Mortgage Banker May 2023

MortgageBanker

REVERSE FAILURE

Some HECMs are being turned against borrowers

BETTER THAN REFIs

Take a second look at second liens

FHFA’S LLPA LOGIC WOES

Low-level pricing adjustments won’t help affordability

CONQUERING THE EMPIRE

HOW SOME MORTGAGE PROS ARE THRIVING DESPITE NY’S IRON FIST OF REGULATION

Shah Tehrany, CEO, Madison Mortgage Services, Long Island, NY

Know-how that wastes you forward. no time moving

Our commercial banking team can help you map the cash moving in, through and out of your business with next-level know-how. So, no matter which way it moves, you can be sure it’s moving you forward.

REGULATORY CORNER

REMINDER REGARDING USE OF HOMEOWNER ASSISTANCE FUNDS WITH FHA-INSURED MORTGAGES

The Federal Housing Administration (FHA) is reminding servicers about the use of the U.S. Department of the Treasury’s Homeowner Assistance Fund (HAF).

This fund helps borrowers with FHA-insured single family forward mortgages and Home Equity Conversion Mortgages (HECM) who are struggling with their mortgage payments.

The American Rescue Plan Act of 2021 established HAF to provide financial assistance to eligible homeowners who suffered hardships during the COVID-19 national emergency. Through HAF, eligible homeowners can receive assistance to cover qualified expenses that may include housing-related costs.

Servicers of FHA-insured mortgages are required to inform distressed homeowners about funds available through their jurisdiction’s HAF program. As allowable by the homeowner’s HAF program, HAF may:

• Be used to bring the homeowner’s mortgage current;

• Be used in combination with certain FHA loss mitigation options for single family forward mortgages;

• Reduce the balance or pay off the homeowner’s outstanding loss mitigation partial claim, even if their mortgage payments are now current;

• Be used in combination with the COVID-19 HECM Property Charge Repayment Plan; and

• Pay for delinquent property tax and homeowners insurance charges on defaulted HECMs, if permissible under their jurisdiction’s HAF program guidelines.

FHA also has expanded the definition of imminent default to include homeowners who qualified for HAF. With this change, servicers will be able to offer additional loss mitigation options to borrowers who qualified for or used HAF funds and may no longer technically be delinquent but require further assistance to avoid redefault.

For additional guidance, servicers and other interested stakeholders should view the FHA FAQs webpage at www.hud.gov/answers and click on the Treasury Homeowner Assistance Fund (HAF) Program box under the Featured Content section.

MORE THAN 6.7 MILLION TROUBLED HOMEOWNERS HELPED DURING CONSERVATORSHIPS

The Federal Housing Finance Agency’s fourth quarter 2022 Foreclosure Prevention and Refinance Report showed that Fannie Mae and Freddie Mac completed 52,469 foreclosure prevention actions during the quarter. This raised the total number of homeowners who have been helped to 6,712,833 since the start of conservatorships in September 2008.

The report also shows that 37% of loan modifications completed in the fourth quarter reduced borrowers’ monthly payments by more than 20%. The number of refinances decreased amid rising mortgage rates from 194,189 in the third quarter to 111,251 in the fourth quarter.

Fannie Mae and Freddie Mac’s serious delinquency rate declined slightly from 0.68 percent to 0.65 percent at the end of the fourth quarter. This compares with 4.40% for Federal Housing Administration (FHA) loans, 2.43% for Veterans Affairs (VA) loans, and 1.89% for all loans industry average).

Other highlights from the report include:

• Forbearance: As of Dec. 31, 2022, there were 81,173 loans in forbearance, representing approximately 0.26% of Fannie Mae and Freddie Mac’s single-family conventional book of business, up from 78,432 or 0.25 percent at the end of the third quarter of 2022. Approximately 3% of these loans have been on a forbearance plan for more than 12 months.

• Mortgage Performance: The 60-plus day delinquency rate increased slightly from 0.83% at the end of the third quarter to 0.84% at the end of the fourth quarter. The delinquency rates remained slightly higher than pre-coronavirus rates due to the forbearance programs offered to borrowers affected by the pandemic.

• Foreclosures: The number of foreclosure starts increased 8% to 18,693 while third-party and foreclosure sales dropped 8% to 3,297 in the fourth quarter.

• Real Estate Owned (REO) Activity & Inventory: Fannie Mae and Freddie Mac’s REO inventory increased 7% from 10,251 in the third quarter to 10,997 in the fourth quarter of 2022, as REO acquisitions outpaced property dispositions. The total number of property acquisitions decreased 9% to 1,706, while dispositions decreased 2% to 977 during the quarter.

FHFA’s quarterly foreclosure prevention and refinance reports include data on Fannie Mae and Freddie Mac’s mortgage performance, delinquencies, and active forbearance plans, as well as forfeiture actions and refinances by state.

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, Sarah Wolak STAFF WRITERS

Rob Chrisman, Nir Bashan CONTRIBUTING WRITERS

Gary Rogo SPECIAL SECTIONS EDITOR

Alison Valvo

DIRECTOR OF STRATEGIC GROWTH

Steven Winokur

CHIEF MARKETING OFFICER

Julie Carmichael

PROJECT MANAGER

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, Angelo Scalise MULTIMEDIA SPECIALISTS

Melissa Pianin MARKETING & EVENTS ASSOCIATE

Kristie Woods-Lindig ONLINE ENGAGEMENT SPECIALIST

Nicole Coughlin, Nichole Cakirca ADVERTISING ASSOCIATES

Lydia Griffin MARKETING INTERN

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MLOs Will Add Value By Coaching The Borrower

EASILY OVERLOOKED IS THE TIMING OF MAKING PAYMENTS

By ROB CHRISMAN, CONTRIBUTOR, MORTGAGE BANKER MAGAZINE

These days, it isn’t as if pipelines are full. Every potential borrower is precious to lenders and loan originators, who in turn want to “put their best foot forward” when it comes to the initial contact and commencing collecting the borrower’s information and processing the loan. Experienced originators will say that instructing the client how to “opt-out” of having credit activity be seen by others is the first step, but pulling the borrower’s credit to check on the numerical score is one of the first things mortgage lenders do. But what happens then?

Of course, the better the three-digit Fair Isaac number, the higher the chances of not only the loan being approved but also getting favorable terms. A trained LO will work with their valued client in improving their credit profile, starting by advising the client to be diligent about making on-time payments. A client’s on-time payment history is very important, and makes up about 35% of a person’s overall credit rating.

Easily overlooked is the timing of making those payments. Borrowers can find out when creditors report balances to the credit bureaus. A client who waits until the due date to pay off the balance may push recording that payment into the next month. This balance could negatively impact a borrower’s credit utilization or the total amount of credit someone is using divided by the total amount extended.

LONGER-TERM GAME PLAN

Most originators will tell a client to keep their credit utilization as low as possible, certainly under 30%, usually by paying down the balances. Or a client can ask for increased credit limits from the credit card issuers although confirm that the issuer, will conduct a soft credit inquiry when asked for an increase. MLOs know that a “hard” inquiry could have a negative impact on a client’s credit score.

MLOs will often tell clients to avoid closing credit card accounts during

processing. Closing a credit card can have a direct impact on someone’s credit utilization ratio, reduce the length of credit history, and limit a client’s overall credit mix. Potential borrowers should not apply for other financial products, such as another credit card, car loan, phone plan, or home equity loan, as a “hard inquiry” can reduce a credit score by a few points.

A longer-term game plan for improving a future client’s credit is helping the borrower enroll in a credit-builder program to help a client with no credit or limited credit, and those trying to improve their credit scores. A lender agrees to lend a certain amount of money to the borrower, and the borrower decides how much and how often they want to make payments toward the loan. As the future borrower makes payments, the lender reports those payments to the credit bureaus, which can help

boost their credit.

Someone with no credit can become an authorized user on someone else’s credit card. This is somewhat dicey, as the client must have a trusted friend, partner, or family member with a credit card account touting a high credit limit or solid history of on-time payments. This person must be willing to add the potential client. But if the primary user has a late or missed payment it will be added to both parties’ credit reports.

All of this can sound arduous and time-consuming to a new originator. But with practice, the rewards can be great. Not only that, but these items can once again prove that a human originator can add value by coaching a client through a complicated process, and have a home at the end of it.

ROB CHRISMAN

A HUMAN ORIGINATOR CAN ADD VALUE BY COACHING A CLIENT THROUGH A COMPLICATED PROCESS.

RISE ABOVE THE REST

Successful women are constantly looking to hone their skills, build relationships and better understand how to use and improve their abilities and talents. They want to be able to share their experiences and questions with colleagues who understand, and do it in an environment that helps build connections that last a lifetime. That’s why there’s the Mortgage Star Conference for women in the mortgage profession, a specially-designed hands-on immersion event centered around superior results.

Empathy & Positivity: 2 Great Ways To Pad Profits

SIMPLE FOCUS ON OLD-FASHION COURTESY SHOULD HELP YOUR FINANCES

By NIR BASHAN, CONTRIBUTOR, MORTGAGE BANKER MAGAZINE

People ask me all the time to help them with their competitive advantage. They want to use creativity and innovation to find a way to the top. To find a way to the front – to find a way to beat out competition and become indispensable to their clients.

But one thing is often overlooked on this journey – and it is a simple building block of modern business.

That fundamental building block is common courtesy. It seems that common courtesy is not at all common anymore. Here is a list of the three biggest common courtesy offenders that you may be doing without even knowing it – and how to fix them once and for all so that you can get to the next level.

CLOSE THE LOOP

In a world driven more and more by technology, the human element of connectivity can get lost in all the convenience. So, make an extra effort to close the loop. Return all emails, phone calls, and texts to close the loop.

Now I know you may be super slammed with 500 emails or texts or whatnot every day – and believe me, I get it – but closing the loop is one of the easiest ways to return common courtesy to your business and excel in all you do.

Reply to the person – even if it’s a short and brief reply – and close the loop.

It is shocking how many times this does not happen! Emails go unanswered; phone calls go unreturned. And then people wonder why their business is not growing and why they are not getting to where they feel they belong.

It is all about not leaving money on the table and instead following up and closing the loop on all correspondence. If you are able to do this on a regular basis, then you will see that not only a creative advantage is able to manifest, but your product or service becomes more attractive to the customer.

DON’T BE JUDGMENTAL

Another easy shift that most people forget about is the simple act of being easy to work with and pleasant both internally and externally. Without judgment. You never know what is going on with your clients or staff. They may be in the middle of a divorce, have a sick child, or have something going on that you know nothing about. And the simple determination that you make to be easy to work with – and not judgmentalcan have a profound effect. And it costs you nothing.

Simply shifting your attitude to one of being pleasant to work with and not casting stones can inject a common courtesy to you and your business instantly. It is all about empathy and understanding that you are in the customer service business. And in the customer service business the most important thing is how you make that customer feel. In a marketplace as crowded as can be, the one differentiator between you and others can simply be the fact that you are the most pleasant version of yourself to work with. That you don’t pass judgment. That you make everyone feel individually special. And that is not only an effective way to drum up more work, but the referral business from this may be the one most important factor in being pleasant!

So, next time you are having a bad day or everything seems to be going wrong for one reason or another, keep it to yourself. And

focus instead on providing the best possible version of yourself for customers to work with. And stop judging people, for heaven’s sake!

SAY THANK YOU

Quit being so ungrateful for what you don’t have and instead shift your mindset to being grateful and appreciative of what you’ve got. I have seen countless careers derailed and businesses shuttered that were otherwise sound – simply because no one ever took the time to say thank you. Say it to customers. Say it to co-workers and employees. Say it to yourself.

Showing some appreciation from time

to time is a common courtesy that is not very common. It will allow you to not only connect with people in a genuine way, but it will show that you care about others. Because people who care about others are people who say thank you once in a while. Heck – they say it often – as you should, too.

When we shift our mindset from looking at what we don’t have or what we haven’t achieved to allow ourselves to assess instead what we do have and what we have achieved, a certain gratefulness takes hold. And that gratefulness is the key to allowing creativity and innovation to take root and grow.

Because in an environment of negativity nothing can grow and mature, but in an

environment of positivity and gratefulness the world becomes one full of possibility and achievement. We make that choice every day. Choose to say thank you.

While common courtesy may not be too common these days, that doesn’t mean there is nothing you can do about it. There is indeed much that can be done to combat this lack of courtesy that is plaguing your business, but you have to make a choice to do so. Using the above three recommendations – even using just one of them – will help you achieve that goal.

Start today and bring back an approach to your business full of empathy and positivity. You will not only become easier to work with and more grateful for what you have, but you may also notice that your newfound approach increases profits as well. And that’s what we are all here to ultimately do.

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

NIR BASHAN

IT IS ALL ABOUT EMPATHY AND UNDERSTANDING THAT YOU ARE IN THE CUSTOMER SERVICE BUSINESS.

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Capital Framework Changes Will Strike Better Balance

ALTERED CREDIT CONVERSION FACTOR INCREASES LIQUIDITY OF UNIFORM MORTGAGE-BACKED SECURITIES

By LEAH DEMPSEY, JACK FURTH, SOHIL KHURANA AND ZACH PFISTER, SPECIAL TO MORTGAGE BANKER MAGAZINE

At the end of February, the Federal Housing Finance Agency (FHFA) announced a proposed rule to amend the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac (the Enterprises). FHFA indicated that the proposed rule would clarify the ERCF and further align it with risks faced by the Enterprises.

Under the new proposed rule, commingled Uniform Mortgage-Backed Security’s (UMBS) capital requirements would reduce from 20% to 5%, while credit conversion factors would reduce 100% to 50%. Additionally, the rule proposes a risk multiplier of 0.6 for certain subsidy-associated multifamily mortgage exposures, offers a standardized approach for counterparty credit risk (SA-CCR), and modifies procedures for determining a representative credit score for single-family mortgage exposure. Overall, these changes

are estimated to lower the common equity tier 1 (CET1) capital needed to meet the Enterprises’ risk-based capital requirements and buffers from $226.4 billion annually to $220.8 billion.

Now, FHFA is seeking comment on this rule and interested stakeholders should review the proposal for any impact.

BACKGROUND

The ERCF was established to satisfy requirements from the 2008 Housing and Economic Recovery Act, which required risk-based capital requirements for the Enterprises. The stated goal of the regulation was to make sure Fannie Mae and Freddie Mac operated in a safe manner that maintained sufficient capital and reserves so they could withstand risks that arise from their day-to-day management. It has been amended three times since its initial publication in December 2020.

THE PROPOSED CHANGE ALSO BUILDS ON THE FHFA’S 2019 RULE ON UMBS TO MAINTAIN MARKET CONFIDENCE.

GUARANTEES ON COMMINGLED SECURITIES

The new rule would adjust risk-based leverage and buffer capital requirements on commingled securities by reducing the risk weight from 20% to 5% and the credit conversion factor from 100% to 50% on an Enterprise’s exposure to other Enterprise commingled securities. The purpose is to better align the requirements with the counterparty risk inherent of the resecuritizations that involve underlying collateral from both Fannie Mae and Freddie Mac.

The proposed change also builds on the FHFA’s 2019 rule on UMBS to maintain market confidence that a UMBS of a certain coupon, maturity and loan origination year issued by one Enterprise is equivalent to one from the other. To

maintain this equal exchange rate, the Enterprises may issue “Supers,” which are single-class resecuritizations of structured securities that can be backed up by UMBS, but if the security of one Enterprise is backed by one from the other, the original security-owning Enterprise is obligated to cover any shortfall in payments by the security-backing Enterprise. This ensures the investor benefits from both the original guarantee of the underlying collateral and the additional guarantees of the resecuritizing Enterprise.

Overall, the change in risk weight decreases the incentive for Fannie Mae and Freddie Mac to only guarantee Supers with their own UMBS, while the altered credit conversion factor increases the liquidity of UMBS in commingled securities and increases the stability of the secondary mortgage market. These guards against

leverage and buffer capital impacts of the guarantees are designed to reduce the total CET1 capital need to balance these risks by $5.1 billion.

MULTIFAMILY MORTGAGE EXPOSURES

The FHFA requires the Enterprises to acquire multifamily loans collateralized by affordable rents based on income. Due to the high demand for affordable units by renters and strong incentives for property owners to maintain affordable buildings to keep government subsidies, the new rules lowered the risk multiplier of these liabilities to 0.6, a 40% reduction.

For a mortgage to qualify for this new multiplier, the property would have to be funded by significant, long-term and continuous subsidies. This includes

only those rents that are supported by the LowIncome Housing Tax Credit (LIHTC), Section 8 project-based rental assistance or state and local affordable housing programs that require the provision of affordable housing for the life of the loan. The property where the mortgage is taken must also have at least 20% of its units be affordable, as defined by their income restrictions being less than or equal to 80% of the area’s median income.

This change is estimated to reduce CET1 capital required by $400 million.

DERIVATIVES AND CLEARED TRANSACTIONS

In 2020, U.S. banking regulators adopting the standardized approach for counterparty credit risk (SA-CCR) to calculate exposure risks for derivative contracts and decide the asset amounts necessary to hold in the case of default on those contracts. Until this new rule, the Enterprises still relied on the current exposure methodology (CEM) for this purpose. CEM is a system that was created before the 2008 financial crisis and had drawbacks including not differentiating margined and unmargined derivatives, not recognizing the need for a balanced derivative portfolio and outdated supervisory conversion factors.

The new rule would enforce the use of SACCR to improve the Enterprises’ ability to capture and reduce the risk of derivative contracts in their portfolios. It would also bring the ERCF more in line with the U.S. banking framework and the international Basel Committee on Banking Supervision. The CET1 required to meet capital requirements would increase by less than $100 million with this change.

CREDIT SCORES

Credit scores are essential for ERCF to determine risk of default, but due to individual borrowers having credit scores from multiple agencies and mortgages sometimes having multiple borrowers, the entities must use a procedure to find a single credit score for each mortgage. The new rule would reduce the number of credit reports necessary to find this score from three to two.

It also alters the method that the score is

calculated. The current method first takes the median credit score of each borrower if there are three, or the lowest if there are two, then takes the lowest score (as determined in the first step) of all borrowers. To relieve the downward bias of this method, the new rule would now take the average of the first step as opposed to the median. The FHFA does not believe this alteration will increase the risk of missing high-risk borrowers. Overall, this change would reduce CET1 capital requirements by less than $100 million.

OTHER CHANGES:

The proposed rule also makes a number of more minor changes to the ERCF that will affect the capital requirements of the Enterprises. These alterations are estimated to reduce CET1 capital requirements by $200 million. The new rules will:

• Require the Enterprises to assign an original credit score of 680 to single-family mortgage exposures without a permissible credit score at origination, rather than 600;

• Introduce a 20% risk weight for guarantee assets;

• Expand the definition of mortgage servicing assets to include servicing rights on mortgage loans owned by anyone, including the Enterprise;

• Delay the first application of the single-family countercyclical adjustment on new originations to coincide with the first update to the property values associated with those single-family mortgage exposures;

• Explicitly permit eligible time-based call options in the credit risk transfer (CRT) operational criteria;

• Amend the risk weights for interest-only mortgage-backed securities to 0%, 20% and 100%, conditional on whether the security was issued by the Enterprise, the other Enterprise or a non-Enterprise entity, respectively;

• Clarify the calculation of the stability capital buffer when an increase and a decrease might be applied concurrently; and

• Extend the compliance date for the advanced approaches to Jan. 1, 2028.

THE NEW RULE WOULD ENFORCE THE USE OF SA-CCR TO IMPROVE THE ENTERPRISES’ ABILITY TO CAPTURE AND REDUCE THE RISK OF DERIVATIVE CONTRACTS IN THEIR PORTFOLIOS.

LEAH DEMPSEY

SOHIL KHURANA

ZACH PFISTER

JACK FURTH

Leah Dempsey, Sohil Khurana, Zach Pfister and Jack Furth are attorneys with Brownstein Hyatt Farber Schreck in Denver, Colorado. This article originally appeared on JDSupra.

HOW TO CONQUERNOT FEARTHE EMPIRE STATE Roadblocks

are many but payoff is worth it

By KATIE JENSEN, STAFF WRITER , MORTGAGE BANKER MAGAZINE

For mortgage brokers trying to get a start in New York, there are plenty of reasons to hate the Empire State.

Inefficiencies, stringent regulations, lengthy licensing periods, and other roadblocks can make this process a nightmare, yet some brokers can overcome these obstacles and dominate this supremely tough environment.

“There is a reason that there are only three or four brokers doing any significant volume in the state of New York,” said Shah Tehrany, CEO of Madison Mortgage Services, based on

Long Island. “That reason is that it’s hard.”

New York is home to one of the most diverse cities in the world, with a population that is incredibly varied in terms of race, ethnicity, nationality, religion, and culture. New York City is home to people from all over the world, with over 200 languages spoken and a rich mix of traditions, customs, and beliefs. With such a diverse demographic, there is a need for a diverse array of product options, and brokers are best at providing these options.

Head north of the city and it’s a whole different universe. Wide-open tracts of land abound when tooling along the New York Thruway between Albany and Buffalo with only occasional cities breaking up the skyline.

For most brokers who began working in New York after 2008, it’s not easy. As detailed in an article in our sister publication, National Mortgage Professional Magazine, “I Hate New York,” there’s plenty of reasons why loan officers and companies avoid this state like the plague. But this aversion also creates an opportunity for brokers who are willing to put in the work and have patience dealing with the New York State Department of Financial Services (DFS).

Trust that it may be hard working in this particular state, but the brokers that do are far from miserable. Tehrany is one of United Wholesale Mortgage’s top broker partners, bringing in close to $400 million in volume last year, according to Modex, and a majority of his clients are located in New York.

PATIENCE PAYS OFF

In New York it takes a while to get a broker license — anywhere up to 18 months, at times. First, Tehrany made the transition over to his friend’s

company, helped him grow a little bit, and then filed for his broker license. Luckily, he was able to get it in nine months. Then he transitioned over to Madison Mortgage.

“New York loans are harder, there’s no question about it,” Tehrany said. “Predominantly just because of the demographics of this area, and the way that New York’s loan business is transacted where a purchase typically would take anywhere from 70 to 90 days to close.”

In markets like New Jersey, Maine and Connecticut, where Madison Mortgage does a lot of business, contract to closing can take 30 days.

Mainly, what causes the hold-up is the fact that every purchase transaction has to be overseen by three attorneys — the buyer’s attorney, the seller’s attorney, and the bank attorney. The loan officers perform with as much speed as loan officers elsewhere, but the coordination and logistics behind each transaction is more complicated.

“It’s just a much different game here in terms of how quickly you can get into

contract and how long it takes to actually execute transactions,” Tehrany said.

Many of these more stringent regulations were implemented after the 2008 financial crisis. The banks needed to be strengthened to better protect borrowers and the mortgage industry from facing a similar collapse in the future.

“The New York [State Department of Financial Services] is amazing at these regulations and implementing them. And in New York, I mean, I think it’s one of the safest places right now to buy,” said A.S.A.P. Mortgage CEO Irene Amato. A.S.A.P. is based north of New York City in affluent Westchester County.

Similarly, Tehrany has an appreciation for the financial services department and believes these regulations are necessary to create a safer lending environment. He said the department does a good job of making sure that the people who do business there are responsible.

“I mean, it is the financial capital of the world, right? So, you know, they take it a

“NEW YORK ... IS AMAZING AT THESE REGULATIONS AND IMPLEMENTING THEM. AND IN NEW YORK, I THINK IT’S ONE OF THE SAFEST PLACES RIGHT NOW TO BUY.”

Irene Amato CEO of A.S.A.P. Mortgage

Shah Tehrany CEO of Madison Mortgage Services

little more seriously,” Tehrany said. Originally, Tehrany worked on the retail banking side before transitioning to become a broker. One of the reasons he switched was because he noticed a demand for less conventional loan products and a lack of brokers in the community to help consumers navigate their options.

COMPETING WITH BIG BANKS

Banks dominate the New York mortgage market, but brokers are absolutely necessary to provide consumers with more unique options and allow them to save more money.

“I think the average is like $9,300 cost savings per transaction using a broker versus a retail competitor,” Tehrany said. Data from the Home Mortgage Disclosure Act shows brokers save borrowers $9,400 compared to retail lenders and mega banks. “Because they (retailers) have a lot more overhead, especially if they’re not at massive

scale. It’s

costly for them to transact, so they have to have higher margins to be able to make money.”

Brokers, on the other hand, are focused on making a reasonable margin to stay competitive. This is more beneficial for consumers; it’s what makes them come back for future transactions and recommend their broker to friends and family members. Tehrany said the average consumer transacts seven times on a single mortgage in their lifetime, and the broker is focused on servicing all seven.

Each broker chooses their compensation rate with a maximum of 3%. Amato’s compensation rate is 2.5%, which is a bit more competitive than brokers who charge 2.75%.

“Brokers across the board, even if we’re at the maximum compensation, offer better and more competitive rates because we’re getting a wholesale rate,” Amato said. “There’s those few specific programs or products that certain lenders will offer that may beat us and that’s when the brokers should say, ‘Go to that program, we can’t beat it.’”

DIVERSE BORROWERS

Additionally, the fact that New York hosts such a diverse population of people in terms of socioeconomic status and ethnicities means they’ll likely need a diverse array of mortgage product options as well.

“You see a lot of different types of people,” Therany said. “We’ll do a loan for an MTA bus operator and a loan for a Goldman Sachs investment banker … but that’s just a function of the wonderfulness of New York.”

There’s also a significant amount of selfemployed borrowers, especially after the pandemic triggered a surge in the number of entrepreneurs. The latest data from the New York Department of Labor shows 9.8% of residents are self-employed in 2021. The 2022 report shows that many of these people work in arts, design, entertainment, sports and media; personal care and service; construction and extraction; legal; as well as building and grounds cleaning and maintenance. From 2021 to 2022,

“NEW YORK LOANS ARE HARDER, THERE’S NO QUESTION ABOUT IT”

the number of business startups rose from 253,666 to 309,163 — the biggest jump in over a decade.

“The ratios also tend to be a little bit higher, because the cost of homes relative to income is just higher than some other areas like Maine and Connecticut, and parts of New Jersey,” Tehrany said.

Above all else, what makes brokers so necessary in all markets, and not just the New York area, is that they work for the consumer rather than the lender. Amato has a story that demonstrates this perfectly. A client called her during the refinance boom in 2021 because he was on the fence about whether or not to do one. His local bank had already approved him, but he wanted to ask Amato if A.S.A.P. Mortgage offered better programs. It turned out that there was no benefit to the borrower to refinance, so she told him exactly that.

“Then about a week later I got this review saying, you know, how excellent myself and my company was. … He was writing it because we actually advised him against coming to us for a mortgage refinanced,” Amato said.

NEW YORK BROKER UNITY

Outsiders may think the mortgage world in New York is as cutthroat as driving an Uber in Manhattan, with people willing to cut you off at every corner. But that’s not entirely true according to Amato, who has been a broker/ owner in the state since 2001.

The broker community was a bit different back then, she said, and brokers generally fell into two categories: what she calls “true

brokers,” and the others she describes as more cutthroat, but to their own detriment.

“Listen, when you have money involved, and people are trying to run their business, there are brokers out there that take deals from one another,” Amato said. “But there are some brokers that will actually call each other up and say, ‘Hey, you’re working with so-andso. He’s a great guy. Stay with him.’”

Amato describes it as a very tight-knit community in New York, so brokers are better off trying to play nice in the sandbox rather than cut each other down. New brokers especially should respect and offer help to their broker compatriots rather than be intimidated by them, even if their proximity is just a mile down the block.

For example, a client is issued a pre-approval after two months of working with Broker A, then goes to Broker B to shop around. Both brokers want the deal but neither wants the client to go to a bank. So the brokers might work out who should take the client, but that doesn’t always mean Broker B will steal the deal. Still, some level of cooperation is the norm among this community.

Their closeness may have something to do with the financial crisis. New York was the epicenter of the 2007 housing crash, abrupting the lives of mortgage professionals and American citizens across the nation.

BAD MOVIES & MEDIA

“I came home with a knot in my stomach every day for all of the people that were getting laid off and losing their jobs from banks and the way that the people that were losing their homes, and it was just a terrible time for us all,” Amato recalled.

Worse is movies and media painted brokers as the culprits of this collapse. For example, “The Big Short” portrayed brokers as slimy salesmen who took advantage of immigrants and lower-income citizens by knowingly offering them faulty subprime loans. But that is a gross misportrayal of the truth, Amato said.

While the movie had some partial truths, it was a disservice to “true brokers” who care more for their clients than they do about making a buck.

“Brokers felt awful every day for almost a year,” Amato said. “True brokers, I like to say, fought through it,” Amato continued. “And maybe that’s what bonded us. And till this day, it’s still in existence. And I feel that, like I said, it was very disheartening watching it happen on multiple levels, but it made us stronger and better and bigger.”

Those not working in New York might be inclined to think the state is suffering due to the large numbers who left during the pandemic, but now that workers are returning to the office, people are coming back to big cities.

“We are seeing more people funneling back into the cities, but it was a mass exodus,” Tehrany said. “We were doing tons of loans in the suburbs. We were seeing a ton of our clients, our past clients moving to Florida, and got licensed in Florida. It was the second state we got licensed in. … but now we’re seeing people come back in.”

There’s plenty of advantages for brokers working in New York, but anyone who works there will admit it’s not for everybody.

“What does the song say?” Amato asked. “If you can make it here, you’ll make it anywhere.”

Nomination Deadline: July 28

Servicers Are Sinking Seniors

INCREASE IN FORECLOSURES FOR HECMs A TROUBLING TREND

By STEVE GOODE, STAFF REPORTER, MORTGAGE BANKER MAGAZINE

Reverse mortgages, marketed as simple solutions for financial security in retirement, may be creating financial insecurity for the elderly instead.

A February report from the National Consumer Law Center (NCLC) argues that home equity conversion mortgages (HECM), designed to help older homeowners borrow against the equity in their homes without risk of displacement, is doing just that with foreclosure proceedings increasing.

According to the report, reverse mortgage borrowers - especially Blacks - who fall behind on required payments such as property taxes and homeowners insurance face significant challenges to fend off foreclosure actions for a variety of reasons.

These reasons include ineffective preloan counseling; cognitive issues among eligible borrowers who must be at least 62; poor communication from mortgage servicers; a limited set of home-retention options; actions taken against spouses of listed borrowers who are still in the home; and rapid increases in property values and insurance fees for borrowers, many of whom are on fixed incomes.

“Across all these situations, poor servicing communication and insufficient access to housing counseling exacerbate the problems,” the report said.

Sarah Bolling Mancini, a staff attorney at the NCLC and the report’s lead author, said her organization spent about six months compiling the information and that it was prompted by complaints they were hearing from housing advocates about homeowner issues, especially the reverse mortgage channel.

In response to the report, an industry trade group acknowledged that there could be improvements in how HECM loans held by troubled consumers are handled. “The [National Reverse Mortgage Lenders Association] recognizes there are opportunities to further improve loss mitigation options for those borrowers who may have challenges meeting their loan obligations. We will continue to advocate for such program improvements,” said Darryl Hicks, vice president, communication.

James and Queen Hambric of Yonkers, N.Y., are among them. According to the NCLC report, the Hambrics, who are Black, owned their home for almost four decades when they decided to apply for a HECM in 2010 to help meet ongoing expenses.

James Hambric is now 80 years old, and his wife is 78. He handles most of the communications related to the reverse mortgage, although the loan is only in her name. As their income continued to decrease over time, the Hambrics fell behind on their property taxes, and the servicer advanced the taxes as it was required to do. There were a few times when the reverse mortgage company paid the taxes, and the Hambrics paid them back fairly quickly.

“We did make agreements to pay them back. We weren’t trying to not pay the taxes. We’ve always been responsible all our lives. … It was just during a time when it was difficult to do.” When the mortgage was serviced by Wells Fargo, Hambric said, it was easy to communicate. He would call, the representative would ask how much he wanted to pay toward the arrearage, and he would make a payment.

SERVICING SHORTCOMINGS

Reverse mortgages came into existence in the late 1980s when Congress authorized the Federal Housing Authority (FHA) to create a federally insured mortgage product as a way to help older, often low-income homeowners on fixed incomes remain in their homes. The program started out slowly with a few hundred initial borrowers, but today there are about 480,000 active HECMs.

When the loan was transferred to a new servicer, Champion Mortgage, things got difficult. Hambric said, “Their routine was to always threaten [you]. … Every time you’d turn around you’d be getting some kind of threatening letter. It wouldn’t be one letter. The reverse mortgage was in my wife’s name. They’d send about five of them to her, certified mail, and five to me.”

Although the Hambrics had difficulties communicating with Champion, they were able to get onto a repayment plan. Once the arrearage was below $2,000, Champion told them they could pay any amount that they wanted. They started paying $50 a month

“THEY’LL TELL YOU ANYTHING (TO MAKE THE SALE). THEY ONLY SHOW YOU THE BEST SIDE.”

–James Hambric, homeowner

and had gotten the total owed below $1,000 when the servicing rights were transferred to PHH Mortgage, where the situation worsened.

Hambric said he called PHH to make a monthly payment and was told he couldn’t do it on the phone. He said they told him he would have to make a payment by mail, but before he could do that, the servicer planned to conduct a financial review, despite his protests. He also described getting “the runaround” with each phone call and getting the feeling that everytime he spoke to someone at the company it was the first time they had heard of him.

“It’s like they have no record of you talking to them,” Hambric said, adding that the couple has struggled for months to get back on a payment plan.

According to the report, the Hambrics were approved for help from the Homeowner Assistance Fund (HAF), a program that is available to homeowners impacted financially by the COVID-19 pandemic. But, the report also notes that the HAF program was still trying to get verification from PHH to determine the balance needed to cure the default. The delay has the Hambrics worried that the assistance will fall through and they will end up in foreclosure.

Hambric told Mortgage Banker in a recent interview that it appears that the HAF program has managed to get PHH to sign off on the cure, but he added that their housing counselor is still having difficulty getting confirmation from the servicer. Asked where he thought the main issues were with his reverse mortgage, Hambric said, “It certainly ranks right up there that no one seems to know anything.”

Hambric said that as he looks back he feels that the loan originator he worked with was not qualified to sell HECMs and was only interested in the commission.

“They’ll tell you anything (to make the sale),” he said. “They only show you the best side.”

Champion and PHH did not respond to requests for comment.

A HECM LENDER’S VIEWPOINT

Michael Branson, CEO of Californiabased All Reverse Mortgage, Inc., said the issues brought to light in the report are real, but added that some are already being addressed.

“Many of the servicing issues we have known about and write about regularly in our blogs, from the larger servicers such as

PHH, Champion - who bought all of Wells Fargo’s portfolio - and NOVAD, whose services for HUD have been well reported over the years,” Branson said. “HUD finally switched their servicing to CELINK - who has had some problems of their own as of late with their expansion - so we have hopes that they will get their act together.”

Branson added that some problems still need to be addressed. Borrowers and their heirs need to understand that a reverse mortgage is not a multigenerational loan, he said, and HUD should make borrowers aware of the assistance programs that are available in writing during the counseling process.

“We get borrowers contacting us years later for information and help with the servicing of their loans, even when we no longer own the servicing rights to their loans,” Branson said. “We have often only become aware of programs to help our borrowers through individual research.”

BEYOND POOR SERVICING

Beyond the criticism of the FHA’s monitoring of servicing, the NCLC found other problem areas for elderly borrowers and their families.

The report found that reverse mortgage borrowers who fall behind on property charges face significant hurdles to obtaining a narrow set of home retention options. Spouses who are not listed on the loan document can generally remain in the home if they keep paying the property taxes, but they are not eligible for loss mitigation if they fall behind. Too often, the report found, servicers also foreclosed based on non-occupancy when the borrower was still in the home.

According to the report, resolving those issues is particularly important because of the effect of preventable reverse mortgage foreclosures on the racial wealth and homeownership gap. The crisis of preventable reverse mortgage foreclosures does not impact all communities equally, the report said.

“Historically, people of color have been more likely to take out reverse mortgages, due to the legacy of discrimination and policies that limited their wealth-building opportunities, and they are also more likely to end up in reverse mortgage foreclosure,” the author wrote. “The heirs of reverse mortgage borrowers of color may lose significant home equity if they are not able to sell or refinance the home to satisfy the loan. When it comes to addressing the racial wealth gap and racial homeownership gap, reducing the number of preventable reverse mortgage foreclosures is an important and necessary step.”

According to the report, a 2019 USA Today investigation found that foreclosure rates on reverse mortgages were six times greater in communities of color than in majority white neighborhoods.

The NCLC and the Reinvestment Fund also conducted their own research using data obtained from the FHA through a Freedom of Information Act request.

The dataset showed reverse mortgage originations from 2001 to 2009 and foreclosures from 2013 to 2017 by zip code, with a goal of getting a sense of the volume of reverse mortgage originations in particular neighborhoods in order to have a baseline against which to compare the number of foreclosures.

Their study found that there is a clear pattern of more reverse mortgage originations and foreclosures in zip codes with more Black homeowners.

According to the study, 24% of originations occurred in neighborhoods where the population was more than 75% Black, but 89% of the foreclosures were filed there. In neighborhoods that were 50% to 75% Black, originations stood at 11% but foreclosures

stood at 49%. In neighborhoods where the population was 25% to 50% Black, the originations were at 6.2%, but the foreclosure rate was at 23.3%, and in neighborhoods where the Black population was 25% or less, the origination rate was 3.3%, but the foreclosure rate was 21%.

The study also examined the ratio of foreclosures to originations by racial concentration of the zip code.

“They have consistently contracted the servicing, and when issues arose, it was up to the servicer to resolve those issues,” he said. “Even on the loans that HUD owned, they defaulted to NOVAD and did not become involved in the servicing problems from all the feedback we received.”

Branson said that HUD has made an excellent first step in moving away from NOVAD, but suggested that they create a servicing review board that would allow them to review complaints such as the ones outlined in the NCLC report.

“HUD cannot start back-up servicing all the loans themselves. Still, borrowers should have a place at HUD where they can relay their concerns,” he said. “HUD can forward them to the loan servicer with the expectation that the servicer will keep HUD in the loop with solutions. Perhaps if the servicers become accountable for these abuses, and early on in the process, they will need to clean up their acts.”

KEY RECOMMENDATIONS FOR FHA AND CFPB

“We found that in zip codes that were less than 20% Black, that ratio was .18 (18 foreclosures in 2013 to 2017 for every 100 originations in 2001 to 2009),” the report said. “In zip codes that were 40% Black or higher, that ratio was close to double at .3 in zip codes that were 40-60% Black, .33 in zip codes that were 60-80% Black, and .28 in zip codes that were more than 80% Black.”

MISSING FACTS

Homeowners Assistant Funds, at-risk extensions and repayment plans are not well-known options to originators and they would be if they were part of the origination package.

Branson, from All Reverse Mortgage, said that his company has always advised potential borrowers that there were ongoing costs with reverse mortgages and that if they couldn’t live comfortably a HECM was probably not right for them. The company also tells borrowers and family members to discuss their plans and seek guidance from trusted legal and financial advisors

Branson added that it’s time for HUD to be more hands-on in the servicing role, at least from an oversight perspective.

The report’s key recommendations for the FHA included: allowing for flexibility with property charge loss mitigation practices; rescinding the due and payable status when loss mitigation is approved; allowing loans to be assigned to the agency while in an active loss mitigation plan; and requiring a loss mitigation review.

The FHA did not respond to a request for comment.

The report also had suggestions for the Consumer Financial Protection Bureau, saying that the agency has a role to play in the success of the program, such as: including reverse mortgages in the RESPA mortgage servicing rules; working with the FHA on effective reverse mortgage communications; prioritizing reverse mortgage servicer supervision and enforcement; and requiring prompt payoff statements.

A spokesman for the CFPB said the agency can’t comment on either changing its rules or supervision/enforcement efforts, but added that it has been working with the FHA on making communications with reverse mortgage borrowers more effective.

NCLC’s Bolling Mancini said the report, which includes the recommendations referenced above, has been shared with the FHA and that the agency has expressed interest in discussing the changes.

“We think these changes would improve and enhance the program,” she said.

“... BORROWERS SHOULD HAVE A PLACE AT HUD WHERE THEY CAN RELAY THEIR CONCERNS.”

–Michael Branson, CEO, All Reverse Mortgage

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.

Veterans, when you’re struggling, soon becomes later becomes someday becomes ...when?

Don’t wait. Reach out .

Whatever you’re going through, you don’t have to do it alone.

Find resources at VA.GOV / REACH

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.

MORTGAGE BANKING LAWYERS

Mitchel H. Kider Managing Partner

kider@thewbkfirm.com

202-557-3511

Mitch Kider is the Chairman and Managing Partner of Weiner Brodsky Kider PC, a national law firm specializing in the representation of financial institutions, residential homebuilders, and real estate settlement service providers. Mitch represents banks, mortgage companies, homebuilders, credit card issuers, and other financial service companies in a broad range of litigation and regulatory and compliance matters. He defends clients in investigations and enforcement actions before the Consumer Financial Protection Bureau, Department of Housing and Urban Development, Department of Justice, Department of Veterans Affairs, Federal Trade Commission, Fannie Mae, Freddie Mac, Ginnie Mae, 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.

Gregory S. Graham

Co-Managing Partner

ggraham@bmandg.com

972-353-4174

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.

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.

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.

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.

Marty Green

MortgageBanker

2.3%

FEBRUARY NATIONAL STATS

RATE LOCK VOLUME

Purchase locks edged up 4%, cashouts fell 11% and rate/term refis held at record lows

MARKET MIX

14% Refi 86% Purchase

AVERAGE LOAN AMOUNT

The average loan amount rose by $9K in February

6.68%

Refi share of the market mix returned to a record low in February

MONTH-END CONFORMING RATE

Our Optimal Blue Mortgage Market Indices tracked a 52 bps rise in 30-year rate offerings throughout February

Big Purple Dot Integrates ChatGPT To Its CRM Ecosystem

Big Purple Dot (BPD), a provider of customer relationship management (CRM) and recruiting solutions for the mortgage industries, has announced the integration of ChatGPT into its CRM ecosystem. Big Purple Dot has become one of the first CRM companies in the mortgage and real estate industry to offer its clients an advanced conversational AI solution that leverages natural language processing (NLP) to easily and efficiently interact with their clients and streamline their sales processes, resulting in a significant improvement in customer satisfaction, lead generation, and operational efficiency.

By integrating ChatGPT into its CRM ecosystem, Big Purple Dot empowers its customers to deliver a seamless conversational experience that allows them to interact with their leads and customers in a more natural and intuitive way. Ultimately, saving time, improving lead conversion, and increasing sales productivity.

“We are excited to be one of the first CRM’s in the mortgage and real estate industry to integrate with ChatGPT,” said Roxana Davidoff, CEO and Founder of Big Purple Dot. “The integration of ChatGPT with our CRM platform will revolutionize the way loan officers, real estate agents, and recruiters communicate with their clients. With natural language processing capabilities, our users can provide quick, accurate responses to clients, freeing up more time to focus on building relationships and closing more deals.”

Enact Announces Integration With Blend To Digitally Enhance Application Process

Enact Holdings, Inc., a provider of private mortgage insurance through its insurance subsidiaries, announced that they have integrated with Blend, a provider of digital banking and mortgage solutions.

Through Blend’s digital mortgage platform, lenders can quickly access rate quotes for private mortgage insurance (PMI). This ability to order PMI rate quotes without leaving the Blend platform creates a seamless and more efficient experience for the lender, as they are working directly through technology they already know and use.

“Enact is committed to providing an exceptional experience for all of our customers, and integrations with technology platforms are an integral component of that,” said Neenu Kainth, chief customer experience officer at Enact, “Each of our customers has different technological needs, and partnering with companies like Blend allows us to support our customers in the environments that work best for them.”

”We look forward to creating more seamless PMI rate-quoting experiences for mortgage lenders to deliver consumers a superior borrower experience,” said Erik Wrobel, head of product at Blend. “This integration partnership is another step in the direction of improving financial access and transparency to all consumers.” Blend’s cloud banking platform is used by more than 300 clients, and processes more than $5 billion in loans each day.

Redwood Trust Selects LoanLogics IDEA To Ensure Mortgage Loan Quality

LoanLogics, a recognized leader in loan quality technology for mortgage manufacturing and loan acquisition, today announced that Redwood Trust, Inc. (NYSE: RWT, “Redwood Trust”), a leader in expanding access to housing, will be implementing LoanLogics IDEA®, an intelligent document processing and data extraction technology, to support the completeness of its loan files and data purification for its loan quality needs.

Redwood Trust will benefit from a recent integration between LoanLogics and LauraMac’s cloud-based Loan Acquisition System, a configurable transaction management platform used to buy loans in the secondary market. After LoanLogics IDEA transforms digital documents into classified, versioned loan documents and extracts data from them, the results are sent to Loan Review, where they are incorporated into a lender’s or investor’s workflow and processed by the lender’s or investor’s configurable rules.

LoanLogics Intelligent Data Extraction and Automation platform (IDEA) provides lenders with an automated solution that meets all their indexing, validation, data extraction and document processing rules automation needs. The platform uses advanced machine learning, comprehensive data extraction programs and rules-based automation workflow to deliver 99% data accuracy, in less time, using fewer of a lender’s resources. LoanLogics IDEA can also handle more mortgage document types, both structured and unstructured, and document variations, delivering greater accuracy for mortgage document classification right out of the gate.

Stewart Enhances Credit And Mortgage Analytics Capabilities By Acquiring AccountChek

Informative Research (IR), a subsidiary of Stewart Information Services announced the acquisition of the AccountChek platform previously offered by FormFree. AccountChek is a digital verification of asset, income and employment service that drives insight into a consumer’s financial profile and is available to customers through multiple channels. The combined IR platform and AccountChek platform creates a single solution to digitally verify consumer financial data, including credit, income, employment, and assets. The solution will allow customers to streamline their loan underwriting process, efficiently qualify borrowers, improve closing ratios, and expand access to mortgage credit.

“This is an exciting day for the IR team, as we gain the experienced, knowledgeable, and well-respected AccountChek team. The AccountChek platform supports IR in providing customers with unmatched analytics and verification solutions,” said Sean Buckner, president, Informative Research. “The combined platform, including AccountChek, creates additional opportunities to streamline loan processes, while ensuring business continuity for existing customers.”

“We’re leaving AccountChek in great hands, and we look forward to continued partnership with IR during our next chapter as we work to create new avenues for lenders to responsibly serve credit invisibles and other underserved populations,” said FormFree Founder and CEO Brent Chandler.

RiskSpan Incorporates Flexible Loan Segmentation Into Edge Platform

RiskSpan, a technology company and comprehensive source for data management and analytics for residential mortgage and structured products, has announced the incorporation of Flexible Loan Segmentation functionality into its Edge Platform.

The new functionality makes Edge the only analytical platform offering users the option of alternating between the speed and convenience of rep-line-level analysis and the unmatched precision of loan-level analytics, depending on the purpose of their analysis.

For years, the cloud-native Edge Platform has stood alone in its ability to offer the computational scale necessary to perform loan-level analyses and fully consider each loan’s individual contribution to a mortgage or MSR portfolio’s cash flows. This level of granularity is of paramount importance when pricing new portfolios, taking property-level considerations into account, and managing tail risks from a credit/servicing cost perspective.

Not every analytical use case justifies the computational cost of a full loan-level analysis, however. For situations where speed requirements dictate the use of rep lines (such as for daily or intra-day hedging needs), the Edge Platform’s new Flexible Loan Segmentation affords users the option to perform valuation and risk analysis at the rep line level. Analysts, traders and investors take advantage of Edge’s flexible calculation specification to run various rate and HPI scenarios, key rate durations, and other calculation-intensive metrics in an efficient and timely manner. Segmentlevel results run at both loan and rep line level can be easily compared to assess the impacts of each approach. Individual rep lines are easily rolled up to quickly view results on portfolio subcomponents and on the portfolio as a whole.

Xactus Offering Automated IRS Data Feeds Through TaxStatus

Xactus, a verification innovator for the mortgage industry, announced that it is offering real-time IRS data feeds through TaxStatus, a top provider of official tax data and IRS account monitoring.

“We’re excited to be working with a like-minded organization that is also focused on advancing the modern mortgage by accelerating lending decisions and reducing risk,” said Shelley Leonard, president of Xactus. “Our integration with TaxStatus will enable us to offer our lender customers a faster, more accurate way to receive comprehensive IRS tax information.”

TaxStatus provides automated, realtime IRS data feeds, wherein lenders can have up-to-the-minute information on their customers once they opt in, reducing 70-90 percent of the time it takes to access and utilize IRS data. Its proprietary platform collects data from the IRS and delivers it in a secure, common data format.

Through Xactus’ agreement with TaxStatus, lenders can receive up to 10 years of historical IRS data on any SSN or EIN, as well as automatic updates when a customer’s profile has changed.

“We chose to work with Xactus because of its commitment to innovation, focus on automation and its significant customer base. We saw an opportunity to support them in delivering a more modern mortgage experience,” said Charles Almond, CEO and founder of TaxStatus.

SECOND-LIEN HOME EQUITY LOANS ARE A FAR BETTER WAY TO TAKE OUT CASH

By EDWARD J. PINTO, TOBIAS PETER, MIKE CALHOUN, AND LIZ LADERMAN, SPECIAL TO MORTGAGE BANKER MAGAZINE

The American Enterprise Institute (AEI) Housing Center and the Center for Responsible Lending (CRL) have jointly prepared a brief on the pitfalls of cash-out refinancing in a rising interest rate environment.

Based on our analysis of both public and proprietary data, we share a common concern: Cash-strapped borrowers are being enticed into using the home equity they have accumulated as an ATM. With today’s higher mortgage interest rates, taking out these first-lien, cash-out refinance loans will damage their long-term financial health.

We are particularly concerned by trends and distributions for Federal Housing Administration (FHA) and Veterans Affairs (VA) programs, which typically serve minority, low-wealth, lower credit score, and veteran homeowners. Accordingly, we focus our discussion on the FHA and VA programs and the borrowers they serve.

SECOND LIENS ARE BETTER

Cash-strapped homeowners struggling to cope with high inflation and lagging wage growth are being enticed by cash-out refinance offers of easy access to their home equity, which increased dramatically during the pandemic.

Although at one time such cash-out refinances were relatively low cost because the new rate was less than, or just slightly above, the borrower’s current rate, in today’s environment, refinancing means substituting a new, higher interest rate that can be two to four percentage points above one’s existing rate.

Our research demonstrates that this can have serious longer-term repercussions for the financial health of vulnerable borrowers. For example, the typical cash-out refinance completed in late 2022 by a borrower with an FHA or VA mortgage provided about $36,000 in cash but will add about $42,000 in

additional interest on the existing mortgage balance over the first seven years (not including interest on the new cash itself or the closing costs on the new loan).

In the current interest rate environment, second-lien home equity loans are a far better way to take out cash from home equity. Second-lien home equity loans were designed to enable homeowners to convert home equity into cash without having to refinance the entire mortgage.

The typical FHA or VA borrower who completed a cash-out refinance in late 2022 would have paid $38,000 less in total interest and accumulated $42,000 more in home equity had they been able to obtain a 10-year home equity loan instead. Further, because closing costs are a percentage of the loan balance, the typical FHA or VA borrower who completed a first-lien, cashout refinance paid three to four times more in closing costs than they would have for a second-lien home equity loan.

Many mortgage lenders, while willing to make new mortgages that the government will guarantee, such as cash-out refinances that are backed by the FHA or VA, appear much less willing to make home equity loans, especially to lower credit score borrowers. Given that interest rates now favor the home equity loan as a cost-effective means to tap home equity, the market now has the opportunity to provide these loans.

At the recent rate of about 13,000 FHA and VA cash-out refinance loans per month, about 160,000 of these homeowners could become saddled with more costly mortgages this year.

Even though the interest rate on the new cash is higher with a home equity loan than with a cash-out refinance, that higher interest rate applies only to the new cash. Therefore, when cash-out refinance rates are above borrowers’ current mortgage rates, the overall cost of the home equity loan is much lower because the borrower continues to benefit from that lower original mortgage rate - a substantial savings, as noted earlier. This factor more than offsets the higher rate of interest paid on the new cash from a home equity loan.

Lenders should make second mortgage products such as home equity loans and home equity lines of credit (HELOCs) more available. Of particular concern is the fact that FHA cash-out refinances are disproportionately going to financially vulnerable borrowers, including those with lower credit scores and borrowers in neighborhoods with higher shares of Black residents.

This brief was written by Tobias Peter, research fellow and assistant director, AEI Housing Center; Edward J. Pinto, senior fellow and director, AEI Housing Center; Mike Calhoun, president, Center for Responsible Lending; and, Liz Laderman, senior researcher, Center for Responsible Lending.

Of particular concern is the fact that FHA cashout refinances are disproportionately going to financially vulnerable borrowers.

NON-QM LENDER RESOURCE GUIDE

Arc Home LLC Mount Laurel, NJ

Multi-channel mortgage leader with exceptional service and comprehensive mortgage solutions. When it comes to choosing your lending partner, there are many things to consider. Our products set the standard in the industry for innovation. Since that innovation is in our DNA, we will always be on the cutting edge of what matters most to you and your borrowers. At Arc Home, our priority is to provide the best customer experience from registration to closing, and we continue to invest in that philosophy every day.

business.archomellc.com

(844) 851-3600

sales@archomeloans.com

LICENSED IN: AL, AK, AZ, AR, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

Carrington Wholesale Dallas, TX

The Carrington Advantage Series is a full suite of Non-QM Loan solutions that “Delivers More” for you and your borrowers. Ideal for borrowers, like the self-employed, that don’t fit Agency or Government Qualified Mortgage standards based on credit quality, property type, documentation type, income documentation, or other borrower situations.

• FICOs 550+

• Primary wage earners FICO

• DTIs up to 50%

• Bank Statements (personal or business) accepted

• We don’t require disputed tradelines to be removed

With the Carrington Investor Advantage (DCR)

• DCR down to .75

• First-time investors are ok

• Only 48 months seasoning for major credit events

• 1x30x12 mortgage history ok

(866) 453-2400 carringtonwholesale.com

LICENSED IN: 47 States (excluding NH, MA & ND.)

WAREHOUSE LENDING RESOURCE GUIDE

FirstFunding, Inc. Dallas, TX

Offers warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors.

*Ease of use (Support staff, technology an other tools to support mortgage bankers) FirstFunding’s FlexClose Funding program allows our clients to fund outside the Fed wire restrictions. Same day and afterhours funding. Browser-based proprietary platform, customized reporting tools, and a dedicated customer service team.

Conventional Conforming, Jumbo, FHA, VA, USDA, Non-QM

(214) 8217800

firstfundingusa.com

LICENSED IN: CT, DC, DE, FL, GA, IL, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA

APPRAISER & AMC RESOURCE GUIDE

Clear Capital Reno, NV

Clear Capital is a national real estate valuation technology company with a simple purpose: build confidence in real estate decisions to strengthen communities and improve lives. Our commitment to excellence is embodied by nearly 800 team members and has remained steadfast since our first order in 2001.

clearcapital.com

LICENSED IN: AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

PRIVATE LENDER RESOURCE GUIDE

Alpha Tech Lending West Hempstead, NY

DSCR Rental NO DOC Loans

Alpha Tech Lending is a trusted direct lender, with over a combined 30 years of experience in the private lending sector. We offer a variety of loan programs for non-owneroccupied residences that are customizable to suit your real estate investment needs. From fix and flips, long term rental, new construction, commercial bridge, and more. We lend to both new and experienced real estate professionals throughout the country. We value long term relationships built on trust. Our brokers are protected.

alphatechlending.com

(888) 276-6565

info@alphatechlending.com

LICENSED IN: CT, DC, DE, FL, GA, IL, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA

Stratton Equities Pine Brook, NJ

Stratton Equities is the leading Nationwide Direct Hard Money & NON-QM Lender that specializes in fast and flexible lending processes. Our Hard Money and Direct Private Money loan programs support the following investment projects:

• Fix and Flip

• Soft Money Loans

• Cash Out — Refinance

• Fixed Commercial Loans

• Commercial Bridge Loans

• Bridge Loans

• Stated Income/ No-Income Verification Loans

• Rental Loans

• Foreclosure Bailout Loan

• NO-DOC

• Blanket Loans

• Fixed Rental Programs

• Multi-Family Loan

No Upfront fees! No Junk Fees! No Tax Returns!

strattonequities.com

(800) 962-6613

info@strattonequities.com

LICENSED IN: All States except for: AK, ND, NV, SD, UT

SPECIAL ADVERTISING SECTION: ORIGINATOR

COMPANY AREA OF FOCUS WEBSITE

Global DMS Appraisal Management Software globaldms.com

SPECIAL ADVERTISING SECTION: APPRAISER & AMC DIRECTORY

COMPANY AREA OF FOCUS WEBSITE

Clear Capital National real estate valuation technology company clearcapital.com

SPECIAL ADVERTISING SECTION: WAREHOUSE LENDING DIRECTORY

COMPANY AREA OF FOCUS WEBSITE

FirstFunding Inc. Offers warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors. firstfundingusa.com

Independent Bank of Texas Mortgage warehouse lines of credit, from $2 million to $150 million, and fund over 200 delegated and non-delegated retail originators. Ifinancial.com

nmplink.com/TheInterest nmplink.com/ThePrincipal nmplink.com/GC

PRODUCTIONS OF AMERICAN BUSINESS MEDIA

Discover Where Your Competitors Stand In The Mortgage Market

Adapting to today’s dynamic mortgage market has changed the way we analyze trends and track competitors. Luckily, we have the tools you need to determine your competitors’ market share and see how individual loan originators are performing in their market.

Mortgage MarketShare Module

Our Mortgage MarketShare Module provides real-time market insights on all lenders, helping you easily benchmark your company’s market share, identify new and emerging markets, and measure your sales performance against your competition.

Loan Originator Module

Our Loan Originator Module provides you with access to the largest and most comprehensive loan originator database in the country. Take advantage of this access to identify top-producing loan officers, verify production, and monitor competitors.

GET A FREE MORTGAGE COMPETITOR ANALYSIS

To show you just how powerful our modules are, we’re offering a free customized mortgage competitor analysis. Simply visit www.thewarrengroup.com/competitor-analysis and provide us with a few details. You’ll receive an updated 2021 vs. 2022 Quarterly Mortgage MarketShare Report at the company level paired with a Loan Originator Report highlighting top LOs and individual performance.

Visit www.thewarrengroup.com to learn more today!

Questions? Call 617.896.5331 or email datasolutions@thewarrengroup.com.

BENEFITS

• Monitor Residential and Commercial Lending

• Measure Sales Performance and Market Activity

• Identify High-Performing Competitors

• Uncover Emerging Markets and New Opportunities

• Pinpoint Top Loan Officers for Recruitment

• Identify and Verify Loan Originator Performance

• Measure Loan Activity Against Competition

• Highlight Success for Market Positioning

NEED MORE DATA?

Inquire about our NMLS Data Licensing and LO Contact Database options.