Mortgage Banker Magazine November 2021

RATE TRENDS

NON-QM’S TOP PLAYERS

CFPB CONCERNS November 2021

REGULATORS HASHING OUT NEW RULES CLOSING TECH’S CUMBERSOME COMING-OUT

PAUL ANSELMO, CEO AND FOUNDER OF EVOLVE MORTGAGE SERVICES

Prepping For A Changing Market LENDERS WEIGHING IN ON WHAT TO DO TO KEEP PROFITS FROM PLUNGING

A P U B LI C ATI O N O F A M E R IC A N B U S IN ES S M ED IA

RATE TRENDS

NON-QM’S TOP PLAYERS

CFPB CONCERNS November 2021

REGULATORS HASHING OUT NEW RULES CLOSING TECH’S CUMBERSOME COMING-OUT

PAUL ANSELMO, CEO AND FOUNDER OF EVOLVE MORTGAGE SERVICES

Prepping For A Changing Market LENDERS WEIGHING IN ON WHAT TO DO TO KEEP PROFITS FROM PLUNGING

A P U B LI C ATI O N O F A M E R IC A N B U S IN ES S M ED IA

SERVING THE MORTGAGE BANKING COMMUNITY FOR MORE THAN THREE DECADES 202.628.2000

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202.628.2000 WASHINGTON DC | DALLAS TX | IRVINE CA

202.628.2000

CO M PL I A N C E OUR MISSION Mortgage Banker magazine is dedicated to providing quality informational/educational content that betters the mortgage process at every step. The content is oriented to help professionals progress their understanding of the residential mortgage banking business and develop their skills at improving the efficiency and profitability at all levels.

PUBLISHER & EDITOR-IN-CHIEF Vincent Valvo, CEO, vvalvo@ambizmedia.com ASSOCIATE PUBLISHER Beverly Bolnick bbolnick@ambizmedia.com FOUNDING PUBLISHER Ben Slayton BSlayton@ambizmedia.com EDITOR David Krechevsky davek@ambizmedia.com STAFF WRITER Katie Jensen kjensen@ambizmedia.com ADVERTISING David Hoierman David@ambizmedia.com GRAPHIC DESIGN MANAGER Christopeher Wallace cwallace@ambizmedia.com MARKETING MANAGER Michael Castor mcastro@ambizmedia.com GRAPHIC DESIGN Stacy Murray smurray@ambizmedia.com HEAD OF ENGAGEMENT AND OUTREACH Andrew Berman andrew@ambizmedia.com DIRECTOR OF STRATEGIC GROWTH Alison Valvo avalvo@ambizmedia.com ONLINE CONTENT DIRECTOR Navindra Persaud npersaud@ambizmedia.com USER EXPERIENCE DESIGNER Billy Valvo bvalvo@ambizmedia.com MARKETING & EVENTS ASSOCIATE Melissa Pianin mpianin@ambizmedia.com www.ambizmedia.com

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REGULATORY CORNER FEDERAL COMPLIANCE GINNIE MAE GOES ALL-IN ON RON

In consideration of the impact of the COVID-19 pandemic and associated insuring agency guidelines for mortgage servicing, Ginnie Mae understands that certain features of the Digital Collateral Program, namely the ability to use electronic signatures and to adopt remote online notarizations, are flexibilities that would benefit all Issuers and borrowers in the government-backed mortgage segment. Effective immediately, all approved Ginnie Mae Issuers are permitted to use electronic signatures when executing loan modification agreements in most cases.

FANNIE MAE ECONOMISTS SEE INFLATION LOOMING LARGER

Inflation is a key forecast concern for the economy, according to the November 2021 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group.

The ESR Group’s expectations for inflation were upgraded meaningfully in the near term to average 6.2 percent on an annual basis in the fourth quarter. The forecast anticipates the recent price gains to begin to moderate over the coming quarters as temporary factors begin to wane, but the build-up of stronger, underlying inflationary pressure suggests that inflation will remain significantly above the Federal Reserve’s two percent target through 2023. The Fed is therefore expected to begin hiking its target rate in 25-basis-point increments beginning in Q4 2022.

However, if inflation continues to exceed expectations, there is increasing risk that the Fed will begin raising interest rates even earlier. The principal risks to the forecast remain the pace of global supply recovery, the availability and cost of labor, and the extent of Federal monetary and fiscal largesse

FHFA GETS THUMBS UP IN PERFORMANCE AND ACCOUNTABILITY REPORT The Federal Housing Finance Agency (FHFA) released its annual Performance and Accountability Report, which details FHFA’s activities as regulator of the Federal Home Loan Bank System and as regulator and conservator of Fannie Mae and Freddie Mac during fiscal year 2021.

For the 13th consecutive year, FHFA received an unmodified audit opinion on its FY 2021 financial statements from the U.S. Government Accountability Office (GAO). Included in the unmodified opinion, GAO noted no material weaknesses or significant deficiencies in FHFA’s internal controls. GAO also found no instances of reportable noncompliance with the applicable laws and regulations it tested.

MORTGAGE BANKER | NOVEMBER 2021 3

T HE M O RTG AG E A DV I S O R

Is The Fabled Rainy Day Here?

F

By R OB C HR IS M A N, M ORTG AG E B A N KE R M AGAZ IN E CON TRIB U TIN G WRITER

or years residential lenders, whether they be depository banks, credit unions, independent mortgage banks, or brokers, have been warned about the time when refinances would dry up.

Danger: Lower volumes and margin compression ahead. What will happen? Is there anything anyone can do about it? In general, lenders are logical, systematic individuals, and in keeping with that, we felt it important to look at both the revenue items and expense items that a lender has, and see what can be done in the event of a “belt tightening.”

First, remember that, as an industry, lenders should still be reaping the rewards from a stellar year in 2020, and very good first and third quarters of 2021. For lenders to have spent all of their income on compensation and benefits for employees or owners would have been near-sighted. Certainly lenders “took chips off of the table” but many reinvested profits back into their companies, whether it was in signing bonuses, new technology, increased warehouse lines, or expanded business channels.

Lenders sell, and compete on, product, price, or service. For lenders to be able to create, find investors for, and roll out new products is

4 MORTGAGE BANKER | NOVEMBER 2021

critical. Even “old” products are This fee increases the worth revisiting. For example, overall interest rate paid on originating VA interest rate reduca mortgage and the total cost tion refinances (IRRRLs) is fashof the home. ionable again. But basic VA loans Residential lenders can make are widely used for home purmoney in a variety of ways, inchases. In the first quarter of 2021, cluding origination fees, yield large lenders had sizeable percentspread premiums, discount ages of their VA loans used for points, closing costs, morthome purchases: Quicken (10%), ROB CHRISMAN gage-backed securities, and loan loanDepot (24%), Navy Federal servicing. Closing costs that Credit Union (43%), Guild (52%), Guaranteed borrowers pay include application, processRate (69%), Fairway Independent (77%), and ing, underwriting, loan lock, and other fees.

Prime Lending (82%).

Mortgage-backed securities allow lenders to profit by packaging and selling loans.

DIVERSIFIED INCOME Lenders may also get money for servicing the From a revenue and expense perspective, loans they package and sell via MBS. depository banks borrow money (from deposBorrowers may pay discount point to the itors) at one rate of interest, generally low, and lender, often due at closing to help buy down lend the money out again at another, higher the mortgage’s interest rate. One discount rate of interest. The difference is income for the point equals 1% of the mortgage amount owners and/or shareholders. Non-depository and may reduce the loan amount 0.125% mortgage banks use their warehouse lines as a to 0.25%. For example, two points on a source of funding. If there is a positive spread $200,000 mortgage is 2% of the loan amount, between the cost of the warehouse line and or $4,000. Lenders know that if a borrower the mortgage rate, the mortgage bank can use is paying points upfront, the fees typically this as income. And lenders typically charge lower monthly loan payments, which saves an origination fee of 0.5% to 1% of the loan homeowners money over the life of the loan. value, which is due with mortgage payments.

In addition to the loan origination fee and

possibly the discount points, an application fee, processing fee, underwriting fee, loan lock fee, and other fees charged by lenders are paid during closing. Because these closing costs may vary by lender, the fees are explained upfront in the Good Faith Estimate.

Another source of income is in the sales execution of the mortgage, or pools of mortgages, aka “Gain on Sale.” After closing on different types of mortgages, lenders will group together loans into mortgage-backed securities (MBS) and sell them for a profit to pension funds, insurance companies, money managers, and even the Federal Reserve. This frees up money to pay down the warehouse line and for the lenders to extend additional mortgages and earn more income. Capital markets staffs should become well-versed in best execution models, specified pool sales (“spec pools”), finding reliable, well-priced jumbo and/or non-QM outlets. Companies should also do their best to limit pricing concessions and free extensions, or at least track them to identify dollar amounts and sources.

Lenders may continue to earn revenue by servicing the loans they sell. If the whole loan or MBS purchasers are unable to process mortgage payments and handle administrative tasks involved with loan servicing, the lenders may perform those tasks for a small percentage of the mortgage value or a predetermined fee.

COST CONTAINMENT

Moving to the expense side of the income statement, lenders’ largest expense is

LENDERS SELL, AND COMPETE ON, PRODUCT, PRICE, OR SERVICE. FOR LENDERS TO BE ABLE TO CREATE, FIND INVESTORS FOR, AND ROLL OUT NEW PRODUCTS IS CRITICAL. typically salaries, commissions, and benefits. Direct loan production costs come next, followed by marketing, travel, and entertainment. Costs to service the servicing portfolio are included, if the company is servicing, as are general and administrative expenses.

So the areas of cutting costs is somewhat limited, especially when producers, whether they are retail loan officers or TPO account executives, are held in high regard. Travel and entertainment budgets are often targeted, although marketing is often increased in an attempt to gain market share. Companies should try to improve efficiency, or the amount of

“friction” between application and funding & servicing. How productive are processors, underwriters, doc drawers, and funders? Certain tasks are outsourced to lower cost providers.

Originators are encouraged to improve their sales, retention, and referral techniques. As an analogy, if you buy a Ferrari, you’re not going to forget what kind of car you own. But the same brand identity doesn’t exist with mortgages. Most people who financed their home don’t know the individual or company they used. Recognition is even worse when they obtained the loan through a mortgage broker, who in turn placed it with a mortgage banker, who then sold it to an aggregator, and who may use a subservicer! How does the borrower remember you? Any loan officer building their brand and marketing to their previous clientele for refinances should keep this in mind.

Loan originators, whether brokers or loan officers, will tell you that a person’s habits do not change simply because a credit card was paid off through a cash-out refinance. In fact, the sight of a $0.00 balance on a credit card may tell a borrower that there is room to spend money using credit again. Top LOs are constantly in front of previous clients, reminding them who they are and of their product offerings.

Lenders earn income in a limited number of ways, and they spend money in a limited number of ways. Running an efficient operation is not rocket science, but it does take knowledge, discipline, and a lack of fear of making wise, yet occasionally difficult, decisions in the face of diminishing margins and production volume. The industry has been through business cycles before, and will go through them again.

“Hope is not a strategy!”

MORTGAGE BANKER | NOVEMBER 2021 5

Howdy, Austin!

Get excited about live events! Join your community of mortgage professionals at the Lone Star State’s largest mortgage event, The Texas Mortgage Roundup. Don’t miss out on our lineup of engaging events centered around networking, skill-building, and kick off your year having a great time with your peers at our edition in Austin.

Tuesday, February 8th, 2022

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Complimentary registration available to NMLS-licensed active LOs and their support staff. Show producers reserve the right to determine final eligibility.

THE ‘OM-BOBS-MAN’

Regulatory Review, Reformatted

A

By B O B NIEM I, M ORTG AG E BAN KE R M AGAZ IN E CON TRIB U TIN G WRITER

s 2021 runs in search of what’s new, we realize that the pandemic disruption has continued through 2021. The NMLS Ombudsman Meeting was held virtually and the upcoming American Association of Residential Mortgage Regulators (AARMR) Annual Conference will be held in person, but with reduced capacity. These frame the search for “a” normal as licensed mortgage companies balance licensing requirements and health risks while serving their borrowers.

The NMLS Ombudsman Meeting was held virtually on September 30th. Jim Payne, NMLS Ombudsman and Kansas Director ​of Examinations and Assistant Deputy Commissioner, started the meeting off by providing updates on actions in the and emails received and overview of the email topics and concerns. Most issues were otherwise referred to the NMLS Call Center team for resolution.

Bill Young of Conference of State Bank Supervisors (CSBS) updated the meeting on the progress made to date with NMLS modernization. Bill noted that this rewind of the modernization process is still too early to publish an estimated completion date and that BOB NIEMI many states will need to update their laws and regulations to adopt the standards for networked supervision. He also noted that an update will be presented at the AARMR Conference the week after Thanksgiving.

ONE COMPANY PILOT

Kyle Thomas of CSBS updated on the State Examination System (SES) adoption and pilot of the one company, one exam that was ongoing. While 49 states are already using the SES for examinations and over 1,500 individual exams have taken place, only 14 states are using SES for managing their consumer complaint process. Both Bill and Kyle mentioned the need for state adoption of the systems and processes by states as part of the drive for uniformity. These are expected to be hot topics at the AARMR Conference.

Kobie Pruitt of the MBA presented the need to make remote work guidance permanent and update state temporary licensing flexibilities

through 2022. His request was followed up by Bob Niemi, your OmBOBsman, who spoke on the need for increased branch licensing changes to allow for work from locations other than just a licensed branch. Mike Stidham of Rocket Mortgage discussed the impact of remote work by mortgage loan originators in meeting their customer’s needs at a time and place determined by the customer.

Keisha Whitehall Wolfe and Gus Avrakotos of Miles & Stockbridge discussed implementation of the money services business model law and increased disclosure and background reviews of passive investors and an expanded definition of control persons. While this is not currently part of the mortgage process, other areas of modernization have been piloted within the money services before being implemented in for mortgage licensing and supervision. This would include core licensing requirements, networked supervision and the SES.

MORTGAGE BANKER | NOVEMBER 2021 7

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Who is Axylyum Charter? ™ What is AXY Wrap ?

Who is Axylyum Charter?

Axylyum Charter was established to unify capital, servicing, and litigation all under one roof. My partner and I recognized the challenges in the private/hard money lending industry and developed a portfolio-wide, secure, engagement option for both retail and wholesale Lenders that allows for the immediate repurchase of Lenders’ defaulted loans.

After nearly two decades of litigating thousands of foreclosure trials in New York City, we saw an opportunity to do what no company has done before—align the roles, goals, and actions of investors, default servicing companies, and their litigation counsel. This is important on so many levels and will enable a unified asset positioning that will move us through any forthcoming crisis.

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Eliminating the risk of default can lead to a drastic decrease in servicing expenses, carrying costs, and property disposition time. All default exposure is shifted to Axylyum Charter and our Lenders are paid within thirty days of default.

One of the most important benefits of AXY Wrap™ is that it comes at no cost to the Lender and 100% of all defaulted loans are paid for in full. We can offer a secure guarantee on the performance of asset-based, non-owner-occupied loans through portfolio-wide engagement pricing. No one else in the industry can even come close.

Another key benefit to point out is that by “AXY Wrapping” your portfolio, you are more likely to keep your relationships with your borrowers. Once foreclosure occurs, borrowers may go elsewhere. AXY Wrap™ helps prevent that from happening.

What about the uncertainty of the financial market?

Unfortunately, this is a question I get asked daily. We developed AXY Wrap™ knowing that no bull market lasts forever. Anyone reading this has heard the frequent rumblings that another 2008 is around the corner. The relationship between interest rates and inflation is absolutely a cause for concern. For that reason, we are seeing numerous Lenders becoming more conservative.

Although I do not believe there is a cause for critical concern, there is certainly enough concern to prepare for the future. I tell our Lenders all the time to plan for the worst, hope for the best. The most successful Lenders have substantial loan loss reserves and can weather multiple storms with AXY Wrap™.

Can Lenders take care of a defaulted loan? Of course.

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2.00% 2.00%

Source: Black Knight, McDash

Source: Source: Black Black Knight, Knight, McDash McDash

12 MORTGAGE BANKER | NOVEMBER 2021

0

0

Source: McDash Flash

Source:Flash McDash Flash Source: McDash

10,000

4/6/21

4/20/21

3/23/21 5/4/21

4/6/21 5/18/21

GSE Portfolio / PLS Portfolio / PLS

1,000,000

50,000

40,000

30,000

30,00010,000

20,000

4/6/21

8/24/21 10/5/21

8/10/21 9/21/21

10/19/21

10/5/21

9/21/21

9/7/21 9/21/21 10/5/21 10/19/21

9/7/21

9/21/21

10/5/21

10/19/21

7/27/21

7/13/21

6/29/21

6/15/21

6/1/21

5/18/21

5/4/21

4/20/21

8/24/21

40,000

8/10/21

60,000

8/24/21

Portfolio / PLS

7/27/21 9/7/21

NEW FORBEARANCE PLAN STARTS

BY INVESTOR NEW FORBEARANCE PLAN STARTS

BY INVESTOR

8/10/21

NEW FORBEARANCE PLAN STARTS BY INVESTOR

7/27/21

60,000

7/13/21

Source: McDash Flash

7/13/21 8/24/21

Source: Black Knight, McDash

6/29/21 8/10/21

6/29/21

6/15/21

6/1/21

5/18/21

Week Ending

6/15/21 7/27/21

6/1/21 7/13/21

5/18/21 6/29/21

5/4/21 6/15/21

3/9/21 3/23/21

Other Other

9/7/21 10/19/21

Week Ending Week Ending

5/4/21

3/23/21

3/9/21 4/20/21

2/23/21

2/9/21

1/26/21

1/12/21

12/29/20

12/15/20

12/1/20

11/17/20

11/3/20

10/20/20

ACTIVE ACTIVE FORBEARANCE FORBEARANCE PLANS PLANS Fannie/Freddie Fannie/Freddie

4/20/21 6/1/21

3/9/21

Week Ending

2/23/21 4/6/21

GSE

2/23/21

2/9/21

1/26/21

1/12/21

12/29/20

12/15/20

12/1/20

9/8/20 10/6/20

9/22/20

Removals

2/9/21 3/23/21

11/3/20

VA FHA / VA FHA /GSE

1/26/21 3/9/21

10,000

0

11/17/20

FHA / VA

1/12/21 2/23/21

3.91% 3.91% 8/25/20

FHA/VA FHA/VA

12/29/20 2/9/21

4.68% 4.68%20,000

20,000

12/15/20 1/26/21

8/11/20

Total Delinquent

12/1/20 1/12/21

5.00% 5.00%

10/20/20

30,000

10/20/20 12/1/20

500,000 7/28/20

Record Low

11/17/20 12/29/20

40,000 7/14/20

NATIONAL DELINQUENCY RATE – FIRST LIEN MORTGAGES

11/3/20 12/15/20

7.00% 7.00%

10/6/20

50,000

9/22/20

50,000

9/22/20 11/3/20

60,000

10/6/20 11/17/20

2,000,000

9/8/20

60Record to 90 Days DQ Low Record Low

8/25/20

NATIONALLOANS DELINQUENCY – DELINQUENT FIRST LIENSTATUS MORTGAGES ROLLING TO RATE A MORE

9/8/20 10/20/20

0

8/11/20

MORTGAGE DELINQUENCIES BY SEVERITY

8/25/20 10/6/20

100,000

500,000

6/30/20

1,500,000

7/28/20

2,000,000

8/11/20 9/22/20

2,500,000

6/16/20

3,000,000

7/14/20

800,000

6/30/20

4,000,000

6/16/20

900,000

7/28/20 9/8/20

4,500,000

7/14/20 8/25/20

3 /33 /3 1/ 1/ 22 4 /24 /2 0 0 0/ 0/ 2 02 0 5 /85 /8 /2 /2 5 /25 /2 0 0 9/ 9/ 22 6 /16 /1 0 0 8/ 8/ 2 02 0 7 /97 /9 /2 /2 7 /27 /2 0 0 9/ 9/ 22 8 /18 /1 0 0 8/ 8/ 2 02 0 9 /89 /8 /2 /2 9 /29 /2 0 0 8/ 8/ 1 01 0 2 02 0 /1 /1 9/ 9/ 22 1 11 1 0 0 /6 /6 / / 1 11 1 2 02 0 /3 /3 0/ 0/ 1 21 2 2020 /1 /1 8/ 8/ 22 1 /11 /1 0 0 1/ 1/ 2 12 1 2 /12 /1 /2 /2 2 /22 /2 1 1 2/ 2/ 22 3 /13 /1 1 1 2/ 2/ 2 12 1 4 /14 /1 /2 /2 4 /24 /2 1 1 1/ 1/ 22 5 /15 /1 1 1 1/ 1/ 2 12 1 6 /16 /1 /2 /2 6 /26 /2 1 1 1/ 1/ 22 7 /17 /1 1 1 2/ 2/ 22 7 /27 /2 1 1 9/ 9/ 22 8 /18 /1 1 1 8/ 8/ 2 12 1 9 /89 /8 /2 /2 9 /29 /2 1 1 8/ 8/ 1 01 0 2 12 1 /1 /1 9/ 9/ 2121

3.91%

6/2/20

3.00%

6/30/20 8/11/20

1,000,000

5/19/20

4.68%

6/2/20

7.00%

5/19/20

8.00%

6/16/20 7/28/20

10.00%

6/2/20 7/14/20

10.00% 10.00%

6/2/20

2021-09

2021-03

2020-09

2020-03

2019-09

2019-03

2018-09

2018-03

2017-09

2017-03

2016-09

2016-03

11.00%

5/19/20 6/30/20

2021-09

3,500,000

6/16/20

8.00% 8.00%

5/19/20

2021-09

1,500,000

2021-09 2021-09

2021-03 2021-03

2020-09 2020-09

2021-08

2021-07

2021-06

2021-05

2021-04

2021-03

2021-02

2015-09

2015-03

4.00%

2021-08

2021-07

2021-06

2021-05

2021-04

2021-03

2021-02

2021-01

2020-12

2021-01

2014-09

2014-03

2013-09

2013-03

2012-09

2012-03

2011-09

2011-03

2010-09

5.00%

2020-03 2020-03

2019-09 2019-09

2019-03 2019-03

2018-09 2018-09

2018-03 2018-03

2017-09 2017-09

2017-03 2017-03

2016-09 2016-09

2016-03 2016-03

2020-11

30 to 60 Days DQ 2000-2005 Average 2000-2005 Average

2015-09 2015-09

2020-12

2020-11

2020-10

90+ Days DQ

2020-10

2020-09

2020-08

2020-07

2020-09

2020-08

2020-07

2010-03

2009-09

2009-03

2008-09

2008-03

2007-09

2007-03

2006-09

2006-03

2005-09

2005-03

2004-09

2004-03

2003-09

2003-03

2002-09

2002-03

2001-09

2000-2005 Average

2015-03 2015-03

2014-09 2014-09

2014-03 2014-03

2013-09 2013-09

2013-03 2013-03

2020-06

2020-05

2020-04

2020-03

2020-06

2020-05

60 Days DQ

2012-09 2012-09

2012-03 2012-03

2011-09 2011-09

Current to 30 Rate Days DQ Delinquency Delinquency Rate

2020-02

2020-01

2020-04

2020-03

2020-02

2020-01

2019-12

2019-11

2019-10

2019-09

2019-08

2019-07

Delinquency Rate

2011-03 2011-03

2010-09 2010-09

2019-12

2019-11

2019-10

2019-09

2019-08

2019-07

2019-06

2019-05

2019-04

2019-03

2019-02

30 Days DQ

2010-03 2010-03

2009-09 2009-09

2009-03 2009-03

2008-09 2008-09

2008-03 2008-03

2007-09 2007-09

2007-03 2007-03

2006-09 2006-09

2006-03 2006-03

2005-09 2005-09

2005-03 2005-03

3.00% 3.00%

2019-01

4.00% 4.00%

2004-09 2004-09

0

2004-03 2004-03

6.00% 6.00%

2003-09 2003-09

9.00% 9.00%

2003-03 2003-03

11.00% 11.00%

2002-09 2002-09

2002-03 2002-03

2001-09 2001-09

DATABANK

5,000,000 5,000,000

Total Total

9.00% 4,000,000 4,000,000

3,000,000 3,000,000

6.00% 2,000,000 2,000,000

1,000,000 1,000,000

0 0

2.00%

Source: McDash Flash Source: McDash Flash Data as of Oct. 19, 2021 Data as of Oct. 19, 2021

Source: Black Knight, McDash

FORBEARANCE PLAN EXTENSIONS & REMOVALS Extensions

700,000

600,000

500,000

400,000

300,000

200,000

Hey, Irvine!

The California Mortgage Expo is one of California’s largest mortgage events for loan origination professionals, bringing together hundreds of mortgage brokers, loan originators and bank and credit union lending officers from throughout the region for an event full of education, networking and fun. You’ll be growing your business and your contacts in a setting packed with passion, professionalism and fun.

Thursday, Dec. 9th, 2021

Irvine, CA

+ Free NMLS Renewal Class December 10th

www.camortgageexpo.com Enjoy free registration using our code OCNFREE

PRESENTING SPONSOR

NON-QM SPONSOR

REVERSE MTG SPONSOR

+ Join us for our Holiday Party in Irvine, CA December 9th, immediately following the show!

SHOW PRODUCER

Safety is our top priority. Learn about the safety precautions we take at each of our events to earn us 100% safety satisfaction from our attendees at originatorconnectnetwork.com/covid19.

Complimentary registration available to NMLS-licensed active LOs and their support staff. Show producers reserve the right to determine final eligibility.

COVE R STORY

M AN AG EM EN T C H A L L EN G E

Why Short-Term Closing Fixes May Be Holding Lenders Back

D

By PAUL A N S E LM O, S PECIA L TO M ORTG AGE BAN KE R M AGAZ IN E uring the pandemic, the mortgage industry did its best to close loans on time under extremely difficult circumstances. As a result, 2020 became a record year for eClosing and eNote adoption—in fact, eNotes registered on the MERS eRegistry soared 261% between December 2019 and December 2020.

In their rush to close loans under social distancing requirements, however, the closing technologies many lenders chose were no more than bandages. They may have done the job, yet they were poor substitutes to a true electronic closing. As the post-pandemic

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housing market heats up, it’s now time for lenders to rip off those bandages and start thinking about the bigger picture.

closing process, which doesn’t bode well for repeat business.

When it comes to eClosing technology providers, there are plenty of players — yet the vast CUMBERSOME AND majority only have partial soluFRAGMENTED tions that don’t integrate well This is not about whether the with other systems. During the typical eClosing technologies pandemic, many lenders relied work or not. It’s about how disPAUL ANSELMO on these one-trick-pony providers jointed they are, and how they for a short-term fix while inadverfail to move the needle on creating a better tently fragmenting the entire closing process. borrower experience — which is the sinFor example, lenders typically send borgle biggest competitive advantage a lender rowers to one solution for eSigning disclocan have. In fact, they often complicate the sures. When it’s time to close the loan, they

CREATING A SEAMLESS EXPERIENCE

send the borrower to another platform.

If they are using an eNote and their current document provider doesn’t support it, the borrower may go to a separate signing room from another provider for the note. And if the borrower chooses a remote eNotary… well, you get the point.

During the pandemic, lenders didn’t have much time to think these things through. One might say they have little time now, with the summer housing market in full swing. But it is never a bad time to think strategically about technology, especially when it involves the customer experience.

Whether lenders are aiming for a completely digital mortgage process or want to continue offering hybrid eClosing options to borrowers, there are certain capabilities that they absolutely need.

One is being able to let borrowers sign everything that needs to be signed—from disclosures to closing packages, eNotes, or any other document — in one seamless environment. If their goal is a true digital mortgage, they’ll need technology that incorporates the all-important online notarization piece, which has been the missing link for some time—but with today’s technology, it’s finally available.

They also need technology that supports the lender’s brand, not somebody else’s.

Currently, when lenders shift borrowers from one technology provider to another, the borrower may not see the lender’s logo but all these different technology logos that mean nothing to them, which creates a sense of confusion and disconnect.

Lenders need to take diligence, security, consistency, and connectivity into account as well. For this reason, they’ll need a platform capable of creating a SMART Doc for every loan document, structured or not.

Keep in mind that most providers just focus on the eNote being a SMART Doc, which means they are usually manually tagging PDF of other documents for signing. Access to an entire SMART Doc library, on the other hand, gives lenders digital versions of every document in the loan file, which eliminates tagging and allows faster, electronic due diligence

reviews. Ultimately, this enables lenders to manufacture loans properly and securely, so if they hit a bump down the road, no one questions the validity of their documents.

Lenders should also look for providers with serious digital mortgage experience on staff.

When reviewing eClosing providers, it’s important to ask whether they have leaders with experience collaborating with the Mortgage Industry Standards Maintenance Organization (MISMO) on data standards for electronic transactions — or whether they are veterans of MERSCORP and understand the MERS eRegistry backwards and forwards. Very few providers do.

LENDERS NEED TO TAKE DILIGENCE, SECURITY, CONSISTENCY, AND CONNECTIVITY INTO ACCOUNT.

THE COST OF INACTION

Most lenders have no idea what the true costs of their technology investments are, especially when one factors in the cost of customer frustration. But while the borrower experience may be difficult to quantify, it definitely exists. When borrowers have so many lenders to choose from, it’s often not rates but a lender’s reputation and record of customer service that truly matter.

With today’s technology, all the stars are aligned for lenders to achieve a true digital closing and a better borrower experience. All the tools, capabilities and expertise are out there for lenders to defragment their entire loan ecosystem and turn it into a well-oiled machine. All they need is a comprehensive strategy and the willingness to execute it.

Paul Anselmo is the CEO and founder of Evolve Mortgage Services

MORTGAGE BANKER | NOVEMBER 2021 15

NON QM Showcase

Angel Oak Atlanta, GA

www.angeloakms.com What Non-QM programs does your company offer?

Angel Oak Mortgage Solutions is the leader in the non-QM mortgage space.

We offer alternative specialized mortgage solutions for brokers throughout the country helping borrowers who don’t fit conventional guidelines. Our innovative non-QM products include:

Bank Statement, Platinum Jumbo, No Income Investor Cash Flow, Portfolio Select and Asset Qualifier. We are pioneering a fresh approach to today’s mortgage lending challenges helping partners to grow their business.

Which states are you licensed in?

NATIONWIDE except: AK HI ID MA MO NY VT

Arc Home LLC

Mount Laurel, NJ business.archomellc.com/ What Non-QM programs does your company offer?

When it comes to choosing your Wholesale lending partner, we know there are many things to consider. Our products set the standard in the industry for innovation. And because that innovation is in our DNA, we will always be on the cutting edge of what matters most to you and your borrowers.

We offer a plethora of Non-QM programs, such as Alternative IncomeBank Statement, Asset Utilization Qualification, DSCR, Agency Plus, Clean Slate, Foreign National, and ITIN. Which states are you licensed in?

Arc Home LLC is licensed in all states except MO HI and NV

Carrington Wholesale Anaheim, California www.CarringtonWholesale.com

What Non-QM programs does your company offer?

The Carrington Advantage Series is a full suite of Non-QM Loan solutions that “Delivers More” for you and your borrowers.

Ideal for borrowers, like the self-employed, that don’t fit Agency or Government Qualified Mortgage standards based on credit quality, property type, documentation type, income documentation, or other borrower situations.

• FICOs 550+ • Primary wage earners FICO

• Bank Statements (personal or business) accepted • DTIs up to 50% • We don’t require disputed tradelines to be removed With the Carrington Investor Advantage (DCR) • DCR down to .75 • First-time investors are ok • Only 48 months seasoning for major credit events • 1x30x12 mortgage history ok Which states are you licensed in?

47 States (excluding NH MA and ND)

16 MORTGAGE BANKER | NOVEMBER 2021

Oaktree Funding Corp.

Chandler, AZ www.oaktreewholesale.com

What Non-QM programs does your company offer?

Oaktree’s NonQM products include a multitude of flexible guidelines that give brokers an advantage in the current market. Our most recent addition to these programs is the Titanium Advantage. It allows for a single year of tax returns with a P&L, the lowest rates available, and 3 months of bank

statements. Our Investor Advantage program doesn’t require reserves! Plus, you’ll get up to $3M in loan amount on all fixed-rate products or do a Non-Agency Advantage for 90% LTV up to $2M! Which states are you licensed in?

AZ CA CO CT DC FL GA ID IL IN MA MD MI MN MO NC NJ NM NV OH OR PA SC TN TX UT VA WA WI

MBA Congratulates Kristy Fercho as our 2022 Chairman!

Kristy Fercho Executive Vice President and Head of Home Lending Wells Fargo 2022 MBA Chairman

Kristy is already making history as the first Black MBA Chairman and only the fourth female to hold the position. She is well on her way to expand minority homeownership and improve diversity in our industry. She is helping do more good for more people. Congratulations on this honor, Kristy, and on your many accomplishments!

23070

L EGAL

MORTGAGE BANKING LAWYERS These attorneys are universally recognized by their peers as setting the highest standard for the legal profession, excelling in all fields — knowledge, analytical ability, judgment, communication, and ethics.

Thomas King Attorney

Mitchel H. Kider Managing Partner

Gregory S. Graham Co-Managing Partner

Jam Mortg

tking@ravdocs.com 713-980-9521

kider@thewbkfirm.com 202-557-3511

ggraham@bmandg.com 972-353-4174

jbrody@

Thomas (Tom) King’s practice is focused on federal financial servicesrelated regulatory and compliancerelated issues. He advises small and medium-sized mortgage and consumer lenders and servicers on a broad variety of topics including, among others, implementation of Dodd-Frank Act requirements, compliance program development and management, examination preparation, employee regulatory compliance training, general counseling, transactional work and loan level advice. King has a juris doctorate, cum laude, from The Thomas M. Cooley Law School where he was notes editor of the school’s law review. He has a bachelor of science from Michigan State University with majors in Psychology, Sociology and Political Science.

Licensed to practice in Michigan; not licensed in Texas; practice limited to federal regulatory law.

In his 35 years as a practicing attorney, Mitch has represented banks, mortgage companies, residential homebuilders, real estate settlement service providers, credit card issuers, and other financial service companies in a broad range of matters. Mitch represents clients in investigations and enforcement actions before the Consumer Financial Protection Bureau, Department of Housing and Urban Development, Department of Veterans Affairs, Department of Justice, Federal Trade Commission, Ginnie Mae, Fannie Mae, Freddie Mac, and various state and local regulatory authorities and Attorneys General offices. In addition, Mitch acts as outside general counsel to smaller companies and special regulatory and litigation counsel to Fortune 500 companies.

Black, Mann & Graham CoManaging Partner Gregory S. Graham has practiced in the areas of real estate, litigation, and bankruptcy law since 1989, and is currently licensed in Texas and admitted to practice before the United States District Courts for the Northern and Eastern Districts of Texas. Mr. Graham is also currently licensed to practice law in Georgia and has been since 2017. He received his Juris Doctor degree from Southern Methodist University School of Law in 1989 after receiving a Bachelor of Arts cum laude from UT Dallas.

18 MORTGAGE BANKER | NOVEMBER 2021

Mr. Graham’s affiliations include the Dallas MBA, where he previously served as a Director & Chairperson of the Legislative Committee; DFW Mortgage Brokers Association, where he previously served as Legal Counsel; MBA; NAMB; Texas AMB prior to its closure; and Texas MBA.

James Brod complex m mitigation, for Johnsto experience that arise d purchase s foreclosure repurchase He receive Relations f received hi concentrat University School of L the Americ Whitney Aw practice la been admit the United the Central Southern D addition, M lead litigat mortgage b related disp and federa or on a pro FL, MD, M TN, and TX

Loan Origination Software

Mortgage Servicing Software

www.FICS.com'" I 972.458.8583

Your Mortgage Software Partner Since 1983

mes W. Brody, Esq. gage Banking Practice Group Chair

@johnstonthomas.com 415-246-3995

dy actively manages all the mortgage banking litigation, , and compliance matters on Thomas. Mr. Brody’s e centers on those legal issues during loan originations, loan sales, loan securitizations, es, bankruptcy, and e & indemnification claims. ed his B.A. in International from Drake University and is J.D., with a certified tion in Advocacy, from the of the Pacific, McGeorge Law. He was a recipient of can Jurisprudence Bancroftward. He is licensed to aw in California and has tted to practice in front of States District Courts for al, Eastern, Northern, and Districts of California. In Mr. Brody has served as tion counsel for numerous banking and commercial putes venued in both state al courts, in a direct capacity o hac vice basis, in AZ, CA, MI, MN, MO, OR, NJ, NY, PA, X.

Marty Green Attorney marty.green@mortgagelaw.com 214-691-4488 ext 203 Marty Green leads the Dallas office of Polunsky Beitel Green, one of the country's top residential mortgage law firms. Mr. Green is an accomplished attorney with more than 20 years of experience in the legal, banking and financial services industries. He is the former Executive Vice President and General Counsel for Dallas’ CTX Mortgage Co. and previously worked with the Baker Botts law firm in Dallas as Special Counsel. In his role as leader of the firm’s Dallas office, Mr. Green advises clients on the latest rules and regulations covering residential lending, in addition to building on Polunsky Beitel Green’s long tradition of delivering loan closing documents with speed and accuracy.

Mr. Green is admitted to practice before all Texas state and federal district courts in addition to the U.S. Court of Appeals for the Fifth Circuit.

An honors graduate of the University of Texas School of Law, he earned his undergraduate degree at Southern Utah University. Texas Monthly has selected him as a Super Lawyer multiple years.

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MORTGAGE BANKER | NOVEMBER 2021 19