National Mortgage Professional Magazine February 2017 by ambizmedia

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NationalMortgageProfessional.com

M ConneectTM is a "sset it and forget it" feature MLS

table of

N A T I O N A L

Making Friends With Crocodiles By Bubba Mills

F E B R U A R Y

36 A Smorgasbord of RESPA Section 8 Violations By Jonathan Foxx

2 0 1 7

M O R T G

V O L

A SPECIAL FOCUS ON “THE GROWTH OF DIGITAL ORIGINATIONS AND CLOSINGS”

A o &

Is Your Lender Following the Progress Bar? By Rey Maninang.... 58 Building a Platform for Digital Originations By Tom Knapp............61

It’s 2017, Not 1997: Improving the Consumer Experience in Real Estate Transactions By Marvin Stone.................................. 63

2017: A Mortgage Odyssey By Sue Woodard.................................. 66 Hidden Opportunities for Digitizing the Mortgage Process By Paul Doman.................................................................................. 68

R Y

Borrowers Represent the Final Link in Digital Loans By Chris Backe.................................................................................. 70

46 Lykken on Leadership: Seven Ways to Cope With Uncertainty in the Mortgage Industry By David Lykken

Going Digital Is Easier Than You Think By Jeff Bode.................... 72

Using Technology to Attract Millennials Into the Mortgage Workforce By Dustin Sheppard........................................................ 74

‘Closing’ in on Digital Mortgages By Brenda B. Clem, CMB.......... 76

In Defense of Paper By Eric Weinstein............................................ 78

M M

FEATURES Searching for Loan Growth in 2017? There’s Only One Place Left to Look … By Tom Hutchens...................................................... 8

The Elite Performer: Unforgettable By Andy W. Harris, CRMS........ 8 Recruiting, Training and Mentoring Corner: Wanted … Mortgage Mentors By Dave Hershman............................................ 10

3 Points With Mat Ishbia.................................................................. 16

86 CFPB Makes $23 Million Statement About Which Credit Scores Are Sold to Consumers and How They Are Sold By Terry W. Clemans

94 Regulations Don’t Take Time Off By Melissa Kozicki

N N H

NAMB in “The Big Peach!” By Valerie Saunders, CRMS.................. 18 NAMB Perspective: February 2017.................................................. 20

V I S I T Company

Web Site

O U R

A D Page

Agility Resources Group...................................... www.agilityresourcesgroup.com ......................................51 Angel Oak Mortgage Solutions............................ www.angeloakms.com .............................. 73 & Back Cover Brokers Compliance Group.................................. www.brokerscompliancegroup.com ................................ 104 Caliber Home Loans.............................................. www.caliberwholesale.com .............................................. 49 CallFurst.com...................................................... www.callfurst.com ............................................................64 Carrington Mortgage Services, LLC...................... www.carringtonwholesale.com ................................ 7 & 60 Champions School of Real Estate........................ www.championsschool.com/loan .................................... 63 Citadel Servicing Corporation.............................. www.citadelservicing.com .............................................. 83 Document Systems, Inc./DocMagic...................... www.docmagic.com ...................................................... 11 First Guaranty Mortgage Corp. ............................ www.fgmccorrespondent.com .......... Inside Front Cover & 62 Flagstar Bank.................................................... www.flagstar.com/ae .................................................... 17 Freddie Mac...................................................... www.freddiemac.com/loanofficers ....................................5 Freedom Mortgage Corporation.......................... www.freedomwholesale.com .......................................... 29 Geneva Financial, LLC........................................ www.genevafl.com ........................................................ 77 Goldwater Bank N.A........................................... www.thinkgoldwaterbank.com ........................................ 9 HomeBridge Wholesale...................................... www.homebridgewholesale.com .................................... 33 Integrity Mortgage Group.................................... www.integritymtgs.com ..................................................69 Lykken On Lending............................................ www.lykkenonlending.com ............................................ 74 MBA-NJ/NJAMB.................................................. www.mbanj.com .......................................................... 97

T T

of contents

R T G A G E

O L U M E

P R O F E S S I O N A L

N U M B E R

A Message From E. Robert Levy, Chairman, Regional Conference of the Mortgage Bankers Associations and Executive Director & Counsel of the MBANJ, NJAMB and PAMB................................ 30

Vendor Assessments Must Include Performance Evaluations By Andrew Liput................................................................................ 32 Is Your AMC Putting You At Risk? By John P. Hamameh Esq....... 38 FHA MIP to Undergo Major Changes.............................................. 40 TRID, the Election and What You Can Do Now: Part III By Richard Horn................................................................................ 48 Recruiting: It’s Never Too Late to Start, But Where Do You Begin? By Steve Rennie............................................................ 50 The Mortgage Godfather: Success in Sales and in Life Through Goal-Setting By Ralph LoVuolo Sr..................................... 54 The Long & Short: The Business of Short Sales By Pam Marron.. 56 Tales From the Closing Table By Andrew Liput.............................. 80 Transforming an Idea Into a Business By John Ardy...................... 88 MBA’s Mortgage Action Alliance: A Message From MAA Chairman.................................................................................. 90 Compliance Matters: Promotional and Discounted Rates By Jonathan Foxx.............................................................................. 92 OrigiNation: Predictions for 2017 (Part II) By Andy W. Harris........ 96 What to Say to Listing Agents: Try This … It Works!!! By Brian Sacks.................................................................................. 98

COLUMNS New to Market..........................................................................................12 News Flash: February 2017 ....................................................................14 Heard on the Street................................................................................ 42

A D V E R T I S E R S Company

Web Site

Page

MBS Highway.................................................... www.mbshighway.com/MNN .......................................... 47 Mortgage News Network (MNN).......................... www.mortgagenewsnetwork.com ............................ 84 & 85 NAMB+............................................................ www.nambplus.com ...................................................... 31 NAMB East........................................................ www.nambeast.com ...................................................... 19 NAMB Kickstart.................................................. www.nambkickstart.com ................................................23 NAMMBA.......................................................... www.nammba.org ........................................................ 75 NAPMW............................................................ www.napmw.org ....................................................72 & 82 NAWRB............................................................ www.nawrb.com ............................................................91 New York Community Bancorp. Inc..................... www.nycbmortgage.com ................................................ 41 NMP U.............................................................. www.nmpucoaching.com .................................. 39, 71 & 79 NRMLA.............................................................. www.nrmlaonline.org .................................................... 68 OSI Express........................................................ www.osiexpress.com/mlsconnect ...................................... 1 Paramount Residential Mortgage Group, Inc....... www.prmg.net .......................... 15, 67 & Inside Back Cover RealtyShares...................................................... www.realtyshares.com/broker ........................................ 93 REMN Wholesale................................................ www.remnwholesale.com .............................................. 13 Secure Insight.................................................... www.secureinsight.com ..................................................43 TagQuest.......................................................... www.tagquest.com ........................................................ 57 The Bond Exchange............................................ www.thebondexchange.com .......................................... 65 United Wholesale Mortgage................................ www.uwm.com ........................................................ 52-53

FEBRUARY 2017 Volume 9 • Number 2

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@mortgagenewsnetwork.com

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Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@mortgagenewsnetwork.com

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ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@mortgagenewsnetwork.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@mortgagenewsnetwork.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@mortgagenewsnetwork.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. 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 Mortgage News Network Inc., 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 Mortgage News Network Inc., 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 Mortgage News Network Inc. publications. National Mortgage Professional Magazine and Mortgage News Network Inc. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

FROM THE

publisher’s desk

Taking the Mortgage World Digital t takes time for an industry as complex as the home finance industry to implement change. Ask any lender about change and you’ll hear plenty of reasons for resistance. But over the past few years, the executives working in the mortgage space have found new incentive for getting serious about the digital mortgage. The meteoric rise of fintech firms, competitors from outside of our space who understand technology and its appeal to today’s consumers, is pushing lenders to move forward on a goal they have pursued for many years. Since the federal government passed the federal Electronic Signatures in Global and National Commerce Act (ESIGN) in 2000, mortgage technologists have been working to lead lenders into the world of the all-electronic mortgage. In this issue, we look at the digital mortgage from all sides and hear from experts who have been part of the industry’s nearly two-decade-long pursuit of paperless to learn what it will take to get our business into the digital world. Inside these pages, you’ll hear from lenders, technologies, attorneys and compliance experts. You’ll hear about successes and challenges, advances and impediments and the people who are pushing for a future that traditional players can own. The alternative is to lose our industry to a new breed of competitor who was born digital and doesn’t even understand how to use paper in the transaction. Here is just a sample of what we bring you in this issue:

l On page 70, Chris Backe, director of financial services at Velocify, writes about why borrowers are the “Final Link” in digital loans. l Mid America Mortgage Inc. owner Jeff Bode tells you why “Going Digital Is Easier Than You Think” beginning on page 72. l Brenda B. Clem, eWarehouse director for Street Resource Group Inc., tells us why we are actually “‘Closing’ in on Digital Mortgages” in her article on page 76. l You’ll learn about “Building a Platform for Digital Originations” on page 61 from Tom Knapp, senior vice president and chief information officer at Waterstone Mortgage Corporation. l We’ll show you “Hidden Opportunities for Digitizing the Mortgage Process” on page 68, through a story by Paul Doman, president and CEO of Accurate Group. l And Sue Woodard, president and chief executive officer of Vantage Production takes us on “2017: A Mortgage Odyssey” beginning on page 66. For any readers who are still holding back, on page 63 we bring you, “It’s 2017, Not 1997: Improving the Consumer Experience in Real Estate Transactions,” penned by Marvin Stone, Stewart’s senior vice president of Business Integration and the executive who

oversees Stewart’s Innovation Council. Along those lines, we also feature, “Is Your Lender Following the Progress Bar?” on page 58,” a story by Rey Maninang, senior vice president and national sales director of Carrington Mortgage Services LLC’s Wholesale Mortgage Lending Division. For those of you looking for a good reason to go digital now, Dustin Sheppard, branch manager of Securus Group, a division of American Pacific Mortgage, brings us “Using Technology to Attract Millennials Into the Mortgage Workforce” on page 74. And finally, for any of our readers who just can’t give up the paper, Eric Weinstein offers his always entertaining slant in his article, “In Defense of Paper” on page 78. In addition to those special focus articles, we bring you the Official Guide to the upcoming NAMB East in Atlanta in this issue. This is just the second year this important trade association has offered an annual show for members in the eastern half of the country, and it’s bound to be a well-attended event. We’ll tell you what to expect inside beginning on page 20. We always like to bring you the most current compliance information and no one is better prepared to offer it than Jonathan Foxx of Lenders Compliance. This time, he offers you “A Smorgasbord of RESPA Section 8 Violations.” Beginning on page 36, this will be the RESPA compliance guide you’ve been looking for. Moving into the future can be difficult. We hope the articles we’ve selected for this issue will make your evolution as an industry leader a bit easier. We welcome your feedback and thank you for reading. Sincerely,

Joel M. Berman, Publisher-CEO NMP Media Corp. Joel@NMPMediaCorp.com

3% Down Mortgages Qualify more ﬁrst-time homebuyers with Freddie Mac Home Possible mortgages

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Income limits as high as 170% AMI in high-cost areas — no limits in underserved areas

■

Mortgage insurance drops off at 80% LTV

Learn more at FreddieMac.com/LoanOfﬁcers

n National Mortgage Professional Magazine n FEBRUARY 2017

Flexible sources of funds for a down payment, including gifts and grants

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■

NAMB—The Association of Mortgage Professionals 2701 West 15th Street, Suite 536 l Plano, Texas 75075 l Phone: (972) 758-1151 l Fax: (530) 484-2906 l Web site: NAMB.org

NAMB 2016-2017 BOARD OF DIRECTORS O F F I C E R S

Fred Kreger, CMC President American Family Funding 28368 Constellation Road, Suite 398 Santa Clarita, CA 91350 Phone: (661) 505-4311 E-mail: Fred.Kreger@APMortgage.com

John Stevens, CRMS President-Elect RPM Mortgage Inc. 6045 West 10050 North Highland, UT 84003 Phone: (801) 427-7111 E-mail: JohnGStevens@gmail.com

Valerie Saunders, CRMS Vice President RE Financial Services 13033 West Lindburgh Avenue Tampa, FL 33626 Phone: (866) 992-0785 E-mail: Valsaun@gmail.com

Olga Kucerak, CRMS Secretary Crown Lending 110 Broadway, Suite 360 San Antonio, TX 78205 Phone: (210) 828-3384 E-mail: Olga@CrownLending.com

Andy W. Harris, CRMS Treasurer Vantage Mortgage Group Inc. 16325 SW Boones Ferry Road #100 Lake Oswego, Oregon 97035 Phone: (503) 496-0431, ext. 302 E-mail: AHarris@VantageMortgageGroup.com

Donald J. Frommeyer, CRMS NAMB CEO Marine Bank 200 Medical Drive, Suite C-2A Carmel, IN 46032 Phone: (317) 575-4355 E-mail: Donald.Frommeyer@gmail.com

Rocke Andrews, CMC, CRMS Immediate Past President Lending Arizona LLC 3531 North Pantano Road Tucson, AZ 85750 Phone: (520) 886-7283 E-mail: RAndrews@LendingArizona.net

D I R E C T O R S

Mike Anderson, CRMS Mortgage Financial Services 11940 Bricksome Avenue, Suite B Baton Rouge, LA 70816 Phone: (225) 293-6855 E-mail: MAnderson@MFSUS.com

Rick Bettencourt, CRMS Mortgage Network 300 Rosewood Drive Danvers, MA 01923 Phone: (978) 777-7500 E-mail: RBettencourt@MortgageNetwork.com

Robert Sweeney, CRMS 600 East Carmel Drive Carmel, IN 46032 Phone: (317) 625-3287 E-mail: Bob.Sweeney46@yahoo.com

Chris Bettis 4710 Village Plaza LP, Suite 140 Eugene, OR 97401 Phone: (541) 284-8098 E-mail: Chris@PrecisionCapital.net

Michele Velez, CMC Supreme Lending 1300 South El Camino Real, Suite 505 San Mateo, CA 94402 Phone: (925) 348-5086 E-mail: Michelle.Velez@SupremeLending.com

Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive Mobile, AL 36609 Phone: (251) 650-0805 E-mail: Linda@MortgageTeam1.com

Nathan Pierce, CRMS Advanced Funding Home Mortgage Loans 6589 South 1300 East, Suite 200 Salt Lake City, UT 84121 Phone: (801) 272-0600 E-mail: NPierce@ADVFund.com

Kimber White RE Financial Services Inc. 1620 West Oakland Park Boulevard #201 Oakland Park, FL 33311 Phone: (954) 306-3553 E-mail: Kimber.LMT@gmail.com

National Association of Professional Mortgage Women 345 North Main Street, Suite 313 l West Hartford, CT 06117 l Phone: (860) 719-1991 l E-mail: NAPMW1@NAPMW.org l Web site: NAPMW.org

2016-2017 NAPMW NATIONAL BOARD OF DIRECTORS

FEBRUARY 2017 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

Kelly Hendricks National President (314) 398-6840 President@NAPMW.org

Cathy Kantrowitz President-Elect (845) 463-3011 PresElect@NAPMW.org

Susan Kerr Vice President (703) 871-1310 NVP1@NAPMW.org

Laurel Knight Vice President (425) 287-5351 NVP2@NAPMW.org

Glenda Mooney Secretary (314) 703-8714 NatSecretary@NAPMW.org

Judy Alderson Treasurer (918) 250-9080, ext. 300 NatTreasurer@NAPMW.org

Frances Reinhardt Parliamentarian (678) 331-1384 FReinhardt@FirstServiceTitle.net

Vincent Valvo Executive Director (860) 922-3441 NAPMW1@NAPMW.org

National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 l Phone: (630) 539-1525 l Fax: (630) 539-1526 l Web site: NCRAINC.org

2016-2017 BOARD OF DIRECTORS

Julie Wink President (901) 259-5105 Julie@DataFacts.com

Paul Wohkittel Vice President (410) 644-5020 PWohkittel@CISInfo.net

Gary Glucroft Director (800) 877-3908, ext. 100 GaryG@TheScreeningPros.com

William Bower Ex-Officio (800) 288-4757 WBower@Continfo.com

Scott Ledbetter Director (214) 833-3315 SLedbetter@LCGSolutions.net

Mike Thomas Treasurer (615) 386-2285, ext. 285 MThomas@CICCredit.com

Brian McKinney Director (706) 373-2200 McKinney@MCBUSA.com

Mary Campbell Director (701) 239-9977 Mary@AdvantageCreditBureau.com

Delia Zuniga Director (623) 889-8999 Delia@AdvantagePlusCredit.com

Janet Curtis Director (210) 224-6121 JCurtis@SARMA.com

Terry Clemans Executive Director (630) 539-1525 TClemans@NCRAInc.org

Maureen Devine Director (413) 736-4511 MDevine@StrategicInfo.com

Jan Gerber Office Manager/Member Services (630) 539-1525 JGerber@ NCRAInc.org

Big Things on the Horizon for ARMCP in 2017 This year will bring some great new opportunities to the Association of Residential Mortgage Compliance Professionals™ (ARMCP™), currently consisting of nearly 1,600 members. ARMCP™ will soon be launching its own Web site to fulfill the needs of residential mortgage compliance professionals. ARMCP™ is the first and only independent, national organization in the U.S. devoted exclusively to residential mortgage compliance professionals. Our independence means we are not affiliated with any profit oriented corporation or enterprise. ARMCP™ membership consists solely of those members who have joined it on their own and were not solicited to join it via solicitations from third-party lists or subscriptions. Independence is the key to the value of our advocacy! There are currently two slots remaining for the Steering Committee. The Steering Committee will be drafting new by-laws, determining a nominating process, conference planning, and many other areas of interest relating to ARMCP™’s mission. If you are interested in joining the Steering Committee, email Info@ARMCP.org.

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6RI: Rhodee Island Licensed Lender, Lender License 201128 809LL. VA: NMLS ID 2600 (www.nmlsconsumera access.org). WA: Consumer Loan License CL2600. Also o licensed in AL, AR, CT,, DE, DC, FL, ID, IN, IA, KS K , KY, LA, ME, MD, MI, MS, MT,, NH, NM, NC, OK K, OR, PA, SC,, TN, TX, UT, WV, WI and WY. NOTIICE: All loans subject to credit, underwriting and d property approval guidelines. -,+,$6*0.16!+0$%)/26&. 6 .+ 6 62/./, 654,+,6326106'%.+.1/,,6/4./6.**6 0++0 ,+26 3**6 %.*3 6 ,2/+3)/30126&. 6.!!* 65432632610/6.6)0&&3/&,1/6/06*,1$ 65,+&2 6)01$3/30126.1$6!+0'+.&26.+,62% ,)/6/06)4.1',6 3/40%/610/3), 654326 information n is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services, LLC is not acting on behalf o of or at the direction of HUD/FHA or any governm ment agency. All rights reserved.

n National Mortgage Professional Magazine n FEBRUARY 2017

OV E D

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Underw Q/C Rev riting Review Apprais iew

Searching for Loan Growth in 2017? There’s Only One Place Left to Look ... By Tom Hutchens

FEBRUARY 2017 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

he results are in, and a massive shift in lending practices are coming to reshape your book of business.

Agency loan growth has become stagnant, and refinances are going away almost entirely due to the surge in interest rates following the election and the upcoming 2017 Federal Reserve rate hikes. Considering agency lending and refinancing are the primary growth channels for a massive portion of the mortgage origination industry, where can lenders turn to spur loan growth? The answer is non-agency, or non-QM, products. In fact, this is the only growing segment of the retail mortgage origination industry. There are several reasons for this phenomenon, the first being the massive untapped pool of prospective borrowers squeezed out of the agency market. Currently, there are millions of Americans with excellent credit scores who want to purchase a home, but do not meet the income documentation requirements imposed by the government-sponsored entities (GSEs). These borrowers are often more than qualified for a mortgage, but are unable to document their income in a manner accepted by the GSEs. These same underserved borrowers, however, do qualify for non-QM loans. As market acceptance of non-QM continues to grow, the market for non-agency securitizations has also started to blossom. A significant hurdle to the reemergence of nonagency loans was the creation of a secondary market. After the financial crisis, investors were wary of owning securities backed by non-agency loans. But throughout the last few years, the implementation of more stringent lending guidelines and prudent underwriting has led to the issuance of very high performing loans that are fueling the demand for these securitizations. With refinances disappearing and agency loan growth stalling, the door remains wide open for massive non-agency mortgage growth, and smart lenders are beginning to position their businesses to offer these products. Historically, non-QM loans have represented about 10 percent of the total mortgage origination market, which stands today at approximately $1.1 trillion. Total non-agency volume has crept up steadily, but is still a far cry from its roughly $100 billion potential peak, leaving an enormous opportunity for growth. Smart lenders need to position themselves on the right side of this historic shift by preparing to offer non-agency loans today, or risk devastating effects to their business’ growth prospects. Make sure you partner with an expert so you can successfully maneuver in this space.

Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender licensed in over 35 states and operating in the non-QM space for over 3 years. Tom has been in the real estate lending business for nearly 20 years. He may be reached at (855) 539-4910 orinfo@angeloakms.com.

SPONSORED EDITORIAL

elite performer the

Unforgettable BY ANDY W. HARRIS, CRMS

irst impressions are important, but lasting impressions matter. If you are meeting with a prospective client, making a sales call, or even motivating team members, your goal should be making a lasting impact on those who interact with you. It’s much too easy to settle as being part of the crowd or doing what most others in your field do. You have to find what truly motivates you and allow your passion to come through your conversations and body language. You must be different and you must be unforgettable, but how? First, you have to have a clear and unwavering vision of your brand and identity. Second, you have to be an expert and have knowledge that others simply cannot easily portray. This knowledge and experience derives a level of confidence and authority. Your company or service offering has to be unique to you and your team, but impactful to others. After any initial sales meeting or speaking engagement you want people sincerely interested in learning more and remembering impactful statements made or information shared. Here are a few other ways you can be unforgettable:

F l l l l l l l l l

Cover important topics that are bold and significant Assert yourself and share accomplishments and credentials Dress professionally, always Stay on topic and be direct with a clear message. Don’t get off topic or get too socially involved For group meetings or speaking, open up for Q&A or engage to motivate questions Have a repetitive message that burns in their memory, something unique that they have not heard before Be unusual and different, motivate others to spread your words Be confident, but humble and gracious Don’t sell, educate

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 4960431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.

GOLDWATER BANK N.A.

REDEFINING THE GOLD STANDARD FOR THE MORTGAGE INDUSTRY 9

"The capability of Goldwater Bank, coupled with the retail branch platform offers a unique and winning combination," said Chris Channell, Branch Manager, NMLS # 226012. "For me and my team, it was an easy decision."

At Goldwater Bank, we focus on sustainable growth, quality originations, and innovative solutions. We’re not interested in being the biggest, just the best! If you’re like Chris and his team and ready to write the next chapter of your own successful story, or a highproducing originator that would like to join a team that knows what it takes to be successful, we would like to share what we can do to help you achieve your goals.

Rett Babb, Divisional Manager, Branch Sales and Business Development Goldwater Bank, N.A. - Mortgage Division Direct: 936.521.2786 Cell: 713.503.8898 32310 Tamina Road, Magnolia, TX 77354

www.thinkgoldwaterbank.com This information is provided exclusively to mortgage professionals and is not intended for public use. This is not an advertisement to extend consumer credit. All loans are subject to credit and property approval. Programs, rates, terms and conditions are subject to change without notice. Not all products are available in all states or for all loan amounts. Other restrictions apply. Goldwater Bank. NMLS# 452955. Equal Housing Lender.

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“We are honored to have Chris and his team join our company and are looking forward to helping them realize their ambitious goals!” said Charles Owens, Senior Vice President, National Retail Sales Executive at Goldwater Bank’s Mortgage Division.

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The leadership team of Goldwater Bank’s Mortgage Division is pleased to welcome Chris Channell and his team of professionals to the Goldwater family. Chris’s success on the East Coast will be taken to the next level at Goldwater thanks to the national capability of the bank’s federal charter.

Recruiting, Training and Mentoring Corner

Wanted: Mortgage Mentors BY DAVE HERSHMAN

he mortgage industry lacks qualified mentors to help bring people into the industry or help elevate the performance of those already in the industry. The typical sales manager is a top producer with a full slate of production, recruiting administrative tasks. This gives them little time to concentrate on mentoring. And there is little training in the industry focusing upon the subject as well. When was the last time a company concentrated upon making their loan officers and managers better mentors? I find this amusing because, beyond the obvious benefit of helping others produce more, helping a loan officer or a manager become a better mentor will increase their production as well. How? When we become mentors for real estate agents and our other referral sources who are in business, we change the typical sales equation. This happens by putting us in a different position. Instead of sales personnel asking for business, we become leaders others will follow. Regardless of this extra benefit, the aging of the industry, combined with the end of the refinance boom, tells us that we need to change this situation quickly. With the average age of loan officers in the industry well over 50, as production slips, some loan officers will retire. This will leave us with a shrinking talent base and many companies bidding for that base. Since I

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don’t consider over-bidding for talent a viable option, this leaves us with two choices. Either bring new blood into the industry, or help our present loan officers increase their production by mentoring them. The truth is, we must work in both directions. And because our sales managers will not magically find more time on their hands, it makes sense that some of our present loan officers could become mentors. Again, there are further benefits to this strategy: l When our loan officers become mentors, we are increasing their loyalty to the company. Employees appreciate it when you delegate responsibility to them and give them the ability to grow their skills. l We are also training the next generation of managers. That is also a foreign concept in this industry—taking a qualify producer, training them to become a manager, and then promoting them. We typically do follow this line, but without the training component.

“When our loan officers become mentors, we are increasing their loyalty to the company.”

mentee will graduate from the program. These are very broad categories and the devil is in the details. For example, a mentorship program is not comprised of the mentee following the mentor around for a few months. It is a mix of classroom (or online) training, company-specific training–such as on the company LOS system

and field work. The program is not the same for each individual. For example, you would not mentor a novice as you would someone with five years of experience needing to take their production to the next level. Want some more information regarding becoming a mentor or developing a mentor program? I just delivered a webinar on the topic and the recording is available for those who email me.

The next question is—what are the components of a successful mentorship program? Here are the steps to the process: l Recruiting within the company for mentorship talent. l Developing a compensation plan. l Making sure the mentees are the right individuals. l Defining the responsibilities of a mentor and the mentee. l Determination of when a

Dave Hershman is a top author in this industry with seven books published, as well as the founder of the OriginationPro Marketing System and the OriginationPro’s online comprehensive mortgage school. Dave is also director of Branch Support for McLean Mortgage. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.

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www.DocMagic.com

1.800.649.1362

newtomarket Global DMS and OpenClose Integrate Platforms

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Global DMS and OpenClose have announced that the two companies have completed a seamless, bi-directional interface between Global DMS’ eTrac Enterprise valuation management platform and OpenClose’s LenderAssist loan origination system (LOS). The new integration eliminates manual touch points, reduces costs and ensures appraisal compliance. “Directly from within OpenClose’s LenderAssist LOS, this integration allows users to tap key functionality in our eTrac Enterprise platform,” said Vladimir Bien-Aime, president and CEO of Global DMS. “Unlike appraisal ordering systems that just place orders, Global DMS has a completely workflow-driven, robust valuation management platform that automates all of the intricacies involved in the appraisal process from start to finish, which OpenClose customers can now leverage in a seamless fashion.” Using the integration, lenders are able to efficiently order appraisals, check real-time status, receive appraisal files back into OpenClose’s LOS, and compliantly submit them to the Uniform Collateral Data Portal (UCDP) or Electronic Appraisal Delivery (EAD) portal. This streamlines data exchange and communication between the two platforms and speeds up the entire process. Global DMS provides OpenClose customers with detailed reports for audit tracking and visibility over their appraisal processes. “We want our customers to benefit greatly from the integrations we establish, so we are very discerning when selecting new technology vendors to

integrate with,” said Jason Regalbuto, CEO and CTO of OpenClose. “Global DMS’ solution is one of the leading single-source valuation management platforms in the mortgage industry and we are extremely pleased to have them as a new integration partner.” Waterstone Mortgage Launches New Mobile App

Waterstone Mortgage Corporation has launched its new Waterstone Mobile app, a proprietary technology solution that connects loan originators with their clients and referral partners and allows potential homebuyers to pre-qualify for a mortgage on their mobile devices in a few simple steps. “It’s a very exciting time at Waterstone Mortgage,” said Waterstone Mortgage President and Chief Executive Officer Eric Egenhoefer. “With the launch of the proprietary Waterstone Mobile app, we’re stepping into a new era of mortgage lending technology.” The Waterstone Mobile app includes a variety of features, such as mortgage calculators and payment estimators, links to the loan originator’s social media and review profiles, and click-toconnect contact information. Prospects can use the app to access a brief pre-qualification form or complete a full application. The Waterstone Mobile app can be easily shared and referred to new prospects and partners. In the next phase of development, the app will also allow homebuyers and their Realtors to access real-time updates and details on their loan status.

The goal of the app is to provide loan originators, referral partners, and clients with a way to easily and quickly communicate with one another and to access important information. “In our industry, nothing stands still for very long. We know we have to respond to changes in technology, changes in the industry, and changes in requirements,” said Waterstone Mortgage SVP/CIO Tom Knapp. “Today’s homebuyer is tech-savvy and has high standards for mortgage lending technology that is convenient, secure, and efficient. At Waterstone Mortgage, we recognize the need for additional mobile technologies, which is why we developed an innovative app to meet–and even exceed–the expectations of the modern homebuyer.” Concord Mortgage Group and Blend Deploy New Online Portal

mortgage experience for our customers by utilizing the most talented people and the best technology in our business.” Ready App is designed to take the friction out of applying for a mortgage by delivering a fully transparent experience on any device through simple conversational prompts and seamless direct connection to more than 10,000 high-fidelity asset, payroll and tax data sources. “At Blend, we’re building technology that reinvents home lending from the ground up,” said Nima Ghamsari, CEO and cofounder of Blend. “Built on a platform that integrates with existing systems, we’re thrilled to work with pioneering mortgage providers like Concord to deliver a digital mortgage experience and enable fast, simple and satisfying lending experiences to both lenders and borrowers alike.” First Heritage Mortgage Protects Downpayments Via Mortgage +Plus

Concord Mortgage Group, a division of NOIC Inc., in partnership with Blend, has released the Ready App, offering borrowers an online portal to submit their applications, documents and follow-ups in a secure, compliant manner. “Our capability allows us to speed up the loan process and reduce borrowers’ anxiety by providing transparency and a smooth process to quickly achieve their dreams of owning a home,” said Philson Lescott, COO and chief digital officer for NOIC, and a former business-technology executive of Fannie Mae. “We are focused on enhancing the

First Heritage Mortgage has introduced Mortgage +Plus, a mortgage product that protects a homebuyer’s downpayment, available immediately on all applicable First Heritage mortgages. Mortgage +Plus will include +Plus downpayment protection by ValueInsured, embedded directly into buyers’ mortgages. With exclusivity in Washington, D.C., Maryland, Virginia and North Carolina, First Heritage Mortgage is the first mortgage lender to offer this protection to homebuyers in the region. With Mortgage +Plus by First Heritage Mortgage, homebuyers may safeguard their downpayment and buy with confidence.

“At First Heritage Mortgage, our priority is to empower our customers to buy their dream homes. We’ve been seeing hesitations due to today’s transient lifestyle and uncertainty in the housing market,” said Alex Wish, president of First Heritage Mortgage. “To help our customers buy a home with confidence, we realized that the one thing we can do is assure them that their down payment will be protected. ValueInsured has created a truly innovative product and we’re thrilled to be the exclusive mortgage lender offering down payment protection in the MidAtlantic region.” Joe Melendez, CEO of ValueInsured, said, “Determined to provide security for today’s homebuyer, we created the first product that protects the homebuyer, the same way private mortgage insurance has been protecting the banks for years. First Heritage Mortgage has always been one of the best in mortgage financing services, which is why we’re excited to partner with them on a next generation mortgage product that provides today’s modern homebuyer with the flexibility and mobility of renting, but with the freedom, pride and investment value of owning a home.”

with current customers, it also causes losses related to lost opportunities when frustrated customers walk away, and also from back office expenses incurred to manually review fraud,” said Pat Phelan, senior vice president in TransUnion’s Innovative Solutions Group. “The fact that businesses can receive all of the fraud and identity management tools necessary to prevent losses in one suite of solutions sets IDVision apart from others in this growing industry.” continued on page 18

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TransUnion has unveiled IDVision, a suite of solutions providing businesses with a holistic approach to fraud and identity management. IDVision helps companies stop sophisticated and evolving fraud while also protecting and restoring their confidence in conducting business. “As fraud evolves and becomes more sophisticated, the legacy systems many businesses have in place are not sufficient to detect today’s fraudsters,” said Chris Cartwright, president of TransUnion’s U.S. Information Services. “We developed IDVision to provide greater certainty now, and as fraud evolves—while still meeting the expectations of speed and uninterrupted consumer experience our customers need. The IDVision suite works to learn and predict patterns of risk to help customers more strategically anticipate tomorrow’s threats by staying ahead of fraudsters today.” IDVision brings together robust data assets with advanced

Verification and Authentication solutions ensure consumers are who they say they are by examining hundreds of digital signals captured during an online or mobile transaction. IDVision also includes the recently launched Fraud Prevention Exchange, designed to help both established lenders such as credit card issuers and emerging FinTech lenders combat online first party fraud by monitoring application velocity and reported fraud real-time. “Fraud today does not just impact businesses’ bottom lines

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TransUnion Introduces IDVision to Assist With Fraud and Identity Theft

analytics technology that links, interprets and analyzes information to discover anomalies and patterns of risk. Businesses receive actionable alerts and instantly-delivered scores so they can make timely decisions. TransUnion’s IDVision suite is comprised of multiple solutions, addressing a variety of critical issues in the fraud and identity management space. The Synthetic Fraud Model addresses the key question of whether an identity has been fabricated or manipulated. Digital

NEWSFLASH y FEBRUARY 2017 y NMP NEWSFLASH y FEBRUARY 2017 y NMP NEWSFLASH y FEBRUA

Angel Oak’s Non-QM Lending Platforms Reviewed by Two Ratings Agencies

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Angel Oak Mortgage Solutions LLC and Angel Oak Home Loans LLC have announced that their mortgage origination platforms have been reviewed for quality by ratings agencies Fitch and DBRS. Both ratings agencies affirmed the acceptable quality of the company’s non-agency, non-qualified mortgage originations. As a result, Angel Oak becomes one of the first non-prime mortgage originators to be reviewed in the entire industry. “The Fitch and DBRS reviews serve as yet another milestone for Angel Oak,” said Tom Hutchens, senior vice president of sales and marketing at Angel Oak Mortgage Solutions. “This third-party validation of the quality of our mortgage products is a testament to what we’re all about. As an industry leader in non-qualified mortgages, we pride ourselves on creating high quality origination products that position our firm for long-term success.” The rating agencies performed an on-site operational risk review of Angel Oak’s company, management, controls, origination practices and technology and deemed them to be an acceptable originator for rated transactions. The review from Fitch noted

that, “the companies’ seasoned management team has extensive non-prime mortgage experience, a comprehensive sourcing strategy, and strong underwriting and risk management practices.” “When you start with higher quality originations, you add significant value to the securitization platform,” said John Hsu, head of capital markets at Angel Oak Capital Advisors. “Rated deals price better than non-rated deals, which lowers the cost of capital and ultimately benefits the issuance platform.” MBA Revisits GSE Reform

While the first days of the Trump Administration have been focused on a myriad of domestic and global issues, the Mortgage Bankers Association (MBA) has offered a reminder that the fate of the governmentsponsored enterprises (GSEs) remains in limbo. The MBA has issued a paper detailing its general recommendations for secondary mortgage market reform. In this six-page paper, which is the initial offering of the MBA’s Task Force for a Future Secondary Mortgage Market, the trade

group called for ending the GSEs’ conservatorship, which has been in place since September 2008, and the creation of a significantly redesigned secondary market. “MBA’s current task force supports an end state comprised of multiple privately owned guarantors, with preferably more than two,” the trade group stated. “The guarantors would be organized as privately owned utilities with a regulated rate of return. They would have a public purpose of providing sustainable credit availability to the conventional mortgage market to lenders of all sizes and business models. Guarantors would also be responsible for executing on an affordable housing strategy to ensure broad access to credit, preserve and develop affordable housing options, and address underserved markets nationwide.” The MBA added that this new secondary market would “build from the significant administrative progress already undertaken by the GSEs under FHFA’s direction. For instance, the Common Securitization Platform and Single Security are key elements of our envisioned infrastructure; the GSEs’ credit risk transfer programs will be expanded upon and form an important source of private capital; and the expanded seller/servicer base, supported by parity in credit pricing across

entity size and type, would be retained to ensure competition.” In advocating a “privately owned, multi-guarantor secondary mortgage market supported by a federal government wrap of eligible MBS,” the MBA acknowledged risks would need to be mitigated. In offering proposed “guardrails” to address these risks, the MBA called for guarantors to operate as standalone companies and be regulated as systemically important financial institutions. The MBA also warned that lenders, including bank holding companies, should be prohibited from owning shares of a guarantor. A full paper offering greater depth on the MBA’s recommendations will be released in April. “Today’s paper is intended to provide thoughtful recommendations on how to reform the GSEs while ensuring a healthy, robust secondary mortgage market emerges for both single-family and multifamily mortgages,” said Rodrigo Lopez, executive chairman of NorthMarq Capital and chairman of MBA. “The U.S. mortgage market requires global capital in order to maintain adequate liquidity through all economic cycles. International and institutional investors will only fill that role if there is an explicit government guarantee on the securities, something that can only be obtained by congressional action.”

Cordray: Regulators Must Not Get “Mired in Partisan Politics”

more now than it has ever been.” Home Prices Closed 2016 on a Very High Note

Last year’s home price levels ended in an up-up-and-away manner, according to the latest data released by CoreLogic. continued on page 16

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Zillow: White House Valuation Up During Obama Era While President Barack Obama’s political legacy is open to debate, it appears that his real estate legacy is solid. A new

more sense to convert it into a rental property, as Zillow stated the monthly rental payment would be just over $2 million per month. “President Obama’s term coincided with a massive recovery of the U.S. housing market, and that’s reflected in the updated value of the White House,” said Zillow Chief Marketing Officer Jeremy Wacksman. “Home values across the country are growing at their fastest pace since 2006, with many markets setting new records—one of the reasons why the White House is worth

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The Director of the Consumer Financial Protection Bureau (CFPB) took a thinly veiled shot at the Trump Administration by stressing the independence of federal regulatory agencies, arguing they should exist outside partisan squabbling. According to a Los Angeles Times report, CFPB Director Richard Cordray insisted that the new White House leadership team “really shouldn’t change the job at all” when it comes to regulators. “We’re expected to work with different administrations of different points of view,” Cordray said at a forum coordinated by the Wall Street Journal. “We have an independent mandate to do what we do and we will continue working to protect consumers.” While Cordray declined to directly answer whether he would fight any effort by President Trump to fire him, he insisted that his position was designed to be above ideological rancor. “I was nominated and then confirmed by the Senate to serve a term,” Cordray said. “All the independent federal regulatory agencies have terms that overlap one administration or another. That’s meant to preserve their independence. That’s important because without the independence you end up mired in partisan politics, the big-money special interests … will try to dictate results.” Whether the new President is preparing to dismiss Cordray is not clear. During a press conference, White House Press Secretary Sean Spicer said “no decision has been made at this time on that.”

data analysis by Zillow determined that the value of the White House has appreciated 15 percent since Obama’s inauguration in 2009. Now valued at $397.9 million, the 55,000 square-foot presidential residence was part of the rising tide in home values over the past eight years, when valuations increased by nine percent. Zillow also estimated that if a standard 30-year fixed mortgage were taken out on the White House today, the monthly payment would be about $1.6 million—though it might make

HUD Suspends FHA Mortgage Insurance Premium Cuts By Mat Ishbia

resident Trump and HUD Secretary Ben Carson have reversed the FHA insurance premium rate cuts that the Obama Administration put into effect before leaving office, saying they want to research it more before moving forward. So those 25 basis points are not in effect as of now. We still think there’s a remote chance they bring it back, maybe around 30 percent. However, even without the cut, Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs, with LPMI, are still very viable options for borrowers interested in putting three percent down.

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Adjustable-rate mortgages making a comeback Make sure you know how to do adjustable-rate mortgages (ARMs). Analysts are predicting that up to 17 percent of all loans originated (purchase and refinance) will be ARMs by the end of 2018. These loans started getting a bad reputation after the sub-prime days back in 2006 and 2007, but today’s ARMs are government-sponsored entities (GSEs). These are great loans for borrowers–with options of five-year, sevenyear and 10-year ARMs. Over 90 percent of people don’t stay in the same mortgage longer than nine years, so seven-year ARMs make a lot of sense. They give borrowers a cheaper payment for seven straight years, and are a cheaper option than a 30-year fixed-rate mortgage (FRM). For these loans, nine years is the break-even point, so that payment advantage extends beyond the sevenyear mark. You have to understand how to sell these ARMs and educate consumers on ARMs because the whole industry is trending in this direction. VA more flexible on student loans Student loans are a major barrier to buying or refinancing a home for a lot of Millennials. A lot of people accumulated a great amount of debt while they were in college and those numbers continue to climb. VA has proven to be more flexible on student loans than FHA, Fannie Mae and Freddie Mac because it allows borrowers to use deferred student loans and not count it if the loan is deferred for 12 months. Whereas FHA, Fannie and Freddie require borrowers to pay one percent of the total balance as a monthly payment, VA enables borrowers to adopt the specific formula, [0.416 x loan amount]. For example, if someone has $25,000 of student loans to pay off to FHA, Fannie Mae or Freddie Mac, that is a $250 monthly payment. That could throw their debt-to-income ratio way off and make it difficult for a lot of people to qualify. Using VA’s equation, the $250 monthly payment would become a $104 monthly payment. That’s a big benefit for Millennials who are dealing with heavy student loan debt. Mat Ishbia is president/CEO of United Wholesale Mortgage (UWM), the nation’s number one wholesale lender. A leading advocate of mortgage brokers, Mat has changed the lending platform, turning UWM into a $23 billion company and a top national workplace.

SPONSORED EDITORIAL

nmp news flash

continued from page 15

Home prices nationwide, including distressed sales, increased by 7.2 percent on a year-over-year measurement in December 2016. On a monthly measurement, December’s home prices saw a 0.8 percent uptick from November. Washington and Oregon had the greatest year-over-year home price increases in December, respectively recording 10.8 percent and 10.3 percent increases. Wyoming was the sole state to show a downturn, registering a slight 0.3 percent dip. Among the major metro markets, Denver saw a 9.9 percent year-over-year upturn, with Boston trailing in second place at 6.9 percent. CoreLogic is also forecasting that home prices will increase by 4.7 percent on a year-over-year basis from December 2016 to December 2017, and by 0.1 percent on a month-over-month basis from December 2016 to January 2017. “As of the end of 2016, the CoreLogic national index was 3.9 percent below the peak reached in April 2006,” said Frank Nothaft, chief economist for CoreLogic. “We expect our national index to rise 4.7 percent during 2017, which would put homes prices at a new nominal peak before the end of this year.”

In addition, Citi has entered into a subservicing agreement with Cenlar FSB for the remaining Citi-owned loans and certain other mortgage servicing rights not sold to NRZ. Loan servicing on these assets are expected to be transferred to Cenlar beginning in 2018. As part of its assumption of the servicing obligations, Cenlar will provide core operations, customer service and default operations. Loans of Citi’s retail banking clients will be retained by Citi but will be included in the subservicing contract. “Over the past several years, we have made significant progress transforming our business to deliver a sustainable annuity of growth,” said CD Davies, president and CEO of CitiMortgage. “CitiMortgage remains a critical part of serving our customers, deepening relationships with existing and prospective retail bank clients and driving growth in our core markets. We will continue to originate loans for current and new clients.” Number of Seriously Underwater Homes Hits New Low

Citi to Cease Servicing Operations

Citigroup has announced that it has executed agreements that will accelerate the transformation of the U.S. mortgage business by exiting servicing operations by the end of 2018 to intensify focus on originations. The strategic action is intended to simplify CitiMortgage’s operations, reduce expenses, and improve returns on capital Citi has signed a definitive agreement to sell its mortgage servicing rights, and the related servicing, on approximately 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers with outstanding balances of approximately $97 billion to New Residential Mortgage LLC (NRZ). The sale, subject to the approval of both agencies and the FHFA, is expected to be completed in the first half of 2017.

What a difference a year makes: New data from ATTOM Data Solutions has determined there were 5.4 million residential properties seriously underwater— where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value—at the end of 2016, a decline of more than one million properties from 2015. This sector of the housing market represented 9.6 percent of all U.S. properties with a mortgage—down from 10.8 percent at the end of the third quarter, down from 11.5 percent at the end of 2015, and the lowest level recorded by ATTOM Data Solutions since it began tracking this subject five years ago. But as the volume of seriously underwater properties continued on page 30

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LoyaltyExpress Announces the Launch of MarketingCentral 2.0

NAMB in “The Big Peach!” By Valerie Saunders, CRMS

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oin NAMB from Thursday-Saturday, March 16-18, 2017 in Atlanta for NAMB East! The NAMB East Conference Committee has worked diligently to put together a schedule of events that would appeal to both loan originators and business owners. This premiere event is proud to feature one of the largest mortgage industry trade shows in the eastern United States. In addition, as part of NAMB East, we are excited to have the CFPB Ombudsman's office as part of their "Ombudsman Interactive," a series of three sessions targeted at senior level executives, small business owners and loan originators. Three CFPB Ombudsman Interactive Sessions will be presented during the course of the event, focused on senior executives, small business owners and loan originators, and all require pre-registration. Discussion topics will be tailored toward the interests of the intended audience, so please register for the session corresponding to your role. Sessions are interactive discussions rather than question-and-answer sessions, so attendance for each is capped at 75 participants. In addition, Thursday and Friday Breakout Sessions and special events include:

l Keynote Speaker Luncheon featuring John King, CNN’s chief national correspondent and anchor of “Inside Politics” l Dan Ellis, marketing and outreach specialist at the HUD Atlanta Homeownership Center l Ricardo Holloway, loan production officer from the VA Atlanta Regional Office l Rod Carnes, Deputy Commissioner for Non-Depository Financial Institutions for the Georgia Department of Banking and Finance l Alan Davis from the United States Secret Service l NAMB Certification Test Prep Class, presented by Rocke Andrews, CMC, CRMS l Certified Military Home Specialist Workshop, presented by Beverly Frase of Boots Across America l Plus, a variety of informative sessions presented by NAMB’s Platinum Sponsors We also have several fun-filled events planned, including our Casino Night on Thursday, March 16 at the College Football Hall of Fame, and our St. Patrick’s Day Party featuring the Trans Am Euro Mutts on Friday, March 17!

LoyaltyExpress has announced the availability of MarketingCentral 2.0. MarketingCentral is best known for equipping lenders with a huge compilation of ready-to-use and custom-created marketing materials, which LoyaltyExpress prints, mails and/or e-mails to third-parties as requested by clients. The new release of MarketingCentral will include: APR and mortgage insurance (MI) calculators for rate sheets and open house flyers; social media badges and ads that can be uploaded directly to Facebook and LinkedIn profiles; automated approval workflow for any materials that can be edited by a loan officer but need marketing and compliance sign-off before deployment or download; easier access to third-party CRM systems and databases to eliminate data uploads for direct mail and email campaigns; support for single sign-on with internal systems; multiple products packaged into a single offering (recruiting flyer with company information flyer and multiple marketing samples); and the availability of wide-format printing for yard signs and banners. As part of the MarketingCentral service, LoyaltyExpress writers and graphic designers work with clients to create as much content as they desire, and fulfill any print, direct mail or e-mail from the system. “Marketing departments are leveraging access to our writers and designers more and more every day as the race to stay relevant with the most up-to-date and compliant content becomes paramount,” said Mary Beth Doyle, founder of LoyaltyExpress. “Our teams allow marketing professionals to work more strategically instead of manually, and these new enhancements will make their jobs even easier.” CoreLogic Provides Detailed Property Info Via Its RealQuest App

Valerie Saunders, CRMS is vice president of RE Financial Services Inc., a Florida mortgage broker business. She has more than 20 years of experience in the mortgage industry, currently serving as vice president of NAMB and chair of NAMB's Conference Committee. She may be reached by phone at (866) 992-0785 or e-mail Valerie@Refinserv.com. SPONSORED EDITORIAL

CoreLogic has launched its RealQuest App to provide real estate and mortgage professionals access to detailed property information, transaction history and neighborhood sales data while

they’re in the field. The RealQuest App gives users access to the nation’s leading property information database and search engine, RealQuest, which covers 3,100-plus counties and 99.9 percent of all U.S. property records. It is designed to provide mortgage and title companies, real estate professionals, appraisers, government agencies, investors, and telecommunication and utility companies with comprehensive property, ownership and mortgage data on their iOS devices. The RealQuest App allows users to: Search by property address, owner name or map; identify all properties associated with an owner; check foreclosure status; validate property value; confirm property ownership; research property transaction history; and compare nearby sales. “Purchase originations are being forecasted to reach more than $1 trillion this year, with one in three new mortgages expected to be made to Millennials. Given the growth of Millennial household formation and their technology preferences, it’s critical for mortgage professionals, real estate agents, appraisers and investors to have cutting-edge, on-the-go technology that gives them a competitive edge,” said Shaleen Khatod, senior vice president of Data Solutions at CoreLogic. “With the RealQuest App, they can access national property, owner and mortgage data and insights that will help them seize more opportunities whenever and wherever they are.” The RealQuest App is an extension of the New RealQuest desktop version, which, in addition to the features available in the app, includes Building Permit Reports to validate home improvements and Homeowners Association Reports to provide detailed HOA information. 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.

March 16-18, 2017 Omni Atlanta Hotel at CNN Center y Atlanta, GA Join NAMB—The Association of Mortgage Professionals and the country's top mortgage professionals for NAMB East! This premiere event is proud to feature one of the largest mortgage industry trade shows in the Eastern United States! In addition, as part of NAMB East, we are excited to have the CFPB Ombudsman's office as part of their "Ombudsman Interactive", a series of 3 sessions targeted at senior level executives, small business owners and loan originators.

Agenda for this event is as follows: Thursday, March 16, 2017 10:00am - 3:00pm: Lenders/Affiliates Council (includes lunch) 12:00pm - 3:00pm: Exhibitor Setup 3:30pm - 5:00pm: CFPB Ombudsman Interactive focused on Senior Level Executives (separately ticketed event) 6:30pm - 9:30pm: Casino Night to Benefit NAMB's Legislative Action Fund at the College Football Hall of Fame (separately ticketed event) Friday, March 17, 2017 8:00am - 11:00am: NAMB's Delegate Council Meeting 8:00am - 11:00am: Exhibitor Setup 11:30am - 1:00pm: Keynote Speaker Luncheon featuring John King, CNN's chief national correspondent and anchor of Inside Politics (separately ticketed event)

1:00pm - 6:00pm: Exhibit Hall Open! 1:00pm - 5:00pm: Originator Focused Breakout Sessions including CFPB Ombudsman Interactive for the Small Business Owner and the Loan Originator (Ombudsman sessions are separately ticketed events) 6:00pm - 8:00pm: St. Patrick's Day Evening Reception sponsored by Caliber Home Loans featuring the Trans Am Euro Mutts Saturday, March 18, 2017 8:00am - 10:00am: NAMB Committee Meetings 10:00am - 1:00pm: Originator Focused Breakout Sessions 1:00pm - 5:00pm: Exhibit Hall Open! 4:30pm - 5:00pm: Trade Show Giveaways!

Separate tickets may be purchased for the Ombudsman Interactive sessions, Casino Night and Keynote Luncheon.

EASTFREE after clicking Tickets.

Don’t miss out on this informative and fun-ﬁlled event!

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To attend the trade show and originator-focused breakout sessions FREE OF CHARGE, please register by entering the promotional code

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To register today visit nambeast.eventbrite.com

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NAMB President’s Message: February 2017

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Welcome to the Show! Greetings and welcome everyone to Atlanta to NAMB East 2017! As this message is being written prior to the event, I hope everyone has their travel arrangements made to descend upon Atlanta, March 16-18 for our big event. In addition to our always packed exhibit hall, we have a full schedule of events planned, designed to further educate attendees and provide you with ideas and revenue-generating channels. This year, NAMB East is excited to have the CFPB Ombudsman’s Office as part of their “Ombudsman Interactive,” a series of three sessions targeted at senior level executives, small business owners and loan originators. Discussion topics will be tailored toward the interests of the intended audience, so please register for the session corresponding to your role. Sessions are interactive discussions, rather than standard question-and-answer sessions, so attendance for each will be capped at 75 participants. You will not want to miss these sessions, as we first target Senior Level Executives on Thursday, March 16 at 3:30 p.m.; and on Friday, March 17, Small Business Owners at 1:00 p.m. and Loan Originators at 4:00 p.m. This year, we welcome CNN’s John King, chief national correspondent and anchor of “Inside Politics,” as our Keynote Speaker Friday afternoon. In his role as chief national correspondent, based in Washington, D.C., King is instrumental in CNN’s daily reporting and breaking news coverage. Diversifying your business options was a goal of ours as we put together this year’s roster of speakers. That being said, NAMB East will offer sessions on topics ranging from renovation lending, VA loan processing, cybersecurity, reverse mortgages, and Fannie Mae’s Day 1 Certainty, among others. Also offered will be a NAMB Certification Prep Class, presented by NAMB Past President Rocke Andrews, for individuals seeking to attain the Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC) designations. In additions, Beverly Frase of Boots Across America will present the Certified Military Home Specialist (CMHS) Workshop, where at the conclusion of the class, attendees can take the exam to attain their CMHS designation. With March 17 being St. Patrick’s Day, join NAMB as we celebrate this holiday Friday evening at 6:00 p.m. during our Caliber Home Loans-sponsored reception featuring music from the Trans Am Euro Mutts Band. Also, mark Thursday evening, March 16 on your calendar and join us for our Casino Night to benefit the Legislative Action Fund (LAF). This event will be held at the College Football Hall of Fame in downtown Atlanta, as admission includes food, two drink tickets, admission to the Hall of Fame and $200 in Funny Money. We hope you enjoy all that we have planned for you in Atlanta at NAMB East 2017. Chair Linda McCoy and her NAMB East Committee have been working feverishly on assembling a memorable event, and judging by the early response from our sponsors and exhibitors, they have done just that by bringing together so many mortgage professionals under one roof for three days of networking, education and business-building opportunities. Hope to see you all in Atlanta in just a few weeks. Thank you and Namaste. Fred Kreger, CMC, 2016-2017 President NAMB—The Association of Mortgage Professionals Fred.Kreger@APMortgage.com • JOINNAMB.com

NAMB Government Affairs Update

NAMB Takes DC as New Administration Settles In By Michelle Velez, CMC Occasionally, we find ourselves faced with situations that are not positive. There is a lot of turmoil in our country now, but I always try to look at the positive. One of the best quotes that I ever heard was from Sun-Tzu, “In the midst of chaos, there is also opportunity.” We know that every cloud has a silver lining, and I want to take this opportunity to consider how we can affect change in the housing industry under the new Trump Administration. There have been many rumors floating about. Congress is going to repeal Dodd-Frank, the Consumer Finance Protection Bureau (CFPB) will be gone completely, and the Qualified Mortgage (QM) Rule will be eliminated are just some that I have personally heard. However, it seems like the likelihood of any of these things happening are likely slim. With that said, the time is perfect now to enact change. You never know what is going to happen under this Administration. On Friday, Feb. 3, 2017, President Donald Trump signed an executive order to review the financial regulations put in place with the Dodd-Frank Wall Street Reform and Consumer Protection Act. Although a full repeal of Dodd-Frank may not be possible, there is a great opportunity for some changes to Dodd-Frank. A major inconsistency that NAMB has been working hard to fix for the past several years is the broker company compensation which is included in the three percent points and fees cap of the Ability-toRepay Rule (ATR) within a Qualified Mortgage (QM). As loan originators, we find that many times this eliminates the consumer’s ability to choose a mortgage broker if their loan falls within the $100,000 to $200,000 range. By doing so, this creates an unintended disparate impact on low- to moderate-income borrowers. NAMB has brought this to the CFPB’s attention for the past several years. The CFPB has the power to fix this, but has refused to take corrective action. With the mortgage industry being overregulated, the cost of compliance has been passed onto the consumer. Will we see the CFPB go away? That remains to be seen. It is important the regulatory agency stay in place, but there is a strong possibility of changing the way it exists today. NAMB is watching the legislation that will create a five-person panel instead of having a single Director for the CFPB. Having Congressional oversight would be helpful as well. Lastly, there is a strong possibility of doing away with QM, but not TRID. We will continue our conversations with the CFPB to possibly lessen some the restraints of TRID. One thing we are requesting review is the three-day waiting period for Closing Disclosure documents and the three-day rescission period on an owneroccupied refinance. We feel that this is extremely cumbersome for home owners who may not have the ability to waive the waiting periods. There is much going on in the mortgage industry and now is the time to have your voices heard in Washington, D.C. NAMB is holding its annual Legislative & Regulatory Conference at the JW Marriott on Pennsylvania Avenue in D.C., Sunday-Tuesday, April 23-25, 2017. There are several amazing speakers lined up and some of the topics we will be covering are Day One Certainty, appraisal compliance changes to expect in 2017 and several other compliance topics. There are several important issues that we will be discussing with our legislators when we meet with them on Tuesday, April 25. While we are in the process of vetting the legislation we are going to discuss at the legislative conference, we are focusing in on a couple of major issues. First, we are going to continue discussions regarding the broker compensation within the ATR of a QM loan. We are working with several legislators to introduce bipartisan legislation to remove the broker company compensation from the three percent points and fees cap of ATR.

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We will focus on the reauthorization of the National Flood Insurance Program (NFIP) which is set to expire Sept. 30, 2017. With the many FEMA Flood Zone map designation changes, many home owners would be harmed by extremely high flood insurance policies if this program does not get extended. NAMB will be working hard to make sure it gets reauthorized. Lastly, we are working hard on Transitional Licensing, which is probably one of the hardest fights in our industry. NAMB feels the consumer and our industry would be better served if all mortgage originators complete all licensing requirements before they operate in any state. The Transitional Licensing Bill that permitted a bank employee to shift to a lender and originate loans for 120 days stalled in the Senate after passing the House last year. The biggest concern that surfaced with registered bank employees was the trend for banks to over-register branch employees just in case they took a mortgage application. NAMB is working with legislators to require all registered loan originators to pass the NMLS National Uniform State Test. We firmly believe it would be better for the consumer for all loan originators to have passed a competency test across the origination channels.

receive her CRMS designation in 2017. She has realized the power of non-credit continuing education. If she receives her CRMS designation in 2017, she would be one of only four CRMS designees in the state of Indiana. My September article discussed the topic of non-credit continuing education. Let me refresh you. There are many reasons why non-credit continuing education is important. Each individual has their own motivations. Below is a short list of the reasons to continue your mortgage education.

Michelle Velez, CMC of Supreme Lending in San Mateo, Calif. is a member of the NAMB board of directors and Government Affairs Committee Chair. She may be reached by phone at (650) 409-5347 or email Michelle.Velez@SupremeLending.com.

Let me tell you more about this MLO’s success in 2016 and see how she stacks up against the list above …

NAMB Education Corner: Sales Management’s Role in Education … By Bob Sweeney, CRMS

l She is the systems trainer for all our northern Indiana MLOs l She had the most loans closed in 2016 with 192 closed loans l She had the highest average of loans closed per month with 16.0 per month l She had the highest dollar volume in 2016, with $21,560,469, with an average loan size of $112,294 l She had the lowest cost per loan in 2016 l She covers six credit union branches l She does “Lunch and Learns” l She does “First-Time Homebuyer Seminars” l She is a member of the local Board of Realtors and on two committees l She has a presence on Zillow l She has a presence on YouTube l She exceeded all of her goals for 2016 l And she is a great mother and spouse

Bob Sweeney, CRMS is a financial advisor at Meridian Mortgage Solutions, director for NAMB–The Association of Mortgage Professionals and serves as chairman of the NAMB Education Committee. He can be reached by phone at (317) 625-3287 or e-mail Bob.Sweeney46@yahoo.com.

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How did she stack up compared to the above list? A significant portion of her success is her desire to learn more, to be the best, to help her member/borrowers, to assist her fellow MLOs and to listen. “Formal education will make you a living; selfeducation will make you a fortune” by Jim Rohn. Dedicated yourself to be the best you can be in 2017. Your role as sales management plays a vital role in the success of your MLOs. Spend quality time with your MLOs. Maybe they will “Listen.” We welcome any input from all mortgage professionals. If you would be interested in joining the Education Committee and become part of our future success in the education of our independent mortgage companies and mortgage loan originators, please feel free to contact me. If you are not an NAMB member, now is a great time to become a member. Go to your state association Web site or NAMB.org and join as a professional member.

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On Jan. 3, 2017 I accepted a position as mortgage sales manager for Teachers Credit Union, the largest credit union in the state of Indiana. More than 95 percent of our 2016 fundings were in their conventional portfolio product. Over the past several weeks, I have conducted one-on-one sessions with the 12 mortgage loan originators who report to me. They were asked to prepare a business plan for 2017 and I did not require a specific format or specific topics other than the fact that I told them that the credit union was moving towards following agency guidelines in 2017. The results were varied as you may expect. Let me digress for a moment. This is the first time in my 30-year mortgage career that I have worked for a financial institution in the retail channel. I have always worked for a mortgage banker, broker or in the wholesale channel for a financial institution. Let me continue. The MLOs that report to me have varying mortgage backgrounds. Some have worked for Teachers Credit Union for many years. The others have worked for mortgage bankers, brokers, title companies and other financial institutions. As you may have guessed, my discussions varied greatly form one MLO to another. Generally, their business plans were spot on, but there was one that deserves further attention. This MLO’s first topic in her business plan was “Education and Professional Development.” As Education Committee Chairman for NAMB, this was music to me ears. Under this topic, she stressed her desire to attend more training seminars/Webinars, improved her knowledge of agency products and guidelines (she listened) and to expand her knowledge of manufactured home programs. I happened to mention this topic to my entire sales staff in a meeting the first week of my employment. Again, she listened. During our discussion, she brought up the topic of my CRMS designation. I was happy to explain the great advantages to her and together we viewed the NAMB Web site to go over the details (please refer to my March 2016 article in National Mortgage Professional Magazine). At this time, she committed to me that she wanted to

1. Be more qualified 2. Make more money 3. Demonstrate success 4. Gain a competitive edge 5. Secure your future 6. A better lifestyle 7. Gain confidence 8. Improve your social network 9. Improve your mortgage knowledge 10. Become an industry expert

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NAMB East 2017 Thursday-Saturday, March 16-18 Omni Atlanta Hotel at CNN Center 100 CNN Center NW • Atlanta Join NAMB—The Association of Mortgage Professionals and the country’s top mortgage professionals in Atlanta on March 16-18 for NAMB East 2017! This premiere event is proud to feature one of the largest mortgage industry trade shows in the eastern United States! In addition, as part of NAMB East, NAMB is excited to have the CFPB Ombudsman’s Office as part of their “Ombudsman Interactive,” a series of three sessions targeted at senior level executives, small business owners and loan originators.

Schedule of events Subject to change

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Thursday, March 16 10:00 a.m.-3:00 p.m. Lenders/Affiliates Council (includes lunch) Dogwood-M1 Noon-3:00 p.m. Exhibitor Setup International Ballroom-M2 3:30 p.m.-5:00 p.m. CFPB Ombudsman Interactive-Senior Level Executives Dogwood-M1 To ensure frank and open discussion, Ombudsman Interactive Sessions require pre-registration and no press, CFPB personnel, or unregistered participants will be in the session. Discussion topics will be tailored toward the interests of the intended audience, so please register for the session corresponding to your role. Please refrain from use of social media during your session. Sessions are interactive discussions rather than question-and-answer sessions, so attendance for each is capped at 75 participants. 6:30 p.m.-9:30 p.m. Casino Night to Benefit NAMB’s Legislative Action Fund College Football Hall of Fame This is a separately-ticketed event. The cost is $99 per person and includes food, two drink tickets, admission into the College Football Hall of Fame and $200 in Funny Money.

Friday, March 17

8:00 a.m.-11:00 a.m. NAMB’s Delegate Council Meeting Dogwood-M1 8:00 a.m.-11:00 a.m. Exhibitor Setup International Ballroom-M2

11:30 a.m.-1:00 p.m. Keynote Speaker Luncheon Grand Ballroom-M4 Featuring John King, CNN’s chief national correspondent and anchor of Inside Politics. This is a separately-ticketed event, cost is $60 per person. 1:00 p.m.-6:00 p.m. Exhibit Hall Open International Ballroom-M2 1:00 p.m.-1:50 p.m. Steve Richman, Sponsored by Franklin American Mortgage Dogwood-M1 Join Steve “That MI Guy” Richman for his seminar BYOB–Building Your Origination Business, a practical approach to knowing what you need to know and doing what you need to do to succeed in today’s market. In this interactive session, you will learn: The differences between being a vendor and a partner and which one works best; transactional and relationship based sales, and when to use which; the number-one most asked question in the country and how to answer it; three news sources everyone needs to know; three things every customer wants from you and four things every customer wants from your company; nine super cool apps for realtors and loan officers; and much more! 1:00 p.m.-1:50 p.m. Ombudsman Interactive–Small Business Owners Cottonwood-M1 To ensure frank and open discussion, Ombudsman Interactive Sessions require pre-registration and no press, CFPB personnel or unregistered participants will be in the session. Discussion topics will be tailored toward the interests of the intended audience, so please register for the session corresponding to your role. Please refrain continued on page 24

READY TO KICKST TA ART YOUR CAREER? GET UP TO $10,000 TO ST TA ART YOUR OWN MORTGAGE BUSINESS. KickStart Independent Mortgage Program provides up to $10,000 of start up funding for mortgage professionals who want to open their own broker shop. All you need to apply is a minimum of 3 years experience, a business plan, two letters of reference and the desire to be the best choice for your borrowers. Apply today at nambkickstart.com

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Dan Tr Tran Trranscend Mortgage Inc. T

A NAMB Program Founding Sponsor UWM

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K KickStart gave me the opportunity to leave a megabank and be my own boss. As a broker, I now have more control over the experience that I am able to provide to my clients. Applying for the grant was easy and it helped me to get my business up and running within just a few short months. hs.

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from use of social media during your session. Sessions are interactive discussions rather than question-and-answer sessions, so attendance for each is capped at 75 participants. 1:00 p.m.-1:50 p.m. Dan Ellis From the Atlanta Homeownership Center Redwood-M1 Dan Ellis, marketing and outreach specialist at the Atlanta Homeownership Center, will provide an overview of the Standard 203 rehabilitation loan that can be used for making structural repairs to an existing house including a HUD Home listed as uninsurable. In addition, he will discuss the Limited/Streamline 203k rehabilitation loan that can be used for minor repairs, cosmetic items and buyer preference items. The Limited K is very popular with Realtors because buyers can transform a house into a home more to their liking within 90 days after closing. This program can also be used with a HUD Home listed as Insurable or Insurable with Repair Escrow. Lastly, Ellis will discuss how the FHA Energy Efficient Mortgage (EEM) can be used to lower the utility cost for existing and new houses. This program can be used with a 203b or 203k mortgage, including a streamline refinance. Brochures on these repair escrow programs will be available at the presentation.

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1:00 p.m.-1:50 p.m. Adding Renovation Lending to Your Arsenal Sponsored by Plaza Home Mortgage Magnolia-M2 Featured speaker will be Ragen Cunningham, national renovation lending manager for Plaza Home Mortgage. It’s time to increase your product offering and marketability with an out-of-the-box mortgage program like renovation lending. In such a competitive marketplace, we are all looking for something that will help our business to stand out. In this engaging session, you will learn how to: Identify the advantages and unique features of these loan programs; understand how these programs fit in the current marketplace; educate your borrowers on key aspects of the program, so they can make an informed decision and investment; and ask your renovation lending questions. 2:00 p.m.-2:50 p.m. Supercharge Your Business in a Blink Sponsored by United Wholesale Mortgage Dogwood-M1 Join Mat Ishbia, president and CEO of UWM, the number one wholesale lender in the nation, for this high-energy presentation designed to supercharge your business. Mat will share strategies you can implement the moment you leave the room to take your business to new heights. This session will highlight the electric new technology that enables brokers to leave their competition in the dust by providing borrowers with a fast and user-friendly loan experience that is unrivaled in the industry. 3:00 p.m.-3:50 p.m. Turn Trash Into Treasure: Producing Profits With Private Lenders Sponsored by RCN Capital Magnolia-M2 Stop throwing money in the trash! With private lending, you have profitable solutions for deals that don’t fit traditional guidelines. Jeffrey Tesch, managing director of RCN Capital and a renowned authority on private lending, will show you how to make money from your most commonly overlooked leads. Learn how private lenders can turn your simple referrals into thousands of extra dollars. See real-life scenarios of brokers that have transformed commercial loan inquiries into cash with little to no effort.

3:00 p.m.-3:50 p.m. VA Loan Processing and Underwriting Dogwood-M1 Presented by Ricardo Holloway, loan production officer, VA Atlanta Regional Office. Don’t miss this opportunity to learn about the hot topics involving VA loan processing and underwriting directly from the VA! 3:00 p.m.-3:50 p.m. Mastering the Art of Lending Sponsored by PRMG Cottonwood-M1 Join PRMG and Kevin Peranio, chief lending officer, discussing the topic of “Mastering the Art of Lending.” Peranio has been in the mortgage banking industry since 2001, originally at First Magnus as an account executive. From 2004-2007, Kevin was the Southeast regional manager over the top territory at First Magnus with a team of 107 people. Kevin served as chief operating officer at North Star Lending for three years. As part owner, he and his team serviced loans with Fannie Mae, creating a $330 million portfolio. For the past five years, Kevin has helped build the eastern region of PRMG, overseeing wholesale, retail and correspondent sales and operations. In his new role as chief lending officer, Kevin is in charge of the loan manufacturing process from beginning to end. He and his team will help improve technology, process and file flow as well as enhance the customer experience at PRMG. 4:00 p.m.-4:50 p.m. Rod Carnes. Deputy Commissioner For Non-Depository Financial Institutions from the Georgia Department of Banking and Finance Dogwood-M1 4:00 p.m.-4:50 p.m. Ombudsman Interactive–Loan Originators Cottonwood-M1 To ensure frank and open discussion, Ombudsman Interactive Sessions require pre-registration and no press, CFPB personnel or unregistered participants will be in the session. Discussion topics will be tailored toward the interests of the intended audience, so please register for the session corresponding to your role. Please refrain from use of social media during your session. Sessions are interactive discussions rather than questionand-answer sessions, so attendance for each is capped at 75 participants. 5:00 p.m.-5:50 p.m. Cybersecurity and Your Business, Presented by Alan Davis From the U.S. Secret Service Sponsored by Freedom Mortgage Cottonwood-M1 Alan Davis began with the U.S. Secret Service in 1999 as a Special Agent in the Dallas Field office. During the past 16-plus years, Special Agent Davis has held positions as an instructor at the Federal Law Enforcement Center Training Center Criminal Investigator Training Program, Special Operations Section Counter Assault Team, and the Presidential Protection Division. Currently, Special Agent Davis is assigned to the Atlanta Field office in the Electronic Crimes Task Force (ECTF) Forensic Computer Lab, where he conducts E-Device and Network Intrusion Forensic Exams. 5:00 p.m.-5:50 p.m. Diversify Your Business–Shift Into Reverse Sponsored by Finance of America Reverse Redwood-M1 Find out how to diversify and grow your business by shifting into the HECM reverse mortgage program. With 10,000 Baby Boomers turning 62 daily, this is an incredible, untapped opportunity with high profit pricing! Learn more from Finance of America Reverse LLC, the nation’s number

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one wholesale reverse mortgage lender. Session includes illustrations of how the HECM can be used to manage wealth and demonstrates why now is the time to offer these loans as part of your clients’ portfolios. 6:00 p.m.-8:00 p.m. St. Patrick’s Day Evening Reception Sponsored by Caliber Home Loans and Featuring the Trans Am Euro Mutts Dogwood-M1

Saturday, March 18 8:00 a.m.-10:00 a.m. NAMB Committee Meetings 9:00 a.m.-1:00 p.m. NAMB Certification Class, Presented by Rocke Andrews, CMC, CRMS Cottonwood-M1 NAMB established the CRMS and CMC certification exams to provide members with an opportunity to be recognized as leaders within the increasingly competitive field of mortgage brokering. The Individuals who seek certification should know that the benefits of achieving distinction will enhance their career and reputation. If you are interested in obtaining one of these prestigious certifications, this prep class is a must! 1:00 p.m.-5:00 p.m. Exhibit Hall Open

1:00 p.m.-1:50 p.m. How to Provide More to Grow Your Business Sponsored by Angel Oak Mortgage Solutions Cottonwood-M1 During this informative session from Tom Hutchens, SVP of sales and marketing with Angel Oak Mortgage Solutions, you’ll learn: Why you shouldn’t ignore non-agency options; why it’s harmful to let good

2:00 p.m.-2:50 p.m. Lending Techniques for Your Valuable Retiree and Senior Customers Sponsored by ReverseVision Cottonwood-M1 This session will show you meaningful scenarios around using mortgage lending to impact the financial health of your retiree and senior customers. Concepts that will be illustrated include: Flexible mortgage payments in retirement; extending retirement income to match life expectancy; funding Social Security delay to maximize value and dealing with HELOC balloons or fully amortizing situations on a fixed income. Join Matt Shaffer, new business development manager, and Dan Hultquist, director of learning and development at ReverseVision, to explore this area of explosive mortgage growth opportunity. Get a jumpstart on your competition and meet your current customers where they are in life, retain them with new lending opportunities and keep them as life-long clients. 3:00 p.m.-3:50 p.m. Alternatives to Hard Money for Investor 1-4 and Small Balance Commercial Real Estate Sponsored by Velocity Mortgage Capital Cottonwood-M1 Join Joe Cowell, COO of Velocity Mortgage Capital, and lLearn about long-term financing options for clients of yours who are often turned down by traditional institutions. We will discuss the ins and outs of alternative financing options for your small business owner and investor clients. 3:00 p.m.-3:50 p.m. Fannie Mae Day 1 Certainty Overview & Discussion Sponsored by Stearns Wholesale Division Dogwood-M1 Join Michael Royer, managing director of Stearns Wholesale, and Stephen Carter, director of Single-Family Business Solutions, Fannie Mae, as they present Day 1 Certainty from Fannie Mae which gives lenders freedom from reps and warrants, plus greater speed and simplicity, and enables an improved borrower experience. Fannie Mae delivers Day 1 Certainty with three exciting new capabilities: The DU validation service, enhanced Property Inspection Waiver (PIW), and rep and warrant relief on property value. Fannie Mae will provide an overview on these Day 1 Certainty opportunities and will focus on details about the DU validation service, enhanced PIW and how to get property value accepted at submission to receive rep and warrant relief. 4:30 p.m.-5:00 p.m. Trade Show Giveaways

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1:00 p.m.-3:00 p.m. Certified Military Home Specialist Workshop, Presented by Beverly Frase of Boots Across America Redwood-M1 This course is designed to acquaint housing professionals with military terminology that is often foreign to the housing community. The course also provides the tools and introduces the skills needed by housing professionals to provide the expert service our military personnel need and deserve. At the completion of this workshop, you will take the exam to become a Certified Military Home Specialist, for which you will receive a certificate upon passing the exam. This is a separatelyticketed event. Cost is $79 per person which includes the workshop, exam and certification.

2:00 p.m.-2:50 p.m. Championship Lending Sponsored by Quicken Loans Magnolia-M2 Successful origination requires innovation, knowledge of the competition, strategic planning and grit. Join us in this session to review game film on industry trends, Quicken Loans data and market research that helps you create your plan for a championship season. Presented by David Schroder, VP of Quicken Loans Mortgage Services.

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1:00 p.m.-3:00 p.m. Creating Efficiencies for Brokers, Presented by Calyx Software Dogwood-M1 Brokering loans requires a very specific set of skills that must be executed at the right time with the most efficient processes. Learn how to streamline activities and manage processes to maximize your time management and technological investment. Topics to be covered in this training include: Generating and sending initial disclosures; electronic signature execution and audit trails; Calyx secure document exchange and management; creating Master Templates; tracking lender conditions; and pipeline views and reports.

customers walk out the door; why you don’t want to exclude potential borrowers from your marketing outreach; why proactive communications during the loan process is essential to delivering a great mortgage experience; and why understanding all possible options, you can serve as the best possible advisor to your borrower.

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List of exhibitors (as of 02/13/17)

Alphabetical Listing Company name Booth # Acopia.......................................................................... 406 ACT Appraisal.............................................................. 407 American Financial Resources.................................... 410 American Mortgage Bank............................................ 103 Angel Oak Mortgage Solutions.................................... 100 Arch MI........................................................................ 504 Axis AMC.................................................................... 309 Bayview Asset Management........................................ 506 Best Rate Referrals...................................................... 408 Bright Path Mortgage (Mortgage Assurance)................211 Caliber Home Loans..............................................713/715 Calsurance.................................................................. 507 Calyx............................................................................ 503 Cardinal Financial........................................................ 601

Carrington Mortgage Holdings LLC.............................. 303 Citadel Servicing.......................................................... 607 CMG Financial..............................................................409 Drop Mortgage............................................................ 602 Finance of America...................................................... 204 Finance of America-Reverse........................................ 206 FirstBank Mortgage Partners........................................505 First Bank SBA............................................................ 405 First Funding................................................................ 603 Flagstar........................................................................ 610 Franklin American Mortgage..................................509/511 Freedom Mortgage................................................302/304 Guaranty Trust............................................................ 106 Homes.com.................................................................. 300 HUD............................................................................ 307 Impac Mortgage Corporation...................................... 202

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P E R S P E C T I V E

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Numerical Listing Booth # Company name 100.................................... Angel Oak Mortgage Solutions 101.......................................................... Stearns Lending 103............................................ American Mortgage Bank 106............................................................ Guaranty Trust 111.................. National Mortgage Professional Magazine 200.............................. Quicken Loans Mortgage Services 201........................................................ Parkside Lending 202...................................... Impac Mortgage Corporation 203..........................................................................Radian 204...................................................... Finance of America 205.............................................. Premier Processing LLC 206........................................ Finance of America-Reverse 210.................. National Mortgage Professional Magazine 211................Bright Path Mortgage (Mortgage Assurance) 300.................................................................. Homes.com 301........................................ United Wholesale Mortgage 302...................................................... Freedom Mortgage 303.............................. Carrington Mortgage Holdings LLC

304...................................................... Freedom Mortgage 305........................................................ Velocity Mortgage 306.................................... Liberty Home Equity Solutions 307............................................................................ HUD 308.................................................................... U.S. Bank 309.................................................................... Axis AMC 310...................................................................... LoanTek 311.......................................................................... NYCB 400........................................ United Wholesale Mortgage 401.......................................................................... PRMG 402.......................................................... Scotsman Guide 403...................................... Retirement Funding Solutions 404.................................................. Plaza Home Mortgage 405............................................................ First Bank SBA 406.......................................................................... Acopia 407.............................................................. ACT Appraisal 408...................................................... Best Rate Referrals 409..............................................................CMG Financial 410.................................... American Financial Resources 411................................................................ Lender Price 500.......................................................................... PRMG 501................................................................ RCN Capital 502..........................................Lenders Compliance Group 503............................................................................ Calyx 504........................................................................ Arch MI 505........................................FirstBank Mortgage Partners 506........................................ Bayview Asset Management 507.................................................................. Calsurance 508.................................... Real Estate Valuation Partners 509........................................ Franklin American Mortgage 510.......................................................... Southwest Bank 511........................................ Franklin American Mortgage 600.................................... Land Home Financial Services 601........................................................ Cardinal Financial 602............................................................ Drop Mortgage 603................................................................ First Funding 604............................................................ LoanScorecard 605.......................................... Reverse Mortgage Funding 607.......................................................... Citadel Servicing 609.................................................. Planet Home Lending 610........................................................................ Flagstar 611..............................................................JMAC Lending 701.......................................................................... NAMB 703.......................................................................... NAMB 709.......................................................................... REMN 713.................................................... Caliber Home Loans 715.................................................... Caliber Home Loans 717..............................................................Reverse Vision

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JMAC Lending..............................................................611 Land Home Financial Services.................................... 600 Lender Price................................................................ 411 Lenders Compliance Group..........................................502 Liberty Home Equity Solutions.................................... 306 LoanScorecard............................................................ 604 LoanTek...................................................................... 310 NAMB....................................................................701/703 National Mortgage Professional Magazine............ 111/210 NYCB.......................................................................... 311 Parkside Lending........................................................ 201 Planet Home Lending.................................................. 609 Plaza Home Mortgage.................................................. 404 Premier Processing LLC.............................................. 205 PRMG.................................................................. 401/500 Quicken Loans Mortgage Services.............................. 200 Radian..........................................................................203 RCN Capital................................................................ 501 Real Estate Valuation Partners.................................... 508 REMN.......................................................................... 709 Retirement Funding Solutions...................................... 403 Reverse Mortgage Funding.......................................... 605 Reverse Vision..............................................................717 Scotsman Guide.......................................................... 402 Southwest Bank.......................................................... 510 Stearns Lending.......................................................... 101 United Wholesale Mortgage.................................. 301/400 U.S. Bank.................................................................... 308 Velocity Mortgage........................................................ 305

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Local expertise pe se e â&#x20AC;&#x201D; we work wh here you work

A Message From E. Robert Levy Chairman, Regional Conference of the Mortgage Bankers Associations and Executive Director & Counsel of the MBANJ, NJAMB and PAMB

FEBRUARY 2017 n National Mortgage Professional Magazine n

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he Regional Conference of the Mortgage Bankers Associations this year will be held SundayThursday, March 19-23, and will perhaps be the most important of all we have hosted in the previous 33 years! I say this because we will have the opportunity to address the first eight weeks of the new Trump Administration, and based thereon, assess what can be anticipated that may impact our industry’s production and profitability from that point forward. The Trump Administration is of particular interest since the policies it intends to pursue include a reduction in government regulations, a new trade policy with other nations, a revision of our tax code and other changes in the trajectory of our government of great interest to the financial sector of our country. The Regional Conference of MBAs will have experts and industry leaders speaking who will help our attendees navigate the activities of the President and his Cabinet in the early days of the Administration with a view toward determining what actions will be likely to be forthcoming that will impact mortgage lending in 2017 and beyond. If that were not enough reason to attend the Conference this year, the other sessions and breakout speakers would be. Barry Habib and Peter Bookvar, both of whom regularly appear on CNBC and were a big hit at our NE Brokers Conference, join us on Wednesday morning, to start the Residential Program on March 22. Our much heralded Industry Panel, moderated by Regina Lowrie, will then provide insights from our industry leaders following an expert panel as they analyze key regulatory programs and enforcement activities. Other panels will explain alternative mortgage products that can enhance a company’s profitability and a special panel with state and federal regulators will look at regulation after PHH. On Thursday, a fraud panel is followed by a Town Meeting Q & A Session, where attendees can provide comments and questions for our panel of experts. The Commercial Program begins with an opening cocktail reception on Sunday evening, March 19, and a General Session and breakouts on Monday and Tuesday, March 21-21. Lunch will be served on Monday with a speaker and on Tuesday in the Commercial Exhibit Hall. And, of course, our Exhibit Hall open during the cocktail reception on Tuesday evening and all afternoon on Wednesday, with lunch in the Hall, is always a major attraction for the Regional Conference. With 75 exhibit booths already taken, we expect another outstanding exhibitor experience and a networking opportunity second to none. Our cocktail receptions, on Tuesday evening in the Exhibit Hall and on Wednesday at Harrah’s Pool, sponsored by REMN Wholesale and MBANJ, provide superior networking opportunities. With all that the Regional Conference offers, I expect another great crowd in attendance, and I look forward to seeing you all there! E. Robert Levy is chairman of the Regional Conference of the Mortgage Bankers Association and Executive Director & Counsel of the Mortgage Bankers Association of New Jersey, New Jersey Association of Mortgage Brokers and the Pennsylvania Association of Mortgage Brokers. He may be reached by phone at (732) 596-1619.

SPONSORED EDITORIAL

nmp news flash

continued from page 16

evaporated, the number of equity rich homes increased. ATTOM Data Solutions reported there were 13.9 million equity rich properties—where the combined loan amount secured by the property was 50 percent or less of the property’s estimated market value—at the end of 2016, nearly 1.3 million more than at the end of 2015. These properties represented 24.6 percent of all properties with a mortgage, up from 23.4 percent at the end of third quarter and up from 22.5 percent at the end of 2015. States with highest share of seriously underwater properties were Nevada (19.5 percent), Illinois (16.6 percent), Ohio (16.3 percent), Missouri (14.6 percent) and Louisiana (14.5 percent). The major metro areas with the highest share of seriously underwater properties were Las Vegas (22.7 percent) and four Ohio cities: Cleveland (21.5 percent), Akron (20.1 percent), Dayton (20 percent) and Toledo (19.9 percent). The states with the highest share of equity rich properties at the end of 2016 were Hawaii (37.8 percent), Vermont (36.9 percent), California (36 percent), New York (34.9 percent); and Oregon (32 percent). The metro areas with the highest share of equity rich properties were San Jose (51.6 percent), San Francisco (47.7 percent), Honolulu (39.8 percent) Los Angeles (39.2 percent) and Pittsburgh (35.8 percent). “Since home prices bottomed out nationwide in the first quarter of 2012, the number of seriously underwater U.S. homeowners has decreased by about 7.1 million, an average decrease of about 1.4 million each year,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Meanwhile, the number of equity rich homeowners has increased by nearly 4.8 million over the past three years, a rate of about 1.6 million each year.”

wider, as a new data study from Zillow has found almost 15 percent of all homebuyers between the ages of 24 and 35 during 2015 were unmarried couples, up from 11 percent in 2005. In some markets, there is a greater prominence of unmarried couples buying residential property: in Washington, D.C., for example, almost 16 percent of all young homebuyers in 2015 were unmarried couples, up from 7.5 percent 10 years earlier. But while more unmarried couples are buying houses, fewer singles are entering into homeownership: roughly 25 percent of all 2015 homebuyers ages 24-35 were single, down from 28 percent in 2005. “Buying a home is a big part of The American Dream— equally shared by Millennials and Baby Boomers alike—but it’s becoming extremely difficult to make it work on a single income,” said Zillow Chief Economist Svenja Gudell. “Many singles looking to purchase a home on their own may not make enough money to afford or qualify for a mortgage on their dream home. That makes buying a home with a significant other even more appealing, even if marriage isn’t quite part of the picture. Simply put, buying a home is much easier with two incomes. Assuming home value growth continues to outpace income growth, I imagine this trend will continue.”

More Unmarried Young Couples Buying Homes Together

NewDay USA has welcomed Valley Forge Military Academy’s Freshman Cadet Christian Rachiele to the list of students who are NewDay USA scholars. The 13-year-old Cadet Rachiele was awarded a four-year academic scholarship, presented through the NewDay USA Foundation’s scholarship program, during a ceremony at Valley Forge

The intersection of marriage and homeownership is growing

NewDay USA Foundation Presents Scholarship to Freshman Cadet

scholarships in 2013, the Foundation has committed approximately $1.2 million in scholarship funds to children attending select military high schools. Gap Between Appraiser and Homeowner Expectations Widens

For the first time in six months,

the gap between homeowner estimates and appraiser opinions expanded, according to the latest National Home Price Perception Index (HPPI) released by Quicken Loans. The new HPPI data found the average appraisal value dropped 1.33 percent below owner expectations in December, a turnaround from the trend during the second half of last year that found a narrowing of valuation opinions between homeowners and appraisers. Last month also saw a decline in appraisal values, with Quicken Loans’

Home Value Index determining that average home value was 1.19 percent lower in December than in November. On a year-over-year basis, appraised values rose by 3.85 percent. “Home value growth has been mostly driven by enthusiastic buyers vying for a smaller than usual inventory of properties,” said Quicken Loans Chief Economist Bob Walters. “Appraised values have dipped along with the seasonal decline in sales continued on page 32

NAMB+ is an independent, wholly-owned, for-proﬁt marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, I hope you are planning to join us in Atlanta, GA March 16-18 for NAMB East! The NAMB+ Board of Directors will be in the Exhibit Hall all weekend to answer questions you have and to introduce you to some of our amazing Endorsed Providers that will be there. This is a perfect opportunity for you to learn more about NAMB+ and, if you haven’t done so already, to start realizing the beneﬁts and added value that NAMB+ brings to your NAMB Membership. If you’re unable to join us at NAMB East, I hope you will consider attending the 2017 NAMB Legislative & Regulatory Conference in Washington, DC April 22-25. NAMB+ is proud to once again be a sponsor of this cornerstone event for NAMB and we are extremely excited about the conference’s new location at the JW Marriott Washington, DC! NAMB members receive a discount off Brokers Compliance Group compliance support programs.

CalSurance® offers competitively priced Professional Liability Insurance for NAMB members. Multiple coverage options and an easy application process are available. Visit www.calsurance.com/namb for program details and to apply.

Finally, keep an eye on your email in the coming weeks for more information about some of our newest Endorsed Providers and additional opportunities to connect with us and learn about the incredible products, services and pricing that NAMB+ Endorsed Providers continue to offer NAMB Members. Sincerely,

Nathan Pierce, CRMS, CMP, President NAMB+, Inc. l npierce@advfund.com See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information.

InfoSight, Inc. offers proven and affordable cyber security, risk management, IT Infrastructure and regulatory compliance solutions. Visit www.infosightinc.com or contact us at 305-828-1003 / 877-577-9703.

without the high costs. We offer all NAMB members a 10% discount off their phone services. For more information please e-mail stevew@simplii.net

If you want a social and mobile marketing strategy that gets noticed contact Social5 today for a FREE consultation and demo and to receive your NAMB member discount pricing.

SYNCRO connects mobile salespeople to their ofﬁce website leads. NAMB Members receive a 10% discount off regular prices for monthly unlimited SYNCRO Web Chat packages.

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eEndorsements promotes your success by making it easy to capture customer reviews, control your content, and publish your testimonials where they matter to drive new business. Automatically share your reviews on Facebook, Twitter and Linkedin. Easily invite your clients to share reviews to sites like Yelp and Zillow. eEndorsements will also hosts a review proﬁle page indexed and found in Google Search. eEndorsements offers a 34% discount to NAMB Members. For more info please visit http://eendorsements.com/namb.

MBS Highway provides daily guidance and insights from Mortgage Market expert Barry Habib who predicted the bottom of the Housing Market. Exclusive NAMB Members offer to try MBS Highway FREE for 30 days. Visit MBSHighway.com/registration/nambplus-registration

NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership. Simplii VOIP business phone solutions include all the features and functionality of a high end business phone system

The Bond Exchange is a national surety agency specializing in providing mortgage license bonds to thousands of mortgage professionals across the country.

USA Business Lending is the nation’s premier commercial brokerage ﬁrm representing over 3500 lenders.

NAMBPLUS Login Instructions Username = Member Number Password = First initial of your first name capitalized and your last name with the first letter of the last name capitalized (example = JStevens) *If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many benefits NAMB members receive!

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MassMutual Disability Income Through an arrangement with Massachusetts Mutual Life Insurance Company (MassMutual), NAMB members have an opportunity to apply for individual disability income insurance (DI) at discounted rates. Learn more by calling Andrew Berman at 516-652-1819

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Military Academy and College (VFMAC). Pictured above is Rear Admiral Tom Lynch, (USN Ret.), executive chairman of NewDay USA; Christian Rachiele and Amy Rachiele. “We congratulate Christian and salute his determination, intellectual curiosity, passion and desire to attend the prestigious Valley Forge Military Academy,” said Rear Admiral Tom Lynch, (USN Ret.), executive chairman of NewDay USA. “The NewDay USA Foundation scholarship program provides an amazing opportunity for children whose parents or guardians have made great sacrifices for our country. By helping to ease the burden of tuition, we honor the service and the memory of Christian’s father Major Timothy Rachiele.” During the presentation ceremony at VFMAC’s Alumni Museum in Mellon Hall, Cadet Rachiele, received congratulations from the school’s other current NewDay USA scholars, Cadet Tyler McCrae, Cadet Quinten Bushyager and Cadet Braeden Bushyager. Rear Admiral Lynch presented the scholarship on behalf of NewDay USA Foundation, joined by NewDay USA Board of Advisors members Jerry Johnson, Regina Lowrie and Walt Rolph. Gary Morrison, vice president of scholarship development at NewDayUSA, was also on hand. “Valley Forge is thrilled that Cadet Christian Rachiele will join Cadets Braeden Bushyager, Quinten Bushyager and Tyler McCrae as part of the NewDay USA scholars here at Valley Forge Military Academy and College,” said VFMAC President Colonel John C. Church Jr. “Like NewDay, we at Valley Forge value leadership and we agree that leadership truly sets us apart at the Forge in service to nation. Scholars are chosen based on performance and the military service of a parent. We are so pleased that NewDay can help provide this scholarship which is an important foundation for our cadets.” The NewDay USA Foundation provides scholarships to children of fallen or severely wounded veterans, and those whose families have endured multiple, extended deployments. Since the inception of these

Vendor Assessments Must Include Performance Evaluations By Andrew Liput

FEBRUARY 2017 n National Mortgage Professional Magazine n

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hen the CFPB issued its Bulletin 2012-3 addressing third-party service provider risk management, the industry largely responded with a blank stare. Because most lenders had never developed risk management protocols and vetting processes for vendors, there was significant confusion about what they needed to do to satisfy regulators. The Bulletin itself was somewhat vague and did not offer a specific list of tasks nor a roadmap or flow chart of detailed steps to ensure compliance and consumer confidence. It did, however, indicate that ongoing monitoring was necessary, and that lenders were to “take prompt action to fully address any problems identified through the monitoring process, including terminating the relationship when appropriate.” In the wake of the Bulletin, the industry responded through private and public means, to provide appropriate tools to manage risk, including for example ALTA’s Best Practices Initiative, and Secure Settlement’s Third-Party Vetting Tool and Nationwide Risk Database. These efforts, and those by others, were designed to ensure minimum uniform standards of risk management and also provide critical data to allow a lender to assess whether or not a vendor posed a risk of harm prior to engaging in a business relationship. What these efforts did not fully address was the continual evaluation of actual performance by vendors. Beyond the licensing, insurance, internal controls, and background checks, there is more to the lender-vendor relationship and the impact the relationship might have on the consumer experience. Is a licensed and insured vendor who has a solid business platform and clean business record competent at what they do? Will the consumer experience be one that meets the reputation of the lender which has introduced the vendor into the lender-client relationship? After all, someone can look great on paper, but create a terrible consumer experience through their attitude, lack of experience, lack of professionalism, and overall incompetence. Consequently, lenders need to do more than just collect paperwork about vendors. They need to actually measure their performance, both internally with operations and among their clients, to determine whether a vendor is doing their job competently. This can easily be determined by periodic surveys of your staff and post-transaction surveys of your customers. When poor performance is uncovered, a lender needs to address it with the vendor and determine whether the relationship should be adjusted or terminated. However you choose to do it, performance evaluations are a critical component of vendor management and must be a part of your overall compliance toolbox.

nmp news flash

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around the winter months. It’s yet to be seen if value growth will build as sales rise in the spring, or as construction increases.” Hispanic Homeownership Rate Continues to Rise

The Hispanic homeownership rate rose from 45.6 percent in 2015 to 46 percent in 2016, according to data from the National Association of Hispanic Real Estate Professionals (NAHREP). This is the second year in a row that this demographic experienced a homeownership rate increase. This increase in homeownership is mirrored by a decline in the overall U.S. homeownership rate—a slight dip from 63.7 percent in 2015 to 63.4 percent last year—and reported declines in homeownership among AfricanAmericans and AsianAmericans. NAHREP also reported that Hispanics led in net household formations in 2016, adding a total net increase of 330,000 households. “With credit remaining tight and limited housing inventory in several markets, these numbers are extremely encouraging and a testament to the economic resilience of the Hispanic community,” said 2016 NAHREP President Joseph Nery. “As the mortgage industry continues to recognize the exceptional opportunities in serving the Hispanic market and adjusts accordingly, we expect these numbers to only The Best Market for Real Estate Agents Is …

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

Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureSettlements.com.

SPONSORED EDITORIAL

bags and head across the Pacific. According to the 2017’s Best Places to Be a Real Estate Agent report from WalletHub, Honolulu is best place for real estate professionals to ply their trade. WalletHub’s compared 150 of the largest U.S. cities using 14 key indicators of a healthy housing market, ranging from “sales per agent” to “annual median wage for real estate agents” to “housing-market health index.” The conclusion placed Honolulu as the best market for real estate agents, followed by Seattle; Denver; Boston; Aurora, Colo.; Madison, Wis.; Reno, Nev.; San Francisco; Irvine, Calif.; and Austin, Texas. Mississippi’s capital city of Jackson ranked last among the 150 cities in the study. Among the specific market characteristics studied by WalletHub, Oxnard, Calif., has the most homes sold in the past year per real estate agent (114.09) and the lowest real estate job density 1.28, while San Francisco has the highest median house price ($799,600) and listings with the fewest days on the market (47). Bakersfield, Calif., has the highest annual median wage for real-estate agents ($89,890) and Yonkers, N.Y., has the highest average ratio of home sale price to home list price (2.03), while Henderson, Nev., has the highest home turnover rate (9.87 percent) and Sioux Falls, S.D., has the lowest unemployment rate (2.3 percent).

Real estate agents looking for the best market to make a living may want to pack their

Note: Submissions sent via email are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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See product guideliness for program restrictions. This is a business-to-b business communication provided for use by mo ortgage professionals only and is not intended fo or distribution to consumers or other third parties s. It is not an advertisement; as such term is +*)(*+'&('%*$#&"('!'! ! '" ' * #&"(' ' "+ $#'&( " #&"('& ' *$#'#"'$ ( *' &# " #'("#&$* ' " * &+ *' " * *'& ' '+& & &"('" ' " * &+ *' &( ($& '%* &$* ' ($ ' %' ! ' ' " * &+ *' &( ($& '%* &$* ' ($ 'All rights reserved.

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Making Friends With Crocodiles Rethinking your 2017 marketing plan with rising interest rates By By Bubba Bubba Mills Mills

FEBRUARY 2017 n National Mortgage Professional Magazine n

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“If you live in the river you should mak love that quote, but let me adapt it for you—the mortgage lender: “If you work in the mortgage industry you should make friends with change!” And of course the change everyone is talking about these days is interest rates. It happened—and no big surprise: As expected, for only the second time since the Great Recession, the Federal Reserve opted to raise interest rates one-quarter of a point. And I wouldn’t be a bit surprised if we see more rate increases during 2017. Many economists agree and predict mortgage rates will

keep climbing. In fact, Lawrence Yun, the chief economist for the National Association of Realtors (NAR), expects rates for conforming loans to hit 4.5 percent by the end of 2017 and says that jumbo loans should be roughly in line with the conforming rates. “Historically, that’s a very favorable rate, but compared to recent times, it is pinching the consumer,” Yun said. “The period of ultra-low interest rates is over. We are getting back toward normalization, so this rate increase should not be viewed as alarming.” The big question for mortgage

lenders of course is this: “How can I still have a stellar 2017 despite those rising interest rates?” Glad you asked. First, no fretting because you can have a great year. Consider these items as you plan for the rest of 2017: 1. We’re coming off a remarkable year. NAR predicts 2016 existing-home sales will reach 5.42 million— that’s 3.3 percent higher than 2015 and the best year since 2006. Plus, in 2017, sales are forecast to grow an additional two percent, to 5.52 million.

2. Rates are still low by historical standards. Yes, rates have jumped over the past few months, pushing the average rate on a 30year, fixed-rate mortgage to over 4.3 at the start of 2017. It was April of 2014 when we last saw rates at this level. 3. Rates won’t price most buyers out of the market. Sure, mortgage rates do affect affordability, but they don’t shut down home buying altogether. Instead, prospective buyers may just look at different neighborhoods or houses

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that need some repairs. Yun at NAR says that while homebuyers might face higher monthly mortgage payments, at the current median home price, a typical buyer is looking at about a $70 difference per month. So now, those buyers who’ve been on the fence and who’ve been worried about rising rates have another reason to bid on a house. All you need to do is give them a little nudge. 4. You can now play the role of educator. Remember,

borrowers might have a good chunk of equity in their homes from rising prices, so homeowners in high-cost areas can tap that equity to use as a down payment on their next home. And don’t forget the possibility of fasttracking a refinance. Sure, those with four percent mortgage may not see a refinance over the next year, but those still in a five percent mortgage might be perfect for that option. I’ll close with this: I think the key in 2017 for mortgage lenders will be about responding

to market changes and working as a consultant to keep your

prospects informed of those changes and their impact.

Bubba Mills is CEO of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit CorcoranCoaching.com.

n National Mortgage Professional Magazine n FEBRUARY 2017

a k e f r i e n d s w i t h t h e c r o c o d i l e . ” —Proverb

FEBRUARY 2017 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

A Smorgasbord of RESPA Section 8 Violations By Jonathan Foxx

l Requiring all consumers to apply for and obtain preapprovals with Prospect before allowing them to submit an offer on a property; l Paying their agents cash or a cash equivalent bonus each time the agent steers a consumer to Prospect; l Selectively imposing economic measures to coerce consumers into using Prospect, such as fees that

would be waived if the consumer used Prospect, or credits that would be given only if the consumer used Prospect; and l Directly referring consumers to Prospect. Prospect is not some rinkydink mortgage lender. It is one of the largest independent retail mortgage lenders in the United States, with nearly 100 branches nationwide. And these referral relationships lay out as the real estate brokers being but two of more than 100 real estate brokers with which Prospect allegedly had improper arrangements, and Planet Home Lending LLC is a mortgage servicer that allegedly referred consumers to Prospect Mortgage and accepted fees in return. Now let’s take a deeper dive into how these referrals were structured. See if you can catch the violations! I will break down each categorical area that can trigger RESPA violations. Violating RESPA by using lead agreements to pay brokers for referrals Lead agreements simply are blatant attempts to circumvent RESPA either in fact or in spirit. Actually, the violations stemming from these types of agreements are easily identified by Examiners. Take a look at this scenario. It is laid out here in a fact pattern.

l Lender enters into lead agreements with more than 200 different counterparties. Most of these counterparties are real estate brokers. 37 l Under these agreements, lender pays the counterparty for each lead it receives. A lead generally consists of a prospective buyer’s name, address, email address, and phone number. Lender then reaches out to the prospective buyer to market its loan products. l But the counterparties who receive lender’s lead fees go well beyond simply transferring information about prospective buyers. They also actively refer prospective buyers to lender’s loan officers. l Most of lender’s lead agreements include an exclusivity provision. (This provision prohibits the counterparty from sharing the prospective buyer’s information with lender’s competitors, and discourages the counterparty from promoting other lenders to those prospective buyers.) l To maximize the number of leads they provide to lender’s loan officers–and their continued on page 38

n National Mortgage Professional Magazine n FEBRUARY 2017

Under the terms of the Order, Prospect is now stuck paying a $3.5 million civil penalty for its illegal conduct, and the real estate brokers and mortgage servicer will pay a combined $495,000 in consumer relief, repayment of ill-gotten gains and penalties. Take a look at these allegations and let’s put a check where there is a violation of Section 8(a) of the Real Estate Settlement Procedures Act’s (RESPA) prohibition on the payment of kickbacks in exchange for referrals of federally related mortgage loans, 12 U.S.C. § 2607(a), and its implementing regulation, Regulation X, 12 C.F.R. part 1024, as well as by violating RESPA, mutatis mutandis, also then violating Section 1036 of the Consumer Financial Protection Act (CFPA), 12 U.S.C. § 5536. Here goes! Allegedly steering consumers to Prospect, often with Prospect’s encouragement, by:

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et another cautionary tale out of the Consumer Financial Protection Bureau (Bureau) about referrals. Yet again, the Bureau took action against a mortgage lender, this time Prospect Mortgage LLC, which happens to be a major mortgage lender, for paying illegal kickbacks for mortgage business referrals. Not stopping there, the Bureau also took action against two real estate brokers (RGC Services Inc., (doing business as ReMax Gold Coast) and Willamette Legacy LLC, (doing business as Keller Williams Mid-Willamette), as well as a mortgage servicer (Planet Home Lending LLC) that allegedly took illegal kickbacks from Prospect. So, here we go again! Now there is yet another Consent Order (Order) on a subject that has been vetted many times already in litigation. How many such Consent Orders need to be had before there is a strong wake-up call? Although Prospect has consented to the issuance of this Order by the Bureau, without admitting or denying any of the findings of fact or conclusions of law, why does it have to come to such a sorry state where a punitive action arises in the first place? Does anybody really believe that the alleged RESPA violations are not foreseeable?

Is Your AMC Putting You At Risk? Deniability is not a defense By John P. Hamameh Esq.

FEBRUARY 2017 n National Mortgage Professional Magazine n

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ppraiserLoft … does the name ring a bell? For some, it may. They were the AMC who shut their doors while still owing substantial debts to appraisers. Ultimately, some of those appraisers brought a lawsuit against the lender, claiming they were responsible for the debts of

AppraiserLoft. We are at a point in our industry where most will acknowledge the lender is responsible for the actions and choice of their AMCs and vendors. The agent/principal relationship is in full effect between these two parties. So with that being said, are you confident that your AMC is not putting you at risk? Let’s think about this for a minute. According to CFPB.gov, since 2012, the Consumer Financial Protection Bureau (CFPB) has received 216,373 complaints specifically regarding mortgages. That is nearly 4,000 complaints per month. That is a somewhat sobering number, especially when you consider those are solely complaints filed with the CFPB. Other agencies such as the FDIC, OCC, FHFA and HUD are constantly receiving complaints as well. So what can you do? Is there any way to avoid the risk? The main thing to acknowledge here is that you must conduct the most thorough due diligence possible, with all of your vendors. Due diligence reviews should be over the top. They should be “overkill.” They should be an annoyance for your vendors to have to complete. Do not simply accept vague or ambiguous responses, ask for detail—put your vendors through hypothetical situations. Everyone knows it is one thing to say you are doing something, but it is a whole other thing to do what you are saying. It is not difficult to put words on paper and create policies to pass around, but are you confident those words and policies are being adhered to? How do you know? How is your AMC handling the following? l l l l l l

GLB/NPI Security Which C&R Fee Presumption is utilized ECOA delivery protocol Dodd-Frank Mandatory Reporting procedures Texas’ review requirements North Carolina’s specific payment requirement

Could you give detailed responses for all of those? That is just a miniscule sampling of things you should be aware of when it comes to your AMC/vendors. The moral of the story is to be more vigilant and cognizant of the fact that your AMC could ultimately be putting you at risk. Make sure that you are choosing your partners wisely and continually monitoring their compliance programs. At up to $10,000 per violation, you cannot afford not to.

John P. Hamameh Esq. is chief compliance officer and general counsel for Class Appraisal, a national AMC. John is a licensed attorney and real estate broker, whose practice has focused on real estate and regulatory compliance. He may be reached by phone at (248) 220-2360 or e-mail JHamameh@ClassAppraisal.com.

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respa section 8 violations

resulting revenue streams from these agreements–many real estate brokers provide incentives for their agents to steer buyers and sellers to lender’s loan officers. Some brokers pay their agents each time the agent refers a consumer to lender. n Example 1: Lender pays one broker anywhere from $25 to $500 per lead, depending on the time period and the type of lead. This typically totals $2,000-$3,000 per month for this broker. The broker, in turn, passes some of the spoils on to its agents. During the broker’s monthly meetings with its agents, the broker physically hands out $20 bills to its agents, one for each consumer that the agent directed to one of lender’s loan officers. n Example 2: Another broker also pays a portion of lender’s lead fees to its agents. Broker, in return, gives a cash-equivalent credit to its agents for each consumer that the agent steers to lender. The agents can use the credit to offset (in whole or in part) the monthly fees they pay to the affiliate of the broker. The amount the broker pays to its brokers increases with the volume of referrals, with some agents receiving more than $500 in a given month. l Lender encourages the brokers to employ these tactics. As lender’s Director of Strategic Alliances allegedly says, he wants brokers to “invest some of the listing lead fees by incentivizing agents to use us.” l One of lender’s regional sales managers sends an e-mail to a broker, which includes suggested language for the broker to send its agents. The message reads, in part, “In order to promote our relationship [with lender, broker] will pay each agent $100 for each Qualified Buyer Lead that we send to lender.” Violating RESPA by using MSAs to pay brokers for referrals Then there’s the messy Marketing Services Agreement (MSA) gambit gone awry! l Lender enters into MSAs with

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more than 120 different counterparties. Most of these counterparties are real estate brokers. l Lender pays real estate brokers a fixed amount of money per month under these MSAs, ranging from a few hundred dollars to over $20,000 a month. In return for the monthly payments, the brokers purportedly perform marketing services for lender. l Lender, however, manages these MSAs to encourage referrals. Lender bases its payments on referral levels, not marketing efforts. And lender also tracks these referral levels as a percentage of the counterparty’s overall business. Lender labels this figure its “capture rate” of the counterparty’s business. n Example: If broker has ten clients use various lenders in a month, and four of those lenders use lender’s loan officers, lender’s capture rate would be 40% for that broker. l Lender monitors its monthly capture rate of each counterparty’s business. Lender also holds monthly meetings with its MSA counterparties. During these meetings, according to varying versions of Respondent’s “MSA Monthly Review Checklist,” lender will “review the capture rate and identify missed opportunities amongst agents and consumers.” l If the capture rate drops below a certain percentage of the counterparty’s business, lender might either lower the monthly amount it pays or discontinue the MSA. Violating RESPA by using desk licensing agreements to pay brokers for referrals The age-old desk licensing agreements are often problems without solutions. Consider these time-honored maneuvers that charge ahead right into the buzzsaw of adverse administrative actions. l Lender enters desk licensing agreements with more than 100 different counterparties. These counterparties are all real estate brokers.

l Under these desk licensing agreements, lender pays various real estate brokers to locate its loan officers onsite with the broker. But these agreements are not just payments for renting office space. The brokers also promise to promote lender “as a preferred lender” and endorse the use of lender’s “services to its employees, agents, and the visiting public.” l Lender analyzes the value of these desk licensing agreements in terms of the number of referrals they produced per office, rather than whether they are paying market rates for the cost of renting office space in a particular area.

explains this change to his team thus: “Of course we desire that our loan officers prequal all buyers, but we have to manage that outside the contract and cannot contractually require it” in the lead agreements themselves. l The listing agents who works for a broker receiving lead fees or MSA fees from lender often insert the preapproval requirement into the agentonly remarks section of the multiple listing service, the MLS, which the general public could not see. These

instructions require the buyers’ agents to inform their buyers that they need to obtain preapproval specifically with one of lender’s loan officers before submitting offers on the sellers’ properties if they wanted their offers to be considered by the sellers. Lender calls this being “written in” to a property listing. n Example: Broker’s listings state that “All buyers MUST be pre-qualified with no obligation or cost” with the lender’s loan officers. This tactic steers consumers to lender. “Writing in” the

lender’s loan officer into the MLS listing gives lender the inside track to the consumer’s eventual mortgage business. Much of the information a consumer provides during the preapproval process is also used in a mortgage application. l Lender’s officials actively encourage “writing in” as one means to drive up the number of referrals for which lender is willing to pay under its MSAs and lead agreements. n Example: One of lender’s continued on page 40

Violating RESPA by encouraging broker and agent counterparties to require buyers to obtain preapprovals with lender’s loan officers The following gimmicky jig is such a mind-bending booby trap that it bespeaks a kind of arrogance to even venture its stratagem. l Lender’s broker counterparties and their agents also use the preapproval process to “funnel” consumers to lender’s loan officers.

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l At some point, lender stops incorporating this scheme directly into its agreements with brokers. But it continues to actively encourage the brokers receiving fees through an MSA or lead agreement to employ this practice to steer consumers to lender’s loan officers. The lender’s Senior Vice President allegedly

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l Lender sometimes incorporates this scheme directly into its lead agreements. n Example: Lead agreement requires the broker to “educate and train” its agents on the need for consumers to seek preapproval with lender, and that the broker will only earn lead fees for those listings in which the lender “has been designated as the preferred lender such that the listing agent is required to have all customers who desire to submit an offer on the property receive” lender’s mortgage pre-qualification.

FHA MIP to Undergo Major Changes Some things to keep in mind when the future is … unknown?

here are big changes to FHA Mortgage Insurance Premiums this month. The U.S. Department of Housing & Urban Development (HUD) said that the reduction to the annual mortgage insurance (MI) premiums borrowers pay when taking out government-backed home loans has been "suspended indefinitely." What does this mean? Are you waiting to see? In one of the first actions of his Administration, President Donald Trump suspended a pending rate cut for mortgage insurance required for FHA-backed loans. There are hundreds of questions being asked. People are gathering to talk about what they plan on doing when the changes hit. Are you prepared? The truth is no one knows what changes are coming or if we will even be writing FHA mortgages much longer. During times like this, a lot of people hold off on marketing, not wanting to waste good money. Then there is always that select group of people who are closing a lot of loans while everyone else waits to see what happens. These people choose to roll the dice and end up making a lot of money. This is for a variety of reasons. The biggest reason is that there is less marketing going out which increases response rates for everyone. So, while some people wait and close no new business, others spend extra money on marketing and get three to four times the return they normally would. Here’s what we know about FHA mortgage business:

FEBRUARY 2017 n National Mortgage Professional Magazine n

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l There are thousands of people who NEED help l FHA mortgages are often their only hope l Marketing is working very well right now and home values are increasing nationwide l There are changes coming that may change the way refinance mortgages are written Monetize your marketing In today’s mortgage business, there’s no time to shop around for marketing products and services. Your time needs to be spent with prospects and customers. Finding a marketing company that can handle all of your marketing needs and not just one aspect is more important than ever. A company that will also track all of your marketing and send you reports that will keep you ahead of the trend. Use CRM tools to track five to 10 times the prospects allowing you to work with more customers in the same amount of time. There are hundreds of online tools available to help increase your return-oninvestment (ROI). Find a company that already understands how they work and will help you decide which ones are a good fit for you.

TagQuest Inc. is a full-service marketing firm specializing in marketing for the mortgage industry. Call (888) 717-8980 or visit www.tagquest.com.

IMAGINE • INNOVATE • SUCCEED SPONSORED EDITORIAL

respa section 8 violations

regional sales managers suggests that a broker and the broker’s agents could generate more leads–and therefore receive more lead fees from lender–if they will “add a requirement to your listing agreements and on the MLS that all buyers need to be pre-approved” by lender. l Some brokers that engage in the “writing-in” practice even require prospective buyers who had already obtained preapproval with another lender to also obtain preapproval with the preferred lender. Lender and the brokers called this a “double application,” “double app,” “cross qualification,” or “cross qual,” referring to the idea that such buyers would have to be preapproved a second time. Brokers sometimes even force all-cash buyers to obtain preapproval with one of lender’s loan officers. Violating RESPA by a mortgage servicer for referrals Now we move to the metastasizing effect caused by skirting RESPA! The mortgage servicer becomes a dimension of the apparatus of deceit. This stunt is a tour de force of collusion. l Lender signs a contract called the Master Origination Services and Sale Agreement (“Agreement”) with mortgage servicer. Under the Agreement, mortgage servicer services its servicing clients and, in the course of doing so, tries to persuade them to refinance their existing mortgage with lender. In return, lender pays mortgage servicer a portion of the proceeds from any resulting refinance and sends the mortgage servicing rights (MSRs) on the refinanced mortgage to lender. l The Agreement requires mortgage servicer to identify its servicing clients who are potentially eligible for a HARP refinance, and also markets lender as mortgage servicer’s preferred refinance partner to them. Mortgage servicer sends letters containing its logo alongside lender’s logo.

continued from page 39

l Mortgage servicer also calls consumers on lender’s behalf. Mortgage servicer allegedly tells consumers, “As a valued customer of … [mortgage servicer], we would like you to take advantage of a refinance opportunity to reduce your payment on your current mortgage loan.” If the consumer expresses interest, mortgage servicer puts the consumer on hold, transfers the call to lender, and makes an introduction to smooth the transition. Mortgage servicer refers to lender’s personnel as “our loan officers” and to lender as its “preferred partner.” Lender then tries to persuade the consumer to apply for a refinance mortgage. l After lender originates a loan derived from such a referral, it bundles it with other HARP loans referred from mortgage servicer. Once it sells the bundle to an investor, lender then splits the net proceeds 50/50 with mortgage servicer and sends the resulting MSRs back to mortgage servicer under the terms of the Agreement. Violating RESPA by using a third-party’s Web site ads to pay for referrals Web site advertising and the use of Web sites for mortgage loan originations are fraught with mine fields of potential violations. But where their use is part of a scheme involving a third-party Web site and co-marketing agreements, the results are predictably perilous. l Although the lender exits MSAs and lead agreements in late 2015, it continues to employ co-marketing agreements, which provide another means for it to continue to pay for referrals. l Under one such set of arrangements, lender pays for a portion of a real estate agent’s advertisements on a third-party Web site. The website includes a database that prospective buyers can search to access publicly available information from the MLS about a given real estate listing. The third-party Web site displays a page for each listing in its database. continued on page 50

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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.

Flagstar Purchases Delegated Correspondent Business From Stearns Lending

FEBRUARY 2017 n National Mortgage Professional Magazine n

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Stearns Lending LLC has announced the sale of its Delegated Correspondent Lending business to Flagstar Bancorp Inc. Stearns Lending remains fully committed to its production in all other channels, including its non-delegated correspondent product offerings. Stearns’ business consists of approximately 250 correspondent relationships accounting for over $7 billion of agency and governmental residential mortgage loan production annually. Stearns’ employees and subcontractors associated with the delegated business will transition to Flagstar. “Over the last several years, we have successfully built production volume in our other channels, reaching a maturation that enables us to meet and exceed our needs,” said Brian Hale, CEO at Stearns Lending. “The strategic decision to exit the delegated Correspondent business is consistent with our evolution as a company.” Alessandro P. DiNello, Flagstar’s president and chief executive officer, said, “The acquisition of Stearns’ correspondent platform gives us a tremendous opportunity to expand our market share in the delegated space. Throughout our analysis of the business, we have been impressed with the Stearns’ team’s approach to the correspondent channel, their focus on customer service and their commitment to sound risk

management. We believe this team will be a strong cultural fit with the Flagstar team.” Wells Fargo Securities served as financial advisor to Stearns and Sheppard, Mullin, Richter & Hampton LLP served as its legal counsel. BuckleySandler LLP served as legal counsel to Flagstar. “We are excited to add the highquality team from Stearns,” said DiNello. “We believe that there is a continued opportunity to grow our market share and expand our relationship with these correspondents. Being a bank, we can offer these new customers additional products and services, deepening our relationships with them.” Castle & Cooke Mortgage Experiences 28 Percent Growth in 2016

Castle & Cooke Mortgage LLC experienced a 28 percent yearover-year increase in loan production in 2016, and is looking at further growth in 2017 as the company plans to continue opening new branches and adding employees. The increase in 2016 loan production follows a 27 percent rise in production in 2015. “Castle & Cooke Mortgage has experienced consistent growth in the past two years,” said Castle & Cooke Mortgage President and COO Adam Thorpe. “With several new branches in queue to be opened this year, we are already on track for a successful year in 2017.”

To accommodate its rapid growth, Castle & Cooke Mortgage moved into new, larger office in Draper, Utah last summer. The company increased its employee count by nearly 25 percent to more than 350 employees in 2016, adding employees at both the corporate level and in new and existing branches across the country. In the latter part of 2016, new hires were collectively responsible for about 20 percent of monthly production volumes. “Higher rates and industry production projections for 2017 present challenges for all lenders,” Thorpe said. “Yet as we continue to expand, we see great opportunities to help even more Americans achieve their dreams of homeownership. We make obtaining a mortgage a very smooth transaction for borrowers with great customer service and an efficient loan origination process.” Goldwater Bank to Open New Headquarters in Phoenix

Goldwater Bank NA has announced the opening of their new headquarters in Phoenix, Ariz. The state-of-the-art banking facility will be home to the depository office, as well as serve as the Bank’s national headquarters . “We could not be more excited about the new location and all the amazing opportunities it brings,” said Julie Merhege, president and

chief operating officer of Goldwater Bank. “The new facility will allow us to expand our banking platform and accommodate more clients with our state of the art technology.” Goldwater Bank will be launching a brand new Web site, featuring new customer capabilities. The new site is intended to allow the customer to essentially bank from anywhere, with new technological features intended to make banking at Goldwater easier than ever. “We have experienced such positive growth over the past year, it seems only fitting to start 2017 with the launch of our new site and celebrate a re-opening of our new location,” said Merhege. With the new site and facility, Goldwater Bank will be able to offer its online banking services nationwide in conjunction with its nationwide residential mortgage lending platform. “We want our customers to know that, no matter where they are or what services they need, they can access Goldwater Bank from anywhere,” said Merhege. “We are very excited to continue our positive growth into 2017, and with the new location and new Web site, the possibilities are endless.” FundLoans.com Selects Comergence for Wholesale Originator Oversight

Comergence has been chosen by FundLoans.com to implement a secure and streamlined solution to manage their newly created wholesale channel for third-party originator oversight. FundLoans.com has existing operations servicing Florida and

the Western United States and is solely focused on jumbo non-QM loans. Using the platform to approve partners will ensure they do business with originators that need their unique jumbo product, and are accustomed to using the Comergence technology. “We’re pleased that we can assist FundLoans.com with their Wholesale channel efforts and regard them as key players in a niche funding market,” said Comergence President Greg Schroeder. “The partnership will be a win for both the FundLoans.com team and all originators registered with Comergence who can utilize their specific product offerings.” By choosing Comergence, FundLoans.com will also be able to standardize their recruitment process while having the added regulation benefits that the Comergence platform offers. “Service is a critical part of our business philosophy and with expertise in specialized funding we need to have a process in place that can quickly get our brokers approved,” said Jon Maddux, FundLoans.com’s chief executive officer. “Giving them the ability to apply using the Comergence gold standard, falls in line with our service requirements.”

the Stonegate Mortgage team to accelerate the build out of Home Point Financial,” said Willie Newman, Home Point’s chief executive officer. “The combined business will have full national coverage across all channels of mortgage origination, as well as vertical integration across the mortgage value chain. Most important, the talent and experience of the combined team will give us the ability to fulfill Home Point’s vision of being a leader in mortgage banking and financial services.” Stonegate Mortgage’s board of directors unanimously

approved the transaction following a review of the transaction and strategic alternatives. The transaction is subject to certain customary closing conditions, including, among other things, approval by Stonegate Mortgage’s stockholders and regulatory approvals. The transaction is expected to close by the end of the second quarter of 2017. “The combination of Stonegate Mortgage and Home Point Financial creates an exciting opportunity for our company, our associates and our customers,” said Jim Smith, chief executive officer of Stonegate Mortgage. “We

look forward to joining forces with the Home Point Financial team and building a best in class mortgage origination and servicing platform focused on delivering value to our customers.” PRMI Hits Record Production in 2016, Opens Third Las Vegas Branch Primary Residential Mortgage Inc. (PRMI) is celebrating its best year since it began continued on page 48

Home Point Financial to Acquire Stonegate Mortgage NationalMortgageProfessional.com

n National Mortgage Professional Magazine n FEBRUARY 2017

Home Point Financial Corporation and Stonegate Mortgage Corporation have announced they have entered into an agreement for Home Point to acquire Stonegate Mortgage in an all-cash transaction valued at approximately $211 million. Under the terms of the agreement, Stonegate Mortgage’s stockholders will receive $8.00 per share. The per share price represents a premium of approximately 61 percent over Stonegate Mortgage’s 90-day volume weighted average price on Jan. 26, 2017, and a 34 percent premium over Stonegate Mortgage’s closing price per share on Jan. 26, 2017. The Stonegate acquisition is the latest move where Home Point has shown significant growth, beginning with a fall2014 acquisition of Maverick Funding, an expansion of the firm’s Reverse Mortgage Division and TPO Production team, and expansion of its Third-Party Channel. “We are very excited about the opportunity to work together with

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Paramount Residential Mortgage Group, Inc. (PRMG) is one of the largest privately held national mortgage bankers and residential home lenders, helping homeowners purchase homes across the U.S.!

UWM is a forward-thinking, fast-moving and innovatively inspired lender that is always working to champion mortgage brokers and change the game with the latest and greatest technology and services.

REMN Wholesale 194 Wood Ave. S. 9th Floor 732-738-7100 www.remnwholesale.com Iselin NJ, 08830 REMN Wholesale provides same day turn times every day on new file submissions. With a commitment to the broker experience, REMN is leading the way as a preferred partner in the mortgage industry.

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TagQuest Inc. is a full service marketing firm offering the most up-to-date, cutting edge marketing solutions for the ever changing Mortgage Industry. Proudly serving our clients for over a decade.

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Lykken on Leadership

Seven Ways to Cope With Uncertainty in the Mortgage Industry BY DAVID LYKKEN

FEBRUARY 2017 n National Mortgage Professional Magazine n

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ast month, a new Administration took over in the American government. For many in the mortgage industry, it was a joyous occasion. President Trump has been vocal about reducing the amount of regulations and freeing up businesses to serve their customers without unnecessary constraints. Certainly, the mortgage industry is no exception to this. It’s possible that our industry could see a greater lessening of regulations than we’ve seen in years. On the other hand, there are some in the industry who are worried about what might happen with the Trump Administration. Despite the benefits that may come from fewer regulations, some are worried that the social and political upheaval from those who do not support Trump’s presidency may have negative repercussions. Regardless of whether or not such fears are overblown, there is a lot of uncertainty right now in the industry. Republicans and Democrats, conservatives and liberals alike, are feeling the tension and volatility in the atmosphere. As a leader in the mortgage industry, how can you keep your head in this kind of environment? Here are a few

“If you want to make sure your organization survives uncertainty, you cannot just take care of your organization; as the leader of your organization, you’ve also got to take care of yourself.”

suggestions as to how you might cope with the uncertainty ... 1. Build a solid team Before you do anything else necessary to navigate uncertain times, you’ve got to make sure you have a steady group of people around you whom you can trust. When the society within which you are operating becomes unstable, you’ve got to make sure your team doesn’t follow suit. Your leadership team will be the anchor that keeps your resolve from shaking. Your people in operations and sales will be the ones who continue to get the work done on a day-to-day basis. If you aren’t careful about how you’ve built your team and how you develop the team you’ve built, your company will inevitably give way to the pressures of uncertainty. The difference between failure and success during times that are uncertain is having a team in place that understands, embraces, and continues to live out your mission no matter what.

2. Have a plan (and a contingency plan) As the saying goes, those who fail to plan are those who will plan to fail. If you don’t have a strategy in place, the volatility in the industry is going to hit your where it hurts. You’ve got to know where you’re going and how you plan to get there. By the same token, you’ve got to be flexible. You can’t just have a plan; you’ve got to have a contingency plan. Plan A isn’t enough; you need plan B, C, D, and E—as many alternative routes as you can think of. The thing about plans is that you never expect to actually be able to completely follow through on them. Challenges inevitably arise that will cause you to change course. The question is, do you know what direction you’ll go when that happens. It isn’t “what if?” It’s “what when?” Are you going to be ready for it? 3. Diversify your offerings Stop me if you haven’t heard this old kernel of truth: Don’t put

all your eggs in one basket! To survive uncertain times, you need to make sure that getting hit in one area isn’t going to sink your entire ship. Do you rely on a single supplier? What happens when that supplier goes out of business? Do you only offer a single product? What happens when regulations prevent you from offering it? Do you only serve a single market? What happens when that market experiences economic difficulty? The point is that you’ve got to be diversified in every way possible. The more things you have your hands in, the more likely you be to come away with something. 4. Keep up with the news I know that this one can be difficult. Especially in the current political and social climate, the news is the last thing that most people want to hear. It’s fraught with strife, and there is a great deal of skepticism about how things

are being reported. But, the bottom line is that if you want to stay ahead of the curve, then you’ve got to stay informed. It’s only if you are paying attention that you’ll see it coming. If you aren’t paying attention, then you’ll be blindsided. As hard as it can be, try to keep up with what’s going on. You’ll never know what might have a direct effect on the mortgage industry, and you want to be ready to adjust as soon as possible. 5. Use the latest technology Another way to reduce that amount of uncertainty you’re feeling is to make sure you’re using the latest technology in your business. Whether it’s technology involving document preparation, communication, record keeping, or anything else, being on the cutting edge can make a world of difference. If your competitors are using the latest technology and you are not, the volatility is going to hit you much harder than it hits them. Technology lessens the impact of negative economic, political and social events. On the other hand, it also magnified the impact of positive events. Are you using the latest and greatest technology in your organization?

take care of your team. Your team is counting on you to help through the uncertainty of the world today—make sure you’re in the right frame of mind to be up for the job!

David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken on Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is David@TMS-Advisors.com.

Why choose MBS Highway? BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country. STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.

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n National Mortgage Professional Magazine n FEBRUARY 2017

7. Keep yourself healthy One final point to bring up may seem a little touchy-feely, but I think it’s just as important as anything I’ve mentioned thus far. If you want to make sure

need to do to keep yourself steady, do it. Leaders sometimes have the hardest time taking care of themselves. But the simple truth is that you don’t take care of yourself, you won’t be able to

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6. Make decisions based on data Another important way to keep yourself stead in uncertain times is to put your trust in data. The more data you have to make decisions, the more accurate your decisions are likely to be. When faced with volatility, the importance of accurate data can have an even larger impact. If you haven’t taken strides to start collecting and organizing more robust data for your organization, the time is now. Do you have data on the economy? Do you have data on the industry? Do you have data on your customers? What about our employees? What kind of useful data do you have on your vendors? All of this information can be compiled to give you actionable insights on operating your business. In times of uncertainty, that insight can prove to be especially valuable.

your organization survives uncertainty, you cannot just take care of your organization; as the leader of your organization, you’ve also got to take care of yourself. When I say “take care of yourself,” I’m talking about the basics— making sure you’re eating right, getting enough sleep, not getting too stressed out, and so on. If you cannot get your spirits up, then you’ll inevitably let your team down. Some folks do yoga; others go to church. Maybe you just need to take a vacation with your family to let off some steam. Whatever you

TRID, the Election and What You Can Do Now: Part III By Richard Horn

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n last month’s article, I discussed how the industry should continue to be ready for potential enforcement by the Consumer Financial Protection Bureau (CFPB) and other regulatory agencies. I want to spend this month discussing an area of liability under the TILARESPA Integrated Disclosure rule (TRID) that should also remain a concern. As most lenders already know, the title and settlement industry has responded to TRID by using a settlement statement that is in addition to the Closing Disclosure (CD). The American Land Title Association (ALTA) even issued its own model version of this statement. One of the significant reasons settlement agents use this separate statement is to disclose the actual rates for title insurance, because the CD discloses title insurance using a different calculation. While the settlement statement also contains the settlement charges in the transaction, it contains a different level of itemization and format. This can be confusing to your borrowers, and it can also expose lenders to liability or repurchase risk. Unfortunately, in its recent proposed rule, the CFPB did not propose to change the aspects of TRID that have caused the use of this separate settlement statement. Therefore, lenders should begin considering the implications of the separate settlement statement. One of the most important implications of the use of the settlement statement is that there could be discrepancies between the settlement statement and the lender’s CD. Such a discrepancy can be an indication to an examiner or a plaintiff’s attorney that there is a disclosure violation on the CD. In addition, investors may reject a loan after identifying a discrepancy, because violations that can be identified by comparing the CD and the settlement statement may be subject to assignee liability under the Truth-in-Lending Act (TILA), meaning that a borrower could potentially sue the investor for such a violation. Because different parties complete each disclosure, differences between them can easily occur. This is especially true with manual processes. The data that is used to complete each form lives in different software systems and is entered and updated by different parties in the transaction. For example, the settlement agent may update the settlement statement with an increased cost at the last minute, but not update the lender’s CD. With such significant liability attached to the CD, this could pose significant problems for lenders. For these reasons, it may be prudent for lenders to consider software solutions, such as a collaborative closing portal like DocMagic’s SmartCLOSE, to ensure consistency between the two disclosures.

Richard Horn of Richard Legal PLLC, was formerly with the CFPB, where he served as senior counsel and special adviser and led the final TRID rule and the design and consumer testing of the TRID disclosures. He may be reached by e-mail at Rich@RichHornLegal.com.

SPONSORED EDITORIAL

heard on the street

operations in 1998. In 2016, PRMI funded nearly $6.3 billion in residential home loans, helping nearly 29,000 families across America achieve their dream of homeownership. In achieving this record production, PRMI launched 40 new branch locations nationwide and added more than 800 new employees. Additionally, 145 PRMI branch offices set new monthly or annual production records. Most importantly, an extraordinary nine out of 10 customers would recommend PRMI to a friend or family member. “These numbers and accomplishments are a reflection of the incredible strength, dedication and passion of our team members,” said David Zitting, CEO and president of PRMI. “The future has never been brighter for PRMI and we look forward to another exciting year of great challenges and even greater opportunities.” In 2016, PRMI was named one of America’s Top Mortgage Employers by National Mortgage Professional Magazine, was a finalist in the Ellie Mae Hall of Fame Mortgage Excellence awards, and was named a Top Workplace in Utah by its largest, daily publication, The Salt Lake Tribune. PRMI also expanded its philanthropic efforts by partnering with Feeding America to aid in the fight against hunger by providing more than 1.68 million meals to those in need. PRMI continues to grow its footprint in the state of Nevada with the opening of its third branch located in Las Vegas. This new office welcomes a seasoned team of mortgage professionals lead by Branch Manager Bo Crawford and Production Manager Diana Dikes. This team, accompanied by Operations Manager Long Phan and Closing Manager Suzanne Nguyen, has a combined 70-plus years of experience in the mortgage industry. Dikes comes to PRMI with numerous years in the industry. Before joining PRMI, she previously excelled in her roles as senior account executive, production manager, branch manager and business development for top mortgage companies across the country. “There are so many home loan programs out there to support homebuyers and most people have no idea they exist,” said Dikes. “We are here to give people in our

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community the tools and resources they need to help make one of the biggest financial decisions in their lifetime.” Crawford comes to PRMI with years of knowledge and leadership to anchor this branch. Preceded by a tremendous amount of experience in providing top customer service and professionalism to his clients, he most recently served as a top producing Loan Originator for his previous employer. “We have created a team of the best home loan specialists and having the ability to serve our clients by keeping operations and decisions local is incredibly important to us,” said Crawford. “Our community has seen a steady rise for home buying and we are here to provide a positive homebuying experience.” CalyxSoftware’s PathSoftware Integrates With MGIC

PathSoftware, a new cloud-based mortgage loan origination software (LOS) from CalyxSoftware, has announced its integration with Mortgage Guaranty Insurance Corporation (MGIC). This integration allows for two-way communication and secure data exchange between PathSoftware and MGIC. PathSoftware customers can now obtain MGIC rate quotes and order mortgage insurance without leaving their loan file. The seamless integration also auto-populates the appropriate mortgage insurance (MI) premium fields back into the loan file without leaving Path—decreasing data entry time and increasing accuracy. “Our integration with CalyxSoftware addresses the growing demand for automation in the loan origination process,” said Margaret Crowley, vice president of Marketing and Customer Experience at MGIC. “This partnership further illustrates our commitment to providing best-inclass customer experiences.” Doug Mitchell, director of Sales and Support at PathSoftware, said, “PathSoftware was designed to simplify and streamline the mortgage origination process and tight integrations with our partners further this goal. We’re proud to partner with MGIC, the nation’s first private mortgage insurer, to make it easier than ever for joint continued on page 82

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Recruiting: It’s Never Too Late to Start, But Where Do You Begin? By Steve Rennie

s we continue down the path in 2017, organically recruiting production is top of mind with most managers and leadership. Whether you are running a satellite, branch, region or company, the dynamics of the current market, including the rise in interest rates and decrease in production, has helped you realize you need more volume (and the revenue from it) to cover your overhead and achieve your growth goals. Many companies began cost-cutting initiatives in December and others are contemplating when they should. Whether your motivation to grow is based on replacing volume attrition or simply hitting loftier goals, recruiting producers is a process and requires a plan. The good news is 2017 will be another year with quite a bit of disruption. If you have been asking yourself, “How can I get in front of more opportunities,” it won’t come easy and it will likely require you to do more work. Here are four best practices to help you start: l

l 50

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Coaching/Training: Seek to improve on best practices and develop new skills. Competition is intense. If you are not able to differentiate yourself, you will look like everyone else. As markets adjust, so do techniques and strategies … strive to stay ahead. Time Blocking: Weekly time blocking is imperative. Find 30 minutes (minimum) on two separate days each week. Use this time to focus on building new relationships. Use time outside of your block to manage current relationships. Accountability: Make sure the people you report to have your back. Ask for accountability and make sure roles are understood both ways. Consistency: Recruiting is a weekly discipline that requires you to chip away at developing relationships. Without consistency, you fall into the bucket of managers or leaders (you know who these people are) that fade away and never get an opportunity due to poor follow-up and follow-through. Don’t find out via a LinkedIn update that another lead joined a competitor because you let it slip through the cracks!

The best “recruiters” are the people who don’t mind a little rejection, like to develop and maintain relationships, and are genuine about their intent. In this industry, you can never have too many friends and the only way you create new friends is to put yourself out there and compel others to see value in spending time with you. Stop “recruiting” and start “relationship building.” The skill set/process is not too different than how you built relationships with your referral partners, right? Feel free to contact us to learn more at ModelMatch.com/See-It. Steve Rennie is chief sales officer with Model Match Inc., a technology platform and business plan used internally by sales leaders and executives at banks and mortgage companies to grow and retain production organically. He may be reached by e-mail at Steve.Rennie@ModelMatch.com.

SPONSORED EDITORIAL

respa section 8 violations

l There are various ways in which real estate agents can advertise on this third-party Web site. The most popular is to purchase ads that appear on listings in an agent’s local area. The agent’s advertisement then appears on various listing pages when a prospective buyer searches for listings in that area. l In return for subsidizing a portion of these agents’ thirdparty Web site advertising, lender’s loan officers require them to exclusively promote lender in all of the agent’s advertisements on that thirdparty Web site. l If a prospective buyer is interested in a property they find on that third-party Web site, they may contact the agent by clicking on a link that appears in the ad. When the prospective buyer clicks on that link, they are asked to provide the advertising agent with their name, phone number, e-mail address, as well as any additional information they wish to provide. l There is also a check box in the advertisement that says, “I want financing information.” When the prospective buyer checks the box, and clicks on the link to provide information to an agent who has partnered with lender, lender then receives a copy of the consumer’s information. l Some agents who co-market their services on that thirdparty Web site with lender take additional steps to convince consumers to use lender’s loan officers. n Example: One agent allegedly tells lender that he “was able to talk [a particular consumer] into using you guys for the financing of his purchase.” Violating RESPA by encouraging brokers to use fees and credits to pressure consumers into using lender l Lender pressures the real estate brokers it works with to send customers its way as part of the quid pro quo for receiving lender’s payments. n Example: One of lender’s top loan officers allegedly

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sometimes tells brokers to “squeeze” consumers into using lender rather than a competing lender. The loan officer directs brokers and listing agents to “make sure you push our way,” when dealing with the consumer. l In response to this pressure, the agents sometimes take steps to economically coerce consumers into using lender. n Example 1: One listing agent makes a seller’s credit–essentially a discount on the sales price– conditional on using lender for the mortgage: “they must use [lender] to get the credit.” n Example 2: Other listing agents include per diem fees–a penalty imposed on the buyer for each day beyond the contractual closing date the buyer is unable to close because its financing has not yet been approved–if the buyer used his or her own lender, but would waive the fee if the buyer used lender. One agent allegedly says “[I]f buyer is willing to go only with her own lender, seller is asking for $150 per diem charge after the expiry of 30 days COE period.” Bottom line: Lender violated RESPA by paying brokers and others for thousands of referrals So, what’s the take-away? RESPA Section 8(a) [12 U.S.C. § 2607(a)] is really quite clear and unambiguous: “No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.” I have endeavored to provide a synopsis of certain violations of RESPA which, in each case, should have been avoided. All of these violations allegedly incurred by Prospect Mortgage LLC are well-known gambits that have been tried before and utterly failed. The subject administrative action resulting in the Order is one of many such results

involving Section 8(a) violations that crop up all too often. I ask, where are the compliance personnel? Are they oblivious to such actions? Where actual written agreements are drafted, and signed, are the compliance and legal staff or legal advisors involved in the review process, or not paying attention, or going along to get along, or just basically, altogether incompetent? Many of the violations I have recited herein are so obvious and so familiar to competent compliance professionals, that it begs the question how such violations can take place at all in a well-managed company where compliance is given a central role in protecting both the consumer and the company’s regulatory standing. Now, the resulting Order is just as predictable, since this lender, whether acting directly or indirectly, is permanently barred from:

source, originality, accuracy, completeness, or reliability of any statement, information, data, finding, interpretation, advice, opinion or view presented herein.

Jonathan Foxx is managing director of Lenders Compliance Group, the first and only full-service, mortgage risk management firm in the United States, specializing exclusively in outsourced mortgage compliance and offering a suite of services in residential mortgage banking for banks and non-banks. If you would like to contact him, please e-mail Compliance@LendersComplianceGroup.com.

n National Mortgage Professional Magazine n FEBRUARY 2017

Prospect Mortgage LLC must now submit to the Bureau a comprehensive compliance plan designed to ensure that its

Information contained in this article is not intended to be and is not a source of legal advice. The views expressed are those of the author and do not necessarily reflect the views or policies of Lenders

Compliance Group Inc., any governmental agency, business entity, organization, or financial institution. No representation is made and no guarantee is given with respect to the

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l Agreeing to purchase or pay for any service that is connected or related in any way to receiving referrals of real estate settlement service business; l Entering into marketing service agreements, lead agreements, or co-marketing arrangements with any real estate broker, agent or servicer; l Entering into any desk license agreement with any broker, agent, or servicer that includes any requirement or understanding that the counterparty will endorse the use of the lender’s mortgage settlement services, or do anything else to affirmatively influence prospective homebuyers to use the Respondent’s mortgage settlement services; and, as if it needs repeating yet again, l Giving or accepting any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person in violation of Section 8 of RESPA, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. § 1024.14.

agreements with real estate brokers or mortgage servicers– other than subservicers retained only for purposes related to servicing its loans–company with all applicable Federal consumer financial laws. The big question is, Why was this compliance plan not done in the first place?

FEBRUARY 2017 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

YOUNITED IS TAKING PRIDE IN OUR SUCCESS. WITHOUT TAKING IT FOR GRANTED. We also know that you bring your loans to UWM because we put that same passion into helping you succeed. Last year alone, we developed technology that let your borrowers “go doc-less,” made our exclusive Elite rates available to more of your borrowers, gave you the power to manage your pipeline like a playlist with Loan Swap, created complete Ad Kits to help you market your business and more. We’re the #1 wholesale lender in the nation thanks to you. And we look forward to earning it every day.

YOU + UWM = YOUNITED | 800.981.8898 | UWM.COM United Wholesale Mortgage (UWM) ranked #1 wholesale mortgage lender in the nation for 2016 by Inside Mortgage Finance. This information is provided to mortgage and real estate professionals only and is not intended nor is it authorized for consumer distribution. NMLS #3038.

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We know who makes us #1. It’s partners like you who are out there every day chasing down leads and submitting applications.

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WE ALWAYS PUT YOU FIRST. THANKS FOR RETURNING THE FAVOR... TWO YEARS IN A ROW.

Success in S BY RALPH LOVUOLO SR.

et’s get right to it. After having good health and a positive attitude, both of which you need to work on for yourself or with a coach, the first thing you need to be successful is to have a clear and defined set of goals. I was going to just skip these thoughts but have a need to address them that can only help you. I know for sure, I cannot change you. I know for sure that you’re not going to do something just because I tell you it is good for you. You’re going to have to know it, feel the pain and act on the emotions of it and then take the appropriate actions. I can’t make you go to the gym if you don’t go. I cannot make you read uplifting articles and books or watch beneficial videos to improve your mind and spirit. All I can do is remind you, every time we talk, every time you read something I write that you need to have good health and a positive attitude to be really successful and possess a fulfilling life. It always amazes me how many people do not realize the importance of setting and achieving goals, but as Stephen Covey states in The Seven Habits of Highly Effective People, “The power to make and keep commitments to ourselves is the essence of developing the basic habits of effectiveness.” It is from this book that I started to believe in the effectiveness of the discipline of setting goals according to a formula. Sure, Bill Schor, in 1974, my first mentor, was scrupulous about them at our weekly sales meetings. But what he didn’t do was actually make us follow the complete outline below on a personal level. We must and I mean all of us, MUST have a set series of goals. If you really think that super successful

The

Mortgage

Godfather

n Sales and in Life Through Goal-Setting

people don’t do that, think again. Goals have four parts, and if any part is missing, your entire future will be muddled. 1. Specific A goal must be absolute. It must be non-interpretable. It must be quantifiable. When a goal is qualified, that is, not definite, then it is never completely achievable. e.g. I want to write new business. This is an incorrect goal. Better to say, I want to write five new applications. This is a definite goal. Not left to be interpreted, not vague. Definite! I’ve done consulting and coaching of many, many people who have just never been taught this one simple start to establishing a good future. It is my goal to break 80 (see the rest below). 2. Attainable If a goal is unattainable, then you are setting yourself up for guaranteed failure. If a goal is irrational, it cannot be realized, i.e. attained. Any goal of any kind should to be just out of your grasp, but absolutely attainable. Tom Hopkins, in How to Master the Art of Selling, says “Set a reasonable success goal …” Have the attainment be attainable. When I had my own business and a guy came for an interview and told me he would be writing and closing at least $500,000 in applications in his first month, we had a very short talk. I never saw him again. I’ve gotten my score as low as 84, so 79 is just out of reach, but definitely attainable. 3. Timely There needs to be specificity with regard to when a goal is expected to be reached. If you were to state that you want to write new business, and then realize that you want a certain number to be reached, you might select five as the number of things that you want to sell. Then you

need to be more specific with regard to the timing of the sale. How long will it take you to achieve your goal? Do you mean that you will have it done in two years? Maybe, but in your business, you probably mean one week. If you’re a serious person, you want to make the relationship with being in line with your future goals and make all of it fit together. I want to break 80 by 12/31/2017. 4. Written If a goal, a commitment to your SELF, is not in writing, then it is guaranteed to be nothing more than a wish. It is nothing more than an ethereal thought. Potentially powerful, but in any case, much too interpretable, much too flexible. Haven’t you found that most often, when we decide to do something, and don’t write it down, that too often we tell ourselves that the goal wasn’t real, we really didn’t mean it. Just like a mortgage commitment, if it isn’t in writing, then it is only someone else’s word that something will happen. Without a goal in writing, it never needs to be acknowledged. This was the one most important of all the goals that Bill had us set for ourselves that we didn’t do. It would have been easy for us to say that in any particular week we were going to write three applications. We could have written that statement on a small piece of paper and done any of the following: signed it, had him co-sign it and put it in our pocket to be reviewed every day; signed it and given it to any of the other salespeople at the sales meeting; given it to our significant other; had a penalty of some amount of money required to be given to charity if the goal was not achieved; after writing it, send a copy to me. Write yourself a commitment Now you are offered an

opportunity that is mostly offered only to those who attend my Webinars or those people I coach: E-mail me a note and I’ll send you a commitment. In the many years I’ve spent in the mortgage industry, I’ve learned the true value of a written commitment. It has all the parts of goals as outlined above. If not, now you are superbly positioned to write a commitment to yourself, right now! In addition, you can share it and assure that a closing will take place. If you write yourself a commitment, one that is a true goal, a goal that you will commit to for thirty days, and give a copy of it to someone you absolutely

trust, (or try one of the ideas above) then maybe you’ll have the satisfaction to achieve it. Maybe you’ve kept a secret goal that you cannot share, but are serious about it. If you have a desire to reach a certain goal, take my commitment letter, write the goal in the proper place, and then give a copy of your commitment to your closest friend. The responsibility that goes with accepting the copy of the goal is to check with you in thirty days to see how you did. Sharing helps produces results. Chose an attainable goal, make it specific and by putting it in writing, with a 30-day commitment … you will then see the benefit of what you’ve learned here.

Ralph LoVuolo Sr. has more than 50 years in the mortgage Industry, with the last 30 as a coach. He is past president and founder of the New York Association of Mortgage Brokers, and long-time member of NAMB— The Association of Mortgage Professionals. He can be reached by phone at (917) 576-1230 or e-mail Ralph@MortgageMotivator.com.

The Long & Short The Business of Short Sales

Correcting Known Short Sale Credit Coded as a Foreclosure Remains an Issue BY PAM MARRON oan originators are unaware that there are two solutions that can work when a short sale credit is erroneously coded as a foreclosure and results in an automated denial. One solution is a workaround in Fannie Mae (there is no workaround for Freddie Mac). The second solution is to “Submit a Complaint” on the Consumer Financial Protection Bureau (CFPB) Web site.

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1. Fannie Mae workaround Loan professionals need to know specific directions on how to use the Fannie Mae DO/DU automated underwriting system (AUS) workaround when a “Refer/Caution” is received and the denial is due to a short sale coded as a foreclosure. Loan originators, upon receiving Refer/Caution: 1. Within the Fannie Mae DO or DU automated underwriting system; 2. Go into “Edit Loan;” 3. Then Full 1003; 4. Then “Declarations;” 5. Then c; 6. In the dropdown box, change to “Yes;” and 7. Then click on the “Explanation” button at bottom right 8. On the “Declarations Explanation” page; 9. For either: l If strictly trying to correct a FORECLOSURE code noted on findings for a short sale, enter on Line C: “Confirmed CR FC Incorrect” l If “Extenuating Circumstances” and are trying to get DU/Fannie Mae approval two years after a

short sale, enter on Line C: “Confirmed CR FC EC” 2. Submit a complaint at the CFPB When you find out that your short sale was coded as a foreclosure, one option to correct this is to Submit a Complaint to the CFPB. Let the Consumer Financial Protection Bureau know that your short sale is being coded as a foreclosure on the Fannie Mae or Freddie Mac automated underwriting system. Take these steps: l Go to ConsumerFinance.gov l Go to Submit a Complaint at

the top left and click on “Submit a Complaint” l For suggestion on how to complete each page, go to HousingCrisisStories.com/Sub mit-a-Complaint-CFPB. l Before you finish, attach Short Sale Approval Letter(s) from your lender and your closing statement (HUD-1) showing the loan closed with you as

the seller, not the lender as the seller. l You will receive an answer back from the CFPB within 15 days, so keep an eye out for their e-mail. Next month: How housing counseling agencies can help your clients prepare for homeownership.

Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail Pam.M.Marron@gmail.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.

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The Growth of Digital Originations and Closings Is Your Lender Following the Progress Bar? 58

New broker-facing tools offer greater transparency throughout the loan process

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By Rey Maninang

nlike other industries, technology can move somewhat slowly in the mortgage business, but new innovations are making their way into the everyday work of brokers and originators. These tools provide a variety of services designed to help brokers improve their business and customer service. While many of today’s digital offerings are client-facing— ranging from online education tools to pre-qualification apps— lenders are also using technology to better serve their originators. Recent innovations in brokerfacing technology can help mortgage professionals better track their loans’ progress, better predict their loans’ closing and make the overall process easier for both their referral partners and clients. Most lenders offer some sort of digital or online portal for brokers and originators to submit loans, but where the technology goes from there varies widely.

For some lenders, it’s upload and wait; but others are embracing advances in the field that offer significant improvements and allow brokers to follow their loan in real time throughout the entire funding process. As mortgage professionals evaluate their lending partners, they should consider companies that offer not only the latest technology, but also tools that improve their workflow and allow them to focus on delivering quality customer service to their clients. Do you know where your loan is? One of the most important improvements technology has made in the mortgage industry is the ability to quickly and easily exchange information. Sending documents securely over the Internet has made it possible for brokers and lenders to move swiftly to meet loan conditions and fill in any gaps in a loan submission. For many lenders, however, what hasn’t changed is the transparency of the loan process.

Brokers and originators submit their loan for funding with the corresponding documentation, and then must wait to learn where the loan is in the process and whether they need to provide additional information or documents. Often, brokers themselves have to call an account executive or manager to check on what is (or isn’t) happening with their loan. The latest broker portals, however, focus on transforming this “wait and see” environment into a more transparent and seamless process. Many lenders now offer dynamic technology that enables brokers to follow their loan in real-time—some even offer a literal progress bar that tracks exactly where the loan is in the funding process the moment they access the portal. Rather than chasing down an account executive to learn the status of their loan, they have the ability to go online and look for themselves. Some portals also offer real-time updates and e-mail alerts, so the information is going out directly to the broker. The increase in outgoing communication not only frees up the broker’s time to follow up on leads and work directly with clients, but also helps brokers provide more information and better service to their borrowers. Access to this information in realtime creates a smooth and

painless lending process that is more predictable. Brokers will have current information about where their loan is in the process and how it is moving along, making it easier to correctly predict the closing. In addition to better serving their borrowers, brokers will also be a more informed and reliable information source for their referral partners. Check, check, check All loans today have a variety of conditions that often vary from lender to lender. Keeping track of which lender needs which documentation can be difficult, and fulfilling these conditions can be tricky without a clear and simple checklist from the lender. Because each loan submission has unique variables, it can create complexities in following the conditions required in the static documents provided by many lenders. Trying to meet conditions by reading through a PDF or other document often leads to mortgage professionals inadvertently submitting incomplete documentation for loans, creating delays and frustration for borrowers and brokers alike. This is another area where dynamic broker portals can significantly improve the funding process for mortgage professionals. Some lenders are continued on page 60

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n National Mortgage Professional Magazine n FEBRUARY 2017

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is your lender following the program bar?

now offering technology that changes and responds to the loan scenario presented and provides a digital checklist of conditions specific to each loan submission. That means no more reading through pages of conditions that don’t apply to your loan, or wondering whether your submission will be delayed due to missing documentation. Brokers also won’t see conditions that aren’t tied to their particular loan. And with this technology, brokers can submit a loan and know immediately if any conditions are outstanding. They will be able to use a simple digital checklist and know immediately if any required items are outstanding. This makes life easier for brokers and borrowers—eliminating lastminute calls or emails asking for one more piece of information and leads to time and cost savings. It means less work to submit a loan, lower

barriers to submitting a loan and more confidence in submitting a loan quickly and compliantly. These improvements are mirrored on the lender’s side as well. When a lender receives a submission with the checklist completed, it leads to faster approvals and faster closings— which is good for everyone involved in the mortgage process. But can you use it? Real-time tracking and dynamic checklists are important components of any broker portal, but brokers should also consider other elements of the technology, particularly usability and responsiveness. If a tool isn’t easy to use and doesn’t adapt to the changing needs of the market, it may not be useful. Brokers should seek systems that minimize the number of “clicks” and amount of time it takes to submit a loan. With most new technology,

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“Real-time tracking and dynamic checklists are important components of any broker portal, but brokers should also consider other elements of the technology, particularly usability and responsiveness.”

there will likely be a degree of learning required, but some tools are more intuitive than others. When evaluating a lender’s broker tools, consider these elements of the user interface: l Is it easy to use? l Are there visuals to guide you through the process? l Can you import and extract files from within the portal? l Does it use simple “drag and drop,” or more cumbersome uploading methods? l Is there a resource center for support and information? l Is real-time help available? These elements are critical in evaluating a new system. Brokers should also investigate whether the technology is flexible and responsive. Although many elements of lending have remained unchanged for years, the needs of brokers and originators frequently change with the market. Make sure to ask your lender if a system is in place for providing feedback and suggestions for improving their portal. It should change as your needs evolve. A better experience for all Today’s technology offers many innovations that can improve the lending process in several aspects for brokers, borrowers and lenders. With improved broker portals, the day-to-day operations of mortgage professionals are more streamlined, transparent and

reliable. Brokers can account for all the conditions that have been submitted, track a loan’s progress in real time and better predict the closing of a loan. Improved communications between the lender and broker means more up-to-the-minute information can be shared with clients and referral partners. Mortgage professionals, however, must do the work and look for lending companies that stay on top of new advances in technology and offer the right tools. These tools should be developed with the goal of improving the lending experience for every party involved—broker, borrower, lender, real estate agents, attorneys, title companies and more—and with an eye toward adapting to the ever-changing customer and workforce. All the latest tools, apps and digital wonders cannot substitute for a quality mortgage originator and the human engagement they provide to their clients. Although new broker portals help with specifying and submitting the correct conditions, machines alone cannot handle the intricacies of a complex credit profile and lending decision. This is why homeowners need brokers and originators to guide them through this process. Brokers and originators need lenders that offer not only a wide range of loan products, but also tools that allow brokers to provide the best customer service possible.

Rey Maninang is senior vice president and national sales director of Carrington Mortgage Services LLC’s Wholesale Mortgage Lending Division. In this role, Maninang oversees the national wholesale sales channel. Under Maninang’s leadership, Carrington’s Wholesale Division has increased volume production by more than 200 percent within a two-year period, and successfully launched several strategic initiatives resulting in consistent profit increases.

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Building a Platform for Digital Originations By Tom Knapp

which will most certainly be mirrored by other investors, is crafted around the availability of automated solutions to quickly and accurately retrieve data from electronic repositories. This is done in a manner that allows for timely underwriting and loan commitments based on the availability, accuracy, and quality of data retrieved early in the loan origination process.

transformation has created unique marketplace challenges and opportunities, as organizations must contend with new and savvy competitors who take advantage of the low barrier to entry that technology provides. Digital origination roadmap While the path to achieving a digital loan origination can take many paths and sequences, the components are relatively consistent in most scenarios: l l Loan Origination System: The starting point for all mortgage ecosystems must be modern Loan Origination Systems built on an open architecture and which expose data for use in other supporting functions. We see

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Digital loan originations For purposes of this discussion, digital mortgage loan originations include the processes that support borrower loan applications and collection of supporting data needed for the mortgage loan application and underwriting functions. Digital originations create a foundation for eClosings and eventually, the eMortgage. Those mortgage companies that have not committed to digital transformation expose themselves to being out of sync with mortgage industry trends and borrower expectations, which will adversely impact their competitive positioning in the emerging purchase-focused market. Digital transformation is not just

companies such as Ellie Mae reengineering their Encompass platform to provide this open framework. Document Management: The secure collection of borrower documents, when digital sources are not available or not compliant, are essential. This includes electronic functions for eConsent, eDisclosures and eSigning. Borrower portals such as Floify provide this mobile-responsive portal for document exchange as well as consistent transparency in communication between the borrower and the mortgage company. Commitment to Systems Integration and Web Services/Open APIs: The mortgage origination environment is an ecosystem of many contributing parties. To work effectively, each component must be open to integration and sharing of data through standard APIs and commitment to industry standards such as the Mortgage Industry Standards Maintenance Organization (MISMO). Participation in National Fee and Service Provider Networks: There are emerging digital networks for sharing of data such as title company’s fees and transfer taxes. Solutions such as Closing Corp’s Smart Fees solution provides a common network to share fees in a consistent and reliable manner. Digital Trumps Paper: In a high-tech game of RockPaper-Scissors, digital exchange of data will always crush-cover-cut paper in terms of timeliness, accuracy, and flexibility. The collection and data entry from paper documents is a relic of past systems. New account aggregation solutions such as AccountChek provide a network of financial institutions which can provide data on depository asset accounts, investment accounts, tax data, and employment data. Mobile Strategy: The preferred platform for communication and transaction platform is increasingly mobile, and systems of all flavors must have a mobile option.

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ne of the benefits of having achieved “senior status” in your career is that you have experienced the ebbs and flows of business and technology trends and strategies that occur consistently throughout the years. Many of these past initiatives have been successful and achieved the desired impact on costs, profitability, quality, productivity and customer service. Others have been short-lived, but have produced valuable experiences which can be applied in later encounters. So with this framework of experience, I have a particular reaction to the “digital transformation” excitement that’s been going around mortgage technology circles for the past several years. This conjures up memories of previous experiences with trends and buzzwords, such as business process reengineering/optimization, workflow improvements, value engineering, and many related technology automation and business management concepts and methodologies. But this time is different and the impact will be permanent– there is no turning back from the waves of change we are now riding with digital transformation. The unique alignment of emerging technology solutions, favorable supporting regulations, Millennial customer demands, investor acceptance, information security improvements, demand for mobile solutions, data driven management, and transition to a purchase market are all contributing to the tidal wave of investment in the mortgage industry’s digital transformation. The end state we are building toward is clearly “eMortgage,” but we will get there in manageable developments; the first leg of the journey is digital originations. Many of the pieces are already in place that will fuel the momentum and ongoing investments in new solutions by software companies and service providers. Fannie Mae’s recent announcement of the Day 1 Certainty program,

about technology–it is about process flow, communication, compliance and a willingness to participate and contribute to networks of relationships with all parties involved in the mortgage loan transaction. Mortgage lenders have increasingly undertaken an enterprise to understand and commit to digital transformation in all aspects of their operations. When planning for digital transformation, organizations will need to account for the cultural changes they will confront as employees and leadership adjust to adopting and relying on new technologies and partners. Digital

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building a platform for digital originations

l Business Intelligence: Data from the LOS, financial systems, payroll/HR, and other data systems must be presented in a uniform manner to allow for the development of business intelligence dashboards and analytical systems to report on production statuses and determine opportunities to improve quality. l Real-Time Communication Systems: Borrowers, real estate agents and other interested parties expect and demand real-time updates on status of a loan. This communication needs to be a holistic combination of e-mail, text, borrower portals, and inperson conversations with upto-date status information. Understanding borrower preferences While the impact of the Millennial generation in the

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mortgage market has been widely covered, there is no denying their impact on expectations for customer experience and access to data. According to a recent Zillow Group Report on Consumer Housing Trends, half of all homebuyers are under the age of 36, meaning the Millennial generation is driving more of the housing market than we previously understood. Millennials comprise a disproportionately high share of first-time homebuyers, but they make up for their inexperience with research. Millennials use more resources to educate themselves and research agents and lending professionals than any other generation, as indicated The Zillow Group Report on Consumer Housing Trends, released Oct. 18, 2016. This generation is very familiar with online resources and uses them often. The Zillow Group

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“The unique alignment of emerging technology solutions, favorable supporting regulations, Millennial customer demands, investor acceptance, information security improvements, demand for mobile solutions, data driven management, and transition to a purchase market are all contributing to the tidal wave of investment in the mortgage industry’s digital transformation.” facilitated by the MISMO eMortgage workgroup, which builds on the existing MISMO data standards, adding data elements and electronic signature capabilities to create an infrastructure for fully electronic mortgages. The Consumer Finance Protection Bureau (CFPB) has advocated for the transition to the eMortgage and has conducted pilot projects to conduct targeted research on eClosing solutions. Several emerging companies have developed solutions for eClosing that will ultimately support eMortgage. Digital transformation in the mortgage industry has been underway throughout the past decade. We now have new technology and new investments that will continue to feed the need for creative solutions for improvement in the industry. Driven by consumer expectation and End game … eMortgage availability of emerging Keeping in mind the preferences networks that support digital of homebuyers (and specifically, collection and sharing of Millennial homebuyers), the end game for digital transformation in documents, data, fees, and information, the mortgage the mortgage industry is an eMortgage. During the eMortgage industry ecosystem is forever process, the loan documentation– changed and improved. To specifically the promissory note– fully execute these strategies, mortgage companies must also is created, executed, transferred be transformed to understand and stored electronically. An and commit to this exciting “eClosing” produces an opportunity to deliver better “eMortgage” only if the quality loans and an improved promissory note is signed electronically. eMortgage is being loan origination cycle. found that nine out of 10 Millennials turn to the internet and eight in 10 use mobile devices or apps to help with the homebuying process. On average, Millennial buyers and sellers use at least three online resources; one in four (28 percent) use five or more online resources. They also turn to the Internet to model financial scenarios, with more than two out of three Millennial buyers who have a mortgage using interest rate and affordability tools and mortgage calculators. When it comes to technology’s role in connecting renters with new homes, most renters are using their desktop computers (74 percent) to search for homes, followed by mobile sites (59 percent) and apps (43 percent). Millennials use mobile searches most frequently, with three out of four turning to mobile (76 percent).

As senior vice president–chief information officer at Waterstone Mortgage Corporation, Tom Knapp oversees the information services functions, which includes new technology initiatives, web applications, technology infrastructure support, information systems and vendor management. In this position, he also directs information systems development, operations and infrastructure.

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It’s 2017, Not 1997: Improving the Consumer Experience in Real Estate Transactions By Marvin Stone he year 2017 is here, and now more than ever, improving the consumer experience is an area of focus for real estate finance and settlement industry leaders, and is a lightning rod for startup disruptors. Across industries, we’re seeing career paths focused on the consumer experience and “experience engineering” as a continuous improvement effort in thousands of companies, large and small. With the digital native Millennials destined to become the next wave of homebuyers, the mortgage industry must align the process, technology and overall experience to meet or exceed the modern transactional experiences they enjoy in other areas of life such as ride-sharing, vacation rentals, online shopping and even Starbucks’ mobile order feature. While those rising to the

challenge may think massive technology innovations or overhauls are needed, the good news is it is not all about tech. It is about innovation and improving the consumer experience. Many of the improvements can be found at our fingertips. Consumer experience enhancements come in a variety of forms. Improving this experience at nearly any company can look like the following: Web site display speeds, mobile friendliness, staff availability via traditional or chat capabilities, paper elimination through digital capabilities, consumer portals, social media interaction and more. Here are several areas that lenders have begun to address: l Connection: Consumers want to connect with businesses in real-time. As such, finding ways to make it easier for

consumers to connect to the right parties in the transaction is paramount. One recent study found younger consumers rely more than ever on online ratings and relationships. Work to form a personal connection and the rewards will be great. l Mobile: While many businesses still do not have mobile friendly Web sites, homebuying consumers rely heavily on mobile sites and apps to aid their search. In a recent study, nine of 10 buyers use the Internet and eight of 10 used a mobile device in their home search. Ignoring the 80 percent of buyers and borrowers using a mobile device in the real estate transaction process is no longer an option. Any newly imagined borrower experience should work on virtually any

device from smartphone to tablet to laptop and largescreen desktop … even TV. While the mobile experience can be improved through a “responsive” Web site or a mobile app, it is important the mobile experience facilitates the mortgage transaction. It’s vital to allow this experience to provide status updates throughout the process. l Education: First-time buyers and infrequent move-ups highlight the fact that we, as consumers, need to have access to information related to the overall mortgage (and real estate purchase) process. Changes to processes and the infrequency of the transactions requires a consumer to selfeducate, whether to refresh their memory or for the first continued on page 64

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“With the digital native Millennials destined to become the next wave of homebuyers, the mortgage

time homebuyer. Whether its new regulation or new loan programs, lenders should ensure a detailed description be provided to assist in consumer understanding. Consider creating a library of infographics that can be provided on demand to explain loan programs, new terms, stages of the loan process and documents required, but make sure they are in language the borrower will understand.

l Self-Service: A recent Harvard Business Review found 81 percent of customers attempt to resolve their issue before reaching out to a live representative. Offering an online solution for answering questions is becoming critical. Such sentiment is fueling the rise of chatbots in the real estate space where the digital native homebuyer expects the same instant access to answers that they enjoy with services like online shopping and ride-sharing. First-time homebuyers want to research and get answers in the privacy of their online world, including the often intimidating process of knowing whether they can qualify for a loan and what type, without the intimidation

industry must align the process, technology and overall experience to meet or exceed the modern transactional experiences they enjoy in other areas of life such as ridesharing, vacation rentals, online shopping and even Starbucks’ mobile order feature.”

of sitting in front of lender in those early stages. l Video: One of the easiest ways to improve the borrower experience is to provide education and communication via video. Consumers increasingly prefer short video communication (under four minutes) over long-form written communication. There are some excellent (and inexpensive) online tools that make 1-to-1 or 1-to-many video communication simple to implement. With only a webcam (or smartphone), sending personalized video to

consumers is almost as easy as sending an e-mail. l Collaboration: One area that still plagues many mortgage lenders is the inability to offer borrowers an easy way to send additional documentation. Borrowers with smartphones are accustomed to banking apps that allow for paper checks to be deposited via picture. This technology or the ability to upload documentation from a website is a key to improving the borrower experience. l eClosing: While eSignature is

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l Status: Previous generations may have been content knowing their loan application was “being reviewed by the loan committee,” but today’s tech-savvy borrower expects up-to-date status on all aspects of their purchase— from shipping of online purchases to the status of their pizza delivery. Now consider a major life event, like purchasing a home. A

consumer wants the transparency they see in other aspects of their day-to-day lives included in the loan process.

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today’s mortgage lender. While positive reviews are important, they only provide a reflection of the great service that leads to repeat business from existing clients or “repeats,” as they are sometimes called. Lenders and real estate professionals agree–it is easier (and much less expensive) to work with repeat buyers and sellers than it is to advertise and vet leads. Again, a positive experience in past real estate transactions leads to repeat business as client needs change and life events occur.

Since the mortgage is a key part of any real estate transaction, it is critical that the loan process go well in order to ensure the satisfaction that brings clients back. Finally, nearly all would agree that referrals represent the best possible prospects in any market. The endorsement from a past

Conclusion By looking at improvements to consumer experience in other industries and leaders within the mortgage space, it is possible to reimagine the contract-to-close experience. Improving the customer experience will make positive online ratings a greater likelihood, as well as strengthen relationships with real estate professionals who increasingly rely on repeats, referrals and ratings. Today’s mortgage lender can combine in-house expertise with many off-the-shelf tools to provide the experience the consumer of today and tomorrow are seeking.

Marvin Stone is Stewart’s senior vice president of Business Integration and oversees Stewart’s Innovation Council. Connect with Marvin on LinkedIn or follow him on Twitter at @marvinstone.

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The Three R’s–Reviews, repeats and referrals Improving the consumer experience in the mortgage process results in benefits beyond mere efficiency. It can result in increased business for lenders and real estate professionals alike in three key areas–reviews, repeats and referrals. The real estate business is changing and reviews are more important than ever. A study recently published by Zillow on consumer trends highlighted the fact that millennial buyers contact more agents than past generations. In addition, Millennials place high importance on agent reviews with more than six in 10 reading agent reviews before choosing an agent. Like any other business, good reviews follow a good experience–and helping real estate professionals provide home buyers with a good experience needs to be a renewed focus for

client leading to a referral is highly rewarding to real estate and mortgage professionals who work so hard to close today’s transactions. It is important to remember referrals represent a key pillar of most real estate marketing plans. A recent Inman report, Real Estate Industry Outlook 2017, found real estate professionals believe more than 60 percent of their leads will come from referrals while more hightech, online lead generation will account for less than 15 percent. Referrals are the coveted source of new buyers, and that will require a better consumer experience.

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commonplace in many areas of consumer life, the holy grail of simplifying the mortgage process and escrow experience is the electronic closing. The “traditional” (i.e. current) closing experience often results in borrowers showing up to sign unfamiliar loan and closing documents and feeling pressure to sign. Regulators like the Consumer Financial Protection Bureau (CFPB) and HUD are looking to improve this process to ensure that consumers do not feel pressured at closing. Several eClosing technology providers assist lenders and closers in implementing a fully paperless process or, at minimum, a “hybrid” eClosing where the notary docs and any other wet ink requirements are “papered out” at closing. At a recent real estate strategy meeting where I spoke on the consumer experience, the majority of brokers voted for the hybrid process. The theory goes that buyers showing up to sign four or five documents can leave time for the “celebration” experience most real estate professionals would love to facilitate at closing. It is now possible to have an entirely digital real estate purchase process in many areas if the real estate professional, mortgage lender and title/closing provider work together using the right technologies.

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2017: A Mortgage Odyssey By Sue Woodard

t’s hard to flip a channel or surf online without seeing ads drawing a parallel between mortgage loans and space travel. The term “Digital Mortgage” has quickly rocketed into our everyday vocabulary, and comes complete with a wave of highly shiny objects that have the consuming public wowed and industry insiders scrambling. From a borrower’s standpoint, what’s not to love about the prospect of clicking to answer a couple questions and granting access to information online versus digging up and handing over mounds of paperwork? Clicking one’s way through the application process feels so much less threatening than having to answer questions and face scrutiny or judgment in person. And credit scores look so much more charming in brightly colored, animated pie graphs than they do on a long, black-and-white printout that chronicles a financial lifetime and indiscretions that may no longer be relevant. Recent surveys show that borrowers are clearly receptive to this new way of doing things:

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l 77 percent of respondents agree that completing the mortgage process online would be convenient (Wells Fargo, “How America Views Homeownership” survey– 2016). l 28 percent of customers completed their detailed mortgage application online in 2016, up six percent from 2015 and an increase of 10 percent from 2014 (J.D. Power, 2016 Primary Mortgage Satisfaction Study). From a lender’s standpoint, it can be daunting to determine how best to enter the Digital Mortgage World, suddenly having to provide a streamlined, super-fast, homogenized way to get consumers through a process that is fraught with variables, obstacles and historically takes weeks. But

technology and automation are here to stay for reasons spanning from regulatory and compliance requirements to consumer demand, to managing the costs of production–and the industry is struggling to adapt with varying degrees of enthusiasm and success. The phrase, “The robots are coming,” has been bandied about for a while as a thinlyveiled warning and an attempt to

been the first chilling humanversus-robot story, but it’s among the most famous. With his unctuously calm voice and visual depiction as big red eyeballs placed throughout a space ship, the super computer HAL 9000 represented a whole new kind of villain. HAL’s ability to cause mayhem and kill in spite of being an immobile object was scary enough, but the idea that he and his kind could render humans powerless and irrelevant opened the door to a whole new genre of things to be afraid of. Mythical beasts and fantasy foes seem sort of elementary when you

“Instead of focusing on what technology will eliminate, companies and MLOs need to envision how technology can magnify their strengths and bandwidth, enhance the customer experience, and increase production and profitability.”

make light of the fact that companies and mortgage loan officers need to prepare for the inevitable, irreversible digitalization of the service we provide. Truth is–the robots are here. The resistance to the mortgage industry’s entry into the digital world can be summed up in the premise of a movie that came out way back in 1968. “2001: A Space Odyssey” may not have

consider an opponent that threatens to systematically remove your species from existence. And as we enter the age of the Digital Mortgage, this fear is haunting some MLOs. (Of course, it’s not paranoia if they really are after you.) The truth is that the mortgage industry will undoubtedly experience some human casualties as technology use increases, but that’s

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necessary for survival in a world where the cost of doing business keeps rising. Lenders seem to understand this, according to survey results released by San Francisco-based software company Capsilon Corporation: l 70 percent of mortgage lenders report they expect total loan production costs to continue to rise in 2017. l 86 percent expect to spend more on technology to reduce production costs. But both lenders and MLOs can still win–and that victory will come only by embracing technology, not fearing or avoiding it. Instead of focusing on what technology will eliminate, companies and MLOs need to envision how technology can magnify their strengths and bandwidth, enhance the customer experience, and increase production and profitability. Anyone who has spent longer than a year in the mortgage industry has found themselves in a situation where production volume increased and the demands of servicing that volume diverted time and energy from relationship building and prospecting. And inevitably, once the volume is closed, the pipeline is empty and it’s a race to build it back up. With smart technology in place to manage all the activities that can be automated, the old pipeline “roller coaster” is a thing of the past. Rather than seeing automation as a depersonalization of our business and a threat to jobs, lenders should embrace the ability to delegate repetitive tasks to automated solutions so they can personally handle things like striking up new referral partnerships and giving guidance and advice to clients. Think about personal finance and the investment world for a moment, as it is not unlike the mortgage arena. This is certainly an area that ostensibly could be handled purely by technology, but the role of the financial planner and investment advisor is still alive and well–and is made better with the help of smart technology. There are many solutions to help the mortgage industry with all the elements of the loan process from lead capture to close, and companies have the ability to choose the best of

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equipped to recognize, explain and execute. Professional loan officers who love the business and who are in it for the long haul share a common problem-solving, obstacle-surmounting, get-it-done “chip” that computers, robots and other artificial intelligence have yet to duplicate. The ability to express empathy and understanding is purely a human trait. The satisfaction and excitement humans experience when helping others finance their

dreams is also unique. The best thing we can do is set skepticism aside and get on board for the next generation of lending, fully embracing the digital mortgage–

whatever shape that takes for your company. Production and profits can take off … and it’s possible to send customer satisfaction over the moon.

Sue Woodard is president and chief executive officer of Vantage Production, a provider of technology and services supporting the sales and marketing of mortgage products, as well as the professional development of mortgage loan officers. She can be reached by e-mail at SWoodard@VantageProduction.com.

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breed for the different aspects. The key is to carefully consider which set of solutions are best for your company, workflow and goals–and have the ability to integrate with your loan origination system for the best coordination, management and results. And while some speculate that regulation may ease up over the next four years, it’s not a wise bet to let up on compliance diligence. The Consumer Finance Protection Bureau (CFPB) reported 211,000 mortgage-related complaints and $11.7 billion in relief to consumers as of the fourth quarter 2016. The cost of purchasing and deploying technology pales in comparison to penalties for violations, as well as business lost to competitors who may be quicker to embrace innovation and respond to consumer demand. There’s a lot of fear and talk of what the proliferation of the digital mortgage will subtract from the lending industry. It’s time to consider all the things this trend will add to our performance as service providers, protection for consumers and ourselves, along with our ability to step away from the repetitive aspects of the business. Refinance volume is dropping significantly and a variety of experts predict that 2017 will be a purchase-driven market. A common cliché in mortgage and real estate is that many people who are great at cultivating relationships tend to be less gifted in the paperwork and detail aspects of transactions. While technology can make things easier for those producers, it can also free up others to develop and exercise the “people skills” that are critical to survive and thrive when the refinances dry up. Times, preferences and technology change, but human nature doesn’t. And that supports an industry truth that isn’t likely to change any time soon: Getting a mortgage is messy. MLOs know that even though a credit score may pop up labeled “good” in a happy font, there may be some issues lurking in the background that could require first aid or even some hardcore rehabilitation that mobile apps aren’t

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Hidden Opportunities for Digitizing the Mortgage Process By Paul Doman

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“Much of the focus and press on digital mortgage has centered on the borrower—specifically removing human contact from the borrower experience. Some envision that a borrower may be able to go from application to funding without

ccording to Forrester Research, the number of transactions settled via esignatures is likely to exceed 700 million in 2017, and financial services firms rank first in adoption and vendor activity for e-signature. The rise of esignature into the mainstream is fueling the growth of digital mortgages. Much of the focus and press on digital mortgage has centered on the borrower— specifically removing human contact from the borrower experience. Some envision that a borrower may be able to go from application to funding without any human intervention.

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But there are other hidden opportunities for digitization in both the back- and front-office that mortgage lenders can leverage to gain greater efficiencies, lower costs and gain a strategic advantage. In this article, we’ll explore three of these areas: E-appraisals, e-closings and e-audits. e-Appraisals Appraisal management is ripe for digitization–with new innovations in technology, everything from placing the appraisal order to receiving the completed appraisal can be automated and managed online. In addition many aspects of creating the appraisal are also being digitized thanks to

any human intervention.”

advances in appraisal management technology. Intelligent business rules and process automation can immediately determine the optimal appraiser for each appraisal order, assign appraisal orders and receive order acceptance from the appraiser. In some situations, the appraiser can even use desktop appraisal technology to complete all or a portion of the property appraisal. Mobile apps are increasingly being deployed to capture property details and, in the most innovative cases, crowdsourcing is being used to locate and secure local property inspectors in real-time–an Uber-like approach to matching appraisal orders with inspectors. Borrowers benefit from being alerted to the identity of the appraiser, what they look like and when the appraisal can be scheduled, giving them a sense of security and greater transparency into the appraisal process. When borrowers have greater transparency, it also instills a sense of greater control which most borrowers appreciate. As lenders cope with a growing appraiser shortage in high-demand markets and appraisers look for new ways to work more efficiently can take on more business without sacrificing quality or compliance, the digitization of the appraisal process is only going to increase in importance. e-Closings e-Closings may not be hidden, but recent changes in regulations and more innovation on the technology front make them worth considering for your business—even if you’re ruled them out in the past. While the industry has been slow to adopt e-closings due for many reasons, including regulations that vary from state to state and

the fear of increased risk, two 2016 court rulings paved the way to give banks and other mortgage lenders greater confidence in moving toward e-signature technology for mortgage loan closings. The rulings affirmed that lenders can enforce electronically signed and transferred notes— which in turn could prompt wider adoption of electronic mortgage technology and eclosing processes. There are many benefits of moving to electronic documentation and esignature technology, including accelerating the production of loan documentation, improving TRID compliance, streamlining the mortgage closing process and improving the borrower experience. For lenders, implementing a solution that can both improve efficiency (including lowering loan costs) and make the closing process easier for borrowers seems to be a logical next step for banks and credit unions looking to improve the profitability of mortgage lending operations. A strong e-Closing solution should combine closing documentation, process workflows and e-signature technology in a web-based bundle. Benefits to the borrower include: l Earlier access to real estate closing documents l More time to review documents prior to closing date l Improved transparency into closing process, title and loan information l Ability to review and sign closing documents from anywhere, in the comfort of their home or office In addition to providing a better borrower experience,

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lenders also benefit by gaining: l A more efficient, streamlined real estate closing process l Easier adherence to TRID documentation requirements l Compliance with the Uniform Electronic Transaction Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESign Act) l Automatic capture and secure storage of online signatures, disclosure acceptances and borrower actions in an audit-ready electronic timeline of each closing

Conclusion By looking to hidden opportunities to digitize backoffice, as well as borrowerfacing steps in the mortgage

process, lenders can deliver shorter loan cycle times and a better borrower experience while also achieving a level of

innovation that enables them to gain a competitive advantage and accelerate business growth.

Paul Doman is president and CEO of Accurate Group, a nationwide appraisal management and compliance company whose mission is to help real estate finance professionals deliver business growth.

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e-Audits With more data moving online, lenders face a unique opportunity to streamline and even automate how they respond to a compliance audit. Lenders should consider maintaining an online repository of compliance documentation and the ability to run real-time reports on all aspects of the mortgage process. For areas of the mortgage process that are reliant on vendors, such as appraisals, lenders should proactively contact vendors to evaluate each vendor’s approach to compliance, their level of commitment to providing audit support and what electronic data they can provide in the event of an audit. For example, in the case of appraisals, a good a AMC should be prepared to provide an electronic “audit kit” on demand for all aspects of the appraisal process and appraisal data related to a lender’s specific loans. Compliance is a high-cost, high-risk area. Much of the cost and a great deal of the risk can be reduced by automating processes, capturing and storing data online and implementing strong reporting technology. By demonstrating that your core processes are consistent, compliant and enforced through automation, you will gain a great deal of credibility with auditors. In addition, the ability to quickly run ad-hoc reports in response to an auditor’s inquiries will allow you to reduce the time it takes to complete an audit and the number of people needed to support it.

Since many audits are unexpected, lenders can lower their risk and save a significant amount of time and money by going digital with compliance data and automating internal workflows associated with the audit response process.

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Borrowers Represent the Final Link in Digital Loans By Chris Backe

re we finally on the brink of creating a completely digital mortgage experience? It certainly feels that way. Over the past two decades, automated underwriting and processing tools have become omnipresent, electronic signatures have become legally binding in all 50 states, and more than half of all borrowers now find their lender through the Internet. New tools enable borrowers to drive much of the mortgage process themselves, and a completely electronic closing process is taking shape. The way things are going, digital loans could be a reality by 2020. Despite such progress, however, things have changed very little for borrowers. Most consumers view the mortgage process as more complicated and daunting than ever, thanks to new regulations and tighter credit requirements. But the truth is that our industry has not been as focused on improving the consumer experience as much as it has been on making the lending process itself more efficient. It’s one thing to promise borrowers preapprovals in minutes and a fast close. But if you’re not providing a great customer experience, with the right human expertise during critical moments of the transaction, it’s a meaningless exercise. It’s almost like taking a 7.0-liter twin-turbo V8 engine and sticking it in a rusty old Model T. You may go fast, but you might not survive the trip. To produce happier clients, the next great innovation in digital loans is likely to take place in the way loan originators interface with the consumer.

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Where we’ve been The annual home sales rate this past year is now the highest it’s been since 2006, the year before everything came crashing to a halt. Back then, a growing number of borrowers

were on the Internet to look up information about homes and mortgages. But for the clear majority of homebuyers, the process was almost entirely an offline affair. Consumers were limited to a highly paper-based and fragmented mortgage process, and brokers were in almost total control of the customer experience.

that followed the housing crisis. Moreover, the costs that came with compliance made streamlining every other aspect of mortgage production that much more important for companies to be profitable. Meanwhile, over the past decade technology and the Internet-of-things have also transformed consumer behavior. According to various figures, the volume of e-commerce sales has roughly tripled over the past 10 years, and approximately one-third of that volume involves a purchase through a mobile device. These days,

“The key to completing the digital loop is for lenders and loan originators to start thinking about using automation to not just create loans, but to complement borrower engagement.”

Since then, loan production has become highly centralized and automated. Technology has transformed a mortgage lender’s ability to qualify borrowers, find products, order credit and other services, and underwrite loans. Besides being a more efficient way to do business, lenders did not have much of a choice. Technology proved to be the best defense against the firestorm of regulations and requirements

borrowers are searching for houses and mortgages through their smartphones and iPads, which they never turn off. More than half of all mortgage consumers are finding their mortgage lender online, too. Despite these transformations, most borrowers do not fill out their applications online—even Millennials, the very group we all assume does everything online. While more consumers

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prefer to be in control over getting a mortgage, they do not seem to crave a digital mortgage process as much as a satisfying customer experience. For many, this is defined by getting the assistance of a trusted mortgage expert when they need it most. E-mail is a perfect example of where many lenders fall short in customer service. According to recent data from McKinsey Group, e-mail is 40 times more effective at getting new customers than Facebook and Twitter combined. Yet many loan officers cannot be troubled to check their e-mail throughout the day, let alone come up with thoughtful, knowledgeable responses. One of the main reasons for this, I believe, is that few loan originators use communication tools that are integrated with their marketing and loan origination software, so they do not have access to important data about incoming prospects. Completing the digital loop By most accounts, 2017 should be a banner year for mortgage professionals. But to take full advantage of today’s low rates to increase production, improve referrals, and secure repeat customers, loan originators need to concentrate less on speed and more on the customer relationship. This applies whether you can provide a completely digital lending experience or not. For example, one the newest and most exciting trends in our industry is the borrower-driven mortgage process. Many lenders have created online portals where consumers can apply and get approved for a mortgage, sign disclosures, and upload documents all on their own, without any human intervention. I’ve seen many of these portals and they are amazing; more lenders ought to be using them. But they need to be closely integrated with human expertise, because evidence suggests that many mortgage borrowers simply aren’t ready for a self-serve approach to the biggest purchase of their lifetime. Recently, STRATMOR Group presented some very interesting survey results about loan originators who incorporate some form of a

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the borrower should have submitted a document and didn’t, so they can reach out with a reminder. The bottom line is that digital loans remain a worthwhile goal, but a digital loan experience without a great customer experience is just one big “So what?” In today’s world, most borrowers do not care if their mortgage experience is digital. They just want it to be good. Originators that provide a great

customer experience on top of a digital loan process will not only be better positioned to

succeed—like a twin-turbo V8 in a Ferrari—they’ll be hard to stop.

Chris Backe is the director of financial services at Velocify, and a sales automation expert with more than 20 years of experience offering technology solutions to multiple industries. Chris has spent the last 10 years in the financial services industry, holding various positions at industry leading technology companies including Ellie Mae and Salesforce. He can be reached by e-mail at CBacke@Velocify.com.

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consumer-driven mortgage process. About 17 percent of originators surveyed said they let consumers share source data from their banks for asset verification purposes. That makes sense—these tools are relatively new. But when respondents were asked how many of borrowers actually gave the originator access to their bank data, 65 percent said it was one half or less. In other words, not exactly overwhelming demand. The key to completing the digital loop is for lenders and loan originators to start thinking about using automation to not just create loans, but to complement borrower engagement. Just as technology can lead to a more consistent mortgage process, it can also create more consistent sales, marketing and customer service efforts, which inevitably lead to higher conversion rates. And merely by leveraging technology to automate the process of communicating with borrowers, loan originators can simultaneously begin the creation of digital loans—only further up the chain, from the time a consumer first indicates interest in obtaining a mortgage. Automated marketing tools can be leveraged to measure how ready borrowers are to get a mortgage by how they respond to certain marketing campaigns, so mortgage professionals waste less time chasing leads that don’t go anywhere. Automation can also help mortgage professionals be far more diligent in their sales efforts. For example, we’ve all seen statistics that suggest most prospects say “no” several times before they say “yes,” or that 80 percent of all sales require at least five follow up calls. Let’s face it, most of us don’t like putting up with that many “no’s,” even if we must. But sales automation tools can make this job much, much easier. After the sales process, automation can also ensure borrowers who want an online mortgage experience get the follow-ups they need when they happen to get stuck—and before they go off to find another lender. It can also remind the loan officer when

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Going Digital Is Easier Than You Think By Jeff Bode t’s a great time to be an independent mortgage banker … regulatory woes notwithstanding, of course. Both origination volume and profits are up for mortgage lenders, and independent mortgage bankers (IMBs) continue to gain market share over their depository peers. However, this era of prosperity will inevitably set up a David-versus-Goliath showdown between smaller IMBs and their larger counterparts over market share. While larger IMBs certainly have the advantage as far as capital, smaller IMBs possess a nimbleness that the big guys just can’t match. That flexibility will enable smaller IMBs to go toe-to-toe with larger market players by going digital. Most people agree that

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digital is the future of the mortgage industry, but few would go so far to say that the industry is already there. This is false. Digital origination technology has been in use for years on the front-end of the mortgage transaction (think eSignatures, online loan applications, etc.), and eClosings are occurring with more and more frequency as investors have become savvy to the positive impact digital closings have on loan quality. Of course, making the switch from paper to digital does require a change in direction, so to speak, and that is where the agility of smaller IMBs works in their favor. A large IMB is not unlike an oil tanker–powerful, expansive, capable of handling significant volume. However, the bigger the vessel, the harder it is to alter its course. Smaller

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“Making the switch from paper to digital will cause some pain–that’s inevitable with any significant change. However, the rewards smaller IMBs will reap from making the transition far outstrip the momentary discomfort.”

IMBs, on the other hand, are much closer to a cutter–a smallto medium-sized craft built for speed rather than capacity and much, much easier to redirect when the need arises. Most of the momentum in the progress of eClosings has come from small to mid-sized players because the scope of their operations is such that change can be rolled out relatively quickly. Furthermore, moving from paper closings to eClosings can provide numerous benefits that can improve profitability and spur growth. As such, it would greatly serve smaller IMBs to make the move to eClosings now while their larger competitors are still years away from making the transition. Making the switch As one might expect, the biggest challenge in transitioning to eClosings is breaking the habit of writing in information on closing documents by hand. This is such an ingrained part of the closing process for many smaller IMBs that paper-andpen comes second nature to loan officers and closing agents. This is where it helps to have a trusted document preparation provider in your corner. These vendors have put considerable time and effort into digitizing the document creation and signature process, and by leveraging the work they’ve already done, smaller IMBs can easily eliminate previous manual processes and move to automatically populating the form using previously captured information and executing eSignatures on documents where allowable. It bears noting here that many states differ on whether certain documents, such as documents that require notarization, can be signed electronically. However, most doc prep vendors are well aware of this fact and can easily accommodate a hybrid eClosing

process where certain documents are printed out for wet signature and ingested back into the overall closing package. In no way should this be a barrier to adopting eClosings. Once the automation hurdle is cleared, it really is downhill from there, though there are a few more details that will need to be addressed. For example, having “prior to funding” conditions on a loan can complicate the eClosing process. Thus, it’s a good idea to ensure all conditions, with the exception of a rare few, are cleared before funding to keep the process running smoothly. There is also a bit of legwork to do with investors. For those IMBs that are working with savvy investors that accept eNotes, they will need to ensure they are using their investor’s preferred electronic document storage method. While some investors have built their own eVaults, others are comfortable with using a third-party provider’s, and most doc prep providers have an eVault offering, which streamlines the process considerably. In addition, IMBs would need to work with their investors to determine the preferred delivery method, but that’s a relatively minor concern, especially if the investor has already embraced eClosing and is prepared to ingest incoming loans in a digital format. The benefits of change Making the switch from paper to digital will cause some pain– that’s inevitable with any significant change. However, the rewards smaller IMBs will reap from making the transition far outstrip the momentary discomfort. For example, eClosings have a demonstrably positive impact on loan quality. For example, missing signatures or incorrectly signed documents are embarrassing mistakes that

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can erode an investor’s trust in the quality of loan production— not to mention that it could be grounds for the borrower to legally nullify the transaction. Utilizing eSignatures ensures that documents are signed correctly and in the appropriate spots, thus eliminating the need to re-sign documents ... or worse. In addition, missing documentation is one of the biggest categories of loan defects that investors see. Fannie Mae estimates that nearly 40 percent of the repurchase requests it issues are resolved by simply providing documentation that was not present when the loan was originally submitted. eClosing easily addresses this issue, as it is virtually impossible to misplace a digital document. In short, the eClosing process extracts much of the “human error” that can negatively impact loan quality, ensuring that minor mistakes don’t become major reasons for rejection by the investor.

On the post-closing end of things, eClosings significantly reduce the amount time spent on each loan file, as staff no longer have to scan and upload documents. All the documents are already compiled in the order in which they must be sent, and delivery to the investor happens with the push of a button rather than the sealing of an envelope and trip via snail mail. In addition to time, eClosings also deliver savings in the form of reduced expenses. Paper, printing supplies, scanners, shipping materials, postage–the cost of paper-based closings is staggering. In contrast, eClosings (eSignature technology, electronic documents, etc.) are a fraction of the cost of paper-based closings, and as an added benefit, the labor that would otherwise be devoted to these highly menial, low-value tasks can be redirected to areas that can drive profitability. And finally, let us not forget the benefit to the consumer. Without a doubt, eClosings

provide a better mortgage closing experience for the consumer. Traditional closings can take an entire morning or afternoon to execute, whereas eClosings can be completed in 15 to 30 minutes, resulting in a much less painful process for everyone involved. In addition, eClosings provide consumers with the opportunity to review their closing documents electronically prior to the actual closing. Not only does this enable the consumer to feel more educated and empowered in the closing process, but it is also one of the key aims of the Consumer Financial Protection Bureau’s “Know Before You Owe”

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initiative, which lenders have been striving to comply with for the past 18 months or more. There’s no denying that eClosings are vastly superior to traditional, paper-based closings, and as IMBs continue to gain market share over depository lenders, competition for this larger piece of the mortgage pie will intensify. By virtue of their natural agility, smaller IMBs are well positioned to claim their fair share by adopting and, subsequently, reaping the benefits of eClosings well ahead of their larger competitors. They need only take the helm and chart their course in the right direction.

Jeff Bode is owner and CEO of Addison, Texas-based lender Mid America Mortgage Inc. Mid America seeks to buy e-closed and hybrid loans through delegated and non-delegated correspondent channels, in which it offers a two-day dwell time. Jeff can be reached by e-mail at Jeff.Bode@MidAmericaMortgage.com. 73

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• Plan, develop, and execute sales strategy to meet established goals in assigned territory • Secure new and maintain current relationships with originators, through both a wholesale and correspondent channel • Market Angel Oak products and programs to the mortgage and real estate community • Serve as liaison between brokers and operations team We are also looking for underwriters and other operations positions in our Atlanta Headquarters. If you’ve been looking for the right entrepreneurial organization with a strong, service-based culture, look no further. Come join the nation’s top Non-QM lender by emailing careers@angeloakms.com for additional information and consideration.

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Using Technology to Attract Millennials Into the Mortgage Workforce By Dustin Sheppard

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“This industry far too often sees people sacrifice the one commodity they will never get back: Time with family and time for personal growth or personal health. We, on the other hand, have chosen to create an environment that has transparency and accountability using technology.”

here has been a lot of talk recently about how the mortgage industry needs to figure out ways to attract the next generation of loan officers. It is often stated that the average age of people who work in the industry are in their 50s. As the younger generation enters and takes over the housing market, will we also see them become the future workforce and leaders of our aging industry? Experience counts, but having the ability to relate to the things that are important to the borrower may be even more important. Mortgage companies and managers are at a crossroads at

a time when Millennials are demanding more out of their work. How do we accommodate that and groom the next generation of loan officer? While trying to find a way to streamline the workflow and improve business efficiencies at my own mortgage branch, I came to the realization that technology may be one of the keys to meeting Millennials where they want to be in their jobs and careers. I’m not talking about the latest customer relationship management system (CRM) or cool flyer-making tool. I’m talking about building a business that has technology at its core and allows loan officers flexibility and information in an instant. In my branch, we use

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technology that pulls information on leads and accounting, as well as information from CRM systems and loan operating systems, into one understandable digital dashboard. In other words, we can check the status of any loan we are working on at any time, from anywhere, as long as we have a smartphone or tablet. I recently hired an originator who falls into the Millennial age range. During the interview, she saw this technology that we have available to our loan officers, and immediately asked if she could get it on her phone and if it will send her notifications. I answered, “Of course.” We hired her and she later told me she felt like she was leaving the stone age behind. She had just left another mortgage branch and had only been in the industry for a few years. This tool won’t close loans for her, but it will certainly give her more visibility and allow her to serve her clients and referral partners easier and quicker. No more being bogged down by diving into spreadsheets or waiting on someone else to do it. Essentially, I am able to use technology that was created to help streamline my business to recruit young originators who are just as excited about the technology as I am. But that’s just the beginning. Here are four things Millennials want out of their jobs and how mortgage technology can help fulfill those wants. Making a difference I have been a mortgage branch manager since 2006. I love the pace of the industry and what service you can provide. It’s an amazing career that allows you to help people realize their financial situation and achieve the dream of homeownership. I don’t believe the mortgage industry will be so streamlined that you will be able to just “push a button” or “pull a lever” and get a mortgage. It takes a lot of

human interaction and the loan approval process is a long one with many regulations along the way. Consumers often don’t understand the different steps of the loan process. Traditionally, if something goes off the rails during the process, loan officers may not know about it for two to three days, which could delay the approval of the loan or cause it to miss critical deadlines. Meanwhile, that consumer could be living in a hotel waiting to purchase their new home. Technology allows us to help make sure everything is on time and turned in properly, thus increasing the chance of a timely close of a loan. Loan officers, real estate agents and banking operations now have tools that help track and communicate critical milestones to make sure people get in their new homes quickly and smoothly. As a result, the Millennial loan originator gets more people into homes with a positive experience and is more fulfilled by that. Schedule flexibility With the technology I have implemented in my mortgage branch, I have been able to save myself 15 to 20 hours per week because I am no longer sifting through spreadsheets to get updated on loans and the pipeline. Because of that, myself and many members of my team don’t have to work ourselves to death managing a pipeline of loans. We are able to spend that time on higher value activities, like business development, training and recruiting. It has also has opened up more time for me to spend with my family and go to the gym. My whole team can check how their workflow is going from their phones. They aren’t chained to their desks. This industry far too often sees people sacrifice the one commodity they will never get back: Time with family and time for personal growth or personal health. We, on the other

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hand, have chosen to create an environment that has transparency and accountability using technology. The byproduct of that is more time without the added stress that comes with too little time in the day. Work that is challenging Don’t be afraid to take a long hard look at your business practices and systems. We have an open-door policy for all of our employees and have a culture that encourages collaboration on system improvement. Your biggest asset is your people, and we as branch managers need to listen to make improvements to move the needle. When branch managers do finally get their data and systems under control and are able to step back and look at how their business is really doing, they find out that things are a mess. If you don’t properly manage your data input, you won’t get great results. Once you know what you need to do in order to clean things up and you use an algorithm to do it, you and your team will be able to set goals

and properly forecast. In my branch, this has allowed us to have healthy (and accurate) competitions that are about more than just closing the most loans in a month (not very original). We have competitions that revolve around the quality of the loan submission and with a scoreboard in the office that accurately lets everyone know where they are at all times. It creates a sense of excitement and challenge, something Millennials embrace. Active on mobile Let’s face it, a lot of people, especially Millennials, are online and on their smartphones nearly all day. In fact, a recent study states that 39 percent of Millennials interact with their smartphone more than anything or anyone else every day. Yep, that said “anyone.” So go back and think about the story of the young originator who joined my team and did so partly because of the loan tracking dashboard that I have in my office. The industry needs to have mobile tools available that Millennials

can use for their work because they want to be on their phones. If they are able to enjoy their job and feel like they are on the cutting edge while making a difference, then they will work harder and that will trickle down to the consumer. The mortgage industry at its core has some of the things that Millennials value in a career– flexible hours and the ability to be inspired by helping borrowers achieve homeownership. The mortgage industry is also filled with fractured systems that don’t interface, but are required to exist in today’s highly regulated world. This creates a clunky experience for the loan officer and borrower. These types of

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challenges baffle and aren’t acceptable to Millennials. So why in a production industry like ours are we having trouble attracting the next generation of loan officers? It’s because the longstanding mantra has been, “If it isn’t broke, don’t fix it.” It is broken though because young people aren’t seeking out careers in our industry. I believe that technology can help us pull more Millennials into the mortgage industry and fix a problem that may soon catch up to all of us. We need to be ready for a fresh set of eyes looking at longstanding industry inefficiencies and allow them to be part of the solution.

Dustin Sheppard is the branch manager of Securus Group, a division of American Pacific Mortgage, in Roseville, Calif., and the CEO of Special Agent X, a fintech startup company that has developed the X-Ray dashboard. X-Ray transforms massive amounts of data warehoused in a variety of different systems into easy-tounderstand, easily accessible analytics that drive top-level decisions for mortgage professionals. Dustin may be reached by e-mail at DSheppard@SpecialAgentX.com. 75

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‘Closing’ in on Digital Mortgages By Brenda B. Clem, CMB

uch is made about the accelerating pace of innovation and how quickly our society adopts new technologies. For example, it was decades after the invention of the telephone before 50 percent of U.S. households had one. But after the iPhone was introduced, half of the country had smart phones in just five years. Technology has also transformed the way people buy houses, too—but only up to a point. For example, it’s been 17 years since the first paperless mortgage closing took place, in which the promissory note and mortgage were signed and recorded electronically. Yet mortgages are still not completely digital, and the mortgage process itself hasn’t gotten much shorter over the past two decades. Borrowers may be able to get fast approvals, but there’s still a lot of paper involved. The truth, however, is that enormous work has been accomplished over the past two decades that have put the digital mortgage finish line clearly in sight. To cross it, the industry needs to shift some of its focus from the front end of the mortgage process and toward the closing process, where the real work of making digital loans a reality awaits.

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Advantages of eClosings By now, the advantages to a digital

mortgage process should seem obvious. Regulators are fanatical about data quality, data standards and data use. They also like pushing lenders to standardize the types and formats of data that is collected and reported. The Mortgage Industry Standards Maintenance Organization (MISMO) has helped by developing a data dictionary that enables an expanded understanding of new loan data definitions, further pushing open the door to digital loans. For example, the Loan Estimate and Closing Disclosure under TRID are included in the MISMO 3 format, allowing lenders and the secondary market to deliver and authenticate disclosure data with greater efficiency. Meanwhile, several key innovations in recent years have made it easier for lenders to collect borrower data and obtain faster loan approvals. The electronic ordering of tax transcripts and automated income and asset verifications are two specific examples. These innovations rely more on the secure transfer of data, not forms or paperwork. So why do most loans require wet signatures to close? The trouble is that closings typically involve the work of several parties—settlement service providers, title companies, notaries and others. Very often, the systems these parties use are totally different. As a result, many lenders are carefully collecting

“While it may be a while before eNotes reach critical mass, front-end pressure on digitizing loans and the prospect of an improving origination market is starting to motivate closing departments and settlement service providers toward closing the digital mortgage loop once and for all.”

and assembling loan data in digital formats only to watch the process grind to a crawl before reaching the closing table. Basically, there are two basic types of electronic closings, or eClosings. The first of which is a hybrid eClosing, in which documents are signed in ink yet scanned and recorded electronically. The majority of mortgages today involve this type of closing. The other is a fully paperless eClosing, which includes a note that has been electronically signed (an eNote) and is registered and stored in an electronic vault (an eVault). eNotes are created using either SMARTDoc v.1 or SMARTDoc v.3 standards, which include tamperevident seals. An eNote essentially completes the digital loop in the mortgage process, assuring the secure exchange and storage of data that has occurred throughout the mortgage lifecycle. Mortgages signed with eNotes mean there is no need for FedEx, UPS or other methods that frequently result in

documents getting lost or misplaced. This has enormous benefits for consumers as well as investors and warehouse lenders, including better data integrity, reduced risk, the ability to conduct automated reviews and approvals, and lower costs per transaction. There are reasons why more lenders haven’t started using eNotes. First, at least out of the gate, eNotes are going to be more expensive than a lender’s current closing process. eNotes require a document provider that uses SMARTdocs, and if a lender doesn’t have one, they’ll need to find one. Yet many lenders are unaware of who the vendors are. After they find a SMARTdocs partner, lenders must create new processes and train staff on them, which also takes time and effort. If they start today, producing digital mortgages could cost twice as much to produce as “normal” mortgages cost today. They may take longer, too, at least at the onset. After considering these

al focus on THE GROWTH OF DIGITAL ORIGINATIONS AND CLOSINGS

challenges, most lenders are inclined to hold onto their paper-based processes for the time being. Yes, paper is wasteful, but from a practical standpoint, paper works and loans get closed. Warehouse lenders have also faced challenges adopting eNotes, mostly because of the perception that it may cut into a warehouse lender’s income by eliminating the length of time warehouse loans are kept on the line. This notion persists even though electronic notes are no different than paper notes when it comes to a warehouse lender’s profit.

standing in the way, it’s possible that we may see digital mortgages reach critical mass before the decade is through. It may not have happened with the

speed of other innovations. But overall impact on consumers— and ultimately, on the entire housing economy—will be no less great.

Brenda B. Clem, CMB, is the eWarehouse director for Street Resource Group Inc. Brenda is a well sought-after source on eMortgage & eWarehouse technology, and a mortgage industry senior strategic leader with more than 30 years of diversified experience, encompassing all areas of mortgage lending as well as operational efficiency and financial services consulting. She can be reached by email at BClem@StreetResource.com.

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Approaching the finish line While it may be a while before eNotes reach critical mass, front-end pressure on digitizing loans and the prospect of an improving origination market is starting to motivate closing departments and settlement service providers toward closing the digital mortgage loop once and for all. Adoption will ultimately be driven by establishing a business case for moving forward—and work is underway on that front. This year, MISMO and the MISMO eWarehouse Workgroup announced an educational series to raise awareness for digital closings. The eWarehouse Workgroup is an industry collaborative hosted by Street Resource Group that includes all parties involved in warehouse transactions— originators, banks, investors and others—and was created to help companies realize the benefits eNotes, such as obtaining better pricing and execution. This year, the workgroup will be diving deeper into core pieces of what it takes to make eNotes work. The series began in February with a workshop that provides an overview of eMortgages. In April, it will focus on pre-closing and originations, followed by eclosings in June and postclosing and delivery in August. The series will wrap up on October with a workshop on how to sell eNotes to the secondary market. Altogether, the series will present a 50,000foot view of making a business case to having an eClosing process. Since Street Resource Group has taken over managing the

eWarehouse Workgroup last year, much progress has been made. Several lenders, including Merchant’s Bank of Indiana, FirstFunding, and Santander Bank, have begun accepting eNotes. Meanwhile, the workgroup is demonstrating to other lenders that there is a viable format for accepting and selling eNotes. With so much at stake, with all the pieces lined up, and with fewer and fewer obstacles

a special focus on

special focus on THE GROWTH OF DIGITAL ORIGINATIONS AND CLOSINGS

a special focu

In Defense of Paper By Eric Weinstein

love the smell of paper in the morning. The intoxicating light headedness that comes from huffing freshly printed paper as the ink fumes destroy my brain cells. Though I am not crazy about the cost of the paper, the ink cartridges, the new HP printer I have to buy every two years and the filing cabinets lining my small home office, nothing satisfies like a paper file. Yes, I know it is the new environmental, tree-hugging trend to go to electronic files, but I am affirming my protest here and now. Who needs trees anyway? They are dirty, bug-infested, eyesores causing pestilence and disease to all of humanity. Okay, I could not find one human disease in Google directly caused by trees, but I did find this … Fungi are everywhere. There are approximately 1.5 million different species of fungi on Earth, but only about 300 of those are known to

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make people sick (CDC.gov/Fungal/Diseases). Fungal diseases are often caused by fungi that are common in the environment. Fungi live outdoors in soil and on plants and trees, as well as on many indoor surfaces and on human skin. Most fungi are not dangerous, but some types can be harmful to health. So there! I typically used to go to my customer’s home, paper file in hand, to have the loan application and disclosures signed. I thought it was a great way to create the human contact needed to cement a deal. As it turns out, people no longer want human contact. They prefer that some strange man NOT come in the home, drink their coffee and blame his flatulence on their dog … who knew!? The world is spinning out of control with the proliferation of emortgages, paperless mortgage transactions and digital originations. Where are my good

“As it turns out, people no longer want human contact. They prefer that some strange man NOT come in the home, drink their coffee and blame his flatulence on their dog … who knew!?” old days of White-Out and carbon copies? Probably with my pager and grandma’s Betamax. Sure, the production and use of paper has a number of adverse effects on the environment, which are known collectively as “paper pollution.” Pulp mills contribute to air, water and land pollution. Discarded paper is a major component of many landfill sites, accounting for about 35 percent by weight of municipal solid waste (before recycling). Even paper recycling can be a source of pollution due to the sludge produced during de-inking (En.Wikipedia.org/Wiki/Environment al_Impact_of_Paper). But, isn’t it worth it? Even my occasional bloody and often painful paper cut is a scar worn proudly in this fight against this rise of the machines.

People mistakenly think we need trees for oxygen. According to Google: “In the process of photosynthesis, phytoplankton release oxygen into the water. Half of the world’s oxygen is produced via phytoplankton photosynthesis. The other half is produced via photosynthesis on land by trees, shrubs, grasses and other plants.” So, cut down all the trees for papers and we still have phytoplankton, scrubs, grass and other plants which I have no problem with. So who is with me? Grab your chainsaw, clear the land and pave over paradise for the sake of the good old says. Turning trees into paper will literally take your breath away.

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. Eric is semiretired, doing mortgages by referral only. He may be reached by phone at (703) 505-8692 or e-mail EWeinstein4U@gmail.com.

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Tales From the Closing Table

By Andrew Liput

role in a $22.9 million mortgage fraudulent purchase of seven he mortgage closing fraud scheme centered on selling properties in Baltimore using transaction is the single condos in a downtown high-rise to fraudulent loan documentation and largest financial straw buyers. The attorney straw buyers causing losses of transaction in the lives represented LLC sellers at more than $1.4 million dollars. of most consumers, closings, while knowing the condo and it is also the prices were inflated, and signed l A politician, a former state Senate riskiest stage of the mortgage off on sales documents sent to and Assembly candidate in New process for lenders. While the vast lenders that contained false Jersey and two of his family majority of lawyers and notaries and information about the amount of members were arraigned on a 27title agents are experienced, ethical money the purported buyers were count indictment for their alleged and diligent professionals, for a few putting into the deal. He faced up role in a sophisticated mortgage the role of closing agent is too to 30 years in prison, but was fraud scheme in Newark. They are tempting a lure for selfish criminal sentenced to 11 months in prison, charged with conspiring to file a intent. This column addresses the two years of supervised release, false document with the county good, the bad and the ugly! and ordered to pay a fine of stating the mortgage held on a $10,000 and restitution of property had been paid off, even Top industry news … $83,000. though an amount in excess of Trump Administration $75,000 was still owed on the signals CFPB changes Wire fraud still a mortgage. With the election of Donald Trump as problem for lenders! President in November, the future of It seems that the wire instruction l A sophisticated mortgage fraud the Consumer Financial Protection scheme in New York resulted in an fraud scheme that has infected the Bureau (CFPB) has come into mortgage industry over the past few attorney and a group of his question. While the elimination of a years remains a serious problem. conspirators facing indictment in consumer protection agency is Wells Fargo first brought the issue to December 2016. The group told unlikely, the new Administration has light in late 2015, when it released a potential clients they could indicated that they intend to oust memo warning its business partners eliminate their mortgage debt in current Bureau Director Richard about phishing schemes that exchange for a fee. In reality, the Cordray. Ever since the PHH decision exposed loan details and allowed lawyer drafted and filed fake last year, the issue of the criminals to substitute fake wire discharges of mortgages at local constitutionality of a lone director instructions allowing them to make county clerk’s offices in without Congressional oversight off with bank proceeds. I have written Westchester and Putnam managing such a powerful regulatory several articles about this in National Counties, and in Connecticut. To body has been in question. It seems profit from their scheme, the group Mortgage Professional Magazine and plausible and early indications from there have been industry workshops charged monthly fees that they President Trump’s financial industry said covered, among other things, and seminars on the topic. Yet in the team offer support for it, that the past few months, there have been audits of the clients’ properties position of CFPB Director will be several banks which have once again that they often failed to perform. replaced with a commission that will They also encouraged their clients fallen for the “switcheroo” on wring be made up of members of both instructions. It is imperative that to take out second or reverse political parties much like the FCC. lenders verify wiring instructions at mortgages on the properties and Some Democrat leaders have stated the source and be wary of changes they then retained substantial they will challenge any attempt to late in the process. Email security is portions of these proceeds. remove Cordray, however, odds are also a key component of anti-fraud Losses exceeded $33 million. the commission management measures. mechanism will ultimately prevail. The l The publisher of a Spanish idea that the CFPB itself will be On the lighter side … language newspaper in Florida, disbanded is a pleasant dream for who was also a licensed real estate in honor of Valentine’s Day many lenders, but is nothing more Bob walked into a post office just sales associate and mortgage than that, just a dream. before Valentine’s Day and couldn’t broker was sentenced to 18 help noticing a middle-aged, balding months in federal prison for You can’t make this stuff up! man standing in a corner sticking embezzlement and misapplication This month, like every month, we “Love” stamps on bright pink of funds. According to court feature some of the latest news about envelopes with hearts all over them. records, he was responsible for mortgage and closing fraud affecting marketing and selling bank-owned Then the man got out a bottle of our industry. These are real cases expensive perfume from his pocket properties to investors in order to from around the country, only the remove these troubled assets from and started spraying scent over the names have been redacted to avoid envelopes. By now Bob’s curiosity his bank’s balance sheet, and in threats of frivolous legal action … had got the better of him, and so he connection with the fraud signed false HUD-1 Settlement Statements asked the man why he was sending l In Washington State, a vice all those cards. and other closing documents president, loan officer and loan The man replied, “I’m sending out causing $10 million in losses. processor at PC Bank Home were 500 Valentine cards signed, ‘Guess indicted by a grand jury in the U.S. who?’” l A Chicago real estate lawyer District Court and charged with “But why?,” asked Bob. “I’m a recently pled guilty to bank fraud conspiracy to make false in Illinois federal court admitting his divorce lawyer,” the man replied. statements on loan applications and to commit bank fraud and Andrew Liput has been a corporate, real estate and bank fraud banking attorney for nearly 30 years He is the founder, CEO and president of Secure Insight, the first data l A Maryland accountant was intelligence and risk analytics firm to offer specialized sentenced to two years in prison, vendor management services to mortgage lenders and followed by three years of banks nationwide addressing settlement agent risk. He supervised release, for a mortgage can be reached by e-mail at ALiput@SecureInsight.com. fraud scheme involving the

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n National Mortgage Professional Magazine n FEBRUARY 2017

heard on the street

clients to order MI and help firsttime borrowers get into homes.” McLean Mortgage Breaks Production Records

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McLean Mortgage Corporation has announced that the company has closed $1.84 billion in mortgage production in 2016, approximately 25 percent higher than the production volume closed in 2015 and more than 20 percent higher than their previous production record achieved in 2013. By way of comparison, the Mortgage Bankers Association (MBA) has estimated that nationwide, residential loan volume increased approximately 13 percent in 2016 from the previous year. “I am especially proud of the fact that our purchase volumes continue to substantially exceed industry averages,” said Pat Peavley, CEO of McLean Mortgage Corporation. The MBA has indicated that purchase volumes averaged approximately 52 percent nationally in 2016. Meanwhile, McLean Mortgage’s purchase volume averaged 67 percent, 30 percent higher than the national average. “We have been able to attract quality loan officers by referral because of our reputation for operational, technological and marketing support of our sales staff,” said James Nader, COO of McLean Mortgage. “Our goal is not to be the biggest, but to be the highest quality mortgage organization in the mid-Atlantic.” McLean Mortgage Corporation has been named a Top Mortgage Employer by National Mortgage Professional Magazine. In 2014, McLean was also named an Inc. 500/5000 company for its growth record during the previous three years. In addition, the company was cited as the ninth largest lender in the Washington, D.C. metropolitan area by The Washington Business Journal. Chronos Solutions Launches National Title Operations Center in Pittsburgh

Chronos Solutions has launched a National Title Originations Division, to be headquartered in Pittsburgh

continued from page 48

under the leadership of Kandi Jablonski, executive vice president of National Operations. “This is the next step in Chronos Solutions’ initiative to aggressively build out our National Origination Title division and becoming a dominant player in the national title business,” said Matt Martin, Chronos Solutions founder and chairman. “We are fortunate to have Kandi on board to lead this effort. Over the last year, Chronos Solutions has strengthened its position as the only true end-to-end provider of lender services with several acquisitions that have expanded our footprint within the origination space.” In addition to running the division, as EVP for National Operations, Jablonski will oversee expansion of the nationwide operation into several key states with the hub in Coraopolis, Pa. She is supported by an executive team with more than a century of combined experience in title insurance and settlement services: SVP of National Operations Dan Loughlin, VP of Operations Sue Gresko, and VP of National Title Production Judy Freeman. “Kandi has the highest level of expertise in operations,” said Mark Hikel, Chronos Solutions CEO. “She is well-known throughout the industry for her ability to optimize efficiencies and create cost-effective processes. With this team, we are now in position to deliver exceptional performance and service to help shorten delivery timelines for our clients.” Jablonski, who joined Chronos Solutions in October 2016, began her career in 1997 at Pennsylvania Land Title. In 2002, she was promoted to president of National Operations, a position she held for nine years. Prior to its merger with ServiceLink/BKFS, she was vice president of National Operations at LSI, a Lender Processing Services Inc. Company. She also served as vice president of Operations at Freedom Mortgage Corporation and senior vice president, director of National Operations at Title365 Company. Cenlar Renews Five-Year Deal With Black Knight Financial for Use of LoanSphere

Black Knight Financial Services Inc. (BKFS) has announced that Cenlar FSB has signed a five-year renewal continued on page 90

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CFPB Makes $23 Million Statement About Which Credit Scores Are Sold to Consumers and How They Are Sold By Terry W. Clemans

different consumer credit file from one bureau to the next and apply the variance of about 50 different FICO score models, the VantageScore models, and then the bureau “educational” score models (“educational” credit scores are not used by lenders to make credit decisions, but designed to be sold to consumers only for financial literacy), there is literally no chance that the consumer is going to buy the actual score used by a specific lender to make a credit decision on a specific transaction. With all of those variables, there is likelihood of the score the consumer obtains being just a few points from the score used in a lender transaction, but it is just as likely to be 25, 50, 75 or more points different. The CFPB settlement stated that TransUnion was selling scores to consumers based on a model from VantageScore. Although TransUnion has marketed VantageScores to lenders and other commercial users, the CFPB found that VantageScores are not typically used for credit decisions, FICO scores were more common. As you know in the mortgage industry, only a specific 10-yearold FICO score is used for underwriting. Rumor has it that will be changing soon, but that’s another article for another day. The CFPB said the scores Equifax sold to consumers were based on Equifax’s proprietary model, the Equifax Credit Score, which is an “educational” credit score, and we already addressed the chance of that score being used by lenders. While knowing your score is valuable, the real value is for the consumer to focus on the data. Are all of their credit obligations

showing and are they being accurately reported? If so, whatever score model used by the lender will be a good representation of the consumer’s creditworthiness. That’s why I like to have consumers focus on the data that drives whatever score model is going to be used. The data is the key as it is within the consumers control. Credit reporting data quality has improved over the years, however, perfection is impossible and mistakes happen, identity theft impacts credit report accuracy, the report is never going to be 100 percent accurate. With regards to that accuracy, the consumer is protected under the Fair Credit Reporting Act (FCRA) to make sure that any errors in their credit file are corrected in a timely fashion. Consumers need to look beyond the score at the actual credit data as they know, or should know, if they did or did not pay the credit card bill (or car loan, student loan, doctor bill, etc.), or if the account rightfully belongs to them. While federal law provides safeguards to assure errors are changed, there is nothing the consumer can do about getting a different score model used to underwrite their application. The score models in use are determined by entities beyond the consumer, and that is why I believe the best value for consumers is looking at the real credit data, making sure it is complete and accurate. Then the score will be properly reflective of whatever the consumers credit worthiness is from whichever model the lender chooses. For the CFPB’s report on the TransUnion and Equifax settlement, visit https://goo.gl/sRyhSq.

Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail TClemans@NCRAInc.org.

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of $23 million. “TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.” While that statement from CFPB Director Cordray is accurate, there is room for other perspectives. For those of you who have heard me speak about credit reports and scores you may remember I represent a slightly different perspective about the value of consumers knowing their credit score. Don’t get me wrong, there is value; however, I personally think its way over-rated in value for the average American consumer. Too many consumers are fixated on just the score, when the real value for consumers is knowing and understanding the credit data that the score is calculated from. The biggest hit to the consumer score value proposition: What score is the consumer getting from which credit bureau? This was a key factor in the CFPB’s $23 million settlement. Lenders use a vast array of credit scores, provided primarily from the original score company: Fair Isaac Company (FICO). For more than 10 years now, a competing provider of credit scores, VantageScore Solutions LLC, a joint venture owned by the “Big 3” credit bureaus who offers their own score models. Outside of the mortgage industry, lenders only need one credit score for a decision. As mortgage professionals, you know first had how much variance you can have between the high and low scores on the mortgage report. Now factor on top of the variance from the

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here are credit scores and then there are “credit scores.” Advertisements about obtaining a copy of one’s credit report and score seem to be everywhere today. This business to consumer market is dominated by the “Big 3” credit bureaus, TransUnion, Experian and Equifax, and their affiliated companies. For those who have been in the financial industry for a long time, you likely remember days not too long ago when this market was nothing like it is today. It’s hard to imagine now, but in just a little more than a decade, this direct to consumer market for credit reports and scores has actually grown larger (by revenue) than the business to business revenue of the sale of credit reports and scores. In January, the Consumer Financial Protection Bureau (CFPB) made a huge statement to the credit reporting industry about how they are marketing these products and services to consumers. The CFPB brought a major action against TransUnion and Equifax for what they claimed was a deceptive representation to consumers about the actual usefulness and cost of the credit scores they were selling. The CFPB also claimed the companies lured consumers into recurring monthly payments for creditrelated products with less than accurate promises. As part of the agreement, the CFPB ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the complete cost of obtaining those credit scores and other services. Between them, TransUnion and Equifax must pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million to the CFPB for a whopping settlement in excess

Transforming an Idea Into a Business By John Ardy

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ichard Branson. Warren Buffett. Mark Cuban. What many don’t know is that these brilliant entrepreneurs started their careers without a business plan. Instead, as teenagers, they took an idea and ran with it. The notion that a business plan is required to launch an idea into a successful business is arguably one of the bigger, unnecessary hurdles to entrepreneurship. So let’s explore what it takes to transform an idea into a business. First, it’s important to realize that an idea is not a

business. A business is defined as a product or service someone will pay for, along with the infrastructure you need to support it. In the early stages, writing a business plan is therefore just guesswork. You have no idea if anyone wants to pay for your product, and the idea probably needs a lot of finetuning before it’s going to create any market appetite. Here’s a three-step approach to transforming your idea into a business. Step 1: Solicit input Find someone who might be a potential customer and show or

explain your idea to them. Then, ask them to fix it for you. You can draw your idea in crayon on a napkin and talk it over. But this important first step begins the transformation process from idea to business. It’s likely that you were 50 percent wrong about your idea. Thanks to their input, your idea will have improved and you have a better chance at turning it into a business. Step 2: Create a mock-up If it’s a Web site, that’s easy and you can do it for very little money. Show the same person the new version of the idea with their thoughts incorporated.

You’ll get more input from them, and then show it to three or four more people who might also be prospective customers. At this point, you’ll have feedback from five different people who are likely customers and you’ll have accomplished two important things. First, your idea is much better now because it’s been improved with market feedback. Secondly, you have “hot prospects” who have invested their time in your idea. It is reasonable to think that one or two of those five people you asked for feedback might sign up for a first version of your product.

“Jean, I really learned a lot from you,” you say. “In fact, I think your ideas make this a viable business concept. So, here’s what I’d like to do. Would you be my first customer? I’m not going to charge you anything. I just want to keep getting your feedback and keep improving it while you use it.” And then look Jean directly in the eye, nod your head up and down and say: “Would that be okay?” Jean is now your first

customer, and you have moved from idea to business for very few dollars. You may have done it in just a few weeks. True, Jean isn’t paying yet, but she’s a customer and a referral source. She’ll also tell others how she uses your business–notice I said “business,” not “idea”–and you are launched! And here’s the funny thing about Jean and your other initial

John Ardy is co-founder and chief executive officer for Calabasas, Calif.-based Resitrader Inc., an online secondary marketing platform for pricing and trading whole loan residential mortgages. He can be reached by e-mail at John.Ardy@Resitrader.com.

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of your idea, you can approach your five “hot prospects” like this:

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Step 3: Turn your idea into a business You have a mock-up, right? You have hot prospects, right? Great. Now let’s create customers for your business! First, you’ll want to scale back your idea to something basic. If it’s a service, then the cost is only your time, which is free at this point. If it’s a Web-based business, there are very cheap services available to build and host Web sites. If it’s a piece of software, you and your friend (or teenager) are the programmers. If it’s a marketing idea, social networking and business cards cost less than $500. With a scaled back version

customers: They truly want you to succeed. Everyone wants to be associated with a winner, and whether they are financially invested or not, they want to be able to say, “I was part of that.” It makes them feel good to see you succeed while it feeds your business. How is it possible to turn an idea into a business quickly in 2017? One of the reasons for the evolution in business-building is the Internet. We live in “the cloud” today–in fact, we carry it around in our pocket–and that has shortened communication cycles dramatically. Another reason is we have come to expect people to launch businesses quickly and on a shoe-string. And finally, it just makes sense to get feedback on your ideas before writing plans. Starting with an idea, having others refine it, and then turning that idea into a business is just good common sense. American businesses used to be created through personal interactions before business schools turned “start-up” into an unnecessary paperwork exercise. Someone might criticize this approach as too simplistic, citing the often-repeated phrase, “plan the work and work the plan.” But you cannot plan the work if the idea hasn’t transformed into a business. There’s no foundation to the planning process. Besides, who wants to plan ideas? After refining your idea into a business, then you may plan your work. But here’s a very important point about planning … it’s much more important to create daily habits which feed your business. Habits such as cold-calling 10 new potential customers every day to demonstrate your product, or always remembering to ask for referrals, or spending 60 minutes every day working on refining your product, will feed your business much more quickly than a planning document. Plans are fine, but just as ideas need to be transformed into businesses, plans need to be transformed into habits. If you need some inspiration, just remember Buffett, Branson and Cuban. With an idea, vision, an open mind and hard work, your idea can be transformed into a thriving business.

MBA’s Mortgage Action Alliance A Message From MAA Chairman Gene Lugat y name is Gene M. Lugat, executive vice president at PrimeLending. It is my honor to chair the Mortgage Action Alliance (MAA), a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). I would like to thank my co-chairs, Cindy Buhr of PrimeLending and Malcolm Hollensteiner of George Mason Mortgage, for partnering with me to grow MAA’s membership. Since it’s a new year, a new Congress, and a new MAA cycle, I want to make sure you have all the information you need to get involved and have your voice heard. Advocacy efforts on behalf of the industry have been important to the development of our neighborhoods and communities. The industry’s ability to navigate and manage policy challenges is critical to efforts in serving consumers around the nation. For those who haven’t yet, please consider joining MAA and helping us leverage your personal relationships to advocate on behalf of our industry. For those of you already connected with MAA—we’re looking for help growing the influence of our industry. The MAA Company Captain program lets you take a leading role by bolstering MAA within your company. Company Captains will be responsible for enrolling colleagues in MAA, supporting our Call to Action participation, and engaging their company and colleagues in other MBA advocacy platforms. We need Company Captains across the country to do the important work of explaining to the importance of advocacy to their colleagues. Recent efforts, highlighted in our weekly MBA Advocacy Spotlight, include Dana Abernathy, CMB, and Norm Fitzgerald at National MI, who ran an MAA enrollment campaign at their company and were able to sign up 100 percent of their sales team. At PrimeLending, we recently promoted MAA with a booth at our national sales rally and were able to sign up nearly 150 new members, bringing our total membership to over 550! You can visit Action.MBA.org to join MAA, sign up to be a Company Captain, or for more information. You can also can stay up to date on current events in Washington, D.C. and your state capital by connecting with MAA on social media. We post the latest political news as well as MAA “Calls to Action” on Facebook at Facebook.com/MortgageActionAlliance. You can also find our group on LinkedIn to connect with fellow advocates and expand your network. If you have any questions regarding MAA, or if you would like to run a MAA enrollment campaign at your office, please contact Peter Shapiro at (202) 557-2933 or e-mail PShapiro@MBA.org. Remember, MAA truly does make a difference in our industry. The larger the group, the louder the voice.

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Gene M. Lugat is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. Gene is executive vice president, national industry and political relations for PrimeLending Inc.

heard on the street

for LoanSphere MSP, Black Knight’s loan servicing system. MSP is a scalable, end-to-end system used by financial institutions to manage all servicing processes, including loan setup and maintenance, escrow administration, investor reporting, regulatory requirements and more. Cenlar has been an MSP customer for 30 years. “As a longstanding client, we knew MSP offered robust, best-inclass servicing capabilities to support our growth, improve our efficiencies and help identify risk,” said Michael Blair, Cenlar FSB’s executive vice president and director of Loan Administration. “Other factors in our decision to renew the MSP contract included the system’s scalability to easily accommodate the ongoing expansion of Cenlar’s loan portfolio; Cenlar’s ability to service both first mortgages and home equity lines and loans on a single platform; and its proven effectiveness at managing our loan servicing tasks while supporting our current and evolving regulatory requirements.” As part of Cenlar’s MSP renewal agreement, the company will also begin use of Lien Alert, a solution that is integrated with MSP. Based on Cenlar’s predetermined rules and frequencies for individual loans or loan portfolios, the Lien Alert solution will automatically send notifications to Cenlar when a key lien-related indicator is triggered— such as tax delinquency, foreclosure/default activity, bankruptcy, changes in valuation and ARM reset. Wipro Gallagher Solutions and Veri-Tax Partner to Streamline Verification Solutions

Wipro Gallagher Solutions (WGS) has announced a partnership with Veri-Tax LLC to streamline verification solutions. WGS is a part of a Wipro Limited, a global information technology, consulting and business process services company. The partnership between WGS, the provider of the NetOxygen Loan Origination System (LOS), and Veri-Tax will help lenders mitigate identity fraud, accelerate processing, and improve the customer’s experience seamlessly and electronically. By integrating with Veri-Tax

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solutions, NetOxygen users can accelerate 4506T (Request for Transcript of Tax Return) turnaround time by enabling and automating secure form processing with the Internal Revenue Service (IRS). The interface also accesses and verifies a borrower’s Social Security Number (SSN), mitigating fraud risk. Using Veri-Tax, NetOxygen users may also order unbiased third-party Verification of Employment (VoE) at the click of a button, eliminating the need for the lender to manually contact the employer. “We are excited to add Veri-Tax to our extensive ecosystem of industry, technology and service providers,” said Alok Bansal, general manager and head of Wipro Gallagher Solutions. “The Veri-Tax solution complements NetOxygen by offering access to electronic sources for verifications and improves upon clients’ underwriting quality and loan processing timelines.” Motto Mortgage to Offer Franchises in California and Maryland

Motto Mortgage has announced that it will begin to offer mortgage brokerage franchise opportunities in the states of California and Maryland. The addition of California and Maryland brings the number of states in which Motto Mortgage franchises are actively being sold to more than 45. “California has tremendous growth potential for Motto Mortgage,” said Motto Mortgage President Ward Morrison. “Our team has the experience and diverse knowledge needed to train and educate mortgage brokers and loan officers in the state so that they are successful. It’s a very exciting time for all of us at Motto Mortgage.” Motto Mortgage officially launched on Oct. 25, 2016, and is expected to bring more choice and a better experience for consumers. Its loan originators work with real estate agents to help homebuyers obtain the mortgage loans that best fit their individual needs. Redfin Enters the Mortgage Space With Launch of Redfin Mortgage

Redfin has announced the formation of Redfin Mortgage to loan money to Redfin customers buying homes.

OpenClose and Mortgage Capital Trading Inc. (MCT) announced they have developed an integration that eliminates manual intervention and streamlines the delivery of loan

our proprietary HALO hedging model, which now facilitates a much smoother, quicker way for us to obtain locked loan information from our mutual customers,” said Chris Anderson, chief administrative officer at MCT. “We are continuing to expand our integration partner network in order to provide the best service and support for our lender clients. Over the past few years, MCT has significantly expanded our business services with technology being a key area, especially with the adoption of our Web-based secondary marketing platform, MCTlive!”

The longer lenders are exposed to interest rate movements the more prone they are to have locked loans without hedge positions. As a result of the integration, MCT is able to hedge more frequently as opposed to having the lender manually send pipeline reports to them. The automatic updates are performed every 15-minutes which provides a tangible reduction in risk by shortening the time period between rate locks and hedge positions. “A key common thread between continued on page 92

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OpenClose and MCT Integration Streamlines Loan Data Delivery

data to maximize hedging for lenders. The integration works by automatically taking loan-level details that are originated and locked in OpenClose’s LenderAssist LOS and then securely passing them directly to MCT to hedge. The entire process of obtaining critical data becomes very easy, with updates occurring every 15 minutes. This removes several steps in the data acquisition process, saving time, reducing errors and providing faster reporting. “We worked diligently with the team at OpenClose to develop this connectivity between their LOS and

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By integrating a lending operation with Redfin’s existing brokerage and title businesses, the company’s ultimate goal is an entirely digital process, with better service, a faster closing and lower fees. Redfin Mortgage plans to begin issuing loans in the first half of 2017, initially serving customers in the Austin, Dallas, Houston and San Antonio markets. “Redfin Mortgage will put the customer first through a combination of technology and personal service,” said Redfin CEO Glenn Kelman. “This approach to mortgage is the same that has made us successful serving more than 75,000 customers buying and selling homes. We’ll meet customers through digital channels to lower customer acquisition costs. We’ll hire our own mortgage advisers with incentives that reward service, not just sales, so customers get advice they can trust. We’ll track every aspect of the closing in a single system used by mortgage advisers, real estate agents, title experts and the customer so everyone works together on an on-time closing.” Redfin has hired Jason Bateman, formerly executive vice president of mortgage operations at BBVA Compass, to lead the effort. Bateman has more than 15 years of experience in the mortgage industry. He will run Redfin’s mortgage operation out of a new Dallas-based office. The software engineers supporting the mortgage business are based in Seattle. “When your real estate agent, title professional and lender work together, you win,” said Bateman. “Lenders should spend their time determining which loan is right for a customer, not looking for new customers. If an appraisal comes in low or an inspection turns up a problem, everyone should learn about it at the same time, without relying on telephone calls and email messages hours after the fact. Automating tasks that were once performed manually should not only lower costs, but reduce the possibility of errors that create lending risk. Our vision is the way I’d always imagined home lending should be.”

heard on the street

our organizations is an unwavering commitment to always provide excellence in customer support,” said Vince Furey, senior vice president of Lending Solutions at OpenClose. “We are also likeminded in that we are both very selective about the organizations we partner with. OpenClose is pleased to expand our technology relationship with MCT.” RoundPoint Mortgage Servicing Partners With Point

By Jonathan Foxx

Promotional and Discounted Rates

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Compliance Matters, presented by Lenders Compliance Group, airs every Friday at 7:00 a.m. Eastern on MortgageNewsNetwork.com. Compliance Matters is brought to you by Mortgage News Network, and the program provides practical advice regarding current mortgage compliance topics. 92 If you would like to contribute a question, please submit it to Compliance@LendersComplianceGroup.com. Question We were recently cited because we did not distinguish between a promotional rate and a discounted rate in our advertisements. What is the difference between promotional and discounted rates? Answer A promotional rate, in connection with a variable rate plan, is an APR that is not based on the index and margin that will be used to make rate adjustments under the plan, if that rate is less than reasonably current APR that would be in effect under the index and margin which will be used to make rate adjustments under the plan.1 The promotional rate is quite a bit different than a discounted rate, because a discounted rate is the initial APR that is not based on the index and margin used to make later rate adjustments in a variable rate plan.2 So, a discounted rate encompasses only an initial rate, whereas a promotional rate encompasses a rate that could be in effect any time during the life of a credit transaction. A rate can be both a discounted rate and a promotional rate and subject to the disclosure requirements for both types of rates. Footnotes 1—12 CFR § 226.16(d)(6)(i)(A); 12 CFR Supplement I to part 226–Official Staff Commentary § 226.16(d)-5.i. 2—12 CFR § 226.16(d)(2).

Jonathan Foxx is managing director of Lenders Compliance Group, the first and only full-service, mortgage risk management firm in the United States, specializing exclusively in outsourced mortgage compliance and offering a suite of services in residential mortgage banking for banks and non-banks. Information contained in this article is not intended to be and is not a source of legal advice. If you would like to contribute a question, please submit it to continued on page 107 Compliance@LendersComplianceGroup.com.

RoundPoint Mortgage Servicing Corporation has announced that it has been selected as the sole servicing partner by Point, the first financial technology platform that allows homeowners to unlock their home equity wealth without taking on new debt, for Point’s growing portfolio of fractional residential real estate assets. Under the agreement, RoundPoint Mortgage Servicing will manage assets acquired by Point. Homeowners sell Point a fractional interest in their properties in exchange for a tax-deferred lump sum without interest rates or monthly payments. Within 10 years, the homeowner exits the agreement by either selling their home or buying out Point. Most homeowners use the capital to diversify their wealth, invest in their businesses, renovate their homes, or pay off debts. “This type of innovation is critical to the continued growth of the housing market,” said Kevin Brungardt, CEO of RoundPoint Mortgage Servicing. “We are delighted to have been selected as Point’s servicer and we are looking forward to a long and successful relationship.” Point provides homeowners with a brand new finance solution that aligns homeowner and investor interests and, for the first time, investors can buy fractional interests in owner-occupied residential real estate through a digital platform. “As demand for our product continues to grow, it is clear that both the extent and diversity of RoundPoint’s asset management expertise make it the perfect partner for our unique product,” said Eddie Lim, CEO of Point. “RoundPoint shares our mission to align our interests with homeowners and provide homeowners with a simple, fast and efficient experience, and our

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partnership enhances our ability to do just that.” Mortgage Professionals to Watch l As Angel Oak Mortgage Solutions closed 2016 with a record month, they added eight new account executives in the fourth quarter alone. Florida alone gained four new AEs as Gerry Calderon, Rick Gil, Arthur Barrera and Sergio Gutierrez all joined the company, while also adding Charles Haney in Texas, Suzi Swisher in Pennsylvania, Chris Barker in South Carolina and Carlos Yniguez in California. l First Guaranty Mortgage Corporation (FGMC) has appointed NanEtte Epperson as national wholesale sales director, TPO Production. FGMC is strategically expanding its Wholesale Origination Channel, and Epperson’s primary role will be to grow the company’s market footprint. l Ridgewood Savings Bank’s Board of Trustees has approved several senior officer promotions within the organization, including Connie Manolopoulos as vice president, Richard Spiegel as vice president and district manager, and Mirsada Tagani as vice president of Digital Channels. l HomeBridge Financial Services Inc. has announced the of hiring of Susie Cheatham as branch manager for its Overland Park, Kan. office. Cheatham is a 20-year veteran of the greater Kansas City mortgage industry and a Five-Star Professional Award winner for three of the last six years. l Flagstar Bank has announced the addition of Heather Slapak as a first vice president of Warehouse Lending. Heather joins Flagstar from Comerica Bank, where she spent most of her 18-year career as a relationship manager in their Warehouse Lending Division. l CalyxSoftware has announced that Patrice Power has joined the company as director of Marketing, where she will be responsible for overseeing the development and implementation of CalyxSoftware’s marketing strategy to enhance the brand continued on page 96

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Regulations Donâ&#x20AC;&#x2122;t Take Time Off By Melissa Kozicki

ue to the implementation of TILA-RESPA Integrated Disclosure (TRID), 2015 was a momentous year for compliance changes. While 2016 was a notably quieter on the compliance front, it’s still critical for lenders to take stock of their compliance practices and risk management strategies now before more changes hit the industry.

State of the industry: Reviewing policies and procedures Following TRID and other regulatory changes, lenders are still determining best practices for operationalizing policies and procedures. A few examples include: l Timing the initial Closing Disclosure: Lenders are struggling to balance TRID timing requirements with demands to get loans to the closing table as quickly as possible. This balance involves closing loans in line with expected deadlines and sending out the initial Closing Disclosure (CD) at the required time. By now, many organizations have put mechanisms in place to control the issuance of the CD, but there are exceptions. Sometimes the CD is issued before the loan is even cleared to close. An automated software platform can help with this, but it is impossible to predict and perfect every scenario so it’s helpful to make sure that the following items are clearly documented: n A standard policy for when a CD can be issued n Scenarios that warrant exceptions to this policy (i.e., expiration of purchase agreement, foreclosure) n Formalized list of staff authorized to make policy exceptions l Streamlining and validating data entry: One of the biggest areas for improvement is to update the standard procedure of relying on closers for last-minute data entry, particularly the information needed to generate the CD. It’s typically evident early in the process who the real estate agents are and where the loan is going to

close, yet most lenders expect the closer to capture the license information for these parties rather than having this information entered into the system as soon as it is received. A more efficient approach is to automate data entry when possible, and otherwise enter the data manually as soon as these details are received. This leaves the responsibility of the closer to simply validate the complete data file at close. l Verifying roles for data management: While reviewing policies and procedures, it’s a good time to confirm staff responsible for data management. It’s important to understand who specifically has the ability to change a loan amount and how late in the process this can happen. Origination and discount points are generally expressed as percentages, so if the loan amount increases, fees may also change and should be documented. Lender charges are subject to zero tolerance under TRID, so when business units like Secondary Marketing or Post Closing make a change without understanding the cause and effect of their actions there can be significant consequences. Furthermore, compliance with TRID requires adequate documentation of these changes within the file. Verify policies around data integrity by: l Taking a second look at the administrative setup of the loan origination software (LOS), placing everything into an appropriate default setting (by loan program, channel, branch, etc.) and ensuring that users are properly trained to evaluate whether the defaults are appropriate. l Making sure that the right people are changing data. When possible, procedures should support changes being made only by staff trained in disclosure requirements. Changes ahead: Understand upcoming regulations to position your organization for success l TRID proposal: A significant benefit to understanding what’s happening in your organization right now is that you can be better prepared for more changes that are on the

way. Examples of proposed changes include: n Changes in the Cash to Close table calculations, notably the Closing Cost Financed and Downpayment/Funds From Borrower. The proposed changes allow the Cash to Close to be accurate in more scenarios, but they require additional loan officer training as the calculations are still not intuitive. n Clarification surrounding mid-year payment changes could potentially impact the Projected Payments Table. n Payoffs and construction costs may be required to be included in Section H for some scenarios. This may be confusing to loan officers as well as consumers since these costs aren’t typically thought of as “other costs” included in this section. l The Uniform Residential Loan Application: Fannie Mae and Freddie Mac have redesigned the Uniform Residential Loan Application (URLA) 1003/65 Form focusing on data quality and consistency and reflecting both GSE and other agency policy and industry changes. The new form displays information in an easy-to-read format with clearly separated borrower-provided versus lender-provided information. The form also includes new fields for collection of demographic information. However, uncertainty remains regarding the implementation and use of this new form. l Home Mortgage Disclosure Act: This year brought the announcement of the new Home Mortgage Disclosure Act (HMDA) rule. While most lenders will not be significantly impacted by the changes that go into effect this year, it is still important to plan ahead for the data elements that will be required for the 2018 filing. These include: n Demographic information of applicant and co-

applicant. This is disaggregated information that allows the applicants to self-identify their race and ethnicity in more detail than previously permitted. On Sept. 23, 2016, the CFPB issued approval for the collection of this new disaggregated ethnicity and race data for applications taken during 2017. Lenders will need to decide whether or not to collect this information early, but it is important to understand that new data elements are required for any loan with a HMDA Action Date on or after Jan. 1, 2018. n HMDA by the numbers. The 2018 HMDA Loan Application Registry (LAR) contains 110 data elements. The current LAR contains 39. That’s 71 more chances to get the loan data incorrect. While many of the new data elements are already collected in the LOS, it is important to have policies and procedures for validating this information to make sure HMDA data is accurately reported. Also, lenders will need to verify that the information required is in the LOS now (or will be in time for testing) and that procedures support data integrity around these elements. There is still a lot of work to be done to update and test policies and procedures that will adequately support compliance and risk management. As we begin the new year, the best advice is to make sure policies around evolving regulations and data requirements are welldocumented, comprehensively understood by your staff and working successfully and efficiently. The foregoing content is not intended to constitute, and in fact does not constitute, financial, investment, tax or legal advice by the author, Mortgage Builder, Altisource or any other business or entity.

Melissa Kozicki is director of compliance at Mortgage Builder, an Altisource business unit. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Mortgage Builder, Altisource or any other Altisource business or entity.

heard on the street

Predictions for 2017: Part II By Andy W. Harris, CRMS

Here are some 2017 predictions people have shared since last month’s OrigiNation column: l Mortgage rates will continue to increase, but not by much. l Originator independence will continue as mortgage brokers resurge and grow the wholesale lending channel again. l Uncertainty will continue to create volatility in the markets with transition in the White House. l The GSEs (Fannie Mae and Freddie Mac) will be privatized again. l Technology, innovation and streamlining will make the mortgage process easier on the consumer. l Refinance volume in 2017 will plummet and purchase demand will rely on affordability. l Turn-times will become fast and more consistent than in 2016. l Appraisal issues will suppress, with concern that fees need to be readjusted down in markets of 2016 extortion when demands were higher. l Competition will become more aggressive for market share with rates rising. l The retracted FHA premium cut will hopefully be reinstated when financial standing confirmed strong enough to support it. l Technology will continue to restrict real estate commissions.

Share your feedback and thoughts of what’s to come for 2017. Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish. You can also join the Facebook Group by searching for “OrigiNation.”

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.

and market presence of the company’s offerings. Leif Boyd and Patrick Welberg have joined Academy Mortgage as regional managers to oversee Academy’s sales, recruiting, personnel management, market expansion and business development along the West Coast. Franklin American Mortgage Company (FAMC) has announced the addition of Jennifer Werner as vice president, director of Project Marketing. Dart Appraisal has announced the promotion of Rachel Lasater to the newly-created role of director of Production Workflow. Jayme Chandler has joined Mortgage Network Inc. as a mortgage loan officer in the company’s Lancaster, Penn. branch office, where she will be responsible for serving homebuyers and homeowners throughout the southeastern Pennsylvania region. Joni Miller has also joined Mortgage Network Inc. as a loan officer in the company’s Longmeadow, Mass. branch office, where she will be responsible for serving homebuyers and homeowners throughout western Massachusetts. Ellie Mae has announced that John Abel has joined the company as senior vice president and chief information officer, responsible for all aspects of the company’s internal information technology and systems and will partner with business units to propose, plan and implement enterprise IT systems to align Ellie Mae’s technology vision with business strategy in support of business operations. LRES has announced that Paul Bush has been promoted to its vice president of technology. In this role, Bush will strategize the future direction of LRES’ proprietary technology, as well as implement and maintain its current systems. Assurant Valuations, part of Assurant Mortgage Solutions, has appointed Marc Hinkle as senior vice president, responsible for Assurant Valuations’ Operations, with a focus specifically on broker price opinion products, hybrid/alternative products, data, analytics and default appraisal solutions. Assurant

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Valuations has also appointed Donna DelMonte as vice president of Operations, with a focus specifically on origination appraisals and other ancillary products. Her primary goal will be to streamline processes across the department, resulting in increased efficiencies and superior quality and service. Starkey Mortgage has announced that Tim Cotten has joined the company as director of recruiting where he will lead the development of an internal recruiting team that will prospect, interview, hire and transition top mortgage talent. Hunt Mortgage Group has announced that Ted Nasca has joined the firm as managing director, where he will operate out of the firm’s Chicago office and report to Bill Hyman, senior managing director and chief production officer. Equity Prime Mortgage LLC has named Eric Skates vice president of Marketing. Mortgage Guaranty Insurance Corporation (MGIC) has announced the promotion of James Hughes to executive vice president of Sales and Business Development, and Salvatore Miosi to executive vice president of Business Strategy and Operations. In addition, MGIC announced the following promotions: Stacey Murphy has been promoted to vice president of Talent Management; Christopher Perry has been promoted to vice president of Sales; David Schroeder has been promoted to vice president of Claims; and Paul Spiroff has been promoted to vice president of Investments.

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.

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What to S Try This

Say to Listing Agents: s … It Works!!! H By Brian Sacks

ave you ever gone after an agent’s business and had them give you a lame excuse as to why they “cannot” use you? Of course you have … we all have and it’s extremely frustrating. So in this article, I want to break down some of the best excuses I have heard and show you some responses that break through that clutter. But before we go into that conversation, you need to know that I firmly believe that YOU need to control your income.

1. “I am just a listing agent.” I remember when I first heard an

The response is always priceless with the agents back tracking and explaining to you that they do work with buyers after all. Now you should not try this until you truly have generated buyers on your own who you can actually refer right on the spot. Trust me, nothing will impress them more and nothing is a more powerful relationship-builder. I generate these deals from renters and Boomerang Buyers that I market to and you can too. There are also other ways to deal with this objection. I use a system that allows the agents to promote their listings and has my information on it. You can offer a similar program that helps them promote their listings with mobile sites and social media tools. You could also offer to provide open house forms and even cosponsor a broker’s open house. The possibilities are endless with the tools you can help a listing agent with. One last idea is to offer them a daily list of expired listings and FSBO’s they can market to. There are a number of providers of these lists if you search Google. But I have also asked these so-called “Listing Agents” what do they do if their sellers are looking to buy a home? Do they refer them to “Buyers Only”

2. “We have our own inhouse lender I have to use.” 3. “I already have a great lender I work with.” I have combined responses two and three because your response to these objections should be the same. This is probably a true statement but the national statistics show that, on average, the in-house loan officer generates 23-25 percent of the business in that office. That percentage is in spite of the fact that the manager of that office is often incentivized based on the capture rate for that lender in that office. When you hear this response, always compliment that company. But ask some probing questions: l What deals they have recently closed with that lender and how the process went?

l Are there any buyers you interacted with that your lender could not help with? l What would you improve about these transactions if you could? The key here is to be quiet and listen! Often by just listening, they will tell you exactly how to sell to them and help them meet their challenges. Have they had any buyers who were turned away because of credit issues? You could assist by working with some non-QM lenders. Maybe their overlays are not as strict as yours? Have they had any buyers turned away because of income/self-employment? There are programs available with just bank statements–no tax returns. Have they had buyers turned 99 away because they did not have enough money for downpayment or closing costs? There are programs available with grants that could help that their current lender or the in-house lender may not currently offer. Maybe you could provide a lender credit for closing costs, most agents are not aware of this option. The bottom line is that you must ask probing questions and listen. Find the opportunity and let them know you can help them grow THEIR business with the tools, knowledge and expertise you have. Now go out and start making some relationships with listing agents!

Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,924 transactions for more than $1 billion. He has trained, consulted and coached tens of thousands of loan officers and company owners over the past 31 years on how to close more loans, make more money, and still have a life. Brian is the host of “Top Originator Secrets,” which can be seen weekly on Mortgage News Network and on his blog. You can get more information and grab your free report on “How to Get Agents Chasing You” at TopOriginatorSecrets.com.

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Let’s get to your meeting with the agent There are generally three reasons that an agent will give you as to why they cannot or will not work with you. Please understand that each of these is generally a lame excuse and simply means that you have NOT shown your value. Here are the top three reasons they will give you and the responses you should think about when you are meeting with them.

“Gee , I am so sorry to hear that and more importantly, I am sorry to have wasted your time and mine. I work with a lot of buyers who I am able to get preapproved and often times they are in need of a Realtor which is why I wanted to meet with you. But since you are ONLY a listing agent I guess we won’t be able to work together. Do you have any suggestions on any Realtors in your office who might be interested?”

agents. Of course the answer is no. But instead of just making them feel bad about being caught in a lie, it’s better to offer them a service: “Would you like me to prequalify your sellers for a mortgage or answer any of their questions. I know that many sellers are very concerned about their move and want to nail the financing down before they even list their home for sale. So I would be happy to speak with them if you like.”

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What does that mean? Simply put, it means that you must have you own marketing systems in place to generate deals where you can refer the Realtor, and thereby control your own income. Of course I understand that this may be foreign to most originators since we are all so used to getting our business from referrals and realtors/builders. But there are ways to generate your own business. One of those ways is to market to renters and get to them first. Another way to generate new business is to market to the 7.3 million Boomerang Buyers that everyone else seems to be ignoring.

agent say this to me. I almost laughed out loud, but I thankfully was able to control myself. I responded by saying:

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MARCH 2017 Wednesday-Saturday, March 1-4 The Mortgage Collaborative 2017 Winter Conference The Omni Scottsdale Resort & Spa at Montelucia 4949 East Lincoln Drive Scottsdale, Ariz. For more information, call (440) 552-0691 or visit MortgageCollaborative.com. Thursday, March 2 FAMP Broward Chapter’s 2017 Annual Trade Show and Masquerade Ball Bonaventure Hotel & Conference Center 250 Racquet Club Road Weston, Fla. For more information, call (954) 986-0808 or visit BrowardFAMP.com.

APRIL 2017 Monday-Tuesday, April 3-4 NRMLA Eastern Regional Meeting & Expo Intercontinental New York Times Square 300 West 44th Street New York, N.Y. For more information, call (202) 939-1783 or visit NRMLAOnline.org.

Monday-Tuesday, April 10-11 NAPMW Annual–The National Association of Professional Mortgage Women Luxor Casino 3900 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (860) 719-1991 or visit NAPMWAnnual.com. Friday-Wednesday, April 21-26 NAMB 2017 Legislative & Regulatory Conference JW Marriott Washington, D.C. 1331 Pennsylvania Avenue NW Washington, D.C. For more information, visit NAMB.org. MAY 2017 Tuesday-Thursday, May 9-11 2017 Great River MBA Conference The Peabody Hotel 149 Union Avenue Memphis, Tenn. For more information, call (901) 321-6702 or visit GreatRiverMBA.com. Thursday, May 11 New York Mortgage Expo Hilton Long Island/Huntington 598 NY-110 • Melville, N.Y. For more information, call (860) 9223441 or visit NYMortgageExpo.com.

Thursday-Friday, August 17-18 Mortgage Star Conference for Women Planet Hollywood Las Vegas Resort & Casino 3667 Las Vegas Boulevard South Las Vegas For more information, call (860) 922-3441 or visit MortgageStar.biz.

JUNE 2017 Thursday, June 1 California Mortgage Expo Crowne Plaza Hotel & Commerce Casino 6121 Telegraph Road Commerce, Calif. For more information, call (860) 922-3441 or visit CAMortgageExpo.com.

Friday-Sunday, August 18-20 Originator Connect Planet Hollywood Las Vegas Resort & Casino 3667 Las Vegas Boulevard South Las Vegas For more information, call (860) 922-3441 or visit OriginatorConnect.com.

Tuesday, June 13 The Great Northwest Mortgage Expo Embassy Suites Washington Square 9000 SW Washington Square Road Tigard, Ore. For more information, call (860) 922-3441 or visit GreatNorthwestExpo.com. JULY 2017 Monday-Tuesday, July 10-11 Ultimate Mortgage Expo Hotel Monteleone 214 Royal Street New Orleans For more information, call (860) 922-3441 or visit UltimateMortgageExpo.com. AUGUST 2017 Monday-Tuesday, August 7-8 California Association of Mortgage Professionals Presents Summer CAMP 2017 Coronado Island Marriott 2000 2nd Street Coronado, Calif. For more information, call (916) 448-8236 or visit TheCAMPSite.org.

SEPTEMBER 2017 Wednesday, September 6 Texas Mortgage Roundup–Dallas DoubleTree by Hilton Dallas Near the Galleria 4099 Valley View Lane • Dallas For more information, call (860) 922-3441 or visit TXMortgageRoundup.com. OCTOBER 2017 Friday-Monday, October 13-16 NAMB National 2017 Rio Las Vegas 3700 West Flamingo Road • Las Vegas For more information, visit NAMB.org. Sunday-Wednesday, October 22-25 Mortgage Bankers Association 2017 Annual Conference & Trade Show Colorado Convention Center 700 14th Street • Denver For more information, visit MBA.org. NOVEMBER 2017 Monday-Wednesday, November 13-15 2017 NRMLA Annual Meeting & Expo The Palace Hotel 2 New Montgomery Street San Francisco, Calif. For more information, call (202) 939-1783 or visit NRMLAOnline.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. *Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

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Sunday-Thursday, March 19-23 Regional Conference of Mortgage Bankers Associations 2017 Harrah’s Resort and Convention Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-1619 or visit MBANJ.com.

Thursday-Sunday, April 6-9 National Association of Minority Mortgage Bankers of America (NAMMBA) Inaugural National Conference Atlanta Marriott Buckhead 3405 Lenox Road Northeast Atlanta, Ga. For more information, visit NAMMBA.org.

Tuesday-Wednesday, May 16-17 2017 NRMLA Western Regional Meeting & Expo Hyatt Regency Huntington Beach Resort & Spa 21500 Pacific Coast Highway Huntington Beach, Calif. For more information, call (202) 939-1783 or visit NRMLAOnline.org.

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Thursday-Saturday, March 16-18 NAMB East 2017 Omni Atlanta Hotel at CNN Center 100 CNN Center NW Atlanta, Ga. For more information, visit NAMB.org.

Thursday, April 6 NAMB on the Road Series Location to be determined Houston, Texas For more information, call (972) 758-1151 or visit NAMB.org.

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TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.

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ÂŠ Angel Oak Mortgage Solutions LLC NMLS #1160240, Corporate office, 980 Hammond Drive, Suite 850, Atlanta, GA, 30328. This communication is sent only by Angel Oak Mortgage Solutions LLC and is not intended to imply that any of our loan products will be offered by or in conjunction with HUD, FHA, VA, the U.S. government or any federal , state or local governmental body. This is a business-to-business communication n and is intended for licensed mortgage professionals only and is not intended to be distributed to the consumer or the general public. Angel Oak Mortgage Solutions LLC is an Equal Opportunity Employer and does d not discriminate against individuals on the basis of race, gender, color, religion, national origin, age, disability, veteran status or other classifications protected by law. 1-11-17 HPG.