

Freedom Mortgage Corp 800-220-9498

Sierra Pacific Mortgage 800-447-3386

Top Flite Financial, Inc. 866-301-0653

A community of mortgage professionals united by Benchmark core values Relationships, Success, Dynamic, Excellence, and a Positive Attitude specializing in retail branching throughout the United States

First First Cal Loan Officers enjoy a unique environment where everyone is invested in each other’s success. If this sounds like a fit for you and your business you owe it to yourself to contact First Cal today

Freedom Mortgage Corporation is a full service mortgage banker engaged in the origination of residential mortgage loans. Freedom’s strategy is simple; to be the best service and quality-oriented lender in the continental United States

Retail Branches and Wholesale Lending Nationwide. Privately owned specializing in residential conforming, FHA, VA and Jumbo. Wholesale: www.spm1.com Retail: www.spmloans.com

National Mortgage Banker – Now hiring experienced Branch Managers with a proven track record. We have answers to the new compensation questions!

TheNicheReport.com

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LENDER & RESOURCE DIRECTORY

360 Mortgage Group National Wholesale Mortgage Lender www.360mortgagegroup.com 866-418-2997

Accurate Quality Control www.AccurateQC.com Genny Kelly or Judy Nash-Ellis 770-931-5999 GennyK@AccurateQC.net or JudyN@AccurateQC.net

a la mode, inc. Websites and marketing tools for real estate professionals. www.alamode.com 1-800-ALAMODE info@alamode.com

Applied Business Software Origination and Servicing software for hard money lenders. www.TheMortgageOffice.com 800-833-3343 leadsmanagement@absnetwork.com

ATTENTION LENDERS!! Buyers of Distressed Debt. NicheBuyers@gmail.com Adfitech Provides Residential Mortgage Post Closing QC, Due Diligence Reviews, Pre-Funding QC, Default Reviews, Fraud Investigations, Post Closing Fulfillment, and LOANVAULT Imaging of Conventional & FHA Products. www.adfitech.com John Rosenhamer 800-880-0456 sales@adfitech.com

AgFirst Correspondent Lending Mortgage Lending for the Homeowner living in Rural America. www.agfirstmortgageloans.com Janice Buchanan 803-753-2420 jbuchanan@agfirst.com

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July 2011

Calyx Software Affordable software that streamlines and optimizes all phases of the loan process—from loan marketing through closing. www.calyxsoftware.com 877-862-2599 point72@calyxsoftware.com

Bank of Internet www.bofilendingpartners.com Darin Judis 888-833-0555 x1508 Darin.Judis@bankofinternet.com

Benchmark A community of mortgage professionals united by Benchmark core values Relationships, Success, Dynamic, Excellence, and a Positive Attitude specializing in retail branching throughout the United States. www.iambenchmark.info Karri Vaught 972-398-7635 contact@iambenchmark.info

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LENDER & RESOURCE DIRECTORY

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July 2011

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BRINGING UP THE REAR - continued from page 58

regulators and law enforcement agencies have been conducting a variety of investigations into mortgage servicer operations and across the board the outcomes of said investigations have been deplorable. Among other things, federal and state investigators are looking into, again quoting from the WSJ story, “whether banks and foreclosure law firms improperly seized homes by using fraudulent or incomplete paperwork.” And that’s one of the nicest things that have been said about the mortgage servicers. The “consent orders” that were the result of an investigation by the OCC, the OTS and the Federal Reserve, stated that mortgage servicers have employed unsafe and unsound banking practices. Now, here’s what Fannie Mae senior vice president Jeff Hayward said to the WSJ: "We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure." Is that what “we” want Jeffrey, my boy? Really? We want homeowners to avoid foreclosure, so the collection of geniuses over at Fannie Mae decided that the way to go about that was to tell the incompetent folks that are employing unsafe and unsound practices and quite possibly improperly seizing homes using fraudulent or incomplete paperwork to do everything FASTER? Jeff Hayward, according to his Linkedin profile anyway, is “responsible for the management of all servicers and the retained attorney network at Fannie Mae and has been in his position from “April 2010 – Present,” or one year and three months… which is basically, all damn day. So, even though Jeff is clearly more than qualified to be this month’s rear end, he can’t be held responsible for the unintelligible words that comes out of his mouth. Michael J. Williams, President and Chief Executive Officer at Fannie Mae, however, enjoys no such protective status… To begin with, according to his bio on Fannie’s Website, Williams started at Fannie Mae back in 1991, so he’s lived through some unbelievable corruption, and seen some of the most magnificent malfeasance in the history of mortgage banking. His claim to fame seems to be that, as Senior Vice President for eCommerce, “he helped bring Fannie Mae into the digital era by leading the development of Desktop Underwriter,” and in 2000 he was appointed President of Fannie Mae eBusiness. Yeah, well that certainly qualifies him to run the most bankrupt mortgage company on the planet. Next it says that in 2004, he gets appointed Executive Vice President for Regulatory Agreements and Restatement, and I have no idea what that means, but his bio says that he was “to lead the company's efforts to strengthen its financial and

operational foundation.” So, bang up job there, Mr. Williams. Nice work on the whole strengthening Fannie’s financial foundation. Crackerjack work, I’d say, absolutely crackerjack. Then, in 2005, Williams is named Executive Vice President and Chief Operating Officer, where he will come to oversee Fannie Mae's role as administrator of the U.S. Treasury Department's Making Home Affordable program, where he is said to have bolstered “the company's foreclosure prevention and credit loss mitigation operations.” And some very nice bolstering it was, Mr. Williams. You are unquestionably quite the bolsterer. In fact, your prowess as a bolsterer is likely unrivaled. Okay, look… why is Fannie Mae allowed to decide anything? They’re not even a company anymore. They went bankrupt and we “nationalized” them. Oh okay, call it a “conservatorship” if it makes you feel better, but it doesn’t change the fact that Fannie Mae and Freddie Mac were both nationalized back in September of 2008. We the taxpayers put $200 billion into Fannie and Freddie back then, as we took over approximately $1.5 trillion in debt and $5.3 trillion in loans. So, not only are we allowing a company that doesn’t even exist anymore make decisions affecting the lives of millions of American homeowners and our country’s economy, but we’re listening to a company that failed in every way and with $1.5 trillion in debt on its books. If we’re going to listen to companies in this regard, couldn’t we start listening to those that have succeeded in some way? Like, ask Steve Jobs over at Apple what he thinks we should do about mortgage servicers, at least we wouldn’t be asking an organization that has gotten almost nothing right in the last 20 years. And I’ll never be able to prove this, but I’m all most positive that I could have bankrupted Fannie Mae for a lot less than $1.5 trillion, and I don’t know anything about the mortgage business. In fact, I think I could have run Fannie Mae into the ground for $500 billion… $750 billion tops. Our economy is circling the drain, housing is in a free fall, foreclosures are completely out of control, and the government has utterly failed in every single attempt to mitigate the damage being caused by a literal tsunami of foreclosed properties through the modification of loans. And so what do we do? We allow Fannie Mae to tell the servicers to speed up foreclosures. Stunning, Mr. Williams… absolutely stunning. Martin Andelman is a staff writer for The Niche Report, and a feature writer for ML-Implode.com, where you’ll find his almost daily column, Mandelman Matters. Questions or comments? Send them to: martin@thenichereport.com TheNicheReport.com

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BRINGING UP THE REAR

Bringing Up the rear Fannie Mae’s President and CEO, Michael J. Williams BY MARTIN ANDELMAN

A

close friend of mine called me a couple of days ago to tell me that he had just heard from a contact he has at Bank of America’s loss mitigation department. His BofA contact had called to tell him that there would be a flood of foreclosures coming soon, as Fannie Mae was telling the bank that there would be no more delays… foreclosures would move faster than ever and no trustee sale dates would be postponed. A blood-letting, was what he called it. Now, I’ve gotten to know this friend of mine over the last two years plus, and he isn’t someone that would misreport such a message from Bank of America, but nonetheless, I had to find something to corroborate the story before I could proceed to tear into Fannie Mae for such an outrageous development. It wasn’t hard at all, unfortunately, the Wall Street Journal had recently run a story under the headline: “Fannie Mae Foreclosure Plan Sets New Standards For Servicers,” and it went on to say that, “The new standards under the Federal Housing Finance Agency's Servicing Alignment Initiative would seek to speed up the foreclosure process…” But that wasn’t all I found. In Fannie Mae’s own bulletin, “Announcement SVC-2011-08, dated June 6, 2011, Fannie provided verification of what my friend’s BofA contact had told him, they were going to push servicers to foreclose faster, and if they didn’t, Fannie was going to pay them less and less to modify a loan.

Here’s a simplified look at the new incentive plan for servicers that modify loans, as opposed to foreclosing: Less than or equal to 120 days delinquent - $1600 121 - 210 days delinquent - $1200 Greater than 210 days delinquent - $400 Fannie’s new rules also impose some new standards for servicers communicating with delinquent borrowers. The new standards, for example, require servicers to contact a homeowner both verbally and in writing during the first 120 days of their delinquency, in order to, as the WSJ phrased it: “inform them about ways to refinance or exit their home while avoiding foreclosure.” Yes, well… that’s very encouraging, wouldn’t you say? The mortgage servicers will have to communicate with borrowers that are up to 120 days delinquent to inform them about ways to refinance. That should be a fascinating, a briefly written or verbal communication… you’re late on your mortgage so there’s no chance of refinancing. And the next thing to explain is how to exit the home while avoiding foreclosure? That’s just great… we’re not even lying about loan modifications anymore? Now we’re going straight from “you can’t refinance” to “how to exit your home.” Okay, that’s enough… what in the Sam Hill is going on here? I have three teensy tiny questions: 1. Why does Fannie Mae get to decide anything? 2. Who’s allowing this? 3. What happened to modifying loans? During the last few months both federal and state - continued on page 57

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