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Issue 047 June 2011
Rate Pimping over Twitter Not a Long Term Successful Strategy
FEATURE ARTICLE! They Once Were Lenders Why the government still can't stop ex-subprime bankers or scammers from destroying homeowners
Mentoring and Being a ProtĂŠgĂŠ Give back to Scouting more than Scouting has given you - Boy Scout Motto
Up 58 Bringing The Rear Jamie Dimon, Chairman & CEO, JPMorgan Chase & Co.
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Are you sure you’re ready for the GSEs’ appraisal XML mandate?
This year, the GSEs will require full appraisals in MISMO XML 2.6 format. If you’re relying on PDF extraction to get the XML, your process will fail. It’s not a question of “if” PDF data extraction and scanning will fail. It’s how often, and how much it costs you. And the answer isn’t good. Do the math: The URAR form alone has over 1000 fields. Even at 98% fieldlevel accuracy, 20 or more fields will be corrupted. Some of those will be critical, and so your pipeline will stop due to bad data. You might not notice it today, because PDF extracted appraisals aren’t subjected to rigorous data analysis. But they will be, and many won’t pass. The solution? Demand “Native XML” appraisals. No conversion, no extraction, no excuses. Just clean XML straight from the appraiser’s desktop software. Then you get exactly what they typed, even on every kind of odd form or addendum. PDF extraction just can’t do that. We’re certain, because we create, transmit, analyze, store, and manage more appraisal data than anyone on Earth, including the GSEs. So when we tell you there’s a problem with PDF extraction, believe it. Protect yourself by downloading the free “MISMO XML 2.6 Appraisal Checklist” from our website. It’s a vendor questionnaire that helps you set policy now for the coming regulations. Whether you use an AMC or manage appraisals inhouse, it ensures a 100% native XML process free of pipeline problems — without changing vendors, or even paying us a dime.
Download the MISMO XML 2.6 Appraisal Checklist at www.MercuryVMP.com/XML
Native XML is just one of our solutions. Call us today for more.
Mercury Network 1-800-434-7260 www.MercuryVMP.com
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They Once Were Lenders Why the government still can't stop ex-subprime bankers or scammers from destroying homeowners
NICHE REPORTS prime & FHA
Martin Andelman FOUNDER & PRESIDENT Robert Pegg firstname.lastname@example.org CO-FOUNDER & PRESIDENT David Pegg email@example.com
Rate Pimping over Twitter Chris Jones branch manager, City 1st mortgage Not a long term successful strategy
Seizing Control of Your Retirement
Bernie Navarro President and founder, Benworth Capital Partners Plan by investing in mortgages: Part VI
Damages Arising from Defects in Real Estate Construction Projects Stan Stephenson managing principal, litigation economics, LLC Analyzing claims in business interruption cases
Mentoring and Being a Protégé Gary Opper president, approved financial corporation Give back to scouting more than scouting has given you - Boy Scout Motto
MANAGING EDITOR Stewart Mednick firstname.lastname@example.org
Why Borrowers Choose Their Lender tom ninness Vice President, Cherry Creek Mortgage Their good experience will result in leads
ACCOUNTING MANAGER Shawna Ingram email@example.com
Center Stage with 360 Mortgage
Advertising Director Jessica Grizzle Jessica@thenichereport.com
The Niche Report The Niche Report talks with Mark Greco, President of 360 Mortgage
Advertising sales Heather Bopp Heather@thenichereport.com
09 10 31 43 45 54 58
EDITORIAL / CONTENT MANAGER Kristen Moser firstname.lastname@example.org
note from the founder Letters to the editor online lead generation What's your mortgage IQ? TIP OF THE MONth LENDER & RESOURCE DIRECTORY BRINGING UP THE REAR
Production Manager Henry Suchman email@example.com Production Assistant Dawn Exner firstname.lastname@example.org Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Martin Andelman Karen Deis Chris Jones Stewart Mednick Bernie Navarro Tom Ninness Gary Opper Stan Stephenson Dennis Yu
Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: email@example.com www.TheNicheReport.com
SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer, or real estate professional and you do not currently receive The Niche Report, please go to www.thenichereport.com. An annual subscription is $47.95 (twelve months/twelve issues.) For additional copies being mailed to the same address please call 866.964.2695 or email us at firstname.lastname@example.org for multi-copy discount. Send address change requests to email@example.com. Remember to include the old address. To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to firstname.lastname@example.org.
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Note from the founder
The Thirty Thousand Dollar Millionaire. Have you ever heard of this term? It is defined by the Urban Dictionary as “A kid who gets their first adult job making $30,000 a year and thinks they are a millionaire. They usually lease a Lexus because they can't afford the BMW or Mercedes and generally treats restaurant servers like crap.” The males are also characterized by Andrea Grimes of the Dallas Observer as “More intelligent than many experts give them credit for, they are highly social and can be easily identified by their plumage: wildly spiked, occasionally faux-hawked and usually frosted hair atop the head. About the torso, look for brand-name adornment in the form of shirts stamped with cheeky slogans or printed with a great deal of over-designed crap. There will be man-jewelry.” I’m sure there’s lots of fist pumping in there as well. Our industry was inundated with these guys in 2005. They made the dedicated, honest, experienced LO’s job a nightmare and bequeathed our industry with the “used car salesman” title after the bubble burst, for which they then scattered to other areas of work such as being a used car salesman, a restaurant server perhaps (ahh, sweet, sweet poetic justice) or jumping into loan modifications. This brings me to Martin Andleman’s Feature article this month titled They Once Were Lenders. It is a fantastic piece on how many of these trolls who helped bring down our economy (and our industry) were trained by sub prime mortgage shops and then moved on to loan modifications – it’s absolutely fascinating and truly mind boggling. Someone should buy the movie rights. I have also asked Fred Glick of NAIHP to co-write this forward. His opinion on bringing back respect should resonate with our profession. Please read below for Fred’s wise perspective. Keep up the Fight – Robert Pegg ••• Respect. How do you get it? Why do you need it? How does it help? The word Mortgage Broker, as you may have heard is a dirty word. People in both Governmental and public circles define a Mortgage Broker as the pushy, car sales-like guy with money as his total motive. This was the guy that told me that I was getting a one percent mortgage. And the scary thing was fifty percent of the loan agents at the time truly believed this because they were not properly trained. I can rehash all that has happened in the last few years but I think you'd all rather watch reruns of Jersey Shore in Chinese than have me go through that angst. Instead, let's look forward. Currently, I am a Director of the NAIHP, the National Association of Independent Housing Professionals that is working in Washington on a volunteer basis to straighten out the industry. After meeting with Congress people, Senators, their staff and the staff of various committees, what I see is that we need to have the respect of the people we are trying to persuade in order to get our point across. When a National Association of CPAs walk in and tell them something is wrong, they listen and respect their opinions. Why? Because their membership is licensed, background checked and properly schooled. And because of the SAFE Act, the NMLS licensed mortgage originator is too. But, there is a big difference. CPAs and their leaders are not out there partying with their clients seeing who can get the most drunk, smoke the most cigarettes, plan on the maximum amount of money they can swindle their clients of, don't come out with silly videos, don't commit fraud within their leadership and don't align themselves with just one far-reaching philosophy. That's right, boring is good. Boring is respected. In the end, your clients and the legislature will enjoy boring. Boring will be listened to. Start looking at your own business in this way. Yes, it's fun to dress in a silly tie, just every once in awhile. Don't make silliness your moniker. Make it your brain. Be the guy that people go to when they need answers, not when they need to party. I had this issue years ago. There was another loan officer in my area that was quiet, smart, plain and knowledgeable. I was the fun guy. Her name is Eileen and my nickname was Slick (get it, Slick Glick). So the line on the street was, “If it's Slick, give it to Glick, if it's clean, give it to Eileen.” The easy clean deals went to her and I got the difficult ones. Even though I pulled a lot of them off, in the long range, she got the referrals of the clean deals. See, boring works. Try it. Make your job and our job easier! Respect! Fred Glick
Letters to the editor
Letters to the editor I just got through watching my daily edition of TBWS and The Niche Report was being featured with a subscription offer. That reminded me of the first copy that I read. All too often people are too busy finding fault and criticizing, usually unencumbered by facts, and rarely issue praise when warranted. I wanted to point out that your publication is one of the best I have read. I donâ€™t remember when I read my first copy but it was some time ago. After reading it cover to cover I tuned to my wife, also a 25 year plus veteran of our industry, and said this is a very good publication. I still have that opinion and here is why. I find The Niche Report relevant and timely with great topics and solid current information. Additionally an industry reader is exposed to options and different perspectives that can help them with their business. There are no publications that I can think of that fit the above parameters and define themselves in this manner on a consistent basis. Great job â€“ You continue to move in the right direction and I am sure you will gain many more subscribers. Neill
Tip of the Month: Going Through Hell and Stopped, April 2011
I just read your article in Niche (Tip of the Month),great tip when going
through Hell, just keep going. Great. Keep up the Good work, Dennis
Bringing up the Rear: Ex Assistant Treasury Secretary Herb Allison and HAMP, April 2011 I love your column "Bringing up the Rear," how true and a painful reality check for us middle class citizens. I am very upset over this entire HAMP fiasco and the numerous people that have and are losing their homes, this is horrible and to say "oh well, we offered to help" is unacceptable. Besides writing congress, what do you suggest I do to help? I am a Mortgage Professional for over (15) years, from Loan Originator, to Management, to Underwriting, I can help our government with suggestions and oversee things I think much better than others as I've been there. Oh and I am also a Licensed Realtor in one of the hardest hit areas (Nevada)...I see the pain and bank beat downs of our people, what a shame! Thank you for your article and keeping it real. Let me know if there's something I can do to assist. We have got to band together. P Jackson
Letters to the Editor may be e-mailed to info@TheNicheReport.com or faxed to 703-991-2362. Include your full name, email address, and daytime phone number. We are unable to publish all letters and may edit letters for length and clarity. Visit us online at www.TheNicheReport.com to subscribe to our magazine and/ or eNewsletter. Or call toll-free at 866-964-2695 for more information.
And now more trouble coming for the Lending World. Makes me wonder if I should become a writer! LOL Keep up the great articles!
The Foreclosure Crisis: Causes and Consequences by Peter Hebert, April 2011 For nearly two years I've been working for a large servicing company doing loan modifications. The things I saw became so frustrating that I left two weeks ago. I could add a number of paragraphs to everything I've read so far. Your article "The Foreclosure Crisis: Causes and Consequences" in "The Niche Report" of April 2011, is exactly on the money with what I saw. Another very accurate article was published by The Center for Responsible Lending entitled "Fix or Evict? Loan Modifications Return More Value than Foreclosures." From what I've read the PSA's deliver no exclusive right to the servicers as far as loan modifications go. Would it be possible for an unbiased third party to do modifications and bypass the servicing company, without taking over any servicing responsibilities? This would be in the best interest of the investor, borrower and depending on how the PSA was written could even benefit the servicer. Cathy B
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