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Issue 032 March 2010



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Marketing 14 Google Adwords 10 Strike Gold with Social for Mortgage Media


Meet, greet and tweet.

Are you making basic mistakes?

with 18 Interview the guys from Think Big Work Small

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Issue 031

February 2010

An interview with Frank & Brian of Think Big Work Small


pg 47 pg 47 pg 48 pg 49


10 23

Strike Marketing Gold with Social Media John Seroka Vice President, Seroka Meet, Greet and Tweet.

How to use HUD Settlement Cost Booklet as a Sales Tool Karen deis Thirty-six years and waiting ... it's got to be good

25 34

An Epic Struggle Justine Assal Owner, ACM financial corp. HEOPA, HERA and Hercules; all epic stories.

Center Stage with Roohmz Mortgage Enterprise The Niche Report The Niche Report talks with William DiPaolo, CEO of Cogent Road.



March 2010

Bringing Up The Rear: Howard Miller the Witch Hunter Martin Andelman Mandelman Matters California State Bar President.


09 14 28 30 38 41 43 50

FROM THE EDITOR'S DESK online lead generation Appraiser sound off Voice of Housing mbs war room RULES & REGULATIONS HEADLINES TIP OF THE MONTH LENDER & RESOURCE DIRECTORY

ACCOUNTING MANAGER Shawna Ingram Advertising Director Jessica Grizzle Advertising sales Heather Bopp Production Manager Henry Suchman Production Assistant Dawn Exner COLUMNISTS Martin Andelman Karen Deis Matt Graham Stewart Mednick Brian Montgomery Adam Quinones Dennis Yu CONTRIBUTING AUTHORS Justine Assal Lamarr Banks John Seroka

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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:

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer and you do not currently receive The Niche Report, please send your name, company name, and address to Send address change requests to 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

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

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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.


This past month has proven to be an exciting one here at The Niche Report. We have been experiencing more growth and developing some new columns as a result of the new friends we have. The guys at Think Big Work Small have become fans of TNR and vice versa. Robert Pegg met these guys at NAMB West in December. This month, we are honored to have an exclusive interview inside this very issue you hold in your hands; an amazing organization that provides top tier daily news related to our industry. In fact, we were so impressed with Frank & Brian at TBWS, we invited them to host their own column which will start next month stay tuned. Go to their website to experience all they have to offer. I am sure you will be big fans, if not already, once you read the interview. Have you been to our website lately? It has been redesigned with a new feature; a Blog! Yes, now TNR has a blog so you can get your fill of recent mortgage information fresh daily. What’s on your mind? I will post “What do you think of this issue?” every month on the blog so you have a chance to share what is on your mind. Since we publish this magazine for you, we want to know how we are doing in providing quality copy that fits your needs. I have already posted many entries, as have other regular contributing authors and columnists…we have been tweeted and I am sure a few other verbs that are now unique to the social network scene. Speaking of which, John Seroka provided a fantastic article on social networking as the new marketing tool. John does this type of thing for a living, so he is the resident expert in my book. After you read the article, respond to my blog “What do you think of this issue?” on the TNR website to let me know what you thought. We have some new columns this year, that you may have noticed in last month’s issue; we have another new one this month. Will we have another one next month? Stick around to find out. Dennis Yu is a nationally recognized expert on marketing online. Look for his article on “Google Search” as he is the newest addition to our month columnist. How are we doing? Do you enjoy The Niche Report? Is there content you would like to see? How is the informative quality of the articles? Log on to our blog to let me know. If it is worth knowing, it is worth sharing. Welcome to the TNR digital community!


Stewart Mednick


Letters to the editor

Strike marketing gold with social media Meet, greet, and Tweet By john seroka


oday’s real estate market feels like a new frontier to homebuyers. While they prospect for good, smart housing buys, they also want assistance from people they can trust, just to be sure that a golden opportunity isn’t actually fool’s gold. With the first-time homebuyer tax credit prompting a younger demographic to enter the market, many people currently purchasing homes are under age 35. In fact, 25 to 34-year-olds represented 51percent of first-time buyers in 2009, according to the National Association of Realtors. These house hunters are relying heavily on the Internet to dig up answers and information. Therefore, now is the perfect time to begin social media networking and market yourself to the online community. Interacting with consumers this way will help you gain their trust and build relationships. But how do you take advantage of social media to connect with potential and current clients? For the strongest results, you need to develop a strategy that combines social media with traditional marketing. Yes, traditional marketing does play a key role – just as shovels and pickaxes have not disappeared with the invention of new mining tools. Integrating social media, advertising and public relations techniques so they work together builds stronger perceptions in the consumer’s mind.

Benefits of social media Social media is a marketing tool that helps you: • connect with potential and existing customers • create interest in your company and your services 10

March 2010

• influence perceptions • monitor customer satisfaction Word gets around fast on the Internet, and social media offers the opportunity to swiftly produce and send messages that enhance the perception of you and your company. You can quickly post content that is relevant to a news event or a change in the market, which positions you as a credible and dependable source for information. Plus, the immediate online feedback given by others in response to your blog writing, Facebook posts and tweets is useful for gauging the effectiveness of your message. Relationships formed via online networking do lead to new business. For example, real estate and mortgage professionals report getting new clients when their online followers refer their friends. Another bonus with social media websites – you can network and reach your audience on a small budget. There is no charge to open an account on popular sites like Twitter, Facebook and LinkedIn. Creating your own blog is another option that lets you interact with people, plus blogging can help boost your search engine placement. Social media is more than a flash in the pan. As more professionals and businesses take advantage of online networking, not participating in this new territory will become a disadvantage. Basically, social media is another dimension for you to connect with people and the more tools you employ to reach your target audience, the more visible and familiar you become.

Strategy tips Social media presents a golden opportunity because of its potential to reach large numbers of people, but attracting

your target market is what matters in order to meet business goals. Having a plan in place is important for social media marketing to be effective. The first step is to clearly identify your purpose for going online and understanding what you expect to gain. For example, a mortgage broker’s objective for participating in social media should be to build a solid following of mortgage loan prospects. You also can focus on mortgage loan originators and other business referrers who want to work for good companies that are social media savvy, and that back them up with marketing to help build their careers. The next step is to conduct a competitor review. Look at your competitors’ online activity and determine how consistent they are with these ventures. Read the information they are presenting online, and then put yourself squarely in the shoes of your target audience to decide whether that information is truly relevant and useful. Also, check out the comments your competitors receive on their blogs and look at the number of followers. These findings will provide clues to how the audience perceives the content and to how you may differentiate yourself. In addition, find out how visible your competitors are through Google searches, Twitter searches and more. As mentioned previously, don’t abandon traditional marketing tools. Make sure all your marketing messages complement each other. For example, if you are using a direct mail piece to promote your expertise in working with first-time homebuyers, then also post tweets that will have value to this targeted audience. Other ideas include writing blog entries that speak to this market, and encouraging clients who recently purchased their first home to become fans of you or your company on Facebook. Another tip is to include your URLs for Facebook, Twitter, LinkedIn, etc., in your ads, emails, direct mailers and

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collateral pieces. This simple step lets others know where to find you online and encourages a following. You also can explore online contests to increase your traffic.

Content is king The No. 1 reason for losing online followers is giving them information they don’t care about. You can avoid this misstep by keeping your marketing goals in mind and developing a plan for the information you’ll present. Every time you select a topic to cover, consider it from your audience’s perspective to determine whether or not the posting has value to them. One recommendation is to rate the message on a scale of 1 to 10 for relevancy, importance and timeliness. If it is a 7 or higher, go ahead and post the message. Ideas for content include: • Are mortgage rates going up or down? • Are home prices stabilizing, rising or falling in your local market? • Are more foreclosures expected? Do they present opportunities to buyers? • What can homebuyers do to make sure they have a reliable lender? • What are mistakes first-time homebuyers frequently make? If you find an interesting article online, provide a link to share it with your followers. When your content is informative, your followers will find more value in your messaging and want to stay connected to you. On the other end of the content spectrum, posting blatant sales pitches is a sure-fire way to lose followers. Social media users are seeking tips and ideas, not hard-sell advertising messages. This is not a direct marketing medium like phone solicitations, emails that contain offers and direct mailings. Also, be sure to frequently update your content. The mortgage industry is constantly changing, providing a good source of fresh topics for you to consider. You can save time updating your content by linking together your social media accounts, such as your Twitter to your Facebook and LinkedIn pages. This will enable your Twitter posts to simultaneously update these other accounts.

Two-way connections Consistently providing accurate, useful and interesting information will lead to a loyal following. Through online feedback, you also will learn more about your potential

clients – what motivates them, what annoys them – and this knowledge can help strengthen your customer service. Social media is a two-way street, so try to become involved with your followers’ blogs, tweets and Facebook pages. Commenting on their postings gets your name out more, and this will help bring more followers to your sites. Also follow the blogs and tweets of industry leaders and other influential people, and post your comments on their sites. Wondering what’s been posted about you on the Web? You can easily track what is being said about you or your mortgage company with tools such as Google Alerts, TweetBeep and many others.

Cost considerations Social media offers a cost-effective way to enhance your marketing strategy. It enables you to engage with your target audience in a new way that complements other marketing vehicles. Although social media marketing is inexpensive to use since distribution is basically free, be aware that it does take time to create strong content, to monitor your presence throughout the Internet and to reply to online feedback. By connecting with people and gaining their trust, a social media strategy pays off. It’s an enterprise that will help you strike gold in the form of new clients and increased business because you have strengthened your prominence in the market. John Seroka is Vice President of Seroka, a full-service branding, advertising, marketing and public relations firm that serves a nationwide client base. He may be reached at john@ or 866.379.0400. You also can connect with him at, or on Facebook.

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Google AdWords for mortgage brokers Are you making basic mistakes? Pay Per Click (PPC) advertising in the mortgage industry is confusing: • There are 124,000,000 searches for mortgage related terms on Google per month in the United States, according to The average cost per click is $13.69—but terms like “mortgage refinance” are up to $32 per click and “loans” can be $3 a click, but are more plentiful. What words should you use? • The bulk of the traffic is among 96 national advertisers with deep pockets—you already know who they are. Should you try to compete against them? • Some leads are worth more than other, depending on factors such as type of loan, value of home, credit score, and so forth. How do you obtain the right traffic at the right price? • What about the multiple search engines and display ad networks—is it worth going beyond Google AdWords? • Do you hire someone else to do this or keep inhouse—and, either way, how do you make your PPC accountable from a ROI standpoint? In this month’s column, we’ll start with keyword strategy—to discuss how to organize your keywords in a way that creates the highest relevancy and Quality Scores. The net result is that your cost of traffic will decrease, your conversion rates will increase, and your campaigns will be easier to manage. In subsequent months we will cover bid optimization, landing page optimization, search vs. content networks, analytics, and call tracking. 14

March 2010

THE MOST COMMON ERRORS IN PPC 1) Broad matching on most of your traffic: If you already have a Google AdWords campaign, odds are that you have a few keywords in a few ad groups that are generating the bulk of your traffic. You might even have 2 million keywords, as we have seen from auditing the portfolios of large financial services companies—but the odds are that just a dozen keywords make up the lion’s share of the cost. So look at those keywords, sorted by cost descending in Google AdWords Editor or your favorite tool. I will bet that most of those terms are on broad match, meaning that your term can loosely match for any search containing that word. So even though you think you’re bidding on “mortgage,” you might actually be buying “mortgage rate calculator,” “what are mortgage prices in London,” or any number of queries. Below is a screenshot of a typical Google search on “mortgage.” You can see how Google uses their “suggest” tool to guess at what you might be looking for. The solution is to create exact match copies in their own ad groups,

Face the Future with Knowledge D







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Commercial Property Highlights Our 2010 Commercial Property Program features: General Session: A Market Perspective from Seasoned Industry Leaders - Panel I of our General Session will cover Office, Retail, Fannie Mae and Freddie Mac, Panel II will speak to Recreating the Capital Markets: The New Paradigm Our Afternoon Session deals with Workouts on Commercial Loans: How to Handle a Commercial Loan Portfolio in a troubled market: How are the Banks handling Current Market Issues? Tuesdays Session features a panel entitled Unlocking pension fund capital followed by a Lenders Panel Come hear about the concepts on how business can be done in the new credit underwriting cycle. The panel will share with you their vision and underwriting guidelines as to how they are closing deals in this unpredictable marketplace. The lenders will be in the house on Tuesday morning, will you? Enjoy lunch in our Commercial Property Exhibit Hall New for 2010 - Our Opening Residential Networking Cocktail Reception on Tuesday Evening is in the Exhibit Hall. We’ll start this year’s conference off with a BANG at our Grand Opening Reception on the Exhibit Hall Floor!

Residential Program Highlights Our General Session will look at The Future of Mortgage Finance: Making a Profit in the Current and Future Markets. Enjoy lunch in the Exhibit Hall and meet with your colleagues and gain valuable face time with your clients Wednesday afternoon our Regulators Roundtable feature Regulators from NJ, PA, NY and MD as well as NMLS Representatives. Enjoy our Second Cocktail Reception sponsored by:

Thursday morning the Information Exchange experts will be seated at roundtables, which will be identified by a sign at each table, available for individual or group exchange on their respective topics. Also in the program: Federal Law update; Special Speaker lunch on Thursday and much more! SAFE Education will be provided at the 2010 Regional Conference on Tuesday, Thursday and Friday.

For Registration and Exhibit Information visit

An Interview with

Think Big Work Small TNR sits down with Frank & Brian of TBWS

Sometimes there are things in life that simply take people by storm – most recently, Avatar the insanely successful movie from James Cameron, Facebook & Twitter, Jersey Shore the reality MTV series (come on! you know you watch it) and Lady Gaga the hit pop artist, just to name a few. Each of these examples has made a lasting mark on their respective industry. Right now, in our much smaller industry by comparison, there is another phenomenon growing wildly fast. And in case you’ve never heard of them, by way of living under a large rock, their name is or TBWS or Frank and Brian or even FnB as we’ve learned to affectionately call them. TBWS is a place where real estate professionals can catch up on the most important issues facing them today inside a daily seven minute video dialogue AND be completely entertained while doing so. I discovered their daily show last year and can attest to their addictive qualities. In fact, even their theme song jingle is so simple it’s pure genius; it can get stuck in your head

for days inspiring you to sing it over and over at the dinner table (my wife was about to rip my head off, my kids loved it). Who knew mortgage and real estate finance news could be this fun. It’s as if your favorite morning local TV news met Jim Cramer of Mad Money with a guest spot from Benny Hill, but even better. After meeting FnB at NAMB West this past December and hitting it off, they happened to mention The Niche Report on their December 10th Daily show. I awoke to my iPhone being blown up with subscription requests and a small army of TBWS followers demanding we put FnB in the magazine, which we were happy to oblige. Hell, forget their crazy army of followers making demands, we had to learn about who these enigmatic, mysterious industry personalities are and where they come from, so we set forth to talk with these two and the following is what transpired.

What is “Think Big Work Small”? It’s not ONLY a Daily show, right? Frank Garay: Think Big Work Small is a company that has three elements to it. The first element is the TBWS Daily Show. The TBWS Daily contains industry news, sales tips and resources for mortgage and real estate professionals, and it's all with a lighthearted twist to it. Currently the TBWS Daily show has about 100k subscribers and receives anywhere from 12k to 20k views a day. The second element is our products. We have two right now, which is an MBS tracking service for mortgage pros, and the Video Marketing Engine (VME), which is a private video marketing sales system for sales people. The third element is the resource center. The vision of the resource center is to become the "" of the mortgage and real estate industry. Tell us about Frank and Brian. What are your backgrounds? I heard that one of you has a real estate background and the other has a mortgage finance background, any truth to that? What brought you two together? Frank Garay: : I've been a mortgage broker since 1987. I recently moved my license to the real estate side of the business for the sake of the show. We felt it would be a better balance considering we have a large Realtor following that seems to be growing quickly. Brian has been a mortgage broker for 15 years, so we've got a bunch of street level experience. Our "coming together" is a funny story. Originally the TBWS Daily show was hosted by me and my brother Patrick Vogelpohl. In December of 2007 my brother could no longer host the show, so I had to find a replacement. I was actually very worried about finding someone new because my brother and I had a really good chemistry going. Brian and I worked for the same mortgage brokerage whose CEO (Tim Kearns) is also the CEO of TBWS. I told him about my brother leaving and he immediately suggested Brian. Only problem was Brian and I didn't really care for each other, in fact I'd say we actually disliked each other. But I was stuck, and I trusted Tim, so I hit Brian up to do the show. Surprisingly

without hesitation he agreed. I remember our first show together. It was a total train wreck. If I said that Brain had to do 50 takes I wouldn't be exaggerating at all. We've been doing the show together for two years now and I consider him to be my best friend. I couldn't imagine doing the show with anyone else. Tell us about how TBWS originated and why. Frank Garay: Think Big Work Small was originally a web based CRM that had automated open house flyers tied to our local MLS, along with other personally branded marketing materials in it. My business partner, Leo Schrupp, and I (Frank) had it built to replace the half dozen 20 year olds we had working for us that suffered from the typical issues that 20 year old's suffer from. We launched it on June 30, 2007. It was a few months prior to this that business was really slowing down, and we realized that the 50 or so loan officers we had working for us didn't really have any sales skills. They had gotten into the business when the getting was good. Not only did we have 50 loan officers, but we had all the overhead to go with them so I knew we had to coach them if we were going to survive. We started by trying sales meetings, but only about 10 out of 50 would show up. So we shifted over to webinars. Webinars provided a bit of an improvement, but not much. After all, a webinar is still a meeting. So on July 2nd, just after we launched TBWS, I finished a coaching webinar with pitiful attendance wondering what we were going to do. I was sitting there starring at the webcam we bought for the webinars, and I thought to myself; "I think I'll just do a video and send it out". So I did it with the help of my brother. It was short, funny, and it had a good message to it. I uploaded it to YouTube and emailed to our 50 loan officers. By the end of the day it had over 50 views on it and we received many emails thanking us for it. The next day I said to Leo "I think I can do this every day", to which he replied, "you're crazy." We came back from the July 4th holiday and on July 6th I made our 2nd video that was received just as well as the first. My brother and I continued to make and distribute a video every day. On July 17th 2007 I

decided to call the video the "TBWS Daily" in an effort to tie the video into the CRM somehow. I wasn't sure how it would tie together with the CRM, but I just went for it. It's funny. I look back and I remember that first video. I remember after I sent it out thinking to myself, "this is what I'm going to do for a living... this is going to be my contribution to the industry". It was a weird feeling, and it's even weirder now looking back at it and thinking about it. When did you notice that TBWS began to gain traction in the industry and why do you think that is? Frank Garay: Well, I remember our Halloween show 2008. Brian was Gene Simmons and I was Ace Freely (sp?) from KISS. Our sales tip was using "props" to get business where we displayed Brian's daughter as a "prop". It was funny (at least we thought so) and it almost got 1,000 views! Here is the link to it: archive/1/2835. We were stoked! I remember us saying to each other that our 1,000 view Daily was just around the corner. Our first 1,000 view daily was on November 12, 2008. We were dressed in French attire and talked mainly

about the auto industry, but for some reason, we past that elusive 1,000 view mark. I remember Brian looking at me saying, "someday we'll have1,000 views everyday"! I think the realization that we were gaining some traction was on our first 2,000 view Daily. That was February 4th, 2009 and it was titled "Poor Wells Fargo... What Will They Do"? It was about Wells Fargo not being able to have their exotic retreats for the first time in many years. I remember "the brass" thinking that there must have been a view counting problem, because there was no way that we actually got over 2,000 views. But... we did. It was that next morning that I was actually a little stressed out about the show. I was thinking to myself, "Oh my gosh... there are like 2,000 people paying attention to us! How can we ever deliver something to them every day"? Today I'm stressed out if we don't get 12,000 views! We started really gaining traction in the middle of 2009. We would hit 5,000 views pretty consistently with an occasional 8,000 views on a great day. We can attribute much of the results to Brian's idea to start the HVCC petition. That petition has over 100,000 signatures on it and it introduced us to a lot of new people. I think the reason that we've achieved the

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success we've gained so far is because we're real. Since we don't have sponsors, or advertisers, we don't have to be PC. We can just say what we think, and that seems to resonate with people. We get to say the things publicly that most people want to hear, so it all works out. We have however toned it way down. Now that we're getting a bigger voice, people rely on us as a value piece to send out to others. We have to respect that so, we've taken the edge off the show a little. But we're still not very PC at all. We know you offer free daily video outputs, so what’s the deal with the $49.95 offer on your website? Is this product for all real estate professionals or is it geared towards one segment over another? Frank Garay: The $49.95 product is what we call our Video Marketing Engine or "VME". It's a private video player that has the same format as the TBWS Daily Show. There are advantages to using a private player to send video to your database. Not only can you provide links and downloads directly from the player page, but you can also track who is watching your videos and who is not. This is really important for sales people. Our player is useful to any salesperson that focuses on maintaining a database of past clients, family and friends. It's actually a full blown CRM that you can send HTML email from with tracking ability as well. It's a very powerful marketing platform if video is the method that you choose to use for your marketing efforts. Within the system there is a prerecorded "Video Marketing Workshop" that's very helpful to watch. The workshop goes over the "show concept" which is what we've found to contribute to our success. The method of video marketing can easily be employed by anyone within their database and their local market area. How do you come up with the topics you discuss on your daily videos? And what topics in particular have generated the most responses from viewers? Frank Garay: We search about 20 websites every day and Twitter is quite useful as well. We're always looking for stories that have the most impact on our day to day business. Brian is the main writer with respect to news stories I'm the main sales-tip content provider. Since I've managed loan officers for many years, the "coaching/sales-tip" realm was natural for me. Brian on the other hand will flat out tell you that

his favorite thing in life is reading the news, so it's a perfect fit for the show. We both have a good sense of humor, however Brian has this "steel trap" mind that retains all kinds of useless information that somehow becomes quite useful for the show! It's so weird. We'll be looking at a story and out of nowhere Brian will say that it reminds him of some obscure scene from some movie that was released in the 70's, or a line from a song that I've never even heard of. His brain is a holding tank of a bunch or random information, that's one of the reasons we call him "Captain Random". FHA, HVCC, YSP and Wells Fargo seem to generate the most responses for us. Really it's the stuff that can have an immediate positive or negative impact on the business that gets the most attention, which makes sense. A lot of times we don't have very interesting stories to work with. When we're working with boring news, we call it "polishing turds" which is exactly what it is. In those situations we usually swing a little heavier to the "humor" side if we can to keep it interesting. Tell us your opinion on the drivers of the economic downturn…was it the fault of greedy (866) 355-9944 Mortgage Insurance Agency, Ltd. is the largest writer for Surety Bonds and E&O & Fidelity policies across the country. State LicenSe Surety BondS

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real estate professionals and Wall Street, the lack of government oversight or homebuyers that should have known better? Brian Stevens: Looking at it from my perspective, progressive and aggressive loans that were delivered to lenders for consumer's consumption is the primary driving force. Prior to Y2K you had qualifying ratios of 27/38 on very few fixed or conservative adjustable products. Once we figured we could use Credit Scores to determine a borrowers "likelihood" to make his mortgage payment, the flood gates of bad loans and lax underwriting began to open. We started at fixed rate conservative underwriting to 100% neg am stated income stated asset loans with a 580 credit score. This artificially spiked property values which lead to the compounding problem of "cash-out refi's" on artificial equity. Sure borrowers should have known better but buying a house became a "money making enterprise" and not a place to lay your head. The truth of the matter is most borrowers knew what they were getting into but didn't care because everyone and their mother told them their house was going to continue gaining equity. Look there's enough blame to go around for what took place. To hold one single group i.e. the brokers, appraisers... is just too easy and wrong. Do you think the new and upcoming regulations are helping matters? Give us your opinion on HVCC, the Safe Act, Red Flags, and the new GFE and HUD-1 (RESPA regulations)? Brian Stevens: Absolutely not. Everything the government has done costs the borrower more money and takes more time. Honestly, I can’t think of one thing the government has done that makes sense. HVCC has led to shitty appraisals at a discount fee to the appraiser and a inflated cost to the borrower. SAFE ACT..... Do I really need to be tested on 100 plus industry acronyms? How does that help anything?! New GFE... you can’t get 3 industry professionals to agree on it, how is the client going to figure it out. Not to mention the 3 page document doesn't accurately reflect the transaction. If we go back to pre Y2K and enforce those reg's we'd be fine. IF TBWS had the power of the Feds, what changes would you enact regarding the mortgage and real estate industries? What are the biggest opportunities here?

Brian Stevens: Just as I said. We would go back to a reasonable set of products with reasonable underwriting. Most importantly, we would enforce the laws of the land. If you're screwing up you lose your license. Further, I'd let these foreclosures go through and get to the recovery part of our recovery. In your opinion, what is the Federal Government doing right and NOT doing right in terms of industry regulation? Brian Stevens: If I had to pick one thing and this is a long shot, the National Regulation with the SAFE act may be a good idea. The government is in a precarious position because something had to be done and I know hind sight is 20/20. I just would have liked to see them involve industry professionals in their decision making. Do you remember when all this was going down with Sec of Treasury Tim Geithner? It came too light that he didn't have a staff. He was so busy lending his hand in historical monetary change that he didn't have time to hire a staff. It's that type of "shooting from the hip" that's exacerbated our problems. Frank Garay: What really bothers me is that our elected officials are so influenced by lobbyist money that they won't go after the real offenders. Let's face it, Brokers only sold what they were given. If we were never given bad products they would have never been sold. The real problem was that fact that the rating agencies were in bed with Wall Street. Rating agencies wanted to rate in order to make money, the investors and bankers wanted the highest rating possible, throw in a lack of regulation and you get a disaster. Attacking the broker in this mess is like attacking the caboose of the train rather than attacking the engine - the rating agencies. Given what has gone down in the last few years, how do you see the dynamic between the real estate agent, the mortgage broker, and the consumer changing? Or do you see the relationships remaining the same? Brian Stevens: Or do you see the relationships remaining the same? At the end of the day I see it as remaining largely unchanged. At the consumer level it’s always been about relationships and it always will. We may have a bigger and different stack of - continued on page 45


March 2010

How to Use HUD Settlement Cost Booklet As a Sales Tool Thirty-six years waiting ... its got to be good by karen deis


he year was1974, the first time HUD required a uniform, standard closing statement (HUD1) and a Good Faith Estimate. Not much had changed since then—but expect 2010 to be the year the mortgage industry, as we know it, changes forever. After waiting almost six months for the new HUD Settlement Cost Booklet, it was finally released on Dec 16, 2009 (HUD’s website) and incorporates the new GFE, HUD 1, MDIA disclosure dates. The entire mortgage application, closing and servicing (the loan) process is all explained in a 49-page booklet and I venture to say—it’s really GOOD! This booklet protects you, the loan originator and mortgage company manager! Pretty much everything clients need to know is covered—so clients can not come back to you and say—“you never explained that to me.” Some “experts” say that the booklet is required to be given ONLY to someone who is purchasing a home. I disagree. In the Mortgage Disclosure Improvement Act, it specifically lists the transactions that require disclosures and we believe that they renamed the booklet “Shopping for Your Home Loan…” for a reason! Rule Synopsis: HUD released new Settlement Cost Booklet called “Shopping for Your Home Loan.” Give to clients on January 1, 2010. Give to clients for the following loan transactions:

• Purchase – Primary & 2nd Homes, Condos, Townhomes • No-cost loans • Construction/End Loans • Refinance of primary & 2nd home • Closed End HELOC’s • Time Shares • Manufacture Homes/Mobile Homes on Real Property • Mortgage Assumptions (if loan terms change from original mortgage) • Reverse Mortgage Not required for: • Rental Property that will be used for Business Purposes • Land • Land & Home with 25 acres or more • Seller-Financed Mortgage or Contract-for-deed • Loan Modifications • HELOCS – open end • Loan application denied – at application o Or if borrower withdraws within 3 days of loan application Can change the Cover ONLY – no alterations to the content; • OK to change picture, add your company name & contact info to cover page • Can be translated to languages other than English Must be SENT three business days after the signed loan application - continued on page 46


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An Epic Struggle HEOPA, HERA, and Hercules; all epic stories by justine assal


ith so many changes in the industry, mortgage brokers have to adapt and redefine themselves at a rate and speed the likes of which have not been seen. It’s not just the rule changes and the adoption of HEOPA, HERA, HVCC, and all of the other acronyms that sound so innocuous but require new training and a new level of vigilance in order to remain compliant and a bulletin board of timelines and dates highlighted so that we can remember when to order appraisals, etc.; but it has also been the need to redefine ourselves from the niche markets that once dominated many of our pipelines, to the first time home buyers and government loans that are now the only option for most borrowers. Many of us had built our referral business in very specific markets and after many years, had become known for our expertise in this specific area. Indeed, it was the hallmark that made a successful broker! The fall-out in 2009 has resulted in brokers fielding an on-going barrage of phone calls and emails from would be buyers, realtors, and other referral sources requesting mortgage information for programs that we cannot currently originate. It is an on-going reminder that most of the inquiries we receive simply cannot be translated into business and sometimes a depressing realization to see how much money we are hypothetically losing. This is

not a problem uncommon to any broker that is still in the business but how to deal with this situation certainly appears to be the main crux that separates those who are now thriving in the marketplace from those who are floundering. Human nature cannot be discounted here as it is certainly more intoxicating to remember when you were on the top of your game than to face the reality that you are no longer there. It is almost therapeutic to just lose yourself in the daily grind, but equally as mind-numbing to just exist without passion. Much like in an Epic movie or any classic story line where the hero eventually has to fall from grace and wander aimlessly while they now battle self doubt; mortgage brokers have made it through the external battle. But, how long will each of us wander aimlessly before we take our parts in the story and fight back? So perhaps we are not Rocky Balboa or Maximus Aurelius, and our struggle is figurative, but the internal struggle in which we find ourselves requires the same soul searching and strength as any great hero. If it is more comfortable to look back with fond recollection at our success, but this is not going to produce new success, we have no choice but to force ourselves into thinking forward and to make a decision to change. This is an Epic struggle and certainly no less life changing than that of any story’s eventual hero. We are the heroes in this story, as we are still here. Those that should not have been in the business have long gone;others had the skill but not the tenacity or pipeline to see it through. Others were simply


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victims of the market and had to find new jobs, but whatever the reason, they are gone and we are left. That makes us heroes! The underdogs! The struggle is ours to fight as we are the survivors. The future of the story must be written by us, or we will be written out of the plot. So now I suppose it is time to get back in shape, stop whining, and train for the next battle. It begins today by writing a new business plan. It doesn’t mean that you should forget your past success but to embrace it as strength to further convince yourself of your ability. If you succeeded once, you know the roadmap to reaching future success! Perhaps you just need a jumpstart and some guidance to get you on the right track. After spending years courting niche markets that we have learned with a degree of expertise, we are left with the realization that although nobody wants to completely redefine a once successful business model, obviously closing loans is what keeps the doors open. This means that the business plan must evolve and adapt in order to once again work. Starting today, begin taking the phone calls for loans that are not closable under current market conditions and add the contacts to your data base. This allows you to prepare an informative newsletter quarterly to remain active in your niche market, just in case! After all, most competition has left so it only makes sense to stay visible and positioned to jump if and when the right time comes. This allows you to maintain your position as expert and continue growing your database for tomorrow. The next and hardest part is embracing a new segment of the market and starting it from scratch. Many of us have always originated FHA, VA, USDA, first time home buyers loans and such, but never sought out this business enough to make it a substantial part of our pipeline; some have never originated any government loans. Either way, be patient as the struggle is part of the growth, you cannot reach future success without going through this process. Don’t under-estimate writing your goals down for the upcoming week. This one should begin with you reading the guidelines and studying any program with which you are not fluent and comfortable, remember this is back to basics. Next, examine the many realtor and referral sources that you have cultivated, they probably have not focused on your new demographic either and are not currently a viable sources of business. This equates to being famous without being rich as this is the source of the phone calls that keep your phone lines ringing, business that cannot be closed but yet it’s flattering to be thought of.

Remember always that staying in touch and in front of clients and referral sources is key. Ensure that your databases are all updated and schedule a mass email once a month. Then start calling up each realtor and scheduling appointments to ideally speak at a sales meeting or at least drop by their office. Request a few minutes to speak at meetings and explain how you can help them to close these clients. Realtors are in the same boat and appreciate your guidance in growing their own clientele. Educate the realtors that have shared your niche market to also begin working with first time home buyers, USDA loans, FHA, and VA. Set your weekly goals to visit at least 3-5 offices each week and write this into your business plan. The next task is to establish new relationships with realtors that already work with this clientele. Set aside a specific amount of time each week to attend networking and industry functions to establish new relationships with realtors. It isn’t enough to just join different business groups; you need to actively work on committees with the local Board of Realtors, Chambers of Commerce, and other functions. It sounds so simple but many of us do not make the time to be seen and to show our work ethic through volunteer committee work. Being involved and present at these functions counts far more than sitting in your office checking your phone on occasion to make sure that the line is still working. This also keeps you in front of potential clients or referral sources. Although there is no magic solution, all you have to do is work slightly harder than your local competitors, those that are left, and watch your pipeline increase. It is common for all of us to ponder with wistful recollection, how wonderful it was when business was plentiful. However, if we succeeded once, we are better armed to succeed again! If we take the steps necessary each day to build our business and be forward thinking, we can take the lessons that we have learned during these tumultuous times and reach greater success in the future. As with any business, set a plan and write your goals down so that you are held accountable. Our industry is transforming itself into more of a profession than it ever was. Many brokers have left the industry and while this has been positive for the most part, it is the biggest tragedy to see brokers that have survived into 2010 remain in the past and not see the potential in the industry and the potential in themselves. This transformation is not comfortable in many ways but no worthwhile growth is. We are the survivors and have

much to learn and contribute to our profession, even if it is one $70,000 loan at a time! It is our responsibility to show the new face of mortgage brokers, not as we were but as responsible, educated, well informed practitioners of the trade that we are. This is our Epic struggle. Justine Assal originally hails from London, England and has lived in Central Florida on and off since the early 80’s. In 1999 she obtained her mortgage broker’s license and by 2000, had established ACM Financial Corp, a Mortgage Lender that specializes in residential niches such a foreign nationals borrowers, non warrantable condos, first time home buyers, and government lending. Justine has obtained NAMB’s highest designation of Certified Mortgage Consultant and has served on NAMB’s Certification Committee, striving to raise the level of education and professionalism in the mortgage industry. Justine is the Owner of ACM Financial Corp and a top originator in volume. She is also a GRI 1 Finance instructor for the Florida Association of Realtors and serving as Vice Chair of the Orlando Realtors International Council 2009-2010. Justine has been President of the British American Chamber of Commerce of Central Florida since May 2008 and is currently serving her second term.

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Appraiser sound off

free to choose by Lamarr banks


ince May 1st 2009 , a law was put in place in regards to appraiser, lender, Broker and Realtor relationships. The idea was to sever the appraisers ties primarily with Brokers and lenders in order to help stop the possibility of coercion. It is the Home Valuation Code of Conduct (HVCC). Since then, appraisal management companies have become the source of work for appraisers. The amc’s control how an appraiser is paid, when an appraiser is paid, how much an appraiser is paid, where an appraiser will work (yes, they can turn down an assignment, but when you do not receive a lot of work?) and in some cases the appraiser is charged to use the amc’s “portal”. Since then, many Brokers have complained about the accuracy and the efficiency of appraisal reports. One has to ask, “Has the task that HVCC set out to accomplish been achieved?” • If a homeowner cannot select their own appraiser, in a way to protect themselves, • If a broker cannot select their own appraiser who they have used for years, • If the appraiser is forced to work for a reduced fee and a shorter time to complete the appraisal, One would tend to believe it is not working. Let’s look at another scenario: You own an automobile. You have taken your car to your trusted independent mechanic of many years to repair


March 2010

it. Your mechanic has always been truthful to you, even charging you less than the quote when a repair was deemed doable for a lower cost. Your mechanic has even assisted in you acquiring a loaner car when needed. The loaner car company has a relationship with your mechanic and they work together to give you a fair price for your loaner car. You have never felt that either one would “rip you off ”. A large nationwide automotive management company is found to have been ripping off customers with false repairs, and often charging customers for repairs not done. So an Attorney General decides to step in “on behalf of the entire nation” to offer a remedy. The Attorney General makes all independent mechanics across the nation join an AMC (automotive management company) in order to continue working in their trade. What you say? Was it not a large nationwide automotive management company that caused the fiasco? Not an independent mechanic? What gives? Now we move forward. Your air conditioning breaks down. You go to your trusted independent mechanic. Your mechanic tells you he can no longer work directly with you, and that you have to call up an AMC (automotive management company) and submit your repair request. You call, fill out the paperwork. And you wait. And you wait. And you wait. You finally have to call an automotive broker (AB) to get a loaner car so you can drive to work, etc. Five wonderful days later you finally hear from the automotive management company! They tell you your selected mechanic will be getting in touch with you!! So you wait. And wait. And wait. Finally one week later, a mechanic calls

Appraiser sound off you up and you set up an appointment for the repair. You ask what your estimated repair cost will be, they tell you that it will be a flat fee! You panic when you hear the new flat fee, as it is extremely higher than your trusted independent mechanic was. But you have no choice!! One week later, you finally get to turn back in your loaner car to your AB (automotive broker). When you see the bill from your AB, you ask them can they not include it in the repair fee? They say no, because they do not have a relationship with the mechanic. Once you pay the bill, you get in your car, and test the air conditioning, only to find that it does not work right. It is then that you find out that they only use “reconditioned” parts (to help cut costs), and that your mechanic (fresh out of trade school) was the most available mechanic for this type of repair. And if you wanted “new parts” you should have stated so. They also tell you they sent you the most seasoned available mechanic at the time you submitted your request, but if you are not satisfied, you are free to reapply and start the whole wonderful process all over again! I use this scenario to hopefully hit home to what has happened to the appraisal industry, under the guise of “protecting the consumer”. The independent appraiser will always need to exist. We are independent so we can be the other option for the consumer. This also allows Brokers and Realtors a chance to work in a free market, protecting their client base, and to service them promptly and efficiently. I am not in favor of eliminating AMC’s, but they should not be the only option regarding the appraisal of real property for banks, lenders, Brokers and Realtors……….a true free market is truly that… to choose! Lamarr is an alumni of the Delta Chi Fraternity of Cal State Fullerton, President of the Black Business Network of Orange County, a member of the City of Orange Chamber of Commerce, a former Ambassador for the Chamber of Orange, former President of the Orange Chamber Ambassadors, Ambassador of the year for the Chamber of Orange 2007 and a member of the Orange Chamber of Commerce Executive Board. Lamarr has been in the Real Estate Appraisal business since June of 2001. During the Real Estate boom years, Lamarr covered most of the greater southern California area. Lamarr is currently licensed at the Certification level and is approved to do FHA appraisals. Lamarr may be reached at

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The Death of Affordable Rental Housing From the ashes, a housing Phoenix will rise‌hopefully. by Brian Montgomery


ost amid the much higher visibility mortgage crisis and the all too common foreclosure stories is the state of affordable rental housing in America. While the housing and economic downturn has slowed the development and construction of both single- and multifamily residential housing available to families earning 80 percent and above of area median family income (AMFI), that is not to imply an ample supply of affordable housing exists (especially for those earning less than 80 percent of AMFI). According to a Joint Center for Housing Studies report, vacancy rates for multifamily housing rose slightly in 2009. However, the same study indicates that condo conversions to rental housing may be the likely reason for the increase in housing units. On the surface this rising vacancy number appears to be good news for working families with incomes at or below 80 percent AMFI as it suggests a housing oversupply. Reality is quite the contrary. For one, the demand for the housing tax credit, which for more than 20 years has helped produce hundreds of thousands of affordable housing units, has stagnated. In an effort to help fill the obvious financing gap and to off-set the drop in demand for credits, the Administration created the TCAP and Housing Credit Exchange programs. However, it remains to be seen what positive effect the two programs will have in producing additional units of 30

March 2010

affordable housing. Drilling deeper down the income strata, the picture looks far bleaker for those families earning below 40 percent of AMFI who more than likely require some sort of housing subsidy. Even though the amount of funding for HUD Project-based Section 8 housing has grown over the last several years, they are basically helping the same number of people as rising rents and operating expenses have largely consumed the additional funds. The same holds true for the sections 202 (elderly) and 811 housing programs (persons with disabilities). The families and elderly residents who rely on this subsidy have few other choices when it comes to finding safe, sanitary and decent housing as their incomes do not support the higher rent levels synonymous with most urban centers. The discrepancy between real wages and what is necessary to afford a two-bedroom apartment in almost every major urban market continues to be dramatic. For example, in more than 30 states, two full-time minimum wage jobs are required to afford the fair market rent for a two-bedroom apartment. And according to the 2009 National Low Income Housing Coalition (NLIHC) Report “Out of Reach,� the number of housing units affordable to families making less than $16,000 shrank by 17 percent between 1995 and 2005. The struggling economy and on-going housing crisis have exacerbated the problem as even more families are having difficulty making ends meet. Overlay on this burgeoning crisis is the need to preserve the existing supply of affordable rental housing.

Voice of Housing To paraphrase the immortal Frankie Valli “let’s hang onto what we’ve got.” According to the National Housing Trust, over the next five years, the contracts on more than 900,000 Section 8 units are scheduled to expire. While very few owners typically opt out of the program, the number of those who are able to opt out will inevitably increase when real estate prices return to a higher level. And it is estimated that another 200,000 existing affordable units will be at risk of

conversion to non-affordable rents over the next 10 years as those contracts expire. Recent legislation introduced will help keep more units affordable to low and very low income families by providing financial and other incentives to existing owners. And during the Bush Administration we worked to extend the successful Mark-to Market program which helped keep tens of thousands of existing units affordable through the restructuring of existing mortgage financing. But given the shifting demographics and the fact many more low income senior citizens will be in need of affordable rental housing, more focus by policy makers is needed as the problem will only continue to exacerbate through inaction. As FHA Commissioner, Brian Montgomery was responsible for the oversight and modernization of the insurance fund’s $600 billion portfolio. He was also responsible for HUD's regulatory tasks to the housing mission of the GSEs and the manufactured housing industry. Montgomery came to HUD from the Executive Office of the President. At the White House, he contributed to the policy process on a wide range of issues including increase access to affordable housing.

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Center Stage with Roohmz Mortgage Enterprise The Niche Report talks with William DiPaolo, CEO of Cogent Road brought to you BY THE NICHE REPORT

What is Roohmz Mortgage Enterprise? Roohmz Mortgage Enterprise is a Web-based workflow management system that intelligently manages the progression of mortgage loan applications from origination to closing, enforces compliance and provides a robust communication platform that delivers e-signature enabled loan documents. The loan management system creates transparency in the loan origination process for both borrowers and lenders by continually monitoring application status, providing real-time updates and ensuring each step is completed in full compliance. The product was built to complement and enhance any LOS system. What were the reasons behind developing Roohmz Mortgage? There are a lot of mortgage systems that tout their ability to automate the workflow of loan origination, but as we talked with our clients and other lenders and heard the issues they were having with their LOS systems, we realized that the concept of workflow management had not been fully developed in the mortgage industry. That is when we began to conceptualize the true meaning of workflow management and developed a product that not only manages work, but takes the burden off of the lender by conducting the tasks automatically. At a time when the industry is in constant search of ways to do more with less, Roohmz Mortgage was developed at the right time. This became especially important as brokers began consolidating into larger lenders. It is no longer feasible 34

March 2010

for a loan officer to complete his portion of the process and then walk it to the office next door for the next step. As shops began to grow, they did not have the infrastructure to stay on top of compliance and loan status for each borrower. There are two version of Roohmz Mortgage: Standard and Enterprise. What is the difference? Roohmz Mortgage Standard edition provides loan originators with an automated compliance solution, ensuring loan officers remain in full conformity with Equal Credit Opportunity Act’s Regulation B, Truth in Lending Act’s Regulation Z without any human effort. It efficiently organizes files to alert loan originators the moment a file is about to fall out of compliance and be withdrawn. The system delivers all adverse notices as soon as the file is withdrawn or declined, either electronically or via first-class mail, while creating an audit trail for compliance officers. Standard also provides a digital loan solution complete document delivery and e-signing capabilities. Roohmz Mortgage Enterprise builds upon Roohmz Mortgage Standard, incorporating all the compliance elements to its upgraded version but also includes automated compliance with RESPA’s new Good Faith Estimate disclosure requirements. Enterprise enforces consistent origination workflow using linked desktops that move files efficiently from worker to worker as the loan progresses. Through Roohmz Mortgage Enterprise, each loan file is digitized and rules are applied to its path to closing, guaranteeing that each prerequisite is met before it even moves on to the next status. Such a predetermined track ensures all necessary checkpoints are completed at the right time, eliminating the chaos and mystery behind


the loan origination process. How does Roohmz Mortgage address lenders compliance needs? Roohmz Mortgage is a completely automated, handsfree compliance solution. The 2009 regulatory landscape was more complicated than ever before, and the trend is set to continue in 2010. With continuous changes and updates to existing regs, as well as the creation of new ones, lenders are in increasing risk of making honest mistakes. As mentioned earlier, Roohmz Mortgage ensures full conformity with Equal Reg B, Reg Z and the latest RESPA GFE disclosure laws. The system ensures that disclosures are delivered and loans are decisioned within compliance guidelines and will automatically warn originators when files are about to fall out of compliance and be withdrawn. At the click of the mouse, the system serves as a customer portal with free e-signing capabilities at no additional cost. For those documents that require ink signatures, Roohmz Mortgage automatically routes them via three-day FedEx or US mail, tracking all numbers imported for compliance purposes. How does Roohmz Mortgage facilitate intelligent workflow management? Roohmz Mortgage Enterprise acts as a track for the lender’s specific mortgage origination process, ensuring origination happens as expected and within compliance timelines. The lender configures document rules into the system, customizing a workflow that best fits the organization. Each rule or event must be completed before the loan is moved onto the next status. Once the status is completed, Roohmz automatically delivers the loan file to the next employee in the workflow and alerts the appropriate stakeholders that the step is complete. The result is significantly increased performance as every underwriter receives consistently complete loan files. What is a Roohm and how does it benefit both the lender and the borrower? The Roohm within Roohmz Mortgage is a personalized, collaborative online workspace that proactively guides the borrower through the application process by clearly displaying loan status and estimated days to closing, providing real-time updates and alerting the borrower to the next required steps, such as submitting requested documents. The Roohm provides social mediastyle tools that enable the borrower to develop a profile

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CENTER STAGE and participate in communication with the appropriate mortgage lender employees, as well as third-party partners such as title agents, real estate agents, appraisers and notaries. In addition, borrowers can electronically sign needed documents, as well as fax back signed documents, which are instantly digitized into the loan file. For the lender, the Roohm provides automated organization with full access to a snapshot of their application pipeline, current statuses and pending steps in the process. Within a given file, the Roohm provides oneclick ordering of state specific loan disclosures and closing documents and files each one by name for underwriting and investor delivery purposes. What is the pricing model for Roohmz Mortgage? Roohmz Mortgage Standard is available for only $2 per application with the implementation of Cogent Road’s FundingSuite product. When a lender launches Roohmz Mortgage Enterprise, they only pay per closed loan, meaning they are not charged unless they make money, a perfect solution to lenders’ current focus on increasing profits while cutting costs.

How will Roohmz Mortgage empower lenders? Roohmz Mortgage does not just assist lenders with loan origination, it does the work for them. Through compliance, document signing, communicating with the potential borrower - Roohmz enables practically hands-off loan origination. The sophistication of the system also educates originators on where in the workflow problems occur and how those issues can be corrected. It also creates a simple and effective way to communicate with borrowers through the customizable Roohm. By facilitating open communication between lenders and borrowers, Roohmz Mortgage Enterprise will increase the number of closed loans, as well as drastically improve the borrower’s experience, potentially leading to referrals and future business. William DiPaolo is the chief executive officer of San Diego-based Cogent Road, which in addition to Roohmz Mortgage, offers AVAIL, Funding Suite with its new eFolder feature, and other SaaS applications for the mortgage industry. For more information, visit and www.

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MBSWARROOM.COM GUTFLOP II Not another name for a Belly Flop, but floating is an option. by matt graham


wo issues ago, we introduced you to the “Grand Unified Theory of Floating or Locking Origination Pipelines,” or what we refer to as “The GUTFLOP.” Don’t let the tongue-in-cheek nod to nuclear physics fool you though. The concepts in the GUTFLOP play an important role in the creation and implementation of your own personal profit strategy when it comes to the age old question: “should I lock or float.” In the past, we’ve conveyed the sense of mental, and yes, even physical anguish that overwhelms us upon hearing that question. Not only did we attribute the reasons for this reaction to the uncertainty that necessarily pervades financial markets (you may have heard someone say “if I knew what the market was going to do tomorrow, I wouldn’t be __________ <insert witty rejoinder here>”), but more importantly, to the numerous SUBJECTIVE considerations that MUST be considered when answering such a question. In other words, we love to scoff and roll our eyes as much as anyone who pretends to be market-savvy when faced with the “lock or float” question, but the truth is THERE IS AN ANSWER. Problem is, it’s just not usually the one you want, or even have time to hear. The scoffing and rolling of eyes usually gets us out of crafting individual answers, but we finally realized if we write this stuff down, 38

March 2010

we can use it to answer the question again and again. Strokes of genius such as this led to the creation of the GUTFLOP. With the cursory introduction to the GUTFLOP out of the way already (if you missed it, its available here http://bit. ly/6ecD97), let’s take a look at how to APPLY those concepts in practice. We’ll start by discussing the allocation of files to different risk categories. That’s really the easiest part, and probably one of the least time consuming. From there, it’s all about your interaction with the market so that you’re best prepared to ACT on the framework of rules you’ve set for yourself in your personal iteration of the GUTFLOP. One of the main goals of the GUTFLOP is to create a system whereby you can assign deals or potential deals to one of several risk categories. There’s no mathematical formula for what these categories will be or how you will determine which loans go where, but there are some universal truths. First, consider all the different approaches you have ever taken with locking or floating files, and perhaps even those you might take in the future. Are you the guy or gal that locks everything upon approval? Or do you ride the rate-o-coaster? Maybe you are somewhere in between? Whatever the case, you probably have an idea of what you would consider to be the riskiest and safest ways to handle the decision to lock or float. Start there! The earliest and longest possible lock will generally be everyone’s lowest risk category. After all, if you’re already


pulling up the 90 day lock page on a lender’s website with your left hand while shaking a new client’s hand with your right, everyone in the room will know exactly what the game plan is from day one. Not much risk there. On the other hand, if you are starting to receive phone calls from your lender saying PTD’s have been clear for 2 weeks and when the heck are you going to lock the dang thing anyway, it would be hard to imagine a riskier situation as far as the decision to lock is concerned. Sure, you may not be fazed by this, and all the other aspects of the file may feel perfectly under control. But as far as “do I lock or float,” this is your highest risk category. It could be that you operate with only these two risk categories: high and low. But for most of us, there will be a category or two in between the extremes. However many stops along the risk spectrum you want to define is not so important. What IS important are the RULES you assign to any given category. There are generally two types of rules that are important to consider in each category: those that define how files are allocated to each category and those that outline what to do with the files after they are sorted, based on any number of conditions or variables. The allocation rules might not be quite as mathematical as the rest, but they certainly can be. The point is to have a clear sense of what you are going to do with the next file that comes in the door. This isn’t to say that you will know whether or not you’re going to lock or float, but rather, you’ll know what questions to ask about the file so you can decide if it’s going to be locked ASAP, floated indefinitely, or something in between. For instance: - IF the client indicates strong desire to lock, THEN the file will go to the lowest risk category - All things being equal, purchases will be placed into

more conservative risk categories than refinances. - Until I have X deals in the pipe, all deals will be assigned to a less risky category - (on the other side of the coin), If I have earned X income so far this month, new deals will be assigned to higher risk categories, assuming this is in line with client preference. After these sorting rules have been applied, you’ll be left with a portion of your pipeline that is locked (or soon will be) and a portion of your pipeline that is floating. You may even stratify the floating files into a few categories such that some of them will lock at the first sign of trouble and others will ride the float-boat down fiery rivers to the very gates of hell before finally pulling the trigger. Whatever the case, this is where the “rule-making” gets quite a bit LESS dependent on objective details about you and your files, and much more dependent on how in tune you can stay with the big picture in the rates market as well as the second to second fluctuations. In other words, you have to know what to look for, where to look for it, and how to interpret its impact on your risk categories. You will even have to draw some


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subjective conclusions as to the relative importance of different types of market data. For instance, do you care if a price is about to cross a TECHNICAL INDICATOR, such as a “moving average,”? Should you care? Or will you not know if you care until you balance the technical analysis against its counterpart, FUNDAMENTAL ANALYSIS? Whether you are already up to speed on all this, excited at the prospect of learning more about it, or lying in a fetal position crying and saying “no more please! No more!” between Adam, myself, and the 100’s of other originators that all chat and watch real time market data in The War Room (, you can go as far into the rabbit hole as you want. Just don’t expect to hear too many custom tailored answers to “should I lock or float?” Ultimately, you have to be the one to answer that question, but we make sure you have all the tools you need to do it. Matt Graham is the creator of the MBS War Room, a first of its kind service bringing institutional quality market data and analysis to mortgage market professionals. Adam Quinones is Managing Editor of Mortgage News Daily and co-founder of the MBS War Room.

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Rules & Regulation Headlines You get a little breather here! The last time we counted, there were 16 rule and reg changes that occurred on January 1, 2010 including the biggie GFE disclosures. However, it goes without saying that there are a couple of things announced this month that will impact your business. Be sure to read VA Little-Known Seller Concession Rules! Mortgage Talking Points® Flyer/Email for your real estate agents to help them negotiate better terms for VA Buyers!

Fannie Issues FAQ Updates to Announcement 09-19 You know the announcement was fairly intense when the FAQs have FAQs to answer the 1s set of FAQ’s. Some operational flexibilities are noted – I’ve not seen some of them before and would NOT have guessed that was Fannie’s position. As a refresher, this announcement updated a slew of underwriting requirements that was recently incorporated into DU 8.0 – from age of credit docs to two-unit eligibility. • 4506T-EZ –don’t use this form in place of the standard 4506-T • HUD-1 – Escrow Closing States – The estimated HUD1 is all that is required to be signed by all parties. The final HUD-1 must be signed by the escrow officer only – Certification Stamps alone are not sufficient • Material Change Defined – affect eligibility of the loan – duh, increases to marketing and/or commissions, and additional disbursements. Not Material – per diem interest or minimal fee changes previously disclosed – all this for the party that is not affected by the change • RESPA – HUD-1 reissued – Signatures are not required so long as the document complies with RESPA requirements – and the parties signed the original HUD-1 • HUD foreclosure (HUD is Seller) – Fannie will accept HUD-1 signed only by the borrower • Institutionally owned properties –Must establish that a signatory has authority to sign on behalf of the owner • Verbal VOE – another paystub is NOT sufficient. The Lender must verify employment verbally or in writing within 10 days of the note date. IF unable to do so, the lender must obtain a phone number from an independent source, call the employer and speak to the borrower.

Fannie Improves the Refi Plus Products – Effective Immediately & February 1, 2010 – Announcement 2009-37. Fannie just gave you a gift…those past clients with funky subordinate loans can finally refinance. Rates are still good enough…time to start dialing for dollars. Watch your condos…what was easy just became more difficult. Effective Immediately: • DU Refi Plus and Refi Plus Subordinate Financing – Fannie finally expanded the acceptable subordinate financing terms for Plus loans. • Negative Amortization – ok • Less than 5yr Balloon – ok • Prepayment Penalties – ok • “Wraparound” terms – NOT ok

VA Loans and Their Deal-Saving Secrets – Seller Concessions! Mortgage Talking Points® “What You Need to Know About Seller Concessions & VA Loans”. VA is a popular loan option again, so refresh your Realtors memory on how these guidelines can benefit their VA borrower. VA allows sellers to pay off debt for buyers. It is also a little known fact, that the 4% limitation on seller concessions does not include closing costs. MortgageTalkingPoints® for your Real estate agents explains it all for them! Get out there and start talking about it! Email your agents! Get those sales meeting set up! Be the first on your block to refresh their memory on how to negotiate seller concessions when working with a veteran!



VA No Longer Accepting HUD/FHA Condominium Approvals – Cir. 26-09-19 – Effective December 7, 2009. Simply put, if you want to do a VA loan on a condominium project, the project MUST be listed on VA’s approved list. Condominiums previously accepted by VA based on HUD approval will continue to be acceptable.

FHA Delays Implementation of ML 2009-28 Appraiser Independence and ML 2009-51 Adoption of the Appraisal Update and/ or Completion Report – Effective 2-15-10 There was no official “document” issued, so don’t waste your time looking for it. Keep an eye on your investor’s policies regarding he appraisal update form so that you don’t end up with a loan that FHA will insure but your investor won’t buy. I wish I could tell you that the Appraiser Independence policy was delayed because HUD thinks that there may be some changes to, or revocation of, HVCC, but that’s just a personal fantasy. I think between condos, RESPA, and the new approved lender policies HUD decided to cut lenders some slack. Not to mention HUD is as overwhelmed as we are.

FHA Short Sales and Short Pay Offs: New Credit Policy – ML 09-52 – Effective 12-16-09 While the language of this letter leads you to believe that a short sale would have to be a previous event to have impact on the current file, think again. What’s really scary is that you probably won’t know this until you have the HUD Settlement Statement from the sale of the home. You may want to make it a practice on purchase applications to ask borrowers, flat out, if they are selling their current primary residence as a short sale. Short Sales Borrowers with a short sale are not eligible for a new FHA loan • If the short sale was done on a principal residence just to take advantage of a declining market and they purchased a similar or superior property at a reduced price within a reasonable commuting distance OR • For 3 years from the date of the pre-foreclosure sale or date that FHA paid the claim from the short sale (FHA loans only) if borrowers were in default at the time of the short sale. Borrowers are eligible for a new FHA loan if • The proceeds from the short sale serve as payment in full AND • All mortgage payments were made within the month due for


March 2010

the 12 months preceding the short sale AND • All installment debt for same period was paid within month due OR • The following exception applies: • Default due to circumstances beyond borrower’s control AND • Borrower had previous good credit history prior to default trigger event.

Short Pay Offs Borrowers are eligible for a FHA rate and term refinance with a short pay off on the loan being refinanced when • The borrower is current on their mortgage AND • There is insufficient equity in property and/or borrower experiences a reduction in income and does not have the capacity to repay the existing indebtedness.

NOTE: New subordinate financing is acceptable if current note holder will not write off indebtedness not covered by new FHA loan, but borrower must qualify with any required monthly payments not deferred for at least 36 months.

FHA Issues FAQ’s on the New FHA Condominium Approval Process – ML 2009-46A & ML 2009-46B. It’s 15 pages of FAQ’s but the biggie here is that “FHA will not provide a checklist.” So it’s up to each lender to decide how they will review the project to feel comfortable certifying to HUD that the project is still in compliance. The last 4-1/2 pages have some interesting facts about Site Condo’s. Right now my main concern is the “Certification Form” that we (the lender) have to complete with every condo loan. We (the lender) certify that the project still complies with FHA standards to the tune of a $1,000,000 fine or 30 years in prison if we knowingly provide false information about it. Note: They do devote the last 4-1/2 pages to Site Condos so you may want to take a look if those types of projects are common in your area. Written and contributed by Karen Deis of Mortgagecurrentcy. com. Provided monthly by - Interpreting the Rules and Regulation Changes for loan officers, processors, underwriters and owners/managers. Mortgage Talking Points ™, charts and checklists included.


TIP OF THE MONTH New Year’s Resolution for Your Body and Business BY STEWART MEDNICK


very year a plethora of Americans attempt to become devoutly pious on the topic of stating and following through on a New Year’s Resolution. More times than not, this resolution is to start something new (again, …again, …again,…) or to change something existing. For example, this year, my friend Joe Schmuckatelli will start working out at his gym on a regular basis to “get my body back to game weight….” Needless to say, after being deprived of McDonald’s dollar double cheeseburgers for a month, the resolution will eventually fizzle soon after. Another example, this time for changing something existing, will be my other friend Charlie Dumplewad who wants to quit smoking. After replacing cigarettes for cigars, his wife hating the smell, and him then replacing cigars for food and beer, he gained 20 pounds, resolved to work out in the gym, failed at that and is back to smoking cigarettes but is now 20 pounds heavier. Does this broken record sound familiar in a closet-of-skeletons kind of way? Andy Harris, the author of a monthly newsletter called “Elite Performer Monthly” talks about the motivation and incentive aspects of success. I found this bit to be relevant to my story:

people will do what they do. Some things simply cannot be trained, regardless of how hard you try. There is no temporary or short-term option for success and you can’t help someone if they truly don’t have the desire to succeed. It’s all or nothing to succeed in this industry, every day. You must understand yourself and how to stay motivated, along with the difference between motivation and incentives….”

So let me share a bit of Stewart’s Pearls of Wisdom on staying focused and motivated. One needs to look at building and growing a business like physically changing your body when working out. Muscles grow when pushed to the limit, ‘no pain, no gain.’ Physiologically speaking, when a muscle is exerted beyond a point of comfort and physical capabilities, the tissues tear. Growth is when the muscle is rebuilt but with greater density and more tissues, creating a larger muscle that is stronger. A business may be metaphorically built the same way. As the business is stressed by volume, it breaks down and then needs to grow to handle the added ‘weight’ of more clients. Growth may be more processors, a larger sales staff, or offering more products. The common link in the quest to build one’s body and to grow one’s business is the motivation or incentive to do so. These are derivatives of effort. As I wrote in my column the last November 2009 issue: Effort = rigor + persistence + passion + endurance.

“…From my years in management I have found that there are specific traits elite performers and high producers share. There are also specific traits that the mediocre producers or failures share. While external efforts are made to help all succeed, you simply cannot change one’s free will. In the long haul,

Go back and read that column for the specifics about each component, then see how you can “find the pain” and use that as your incentive. Then apply effort to



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motivate and grow your business. In fact, grow your body in the same manor. You may even find that the motivation in the gym stimulates the internal secretion of endorphins which stimulate production of neuro-conductors in the brain and creates a healthy mindset to productively grow your business. And if you don’t believe me, then you will have to work your ass off in the gym, and grow your business to see if I am correct in my analysis, or just blowing smoke… email me when you find out. Andy Harris President of Vantage Mortgage Group. Andy may be reached at 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 marketing consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-895-5122 or

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- continued from page 22

paper for the consumer but those papers will get signed based on communication and trust. In general, where do you see the real estate market heading? Will it get worse before it gets better? Or have we hit rock bottom and the only way is up? Brian Stevens: Well, people are still not making their house payments in record numbers, and until that changes, a double dip is inevitable. A newer word to our vocabulary is "strategic non payment." This is where people can but choose not to make their payment. I'd like to see the psychological profile of some of those strategic non payments. I really believe people have lost their desire to make payments as well. I think you'll find an even newer industry term. That of course would be the "I don’t give a crap... non payment." In any event until we solve that I think well jump back in the deep end. Frank Garay: Until we get unemployment under control we won't see any real recovery.

More specifically, where do you see the future of the mortgage broker? Do you see the business changing to a banker model or do you foresee a future for the mortgage broker? Brian Stevens: A dash of broker with two sprinkles of correspondent lines is probably our immediate future. However the broker will never go away. First, the most motivated sales people are your friendly neighborhood mortgage broker. Secondly, there is no cheaper and more transparent way to deliver a loan than through the broker channel. Eventually the industry will realize this point. Frank Garay: Having Brokers and Correspondent lenders at the disposal of the major banker only makes sense in that they don't have to carry retirement and health care for those originators. Once the witch hunt for the broker has subsided, you'll see the fat cats scrambling to get them back. What are we going to see out of TBWS in the near future?

Brian Stevens: Lots of changes that involve our viewing audience. We have an unbelievably innovative and intelligent gang of viewers. They are the future of our industry. The more we can tap into them the better off we'll be. We will become a conduit for others to exchange ideas. We will have a forum where all ideas and products can be shared. However all products and ideas will be scrutinized by their TBWS viewing peers. Really, I'm excited for our future. As Stewart Mednick, our managing editor, mentioned in From the Editor’s Desk, TBWS will be hosting an exclusive monthly column for TNR beginning next month. What are your plans for this column? What do you plan to discuss with our readers that you may not be able to address in your daily show? Brian Stevens: We want our column to be understandable and enjoyable for people inside and outside of our industry. We want to tackle topics that we cannot with our 7 minute daily show. Last but not least, tell us something that nobody knows about Frank and Brian. Don’t be shy. Brian Stevens: Let me take a run around the office and see what others have to say… Let’s see, we sometimes drink way too much... nope they already knew that. Frank Garay: Brian's kids are sometimes un-kept... oh wait, nope, they've already seen them. Brian Stevens: Our language is often off kilt... nope got that. Frank plays in a hillbilly band.... no. Oh I got one, Frank thinks he may have fathered a kid in the Philippines in the 80s and won’t go back because he's afraid he might end up getting a lap dance from his daughter. I once drove to Florida to ride out a hurricane (Francis). On that trip I ran down the freeway naked with 100mph winds just because I could... then bought and drove a 1983 white caddie Hurst and drove it home across all the southern states. And that’s why we love you guys, keep up the great work, and as Frank & Brian say at the end of every daily show, "pass this along to everyone you know." - isigcino.


Appraiser Sound off

- continued from page 23

• Business Days Defined: Monday thru Saturday (excluding Sunday and Holidays) Acceptable Delivery Methods • Give to client at face-to-face application • Place in mail no later than three days after loan application • Email Throw away the old one (Buying Your Home: Settlement Costs & Information). If you meet with your clients face to face, and after completing the 1003, the booklet explains most of the disclosure forms they have to sign anyway! For example: Page 11-18, “Your GFE Step-By-Step” explains the GFE—which you may want to review and compare when going thru YOUR GFE numbers. Page 30 “Servicing and Escrow Disclosure Statements” –whip out the servicing statement and have them sign it when you get to that page. I’m not saying that you need to go through the entire 49 pages. However, review the chapters that you would cover (and which they have to sign disclosure forms

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for anyway) and use the booklet to valid what you are explaining. I also see this booklet protecting you, the loan originator and mortgage company manager! Pretty much everything clients need to know is covered—so clients can’t come back to you and say—“you’ve never explained that to me.” In the Mortgage Disclosure Improvement Act, it specifically lists the transactions that require MDIA disclosures (see list above). Also, there was no mention of when the HUD Settlement cost booklet needs to be given in the Nov 19, 2009 HUD RESPA FAQ You can order 100 at a time--FREE from HUD. You must call 800-7677468. (No online orders at this time.) I tested it. Ordered five booklets and received a confirmation number. Only the English version is available at this time. (They did not know if the Spanish version would be available.) The clerk claimed that I would receive my booklets within ten days. While Mortgage Insurance is explained on page 10, what is missing is an explanation of FHA UFMIP and VA Funding Fees. Maybe itis not “officially” MI, but it is simply not addressed ANYWHERE in the booklet. On page 21, VIII. Your Settlement and HUD 1 – clients can request a copy of the HUD 1, one day prior to closing. You might as well get the elephant out of the room right way. Way back on page 36 is a “Determining What You Can Afford” worksheet. I Suggest that you copy and use this for your pre-quals. I can just see you going through the loan approval process and the client decides to use the worksheet and determines that they can not afford the mortgage payment. Choose 10 or 12 pages to discuss with your clients. Take a look at page 36-what you can afford worksheet. You may want to use these pages with your prequalification forms in home buying seminars or on your website as an interactive qualification tool. Review the booklet with your real estate agents too. Since pages 4-8 specifically talk about the home buying process, give them a copy because they’ll get questions too. Karen Deis, was in the mortgage and real estate business for 28 years and in 2000, sold all of her companies to train loan officers and agents full time. She has 7 training websites with the most popular being www.LoanOfficerTraining. com (download free marketing materials) and www. Email


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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.


March 2010


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March 2010

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March 2010

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Presidents First Mortgage FHA specialists Contact: Tim Dooley Phone: 703-754-9643 Email:

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Stearns Lending A prime wholesale lender committed to helping you achieve your goals by delivering lending services to you and your borrowers Contact: Debbie Davis Email: Phone: 714-513-7777

BRINGING UP THE REAR - continued from page 54

to help you, why wouldn’t you just have called your bank directly or walked into a HUD counselor? Now, if you told me that you paid a bank several thousand a month for six months and the bank didn’t do anything to help you save your home, that I’d have no trouble believing. Here are some numbers from the State Bar: According to the State Bar, in 2008, before the flood of loan-modification cases, the state disciplined 469 of the state's 206,165 lawyers. Of those, 245 were suspended from practicing law and 57 were disbarred. The disciplinary figures for last year have not been released, but ‘we anticipate seeing very different numbers in 2009,’ said Etzel Berrio, special assistant to the bar's chief trial counsel.” Okay, stop. Before the “flood of loan modification cases, the state disciplined 469 of the 206,165 lawyers?” That’s .002 percent. And of those, only 245, or .001 percent, were suspended and 57, or .00027 percent, were disbarred? And the disciplinary figures for 2009 have not been released, but the special assistant to the Bar’s chief trial counsel says that they expect to see very different numbers? But I thought the Bar was “investigating more than 300 California lawyers involved in loan modification ripoffs?” I’m almost positive that I was just making fun of that incredibly unconstitutional sentence just recently. But they also said that in 2008 there were 469 lawyers disciplined, and only 245 suspended, and 57 disbarred. That adds up to 302 bad lawyers. So, when the special assistant to the chief trial counsel said that he expects to see “very different numbers,” did he mean that they’d be very-different-lower? I’m not trying to be a smart ass, I’ve just never been that comfortable with numbers…. I mean, with stupid numbers. Intelligent numbers I have no trouble understanding. And what the heck happened to the 167 lawyers that were part of the 469 that were disciplined in 2008, but weren’t among the 302 that were suspended or disbarred? How exactly were they disciplined? Were they spanked, because if that’s the case, I’d consider going pay-per-view in ’09. And what’s the hold up with releasing the 2009 numbers, President Miller? It’s the end of January. Don’t you have anyone that can count to three hundred in less than a month over at the California State Bar? Is that why Governor Schwarzenegger refused to sign the bill that would have allowed the State Bar to collect dues from its 206,165 members? I apologize, Mr. Miller. You guys at the State Bar should take all the time you need to do the counting. I realize California’s schools aren’t turning out many

Mensa members these days, but seriously? I’ve read every single article that the State Bar has obviously pushed into the press and not one of them has made any sense whatsoever. Maybe I’ll send President Miller one of those calculators they have at Brookstone in the mall… you know, the ones with the really huge keys that talk. Then there are times when the State Bar sends out a release saying “The State Bar is investigating 1,200 loanmodification cases.” From where has that number come? It’s a simple formula, really. You take the 302 cases, multiply by the square root of Miller’s I.Q. and then subtract 8. I don’t have any idea where that number comes from and apparently neither does anyone else. As of mid-January, the State Bar had resignations from 13 lawyers, and three trials were pending at the State Bar Court, Layton said. Settlements have been reached with lawyers in five cases to accept discipline, he said. What? 13 resignations, 3 trials pending, settlements reached with 5 who have agreed to (thank-you-Sir-may-Ihave-another) accept discipline?” How many is that? Let’s see… hmmm… 21… assuming no duplicates in there, which I’d bet money is not the case. 21 LAWYERS OUT OF 206,165 THOROUGHOUT CALIFORNIA? That’s .0001 percent… ONE TEN THOUSANDTHS OF ONE PERCENT? Oh for Christ’s sake Miller, don’t you have anything better to do than to scare people out of hiring a lawyer when at risk of losing their home? Because that’s all this kind of crap is accomplishing, don’t you realize that? You make people believe that there’s a lawyer on every corner waiting to scam a homeowner out of some relatively paltry amount of money, when in fact… by your own numbers, the chances of being scammed by a lawyer in California are somewhere between the odds of finding a fourleaf clover on your first try… one in ten thousand… and the odds of being killed sometime in the next year in any sort of transportation accident, one in 77. Of course, there’s no changing the mind of State Bar President Howard Miller: "It's the most disturbing thing I've seen in the legal profession practicing for more than half a century.” Oh fine then. Scam, scam, scam, scam, scam. Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on called Mandelman Matters. He also publishes a Monthly Museletter and you can follow "Mandelman" on Twitter. Send your reponses to



Howard Miller the Witch Hunter California State Bar President BY MARTIN ANDELMAN


t was almost exactly one year ago that President Obama told the country about his Making Home Affordable plan to save the housing markets from their free fall, and thus save the American Dream as we knew it. Okay, so it didn’t work worth a damn, so what? Obama had his shot at stopping us from plunging into a deflationary collapse that is at this point all but certain to last a decade or longer… and he blew it. A few weeks after President Obama gave that speech, Secretary Geithner and Attorney General Holder went on television to tell the world that everyone offering to help homeowners obtain loan modifications was a scam and ever since then, all I’ve heard from my government in relationship to private sector firms offering to help homeowners obtain loan modifications is “Scam, scam, scam, scam, scam and scam.” It really would be funny, were it not so monumentally sad. Everyone watching the situation closely now knows that it’s the lenders and servicers that have dropped the ball on loan modifications, but when Bank of America reports that they’ve managed to modify something like 4% of their mortgages, all the government says is “servicers are overwhelmed,” or “it’s a difficult situation”. But when a private sector firm, or law firm doesn’t get a loan modified… they’re a scammer who deceived the homeowner, took their money, and did nothing in return. Why so few Americans have connected those dots as yet, I have no idea except that it’s possible that since they’re not yet losing their homes, they simply don’t want to think

about it that carefully. So… enter Howard Miller, the recently named president of the California State Bar Association. What Mr. Miller knows about the situation related to loan modifications you could put in a thimble. He must have asked a number of people in government what all this loan modification business was all about and they responded by saying: “Scam, scam, scam, scam, scam, scam.” So, Howard decided to go Witch Hunting… and it’s a lot like watching Larry, Moe and Curley play police officers. Let me run a few things by you and then you can decide for yourself. The California State Bar is investigating more than 300 California lawyers involved in loan modification rip-offs, which is one of the strangest sentences I’ve ever had the displeasure to come across. I mean, if we already know that these 300 have been involved in “rip-offs,” why are we still “investigating” them? Shouldn’t we have already charged and convicted them? Howard seems to think that the lawyers he’s after cause people to lose their homes. But, how does paying a lawyer a couple grand make someone lose their home? Hell, according to the State Bar, the Attorney General, the federal government, the President of the United States, and every single bank or mortgage servicer in the country, you don’t even need a lawyer to get your loan modified… you can just call your bank directly or dial 1-800-HUDCOUNSELOR. So, how in the world could you lose your home as a result of paying a lawyer? These days, and it takes the bank a year or more before they get around to foreclosing and kicking you out. When you noticed that the lawyer you paid wasn’t lifting a finger - continued on page 53


March 2010









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TNR - March 2010  

Feature Article Interview with Frank & Brian of Think Big Work Small