Mortgage Banker Magazine May 2021 by ambizmedia

FHA UPDATES

TECH RESOURCES

DATABANK MAY 2021

MortgageBanker MAGAZINE

MOST EFFECTIVE

DIGITAL TACTICS NMLS READIES FOR NEXT GEN MARKET TEMP

RISES IN SOUTH FLORIDA

A PUBL I C ATI O N O F A M E R IC AN B U S IN ES S M ED IA

KNOW IT ALL WHY LENDERS NEED TO BE SURE THEIR TEAMS ARE VERSED ON OPTIONS BEYOND TRADITIONAL PURCHASE LOANS

BACK COVER

Hey, San Diego! 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, August 12th, 2021

San Diego, CA

+ Free NMLS Renewal Class August 13th

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

PRESENTING SPONSOR

NONNQM SPONSOR

REVERSE MTG SPONSOR

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 resereve the right to determine ﬁnal eligibility.

FRONT COVER FHA UPDATES

TECH RESOURCES

DATABANK MAY 2021

MortgageBanker MAGAZINE

MOST EFFECTIVE

DIGITAL TACTICS NMLS READIES FOR NEXT GEN MARKET TEMP

RISES IN SOUTH FLORIDA

A PU B L I CATI O N O F A ME R IC A N B U S IN E S S ME D IA

KNOW IT ALL WHY LENDERS NEED TO BE SURE THEIR TEAMS ARE VERSED ON OPTIONS BEYOND TRADITIONAL PURCHASE LOANS

Howdy, San Antonio! 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 having a great time with your peers at our early year edition in San Antonio. Tuesday, May 18th, 2021

San Antonio, TX

+ Free NMLS Renewal Class May 19th

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

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May 2021 CONTENTS

Special

FEATURE 14

Nailing The Social Media Game Follow these tested digital marketing tactics for loan officers to draw in clients and grow their personal pipeline. BY ALEX CARAGIANNIDES

COVER STORY

Turning The Page: What Lenders Need To Focus On When The Mortgage Market Morphs BY ROB CHRISMAN

MORTGAGE OPPORTUNITY

THOUGHT LEADERS:

Decision Management Changes The Game

Moving Mortgage Digitization Forward

Advertising Compliance For Lenders

Automation Beyond Origination

Markets As Hot As The Sun It is full steam ahead for originators, but lenders need to remember how valuable their real estate relationships are—because none of us would be able to survive without them. BY MATT WEAVER

COMPLIANCE

From The Desk Of The ‘Om-Bobs’Man’: A New NMLS BY BOB NIEMI

Monthly

DEPARTMENTS 4

Editor’s Letter: Going To The Markets

May 2021 Authors

11 Mortgage Banker Calendar of Events 13 Databank 18 Mortgage Banking Lawyers 28 Regulatory Corner

MORTGAGE BANKER | MAY 2021 3

MortgageBanker 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. VINCENT VALVO, CEO, Publisher & Editor-in-Chief vvalvo@ambizmedia.com ASSOCIATE PUBLISHER Beverly Bolnick bbolnick@ambizmedia.com FOUNDING PUBLISHER Ben Slayton BSlayton@ambizmedia.com STAFF WRITER Katie Jensen kjensen@ambizmedia.com SENIOR EDITOR Jill Emerson Jill@ambizmedia.com ADVERTISING David Hoierman David@ambizmedia.com GRAPHIC DESIGN Stacy Murray smurray@ambizmedia.com HEAD OF ENGAGEMENT AND OUTREACH Andrew Berman andrew@ambizmedia.com INTERACTIVE DESIGN DIRECTOR Alison Valvo avalvo@ambizmedia.com ONLINE CONTENT DIRECTOR Navindra Persaud npersaud@ambizmedia.com USER EXPERIENCE DESIGNER Billy Valvo bvalvo@ambizmedia.com

L ET T ER FR O M T H E EDI TO R

Making Markets

aturally, the mortgage industry is obsessed rates. What will interest rates do? Where are they headed.? Are they trending in a way we can forecast, or are there factors foreclosing the foreseeable future? Second only to the rate obsession is the question of what markets will be most profitable. We are fortunate in this issue to have two insightful pieces giving guidance on what mortgage lenders should be concerned about. First, we take a look at a microcosm of a market: South Florida, and especially Boca Raton. There are many areas across the nation that have home sales on a rocket trajectory, but few are as heated as the markets in the Sunshine State. What is fueling this tremendous rise, how long might it last, and how can lenders best take advantage? The answers that work in southern Florida will be answers that work in marketplaces throughout the U.S. Meanwhile, our contributing writer, Rob Chrisman, is looking beyond the current rate and market environment. When purchase mortgages finally slow, and interest rates stabilize north of their current positions, it will be critical for mortgage lenders to have a full arsenal. More importantly, the sales teams need to be fully versed in what is available to them. It doesn’t help having a strong product line up if no one knows it’s there for sale.

MARKETING & EVENTS ASSOCIATE Melissa Pianin mpianin@ambizmedia.com www.ambizmedia.com

© 2021 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 345 North Main St., Suite 313, West Hartford, CT 06117 Phone: (860) 719-1991 | info@ambizmedia.com

4 MORTGAGE BANKER | MAY 2021

V IN C E N T M . VALVO

CEO, Publisher & Editor-in-Chief

May 2021 AUTHORS Alex Caragiannides

Alex Caragiannides is the Founder of BSM Vault. Alex’s work has been featured in Yahoo Finance, NBC, FOX and Finding Leadership Within Podcast among other publications.

Rob Chrisman

ALEX CARAGIANNIDES

ROB CHRISMAN

Rob Chrisman began his career in mortgage banking – primarily capital markets – 35 years ago in 1985 with First California Mortgage. Since then, he’s held a variety of high-level positions at mortgage banks across the country. Currently, he writes a daily commentary subscribed to by mortgage leaders nationally. He is on the board of directors of Inheritance Funding Corporation, a financial services company which advances capital to heirs, of Doorway Home Loans, of AXIS Appraisal Management, and of the California MBA. He is also a member of the Secure Settlements Advisory Board, an associate of the STRATMOR Group, and of the Mortgage Bankers Association of the Carolinas and its membership committee. Rob has provided expert witness services for mortgage and real estate-related cases, has lectured to groups around the country. He holds a BS from Cal Poly, San Luis Obispo, and an MBA from UC Berkeley.

Bob Niemi BOB NIEMI

Bob Niemi is a Senior Advisor for Financial Services at Bradley, a national law firm. He was formerly Ohio’s chief lending regulator . He has served as the NMLS Ombudsman, a state regulator, a mortgage leader, and now a regulatory compliance advisor.

Matt Weaver MATT WEAVER

Matt Weaver is Vice President at CrossCountry Mortgage. Matt has dedicated his life’s work, over 20 years, to create a better mortgage system and process for the real estate agent community and their clients.

MORTGAGE BANKER | MAY 2021 5

COVE R STORY

As Rates Rise, Mortgage Originations Need To Vary Portfolio LENDERS, WHAT ARE YOU GOING TO DO NEXT?

By R O B CHR IS M AN, M ORTG AGE BAN KE R M AG A ZIN E CON TRIB U TIN G WRITER

s we move through 2021, rates are going to do whatever rates are going to do. But how lenders react, or be more proactive than their competitors, will be what matters. And it may require some thinking outside of the box, a little more difficult on a Zoom call, but becoming easier as employees return to the workplace and can actually informally chat. Lenders have a variety of tools at their disposal which can be used to help new clients or retain old ones. For example, why should every loan originator care about the age of housing in their area? Do you, as a lender or vendor, have a product to help previous clients with renovations? The median age of owner-occupied homes across the U.S. is 39 years, according to the 2019 American Community Survey. New York comes in at 60 years (Washington DC is 79 years, but is not a state) and the states bottom out at Nevada which has the newest at a median age of 23 years. The age of housing is an important remodeling market indicator. We all know that older houses are less energy-efficient than new construction and ultimately will require remodeling and renovation in the future. And your previous clients, like the ones you gave 2.75 percent 30-year fixedrate loans to last year, may need a renovation loan, or another product if they use their homes for more purposes or require additional space.

KING CASH

Which brings up the topic of cash out refi-

6 MORTGAGE BANKER | MAY 2021

nances. The housing market has aware of what is being proposed been a solid gainer for most of to support affordable housing. 2020 and halfway through 2021. The plan’s overview calls for the A cash-out refinance swaps out funding to “produce, preserve, a borrower’s existing mortgage and retrofit more than 2 million with a new loan for more than affordable and sustainable places the current mortgage (provided to live.” the borrower has equity built up Any plan that includes buildin the home), with the difference ing or preserving more than 1 ROB CHRISMAN going to the borrower in cash, million housing units should usually for home improvements, matter to MLOs. paying off credit cards, or other financial One million units that in theneeds. Borrowers can usually “cash-out” up ory are affordable, resilient, to 80 percent of their home’s equity. Loan accessible, electrified, and enofficers should be well-versed in their comergy-efficient. The plan would pany’s programs. Yes, the rate will be higher also improve the infrastrucfor someone that you financed in the last ture of the roughly 1.2 million year, but if they need the cash, and the rate units of public housing that is lower than their credit card rate… currently exist. The plan will provide tax credits, competiAFFORDABLE HOUSING EFFECTS tive grants, and other forms of Financing existing housing stock is only one support to spur partnerships part of the equation that lenders are tuned between local government, into. Creating new housing opportunities nonprofits, and private develis important to the new Biden Administraopers, and it will leverage the tion, and originators should know what is government’s money with rehappening in Washington DC. Housing is sources in the private sector. included in the overall Infrastructure bill, as it should be given the role housing plays IN THE ZONE in stable communities. First-time home The plan tries to address some buyers are reliable neighbors and consumof these nonfinancial barriers. Small businesses are supported by more ers by also focusing on elimicustomers, and stable housing represents nating exclusionary zoning economic stimulus and economic developlaws, the structural policies ment for all businesses. on minimum lot sizes, parkWhile it may not be directly relevant ing requirements, and preferto your current clients, it is important for ence for single-family homes mortgage loan originators (MLOs) to be that often prevent affordably

LENDERS WHO ARE AWARE OF THESE TRENDS AND PROGRAMS, AND HOW TO TAKE ADVANTAGE OF THEM FOR THEIR CLIENTS, WILL COME OUT AHEAD.

billion to a record of $8.05 trillion at the end of 2020, according to data provided by the National Reverse Mortgage Lenders Association (NRMLA) and data analytics firm RiskSpan. A reverse mortgage does not require the homeowner to make any loan payments. Rather, the entire loan balance becomes due and payable when the borrower dies, moves, or sells the property.

priced development from being legally and economically feasible. And create a new grant program that awards funding to communities that remove these barriers. While there are details to work out, housing as infrastructure is an economic driver.

DIG DEEPER

PROGRAMMING VARIETY

Lenders are training their loan officers on down payment assistance programs (DPAs) for borrowers. (They vary wildly from payments that are forgiven, those that are deferred, or even those that are subsidized in some manner until eventual resale of the mortgaged property.) HELOCs are on the training menu as well as an alternative to

cash out refinancing. (The HELOC is a second mortgage that provides access to cash based on the value of the home, and is often thought of as a credit card tied to a home’s equity.) Some loan originators are marketing second mortgages to their existing clients, another lien taken against a property that is already mortgaged. (It is usually a lump-sum loan with a fixed term and rate. Homeowners may use the money from these second mortgages for any purpose.) Other MLOs are turning leads over to their reverse mortgage departments. Homeowners, aged 62 and older, saw their collective housing wealth increase by $234

As we head into the summer months, the press and many lenders will focus on the purchase market. But MLOs who are aware of these trends and programs, and how to take advantage of them for their clients, will come out ahead. Everyone talks about the weather, but knowing how to plan for it makes the difference between looking stylish and soaked shoes. MLOs and lenders can’t control interest rates, but MLO training on a variety of products will make the difference between another good year and losing your clients to someone who can help them.

MORTGAGE BANKER | MAY 2021 7

THE NATION’S LARGEST REGIONAL CONFERENCE IS BACK.

JUNE 10 — 11, 2021 MOHEGAN SUN CASINO & RESORT UNCASVILLE, CT

ATTEND FOR FREE* WITH PROMO CODE OCNFREE.

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 resereve the right to determine ﬁnal eligibility.

8 MORTGAGE BANKER | MAY 2021

WWW.NEMORTGAGEEXPO.COM PRESENTING SPONSOR

NONNQM SPONSOR

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MORTGAGE BANKER | MAY 2021 9

SERVING THE MORTGAGE BANKING COMMUNITY FOR MORE THAN THREE DECADES 202.628.2000

PROVIDING COUNSEL TO THE FINANCIAL SERVICES INDUSTRY FOR MORE THAN THIRTY YEARS SERVING THE REVERSE MORTGAGE INDUSTRY SINCE ITS INCEPTION

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202.628.2000 10 MORTGAGE BANKER | MAY 2021

MortgageBanker Calendar of Events MAY 2021

JULY 2021

AUGUST 2021

Wednesday, May 5 Mid-South Mortgage Expo Sheraton Memphis Downtown 250 N Main St, Memphis, TN 38103 www.midsouthmortgageexpo.com

Tuesday, July 13 2020 Carolinas Connect Mortgage Expo Embassy Suites Hilton Charlotte 4800 South Tryon St. Charlotte, North Carolina CarolinasConnectMortgage.com

Thursday, August 12 2021 California Mortgage Expo— San Diego Hyatt Regency La Jolla 3777 La Jolla Village Dr. San Diego, California CAMortgageExpo.com

Tuesday, May 18 Texas Mortgage Roundup – San Antonio Wyndham San Antonio Riverwalk, 111 E Pecan St San Antonio, TX txmortgageroundup.com

Thursday, July 22 2021 Arizona Mortgage Expo Wild Horse Pass Resort & Casino 5040 Wild Horse Pass Boulevard Chandler, AZ 85226 2021 Arizona Mortgage Expo www.azmortgageexpo.com

Thursday, Aug. 19 – Sun. Aug. 22 Originator Connect Planet Hollywood Resort & Casino 3667 Las Vegas Boulevard South Las Vegas, NV 89109 originatorconnect.com

Tuesday-Thursday, May 4-6 Mortgage Star Conference for Women Sheraton Memphis Downtown 250 N Main St, Memphis, TN 38103 www.mortgage-star.net

JUNE 2021

Thursday-Friday, June. 10-11 2021 New England Mortgage Expo Mohegan Sun Resort & Casino 1 Mohegan Sun Blvd. Uncasville, Connecticut NEMortgageExpo.com

Tuesday, July 6 2021 Ultimate Mortgage Expo Hotel Monteleone 214 Royal St New Orleans, LA 70130 www.ultimatemortgageexpo.com

Tuesday, Aug. 3 New York Mortgage Expo Crowne Plaza Suffern Three Executive Boulevard Suffern, New York 10901 Nymortgageexpo.com

DECEMBER 2021 Thursday, December 16 2021 California Mortgage Expo— Irvine Hilton Irvine/Orange County Airport 18800 MacArthur Blvd. Irvine, California CAMortgageExpo.com

Tuesday, June 15, 2021 Great North West Mortgage Expo — Portland Holiday Inn Portland South 25425 SW 95th Ave., Wilsonville, OR 97070 www.greatnorthwestexpo.com Tuesday, June 22 2021 Chicago Mortgage Originators Expo Holiday Inn Chicago SW 6201 Jollet Road Countryside, Illinois ChicagoOriginators.com

See www.mortgageconferences.com for more events. To submit your entry for inclusion in the Mortgage Banker magazine calendar of events, please e-mail the details of your event, along with contact information, to editorial@ambizmedia.com. All events are as of May 1, 2021 and are subject to change.

MORTGAGE BANKER | MAY 2021 11

All-New Two-Day Event Provides Market Insights & Measures MBA’s SINGLE-FAMILY RESEARCH & ECONOMICS SHOWCASE 2021 JUNE 23–24 • ONLINE

Led by Chief Economist Mike Fratantoni, Ph.D., MBA analysts will detail the most current results and insights from their residential surveys, forecasts and reports. Highlights include: •

Keynote on the Economy and the Mortgage Market

•

Latest Performance Benchmarking for Production and Servicing

•

Industry Volume and Demand: Demographics, Market Profiles and Players

•

Forbearance and Delinquency

•

Technology and Innovation

•

Staffing Issues

•

Views on the Future of the Mortgage Industry

MBA.ORG/RESEARCHSHOWCASE2021

22513

12 MORTGAGE BANKER | MAY 2021

MortgageBanker MAGAZINE

U.S. Homeowners Equity Over Time

Bank and Nonbank Servicing ($000)

DATABANK

Overall Mortgage Debt Since 2010

Mortgage Originations Actual & Projected | ($B)

MORTGAGE BANKER | MAY 2021 13

H EA DER

Picking the Winners

THE MOST EFFECTIVE AND TESTED DIGITAL TACTICS FOR LOAN OFFICERS

By A L EX CAR AG IA NNID ES, SPECIA L TO M ORTGAGE BAN KE R M AGAZ IN E

he power of digital marketing is undeniable. Within minutes of placing an ad, we have allowed our business to immediately interact with potential clients and increase awareness of our brand. Using a digital world right at our fingertips quickly gives us the ability to boost profits. Why is it then that we, as loan officers, continue this circle of relying on real estate agents to bring us clients instead of reaching directly to them ourselves? I know all too well how easy it is to be swept up in tradition. When I first became a loan officer, I listened to those who had come before me. After all, I had started out as a telemarketer who had to work his way to the position of loan officer. It has long been emphasized if a loan officer is not meeting their quota, then sales training must be the problem. My “ah-ha” moment came when I realized that is not necessarily true. Marketing is the more likely issue. I discovered I could target consumers directly using platforms like Google and Facebook to reach twice the leads as I was bringing in and was astonished at just how well the tactic worked. I was suddenly seeing 20 loans a month, up from just around three before I implemented my new strategy. As you begin planning your marketing campaign for this quarter, follow these tested digital marketing tactics I have designed for loan officers to draw in clients and grow your personal pipeline.

DEFINE YOUR TARGET AUDIENCE

The first step to successful marketing is knowing your target audience. If you do not know who you are speaking to, how will you know what to say? First, you need to make a choice between new homebuyers or refinance clients. A new buyer will have a different message than an investor. A new homebuyer might be willing to pay more for someone for helpful advice, while a refinance client is going to be 14 MORTGAGE BANKER | MAY 2021

shopping around for quotes. Your message needs to be in line with the type of client you are trying to reach. After choosing, you can take it a step further and carve out a specific niche. For example, when I was a loan officer working for my mentor, Samuel Webster, I found my role serving veterans. Other audiences you can choose to work with include luxury, sellers, listings, etc.

UNDERSTAND THE IMPORTANCE OF OMNIPRESENCE

Before kicking off your new marketing campaign, it is important to have a grasp of the three marketing vehicles: E-mail, text, and retargeting on Facebook and Google. To nurture and follow up with any campaign, all three must play a part in drawing customers to your mortgage business. Ads are only 10 percent of the equation. The other 90 percent comes from having the right systems, processes, and methodology in place. Implementing a campaign that incorporates a variety of social media platforms will help you capture and convert more leads online into sales. However, do not forget the importance of follow up, where email becomes quite the useful tool. Create customized templates to increase conversions and optimize your audience engagement. A powerful, diverse marketing strategy will increase your clients and get you the return on

your investment that a single platform cannot provide.

FOCUS ON CONTENT

You have two valuable assets at your disposal, and those are your contacts and content. The content you post across platforms needs to be original. It will not do you any good to use content that might appear on hundreds of other ads. Through unique content, you can control your own narrative. Your story and your message matters. It is how you set yourself apart from the competition and make home buyers interested in choosing you as their lender. You can use the content to teach home buyers not only about your company, but helpful, mortgage-related tips. This causes the audience to begin viewing you as a learning source and expert.

KEEP UP WITH YOUR GROWING CONTACT LIST

You never know when a contact is going to find the home of their dreams and turn to the professional, they trust to walk them through that process. It is time for lenders to make a stand and stop the cycle of relying on other professionals in the real estate industry to bring us customers. We are more than capable of increasing our digital footprint with a marketing plan that aligns with our business goals.

Attend for FREE, use code: OCNFREE

The Originator Connect Network presents the

Renew your NMLS for free!* Enjoy our complimentary complete 8-hour NMLS renewal course, taking place on June 16th, when you attend the event.

Great Northwest Mortgage Expo — Portland Edition. Join us for a lineup of engaging events centered around networking, skill-building and having a great time with your peers. There will also be a wide variety of exhibitors and workshops on topics to educate and enhance the opportunities for mortgage pros throughout Oregon.

Attend for FREE with code OCNFREE

June 15, 2021 Portland, OR www.greatnorthwestexpo.com TITLE SPONSOR

NON-QM SPONSOR

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Attend for FREE, use code: OCNFREE

Find an event near you at originatorconnectnetwork.com Conditions apply for eligibility to attend the free NMLS renewal course. Complimentary registration available to NMLS-licensed active LOs and their support staff.| Show producers MORTGAGE BANKER MAY 2021 15 reserve the right to determine final eligibility. To find out how we’re keeping attendees safe, visit originatorconnectnetwork.com/covid19

MORTGAGE EDUCATORS MAKES US BETTER. Offers SAFE NMLS CE education

Increases our membership and helps CAMP grow Provides engaging, entertaining and professional trainings Live classroom and webinar options Supports and sponsors trade shows and chapter events

At Mortgage Educators & Compliance, we help businesses and associations like CAMP thrive by making compliance painless, and fun. Connect with us, and we’ll show you how we can make YOUR business better. — David Luna, President 16 MORTGAGE BANKER | MAY 2021

NMLS PROVIDER #1400062 (8777 40331428 MortgageEducators.com

MORTGAGE BANKER | MAY 2021 17

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.

Ja Mort

Thomas King Attorney

Mitchel H. Kider Managing Partner

Gregory S. Graham Co-Managing Partner

tking@ravdocs.com 713-980-9521

kider@thewbkfirm.com 202-557-3511

ggraham@bmandg.com 972-353-4174

jbrod

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 Co-Managing 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.

James Br the comp litigation matters f Brody’s e legal issu originati loan secu bankrupt indemnifi his B.A. i from Dra his J.D., in Advoc of the Pa of Law. H American Whitney practice been adm the Unite the Centr Southern addition, lead litig mortgage related d and feder or on a p FL, MD, PA, TN, a

18 MORTGAGE BANKER | MAY 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.

ames W. Brody, Esq. tgage Banking Practice Group Chair dy@johnstonthomas.com 415-246-3995

rody actively manages all plex mortgage banking n, mitigation, and compliance for Johnston Thomas. Mr. experience centers on those ues that arise during loan ions, loan purchase sales, uritizations, foreclosures, tcy, and repurchase & fication claims. He received in International Relations ake University and received with a certified concentration cacy, from the University acific, McGeorge School He was a recipient of the n Jurisprudence BancroftAward. He is licensed to law in California and has mitted to practice in front of ed States District Courts for ral, Eastern, Northern, and n Districts of California. In , Mr. Brody has served as gation counsel for numerous e banking and commercial disputes venued in both state ral courts, in a direct capacity pro hac vice basis, in AZ, CA, , MI, MN, MO, OR, NJ, NY, 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.

Chicago

June 22, 2021

+ Free NMLS Renewal June 23rd

www.chicagooriginators.com Enjoy free registration* using our code OCNFREE

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

MORTGAGE BANKER | MAY 2021 19

ADVERTORIAL

THOUGHT LEADER Logic Unleashed with Decision Management Decision Management: A New Approach

Harold Westervelt

General Manager and CEO

magine what a game changer it would be if your business could optimize operations and seamlessly improve the borrowing experience with a smaller, more efficient team. Picture a scenario that maximizes your mortgage operation by lowering the cost per loan, enabling you to underwrite more loans with your existing team and create new products within hours. And finally, envision the cherry on top – a more stable and secure future without the rapid staffing build-ups and inevitable layoffs that typically mar the mortgage industry.

Pain points for Mortgage Lenders

Many obstacles impede this gamechanging scenario: • Loan Origination Systems (LOS) are difficult to update/maintain and error prone • Reliance on vendors and overworked IT resources for updates that can take months • Manual processes and checklists are still prevalent

There is a need for a better approach, one that allows lenders to use their current systems in a more efficient and effective way to drive savings through automation and respond to market changes faster. Leading national mortgage lenders and GSEs have been deploying decision management solutions because they address the enormous complexities of the industry. With decision management, changes can be made in near real time, enabling the business to be more responsive. That’s because logic that’s hard coded in LOS business rules is extracted and managed as a separate asset, independent of the technology. There is no need to “rip and replace” existing systems; decision services allow you to do more with your existing technology. Centralized business logic can be quickly accessed and shared across multiple systems to reduce costs. Logic is maintained in a decision model written in simple English that non-IT users can easily update with a “no code” platform.

Benefits of Decision Management

Historically, mortgage technology has not always been user friendly or flexible, forcing loan officers to adapt processes to suit the technology. Lenders rely on the vendor or overworked IT staff for changes or updates, creating backlogs. Decision management enables business users, like loan officers and originators, to make updates directly, decreasing dependency on IT staff by 90%. Lenders must stay on the competitive edge by offering a wide variety of products to keep loan officers engaged with customers, but not get slowed down by time-consuming, manual processes and checklists. Decision management can enable marketers and loan

originators to create products quicky and automate outdated processes. Decision management addresses pain points across the end-to-end process, including: Origination - Existing systems can be extended with business logic to oversee data quality and compliance. Price and process more loans with greater confidence and fewer errors. Underwriting – Lender and GSE requirements can be updated immediately to increase turns. Closing - Replace or reduce the repetitive manual intervention during redisclosure process. Securitization - Gain more control with a complete logic set by program and customer. Servicing - Quickly update rules consistently and automate checks to streamline operations. By modernizing traditional business rules management, decision management transforms how lenders approach and manage change. Speed: • Reduce turnaround times by 40-50% • Introduce and update products quickly Control: • Production errors reduced with clear traceability • Reduce dependence on vendors and overworked IT resources Growth: • Handle more volume without adding resources • Supercharge your LOS and other mortgage systems Sapiens Decision provides decision management solutions to the mortgage industry. Visit Sapiens Decision for more info.

THE ‘OM-BOBS-MAN’

NMLS Wants Input On Next-Gen System

By R O B ERT NIEM I , M ORTG AGE BAN KE R M AG A ZIN E CON TRIB U TIN G WRITER

he Conference of State Bank Supervisors (CSBS) is requesting your input on their latest proposal to develop a ‘next generation’ system to anticipate and accommodate the needs of the Nationwide Multistate Licensing System (NMLS). While first posted on the NMLS Resource Center on March 31, the CSBS first provided insights during the 2021 Annual NMLS Conference and has since followed up with press releases, videos and several podcasts to support the initiative. NMLS Modernization is a core component of this effort to support how regulators will incorporate Networked Supervision. One video highlights this process as a ‘dynamic’ and ‘collaborative approach’ to regulatory supervision. The video also discusses improvements in technology, increasing collaboration and harmonizing of state policies as part of the effort. While Networked Supervision may not be as visible to the mortgage industry, the money services businesses have experienced this regulatory coordination for several years. One area where mortgage companies have experienced Networked Supervision is the implementation of the State Examination System or SES. While state regulators have worked to align examination processes for larger companies, the SES is in the final deployment for state regulators. The SES utilizes information captured from within the NMLS from licensing data and mortgage call reports. This data is then risk evaluated to help focus multistate exams on companies with increased potential risk. The SES also shows more of the concept of Networked Supervision by how the state regulators share information, data, and coordinate efforts while relying on other state regulator’s work as part of the examination process. This includes full information sharing among states, common standards, data standardization and interdependent reviews to formulate the examination report. The concept of One

Company, One Exam has also recently evolved to mortgage. A modernized NMLS is also crucial for improved technology platforms that support a data driven and automated process. This is not NMLS 2.0 but a framework for how the technology will evolve to support the coordinated licensing and supervisory process that is to become the foundation of the modernized NMLS. Once achieved, NMLS could then provide a more user-friendly system for applicants, licensees and regulators. There are also goals for a single point of contacts where one state regulator takes the lead on multistate applications, changes in control and more. The alignment of application information, how the information is processed will be crucial for Networked Supervision to succeed. Networked Supervision is not new, but this evolution of the Networked Licensing Model is novel for mortgage licensing. While the core components of the state specific license requirement are based in the federal SAFE Act, ten years of regulation has brought alignment and disagreement in how states review applications and to process changes in control. So this challenge can benefit from your company’s review and comment on this proposal. Each company holding an NMLS license should submit one single response that represents the company’s comments and feedback. Please note that submissions must include company contact information. Your comments should be emailed to comments@csbs. org by May 31.

MORTGAGE BANKER | MAY 2021 21

ADVERTORIAL

THOUGHT LEADER Mortgage Technology Adoption In The Age Of Covid

Vladimir Bien-Aime, CEO and President

lthough COVID-19 has had a dramatic impact on the U.S. economy, and disrupted so many businesses, the mortgage industry had a remarkable 2020. However, there is a silver lining. According to a new McKinsey Global Survey of executives, their companies have accelerated the digitization of operations by three to four years, and the amount of technology products in their portfolios has accelerated by a shocking seven years. One thing that is certain, change in the mortgage industry is inevitable and lenders that want to stay competitive need to get ahead of the curve. The mortgage industry has traditionally been very slow to embrace new technology. This line of business has been historically affixed with individuals that are part of the late majority and laggards and not the innovators and early

adopters of the technology adoption curve. These industry participants often resist change and impede the forward movement of their organizations as a result – only driven by regulation, GSE policy and necessity. It’s hard to believe that it took until 2011, when the GSEs mandated the MISMO 2.6 GSE format for appraisals, for Adobe PDF to become the standard for delivering appraisals. One of the unexpected ramifications of the pandemic was the necessity for businesses to deploy technology to continue to operate effectively. This game changer forced many mortgage lenders to reevaluate their current processes and technologies to better facilitate managing remote employees, vendors, and clients while adhering to social distancing guidelines and restrictions. Many lenders were ill prepared and had to scramble to implement even common technologies, like VOIP phones, to facilitate essential business functions. This shotgun approach often caused significant disruptions to their business operations, which shows that acquiring technology under significant pressure with a limited staff can be extremely tough. Lenders that never would have considered cloud-based technology solutions had to quickly reconsider their viewpoint, since traditional in-house implementations on considerably compacted timeframes were virtually impossible. Many lenders gravitated to solutions that replaced their legacy client-server technologies and opted for versatile, mobile, and plug-in-play solutions that could be implemented quickly and remotely. When you consider the numerous platforms lenders must utilize to conduct their business, it’s not surprising that many are

still in transition. Lenders were forced to prioritize the replacement of critical systems and have been systematically migrating parts of their infrastructure to maximize their efficiency in this new environment. Of course, lenders must allocate the appropriate resources to facilitate so much change, meaning they should only focus on projects that yield the most return on investment (ROI). The traditional appraisal process is extremely manual, timeconsuming, and resource intensive – thus allowing significant opportunity for improvement. This process, if not managed properly, can delay closings, frustrate borrowers, and kill deals. However, the right appraisal management technology can deliver remarkable ROI by automating manual processes, connecting systems, cutting hard-costs, and reducing man-hours. Global DMS’ EVO cloud-based platform is revolutionizing the way lenders manage collateral by streamlining the entire appraisal process through workflow automation, smart logic, transparent communication, and system connectivity. EVO gives clients the ability to easily implement and change their valuation process independently without costly and time-consuming IT projects. This next generation appraisal management platform can also completely automate the entire real estate appraisal process and provides the industry’s only Compliance Guarantee Program. Best of all, EVO’s complete configurability allows for a seamless implementation experience that can be completed in days.

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775-970-5539 MORTGAGE BANKER | MAY 2021

South Florida Housing Market Brings the Heat

CASE STUDY: BOCA RATON REFLECTS PRESSURES THROUGHOUT NATIONAL INDUSTRY By M AT T W EAVER , S PECIA L TO M ORTGAGE BAN KE R M AG A ZIN E

he trends happening across the country in several major housing markets—low housing inventory, higher sales, soaring home prices, and competitive bidding on homes—are happening in south Florida and the area of Boca Raton. In other vacation destinations like Cape Cod, Lake Tahoe, and even President Biden’s vacation home of Rehoboth Beach, Delaware, sales and home prices have picked up substantially. However, South Florida is really heating up as homeowners flee big cities in the Northeast for warmer climate—a trend due, in part, to the COVID-19 pandemic. The National Association of Realtors reported existing-home sales fell 2.2 percent in the Northeast from December 2020 to January 2021 and 4.4 percent for the West region. In the South, however, for the same timeframe, existing home sales grew 3.2 percent. In our home of Boca Raton, sales have soared by nearly 50 percent from one year ago. Meanwhile, home prices have increased by nearly 15 percent over the past year and housing inventory is down by nearly 50 percent. This is an unprecedented level of activity, and it’s happening throughout south Florida, in Palm Beach, Miami Beach and Key West. Further northwest, inside and outside of Tampa, home prices are also growing substantially. It probably goes without saying that it is full steam ahead for originators, but it also reminds lenders of how valuable their real estate relationships are—because none of us would be able to survive without them.

WHY EVERYONE LOVES SOUTH FLORIDA

Boca Raton has always been a popular destination for retirees and people looking

24 MORTGAGE BANKER | MAY 2021

for a second home and warmer weather. But right now, we are seeing unparalleled demand from homebuyers relocating from New York, New Jersey and even from California. This past summer, ICG World’s Miami Report reported that nearly 1,000 people were moving to Florida every day. There are other factors fueling the local housing market besides the search for a sunnier climate. For example, most of Florida has remained open during COVID-19; there are very few restrictions involving gyms, restaurants, and other public spaces. It’s also one of the most taxfriendliest states in the country, as there’s no personal income tax and no inheritance tax. But the droves of people moving to our state is creating some pandemonium in the housing market. Boca Raton is a microcosm of a national trend. Homeowners can work remotely, from anywhere in the country as long as they have a computer, company software and a secure Wi-Fi network to guide them. As a result, remote work has opened the door to moving to not only closer to a vacation or possibly a retirement destination but, in some cases, closer to family. In Boca Raton, like other areas of South Florida and across the country, housing inventory is at the lowest level we’ve

ever seen, and multiple offer situations are occurring at every price point. It’s not uncommon to get five, 10 or even 15 offers on a property. Homebuilders have been caught completely off-guard as well. As with other areas of the country, housing developers and homebuilders need to put out more product, but it’s not happening fast enough. Local buyers are particularly struggling right now. If you’re trying to sell your home to move up to a bigger home, you’re suddenly competing with a large number of out-of-state buyers for a smaller number of properties. Many such buyers have no idea how long it’s going to take them to find the right house and get an offer accepted. For this reason, post-settlement agreements, which enable home sellers to continue living in their home until they find a new one, are becoming extremely popular.

LOYALTY AND TRUST

Most lenders work at building and nurturing real estate partners. But in this climate, the bond between agent and lender has never been more essential to survival. In fact, as challenging as the current market is for lenders, it’s the real estate agent who is tasked with putting and keeping deals CONTINUED ON PAGE 26

IT PROBABLY GOES WITHOUT SAYING THAT IT IS FULL STEAM AHEAD FOR ORIGINATORS, BUT IT ALSO REMINDS LENDERS OF HOW VALUABLE THEIR REAL ESTATE RELATIONSHIPS ARE— BECAUSE NONE OF US WOULD BE ABLE TO SURVIVE WITHOUT THEM.

MORTGAGE BANKER | MAY 2021 25

FLORIDA

CONTINUED FROM PAGE 24

TECH RESOURCE DIRECTORY

together under extraordinarily difficult conditions—conditions that are only going to get tougher as spring homebuying season kicks into full gear. On every deal, both lender and agent must work as a team in order to react quickly to a highly competitive bidding market. The goal is to place our shared clients in the best position to get offers accepted. If our real estate partners are working long hours—which they are—so must we. We’re operating on call, seven days a week in order to generate preapprovals and loan approvals as quickly as our shared clients need them. Fortunately, our focus has always been on the purchase market. We are hyperfocused on real estate agents and building long-term, sustainable relationships with them. The agents we work with have treated

Global DMS

us well for years, and right now, they need us. That means we can’t have our pipelines tied up by going after quick low hanging fruit. For originators in this market, there’s a real danger of being overwhelmed with refinances and not being there for buyers and real estate partners when they need us most. There’s an obvious risk in promising more than you can deliver just to get an agent’s business. That’s why it’s so critical to have the operational infrastructure, including administrative and underwriting staff, to be able to scale production and act quickly. At the same time, originators aren’t just serving buyers and the buyer’s agent. They also need to earn the trust of the listing agent and the home seller, who will both be relying on the lender’s ability to follow

RES.NET

through quickly. Boca Raton and South Florida may be an exaggerated example, but it is also symbolic of the trends happening in a number of markets nationwide. As the spring market continues to heat up, the lessons originators are learning here—which we already knew from our experience—can be applied everywhere. The good news about working in such a tough environment is that once you help a buyer overcome all these obstacles, and keep in contact, you likely have a customer for life. And when you pull through for your real estate partners, you’ve not only shown your loyalty but earned their trust as well. Matt Weaver is vice president of CrossCountry Mortgage.

Smarsh

http://www.globaldms.com Lansdale, PA

https://www.res.net/ Lake Forest, CA

http://www.smarsh.com Portland OR

What Tech Tools Does Your Company Offer? Global DMS empowers residential and commercial lenders and AMCs with intelligent appraisal management software. We offer the most advanced appraisal technology on the market called EVO™, with a purposeful departure from the outdated processes of older platforms.

What Tech Tools Does Your Company Offer? Since its inception, RES.NET has been the premier software solution in the mortgage servicing and private lending space - providing workflow and transaction management tools that focus on transparency within real estate-owned portfolios. RES.NET is an off-the-shelf enterprise application that evolves with our client’s collaboration and allows users to create custom workflows, supporting traditional, rent-to-market, reverse mortgage conversions, mobile chattel, renovation, investment and capital markets; all within Retail, Real Estate Owned, Valuation, and Default Servicing transactions. The platform’s flexible architecture can be easily modified to meet the specific needs of each client without requiring lengthy development cycles.

What Tech Tools Does Your Company Offer? We provide companies with a better way to capture, store, and monitor their communications. We enable our customers to focus on innovation and growth, while our industry-leading solutions enable them to manage communications compliance. This has been our core focus for 20 years. We believe that this is more important now than ever.

Built with the user in mind, EVO was designed to streamline the appraisal experience with a 100% configurable design that automates routine tasks, provides user-friendly navigation, alerts you along the way, gives you powerful reports, and has the only true cascading decisioning tool. EVO reduces turn-times by 30% by helping you work smarter and comes with the industry’s only compliance guarantee. 26 MORTGAGE BANKER | MAY 2021

ADVERTORIAL

THOUGHT LEADER How Mortgage Lenders Can Ensure Compliance with Advertising Regulations

s a mortgage lender, there are a multitude of regulatory recordkeeping requirements your firm must address to avoid financial penalties, legal action or reputational damage. This includes Regulation N, also known the Mortgage Acts and Practices Advertising Rule or the MAPs rule, and Regulation Z, the Truth in Lending Act. Managing these obligations is a necessary part of doing business. However, for most mortgage companies, the process is typically disjointed. Some organizations keep manual logs and spreadsheets of website changes, social media posts, marketing emails and more to meet advertising retention and monitoring regulations. Or they may capture certain social media channels in one archiving platform but use another platform for emails — requiring extra time and effort to pull together content for an audit or legal event. The process of searching for, monitoring and producing advertising and electronic communications records is time consuming, and can lead to unexpected costs down the road. If your records aren’t comprehensive or intact, you could face fines, penalties or even reputational damage.

A compliance solution built for today’s mortgage lenders

he good news is ensuring compliance with advertising regulations can be easier and more dependable with the right solution in place. With modern archiving technology, all records can be securely captured and stored in

one place and then quickly accessed and produced when necessary. Smarsh solutions capture social media, email marketing and other electronic communications in their original format, along with accurate snapshots and dynamic views of your website advertising. These solutions are easy to use so you can monitor and find information when it’s most critical. Free self-service exports allow for quick collection and production of data for auditors, legal cases or internal review. Built for today’s mortgage lenders, Smarsh solutions: • Capture 80+ channels of electronic communications in full context • Offer fast, secure and consistent access to your data • Empower key stakeholders with purpose-built, easy-to-use workflows • Let you easily download the data you need with free self-service exports

Additional business benefits of a streamlined archive Reduce risk. Ensure your organization is compliant with records retention and supervision requirements. Be ready for any future audits, examinations or legal matters. Additionally, you can detect internal risk like employee misconduct in your organization before it becomes a problem. Smarsh helps you

automatically narrow your search for questionable content with built-in, intelligent lexicon policies. Save time and resources. All your communications data is stored in one place, eliminating the need for multiple archiving tools catered to individual channels. Smarsh solutions have a user-friendly interface, making them easy to use, so you don’t have to tie up technical resources to collect the information you’re looking for. Enable employees to communicate. Smarsh continues to invest in archiving new communications channels so you can capture the latest social media and marketing communication tools. As platform preferences change and evolve, you’ll be able to quickly and easily add new channels to enable employee and client communication where it’s optimal in the moment. “Worrying about complying with regulatory requirements for social media capture used to keep me up in the middle of the night. Thanks to Smarsh, I can sleep much better.” –Lonny Elfenbein Compliance Consultant, the O.N. Equity Sales Company (ONESCO) To strengthen your communications compliance programs and avoid potential regulatory and legal risk, visit www.Smarsh.com.

CO M P LI A N C E

REGULATORY CORNER FEDERAL COMPLIANCE HUD: HOUSING INSPECTIONS HUD Secretary Fudge announced that HUD will substantially increase housing inspections beginning on June 1, 2021. Last year, in response to the COVID-19 pandemic and in line with public health guidance, HUD took many steps to protect HUD-assisted households and the people who provide that assistance from exposure to COVID-19. Among those steps was the suspension of most in-person housing inspections by the Real Estate Assessment Center last year along with waivers that enabled Public Housing Authorities and Multifamily housing owners and managers to reduce activities that could contribute to COVID-19 transmission. Multifamily housing owners and property managers were informed on Friday that HUD has developed detailed protocols guiding all aspects of the inspection process. HUD, in collaboration with the CDC, will implement additional protocols and associated safety measures, including: • The inspection of high priority/risk properties for both the Public Housing and Multifamily portfolios before other properties. • Evaluation of known property-specific health conditions prior to the inspection. • Regular COVID-19 testing of inspectors and efforts to facilitate the vaccination of inspectors. • Travel and quarantine guidelines for inspectors. • Detailed operational protocols for inspectors pre-inspection, during the inspection, and post-inspection reviewed by the CDC. • Ability for residents to opt-out of unit inspections when inspectors arrive onsite.

HUD: EQUAL ACCESS RULE Also, HUD announced it is withdrawing the previous administration’s proposed rule that would have weakened the Equal Access Rule. The Rule ensures that all individuals, regardless of sexual

28 MORTGAGE BANKER | MAY 2021

orientation or gender identity, have equal access to the Department’s Office of Community Planning and Development programs, shelters, other buildings and facilities, benefits, services, and accommodations. HUD also announced it is releasing technical assistance resources to HUD grantees. These resources will support HUD’s Office of Community Planning and Development grantees in implementing the Equal Access Rule.

FHFA: EXTENSIONS The FHFA announced that Fannie Mae and Freddie Mac will extend some temporary loan origination flexibilities until May 31, 2021. All temporary flexibilities were originally set to expire on April 30. Alternative appraisals on purchase and rate-term refinance loans are among the flexibilities that will now be extended through May 31, 2021. Those temporary flexibilities related to employment verification, condominium project reviews, and expanded power of attorney are being allowed to expire as scheduled on April 30, 2021. Due to low usage of the temporary flexibilities, FHFA expects to retire all temporary selling flexibilities on May 31, 2021.

FHA: UPDATES TO FHA SINGLE FAMILY HOUSING POLICY HANDBOOK The FHA announced the publication of an update to the Servicing and Loss Mitigation section of the FHA Single Family Housing Policy Handbook4000.1. The update streamlines many standard operational requirements for mortgage servicers, including revising FHA’s loss mitigation home retention “waterfall” so that servicers can more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure. Additional changes streamline and enhance many servicing requirements to provide more consistency with industry practices and

reduce barriers to servicing FHA-insured single-family mortgages.

CFPB: INTERIM FINAL RULE ON FDCPA The CFPB issued an interim final rule in support of the CDC’s eviction moratorium. The CFPB’s rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium. In its press release, the CFPB said debt collectors who evict tenants who may have rights under the CDC’s moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state attorneys general for violations of the FDCPA and are also subject to private lawsuits by tenants. A temporary eviction moratorium ordered by the CDC has been extended through June 30, 2021. The CDC order generally prohibits landlords from evicting tenants for non-payment of rent, if the tenant submits a written declaration that they are unable to afford full rental payments and would likely become homeless or must move into a shared living setting. This prohibition applies to an agent or attorney acting as a debt collector on behalf of a landlord or owner of the residential property. Under the FDCPA interim final rule, debt collectors, including attorneys, seeking to evict tenants for non-payment of rent must provide tenants who may have rights under the CDC order with clear and conspicuous written notice of those rights. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed. The CFPB is providing debt collectors with

sample language to satisfy the rule’s disclosure requirements.

The interim final rule will become effective May 3, 2021, with earlier compliance optional. Comments due by May 10, 2021.

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ADVERTORIAL

THOUGHT LEADER Automation Beyond Origination By Greg Council

much of this work can occur automatically allowing staff to focus on what is most important. The result is a set of compliance and quality control processes that are consistent, compliant, comprehensive, and efficient.

ecent advances in machine learning have begun to significantly impact loan origination and other key processes, especially those focused on quality control and compliance. Most applications of document automation technology are rightfully centered around the still cumbersome processes within loan origination, including confirmation of receipt and data entry. There are also a number of related processes that greatly benefit from document automation. The reality is that while document identification and automated data entry are cornerstone functions of document automation software attractive within origination, there are often functional limitations of these solutions that prevent wider adoption into other key processes. This has been especially true for those focused on quality control and compliance. But machine learning is having a significant positive impact. Let’s first establish some context for this recent development. Context #1: The Difference between Compliance Technology and Document Automation The market is full of compliance-enabling solutions for banking and lending operations that serve to streamline complex, regulated functions. The core value of these solutions often revolves around the ability to create and manage a controlled process, typically with encoded rules based upon internal and government regulations that enable consistent and comprehensive compliance. Process management aspects such as validations by staff, adherence to specific process steps, and reporting are key to delivering value. Yet few of these solutions offer automation that extends to the unstructured, document-based information that is often a critical component within lending-related processes. Rather, solution functionality focuses on the process-specific controls and reporting, leaving the tasks that involve working directly with documents as largely manual. Documents are presented by the software and staff identify them and marked as received. Data within specific documentation is located and typed into LOS by loan officers. Document automation solutions work hand-inhand with compliance solutions to automate those document-oriented tasks with the goal of taking a controlled process and making it as close a straightthrough process as possible. Instead of requiring staff to perform manual tasks which slow down a process,

Context #2: OCR is not Document Automation One still major misconception in the market is that optical character recognition (OCR) is the same or similar to document automation. It is not and the introduction of OCR capabilities by the major cloud platform providers further confuses the point. At a basic level, OCR simply converts images of text to machine readable text. That’s it. More advanced OCR software might enable what is called “document conversion”, taking a scanned document and converting it, word for word, font for font, and even tabular data and pictures, into an editable format such as Word or Google Document. With document automation, OCR is simply a prerequisite step to move on to other tasks and only if the document in question is an image and not a born-digital document such as a searchable PDF. If you think about document automation as a sort of Maslow’s Hierarchy of Needs, OCR would be on the bottom, but it is hardly the last step to achieve true automation. On top are a number of technologies and techniques, each designed to optimally locate and extract into a structured format, the precise information an organization needs and nothing else. Using OCR simply gets you all the text into a machine-readable format. It does not convert unstructured information into precise, structured data. Examples of other critical steps beyond OCR are the ability to identify documents and separate them if needed, the ability to freely locate data where there is no standardized format, and the ability to validate data automatically such that staff are not required. And when it comes to processes that go beyond even the technology and techniques employed by document automation software, there are yet other challenges. Moving Beyond Basic Automated Document Classification and Data Entry There are many organizations that consider automation of any document-related task as anything but basic and this is certainly the case within lending where the range of documents and data can be considerable. Even so, solutions abound that claim to automate these tasks in service of common loan origination scenarios including the ability to train systems on how to identify that one document is a W-2 while another is a bank statement. Most of these solutions, however, have a common underlying limitation: reliance upon analysis of text. Out of scope are any processes which require review of non-textual data such as signatures, initials, and notary stamps. Yet verification of this non-text data is critical with processes such as post-closing quality control audits.

While many solutions can automate to some level the process of identifying documents and data within a loan file, when it comes to review of non-text information, it is a very manual process. Staff must locate and order documents to support sifting through specific paperwork, verifying multiple requirements such as presence of signatures on specific documents, presence of initials in the proper locations on documents and identifying that required notary stamps, signatures, and dates are present. While some organizations have tried creative solutions such as counting the number of pixels in a given location or attempting to train machine learning on how to detect curves or shapes that signify handwritten information, the results haven’t been good at all. The upshot is that there is a significant gap between where the compliance industry wants to be and where we are now. Towards Complete Automation But what if there is technology out there that can reliably discern between a signature or initials and a bunch of pixels? That could find this information without any need to create templates or rely upon variable keywords? The reality is that in order to solve these problems, the software has to do it better than a human – it has to be able to quickly view a document and easily locate and verify the presence of this non-textual information. And it has to also know what documents and which pages within those documents are the most likely to contain this information. Technology Driving New Levels of Automation The answer is that a combination of deep learning neural networks applied to the problem based upon emulating human vision is makes automation of this more-complex task a reality. This technology is trained on a large corpus of data both lending-related documents and discrete signatures, initials, and stamps of all sorts. In doing so, the system quickly and reliably separates text-based information from the targeted data. The next step is that the software is trained to understand what documents are within the scope of review. There is really no need to parse a bank statement or W2 form, so the system learns how to quickly evaluate the document and determine whether it needs further analysis. And software can even be trained to compare one signature in a file to another to ensure that the same person was signed on all required pages. A Revolution in Applications The technology driving this new level of automation is not new – it is being used in bank and government processes to root-out fraud; but the application of it towards compliance within other processes feels much more like a revolution than mere evolution. Greg Council is the VP of Marketing and Product Management at Parascript.

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Mortgage Banker Magazine May 2021

Articles inside

South Florida Housing Market Brings the Heat

NMLS Wants Input On Next-Gen System

Picking the Winners

As Rates Rise, Mortgage Originations Need To Vary Portfolio

Regulatory Corner