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10 The Science of Recruiting: Why Some Mortgage Employment Relationships Work and Others Fail By Steve Rennie
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24 Lykken on Leadership: Great Leadership Breeds Great Leadership By David Lykken
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A SPECIAL LOOK AT “THE WHOLESALE & CORRESPONDENT MARKETS” Cutting-Edge Wholesaling: New Technology Meets New Industry Standards By Andrew Russell ........................46 Choose Your Wholesale Friends Wisely By Buster Williams ................................................................................47
The Future of the Mortgage Broker and Correspondent Markets (Part IV) By Andy W. Harris, CRMS ....48
28 Survival Perspectives of the Small Broker Shop ... Will the Impending QM Rule Finally Spell “The End?” By George L. Duarte, CMC
35 Who’s Who in the 2013 Wholesale Arena?
44 Millennials, the Internet and Originations ... A Closer Look By Phil Hall
FEATURES Be a Leader in the Mortgage Industry By K. Justin Restaino ....8 The Elite Performer: Summer Smiles By Andy W. Harris, CRMS ..........................................................8 The Mortgage Fraud Triangle: What It Means for Your Business! By Andrew Liput ..........................................16 Powering Through Change: Six Steps for Making Change Work for You By Sharon Bitz ..................................18 The NAMB Perspective: August 2013 ............................20 Discount Point Now Included in Texas Three Percent Points and Fees Audit By Melanie A. Feliciano Esq. ................22 For Managers Only: Dealing With Difficult People By Dave Hershman ................................................................30 Sales & Marketing Tips for Today’s Mortgage Professional: When One Door Closes … Another One Opens By Fred Arnold ....................................32 Go Dinosaurs! One Loan Officer’s Point of View By Eric Weinstein ..................................................................40 ValueNation: Vendor Assurance By Henry Bagdasarian ......42
V I S I T Company
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AllRegs.............................................................. www.allregs.com ..........................................................43 American Financial Resources Inc. ...................... www.afrwholesale.com ............................Inside Back Cover Amerisave Mortgage Corporation ........................ www.amerisavetpo.com ................................................11 Appraisal Nation, LLC ........................................ www.appraisal-nation.com ..............................................3 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ....................................5 Calyx Software .................................................. www.calyxsoftware.com ................................................39 CBC National Bank ............................................ www.cbconnex.com ......................................................59 Clix Inc. ............................................................ www.clixmg.com ..........................................................43 Data Facts ........................................................ www.datafacts.com ........................................................53 Document Systems, Inc./DocMagic ...................... www.docmagic.com ......................................................31 First Guaranty Mortgage Corp. ............................ www.fgmcwholesale.com ..............................................45 Florida Capital Bank Mortgage ............................ www.flcbmtg.com ..........................................................29 Global DMS........................................................ www.globaldms.com ......................................................25 GSF Mortgage Corp. ............................................ www.gsfsales.com ..........................................................7 Hometown Lenders ............................................ www.whotookmybacon.com ..........................................13 HomeBridge ...................................................... www.homebridgewholesale.com ....................................17 Maverick Funding Corp....................................... www.maverickbranch.com ............................................27 Maximum Acceleration Coaching ........................ www.maccelcoach.com ..................................................15 MBA-NJ/NJAMB .................................................. www.mbanj.com ..........................................................57
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Menlo Park Funding .......................................... www.mpfunding.com ....................................................51 Mortgage Mapp, Inc. .......................................... www.mortgagemapp.com/MO ........................................41 NAPMW ............................................................ www.napmw.org ..........................................................63 New Penn Financial, LLC .................................... www.gonewpenn.com ....................................................50 PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................59 Quality Mortgage Services .................................. www.qcmortgage.com ....................................................49 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com ..............................................23 Rushmore Loan Management Services LLC............ www.rushmorehl.com ......................................................9 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................30 Streetlinks LLC .................................................. www.streetlinks.com ..............................Inside Front Cover TagQuest .......................................................... www.tagquest.com ........................................................33 The Bond Exchange............................................ www.thebondexchange.com ..........................................48 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ........................................................19 Senior Security Advisors...................................... www.want2Reverse.com ..................................................1 United Northern Mortgage Bankers, Ltd............... www.unmbwholesale.com ..............................................72 United Wholesale Mortgage ................................ www.uwm.com ................................................Back Cover Veros ................................................................ www.veros.com ............................................................46 WCS Lending...................................................... www.wcswholesale.com ................................................55
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NMP News Flash: August 2013 ....................................12 New to Market................................................................14 Heard on the Street ......................................................26 NMP Resource Registry ................................................66 NMP Calendar of Events ................................................71
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Wharton School Professor Pushes for Complete Dissolution of the FHA By Robert Ottone ............................51 Appraisal Compliance and Processes: What You Need to Know By Vladimir Bien-Aime ....................52 Boosting Sales Via Emotional Stimulation By Joshua Conklin ..................................................................53 Why the “Farm Bill” Can Save the USDA Home Loan By Rich Obermeier ................................................................54 How to Position Yourself for Your Next Career Move By Dr. Marty Martin ................................................................54 Hidden Opportunities in Basel III—Second Edition By Shannon Lois ....................................................................56 Growing Your Real Estate Agent Relationships, Grow Your Mortgage Business (Part II) By Jean LeBlanc ..58 The High Cost of Profitable Quarters By Robert Ottone ......59 Four Steps to Building an Online Mortgage Lead Generating Machine By Mark Madsen ................................60 Why Do I Need a Compliance Management System? By Joy K. Gilpin ....................................................................61 Marketing: Late Summer 2013 ......................................62 Study Concludes Underwater Homeownership Not a Factor in Relocation By Robert Ottone ................................63 The State of the Jumbo Mortgage Market By Phil Hall......64 USA Cares Mortgage Heroes: Jeff Wu By Joann Muncey ..65 Bonded With NAMB: Am I Paying Too Much for My License Bonds? By Mason Grashot, CPA ..............................70
AUGUST 2013 Volume 5 • Number 8
FROM THE
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com
As summer comes to an end, the “Dog Days of Summer” still give us an opportunity to reflect on how the mortgage industry is doing, and in particular, how mortgage originators are continuing to thrive in the marketplace. Besides the shift from a “refi” based origination engine to a “purchased” based model, mortgage originators have been met with a slew of acronyms that, in the end, spell compliance concerns such as the CFPB, FRB, QM, QRM, RESPA, HMDA, TILA, ECOA, FCRA, FACTA, to name just a few! It seems that the effort put forth by the Feds to “reduce paperwork” hasn’t hit the mortgage industry yet, and seems well downright counterproductive. As we have seen with regs such as the Dodd-Frank Act, they have consumed reams of paper, not to mention have been on the minds and nerves of all in the mortgage industry. With that said, our August 2013 issue once again recognizes those wholesalers that consistently rise above it all and serve to provide the conduits for originators to thrive in. These battle-scarred, but resilient, warriors choose to deal and work with every roadblock placed in their path and move on. It isn’t that they look for a way to work around the myriad of compliance issues consistently changing, but they use the power of “grit” to overcome. I was watching a TED (Ted.com) video online the other day and the presenter, Angela Lee Duckworth, defined “grit” as a passion that, in and of itself, can provide the foundation for success. Grit is defined as “perseverance and passion for long-term goals. Grit is often misdiagnosed as a symptom of being a “workaholic” because a person or company driven by “grit” has a strong “zeal” and “persistence of motive and effort.” Individuals and companies high in “grit” are able to maintain their determination and motivation over long periods despite experiences with failure and adversity. Their passion and commitment towards the long-term objective is the overriding factor that provides the stamina required to “stay the course” amid challenges and set-backs. To those wholesalers still thriving and surviving in this industry, National Mortgage Professional Magazine congratulates you on the “grit” you possess. You are driven by a passion that pushes you to win the marathon and not just the sprint. You are in it for the long haul to serve the multitude of originators that deliver for you and the thousands of consumers they represent. As lenders continue to abandon the wholesale model, including the recent departure of EverBank, those that remain have the “grit” and we collectively give you our most sincere thanks! Until next month …
STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com
Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com
Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com
Beverly Bolnick National Account Executive (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com
Scott Koondel Operations Manager (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Robert Peter Ottone Assistant Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com
David J. Coster Senior Editor davidc@nmpmediacorp.com
Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 jonb@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.
ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.
SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.
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publisher’s desk
Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
Joel M. Berman, Publisher-CEO NMP Media Corp. joel@nmpmediacorp.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2013 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Fred Arnold, CMC
David Lykken
By Melanie A. Feliciano Esq.
Mark Madsen
Andrew Russell
Robert Ottone
Joy K. Gilpin
Dr. Marty Martin
Eric Weinstein
Mason Grashot, CPA
Joann Muncey
Buster Williams
Jean LeBlanc
Rich Obermeier
Andrew Liput
Steve Rennie
Shannon Lois
K. Justin Restaino
George L. Duarte, CMC
Donald J. Frommeyer, CRMS
Editorial Contributors Henry Bagdasarian
Andy W. Harris, CRMS
Vladimir Bien-Aime’
Phil Hall
Sharon Bitz
Dave Hershman
Joshua Conklin
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NAMB—The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org
P.O. Box 451718 l Garland, TX 75042 Phone: (800) 827-3034 l Fax: (469) 524-5121 Web site: www.napmw.org
NAMB 2013-2014 Board of Directors
2013-2014 NAPMW National Board of Directors and Administration
OFFICERS Donald J. Frommeyer, CRMS (t/e 2014)—President Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net John Councilman, CMC, CRMS (t/e 2014)— President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 200 South Wilcox Street, #224 l Castle Rock, CO 80104 Office: (720) 810-4917 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com
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Jim Pair, CMC (t/e 2014)—Immediate Past President Mortgage America Corpus Christi Inc. 22800 Bulverde Road, Apt. 1402 l San Antonio, TX 78261 Phone: (361) 774-7314 l E-mail: jlpair@aol.com
DIRECTORS
President Jill Kinsman (206) 344-7827 president@napmw.org President-Elect Christine Pollard (607) 226-1046 cpollard1046@gmail.com
National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org
2013 Board of Directors & Staff Daphne Large President (901) 259-5105 daphnel@datafacts.com
Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com
Maureen Devine Vice President (413) 736-4511 mdevine@strategicinfo.com
Dick Morin (t/e 2014) Consumers First Mortgage P.O. Box 918 l Kennebunk, ME 04043 Phone: (207) 985-2895 l Fax: (207) 636-8027 E-mail: dick@consumers1stmortgage.com Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com
Secretary Cynthia Nutter (360) 449-6408 cynthia.nutter@fnf.com
Vice President (Central Region) Kelly Hendricks Treasurer (314) 398-6840 Jeanne Evans, CME khendricks@fsbfinancial.com (918) 431-0155 drmjevans@att.net Vice President (Eastern Region) Kimberly Rozell, CME Parliamentarian (607) 229-5008 Dawn Adams, GML, CMI kimrozellnapmw@gmail.com (607) 737-2584 dawnadams@elmirasavingsbank.com Vice President (Northwestern Region) Administrator Ken Perry, CMI, CME Hulene Works (360) 936-3010 (800) 827-3034 kenapmw@gmail.com hulene01@verizon.net
Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com
John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com
Vice President (Western Region) Anna Mackovska (323) 331-2222 anna.napmw@gmail.com
Donald J. Unger Ex-Officio (303) 670-7993, ext. 222 don@advcredit.com Mike Brown Treasurer (800) 925-6691, ext. 4350 mike.brown@ncogroup.com Nancy Fedich Director–Chair Legal Committee (908) 813-8555, ext. 3010 nancy@cisinfo.net William Bower Director–Chair Tenant Screening Committee (800) 288-4757 wbower@continfo.com Tom Conwell Director–Liaison Legislative Committee (800) 445-4922, ext. 1010 tconwell@credittechnologies.com
Judy Ryan Director–Chair Strategic Alliance Partnership Committee (800) 929-3400, ext. 201 jryan@kroll.com Renee Erickson Director–Chair New Membership Committee (866) 932-2715 renee.erickson@acranet.com Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org
www.GSFSales.com
It’s All We Do!
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Be a Leader in the Mortgage Industry Practicing High Ethical Standards Everyday
By K. Justin Restaino
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When you woke up this morning and got ready for work, did you stop to think about what kind of leader you wanted to be? Do you want to be a real leader or someone who is perceived as a leader because you know how to fake it to get by? In a world where success is hard to come by, it’s easy to see how people fall to negative forces that push you to be guarded or deceptive. The mortgage industry is in dire need of genuine leaders who are willing to take the high road to success and motivate others to follow suit. Different situations in the mortgage world call for different leadership approaches, depending on needs and objectives. Ultimately, the goal of any leader is to get results, but at what cost? There are two types of people in the world of leadership: Those who are actually great leaders; and those who wish to slide by and merely be seen as great leaders. The best leaders know who they are, they are in touch with their true self, and more importantly, they know what they value and what’s unacceptable. Tzu-Ssu, a Chinese philosopher and grandson of Confucius, said it best: “Sincerity is the fulfillment of our own nature, and to arrive at it, we need only follow our own true self.” It takes some time and self-understanding, but if you can assess what values you believe in, then you can choose the impact you want to have in the mortgage industry. People around you will recognize the positivity you bring out in human nature, and they will consider you a safe point around whom strong teams can develop and achieve success together. We see fraud everywhere: Politics, religion, education, and in the business world. Fraud, if achieved, is a less costly means to an end than actually doing the work. However, fraud will take you further than you are probably willing to go, and in the end, cost you more than you are willing to pay. Fraud almost always catches up with you; exposing your true, socalled leadership, or lack thereof. In 2012, mortgage fraud was on the rise again after being relatively flat for about a year, according to CoreLogic. Their report estimated approximately $12 billion in fraudulent activity over the year. With recent mortgage regulations at an all-time high, you would think fraud would be on the decline. The penalties and incentives aren’t there for brokers to engage in fraudulent behavior. Or so you would think … Great leaders in the mortgage industry must practice constant vigilance in the ethics of how business is conducted. You must create a culture of high ethical standards, so dangerous incentives don’t throw you into a downward spiral. If shortcuts produce success, and that success is rewarded, you may find your entire office cutting corners to get ahead. Instead, ethics must come first and results, second. You must instill a “Buck Stops Here” mentality, and measure successful results with accurate measurement of how they were obtained. With all of the changes and negative stereotypes of the mortgage industry, we need such leaders more than ever before. The temptation and opportunity to commit fraud is there, but being aware of it is your first step to achieving true leader status. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.
SPONSORED EDITORIAL
THE
elite performer Summer Smiles By Andy W. Harris, CRMS Hey … it’s summer. Hopefully you’re reading this on a beach somewhere or enjoying a margarita by the pool. If not, I suggest you do that soon. It’s good for business to take a break every now and again, so I thought I’d share some industry laughs with you.
l Sign next to FSBO: We shoot every third agent and the second one just left. l The sellers told me their house was near the water. It was in the basement. l Real estate agent: First, you folks tell me what you can afford, then we’ll have a good laugh and go on from there. l There is no longer a need for the neutron bomb. We already have something that destroys people and leaves buildings intact. It’s called a mortgage. l The house is only five minutes from shopping … if you’ve got an airplane. l The trouble with owning a home is that no matter where you sit, you are looking at something you should be doing. l If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem. l I went to buy a toaster and it came with a bank. l How much are they asking for your rent now? Oh, about twice a day. l How do you define an optimist? A bank manager who irons five shirts on Sunday night. l My buyers want a new home on the outskirts—of their income, that is. l A man went to his bank manager and said, “I’d like to start a small business. How do I go about it?” “Simple,” said the bank manager. “Buy a big one and wait.” l My buyers went through debt consolidation. Now they have only one bill they won’t pay. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or e-mail aharris@vantagemortgagegroup.com or visit VantageMortgageGroup.com.
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Why Some Mortgage Employment R By Steve Rennie
also described “hygiene factors” or environmental factors which include: Company Policy and Administration, Supervision—Technical, Salary, Super-vision—Personal and Working Conditions. Dr. Herzberg’s theory is still highly regarded within business today, as it has served as the foundation for a myriad of assessment tools (including our Model-Match Assessment) used to measure employee job satisfaction/dissatisfaction. His major contribution is the premise that an employee can be motivated, but still dissatisfied which can ultimately lead to a drop in productivity or the loss of the employee to another employer. Two-Factor Theory lies behind a key component of one of the biggest selling business books of the past 25 years, 1989’s First Break All the Rules: What the World’s Greatest Managers Do Differently, by Marcus Buckingham and Curt Coffman. In the book the authors provide the 12 fundamental questions that employees ask of themselves, and that great managers/leaders need to answer if they hope to keep their employees motivated and engaged. The 12 questions are:
W
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hy do s o m e professionals just seem to “fit” better with their company? Why do some salespeople perform better at one company than another? These are questions that have driven those of us in the recruiting profession—more specific within mortgage sales recruiting—to try to identify the reasons for a successful fit and extraordinary performance so they can be replicated. When my company was founded in 2008, it was a challenging time for the mortgage industry, yet the constant through those challenges and through every cycle the industry has faced, has been the need to attract and retain highly productive mortgage sales professionals with books of business. Our experience in recruiting these specific professionals taught us that fit and production are byproducts of what we call “ModelMatch.” Where Model-Match exists, high production and longterm relationships are realized. Where Model-Match is absent, lack of production and failed long term relationships are more than likely. We have previously written about what the practice of Model-Matching looks like. Our definition: Model-matching is the pro-cess of improving the mutual results from relationships between lenders and originators. It is a comprehensive process of assessment of both parties across a wide range of factors, including leadership, culture, business, operations, technology and geography. This process involves due diligence and consideration of both objective and subjective factors of a relationship in order to produce a holistic picture of positive-matched and negative-matched areas within the relationship. What we have yet to describe are the psychological foundations for ModelMatching. This article will provide a condensed overview of research behind the concept of Model-Matching. With the respect for the principles of Dr. Robert Cialdini within the mortgage industry, relative to the topics of influence and per-
suasion, we believe such a grounding of our practices in widely accepted psychological research will be appreciated. Where does Model-Matching come from?
Hierarchy of Needs— Abraham Maslow Dr. Abraham Maslow was an American psychologist who published Motivation and Personality, in 1954. Maslow’s theory, which is familiar to anyone who has every taken an introductory psychology class, describes human motivation as a result of pursuing more highly valued needs only after more basic needs have been met. According to Maslow, human needs proceed upward along this path: Physiological, Safety, Love/Belonging, Esteem and SelfActualization.
While Maslow’s work has largely been by-passed by other theories today, what his work established was the clear relationship between motivation and both internal and external factors that could be addressed by employers to improve job satisfaction and performance.
Two-Factor Theory— Frederick Herzberg Dr. Frederick Herzberg was an American psychologist who published The Motivation to Work in 1959. In it, he described two competing sets of factors that determine how motivated a worker is to perform in his or her job. He described “motivator factors,” which include: Achievement, Recognition, Work Itself, Responsibility, Promotion and Growth. He
1. Do I know what is expected of me at work? 2. Do I have the materials and equipment I need to do my work right? 3. Do I have the opportunity to do what I do best every day? 4. In the last seven days, have I received recognition or praise for doing good work? 5. Does my supervisor or someone at work seem to care about me as a person? 6. Is there someone at work who encourages my development? 7. At work, do my opinions seem to count? 8. Does the mission/purpose of my company make me feel my job is important? 9. Are my co-workers committed to doing quality work? 10. Do I have a best friend at work? 11. In the last six months, has someone talked to me about my progress? 12. This last year, have I had the opportunity at work to learn and grow?
of Recruiting:
Relationships Work and Others Fail Expectancy Theory— Victor Vroom Dr. Victor Vroom is a Canadian-born, professor at Yale who published Work and Motivation in 1964. The crux of his theory is that individuals make choices based on estimates of how well the expected results of a given behavior are going to match up with, or eventually lead to, the desired results. Motivation is a product of the individual’s expectancy that a certain effort will lead to the intended performance. This is where we got our concept of “matching.” In mortgage sales, like other types of work, we are motivated by our belief that working hard (and smart) will result in the outcomes we desire. When producers’ expectations are aligned with the results they see, they remain motivated. When they lose that connection, perhaps due to leadership, communication, or managerial impediments, they lose their motivation and performance can suffer, or they will look for a better match elsewhere.
Person-Organization Fit Theory— Amy Kristof-Brown
Steve Rennie is a managing partner at
Hammerhouse LLC, an expanding national recruiting and strategic growth firm for the financial services industry with mortgage sales and leadership placement at its core. He may be reached by e-mail at steve.rennie@teamhammerhouse.com or call (949) 525-9407.
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Taken together Maslow’s Hierarchy or Needs, Herzberg’s Two Factor Theory, Vroom’s Expectancy Theory and KristofBrown’s conception of PersonOrganization Fit provide the psychological underpinnings of Model-Matching. We wanted to understand how the interaction between employees and employers impacts both initial attraction to one another, as well as, performance and
endure while performance excels. Model-Matching is our way of determining compatibility, fostering success and preventing failure and disappointment. In the end … it’s just science.
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Dr. Amy Kristof-Brown is a professor at the University of Iowa who edited Organizational Fit: Key Issues and New Directions just this year. However, she is credited with defining the theory of Person-Organization Fit (POF) back in 1996. The POF Theory states that employee attraction and performance is strongly impacted by the degree of compatibility between the person (employee) and the culture of the organization. Going beyond the Expectancy Theory of Vroom, POF theory adds the concept of “organizational brand identity” which simply says that membership in a group or organization that reflects an individual’s true or intended self-image allows them to feel as though they fit in a culture that reflects their true nature. Simply put, we all create a model of who we are, or want to be, and evaluate whether people, organizations or employers help or hinder us in being or becoming that person. The POF Theory informed the “model” component of our process of Model-Matching.
retention. What we learned from these scholars and have applied so successfully is that success in these relationships is tied to the degree of genuineness present. When both parties are open and honest about who they are, what they like and where they want to go, relationships flourish and
EWSFLASH l AUGUST 2013 l NMP NEWSFLASH l AUGUST 2013 l NMP NEWSFLA MBA Targets Originations the third quarter and 4.7 percent during the fourth quarter, about 20 to 30 to Hit $606 Billion Mark basis points higher than was forecast at in Second Half of 2013
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The Mortgage Bankers Association (MBA) reaffirmed its outlook for mortgage originations in the second half of 2013, but lowered its forecast for U.S. economic growth. MBA expects originations in the second half of the year to total $606 billion, up from the $527 billion it had forecast at the beginning of the year, but down considerably from the estimated $976 billion in originations during the first half of the year. The increase in the forecast is due almost entirely to carryover refinance loans originated during the second quarter that will close in the third quarter. Purchase loan originations during the second half of the year are expected to total $312 billion versus the $299 billion originally forecast. MBA expects economic growth to average 2.2 percent in the second half of the year versus the 2.4 percent originally forecast, with the declines mainly due to reduced fixed residential investment and reduced government expenditures. MBA expects the unemployment rate to be at the 7.5 (third quarter) and 7.3 (fourth quarter) percent levels forecast at the beginning of the year but cautions that inflation over the next several months will be sharply higher due to higher oil prices and housing rental costs. “As we said at the beginning of the year, the big unknown for origination volumes was the timing of the market reaction to any statements from Federal Reserve officials regarding the phasing out of quantitative easing and the impact on refinance volumes,” said Jay Brinkmann, MBA’s chief economist. “While the magnitude of the rate increase was larger than we had forecast, the timing of the increase and the impact on refinance volumes was pretty much in line with what we had expected.” MBA expects the purchase mortgage rate as reported in the Freddie Mac weekly survey to average 4.4 during
the beginning of the year.
Jonathan Foxx to Direct Mortgage Compliance Division of Abrams Garfinkel Margolis Bergson LLP Lenders Compliance Group Inc. (LCG) has announced that its President, Founder and Managing Director Jonathan Foxx has been named principal advisor to the mortgage compliance group of Abrams Garfinkel Margolis Bergson LLP. LCG and Abrams Garfinkel Margolis Bergson had a previously established strategic relationship, allowing comprehensive, timely and cost-effective support to mortgage lender and mortgage broker clients. Neil Garfinkel and Michael Barone, both directors of LCG, also serve as partners of Abrams Garfinkel Margolis Bergson. “Abrams Garfinkel Margolis Bergson is a highly capable firm with a sterling reputation for providing compliance counsel to a diverse group of mortgage firms,” said Foxx. “I am honored to have the opportunity to expand our relationship and extend the services we provide.” Foxx has 35-plus years of experience in the operations of residential mortgage lenders and originators, and has served as chief compliance officer of two publicly traded financial institutions. He currently serves as president and managing director of LCG, as well as its sister company, Brokers Compliance Group Inc. (BCG). He is a featured contributor to JDSupra and frequent speaker and participant at industry conferences and conventions. Jonathan holds a Ph.D. from Columbia University and an MBA from the Wharton School. Foxx is also a regular contributor and columnist to National Mortgage Professional Magazine.
Abrams Garfinkel Margolis Bergson is a full-service law firm dedicated to smart, practical and cost-effective counsel. Providing comprehensive and creative counsel is the firm’s primary goal, as they represent a variety of clients, including banking institutions, start-up and middle market companies, real estate developers, cooperatives and condominiums, trade organizations, entertainment companies, performing artists, insurance companies, personal services firms, hedge funds, wholesalers, distributors, transportation companies and product manufacturers.
Appraisers Remain Encouraged by State of the Housing Market
Appraisers remain mildly encouraged by the current state of the housing market, according to a recently completed survey conducted by United States Appraisals. When asked, “What is your current level of confidence in the housing market?” 49.6 percent of respondents answered mildly or moderately strong, while only 14.5 percent answered mildly or moderately weak. The survey was completed by United States Appraisals’ nationwide panel of residential appraisers. United States Appraisals conducted the same poll after the first quarter of 2013 and plans to conduct the survey quarterly to monitor trends and opinions in their appraiser network. This level of confidence is slightly lower than polling conducted at the end of the first quarter when 54.5 percent indicated a mildly or moderately strong outlook. Neutral replies increased from 24.8 percent to 29.7 percent. “Appraisers tend to focus on the local markets in which they work and are not typically concerned with national numbers or reporting,” said
Aaron Fowler, president of United States Appraisals. “By polling our nationwide panel of local appraisers, we believe that in the aggregate we receive a solid interpretation of the national marketplace. Overall, it is good to see continued optimism in our appraiser community.” Opinions were slightly higher regarding home values with 70.7 percent of respondents reporting an increase in values in their area vs. 65.4 percent at the end of the first quarter. Only 6.6 percent of respondents reported value depreciation in their areas. The polling also revealed a large shift in order volume, which mirrors the recent decline in mortgage applications. 33 percent reported decreased volume in the quarter vs. only 15 percent reporting decreased volume in the prior period. “We value the input of our appraisers,” said Fowler. “We want to make sure we stay engaged, address their concerns and understand their vision of the marketplace.”
EverBank to Shut Down Wholesale Ops and Eliminate 150 Positions
EverBank Financial Corporation has announced that it will end its wholesale broker home lending business and intensify its focus on the company’s growing network of retail lending offices and consumer-direct and correspondent lending channels. The company will close wholesale lending regional operations centers in Dallas, Texas, Sacramento, California, and Jacksonville, Florida, and will eliminate approximately 150 positions nationwide as result of these changes. “As the housing market recovers and the competitive and regulatory landscape of the residential mortgage industry evolves, we believe now is the time for EverBank to focus on growth opportunities in our retail, direct and corre-
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AFR Wholesale Offering Processing to Mortgage Brokers
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AFR Wholesale, a division of American Financial Resources Inc., has announced a free fulfillment service for the mortgage broker community in all 50 states, the AFR Wholesale Direct Program. As interest rates continue to rise, and the uncertainty of loan volume makes properly staffing a back office challenging, AFR’s Wholesale Direct Program is a free service designed to help its customers manage through the challenges of the mortgage marketplace of today. “We are always looking to help our customers succeed in their business regardless of the size of their company,” said Corey Dubnoff, president of AFR. “We feel that offering free loan processing on all of AFR’s mortgage products will help our broker originators focus on what they do best, originate new business.” The process flow of the AFR Wholesale Direct Program is simple. The broker originates, discloses and uploads the file to AFR. AFR’s Wholesale Direct personnel take over the file, processing the paperwork that’s required to close all the way through funding. This is all done while keeping in constant communication with the originator. “We know that we have a great processing team in place,” said Laura Brandao, COO of AFR. “There is no better value-added service to offer our loyal customers than the part of the lending process that we do best.” AFR’s Wholesale Direct Program is not an “all or nothing” service. Brokers can choose which loans they would like AFR to process and which ones they’d prefer to process themselves. “By allowing brokers to choose which loans they would like AFR to process and which loans they would prefer to process, gives our customers confidence in knowing that they can originate more difficult loans such as FHA’s 203k or the FHA One Time Close Construction loan and not have those loans clog up a processors’ pipeline,”
said Dubnoff. “The program also allows the broker to be more competitive. By shifting a big piece of the cost onto us, it makes the broker originator more competitive in the marketplace. That’s a win-win situation for AFR and our customers.”
SSI Begins Testing SafeClose QC Mobile App
Secure Settlements Inc. (SSI) has announced that it has developed a revolutionary, first to market mobile application, SafeClose, that will be utilized by vetted settlement agents to verify quality control (QC) measures, ensure best practices and educate agents about what to look for with respect to fraud and money laundering schemes at residential mortgage closings nationwide. SafeClose will also capture key loan data and transmit the information to SSI’s proprietary technology for analysis and reporting. The application is presently being beta tested with select settlement agents who are in the SSI vetted agent database. Agents use their SSI smartphoto ID card to log into the application, and proceed to verify various quality control steps have been followed. The agent certifies that the closing has concluded, all lender instructions have been followed, and no fraud has occurred. The application registers the date, time and physical location of the agent. It also provides references and primers on how to spot closing fraud, the signs of money laundering, best practices, and includes a fraud reporting function to notify law enforcement if fraud has occurred or is about to occur. “This new mobile app technology reflects our commitment to think outside the box and develop services and products that are on the cutting edge of risk management,” said SSI President and CEO Andrew Liput. “We believe this product will act as a further deterrent
to fraud, provide basic education about how to spot fraud at the closing table, and also collect valuable closing data. This data will feed our advanced analytics to develop new data predictors to understand and track potential fraudsters before they strike.” The mobile app is expected to be launched nationwide, among all the SSI vetted settlement agent network, beginning Sept. 1.
New United Wholesale Mortgage Offering Reaffirms Commitment to the Broker Community
rects them directly back to the broker; and UWM Connect is provided free to brokers that are signed up with UWM. “UWM operates with ethics of the highest standard, the best quality, second-to-none service and an intenselyfocused commitment to our broker community,” said Ishbia. “We continue to launch innovative tools, free services, creative products and various types of assistance to our brokers with the objective of making their jobs easier and them more successful. UWM Connect is another offering that exemplifies our extreme support and partnership with brokers.”
Veros Updates its VeroSCORE Appraisal Risk Scoring Tool
United Wholesale Mortgage (UWM) has announced that it has made available a free service, UWM Connect, designed to generate more business for its brokers. UWM Connect monitors borrower credit pulls for activity to funnel potential leads back to brokers who have previously completed deals with them. “Simply put, we designed UWM Connect to reunite borrowers back with originators that have done deals with them before through UWM in an effort of good faith to give back more business to our brokers,” said Mat Ishbia, president of UWM. “Some lenders will take leads for themselves when a potential repeat borrower is in the market, axing the broker that originally worked the deal. That is not how UWM conducts business. We have created UWM Connect to further demonstrate that we’re a true partner to our brokers, and we always have their best interest and success in mind.” Highlights of UWM Connect include: Monitors past clients for any mortgage credit pulls performed; UWM account executives alert their brokers of the credit pulls so they can proactively contact the borrower to rekindle relationships; UWM also provides the broker’s contact information to the borrower and redi-
Veros has announced an update to its appraisal risk scoring tool, VeroSCORE. The updates focus on the complexity of the appraisal assignment and include several new scoring factors within the tool’s credibility score component to help lenders better assess appraisal risk. “Automating appraisal review in a safe and judicious manner requires the ability to understand the overall complexity of an appraisal assignment,” said David Rasmussen, senior vice president of operations for Veros. “Lenders can better mitigate repurchase risk if they can increase their level of confidence that the appraisals they are using to fund loans are defensible. The new capabilities of VeroSCORE are helping lenders get a better handle on the appraisal in the most efficient manner possible.” Among other enhancements, the new complexity component within VeroSCORE measures the expected difficulty of the appraisal assignment. It does so by analyzing a number of factors within the appraisal report itself in conjunction with external data and analytics. VeroSCORE is designed to run on a fully automated basis when the appraisal report is received from the provider, checking the report for completeness, compliance, credibility and complexity. The resulting report includes a numerical score for each of
these factors along with a suggested routing decision and clear messaging correlated to each reviewed field in the appraisal report. When used in conjunction with valuation workflow systems like Veros’ Sapphire, the appraisal is automatically returned to the vendor for correction if the report fails to clear certain hurdles, such as required fields left blank, invalid data, and other problems within lender-set thresholds.
LoanLogics Develops Module to Streamline MERS Process
identification, in lieu of the CUSIP, FINRA will provide the key characteristics of the security. Transactions must be reported to TRACE within two hours of execution, and are disseminated as soon as received (the reporting timeframe will be reduced to one hour after six months). In addition to increased transparency in agency pass-through mortgage-backed securities, FINRA recently announced that it will soon file proposed rule amendments with the SEC to disseminate transactions in additional types of asset-backed securities, such as those backed by credit card receivables, automobile and student loans, and a variety of other credits.
With mortgage rates drifting higher, coupled with reduced margins in an increasingly competitive origination environment, Loan Value Group LLC has launched a suite of retention and marketing programs that offer lenders and servicers a proactive approach to achieve greater market share and increased volume while creating consumer loyalty and lowering the overall continued on page 39
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FINRA Increases Transparency in MBS Issued by GSEs and SBA The Financial Industry Regulatory Authority (FINRA) has significantly increased transparency in mortgage-backed securities (MBS) issued by Fannie Mae, Freddie Mac and Ginnie Mae, as well as in securities backed by loans guaranteed by the Small Business Administration (SBA) through its new Trade Reporting and Compliance Engine (TRACE) offering. Through TRACE, FINRA will begin to disseminate
LVG Launches New Marketing and Client Retention Program
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LoanLogics has developed an automated module for MERS reconciliation designed to replace the manual processes that many servicers found exposed them to unnecessary risks and were slow, expensive and inaccurate. The new module which has been developed on LoanLogics’ LoanHD platform, addressed the reconciliation of MERS data with servicing system data. “It identifies errors or inconsistencies and flags them so that they can be resolved, keeping the servicer in compliance with the MERS audit requirements and rules,” said Don Smith, product manager for LoanHD. “It generates an audit trail that is transparent to the parties and eliminates the need for servicers to manually review spread sheets to find inaccuracies.” Users of the LoanHD reconciliation module can load their data into the system and quickly compare MERS data and servicing system data in an automated fashion. That process eliminates the time consuming, expensive and error-prone manual processes that many mortgage companies or their servicers continue to rely upon. “Moreover, the platform provides a sophisticated, powerful workflow tool that enables managers to assign work to a specific team or person that is best equipped to do the work,” said Smith. “That will help ensure that discrepancies are resolved as quickly and accurately as possible. Also, bottlenecks are avoided because the professionals that are best at resolving a particular issue are assigned to handle it.”
information for so-called specified pool transactions in agency pass-through mortgage-backed securities and SBAbacked securities. This represents approximately 3,500 trades, totaling $18 billion in par value, on an average daily basis. “With today’s announcement, TRACE has brought historic transparency to the mortgage-backed market, and we will shortly file with the SEC to bring transparency also to asset-backed securities, including those backed by auto loans, credit card receivables and student loans,” said FINRA Vice President Ola Persson. TRACE will disseminate transaction information such as the time of the trade, price and volume. For security
The Mortgage Fraud Triangle: What It Means for Your Business By Andrew Liput
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Fraud is pervasive in virtually every industry. The reason is that fraud is the consequence of a human condition that exploits the opportunity to gain assets through rationalization and need. Every one of us is vulnerable to committing a fraud crime given the right circumstances and the opportunity. Mortgage lenders and banks need to understand the underpinnings of the Fraud Triangle to design programs, policies and procedures to identify risk and deter fraud before it makes them a victim. Risk managers and CPAs specializing in forensic accounting work to root out fraud have, for many years, relied upon the Fraud Triangle diagram, first created by renowned criminologist Donald R. Cressey, to effectively identify the three “legs” of fraud and the human behavior that predicts the propensity to commit fraud. Then, applying internal and external policies and procedures designed to identify behaviors and practices that may lead to fraud, these experts minimize the risk of harm to organizations. A visualization of the “Cressey Triangle” is below: The theory postulates that in order for fraud to take place there are three key elements which must be present. The first is “Motivation” or “Need.” A person finds themselves in a situation where they are, perhaps unexpectedly, facing financial stress, personal pressures or psychological issues caused by external forces. Some examples are an IRS audit, a divorce, a gambling debt, a reduction of employment hours or wages causing a need to maintain a high lifestyle and greed. The second is “Rationalization.” Since it is against human nature to break the law, most people need rationalization to boost their confidence to commit fraud. Examples include feeling underpaid, a sense of entitlement (“I deserve that”), and a sense of unfairness (“he has more than me”). Last and most important is “Opportunity.” A perpetrator of fraud needs access to money and some control over the means of getting to it (or a loophole or lapse in controls that enables easy access). In the mortgage industry, opportunity exists in (a) Trust account access (mortgage proceeds theft), and (b) Access to personal financial information of borrowers (identity theft). Risk management experts, like those at our firm, focus on the three legs of the Fraud Triangle to design vetting and monitoring programs to spot possible fraud characteristics before an event takes place. The SSI Risk Metrics Evaluation System was built on the basis of years of analysis of typical mortgage fraud events. While evidence shows that the mere existence of an independent fraud deterrence process, such as vetting and monitoring, creates a significant perception of oversight and controls that deters potential fraudsters, SSI’s process does much more by studying a person’s background details to reasonably estimate the propensity for fraud. As the science of risk management and fraud detection and deterrence matures, more advances will be made. For example, we are developing both enhanced technological analytics as well as highly-focused personality testing modules to enhance the future vetting process and give the industry key risk data available nowhere else. The ultimate goal for any risk management process is the total elimination of fraud losses. At SSI, we spend all of our time seeking new ways to achieve that lofty goal for our clients. Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.
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spondent lending businesses,” said Robert M. Clements, EverBank’s chairman and chief executive officer. EverBank’s wholesale broker lending business offered a comprehensive suite of mortgage products to mortgage brokers nationwide, including conventional, FHA, VA and jumbo loans. These products will continue to be offered by EverBank to clients across the country through the company’s other home lending distribution channels. “We’re dedicated to providing innovative mortgage products to our clients and improving the efficiency and effectiveness of EverBank’s loan-origination platforms,” said Blake Wilson, EverBank’s president and chief operating officer. “To do that, we’ve decided to exit the wholesale broker lending business and continue enhancing our other residential lending channels.”
BB&T Tops J.D. Power’s Servicer Satisfaction Survey for Fourth Consecutive Year New business practices instituted in the wake of nationwide mortgage reform appears to have contributed to an increase in overall customer satisfaction with primary mortgage servicers, according to the J.D. Power 2013 U.S. Primary Mortgage Servicer Satisfaction Study. The Study measures satisfaction in four factors of the mortgage servicing experience: Billing and payment process; Escrow account administration; Web site; and Phone contact. Overall satisfaction with primary mortgage servicers has increased to 733 (on a 1,000-point scale) from 725 in 2012. BB&T (Branch Banking & Trust Company) continues to rank highest in customer satisfaction among primary mortgage servicers for a fourth consecutive year, with a score of 765, despite a 38-point decline from 2012. Regions Mortgage ranks second with a score of 764, and SunTrust Mortgage ranks third with a score of 762. The 2013 U.S. Primary Mortgage Servicer Satisfaction Study is based on responses from 4,669 customers regarding their experiences with their primary mortgage servicer and was fielded between April 17, 2013 through May 8, 2013. Overall satisfaction substantially increases year over year, as performance at large national servicers improves. However, overall satisfaction with some smaller national servicers that have performed well-above average in previous studies has shifted toward the industry average. This leveling off is potentially the result of an increase in new clients combined with a new set of rules released by the Consumer Financial Protection Bureau (CFPB)—effective January 2014—which
has had many firms focused on ensuring their policies and procedures are fully compliant. The importance of improving communication is readily apparent in escrow account administration, as reflected in the 21-point increase in satisfaction from 2012—the largest increase among the four study factors. Escrow payments are among the most difficult aspects for customers to understand, making straightforward communication critical. Year-over-year satisfaction ratings have increased for all three attributes that comprise the escrow account administration factor: Management of escrow payments; effectiveness of communication; and ease of understanding how the escrow payment applies to the loan. “We have seen an increase in the use of escrow analysis guides, which are very helpful in explaining how the escrow process works,” said Martin. “While there isn’t a silver bullet, mortgage servicers that focus on the Voice of the Customer and improve communication by being more proactive and using various methods to provide information to borrowers appear to be reaping the benefits through higher levels of satisfaction.”
PATH Act Approved by House Three years after the Dodd-Frank Act failed to address the need for housing finance reform and end the record taxpayer-funded bailout of Fannie Mae and Freddie Mac, the Financial Services Committee approved legislation to end their bailout and create a sustainable housing finance system for America. The bill–the Protecting American Taxpayers and Homeowners Act, the PATH Act – ends the largest bailout in history–the nearly $200 billion taxpayer-funded bailout of Fannie Mae and Freddie Mac–and phases out the troubled Government-Sponsored Enterprises (GSEs) within five years; increases competition by ending the federal government’s domination of the housing finance market that has left taxpayers liable for $5.1 trillion in mortgage guarantees; and gives consumers more choices in determining which mortgage product best suits their needs. “The PATH Act creates a housing finance system that’s designed for homeowners so every American who works hard and plays by the rules can have opportunities and choices to buy homes they can afford to keep. It creates a housing finance system that’s designed for hardworking taxpayers so they never again have to bail out corcontinued on page 18
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Powering Through Change: Six Steps for Making Change Work for You By Sharon Bitz Everyone must find their own way of dealing with change. Yet, because change is the norm in the mortgage industry— new regulations, new market conditions, new products, new employers—handling change effectively is an essential skill. Here are six steps that experts point to as strategies for not only dealing with change, but for powering through it on the way to accomplishing your goals. 1. Be flexible Don’t be so regimented and set in your ways that unexpected events knock you off your stride. When facing an unplanned situation, take the time to plan out alternative ways of addressing it. Break the problems into smaller bite-sized pieces and think of them as a puzzle to solve. Your calm and calculating approach to change will enable you to remain focused on results and will provide a clear differentiation from your competitors. 2. Maintain a positive attitude We have heard it a million times, but it never loses relevance—our attitude impacts our performance. Psychological research clearly demonstrates that the ability to handle stress and not develop negative feelings about the particular circumstances we face produces more effective decision-making.
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3. Live in the present One of the great life lessons a co-worker of mine credits to his father: “When facing a difficult challenge, simply do what is next.” The problem in front of us is the key to moving forward, so give it your undivided attention. 4. Ask for help More sage advice I received from a college professor: “If you need or want something, ask for it.” There are people all around us willing to provide their time, expertise or simply an ear to aid us in solving a problem or meeting a challenge. Use these resources and be that resource when the opportunity arises. 5. Don’t sweat the small stuff Every day is filled with thousands of actions and interactions. Some are vastly more important than others in pursuit of our goals. Don’t get bogged down or discouraged by failure to master every detail of your day. Keep your attention and your energy focused on the crucial tasks and moments each day brings. 6. Focus on your foundation Never lose sight of who you are and why you do what you do. Values and inspiration should never be out of our mind. Being grounded provides a platform from which we can do our best work. We have all heard the expression, “Keep your head when everyone around you is losing theirs.” By following these six steps, you will not only handle change, but also use it as an opportunity to power ahead. Sharon Bitz is the national head of wholesale lending for WCS Lending, one of the largest privately-held mortgage banks in the U.S. that has been recognized as an Inc. 5000 honoree for the fourth consecutive year. WCS, which is licensed in 49 states, has offices in Florida, New York, California, Michigan, Maryland, Delaware, Ohio and Hawaii and generates $2 billion-plus in loans annually. She may be reached by phone at (916) 996-1620.
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rupt financial government enterprises like Fannie Mae and Freddie Mac, whose top executives engaged in accounting shenanigans to trigger huge bonuses for themselves,” said Chairman Jeb Hensarling (R-TX). “With the reforms in the PATH Act, Americans will finally have a housing finance system that is worthy of them.”
Wells Fargo to Part Ways With Mortgage JV Businesses Wells Fargo & Company has announced that Wells Fargo Ventures LLC, a wholly-owned operating subsidiary of Wells Fargo Bank NA, plans to withdraw from its eight joint ventures in mortgage lending. The decision is effective immediately and is expected to be completed over the next 12 to 18 months. No impacts on customer service or loan processing are expected. The decision is based on the current regulatory and market environment as changes in state and federal oversight have increased the complexity and difficulty of operating mortgage joint ventures. Wells Fargo began forming mortgage joint ventures more than 20 years ago, successfully leveraging them to provide mortgage lending and services to customers and referral sources around the country. “This decision reflects our response to new operating realities and our commitment to continuously improving our business model,” said Franklin Codel, executive vice president, head of mortgage production. “As a leader in home lending, we want to ensure we’re always in the best position to help Americans achieve the dream of homeownership.” The eight joint ventures that Wells Fargo Ventures will be withdrawing from include: Bankers Funding Company LLC, Colorado Mortgage Alliance LLC, DE Capital Mortgage LLC, Home Services Lending LLC, Military Family Home Loans LLC, Prosperity Mortgage Company, Premia Mortgage LLC and Private Mortgage Advisors LLC. Joint venture customers with a mortgage loan application in process will continue to have their applications processed by the joint venture and may call their mortgage consultant with questions.
CoreLogic Renter Report Shows Improvements in Applicant Credit Quality CoreLogic has released its CoreLogic Renter Applicant Risk (RAR) Index Report for the
first quarter of 2013, showing a twopoint year-over-year increase to a value of 104. The rise in the index is a sign of improving ability to meet lease obligations among prospective apartment renters nationwide. Published quarterly, the RAR Index Report provides market-based benchmarks for evaluating credit quality and risk of default among renters applying for apartment homes in multifamily housing units and singlefamily rentals. Using a mean of 100, an index value above 100 indicates improved applicant credit quality and decreased lease default risk, and a value below 100 indicates declining applicant credit quality and increased lease default risk. “It’s encouraging to see better qualified applicants who are more likely to meet their lease obligations,” said Jay Harris, senior director, CoreLogic SafeRent. “As the economy continues to grow slowly, conditions appear cautiously optimistic for continued improvement in renter applicant qualifications in the year ahead. During this relatively upbeat period, renter trends are pointing toward increased confidence among property owners and applicants.”
CFPB Busts Utah Firm for Violating LO Compensation Rules
The Consumer Financial Protection Bureau (CFPB) has filed a complaint in federal district court against a Utahbased Castle & Cooke Mortgage LLC and two of its loan officers for illegally giving bonuses to Los who steered consumers into mortgages with higher interest rates. The Bureau is seeking an end to this unlawful practice, restitution for those consumers who were upcharged, and civil money penalties. “We are taking action against the type of practices that precipitated the financial crisis,” said CFPB Director Richard Cordray. “Consumers should be able to get a mortgage without worrying about how the financial incentives of their loan officers may cause them to pay higher rates than they actually qualify for.” Castle & Cooke originated approximately $1.3 billion in loans in 2012. The company does business in approximately 22 states and maintains approximately 45 branches across the country. The CFPB alleges that Castle & Cooke, through the actions taken by its president, Matthew A. Pineda, and senior vice-president of capital markets, Buck L. Hawkins, violated the Federal Reserve Board’s Loan Originator Compensation Rule that had a mandatory compliance date of April 6, 2011. continued on page 22
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The President’s Corner: August 2013 For the love of the game …
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I think by now, most of you know that I umpire baseball. I have worked high school, some summer college, junior high and middle school games, and I have worked all categories of Little League, from nineyear-olds to the Big League at the 16-, 17- and 18-year old levels. I have been doing this for more than 38 years, and it is one of the biggest thrills that you can experience when you take the position behind the catcher and the pitcher throws the ball. After all of this time of doing Little League Baseball, umpiring at local Little League games, district games, sectional games, state championship games and regional games and applying to umpire at a World Series, I got a letter in January that I had been chosen to umpire at the Big League World Series in Easley, S.C. What an honor it was to receive that letter. The feeling that day that I would be umpiring in the ultimate experience brought me to the realization that dreams do come true. Well time goes by very quickly, and I soon found the date of July 21 here before I knew it. All of the preparation and planning was now before me and we left on that day for a nine-hour drive from Indiana to South Carolina. Upon arrival, my wife and I were greeted by T.R., Steve and Bryan who are in charge of the umpire crews. I also met the other 12 members of this fraternity of umpires that were also chosen. We registered, got our apartment assignments and proceeded to move in. The apartments were made up of four individual bedrooms with a shared kitchen with a coffee maker and refrigerator and living room, a small TV and washer and dryer, and two bathrooms. The beds were typical dorm single beds and the bedrooms each had their own desk and dresser. We then all got together and went over to the ball fields to get a feel for where we would be umpiring over the next week or so. After a dinner at a local pizza place, we went back to the school, which is about 16 miles from the park, to get final instructions and to rub up 50 dozen official game balls that we would be using during the week. Pictures of the umpires in our uniforms were to take place on Tuesday. On Tuesday, we had an umpire meeting to go over our responsibilities
and a meeting with all of the managers and coaches from the 11 teams that would vie for the title and the first inspection of the equipment of the teams. We also received our assignments for the next day’s competition, and I was chosen to umpire the first game. It was between Latin America (Venezuela) and Mexico. What a thrill! I could hardly sleep that night for the excitement was building. It was a great game. The catcher for the Latin America team, Diego, was a great kid and a really good catcher. We started a friendship that day that continued through the entire Series. As the days went on, we would get our assignments at dinner for the next day. And dinner was served to all of us together after the last game of the day was completed. On one day, we had a rain delay and we went over to get dinner at 12:15 a.m. Boy was that a late night! As the week progressed, we were all working one or two games per day and the weather was muggy. The humidity was so bad that after each game, I had to change my clothes because they were soaked with sweat. But, it was well-earned sweat and what a great experience. On Monday night, they announced the crews for the International Championship and the U.S. Championship games. I was chosen for the U.S. Championship, and I was to umpire first base. How exciting. The game was between the Southeastern Regional team (South Carolina) and the Western Regional team (California). It was a great game and
it was the thrill of a lifetime. I can now mark this outstanding time in my life off my bucket list. This was a dream of mine 10 years ago and it did come true. But I will tell you that it was a lot of hard work and dedication, and I was bound and determined to reach this mountaintop. Reaching the goal of umpiring in the World Series is unparalleled to all of my other umpiring accomplishments. I feel so honored and humbled. The Big League World Series umpire Class of 2013 is made up of great friends and great umpires. To have my name next to theirs and to know that we represented the best for this tournament is so inspiring, yet bittersweet. You see, you can only do this tournament once. Sure, you can apply to go to another one after a four-year wait, but it won’t be the same. I met great people and great kids. I am truly grateful to those who helped me get there. You know who you are and it wouldn’t be fair to call you out as I know that I would probably forget someone. But a mere “thank you” is not enough. I will cherish this time forever, and I will never forget it. I am glad that I got to share this time with my wife and all of my new umpire friends. I will also make this commitment that I will return the favor and help all the young umpires in any way so that they can also reach for the stars and their goals. I do wish to also thank all of my NAMB Board members for their help as they did keep me
up to date on everything that we are working on in Washington, D.C. while I was away. So there you have it. One of the major goals in my life has been accomplished. I am glad that I got to share some of this experience with you. I have included some pictures of me umpiring in the games. And one final word about this experience … as a plate umpire, I usually have general conversation with the catcher about a lot of things. We talk about the pitcher, how his season went, etc. But Diego asked me a question that was truly reality. He asked me why I chose to become an umpire and what did I get out of it. I told him that when I finally realized I would not make it into the professional ranks as a left-handed catcher, I was stepping away from playing and my coach told me about a guy that could keep me attached to the game. Ken was a great mentor of mine and I started to umpire baseball. The best part is that I still get to be on the field, smell the grass and feel the dirt. Umpiring, to me, is a passion. It is something that completes me and makes me happy every day. And most of all, I do it “for the love of the game!” Sincerely,
Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals
NAMB
perspective
Nationally-Syndicated Columnist Kenneth Harney to Speak at NAMB Conference ationally-syndicated columnist Kenneth Harney is the latest to join NAMB National’s speaker lineup. As the author of the column “The Nation’s Housing,” Harney focuses on issues surrounding homeownership, including complicated tax problems, the settlement fee thicket, credit scores and credit files–and guides readers to smart solutions. The 2013 NAMB National event is set for SaturdayMonday, Oct. 19-21 at Harrah’s Resort & Casino in Las Vegas, Nev. Harney’s columns have added to key pieces of housing reform on Capitol Hill and in federal agencies, including cancellation of private mortgage insurance premiums, better disclosures on refinancings, restrictions on private transfer fees, and prohibitions against loan transfer abuses and predatory mortgage servicing practices. Harney is a member of the Federal Reserve Board’s Consumer Advisory Council, a member of the U.S. Department of Housing and
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Urban Development’s Working Group on Computerized Loan Origination, and president and chairman of the board of the National Association of Real Estate Editors. In addition to Harney, NAMB has a number of great industry speakers lined up with more being added weekly, including: l Lawrence Yun, chief economist of the National Association of Realtors (NAR) l Jonathan Foxx, president and managing director of Lenders Compliance Group and Brokers Compliance Group l John Loveless of Generation Mortgage l Larry Avery, director of sales for Birchwood Credit Services Inc. l Ginger Bell, national compliance training director l Bart Shapiro, former senior advisor to the Consumer Financial Protection
l l l l l l l l l l
Bureau’s Office of Community Banks & Credit Unions Erik Janeczko, national trainer for Maximum Acceleration Ralph Rosynek, senior vice president of production for Reverse Mortgage Solutions Mark Madsen, digital engineer at Best Rate Referrals Jeffrey Tesch, managing director of Rehab Cash Now Michael Tedesco, president of Appraisal Nation Simon Webster, CEO of CRE Credit Services Lorraine Geraci, AVP of reverse mortgage sales training at Urban Financial Group Jason Frangoulis, national wholesale manager for United Mortgage Corporation Mary Grabow, credit manager for United Mortgage Corporation Rene Rodriguez, founder and CEO of Volentum
Kenneth Harney For information and updates on the NAMB National event in Las Vegas, visit www.nambnational.com.
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Discount Points Now Included in Texas Three Percent Points and Fees Audit By Melanie A. Feliciano Esq. The Supreme Court of Texas has finally spoken! Discount points are not considered interest under Section 50(a)(6)(E) of the Texas Constitution. Section 50(a)(6)(E) provides that a Texas home equity borrower and the borrower’s spouse may not be required to: Pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, three percent of the original principal amount of the extension of credit …
Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail melanie@docmagic.com.
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Historically, home equity lenders have been excluding discount points from the above three percent points and fees limitation based on published interpretations of The Finance Commission of Texas, The Credit Union Commission of Texas and Texas Bankers Association (collectively, the “Commissions”) that discount points are to be considered interest under Section 50(a)(6)(E). The Commissions’ position was that in capping “fees to any person that are necessary to originate, evaluate, maintain, record, insure or service” a home equity loan, the framers and those ratifying intended to cap only fees to any person other than the lender. (Finance Commission of Texas, et al. v. Norwood, et al., No. 10-0121, Tex. Sup. Ct. June 21, 3013) Not so, said the Texas Supreme Court in a decision rendered on June 21, 2013. In Finance Commission of Texas, et al. v. Norwood, et al., No. 10-0121, (Tex. Sup. Ct. June 21, 3013), the Texas Supreme Court held that the term “interest,” as used in Section 50(a)(6)(E) of the Texas Constitution, means simply the “amount determined by multiplying the loan principal by the interest rate.” Accordingly, discount points should now be included in the Texas home equity three percent points and fees limitation. Note that origination fees will continue to be included in the limitation.
SPONSORED EDITORIAL
nmp newsflash
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That rule banned compensation based on loan terms such as the interest rate of the loan. The CFPB alleges that the company violated the rule with its quarterly bonus program, which paid more than 150 Castle & Cooke loan officers greater bonus compensation when they persuaded consumers to take on more expensive loans. The average quarterly bonus ranged from $6,100 to $8,700. By contrast, those loan officers who did not charge consumers higher interest rates did not receive quarterly bonuses. The CFPB estimates that more than 1,100 illegal quarterly bonuses were paid and that tens of thousands of customers may have been upsold since April 2011. By tying bonuses to the interest rate of the loans in this manner, the CFPB alleges that Castle & Cooke was in direct violation of the law. The CFPB also believes Castle & Cooke violated laws that require companies to retain their compliance records for a certain period of time. Creditors are required to retain evidence of compliance with the rule. The complaint alleges that Castle & Cooke did not record what portion of each loan officer’s quarterly bonus was attributable to a particular loan and did not reference its quarterly bonus program in each loan originator’s compensation agreement, in violation of federal consumer financial law.
Rep. Campbell Reintroduces Eminent Domain Measure to Protect GSEs Rep. John Campbell (RCA) has reintroduced The Defending American Taxpayers from Abusive Government Takings Act, legislation to stop reckless city and county governments from enacting profiteering schemes that seek to cash in on the plight of underwater homeowners through the arbitrary seizure of private home loans. In an expansive, flawed and untenable interpretation of eminent domain authority, several local governments around the country have proposed plans to override property rights in a device that is specifically designed to make money for over-leveraged cities. The Act prohibits Fannie Mae and Freddie Mac from purchasing, the FHA from insuring, and the Department of Veterans Affairs from guaranteeing, making, or insuring, a mortgage that is secured by a residence or residential structure located in a county in which the State has used the power of eminent domain to take a residential mortgage. “Using eminent domain to seize mortgages is not only legally question-
able,” said Rep. Campbell, “it represents a complete abrogation of private property rights. The federal government and the American taxpayer would be forced to bear all the risk in the event of a failure. Further, these schemes pose a critical threat to recovery of the housing sector as lenders and investors that a sustainable housing finance system rely on would not have any faith in the durability of contracts. Moreover, the savers and retirees who own these mortgages, many of them through their pension funds and 401(k) accounts, would be exposed to serious losses.“ The authors of these schemes intend to use federal taxpayer dollars to seize distressed home loans in order to fund unconventional loan modifications. Not only will cities and counties benefit from this wealth redistribution plot, private consulting firms purporting to be experts on eminent domain seek to partner with these governments in order to profit from this abuse of power. Even more egregiously, the underwriter for the unpaid principal balance in this scheme will not be private financiers, as proponents for the eminent domain plan claim, but the American taxpayer. “Congressman Campbell is to be commended for reintroducing legislation that would limit the ability of local municipalities from using eminent domain to seize residential mortgages, and prohibit Fannie Mae and Freddie Mac from purchasing any loans seized in this clearly unconstitutional manner,” said MBA President and Chief Executive Officer David H. Stevens. The Defending American Taxpayers from Abusive Government Takings Act currently awaits consideration in the House Committee on Financial Services.
First-Half Home Flipping Up 19 Percent Over Last Year RealtyTrac has released its Midyear 2013 Home Flipping Report, which shows 136,184 single family home flips—where a home is purchased and subsequently sold again within six months—in the first half of 2013, up 19 percent from a year ago and up 74 percent from the first half of 2011. The report also shows that real estate investors made an average gross profit of $18,391 on single family home flips in the first half of the year, a nine percent gross return on the initial purchase price. That was up 246 percent from an average gross return of $5,321 in the first half of 2012 and an average loss of $13,206 in the first half of 2011. Real estate investors who flipped continued on page 34
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LYKKEN ON
leadership
Great Leadership Breeds Great Leadership By David Lykken
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have written before about the changes that have taken place in recent years with Fannie Mae and Freddie Mac and the negative impact those changes have had on the prevalence of wholesale and correspondent lenders in the mortgage banking market. I have pointed out, as the wholesale channel has fallen from a peak of controlling as much as 65 percent of all loans originated, to less than 30 percent, and eventually, dipping below 15 percent, the greatest impact has been felt—not by the big banks—but rather, by the independent mortgage bankers. The health of independent mortgage bankers of all shapes and sizes is directly correlated with the health of competitive secondary markets. Make no mistake; times are tough for the independent mortgage banking industry. On the surface, the outlook is
bleak. If there was ever a time an independent mortgage broker could fall prey to seeing themselves as the victims, it is now. It can be easy to point to the changes that have befallen the industry and bemoan our helplessness. It can be easy to throw up our hands in defeat. It can be easy to give up. We have every reason to do just that. But, as the overused saying goes, “When the going gets tough, the tough get going.” When backed into a corner, great leaders don’t surrender to circumstances … they fight their way out. If the dismal outlook for the industry has been created from the top down, it is most assuredly going to be reversed from the bottom up. For this article, I don’t want to write about secondary markets, per se. I don’t want to discuss how and why things are worse than they were before. Instead, I would like to take the next few paragraphs to discuss how independent mortgage bankers might adopt the attitudes and behav-
iors necessary to revive a hurting industry. Change starts from within. What needs to be happening on the inside for that change to occur? Let’s explore it. The first reaction we might have to changes in the mortgage banking industry is to adopt the belief that there is only so much money to go around. We may begin to say to ourselves, “If I am to succeed, I must overcome my fellow independent mortgage bankers.” We may begin to think that the business is a zero sum game and that, if we are to survive, there simply needs to be fewer competitors. There are two ways of looking at the world: Through the lens of scarcity and through the lens of abundance. Scarcity is the “zero sum game” mentality. It is the belief that the pie is shrinking and the only way for us to have more is to take a bigger piece of it. We see this mindset, not just in the mortgage banking industry, but also in the world at large. Every day, we are bombarded with news about things that are going wrong with the world. It is a rare thing to hear something good on the news. As the old media saying goes, “If it bleed, it leads.” The stories we are told are those consistent with the idea that the world is getting worse off and there is less for us to live on. We go into panic mode and begin to think that we must grab all we can to survive. That’s the story we’re told, and we so readily buy into it. Abundance is the opposite. When we adopt an abundance mindset, we believe that the pie can become bigger and, therefore, we can all be successful. It is the belief that there is plenty to go around and that one
person becoming successful does not necessitate another failing. When we look at the outside world, despite the fact that everything we hear on the news is entrenched in negativity, the world has indeed improved in many respects. As author Peter Diamandis has pointed out, the last century has brought us a large number of improvements as human beings: The average human lifespan has doubled, the average per-capita income has tripled, and the child mortality rate has decreased by a factor of ten. The costs of food, electricity, transportation, and communication have all declined dramatically in the last century. In many ways the world is better than it ever has been. If we look hard enough, we can see the same thing in the mortgage banking industry. There are things that have improved. The world has gotten better. As Proust has said, “The real voyage consists not in seeing new landscapes, but in having new eyes.” Perhaps we need to start looking at things differently. Perhaps we need to start looking at how the pie can grow, rather than how we can get our piece of it. That’s where true leadership begins. Great leadership breeds great leadership! As independent mortgage professionals who want to see our industry thrive, we must be willing to help others succeed. We must be willing to share best practices and teach one another how to grow our businesses. The true leader doesn’t seek to create followers; the true leader seeks to create more leaders. That’s where renewal begins. Think of an outstanding athlete. How does he or she react toward his or her fellow athletes? Does the star
industry on the social web. You can start a group on Facebook or LinkedIn to serve as a hub for questions surrounding the mortgage banking industry. Encourage everyone you know in the industry to join in the discussions. Encourage them to ask questions. Encourage them to offer answers. Be the one who gets the conversation going. You can also create a blogging community. Write about the industry for your customers, encourage others to do the same, and then share one another’s blog posts on Twitter, via e-mail, and however else you distribute your information. I am a student of leadership. I
love studying great leaders throughout history. Personally, I believe the greatest leader that ever walked this earth was Jesus of the Bible. When he left this world, He instructed his followers to go into the entire world and basically become great leaders as well. It is the best example of the “Law of Reciprocity” to the positive. In the mortgage industry, we need to adopt the same mission. We need to be willing to become leaders who create leaders. We need to adopt a mindset of abundance—striving to increase the size of the pie rather than developing a strategy to just take our piece of it. Great leadership breeds great leadership. Let’s all do
what we can to be better leaders today. That’s the only way to save our industry. David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail dlykken@mortgagebankingsolutions.com or dlykken@mbs-team.com.
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athlete attempt to inhibit the performance of competitors, or to strengthen it? We’ve all heard inspiring stories of great sportsmanship. There’s a story about a college softball player who hit her first home run in a league championship, but tore her ACL while rounding the bases. Rather than taking advantage of their opponent’s injury to win the game, the members of the opposing team lifted her up and carried her around the bases. Then there’s a recent story about high school track meet in which a girl helped another girl, who had begun to faint in the heat, cross the finish line to finish the race. And who can forget golfer Bobby Jones’ famous remark after receiving praise for counting a questionable stroke against himself in the 1925 U.S. Open, “You might as well praise a man for not robbing a bank?” Why do we find these examples of sportsmanship so inspiring? It’s because these great leaders care more about the legacy they are creating than they do their immediate personal gain. They know that, if they don’t exemplify the best leadership possible, it is not only going to hurt them in the long run, but it is going to be detrimental to the game itself. They do these great deeds, because they love softball, track, and golf. They want to see the sport succeed. That’s what it means to be a true leader. As leaders in the mortgage industry, we need to adopt the same mentality. We’ve got to be willing to value the industry above ourselves. That’s what leadership means. There are a number of ways to be leader who inspires others to become leaders in the industry. A simple gesture like sharing a referral with a competitor is a good place to start. If a customer is not a great fit for your business or if your business is not a good fit for the customer, pay it forward to someone else. In doing so, you set the bar higher for the industry. Remember, you’re not giving up your piece of the pie; you’re making the pie bigger. Another way to demonstrate leadership is to start and/or join networking groups of mortgage professionals. There is nothing that more quickly and fully generates growth than collaboration. Get together with one another, swap stories, and share ideas about how to manage and grow your businesses. You have plenty to teach and plenty to learn. Why not get together with others in your industry and take advantage of the mutual education? For example, check out the LinkedIn discussion group, “Loan Originator Compensation & New Rule” which now has more than 6,000 members. A third way to demonstrate exceptional leadership in the mortgage banking industry, and to encourage others to become leaders in the space as well, is to engage with the
heard street ON THE
Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.
Global DMS Integrates Its Software With DataQuick
assignment, tracking, reviews, delivery and reporting.
Maverick Funding Approved as a Ginnie Global DMS has announced that its val- Mae Lender
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uation management software is integrated with DataQuick. The integration taps DataQuick’s Collateral Validation (CV) analytics to render accurate valuations by utilizing in-depth area-based metrics, trending and other important factors that are not typically taken into account when underwriting loans. DataQuick’s CV solution enhances the confirmation of property valuations by ensuring that specific values fall within acceptable ranges, which involves the use of key data elements that provide added market intelligence. This includes analyzing and making use of public data sources such as multiple listing service (MLS) data, industry-leading automated valuation models (AVMs), neighborhood-level house price indexes (HPIs), inventory and sales trends metrics, foreclosure data, various housing analytics, and other relevant data elements. The results of the data is interpreted into meaningful information and then incorporated into Global DMS’ valuation determination, thus producing a highly accurate, quality appraisal. “As the uses for property data expand from origination to servicing, lenders and servicers are leveraging a greater number of tools to validate collateral,” said Vladimir Bien-Aime, president and CEO of Global DMS. “Incorporating DataQuick’s solution into our valuations offering such as automated review products and hybrid valuations that combine manual appraisal know-how and data analytics allows us to provide unique solutions that are immediately available to our growing customer base.” Global DMS’ valuation management eTrac Enterprise platform enables organizations to cost effectively and compliantly manage the entire appraisal management process from vendor management to appraisal ordering,
Maverick Funding Corporation has announced that it has been approved as a Ginnie Maeapproved lender. The Ginnie Mae approval comes at a pivotal time for Maverick with a newlyopened 18,000-sq. ft. operating center allowing Maverick employees to service the expected increased client base. The center is fully staffed and trained with enthusiastic employees who are excited to assist those attracted to this new platform. Maverick clients can expect to see rates drop making loan prices even more competitive, all within the company’s core guidelines. “I am excited about the prospects of this new opportunity and confident that Maverick will continue to prosper,” said Maverick CEO Ralph Vitiello. As a newly coined Ginnie Mae lender, Maverick Funding has just made housing more affordable by acquiring better prices in the secondary mortgage market further availing an increase in mortgage loans. “The Maverick team will seize this milestone to continue to make Maverick a leading force in the industry,” said President Maverick Funding Michael Petruccelli.
Flagstar to Begin Outsourcing Mortgage Servicing Flagstar Bancorp Inc. has announced its plan to shift the focus of its mortgage servicing business to performing servicing assets.
Flagstar has made the decision to outsource its non-core default servicing business, which represents less than four percent of its overall servicing book, to a recognized servicer that specializes in this area. This is part of Flagstar’s ongoing strategy to deliver improving performance while maintaining its commitment to its national mortgage business and community banking in Michigan. Part of this strategy is to diversify earnings through the growth of Flagstar’s performing mortgage servicing franchise. This transition to a recognized specialty servicer is expected to occur by the end of the third quarter. “Improving company-wide efficiency and carefully managing expenses is consistent with our plan to build longterm shareholder value,” said Sandro DiNello, president and CEO of Flagstar. “By focusing our mortgage servicing business on core, performing mortgages, we seek to enhance Flagstar’s profitability and be even better positioned to serve our clients and capitalize on value-enhancing opportunities. Further, this action will better position our servicing department for long-term growth. We remain deeply committed to our community banking in Michigan and our mortgage origination and servicing, and look forward to continuing to meet and exceed the needs of our clients and communities.” While Flagstar will work to redeploy as many employees as possible to other parts of the company, this outsourcing arrangement is expected to affect approximately 300 positions in the non-performing mortgage servicing business. Flagstar is committed to providing transition support to all employees impacted by this arrangement. By outsourcing the default servicing business, Flagstar expects to realize significant cost savings.
Mortgage Master Generates Record Volume
Mortgage Master announced it generated record production volume of $3.97 billion for the first six months of 2013, compared to $3.25 billion in the same period in 2012. In 2012, Mortgage Master increased its originations to a record $7.3 billion, from $5.5 billion in 2011. Mortgage Master, which was the leader in Massachusetts in terms of residential loan production for the full year 2012 (bank or mortgage banker), maintained the number one position in Massachusetts for the first half of 2013, according to data compiled by The Warren Group. For the first six months of 2013, Mortgage Master’s Massachusetts production was $2.17 billion. “Our model of providing the best possible pricing and service to borrowers, and the commitment of our talented employees, have been the driving force behind our success over the last 25 years,” said Paul Anastos, president of Mortgage Master. “As we expand and leverage our successful model across the U.S., we continue to hire quality loan officers looking to join a lender that is committed to helping borrowers find the right mortgage solution.”
Total Mortgage Named Official Mortgage Services Provider for Yale Athletics
Total Yale have ship
Mortgage Services LLC and the University Athletics Department announced a corporate partnerjoining the two institutions as
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Survival Perspectives of the Small Broker Shop …
Will the Impending QM Rule Finally Spell “The End?”
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By George L. Duarte, CMC
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s a small shop pure broker who has so far successfully withstood the onslaught of the alphabet soup of regulations: The CFPB, FrankenDodd, AML, FACTA, LO Compensation Rule, GFE/TILA, Red Flags, etc. (looks like the list of ingredients of an insecticide and with the same intended results), the qualified mortgage (QM) rule will be one that has the most dire effect. At the time of this writing, it is still not clear, to me anyway, what is included aside from the origination fees in the three percent cap. The fees cap portion of the QM rule is intended to protect consumers from alleged excessive origination fees when in fact, the result will be that many consumers will be protected from getting loans at all. In a highcost area like those on both coasts with larger loan amounts, this will be inconvenient, but probably not fatal. However, in areas with loan amounts under $250,000, which is the majority of the United States, this will be disastrous for the small business broker. The QM rule really hit home for me because I recently closed a loan for $89,000 that I will not be able to do after January. It was a very difficult and time consuming transaction with a great end result, but absolutely
not be worth the effort or the trouble under the new fees cap mandate of the QM rule. Philosophically, it is useless to debate the need for this latest rule given the LO compensation rules and the new disclosures; it is the last gasp of the eruption of regulations that started with the abomination known as Home Valuation Code of Conduct (HVCC) years ago. So what are the alternatives for those independent brokers still surviving to adapt to this latest rule? Clearly the rule is slanted toward the banking model, due to their much stronger lobbying resources. One of most likely choices is that brokers will have to go the “net branch” model which was popular for a few years. However, the popularity of the branch model has waned in the last few years, when the inherent disadvantages became apparent, and brokers learned they could survive without being in a net branch. Brokers could choose not to do QM loans at all, and go back to the fringes of real estate lending where they started many years ago. This is a quite viable option with the recent loosening of credit, more investors getting into the market, and more commercial loan opportunities occurring as the economy improves. I think the recent loosening of credit and availability of credit and capital will have the greatest impact on the choices that will become available to brokers as
evidenced by the concept of the minicorrespondent (mini-C)—previously known as a warehouse line, but with lower net worth requirements. A broker with this facility will be able to fund in their own name, circumventing the Dodd-Frank QM rule and putting brokers on a level playing field with bankers. I am eagerly awaiting the various iterations of this concept from many investors who will be looking to offer these lines of credit, who are flush with cash, and like all money lenders, need to “put the money out on the street” to get a good return, especially in this very low interest rate environment. Investors are desperately searching for alternatives to the stock market for investments with good yields, especially those whose risks are mitigated, like real estate-related lines of credit. One of the admitted benefits of the housing market collapse is that those who survived are stronger and smarter … good credit risks. For those small brokers who still may not have the resources to afford their own mini-C, I am sure that opportunities will develop for mergers or partnerships with other like-minded businesses. As statewide president of the California Association of Mortgage Professionals (CAMP), I am always looking for the “value-added” proposition of our association. Applying the principle of
“There is Opportunity in Chaos,” it occurs to me that this is an opportunity for CAMP, NAMB—The Association of Mortgage Professionals and the other state associations to enhance their “value-added” proposition by facilitating communications between small brokers looking for answers in exploring the mini-C option. Social media and expansion of the LinkedIn NAMB and CAMP sites can be used as catalysts of introductions for brokers seeking investors or merger partners, and I’m sure this technology can be leveraged for this purpose. I am a huge fan of small business ingenuity in adapting to regulations, and I am confident that this latest QM challenge will be met. Yes, it will be inconvenient, probably expensive and consumers will suffer for it because we all know the road to hell is paved with good intentions (and unintended consequences). George L. Duarte, CMC is president, CEO and broker with Wentworth Enterprises Inc., parent company of Horizon Financial Associates, and Elite Real Estate Properties, real estate brokerage, located in Fremont, Calif. George has 27-plus years in the mortgage industry and is the current statewide president of the California Association of Mortgage Professionals (CAMP). He may be reached by phone at (510) 377-9059 or e-mail gduarte@horizonfinance.com.
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for managers only Managing for the Future Dealing With Difficult People By Dave Hershman
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ome time ago, I wrote a column which addressed an important management rule. The rule is simply: Fire the Wrong People. A simple rule stated even more simply: If you hire the wrong people and keep them, you will never, never, never be a good manager. It is impossible to manage well with the wrong people.
When you get in the position of analyzing who is “right” and who is “not right” for your office, you will be, in effect, dealing with a lot of difficult people. That does not mean that all people who are not succeeding are difficult. But even if someone is the nicest person in the world, if you have to correct their actions or take more serious disciplinary measures, it is, at best, a difficult situation. Sometimes it is easier to fire someone who is difficult as opposed to someone who is nice.
So someone is difficult. How do you deal with them?
First, find the source of difficulty If they are complaining all the time about poor processing, is it really poor processing or are they unhappy with something else? They may be unhappy with themselves and their performance. But they are not going to be wandering around complaining about themselves. They are going to complain about processing.
Second, help them isolate the issues through good two-way communication Start with general, open-ended questions that get them talking. For example—you have mentioned several times that you are unhappy with _____. What has caused you to become unhappy, and if this situation were corrected do you feel that you could perform up to your potential? Just the fact that they have been heard may take away some of the stress associated with the situation.
After the issue is isolated, takes steps to deal with the problem They may be handling the complaint in the wrong way, but it does not mean that there is not a problem that needs to be solved. Solving it helps you in two ways. First, it makes your office/company better. Second, it removes their barrier to better performance, whether the barrier was real or not.
Follow-up After the barrier has been removed, do not let the person off the hook by letting them wander off. Let them know that you are expecting reciprocity. If they don’t see you making them accountable, then there is no reason for them to change their behavior. Do not get the idea that difficult people are just those who complain. There
are many other types of difficult people. For example, those who do not listen and those who explode every time something goes wrong. Each situation entails a different process to resolve the issue. The ability to adapt to different situations is a management trait that is very important. It is also important to note that the hiring process and development of a company culture is all-important in preventing these situations before you get to the confrontational and/or firing stages. Are outbursts by others tolerated because they may be seen as more valuable players? Even more important, are you the best example in this regard? If you can’t be the best example, then you will have a harder time dealing with difficult people and difficult situations. As rates rise and refinances dwindle, you will have more difficult personnel choices to implement. When production is flowing, personnel flaws may not stick out as much because everyone is so busy. When people have more time on their hands, it is easier to spot issues that need to be corrected. On the other side of the coin, if a loan officer is difficult but a good producer, it is tougher to cut the cord as production wanes. Therefore, it become more imperative for you to “address” the situation rather than just cut the cord. Most important of all, if you are harboring difficult people and not addressing the situation, you may be preventing great people from coming to your company. Many times I have heard this in the industry–I would not work at that company because I know _____is there. Ask yourself this question: Is your present staff hampering your recruiting efforts? Dave Hershman is a top author in the mortgage industry with seven books published, including The Complete Mortgage Management Kit. Dave is also director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.
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Sales Marketing Tips for Today’s Mortgage Professional When One Door Closes ... Another One Opens
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How to celebrate your victories and prepare for the next chapter By Fred Arnold, CMC
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atching my son graduate from high school recently was certainly one of my proudest moments. As I looked on, the excitement that he and his friends were experiencing was absolutely palpable. The smiles spoke volumes about how relieved and excited they all were to have successfully completed such an important stage in their lives. But there was more there than just a feeling of pride in having completed high school. There was a tangible feeling of exhilaration about what was coming next … college. Much of the success of my own loan business can be attributed to the fact that I try to put myself in the place of everyone I come into contact with. I listen, watch them and see if I can draw a parallel to what they are experiencing. By that, I mean, I figure out how I can honestly relate. When it came to my son’s graduation, what I could clearly see is that, all too often as mortgage professionals, we complete our own chapters. Regardless of whether you’re closing one loan per month or 15 loans per
month, each loan that is completed is a chapter closed. After we have spent countless hours addressing every condition under the sun that a lender has affixed to a refinance loan, we often breathe a sigh of relief when the loan closes. But what most of us forget to do is celebrate. In the day to day tedium, we ought to take a moment to celebrate our victories, not because we’ve earned a commission, but because we have helped someone else to realize the dream of homeownership. Or perhaps because we’ve helped a family refinance and with the monthly savings, they can get their child piano lessons or take the whole family on a vacation. We aren’t the only ones who have achieved a personal goal. While we can look to our past as anchors of our success, we should remember that every little victory deserves its own celebration. Whether you choose to celebrate with lunch for your hardworking team members, or perhaps decide to have a celebratory glass on wine on the weekend will be a personal choice. The point is to acknowledge the achievement. The work that we do helps others and that, in and of itself, is reason to celebrate in your own special way.
But, we cannot just stop with the celebration. We need to nurture that thrill at the thought of what’s next to come. Again, we can learn a lot about looking toward the future by looking at recent graduates. Concurrent with the relief of having finished a substantial portion of their education comes the thrill of what’s to come next. As mortgage professionals, we should have that same enthusiasm for our next chapter. At the end of each year, for example, we should be planning what education courses to take the following year. We should be laying out a roadmap to our next certification. Do we want to add a new segment of business to our repertoire? Do we want to have a new teacher to mentor us? What are our goals in five years? After all, don’t we want to learn new things? Don’t we want to experience that exhilaration about starting a new chapter? Don’t we want to earn a Master’s Degree or perhaps even a doctorate in our industry? If we do, then we need to also have a road map for the next “degree” we want to earn. Therefore, in addition to an annual review of what we have completed, it will serve us well to reevaluate our progress after few years, just like we would upon graduating from high
school. We, too, ought to have a method in place to gauge just how we are doing. For example, set yourself a goal to check your progress every five years. That way, you will be able to look back and recognize that you have successfully completed your own educational and professional goals. You will have, in a sense, graduated from one portion of your career and can then look forward to the next. Of course, when we recognize these successes, we need to remember to toss our proverbial cap in the air and celebrate our accomplishments, which marked incredible accomplishments of our clients. Then, much like the Class of 2013 just did, we can immediately turn our attention to the fact that a new door of opportunity is standing wide open in front of us. Fred Arnold, CMC is past president of the California Association of Mortgage Professionals and a mortgage professional at American Family Funding in Southern California. Fred hosts the radio show SCV Chamber and Business Spotlight on AM 1220 KHTS, as well as the televised program “Out of the Rough” on SCVTV.com, Channel 20. He may be reached by phone at (661) 284-1150, ext. 109 or e-mail fred@fredarnold.com.
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nmp newsflash
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homes in the first half of the year purchased those homes at a discount of five percent below estimated market value on average, and sold them at a premium of one percent above estimated market value on average. “While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available,” said Daren Blomquist, vice president at RealtyTrac. “Out of the 100 markets we analyzed for the report, 32 had declining flipping numbers, including perennial flipping hot spots like Las Vegas, Phoenix, Southern California and Atlanta. Still flipping was on the rise in more than twothirds of the markets, including New York, Washington, D.C., Chicago and several Florida metros.” RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family home flip was any transaction that occurred in the first half of the year where a previous sale on the same property had occurred within the last six months. RealtyTrac analyzed only metro areas with at least 200 sales in the first half of the year. To determine the top 15 markets for profitable flipping, RealtyTrac narrowed the metro list to only those with at least 500 flips in the first half of the year and where flipping had increased 10 percent or more from the previous year and where the gross profit percent was at least 10 percent. The top 15 list was then sorted by gross profit percent, from greatest to least.
Remainder of Mortgage Servicing Settlement Checks to be Issued This Summer We are seeking nominations from our readers for National Mortgage Professional Magazine's "40 Under 40" feature, slated to appear in our December 2013 edition. Anyone who is under the age of 40 and has had a major impact on the industry can qualify for this feature. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on the nominee, along with a color photo and company contact info to complete the profile. To nominate yourself or someone else, visit https://nmpmag.wufoo.com/forms/m7p8s1/.
NMP Media Corp. 1220 Wantagh Avenue Wantagh, New York 11793-2202 p 516.409.5555 f 516.409.4600 e advertise@NMPMediaCorp.com w www.NationalMortgageProfessional.com
Nearly 2.9 million checks, totaling more than $2.5 billion, related to the Independent
Foreclosure Review (IFR) Payment Agreement have been cashed or deposited through July 11, 2013. More than 3.9 million checks, worth more than $3.4 billion, have been sent to eligible borrowers, since payments began on April 12. The remaining checks will be issued this summer. The payments result from agreements between the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board related to the Nationwide Mortgage Servicing Settlement, and 13 servicers to provide $3.6 billion in payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo. Federal regulators also released a report today showing the volume and value of checks issued and paid (cashed or deposited) by state as of May 31, 2013. The data represent the mailing addresses of the recipient and not necessarily the addresses of the eligible property.
Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
Company Name
Website
Specialty or Niche
State(s) Licensed In
www.myacopia.com
Government Loans
KY, IN, TN, OH, KS, MO, TX, GA, LA, AL, AZ & CO
www.affiliatedtpo.com
Texas Cash Out, Texas Veterans Land Board, Fannie Mae Flex 97, My Community Mortgage, FHA, VA, USDA, Libor ARMs
AK, AR, CO, FL, GA, IA, ID, IN, KS, KY, LA, ME, MO, MS, MT, NE & TX
www.afrwholesale.com
Wholesale Direct Free Processing for Brokers, FHA 203k, FHA Streamline 203k, FHA Manufactured Home Loans
American Southwest Mortgage
https://amsw.mmachine.net
USDA Rural Development
Amerisave
www.amerisavetpo.com
All Segments
Carrington Mortgage Services
www.carringtonhomeloans.com
USDA, LPMI
www.cbconnex.com
Excellent Customer Service
ClearVision Funding
www.clearvisionfunding.com
Purchase, 560 FICO
Fifth Third Wholesale Mortgage
www.53.com/wholesale
FHA, VA, Jumbo
www.fgmcwholesale.com
FHA, VA, USDA, 203k, Manufactured Housing (Direct Issuer GNMA, FNMA)
www.imcoloans.com
Direct Access to Underwriting
Acopia Capital Group
FL, NC, OH, PA, TX, LA & TN
Nationwide
FL, VA, MD, DC & GA
All 50 states
38 states, please see Web site
Licensed in Over 40 States
MI, OH, IN, KY, TN, SC, NC & FL
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CT, NJ, PA, MD, VA, NC, SC, GA, FL, CO, OH, TX & CA
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First Independence Bank
Nationwide
Company Name
Website
Specialty or Niche
www.wholesale.flagstar.com
Technology
www.flcbmtg.com
Wholesale, Correspondent, Warehouse
Fremont Bank
www.fremontbank.com
Portfolio Jumbo
Freedom Mortgage
www.freedomwholesale.com
Direct Lender, Minimal Overlays. Full Mini-C and Warehouse Lending Programs
Nationwide
www.gsfsales.com
USDA Rural Development Purchase and Streamline Refinance
AZ, CA, CO, DE, FL, IL, IN, IA, MD, MA, MI, MN, NH, NJ, NC, OR, PA, SD, TN, TX, VA, WA & WI
www.homebridgewholesale.com
Conventional, FHA, VA, USDA, Express Purchase Program, 24 Hour Underwriting, Same Day Docs
Nationwide (Except MA, NE & NV)
www.homemai.com
FNMA & FHLMC Direct With Minimal Overlays; FHA, VA, & USDA Specialists; Repair Escrows Allowed in Conjunction With All Loan Products
AL, FL, GA, LA, MS & TN
www.hometownbranch.com
We help you GROW your branch, and SKYROCKET YOUR INCOME!
www.loankinection.com
Agency, Jumbos, FHA, DU/Refi Plus, Special MI-Supported Products
Flagstar Bank
State(s) Licensed In Nationwide
AL, AZ, AR, CA, CO, CT, 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 CA
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Home Mortgage of America Inc.
AL, CO, FL, GA, KY, OH, SC, TN, TX, LA, NC & MS
National Except AL, AK, AR, HI, KY, MS, MT, NV, NM, TX & WY
Company Name
Website
Specialty or Niche
LeaderOne Financial
www.leader1.com
Residential
loanDepot
www.loandepot.com
Mortgage Lending
www.maverickwholesale.com
FHA, VA, USDA, Conventional, Reverse & HARP
State(s) Licensed In AL, AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, LA, MD, MN, MO, ND, NE, NJ, NM, OK, OR, PA, SD, TX, VA, WA, WI & WY Nationwide, Except in MO
Licensed in 30 States (See Web site for Details)
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Nationstar Mortgage
PRMG
Nationwide
www.gonewpenn.com
Jumbo Up to $2 Million, Foreign National Program, HARP With Unlimited LTV/CLTV
www.norcompartners.com
Government Lending
www.pbfinancialgrp.com
Private Money, Bridge Financing, Hard Money Loans
CA DRE # 01522495 and NMLS # 348736
www.plazahomemortgage.com
Conventional Fixed-Rate; Conventional ARM; Conventional Interest-Only Fixed-Rate
All States, Except MS & WV
www.learnaboutpremier.com
80% of the $2 Billion We Funded Was Purchase Business. We Focus on Keeping Your Referral Sources More Than Satisfied
TX, LA, AR, OK, NM, FL, CO, MT, NE, SD, ND, MN, IA, WI, PA & DE
www.prmg.net
Jumbo
CA, WA, OR, UT, NV, CO, FL, ID, TX, AZ & NC
Nationwide, Except: AK, HI, MA & UT
The East Coast
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[INSERT: Plaza Home Mortgage Logo]
Agency, FHA, VA, USDA, RD & Jumbo
NationalMortgageProfessional.com
Norcom Mortgage
www.nationstarbroker.com
Company Name
Website
Specialty or Niche
www.pbmwholesale.com
Conventional, Government, Jumbo
CA
www.remnwholesale.com
Same Day Turn Times on New Files Since 2002
All States Except NV and MA (Pending)
www.rsmwholesale.com
Price, Product & Service
www.rushmorehl.com
National Wholesale Lender
Sierra Pacific Mortgage
www.spm1.com
Wholesale
Stonegate Mortgage Corporation
www.tpo.stonegatemtg.com
Non-Agency, 203K, VA IRRRL, FHA Streamline, DU RP
U.S. Bank
http://usbank.com/brokerloans
Jumbo Portfolio Broker
United Guaranty
www.ugcorp.com
Wholesale
www.unmbwholesale.com
Fannie, Freddie, FHA/Reverse
www.uwm.com
Full Spectrum of Products (Conventional, Jumbo, FHA, VA, USDA, HARP 2.0 & Refi Plus); Elite Client Service, Speed and Consistency
All 50 states
WCS Lending
http://wcslending.com
Government, Agency
Nationwide
Western Bancorp
www.westernbancorp.com
No Overlays
Right Start Wholesale Mortgage
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State(s) Licensed In
AZ, CA, CO, MD, NM, OR, TX, VA, WA & WY
Licensed in All States, Except AK & MA (Licenses Pending in NY, NV & MO)
CA, AZ, WA, OR, TX & NJ
All but AK, AZ, CA, CT, HI, ID, MA, MT, NV, NH, NY, OR, RI & UT All States Except for LA, MS & HI
Nationwide
NY, NJ, PA, CT, SC, NC & FL
CA
new to market
continued from page 15
cost of origination and servicing. Under these new Retention Strategies, LVG will work with lenders and servicers to create an education and outreach campaign specifically designed to target loan retention, consumer loyalty, and, where applicable, affiliate marketing. The programs require little to no additional operational or technology integration and minimal internal resource requirements. Past LVG programs boast 78-92 percent contact & conversion rates, greater pull-through, and reduced origination timelines. More than 325,000 borrowers have been a part of LVG outreach, loyalty and incentive programs since 2010. “The recent slow-down in re-financing activity will again force the industry to focus heavily on margins,” said Frank Pallotta, managing partner of Loan Value Group. “LVG’s Retention Strategies will allow financial institutions to quickly and proactively establish a two-way, 24/7 connection with consumers that can last over the life of the loan and dramatically improve retention and loan performance at a reduced cost.” He added, “Simply offering a series of rate and fee options to consumers is barely half the battle. Being able to market those benefits effectively is often the difference between losing a customer and establishing a long-term financial relationship.”
Capsilon Announces Upgrades to DocVelocity
SecondaryWire Inc., a regulatory compliant platform designed to execute wholesale mortgage transactions through the Internet, has completed the development of its trading platform. “We’ve completed a cutting-edge technology, that ensures that brokers receive the best price for their loans and enables lenders to dramatically reduce the cost of acquiring loans and increase their profits,” said Katherine Chalmers co-founder and executive vice president of marketing for SecondaryWire, Inc. “Our aim was a trading platform that addressed the needs of both sides of a wholesale transaction— without forfeiting existing relationships— and we achieved that goal.” Brokers are able to maximize the number of bids they receive for a loan, increasing the price that is paid for it; lenders are able to purchase loans from anywhere in the U.S., without the expense of having to open branches or adding loan officers. “SecondaryWire was designed with the requirements of the wholesale market in mind by people who worked in the arena, understand the market, and knew how to improve it,” said Chalmers. “That’s why we were able to build a flexible, easy to use trading vehicle through which members can capture efficiencies, and increase profits on behalf of our members.”
2014 W We e w ill b e rread ead y. y. Yo Yo u will b e read r ead y, y, t o o .
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New FNC Offering Improves Transparency in the Mortgage Process
continued on page 70
F or m ore tthan han 20 yyears, ears, For more tthe he preferred preffer e red loan loan o rigination p origination platform latform
800.362.2599 sales@calyxsoftware.com www.calyxsoftware.com ww w.calyxsoftware.com
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FNC Inc. has launched a Web-based technology platform through which banks and investors can buy and sell mortgages. Dubbed the FNC Clean Room, the technology makes loan trading more efficient and transparent by turning the loan file into structured data that can be easily analyzed. Additionally, the FNC Clean Room streamlines connections between buyers and sellers, which enables both parties to expand their business and increase revenues. “Up to this point, FNC has developed great software and analytical tools for evaluating loan collateral, and the FNC Clean Room will apply those same skills and experiences to the entire loan,” said FNC CEO Bill Rayburn. “Over the years, we have witnessed inefficiencies in how loans are bought, sold, and transferred between banks and institutions. The FNC Clean Room will help to eliminate those inefficiencies.” Originators can use the FNC Clean Room to more efficiently deliver loans to investors, reducing funding times and mitigating the risk of error. Investors can use the FNC Clean Room to efficiently
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Capsilon has enhanced its DocVelocity desktop application to improve performance, including an advanced printer driver, local page caching and page streaming to speed up the way mortgage documents are imaged, stored, downloaded and viewed. The updated printer driver enables users to print documents from their desktop applications with reduced file sizes, making them more efficient for uploading, downloading and storage. Intelligent page streaming downloads images only as they need to be viewed by the user, providing a visible performance improvement. Additionally, when users download a document from the cloud to their desktop, images are locally cached to increase speed when needed again. “We’re very impressed with the increased speed of the newest DocVelocity desktop application,” said Bruce Clarke, chief technology officer of Michigan Mutual Inc. “The faster solution is making our users more productive.” “DocVelocity’s improved desktop application makes optimal use of system resources to provide users a better overall experience,” said Sanjeev Malaney, CEO at Capsilon. “The latest updates enable lenders to use DocVelocity faster and more effectively than ever before.”
SecondaryWire Completes Development of Its Trading Platform
Go Dinosau One Loan Officer’s Po
By Eric Weinstein
I am a Dinosaur and proud of it! Okay, a little context might be in order for that statement. In a previously life, I was the guy who started Carteret Mortgage Corporation. In 1995, in my basement wearing nothing but a bathrobe and bunny slippers, I grew my one-man mortgage broker shop into, listen to this … the largest mortgage broker in the country in 2003. Volume was $4.7 billion … and that is billion with a capital “B.” In 2008, Carteret, along with General Motors, Fannie Mae and Freddie Mac went out of business. It was a good run. Carteret was strictly a broker. We didn’t go out of business because of buy backs, regulators or anything like that. Volume was just not enough to keep the doors open. After Carteret, I was convinced, with the new regulations, brokers were dinosaurs doomed to extinction. Look at the laws. Federal bank loan officers are not licensed, don’t have to take tests, can even be felons and in personal bankruptcy. All they need is to be “registered.” Compare that to your state’s requirements. Banks don’t have to disclose to the customer nearly half as much as brokers, certainly NOT how much they make on a deal. The laws were definitely written slanted toward banks. So what is a starving loan officer to do? Work for a bank, of course! As I told my friends, “I was a dinosaur, but then when the asteroid hit, I became a mammal. It was evolve or die!” So, I went to work for a federal bank. When I owned Carteret, we paid our loan officers 70 percent of the income. Now, I know with the new laws, you can’t pay a percentage anymore, but if the bank is pricing their loans at 2.5 percent over the correspondent rate sheets, and you are making 70 basis points, it doesn’t take a rocket surgeon to figure out that you are really on a 28 percent commission. But hey, you win a free iPad if you do over $3 million for the month! Forget that, give me 50 percent and I will buy 20 of my own iPads, thank you. When I had the nerve to say something, they started giving us their own rate sheets so that we couldn’t see the real price. When I complained, I wasn’t making enough money to live on, they said, “Just do more loans.” Why didn’t I think of that? Yes, banks do have some good benefits. I could just walk into the underwriter’s office and discuss my loan. Yes, I could lean on the closer to get my rush deals done. Yes, I did get some (not enough) referrals from the bank (which were paid on a half commission basis.) I complained, but stayed because “Good is the enemy of Great.” When things are good, you never think to move or change, because, well … things are good.
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“I was a dinosaur, but then when the asteroid hit, I became a mammal. It was evolve or die!”
Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at :(703) 505-8692 or e-mail eweinstein4u@gmail.com.
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broker, while keeping things the same for lenders. The banks have capitalized on this by charging more to borrowers and paying less to loan officers. Banks now do 80 percent of the mortgage volume, where just a few years ago, brokers did 80 percent of the volume. It is bad enough they are charging borrowers more than brokers ever did, but they don’t even have the honor among thieves to compensate the loan officer adequately from their ill-gotten gains. Brokers, on average, charge their borrowers less, and pay their loan officers more. So I am back to being a dinosaur after a short foray into the mammalian world. That’s my story and I am sticking to it. Go dinosaurs!
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Then, the bank was sold. The new bank decided it did not want a mortgage division and that was that. It took me about 15 minutes to get a new job. This time, I went back to being a broker. I work for a small shop in Maryland and it is GREAT. If you are a broker, you know the trouble working with wholesalers, having to disclose, rushing to get a deal done, but I am paid 140 basis points on a two percent margin. For twice the income working on a smaller margin, I can put up with the hassles. More money in my checking account seems to soothe much of these loan anxieties, don’t you know. Now, I just worked for one bank, so I cannot speak about all banks. And I have had the privilege of working for a broker that was a past employee of mine that copied my Carteret model, so I don’t claim to know everything about every broker. I can only relate to my own experience. Here it is in a nutshell … and this is my own personal observation. You get paid more at a broker shop than at a bank, but you have more hassles. If you are experienced like I am, the hassles are not that bad. Yes, you put more work into a file, but you get paid more. Personally, I don’t do enough volume where I have to worry about being too busy. I would rather work more and make more. In my humble opinion, banks got a free ride from Congress. Legislation has definitely clamped down on the
Vendor Assurance By Henry Bagdasarian
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When a mortgage lender outsources services to a vendor, whether it is for account management, mortgage application processing, software development or system management, the lender expects and relies on the vendor to manage related risks. Those risks may center around privacy and the protection of sensitive customer data (i.e. Social Security Numbers), unauthorized employee access, outside intrusions or hacking, assurance of fully functioning systems (in the event of natural disaster or corruption to software during development), and finally, data backup and business continuity. Unfortunately, no single manual exists when it comes to ensuring vendors having all the right controls in place, or meeting regulators’ expectations. Though this brief column won’t be able to provide the full manual, we can certainly cover some essentials that lenders need to understand in regard to vendor assurance. Let us begin with how vendors can expose mortgage lenders to risks. Lenders are ultimately responsible for ensuring that the external services procured do not have an adverse impact on their operations. As such, any impact arising from unmanaged risks can have a variety of negative consequences, including lost revenues, lawsuits, negative publicity and penalties for non-compliance. How can lenders be assured that their vendors properly manage the risks associated with outsourced services? Lenders can request information regarding a vendor’s practices by asking vendors to complete and submit a Request for Information questionnaire (RFI), perform audits of their vendors themselves, and/or request independent audit reports such as the “SSAE 16” and “FISMA” compliance audits. RFIs are inherently less reliable, since the vendors attest to their own internal controls without the verification of an independent party. Audits conducted by the lender or an independent third-party are more reliable, but can be expensive. In order to be strategic in their vendor assurance efforts, lenders should assess the potential risks and identify vendors to be audited. Those insights should then be used to determine the type and frequency of the audits required. Some vendors may have previously participated in an independent audit and be able to furnish a recent audit report as an external source of validation. Lenders may be familiar with the term “SAS-70.” This term was replaced in 2011 with “Standards for Attestation Engagements No. 16,” or SSAE 16. SSAE 16 audits of service organizations exist in two forms: Type I provides limited assurance and is based on a single point in time, whereas Type II audits cover a range of time and provide the highest level of assurance that proper controls, procedures and process operating as management intends. Due to the increased regulatory oversight of the Sarbanes-Oxley Act, many lenders are taking the wise approach in requiring their vendors to demonstrate SSAE 16 compliance. With an understanding of the risks and vendor assurance practices, lenders can protect their business against lost revenue, system downtime, security threats and other issues resulting from non-compliance. As a final word of caution, lenders should be careful not to “set and forget.” It’s important to routinely evaluate compliance needs and ensure that vendors continue to live up to expectations over the life of the business relationship. Henry Bagdasarian is compliance and audit director at Veros Real Estate Solutions. For more information, call (714) 415-6300 or visit Veros.com.
SPONSORED EDITORIAL
heard on the street
continued from page 26
Total Mortgage becomes “The Official Mortgage Services Provider for Yale Athletics.” “This is an exciting time for Total Mortgage to partner with Yale Athletics, and we are thrilled to work with them,” said Tom Beckett, Yale athletics director. “Total Mortgage will have a presence in multiple Yale Athletic platforms highlighted by an athlete of the week promotion. The Total Mortgage Yale Athlete of the Week, which will begin this fall, recognizes a Bulldog student-athlete for extraordinary efforts on and off the field. “Our corporate partnership with Yale Athletics, part of one of the nation’s leading universities and a globally recognized brand, is an exciting opportunity for Total Mortgage,” said John Walsh, president of Total Mortgage Services. “We look forward to becoming part of the Bulldog family, and to be in a position to help alumni, parents of students and employees of Yale University to find the right mortgage with the lowest possible interest rate to either purchase or refinance a home.” Total Mortgage has also announced that, in order to accommodate its growth and expansion plans, it has purchased Milford Place Corporate Center, a 143,802-square foot Class A office building located in Milford, Conn. The company plans to consolidate its growing production, marketing and operations teams into its new headquarters building, which is a substantial expansion over its existing space. Total Mortgage plans to move into its new headquarters in the fall of 2013.
Hammerhouse Kicks Off Fifth Year in Business
Hammerhouse LLC has announced the kick-off of its fifth anniversary year. This is an important milestone for Hammerhouse as it continues to help client’s source, attract, model match, hire and retain revenue-generating human capital at all levels of an organization. Over the next several weeks, all of Hammerhouse’s offices across the U.S. will be taking part in employee appreciation events to celebrate this milestone. In addition, the company is making a cash donation to Academy Foundation for the Future on behalf of all of the company’s employees. “We are extremely proud to be celebrating Hammerhouse’s fifth year in business as well as the work we have done, not only to help drive positive change throughout the mortgage industry, but to set a new standard for recruiting,” said Drew Waterhouse,
managing director of Hammerhouse. “Our leadership team and all our employees, combined with our unique model-matching process, have been driving Hammerhouse’s significant expansion over the last five years. We look forward to many more years of working with mortgage bankers, depositories and private equity firm’s to help continue to move our industry forward.” To celebrate Hammerhouse’s five year anniversary, the company is making a cash donation to Academy Foundation for the Future. This important charity supplies financial resources, materials, and labor to disadvantaged individuals, families, and communities in need of assistance in the areas of infrastructure, education, and housing. Hammerhouse has four offices in Mission Viejo, Calif.; Chicago, Ill.; Charlotte, N.C. area and Redmond, Wash. Its leadership team, which includes Waterhouse, and managing partners Steve Rennie, Eric Levin and Eric Petersen, have over 47 years of combined experience working in mortgage recruiting and a total of 57 years including traditional recruiting.
Berkshire Hathaway’s HomeServices Lending Brings on Wells Fargo Venture
HomeServices Lending LLC, a joint venture with Wells Fargo announced plans to transition to become a wholly-owned subsidiary of HomeServices of America, a Berkshire Hathaway affiliate. The transition work has been underway for some time, and is expected to conclude in 2014. “HomeServices is a world-class company with an expansive and aggressive growth strategy,” said Todd Johnson, president of HomeServices Lending. “Wells Fargo has been a great partner for many years, and we look forward to working together in the future, but we felt that a whollyowned model better fits our long-term strategy.” The change in ownership structure does not impact HomeServices Lending’s current operations or organization. HomeServices Lending home mortgage consultants, along with their extensive staff of processors, closers and underwriters will continue their long-standing mission of serving customers with mortgage financing as they do today. The decision to move to a wholly-owned subsidiary strategically aligns with HomeServices of America’s growth strategy, and supports its business model of providing buyers and sellers with fully integrated home ownership services.
Norcom to Launch Emerging Correspondent Program
Norcom Mortgage has announced that it will be launching its new Emerging Correspondent Program, which will be led by Patti White. The addition of the Emerging Correspondent Program will provide Norcom Mortgage’s clients with a more complete suite of mortgage services. “Launching our Emerging Correspondent channel is a logical next step to expand Norcom’s Correspondent offerings,” said White, VP of correspondent lending at Norcom Mortgage. “We are excited to offer our partners the option of both our full and emerging correspondent lending options, in addition to having the ability to broker their loans to us. It provides our partners with the opportunity to grow profits and capture more business.”
LendingQB and DocuTech Partner to Integrate Platforms
McLean Mortgage Corporation has announced that the company closed just under $900 million in mortgage volume during the first half of 2013, an increase of over 40 percent compared to the production levels achieved in the first half of 2012. Once again, this production performance exceeded the industry average for the first half of the year. Nathan Burch, president of McLean Mortgage Corporation, indicated that the company was able to achieve this tremendous rate of growth without purchasing existing operations. “One hundred percent of our growth has been organic–by referral,” said Burch. “Word has spread regarding McLean’s excellent service record and support of loan officers and operations personnel.” McLean Mortgage’s growth has been extraordinary in its five years of existence as the following chart illustrates: “While the industry averaged 20 percent purchases during 2012, our purchase levels exceeded 40 percent and during the first half of the year we exceeded 70 percent purchase volumes,” said Pat Peavley, CEO of McLean Mortgage. “This focus has helped put us in a position to lead the industry.”
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CoreLogic Further Expands With a Number of New Acquisitions
continued on page 52
Marketing Compliance Manager® is a cost effective, web based, easy to use, Compliance Management System for Marketing & Lead Acquisition. MCM® works with all types, and sizes of mortgage companies. For more information and demonstration: www.clixmg.com or email info@clixmg.com or call (727) 474-0961.
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CoreLogic has announced the company has entered into a definitive agreement to acquire Marshall & Swift/Boeckh, DataQuick Information Systems and the credit and flood services operations of DataQuick Lender Solutions from the Decision Insight Information Group (DIIG). Founded in 1930, Marshall & Swift/Boeckh (MSB) is the leading provider of building cost information, residential and commercial analytics solutions and business management services for property insurance companies, financial services organizations and the public sector. Using proprietary data, algorithms and platforms that leverage best-in-class replacement and repair cost estimates, analytics and other services, MSB assists insurers in analyzing risk, underwriting property insurance coverage and estimating, managing and analyzing claims. DataQuick Information Systems is a supplier of real estate data, analytics and business solutions to mortgage originators and servicers, investors, real estate professionals and the public sector. Employing a database of over 120
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LendingQB and DocuTech have formed a partnership to integrate their platforms where LendingQB’s browser-based LOS is now seamlessly integrated with DocuTech’s ConformX system, enabling users to compliantly manage all aspects of document preparation directly from within LendingQB’s LOS. The new integration enables all tasks that would otherwise be performed within DocuTech’s ConformX platform to be completed within LendingQB’s LOS without having to leave the application. All loan data resides in LendingQB, thus eliminating the exchange of potentially inaccurate disclosures that can be out of compliance. The integration removes a cumbersome, time-consuming process to enter or reenter data in the document system, dramatically speeding up the processing of initial disclosures and closing documents. As a result, employees are freed up to focus on other tasks, which requires fewer resources and increases employee productivity. “Our integration with ConformX took a considerable amount of time and resources to complete such a seamless, bi-directional interface that is delivered on a software-as-aservice (SaaS) basis between our platforms,” said David Colwell, vice president of corporate strategy at LendingQB. Each of our solutions are sophisticated, enterprise-class applications that provide more value and compliance assurance than some of the older document preparation systems on the mortgage market.”
McLean Mortgage Achieves Record Production in Q2
Millennials, the Internet & Originations A Closer Look
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By Phil Hall hen it comes to homeownership and the demographic sector known as “Millennials” (those born between 1977 and 1995), there is good news, bad news and interesting news. First, let’s get the bad news out of the way: Recent U.S. Census Bureau data has determined that Millennials experienced the largest drop in homeownership rate between 2006 and 2011. In the course of this five-year stretch, Millennial homeownership rates fell seven percent–compared to a 6.3 percent drop from those between 35 and 44 years of age and a 3.8 percent tumble for those between 48 and 54. Now … the good news. In July, the National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Survey found that eight out of 10 recent homebuyers considered their residential purchase to be a good financial investment. And among buyers under the age of 32, the number was 85
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percent. This would suggest that, despite the tumult of recent years, Millennials have not soured on the concept of homeownership. But, now we have the interesting news: The NAR survey also found that Millennials are leading the charge away to Internet usage for home searching. Indeed, the survey found that the frequency of Internet usage for home searches decreased as the age of potential homeowners increased. Ninety percent of Millennials were found to frequently use the Internet to search for homes, while less than half of the socalled Silent Generation (those born between 1925 and 1944) relied on Mozilla or Internet Explorer for their home searches. Furthermore, the younger generations of homebuyers stated they were more likely to find the home they purchased via the Internet, while older buyers primarily learned about the home they acquired from a real estate agent. This development is interesting because it affirms an evolving shift in the dynamics of the origination process.
Thus, a new question needs to be asked: Does the younger Internet savvy home purchaser spell opportunity for the mortgage loan originator? The answer, it seems, is a qualified yes–which can be translated into an unmistakable affirmation if originators pay careful attention to this demographic. Although the NAR survey seemed to accentuate the positives in terms of how Millennials considered homeownership, originators need to recall that this demographic came away from the housing crash with the greatest degree of pain. Factor in difficult economic aspects, such as stagnant wages, a somewhat moribund employment environment and a large number of Millennials burdened by debt from their college loans– and originators face potential younger homebuyers who are still on unsteady financial ground. Therefore, it may be a good idea for originators to offer very careful financial planning and a somewhat higher level of emotional support for this demographic. This will be a challenge, as the new regulatory burden does not allow the easy
flexibility afforded to homebuyers as recently as five years ago–even a 20 percent downpayment may be beyond the reach of many Millennials today. But while it is a difficult situation, it is not an impossible endeavor. As for the Internet, originators will need to ratchet up their online marketing game in order to get face time with this demographic. The mortgage banker who cannot tell a QRM from a QR Code runs the risk of losing significant business. Now, more than ever, originators need to display detailed expertise in Search Engine Optimization (SEO), social media marketing and online engagement skills aimed at the next generation of homebuyers. Quite frankly, most Millennials will not be strolling into the neighborhood mortgage brokerage–and originators that cannot raise their online visibility with this audience will see their market share begin to evaporate. Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
We’re more than just our niches.
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“Think instead about what technological edge you are placing within your wholesale business model in order to ensure that you continually have more success.”
Cutting-Edge Wholesaling: New Technology Meets New Industry Standards By Andrew Russell
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Mortgage wholesaling has been rejuvenated by the fully recovered and the robustly rebounding construction industry and housing market in the U.S., and with that, the bar of wholesale industry standards is being raised every day at an unprecedented rate. Among the emergence of the new wholesale standard is the increasing
emphasis on compliance, the continued prioritization of service, and the necessity for cutting-edge technology to be involved in and intrinsic to both the quality and efficiency of service and the wholesale team itself. And we’re not talking about just knowing that we need to have a good looking Web site up … that’s a given in today’s business world. Think instead
Knowing the industry’s future and complying
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about what technological edge you are placing within your wholesale business model in order to ensure that you continually have more success. Above all, quality is what it is all about, and what ensures the edge in wholesaling. “The year 2013 will continue to see significant and industry-altering changes. Yet the role of the broker, the account executive and the wholesale mortgage banker will continue to ascend as it is further proven that [the] team produces the highest quality loans” (from the January 2013 issue of National Mortgage Professional Magazine on page 24, “2013: Wholesale Rising” by Al Crisanty).
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As 2013 has gone on, there has been an increasing emphasis on compliance, in particular, on the forward mortgage side. The rules and penalties will only continue to get stricter and more stringent as 2013 passes into 2014. This could hinder the success of a wholesale company, which is why there needs to be a black and white, zerotolerance policy with regards to violators of established guidelines or procedures. In short, there needs to be a committed understanding to learning what it takes to be compliant, and the wholesale organization must actively set out to be aware of, approve, and review all partner procedures, while maintaining vigilant quality control (QC) procedures. The continued resurgence of the wholesale channel—and examine why this is simply a part of crafting the New Mortgage Industry (NMI). The NMI is simply the combined structural, operational and regulatory changes that are being put in place in the aftermath of the mortgage system collapse and housing bubble. One of the emerging themes of the NMI is the potential risk for lenders for all activities from first customer contact through their final mortgage payment. While this may be a dose of hyperbole, in reality, the unknowns regarding the final composition of the NMI make it imperative for lenders to have visibility and confidence in all aspects of the mortgage process or risk substantial regulatory and financial consequences. [again from the January 2013 issue of National Mortgage Professional
Magazine on page 24, “2013: Wholesale Rising” by Al Crisanty).
What is paramount for a broker in 2013? Understanding the broker’s needs is integral to success. Experience has shown that these are keys to being a great wholesaler: having quality service, pricing, customer introduction, customer retention, technology, seminars, innovative marketing material, and helpful training programs. Knowing the client is every bit as important as knowing the industry. This gets tricky when the use of new technology provides powerful tools that bring pricing and the status of deals to the lenders and brokers instantaneously. UNMBWholesale.com, for instance, makes daily improvements to provide active viewers, brokers, and lenders, alike, with not only user friendly content and tools, but the instant feel–where there is no wait for what you need–helps to greatly increase the efficiency of everyone involved in a wholesale deal. Having a pricing system that is updated online constantly and is built on a fully integrated system of quality is paramount to succeeding in today’s world. With a few clicks, anyone should be able to easily find and know how to apply, what the pricing is, and whether or not a deal is qualified. Working hand in hand with this technological area is how the quality of service continues to show as the wholesaler’s number one priority. Service, which has been always been and always will be vital to the industry, must cater to each individual involved, from the broker, to the loan officer, to the executive, to the borrower so that they get the boutiquelike, the concierge-like attention they desire and deserve. Adding question forms and easily found contact information that is incessantly monitored on a web page makes for the kind of attention to detail that grows the personal service and quality that succeeding in the future of the vastly dynamic wholesale industry is contingent upon. Andrew Russell is director of wholesale lending for United Northern Mortgage Bankers. He may be reached by e-mail at arussell@unitednorthern.com.
“… it behooves brokers to work with a range of wholesale partners that can best cover all the different needs one’s borrowers will have.”
Choose Your Wholesale Friends Wisely By Buster Williams
Attention to compliance
Let’s face it, we are now subject to a deluge of new rules, and many more are on their way. As a broker, you want to make sure your wholesale lender has the right compliance processes in place. You’ll want to know answers to critical questions. For example: How does your lender protect your borrower’s information? Who do they use for appraisal management, and are they reliable? Does the lender have a fraud control system in place? Does your lender perform underwriting and collateral reviews to ensure loan quality and compliance with the secondary market? If you are looking for new wholesale partners or considering whether to give Strong all-around perform- more of your business to a company that’s advertising great rates, see if they pay more ance Even for companies like my own, there than lip service to this issue. Ask for conare huge opportunities in the current crete evidence of what they do to keep your market. A number of large takeout transactions safe from regulatory scrutiny. lenders, such as Wells Fargo and Bank of America, have pulled out of the wholesale Useful tools business, which has really created open- Technology makes all of our jobs easier, ings for companies like ours that can pro- plain and simple. Brokers who want to vide direct Fannie Mae and Ginnie Mae make big gains in a rebounding market will approvals, a great array of tools and serv- want to work with lenders who provide ices for broker partners, and a wide range compelling, easy-to-use and useful tools for of products. It also creates a break for transacting loans quickly and smoothly. organizations to build a reputation for This typically means that the lender has a being responsive and reliable. For bro- web-based automated underwriting platkers, this is an important characteristic to form through which it can accept and lock look for in a wholesale partner, because rates at any time, in addition to tools that they will be able to pass this same level of provide brokers with the ability to manage service to their customers. Borrowers, as their pipelines efficiently. Even better is the we all know, can be nervous about getting wholesale lender that uses technology to the best product and locking in rates, and streamline approvals with Fannie Mae, as
Choose wisely In nearly a quarter century in this business, I’ve learned firsthand both what it takes to get a broker’s business, as well as what it takes to make borrowers happy. I’ve also learned the importance of choosing partners wisely, and make it a point to seek out individuals and companies who hold themselves to a higher standard. After all, your business strategy may change over time based on current market conditions, but healthy principles and strong ethics never go out of style. Everyone in business gets excited when a potential partner seems to have the answer that could transform our business. As the mortgage market improves, I think we’ll see a lot of new names in the wholesale business—and maybe some old ones, too. They’ll be courting brokers and originators with claims about how fast they can close, how low a credit score they’ll accept, and so on and so forth. As with all things, some of these lenders will be able to deliver on these promises and some won’t. For anyone in the mortgage industry, the wise thing to do is to listen carefully, ask questions and tread slowly. And to always remember to choose your friends wisely. Buster Williams is president and CEO of RightStart Mortgage, a mortgage lender based in Pasadena, Calif. that provides a full range of FHA, conforming, ARM and refi products. RightStart’s wholesale division, RightStart Wholesale, is a full-service Fannie Mae Seller/Servicer and a direct Ginnie Mae issuer. He may be reached by e-mail at bwilliams@rightstartmortgage.com.
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price logged its seventh straight month of double-digit increases. Similarly, new mortgage loans are making a modest comeback. On July 24, the Mortgage Bankers Association’s Purchase Index was six percent higher than it was just one year ago. And while 30-year-fixed mortgage rates have risen in recent months (to approximately 4.5 percent as of this writing), from a historical perspective, they are still tremendously low. What does this mean for brokers? If you managed to survive the downturn, you probably have a good number of former partners and referrals that were waiting on the sidelines for the market to turn and are now about to spring into action— if they haven’t already. At the same time, if you’re brand new to the business, you don’t have to adjust your prior business practices or feel inclined to work with past partners out of a sense of loyalty. You can start fresh. Either way, you’re in a great position to succeed. When it comes to a wholesale lender, how do you select a partner than paves your way to success? There are three factors I consider critical.
this makes the transaction so much faster and more efficient—something borrowers can surely appreciate. Technology also feeds into the compliance issue, and for a very simple reason. No lender in the year 2013 is able manage the growing number of federal and state mortgage regulations without some level of automation. Long gone are the days in which human eyes could be solely relied upon to ensure loan files were accurate and free from missing data. For this reason, it’s a good idea to work with lenders who have automated processes in place that can keep transactions safe.
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“Choose your friends wisely.” Wise words of caution often passed down by parents or learned through trial and error. If you associate with troublemakers, you’re likely to run into trouble yourself. Choosing friends wisely applies not just to our personal lives, but also to our business partnerships. A glance at the latest headlines is all the proof anyone needs to see how a rotten apple can spoil the barrel. Indeed, you can get in sizeable trouble by working with the wrong folks, whether it’s an unscrupulous appraiser, deceitful clients or a careless lender. And yet, it’s not just bad players we need to avoid. Choosing to align ourselves with people or companies that are barely good enough to stay out of trouble—or provide the bare minimum of service required to do business—can have a profound effect on our performance, too. This is extraordinarily important for brokers, loan officers, and other originators to remember, because it is these folks who have the closest relationships with consumers and whose business most depends on making those consumers happy. The stakes, as we all know, are high. After the mortgage meltdown of the last decade, the mortgage industry faces an unprecedented number of new rules and guidelines that affect everyone in our business, from investors to title agents to lenders to mortgage insurers. Brokers must choose among these companies, aware that if their partners don’t abide by the rules, transactions may fall apart and their reputation can be ruined. Today, companies are often judged simply for being unwise enough to partner with a company or individual who broke the rules. Choosing your business partners wisely is also critical due to the extraordinary opportunities presented in the current lending environment. By most accounts, the housing market is improving. According to the National Association of Realtors (NAR), existing home sales as of July were 15 percent higher than they were in 2012, while the median home
will switch lenders quickly if they don’t think anything is happening. Unfortunately, the housing market’s improving health has lured a lot of new lenders to the business that have not quite figured out what brokers need in order to excel. Furthermore, many wholesale lenders only offer niche products that serve a small sector of the market. As the market continues to improve, and more mortgage products begin entering the picture, it will be unwise for brokers to count on a single wholesale partner for all of their business. Rather, it behooves brokers to work with a range of wholesale partners that can best cover all the different needs one’s borrowers will have.
“… what does the future of wholesale and correspondent lending look like? That will be fully determined by the behavior of non-depository mortgage loan originators, as they provide the gas that fuels the engines.”
The Future of the Mortgage Broker and Correspondent Markets (Part IV) By Andy W. Harris, CRMS
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The more things change, the more they stay the same. It feels like ages ago I began writing on this topic of wholesale and correspondent lending in late 2009 and early into 2010. This was the first period in which non-depository mortgage providers really began revising operations and preparing for the new federal regulatory changes. I continued to update my opinions on what the future would look like and my view point as an involved mortgage broker, motivated by all the inaccurate information and assumptions flooding the industry regarding the wholesale lending channel. Part four of this series will mirror the same message as before, with the addition of final ruling interpretation of the Qualified Mortgage (QM), primarily as it pertains to the three percent cap on points and fees
(set to take effect Jan. 14, 2014). On May 29, 2013, the Consumer Financial Protection Bureau (CFPB) finalized a rule amending the Ability-toRepay/Qualified Mortgage proposal issued this past January. There was a lot of new attention placed on the change in how loan originator (LO) compensation would be calculated under the points and fees calculation. Some had misinterpreted the proposed rule before, assuming that there would be a “double counting” wherein the bureau would count the mortgage brokerage “company” origination fee, in addition to the compensation paid to their originator. While written a little poorly on the proposal, this was never the intention of the bureau just as it was not with the “flat fee” misinterpretation on prior proposed amendments to compensation rules. The broker “compa-
ny” compensation was the only to be included in the cap. Many of us were surprised with the recent change from earlier proposal when it comes to creditor-employed originators. To begin, let’s all remember that the three percent cap on points and fees as created under the Dodd-Frank Act was to protect consumers from excessive upfront fees or predatory high-cost loans. These rules were not created to include origination or other fees in which consumers do not pay. Common sense would then tell us that if a creditor is paying an originator (regardless of the channel), than this would not be included in a QM calculation unrelated. Unfortunately, they made the amendment for originators “employed” by the creditor to be exempt from the calculation, but not for originators “not employed” by the creditor (unchanged). It appears that special interests and lobbying had finally made its influence on the CFPB. I noticed some comments about the difficulty creditors claimed when calculating income for the originators they employ. I do not believe that non-consumer paid originator compensation
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should be included in the three percent cap on any channel, but we all know that this statement regarding difficulty in calculating is completely false. Compensation reform makes it very easy to determine exactly what each originator will be paid per file, regardless if they are employed by the creditor or not. These compensation agreements do not only pertain to a mortgage broker and wholesale lender, it applies to every originator on every channel. To provide this exemption for creditor-employed originators rather than non-creditoremployed is unjustifiable as this should have applied to all origination channels equally. We hear a lot about “disparate impact” and “fair lending.” What we are witnessing is regulators contradicting their own alleged agenda and presenting the opposite of their intended responsibilities for consumer protection under this final ruling. They are discriminating against small business and a minority class originator (the wholesale lending channel), resulting in unfair lending which affects consumer choice in the primary mortgage market. If a regulator is to discriminate a class of originator without merit, this will reduce competition and influence higher costs and fewer choices to consumers. Remember, these rules should be 100 percent focused on protecting consumers. Clear confusion by regulators and special interests should have no place in influencing these rules when dealing with such an important financing transaction. Both consumer groups and regulators cannot allow ignorance to create this “disparate impact” or unintended consequences. The analytics and facts must be understood rather than blanket assumptions, fully created by the “old” mortgage industry and how things were in the past. There are many analytical internal key elements also that are still up in the air on interpretation when calculating the three percent cap. How will future disclosures look as it pertains to removal of yield spread premiums (YSPs) to equally match service release premiums (SRPs)? What does this mean to “bona fide” discount points under different channels for exemption? Will risk-based pricing be
l Wholesale is discretional: It’s interesting to think back on a few files in which I had a bad experience. It could
l A line of credit is not a fountain of youth: It sounds like 2008 or 2009 all over again. The sky is falling. Hurry up and get those correspondent lines, net branches, or mini-correspondents set up. Broker to banker … step right up, step right up. Get your broker to banker here. We’ve got all kinds … you can choose from more overlays, to higher rates and margins, but don’t forget we also have some warehouse line steering requirements with questionable capital retention for longterm sustainability. Don’t worry, the buy-backs are not as bad as they seem and you shouldn’t worry about the fair lending suit because you can call yourself a banker now to the real estate agents you’re calling on. This can all be yours and all you have to do is give up your entire business you spent years building … for free. Yes, I am being sarcastic, but come on guys … we’re smarter than this. I’m surprised we have not seen banker to broker talk to counter the chaos. l Performance is not determined by the channel, but only by the originator: The originator is the main point of contact as the licensed professional dealing with the consumer directly. They decide where they fund their loans and there is no doubt they make the most important decisions with their clients. There are good “brokers” and there are bad “brokers.” There are good “bankers” and there are bad “bankers.” The titles, however, mean nothing. The client experience is fully reliant on humans establishing the systems needed for effective execution and communication. l Perspective: It is very difficult for a
creditor-employed originator to l Control your balance sheet or you understand what being a mortgage balance sheet will control you: broker “exclusively” is like in today’s Individuals or businesses that cannot market. Employer influence (influence control their liabilities will make from a party financially interested in short-term impulsive decisions, many you believing one thing over another), of which are not the best choice for warehouse line restrictions or steertheir careers or clients they serve. You ing, varying margins, etc. can make it must have a long-term vision and dochard to properly judge wholesale umented goals, created without the when others try to discredit. Many corstress of an unfavorable balance sheet respondent originators find themover your head. Many have expanded selves brokering only the programs too fast and taken on too much overthey cannot do, resulting in a “niche head and will be unable to continue program” performance that does not without recourse. Stay as liquid as posbest represent wholesale operations sible and be prepared for volume flucand execution. This builds on the false tuations and new regulations. sales mentality when using terms such as “banker,” “in-house underwriting,” l Interest rates are up: We have seen a or “direct lending” all of which mean significant increase in interest rates. nothing to consumers and business Simply put, we’re in a purchase marpartners (and in many cases are miscontinued on page 50 representative). 49
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l Step back for a moment: I’ve noticed that everything in our industry seems to be surrounded with special interests, recruiting, and people putting their own agenda in place of what might be best for the consumers we serve. It’s vital that we put our sales and competitive mentality aside for a moment to really think about what we need to support together without expecting financial gain. If you broker a little or a lot, competition and the wholesale lending channel is important for consumer’s choice and comparison.
have been with an overlay, possibly performance, turn times or an underwriter. Things that generally would have impacted my client in a negative manner. When I think more about these instances although somewhat rare, the thought crosses my mind … what if I was actually employed by this lender? I couldn’t imagine having that kind of restriction. The ability to have lenders competing for our business and comparing them on products, warehouse lines or direct seller/servicers, overlays, pricing, and performance is priceless to the clients we serve as brokers.
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exempt as built in the rate sheet, or will up-front bona fide discount costs be viewed as a fee to off-set this embedded adjustment? Will underwriting fees be moved into the rate sheet in wholesale to allow for more room? How will the lower loan amounts and exemptions fit in and will lower income borrowers be negatively impacted? Will lender rebates be applied toward reducing costs calculated in this cap? Many more questions, but we need to get busy communicating with the Consumer Financial Protection Bureau (CFPB). Things have changed and everyone must acknowledge that, including our regulators and consumer groups. I encourage you to read parts one through three of my series in National Mortgage Professional Magazine also if you want some of my opinions and things in which I feel have already transpired in the wholesale and correspondent markets. I have also created the site www.TheFutureofMortgageLending.com to share a message and spread the need for fair and equal accountability and consumer choice in lending. Real-life examples and facts must be discussed and debated. Future rules and disclosures must be transparent and equal, for the sake of consumer costs and to avoid confusion. While congressional action for change is unlikely, awareness to consumers and regulators for change is possible if we all come together to support a message of right versus wrong. Wholesale lending is important to the consumer and should be treated fairly, period. Here are just a few bullet points I would like to again share about our industry and the wholesale lending channel:
the future of the mortgage broker ket. The good news is that rates are still historically favorable and market share opportunities are great for those with a good book of business. The bad news is that we will see many companies merge, downsize, or close their doors as they have to deal with much less revenue compared to the 2012 party, in addition to much tighter regulatory demands and higher capital requirements. Between June 2013 and June 2014 (just an estimated range in my opinion), originator (revenue makers) recruiting efforts will be the most aggressive in history. l We are in a transactional-based industry: There is no passive or residual income or revenue. The employer
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is the consumer. The employee is the originator. Originators, through a combined effort, then cover the payroll and all other expenses of the mortgage company in which they place their NMLS number. The company is completely reliant on the activity of the originator(s) to cover overhead and profits. This is important to remember when fear-based recruiting hits the streets. So the big question is what does the future of wholesale and correspondent lending look like? That will be fully determined by the behavior of non-depository mortgage loan originators, as they provide the gas that fuels the engines. I have personally found that about 80 to 90 per-
cent of originators are not informed of the new rules and regulations or how this affects the analytics of the process under the wholesale and correspondent origination channels. I do hope that awareness grows and I have faith in originators to self-educate rather than procrastinate when career planning. I also have faith in our regulators. I truly hope that the CFPB continues to capture data to make wise and accurate amendments for consumer choice and protection. I’ve agreed and applauded all changes, with the exception of the recent unjust discriminatory ruling against wholesale. With all of this said, the mortgage broker will still be here in the future just as we have always been. We are one of the most resilient groups of small business professionals in the Unites States. We evolve and we adapt. We have deep-rooted commitments to our clients and the local communities we serve. We have
much more “skin in the game” than our non-owner competitors originating for banks, net branches, and correspondents. The good will stand out from the bad and we will always put our client’s interests before our own. We choose this path because we support where it leads our clients and welcome more followers that can see the trail. Although titles mean nothing to the consumer in this agency-backed primary mortgage market, I am certainly proud to be a mortgage broker! Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or e-mail aharris@vantagemortgagegroup.com or visit VantageMortgageGroup.com.
Wharton School Professor Pushes for Complete Dissolution of the FHA By Robert Ottone
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Joseph_Gyourko Robert Ottone is an assistant editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 4095555, ext. 314 or e-mail robertpo@nmpmediacorp.com.
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oseph Gyourko’s recent white paper, “Rethinking the FHA” begins with a bold statement: “The Federal Housing Administration (FHA) has failed by any reasonable metric.” Reverse Mortgage Daily uses the term “radical” when it comes to highlighting Gyourko’s concepts in the paper, stating that FHA reform has been bandied about in the past, but nothing quite so intense as what Gyourko outlines. “Their main mutual insurance fund is underwater. They don’t have enough resources to pay off expected losses,” said Gyourko, a Martin Bucksbaum Professor of Real Estate, Finance and Business & Public Policy at The Wharton School of the University of Pennsylvania. “Ultimately, we’re going to have to pay off those losses, so they’ve failed in a financial sense. I think, perhaps more importantly, they have too many defaults. Their long-range default rate is over 12 percent.” Gyourko’s plan calls for the FHA to be completely phased out over the course of a few years to be replaced by a “subsidy scheme” that would be subsidized by matching funds from the United States government. “We need much better underwriting and risk-taking,” Gyourko said. “The damage is already done. I don’t think we’ll be able to maintain the underwriting discipline throughout the housing cycle. There are a number of political reasons why I believe we won’t be able to enforce a more stringent underwriting program, that’s why I propose phasing them out. The main problem with the FHA is there’s no equity. My proposal has borrowers providing 10 percent of the downpayment, if prices fall, they still have time for equity.” Gyourko’s paper states, “It is running an insolvent mortgage insurance guarantee platform with a total risk exposure equal to about seven percent of national output, and has shown itself unable to discipline its underwriting process to prevent a much too high share of its intended beneficiaries from achieving sustainable homeownership. For FHA to be broke on a program of this scale and to be failing at such a core part of its policy mission cannot be categorized any other way. “The Moody’s report essentially says that the FHA saved the housing market. In 2009, the FHA provided mortgage prices that estimates had around 30 percent default rates. That’s incredibly high. By providing liquidity and providing more secure households, a default rate is kept lower. I disagree with Moody’s economic logic, I don’t think it’s dishonorable, I just don’t agree with it.” Money News reported that Gyourko’s presenting of his paper was met by a gathering split down the middle. While some agree with Gyourko that the FHA is, essen-
tially, insolvent, others declare the FHA an unmitigated success. Gyourko, who has studied the FHA a great deal over the years, highlighted the fact that the FHA has seen a six percent rise in delinquency, the highest since 2011. “Eliminating anything completely ingrained in the delivery process from origination to servicing to secondary markets for nearly four generations assumes that market behaviors can be predicted or even
channeled—they cannot,” said Mark Dangelo, president of MPD Organizations. “Without a final solution to the GSE debacle, a robust private secondary market that promotes not only gains but an ability to sustain losses and an open market that accepts new forms of fixed incomes securities, the elimination of an agency regardless of material flaws is like telling an alcoholic to just quit drinking—why not just stop breathing?” Reception of Gyourko’s paper has been mixed, as some are staunch supporters of the FHA, while others are celebrating the notion of eliminating the organization in order to provide better-subsidized equity. “By eliminating the FHA, I think we’ll have a more stable, safer housing situation with fewer defaults,” Gyourko said.
Vladimir Bien-Aimé’ is president and chief executive officer of Global DMS. Since co-founding Global DMS in 1999, Bien-Aime’ has grown the company to capture a leading share of the appraisal management segment, with a client base of over 20,000 unique users and a 100 percent retention rate among lender clients. He may be reached by phone at (877) 866-2747 or visit www.globaldms.com.
Mortgage Professionals to Watch l Prospect Mortgage LLC has named veteran mortgage finance professional Amy Brandt as chief operating officer.
l Norcom Mortgage has announced that Tyler Rhea has been promoted to the position of branch production manager.
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l Adam Roloff has joined Bell Mortgage, a division of Bell State Bank & Trust, as a senior loan officer, and Nick Kallman has joined Bell Mortgage as a senior loan officer.
KALLMAN
million U.S. residential properties, DataQuick provides customized analytical solutions, credit reporting, flood zone determination services, fraud monitoring, property valuation and automated decision software. “The acquisition of MSB and DataQuick significantly expands our footprint in property and casualty insurance and adds additional scale to our existing property data and analytics business. The combination of MSB and our existing geo-spatial business capabilities and property-related data assets allows CoreLogic to provide our clients in the insurance industry with new and unique insights into underwriting property coverage as well as managing natural hazard risks and claims,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “In addition to the obvious financial benefits and cost synergies, the combination of CoreLogic, MSB and DataQuick should yield significant future growth opportunities through the introduction of new products, services and workflow tools which draw from a wide range of gold-standard data assets and analytical capabilities.” The transaction is expected to close during the third quarter of 2013 and is subject to customary closing conditions and regulatory clearance. The purchase price of the transaction is $661 million. As a result of this transaction, CoreLogic expects to realize cash tax benefits from certain acquired amortizable intellectual property, amortizable goodwill and net operating loss carry-forwards with an estimated present value of approximately $115 million. The acquisition is expected to be accretive to 2013 financial results excluding onetime reductions in acquired deferred revenue and other purchase accounting adjustments.
RHEA
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It’s clear that constantly changing rules makes keeping pace in the valuation compliance arena very challenging for lenders to effectively and consistently manage. There are so many aspects of compliance that lenders must stay on top of, or they risk making errors and being out of compliance, which can slow the appraisal process, increase costs, and worse yet, result in steep fines. Even though the Home Valuation Code of Conduct (HVCC) is technically no longer in existence, we still have remnants of it that must be adhered to. We also have the 25,000-page Dodd-Frank Act to contend with, the Consumer Financial Protection Bureau (CFPB) and the prospect of a potential audit, GSE compliance requirements, and federal and statebased regulations. The aforementioned can be an overwhelming undertaking for any lender to manage. Further, the appraisal process in and of itself is intricate, involved and lengthy. This makes compliance not only business-critical, but the internal appraisal process that lenders develop becomes equally as important. That process needs to be workflow-driven in order to efficiently complete appraisals and sell compliant loans. Handling appraisals manually is not the way to manage the appraisal process. Lenders cannot turn on a dime and respond to new rules and regulations with a manual process and they cannot complete appraisals expeditiously. A well-thought-out process to manage appraisals is paramount to remaining in compliance and achieving efficacy. If you do it right, you’ll lower your costs, reduce risk, prevent instances of fraud, speed up turn times and sell loans with quality appraisals that won’t come back to haunt you. So how do you achieve this? It can be outsourced to an appraisal management company (AMC); however, you must be discriminating when doing so, as many AMCs lack quality and the lender is ultimately responsible for any errors the AMC makes. Alternatively, you can arrive at sound internal processes and workflows coupled with enterprise-class valuation management technology. The right type of valuation technology should be 100 percent Webbased, simple to use, workflow-driven, contain configurable business rules to drive internal processes, and have a track record of keeping lenders in full compliance. It should also be able to integrate tightly with your loan origination system (LOS) to eliminate data re-entry and prevent errors or missing information. Good valuation management technology will handle key functions such as vendor management, appraisal ordering, appraiser assignments, tracking, accounting, electronic delivery, automated reviews and scoring of appraisals, and compliant passage to the GSE’s Uniform Collateral Deliver Portal (UCDP). Some solutions only handle portions of the process and are not an all-in-one platform. Also, look for a solution that accompanies a mobile application for smartphones and tablets to allow appraisers working in the field to communicate and receive orders and updated statuses that help them perform tasks on-the-go. You have two choices: Outsource your appraisal process to AMCs that are proven to be of high-quality or engage with a technology vendor to implement a valuation management solution that automates the entire process. Whatever you do, don’t make the mistake that many lenders do— attempt to tackle the complex appraisal process manually by adding staff. This isn’t a do-it-yourself undertaking. Your business is too important to risk it.
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l Wingspan Portfolio Advisors has announced the hiring of mortgage industry veteran Meredith McCrory for the newly created position of vice president of strategic alliances.
MCCRORY
By Vladimir Bien-Aimé
heard on the street
BRANDT
Appraisal Compliance and Processes: What You Need to Know
l DocMagic Inc. has announced that Brian Yoder has joined the company as director of software development. l GSF Mortgage has named Michael Licciardi branch manager of GSF’s Langhorne, Pa. branch. l Auction.com has announced that former Carrington Mortgage Holdings Executive Vice President Rick Sharga has been named executive vice president. l The Consumer Financial Protection Bureau (CFPB) has announced the addition of several members to senior positions within the Bureau, including Sartaj Alag as Chief Operating Officer, Christopher D’Angelo as Chief of Staff, Nora Dowd Eisenhower as Assistant Director for the Office of Older Americans and Laurie Maggiano as Program Manager for Servicing and Securitization Markets. l Stewart Lender Services (SLS) announced the appointment of Jessica Thorne as senior vice president, strategic relationship manager. l LoanLogics has hired Matt Thoman as product manager for origination technologies. l Stonegate Mortgage Corporation has announced the hiring of Julianne Ilstrup as senior vice president of structured finance. l Lender Processing Services Inc. (LPS) has announced that Vicki Vidal has joined the company as a senior vice president of product management for LPS’ Servicing Solutions and Technology Division. l IndiSoft has appointed Brad Urquhart as vice president of business development. l Gateway Mortgage Group LLC has hired G. Todd White, CMB as senior continued on page 63
Boosting Sales Via Emotional Stimulation BY JOSHUA CONKLIN
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s a business owner, you already know that people buy for emotional Be confident in your product reasons. No matter how great your product or service is, apathetic con- When talking about your product or service, don’t say what it might or could sumers will simply dismiss it. You need to tap into their emotions if do for them. Explain what it will do. Keep in mind that your prospect needs you re going to convince them that they need your product. to get rid of their pain or acquire pleasure as soon as possible. They need a By manipulating the pleasure and pain triggers in your guaranteed solution! prospect, you will be catching their attention, and encouraging them to act (either to rid themselves of the pain, or to Use the right words “By manipulating retain feelings of pleasure). Make your message vibrant by using active verbs. For the pleasure and pain Here are some tips for injecting pain and pleasure example, Jane runs instead of Jane is running. Also, use into your marketing messages: triggers in your prospect, you words associated with pleasure (babies, soft, relaxing, etc.) or pain (dentist, suffering, trauma).
Tell stories People immediately connect with stories. If your story relates to an experience your prospect has had, they will immediately be reminded of the feelings they are fighting to avoid, or the feelings they’d love to feel again.
Make your prospect imagine
will be catching their attenOne last point … once you draw out the pain or tion, and encouraging them pleasure, let your audience revel in it. Don’t be too to act (either to rid themselves quick to move past the emotion. It’s the emotion that moves people to action. If you can successfully incorporate emotional stimulation in your marketing of the pain, or to retain messages, you will be transporting your prospect to a feelings of pleasure).” buying state!
The mind is a powerful tool. Asking your prospect to visualize sets a stage for you to present painful/pleasurable situations.
Tap into past experiences or create hypothetical ones When it comes to emotion, your prospect’s brain will not make a distinction between fact and fiction.
Joshua Conklin is director of business development at MortgageLeads.org and is an authority in the lead generation space. Joshua has more than 14 years of experience at developing strategic marketing platforms for the nation’s tops lenders and brokers nationwide. He may be reached by phone at (800) 848-7086, ext. 201 or e-mail josh@mortgageleads.org.
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Why the “Farm Bill” Can Save the USDA Home Loan By Rich Obermeier
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On Oct. 1, 2013, more than 900 rural communities, along with millions of low-income rural families, will lose their eligibility for what is often their only source of federal affordable housing assistance. On June 10 of this year, the Senate passed the Farm Bill, a bipartisan bill that will reduce the national deficit, save taxpayers money and will abolish outdated government programs, while consolidating and streamlining others, allowing for rural American communities to be modernized and updated for the 21st Century. The bill's proposed programs and initiatives would allow for greater accessibility of USDA programs to small, rural communities nationwide. The Rural Housing Section 502 loan program, which is primarily used to help low-income individuals or households purchase homes in rural areas, are advantageous in providing opportunities for homeownership for families living in rural communities. These loans can be used to build, repair, renovate or relocate a home or to purchase and prepare the building sites. This also includes water and waste water programs that will assist rural dwellers with well water improvements, and it will also assist those areas that need water improvements and clean up. The Farm Bill includes language to ensure that rural communities that are currently eligible for USDA’s rural housing programs and would lose eligibility due to USDA’s use of 2010 Census data are able to continue their eligibility through 2020. The bill raises the population limit used to define an area as rural from 25,000 to 35,000. To maintain rural eligibility, communities would still need to be rural in character and have a serious lack of mortgage credit for lower and moderate-income families. Communities should not be excluded from rural housing programs because they have outgrown an arbitrary cap that has not been adjusted to reflect demographic trends. It is important to realize that the bill is revenue neutral. It does not expand funding levels for rural housing programs. It updates the pool of communities eligible for its services. Without Congressional action, the current definition of "rural"—for USDA Rural Housing programs—will expire, leaving these families without the help they need to access clean, decent, and affordable housing. The USDA program continues to be the only source of non-military 100 percent financing in the marketplace. In 2012, before the Refinance Pilot Program was released in March, 97 percent of Rural Development (RD) production was purchase money and after its release, 92 percent of total production are purchase transactions. All 50 states currently have areas of eligibility. USDA offers some the lowest rates of any loan and you will always have a fixed interest rate in the market. Even today, many lenders don’t actually have much experience in approving USDA loans and take a “learn as you go” approach, which isn’t always great for homebuyers. Truly understanding the USDA eligibility requirements and how to approve these loans is important. For this reason, it is important for homebuyers to work with a mortgage company that “gets it” when it comes to USDA loans. Doing so will insure that their loan will close seamlessly and under the quoted terms. With more than 25 years in the mortgage industry, Rich Obermeier, branch manager for GSF Mortgage Corporation, has worked with some of the largest mortgage companies in the county developing retail and wholesale channels. Rich has assisted in developing and implementing operational protocols for sales managers, originators and loan processors. In recent years, Rich has developed the USDA Rural Development Product in multiple states and locations. Rich may be reached by phone at (262) 957-8901 or e-mail robermeier@gogsf.com.
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How to Position Yourself for Your Next Career Move Develop a written vision for your career spanning a Have you thoughtfully short-term, medium-term planned out your next and long-term horizon By Dr. Marty Martin
career move? Most people have not. While they may have a vague idea of what their profession will look like in the future, they aren’t sure how to position themselves for optimum growth. But because the work world is changing so rapidly, planning your path and positioning yourself for the next advance is a critical step all professionals must take. Of course, since no can foretell the future, planning often involves ambiguity—and that’s where the challenge lies. Most people have a low tolerance for uncertainty, so they don’t bother creating a plan. And while it’s true that neither you nor anybody else, not even experts, can predict the future, you can map out possible scenarios. Doing so increases your ability to adapt to changing situations and helps you see future opportunities others may miss. The following are some suggestions for making your plan as realistic as possible so you can properly position yourself for future success.
Conduct research on the current and future job market You can find many online resources to help you better understand which professions and industries are growing, which are shrinking, and which are evolving into something different. One is the Occupational Outlook created by the Bureau of Labor Statistics www.bls.gov/ooh/). The other is O*NET Online (www.onetonline.org/), which is a partner of the American Job Center Network. Both of these resources will give you an accurate overview of a variety of professions, including both current and future trends. Use this information as a way to gauge job growth (or possible shrinkage) in your industry.
Read magazines that focus on future trends There is an entire profession focused on future studies in which people called Futurists analyze trends in particular areas and make educated predictions about where we as a society are heading. Sometimes, the predictions focus on a key area or profession, such as healthcare or robotics. Other times the predictions are more general. The World Future Society (www.wfs.org) is the leading futurist organization. In addition to their Web site and blog, they publish a magazine called The Futurist. Read some current issues or subscribe to it so you can keep up-to-date on upcoming career and industry trends.
Using the information you gather about the probable future of your profession or industry, combined with what you know or personally see going on around you, create a vision for what your career could look like in five years, 10 years and 15 years. Granted, as you extend the timeline, you increase the level of uncertainty, but the goal is not perfection. The goal is to give you a vision of what’s possible so you can start positioning yourself for that future vision today.
Map out more than one path to get to your destination as depicted by your career vision With your vision of what reasonably could happen, write out what you deem the most logical path to reach that vision. Then, write out an alternate path that is just as viable, but perhaps not what you deem as ideal. For example, maybe in one path you continue working in your current organization, helping to shape the future of your position. And perhaps in an alternate path you open your own firm, go to work for a competitor, or become an outsourced employee to your firm (as a freelancer or consultant, for example). Feel free to come up with several paths to the vision. Of course, you have no idea which path will actually transpire. But when opportunities present themselves from any of the outlined paths, you’ll be able to recognize them and act on them because you’ll have already done some planning. As a result, you’ll find yourself a step ahead of everyone else. Sometimes it’s those little steps that position you the best.
Engage in scenario planning by fully detailing the various paths to your vision The more detail you can give the various paths you outline, the better. While there’s no need to go overboard with a 50-page document, you should detail each path as much as you can, including timelines, new skills or training you’d need, resources that would help you at key junctures, etc. Some people naturally think in pictures and graphs, so they create a series of diagrams. Other people think in the narrative form. Regardless of your preferred style, you need to capture the information, record it, document it, share it, and then continuously refer to it and update it as things change.
It’s your future … plan it! While all this may seem like a lot of work for something that may or may not transpire exactly as you plan, it realcontinued on page 59
Senate Banking Committee Approves Bipartisan FHA Solvency Act BY ROBERT OTTONE
enate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) have released a draft Federal Housing Administration Solvency Act of 2013, a bipartisan bill to ensure stability in the nation’s mortgage market and protect taxpayers. “The Federal Housing Administration plays a key role in our nation’s housing market, and I am pleased that Ranking Member Crapo and I have been able to work together on this bipartisan legislation,” said Chairman Johnson. “Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to many Americans, and I look forward to working with the rest of the Committee to move this legislation forward.” The FHA Solvency Act was passed by the Senate Banking, Housing and Urban Affairs Committee by a margin of 21-1. Sen. Tom Coburn (R-OK) was the only Senate Banking Committee member to vote against the bill. “MBA [Mortgage Bankers Association] applauds the Senate Banking Committee for passing the FHA Solvency Act of 2013. We believe this bill contains many common sense reforms that will help shore up FHA’s finances and ensure the agency continues to fulfill its traditional counter cyclical role,” said David H. Stevens, president and chief executive officer of the MBA. “Chairman Johnson and Ranking Member Crapo worked diligently to draft this bipartisan legislation and we look forward to helping refine key provisions of the bill before it moves to the Senate floor.” The FHA Solvency Act was drawn up to provide the FHA with the tools necessary to get back on stable footing. The FHA has been dogged by depleted reserves after years of defaults due to the housing bubble burst impacting insurance funds. “Chairman Johnson and I have crafted a bill that includes bipartisan, effective reforms that put FHA on a path toward improving its unsustainable financial condition,” said Sen. Crapo, in mid-July. “Many of these reforms include priorities from our colleagues on the Committee, and I am eager to work with them to return the FHA to a strong, self-sustaining insurance program that can remain a viable option for future homeowners.” Both Johnson and Crapo have been busy this month, tackling community-lender concerns, along with receiving input on how to improve the Dodd-Frank Act. “It pleases me that the Senate Banking Committee can come together and pass bipartisan legislation designed to help the FHA. Senate Bill 1376 will give the FHA the authority it needs to deal with lenders originating bad FHA loans and ensure that the FHA remains solvent,” said John H.P. Hudson, Premier Nationwide Lending’s vice president of regulatory affairs. “While there is potential downside for consumers by way of higher insurance premiums, this bill is a step in the right direction of fixing the mortgage market. Hopefully this bill be get the comprehensive, bipartisan support it needs.”
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Robert Ottone is assistant editor of National Mortgage Professional Magazine. He may be reached by e-mail at robertpo@nmpmediacorp.com.
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Hidden Opportunities in Basel III–Second Edition
By Shannon Lois
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We saw this movie before, at least the rough cut. On July 9, regulators jointly released Basel III: The Final Cut. Large institutions will be required to begin to implement Basel III on Jan. 1, 2014, with smaller institutions scheduled to begin on Jan. 1, 2015. Furthermore, as a compromise for regulators who didn’t think the international Basel III standards went far enough, supplemental leverage ratios were proposed to begin to be implemented for the very largest banks beginning in 2016. Concurrent with Basel III are the stress testing rules, in effect today under the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) and CapPR for larger institutions, and effective Oct. 1, 2013 for smaller ones. As part of the oversight, the Federal Reserve Board (FRB) and other regulators conduct or will conduct annual assessments, including “stress tests,” of the capital planning processes of financial institutions to ensure that these institutions can continue operations in the event of economic distress. This is followed by an expectation for the banks to have credible plans showing that they have adequate capital to continue to lend, even under adverse economic conditions. In addition, Basel III will also have safeguards to ensure banks are well-capitalized, and not overly leveraged in times of economic stress, and may even impose a “countercyclical capital buffer” if, in its opinion, the times warrant. Whether it is meeting the requirements of BASEL III and CCAR, CapPR, or other stress testing regulations, institutions need to commit sizeable resources to abide to new and ambiguous regulations within short timeframes. Nevertheless, these compliance responsibilities offer an opportunity for a bottom-up approach to credit strategies, which can also be applied to other business processes.
Basel advises banks to measure credit risk: “Banks should have methodologies that enable them to assess the credit risk involved in exposures to individual borrowers or counterparties as well as at the portfolio level,” reads Paragraph 733 of the Basel text. Sounds reasonable, and a bit self-evident; banks should be able to assess their credit risk—whether Basel mandates it or not. If this were a movie, it would have a depressing tone. Planning for the worst case scenario is not an exercise that generally lifts one’s spirit, but is there a way to turn this scene into something that would bring a more positive, uplifting message. It is about constantly assessing your current processes and strategies, so that you are prepared for regulations and are operating at maximum efficiency.
Optimizing assets In response to the challenges of CCAR, stress testing and BASEL, many institutions are choosing to restructure their businesses to meet compliance. Some banks may move away from certain business lines in response to the new capital requirements or risky concentrations. For example, a retail bank may shed an investment banking unit, or increase retail lending, while decreasing corporate lending. These moves are taken toward the goal of optimizing a bank’s Risk Weighted Assets (RWA) and use of capital, as these “RWA Optimization Strategies” may minimize regulatory impact. While some banks follow this
approach to optimizing their RWA, a case can also be made for a bottom-up approach, one that focuses on operational processes like credit rules, thereby driving value from existing portfolios. For example, improved customer screening to accept or reject applicants, applying finely-grained pricing limits based on credit data, or matching actual risk with expected or forecast risk.
Decision optimization Because each strategy shift or operational change has consequences to multiple interconnected processes, it becomes imperative to test prospective moves before putting them into place. Every decision can have far-reaching consequences. A decision-optimization framework is essential to enhancing credit strategies. This requires data analytics, optimization software, and a consistent decision engine that can be customized for specific variables, tested and modified so that it becomes self-learning over time. Notably, few processes operate in a vacuum; addressing credit rules, policies and processes impacts every department. The interaction between strategic decisions and operational processes has an exponential effect on both processes and profit. For example, credit decisions made in the front office must align with
the operational systems and processes of the back office. A decision optimization framework allows an organization to test which strategy best aligns with its goals and risk tolerances. How much can prices increase before losing customers? At what point does the increased price outweigh that lost business, and when does it still make sense? In one testing exercise, Experian applied portfolio data, variable offers, rules and decision options to an optimization engine. The intent of this testing was to evaluate how likely loan offers would be accepted or rejected, and the ultimate effect of long-term profit. The results indicate that an organization can increase its booked loan amount while increasing the value of its loan portfolio. Strategic decisions such as which business line to pursue or where a financial institution should locate, are made based on clear goals and expectations for risk and reward, not clouded by regulatory mandates. These choices do not come easily. And because they so heavily impact a bank’s profitability—and its reputation— any credit strategy decisions should be tested prior to implementation. Stress testing offers an opportunity to drive more value from existing operations, customers and profits. Capital is enhanced (and thereby further satisfying the demands of CCAR and BASEL) without sacrificing growth potential or competitiveness. So if a bank is already compelled to put its capital assets and resiliency to the test for Basel III, doesn’t it also make sense to conduct testing that might find operational deficiencies and profit opportunities? Shannon Lois is vice president of consulting for Experian’s Decision Analytics’ Global Consulting Practice. She may be reached by phone at (678) 731-1165 or email shannon.lois@experian.com.
NAMB Affiliates in Oregon and Missouri Partner With Agility Resources Group
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ing necessary to make homeownership dreams come true. We’re looking forward to our partnership with MAMP and OAMP, as they solidify their place as the pre-eminent voice for mortgage finance in their states.” Said MAMP President Janezcko: “We don’t want to be an association that’s satisfied with the status quo. Our members expect more from us. That’s
why we’re so pleased to team up with an entrepreneurial organization like Agility Resources Group. We’ve seen them in action, and we’re excited about the passion they bring and the ideas they want to try.” In addition to working with the OAMP and MAMP, Agility Resources Group LLC provides similar services to the Connecticut Mortgage Association
(CMA). It produces the annual national conference for NAMB, and for the Utah Association of Mortgage Professionals. In addition, it provides management services for the Massachusetts Society of Enrolled Agents, and produces the national Ultimate Mortgage Expo and the annual New England Women in Banking Conference.
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he Oregon Association of Mortgage Professionals (OAMP) and the Missouri Association of Mortgage Professionals (MAMP), state affiliates of NAMB—The Association of Mortgage Professionals, have partnered with Agility Resources Group LLC. The collaboration is designed to expand OAMP and MAMP’s offerings to members, increase educational and networking opportunities for local mortgage professionals, and create a go-to resource for consumers looking for help and guidance in financing their homes. “Our association is strong and thriving. But as the housing market rebounds, we see an opportunity to become an even more important resource for mortgage professionals and for consumers,” said OAMP President Matt Jolivette. “The Oregon Association of Mortgage Professionals stands for the highest levels of lending integrity. That means those in the mortgage industry turn to us for the best in education, and to lead the way in sharing best-practices. It also means that consumers should be able to turn to us to find leaders in mortgage lending that they can count on and trust.” “When it comes to financing their home, consumers need to know that the person they’re dealing with is held to the highest standards,” said MAMP President Erik Janezcko. “They know that’s true when dealing with members of the Missouri Association of Mortgage Professionals. But it also means that mortgage professionals look to us for education on changing rules and regulations. They need us to help them reach out to consumers. They want the benefit of networking with the industry’s best. And they want their voice heard when rules would work against consumers’ interests.” To help in that mission, both the Oregon and Missouri associations have enlisted the services of Agility Resources Group LLC. The Connecticut-based company has a strong background in working with mortgage groups to achieve aggressive goals. It will work with MAMP and OAMP providing association management, public outreach and conference and event development. “We’re honored to work with the mortgage leaders in Missouri and Oregon,” said Agility Resources Group CEO Vincent M. Valvo. “The mortgage industry is complex, both for those originating loans and for consumers who are seeking them. But a strong housing market, and a strong economy, can’t happen without the financ-
Growing Your Real Estate Agent Relationships, Grow Your Mortgage Business Part II
Show Your Appreciation By Jean LeBlanc Last month, we talked about the basics of building relationships with real estate agents. Obviously, the same principals hold true whether you’re working with other real estate professionals, attorneys, financial and investment planners or CPAs. Of course you know to always ask every new client, “How did you hear about us?” And when they mention a real estate agent, be sure to drop a short thank you note in the mail that same day. Also, call or e-mail the agent back after your meeting with his or her prospective homebuyers to update them with next steps. E-mail them every week to10 days during the process to keep them up to speed— even if there’s really nothing new to report. Once the loan receives conditional approval, send a note with a small gift, such as a Starbucks gift card or movie tickets (you can buy both in bulk at a cheaper rate from Costco or Sam’s Club). Your note could say, “Congratulations, your clients are
approved! You deserve to treat your- when and where the closing will take place, as soon as possible. Many times, self!” When the purchase contract is they are the last ones to hear this information; ironically, they accepted, call the listdeserve to be one of the ing agent and introduce yourself as the “At the end of first ones to know. If possible, attend the loan originator who is closing. It will score you every closed working with the extra points with the “Jones Family” to loan, send a client, both agents, the obtain financing on title company or attortheir listing at 123 Hill thank you ney, helping you garner Street. Let them know more referrals. Just where in the loan e-mail to the don’t be afraid to ask for process the Jones them. In fact, if you Family is, and when a buyer’s and have an iPad, bring it closing date may occur. seller’s and ask them to post a Once the appraisal is quick referral on your complete, call both agents, along Yelp, Google Places, agents and discuss the results. It’s good to with a page of Zillow, Homes.com or Trulia listing, and then interject a question in copy and paste their teshere as to how things your client timonial on your Web are going with the testimonials …” site and your social Joneses: Is there anymedia pages when you thing you as their LO get back to your office. need to work on or At the end of every closed loan, send improve? Plus, remind them that refera thank you e-mail to the buyer’s and rals are very important to you and you appreciate their trust. Call both the list- seller’s agents, along with a page of ing and seller’s agents to let them know your client testimonials, mentioning
that you can now add their client to your testimonials list. Follow that with a handwritten thank you and your business card. Provide them with a testimonial from you that they can use, and ask for one from them. Mention on your Facebook and LinkedIn pages the various real estate agents whom you are working with, such as “Just worked with agent Jill Jones to help her clients, the Smiths, close a loan on their dream home. Jill was very thorough and a great help to the Smiths, who were buying their first home.” And then e-mail them a link to your post, if they’ve not already “Friended” you on Facebook or “Connected” to you on LinkedIn. In Part III of this series, we will discuss several types of value-added services to offer your real estate contacts. Jean LeBlanc is director of marketing for Guaranteed Home Mortgage Company. For more marketing tips, download the eBook, 13 Ways to Juice Up Your Marketing in 2013, by going to joinghmc.com and clicking on the eBook offer midway down the page. She may be reached by phone at (914) 696-3400.
The High Cost of Profitable Quarters: Wells Fargo and Citi Announce Mortgage Division Layoffs
We ar Califor e Premie nia’s r Private Direct Mon Lender ey
BY ROBERT OTTONE
how to position yourself ly only amounts to about three hours a week of planning time. Chances are you spend more time than that watching television or surfing the Internet for fun. What if you took a few minutes from those activities and spent it reviewing the Occupational Outlook, reading articles about what the future may hold, reviewing your scenarios, sending out e-mails and connecting with people who may be able to help you, going to certain social and networking events, etc.? What could that do for your professional outlook? Remember, you are responsible for your own career and ability to earn a living, not society, not the government, not your employer, not your family, and not your friends. The safety nets of yesteryear
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are slowly disappearing. That means it’s up to each of us to ensure our future employability. The better you position yourself for the next advance, the better your ability to respond to a changing job market and reach your career goals. Dr. Marty Martin, known for his state-ofthe art content presented in an engaging, dynamic fashion, has been speaking and training nationally and internationally for many years. Dr. Martin is the director of the Health Sector Management MBA Concentration and an associate professor in the College of Commerce at DePaul University in Chicago, Ill. He may be reached by phone at (630) 715-6270 or email drmartymartin@gmail.com.
Apartments and units (5+ residential units) • Up to 70% on refinance and purchases • Stated but verified rental income • Loan terms: 1 year, 3 year, 5 year, 7 year and 10 year; fixed IO or fully amortized • Rates from 8.00% to 12.00%, depending on LTV, prepayment and term • Programs with no PP available • Loan costs from1.50% to 4.00% depending on LTV, term and prepayment penalty • We have 2nd position loans available for our commercial products up to 60% CLTV
Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.) • Up to 55% on refinances • Up to 60%-65% on purchases • Term 1 to 5 years • Loan costs from 2.00% to 4.00% depending on LTV, term and prepayment penalty Land loan (max LTV 35%, refinance, 50% purchase) call for details
877-700-3703 Office 866-318-4471 Direct Fax
www.pbfinancialgrp.com • e-mail scenarios to: info@pbfinancialgrp.com PB Financial Group NMLS Corp. NMLS #357614/PB Financial Group Corp DRE01522495
Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums. This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614
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Robert Ottone is assistant editor of National Mortgage Professional Magazine. He may be reached by e-mail at robertpo@nmpmediacorp.com.
Residential n/o/o and investment SFR, condo, PUD (1-4 units) properties • Stated and no doc available • Refinances up to 65% LTV, min loan amount 50K to 5 million • Purchases up to 70% min. loan amount 50K to 5 million • Loan term, 1 year, 3 year, 5 year, interest only or fully amortized available • Programs with no PP available • Rates from 8.50% to 12.00% fixed • Loan costs from 1.50% to 4.00% depending on LTV term and prepayment penalty • We have 2nd position loans available for n/o/o and investment properties up to 55%-60% CLTV
NationalMortgageProfessional.com
Typically, when a company reports solid financial gains, that means that they aren’t doing badly, right? High revenue surely means that workers’ jobs are safe, that business will continue, undaunted for at least another quarter. Unfortunately, in big business, this isn’t the case for companies like Wells Fargo and Citigroup, who both announced the layoff of hundreds of employees in their respective mortgage divisions. “While business decisions such as these are always difficult, they are a necessary part of our strategy of remaining a competitive and strong player in the mortgage industry,” wrote Mark Danahy, a Citi managing director and head of origination services in a company memo. National Mortgage News highlights the fact that JPMorgan Chase stated that layoffs could potentially continue into the third and fourth quarters of 2013. “We’re just now starting to see layoffs,” Keith May, a partner at Richey, May & Co., an accounting and consulting firm said. “It’s a cyclical industry with these types of cycles that are boom or bust. When refinance volume disappears it creates a short-term problem that everyone has to work through to get back to normal levels. Refinances made up 70 percent of total volume last year so production volumes are going to be off significantly from 2012, and companies will be forced to start laying off staff.” Citigroup posted an income of around $4 billion in revenue, an increase of over $1 billion from 2012. In fact, Citigroup’s numbers posted increases of around 42 percent when compared to their 2012 take. How an increase of 42 percent results in the firing of hundreds of employees is anyone’s guess, but all indications lead to mortgage refinances. Overall, refinances are expected to drop around 60 percent by next year, these layoffs are the first of many, should the refi market take a bigger hit by the beginning of Q3 2014. Wells Fargo alone is laying off around 350 employees, though they service one-third of every single mortgage on the market. After their powerful second quarter, Wells Fargo Chairman and CEO John Stumpf stated, “Compared with the prior quarter, we grew loans, deposits, and net interest income, and both our efficiency ratio and credit quality improved, Wells Fargo again demonstrated an ability to grow during a dynamic economic and interest rate environment, and we feel very well positioned to continue to perform for our shareholders over the long-term.” Both Citigroup and Wells Fargo point at mortgage rates remaining elevated as the primary reason for the layoffs. Both companies project mortgage revenue dropping 30 to 40 percent should rates remain around the current two-year high of 4.51 percent. “While rising interest rates will reduce housing demand, rates would have to increase considerably more before the reduction in demand for home purchases would be substantial across the country,” said Frank Nothaft, chief economist at Freddie Mac.
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Four Steps C to Building an
By Mark Madsen
Online Mortgage Lead Generating Machine
an you explain in 60 seconds or less how you will execute your new marketing strategy when rates finally go up the refinance boom ends? You may target renters, make cold calls to aged leads, sit open houses, work your referral partners or learn how to improve your website to start building your own equity online. And yes, you may even consider talking to real estate agents about helping their buyers get qualified. I built a business on developing real estate agent referral relationships that served me well for many years, so I definitely know the pain of sitting in an agent’s office trying to explain your net benefit to them. With more than 42,000 organic mortgage leads generated in the month of May alone from our online marketing efforts with localized consumer focused mortgage and real estate related Web sites, I do not have to buy real estate agents lunch to earn their business anymore. The transition from referral to consumer direct happened for me in late 2006 when all of my real estate agent partners disappeared as soon as the bubble popped in our Las Vegas housing market. I had one agent remaining, and that was because he and I had been building sites together since 2004. After a painful crash and burn that lasted for about six months, I realized that all of the weekend phone calls and late night prequalification letters for agents who counted on me to jump through hoops at a moment’s notice … and buy them lunch, didn’t equate to a true business model. However, I learned that simply driving traffic to a well-optimized and designed Web site could actually turn into transactions and a marketing system that could be measured and trusted.
The online mortgage Web marketing strategy While the Web has evolved from the old social networking days on MySpace when I started playing online in 2004, much has remained the same with regards to the strategies necessary for converting targeted traffic to leads, prospects and then closings. Different tools, definitely more shiny objects, search engine algorithm changes and a more confused consumer are the primary things that I have noticed changing since I have been paying attention to the web over the past 9-10 years. Before we talk about the four steps in our online marketing blueprint, let me mention the two most important things to pay attention to in everything you do online: Trust + Authority = Quality Leads That Convert at a Higher Ratio Into Closed Loans
Step one: Establish a target audience
Step two: Craft the message Now that you have identified your target audience, we need to create a marketing campaign for them. Before we
Step three: Design your niche sites and landing pages Now to the fun part—showcasing your authority as a “local” mortgage program expert by designing a niche Web site that is full of content, videos and consumer-friendly information. It’s important to remember that with regards to online mortgage marketing, borrowers are looking for a reason to “Disqualify” you, not “Hire” you to do their loan. Compared to a generic mortgage company site or profile page that typically converts less than two percent of Web visitors into a form or call, our niche sites convert organic traffic at continued on page 62
By Joy K. Gilpin I wanted to explore a question that my team frequently gets: Why do I need a Compliance Management System? While there are many strong reasons why you need one, there is probably one critical reason … because the Consumer Financial Protection Bureau (CFPB) says so. For all supervised entities, the expectation is to have a true Compliance Management System in place that is appropriate for the size and scale of your organization. This is emphasized in several documents, including the Supervision and Examination Manual, which gives you guidance on an examination, as well as the recently released 2013 CFPB Dodd-Frank Mortgage Rules Readiness Guide which includes a questionnaire to evaluate your current progress complying with all of the new mortgage rules. The CFPB has come out and stated pretty clearly that in their opinion, weaknesses in a Compliance Management System can really result in violations of law or regulations, each of which are associated with harm to our consumers. So then, what is a Compliance Management System? While there are many components that go into a true Compliance Management System, essentially it is a program designed to ensure that the policies and practices that are implemented in your business operations are in full compliance of federal financial consumer law. That’s the big picture that we are trying to get to. When you think about it, a Compliance Management System, when properly structured, establishes compliance responsibilities. It then communicates those responsibilities to employees and associates. Also, it gives you a vehicle to incorporate policy and procedure into business process. Finally, it creates a responsibility for meeting those requirements through internal policies and creates ownership or accountability by ensuring that those acts, policies, and practices are carried out and that legal requirements are met. This process is validated by regular and scheduled review, and, as needed, implementation of revisions for corrective action. It’s all part of a larger working solution in which each piece supports the overall objective of adherence with consumer financial law and regulation, as well as consumer transparency and advocacy. Ready to get started? The AllRegs Compliance Management System can help. Our comprehensive compliance solution can help you with the following features: l l l l l l
Audit all policies and ensure that you have the correct policies in place Policy authorship as needed Deliver training on policies Archive and track what policies were live at anytime Assess and test staff on the policies after they read them Conduct training for your Board of Directors and all employees as applicable l Provide one system of record for all reports For a personal consultation on your AllRegs Compliance Management System needs, call your dedicated account executive at (800) 848-4904 or visit www.allregs.com and click on “Compliance Management System” to request a demo. Or, get more information about AllRegs and the full suite of products and services by visiting www.allregs.com today. Joy K. Gilpin is professional services manager with AllRegs. She may be reached by phone at (800) 848-4904.
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The secret to winning on the Web is simple: “Niche and Grow Rich.” Buyers or borrowers are not asking Google for a “mortgage professional that believes in integrity, has good communication skills and strives to be the best of the best of the best at everything.” Instead, they are searching locally for a “(city) 203k Mortgage Lender” or a “(city) HARP Mortgage Lender” that specializes in a type of loan program that will help them achieve their goals. Buyers want a home and borrowers need a loan. Borrowers are both looking for an expert they can trust to help them with their unique scenario. The Web is a beautiful place that allows you to be whatever you choose, and market to whomever you want. So step outside of your Web site profile page and start thinking in terms of who you are marketing to and what words they may be using when searching for someone like you online.
Why Do I Need a Compliance Management System?
NationalMortgageProfessional.com
Developing trust and authority is your goal and benchmark for everything from your Web site design to your personal bio, your message, landing pages, testimonials, follow-up campaigns … and the list goes on. As we go through the next four steps, you’ll see specific examples and patterns of how we focus on building trust and authority online.
begin building sites and landing pages or worrying about where we’re going to drive traffic from to those sites and landing pages, we start with the message. In simple terms … we need content. Borrowers, buyers, refinance, purchase … depending on your niche program you are marketing... there are different needs that your target audience is trying to satisfy. If you write your content with the consumer in mind, you’ll connect with them easier by establishing that trust and authority I mentioned earlier. Consumers express their needs, fears, frustrations and challenges in several ways online. Two great resources to tap into the mindset of your target audience are Google Adwords for keyword research, and Forums like Yahoo Answers, Ask.com and even Zillow or Trulia to see what type of questions people are asking. As mortgage professionals we know that program eligibility is determined by LTV, DTI, Credit, Employment, Income, Assets. But from a consumer’s perspective, they want to know what their minimum downpayment is, how long they have to wait after a short sale to buy again, what first-time homebuyer programs are available and the list goes on. Start with the top 10-15 frequently asked questions, give a basic program overview and show them how you can match their unique lending scenario with a solution to get them what they really want. Having “Buyer Empathy” when you craft a message boils down to articulating this complex mortgage process in a manner that they can understand. If your message connects with them and gives them a sense of confidence, then they’ll trust that you will be able to hold their hand through the transaction without overwhelming them. Another benefit of having a lot of content about a particular niche is that you establish yourself as the authority on that topic. When comparing your niche site of 10-15 pages of FAQ’s to a competitor who copied a few paragraphs from the government’s FHA site, who do you think is going to win?
As an originator, there is a sense of empowerment and security that comes from being the one who holds the “referral card” in an agent/originator relationship.
Marketing: Late Summer 2013 Things you should know going into the fall of 2013
Rates are increasing, which means there is a shift occurring from a refinance market to a purchase market: Every time rates go up, the industry moves to a purchase market. Fact: They are rising again. And, it might be a while before the housing market increases enough for another refinance boom. The difficulty with marketing for purchase business The difficulty is that there is really no way to tell when someone is “interested” in purchasing anything. It’s a thought, and it cannot be read. Even Google’s algorithms cannot read people’s minds … yet. So the real question is: How do you find people who are genuinely interested in purchasing a home? The simple answer is … you can’t. But luckily, we are moving into Web 3.0 which brings the Internet and traditional marketing techniques together. What this does for you as a mortgage professional is provides people who are genuinely interested in purchasing a home. We know this because they’ve gone online and have asked to be contacted by a loan officer.
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Now, you have interested people who want to buy, but how do you know if they qualify? The solution to this key problem lies in cutting-edge software systems that marketing companies have. It’s within these systems that they can combine Internet leads with traditional data files, and thus, traditional marketing strategies. This process produces a lead that’s interested in purchasing a home, and is qualified to buy (we know this from a combination of Internet data, traditional data files and consumer surveys). How do you put all of this together to produce quality, interested prospects for yourself? That’s completely up to you. One of the best parts about this new style of marketing is the versatility that it offers. Depending on how you best close new business. There are several places to get quality Internet leads for purchase prospects in all 50 states. You can partner with a call center to call on past and current leads to produce live transfers. You can buy bulk aged Internet leads also called (Opt-in Data) and send them direct mail. Or, you can call a marketing firm that combines all of these verticals and is already producing leads throughout the nation. In all of the above referenced scenarios, you get a quality lead that closes at higher rates … producing closed loans in your area at profitable acquisition costs. Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit Tagquest.com.
VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser. http://www.youtube.com/watch?v=coBEsmEVOgo
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four steps
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eight to 12 percent. This also depends on the specific search phrase or link they followed to hit a certain page. Keeping trust and authority in mind, here are the primary things to pay attention to when designing your site: l Niche specific: Be the program expert l Easy to navigate: Simple menu and sidebar navigation with less options l Availability: Large text phone number (not image) in top right l Geo-targeted: Target one city or state per site and optimize accordingly l A clear call-to-action: Above the fold with value benefit highlighted l Content rich: Frequently Asked Questions (FAQs) to establish you are the trusted expert l Communication: Add video and infographics to help educate l Trust icons: Better Business Bureau (BBB) or any affiliations that show consumer protection l Clarity: Cut the noise and take out all clutter on your site The bullets from above apply to landing pages as well, but let’s separate the difference between a landing page and a Web site in our online lead generation blueprint: l A Web site targets a niche and should convert at around eight to 12 percent. l A landing page targets a message and should convert at around 28 to 32 percent. l Your landing page is a component of your Web site, but can also stand on its own, depending on your traffic strategy that we’ll get into momentarily. Basically, a landing page is your Call-to-Action (Money Page) that should generate a form or phone call. The message should be highly targeted, such as purchase versus refinance. l You should clarify the benefit or value, which should remain consistent with the message they followed to get to your page, as well as throughout the entire lead conversion and follow-up process. l Include trust icons, testimonials and even additional content or FAQs for the purpose of building trust and authority. l Definitely remove all exit links, which would include the navigation bar, footer links (except for required privacy or licensing links). l Make it simple … trust me, simple sells. A great resource for you to use when building or learning about landing pages is www.unbounce.com. They even have free or premium templates that you can use to get something up
and running quickly if you want to skip the niche site process and just send paid traffic to one landing page.
Step four: Traffic Consumers are looking for a local niche expert, which is why it is beneficial to launch a local version of your niche website in every city you do business in. From a search engine marketing and “getting found on the Web” standpoint, a local content rich site that is optimized for the right keywords at the city level will have a greater possibility of showing up in the search engines for people in that area. Spreading your content across a few top ranking real estate blogs, dropping some press releases and a little activity on a niche specific Google+ page will help your target audience continue to find you as they are on their journey for a niche expert that they can trust. Targeted traffic to a landing page that converts at 28 to 32 percent will produce you a certain amount of leads that are measured in quality based on how much trust and authority you’ve established up to this point. This means that 28 percent of your traffic should fill out a form or call. If you send 100 people to your landing page, you should get 28 forms or calls. Traffic is not free, unless you do not value your time. Paying for traffic can include things such as: l l l l l
Pay-per-Click (PPC) E-mail Press releases Buying a database or aged leads Banner advertising
“X” amount of traffic converts to a lead. There is a Cost-per-Lead, and then you have a conversion ratio on that lead. Basically, you can spend anywhere from $100 to $1,200 per closed loan after everything is said and done. Free traffic examples include: l SEO: Optimizing your niche sites so that they show up on page one of the search engines. l Referrals from other agents or sites. l Guest blogging on other industry sites, news publications or agent’s Web sites l Social media links such as Facebook or Google+ l Your own database
Bonus tip: Go where the buyers are This is a free tip for you today. As I mentioned earlier, I started out in the online marketing game by helping an agent build a real estate site. The best leads I have ever received as a lender came from real estate sites because that’s where the buyers are. Buyers continued on page 70
Study Concludes Underwater Homeownership Not a Factor in Relocation
NMLS
BY ROBERT OTTONE
O
Robert Ottone is assistant editor of National Mortgage Professional Magazine. He may be reached by e-mail at robertpo@nmpmediacorp.com.
W Why hy NAP NAPMW? MW? Three Three Simple Reasons Education E duc d cation providing education Organized education to to professionproffe essionOr ganized for for the purpose purpose of providing tgage industry, industry, NAPMW N NAPMW offers offers educaeducamortgage als in all phases of the mor orkshops held ar ound the manyy vvenues workshops around tion via man enues – seminars and w tional EEducation ducation C onference held country, on-line,, and at National Conference country, on-line at its Na May. ay. each M NAPMW access to to timely educaeducaNAPMW membership gives gives you you exclusive exclusive access tion regarding affecting career our car eer such as a regarding the regulations regulations aff ecting yyour FREE TO industry updates updates AND TO MEMBERS monthly monthly webinar webinar on industry our 8 hour NMLS continuing education offering continuing educa tion class ss off ffe ering (NMLS Provider Provider # 1400309) 63
LLeadership eadership If If you you believe believe in helping to to elevate elevate the educational educational standards standards of this industry, industry, or assisting in developing developing the most competent competent industry work industry w ork force, force, then you you believe believe in NAPMW. NAPMW. NAPMW since women NAPMW is not a women’s women’s organization. organization. But sinc ew omen make up the major majority profesity of professionals professionals in the mortgage/banking mortgage/banking pr ofession, our purpose purpose is to to help them advance advance in business, business, personal, personal, and leadership development. development.
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vice president of national production of the retail division. Radian Guaranty Inc. has announced that it is expanding its team, as Dan Bayer, Rhys Nevarez and David Davis will join the company’s sales team, while Robert Mullins has been appointed vice president of underwriting. LenderLive Network Inc. has named Deborah Holm vice president and client relationship manager. Indecomm Global Services has announced that Michael Larkin has been named director of risk management, and that Randall Haupert has been appointed to the position of director of eRecording services. Valuation Partners has named Paul Friedrichs as vice president,
national account executive for the western U.S. region.
Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
Na tional E ducation National Education Na tional T raining National Training Na tional N etworking National Networking
To T o Join NAPMW NAPMW W visit: www.napmw.org w ww.napmw.o org or ccall: all: 1-800-827-3034 1 800 8 1-800-8 827 3034 827-3034 Have Ha ve Q Questions? uestion ns? Please ffeel eel free free to to e e-mail -m mail us a at: t: napmw1@aol.com napm w1@aol.c . om
Coas Coast oast to to C Coast oas A oast Associations ssociations Discounted Services Discoun un nted S errvic v es Industry Industry Updates U Updatess
n National Mortgage Professional Magazine n AUGUST 2013
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n the heels of the Federal Housing Finance Agency (FHFA) launching a new program to help underwater borrowers stay in their homes, Yuliya Demyanyk, a senior research economist with the Federal Reserve Bank of Cleveland, has published the findings of a recent study, “Keeping the House or Moving for a Job,” that reverses the initial findings that mobility was tied to underwater homeownership. A previous study published in 2010 indicated that homeowners weren’t uprooting and heading elsewhere, a sign of the difficult economy, but also a strong indicator of a poor housing market. At the time, University of Toronto professor Richard Florida told USA Today: “It’s important for people to move to where the new opportunities are, because that is the cornerstone of our idea-driven economy.” The two-fold study, spearheaded by Demyanyk, and co-authored by Dmytro Hryshko, María José Luengo-Prado, and Bent Sørensen, found that underwater homeownership is, in fact, not a barrier for relocation. “If a hypothetical unemployed, underwater homeowner gets a job offer, he is going to take it,” Demyanyk said. The Bureau of Labor Statistics (BLS) reported in 2012 that a projected growth of 0.7 percent annually in the labor market would occur, which is somewhat encouraging. While this is hardly the first paper to declare that underwater homeownership is a leading contributor to lack of mobility, it utilized credit report data and developed a theoretical model to better-provide information about borrowers regarding negative home equity. From the report: “The results show that if an unemployed homeowner with negative equity is able to find a job in another core-based statistical areas (CBSAs), he or she is highly likely to accept this job because the net benefit of moving (getting a higher income minus paying the cost of selling the house) outweighs the benefit of staying put, remaining unemployed, and keeping an underwater mortgage.” “We conclude that negative equity does not limit job-related mobility and, hence, is not a major reason for elevated aggregate unemployment in the United States,” reads the report. With an increase in the job market, combined with the notion of underwater homes not limiting the mobility of job-seekers, economic recovery in the housing market could be attained quicker.
Jumbo THE STATE OF THE
Mortgage Market By Phil Hall hile the housing market as a whole is still on somewhat shaky ground, at least one sector is enjoying a new rush of recovery: Jumbo mortgages. In April, the National Association of Realtors (NAR) reported that sales of homes priced between $750,000 and $1 million enjoyed a 41 percent yearover-year increase. Things are also sunnier on the securitization side: The trade journal Inside Mortgage Finance reported that lenders sold $4 billion in jumbo loans during the first quarter of this year–more than $3.5 billion total sold during all of 2012. David Abrahamson, senior vice president at Atlanta-based Equity Loans, believes that jumbo mortgages offer the best of all worlds. “It is a better performing product,” he explained. “With jumbos, you are not looking at a maximum financing situation. You are dealing with a very stable borrower who can make a large down payment and who carries a high credit score. This is a very safe product, and pretty much everyone wants to be a player now.” “Jumbos have a zero default rate,” said David Zugheri, co-founder of Houston-based Envoy Mortgage, who pointed to the success of Redwood Trust in its jumbo-packed residential mortgage-backed securities. “Ask Redwood about delinquencies. Out of umpteen thousand loans, they had one person who was 30 days late.” Admittedly, the jumbo mortgage market is still something of a niche–the NAR data found that only four percent of residential properties valued at $500,000 or higher were purchased in 2012 by first-time homebuyers. Still, the jumbo market is a lucrative niche, and one that seems to be more lucrative with each passing month. In July, Bankrate.com found that the national rate on jumbo mortgages was only 30 basis points above the 30-year national average for all mortgages–a 170 basis points drop from December 2008. “The volatility of the market impacts
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all loans, but it impacts jumbo loans less,” said Mat Ishbia, president and CEO of Troy, Mich.-based United Shore Financial Services. “The interest rate moving a half-point or one point will not stop people from buying.” The new focus being put on jumbo mortgages is no surprise to Ishbia–his company’s lending subsidiary, United Wholesale Mortgage, was ready for this back in December 2011, when it debuted “The Big & Easy” jumbo mortgage, a product that could accommodate loan amounts up to $2.5 million and loan-tovalue ratios up to 80 percent. “It is a great product for our client base,” Ishbia said. “This has been a Fannie-Freddie-Ginnie market for the past couple of years. But now that the private market is coming back, we will see a lot more of this trend.” Another lender, John Walsh, president of Milford, Conn.-based Total Mortgage Services, agrees with Ishbia’s diagnosis. “We had a recent uptick in wholesale jumbo products,” Walsh said. “On the wholesale side, brokers have more shortages of available products.” Walsh believes that the industry will begin to see more lenders offering jumbo mortgages. “There are lenders that are looking to expand their product offering,” he said. “We will be seeing more competitive priced jumbo mortgages.” Bob Rubin, managing director of The Business Loan Connection LLC, based in Southfield, Mich., points to a surprise player in the growth of the jumbo mortgage market. “The hidden guy is the credit union industry,” Rubin said. “Some credit unions are offering interest takes on this mortgage–they are doing 90 percenters and 85 percenters, offering an 80-10-10. And some credit unions here in Michigan will do about 100 percent financing if people have great cash resources.” Rubin believes that credit unions are the perfect institutions for offering jumbo mortgages.
“Credit unions are non-profits, and they exist for the benefit of their members,” he explained. “Their pricing and customer service is usually a lot better than an ordinary thrift. And with a jumbo mortgage, they have more of an individualized loan scenario versus the rigid requirements that impact everyone.”
Clouds on the horizon? However, the jumbo mortgage market is not without its share of current and potential problems. Scott Stucky, chief operating officer at Idaho Falls, Idaho-based DocuTech, warns that the still-evolving qualified mortgage (QM) issue can cloud
the product’s future viability. “QM is the 800-pound gorilla in the room,” Stucky said. “Jumbos can be outside of the requirements of QM, and that puts an additional layer of liability and financial responsibility on the originator, who needs to retain five percent ownership interest in the loan. Many small institu-
sales. But there will also be the price point differential between depositories and non-depositories. On the aggregator side, Redwood and Penny Mac are coming out with product, but I don’t know how many guys have the wherewithal to compete with the depositories, unless they set up as a real estate investment trust.” Still, some industry experts that believe these problems can be overcome, in one way or another. “The big question is how this whole QM thing plays out,” said Abrahamson. “But there are non-QM players out there willing to take that risk. And this product is great for lenders that want to maintain their well-heeled clients.” “The biggest problem is that a lot of banks do not understand the beauty of this product and what they could create with it,” said Rubin. “It gives the customer the availability to rely on their good credit and cash resources.”
tions will have problems retaining that, and it also disqualifies some big mortgage banks. The big question will be how get around that and make it work. Otherwise, it creates a top heavy market where only larger banks operate.” “The aggregator space is decimated,” said Michael Kime, chief operating officer at W.J. Bradley Mortgage Capital in Centennial, Colo. “Those left are mainly big banks.” Kime adds that any expansion of jumbo origination will create a lopsided environment in regard to potential securitization channels. “The market is a bit disjointed today,” he said. “We do not have the right equilibrium.” Howard Hoyt, president of Fort Wayne, Ind.-based USA Wholesale Lending, questions whether non-depositories will be able to vigorously compete in this market. “Liquidity is an issue for the true nonconforming product,” he said. “There is more and more demand for the product, and it will be interesting to watch the demand escalate based on increased
USA Cares Mortgage Heroes: Jeff Wu By Joann Muncey
month.”
USA Cares is a 501(c) 3, nonprofit organization that provides financial and advocacy support to post 9/11 veterans and their families. USA Cares has four core programs: Combat Injured, Housing Assistance, Emergency Assistance, and Jobs Assistance. Nationally, USA Cares has responded to over 45,000 requests for assistance with approximately $10 million in direct-support grants. Additionally, USA Cares offers a Certified Military Housing Specialist Course to all housing professionals which offers 10 CEU’s from the Association of Financial Counseling, Planning and Education. For more information, log on to www.usacares.org.
“… the jumbo market is a lucrative niche, and one that seems
SPONSORED EDITORIAL
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with each passing
Joann Muncey is director of housing assistance at USA Cares, where she has worked since 2008. She may be reached by e-mail at joann@usacares.org.
Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
NationalMortgageProfessional.com
to be more lucrative
When Jeff Wu began working in real estate more than 10 years ago, he had one guiding principle in mind, and that was to have a business centered on life balance. The philosophy was not only a personal one, but one that translates in his work as a real estate agent at Agent Knows Homes in Tyson’s Corner, Va. “We work as a team to provide for the needs of our real estate clients,” said Jeff. “My goal is to minimize their stress and make it as easy as possible for my military buyers when they are purchasing their home. I have a lot of empathy for our military families because they do move so often, I really try hard to anticipate their needs. We even have a team of Jeff Wu vendors that come together as a one stop shop for them!” Jeff’s experience is in a variety of areas such as buying, selling, investing and managing residential properties. Jeff has a real passion for life. He also finds real joy in helping people. With his varied experience and creativity, he was able to help a military family transition from Japan to the United States with ease and grace. “When I previewed homes for them, I took along my camera and did a walking tour of the properties. I sent videos, negotiated the offer of one of the homes, and secured the contractors and home inspection. They flew in to settle having only seen the property twice. They are happy with where they live and have become good friends of mine,” said Jeff. Jeff is dedicated to always focusing on education and communication. These are two areas that he knows are very important in any industry, and the real estate industry is no different. Besides educating his clients, Jeff knows it is important for him to strive to constantly improve his education. That’s why Jeff earned his CRS, CIAS, SRES, E-Pro Designation, GRI Designation, CDPE, NAR’s Green Designation and his Virginia Broker’s License. Additionally, he completed the Certified Military Housing Specialist (CMHS) course. “The course gave me a new perspective in working with military families. They are the foundation of our country,” said Jeff. “They protect our values and our way of life. I love serving them and doing whatever I can to make their transition as smooth as possible. Jeff is the team leader at Agent Knows Homes with @home real estate, located at 8000 Westpark Drive, Suite 140 in Tysons Corner, VA 22102. He may be reached by phone at (703) 791-1169 (office line), (571) 248-1110 (direct line), or e-mail jeff@agentknowshomes.com.
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Titan List & Mailing Services, Inc. 1020 NW 6th St Suite D, Deerfield Beach, FL. 33442 (800) 544-8060 www.TitanLists.com Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services. The firm specializes in data lists (mail/phone), printing, direct mail, graphic and website design as well as internet and SEO marketing. Starting in 1998, the company has, since then employed highly skilled individuals who have considerable experience regarding marketing trends. The company manages the complete in-house campaign themselves including Design, Data Lists, Printing, Postage, and Mailing.
EMPLOYMENT SERVICES
Credit Plus, Inc. 31550 Winterplace Parkway, Salisbury, MD 21804 800-258-3488 www.creditplus.com
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Credit Plus, Inc., a leader in credit information services, is dedicated to providing mortgage professionals with an unsurpassed level of service and technology. We provide lenders and brokers the best tools and support to close more loans faster and cheaper. Offering the most innovative, reliable and robust credit reporting platforms on the market, Credit Plus goes BEYOND BUNDLEDTM by combining key products, such as credit reports, scoring tools, Undisclosed Debt Monitoring powered by Equifax, flood reports, title services, AVMs, Warranted AVMs, tax return verifications and more, while providing stellar customer service.
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WHOLESALE LENDERS
HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology. Currently expanding and hiring experienced Wholesale Account Executives nationwide.
United Wholesale Mortgage 800-981-8898 www.uwm.com UWM has a full set of mortgage products to meet all of your lending needs with Conventional, FHA, USDA (Rural Development), VA, Jumbo, HARP 2.0 and DU Refi Plus. With UWM’s ELITE program, you will receive the most aggressive conventional rates and pricing in the industry for your elite borrowers! Discover Lending Made Easy with United Wholesale Mortgage!
WHOLESALE/RESIDENTIAL
CBC National Bank 3010 Royal Boulevard South, Ste. 230 Alpharetta, GA 30022 888-486-4304 CBC National Bank is one of the nation’s fastest growing wholesale lenders offering Conventional, FHA, VA, and USDA. The most important aspect of being a leader in today’s market is the ability to build and maintain a meaningful relationship with each customer. We understand that these meaningful relationships coupled with competitive pricing and efficient technology are the pillars of today’s lending environment. We are hiring Loan officers in the Southeast. GA, FL, AL, TN, NC,SC.
Please send your resume to marketing@homebridge.com.
Contact Gabe Santiago our Corporate Recruiter at gsantiago@cbcnationalbank.com for further details.
Building bridges to success, one loan at a time.
Big Enough to MATTER…Small Enough to CARE
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HomeBridge 5 Park Plaza, 10th Floor Irvine, CA 92614 www.homebridgewholesale.com
Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com
NationalMortgageProfessional.com
Rushmore Home Loans is a wholesale lender dedicated to understanding and answering the needs of our brokers. We provide competitive mortgage loan products with a focus on quality, efficiency and flexibility. Our goal is to deliver an experienced, customer-focused team with access to the most comprehensive technology platform to deliver the highest possible service to our brokers.
REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time.
BONDED WITH NAMB
Am I Paying Too Much for My License Bonds? By Mason Grashot, CPA Not if you’re paying premiums of $5 per thousand (or 0.50 percent) of the bond amount! The premium you pay is certainly dependent on various underwriting factors:
1. Do you have decent credit? Not great. Just decent. You probably do or you wouldn’t be licensed.
2. Do you have any skeletons in your past? Bankruptcies, felonies, prior bond claims, etc. You probably don’t or you wouldn’t be licensed. 3. How much bonding do you need? There is a level of bonding that is based primarily on underwriting the owner(s) personally. Above that level, business and personal financial statements are considered as the primary focus of the underwriting. 4. What bond carrier is bonding you? Some are simply better than others at this particular line of business. Some carriers view mortgage bonds as more risky than other types of bonds. Their pricing and underwriting process is very relative to that perception of risk. 5. What bond agent/broker do you use? That broker is your path to the surety market. Their knowledge of and access to bond carriers has a direct relationship with what the price and process is for your bond.
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By far, the variable that obviously has the biggest impact on your bond pricing is number five—your broker. That’s where your access to the marketplace starts—or stops. The mortgage bond market has changed significantly over the past few years. While the industry bubble was being inflated, carriers started becoming increasingly nervous about what would happen when it eventually popped. Some proactively began to increase prices, tighten underwriting, raise qualifications and limit exposures. Once the bubble burst, others reactively did the same and some even stopped writing mortgage bonds entirely. While average surety pricing used to be at a widely-available rate of $7.50 per thousand a few years ago, it quickly moved up to $10 per thousand. Several carriers positioned themselves at even higher rates in order to absorb the flurry of claims and uncertainty brought on by the industry’s implosion and increased regulation. Those carriers that had been writing mortgage bonds for years and had large exposures were suddenly faced with game-changing events and conditions that forced them to endure financial losses and realign their perspective of risk. Other carriers (and brokers), seeing a competitive window of opportunity due to the change in the marketplace, introduced rates as low as $6 per thousand and even $5 per thousand. Stop throwing away extra money year after year after year. If you have had your bond for a while and your price hasn’t changed, it’s probably worth asking your bond broker why. If you don’t like the answer or the price, it’s probably worth a little time to shop for a new broker—and probably one who specializes in surety. Search online. Talk to your colleagues. Ask your trade association. Sometimes the first answer isn’t always the best answer. Mason Grashot, CPA is president of The Bond Exchange, a national insurance agency focused on surety bonds with a unique specialty practice centered on the mortgage profession. As the endorsed strategic partner of NAMB—The Association of Mortgage Professionals, The Bond Exchange services thousands of surety bonds through programs designed specifically for the mortgage industry. For more information, call (501) 224-8895 or visit www.thebondexchange.com.
SPONSORED EDITORIAL
new to market
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extract the data needed from scanned loan files and process defects. Capital market entities can use the FNC Clean Room to acquire mortgages, sell mortgages, and securely share mortgage data and documents with their approved due diligence vendors.
tion, whether that be vacant foreclosures that have fallen into disrepair or non-distressed homes with deferred maintenance keeping the home off the market,” said Jamie Moyle, CEO of RealtyTrac. “This partnership with REbuildUSA allows RealtyTrac to conveniently connect the dots between purchase and cost-effective property rehab for the millions of users searching our website for the best real estate deals each month, as well as for homeowners who want to improve their home and their home’s market value and finance that improvement with today’s low interest rates.” ”All across America there are families and individuals bringing their dream of home ownership to life leveraging the power of the FHA 203k Renovation Loan Program,” said Dennis Walsh, co-founder of REbuildUSA. “At the same time, there are many more who have no idea this opportunity exists. That’s why we describe it as ‘Real Estate’s Best Kept Secret.’
RealtyTrac Launches Online Renovation Loan Center
RealtyTrac has announced the launch of a new Renovation Loan Center powered by proven renovation loan specialist REbuildUSA to help buyers and homeowners more conveniently take advantage of one of real estate’s best kept secrets: the Federal Housing Administration’s 203k renovation loan program. Whether the consumer is purchasing a new home, or refinancing an existing one, both stand to benefit from the power of the longstanding but underutilized FHA 203k loan. Established in 1978 to improve housing conditions and ownership opportunities, the 203k program provides hope for homebuyers who want to purchase a home and make improvements at the same time—all wrapped up in one loan. The program also allows homeowners to refinance their existing home and make improvements with a new single loan— even if the homeowners have as little as 5 percent equity in the home. Both homebuyers and homeowners can secure a 203k loan with as little as 3.5 percent down and for a loan amount that is up to 110 percent of the after-repair value of the home. “Much of the nation’s housing inventory is in need of at least some revitaliza-
four steps
Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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spend five to six months obsessing over homes on a real estate agent’s site, compared to the 90 seconds, if you’re lucky, that they’ll spend on your mortgage site. This gives you an opportunity to be in front of your target audience earning their trust and establishing your authority for a much longer period of time. If you take some of that content you created earlier and post it to a top ranking real estate agent’s blog in your area, you’ll generate leads for both of you. Agents with top ranking real estate sites are always looking for good original mortgage content, and they can never seem to find an originator who gets the concept of being a true “marketing partner” online as opposed to just another lender waiting for a free handout. They will allow you to include a link in your bio after the article, which
should go back to your landing page or niche site. And definitely make sure your mini two sentence author bio matches the message in your article.
To quickly recap … Pick a target audience, create your message, publish your content across several geo-targeted niche Web sites and drive traffic to high converting landing pages. Mark Madsen manages a portfolio of more than 13,800 consumer-focused mortgage and real estate niche Web sites which has produced more than 42,100 organic mortgage leads from top search engine marketing strategies. He runs one of the largest mortgage professional networks on Google+, as well as a few very active private mortgage and real estate blogging communities on Facebook. He may be reached by phone at (702) 4965626 or e-mail mark@markmadsen.me.
calendar of events N A T I O N A L
SEPTEMBER 2013
Tuesday-Wednesday, September 10-11
M O R T G A G E
Saturday-Monday, September 21-23
Tuesday-Thursday, September 10-12
Sunday-Tuesday, September 29-October 1
Mortgage Bankers Association’s (MBA) Risk Management and Quality Assurance Forum JW Marriott Desert Ridge Resort 5350 East Marriott Drive Phoenix, Ariz. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
Mortgage Bankers Association Regulatory Compliance Conference Renaissance Washington DC Downtown Hotel 999 9th Street NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. OCTOBER 2013 2013 New England Women in Banking Conference The Hyatt Regency Newport 1 Goat Island Newport, R.I. For more information, call (860) 922-3441 or visit www.nebankwomen.com.
Thursday, September 19 Hawaii Association of Mortgage Brokers (HAMB) 22nd Annual State Conference “HAMB 2.0: Ready Yourself for the New Wave” Japanese Cultural Center of Hawaii 2454 Beretania Street Hon, Hawaii For more information, call (808) 783-4442 or visit www.hamb.org.
Friday, October 11
Tuesday-Thursday, October 15-17 Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort Atlantic City, N.J. For more information, call (732) 596-1619, or visit www.mbanj.com.
Thursday, November 7
IAAMB—Mortgage Professionals of Iowa 2013 Convention Stoney Creek Inn 5291 Stoney Creek Court Johnston, Iowa For more information, call (800) 462-0077, e-mail director@iaamb.net or visit www.iaamb.net.
Utah Association of Mortgage Professionals 2013 Annual Expo & Conference South Towne Exposition Center 9575 South State Street Sand, Utah For more information, call (801) 597-2122 or visit www.uamp.net.
Saturday-Monday, October 19-21
Sunday-Wednesday, February 2-5
NAMB National 2013 Harrah’s Las Vegas 3475 Las Vegas Boulevard South Las Vegas, Nev. For more information, call (972) 758-1151 or visit www.namb.org.
CREF/Multifamily Conference & Expo The Peabody Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
Sunday-Wednesday, October 27-30
Tuesday-Friday, February 18-21
Mortgage Bankers Association (MBA) 100th Annual Convention & Expo Walter E. Washington Convention Center 801 Mt. Vernon Place Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
FEBRUARY 2014
Mortgage Bankers Association (MBA) 2014 National Mortgage Servicing Conference & Expo The Peabody Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
NOVEMBER 2013
Sunday-Tuesday, November 6-8 National Consumer Reporting Association (NCRA) 2013 Annual Conference Embassy Suites Hotel & Spa 1000 Woodward Place NE Albuquerque, N.M. For more information, call (630) 539-1525 or visit www.ncrainc.org.
To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com.
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Friday, September 13 Washington Association of Mortgage Professionals 2013 NW Housing Summit & Lenders Expo Meydenbauer Center 11100 NE 6th Street Bellevue, Wash. For more information, e-mail admin@mywamp.org or visit www.mywamp.org.
Thursday, October 17
NationalMortgageProfessional.com
Alabama Mortgage Brokers Association (AMBA) 2013 Annual Convention The Tutwiler Hotel 2021 Park Place Birmingham, Ala. For more information, call (205) 663-9696 or visit www.almba.org.
Mortgage Bankers of the Carolinas 58th Annual Convention “The Art of Lending” Hilton Head Marriott Resort and Spa 1 Hotel Circle Hilton Head Island, N.C. For more information, call (704) 557-0204 or visit www.mbac.org.
P R O F E S S I O N A L
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LOOKING FOR A COMMITTED RELATIONSHIP? While some of our competitors were trying to get rid of you, AFR was figuring out ways to close more of your loans. Conventional - Conventional Fixed - Freddie Mac Open Access - Fannie Mae DU Refi Plus
AFR DOES NOT CHARGE ANY LENDER FEES!
(Unlimited LTV/CLTV on HARP loans)
- Manufactured Housing VA - Purchases and Refinances - VA IRRRL Refinances - Manufactured Housing FHA - FHA Streamline - FHA Premium Plus - FHA $100 Down - FHA One Time Close - FHA 203(k) and 203(k) Streamline - Manufactured Housing - FHA 203h for Disaster Victims
To sign up as a TPO or Table Funded Broker, Correspondent or Correspondent with Delegated Underwriting Authority, call us at 888-913-3912 or online at AFRWholesale.com
USDA - Guaranteed Rural Housing Loan - Manufactured Housing
Free Processing through AFR’s Wholesale Direct. Call 888-913-3912 for more details. American Financial Resources, Inc., 9 Sylvan Way, Parsippany, New Jersey 07054 • 1-888-664-2101 • NMLS # 2826 • Intended for Mortgage Professionals only. Celebrating 15 years of exceptional service to our clients. Please visit www.afrwholesale.com for a full range of products, programs, forms and additional information.