Mortgage Banker Magazine July 2022

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REGULATORY CORNER FREDDIE MAC TAKES FURTHER ACTION TO HELP RENTERS ACHIEVE HOMEOWNERSHIP

Freddie Mac announced that it will increase homeownership opportunities for first-time homebuyers by considering on-time rent payments as part of the company’s loan purchase decisions. This automated functionality will be available to mortgage lenders nationwide through Freddie Mac Loan Product Advisor, the company’s automated underwriting system.

“This extremely important initiative will help many renters move closer to achieving the dream of homeownership,” said Michael DeVito, CEO of Freddie Mac. “Millions of American adults lack a credit score or have limited credit history. By factoring in a borrower’s responsible rent payment history into our automated underwriting system, we can help make home possible for more qualified renters, particularly in underserved communities.”

With the borrower’s permission, lenders and brokers can submit bank account data for LPA to identify 12-months of on-time rent payments for inclusion in the tool’s assessment of purchase eligibility. The bank account data is obtained from designated third-party service providers using the same automated process used to verify assets, income and employment through LPA asset and income modeler (AIM). Eligible rent payment data includes check, electronic transactions or digital payments made through Zelle, Venmo or PayPal.

MISMO SEEKS COMMENT ON ENHANCED VERSION OF ILAD

MISMO, the real estate finance industry’s standards organization, is seeking public comment on an enhancement to the Industry Loan Application Dataset (iLAD), an industry standard for the exchange of loan application information.

MISMO said the iLAD version 2.2.0 extends the capabilities and increases the effectiveness of this dataset, which serves as the industry’s standard method for exchanging data associated with originating and underwriting mortgage loans.

The 30-day public comment period for this dataset runs through Aug. 5, 2022.

The most recent version of iLAD was updated to include the new USDA Guaranteed Underwriting System (GUS) Specification, which is based on MISMO’s v3.4 Reference Model. As a result, new data points and enumerated values were added to better support evolving industry loan origination and underwriting business processes. The new, updated version is referenced as iLAD version 2.2.0. iLAD is a compendium of data points and allows for the seamless exchange of loan application data between industry partners. It reduces friction and improves efficiency as originators can use this one resource rather than have to create their own proprietary exchange, MISMO said.

MortgageBanker STAFF

Vincent M. Valvo CEO, PUBLISHER, EDITOR-IN-CHIEF Beverly Bolnick ASSOCIATE PUBLISHER Christine Stuart EDITORIAL DIRECTOR David Krechevsky EDITOR Keith Griffin SENIOR EDITOR Mike Savino HEAD OF MULTIMEDIA Katie Jensen, Steven Goode, Douglas Page, Sarah Wolak STAFF WRITERS Rob Chrisman, Nir Bashan, Joe Welu, Marty Green CONTRIBUTING WRITERS Alison Valvo DIRECTOR OF STRATEGIC GROWTH Meghan Hogan DESIGN MANAGER Christopher Wallace, Stacy Murray GRAPHIC DESIGN MANAGERS Navindra Persaud DIRECTOR OF EVENTS William Valvo UX DESIGN DIRECTOR Andrew Berman HEAD OF CUSTOMER OUTREACH AND ENGAGEMENT Tigi Kuttamperoor, Matthew Mullins MULTIMEDIA SPECIALISTS Melissa Pianin MARKETING & EVENTS ASSOCIATE Kristie Woods-Lindig ONLINE ENGAGEMENT SPECIALIST Michael Castro MARKETING MANAGER Ben Slayton FOUNDING PUBLISHER

Submit your news to editorial@ambizmedia.com If you would like additional copies of Mortgage Banker Magazine Call (860) 719-1991 or email info@ambizmedia.com

www.ambizmedia.com © 2022 American Business Media LLC. All rights reserved. Mortgage Banker magazine is a trademark of American Business Media LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: American Business Media LLC 88 Hopmeadow St. Simsbury, CT 06089 Phone: (860) 719-1991 info@ambizmedia.com

I NNOVAT I O N

Mortgage-Backed Security Primer WHAT INVERSIONS AND THE TIMING MEAN FOR A POSSIBLE RECESSION

A

By R O B CHR IS M A N, CO NT R IB U TIN G WRITER, M ORTGAGE BAN KE R M AG A ZIN E

s we make our way through 2022 and the pandemic continues to wind down, it is helpful for anyone attempting to understand the mortgage-backed security (MBS) market to remember what happened in March of 2020 and its ramifications going forward. Especially the role that the U.S. Federal Reserve played in trying to maintain the stability of the economy through its Quantitative Easing actions.

Namely, the Fed’s purchases of MBS (and Treasuries) caused prices to shoot higher, thus dropping rates, but there were risks.

The Fed’s desire to bring mortgage rates down wreaked chaos in lenders’ ability to hedge their risk.

Let’s look at what happens when a borrower locks in their mortgage rate with a lender. Mortgage rates are based on the trading and prices of MBS, which are determined by the supply of and demand for those securities. As MBS rise in price, interest rates improve and move lower. A locked rate on a mortgage is nothing more than a lender promising to hold an interest

4 MORTGAGE BANKER | JULY 2022

rate, for a period of time, or the lender additional profits. until the transaction closes. The The lender’s losses on their lender is at risk for any MBS short position, however, negate price changes in the marketplace any additional profits from the between the time they agreed to improvement in MBS pricing. grant the lock and the time that This hedging system works well the loan closes. to deliver the borrower what If rates were to rise because was promised, while removing MBS prices declined, the lender market risk from the lender.

ROB CHRISMAN would be obligated to buy down But in March 2020, in an the borrower’s mortgage rate to effort to reduce mortgage rates, the level they were promised. the Fed began purchasing an And since the lender doesn’t want to be in incredible amount of MBS, causing their a position of gambling, they hedge their price to rise dramatically and swiftly. This, locked loans by shorting (selling) MBS. in turn, causes the lenders’ hedged short Therefore, should MBS drop in price, positions of MBS to show huge losses. These causing rates to rise, the lender’s cost to losses appear to be offset on paper by the buy down the borrower’s rate is offset by potential market gains on the loans that the the lender’s gains of their short positions in lender hopes to close in the future.

MBS. But broker dealers did not wait on the possibility of future loans closing and PRICE FLUCTUATIONS demanded an immediate margin call.

Now think about what happens when MBS The amount that lenders were paying in prices rise or improve, causing mortgage margin calls was staggering… millions rates to decline. On paper the lender should of dollars for many. And while the Fed be able to close the mortgage loan at a better believed it was stimulating lending, its price than promised to the borrower, giving actions resulted in the exact opposite. The

IF RATES WERE TO RISE BECAUSE MBS PRICES DECLINED, THE LENDER WOULD BE OBLIGATED TO BUY DOWN THE BORROWER’S MORTGAGE RATE TO THE LEVEL THEY WERE PROMISED.

to worry about the long-term outlook. It can also signal that the high levels of shortterm yields are unlikely to be sustained as economic growth slows, which can have an impact on a range of asset prices. The typical metric that is watched is the difference between the 2-year and 10-year Treasury yields.

Recessions have not happened without an inversion, so likely it will be a predictor of a future recession. The timing, however, is

market for government loans (such as the servicing value for FHA & VA loans), jumbo loans, non-QM, and loans that don’t fit ideal parameters virtually vanished. And many lenders had little choice but to slow their intake of transactions by increasing their profit margins and moving mortgage rates higher and by reducing the term that they are willing to guarantee a rate lock.

UNINTENDED CONSEQUENCES

Furthering the Fed’s unintended consequences were announcements in March and April of 2020 to cut interest rates on the Fed Funds Rate by 1% to virtually zero. Because the Fed’s communication failed to educate the general public that the Fed Funds Rate is very different than mortgage rates, it prompted borrowers in process to break their locks and try to jump ship to a lower rate. This dramatically

increased hedging losses from loans that didn’t end up closing.

Which brings us to today. The Federal Reserve is still in the headlines. It has ceased the outright purchases of MBS and moved toward only reinvesting the early payoffs (refis) from its portfolio. The Fed is also in the headlines for its expected increases in the targeted overnight Fed Funds rate that will eventually dampen inflation.

METRIC TO WATCH

Meanwhile, the markets are watching the yield curve which “inverted” in late March, meaning that short-term rates were higher than long-term rates. What does it mean for your clients? A graph of yields, which have interest rates along the Y axis and time along the X axis, typically slopes upward, so when short-term yields return more than longer-dated ones, it suggests there is reason

unknown. It could take up to two years, and plenty of unforeseen things can happen in the interim. As the Federal Reserve embarks on a cycle of quantitative tightening, there are fears that it will reduce consumer spending and business activity as the central bank battles the highest inflation rates in a generation.

But before brokers start sounding the “recession alarm,” some economists will tell you that there’s reason to believe that this time around, yield curve inversion may not be as good of an indicator as it has been in the past, particularly given the enormous amount of quantitative easing undertaken by global central banks. Regardless of what the yield curve suggests, MLOs are doing the best they can helping clients with their financing needs.

MORTGAGE BANKER | JULY 2022 5

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L E AD E RSH I P

Mentorship In Times Of Crisis THE VALUE OF A CREATIVE PERSPECTIVE

By NIR B AS HAN, CO NT RIB U TOR, M ORTGAGE BAN KE R M AG A ZIN E

T

he Fed keeps all of us on the edge of our seat with interest rates. Will they continue to hike them as they say they will? Will inflation continue to spiral out of control? Will demand from consumers remain constant or shrivel up in recession? Mortgage applications hit a 22-year low this month. These and many other issues plague the business, and the unknown has led many to fear the worse.

How can we ever keep up with the changes that are headed our way at breakneck speeds? What can we do?

It turns out that in times of massive change and unpredictability there is one thing that we can rely on time and time again. And that is creativity to spark innovation. A crisis is a terrible thing to waste, and in times of hardship, creativity

and innovation can thrive. and the mentoree. One hand, the mentor can potentially One creative idea you can use learn a fresh way of thinking to help navigate the current about things or even ideas on landscape and turn adversity challenges they are facing. And into opportunity is to foster a the mentoree can potentially mentorship. receive subject matter expertise There is some benefit an and critical guidance on career experienced mentor can bring choices and market conditions. to help navigate the current NIR BASHAN It seems like this is one of climate. Mentors have seen it all the most often requested tools before and can offer historical that people are looking for in context. They have ridden out the workplace. But most people don’t know lean times and can share some tips and how to go about finding a mentor. tricks. They have a long-term view which It turns out that most people do not may come in handy. approach mentorship from a creative Let’s look at some of the numbers: 61% mindset – and so there is a huge gap in of employees seek mentors at work, yet only mentorship industry wide. It is time to flip 31% report having them. There is a serious the equation and look at this important shortage of mentorship as it can provide some amazing benefits to both the mentor

CONTINUED ON NEXT PAGE

MORTGAGE BANKER | JULY 2022 7

IN ORDER TO FIND A MENTOR, YOU MUST BE WILLING TO GIVE JUST AS MUCH AS YOU TAKE.

relationship creatively. Here are two powerful ways to shift your mindset from an analytical perspective to a creative perspective. Let’s dive in:

1. Focus on what you can bring to the table

Mentorship, like all relationships at work, are a two-way street. They involve a ton of give and take as the relationship matures into something of value for both parties.

And that is key: promoting value to both parties is the secret-sauce of mentorships.

Mentorship can have such great creative and innovative value especially in tough times. In good weather, anyone can be a hero. But it takes a particular type of grit to be of service when things are not going as expected. That is why a mentor can be so valuable. Especially today.

So, try to focus on what you can bring to the table. Get creative. What can you contribute to the mentor that would want them to take you on in the first place? Is it a particular expertise you have in the sector -- an approach that is not industry wide? Really think about that last question as it will unlock lots of opportunity for you while looking for a mentor. What can you offer that will make you a better candidate for mentorship? Instead of thinking about what a mentor can do for you, think instead of what you can do for that mentor. And speaking of which…

8 MORTGAGE BANKER | JULY 2022

2. Give Back Each Time

I have hired over a thousand people in my career. I know that because when I published my McGraw Hill book, the editors made me count. And what I found was some mixed success in both mentoring and being mentored. Successful mentorships always had some give and take and were beneficial to both parties. The relationships ended up had something for everyone. The unsuccessful mentorships all had one thing in common – no matter what: Entitlement.

Here’s a short case study: I recently mentored someone who was full of promise. She didn’t have much experience but was hungry to learn and improve her career. She even scheduled weekly meetings on my calendar where she would make a list of work issues from interpersonal relationships that she found challenging all the way to asking for help on wording emails to get optimal efficiency – and I gave her feedback and mentorship on the issues she was facing. This continued for four years.

And in all that time, not once did she say, “Thank you.” Not once. I got little out of it – she got a lot out of it. Therefore, it was unsustainable, and I began to dread our meetings.

If you want to be mentored, focus on what you can give back instead of just

focusing on yourself and what you can take out of the relationship. Each time you have a session with your mentor, have one take-away prepared that you can give that person. It may be small but that’s OK. Most times just the smallest adjustment to our pathway, thought process or ideas can have profound impact. Think about one item you can give away in each session to help that mentorship remain healthy. Mentorships are like any other relationship you have in life. They have to be balanced or else they sink.

...

On one of the greatest Beatles albums, I think it was Abbey Road, the record ends with a phrase that should sit close at heart to anyone looking for mentorship, “And in the end – the love you take – is equal to the love you make.” In order to find a mentor, you must be willing to give just as much as you take. And if you can find a way to do that, then you will not only find a mentor, but you will also find a boost in the overall quality of your work relationships in general. And that is the secret to finding a lasting and meaningful mentorship – one that works in harmony for both parties involved.

Nir Bashan is a Top 100 nonfiction book of all time author and speaker. He helps folks become more innovative and creative at work.

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(317) 625-3287 MORTGAGE BANKER | JULY 2022 9

COVER STORY

A TALE OF

Two Mortgage Players WHY SMALLER MAY BE MORE SUCCESSFUL DURING DOWN ECONOMIC TIMES

By D O U G PAG E, STA FF WRITER, M ORTGAGE BAN KE R M AG A ZIN E

I

n these days of increasing interest rates and bad economic headlines, it’s easy to believe the layoff-riddled mortgage industry is teetering on a cliff, soon to descend into a black hole from which it can never crawl out.

Generating much of the headlines are top-end players, like PennyMac, loanDepot and Better.com, to name a few, that have announced layoffs due to a decrease in loan originations and revenues. Even Wells Fargo, a traditional bank, is feeling the sting of higher interest rates, shedding jobs in its home lending division.

With 30-year fixed mortgage rates around 5.25% and likely to increase in the coming months due to the actions of the Federal Open Market Committee, which sets overnight lending rates, it’s no surprise the refi market, which was nearly 60% of last year’s mortgage originations, is expected to drop by nearly two-thirds this year from where it was in 2021.

“The (mortgage) industry cannibalized itself to some degree by turning $8.4 trillion of new mortgages, which were made in the last two years, with very low interest rates, into loans that will very unlikely refinance in their lifetime,” said Brian Hale, CEO of Mortgage Advisory Partners, a consulting firm based in Newport Beach, Calif. “The people who have low-rate mortgages and who have been living in their house for the last couple of years have seen their values go up 20 to 40%.

“They likely, in many cases, could not afford to buy the house they’re living in today, and they would have to do it with a

10 MORTGAGE BANKER | JULY 2022

5.25% interest rate instead of a 2.5% one. So, they’re not likely to sell their existing house to buy a new one,” he continued.

“Everybody (in the top-end of the mortgage industry) has been lowering their production estimates for 2022,” said the former mortgage executive-turned consultant. “The most recent ones I saw were in the $2.2 to $2.4 trillion level for this year.”

CUT IN HALF

Hale says that by the third and fourth quarter this year “the annualized pace could be well below $2 trillion and so the industry is likely going to be cut by more than half over the next six months.”

In fact, ATTOM reports lenders issued $892.4 billion in mortgages during this year’s first quarter, down 27% year over year.

“There’s not enough volume to feed everybody,” said Hale. “Competition is through the roof for purchase volume.”

As much as it might seem like layoffs are the norm, it isn’t. At least among some of

the smaller industry players.

“Mortgage brokers tend to be small,” said Bill Corbet, managing director of Englewood, Colo.-based BlackFin-Group, a consulting firm. “They’re usually composed of a couple of brokers and maybe a couple of operations people. They tend to be nimbler.

“The folks who maintained a balanced referral base, they’re still doing OK. The folks who lived off the refi biz, they’re learning how to do their jobs all over again,” the former banking executive added.

Hale agrees, saying the typical, small mortgage broker doesn’t “have regional managers and divisional managers and corporate folks and accounting and human resources departments and technology departments and all those things. They don’t have fixed overhead.”

Corey Vandenberg, a Lafayette, Ind.based mortgage loan officer, and Gerald Bliss, who owns a mortgage brokerage in Tampa, Fla., confirm much of what Hale and Corbet said.

“THE (MORTGAGE) INDUSTRY CANNIBALIZED ITSELF TO SOME DEGREE

BY TURNING $8.4 TRILLION OF NEW MORTGAGES, WHICH WERE MADE IN THE LAST TWO YEARS, WITH VERY LOW INTEREST RATES, INTO LOANS THAT WILL VERY UNLIKELY REFINANCE IN THEIR LIFETIME.”

BRIAN HALE, CEO, MORTGAGE ADVISORY PARTNERS

PRICES DRIVE PURCHASE HIKE

“So, it’s an interesting thing,” Vandenberg said. “It’s a banner year in purchases. Last year, it was a banner year in refis. It’s like a seesaw.

“Purchases are going up, and it’s not like it’s because there’s a million homes out there for sale. It’s because prices keep going up. Homes that were once $200,000 are going for $300,000,” he added.

Vandenberg writes fewer mortgages than he did last year but, he notes, “the ones I write are for more money.”

He credits his success to the many relationships he built up as a local banker for 17 years in and around Lafayette.

Today, he works remotely for Lake State Mortgage, which is four hours away in Grand Rapids, Mich., and writes mortgages in nine states, including Florida, Georgia, Kansas, Michigan, Kentucky, Texas, Ohio, Illinois and his home state.

“Florida and Texas are extremely hot markets but they’re all hot markets,” he said. “I don’t have a bad market.”

He describes the typical home that’s being sold as a three-bedroom, twobathroom house. “Quite a few homes that sell for $500,000 or $525,000 would have previously sold for $350,000,” Vandenberg said, adding that the increase in prices

and the shortage of houses in Lafayette is sending homebuyers to communities that are 45 minutes away by car.

It’s the same for Bliss, owner of Tampa, Fla.-based Bliss Mortgage.

“It’s more or less a purchase business,” he said. “Refis are pretty much no longer there although cash-out refis for debt consolidation are still there.”

Cash-out refis became popular this year because home prices have increased, providing people with more equity in their homes.

When asked if today’s market conditions forced him to enact layoffs or any other cutbacks, he replied, “Not yet.” His firm is composed of 12 people. “Eleven of us are loan officers,” he said. “Two years ago, we were at seven.”

“We’re staying strong with marketing and pay for SEO [search engine optimization],” he said. “We have 145 Google reviews and almost 100 Zillow reviews. People are calling us.”

PRESS THE FLESH

Bliss says they did $22.3 million in loan volume two years ago and $35 million last year. Right now, he’s projecting they’ll do $35 million this year and that’s due to the fact that five of the seven loan officers they added are new to the business.

He attributes their success to pressing

the flesh.

“It’s a relationship business. We’re making good connections and are constantly communicating to anyone and everyone selling real estate here,” he said.

They also recently added a tech system called Floify. “It helps you communicate with all parties involved in the transaction,” he said, saying they introduced it last year.

It also comes with another feature.

“Say we approve a client for a $400,000 mortgage and they’re having to increase their bid. With Floify, the Realtor can generate a pre-approval letter for up to $450,000,” he said. “It helped us streamline the process and helps us become more efficient.”

As for prices, Bliss says, “$400,000 is the new $200,000. Where it used to be $200,000 or $250,000 for a three-bedroom, two-bathroom house, now it’s $350,000 to $400,000.”

Another factor driving their success is the fact that people are moving to Florida.

“People are moving to Florida to escape high taxes,” he said. “We benefit from that.”

“There’s also the Tom Brady effect.

Sports teams like football’s Tampa Bay Buccaneers, hockey’s Tampa Bay Lightning and baseball’s Tampa Bay Rays are putting the area on the map,” added Bliss.

MORTGAGE BANKER | JULY 2022 11

E CO NO MI C S

Mortgage-Backed Securities & Adjustable-Rate Pricing LEARN THE VARIOUS COMPONENTS OF SECURITIES IN THE MORTGAGE SECTOR

T

By R O B CHR IS M A N, CO NT R IB U TIN G WRITER, M ORTGAGE BAN KE R M AG A ZIN E

he secondary marketing side of the residential lending business is focused on residential mortgage-backed security (RMBS) prices, usually shortened to MBS. The supply and demand of mortgages, which are sold and then treated as assets by the owner, determine prices, and therefore the price and rates that borrowers see in the primary markets.

As can be seen, this is one of the key reasons that adjustable-rate mortgage pricing is so off kilter: the market for ARM securities is not liquid. It is important to take a look at MBS and “asset-backed” securities: Are they the same thing?

The answer is no. Yes, asset-backed securities (ABS) and mortgage-backed securities are two important types of asset classes. MBS are securities created from the pooling of mortgages, and then sold to interested investors, whereas ABS have evolved out of MBS and are created from the pooling of non-mortgage assets. ABS are usually backed by credit card receivables, home equity loans, student loans, and auto loans. Even music concert receivables!

INVOLVED PARTIES

There are similarities. There are three parties involved in the structure of ABS and MBS: the seller, the issuer, and the investor. Sellers are the companies that generate loans and sell them to issuers. They also take the responsibility of acting as the servicer, collecting principal and interest payments from borrowers. Issuers buy loans from sellers and pool them together to issue ABS or MBS to investors.

ABS and MBS benefit sellers because they can be removed from the balance sheet, allowing sellers to acquire additional funding. Or put another way, think of a non-depository mortgage banker selling the loan and then simultaneously paying off its warehouse line.

12 MORTGAGE BANKER | JULY 2022

Investors of ABS and MBS subordinate or junior tranches (which include securities backed will absorb all of the losses,

by ARM loans) are usually up to their value before senior institutional investors and they tranches begin to experience use ABS and MBS to obtain losses. higher yields than government bonds while diversifying their IN THE TRANCHES portfolios. Both have prepayment Subordinate tranches typically risks, the risk of borrowers have higher yields than senior ROB CHRISMAN paying more than their required tranches, due to the higher risk monthly payments, thereby incurred. Investors can choose reducing the interest of the loan, which one they want to invest in according though these are especially pertinent for to their risk tolerance and their outlook on MBS. the market. There are many types of ABS, Investors in current ARM securities are each with different characteristics and cash especially concerned about prepayment risk: flows, examples of which include Home Few want to pay a premium and then have Equity ABS, Auto Loan ABS, and Credit the ARM pay off early when the borrower Card Receivable ABS. And it is important refinance into a fixed-rate loan. And when to measure the spread and pricing of bond there is uncertainly, prices tend to drop or be securities and know which type of spread lower than what one would normally expect. should be used for different types of ABS and This is what we’re currently seeing in the MBS for investors.

ARM market.

Although no one can predict where mortgage rates will go, there are plenty of PREPAYMENT RISK forecasts. And with those forecasts come a Prepayment risk can be determined by solid historical working knowledge of how many factors, such as the current and issued fixed-rate mortgage borrowers will behave. mortgage rate difference, housing turnover Borrowers with adjustable mortgages, and path of mortgage rate. If the current however, have more variability. ARMs have mortgage rate is lower than the rate when the always represented the minority of mortgage mortgage was issued or housing turnover is originations, and there is less historical data high, it will lead to higher prepayment risk, concerning the “what ifs.” Many ARMs as any loan officer knows. are held in portfolios where information Historically, most homeowners refinance is tracked by the holder, usually a bank or their mortgages the first time rates drop. credit union, and there is little reason to Therefore, when the mortgage rate falls divulge this information to the marketplace. again, refinancing and prepayment would be It is important for those involved in much lower compared to the first time. lending to see what happens to the loans they To deal with prepayment risk, ABS and originate.

Pools are sliced and diced based MBS have tranching structures, which help on risk, pool characteristics, and so on, and by distributing prepayment risk among can be very complicated in terms of their tranches. Investors can choose which tranche structures, characteristics, and valuations. to invest based on their own preferences Anyone investing in MBS, whether fixed or and risk tolerance. One additional type adjustable, should be sure they match their of risk involved in ABS is credit risk. ABS risk tolerance, just as underwriting does in have a senior-subordinate structure to deal with credit risk called credit tranching. The the primary markets.

MORTGAGE BANKER | JULY 2022 13

And … Action!

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ortgage News Network’s mission is to use the power of video and podcasts to compliment the written word and inform, educate, enable and empower mortgage professionals with the most relevant, up-to-date information and advances in the mortgage industry.

It is our goal to offer worthwhile information to our viewers while delivering it with the utmost professionalism.

Every weekday, we give you a heads up of what should be of interest to you now. The action is fast, and the information is up-to-date. Give us two minutes, and The Interest will give you the big picture.

Watch at: nationalmortgageprofessional.com/video Great conversations start with great stories. Tune into The Principal podcast daily for your deep dive into the big issue of the day. Editors, reporters, and sources involved in the day’s top news take on topics with vigor and valor, unafraid to speak openly and honestly, so you get the truth about what’s changing the mortgage market. You’ll get an excellent payback for your time when you listen to The Principal.

Listen at: nationalmortgageprofessional.com/ podcasts/principal Picture your dream home. Now look down. There’s a bright red line keeping you out. Join host Katie Jensen as we dive into redlining and the legacy of discrimination. You’ll hear first-hand accounts from those who’ve had to fight back to achieve their dreams. And we’ll challenge industry leaders on how to rewrite this legacy.

Listen at: nationalmortgageprofessional.com/ podcasts/gated-communities

14 MORTGAGE BANKER | JULY 2022

MORTGAGENEWSNETWORK.COM PRODUCT IONS OF A ME RICA N BUS INE S S ME DIA MORTGAGE BANKER | JULY 2022 15

TE CH N O LO GY

How Tech Can Help Mortgage Lenders Stay Ahead of Fintech Competitors LEARN TO SWIM RATHER THAN SINK AGAINST THE EMERGING TIDE OF COMPETITION

By J O E W ELU, CO NT R IB U T I N G WRITER, M ORTGAGE BAN KE R M AG A ZIN E

I

n today’s increasingly 2020. This number is predicted digital-first world, new to grow at an annual compound direct-to-consumer rate of nearly 50% from 2021 financial technology to 2028. Knowing this, it’s (fintech) players – also no surprise that traditional known as consumer-direct financial institutions feel the fintechs or neobanks – now need to shift gears quickly compete for the same mortgage before these fintech disruptors and housing loan opportunities dominate the industry. as traditional mortgage lenders.

The good news is that JOE WELU To put that into perspective, traditional lenders can learn to according to the Mortgage swim rather than sink against Bankers Association, the U.S. mortgage the emerging tide of consumer-direct industry is projected to fund $2.56 trillion in fintech competitors. By implementing the new volume in 2022 alone. This is a glimpse right technology within their organizations, at what the prize at the end of the race looks traditional financial institutions can stay like. ahead of the competition. To achieve this, Despite their recent emergence, however, a business must first ensure that consumer-direct fintechs have been valued their technology automates and enhances in the global market at $35 billion as of processes for its loan officers.

16 MORTGAGE BANKER | JULY 2022

A DIFFICULT MARKET AHEAD

The mortgage industry has long seemed ripe for new fintech entrants to challenge incumbent lenders. But what “easy money” existed in recent years may already be gone. 2020 and 2021 saw a massive wave of borrowers refinancing at a lower interest rate, and refinances now represent around 50% of outstanding mortgage debt. As rates continue to rise, that total mortgage origination volume has been forecast to fall by 33% to $2.56 trillion this year.

Though healthy refinancing options will be available, it’s unlikely that new competitors will become true disruptors without significant loan origination.

For example, after making headlines by purchasing mortgage lender RedDoor in late 2021, Opendoor has only 10 mortgage loan

THE COMPLEXITY OF THE MORTGAGE INDUSTRY IS AMONG THE MANY LIMITATIONS KEEPING CONSUMERDIRECT FINTECHS FROM TAKING HOLD AND CREATING SUSTAINABLE SCALE WITH BORROWERS. officers – a small sales team that likely won’t move the needle amidst a market that’s expected to fund nearly 6.8 million home loans in 2022.

The complexity of the mortgage industry is among the many limitations keeping consumer-direct fintechs from taking hold and creating sustainable scale with borrowers. Housing and mortgage regulations are among the strictest in consumer financing, and referrals that stem from builders or realtors are subject to many federal rules. Mortgage markets are strongly influenced by referral networks and specialized advisors, so having strong relationships – and the capacity to manage the risk of those relationships – is essential for owning a purchase market.

Between the strength of lending giants and the complexity of the mortgage sector, there is a difficult – but not impossible – barrier to climb keeping new fintech competitors from making an immediate dent in market share. But the more important question that traditional lenders need to understand is why these entrants are appealing to customers and pose a legitimate threat. To do this, lenders must acknowledge how technology can help them better provide what their borrowers expect from them.

ADDRESS ‘WHY’ WHEN CHOOSING

To equip sales teams for success, lenders need the right tools in place. These tools should be made with the future of lending in mind and include the technologies and systems necessary to execute marketing strategies at the right time and place. When assessing and implementing business technologies, the two factors organizations should prioritize are centralization and integrations.

Having a centralized system will enable teams to track and report on all sales and marketing activities through all channels.

As a result, employees will be empowered to efficiently go to market and quickly finish routine administrative tasks, freeing them up to tackle more fulfilling projects.

Cultivating life-long customers while gaining new ones is more important than ever and having a unified system for delivery and collaboration guarantees that existing, new, and prospective customers can feel personally understood.

IMPORTANCE OF INTEGRATION

Once organizations compile best-ofbreed solutions, they can optimize their technology stack. Considering the speed of innovation, these technologies will inevitably evolve just as the needs of the business will. As companies build their systems, it’s imperative to avoid unintentionally limiting what systems will and will not be able to do, particularly from an integration perspective. Today’s lenders have massive amounts of data to protect and manage. And consumer expectations have only increased – lenders must now communicate with customers across all channels in record time.

Efficiency-boosting technology solutions like CRM and customer engagement platforms will provide traditional lenders the advantages needed to compete against consumer-direct fintechs. These solutions allow businesses to take charge of marketing and sales activities from a centralized environment that can help ensure the business is compliant with complex regulations – a critical tool to have in the financial services industry.

The right technology can also use data to gain knowledge of how customers and

prospects are interacting with marketing and sales, which helps them to make wellinformed decisions about how to better connect and engage with them moving forward.

Through an integrated technology approach, this enables smarter marketing throughout all platforms, allowing for the unified integration of other best-of-breed solutions to be used together, as opposed to working in siloed operations.

TECH FOR STRENGTH

Digital transformation can’t be stopped.

Traditional lenders can choose to get their teams onboard, finding and integrating the right technology that enables them to not only survive today’s transforming business landscape, but thrive against new consumer-direct fintechs and neobanks.

Leaving outdated tools behind and embracing new solutions to help optimize business processes while scaling growth will be the key to success in ensuring traditional financial institutions remain strong competitors.

Traditional players have one big advantage – the strength of their humanfirst customer connections. While most fintech companies eliminate the need for personal customer relationships, traditional lending institutions can disrupt the disruptors by leveraging technology that empowers them to continue a human-first approach, which will create a financially healthier world as a result.

Joe Welu is founder and CEO of Total Expert, a fintech software company that delivers purpose-built CRM and customer engagement for modern financial institutions.

MORTGAGE BANKER | JULY 2022 17

TECHNOLOGY ROUNDUP New Tool To Lighten Compliance Workload For Mortgage Companies

Ncontracts,a provider of integrated risk management and lending compliance solutions for the financial services industry, announced the release of an enhancement to its Ncomply solution that cuts the time mortgage companies spend scoping product and service requirements.

“Normally, compliance officers spend 10 to 20 hours using Google, regulatory manuals, borrowed peer checklists, and other information to scope out the regulations that apply to just a single product or service,” says Stephanie Lyon, vice president of compliance and regulatory content strategy. “With the new Ncomply requirements builder, the work is done in 10 seconds.”

Ncomply Requirements Builder leverages Ncomply’s extensive regulatory library to empower compliance professionals to choose a product or service and generate customized lists summarizing the regulatory dos and don’ts their institution needs to address in plain, easy-to-digest English. Sourced by a team of certified compliance attorneys, the lists include citations and links to all regulations, so compliance officers know the exact part of the regulation stating the requirement, control, or risk.

Ncomply Requirements Builder is the latest addition to Ncomply, Ncontracts’ secure, centralized compliance management system (CMS) that eliminates manual processes to save time and money while reducing compliance risk. Designed and supported by compliance professionals with extensive industry experience, Ncomply can be configured to meet financial organizations’ needs for comprehensive compliance management, ensuring comprehensive, continuous exam readiness.

RiskSpan Introduces Proprietary Measure For Plotting Burnout Effect RiskSpan, a provider of residential mortgage and structured product data and analytics, has announced a series of new enhancements in the latest release of its award-winning Edge Platform.

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Among the new features: • Burnout Metrics – MBS traders and investors can now look up a proprietary, cumulative burnout metric that quantifies the extent to which a defined pool of mortgages has continued to pay coupons above refinance rates over time. The metric goes beyond simple comparisons of note rates to historic prevailing rates by also tracking the number of times borrowers have ignored the "media effect" of repeatedly seeing rates reach record lows. Edge users can plot empirical prepay speeds as a function of burnout to help project performance of pools with various degrees of burnout.

• Reperforming Loans – Investors in nonperforming and reperforming loans – particularly RPLs that have recently emerged from covid forbearance – can now project performance and cash flows of loans with deferred balances. Edge reads in the total debt owed recovery method and has added key output fields like prepaid principal percent reduction and total debt owed to its cash flow report.

• Hedge Ratios – The Edge Platform now enables traders and portfolio managers to easily compute, in one single step, the quantity of 2yr, 5yr, 10yr, or 30yr treasuries (or any combination of these or other hedges) that must be sold to offset the effective duration of assets in a given portfolio. Swaps, swaptions and other hedges are also supported.

Act! Partners With Performance Insights To Deliver Enhanced Client Management Solutions

Act!, a customer relationship management and marketing automation solution for small businesses, announced the availability of Act! Solutions for Financial Services in partnership with Performance Insights – a sales performance consultancy for the banking industry. Act! will now offer industry-specific analytics and automated document collection to optimize sales operations for mortgage lenders.

The two solutions, Reporting-as-a-Service (RaaS) and Document Collection, provide small financial services businesses with improved customer experience, greater efficiency and detailed visibility across their pipeline. The Reporting module allows users to specify parameters for data aggregation and customize filtered views of the bookof-business. Drilling into select metrics with

analytics dashboards and reports, this robust RaaS provides unprecedented insight into financial customer relationships and firm performance.

The Document Collection module enables financial services professionals to collect, secure and manage all client-related documentation. It accelerates contract executions with e-signatures and optimizes form processing with automated client reminders and flexible branded templates.

The solution leverages bank-grade security, with encrypted client data, audit trails and roles-based access.

“Simply digitizing a book-of-business isn’t enough anymore – financial services businesses are expected to deliver a deeper level of personalization and understanding to their customers than ever before,” said Ron Buck, president of Performance Insights.

Infrrd Unveils Industry-first 100% Accuracy Offering For Document Processing

Infrrd, a provider of Intelligent Document Processing (IDP) solutions, announced the unveiling of an industry-first 100% accuracy offering for the processing of high volumes of complex documents spanning many variations of document types. These include, among others, invoices, mortgage-related documents, Form W2s, tax paperwork and more.

Infrrd is promising its customers they can achieve unprecedented levels of success in the extraction and processing of data from within their documents. This is due to the powerful artificial intelligence (AI)-led capabilities found in Infrrd’s proprietary and patented technology. Infrrd’s IDP software platform, coupled with its team of data experts (which provides as needed human-in-the-loop processing), has the ability to learn from initial errors in the processing of data and quickly correct these to ultimately reach this 100% accuracy target.

“We are offering services backed by our 100 percent accuracy promise based on performance because we are very confident in the power and proficiency of our technology and the subsequent results it delivers to Infrrd customers. Our AI-led solution ensures customers can reach their processing goals seamlessly and more quickly with 100 percent accuracy than any other solution in the market,” explained Amit Jnagal, Infrrd founder and CEO.

Boston National Title Agency Announces Alliance With Clarifire

Boston National Title Agency announced an alliance with Clarifire, a provider of workflow automation and seamless servicing.

Users of Clarifire for default servicing and loss mitigation will now benefit from its integration with solutions from Boston National Title, one of the largest independent title and settlement service providers in the country.

“Our mission is to provide servicers with effortless accessibility to the resources needed to help borrowers quickly get back on their feet,” said Jane Mason, CEO of Clarifire.

“The addition of Boston National Title provides our clients with seamless access to these products. This vital integration will enable servicers to expedite the delivery of BNT product options, reducing costs and improving turn times. This translates into an improved borrower experience.”

Servicers already rely on Clarifire to streamline workflow and workout processes.

Now they will be able to further increase efficiency by automating requests and responses for property reports, mortgage modification policies, and similar documentation from Boston National Title— never going outside Clarifire. With these additional services delivered rapidly to their dashboards, they have robust visibility and capabilities.

Model Match and Total Expert Teamup to Launch Enhanced Outreach Capabilities to Priority Prospects

Model Match, a talent management system intentionally designed for the mortgage industry, has partnered with Total Expert, the CRM and customer engagement platform purpose-built for financial institutions, to launch an integration enabling lenders and their recruitment teams to leverage the Model Match solution to deliver highly targeted and valuable marketing content to prospects via Total Expert's platform.

On top of significantly expanding outreach, the talent teams that leverage this integration will improve their recruiting processes, enhance workflow efficiency and foster greater trust with potential hires, the companies claim.

"Our platform, combined with Total Expert, will connect two extremely powerful ecosystems and allow mortgage lenders the ability to expand their automated marketing outreach at scale," said Thomas Seelbinder, head of customer success and product at Model Match. "Instead of jumping between platforms, talent teams can now seamlessly identify, source and manage relationships while delivering impactful content to their prospects."

Many organizations suffer from a disjointed tech stack with incompatible solutions. As a result, simple tasks require unnecessary time and effort, drastically decreasing the efficiency of talent teams. However, through the Model Match and Total Expert integration, lenders and recruitment teams will have a central repository, helping remain top-of-mind with their priority candidates.

Newly Launched Inhabet Offers Lenders Compliant DIY Property ValuationsEquity Valuation Partners

(EVP), a provider of home value services, valuation tools and property value data for the real estate industry, announced the launch of Inhabet, a one-stop platform that empowers lenders to generate their own compliant estimate of value for residential and commercial real estate (CRE) properties.

Because the demand for home valuations far exceeds the supply of appraisers, many lenders are experiencing delays in closing real estate transactions. Using the internal evaluation bank regulatory carveout, Inhabet eliminates these obstacles by utilizing data and an appraisal platform to enable lenders to come up with their own estimates of value in a controlled environment.

transactions are guided through a multi-step process that leverages big data to simulate the appraisal process. After gathering data about the property, such as its age, square footage, interior condition and surrounding neighborhood characteristics, Inhabet helps lenders select and assess comparable properties.

First American Data & Analytics Launches FraudGuard Home Equity Solution

First American Data & Analytics, a provider of property-centric information, risk management and valuation solutions and a division of First American Financial Corporation, announced the launch of FraudGuard Home Equity, a new singlesource solution for fraud risk management designed and configured to help home equity lenders streamline their use of third-party vendors, while reducing costs and improving efficiency.

The FraudGuard Home Equity solution identifies undisclosed liabilities, validates identity, detects occupancy discrepancies, checks all applicable loan participants (including borrowers and employers) against industry exclusionary lists, and instantly provides a comprehensive property valuation report complete with property type, listing status and homeowner and condo association data. The solution, which integrates with all leading loan origination systems, covers 100% of residential properties in the U.S. and has targeted risk alerts specific to the home equity transaction that help lenders efficiently identify potential misrepresentation.

“When appraisal management companies first emerged after the financial crisis, I saw an opportunity to transform appraisals for appraisers, banks, credit unions and portfolio lenders with a product that did not require an appraiser’s inspection,” said EVP Founder, CEO and Principal Drew Watson. “Today, with the unveiling of the Inhabet platform, we have made it possible for a lender’s trained staff to complete an estimate of value themselves.”

“With this sophisticated, streamlined solution, lenders can assess the risk on a potential home equity loan using one centralized tool that analyzes all appropriate risk categories,” said Paul W. Harris, general manager, mortgage analytics for First American Data & Analytics. “The FraudGuard Home Equity solution provides a cost-effective and efficient way for lenders to close home equity transactions, while continuing to meet the quality standards of their origination process.”

The Inhabet platform is self-contained and includes the comparable sale data, app-based inspection platform and valuation platform.

No third-party login is required for Inhabet, and there is no software to install. Instead, users with basic knowledge of real estate

The FraudGuard Home Equity tool is a customized version of the company’s industry-leading FraudGuard fraud analytics solution, which leverages public, private and proprietary data sources to help lenders identify risk and assess overall loan quality.

MORTGAGE BANKER | JULY 2022 19

RE GU L ATI O N

Community Reinvestment Act Expansion A Poor Fix For A Non-Problem EQUATING NON-BANK MORTGAGE COMPANIES TO BANKS IS MISGUIDED FOR SEVERAL REASONS

T

By M A RTY G R EEN, CO NTRIB U TOR, M ORTGAGE BAN KE R M AG A ZIN E

he Community Reinvestment Act (the “CRA”) was originally passed by Congress in 1977 and its purpose is to ensure that banks receiving deposits from a community are also serving that community’s credit needs by extending loans in the area. A lot has changed in the world of banking since 1997, with internet operations and other advancements away from branch networks to name a few.

Now, after almost 45 years, the Board of Governors of the Federal Reserve, along with the FDIC and the OCC, have jointly proposed an overhaul of how the CRA is implemented to take into account the substantial changes in how national banks operate today.

Although not part of the rulemaking proposal, there have also been suggestions that the CRA should be expanded

20 MORTGAGE BANKER | JULY 2022

to independent mortgage First, “Reinvestment” is the companies (IMCs), which would middle name of the CRA. As require congressional action. its name implies, the CRA In 2021, Jerome Powell, Fed contemplates that the receipt Reserve chair, voiced his support of deposits by a bank from a for this expansion, stating in particular community imposes remarks before the National an implied duty on the bank to Community Coalition, a fair“reinvest” or lend money in the lending advocacy group, that same community because of MARTY GREEN “like activities should have like the special benefits that banks regulation.” In addition, at least receive as a result of their bank three states – Massachusetts, charter. These benefits include New York and Illinois – have independently potential access to the Federal Reserve adopted a type of community reinvestment borrowing window or other government act applicable in those states to non-bank support and the ability to offer FDIC mortgage companies. insurance on deposits, which increases the With all due respect to Mr. Powell confidence the bank’s customers have in and other advocates for such expansion, depositing assets with it. Importantly, IMCs applying the CRA (or a state specific do not accept deposits, but instead fund equivalent) to IMCs, while well-intended, is loans either through their own corporate misguided for several reasons. cash, through a warehouse line obtained

PHOTO BY DAVID MCBEE

A FOCUS ON AGGREGATE MARKET SHARE IS MISPLACED, AS IT FAILS TO OFFER ANY COMPELLING ANALYTICAL REASON FOR THE PROPOSED EXPANSION OF THE REGULATION.

from banks or other funding sources, or perhaps by issuing commercial paper – all of which require that the independent mortgage company pay a market rate of interest, which is much higher than what a bank pays on deposits. Thus, business models for IMCs are fundamentally different than banks and the basic premise for applying the CRA to banking institutions simply has no application to IMCs, which lack bank deposits to reinvest.

Advocates for the expansion of the CRA often point to the increased overall market share of IMCs as a broad justification to expand the coverage of the CRA to include them. Certainly, the aggregate market share for IMCs grew to almost 70% during the COVID refinance boom compared to a few years ago when it was under 50%. But a focus on aggregate market share is misplaced, as it fails to

offer any compelling analytical reason for the proposed expansion of the regulation.

In my view, any proposed expansion of the CRA should be supported by data indicating that the extension to IMCs is necessary and will be effective in achieving an appropriate goal. In this case, the data simply doesn’t support such expansion. Each year, the CFPB analyzes Home Mortgage Disclosure Act data and publishes a report that includes analysis of lending activities of depository institutions and independent mortgage companies. In its most recent report, the CFPB concluded that depository institutions did not have a higher market presence in serving minority borrowers or low- to moderate-income borrowers, who have historically been underserved, stating that “smaller shares of loans originated by [depository institutions] went to minority borrowers, LMI (low to moderate income) borrowers, and in LMI neighborhoods than [non-depository institutions].” The fact that depository institutions, which have now been subject to the CRA for over 40 years, are NOT out-performing their non-depository counterparts in serving the needs of minorities and lowto moderate-income borrowers, is a clear indication that the proposed expansion of the CRA to IMCs is unlikely to serve its intended purpose.

Likewise, the data as it relates to the statespecific application of a CRA equivalent also does not offer a compelling case for further expansion. Although Illinois and New York have only recently adopted a CRA requirement for non-banks, Massachusetts has had one on the books since 2007. According to the Mortgage Banker Association’s data, Massachusetts IMCs enjoyed a 55% overall market share of purchase loans in 2020, yet IMCs made 62% of loans to minority homebuyers and

to low- to moderate-income borrowers, overperforming their overall market share by 7%.

While this performance might at first glance seem impressive, it is no greater than IMC’s performance in states without a state CRA for non-banks. For instance, IMCs in Texas had a 70% market share for purchase originations, but made 77% of purchase loans to minority homebuyers and 76% of loans to low- to moderateincome homebuyers. In Florida, IMCs had a 71% overall market share, yet made 81% of purchase loans to minority homebuyers and 77% of purchase loans to low- to moderate-income borrowers.

Other states show similar results. Accordingly, there appears to be nothing in the data to conclude that a broader application of the CRA to non-banks results in a tangible benefit to under-served markets, based on the Massachusetts results.

I understand that the advocates for expansion of the CRA are motivated by a desire for all segments of society – and particularly historically underserved areas – to have ample credit available to buy homes, fund businesses, and expand opportunities, which is a very worthy objective. But the worthiness of this goal does not justify the conclusion that the expansion of the CRA is the appropriate course of action, particularly in the absence of data to support it and when the fundamental premise for CRA, the receipt of deposits, does not exist.

Marty Green is a principal at Polunsky Beitel Green LLP, where he leads the firm’s Dallas office. With more than 30 years of experience, Green advises clients on the latest rules and regulations covering residential mortgage lending.

MORTGAGE BANKER | JULY 2022 21

MortgageBanker MAGAZINE

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE 2228MORTGAGE BANKER | JULY 2022

| AUGUST 2022

DATABANK

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23

D I GI TAL TE CH

Wolters Kluwer Expert Shares eVaulting Technology Insights

A

KEY CONSIDERATIONS INCLUDING ASSESSING BUSINESS NEEDS AND DIGITAL READINESS

s mortgage markets become increasingly digital, most lenders, regardless of their lending strategy, will eventually need an eVaulting capability because eVaults are a requirement for moving electronic promissory notes, or eNotes, through the digital mortgage ecosystem. That’s according to Wolters Kluwer Compliance Solutions, sharing its digital lending expertise in an article, “Three Steps Lenders Should Take When Selecting an eVault Provider.” “eVaults are an integral part of any endto-end digital mortgage transformation.

They enable lenders to originate and securely hold eNotes and accelerate capital market transactions,” said Kevin Wilzbach, director, technology product management, at Wolters Kluwer Compliance Solutions. “eVaults also support an enhanced customer experience for borrowers and streamline interactions with other participants — warehouse lenders, investors, servicers, etc.

— within the mortgage ecosystem.”

He pointed to some key considerations in selecting an eVault vendor, which starts with assessing one’s business needs and the “digital readiness” of counterparties, understanding the elements of a successful implementation, and conducting due diligence on the experience and connectivity of potential eVault partners. The evaluation includes assessing a provider’s ability to seamlessly interact with MERS, the breadth and depth of its counterparty working relationships, and its participation in all MISMO (Mortgage Industry Standards Maintenance Organization) groups, such as eMortgage, eDoc/eVault Interoperability, RON and SMARTDoc as a means of staying ahead of future requirements and an ability to work on different eVault platforms.

Wilzbach wrote that a common misperception of eVaults is that they are

24 MORTGAGE BANKER | JULY 2022

just for the storage of eNotes and other documents, including paper documents that have been wet-signed and uploaded into the eVault as part of a hybrid transaction.

“But they also must be compliant, provide a comprehensive audit trail to track various activities and actions, be seamlessly integrated with the Mortgage Electronic Registry System (MERS) eRegistry, and have the scale and connectivity to enable capital market transactions.”

“The true purpose of an eVault … is to reliably establish the person or entity to whom the single, transferable record of the digital loan is assigned, issued or transferred,” Wilzbach wrote. “It provides an immutable, tamper-proof eNote that financial institutions can rely on when they pledge, sell and securitize eNotes.”

This capability, he said, is crucial today

for capital market transactions. Fannie Mae and Freddie Mac both use eVaults and encourage eNote sales. Having an eVault is a requirement for delivering eNotes to these entities— and an opportunity to increase capital market efficiencies.

“Various types of lenders may experience different advantages to using eVaults. A portfolio lender, for example, might want to add an eVault to offer eClosings and eNotes that enhance their borrower experience and help them compete more effectively against national retail lenders,” Wilzbach explains.

“As a critically important component in digital mortgage lending, it’s not a matter of if lenders adopt eVault technology, but when and how,” concluded Wilzbach. “And more importantly, how successful they are in selecting an eVault provider with a proven track record to deliver.”

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.

Scott L. Luna Partner sluna@ravdocs.com 469-730-4607 Scott Luna’s practice is focused on real estate law with an emphasis on mortgage document preparation and land title issues. Scott managed a successful multistate highvolume title and document preparation business for over 20 years before joining RAV and is recognized throughout the real estate legal community for his expertise. As a past President of the Oklahoma Land Title Association, Scott’s ongoing involvement in the industry adds to his wealth of title-related knowledge. Scott received his Juris Doctor degree from the University of Tulsa College of Law in 1991 after receiving his Bachelor of Science degree from Texas A&M University.

Scott is currently licensed in Texas, Oklahoma, Missouri, Minnesota, Nebraska, and Kentucky.

Mitchel H. Kider Managing Partner

Gregory S. Graham

kider@thewbkfirm.com 202-557-3511

ggraham@bmandg.com 972-353-4174

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.

Co-Managing Partner

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 W. Brody, Esq. Mortgage Banking Practice Group Chair

jbrody@johnstonthomas.com 415-246-3995 James Brody actively manages all the complex mortgage banking litigation, mitigation, and compliance matters for Johnston Thomas. Mr. Brody’s experience centers on those legal issues that arise during loan originations, loan purchase sales, loan securitizations, foreclosures, bankruptcy, and repurchase & indemnification claims. He received his B.A. in International Relations from Drake University and received his J.D., with a certified concentration in Advocacy, from the University of the Pacific, McGeorge School of Law. He was a recipient of the American Jurisprudence BancroftWhitney Award. He is licensed to practice law in California and has been admitted to practice in front of the United States District Courts for the Central, Eastern, Northern, and Southern Districts of California.

In addition, Mr. Brody has served as lead litigation counsel for numerous mortgage banking and commercial related disputes venued in both state and federal courts, in a direct capacity or on a pro hac vice basis, in AZ, CA, FL, MD, MI, MN, MO, OR, NJ, NY, PA, TN, and TX.

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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