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NationalMortgageProfessional.com
n National Mortgage Professional Magazine n MAY 2014
10 Former CFPB Deputy Director Raj Date Goes Non-QM in a QM World By Robert Ottone
M A Y
32% Yes
68% No
21 Zeal for a Deal By Phil Hall
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A SPECIAL FOCUS ON “MOTIVATION & TRAINING FOR SUCCESS”
Measuring ROI on Mortgage Professional Education By Phil Hall ..........................................................................58 Motive and Opportunity By Eric Weinstein............................60 Putting Freedom and Motivation Back Into Retail Lending By David Williams ..........................................61 Motivational Tips for Fostering Successful Leadership Traits By Elizabeth Morales ................................63 How to Bridge to Higher Sales By Dr. Kerry Johnson ..........64
FEATURES
Who Are You … and Why? By Rene Rodriguez ......................8
26 Lykken on Leadership: Seven Prerequisites for Choosing a Great Sales Trainer By David Lykken
The Elite Performer: The Mentor & the Protégé By Andy W. Harris, CRMS ..........................................................8 A Few Quick Tips From AllRegs on Vendor Management ....................................................................16 Turning Mortgage Leads Into Conversions By K. Justin Restaino ..............................................................18 NAMB Perspective ..........................................................20 Marketing Your Database and Your Brand By Brent Emler ......................................................................22 Leveraging AVM Technology Increases Accuracy and Cuts Costs By Vladimir Bien-Aime ..................................28 NMP’s Economic Commentary: The Perfect Storm By Dave Hershman ................................................................32 Tales From the Closing Table By Andrew Liput ..................34
36 Big Brother’s Mortgage Secret By Mark Buskuhl
54 NMP Mortgage Professional of the Month: Don Giorgio, President of United Northern Mortgage Bankers Ltd. By Phil Hall
First and Second Trust Deed Lenders Achieve a Competitive Edge by Working as a Team By Johanna Traynor ................................................................38
V I S I T Company
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AllRegs.............................................................. www.allregs.com ..........................................................69 American Financial Resources ............................ www.afrwholesale.com/wd ......................Inside Back Cover Appraisal Nation, LLC ........................................ www.appraisal-nation.com ..............................................3 BetterLoanOfficers.com ...................................... www.betterloanofficers.com ..........................................37 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................47 CallFurst.com ...................................................... www.callfurst.com ............................................................65 Calyx Software .................................................. www.calyxsoftware.com ................................................77 CAMP ................................................................ www.thecampsite.org ....................................................71 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................26 & 45 Continental Home Loans, Inc. ............................ www.continentalhomeloans.com ......................................5 Document Systems, Inc./DocMagic ...................... www.docmagic.com ................................................7 & 80 Easy Mortgage Apps............................................ www.easymortgageapps.com ..........................................53 Emerald Creek Capital ........................................ www.emeraldcreekcapital.com ......................................35 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................................................39 Global DMS........................................................ www.globaldms.com ......................................................49 GraceChurch Intermediaries................................ www.gracechurchintermediaries.com ..............................19 Great Northwest Mortgage Expo .......................... www.greatnorthwestexpo.com ........................................72 Lend.com .......................................................... www.lend.com ..............................................................68 Lykken On Lending ............................................ www.lykkenonlending.com ............................................69 MailerLeads, LLC ................................................ www.mailerleads.com ............................Inside Front Cover Matchbox .......................................................... www.matchboxllc.com ..................................................43 Maverick Funding Corp....................................... www.maverickfunding.com ............................................33
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HECM for Purchase By Ralph Rosynek ................................42 America’s Obsession With Credit Scores By Terry W. Clemans ..............................................................44 The Long & Short: The Business of Short Sales By Pam Marron ....................................................................46 Seven Must-Know Tips to Managing Your Millennial Salespeople By Marc Wayshak ............................48 Mortgage Marketing: How You Can Shine ....................50 How Servicers Can Meet Compliance Challenges Within Their Call Centers By Barry Hays ............................50 We Need More Than e-Closings to Improve the Consumer Closing Experience By Andrew Liput ..................52 Updates to the New York Sub-Prime Home Loan Rules By Laurie Spira ..................................................56 Lack of Inventory Equals Long-Term Growth for Your Pipeline By Tom Ward ..........................................66 Three Keys for Adapting to Any Career Change By Dr. Marty Martin ................................................................66 Your Game Plan to Social Media Success By John Seroka ....70
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Developing a Solid Branch Starts With Being a Servant By Kurt Reisig ......................................................73 Taking the Lead: Why Your Web Site Sucks … and How to Fix It By Jonathan Blackwell................................78
New to Market ................................................................12 NMP News Flash: May 2014 ..........................................14 Heard on the Street ........................................................24 NMP Resource Registry ..................................................74 NMP Calendar of Events ................................................79
Company
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Menlo Park Funding .......................................... www.mpfunding.com ....................................................15 NAPMW ............................................................ www.napmw.org ..........................................................70 NAWRB ............................................................ www.nawrb.com ............................................................55 New York Community Bancorp, Inc. .................... www.nycbmortgage.com ................................................62 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ................................................13, 25 & 73 Path2Buy .......................................................... www.path2buy.com ................................................1 & 57 PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................57 Prime National Credit Repair .............................. www.primenational.com ................................................71 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com/birthday ........................40 & 41 Reverse Mortgage Solutions, Inc. ........................ www.rmsnav.com ..........................................................53 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................51 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................11 Stearns.............................................................. www.stearns.com ..................................................29 & 72 Streetlinks LLC .................................................. www.streetlinks.com ......................................................17 TagQuest .......................................................... www.tagquest.com ........................................................23 The Bond Exchange............................................ www.thebondexchange.com ..........................................63 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 U.S. Bank c/o Empower Media ............................ www.usbank.com/mortgage ..........................................61 Ultimate Mortgage Expo .................................... www.ultimatemortgageexpo.com ....................................67 United Northern Mortgage Bankers, Ltd. ............ www.unitednorthern.com ............................27, 30 & 31, 59 United Wholesale Mortgage ................................ www.uwm.com ........................................43 & Back Cover
n National Mortgage Professional Magazine n MAY 2014
D V E R T I S E R S
NationalMortgageProfessional.com
COLUMNS
MAY 2014 Volume 6 • Number 5
FROM THE
Motivate, smotivate … who needs it anyway!
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com
This month, we focus on “Motivation and Training for Success,” two components that are clearly needed to deliver success in today’s marketplace. It is a general tendency to believe that motivation is a personal trait. Some people have it and the others don’t. In practice, some are labeled as “lazy” because they do not display an outward sign of motivation. However, individuals differ in their basic motivational drives. The concept of “motivation” is situational, and its level varies between different individuals and at different times. If you understand what motivates people, you have, at your command, the most powerful tool for dealing with them. By definition, motivation is to inspire people to work, individually or in groups in the ways such as to produce best results. It is the will to act. It is the willingness to exert high levels of effort towards organizational goals, conditioned by the efforts and ability to satisfy some individual need. Motivation is getting somebody to do something because they want to do it. It was once assumed that motivation had to be injected from the outside, but it is now understood that everyone is motivated by several differing internal forces. Motivation is a general term applied to the entire class of drives, desires, needs, wishes and similar forces. To say that managers motivate their subordinates is to say that they do those things which they hope will satisfy these drives and desires and induce the subordinates to act in a desired manner. To motivate others is the most important of management tasks. It comprises the abilities to communicate, to set an example, challenge, encourage, obtain feedback, involve, delegate, develop and train, inform, brief and to provide a just reward. Working concurrently with motivation, there is a need for training because without training, motivation lacks the platform from which to inspire your team. As last month we focused on leadership, in reality, one of the most important realities of an effective leader is the ability to always be open to learn more. Towards that end, training complements the leader who is expected to motivate their team. The mortgage profession is constantly in transition, enduring an almost daily onslaught of regulatory and compliance requirements and technology initiatives. To exist without ongoing training, the industry’s leaders, as well as their respective teams, will fall behind and eventually become victims when they are not prepared. Luckily, the mortgage profession has many companies, some of whom I am pleased are supporters of our publication, that provide training either online or in a classroom setting. Don’t be left behind or wait until enforcement action occurs before you seek training. I am not talking about your continuing education requirements. There is a lot more out there to learn and to be a truly compliant mortgage professional. You need to remain proactive in your personal training and the training of your team. As I close this month’s column, I urge you to do something every day to motivate your team, and don’t even sit back and think you know it all. There is so much more to learn out there. You can not only improve yourself in the process, but pass it along to your team and your industry peers and inevitably boost your business in the process by boosting your professionalism and soaring above the average and the “norm.” Continue to innovate yourself and your company, and use motivation and training as the impetus for change. The benefits are immeasurable to both your bottom line and personal growth. Sincerely,
STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com
Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com
Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com
Beverly Bolnick National Sales Manager (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com
Scott Koondel Operations Manager (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Robert Peter Ottone Executive Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com
Phil Hall Senior Editor philh@nmpmediacorp.com
Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com Brian Coleman Business Development Coordinator (516) 409-5555, ext. 311 brianc@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.
ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.
SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.
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publisher’s desk
Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
Joel M. Berman, Publisher-CEO NMP Media Corp. • joel@nmpmediacorp.com
MAY 2014 n National Mortgage Professional Magazine n
NationalMortgageProfessional.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2014 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Terry W. Clemans
Andrew Liput
Mark Buskuhl
Andrea Obston
Laurie Spira
David Lykken
Brent Emler
Kurt Reisig
Johanna Traynor
Pam Marron
Barry Hays
K. Justin Restaino
Tom Ward
Robert Ottone
Dr. Kerry Johnson
Rene Rodriguez
Marc Wayshak
Dr. Marty Martin
Ralph Rosynek
Eric Weinstein
Elizabeth Morales
John Seroka
David Williams
Donald J. Frommeyer, CRMS
Phil Hall
Andy W. Harris, CRMS
Dave Hershman
John H.P. Hudson, CRMS
Editorial Contributors Vladimir Bien-Aime
Jonathan Blackwell
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n National Mortgage Professional Magazine n MAY 2014
NAMB The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org
2013-2014 NAPMW National Board of Directors and Administration President Jill Kinsman (206) 344-7827 president@napmw.org
Vice President (Western Region) Anna Mackovska (323) 331-2222 anna.napmw@gmail.com
Donald J. Frommeyer, CRMS (t/e 2014)—President MSI, III 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net
President-Elect Christine Pollard (607) 226-1046 cpollard1046@gmail.com
Secretary Cynthia Nutter (360) 449-6408 cynthia.nutter@fnf.com
John Councilman, CMC, CRMS (t/e 2014) President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com
Vice President (Central Region) Kelly Hendricks (314) 398-6840 khendricks@fsbfinancial.com
Treasurer Jeanne Evans, CME (918) 431-0155 drmjevans@att.net
Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net
Vice President (Eastern Region) Kimberly Rozell, CME (607) 229-5008 kimrozellnapmw@gmail.com
Parliamentarian Dawn Adams, GML, CMI (607) 329-4622 dawnvadams@live.com
Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 200 South Wilcox Street, #224 l Castle Rock, CO 80104 Office: (720) 810-4917 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com
Vice President (Northwestern Region) Ken Perry, CMI, CME (360) 936-3010 kenapmw@gmail.com
Administrator Hulene Works (800) 827-3034 hulene01@verizon.net
NAMB 2013-2014 Board of Directors OFFICERS
Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com
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Jim Pair, CMC (t/e 2014)—Immediate Past President Mortgage America Corpus Christi Inc. 22800 Bulverde Road, Apt. 1402 l San Antonio, TX 78261 Phone: (361) 774-7314 l E-mail: jlpair@aol.com
NationalMortgageProfessional.com
National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org
2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511 mdevine@strategicinfo.com
William Bower Resident Screening Committee Liaison (888) 316-4242 wbower@cicreports.com
Mike Brown Vice President/Treasurer (801) 925-6691, ext. 3777 mike.brown@ncogroup.com
Judy Ryan Strategic Alliance Committee Chair (410) 747-9551 judy.ryan@creditplus.com
Daphne Large Ex-Officio (901) 259-5105 daphnel@datafacts.com
Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com
Nancy Fedich Conference Committee Chair (908) 813-8555, ext. 3010 nancy@cisinfo.net
Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com
Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com
Julie Wink Education Committee Liaison (901) 259-5105 julie@datafacts.com
Dean Wangsgard Director (801) 487-8781 dean@nacmint.com
Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com
Tom Conwell Legislative Committee Liaison (800) 445-4922, ext. 1010 tconwell@credittechnologies.com
Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org
Renee Erickson Membership & Elections Chair (866) 932-2715 renee.erickson@acranet.com
Jan Gerber Office Manager & Member Services (630) 539-1525 jgerber@ncrainc.org
DIRECTORS
MAY 2014 n National Mortgage Professional Magazine n
P.O. Box 451718 l Garland, TX 75042 Phone: (800) 827-3034 l Fax: (469) 524-5121 Web site: www.napmw.org
Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com
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n National Mortgage Professional Magazine n MAY 2014
Online Reputation & Influence
Who Are You ... and Why? By Rene Rodriguez
MAY 2014 n National Mortgage Professional Magazine n
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The above title seems like a simple enough question: Who am I? Well … I’m a father, son, friend, sales professional and a few other things. I’m quite sure if I were to ask you the same question, you could come up with similar answers, all of which would be perfectly valid. Now let me challenge you a bit … who are you in the business world? If you are like most people, you probably answer that question with some iteration detailing “what” you do. Something along the lines of “I’m a loan officer.” Yes, this does describe what you do, and in part, “who you are.” Now, here is the challenge ... who cares? Why should I, or anyone else for that matter, care that you are a loan officer? Don’t take offense, I mean it literally ... who really does care? There are thousands of originators out there, what makes you different? Why should anyone work with you? This is not a new question. I’m quite certain that you have heard it countless times before, so why is it that there are still so many originators who look, feel, act and talk the same? The more important question to answer is: What are the implications, not only to you, but also to the consumers, when they are faced with so many similar choices? It all comes down to the psychology of decisionmaking, which, in essence, is a very simple psychology. We, as humans, need to base our decisions on perceived differences. The decision is made emotionally, but rationalized logically, through the differences. So what happens when we don’t differentiate ourselves? The answer: Your customer is forced to find a differentiating factor on their own, and more often than not, they will gravitate to something they can easily measure: Price. By far the most powerful way to differentiate yourself is to let your customers and referral partners do it for you. Let them tell your story through testimonials and reviews. Seventy-nine percent of people trust an online review in the same way they trust a personal referral, so why not take advantage of that fact? Another exciting fact is that the mortgage industry is one of the slowest industries to respond to the fact so it has never been easier to stand out from the rest. I see so many originators post testimonials or praise reports on social media sites like Facebook, which are great, but if your intended audience doesn’t see it in the News Feed, chances are, they never will. That is why it is it is crucial to create a profile on FREE sites such as BetterLoanOfficers.com so you have a place to collect, manage, and more importantly, share your reviews with potential clients and business partners. Take control of your online reputation by signing up at www.BetterLoanOfficers.com today. Rene Rodriguez is founder and chief executive officer of BetterLoanOfficers.com, a powerful and easy-to-use online loan officer review management system. Loan officers can collect, manage and promote their reviews in order to build trust, secure more referral relationships and close more deals. Rene is also CEO of Volentum, an enterprise education and consulting company. He has been named to National Mortgage Professional Magazine’s “40 Under 40 Most Influential Mortgage Professionals” for five consecutive years. He is a renowned behavioral and organizational change expert, leadership coach, world class sales trainer & dynamic keynote speaker who has shared the stage with Tony Robins, Lou Holtz, Ben Stein, Roy Firestone and Jeffery Gitomer.
SPONSORED EDITORIAL
THE
elite performer
The Mentor & the Protégé By Andy W. Harris, CRMS Every Monday night, I attend a men’s group “Tell me and I forget, teach me where we discuss life, famiand I may remember, involve ly and faith. Each week me and I learn.” brings a new discussion, and everyone’s background creates a unique perspec—Benjamin Franklin tive. We recently spoke about others who have influenced our personal and professional lives and how we can also individually impact the lives of others. We addressed, in detail, the benefits of having both a mentor and a protégé in our lives. It got me thinking about who in my life I have had as a mentor over the years, and who I might have considered to be my protégé. A mentor is defined as “an experienced and trusted advisor or trainer.” A protégé is defined as “a person who is guided and supported by an older and more experienced or influential individual.” Regardless of your age, you can have or be a mentor or protégé at any stage. I believe it is important that we think about who is presently in our lives who could be defined as our mentor, and if there are those out there who consider us to be their mentor. I can personally remember having these influences in my life, and I believe that I once was a mentor’s protégé, but this is currently something I believe I am presently missing. It may be my commonly shared independence or stubbornness through my own gained experiences and pride, but I certainly do know the value of learning from those who have gained wisdom over the years and also sharing the wisdom I have gained. If we are not continuously growing in knowledge by surrounding ourselves with those who are wiser than us, would doing anything but seeking a mentor be acceptable? A mentor can help hold you accountable and guide you down a clearer path … a path they have already traveled and learned by their own mistakes to become better navigators. Having insight and support from a mentor can be priceless. You don’t feel isolated and you have the motivation to succeed through words and actions of encouragement. Seeking out a mentor should begin by thinking of someone you respect or admire and who might be a generation ahead of you in your trade or area of focus. Simply asking might do the trick and you might be surprised by how willing people can be. There are certainly different mentors for different areas and times in life, but having this trust and connection with another person can be invaluable. If you have employees or others who you have trained or influenced in any way, you may have experienced your own protégé at some point in life. I have personally had experiences with those whom I believe to be my protégé. I encouraged them to grow through my influence, and as a result, they encouraged me through their success and determination. I believe it is important that we all gain wisdom through mentorship, and in turn, share that wisdom with others through the different generations of life. Supporting and changing the lives of others in a positive way can also be invaluable. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.
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Former CFPB Deputy Director Raj Date Goes Non-QM in a QM World Raj Date discusses new partnership, non-QM products and the birth of the CFPB
By Robert Ottone aj Date was the first-ever Deputy Director of the Consumer Financial Protection Bureau (CFPB). After spending over two years guiding the new agency’s strategic, operational, and policy initiatives, Mr. Date left public service to go into the private sector, forming Fenway Summer, a consumer advisory and venture investment firm that has become a major player in the industry today. Fenway Summer and Ethos Lending LLC recently announced the combination of their respective mortgage ventures. The combined firm’s goal is to build a national mortgage origination business focusing on agency mortgages and prime non-qualified mortgages (NQM). Ethos Lending anticipates beginning to originate agency mortgages in the second quarter of 2014, and by the end of the year, plans to be one of the first wholesale originators of non-QM mortgages. We were lucky enough to chat with Mr. Date about the new non-QM loan program, as well as the formation of the CFPB from its infancy.
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Can you discuss the early days of the CFPB … the formation of the Bureau, what it was like to be part of this new governmental arm and its early culture? How did your work with the CFPB influence the formation of Fenway Summer? Raj Date: It was more or less serendipity that I ended up with the CFPB. I left Wall Street in the spring of 2009 after a surreal experience as a senior investment banker covering large-cap banks and the GSEs during the course of the housing and economic crisis. As you can imagine, it was a remarkably fascinating seat to be in. It just so happened that at the moment I left Wall Street, the intersection of the few disciplines I knew deeply—consumer credit, capital markets, and the law—was more relevant from a public policy perspective than it had ever been before. I realized that this moment was my best shot at making a difference in public service. Through some random twists, I ended up joining the Treasury Department in October 2010 to help build the CFPB. I was probably the 12th person on the CFPB staff; when I left, we numbered over 1,200. In the Bureau’s early days, we tried to instill disciplines I’d learned through-
out my career in the private sector. For instance, we incorporated the notion of fast-cycle times to developing a point of view on what the right policy answer to any given problem is, knowing you can fix or adjust over time, as you learn more. There’s nothing quite so damaging to a startup’s energy as analysis paralysis. You won’t get everything quite right out of the gate. We tried to develop an initial a point of view of where the world is going and then develop and iterate from there. From the outside, it seems to me that the CFPB still practices this discipline to an extent rare among regulatory agencies.
into the technology and operations sides of the business, while our team is strong in capital markets, regulation, and credit analytics. Bringing those two sides together, there’s no overlap, and there are no gaps. The pieces fit together nicely. Ethos also started around the same time we did, so, they don’t have any legacy put-back liability. From our point of view, the last thing we wanted to happen was to assemble a talented team and then have them distracted by legacy issues. Our ideal partner would allow us to focus exclusively on the future. The Ethos platform allows us to do exactly that.
Can you discuss your recent partnership with Ethos Lending and your non-QM program? Date: As we’ve discussed since last summer, Fenway Summer’s long-term objective is to build a prime non-qualified mortgage originator. With the Ethos Lending transaction, we wanted to accelerate our advancement into that market. Over the past six or seven months, we considered acquiring a number of mortgage platforms, but when we came across Ethos Lending, it just seemed like the perfect fit. Their team complements the core capabilities of our team. They are deep
You spoke back in March in Washington, D.C. at the 2014 NAMB Legislative & Regulatory Conference, braving some treacherous winter weather in the process. What was your experience like addressing a mortgage industry trade association such as NAMB—The Association of Mortgage Professionals? Date: It was nice to see so many people gathered together in what was such disastrously-bad weather. I saw my discussion with the members of NAMB as a chance to engage with individuals who are part of a chan-
nel that is going to be very important to our business. Ethos Lending will focus on the wholesale channel in order to build volume in our offering. We think we can manage risk in a disciplined way to the extent that we’ve partnered with the right customer-facing professionals. And, importantly, we think that Ethos can provide brokers with differentiated service and value in both agency-eligible and non-QM products. What do you feel the value of the mortgage broker is to today’s housing landscape and to the consumer? Date: I have seen and closely examined the mortgage business from the outside, from the inside, from Wall Street, from every angle you can imagine. My point of view on the independent mortgage broker channel hasn’t changed that much. Whenever you have an independent actor in the sales channel, you need to have a ton of trust in that person. As a lender, you have to make sure you’re not adversely selected, and that the end consumer is being treated right. But if you can work with the right people and calibrate and manage risk well, it can be a terrific channel for a growing business like ours.
The cost of compliance can truly add up for the smaller mortgage shop looking to remain in compliance under gov-
rithm, not spent on streamlining processes, not spent on delighting your customer. So nobody—lenders, brokers, regulators, legislators—nobody likes high compliance costs. That’s why we spent so much time worrying about reducing compliance burden in the policy shop at the Bureau. But this is, in my opinion, quite a necessary consequence of the financial crisis. The old rules obviously didn’t work. So we
Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by e-mail at robertpo@nmpmediacorp.com.
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What’s the future of the U.S. economy? How important will its recovery be based on property values and interest rates in the housing market in general? Date: The recovery is obviously well under way, but has been considerably less robust than anyone might have wanted. Housing is a huge part of the economy, so a more vibrant housing sector would help. My point of view is that regulatory reform will make it harder for the kind of leverage-fueled asset bubbles that we saw before the crisis to occur in the future. Lenders should take comfort in that. Overall, the inevitable rate-related headwinds will be a challenge as we get to a more normalized curve. But the underlying resilience in housing has, frankly, been better than where I thought we’d be at this point in the cycle, post-crisis. Things aren’t great, but they’re obviously much, much better than they were.
ernmental rules and mandates. This obviously impacts the consumer. Do you feel there will ever be a time when the cost of compliance will be more manageable and, as a result, be less of a burden on the consumer? Date: Compliance costs are real. Every dollar spent on compliance is a dollar not spent on research and development, not spent on developing a better credit algo-
needed new rules of the road, and adapting to these new rules does take some energy, time and financial resources. I think this is one of the ways where designing processes and technology from scratch can be a real advantage. With our recent partnership with Ethos Lending, we don’t have to retrofit old technology to fit new challenges. We can build from scratch, using the best platforms to meet real customer needs, meet real regulatory expectations, and meet real investor demands. I think we will be up to the task.
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The culture at the CFPB has a lot to do with spotting what’s wrong in the private sector, do you feel you were a major influencer on that? Date: Alongside Sen. Elizabeth Warren, Secretary Tim Geithner, and Director Richard Cordray, I like to think that I was part of instilling the CFPB with a positive, proactive and yet disciplined culture. As I mentioned earlier, achieving this type of culture requires having an agile development approach, where you answer the question, then take the time to refine and re-tune. In my opinion, we’d be better served if this approach was more common across the government.
“My point of view is that regulatory reform will make it harder for the kind of leverage-fueled asset bubbles that we saw before the crisis to occur in the future. Lenders should take comfort in that.”
Secure Settlements Announces Updates to Closing Guard Vendor Management
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Secure Settlements Inc. (SSI) has announced new enhancements to its Closing Guard vendor management and risk monitoring product for mortgage lenders and banks. SSI’s platform enables lenders and banks to access information in real time regarding settlement agents before they wire funds to the closing table, complimenting internal prefunding quality assurance programs and meeting regulatory expectations for consumer protection. The company’s Closing Guard product, which assesses third-party risk, monitors it in real time and provides detailed reporting now offers a tool that enables clients to build and maintain their own internal approved agent and watch list data reports. The “My Agent List” and “My Watch List” functions customize a lender’s information, makes it available to their operations staff and the lists can then be downloaded or exported as evidence of compliance during audits and examinations by state and federal regulators. For example, Fannie Mae seller-servicers must demonstrate that they have a suitable closing agent vetting and monitoring program and be able to produce a current list of approved and vetted agents during examinations. State banking auditors are now beginning to ask for approved agent lists as well. This new product enhancement meets this need. “SSI continues to be a thought leader in the area of loan quality assurance and counterparty risk management assessment and reporting,” said SSI President Andrew Liput. “Our ‘My Agent List’ and ‘My Watch List’ tools will be closely followed by additional innovative resources that will assist lenders to navigate and satisfy the myriad of regulatory and investor expectations for better quality control and loan quality assurance. At a cost that equates to less than 3/4s BPS per loan, our service offers an affordable solution to compliance needs.”
Mortgage Master Forms Loan Officer Concierge Service
The Work Number Now Available From CoreLogic
Mortgage Master has announced the formation of a new internal team of professionals, which has a deep understanding of the mortgage process and functions including sales, operations, underwriting and closing, named “Loan Officer Concierge,” dedicated to making the on-boarding process for new loan officers more efficient by offering value-added support and personal attention. New loan officers joining Mortgage Master are now able to continue to focus on serving clients and building business without any interruption, except for state licensing. Over the last four months, Mortgage Master has hired 46 experienced mortgage professionals. The Loan Officer Concierge team is working with all departments of Mortgage Master, including recruiting, human resources, marketing, information technology, scenarios and operations to facilitate a smooth transition for loan officers joining Mortgage Master throughout the U.S. The mission of this team is to help new loan officers to focus 100 percent of their time and energy on serving clients and building business. “This enhanced on-boarding process demonstrates Mortgage Master’s commitment to offering the best possible support to loan officers so they can better serve their clients from day one,” said Paul Anastos, president of Mortgage Master. “Starting any new job can be stressful, but this team of professionals is in place to assist our newest loan officers on a personal, one-on-one level to make their transition easier. Mortgage Master offers a unique opportunity to high quality loan officers. Our model, not only provides borrowers with the best possible pricing, solutions and service, it also empowers loan officers to increase their own production and income.”
CoreLogic has announced an agreement to offer The Work Number, as part of the CoreLogic Credco Verification of Employment service. The Work Number, a solution offered through Equifax Workforce Solutions, is the largest collection of payroll records contributed directly from employers. The agreement enables CoreLogic to deliver automated mortgage applicant employment with income verification as part of their Verification of Employment service. The Verification of Employment service provides mortgage professionals with an efficient way to conduct third party verification of a borrower’s employment status and income. Historically, verification of employment was a manual process, requiring either verbal or faxed confirmations from the applicant’s employer. With The Work Number, CoreLogic is now able to provide its mortgage customers with instant access to nearly 220 million current and historical employment records, allowing verification requests to be handled in minutes as opposed to hours. “With the recent implementation of the Qualified Mortgage Rule, the need for third party verification of employment and income has never been more important than it is now,” said John Bauer, senior vice president for CoreLogic Credit Services. “The inclusion of The Work Number data into our Verification of Employment service means that one in four requests will receive instant, up-to-date information on a borrower’s employment status, saving clients valuable time and keeping their application pipeline moving forward.” Because The Work Number collects week-by-week salary information directly from employer payroll databases, it can return timely employ-
ment data that is up-to-date as of the last pay period. Plus, the historical records go back many years. Information collected includes: Length of employment, job titles, income and other location information which can reduce the risk of liability over personal sources.
Mercury Network Announces Upgrades to SureReceipts
Mercury Network has announced new features added to their SureReceipts service for lenders to securely deliver documents to borrowers in compliance with the new ECOA Valuations Rule disclosure requirements. As with all new features, the SureReceipts enhancements were deployed across the entire user base, giving over 600 lenders and AMCs the ability to document a borrower’s consent for electronic delivery in compliance with the E-Sign Act component of the new ECOA requirement. With the enhancement, the borrower’s acceptance or dissension is recorded separately from the document download in the transaction audit trail. In addition, if a borrower declines electronic delivery, the file can be automatically pushed to the user’s “Action Required” folder to prevent disclosure compliance violations and closing delays. “All Mercury Network users have access to the SureReceipts service at no charge, but when the ECOA Valuations Rule took effect in January, many platforms and their lender customers weren’t prepared with a solution to document the borrower’s receipt of the appraisal”, said Jennifer Miller, president of a la mode’s Mortgage Solutions Division. “We acted quickly to open the service to any lender or AMC, regardless of the other software tools they use, to provide a stand-alone eDisclosure solution for compliance.”
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EWSFLASH l MAY 2014 l NMP NEWSFLASH l MAY 2014 l NMP NEWSFLASH l M CFPB Examines Mortgage Debt by Older Population in New Study
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The Cons u m e r Financial Protection Bureau (CFPB) has released a snapshot report spotlighting the mortgage debt challenges faced by a growing number of older Americans. These challenges include more mortgage debt, less affordable housing, and greater risk of foreclosure. The CFPB is also issuing a consumer advisory reminding older consumers approaching retirement to think about their mortgage pay-off date and to consider their retirement income and expenses. “A home can be a place of security for older Americans in their retirement years—a roof over their heads as well as a valuable asset,” said CFPB Director Richard Cordray. “But as more seniors carry significant mortgages into retirement, they put themselves at risk of losing their nest eggs and their homes.” Approximately 80 percent of the 41 million Americans age 65 and older own their home. They have the highest homeownership rate among all age groups. But while their rate of homeownership has remained constant over the last decade, the percent of older homeowners holding mortgages has increased. Much of the increase can be attributed to the refinancing boom of the 2000s. Other factors include a general trend among Americans to buy their first home later in life, provide small down payments on home purchases, and borrow against their home equity to pay for a variety of expenses. The report gathered and analyzed data from the Census Bureau, the Federal Reserve, and consumer complaints submitted to the CFPB, among other sources.
Senate Banking Committee Approves Johnson-Crapo Measure to Stabilize the Housing Finance Market The Senate Banking Committee has approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act of
2013, by a bipartisan vote of 13-9. The legislation included a bipartisan agreement drafted by Chairman Tim Johnson and Ranking Member Michael Crapo and is designed to stabilize the housing finance market and strengthen the American economy. It will create greater competition in the housing finance system and reduce risk to the taxpayer while ensuring affordable, fair access to all creditworthy borrowers. “After the housing crisis we experienced, real reform is clearly necessary to stabilize the housing system and renew the faith in the American dream of homeownership for generations to come,” said Johnson. “I want to sincerely thank all of the members of this Committee for their hard work and input while drafting this legislation. Even though the support was not unanimous, every member on the Committee was actively engaged in this collaborative process, and passing this legislation out of committee is only the first step. I look forward to continue working with my colleagues to keep this important process moving forward.” The legislation approved by the Committee builds on S. 1217 as introduced, a bill put forward by Sens. Corker, Warner and a bipartisan group of eight other Committee members, and it incorporates many ideas generated by an indepth series of hearings and briefings hosted by the Committee last fall and winter. The legislation winds down and eliminates Fannie Mae and Freddie Mac and allows for a diverse set of private entities to step in and replace most of the functions of the government sponsored enterprises. The new system will be regulated by the modernized and streamlined Federal Mortgage Insurance Corporation (FMIC), modeled in part after the FDIC. It also creates a reinsurance fund, known as the Mortgage Insurance Fund, to protect taxpayers. The new system establishes a type of mortgage-backed security (MBS) with an explicit government backstop and 10 percent first loss private secondary-market
capital to absorb losses and protect taxpayers from future bailouts. Small lenders will have multiple access points to the secondary mortgage market, including the option to sell their individual loans through a new small lender mutual. The mutual will be jointly owned by small lenders, providing community banks, credit unions, and other small lenders direct access to the secondary market so that they will not be at the mercy of their larger competitors when Fannie Mae and Freddie Mac are dissolved. Lastly, the new system provides certainty to investors and homeowners through standardization and improved market liquidity. “MBA commends the Senate Banking Committee for voting this bill out of committee for consideration by the full Senate. Chairman Johnson and Ranking Member Crapo are to be applauded for coming together in a bi-partisan fashion and creating a piece of legislation that reforms our housing finance system in a way that ensures sufficient liquidity for single family and multifamily mortgages while also protecting taxpayers,” said David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA). The Senate Banking Committee also approved two managers’ amendments that included input from Committee members on both sides of the aisle, the Administration, regulators, and other key stakeholders. “The President has been clear about his commitment to preserving the American dream of sustainable homeownership for all creditworthy borrowers,” read a statement by the White House Press Secretary. “That means ensuring that affordable rental options are widely available, and preserving access to mortgage credit during severe downturns while protecting taxpayers from substantial losses in the housing sector. We have worked closely with the Senate Banking Committee to provide policy, technical, and analytical support throughout the process to achieve these goals, and going forward, we will continue to work with
the Senate to address affordability and access to broaden support for reform.”
Senior Home Equity Hits Highest Point Since Q3 of 2008 Americans 62 years old and older now have more equity in their homes than at any time since mid-2008, according to data released by the National Reverse Mortgage Lenders Association (NRMLA). The new information comes from the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), which analyzes trends in the home values, home equity, and mortgage debt of homeowners 62 and older. The RMMI is updated quarterly and tracks back to the start of 2000. In the fourth quarter of 2013, the RMMI reached its highest level (169.76) since the third quarter of 2008. It has now risen for seven straight quarters. Over the past two years, the aggregate home equity held by Americans 62 and older grew 12.5 percent to a total of $3.34 trillion. Mortgage debt held by Americans 62 and older stands at $1.08 trillion—same as the Q3 RMMI Report. Senior mortgage debt peaked at $1.143 trillion in the fourth quarter of 2009. The senior housing value estimate is based on the Federal Housing Finance Agency’s Q4 2013 all-transactions Indices, which saw housing values increase in 72 percent of the 412 MSAs covered by RiskSpan. Over the long term, home equity has proven to be a valuable resource. The collective home equity of Americans 62 and older has grown by 83.7 percent since the RMMI’s starting point. In Q1 of 2000, seniors owned $2.10 trillion in home equity, compared to $3.34 trillion today.
FHFA to Expand Social Media Presence The Federal Housing Finance Agency (FHFA) will soon launch its official Twitter handle, @FHFA, to
increase the availability and accessibility of FHFA news. FHFA will use @FHFA to tweet links to speeches, testimony, news releases, research papers, monthly and quarterly reports and other select announcements. FHFA’s recently revamped Web site, www.FHFA.gov, will continue to serve as the Agency’s primary source of communication. FHFA will also post select news on YouTube on the newly-created FHFA Channel. FHFA’s YouTube channel features recent radio and TV spots in English and Spanish from FHFA’s national education campaign on the Home Affordable Refinance Program, or HARP. The TV spots are also closedcaptioned. The FHFA will use LinkedIn to post job advertisements on an occasional basis.
MBA’s Quarterly Survey of Commercial/ Multifamily Mortgage Bankers Originations Highlights 45 Percent Dip, Year Over Year
Among investor types, between the fourth quarter of 2013 and first quarters of 2014, the dollar volume of loans for CMBS decreased 57 percent, loans for GSEs decreased 53 percent, originations for life insurance companies decreased 42 percent, and loans for commercial bank portfolios decreased by 28 percent.
Survey Finds Benefits of Buying a Home Outweigh Renting In half of U.S. metros, buying a home is a better financial decision than renting for homebuy-
ers who plan to stay in their home for at least two years, according to the first quarter Zillow breakeven horizon analysis. Among the 35 largest metro areas analyzed by Zillow in the first quarter, those with the shortest breakeven horizon were Riverside (less than one year), Orlando (one year), Tampa (1.1 years) and Miami-Fort Lauderdale (1.2 years). Large metros with the longest breakeven horizon included Washington, D.C. (4.2 years), Boston (four years), Phoenix (3.3 years), San Diego (3.2 years), Minneapolis and Baltimore (both 3.1 years). Because conditions for buyers and renters can vary dramatically even continued on page 16
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According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, first quarter 2014 commercial and multifamily mortgage loan originations were one percent lower than during the same period last year and 45 percent lower than the fourth quarter of 2013. “Commercial and multifamily borrowing typically starts the year slowly, with less than one-fifth of the annual volume usually done in the first quarter,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “This year is looking to continue the trend. Lending by banks and life companies increased compared to last year’s first quarter, but first quarter originations for Fannie Mae and Freddie Mac and for inclusion in commercial mortgage-backed securities (CMBS) were lower than during the same period last year. Taken together, commercial and multifamily mortgage originations started 2014 at the same pace they started 2013.” The one percent overall decrease in commercial/multifamily lending volumes, when compared to the first quarter of 2013, was driven by the decrease in originations for retail and multifamily properties. The decrease included a 19 percent decrease in the dollar volume of loans for retail properties, a 17 percent decrease for multifamily properties, a 10 percent increase for healthcare properties, a 15 percent increase for office properties, a 44 percent increase in hotel property loans, and a 52 percent increase in industrial property loans. Among investor types, the dollar volume of loans originated for government-sponsored enterprise (GSE) decreased by 55 percent from last year’s first quarter. There was a 21 percent decrease for CMBS, an 18 percent
increase for life insurance company loans and a 55 percent increase in dollar volume of loans for commercial bank portfolios. First quarter 2014 commercial and multifamily mortgage originations were 45 percent lower than in the fourth quarter of 2013. Compared to the fourth quarter of 2013, first quarter 2014 originations for health care properties decreased 65 percent. There was a 53 percent decrease in originations for retail properties, a 51 percent decrease for hotel properties, a 50 percent decrease for office properties, a 44 percent decrease for multifamily properties, and a 24 percent decrease for industrial properties from the fourth quarter 2013 to the first quarter 2014.
A Few Quick Tips From AllRegs on Vendor Management Vendors pose a risk for banks and non-banks alike … and the Consumer Financial Protection Bureau (CFPB) is monitoring those risks. “Consumers are at a real disadvantage because they do not get to choose the service providers they deal with—the financial institution does,” said CFPB Director Richard Cordray in a release from the CFPB. “Consumers must not be hurt by unfair, deceptive or abusive practices of service providers. Banks and non-banks must manage these relationships carefully and can be held accountable if they break the law.” The CFPB has specified that “supervised entities” are responsible for ensuring that their vendors and service providers are in compliance of federal financial laws. Here are few items you should know about vendor management compliance. 1. There is a difference between a vendor and a service provider A vendor is a person or organization that vends or sells a product. A service provider sells a service, like consulting or staffing. In the mortgage arena, vendors do not come in contact with consumers or client files. The “vendors” who usually cause the extra compliance risk are in fact “service providers.” These companies offer services that bring them into contact with consumers, consumer data, loan files, and decision-making processes which are regulated by the government. You are liable for your service providers when they are in contact with your consumers or loan files.
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2. Be diligent about ensuring vendor/service provider compliance, or you put your own organization at risk When you hire a vendor or service provider, they may seem like they are responsible and compliance-ready. You may feel confident to trust that they are compliant since they are a reputable company and actually doing the work that requires compliance. Do not follow this route. The law holds you liable for their actions. Make sure you have policies and procedures in place to monitor their activities to ensure compliance of the law. More importantly, make sure you have a Compliance Management System in place for all aspects of CFPB compliance. 3. Get your senior management and board of directors involved CFPB guidance clearly conveys the expectation that the board of directors and management will “develop a plan of action for oversight of serviceprovider (vendor) relationships.” Your vendor management policy requires their final approval. To take it a step further, your staff vendor management training should also reflect the internal policies of your business. So, how do you manage vendor compliance? The AllRegs Compliance Management System gives you the tools you need to ensure that your entire organization is compliant with the CFPB through technology and professional services. Our system gives you access to courses like Examining Vendor Management to train your staff. You can also work with the AllRegs Professional Services Group on a customized Vendor Management policy. To learn more, visit us at www.allregs.com or contact your dedicated account executive at (800) 848-4904.
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within cities themselves, Zillow produces breakeven horizons down to the neighborhood level in order to give potential buyers and renters the most insight into local conditions where they’re considering living. For example, the breakeven horizon for the city of San Francisco is 2.8 years, but home shoppers who purchase in the Bayview neighborhood will break even after 1.4 years, while those who buy in Presidio Heights will need to stay in their home 11.7 years for buying to be a better financial decision. “Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it. Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas,” said Zillow Chief Economist Dr. Stan Humphries. “However, some renters still have to overcome significant hurdles before they can pull the trigger on homeownership. For those renters who can’t qualify for a mortgage or aren’t able to save enough for a downpayment on a house, renting can be a more flexible, and often far less frustrating option.”
New CFPB Proposed Rule Looks to Protect Consumer Disclosures The Consumer Financial Protection Bureau (CFPB) has proposed a rule to promote more effective privacy disclosures from financial institutions to their customers. The rule would allow companies that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually. “Consumers need clear information about how their personal information is being used by financial institutions,” said CFPB Director Richard Cordray. “This proposal would make it easier for consumers to find and access privacy policies, while also making it cheaper for industry to provide disclosures.” The Gramm-Leach-Bliley Act (GLBA) generally requires that financial institutions send annual privacy notices to customers. These notices must describe whether and how the financial institution shares consumers’ non-public personal information. If the institution does share this information with an unaffiliated third party, it typically must notify consumers of their right to opt out of the sharing and inform them of how to do so. This proposal would allow institutions to post privacy notices online instead of distributing an annual paper copy, if they satisfy certain conditions such as not sharing data in ways that
would trigger consumers’ opt-out rights. This proposal would apply to both banks and those non-banks that are within the CFPB’s jurisdiction under the GLBA. Institutions that choose to rely on this new method of delivering privacy notices would be required to use the model disclosure form developed by federal regulatory agencies in 2009. Under the proposal, if an institution qualified for and wants to rely on the online disclosure method, it would have to inform consumers annually about the availability of the disclosures. Currently institutions must send consumers a separate communication about privacy disclosures. Under this proposal they could include an insert in regular consumer communication, such as a monthly billing statement for a credit card, letting consumers know that the annual privacy notice is available online and in paper by request at a toll-free telephone number. If an institution chose not to use the online disclosure method, it would need to continue to deliver annual privacy notices to its customers.
Latest Monitor Report Shows Green Tree Lacking in Servicing Settlement Compliance Joseph A. Smith Jr., Monitor of the National Mortgage Settlement (NMS), has released a summary of six compliance reports he filed with the U.S. District Court for the District of Columbia. This summary details the results of his tests to determine Bank of America, Chase, Citi, Ocwen and Wells Fargo’s compliance with the NMS servicing rules from July 1, 2013 to Dec. 31, 2013. This report also contains the test results for Green Tree from Oct. 1, 2013 to Dec. 31, 2013. “My colleagues and I conducted a rigorous testing process to review five servicers’ compliance with the National Mortgage Settlement’s original 29 metrics for the third and fourth quarters of 2013. I’m pleased to report that these servicers passed all tests during this reporting period,” said Smith. “In addition, this report contains the results from the first quarter Green Tree was tested for the loans it acquired from the ResCap Parties. After extensive testing, I can confirm that Green Tree failed eight metrics. These results show that Green Tree must make significant changes to improve its practices and comply with the Settlement.” Shaun Donovan, Secretary of the U.S. Department of Housing & Urban Development (HUD) praised the report issued by Smith, stating, “I look forward to the Monitor’s next report which tests continued on page 25
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Š StreetLinks, LLC
Turning Mortgage Leads Into Conversions By K. Justin Restaino If you are buying leads, telemarketing or sending direct mail, you are probably aware that not all leads result in sales. In fact, statistics show that only 21 percent of leads will end in a sale. But what if you could increase your conversion rate by 20 percent? Ultimately, you could expect to see greater revenue, more clients, and hopefully, an increase in referrals. Accomplishing this is not difficult. There are some great strategies you can implement in order to increase your conversion rate with purchased leads. Think about how you handle your leads currently by considering the following questions: l How soon after getting a lead do you make contact? l If you cannot reach your lead, how often do you try again? l Are you really selling your leads or just taking orders? l Do you purchase real-time leads at optimal times? By answering these questions, you can take note of areas where you can improve your lead responsiveness, something that is critical in today’s competitive marketplace. Lead speed There are a number of chilling statistics for mortgage brokers who don’t get in contact with their leads soon after receiving their information. For instance, take a look at the following: l “… research indicates that leads responded to within one minute result in a 391 percent improvement in conversion rate.” l “… by being the first to contact a lead, you are 238 percent more likely to close the transaction.”
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Quite obviously, response time is critical if you want to improve your conversion rate. As such, you want to be the first person to make contact with your lead, and the sooner you can do it, the better. Persistence How persistent are you in trying to reach your leads? Amazingly, after taking or making one phone call, 50 percent of brokers never try to reach a lead again. It’s of no use to spend good money on leads if you’re not willing to engage in follow-through. Research indicates that by contacting your lead six times, your chances of selling your prospect are 93 percent. So, be proactive and be willing to contact your lead as much as six times to get them on the phone. After making your six calls, turn your attention to better prospects—don’t waste time and energy trying to get the remaining seven percent on the phone. Work off hours Studies show that leads received outside of the classic workweek (9-5 Monday through Friday) are 11 percent more likely to be converted than the average. As a caveat, remember that you should always be available to contact your leads. If someone submits an inquiry at 9:00 a.m., you don’t want to wait until dinner time to call back. Increasing your mortgage lead conversion rate by 20 percent is not an unrealistic goal. However, it does require you to make a strong effort. All too often, leads are wasted and Cost-to-Close increased because of mismanagement of leads. So, after making sure that you have purchased the best leads you can find, make immediate contact. Studies show time and again that making a phone call as soon as possible is a key tactic for upping conversion rates. And if you cannot reach your prospect, don’t quit. Instead, continue calling—six times at most— until you make contact. By following these steps, you’ll stay ahead of the majority of your competitors, close more sales and generate higher revenue. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.
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HSH.com Unveils New Downpayment Calculation Tool HSH.com released a new tool to help homebuyers more effectively allocate their funds toward the downpayment for a home, showing the changes in mortgage insurance cost that larger and smaller downpayments have, how much that mortgage insurance will cost them over time, and how soon buyers can stop paying MI. Mortgage borrowers may not know that the size of their downpayment has a direct impact on their monthly mortgage insurance payments. “Many homebuyers, especially first-time homebuyers, scrimp and save to get enough funds put together a downpayment for a home with the impression that more is always better,” said Keith Gumbinger, vice president at HSH.com. “Striving for a downpayment of a given size may be stressful, and the reality is that a larger downpayment may not be necessary.” The calculator reveals and compares the costs of mortgage insurance using the borrower’s present downpayment, and shows the changes in MI and loan costs when a smaller or larger downpayment is employed “The Downpayment Decisioner Calculator allows you to see these choices and costs without needing to do a lot of complicated math or call a mortgage lender to run the figures for you,” said Gumbinger. “Most borrowers probably don’t know that there may be a sweet spot for their situation where they not only have plenty of funds for a downpayment, but also can repurpose some of that cash to cover costs or even pay a point to lower the interest rate on their loan.”
Collateral Analytics Launches Credit Risk Model Collateral Analytics has launched the CA Credit Risk Model. This new patent pending product is designed to offer quantitative measures of the risk and cost of potential borrower default embedded in a residential mortgage. The CA Credit Risk Model combines CA’s AVM with its proprietary home price forecast and mortgage performance models to predict the expected profitability of a mortgage. “Our new Credit Risk Model can be used to help lenders set the interest rate that should be charged for a particular loan based on its loan-to-value ratio, borrower’s credit score, and specific loan and property traits,” said Michael Sklarz, president and CEO of Collateral Analytics. “As such, it can be viewed as a pricing tool for an individual mortgage, mortgage portfolio, or an indicator of the credit risk among different real estate markets.”
LoyaltyExpress Unveils New Web Marketing Platform
LoyaltyExpress has announced the release of PromotionalMaterials, a Web-to-print platform for retail banks and mortgage companies. PromotionalMaterials serves as a centralized repository for high-impact sales and marketing collateral. As a worldclass marketing service provider, LoyaltyExpress further distinguishes the value of PromotionalMaterials by dedicating content and design resources in conjunction with the service to help clients benefit from their exceptional infrastructure, work flows and industry expertise. A Web-based, software-as-a-service (SaaS) platform, PromotionalMaterials enforces standards of compliance, while providing enterprise-wide access to flexible templates with multiple fields for personalization. As a result, organizations can distinguish themselves with a private label service that delivers robust marketing solutions to sales teams. Users have the ability to select from a wide range of products— co-branded open house flyers, rate sheets, corporate flyers, advertisements, tri-fold brochures, e-mail signatures, business cards and stationery, and much more. Depending on the complexity of the marketing templates, they can either be downloaded as high-resolution PDFs, or printed and shipped to locations of choice. “PromotionalMaterials empowers mortgage enterprises with compliant and branded marketing products that arm sales forces with distinctive, high-impact communications,” said Mary Beth Doyle, LoyaltyExpress founder. “Our clients benefit by reducing the gross inefficiencies of reactive, manually generated marketing products, and simultaneously, satisfying ever-rigorous audit, compliance, and regulatory conditions. Additionally, the platform’s dynamic templates allow for geographic and regional customization based on image selections and dropdowns for content personalization without having to create entirely separate products.”
LRES Unveils DirectConnect, Enabling Connection with LINK LRES has announced the latest release of its LRES DirectConnect, framework, which enables a user’s technology to seamlessly connect with the LRES LINK proprietary order management platform to optimize and accelerate the valuation ordering process. The latest version of LRES DirectConnect significantly reduces the time for successful systems integration from four to six months down to two to continued on page 46
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n National Mortgage Professional Magazine n MAY 2014
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NAMB PERSPECTIVE The President’s Corner: May 2014 s I look over the past few months, I am starting to see that people are really interested in becoming members again of NAMB—The Association of Mortgage Professionals. Too many times, I have seen people just take for granted that NAMB will represent them, even if they are not members of their trade association. But the tide is beginning to turn. We have had a steady increase in membership over the last few months, and much of that has to do with the business coming back. And if you are not a member, now is the time to OPT IN and become a member today. Remember, by OPTING IN, you are choosing to become an active participant in making change … the kind of change that will benefit your career and livelihood. Lately, I have been busy talking with new homebuyers and talking to new real estate agents who are trying to establish themselves in the market. The one thing that does seem a little strange is that many of these new real estate agents are basically trying to just be listing agents. They are out there try-
A
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ing to list as many homes as they can so that they can have reasons for people to call them. It is a great starting point for discussion for new homeowners. But you as a mortgage professional still have to go out there and solicit your wares to everyone. I would like to thank Joel Berman and his staff at National Mortgage Professional Magazine for the great article and honor of being named NMP’s Mortgage Professional of the Month (see page 62 of the March 2014 issue). It was truly a great honor, and I am humbled to be recognized in this manner. As I stated in the article, I have not been able to do this alone and everyone along the way has helped me become successful and have helped make this association very successful. Whether you have served NAMB as a board member, committee chair, or participated as a committee member, I THANK YOU for everything that you have done. I hope you will continue to stay involved in some way or another. Have I screamed it enough to everyone that this NAMB National is going to be our 40th Anniversary Party, Sept. 1315, 2014 at the Luxor Resort and Casino in Las Vegas. We are finalizing the
Effective Communications Is a Two-Way Street By John H.P. Hudson, CRMS In order for NAMB and the Government Affairs Committee to be effective, mortgage professionals (both
members and future members) must get involved. You may have noticed several surveys of late sent be NAMB and the Government Affairs Committee asking for feedback on the state of the industry, the impact of the three percent cap on points and
Why Do I Need NAMB? l l l l l l l l
NAMB Testifies Before Congress NAMB Works With the CFPB NAMB Participates in Multiple Regulatory/CFPB Panels NAMB Webinars Full-Time NAMB Lobbyist on Capitol Hill NAMB Protects Your Business NAMB Forms Industry Coalitions NAMB Education
For detailed information, visit www.namb.org.
schedule, getting the final speakers, collecting the final information about the booths and sponsors, and all that is missing right now is YOU! Go to www.nambnational.com and see what’s going on. This Web site will get you all of the information that you need to register for the event, get your hotel room reserved, and get you started for the most fantabulous fun a conference can bring, along with what will be one of the greatest anniversary parties of all time. Don’t be left out. We are expecting about 2,000 people to attend. Rooms are very inexpensive (about $330 for the Friday night through Tuesday morning) so you won’t have to spend an arm and a leg for this event. The NAMB Awards Banquet on Sunday night will be the time that we will honor those people that have given back to the members of our association. And then, it is time to party the rest of the night away in the great Luxor Hotel. You will not want to miss this event. Those of you who are delegates from your NAMB state affiliates, start to put together how you are going to get to this Delegate Council Meeting. There will be a lot to talk about and a lot to discuss. The states are a very important factor in our association and you need to be there to represent all of your state members. As a conclusion to this NAMB
Perspective, I have been working very hard to be able to let our members know that we are looking out for their best interest. I continue to have meetings with members of Congress, the House Financial Services Committee, the Consumer Financial Protection Bureau (CFPB), and even national mortgage companies discussing the protection of the mortgage industry. I will keep you informed as these talks progress via the NAMB Monday Morning Messenger. I also want to extend to all of the NAMB executive directors at-large … thank you for everything that you do for your states. It is you that keeps the state affiliates going and showing your members the reasons for membership. I hope you get to make it to this event as well. Please stay involved with each of your state affiliates, and I thank all of you who are members of NAMB. We still need more members, so if you know someone that is not a member, get them to OPT IN today.
fees of the qualified mortgage (QM), and the impact of thousands of pages of regulation are having on small business mortgage professionals. As the Communications Chair for NAMB, I ask all of you to participate in these surveys when they arrive in your Inbox, via Facebook posts, on Web sites, etc. Here is why … NAMB and our colleagues at the other major trade groups (the Mortgage Bankers Association [MBA], National Association of Realtors [NAR] and National Association of Home Builders [NAHB]) have made real strides getting the CFPB and members of the legislature to understand why some of the rules and regulations need to be, well … corrected. However, the very people who are in positions to make the actual corrections to the regulation and legislation are very data driven—meaning, they want to see numbers, statistics, data points, etc. The only way we will be able to provide this data is if we get feedback from the mortgage professionals who experience these impacts every day. Whether it be the first-time buyer who cannot get a qualified mortgage because the pric-
ing adjustments for credit and LTV push the APR too high, or the female-owned small business mortgage company that cannot earn enough revenue as a mortgage brokerage due to income limitations to stay in business and must sell out to a mortgage bank … you are all on the front lines and live this daily. These are the stories that must be told and the only way the decisionmakers in D.C. will hear them is with your participation. So, the next time you receive an email from NAMB asking for two minutes of your time to help us gather data and tell your story, please participate and forward the e-mail to your colleagues, referral partners and even consumers. Ask yourself, “Am I doing everything I can for my industry and livelihood?” Taking two minutes to help NAMB—The Association of Mortgage Professionals to tell YOUR story, is a great place to start.
Sincerely,
Donald J. Frommeyer, CRMS NAMB President president@namb.org www.joinnamb.com
John H.P. Hudson, CRMS of Premier Nationwide Lending in Flower Mound, Texas is NAMB Communications Committee Chair. He may be reached by phone at (817) 247-4766 or e-mail jhudson@pnlending.com.
Zeal for a Deal 179 managers were surveyed and answered the following questions … 1. What do you think is/are the most important factor(s) in meeting your production goals this year? 40% Getting my loan officers consistently prospecting for purchase business
2. Which of the following are you currently using as part of your value proposition to recruit loan officers? 42% Compensation model 51% Product flexibility
6%
Improving operation customer service 59% Operation excellence
76% Recruiting highly qualified loan officers 36% Marketing platform 11% Recruiting new sales professionals to be loan officers 13% Sales training programs 4%
Getting my Loan Officers to convert a greater number of leads
3. Do you currently have a structured sales and leadership training program in your branch/company?
10% Leadership
4. What would best describe your current company?
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68% No
hat preoccupations are fueling today’s mortgage business? According to new data released by XINNIX, an Atlanta-based provider of mortgage sales and leadership training, today’s focus is overwhelmingly on growing the purchase business and bringing in highly talented loan officers. In a survey of 179 managers, XINNIX sought out the most important factors in meeting this year’s production goals. The answer “Recruiting highly qualified loan officers” was the overwhelming response at 76 percent, while “Getting my loan officers consistently prospecting for purchase business” came in sec-
W
ond at 40 percent. However, the same question found a relatively puny response for the answers “Improving operation customer service” (six percent) and “Getting my loan officers to convert a greater number of leads” (four percent). Yet Casey Cunningham, XINNIX’s founder and CEO, believed those lower-rated responses were perfectly reflective of today’s industry. “When refinancing was at an all-time high, that would have been the number one answer,” said Cunningham. Cunningham warns that the strong emphasis on obtaining purchase business may run into a human resources obstacle. “Many loan officers are either illequipped or were never equipped for going after purchase business,”
15% A reactive organization
Cunningham added. “There is a huge transition to go from refinancing to purchases. The number one objective today is for growth—either through acquisitions or through recruiting home-grown talent or other people’s talent.” Cunningham believes that the XINNIX data (shown in the accompanying chart) confirms a need to bring new people into the industry, particularly as many loan officers are reaching the tailend of their careers. She is also optimistic that the majority of survey respondents found their current company to be either a visionary or proactive organization. “I was surprised that there was not a higher number for being proactive,” she added. “Most leaders knew the refinance business would go away.”
For one question that appeared to offer a bit of gloomy news—the query on whether respondents’ company or branch has “a structured sales and leadership training program”—Cunningham noted that the overwhelmingly negative answer made sense because of the key words “Structured Sales and Leadership Training.” “Many companies allow their branches to operate in a more entrepreneurial manner,” she explained, noting that an individualized approach at the branch level is not unusual in the sales and leadership training process. Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
n National Mortgage Professional Magazine n MAY 2014
By Phil Hall
39% A proactive organization
32% A visionary organization
NationalMortgageProfessional.com
32% Yes
14% A status quo organization
Marketing Your Database and Your Brand
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By Brent Emler n the mortgage industry, the power of relationship marketing is unparalleled. We say that with utmost confidence because we’ve personally observed those companies who’ve adopted the concept and have seen them soar to success, far above their competitors. The great news is that it will work for anyone who really educates himself and invests in available technologies. Mostly, we’re provided with information that tells us why relationship marketing is valuable but far less often are we told how to effectively use this incredible marketing methodology.
I
Let’s assume you’re sold. You believe that relationship marketing is where it’s at and are committed to taking the steps necessary to bringing your vision to life. Where do you start? What’s your strategy? The best place to start is with your current book of business. Your clients, both prospective and closed, are where the magic happens. Begin with establishing a clear vision for your client’s experience from the very first point of contact forward. Develop your culture around the way you want your customer to feel—not what you want to sell. Inspire positive changes by putting yourself in your client’s shoes and walk through your current application interview and process. If
your team of support staff sees you investing in this process, they will join you. A collaborative environment inspires and perpetuates individual involvement. If your potential client is shopping lenders and your organization is the one that makes them feel especially comfortable and valuable, would they not choose that particular experience in an industry where almost everyone can offer competitive products and pricing? The referral business begins at that point where a client sees you define your processes as a uniquely pleasant and positive experience over others. Referral business and relationship marketing in the mortgage industry have far less to do with the product
you’re selling than they do the way in which you sell it. Promote the following concepts throughout your organization and implement strategies that focus on connecting with your customer base in a personal, relevant, and timely way and watch your profits soar.
Database segmentation List segmentation in e-mail marketing is a way to diversify your marketing to match your customers. Your e-mail reputation will improve and you’ll achieve the results you’re looking for—the first and foremost of those is that your customers will be more likecontinued on page 30
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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.
Stearns Lending Pledges to Aid the Nation’s Homeless
$200 million – nearly 50 percent of which was donated by the building industry.
StreetLinks Acquired by Assurant in Stearns Lending recently joined the $60 Million Deal
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effort in battling homelessness by providing funding to HomeAid America, a non-profit organization that builds and renovates housing projects for America’s temporary homeless families and individuals. As part of Stearns’ partnership with HomeAid, James Hecht—executive vice president of Strategic Development for Stearns— has joined the HomeAid America board of directors. An expert in strategic alliances, Hecht has developed and operated multiple, highly successful builder and realtor alliances during a mortgage banking career that spans more than two decades. Hecht is currently responsible for leading and growing Stearns’ strategic production channels including Consumer Direct, Builder, Financial Institutions Group, and Credit Union Partners, as well as the company’s Marketing and Recruitment teams. “I am pleased and proud to join the leadership team of HomeAid America on behalf of Stearns Lending,” said Hecht. “The partnership between Stearns Lending and HomeAid America promises to be a big success. Both organizations share similar philosophies about the importance of helping families and individuals in the communities where we live and work. I am eager to work with the directors of HomeAid, as well as home builders who support the terrific efforts of this non-profit group.” More than 630,000 experience homelessness on any given night in the U.S., according to the National Alliance to End Homelessness. To address this tragedy, HomeAid America has been working for 25 years with the building industry to help supply temporary shelter for homeless families working to get back on their feet. To date, HomeAid has built more than 360 projects nationwide at a value of more than
Assurant Inc. has announced the acquisition of StreetLinks Lender Solutions from Novation Companies Inc. and other shareholders. With more than $140 million in annual fee income, StreetLinks is among the largest independent U.S. appraisal management companies. Through a nationwide network of expert appraisers, StreetLinks provides a comprehensive suite of valuation services and technology solutions for the mortgage banking industry. “Assurant and StreetLinks share a like mindset, particularly when it comes to innovation and commitments to quality and service, which presents numerous opportunities for us to shape the ever-changing appraisal industry together,” said StreetLinks President Tom Hurst. “We are thrilled that Assurant has chosen StreetLinks and are honored to be joining the Assurant team.” Assurant Specialty Property has acquired StreetLinks for approximately $60 million in cash, plus a potential earnout payment based on future performance. Assurant expects the transaction to be accretive to earnings in 2015. “This acquisition is a natural extension for Assurant Specialty Property,” said Assurant President and CEO Gene Mergelmeyer. “We are a leader in insurance, preservation and other services for the mortgage industry, and StreetLinks is a leader in valuation solutions and technolo-
gies used by lenders and appraisers nationwide. We look forward to working and growing together, and bringing our clients a more comprehensive suite of services.”
loanDepot Enters the Wholesale Arena
loanDepot LLC has announced the launch of its wholesale lending division, LDWholesale. Designed to offer mortgage brokers efficient, high-touch boutique360 Mortgage style service, LDWholesale delivers fastGroup LLC has funding loan products at competitive announced t h e rates with the convenience of both an formal introduc- online and direct call experience. tion of its newly launched reverse mort“While market and regulatory condigage division. The foundation of 360 tions are pushing many lenders out of Mortgage Reverse is an end-to-end reverse the wholesale market, we see a tremenmortgage processing platform for mort- dous opportunity to serve brokers who gage brokers, third-party originators, com- are interested in a wholesale partner munity banks and credit unions to origi- backed by the power of the loanDepot nate reverse mortgage loans. brand,” said loanDepot President and The foundation of 360 Mortgage COO Dave Norris. “Our expansion into Reverse is an end-to-end reverse mort- wholesale strengthens loanDepot’s gage processing platform for mortgage commitment to brokers across the brokers, third party originators, com- country who are working hard to conmunity banks and credit unions to nect home buyers with financing that originate reverse mortgage loans. This best fits their needs. Today’s mortgage on-demand reverse mortgage process- brokers will play an important role in ing platform, allows originators to the nation’s overall recovery this year, scale capacity to market demands, especially considering the far reaching increase profitability, remain fully impact housing has on the health of the compliant and continue to own the U.S. economy. loanDepot is dedicated customer relationship. 360 Mortgage to their success and we look forward to Group, which is currently licensed for becoming a valued partner to mortgage reverse mortgage loans in 35 states brokers across the country.” and the District of Columbia, will also Built on proprietary mortgage techbe originating reverse mortgages nology, the LDWholesale experience through its growing retail channel. centers around a web portal and loan In conjunction with the launch of origination system offering mortgage its reverse mortgage division, 360 brokers anytime access to the compaMortgage Group named reverse ny’s full suite of loan products in an mortgage industry executive Mike easy-to-use and intuitive online experiSuits Division Manager of 360 ence. Through the online LDWholesale Mortgage Reverse. In this role, Suits Broker Portal—at any time in their will be responsible for the Division’s work day—brokers can quickly find the management and growth, develop- loans that best fit their client’s needs, ing new lending relationships competitively price loans, lock during nationally, hiring and mentoring lock hours, submit loan documents experience professionals and build- through a secure data exchange, and ing brand reputation. track loan progress.
Mike Suits to Lead 360 Mortgage’s New Reverse Mortgage Division
continued on page 28
nmp news flash continued from page 16
the banks on four new metrics issued in October. These will help the Monitor measure and ensure that the banks are doing a better job sending notices and communicating with struggling homeowners in a timely manner.” Green Tree failed over a quarter of the testing issued by Smith and the individuals at the Monitor. Green Tree, a division of Walter Investment Corporation, took on Ally Financial’s servicing rights back in October of 2012, with the deal reportedly being worth upwards of $20 billion. Smith announced that he is pleased with the findings of the report. “I believe that these results, when compared to my previous reports, show that, under the Settlement, servicers are addressing problems quickly and effectively through focused corrective action plans,” said Smith. “While these results are encouraging, work still remains to ensure that the servicers treat their customers fairly. My colleagues and I continue to test their compliance with the original 29 metrics. In addition, we have started testing the servicers on the four new metrics issued in October which provide more stringent review on the loan modification process, single point of contact and billing accuracy. I look forward to reporting those results in my next compliance report.”
CFPB Proposes Minor QM Changes
Chase Picks the Brains of First-Time Homebuyers in New Survey Though they felt prepared, many recent homebuyers would d o
chasing a home, specifically: l The ins and outs of closing on the house: 22 percent l Making the offer and negotiating: 19 percent l Financing a home: 15 percent “While consumers said they felt prepared to buy a home and were satisfied with their home purchase, our results found that there are challenges and areas for improvement,” said Lisa Foradori, chief marketing officer for Chase Mortgage Banking. “We created our My New Home app, online educational materials and YouTube Channel to give homebuyers a primer on what to expect.” continued on page 42
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The Consumer Financial Protection Bureau (CFPB) is proposing minor adjustments to its mortgage rules to ensure access to credit. The proposal includes two changes that would help certain non-profit organizations continue to provide mortgage credit and servicing to underserved populations. The proposal also lays out limited circumstances where lenders that exceed the points and fees cap can refund the excess amount to consumers and still have the loan be considered a Qualified Mortgage. “Our mortgage rules are now helping to protect consumers all across the country from debt traps, runarounds, and surprises,” said CFPB Director Richard Cordray. “This proposal would maintain those strong protections, while making minor changes to ensure consumers have access to credit. This includes helping nonprofits that provide working families with important pathways to affordable homeownership.” In January 2013, the CFPB finalized several mortgage rules, most of which took effect in January 2014. Among these rules, the Ability-to-Repay (ATR) rule protects consumers from irresponsible mortgage lending by requiring that lenders generally make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans. The mortgage servicing rules establish strong protections
for homeowners, including those facing foreclosure. The proposed amendments respond to concerns about origination and servicing issues, particularly for non-profit housing providers.
more homework and make some different choices if they had a second chance, according to research released by Chase. The independent survey gave 807 recent homebuyers a chance to reflect on how their home purchase turned out. The “What I Wish I Knew About the Homebuying Process” survey provides a comprehensive look at the level of their preparedness during the homebuying process and what living with the home purchase has been like. They felt ready, but … Nine of every 10 recent homebuyers felt prepared when they bought their home, but in hindsight, 56 percent wish they were armed with more knowledge about the financial aspects of pur-
LYKKEN ON
leadership
Seven Prerequisites for Choosing a Great Sales Trainer By David Lykken
T
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raining and motivating any sales force is a difficult undertaking. The team must learn the complexities of the product, the complexities of inter-
actions with customers, and perhaps most important of all, the attitude that enables them to bounce back from failure to rebound and try again. These challenges are magnified to an even greater extent in the mortgage industry. Not only must loan originators deal with increasing regulatory hur-
MAY 2014 n National Mortgage Professional Magazine n
NationalMortgageProfessional.com
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© Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. All rights reserved.
dles, but they also need the motivation to maintain a positive attitude in an economy in which people are less likely to buy homes. You need to train your salespeople to make sure they are up for these challenges. The question is, “Where do you find the time?” If you are a leader in your company, you have your own issues to deal with. You are busy wrestling with the strategic issues, and it seems like a great strain on your time to teach your team the fundamentals of doing business in the mortgage industry. Nevertheless, if you wish to run a successful organization, you’ve got to have well-trained people working in the front lines. At some point, it may make sense for you to outsource. Just like it becomes more beneficial to outsource any other component in business as it becomes cheaper, it may make sense for you to seek an outside vendor to train your loan originators. The obvious risk you run into is hiring a trainer that does an inadequate job. The training may be ineffective or, worse, it may be counterproductive. When you hire someone from the outside to train your people, you risk undoing all of the training that has been done so far. So, you must be careful. You must be selective and make the best decision for your team. In this article, I would like to offer some pointers in regards to choosing a vendor for your team’s training. Here are seven prerequisites for hiring a great sales trainer. The first thing to consider when hiring a sales trainer is something that is often overlooked or taken for granted. More than anything, you want the person who will be training your sales team to have a strong
sense of ethics. Character precedes competence. If the sales trainer doesn’t have integrity, then nothing else really matters. You don’t want your trainer teaching your salespeople to lie, or to do anything of questionable legality. And, believe me, there are trainers out there that will insist salespeople do whatever it takes to get the sale. Why do they do this? Because it works, of course—at least until the salespeople are found out. One way or another, though, the truth always comes out. You want someone to train your sales team to behave with a strong sense of ethics. It’s better to lose a sale than it is to lose reputation. You can always get another sale, but you only have one reputation. The next thing you’ll want to look for in a sales trainer is a strong foundation of industry knowledge. The trainer doesn’t necessarily have to have a Ph.D., but you want someone who knows what they’re talking about. Does the trainer know the most current research in the academic literature? Is he or she keeping up on the latest news in mortgage finance? What trade magazines are on the trainer’s desk? Of course, any trainer can claim to have knowledge, but you’ll want to look for someone who has evidence of that knowledge. What degrees or professional certifications does the trainer have? Is the trainer published in a journal or magazine? Has he or she written a book, showcasing their industry knowledge? In order to find someone who is qualified to teach, you must find someone who has taken the time and made the effort to learn. The third thing you’ll want to look for in a sales trainer is industry experience. Although not every soldier can become a great general, every great
David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail dlykken@mortgagebankingsolutions.com or dlykken@mbsteam.com.
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improved their sales performance? What customer testimonials can the trainer provide to bolster the credibility of his or her training programs? Just like you would expect any other vendor to show some level of return-oninvestment (ROI) on the product they are pitching, you’ll want your sales trainer to provide demonstrated ROI. You’ll want to know that you’re getting your money’s worth. In the end, it’s all about results. Can the trainer deliver? What is in their portfolio? Look for a trainer who can prove that they have made other sales teams more successful. One final thing to consider before hiring a sales trainer is his or her willingness to adapt to your organization. Every mortgage bank is dealing with different issues and has a different culture. Many trainers have stock training programs that they deliver to all of their clients. Although it’s perfectly fine for the trainer to have a general outline when approaching your team, you’ll want to find someone who is willing to tweak his or her program to meet the specific needs of your sales team. If the sales trainer doesn’t ask you any questions about the problems you are dealing with or about the characteristics of your salespeople, that’s not a good sign. You’ll want to find someone who asks a lot of questions and takes a lot of notes. The more interested the sales trainer is in understanding your organization’s needs, the more likely the trainer will be to tailor his or her training program to those specific needs. When the time comes for you to hire a sales trainer, don’t make a rash decision. Take the time to find someone who will bring out the best in your salespeople. Look for someone with integrity, knowledge, industry experience, training experience, people skills, proven success, and an adaptable training program. With the right sales trainer, you can turn your organization around and grow exponentially in a matter of months. With the wrong sales trainer, you can bring your organization to the brink of failure in even less time than that. Look for a trainer who shares your organizational values and has a strong desire to see your sales team succeed. When you see the results, you’ll be glad you took the time to find the best person for the job.
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general must have at one time been a soldier. If you look at any industry, this holds true. How many coaches in professional sports, for example, are retired players? If you want to hire a great trainer for your mortgage salespeople, you’ll want to find someone who has worked extensively in the mortgage industry. While I don’t think that the trainer must cater exclusively to mortgage banks, he or she must have had at least some experience working in mortgage banking. Think of it from the perspective of your salespeople. Who are they more likely to listen to, someone from outside the industry or someone who has been where they’ve been? Look for someone who has spent some time in the field; it will pay great dividends. After actual industry experience, you’ll want to look for something in a sales trainer that may seem quite obvious, but is nevertheless important … you want someone who has a great amount of experience doing training. As I mentioned, being a great soldier doesn’t necessarily mean you’ll be a great general. While having industry experience is necessary, it isn’t sufficient. If you’re hiring someone to train, you’ll want them to be good at training. You’ll want them to have had a strong track record of conducting workshops, delivering presentations, and providing coaching sessions. It takes specific skills to be a great teacher. The trainer you are hiring must be able to demonstrate that he or she has these skills. If possible, try to secure a list of other organizations for which the trainer you are considering has provided training. If there are any videos available of seminars the trainer has conducted, watch them before making your decision. Related to, but slightly different than the importance of training experience, is a fifth factor you’ll want to consider when selecting a sales trainer. You will want to find someone who has solid people skills. You’ll want someone who not only knows how to deliver a presentation, but also knows how to connect with other human beings. For most mortgage banking organizations, the sales trainer is probably going to be presenting to a relatively small group. With less than 100 salespeople in the room, the trainer should be able to comfortably share dialogue with your team members. He or she must know how to ask the right questions and listen empathetically to responses. When your salespeople feel that they can trust the person training them, they’ll be more receptive to the information. Look for someone who can connect with your team on an intimate level. When all is said and done, the way the trainer you are considering looks doesn’t really mean much without some proof. The sixth thing you’ll want to consider when looking for a trainer is proven success. Can the trainer provide detailed data on how his or her work with other organizations has
Leveraging AVM Technology Increases Accuracy and Cuts Costs By Vladimir Bien-Aimé
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It has become more of a challenge for lenders to stay abreast of compliance than ever before with the Dodd-Frank Act and the Consumer Protection Financial Bureau (CFPB). There has always been a cost associated with compliance, but the unprecedented quantity of recent regulation in conjunction with a new regulator has created an entirely new landscape for the mortgage industry. The mortgage industry quickly became an industry overwhelmed with compliance rules and as a result, the cost to adhere to new, constantly changing rules has skyrocketed costs. The Mortgage Bankers Association (MBA) has said independent mortgage banks and mortgage subsidiaries of chartered banks reported an average of $743 per loan profit in the third quarter of 2013, compared to $1,528 for each loan originated in the second quarter of 2013. The average production income fell from 75 basis points to 38, marking the fourth consecutive quarter that productions profits have declined. It is clear that lenders must find ways to operate more efficiently to drive down costs and bring back profitability. One strategy is to leverage technology that incorporates data products like automated valuation models (AVMs), collateral analytics and automated review. These types of products not only save time, but allow lenders to understand what is actually going on in their collateral valuation process. An AVM is a tool that produces an instant real estate value. AVMs use mathematical modeling to value properties utilizing large amounts of data available from various sources. The majority of AVMs compare the values of similar properties at the same point in time. Over the past decade AVMs have been used sparingly by lenders due to their dependence on public records data, which in some cases has resulted in inconsistent results. Most lenders would limit the use of AVMs to prequalifying the borrower’s property. Today, however, AVMs tap into richer, reliable data sources like those found in Multiple Listing Services (MLS). These MLS powered AVMs are effective, efficient and an essential tool for staying competitive. AVMs can accelerate processes, minimize risk and reduce costs. Lenders have greatly increased their use of AVMs to confirm property value and streamline the lending process by utilizing AVMs as a solid property value screen in home-equity lending. As the market has grown, so has the number of commercially available AVMs. Each AVM has different performance characteristics, geographic coverage, and confidence scores. To achieve the most potent risk management, lenders must leverage a provider that offers various data products to achieve the best performance of the AVMs they use. The bottom line is that using AVMs is an effective way to reduce costs, increase profitability and help mitigate risk. However, you have to look for an AVM that has advanced past the older AVM model the industry is used to, which generally relied on less data to value properties. Instead, look for an AVM that is backed by a robust data set takes into account additional data elements to ensure the highest degree of accuracy for your property valuation. Many of today’s popular AVM providers have partnered with other complimentary vendors like appraisal management technology to add even more efficiencies to your daily workflow. Vladimir Bien-Aimé is president and chief executive officer of Global DMS. Since cofounding Global DMS in 1999, Bien-Aimé has grown the company to capture a leading share of the appraisal management segment, with a client base of over 20,000 unique users and a 100 percent retention rate among lender clients. He may be reached by phone at (877) 866-2747 or visit www.globaldms.com.
SPONSORED EDITORIAL
heard on the street continued from page 24
The new feature helps to improve title-related workflow and simultaneously captures images, data and ordering activities, creating reduced cycle times and robust audit trails—both very important to Clarifire’s customer base. “Today, new requirements from both industry regulators and investors have necessitated a change in the Freedom Mortgage default servicing market,” said Kevin Acquires BluFi’s Assets Wall, president of First American and Branches Mortgage Services. “As a result, we’re taking this opportunity to develop a dynamic solution that emphasizes process automation, while mindful of Freedom Mortgage Corporation has pur- compliance requirements. Integration chased the assets of BluFi Lending, a with Clarifire helps us deliver on both direct mortgage lender with branches in accounts.” California and Nevada. Under terms of this transaction, BluFi Lending’s five Republic Mortgage Opens branches will be rebranded as Freedom 16 New Branch Locations Mortgage. This is part of Freedom Mortgage’s strategy to expand its retail lending footprint in the Western U.S. BluFi, founded in 2009, is headquartered in San Diego, Calif. and specializes in helping consumers save time and Republic Mortgage Home Loans has money on home loans for purchase and announced the opening of 16 new refinance and prides itself on having a branch locations in 10 states. Having seasoned team of mortgage bankers recently been named as one of the and industry professionals. In 2013, fastest-growing mortgage companies in BluFi originated over $400 million in the country by Inc. 5000, this announcement represents a significant residential mortgages. “The hard work of [BluFi CEO] John step toward continued expansion Lee and his talented team exemplifies nationwide. “We’re thrilled to welcome this new what a well-established mortgage lending organization can accomplish. BluFi crop of loan originators to the Republic Lending built a solid market presence in Mortgage family,” President and CEO the Western U.S. and Freedom Mortgage Scott Leishman said. “By doing things will help them continue to grow,” said the right way and innovating for the Stanley C. Middleman, president and future, we continue to attract the best CEO of Freedom Mortgage. “Freedom talent in the industry. We take care of Mortgage is gaining valuable expertise, our people and the feedback we’re getproven marketing tools and a retail ting from our employees, partners, and platform to expand. We’re pleased to clients has been outstanding.” “I am excited to join the Republic have them become a part of Freedom Mortgage Home Loans family and Mortgage.” begin contributing to an organization that treats their employees as people First American Title first,” said Ullysses Soto, branch manPartners With Clarifire C l a r i f i r e a n d ager in Schaumberg, Ill. “I’ve found a First American very refreshing culture that leverages Title Insurance best-in-class technology to grow longCompany’s Mort- term relationships with the people g a g e S e r v i c e s we serve. My existing referral partners Division have announced a strategic inte- are happy I made the move to gration that allows CLARIFIRE technology Republic Mortgage and I am thrilled users to automate orders of First to be able to help them grow their American title products. Standard business, as well.” Property Reports, ALTA Loan Policies/ALTA Endorsements and Mortgage Priority National MI Now Licensed Guarantees can now be delivered directly to Write Mortgage Guaranty Insurance to CLARIFIRE user dashboards. “This new relationship is exciting Nationwide because it makes our clients’ lives easier and more efficient,” said Clarifire CEO Jane Mason. “Automating workflow around exceptional title and property NMI Holdings Inc. announced that products from First American is just National MI’s application for an insuranother example of our commitment to ance license in Wyoming has been helping businesses transform their processes.” continued on page 51 LDWholesale will offer a full suite of high-quality competitively-priced loan products including ConventionalFixed/ARM, Conventional Hi-Balance Fixed/ARM, HARP DURP-Fixed/ARM, HARP LP Open Access-Fixed, FHA Fixed/ARM, FHA Streamlined, and VA Fixed/ARM loans.
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marketing your database continued from page 22
ly to open your e-mails. As a buyer, you no doubt open at least a few marketing e-mails sent your way. Aren’t the ones you open the ones that grab your attention by offering something that already appeals to you? Those marketers are probably doing some really good segmentation and targeting. You’re probably wondering just how you can best segment your customer database. There are all kinds of different ways you can segment your e-mail list that will enable you to run compelling e-mail campaigns. Since the whole point of segmentation is to provide the most relevant content to your e-mail recipients, you will need to collect the right information and categorize it. For instance, you could segment your database and execute marketing tasks based on contact types or loan status. Contact types might simply be “Realtor” or perhaps you want to get even more specific and use a contact type like “Purchase Agent Realtor” or use a specific company like “Remax Realtor.” You may want to segment your database based on loan status (lead, application, clear to close, closed). However you decide
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to segment your database, the point is to make sure you’ve thought though who is in your database, why they’re there, and what you would like to communicate to them. The goal is to market to each customer group in a way that will maximize retention as customers. Database marketing sends targeted letters or emails to customers who are most likely to be interested in the current message. This benefits both the customer and the marketer.
right content—useful content should be at the core of your marketing. Consumers have proved to be tired of the traditional world of marketing. They record shows in order to skip over advertising, magazine advertising goes ignored (magazines have ads? who knew?), and we’ve all become so adept at internet surfing that we don’t even pay attention to banners or buttons. Smart marketers will understand that traditional marketing is becoming less and less effective as time goes by. There has to be a better way, and that way is content marketing. Couple database segmentation and content marketing to make sure you’re sending the right messages to the right customer, at the right time.
Content marketing Content marketing … what is it? Content marketing is a marketing technique that involves creating and distributing relevant and valuable media in order to acquire and retain customers. It is an ongoing process that works best when integrated into your overall marketing strategy. Content marketing can be presented in a variety of formats, such as news, video, e-books, infographics, how-to guides, question and answer articles, photos, etc. The focus with content marketing is not on selling, but on simple communication with customers and prospects. Engage your prospects with the
Personal branding We are all aware that branding our business is important, but what about branding ourselves? In some ways personal branding has always existed. As humans, we’re nearly always “selling” ourselves in various situations, from trying to impress our bosses to convincing our friends where to meet for dinner. Personal branding is how we market ourselves to others. Big brand companies are beginning to act as if they are individuals. Why? Because consumers want that kind of engagement and two-way conversation with brands. These days, you often see
employees tweeting and updating their status messages under a corporate umbrella. If that strategy can be used to brand products, then why can’t it also be leveraged to brand people? It can! Your personal brand is everything. It’s
Communicate, Maintain l Discover: Each of us is an individual whose character is made up of myriad things that define who we are and how we connect with others. Our personality determines how we behave in different situations, how we dress and what we say. For the most part, that’s all intuitive and we rarely consider what our own character is. From your values, personal mission, and unique attributes, to how you behave and interact with other people, everything is tied to your overall brand. If you don’t spend time learning about yourself, you will be at a disadvantage when marketing your brand to others. You might begin by asking yourself, “What do I want to be known for?” Then you’ll be better able to select a niche where you fit in the marketplace.
your reputation, the size and strength of your network, and the unique value you can contribute to a company or your clients. There are four basic principles to personal branding: Discover, Create,
l Create: When building your brand, think of it as a person. Your brand acts to promote your business, connect you with your customer base, and differentiate you in the market. Your brand has a toolbox full of all kinds of useful stuff—a blog, a Web site, your business cards, resume, video resume, portfolio and social network profiles. In fact, it’s most likely a combination of many or all of those things. The key is that your
brand must be consistent. How consistently you present your brand makes a big difference because the brand experience is strengthened when it is instilled into all your products and services, and at every customer touch point. So be a good steward of your brand. Consider that your customer’s notion of your brand is formed from the very first experience with you and that every interaction is a chance to augment that brand. l Communicate: Naturally, one of your branding goals is to build longterm relationships with your customers. Now is the time to use everything you’ve created to let people know you exist, as well as to keep valued customers interested. There are all kinds of ways you can communicate your brand—attend professional networking events, pitch in at a charity event, write articles for magazines and media sites, comment on blogs, connect with people on social networks, and reach out to the press. With your brand in place, you can integrate it into all of your marketing and communications. Then stand back and watch the results of your marketing efforts soar! l Maintain: Not so long ago, the stan-
dard way of doing things was to simply stamp your logo on everything that sat still long enough. However, with regard to personal branding, as you grow in your career, everything you’ve created needs to be updated to accurately represent your current brand. Be innovative, be flexible, always remembering the ever-changing needs of your customers. You should also monitor your brand online to ensure all conversations about you are positive and factual. Building your personal brand is vital to your success because consumers want brands that instill in them a sense of confidence and trust. People are searching for you or people like you online, so it pays to have a solid brand presence. Database marketing works. It takes a commitment, it takes consistency, it takes having a platform and business rules in place. Repeat and referral business from your database will result in more profits, superior customer satisfaction, and more productive originators. Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.
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N A T I O N A L
M O R T G A G E
P R O F E S S I O N A L
M A G A Z I N E ’ S
economic commentary
THE PERFECT STORM By Dave Hershman
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f it was the weather, we would have called it “The Perfect Storm.” Last month, we had one week which experienced a confluence of economic news which rarely is seen in a fiveday period. At the end of April, we started the week with the release of the index of pending home sales. This measure has taken on new significance this spring since both existing and new home sales have languished because of the weather. The Index of Pending Home Sales gives us a peek at the future. Next came the monthly consumer confidence index which was released as the Federal Reserve Board started their meeting of the Federal Open
Market Committee (FOMC). On Wednesday, things really heated up with the release of the ADP Private Payroll Report, the Fed made their announcement at the conclusion of their meeting and the preliminary estimate of the first quarter’s economic growth was also announced. Thursday brought the weekly first time claims for unemployment, personal income and spending for March and the PMI manufacturing index. We ended the week with a bang with the release of factory orders and the monthly jobs report. So the next question is … how did the data come out? The answer to that is not so simple. We started with an increase in pending home sales, but sales were still slower than they were last year. The eco-
nomic growth of 0.1 percent for the first quarter was disappointing, but many seem to think that the number will be revised later and definitely was affected by the weather which is a temporary factor. On Wednesday, the Fed’s optimistic statement about the economy seemed to bear out this hypothesis regarding the slow first quarter. The start of the month of May began on Thursday with reports on personal spending and manufacturing which came out on the positive side while first time claims for unemployment rose unexpectedly. Rising claims can indicate a weakening of the labor market; however, the weekly number is often volatile—witnessed by the fact that the number eased back down the following week. On balance, we were left with a mixed bag coming into the release of the employment report which put us solidly in the plus column. Not only were there almost 300,000 jobs created in March, but the previous months were revised upwards by almost 100,000 jobs and the unemployment rate moved down to 6.3 percent, the lowest since September 2008. Keep in mind that the precipitous drop in the unemployment rate was at least partially due to workers leaving the labor force which means that there is still a long way to go until we solve the long-term unemployment issue and explains why the markets did not respond “euphori-
cally” to the news. In other words, even the “great economic news” of the week had negative factors sprinkled into the mix. But certainly, the news kicking off May was positive on balance and shows we are headed in the right direction after a pause for a long and cold winter. What really has helped the markets is that Janet Yellen’s testimony before Congress in early May also indicated a rebound from the winter slowdown, but that Yellen was concerned with a slowdown in the housing market as well as several issues in the labor sector, including the high levels of long-term unemployment. Thus, though the news has been positive, the Fed’s cautionary tone has assured the markets that they are not ready to raise rates anytime soon. This is the best of both worlds for the markets—an improving economy and continued lower rates. And exactly why mortgage rates hit their yearly lows during the first third of May. Of course, increasing tensions in Ukraine also was a factor in this equation. Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.
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n National Mortgage Professional Magazine n MAY 2014
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TALES FROM THE CLOSING TABLE By Andrew Liput The mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This monthly column addresses the good, the bad and the ugly …
Top industry news … CFPB embraces e-closings In Washington, D.C. on April 23, the Consumer Financial Protection Bureau (CFPB) hosted a public forum to discuss the results of their investigation of consumer experiences at the closing table. CFPB Director Richard Cordray discussed the stresses and pressures consumers face in the single largest financial transaction of their lives. He further stated that the Bureau believes that consumers need more time to review documents and if they receive them electronically three days before a closing, they would have the time to properly review, understand and digest the loan package and thereby be better prepared to close the single largest financial transaction of their lives. Mr. Cordray also talked about embedding notes and explanations in the documents so that consumers could get an education not otherwise provided today by most closing professionals. This measure is meant as a first step towards improving the closing process for consumers and will be beta tested over the next 15 months with select lenders who have had previous e-document experience.
Fannie and Freddie reform not likely in the near future … Scuttlebutt is that Congress may not come up with a plan for Freddie Mac and Fannie Mae, and the Federal Housing Finance Agency (FHFA) before the mid-term elections in 2016. This comes as a big disappointment to the MBA and other advocates for change, but that’s politics folks.
You can’t make this stuff up! l A California licensed real estate agent, pleaded guilty to conspiring with others to commit wire fraud in connection with a mortgage fraud scheme. The defendants provided money to borrowers in order to fraudulently inflate the borrowers’ assets and bank account balances. Once the defendants had secured the loans, the borrowers returned the money the real estate agent had provided for the scheme. Like a holiday fruitcake, the checks just kept getting passed around! l A Maryland title agent was sentenced to 51 months in prison, followed by three years of supervised release, for conspiring to commit wire fraud in connection with a mortgage fraud scheme which resulted in losses of over $4.8 million. In 2002, the agent’s license to issue title insurance policies was revoked after she was convicted of theft for fraudulently endorsing checks at a title attorney’s office where she worked. Despite her conviction, from 2007 until January 2010, she worked at another title agency as a manager, and once again engaged in fraud. If at once you don’t succeed … try, try again! l A New York attorney entered into a settlement to resolve allegations of submitting at least nine fraudulent filings to the Attorney General’s Real Estate Finance Bureau and breaching his fiduciary duties as an escrow agent. Under the settlement agreement, the lawyer and his firm are permanently barred from engaging in any act, directly or indirectly, related to the offer or sale of securities in or from New York, which includes cooperative apartments and condominium units. I guess providing legal advice on single family homes is still on the table? l A North Carolina attorney was sentenced to more than six years in prison for her role in a mortgage fraud scheme involving the use of false mortgage applications and HUD-1 Settlement Statements. Those pesky HUD-1s are so darn confusing. continued on page 57
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Big Brother’s Mortgage Secret Is all the access to consumer confidential data really necessary? By Mark Buskuhl he mortgage industry has gone through a whirlwind of changes in recent years. We have the new Consumer Financial Protection Bureau (CFPB), Nationwide Mortgage Licensing System (NMLS), Qualified Mortgages (QM), Home Valuation Code of Conduct (HVCC), and more. These government programs were all created under the pretense of “protecting the consumer.” Originator compensation plans must now fit within very tight guidelines. Consumer disclosures are so thick that many don’t have time to read them. Regulations are a moving target the industry and even regulators both struggle to interpret and understand.
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With all of these new agencies, regulations and disclosures, there still exists a big secret consumers do not know. The government did not feel it was necessary, or perhaps simply forgot, to notify consumers that it has carte blanch access to consumers’ personal and private information—without subpoena, and without any probable cause. Missing is the government disclosure. The disclosure, consent or agreement by the consumer for a mortgage broker or mortgage lender to hand over consumers’ personal and private information—including bank statements, credit reports, photos of the interior of their home and more—to regulators is nowhere to be found. It simply does not exist. Mortgage companies involved in the origination and servicing of loans are
regulated by several government agencies. State regulatory agencies govern mortgage brokers and lenders who are regularly subjected to “routine audits” to ensure compliance with many laws. Not just disclosures or public records, but rather entire loan files with private and personal information are given to auditors without reason of suspicious activity, without subpoena, and without the consumer’s knowledge. What eventually happens to consumers’ personal and private information after this is a mystery. Why are consumers’ bank statements necessary for a government auditor to determine compliance? Government auditors do not underwrite loan files to determine borrower qualification but rather make sure that the proper disclosures, fees, and time periods were all adhered to. How are consumers’ pay
stubs or retirement account statements relevant to a government compliance audit? They are not, but they are required to be handed over anyway. To conduct business of most any kind, including anything involving mortgages, businesses must agree to certain laws and regulations and oftentimes are required to obtain a license. Mortgage lenders and brokers agree as a condition of their license to be subject to audit or investigation at any time and for any reason by government regulators. It’s an upfront and fully disclosed agreement between both parties in which the terms and conditions are clearly spelled out. There is a very important party to this agreement that is missing, though—the consumer. Consumer protection, as we know it today, centers
The consumer was not under investigation and was not the subject of a complaint, but was rather a consumer who became aware that their mortgage loan file from a year prior had been selected with hundreds of other loan files for a routine compliance audit. The consumer objected to their personal information—including bank statements—being released, but the government denied the request and required the mortgage company to comply and turn them over anyway, along with the bank statements and other private information of every consumer. Thousands of loan files are reviewed daily by state regulatory agencies, and daily, thousands of consumers are completely blind to the fact that their per-
sonal information is being reviewed by government employees and where that information might end up. Is the information forwarded to other agencies, such as the IRS? Is consumer information safely destroyed, or is it subject to theft, either in hard copy form or digitally by a computer hacker? While all of the new regulations, government agencies, and host of other changes in the mortgage industry in recent years are debatable as to their
effectiveness and overall good, it is without doubt that consumers would benefit from and most definitely want to know that the government can and is looking into their personal information. It is time for consumer protection, time for the CFPB and every state regulatory agency to require disclosure and consent from consumers when they apply for a mortgage loan regarding what information may be given to regulators. Consumers have the right to
know what documents or information will be turned over, what agencies may have access to the information, when such information is given to auditors, and the ability to opt out. Consumers deserve the right to choose whether their loan file may be audited without subpoena by a government agency and have the ability to freely enter into a private transaction with a lender without the fear of Big Brother spying. Mark Buskuhl is COO of Southwest Funding LP and has more than 12 years of experience building and managing mortgage banking companies. He may be reached by phone at (214) 221-5215 or e-mail mbuskuhl@southwestfunding.com.
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“We cannot provided you with a ‘copy of any disclosure, agreement, notice, consent, or otherwise’ which was given to have your information released to the Department because no such document exists.”
“Regulations are a moving target the industry and even regulators both struggle to interpret and understand.”
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around disclosure after disclosure after disclosure. Regulations today seek to inform the consumer about everything backwards and forwards regarding their mortgage loan. Consumers are told whether the mortgage broker or lender has any affiliated businesses, whether their loan will be serviced or sold, and much more. Page after page after page require notice and consent with a signature by the consumer. What is omitted from every one of these disclosures is what may happen to the consumer’s personal and private information as it relates to the government. The government very likely will look at it—at any time and for any reason. How many consumers are aware of this? My bet is almost none. Why does the government make it a secret that consumer confidential information may be given to government auditors? Is big brother spying on consumers and they don’t want to make everyone aware? Did they simply forget during the recent year’s new rule-making sessions to add this particular disclosure? The Fourth Amendment to the United States Constitution guarantees “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” In short, Americans have a right to privacy which cannot be infringed upon without cause. What happened to the Fourth Amendment and right to privacy? It has been largely ignored by mortgage regulatory agencies. There is no subpoena, no probable cause, and no reason for someone’s personal information to be seized and reviewed by the government. In a March 2014 letter from a certain state mortgage and financial regulatory agency, the state wrote in response to a consumer’s request:
First and Second Trust Deed Lenders Achieve a Competitive Edge by Working as a Team
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Because of the added risk, many lenders are hesitant to be in a junior position, especially when the second trust deed loan is behind a much larger first trust deed loan amount.
By Johanna Traynor With the improving economy comes the need for more aggressive financing. This introduces a challenge for many private money lenders, but some are finding a creative solution in teaming with other lenders. First trust deed and second trust deed lenders who work together will find there are financial benefits to both parties, as well as to their mutual clients. Those who partner become more competitive in the market, creating more business than each would on their own. The positive factors for first and second trust deed lenders working together include:
1. Competitive terms When first and second trust deed lenders work together to meet a prospect’s needs for a loan, the lenders can achieve higher leverage while maintaining a relatively low blended rate, making the terms more competitive than either lender could offer on their own. The first trust deed lender’s low rate enables the two firms to offer
competitive rates, while still enabling the second trust deed lender to achieve their yield. The low rate coupled with the higher combined loan-to-value (LTV) ratio offers an extremely attractive package to the borrower. Because this benefits the borrower, the lender team is more likely to be selected, and more likely to be called upon again when the same borrower has another deal.
2. Stronger due diligence Together, the team is offering the borrower higher leverage, but a two-lender partnership decreases the risk as both lenders perform their own due diligence before closing the deal and can crosscheck their findings. This is particularly true when either lender is specialized by product type and/or geography; the lenders can share their knowledge and expertise, creating a higher level of certainty and comfort in making the loan.
3. More flexibility When the partners work together, this first and second trust deed partnership allows each lender to meet their individual goals on a wider variety of loans. For example, at Lone Oak, we recently
financed a first trust deed loan with a second trust deed partner for the rehabilitation of a portfolio including nine multifamily properties in Los Angeles. As a conservative lender, we were able to lend only 60 percent of the current value; the borrower was requesting 75 percent. We quickly partnered with Columbia Pacific Advisors, who provided the second deed of trust. Columbia Pacific Advisors, an expert in Section 8 housing, was able to be more aggressive based on their specific product knowledge. Together, the combined leverage met the borrower’s need, creating a win for both lenders and the borrower.
4. Increased protection for the second trust deed lender Because of the added risk, many lenders are hesitant to be in a junior position, especially when the second trust deed loan is behind a much larger first trust deed loan amount. By working together, lenders can alleviate this problem. In connection with the loan with Columbia Pacific Advisors, we agreed to drop its loan so that there was greater
parity in the two loan amounts, giving Columbia a greater comfort level. More importantly, we provided a mutually beneficial inter-creditor agreement which allowed the second trust teed lender time to cure any potential default on the first. By communicating closely, we were able to find a loan structure that benefited all. As real estate investors are finding greater opportunities in the market, lenders can increase their participation by being open to creative financing structures, while still remaining within their comfort zone. Cooperation between senior and junior lenders is a prime example of such creativity. Johanna Traynor currently serves as senior loan officer for Lone Oak Fund LLC, where she leads the firm’s loan origination department. In addition to underwriting both commercial and residential investment properties, Traynor oversees the company’s lending law compliance, and is currently managing the development of a proprietary company software. She may be reached by e-mail at johanna@loneoakfund.com.
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First First Guaranty Mortga Mortgage ge Corpora Corporation tion is an FHA AApproved pproved Lending Institution, and is not acting on behalf of or aatt the direction of HUD/FHA or the federal government. First First attion Headquarters is loca Guaranty Mortgage Mortgage Corpora Corporation located ted aatt 1900 Gallo Gallows ws Road, Suite VA 22182 (800) 296-2275. Company Company NMLS# 2917. 800, Tysons Tysons Corner, Corner, VA
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TThis his iinformation nformation isis solely solely for for mortgage mortgage professionals professionals and and should should not not be be provided provided to to consumers consumers or or third third parties. parties. Information Information isis accurate accurate as as of of 1/01/2014 1/001/2014 and and isis subject subject to to change change without without notice. notice. First First Guaranty Guaranty Mortgage Mortgage Corporation Corporation isis licensed licensed as as follows: follows: Alabama: Alabama: Licensed Licensed by by the the Alabama Alabama Banking Banking Department, Department, Licensee Licensee No. No. 21332; 21332; Arizona: Arizona: Licensed Licensed as as an an Arizona Arizona Mortgage Mortgage Banker Banker under under the the Arizona, Arizona, Department Department of of Financial Financial IInstitutions, nstitutions, 4347 4347 W West est BBell ell Road, Road, Suite Suite 1, 1, Glendale, Glendale, AZ AZ 85308, 85308, Licensee Licensee No. No. 0907158; 0907158; Arkansas: Arkansas: Combination Combination Mortgage Mortgage Banker-Broker-Servicer Banker-Broker-Serrvvicer Licensee Licensee No. No. 11884; 11884; California: California: Licensed Licensed by by the the Department Department of of Business Business Oversight Oversight under under the the California California Residential Residential Mortgage Mortgage Lending Lending Act, Acct, Licensee Licensee No. No. 6037237; 6037237; Colorado: Colorado: Registered Registered to to conduct conduct business; business; Connecticut: Connecticut: Licensed Licensed by by the the Connecticut Connecticut Department Department of of Banking, Banking, Licensee Licensee No. No. 110162; 0162; D Delaware: elaware: Licensed Licensed by by the the Office Office ooff the the State State Bank Bank Commissioner, Commissioner, Licensee Licensee No. No. 2403; 2403; District District of of Columbia: Columbia: Licensed Licensed by by the the District District of of Columbia Columbia Department Department of of Insurance, Insurance, Securities Securities and and Banking, Banking, Licensee Licensee No. No. MLB2917; MLB2917; Florida: Florida: Florida Florida Mortgage Mortgage Lender Lender Licensee Licensee No. No. MLD333; MLD333; Georgia: Georgia: Georgia Georgia Residential Residential Mortgage Mortgage Licensee Licensee No. No. 13967; 13967; Idaho: Idaho: Licensed Licensed by by the the Idaho Idaho Department Department of of Finance, Finance, Licensee Licensee No. No. MBL-5032; MBL-5032; Illinois: Illinois: IIllinois llinois Residential Residential Mortgage Mortgage Licensee Licensee No. No. M MB.0005484, B.0005484, by by the the IIllinois llinois D Department epartment of of Financial Financial and and PProfessional rofessional RRegulation, egulation, Division Division ooff BBanking, anking, First First Guaranty Guaranty Mortgage Mortgage C Corporation, orporation, 1900 1900 G Gallows allows RRoad, oad, SSuite uite 8800, 00, TTysons ysons C Corner, orner, V VA A 222182; 2182; IIndiana: ndiana: IIndiana ndiana First First Lien Lien Mortgage Mortgage Lending Lending License License under under the the Indiana Indiana Department Department of of Financial Financial Institutions, Institutions, LLicensee icensee No. No. 111058; 1058; IIowa: owa: LLicensed icensed by by the the Iowa Iowa Division Division of of Banking, Banking, Licensee Licensee No. No. 2004-0309; 2004-0309; Kansas: Kansas: Kansas-Licensed Kansas-Licensed M Mortgage ortgage C Company, ompany, LLicensee icensee N No. o. SSL.0000212; L.0000212; KKentucky: entuckkyy: Licensed Licensed b byy the the Kentucky Kentucky Department Department of of Financial Financial Institutions, Institutions, Licensee Licensee No. No. MC16957; MC16957; Louisiana: Louisiana: Residential Residential Mortgage Mortgage Lending Lending Licensee Licensee No. No. RML-1421; RML-1421; Maine: Maine: Supervised Supervised Lending Lending Licensee Licensee No. No. NLC649592; NLC649592; Maryland: Maryland: Maryland Maryland Mortgage Mortgage Lender Lender Licensee Licensee No. No. 1731; 1731; Massachusetts: Massachusetts: Massachusetts Massachusetts Mortgage Mortgage Lender Lender and and Broker Broker Licensee Licensee No. No. ML ML 2917; 2917; Michigan: Michigan: 1st 1st Mortgage Mortgage BBroker/Lender/Servicer roker/Lender/Servicer Registrant Registrant Licensee Licensee No. No. FR0714; FR0714; Minnesota: Minnesota: Minnesota Minnesota Residential Residential Mortgage Mortgage Originator Originator License License No. No. MN-MO-20399083, MN-MO-20399083, This This isis not not an an offer offer to to enter enter into into an an agreement agreement under under Minnesota Minnesota law. law. Any Any such such offer offer may may only only be be made made pursuant pursuant to to the the requirements requirements in in Minn. Minn. Stat. Stat. Section Section 47.206 47.206 (3) (3) and and (4); (4); Mississippi: Mississippi: Licensed Licensed by by the the Mississippi Mississippi D Department epartment of of Banking Banking and and Consumer Consumer Finance, Finance, Licensee Licensee No. No. 000282/2008; 000282/2008; Nebraska: Nebraska: Nebraska Nebraska Mortgage Mortgage Banker Banker Licensee Licensee No. No. 1470; 1470; Nevada: Neva ada: Licensed Licensed by by the the Nevada Nevada Division Division of of Mortgage Mortgage Lending Lending to to make make loans loans secured secured by by liens liens on on real real property, property, Licensee Licensee No. No. 1047, 1047, First First Guaranty Guaranty Mortgage Mortgage Corporation, Corporation, 1489 1489 West West Warm Warm Springs Springs Road, Road, Suite Suite 215, 215, Henderson, Henderson, NV NV 89014, 89014, Phone Phone No. No. 702-454-4212; 702-454-4212; New New Jersey: Jersey: Licensed Licensed b byy tthe he N New ew JJersey ersey D Department epartment ooff BBanking anking a and nd IInsurance, nsurance, LLicensee icensee N No. o. 99700530; 700530; N New ew M Mexico: exico: N New ew M Mexico exico M Mortgage ortgage LLoan oan Company Company License License No. No. 01085; 01085; New New York: York: Licensed Licensed Mortgage Mortgage BBanker anker - N N.Y.S. .Y.S. Banking Banking Department, Department, LLicensee icensee N No. o. BB500800 500800 ((d/b/a d/b/a FFGMC GMC In In Lieu Lieu of of True Trrue Corporate Corporate Name Name First First Guaranty Guaranty Mortgage Mortgage Corporation); Corporation); North North Carolina: Carolina: North North Carolina Carolina Mortgage Mortgage Lender Lender LLicensee icensee N No. o. LL-100362; -100362; North North D Dakota: akota: Licensed Licensed in in North North Dakota Dakota as as First First Guaranty Guaranty Mortgage Mortgage Corporation Corporation dba dba FGMC, FGMC, Licensee Licensee No. No. MB101924; MB101924; Ohio: Ohio: Ohio Ohio Mortgage Mortgage Broker Broker Act Act Mortgage Mortgage Banker Banker Exemption Exemption No. No. MBMB.850010.000; MBMB.850010.000; Oklahoma: Oklahoma: Oklahoma Oklahoma Mortgage Mortgage Lender Lender Licensee Licensee No. No. MB001318; MB001318; Oregon: Oregon: Oregon Oregon Mortgage Mortgage Lending Lending Licensee Licensee No. No. ML-2634; ML-2634; Pennsylvania: Pennsylvania: Licensed Licensed by by the the Pennsylvania Pennsylva ania D Department epartment ooff BBanking, anking, Licensee Licensee No. No. 20768; 20768; South South Carolina: Carolina: South South Carolina Carolina Mortgage Mortgage Lender/Servicer Lender/Serrvvicer Licensee Licensee No. No. MLS-2917; MLS-2917; Tennessee: Teennessee: Tennessee Tennessee Department Department of of Financial Financial Institutions Institutions Mortgage Mortgage Licensee Licensee No. No. 791; 791; Texas: Texas: Licensed Licensed by by the the Texas Texas Department Department of of Savings Savings and and Mortgage Mortgage Lending, Lending, Licensee Licensee No. No. 43786; 43786; Utah: Utah: Utah Utah Mortgage Mortgage Entity Entity Licensee Licensee No. No. 5491155; 5491155; Virginia: Virginia: Licensed Licensed by by the the Virginia Virginia State State C Corporation orporation Commission Commission as as a Lender Lender and and Broker, Broker, Licensee Licensee No. No. MC-436; MC-436; Washington: Washington: Washington Washington Consumer Consumer Loan Loan Company, Company, Licensee Licensee No. No. CL-2917; CL-2917; West West Virginia: Virginia: West West Virginia Virginia Mortgage Mortgage Lender Lender Licensee Licensee No. No. ML-20742; ML-20742; Wisconsin: Wisconsin: Licensed Licensed Wisconsin Wisconsin Mortgage Mortgage Banker, Banker, Licensee Licensee No. No. 26835BA; 26835BA; Wyoming: Wyoming: Licensed Licensed by by the the Wyoming Wyoming Division Division of of Banking, Banking, Licensee Licensee No. No. 1831. 1831.
n National Mortgage Professional Magazine n MAY 2014
FFirst i rst Guaranty G u a ra n t y M Mortgage or tgage C Corporation o rpo ration ® ((FGMC), FGMC), is rrecognized ecognized ffor or iits ts commitment commitment tto o ttheir heir Co Correspondent, rrespondent,, W Wholesale holesale a and nd R Retail etail origination origination channels. channels. Together Together with heir Capital Capital Markets Markets and and Warehouse Warehouse Lending Lending wiith ttheir Divisions, FFGMC GMC p rovides a ffull ull sspectrum pectrum of llending ending Divisions, provides products and and services services nationwide. products nationwiide.
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HECM for Purchase: New Networking Tool to Increase Your Originations By Ralph Rosynek Today’s senior homebuyers now have access to a powerful traditional mortgage alternative when considering the purchase of a new primary residence. Imagine purchasing a new home and no monthly payment is required! The safe, secure government-insured Home Equity Conversion Mortgage (HECM) for Purchase, aka H4P, program allows for use of the loan proceeds and their downpayment to purchase the perfect new home they have been thinking about—in one single transaction! The H4P Program also represents a significant talking point to your network of real estate agents and just the needed financing program resource which can help close more purchase transactions. Whether homebuyers are downsizing or upsizing, moving closer to family, changing climates, or the present home no longer meets their needs, the H4P Program provides a wide range of features and benefits including: l l l l l l
Available for senior homebuyers age 62 and older FHA-insured No monthly mortgage payments required Homeowner(s) remain solely on title Minimal income and credit requirements Existing single family, two- to four-unit, PUDs, and condominiums approved by FHA are all eligible property types l Adjustable- and fixed-rate options are available
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New construction homes may also be eligible for the H4P Program, subject to completion, inspection, issuance of occupancy certificate and HUD guidelines. Mastering this H4P option also allows for increasing your reference network to include homebuilders. The H4P program has the same terms and conditions as the traditional HECM refinance and streamlined programs. The loan balance and accrued interest will become due and payable upon a maturity or default event such as no longer living in the property as the primary residence, failing to pay hazard and flood insurance (if applicable), property taxes and assessments or failing to maintain the property. For years, reverse mortgage loans have allowed senior homeowners to convert part of the equity in their homes into cash, without having to sell their homes or take on additional monthly debt payments. The opportunity to offer this powerful product starts with a company Wholesale/ (TPO) or Correspondent relationship. The key to successful origination begins with knowledge of HECM basics; including program features and benefits, program HUD guidelines, and the ability to interpret loan scenario options generated by proprietary software offered by lenders to potential borrowers and their trusted advisors. Today’s new reverse mortgage loans in general have become increasingly popular as a financial longevity and retirement planning tool, but good information is hard to find. Reverse Mortgage Solutions Inc. (RMS) offers complete training and support to new market origination participants. Assisted by a team of dedicated HECM professionals, our scalable partnering opportunities will provide you with the resources to deliver the “right fit” reverse mortgage product to your borrower(s). Next edition, we will take a closer look at eligibility and pre-qualification information for the HECM For Purchase program. Ralph Rosynek is senior vice president and director of marketing and communications and a seasoned HECM Direct Endorsement Underwriter. For additional information, he can be reached at rrosynek@rmsnav.com or call (281) 404-7970.
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FHA Releases “Blueprint for Access” to Expand Credit for Underserved Borrowers The Federal Housing Administration (FHA) has issued its “Blueprint for Access” outlining the additional steps the agency is taking to expand access to credit for underserved borrowers. These steps include encouraging a broader use of housing counseling. This week, HUD will publish a notice in the Federal Register for the Homeowners Armed with Knowledge (HAWK) pilot program to further incorporate housing counseling into the home buying process for borrowers using FHA insured financing. Under the new pilot, homebuyers will qualify for savings on their FHAinsured loans by completing HUDapproved housing counseling provided through independent nonprofit organizations that give people the tools they need to understand the rights and responsibilities of homeownership. This counseling is aimed at improving buyers’ budgeting skills and housing decisions. In addition the Blueprint for Access includes enhancing FHA’s quality assurance efforts. HUD announced more information on FHA’s Quality Assurance Initiative, intended to provide greater clarity and transparency to FHA approved lenders to encourage lending to qualified borrowers across the credit spectrum. “This is a win for families, FHA, lenders, Realtors and the overall market, which is why we are very excited about its potential impact, said Shaun Donovan, Secretary, U.S. Department of Housing and Urban Development. “We want to create an environment that encourages responsible behavior and provides clear rules of the road so lenders can originate loans without fear of unanticipated consequences. We want lenders to be able focus on the quality of their processes and lend to all qualified borrowers.” Under the four-year HAWK for New Homebuyers pilot program notice, homebuyers who commit to housing counseling will qualify for tangible savings on their FHA-insured loans. The average buyer would save approximately $325 a year–or almost $9,800 over the life of their loan. FHA proposes that homeowners who complete housing counseling before signing a contract to purchase a home and who complete additional pre-closing housing counseling will receive a 50 basis point reduction in the upfront FHA mortgage insurance premium (MIP) and a 10 basis point reduction in the annual FHA MIP. Choosing to participate in post-closing counseling and a track record of timely mortgage pay-
ments will bring even greater benefits. After two years with no serious delinquencies, participants receive an additional 15 basis point reduction in annual MIP. The HAWK program is a strong step toward integrating housing counseling into the home buying process and ensuring broad access to housing counseling services. Proposed changes to FHA’s quality assurance measures are said to provide clarity and transparency in FHA’s policies to encourage lending across the entire credit spectrum–especially for underserved borrowers. Clarity with respect to quality assurance measures enhances access for potential borrowers because lenders can originate loans confidently—knowing their mortgages meet FHA standards. By changing the way FHA provides policy direction and monitors lender compliance and performance, the FHA insurance fund, borrowers, lenders and taxpayers will be better protected.
CFPB Reports on Consumer Frustration With Mortgage Paperwork The Consumer Financial Protection Bureau (CFPB) has published a report which finds that many consumers are frustrated by the short amount of time they have to review a large stack of complex closing documents when finalizing a mortgage. The Bureau also released guidelines for an upcoming eClosing pilot project to assess how electronic closings can benefit consumers as they navigate the mortgage closing process. “Mortgage closings are often fraught with anxiety,” said CFPB Director Richard Cordray. “We have taken action to address some of the problems consumers face, but more needs to be done. Our eClosing pilot project will provide valuable insight into how to improve the closing experience for consumers.” This report and guidelines are the latest components of the CFPB’s “Know Before You Owe” mortgage initiative, which is designed to improve the homebuying experience for consumers. In November 2013, the Bureau issued a rule requiring two, new easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a homebuyer. The first form is a Loan Estimate, which provides a summary of the key loan terms and estimated loan and closing costs. The second form is a clearer Closing Disclosure, which offers a detailed accounting of the transaction. The Bureau is now in the process of preparing for this rule to be implemented in August 2015. This
report and the upcoming pilot program are not part of a rulemaking process, but rather are designed to promote best practices in the marketplace. The report is the culmination of research conducted over the past year. As part of that research, in January 2014, the Bureau published a Request for Information about the challenges consumers face when closing on a home. The request asked for input from market participants, consumers, and other stakeholders on ways to encourage the development of a more streamlined, efficient, and educational closing process that would be beneficial to consumers. The Bureau heard about three major pain points for consumers during the closing process: Not enough time to review; an overwhelming stack of paperwork; and the complexity of documents and errors. When the CFPB’s new “Know Before You Owe” mortgage rule takes effect, it will address some of these challenges. For example, consumers will receive their new Closing Disclosure at least three business days in advance of closing, to provide more time to review the terms of the deal. However, this rule does not apply to any of the other paperwork consumers receive at the closing table. The Bureau only has jurisdiction over a few forms in the closing stack. More needs to be done to improve the closing experience for consumers.
Study Finds Only 13 Percent Content With Current State of Compliance
NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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A new Osterman study, sponsored by security awareness training company KnowBe4, shows a low satisfaction level with current methods of managing compliance, despite the fact that 63 percent consider regulatory compliance to be “very important.” Only 13 percent are very satisfied with the current methods they use. Osterman’s research also found typically 19 percent of compliance and audit time each year is spent on tracking requirements and another 31 percent on gathering and maintaining audit evidence. According to the report, compliance management is subject to a high volume of change in regulations, with the U.S. government leading the way as demonstrated by the growth of the U.S. Federal Register. This document, a daily publication that contains proposed and final regulations of US federal agencies, published an average of 3,827 final rules and 2,445 proposed rules each year between 2002 and 2012. That represents an average of 14.7 final rules and 9.4 proposed rules each workday. Managing this level of change
using manual processes can be very difficult, if not impossible. “Much of the discontent stems from the focus on manual processes,” said Stu Sjouwerman, CEO of KnowBe4. “This is quite cumbersome and expensive. Improving the tracking and gathering of audit evidence alone can help an organization save considerably in both time and budget.” To understand the high cost of conventional compliance management processes, Osterman Research conducted a survey with organizations in a variety of industries. Using a subset of their survey sample to eliminate outliers, they discovered that the combination of labor and expenditures on tools and services totals $523.93 per employee per year translates to a cost of $43.66 per month. For a company with 500 employees, that is $261,000. One of the fundamental problems of compliance management is the fact that much of it is focused on manual processes—maintenance of spreadsheets or Word documents or home-grown software that help an organization to stay current with its compliance obligations, but that require significant effort to maintain. Add to this the significant amount of time that is required simply to search for the right information to populate these documents and tools. One source has estimated that up to 80 percent of the time spent by compliance risk professionals is focused on the search for relevant data. Moreover, there can be significant duplicate effort on the part of compliance management staff, particularly in large and distributed organizations because several people may be working on the same compliance issues unbeknownst to others in the organization. In conjunction with the manual nature of the compliance process in most organizations, this duplicate effort results in compliance management that is relatively inefficient and may actually be contradictory in some cases as different groups develop their own interpretation of how best to satisfy compliance issues.
America’s Obsession “A history of on-time payments accurately reported in the credit history is far more important than whatever score model they could obtain.”
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By Terry W. Clemans o you know your credit score? Many Americans do, and more are learning about it daily. While this is a big step in the right direction in the pursuit of financial literacy, some Americans have become “score obsessed.” There is an argument to be made that knowing your credit score could actually be harmful for a consumer, but more on that later since some major players in government believe the opposite. If those players, specifically Consumer Financial Protection Bureau (CFPB) Director Richard Cordray and/or some members of Congress, get their way … even more consumers will know their credit score, and will obtain this information for free. First, let’s focus on the comments made earlier this spring by Mr. Cordray regarding the practice of some credit card firms who have started putting consumers’ credit scores on the monthly billing statements. Does the word “Awesomesauce” sound familiar? How about if it was stated energetically by a young female voice? Perhaps a commercial about a Surprise party for someone who hates surprises? These are some of the Discover “It” Card commercials promoting their policy of adding the FICO credit score to the statement each month. Discover (like most creditors) monitors credit regularly via a soft credit pull (which does not count in score calculations) as part of the maintenance of the credit card account. Director Cordray likes this program so much that he urged the leaders of the nation’s top credit card companies to follow suit by making credit scores and related content freely available to their customers. Cordray stated, “I believe this initiative will benefit both providers and consumers by making people more capable of protecting themselves, more able to benefit by the opportunities that credit can create and ultimately more productive members of our economy.” Cordray added, “Indeed, I see no reason why this approach should not be replicated with customers across other product lines as well.” Capitol Hill is also active on the pursuit of free scores. The Secure Act, which is also known as “Stop Errors in Credit Use and Reporting Act” or S.2224 (https://www.govtrack.us/congress/bills/113/s2224/te xt), addresses this issue. This recent bill was introduced by Sen. Brian Schatz (D-HI) and is co-sponsored by Sens. Richard Blumenthal, (D-CT), Sherrod Brown (D-OH, Bernard Sanders (I-VT) and Elizabeth Warren (D-MA). The Secure Act addresses many credit reporting concerns, and includes the latest legislative attempt at providing free credit scores to consumers when they receive their free annual credit report. While this bill has very little chance of becoming law in the limited Congressional calendar that is remaining prior to the midterm election in November, it will still influence other legislation attempts and could be used to influence future rulemaking. Since the power players in Washington, D.C. believe free credit scores are important to consumers, let’s go back to my less than popular position of them potentially being harmful. There are three elements to my position. The first element asks the question, which score does the consumer see? Please don’t respond “all of them,” as that would be very confusing. There are dozens of versions of the FICO score, the Vantage Score (the score jointly owned and developed by the
D
n With
important as the data from which harmful. The last thing we want to do the score is calculatis discourage a consumer who is maked. Consumers need ing an effort to keep and maintain a to regularly check clean credit history. their credit report and carefully look The bottom line is, while any at the data to make sure that it is added incentives to increase the reporting all of their payments accunumber of consumers who take rately. A history of on-time payments advantage of the free annual credit accurately reported in the credit hisreport is helpful, the score is not as tory is far more important than what-
ever score model they could obtain. As long as the data is accurate, whatever score model is used will be an accurate forecast of the consumer’s credit risk. 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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OUR COMMITMENT TO OUR BROKERS IS UNSURPASSED. WE OFFER:
On-Time Closing Promise for FHA loans – 15 Day Clear to Close on qualifying purchase or refinance loans, or your borrower receives a $500 closing cost credit.* Plus, get a prequalification letter and enjoy our early disclosure service. Submit with no AUS. Restrictions apply. FICO minimums to 550 on government programs and expanded FHA guidelines that include manufactured housing and use of non-traditional credit. Expanded Operations Support. Multiple operations centers offering support across all time zones provides outstanding service and fast turn times.
*Carrington will process any qualifying loan from the time a loan file is submitted to underwriting to the time it funds within 15 business days of appraisal receipt or the company will apply a closing cost credit of $500 to the loan once the loan closes. In order to receive the closing cost credit, any delay that causes the loan to close more than 15 days after appraisal receipt must be due to Carrington’s independent processes. If the delay is due to the broker, borrower’s or third party’s action or inaction or any other circumstances outside of Carrington’s control, the closing cost offer will be void. This offer excludes some loan programs, such as VA loans, USDA loans, 203K Loans Short Sales, New Construction loans, loans requiring property repairs, inspection, or re-inspection prior to closing, loans requiring condo approvals and flips. Offer is subject to revision or cancellation at any time. The appraisal received date is recorded in Pipeline Manager for all qualifying loans. Some loans may require additional information and be returned. Exclusions apply; contact your Account Executive for details. © Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. NOTICE: All loans are subject to credit, underwriting, and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions, and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any office of the federal government. All rights reserved.
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Growing your business with the right partner has never been easier. Get started today with Carrington Mortgage Services.
At Carrington Mortgage Services, we are committed to meeting the financing needs of those who are underserved throughout America. We have loan programs specifically tailored to credit-challenged borrowers, so there’s no need to turn away those borrowers with low FICO scores. We are your government lender of choice with loan programs, service, technology and national support to grow your business today, tomorrow and beyond.
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three national credit bureaus), multiple industry specific scores developed by non-FICO/Vantage analytical companies, and then the “FAKO” scores (industry slang for the FICO knock off educational scores), totaling an estimated 70-plus score possibility. Additionally, remember that this total needs to be multiplied by three, as each score is going to vary based on the different data sets in each of the three national credit bureaus. All of this means that there is a very, very slim chance the consumer will even see the actual score model that would be used by the next creditor they apply to for the underwriting of a credit transaction. With that in mind, what is achieved by viewing a score that is likely to be irrelevant? The second element asks the question, once the consumer sees a credit score, do they understand what that score means and what action steps they can take if they don’t agree? Who will explain this to the consumer? This is a concern, as a consumer can look at their credit report and know if accounts belong to them, were paid as being reported, or if there is something on the file that does not belong to them. They can file a dispute on any incorrect information with a federal law and the CFPB complaint hotline to back their rights in the process. Conversely, scoring algorithms are proprietary intellectual property of the model developer and the consumer is powerless in the decision about which model is used and if they agree with the score logic. That’s why it’s so important for consumers to make sure they get the free copy of their credit report at www.annualcreditreport.com and review it annually for accuracy. The third elements asks … what happens when a consumer has had credit problems in the past, has worked hard to pay their bills on time, and then receives a score, finds that it is low, and becomes discouraged about looking into the actual credit information in their file? This, in my opinion, holds the most potential for harm. Perhaps some of their previous credit problems are not being accurately reported. Perhaps they have a mixed credit file with a similar named consumer which is holding their score down. Both of these occurrences are not unusual and can be devastating to a consumer’s credit score. Since the score is a reflection of the data being reported, any impediment to the consumer actually looking into the details of their credit history could be
Scores
The Long & Short: The Business of Short Sales
Policymakers: Pay Attention! Short Sale Credit Code Error Keeping Millions of Past Short Sellers Out of the Housing Market By Pam Marron
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new to market continued from page 18
four weeks. This release is flexible enough to connect any financial institution to any third party provider of appraisal and property valuation services. It also provides users collateral valuation reports as well as the supporting data in the MISMO industry-standard format. “Our latest version of DirectConnect offers mortgage lenders, bankers, credit unions and other financial institutions a comprehensive yet practical solution for ordering and delivering property valuations,” said Roger Beane, CEO of LRES. “The benefits of using this technology can be leveraged into a competitive advantage by organizations that value automation, speed, efficiency and accuracy in an increasingly competitive marketplace.”
A huge number of eligible past short sellers are ready to come back into the housing market, but they are being locked out because their short sale is being credit coded as a foreclosure. This code error issue is causing those eligible for a conventional mortgage two years after the short sale to wait seven years, instead. And, many who were approved for a short sale but were required to make payments on deficiencies and settled with their lenders, are having far worse troubles. Not only do they have to deal with getting the foreclosure code off, but their deficiency shows as a new loan, often as “charged-off,” and the “date reported” pulls forward making Fannie Mae and Freddie Mac automated systems think the short sale just occurred. Massive numbers of past short sellers who are encouraged by an improving economy are coming back into the housing market across the United States. Many are told by new lenders that Fannie Mae and Freddie Mac short sale guidelines allow them to get a new mortgage again: Two years after the short sale through Fannie Mae’s automated system or four years later through the Freddie Mac system. But shocked consumers are being told they are denied a new mortgage often days before the loan closing. The denial is clearly visible on Fannie Mae or Freddie Mac automated system findings, but only the Fannie Mae findings state which account is causing the problem. Even when proof of the short sale is produced directly from the short sale lenders, the foreclosure code is not changed. A solution to get a universal specific short sale credit code has been pushed for the last year, but continues to be ignored at the highest levels, even though many short sale lenders, frustrated that they can’t help these consumers, also state, “There needs to be a specific short sale credit code.” This problem has been known for a few years, and on May 7 of 2013, U.S. Sen. Bill Nelson of Florida brought the problem to the attention of a U.S. Senate Committee meeting and instructed the Consumer Financial Protection Bureau (CFPB) to get a fix within 90 days. Initially, the problem was thought to be in the Fannie Mae underwriting system, so the CFPB worked with Fannie Mae on a solution that would have allowed lenders who had proof that the foreclosure was a short sale to go into the Fannie Mae system and fix it. However, this did not happen. Instead, lenders must receive a message from Fannie Mae on the findings that allow the lender to then go into the system to make the change, rather than the lender notifying Fannie Mae of the error. And, only a few specific credit code combinations will trigger the message. Lenders who clearly have proof of a short sale are given no opportunity to make the correction, and the Fannie Mae message allowing entry only comes occasionally. Estimates of how many past short sale cases are getting through the Fannie Mae system have been reported on 30 percent of the cases received since Nov. 16, 2013, when the “fix” was put in place in the Desktop Underwriter/Originator system. Thirty percent of all cases or 30 percent of short sale error cases … is this acceptable? On April 9, 2014, Sens. Elizabeth Warren (D-MA), Brian Schatz (D-HI), Sherrod Brown (D-OH), Bernie Sanders (I-VT) and Richard Blumenthal (D-CT) introduced a bill called “The Secure Act” to protect consumers from credit errors. Though this bill has been introduced at the end of a congressional session, pay attention, and if you are having this problem, get in touch with your senator and all of these senators and let them know this is happening across the U.S. Initially, this was thought to be a Fannie Mae automated system problem, but the problem is also in the Freddie Mac system. It is not the fault of either Fannie Mae or Freddie Mac, but was simply able to be seen in their systems. This is a credit code issue that needs to be corrected.
Applied Business Software (ABS) has introduced The Loan Office, designed for smaller lenders, and ideal for managing loans, collecting payments, paying investors, printing statements and much more. ABS has been creating versatile solutions for private lenders, investors, brokers, mortgage lenders, attorneys, loan originators, fund administrators, note buyers, accountants, non-profits and municipalities for more than 35 years. Some of the software’s features include QuickBooks integration, letterwriting, conversation log, fully integrated document imaging and management system, contact management, reminder system, user defined fields, RESPA compliant escrow administration, unlimited unpaid charges per loan, payment processing (NSFs, payoffs, etc.), comprehensive year-end tax reporting (1098s, 1099-INTs, Canadian T5s), built-in financial calculator, context-sensitive help assistant, and a minimum 11 hour a day software support. ABS says The Loan Office is the answer for small lenders and their need for powerful, flexible, compliant, and affordable software. “There has always been a need for powerful software for smaller lenders, and we understand the economics for small businesses when making these decisions,” said Jerry Delgado, CEO of Applied Business Software. “The Loan Office fills that gap. It allows customers to start out with an affordable solution, and then upgrade later to our larger enterprise, multi-module software The Mortgage Office as their business expands and grows.”
Pam Marron is senior loan officer with Bankers Mortgage of Pasco County. She may be reached by phone at (727) 375-8986 or e-mail pmarron@tampabay.rr.com.
DocuSign Inc.’s launch of its Digital Trans-
ABS Develops The Loan Office for Smaller Lenders
DocuSign Unveils Latest Digital Transaction Management Platform
action Management (DTM) platform for brokers, DocuSign for Real Estate Broker Edition, is successfully bringing small, medium, and large brokerages into a 100 percent digital future. The latest DocuSign For Real Estate Broker Edition solution adds deeper transaction room functionality with real-time visibility, reporting, and document checklists that make managing a real estate brokerage easier, more compliant and more secure than ever– enabling brokers to manage their business from anywhere, at anytime, on any device. DocuSign for Real Estate Broker Edition offers real estate brokers a simple way to manage multiple offices with a single, unified dashboard report of transaction activity. It has already been enthusiastically adopted since its release in February by more than 120 brokerages representing more than 13,000 agents. “DocuSign is the industry standard in real estate because it is the easiest and most secure DTM platform to manage transactions,” said Jimmy Dulin, brokerowner of RE/MAX Ability Plus in Carmel, Ind. “DocuSign has helped us be a more efficient, effective and ‘green’ brokerage so our agents can focus on creating a great experience for their clients without the hassles, costs and impact of having to print, fax, scan, overnight or drive around town to close a deal.” DocuSign for Real Estate Broker Edition includes new features to help brokers and their agents close deals faster, increase security and control in every transaction, and create a better agent and client experience alike, including: Enhanced Transaction Rooms; Broker Team Management Tools; and Improved Compliance. “The interest, adoption and momentum we are seeing around our Digital Transaction Management platform and Transaction Rooms among brokers has been tremendous,” said Tom Gonser, founder and chief strategy officer, DocuSign. “Like in many other industries, DocuSign has become the catalyst that’s helping brokers make the digital transformation in their businesses. DocuSign is creating a better experience for everyone involved in the real estate transaction– from buyers and sellers, to agents, loan officers, inspectors, and more.”
Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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Seven Must-Know Tips to Manag By Marc Wayshak rganizations used to be able to cook up a successful sales team with a few basic ingredients: A quality product, compelling compensation plan, simple training program and effective sales tracking. Not is the case anymore. Millennials have changed the recipe. Born after 1981, Millennials are the youngest generation in today’s workforce. They are also vastly different from every generation before them—and that’s especially true when it comes to sales. Millennial salespeople are confident, self-expressive, liberal, upbeat and open to change. They came of age immersed in technology and instant communication. Their expectations, both for work and personal life, are sky-high. It should come as no surprise that this unique generation has tremendous potential for success in sales—but Millennials require a new style of management to achieve success in today’s marketplace. Here are seven must-have ingredients for successfully managing Millennial salespeople:
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1. Figure out what’s really driving them: Millennials are a generation of idealists, which means that they often focus more on social impact or personal fulfillment than how much money they make. They also live at home with their parents longer and put off marriage and child-rearing to a greater extent than any previous generation. As a result, many Millennials are less driven by financial stability than they are by work-life balance or community contribution. Figure out what really drives your Millennial salespeople so that you can motivate them in the most effective ways possible. 2. Help them see the client’s perspective: Because Millennial salespeople are often selling to older clients, it is critical that they understand and connect with those in older generations. Teach your Millennial sales team that 55-year-old prospects will not have the same outlooks or aspirations as 27-yearold prospects. For example, a 55-year-old Baby Boomer client might be highly motivated by financial security, while a 27-year-old Millennial client is more likely to be driven by convenience and flexibility. If Millennial salespeople fail to understand the perspectives of older generations, they will struggle to maintain relationships with clients and close sales with a large demographic of prospects. 3. Train, train, train … and then train some more: Millennials are often over-educated for their entry-level jobs, but you should still provide them with extensive work training for two key reasons. First, Baby Boomer parents have imbued their Millennial kids with an appreciation for continued education. By offering comprehensive training to new hires, top young talent will actually be attracted to your organization.
ging Your Millennial Salespeople Second, Millennials are typically enthusiastic learners who will implement the strategies and techniques they are taught. The more training you give them, the more effective at sales they will be. 4. Focus on what they do—not when they do it: The idea of a nine-to-five work day is not merely foreign to most Millennials, it’s completely abhorrent. When left to their own devices, these young salespeople might head off to the gym at noon—but that doesn’t mean they’re not hardworking! It just means they’re likely to stay late at work to finish what they have to do. Many organizations struggle to manage their Millennial salespeople by requiring that they work certain hours. Not only is this unnecessary, but it’s also harmful to work productivity. Millennials are famous for demanding work-life balance. If they sense that their employer lacks an appreciation for work-life equilibrium, their morale will plummet and they’ll consider other job options. So instead of setting a rigid work schedule, give your Millennial sales team specific daily or weekly sales activity goals. For example, tell them to make a certain number of calls, conduct a certain group of meetings, or attend a certain type of event. Then let them work according to whatever schedule will make them most productive.
and social impact, the opportunity to improve the sales team with their knowledge and skill is very rewarding for them. Marc Wayshak is the author of two books on sales and leadership, Game Plan Selling and Breaking All Barriers, as well as a regular contributor for Entrepreneur Magazine and the Huffington Post Business section. He may be reached by phone at (617) 203-2171, email info@marcwayshak.com or visit www. marcwayshak.com.
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6. Set their expectations for success— instant gratification: Millennials grew up with it, whether it was fast food, instant messaging, or the 24-hour news cycle. As a result, this generation looks for fast results and is likely to get bored quickly. In the workplace this translates to what’s known as job-hopping, where Millennials stay at each job for only a few months to a year, leaving for greener pastures if their expectations aren’t met in a timely manner. Instead of viewing this as a negative reality, consider that this mindset can be an asset to your business. Millennial salespeople start every new job
7. Ask for their help: One of the best qualities of the Millennial generation is that they are collaborative, team-oriented
workers. This means they are likely to want to help others in the workplace. Once your Millennial salespeople have shown superior skills in particular areas, invite them to train others on the team. For example, Millennials will likely be strong with technologies such as your CRM system. Let them contribute to the team by helping veteran salespeople master whatever technologies they might struggle with. Because Millennials are highly driven by community contribution
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5. Give them lots of feedback: There’s a reason why Millennials are called Trophy Kids! This generation wants glowing recognition—and lots of it. Remember that your Millennial salespeople grew up receiving awards and trophies for nearly every endeavor, whether coming in last place at a Little League tournament or taking fifth place at the science fair. To be a successful manager, you must capitalize upon this deep-seated Millennial trait: Give your sales team lots of feedback. Knowing that their manager thinks they’re doing a great job is often more motivation for Millennials than a monetary bonus. And don’t shy away from giving your Millennial salespeople constructive feedback, either. Millennials aim high when it comes to work achievement, and they are exceptionally open to constructive criticism if it will translate to more success, faster.
with enthusiasm and high hopes—if you can help shape their expectations for the job, you can more consistently retain Millennial talent. Set realistic expectations early on for Millennial salespeople, and you will lessen the likelihood that they’ll leave for greener pastures in the near future.
Mortgage Marketing: How You Can Shine The news is out ... the first four months of 2014 have shown that the demand for home loans has plummeted, mortgage rates are increasing, Freddie Mac and Fannie Mae are being overhauled, and Wells Fargo cut 700 mortgage jobs. In the midst of all this gloom, there is a way to for you to shine… As is important with all types of marketing you first want to make sure you comply with the regulations of the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) as well as any internal company policies that are in place. The rules are changing, so staying abreast of these regulations is imperative. Read the guidelines available on the Federal Trade Commission (FTC) and CFPB Web sites, work with a reputable marking firm who has experience with the types of marketing you are doing, take advantage of your compliance department, and most importantly, discuss compliance with your marketing firm. While it is not up to the marketing firm to ensure that you follow the rules, a quality firm will encourage and support you through the compliance and marketing process. The hot product of the season is Live Transfer Leads. The number of professionals using live transfers is rising, and with good results. The benefits of using these leads are illustrated by the clarity and ease of tracking and calculating your ROI, close ratios and customer costs. Live Transfer Leads provide you with pre-screened, qualified candidates. And you pay per call. Pre-qualified candidates mean receiving calls from leads who are already interested in what you have to offer. Furthermore, paying per call lends itself to easier tracking and calculations of your close ratio, so you really know the cost of each customer. So, perhaps it’s your turn to shine this summer!
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TagQuest Inc. Client Spotlight … Matt Flores Each month, we like to talk with our clients and find out how their campaigns are going. Here is what we heard from one of our mortgage professionals in California. Product: Live Transfer Leads One-week snapshot: The below numbers were taken from a Monday-Friday. l Forty-nine total calls l Six applications completed l Twelve more working leads l Ten others that were pitched loans Highlights of the campaign that worked well for Mr. Flores? “Technology, integration and leadership,” Mr. Flores said. Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit Tagquest.com.
VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser. http://www.youtube.com/watch?v=coBEsmEVOgo
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How Servicers Can Meet Compliance Challenges Within ++What controls are in place to pensation for at least three years? Their Callensure Centers that regulatory updates are ++Mandatory Arbitration and By BarrySingle-Premium Hays Financed Insurance Consumer Doheyour policiesFinanand cial Protection Burprocedures address provisionseau’s that: (CFPB) continuity ++Prohibit of contact contracts mandate (commonly referred to as Single Point of or agreements from requiring conContact, or “SPoC”) and loss mitigation sumers to submit disputes concerning a guidelines aremortgage likely the loan greatest residential orcomplihome ance challenges servicers will face and this equity line of credit to arbitration year. While the benefits of the CFPB’s new prohibit applying or interpreting such servicing regulations—improving borrowcontracts or agreements to waive federer statutory satisfaction, establishing sound comal causes of action? munication efforts and offering ++Prohibit financing of anyrelevant premiloss mitigation options to borrowers— ums or fees for credit insurance or debt have the potential to outweighin its conneccomplicancellation or suspension ance costs, this is achievable only if sertion with a consumer credit transaction vicers take a thoughtful approach to call secured by a dwelling?20 center efficiencies. 2. Do your policies contain all the The compliance climb by the relevant disclosures required The SPoC new rules?mandate requires servicers to establish withmodel a borrower by the ++Docontact you use disclosure 36th day of delinquency and provide forms and language contained in the applicable loss mitigation options by the regulatory guidance? 45th day of delinquency. The process of ++If not, are your disclosures clearly documenting each borrower communicawritten in a way that consumers are tion effort—inbound likely to understand?or outbound calls— is at best, the a tedious assignment for per++Are disclosures presented in a sonnel. existing technoloway thatYet is leveraging likely to call the consumer’s gy, and even implementing new techattention to the nature and significance nologies within a call center to of the information in the notice?streamline++Have compliance processes, canreviewed greatly disclosures been enhance a servicer’s functionality and by compliance and audit? reporting capabilities. CallHave centers be been equipped with 3. the must policies reviewed SPoC that oversight are efficient in by therepresentatives board (or similar functheir work, representatives cannot tions) and and senior management as achieve this level of efficiency if existing appropriate, the compliance officer, technologies are not leveraged effectively. risk management firm, or legal counsel? For++Were example, the Interactive Voice any concerns identified at Response (IVR) experience that borrowers this level? have before connected agents is ++If yes, being have they been to resolved? when they are commonly authenticated through of reflect loan and personal 4. Do the the entry policies your actual data. The SPoC is then assigned and the practices? borrower transferred. Very planned often, bor++Do isyou have testing to rowers are forced to authenticate a secconfirm this? ond time when their call reaches an agent. IVR solutions, 5. What processescomplemented do you have by in Computer Telephony Integration place to ensure that policies are (CTI)kept enabled and solutions such pops, current account forasallscreen changes in eliminate the need for repeated authentithe regulatory environment? cation ensuring that both the and ++Who is responsible foragents’ maintainborrowers’ time is better utilized. ing content? Servicers with the most effective SPoC implementations now with 6. Describe theare steps youtasked will take to successfully managing the critical prioritiensure that new product development zation of inbound and outbound calls.and In considers new regulatory rules order to achieve associated risks. this, calls should be assigned priority based upon call type, call ++Is the compliance function reprehistory, incall and the borrower’s sented the status new product development loan-level data. This requires the servicer’s process? SPoCs to be able to see in real time which call7.is Do scored highestand and procedures which boryourthepolicies rower needs attention immediately. Call vary materially regionally, by delivery center technologies that specifically track method, or by legal entity? these details and vary: prioritize calls based ++If practices upon identified criteria thesegment? servicer, ++Is testing done forby each can++Are effectively risk and improve allmitigate policies individually borrower satisfaction. approved?
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Records, rapport and 8. reporting Have automated tools been By enhancing call center and updated to reflect your processes new policies technology, servicers can also better and procedures? protect themselves ++Have they been from testedregulators, to confirm audits and borrower complaints. In a accuracy? stringent and watchful regulatory environment, between bor9. Havethe youinteraction updated your risk assessrowers and servicers must now be ment to reflect the regulatory changes? detailed and easily generated in the ++Do your policies and procedures event an audit. CFPBupdates has outdefineof a process for The ongoing to lined two standard documentation the risk assessment to account for regurequirements latory changes?for services: document retention and a servicing file. A“Confidence key focus ofcomes the CFPB’s file fromservicing discipline mandate is the retentionKiyosaki21 of notes reflectand training.”—Robert ing communication with borrowers. It is crucial for servicers to implement call cenTraining ter Training technologies fully component document the is athat critical of disposition of all inbound and self-assessment and, indeed, itoutbound is a pivcalls order produce reports on a loanotal in part of atocompliance management level and Policies summarystatements level. Attempts, system. are voiceguide mails foremployees example, are posts,and but,conversations, inevitably, the of all critical pieces of information that must a financial institution must know the be stored in a centralrelated depository is many requirements to thethat comreadily available to pull and generate into pany’s regulatory compliance commitaments. report.Consider this list a de minimis reporting, detailing the setLoan-level of questions! results of each attempt to contact the 1. Have you determined what trainborrower inbound call from ing needs and to beeach developed? the2.borrower, an who immediate Have you provides determined needs defense training?against borrower complaints to the3.CFPB. Summary reporting of all Have you considered the following SPoC activity provides the overall questions in developing training: call center metrics that demonstrate the ++What information will be covered servicer’s compliance with all borrower in the new training? contact requirements. It alsobeprovides a ++What will the format for trainvaluable window into the effectiveness ing? (Instructor-led, online, et cetera.) of ++How loss mitigation processes, giving will training vary based on management job duties? the necessary insight to assess staffing leverage technolo++How doand youtodocument completgy for optimal results. Call center teched training? nologies that generate ++What are can the quickly consequences for reporting files and specific data levels employees not completing training by will save time, money, resources and the assigned deadline? usher in a new ser++Have the standard changes of to the the way training vicers interact borrowers. program been with fully their integrated into your full training program and ongoing
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Mortgage take 4. Howservicers will youshould roll out theadvantage changes of compliance challenges to to your training program? reexamine current processes and improve business ++When will training be completed? operations. Implementation of config++Do training timelines allow for urable center canunderaccelenoughcall time fortechnologies staff to fully erate ability to achieve standservicers’ rule requirements prior complito the ance, satisfy business goals, streamline effective dates? reporting, borrower relation++Havemaintain you done any testing of ships and improve day-to-day processes. training program changes? The5.flexibility and security for of complianceWho is responsible developing assured call center systems will alleviate course content? servicing and accommodate for ++Didpressures you purchase content from potential future regulatory requirements. an outside vendor? ++How is senior management Barry Haysinis developing senior vice president and coinvolved and approving founder of TeleVoice, a provider of cuscourse content? tomized call center solutions, including ++How did you determine that Interactive Voice Response (IVR) and course content is adequate? Computer Telephony Integration (CTI), to ++What is the process for identifythe financial services industry. Barry may ing the need for additional changes? be reached by e-mail at bhays@televoice.com.
approved by the Wyoming Department of Insurance. With Wyoming’s approval, National MI is now licensed to write mortgage guaranty insurance in all 50 U.S. states and the District of Columbia. “We are pleased that National MI is able to provide mortgage insurance to lenders offering loans to borrowers in Wyoming,� said Bradley Shuster, president and chief executive officer of NMI Holdings Inc. “The approval by the Wyoming Department of Insurance marks a significant milestone for National MI as we are now able to provide mortgage insurance in every state in the U.S., as well as the District of Columbia. We believe this is especially important to our customers who do business nationwide.� By approving National MI as a licensed insurer in the state of Wyoming, National MI believes the Wyoming Department of Insurance is helping to expand the availability of mortgage financing, particularly for first-time homeowners who might not have a 20 percent downpayment, Shuster noted. Private mortgage insurance is typically required on mortgages with a loan-to-value (LTV) ratio greater than 80 percent.
LendSmart Expands Into Southwestern U.S. LendSmart Mortgage has opened a new lending center in Scottsdale, Ariz. with additional reach in California, Colorado and Texas. The new lending center is a part of LendSmart’s continued growth strategy for 2014. “As a national retail origination platform, we offer a full range of conventional and specialty products–ranging from VA, 203K rehab loans, jumbo, manufactured housing and reverse mortgages,� said Rick Roque, a leading industry consultant and vice president of corporate development at LendSmart. “Our national retail platform is expanding aggressively in the SouthWest, under the leadership of Brian Seligmiller, as vice president of sales.� A 14-year mortgage industry veteran, Seligmiller, manager of the lending center, provides leadership to more than 80 loan originators, processors, underwriters and administrative staff at the Southwest regional center. “We forecast closings for this location to exceed $25 million per month by the end of Q2 2014,� he said. “We are committed to measured growth without negatively affecting service levels
Universal American Mortgage Acquires Pinnacle Assets
Universal American Mortgage Company (UAMC) announced that it has acquired certain assets of Pinnacle Mortgage Group Inc. The STRATMOR Group served as the exclusive advisor to UAMC and initiated this transaction. Pinnacle is licensed in seven Western states and has ten established retail office locations in Southern California and Colorado. Pinnacle will join UAMC’s retail mortgage operations operating under the Pinnacle Mortgage Group brand name, while transitioning to UAMC’s retail brand name, Eagle Home Mortgage. The combined company is licensed in 26 states and has 100 branch offices. “We’re excited about the opportunity to grow our presence in California and Colorado through this acquisition which we believe is an excellent cultural fit,� said Jimmy Timmons, president of UAMC. “Both organizations have enjoyed success over the years by building strong team cultures and focusing on customer satisfaction.� As part of UAMC, Pinnacle will have access to a larger variety of conventional and niche home loan programs and will be approved directly as a seller and
Mortgage Professionals to Watch l First Guaranty Mortgage Corporation (FGMC) announced that Marla Grassgreen has joined the company as director–USDA program manager. FGMC has also announced that Ritchel Castillo has joined the company as creative director.
GRASSGREEN
continued from page 28
servicer with the Fannie Mae, Freddie Mac and Ginnie Mae. “We believe leveraging the vast resources of the Lennar Family of Companies will strengthen our value proposition and grow market share,� said Todd Henderson, who founded Pinnacle with Brian Rindels.
CASTILLO
to our network of Realtors, builders and other referral partners.�
heard on the street
continued on page 52
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Markets may be volatile, but there’s one thing you can always count on, the total commitment of our Mor tgage Team. Loyalty, continuity of ser vice and our dedication to protecting the integrity of our relationships are just a few of the things that set us apar t. Ridgewood understands the needs of its communities
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MAY 2014 n National Mortgage Professional Magazine n
Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.
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Rojakovick in Richmond, Va., as well as the appointment of two new branch managers: Timothy Hoy in Towson, Md. and Tyson Rondeau in Scottsdale, Ariz. l Wingspan Portfolio Advisors has promoted industry veteran Eshna Ghosh to the newly created position of senior vice president for business development.
GHOSH BADCIONG BUEGE
l Norcom Mortgage has announced the addition of mortgage consultant George Lazos to its growing retail team.
LAZOS
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On April 23, I traveled to Washington, D.C. to attend the Consumer Financial Protection Bureau (CFPB) Forum on the mortgage closing process. The build-up to this event came on the heels of the open public comment period the Bureau established for consumers and industry participants to offer personal experiences, ideas, suggestions and comments about the residential mortgage closing process. The sum and substance of the open comment period was reviewed, edited and compiled into a CFPB Report entitled: “Mortgage Closings Today.” I must say that the CFPB event was not as exciting as I had hoped. The Bureau has decided, at least for now, to focus on e-signing and e-closings as a solution to complaints by consumers that they are overwhelmed with the closing experience. CFPB Director Richard Cordray stated that the Bureau believes that consumers need more time to review documents and if they receive them electronically three days before a closing, they would have the time to properly review, understand and digest the loan package and thereby be better prepared to close the single largest financial transaction of their lives. Director Cordray also discussed embedding notes and explanations in the documents as an educational component, so that consumers could get an education not otherwise provided today by most closing professionals. There was very little talk about settlement agents other than consumer complaints about their failure to explain documents, and rushing borrowers to complete the closing with little time to ask questions. I had expected a conversation about an agent certification/education initiative for agents, who usually have no knowledge of the mortgage process, just the real estate, title and legal aspects of the closing, but there was none. A question and answer period followed the Director’s remarks, and while most commented on how an e-closing would improve the process, not everyone was sold. I was impressed with comments made by Margot Saunders, an attorney with the National Consumer Law Center. Ms. Saunders pointed out that e-closings may possibly exclude a significant segment of consumers who do not have access to computers or have the knowledge and experience to use them in a manner that will relieve the stress of the overall experience. She also explained that it also does not really address the core issue: The complexity of these documents and the failure of the professionals who participate in closing the loan to take the time to explain them fully so that a consumer can make an informed decision whether to proceed. I applaud the CFPB and Director Cordray for the work they are doing to improve the overall mortgage experience for consumers, as well as the closing table experience in particular. And while I believe that the e-closing initiative is an interesting first step towards a more efficient and consumer-friendly experience, I believe that the time has come for uniform standards, cross-discipline best practices and mandatory education. Measures such as these will ensure that anyone acting in such an important role in a major consumer financial transaction has the minimum knowledge, experience and ability to properly advise a consumer regarding the mortgage closing.
l Inlanta Mortgage has announced that Jean Badciong has been promoted to the position of chief compliance officer and Paul Buege has been promoted to chief operating officer. Inlanta has also welcomed Jonathan Arnold and his team as they open a new Inlanta branch office in Grand Rapids, Mich. Inlanta has also announced a new branch office in East Wareham, Mass. which will be managed by veteran loan originator and manager Dan Sheehan.
l DocuTech Corp. has named Justin Summers director of implementations and professional services.
SUMMERS
By Andrew Liput
continued from page 51
l Amerisave Mortgage Corporation has announced that Ed Abufaris has been named company president.
ABUFARIS
We Need More Than e-Closings to Improve the Consumer Closing Experience
heard on the street
l Denise Tragale has been named northeast regional sales manager for CMG Financial. l Carrington Mortgage Services LLC has announced the appointment of Chad Ruggles as national sales director. Carrington Mortgage Services LLC has also announced the opening of a new branch and the appointment of Sales Manager Greg
l American Financial Resources Inc. (AFR) has hired David Margulies as its new executive vice president, global sales. l Guaranteed Rate has announced that Martin J. Logan has been named as the company’s new chief information officer. l Primary Residential Mortgage Inc. (PRMI) has named Dan Rivisto a division manager. l Primary Capital Mortgage (PCM) has announced the appointment of Sharon Bitz as its new vice president of the western region, supporting wholesale account executives, as well as broker and correspondent business partners, in the western region. l W.J. Bradley Mortgage Capital LLC has promoted Danya Sawyer to the position of senior vice president of mortgage operations. l GSF Mortgage has announced the addition of Brian Reno as branch manager in Indianapolis, Ind., joining GSF with 23 years of experience, and is a Certified Mortgage Planning Specialist (CMPS). GSF has also announced the addition of Samantha Klaburner as branch manager in the firm’s Hixson, Tenn. branch. GSF has also announced the addition of Sue Jackson to their Carmel, Ind. branch. Jackson will work under Jack Westfield, Carmel branch manager. l Birchwood Credit Services Inc. has announced the promotion of Jim DeGeorge to the position of national sales director. Birchwood has also named AJ Dougherty regional sales manager for the Pennsylvania, New York, New Jersey and Delaware areas. l American Financial Network (AFN) of Chino Hills, Calif. has appointed Brian Pool as wholesale vice president and Susan Belese as regional production manager, Wholesale Lending Division, of the Northeast Region, including New Jersey, Pennsylvania, Ohio, Maryland, Virginia and Delaware. continued on page 57
Senate Banking Committee Approves Johnson-Crapo Measure to Stabilize the Housing Finance Market
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allows for a diverse set of private entities to step in and replace most of the functions of the government sponsored enterprises. The new system will be regulated by the modernized and streamlined Federal Mortgage Insurance Corporation (FMIC), modeled in part after the FDIC. It also creates a reinsurance fund, known as the Mortgage Insurance Fund, to protect taxpayers. The new system establishes a type of mortgage-backed security with an explicit government backstop and 10 percent first loss private secondary-market capital to absorb losses and protect taxpayers from future bailouts. Small lenders will have multiple access points to the secondary mortgage market, including the option to sell their individual loans through a new small lender mutual. The mutual will be jointly owned by small lenders, providing community banks, credit unions, and other small lenders direct access to the secondary market so that they will not be at the mercy of their larger competitors when Fannie Mae and Freddie Mac are dissolved. Lastly, the new system provides certainty to investors and homeowners through standardization and improved market liquidity. â&#x20AC;&#x153;MBA commends the Senate Banking Committee for voting this bill out of committee for consideration by the full Senate. Chairman Johnson and Ranking Member Crapo are to be applauded for coming together in a bi-partisan fashion and creating a piece of legislation that reforms our housing finance system in a way that ensures sufficient liquidity for single family and multifamily mortgages while also protecting taxpayers,â&#x20AC;? said David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA). The Senate Banking Committee also approved two managersâ&#x20AC;&#x2122; amendments that included input from Committee members on both sides of the aisle, the Administration, regulators, and other key stakeholders. â&#x20AC;&#x153;The President has been clear about his commitment to preserving the American dream of sustainable homeownership for all creditworthy borrowers,â&#x20AC;? read a statement by the White House Press Secretary. â&#x20AC;&#x153;That means ensuring that affordable rental options are widely available, and preserving access to mortgage credit during severe downturns while protecting taxpayers from substantial losses in the housing sector. We have worked closely with the Senate Banking Committee to provide policy, technical, and analytical support throughout the process to achieve these goals, and going forward, we will continue to work with the Senate to address affordability and access to broaden support for reform.
The Senate Banking Committee has approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013, by a bipartisan vote of 13-9. The legislation included a bipartisan agreement drafted by Chairman Tim Johnson and Ranking Member Michael Crapo and is designed to stabilize the housing finance market and strengthen the American economy. It will create greater competition in the housing finance system and reduce risk to the taxpayer while ensuring affordable, fair access to all creditworthy borrowers. â&#x20AC;&#x153;After the housing crisis we experienced, real reform is clearly necessary to stabilize the housing system and renew the faith in the American dream of homeownership for generations to come,â&#x20AC;? said Johnson. â&#x20AC;&#x153;I want to sincerely thank all of the members of this Committee for their hard work and input while drafting this legislation. Even though the support was not unanimous, every member on the Committee was actively engaged in this collaborative process, and passing this legislation out of committee is only the first step. I look forward to continue working with my colleagues to keep this important process moving forward.â&#x20AC;? â&#x20AC;&#x153;This vote marks an important milestone. For the first time in the nearly six-year conservatorship of Fannie Mae and Freddie Mac, both bodies of Congress have passed legislation to reform our broken housing finance system. I thank everyone for their continued work on this legislation and look forward to further discussions as the process continues,â&#x20AC;? said Ranking Member Crapo. The legislation approved by the Committee builds on S. 1217, as introduced, a bill put forward by Sens. Corker, Warner and a bipartisan group of eight other Committee members, and it incorporates many ideas generated by an in-depth series of hearings and briefings hosted by the Committee last fall and winter. â&#x20AC;&#x153;NAHB commends the Senate Banking Committee for passing bipartisan legislation that would bring certainty and stability to the housing finance market and provide muchneeded credit for qualified single-family and multifamily borrowers,â&#x20AC;? said Kevin Kelly, chairman of the National Association of Home Builders (NAHB). â&#x20AC;&#x153;By defining the federal governmentâ&#x20AC;&#x2122;s role in housing finance and including private sector investors, this bill would increase private capital in the marketplace, ensure that 30-year mortgages remain readily accessible and available, and protect American taxpayers.â&#x20AC;? The legislation winds down and eliminates Fannie Mae and Freddie Mac and
Resolve to attract more realtor partners in 2014
NMP M O R T G A G E P R O F E S S I O N A L
Credit all photos to Robert Ottone
Don Giorgio
President of United Northern Mortgage Bankers Ltd.
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NationalMortgageProfessional.com
BY PHIL HALL
ack in late 1970s, the financial services industry was thoroughly different from the environment we know it as today. How different was it? Well, in those days, contractors were able to handle sales finance papers for their clients. And most contractors saw nothing wrong with charging upwards of 21 percent for a sales finance paper. But one man, a Long Island, N.Y.based contractor named Anthony Giorgio, was not happy at how his peers were handling sales finance papers. He felt that he could offer borrowers better treatment, both in terms of financing and customer service, and in 1979, he created A to Z Funding Corporation. Three years after the company began operations, Anthony’s son Don joined the firm. The company would later change its name to United Northern Mortgage Bankers Ltd., but its holistic treatment of its customers has remained unchanged. Anthony Giorgio retired in 1995 and Don Giorgio took over as president and chief executive officer of the company. Today, under Don Giorgio’s leadership, United Northern Mortgage Bankers has become one of the most respected and innovative firms in the mortgage banking industry, offering significant leadership in the reverse and wholesale sectors. As the Levittown, N.Y.-based com-
B
pany celebrates its 35th anniversary, Giorgio spoke with National Mortgage Professional Magazine about the dramatic changes that have shaped both the mortgage industry and his career. How did you first get involved in the mortgage business? Don Giorgio: I went to Hofstra University and graduated with a business degree in 1982. I was the first person in my family to graduate from college. At that time, my father was the owner of a sales finance company and wanted to evolve it into mortgage lending. So I, along with another person, started the mortgage lending division which was, at that point of time, was doing second mortgages. Was this a career that you wanted to get into? Were you thinking about real estate finance as a professional pursuit? Giorgio: You know, when you’re twentysomething-years-old, you never really know what you want to do—you have to figure something out. The opportunity was there. I funded my way through college by working in retail—at The Gap and at Macy’s— and I knew that was what I didn’t want to do.
This was something that I looked at and said, “Okay, that will work.” And we’re an Italian family, so we’re close. As a bit of a background check … at that time, my father having a mortgage banking license as an Italian individual was an accomplishment. There was a kind of impression back then that if you were Italian and you were in banking, you were from the wrong side of the tracks. How did the company overcome the initial obstacles of not only in being a start-up, but doing business in the late 1970s and early 1980s … a pretty rough time in terms of the U.S. economy? Giorgio: It’s funny you should say that. Back then, when people were seeking a second mortgage, they were deemed to be “in trouble.” Over time, people became increasingly comfortable with a second mortgage as a means to an end because the sales finance people went by the wayside. Through those hard times, when people got a little bit overextended on their credit cards, those second mortgages helped them. It quickly became a financial tool to help fix whatever financial issues occurred and put them back on the right track.
Where did the United Northern name come from? Giorgio: My father was friends with someone who owned a bank all the way up in Watertown, N.Y. , near the Canadian border. They were supposed to work out a deal together to do banking and mortgage financing, but that never happened. Under the best of intentions, we got stuck with the name that we were supposed to be working under. However, you have to admit that A to Z Funding is a horrible name, to a degree! How did the company get into the reverse mortgage space? Giorgio: We started to do reverse loans because I saw need for it in the marketplace. This was about nine years ago. But it became more of a sensitive issue because my father, who was aging, had a quadruple bypass and then had some other health issues. And very quickly, he felt the signs of Alzheimer’s. As we were reaching out to what was available, we found it was a really hard path. In dealing with insurance companies over something like a wheelchair for someone who could not walk anymore—because he had forgotten how to walk—I realized that seniors need someone to help them. The least I
OF THE MONTH
“I DON’T NEED TO BE THE BIGGEST BANK OUT THERE, BUT I CERTAINLY KNOW THAT I CAN BE THE BEST.”
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This is very inspiring. But being in media business, I am aware that
many of my colleagues at newspapers and magazines view reverse mortgages in a very negative way. Why do you think the product has such a poor reputation in so many corners? Giorgio: I think if you look at the media, they are generally negative. If they were writing and reporting on happy stuff, nobody would read it. When you look at the scope of the industry and the amount of transactions that occur, the issues that are there are somewhat minimal in nature. And it is okay to have watchdogs—it helps people stay focused on what they need to accomplish and helps evolve the industry into a more efficient product for the people. But there are going to be people who just don’t like it, for whatever the reasons are. I have no idea why. The reverse mortgage product
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could do, through mortgage financing, was to offer reverse mortgages to help fulfill that need and literally change lives. In doing reverse mortgages, we are trying not looking at it as just a mortgage. Where we can assist them in a way that is legitimate and compliant, we have to help. We cannot just turn our backs on them. These people need a lot of assistance—sometimes we have to direct them to a social worker or an attorney. We found out very quickly that there is a huge gaping hole in the market. As seniors age, there is no one there for them. Our mission is encompassing that we want to change somebody’s life—not just because they need a mortgage, but because we help them improve their lives.
Updates to the New York Sub-Prime Home Loan Rules
mortgage professional of the month continued from page 55
By Laurie Spira The New York Department of Financial Services published two regulations in March. On March 19, 2014, the Superintendent of Financial Services amended Title 3 of the New York Codes, Rules and Regulations to include Part 43, which defines the meaning of certain terms in Section 6-m of the New York Banking Law. Then, on March 27, 2014, the Department of Financial Services issued an “Explanatory All Institutions Letter,” announcing the emergency adoption of Part 42 of the General Regulations of the Superintendent. The new Part 43 provides definitions for “Week,” “Good Faith Estimate” and “Commitment:” l “Week” has been defined to mean the seven-day period from Friday through Thursday, the day on which the Federal Home Loan Mortgage Corporation publishes its Primary Mortgage Market Survey (PMMS). Therefore, the PMMS used for making a sub-prime home loan determination is the PMMS published on the Thursday prior to the date the Good Faith Estimate was provided. l “Good Faith Estimate” means the Good Faith Estimate used to establish the terms of the mortgage loan. If a revised GFE is used to establish the terms of the mortgage loan, the term “Good Faith Estimate” means the “Revised Good Faith Estimate.”
MAY 2014 n National Mortgage Professional Magazine n
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The meaning of “Good Faith Estimate” affects the sub-prime home loan determination in two ways. First, the New York Fully-Indexed Rate for adjustable-rate loans is calculated using the index rate on the loan as of the date the lender provides the GFE. Second, the GFE date is used to select the PMMS applicable to the transaction, as described above. Because this definition makes it clear that the New York Fully-Indexed Rate for ARM loans must be calculated based on the index at the time of each revised GFE, lenders must ensure that the loan index (for example, the LIBOR selected for a LIBOR ARM) used to calculate the New York Fully Indexed Rate is the index in effect as of the date the revised GFE is provided to the borrower. In order for the calculation of the New York Fully-Indexed Rate to be correct, the loan index (for example, the LIBOR selected for a LIBOR ARM) must be the index in effect as of the date the most recent GFE was provided. l “Commitment,” in all cases where a commitment is not issued by the lender, means the “Good Faith Estimate.” The emergency adoption of Part 42 is unchanged from the emergency regulation on the same subject that was adopted on Dec. 29, 2013. Laurie Spira is chief compliance officer with Torrance, Calif.-based DocMagic Inc. She may be reached by phone at (800) 649-1362, ext. 6446 or e-mail laurie@docmagic.com.
“THE GROWTH OPPORTUNITY FOR MORTGAGE BANKERS WILL BE EXPONENTIAL IN THE COMING YEARS AS WE GIVE THE PUBLIC WHAT THEY ARE LOOKING FOR.”
changes people lives—we’ve taken people and have saved them from foreclosure. Where people still have the ability to stay in their house and handle it, they need help to keep them there. Just because finances have turned on them is not their fault, so why should we turn our backs on them? How do you view the current state of the reverse mortgage sector? Giorgio: It is almost like an industry that has been around for a long time, but is still in its infancy. We only have a two to three percent penetration of the existing reverse mortgage marketplace—and we have a long way to go. Right now, we are dealing with people who are in a crisis situation. But the reverse product is a great financial tool, and as time goes on, it will be used more and more as a financial tool that can help people and broaden their options—whether it be for long-term help or to help them keep and maintain their current lifestyle. Where do you see the greatest growth opportunities in mortgage banking? Giorgio: The opportunities for mortgage bankers are there, but the obstacles are many. From regulatory considerations, there have been a lot of changes that have been made that are important and worthwhile. As mortgage bankers get back on their feet again, the public still wants the service that we, as mortgage bankers, can
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provide. The growth opportunity for mortgage bankers will be exponential in the coming years as we give the public what they are looking for. Going back to the regulatory climate … how does your company deal with and remain in compliance with today’s mandates and regulations? Giorgio: We have a very large legal bill. We’re constantly going back and forth with our compliance attorneys to make sure that we are on point with whatever is being demanded of us. But those are the cards that have been dealt and we must respect them. People feel it is necessary. I am not here to change that … I am here to deliver. Looking back, what have been your greatest triumphs over your career that your company has been in business? Giorgio: You just said it … the years the company has been in business. That’s our triumph. I have been around a long time. I’ve watched people come and go. I don’t need to be the biggest bank out there, but I certainly know that I can be the best. I know that the average lifespan of a mortgage banker is nine years. We are here and we have endured, and that in and of itself is a triumph. Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
heard on the street continued from page 52
l Lenderlive Network Inc. has announced that Claire Rhodes has joined the firm as regional account executive covering the northeast region for the companyâ&#x20AC;&#x2122;s correspondent lending division. l Stonegate Mortgage Corporation announced that it has named Robert B. Eastep, CPA as its chief financial officer. l Generation Mortgage Company has announced the addition of six new reverse mortgage professionals to its Pacific region. Ben Murray has joined Generationâ&#x20AC;&#x2122;s Arizona sales team and will report directly to Area Manager Charles Byler, while John Martin and Blake Pavlichâ&#x20AC;&#x201D;who are handling Oregon and Washington, respectivelyâ&#x20AC;&#x201D;will report to Area Manager Jim Becker. In California, Candy Watson, Thomas Pressler and Ronna Webb are representing the company under the leadership of Area Manager Evan White. l Reverse Mortgage Funding LLC has announced that it has hired Patrick Lambrecht as its retail operations leader. l Cary D. Williams has joined WFG National Title Insurance Company as a vice president and sales manager for the companyâ&#x20AC;&#x2122;s team in central Florida. l LoanLogics has promoted Matt Woolley to senior vice president of national sales, Terrell Cassada to chief information officer, and has hired Terese L. Campbell to serve
as senior vice president for product management. l CoreLogic has announced that Michael Ceppetelli, a financial services industry veteran, has joined the company as senior vice president of capital markets. l Title Source National Commercial has announced the addition of Tom Horton as its newest branch manager in Denton, Texas. l Caliber Home Loans Inc. has announced that Tim Kirchner has joined the company as national marketing director. Caliber has also announced that Brian Livingston has joined the company as regional vice president of retail lending for its Southeast Division and that Carl Streicher has been named Pacific Southwest divisional executive.
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Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com
Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums. This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614
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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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Regulatory updates â&#x20AC;Ś The CFPB is focusing on fair lending and refining its investigative efforts in these areas. According to a release posted on its Web site on April 30, 2014, the Bureau is committed to ensuring lender compliance with the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA). The Bureau is soliciting public comments about fair lending issues and encouraging the filing of complaints where discrimination takes place or is suspected. The word is also that state regulators have been instructed to focus on fair lending policies and compliance during state audits and examinations. Several mortgage lenders have indicated that examiners are laser focused in this area recently.
On the lighter side â&#x20AC;Ś Some puns about the mortgage industry (with apologies to Henny Youngman): l I used to be a mortgage lender, but lost interest. l During an earthquake in California a bank went into default. l One night a star mortgage originator fell overboard from his yacht. He was saved because he could float a loan. l Two lenders with different rates have a conflict of interest. l Old mortgage bankers never die, they just pass the buck. Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years. He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at aliput@securesettlements.com.
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n National Mortgage Professional Magazine n MAY 2014
l A California escrow company owner was sentenced to 21 months in prison for stealing refinance funds intended to pay off debts, which forced the borrowers into bankruptcy. He felt he needed the money more than they did apparently.
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“Is it possible for a mortgage company to determine that it has secured a genuine return-on-investment (ROI) for its focus on lender education?”
Measuring ROI on Mortgage Professional Education By Phil Hall
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Across the mortgage industry, there is no shortage of educational courses available for lending professionals. Trade associations, law firms and privately-owned companies host a variety of classroom instructions and online offerings, while some companies have created their own in-house courses for loan officers. But while there is a surplus of learning opportunities available, one somewhat question arises: Is it possible for a mortgage company to determine that it has secured a genuine return-on-investment (ROI) for its focus on lender education? “ROI in education is the Holy Grail—an elusive thing to figure out,” said Dan Thoms, executive vice president at Eagan, Minn.-based AllRegs. Thoms said that the fluid nature of the mortgage industry, especially in regard to the recent changes in the regulatory regimen, make it impossible to identify education in terms of a static consideration. “You cannot take a snapshot because things are always changing,” Thoms continued. “If you took a snapshot at the beginning of 2013, you could say that a person needed to know 100 things going into 2013. But now, the same person needs to know 200 things. In the grade schools, everybody fights with standards of learning. But we don’t have that in mortgage industry.” Jeff Schummer, vice president of education and business development at the Mortgage Bankers Association (MBA), agreed that a standardized ROI formula is tricky to pin down. “Quantifiable percentage for return is difficult,” he said, adding that there is no question on the value of the investment in learning. “I think you look at is as an investment by our members, many
of whom are looking for the information needed to improve their business. We’ve seen it through the sheer growth of attendances – in our webinars and classes, we have been oversubscribed in the majority of the programs we offer.” Schummer noted that the MBA’s Future Leaders Program for middle and senior-level managers has sold out every year for past 15 years. However, enrollment in the MBA’s Certified Mortgage Banker (CMB) took a dip after the 2008 crash and has only begun to recover its attendance momentum over the past two years. “We have 20 to 25 new CMBs per year,” Schummer said. “The CMB Society now has 1,100 members.”
What works and what doesn’t The value of pursuing professional education cannot be overstated, according to Thoms. “Education is the change agent,” he said. “After all, you cannot get a college degree in mortgage banking.” Several industry leaders track ROI by stressing the value of a well-educated workforce. For Paul Donohue, dean of Fulton, Md.-based NewDay USA University, education works best when it prevents a mortgage company from being vulnerable to problems that can lead to litigation and regulatory discipline. “From a defense standpoint, the idea of training is about compliance, quality control, measuring accountability,” Donohue said. “If a company does not address it on the front end strategically, they will eventually have to pay for it.” Donohue was previously the founder of Abacus Mortgage Training and Education, which was acquired by NewDay USA two years ago to
become its proprietary educational division. Donohue points out that this division is not a standalone section of NewDay USA, but an integral part of the company’s culture. “A career track is a learning track,” Donohue said. “We want to create an environment where you never stop learning.” Donohue stressed that training should concentrate on efficiency over effectiveness. “Being effective means that I am doing my job well,” he said. “Being efficient means that I am learning how to do job right. The more efficient we can be, the faster we get an ROI.” NewDay USA’s approach to inhouse education concentrates on multiple aspects of the mortgage world, including processing, underwriting, compliance and IT training. However, participation in this program is limited to people that are brand new to the mortgage world— veteran mortgage professionals are not sought out by NewDay USA. “We prefer to bring new people out of college and train them to do the business right,” Donohue explained. “The benefit of having new people is that you do not have the old habits to deal with. Very difficult for someone to unlearn and relearn everything they know.” Troy, Mich.-based United Wholesale Mortgage (UWM) also conducts in-house education for its loan officers and account executives. According to Justin Glass, senior vice president of business development, the education-plumbed ROI measurement is a mixture of external and internal forces. “Typically, we have a balance on what percentage of production is driven by the industry itself and then figure out the numbers,” said Glass. “For example, if we expect production to increase 20 percent its own terms, then we can forecast an additional 10 percent through our training.” Glass recalled that UWM’s educational training evolved over the past decade, mirroring the extraordinary
highs and lows faced by the industry. “We began our loan officer training course 10 years ago, and the account executive training during the last six-to-seven years,” he continued. “Both started off as oneweek courses using lots of printed materials, and they taught the basics about the mortgage industry—and that was pretty much it. Now, both run four-to-five weeks and involve more and more technology, plus more role-playing of various scenarios involving internal communications and customers.” In terms of measuring ROI, Levittown, N.Y.-based United Northern Mortgage Bankers Ltd. stresses the depth and scope of the educational training received by its loan officers as being a primary selling point. “By the sheer nature of the business itself, we need to have a betterrounded loan officer,” said Heidi Frigano, executive vice president of marketing and business development for United Northern. “What sets us apart from the larger lenders is that our guys are required to go for their state and federal licenses.” Frigano observes that the majority of states participate in the Uniform Standard Test (UST) administered by the Nationwide Mortgage Licensing System & Registry, some major real estate markets including California, New York and New Jersey require their own special testing, Thus, the lenders at United Northern Mortgage Bankers often have to take multiple courses in order to pass a variety of licensing exams. “It is a very, very intensive type of testing,” Frigano added. Furthermore, United Northern also requires special education for its professionals in charge of niche products. “On the reverse side, there is a three-day course for lenders to achieve certified senior advisor status,” Frigano continued. “Not only does this cover the educational aspect, but it also covers Medicare, retirement planning, how to look for
signs of the early on-set of dementia and the challenges a senior faces. With the 203k loans, there are certain nuances in selling that product that require our loan officers to go through training and take courses— they cannot just run out there and start pitching 203ks.”
Another point of view Gibran Nicholas, CEO of Ann Arbor, Mich.-based CMPS Institute, a national organization that certifies mortgage bankers and brokers, sees the situation from a different perspective. “A lot of people spend inordinate amounts of money on training with no measurable impact on their business,” he said. What goes wrong? According to Nicholas, too many companies mis-
takenly believe that education is a standalone activity that concludes once the class curriculum has run its course. Instead, Nicholas stresses that the industry is in a state of constant change and the approach to the daily workload often needs to be adjusted to meet these changes. “What has worked very well is recent years is what we call ‘habit integration,’” he said. “We take the loan officers’ pre-existing habits— even on one or two things—and get them to do that a little bit differently in order to have a higher impact on business.” Nicholas also stressed continuing education, with weekly 30-minute coaching sessions to ensure that industry professionals are up to speed on both large issues and seemingly
esoteric considerations, such as the potential problems on how the gift tax could impact a home loan. “Why should mortgage professionals just sit through training and have their companies expect them to retain everything they learned in a 15-hour class?” he asked. “Now, training becomes an implementation resource—with weekly coaching to keep them informed on a regular basis.” One aspect of contemporary mortgage education that Nicholas expresses concerns about is the heavy focus on compliance—to the point that it could obscure an emphasis on sales skills and other considerations. “Compliance is important,” he said. “But it is like eating a meal—if all you eat for dinner every night is
hamburger, you’re going to be sick of hamburger. You are going to need to switch it up.” Still, Nicholas is satisfied at how the industry has embraced the importance of education—not only for ROI purposes, but for building credibility. “When we started in 2005, there was no standardization in mortgage industry,” Nicholas said. “We had people selling cars one day, shoes the next day and mortgages the following day. We saw a void in the market— someone has to train this originator before they speak to consumers.” Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com. 59
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“…money is one of the best motivators for people. It becomes addictive. The more you make, the more you want to make.”
Motive and Opportunity By Eric Weinstein
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My first advice to a young loan officer just starting out with my company would be to immediately go out and buy a brand new house, a new car and to charge up all of their credit cards. This way, they would be heavily in debt and be forced to do lots of loans. I say this jokingly, but truth be told, money is one of the best motivators for people. It becomes addictive. The more you make, the more you want to make. But this is only true up to a point. All of us have a figure in mind, may it be $100,000 a year, $330,000 a year or a $1 million a year when we say to ourselves, “If I could only make that much, then I would be rich.” What I noticed was when the person DID make that much, then their leisure time became more important to them than making any extra money. If someone dreamt of making $100,000 per year and made it, then they would try to figure out how to make the same money by working only three days a week and spend the rest of their time on their new boat. So, here I had a bunch of people I was helping make tons of money, and I had to motivate them to make more money against their will. Such problems a mortgage company owner has! So I started something called “The
Winners List.” We took the top monthly income earned in the month and broadcast it to the rest of the company. Once people have all the money they need, then they want fame. The top 20 “Winners” got a royal blue “Carteret Mortgage” baseball jacket. It was just about the ugliest thing you ever saw in your life, but the competition was fierce. When you went to a Carteret bowling party, you knew the person wearing the jacket was a top producer. Respect was earned. But doing more loans is not the only thing a manager has to motivate a loan officer to do. Think of all the rules and procedures you lay out that they have to follow. If you have kids, you know, it is not always easy to get them to do what you say. You cannot threaten to fire employees after every little offense. It loses its power when you both know it is a hollow threat. That is why I always used a “carrot and stick” approach to my procedures. If you do it like this, good things happen, if you don’t slightly bad things happen to you. If you get the file in on time and correct, you get paid that week. If not, well, it could take up to two weeks to get you your money. Another good motivator is “opportunity.” I have never met a loan officer who ever told me, “All I want to be is a loan officer for the rest of my life.” No
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one plans on being 70-years-old and still bringing doughnuts to real estate agents at an open house. Everyone has a dream. That is why, as a manager, you have to offer the opportunity for upward potential. If you do this and this and that, then one day …” With us, it was the opportunity to be a “Recruiter.” This meant you had the authority to bring in other loan officers where you would get a “piece of their action.” Enough of these and you could retire just on the extra override, which many of my people did, reinforcing the idea that “one day this could be you.” It is not enough to promise things to motivate. The employee has to see it is real by it happening to someone else. It has to be a thing of value, whether tangible like money or intangible like the esteem of his colleagues or the opportunity to get ahead. This reminds me of a story. Since I am Jewish, it is a rabbinical tale, but feel free to substitute your own religious personages as you wish. There was once a poor farmer. All he had was this one cow, but with the milk, he could sell, he was able to feed his family, barely. He was a deeply religious man, so he was happy with his portion in life. He was pious, never said a bad word and helped his neighbors when he could. One day, a famous Rabbi comes to town and honors him with a visit. He tells the Rabbi he doesn’t have much, but he will provide whatever the Rabbi wants. The great Rabbi says all he wants is for him and his disciples to share a dinner with the man in his family, but the plates must be made out of gold, the finest wine served and only most expensive table linens used. The pious man is shaken, but he agrees. How could he deny such an honored and respected sage? He goes to town, sells his only cow and buys what the Rabbi requests. The next day, the Rabbi has his meal, thanks the man and promptly leaves. Now the pious man doesn’t know what to do. He only had the one cow and now he doesn’t even have that. He decides to go into the woods and just kill himself. While in the woods, the pious man
meets an old man who is dying. The pious man makes him comfortable, gives him water and they talk. The old man says that he is wealthy, but his kids only love him for the money they will get after he dies. He says he will fool them as he has buried his fortune in the forest. They will never get it. But, since the pious man was so nice, here is a map to where it is buried. The old man eventually dies and the pious man goes and digs up the treasure. He becomes a very wealthy man, donating to the Synagogue and helping the poor. One day, the pious man is riding through town in his golden couch and the people are cheering. The Rabbi just happens to be there and waves to the man. One of the Rabbi’s disciples turns to the great sage and says, “Rabbi, I really do not understand. You are a very modest man. You never eat from golden plates or even desire the finest things. Why did you do that to this good man?” The Rabbi replies, “The Lord spoke to me and told me of this man. The man was destining for greatness and to help many people. But he was never going to do any of it until he sold that damn cow.” This is the REAL problem in motivating people; “Good is the Enemy of Great” As long as things are good and you are happy with them, then they will never be great. Like I joked earlier, have your new loan officers buy that new house and car, then they will be forced to be a great loan officer. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 505-8692 or email eweinstein4u@gmail.com.
“No matter how long they have been in business, the best lenders continue to innovate and change, whether it’s identifying new products and services for underserved borrowers, or finding new markets or channels through which to deliver service.”
Putting Freedom and Motivation Back Into Retail Lending By David Williams A few years ago, researchers from the Victoria University of Wellington in New Zealand studied data from 63 countries over a 40-year period and determined that it’s actually true: Money really doesn’t make people happy. Having freedom and autonomy, on the other hand, is much more effective at putting people in
a positive mental state. Sure makes sense to me. In fact, I see the truth behind this theory everywhere I look. Let’s face it, most of us who got into selling mortgages do so because of the independent nature of the business and the opportunity it offers to carve our own path. There is no uniform, no clock to
punch, and for a great majority of folks, no single technique for going out and selling loans. Of course, with freedom comes responsibility. Because a house is the single largest investment most people ever make, our profession needs ground rules. And today, increasing regulatory pressure—coupled with a challenging origination market—is placing many industry professionals in a tough spot. Right now, we’re seeing a lot of migration of the professionals within our industry. As the opportunities for selling purchase loans grows, retail lenders everywhere are looking for top performers. Likewise, experienced loan officers and
managers—and even people who are new to the business and are hungry—are looking for a strong “home” that will put them in the best position to excel. But few retail lenders seem to be rising to the challenge. Some just haven’t been able to figure out the current market or change the way they do business fast enough. Others have tightened up processes so much that their salespeople have lost the ability to create business on their terms. Many are simply not doing what it takes to keep great people once they find them. The fact that origination volumes are continued on page 62
61 branch branch usbank.com/mortgage usbank.com/mortgage
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down and housing is struggling so far in 2014 has put everyone more than a little bit on edge. Itâ&#x20AC;&#x2122;s also contributing to a low pool of quality managers and loan officers in the market. And yet, when retail lenders give mortgage professionals reasonable freedom to do what works for them, everybody winsâ&#x20AC;&#x201D; the lender, the manager, the loan officer and the consumer. It can still be done, too, even in todayâ&#x20AC;&#x2122;s more rigidlycontrolled market. Hereâ&#x20AC;&#x2122;s how.
Give them protection Itâ&#x20AC;&#x2122;s not sufficient to just be good enough to avoid the attention of regulators or investors. Great loan officers who have been around for a while can tell when something doesnâ&#x20AC;&#x2122;t feel â&#x20AC;&#x153;rightâ&#x20AC;? about a
lender, and they will take no chances when protecting their greatest assetâ&#x20AC;&#x201D;their reputationsâ&#x20AC;&#x201D;on a company that will not do the right thing when it matters most. It should go without saying that lenders should do everything possible to protect themselves and mitigate risk. However, they should be transparent with their sales people about their compliance strategy, too, so that everyone is on the same page. This way, a lenderâ&#x20AC;&#x2122;s salespeople are fully equipped to explain any requirement to the borrower, and perhaps even make it a marketable asset, a la â&#x20AC;&#x153;hereâ&#x20AC;&#x2122;s how we are protecting you.â&#x20AC;?
Power under the hood Every mortgage business has, or should have, an engine that keeps running
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smoothly, so that loan officers have everything they need to sell loans quickly and efficiently. But thereâ&#x20AC;&#x2122;s a huge difference between providing the basic technology to manage customer information and loan files, and solutions that actually empower loan officers to excel. In todayâ&#x20AC;&#x2122;s market, the bare minimum that a retail lender should provide loan officers includes a Web-based automated underwriting platform and the capacity to lock rates instantly. But they should also be providing a flexible, easy-to-use CRM solution that enables loan officers and managers to import partner and client contacts and help them nurture those relationships for new sales opportunities. More than anything, loan officers require technology that lets them spend more time communicating with customers and less time performing tasks that can be automated, streamlined or outsourced.
industry feelâ&#x20AC;&#x201D;from the complexity and confusion of new regulations to the concern that one canâ&#x20AC;&#x2122;t offer the best range of products and service, or that one might find oneself in the position of overpromising and under-delivering. Yet, there are many other intangibles that are important. For example, how experienced is the lenderâ&#x20AC;&#x2122;s leadership? What does its past performance say about its ability to â&#x20AC;&#x153;pivotâ&#x20AC;? when the market changes and stay on top of new trends? Do they push electronic signatures and have a simple online application process? No matter how long they have been in business, the best lenders continue to innovate and change, whether itâ&#x20AC;&#x2122;s identifying new products and services for underserved borrowers, or finding new markets or channels through which to deliver service.
Mortgage professionals can always control their Weaker-than-expected origination vol- own destiny Great customer service
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ume is a challenge for everyone. But it is a particular problem for lenders that have not quite figured out a strategy that works in todayâ&#x20AC;&#x2122;s market. Of course this situation is creating opportunities for other companies to separate themselves from the pack by simply being faster, more reliable and consistentâ&#x20AC;&#x201D;basically, by providing better service. In areas where buyer demand far exceeds the supply for homes for sale, lenders that are able to close loans fast have a tremendous edge. Likewise, the loan officer that can market 15-day closings and automated approvals with the government-sponsored enterprises (GSEs) will have a huge advantage in areas where buyers are going head-to-head on hot property listings. As we all know, however, itâ&#x20AC;&#x2122;s one thing to market such features and another to deliver them. When a loan officer has a qualified and motivated borrower, few things are more valuable than knowing that the lender is able to perform. In fact, lenders with fast response times and quick underwriting instill confidence in their salespeople that is infectious. It rubs off on borrowers and referral partners, which in turn creates more enthusiasm, more referrals and more sales. By reducing risk and providing better and faster service, each of these traits provides mortgage professionals with greater freedom in how they market and go after sales. Each characteristic removes some sort of encumbrance that many in our
When loan officers and branch managers are free to focus on origination and not worry about risk, processes and systems, or whether they will get loans funded on time, or whether their company is looking for new lines of business, you can tell. They are just happier. They smile more, they have fun with their customers, and they feel good about what they doâ&#x20AC;&#x201D;which they should. But the key is creating a truly effective environment where their time and expertise is always maximized. As my own company continues to grow our retail lending business, the traits Iâ&#x20AC;&#x2122;ve listed above are exactly what are helping us attract new branch managers and build an amazing team. Of course we pay wellâ&#x20AC;&#x201D;but we want to take care of all the tangibles and intangibles so that our folks donâ&#x20AC;&#x2122;t have to fret about them. We want them to go after business in ways that work for them, within a framework of compliance that protects them and their borrowers. We know that when that happens, theyâ&#x20AC;&#x2122;re capable of anything. Money may not buy happiness, but freedom, success and fulfillment do. David Williams is vice president of RightStart Mortgage, a mortgage lender based in Pasadena, Calif. that provides a full range of conforming, non-conforming, FHA, VA and USDA products. He may be reached by e-mail at dwilliams@rightstartmortgage.com.
“People don’t want to be managed, people want to be lead … some by the hand, while others by just pointing at the direction they should be heading.”
Motivational Tips for Fostering Successful Leadership Traits By Elizabeth Morales parent, an older sibling or a boss. What were some of the elements involved? Someone praised you; someone noticed one of your talents and recognized how valuable your contribution was to a project. That all summarizes, in one line, what my old boss used to say: Everyone wants to matter. A good employee can be a great employee if given the proper set of tools. They have the potential. A mediocre employee has the potential to be a good one, and subsequently, great. How does this happen? Start by asking what they like to do. Observe from afar what they are great at and place them in a role where they can not just survive, but thrive and shine in their own light. We were all born
your employees. Why? Because everyone looks at that decision from their own lens and they can give you a perspective you have no way of seeing. They will also feel like a part of the decision-making process and that makes them feel they matter. Future leaders are part of those folks. The answer to your question is always in the room … you just need to ask it. Elizabeth Morales is business development director for Long Beach, Calif.based Applied Business Software Inc., creators of The Mortgage Office and The Loan Office Software. She may be reached by phone at (562) 279-7424 or email elizabeth@absnetwork.com.
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By now, you have probably read a few books on leadership, management, delegation and tiers, among other topics. But there are still some pieces that are not matching the puzzle you have. What exactly does a good leader do? Exactly that: Lead. You manage time and tasks, but lead people. People don’t want to be managed, people want to be lead … some by the hand, while others by just pointing at the direction they should be heading. Coming from an education background, I can tell you that when you ask fourth graders what they want to be when they grow up, none of them say, “I want to be a drug dealer.” They all have these great dreams of being working professionals and a success. But somewhere along the way something happens where some kids fall through the cracks and they end up derailed. Why? What is the difference between a child who ‘made it’ and one who has not or did not? They went to the same school, lived on the same street, and had very similar experiences. The difference in most cases is that the one who succeeded and surpassed life’s vicissitudes had someone who believed in them. It only takes one person. That person can be you. Leading people is like teaching children. Remember the worst teacher you ever had? Remember how incapable you felt, when you were told you could not do the task exactly the way it was supposed to be done? Don’t be that leader. Don’t be that teacher. Think back at the times you felt great about yourself because you were told you did something that impressed someone. Chances are one of those people was a teacher, a
with great talents. It is your job as a leader to make those talents come to light. Point your folks in the right direction and give them a little push. Set goals where employees are aware of the areas of improvement and spend time working on a plan to achieve goals. I don’t need to tell you those goals need to be SMART, because you have seen that acronym 100 times. Yes … they do need to be smart. Do not micromanage. Do you like having someone looking at how you do our job constantly? I am sure you don’t and your employees don’t either. When making a department or companywide decision, involve all
“What is the best way to bridge your clients into more products? First discover their needs and then move them to other products and services you offer.”
How to Bridge to Higher Sales By Dr. Kerry Johnson Andre is very successful at attracting mortgage prospects and refinancing existing clients. But as rates increase and more adjustable clients have already moved to fixed rate loans, it has become harder to make money. Andre would love to talk to his past borrowers about investing their home equity for retirement, but he doesn’t know how to start the conversation.
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Bridging is the answer You have a customer you would like to up sell. They have a need but don’t yet know it. You aren’t really sure how to approach them. Use “Bridging.” Bridging is a set of techniques you can use to sell or upgrade clients from your products or services to a higher level or a larger quantity. This is particularly important because not only will they buy from you more quickly than would a cold call, but there is a high likelihood you will be able to retain them as clients longer as they buy more products and services. But why worry about up-selling when they have already done business with you in the past? The biggest reason is to keep your client over the long-term. They next is to pro-
vide products and services to those who already trust you. According to one study, only 17 percent of mortgage clients will use their last vendor. The biggest reason for this loss of business is the lack of a personal relationship with the client. According to one study done by LIMRA research: 1. There is a 35 percent client retention rate over five years with one product or service. 2. Two products—a 56 percent chance of retention over five years. 3. Three or more products—a 92 percent chance of retention over five years. The more products you have with the client, the longer they will stay with you. These products could be a purchase loan, HELOC and even credit service. It could also be a equity management program in partnership with a financial planner. Banks know as they gain your checking account, they are much closer to gaining your next car loan, CD and securing your retirement accounts.
Hurt and rescue
Bridging steps
What is the best way to bridge your clients into more products? First discover their needs and then move them to other products and services you offer. They method you can use to create this initial interest is a concept called “Hurt and Rescue.” Listerine created a brand from the tagline, “The Taste You Love to Hate.” It tastes bad, so you know it works. But the real hurt was to make you worry about bad breath. If they could do that, you would gargle with Listerine every morning. Listerine marketers at first wanted to hurt and then rescue you from this fate that causes friends and strangers alike to flee from your presence. Brokers advertise every day trying to scare homeowners into converting their adjustable mortgage into a fixed rate loan because rates could skyrocket. They offer to rescue prospects from this dilemma with a more stable payment schedule. For example, in selling an equity management approach, very few clients will be looking for a way to better manage their pension fund assets. Most don’t look at their fund balance statements and don’t know if it is even making any money. But if they don’t pay attention, they won’t have enough money to retire. Only 50 percent of those eligible contributed to their 401K plans even though employers matched the employee contributions. This will give you the opportunity of helping them build a retirement account by selling them on investing their equity. But first ask questions creating a “hurt” or pain with the person responsible. Here are five steps to help you bridge your clients into giving you more business. As you ask these questions, your job is to let them know how much of a problem (hurt) their lack of knowledge creates and how you can “rescue” them from those worries. Here are five steps you can use to bridge your clients into an appointment and help them solve their problems.
1. Make an introductory statement 2. Ask a bridging question and search for needs 3. Recap 4. Trial close 5. Book an appt
Make an introductory statement An example of this is to make a statement that scares or gains the client’s attention again using the equity investing approach: l The average retirement account is only $29,000. l Ninety-three percent of Americans won’t be able to retire without going back to work. l Your home equity is just sitting there not making money. l You are paying twice as much tax as you should. l You will need 15 times your salary at retirement to live on 80 percent of your earnings. These are all examples of introductory statements.
Ask a bridging question and search for needs These are questions used after the intro statement that brings the concept home to your client. You need to personalize the hurt statement with a query: l The average college tuition will be $18,000 a year by the time your kids are ready. At this rate, you won’t be able to afford college for your kids when they hit 18. What will you do? l You will need 15 times your salary at retirement to live on 80 percent of your earnings. You only have $50,000 saved right now. What plan do you have in place to hit this goal? l Your adjustable mortgage could spike to eight percent this year. Do you want to pay that much? After you ask the bridging question, try to find out how worried the client is and how much it bothers them. In many cases, clients mistakenly think they are okay with their plans. But they really haven’t thought about the future
enough to make any plans at all. Xerox research has discovered if you can get the client to recognize needs, there is a progressive chance that a sale will occur. Here are the stats: l If you can uncover one need, there is a 36 percent chance of a sale closing, depending on your skills. l If you can uncover two needs, there is a 52 percent chance of a sale. l If you can uncover three or more needs, a sale occurs nearly 100 percent of the time. Bridging works because it helps you uncover needs your client may not have thought about. I just bought a new Porsche 911 through my company. My auto insurance agent told me that if I had an accident, the other party could sue my company also because it owned the car. What plan did I have in place to protect
my company from that risk? He then sold this stage, your closing rate will be nearme a commercial policy on my auto, dou- ly 100 percent. No one will ever say no ble the price of a personal auto policy. to you again. Because you will only sell what prospects have already told you Recap they wanted. Examples of trial closes As you listen to their needs, you will are: If we could do “so and so,” would keep asking questions until you get up that be helpful? For example, “If we to three. When you get three, you will could lower your payments, take some recap by saying, “Let me get this equity out to buy an investment propstraight … did I get that right?” For erty, and avoid paying PMI, would that example, “Let me get this straight. You be helpful?” When they say “Yes,” your want to lower your payments. You also prospect has just committed themselves want to take some equity out to buy an to work with you to reach a solutions to investment property, and you don’t their problems. want to pay PMI, Did I get that straight?” The prospect will either cor- Book an appointment rect you or agree. Either way you win. When they say yes to your trial close, an appointment is assured. If they say no, go back and ask more questions, you Trial close These are the money questions. This is haven’t probed for needs well enough. where you ask if they would benefit if Your clients already trust you. You you could help them. If you can master have their attention when you want it.
But it is up to you to continually stay in contact and help decrease risk, improve their lives and then solve problems. One of our coaching clients in South Carolina, has a mortgage business and tax practice. He calls his clients every three months to check up on them. His closing rate is 80 percent on every call. The reason? He bridges them to a product he creates a need for. Sure, he hurts and rescues. But mostly he listens. Your clients would rather buy from you than anyone else. Why force them into other relationships. Keep in contact, listen and they will stay with you forever. Kerry Johnson, MBA, Ph.D. is a best-selling author and frequent speaker at mortgage conferences around the world. He may be reached by phone at (714) 368-3650, visit www.KerryJohnson.com/coaching or email kerry@kerryjohnson.com. 65
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Lack of Inventory Equals Long-Term Growth for Your Pipeline
Three Keys for Adapting to Any Career Change By Dr. Marty Martin
By Tom Ward As I travel across the country, the words I'm starting to hear are "We have a shortage of inventory here.” This is not isolated to any particular area as it's happening almost everywhere. Recently, I was asked to speak at an office meeting. The sales manager let me sit in on the first 15 minutes where he covered the previous month's production numbers and addressed how the originators were faring compared to their goals. Every one of them was short of achieving their goal. Now store that thought until I finish my next part. As I am delivering my presentation, I begin to discuss our Path2Buy Program and the research I did when interviewing 318 renters, how 317 of them said they would want to own a home … just not right now. Then, I talked about how our program helps get renters off of the sidelines. When I got to the Q&A portion, a very respectful gentleman challenged my information and said, "The market here is very hot right now, but there is just a shortage of inventory.” I said with all due respect, if the market is so hot, how come no one made their goal last month? Silence filled the room. I then explained what I call "The False Positive.” The market appears to be hot because the amount of buyers exceed the number of sellers. The issue is inventory. Sellers aren't putting their houses on the market for a couple of reasons: 1. They don't have enough equity to move up … just yet. Even if they wanted to move up, they cannot get enough cash out of their existing house to put down on the next house, so they are staying put.
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2. They're afraid to take on more debt due to the uncertainty of the economy in general. They're still gun shy after the drop in values from a few years back. So what happens to this potential first-time homebuyer is they get frustrated looking at houses, making numerous offers and coming up empty, in turn, driving them back to the sidelines to continue to rent. The first time I saw this was in the Phoenix market when the renter was competing with institutional buyers, like Blackstone, that were making offers of 105 percent of list with no contingencies. As an originator, you used to count on your pre-approved buyers being the ones who were "on deck" to write a contract. Today, it's a different world. The advice I can give any originator is to change your way of thinking … start thinking about a longer incubation time than what you're used to. Stay in front of this potential buyer and keep in touch. Make sure you have a system to do this. In our Path2Buy system, the incubation strategy is one of the cornerstones of its success. My research shows that the bitter taste of renting will re-appear a few months down the road and the originators who had a system to incubate will reap the benefits of the changing market. I learned a long time ago that whether the reason is saving for a downpayment or waiting for inventory, the renter will eventually buy their first home, the only question is from whom and where will they get their mortgage. Tom Ward is founder of the Path2Buy Homeownership Coaching Program (Path2Buy.com). He may be reached by phone at (847) 340-4295 or e-mail tom@path2buy.com.
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hether you work for yourself or are employed in an organization, one thing is for certain … at some point, your career will change. It could be a gradual change, such as a job or industry slowly evolving or phasing out; or it could be a sudden change, such as the board of directors mandating a reduction in staff immediately. Regardless of the exact scenario, the key trait that will enable you to reposition yourself and thrive after a career setback is your ability to embrace adaptation. Unfortunately, many people lack a belief in their ability to adapt. As such, they become immobilized by fear when change is apparent. So rather than adapt their mindset, approach and even skill set, they choose to stay stuck in their comfort zone, even though it’s no longer comfortable at all. Realize, though, that adaptation is natural. For example, when you travel to a location that has a different climate than what you’re used to (such as going from Miami, Florida to Chicago, Illinois in the winter), the new weather feels harsh for the first day. But after a few days in the new climate, your body adjusts and the colder temperatures don’t feel as frigid. Your body and mind acclimates and you get used to the new environment. This natural ability to adapt at a physiological level also applies to dealing with changes in the career environment. You simply need to tap into your natural ability to adapt and apply it to your professional life. The following suggestions will help you achieve that.
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1. Reflect on your past When change is upon you, reflect back on a few times in the past when you overcame an adversity and identify what you had to do to get through those events. Ideally, choose examples from your past workplaces. If you can’t think of any, then go back to your school days and your personal life. If you really have led a challenge-free life thus far, then think about books or movies where you’ve learned about others overcoming adversity. Once you choose a few situations to reflect upon, determine the actions and attributes that helped you or others in the past. There’s a high probability if you repeat the mindsets and actions that worked in the past, they’ll work for you now as well. This exercise helps you shift your energy from victim to victor. You prove to yourself that success is possible.
2. Choose to associate with like-minded people To keep your mindset strong, surround yourself with individuals and groups who support you in doing something different, rather than those who try to keep you chained to the status quo. Of course, this step is always easier said than done, especially when your family or closest colleagues are the ones holding you back. First, in your work life, assess your transferable skills. For example, if you were a video store manager whose store closed, your skills likely include hiring and staffing, inventory, merchandising, and customer service. Look at what other stable and growing professions and industries use those skills and join their leading association. This enables you to actively make connections with new people in a sector that has more optimism than the one you’re currently in. If your loved ones are contributing to your negative mindset, sit down with them and have an honest conversation about the current situation and your options for change. For example, if you realize you need to relocate to find a new job, and your spouse does not want to move, show the reality of the situation. You might say, “If we remain here we can’t maintain our lifestyle. We’ll have to downsize to a one-bedroom apartment or move in with family. But if we relocate to this area where jobs in my sector are plentiful, we can maintain our lifestyle, just in a different zip code. What makes the most sense to you?” Be calm and use specifics when you talk. Chances are the loved one will see the necessity for whatever change is needed.
3. Do scenario planning Write out detailed scenarios about what can happen if you adapt, if you fail to adapt and if you somewhat adapt. You need to do all three rather than single point planning, because single point planning can set you up for frustration if the plan doesn’t go exactly as outlined. This sort of triple scenario planning is based on stress inoculation training, which encourages people to anticipate a negative event and explore how they might deal with it in various ways. Should the negative event actually occur, the person has an idea of what to do to overcome, which makes the negative event less stressful. The scenario planning works a lot like stress inoculation training. For example, if you’ve been laid off and can’t find a new job in your area, you may decide that your best case scecontinued on page 77
3-D Printing the American Dream By Robert Ottone
“With the 3-D method of homebuilding extremely young in its infancy, but as it grows, does it have the power to sustain over the tried and true methods of homebuilding?” tains to a $10,000 3-D printed home? This technology has the potential to shake the housing industry to its foundations (pun totally intended). While the argument could be made that this will negatively impact the economy (less need for manual labor), at the end of
the day, a majority of home production is often performed by unlicensed and undocumented workers who do not pay taxes on the wages they earn, and oftentimes do not reinvest in the infrastructure of America and the growth of the U.S. economy.
Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by e-mail at robertpo@nmpmediacorp.com.
Ultimate Mortgage Expo Making you the Ultimate Mortgage Sales Professional Hotel Monteleone | New Orleans | July 7-9, 2014 The mortgage industry is going through significant change. For mortgage origination professionals, it’s a struggle to keep on top of all the changes, and to keep your sales strategies and marketing initiatives at their peak. You need to keep your pipeline filled, and you need the tools and directions to stay profitable, efficient and effective. So join the company that produces the NAMB National Conference, and scores of industry partners for this ultimate conference to keep you on the cutting edge.
www.ultimatemortgageexpo.com To contact us: Vincent M. Valvo, CEO Agility Resources Group LLC Direct: (860) 922-3441 Email: info@agilityresourcesgroup.com
n National Mortgage Professional Magazine n MAY 2014
The ULTIMATE MORTGAGE EXPO provides an exceptional opportunity to showcase your solutions, while networking with hundreds of mortgage industry leaders, brokers and lenders.
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3-D printers are amazing tools. They have been used for making smaller niche items like key chains, jewelry and statues, as well as larger items like cellphone cases or mechanical parts, and even been used to create weaponry. Once thought to be a high-end luxury, these tools are growing in popularity and some higher-end consumer models can be had in the $2,500 range. A China-based company is revolutionizing the 3-D printer game by using their systems to spray a blend of reclaimed construction materials and cement into a livable structure. The firm, WinSun, highlighted the lack of manual laborers and their use of leftover construction pieces as a way to keep costs down. As a result, each home costs roughly $5,000 (American) to build. Gawker broke down that WinSun uses four 3-D printers to construct each home, with each printer being 32 feet by 21 feet. “We can print buildings to any digital design our customers bring us. It’s fast and cheap,” said WinSun Chief Executive Ma Yihe. As of right now, Chinese regulations do not allow for multi-storey home production, though Yihe hopes to one day be able to construct skyscrapers via 3-D printers. Layer by layer, homes can go up relatively quickly, though, which is meeting the increased demand for cheap, affordable living in China. WinSun was able to create 10 homes in one day using the process, all for under a fraction the cost of a normal American home. Recent developments in 3-D printing has also allowed individuals to create beds, couches and other pieces of furniture as well to furnish the new homes. While not the most attractive homes ever seen, the structures by WinSun are affordable and look ready to move into immediately. One of the more fascinating aspects of 3D printing is its lessened impact on the environment, as well. As highlighted by Tech Republic, there are fewer waste materials, less transport and less wasted materials, thus lessening the carbon footprint on the nation. Also, should a piece of the home break down or become damaged in some way, a printer could, quite literally, spit a new piece out relatively quickly and make the repair immediately. he possibilities of 3-D printing are endless. The days of exorbitant home prices could be at an end through the use of 3-D printers. Homes that cost a quarter million dollars could suddenly cost around ten thousand. What’s the rate on a 30-year mortgage as it per-
With the 3-D method of homebuilding extremely young in its infancy, but as it grows, does it have the power to sustain over the tried and true methods of homebuilding? Only time will tell before that plot of land or open space is inhabited by a crew not laboring feverishly with brick and mortar and hammer and nail, but operating the 3-D machinery responsible for a habitable structure. Just think, the American dream of homeownership ... at the click of a mouse.
Rebuilding Trust After a Layoff By Andrea Obston ow does a company rebuild trust after a layoff? Is it best to push past the layoffs and hope no one notices? Not in today’s environment. Not if you expect to be in business tomorrow. We know that companies that weather layoffs most successfully are those that communicate the decision honestly to all the stakeholders it touches. But most companies are so focused on the internal aspects of this difficult decision that they choose to ignore its external impact. This puts their company’s reputation in jeopardy. As a manager or business owner, you may be faced with the tough decision of whether or not to deal with your layoff publicly. It will help if you remember this: The purpose of most layoffs is to preserve the business in tough economic times so it lives to fight another day in the future. In other words, the business (and you) will be experiencing the short-term pain of a layoff in exchange for the long-term health of the company. It’s not pleasant to face, but it is often a solid business judgment made with an eye towards the future. And in order to preserve the company and its reputation, you need to include
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managing the public face of that layoff as part of your downsizing plan. Ignoring this point puts the future of your business at risk. Businesses that close their eyes to the communication aspect of layoffs can expect to find themselves on the defense. No one looks good in defensive mode, especially when they are dealing with angry customers, curious reporters and surprised local government officials. The last guy who looked good playing defense was Troy Polamalu of the Pittsburgh Steelers. As crisis managers, we are called in to companies in the planning stages of a layoff to help them with their communications before, during and afterwards. We help them put a public face on this very private decision. Over the years, we’ve learned two key truths in this work: l Companies either choose to take charge of their own reputations during difficult times or end up allowing others to do it for them; and l People judge companies by the way they behave when the going gets tough. Companies either take control of these situations or the situations end up controlling them. Taking control means engaging in straightforward communication and focusing on the positive. For
example (assuming this is true), you tell your customers, prospects, employees, vendors and the rest of the world that the layoffs were a thoughtful business decision on the part of strong company with a good future. In plain language (and before people have a chance to make up their own stories), you need to deliver these kinds of messages: l We have had a staff reduction of X number of people; l We value all employees who work for this company and did not make this decision lightly; l This was a difficult choice that we made to ensure the long-term health of this company; l The layoffs were necessary because of the impact of prevailing economic conditions. These have hit our customers, and therefore, our bottom line. (By the way, it is not necessary to be as dramatic as one organization that ascribed the need for layoffs to “the global financial crisis”). l This company is strong and has a long history of weathering economic changes. It will continue to provide the superior customer service and products that have characterized it for the last [insert number of] years.
It is also helpful to prepare for any outside interest in the layoff as a symbol of a trend in your industry or region. While these stories have been done over and over, there is a good chance that a reporter or blogger may seize on this if they are looking for an angle to make the story of your layoff more “interesting.” Here are some basic steps that will help you prepare for the public face of your layoff decision:
Make a list of all groups impacted, in addition to the employees laid off Look at both internal and external audiences. Internally, these may include some or all of these groups: Remaining employees, managers, members of the board, stockholders and investors and retirees. Externally, think about customers, vendors, affiliated organizations, referral sources, industry trade groups, government officials (locally and statewide), customers, lenders and members of the community.
Understand the concerns of each group and be prepared to address them Often,
these
concerns
will
vary.
“THE PURPOSE OF MOST LAYOFFS IS TO PRESERVE THE BUSINESS IN TOUGH ECONOMIC TIMES SO IT LIVES TO FIGHT ANOTHER DAY IN THE FUTURE.”
Employees will be most worried about losing their jobs in the event of more layoffs, and how the layoff will impact them if they remain. Investors need to know the bottom line impact of this move, especially if it sets the stage for long-term profitability. Local government officials, on the other hand, will want to know what you’re doing to help laid off workers find other jobs. Customers need to be assured that service will not be impacted.
Communicate with each of these audiences in the most direct way possible That may be through written letters, phone calls, pro-active press releases (if you want announce the layoff yourself), reactive press statements (if you prefer to have something on-hand in response to a reporter’s call), posts on your Web site, and/or updates on any social media your company uses for self-promotion. Remember, you’ll be depending on these outlets to carry the good news about your company as part of your recovery. That means treating them with respect during the tough times to gain their trust for the future.
Remember that timing is everything
In today’s “porous” business environment, once you tell one person, you can expect the story to be public. Employees Tweet. Members of the board have neighbors in the media. Vendors share information with your competitors and retirees stay in touch with each other. The best way to “manage” this process (and you’ll note that I purposely put that word in quotes) is to have a written internal policy about how information is to be shared outside company walls. That policy should designate one person as the only liaison with the press. It should also include explicit instructions to all employees about how they handle any press calls or requests for interviews outside the company walls as some-
That sounds a lot less suspicious than, “They told me I’m not allowed to talk to you.” Your policy statement should also cover what people write about the company when they participate in social media, such as LinkedIn, Facebook and Twitter. While the jury is still out on how much control you can exert over people’s off-work communications, you can and should explain why refraining from social networking about the company’s internal affairs benefits everyone associated with it, especially in stressful times. And remember that the more thoughtfully and openly you handle communications with them, the more respectful they’ll be of your requests.
Look for ways to deliver good news after a respectful time It’s not enough to say your company is strong and expects to weather hard times, you’ve got to prove it. As part of your communications planning, look for ways to demonstrate that your company is back to business. Search out customer hero-tales. Congratulate employees who picked up the slack. Celebrate small victories internally and announce them publicly. Touch base with customers to make sure transitions to new customer contacts are going smoothly. Be willing to learn from any complaints you hear. Your company has worked hard to establish relationships of trust with your customers, employees and local reporters. Those relationships are the assets upon which you can rebuild your company’s future. If they are cultivated and nurtured, they’ll get you through and past these difficult time and lay the foundation for your future success. Andrea Obston is president of Andrea Obston Marketing Communications LLC. Its subsidiary, Andrea Obston Crisis Management, provides public image crisis planning and management. She may be reached by phone at (860) 243-1447 or e-mail aobston@aomc.com.
With the AllRegs® Compliance Management System, you’ll be able to: Audit and ensure correct policies are in place Deliver training on policies Archive and track historical policy practices Assess, test and train staff on policies Provide one system of record for all reports
What are you waiting for? Call (800) 848-4904 or visit us at www.allregs.com
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Fight information leaks as aggressively as you can
l “We have someone who’s handling calls from the media.” l “Give me your contact information and I’ll make sure gets into contact with you.”
You Need A Compliance Management System!
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When we pre-plan for layoffs with our clients, the most difficult part is the timing issue. It all boils down to this: The more personally affected someone is by the layoff, the earlier they need to be told directly. Not by reading it in the newspaper; not by stumbling upon it on someone else’s Facebook page and not by catching wind of it through the grapevine. They need to hear it from you.
times happens after a layoff. That should include a strong statement that they not speak with any member of the traditional or “new” press (i.e. bloggers) and a phrase that allows them to tactfully send the caller to the official press contact. We prefer something like:
The CFPB Says...
Your Game Plan to Social Media Success By John Seroka hink about the last time you attended a major sporting event, such as a professional basketball game. One connection—an interest in how the team’s players will perform that day— brought you and thousands of people together. The idea of a shared connection helps explain why social media is now a dynamic marketing force for businesses. The Internet is your arena to connect with a crowd that’s interested in what you bring to the home financing game. But how do you get the crowd’s attention and make them your fans? First, you need to be a starter … you have to get off the bench and get into the action. Social Web sites are buzzing with activity. Best of all, no tryouts are required, so you can easily join the game and become a major participant. A main point to understand is that online social networking is about relationship-building. Take the time to build your online relationships and understand that rewards will come your way in due time … and it snowballs. After all, Kobe Bryant didn’t become a household name after his first few games. Online networking is an inexpensive way to reach people, but you may need to pace yourself in the beginning. Too many people new to social networking get overzealous at first and then drop off completely because they don’t see immediate results from all the postings they have done. Like a coach developing a game plan, you too will need to plan a strategy that successfully uses social media.
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Why NAPMW? Three Simple Reasons
Education Organized for the purpose of providing education to professionals in all phases of the mortgage industry, NAPMW offers education via many venues – seminars and workshops held around the country, on-line, and at its National Education Conference held each May.
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NAPMW membership gives you exclusive access to timely education regarding the regulations affecting your career such as a FREE TO MEMBERS monthly webinar on industry updates.
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Leadership If you believe in helping to elevate the educational standards of this industry, or assisting in developing the most competent industry work force, then you believe in NAPMW. NAPMW is not a women’s organization. But since women make up the majority of professionals in the mortgage/banking profession, our purpose is to help them advance in business, personal, and leadership development.
Networking NAPMW is a community of nearly 2,000 professionals across the Country who engage in the mortgage / banking industry. Men and women from all backgrounds have joined NAPMW because they want to excel at what they do. Employers who want excellence from their employees engage with NAPMW for up-to-date education. Both professionals and employers have found there is a place for them in NAPMW. • National Education • Coast to Coast Associations • National Training • Discounted Services • National Networking • Industry Updates
To Join NAPMW visit: www.napmw.org or call: 1-800-827-3034
Identify your purpose, know your audience No pro makes it onto the court without knowing his purpose based on the position they play. As a broker, your purpose for participating in social media should be to build a solid following of loan originators, other business referrals and loan prospects.
Avoid sales pitching Just as fans entering a basketball arena have expectations about what will transpire there, social media users have expectations too. They turn to blogs, Facebook or other social Web sites for interesting and informative online conversation. Sales pitches will drive people away from you. Instead, let people know what your key interests are, what your function is within your company, and share key industry information to help their careers.
Remember that people do business with people they like, which ties into the relationship-building purpose of a social media strategy.
Know the tools available Each social Web site has a different playbook to follow. For example, Twitter revolves around Tweets, which are messages of 140 characters or less. Facebook is designed to be personal and communicate the personality of you and your business. LinkedIn is a site that enables you to describe your professional background and display recommendations from customers and associates. A blog is a Web-based journal that typically focuses on one subject. There are other websites for social networking, but we’ll take a closer look at the most popular examples so you’ll be ready to score points in any of them.
Blogs Selecting a blog host such as WordPress.com, Blogger, Typepad or Vox is the easiest way to begin. A hosted blog is very inexpensive and takes less than 10 min. to establish. If you want the look and feel to be completely customized, however, you may feel limited by a hosted blog. The other option is a server side or stand alone platform. As a mortgage professional, your blog will target business referrers (loan officers, past customers and other professionals), so anything you write needs to keep this audience in mind. There are more than 40 documented ways to drive traffic to a blog. One popular method is to submit your blog to several blog directories like Blogarama or Bloggapedia. This is just one of the many effective tools available to get your blog noticed in the social media arena. Include your contact information and picture to personalize your blog. Below each post, install a bookmarking widget. If you have Facebook or LinkedIn pages, include a link in your profile and send Tweets driving people to your blog. Be sure to put your blog URL on all your marketing pieces, including your business card. Another tip is to research keywords and be sure to use them in the title and first sentence of your posts. For example, don’t try to rank in Google for the term “mortgage news,” but instead try to rank for something specific like “mortgage news in Venice, Calif.” Use Wordtracker to find keywords with less than 100 competitors if you can. Also ensure that people can subscribe to an RSS feed, leave comments and leave trackbacks.
â&#x20AC;&#x153;TOO MANY PEOPLE NEW TO SOCIAL NETWORKING GET OVERZEALOUS AT FIRST AND THEN DROP OFF COMPLETELY BECAUSE THEY DONâ&#x20AC;&#x2122;T SEE IMMEDIATE RESULTS FROM ALL THE POSTINGS THEY HAVE DONE.â&#x20AC;?
establishing your fan base, be personable and informative. People on Facebook will be interested in knowing a bit about what you do during your personal time; however, overdoing this at the cost of informative communications will cost you. To find people to follow you, you can click on â&#x20AC;&#x153;Friendsâ&#x20AC;? and then click on â&#x20AC;&#x153;Invite Friendsâ&#x20AC;? or â&#x20AC;&#x153;Find Friends.â&#x20AC;? After clicking â&#x20AC;&#x153;Invite Friends,â&#x20AC;? you simply input e-mail addresses of those you wish to invite or import addresses from your address book, write a message and send it out. â&#x20AC;&#x153;Find Friendsâ&#x20AC;? helps you find people in your e-mail contacts who already have Facebook accounts.
Keep a consistent presence and post relevant content
Connect with your crowd
Establishing a strategy for your Facebook page before creating your profile is necessary in order to best optimize your presence on this Web site. One idea is to use your company logo or your picture as the primary photo â&#x20AC;Ś it depends on your overall social media strategy. You can also post photo albums with pictures of yourself and your employees to more personally connect with your audience. Including pictures of you or employees engaged in group activities or corporate events is perfectly acceptable. Attracting people to follow you on Facebook is fairly simple, but you must remember why people become followers to begin withâ&#x20AC;&#x201D;itâ&#x20AC;&#x2122;s because they like you, your company and you are a source of information to them. While
By understanding how to use social media effectively, your online game plan will help your company grow. There are books available that can provide more strategy details, and marketing firms can give you a jump start to help achieve quicker results. With the widespread use of social networking sites, nowâ&#x20AC;&#x2122;s the time to get off the bench. John Seroka is vice president of Seroka & Associates, a full-service branding, advertising, marketing and public relations firm that serves a nationwide client base. He may be reached by phone at (866) 379-0400, e-mail john@seroka.com, or connect with him at linkedin.com/johnseroka or at twitter.com/johnseroka.
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n National Mortgage Professional Magazine n MAY 2014
Players who have a reputation for slam dunks and three-point shots quickly become fan favorites. If you consistently post interesting and reliable updates that affect your audience directly and immediately, then the more loyal your fan base will become. In the mortgage industry, things are constantly changing and these changes have a definite impact on consumers, loan officers and other business referrers. There is a constant flood of economic and industry newsâ&#x20AC;&#x201D;keep track of whatâ&#x20AC;&#x2122;s happening and frequently update your messages. Social networking is all about twoway communication. So how do you respond to negative feedback? Quickly and directly! This always requires tact. You have to remember that putting something out there is like taking the final shot at the buzzerâ&#x20AC;&#x201D;you cannot take it back. If you have a problem client who posts something derogatory about you or your business, resolve it quickly, first privately and then online. Do not continue an argument online.
NationalMortgageProfessional.com
Strategic page development is an important key to the success of your Twitter page and can help set you apart from the competition. When you design your Twitter page, itâ&#x20AC;&#x2122;s best to customize the page background so it complements your brand. Be sure to include a photo and select something professional that communicates your personality. A Twitter page with your picture will do a better job attracting followers. Just look at the top 100 Twitterers and youâ&#x20AC;&#x2122;ll see that they include pictures of people, not logos or objects. After you have your Twitter page set up, Tweet several messages of strategic value and substance before you invite your colleagues and business prospects to follow you. This way your followers will understand the value. As a mortgage professional, you may wish to communicate information about rates, new guidelines, mortgage industry trends or other topics that would be of value to your audience. When communicating this information, use a hashtag (#) in front of keywords in your Tweets. This will make it easier for people to find you. There are several ways you can encourage people to follow you. One way is to click on â&#x20AC;&#x153;Find Peopleâ&#x20AC;? at the top of your Twitter page where youâ&#x20AC;&#x2122;ll find several options for drawing them in. You can also install a Twitter widget on your Facebook page so that every time you send a Tweet, your Facebook wall is updated. You wonâ&#x20AC;&#x2122;t have to go to both sites to send the same message, which saves time. Remember to include your Twitter URL in your e-mail signatures and add the Twitter link icon on your Web site landing page. In addition, there is a new feature at LinkedIn that allows integration with your Twitter account.
Obama Cabinet Reshuffle: Is Julian Castro Too Radical a Choice for New HUD Head? By Robert Ottone resident Obama, whose approval rating among Latino voters has dipped dramatically according to a March 2014 Pew Research poll, is looking to potentially nominate the Mayor of San Antonio Julian Castro as the new head of the U.S. Department of Housing & Urban Development (HUD). Now, based on those plunging Hispanic poll numbers, this move makes sense. Is Julian Castro the right guy for the job, though? Back in 2012, many hailed Castro as “The Next Obama.” Even right-wing Web site Breitbart was quick to hop on the Castro/Obama train, with an in-depth look at the politician. In that piece, Breitbart declares Castro as “anti-white,” “a radical” and a member of a Latino group dedicated to establishing a new country in the American southwest. While La Raza Unida (English translation: “The Race United”)’s Web site espouses a pro-Chicano message. While I wouldn’t necessarily call the organization “racist,” it certainly doesn’t appear to welcome individuals of outside ethnicities. They also appear to have a strong anti-war, anti-police brutality message, as they protest both regularly. “His family was very present in La Raza Unida,” said Jenaro Ayala, national chair of La Raza Unida. “When he was younger, there was a certain involvement.” While association with a pro-Chicano community group isn’t something that should paint Mayor Castro in a poor light, there certainly are questions to be asked about Castro’s involvement with what some could perceive to be an antiAmerican organization, which, coincidentally, was partially-founded by his parents, both staunch political activists in the 1970s. Back in 2010, Castro’s mother, Rosie, stated that she did not approve of the educational field trips to Texas landmark The Alamo. “They used to take us there when we were schoolchildren,” Rosie Castro said at the time in an interview to The New York Times Magazine. “They told us how glorious that battle was. When I grew up, I learned that the ‘heroes’ of the Alamo were a bunch of drunks and crooks and slaveholding imperialists who conquered land that didn’t belong to them. But as a little girl I got the message—we were losers. I can truly say that I hate that place and everything it stands for.” Obviously, this is a huge deal considering that Texans worship what The Alamo stands for—a symbol of independence. History, of course, can look at an event in multiple ways, so, something that stands for independence to Texans could be a symbol of hatred for Mexicans.
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“I think this is a great opportunity for San Antonio to have our mayor running HUD,” said native Texan John H.P. Hudson, vice president of regulatory affairs for Premier Nationwide Lending and chair of the Communications Committee for NAMB—The Association of Mortgage Professionals. “He’s done a lot to promote green energy here in San Antonio, but I have yet to see that translate to housing here. One of the problems I see happening here in San Antonio is housing affordability being diminished due to developer impact fees. Many homebuilders have left the first-time homebuyer market because of that. I think Mayor Castro could bring the plight of housing affordability issues in San Antonio into the national debate.” Castro delivered the keynote address at the 2012 Democratic National Convention. At the time, Castro seemed to be groomed for a major political push, with some even saying White House ambitions were in order, according to Yahoo. However, Castro’s ties to La Raza Unida could end up being a black eye for him down the stretch, considering he will face an intense grilling and be put under the microscope if nominated. “We don’t see anyone’s involvement in LA Raza Unida as negative,” said Ayala. “La Raza Unida is an expression of community. We’re hoping that he (Castro) remembers that. We’re upholding a commitment to community.” On an odd and somewhat interesting note, former HUD Chair Henry Cisneros was also the Mayor of San Antonio. Only time will tell if the city of San Antonio will serve as the farm system for future HUD heads, but from what we can gather at this point, the still under-40 Harvard Law School grad Castro is on the radar and has his finger on the pulse of the U.S. housing market. “The American dream is not a sprint, or even a marathon, but a relay. Our families don’t always cross the finish line in the span of one generation,” said Castro in his speech at the 2012 Democratic National Convention. “But each generation passes on to the next the fruits of their labor. My grandmother never owned a house. She cleaned other people’s houses so she could afford to rent her own. But she saw her daughter become the first in her family to graduate from college. And my mother fought hard for civil rights so that instead of a mop, I could hold this microphone.” Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or by e-mail at robertpo@nmpmediacorp.com.
Developing a Solid Branch Starts With Being a Servant By Kurt Reisig In today’s uncertain and highly fragmented mortgage industry, mortgage professionals must continually strive to distinguish themselves. Reforms over the past few years have drastically limited the ability of originators to differentiate based on loan rates and structure, but there are still ways to stand out. Those who have made their mark as successful branches, brokers, loan officers and support staff often have a couple things in common. First, they demonstrate an understanding that their role requires them to serve other people within their branch, as well as their clients. Second, successful lenders and loan officers practice a few old-fashioned sales techniques that are paramount to increasing sales, retaining current clients and getting referrals for new business.
make good decisions. Taking a personal approach is a proven technique for success in every type of business or sales, and using it today can be an invaluable tool to stand out.
Developing a culture of service During the booming years of the housing market, many mortgage companies got so caught up in making money that they forgot they were in the service industry. There is a difference between
being a service provider and truly being servant to customers and clients. A service provider offers a service that their customers need, however, that does not mean that each person who provides a service is a good servant. A servant is one who remembers that they should add value and go beyond the basics. They see their organization as one that serves to benefit their customers, clients and team members, for the long haul. They do not think transactionally. Their focus is on the long-term relationship. An organization with a servant cul-
ture is one where employees work as a team to understand and better assist client needs. Not every originator understands being a servant. Building a “servant culture” must start at the top, with management setting an example for loan officers and assistants of what it means to be a servant. Once each staff member embraces the concept of service and realizes that no task is too small (or too big), the company as a whole will benefit. continued on page 77
Sales training
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n National Mortgage Professional Magazine n MAY 2014
Mortgage rates and loan programs are relatively similar across the industry right now, so lenders and loan originators must develop new ways to differentiate themselves from their competitors. One way to do this is to develop a streamlined, internal process for loan approvals. This positions originators to build relationships with referral partners and ensure that loans are approved for consumers and real estate agents in a timely manner. Originators who provide customers with a realistic timeline and deliver results on time will build credibility. This will help an originator to establish a positive reputation and drive repeat business. Once good internal processes have been developed, loan originators should sharpen their basic sales techniques. There are time-tested techniques, often overshadowed in the age of technology, where many salespeople rely heavily on e-mail marketing campaigns, digital ad buys and other hightech methods of communication. These campaigns will be even more effective and will achieve a higher return on investment (ROI) if a loan originator takes that extra step to make it personal. Brokers and loan officers should pick up the phone and call potential customers, reach out to current customers and regularly meet with current and prospective clients face-to-face. Conducting a personal phone call or meeting gives a loan originator the opportunity to add value to the services they offer. They can learn more about what a customer’s needs are and can tailor their services specifically to that client. They can offer guidance and suggestions about a loan to a client. This helps make an originator an even stronger service provider moving forward with clients. It shows that they’ll go the extra mile to help their clients
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AllRegs—Your Source for Fast, Reliable Answers 2600 Eagan Woods Drive, Suite 220 Eagan, MN 55121 (800) 848-4904 www.allregs.com AllRegs offers mortgage professionals fast, reliable answers needed to conduct their day-to-day business. From research and reference to business intelligence, from education and training to professional services, we are your definitive source for mortgage industry information. With tools for originators like NMLSapproved CE training, regulatory content libraries for compliance staff, guidelines for underwriters, policy manuals for operations, and business intelligence for business development – we have you covered as the leading information provider for the mortgage industry. If you have a specific need, our professional services team can help with thing like policy, procedure or guideline development, as well as custom training or publishing resources. Contact us to learn how we can help you – visit www.allregs.com today.
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Lenders can take advantage of Calyxâ&#x20AC;&#x2122;s fully integrated automated underwriting and pricing products to help them determine loan eligibility, pricing against investor or FHA guidelines while staying compliant in 2014.
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n National Mortgage Professional Magazine n MAY 2014
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developing a solid branch continued from page 73
A servant culture is a key tool to generate new business. A client who has worked with a company that provides a necessary service versus one that actually serves well will likely be more satisfied with the latter. In turn, they may be more willing to recommend that specific company to friends and colleagues. Eventually, this will build a group of loyal, satisfied customers who will increase word-ofmouth referrals and generate new leads for new customers. The cycle will continue as these new customers provide additional referrals and tell more people about the excellent service they received. To develop a company culture of servants, many companies have turned their organizational charts upside down. An executive team that serves its staff produces a staff more willing to serve the executive team and more importantly, customers. In this business, every staff member—no matter their position or the office they work in—must realize that they are servants to each other, vendors, and external clients and customers. To act as a servant in the mortgage industry, companies and originators must remember that they first have to earn that role. It takes solid sales skills and a personal touch to find a client or customer in today’s competitive mar-
ket. If a broker sells a service and can deliver a good product, on time and with impeccable integrity, they have earned the opportunity to serve. This will lead to repeat business and new customers coming through the door simply because of referrals. The number of loans that a branch closes will continue to grow, increase branch revenues and (ideally) increase pay for every branch staff member. Many companies may never become true servants, though the commitment to seek it is most important and loan originators must consistently strive to become better servants. For managers who want to increase revenues and, in turn, their salaries, their work as servants and salespeople is never done. Now, more than ever, the art of service has come into the forefront of the mortgage industry. Those who sell well and provide excellent service to their customers will continue to be top performers. Those who embrace a true “servant culture” will experience this success to an even greater level. Serving is a great strategy! Kurt Reisig is the founder and chief executive officer of American Pacific Mortgage Corporation. He may be reached by phone at (916) 960-1325 or email kareisig@apmortgage.com.
with QM ((A-t-R) A-t-R) A
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Compliant Compliant • Efficient Efficient • Reliable Reliable • Affordable Aff ffo ordable
three keys for adapting
Embrace the new reality Make no mistake: Everyone’s career is going to be affected at some point in
their life. This isn’t an “if” scenario; it’s a “when.” So even if your work life seems to be going well right now, start developing your capacity to adapt so that when change occurs, you know what to do. If you’re in the midst of a change and need to adapt quickly, remember that learning is inherently difficult because you often feel awkward, incompetent, and insecure for a temporary period of time. Eventually, though, you become so fluent in the new knowledge or routine that you can’t imagine your life any other way. Therefore, the sooner you start cultivating and embracing your ability to adapt, the sooner you can thrive in your new situation. Dr. Marty Martin, known for his state-ofthe art content presented in an engaging, dynamic fashion, has been speaking and training nationally and internationally for many years. Dr. Martin is the director of the Health Sector Management MBA Concentration and an associate professor in the College of Commerce at DePaul University in Chicago, Ill. He may be reached by phone at (630) 715-6270 or email drmartymartin@gmail.com.
800.362.2599 sales@calyxsoftware.com www.calyxsoftware.com ww w.calyxsoftware.com
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nario if you adapt is to find a job you love—one that pays great and offers high satisfaction—albeit in a different part of the country. If you fail to adapt, that scenario may include you moving back in with your parents and working at a minimum wage entry level job that you hate. And if you somewhat adapt, perhaps you find a good paying job in your town, but you’re doing work that doesn’t give you much joy or satisfaction. With these three scenarios detailed on paper, you have the option of choice. Which scenario do you want to pursue? Now, instead of becoming paralyzed with thoughts like, “I don’t know what to do next” or “Until I figure out what is the right decision I’m not going to do anything,” you can make an informed choice of the best way to overcome your current situation. If you are involved in joint decision-making with loved ones, share what you wrote with them so they can be part of the choice process too.
F or m ore tthan ears, For more han 20 yyears, tthe he preferred preffer e red loan loan o origination rigination p platform latform
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taking the lead Why Your Website Sucks ... and How to Fix It
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By Jonathan Blackwell our Web site sucks. I say this with a high degree of confidence even though I haven’t seen it. And just how can I make such a blanket statement? Because it is generally true of most Web sites. They do, in fact, suck! Don’t throw in the towel just yet though. You can fix your site. You might even be able to get leads from it for once.
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1. You have not updated it in more than five years Much has changed in Web design and the way users experience a Web site visit in the past few years. One of the biggest changes is HOW users access your site. Five years ago, it was from their desktop or laptop. Today, more than half of your visitors likely come from mobile or tablet devices. If your Web site isn’t responsive and does not adjust to the device it is being viewed on, then you are losing visitors fast. Make your Web site responsive. While you are working on a new and responsive design, ditch any dated flash intros and, for Pete’s sake, do not have any atrocious music that plays while your visitors navigate the site.
2. It is static Static Web sites are just that … static! They do not get fresh, useful content
that continually adds value and helps boost your search rankings. If you are not blogging consistently, then start if you want to see repeat visitors or any quality search rankings. Add useful, valuable content and do it with greater frequency.
3. Your on-page SEO sucks This is a blanket category. It includes lots of individual aspects. The biggest three being slow load times, poor internal linking and poor navigation. Other culprits are poor use of header tags, keyword stuffing and poor formatting of your content making it hard to read. All of these factors will kill your search rankings, which is probably good. If a customer did find your site, they are not going to sit and wait 10 seconds for it to load. They are probably also looking for specific content. They might even check out a few pages … if they can find them. Your job is to facilitate their journey through your site with clear internal linking and menu navigation.
4. Your site lacks trust and/or security It goes without saying if a visitor hits your site and gets a malware warning, then they are going to bounce quickly. Visitors also like to see trust symbols. If you are a member of the Better Business Bureau, then display the BBB seal. Have the Equal Housing Seal and any other signs and symbols for certifications or organizations you are a part of. Have a phone number available prominently as well.
5. Lacks a clear call-to-action You may have done everything right. The visitor found your cleanly designed, malware-free, quick loading site and read several of your value-adding pieces of content. They’d like to connect with you, but they are not sure how. The only form you have is an application which they are not ready to complete. They try to call, but get voicemail, so they move on to the next Web site. You need clear, frequent calls-toactions through your Web site. You
“If your Web site isn’t responsive and does not adjust to the device it is being viewed on, then you are losing visitors fast.”
should have one after every post and on the sidebar. Wherever that visitor goes, they should be able to quickly locate a way to contact you. The contact form should be short too and no more than six fields. The fewer fields, the higher the conversion rate.
6. No social proof It gives your visitors the warm and fuzzies to see your testimonials. They also like to see social sharing buttons. Other people are reading and sharing your content. Some are doing business with you and are thrilled with the results. You are a real, living and breathing loan officer that they want to do business with. Having a lead generation Web site is a great way to drive business. Sadly, it is not as easy as just sticking up a cookie-cutter site and praying. Producing a good, quality product takes effort, time and some work. I know from experience that the last two, time and work, don’t come easy for most busy mortgage professionals. If you do fall into that category of “busy mortgage professional,” then I hope that “busy” is also producing commission revenue. Don’t be scared to use it. There are plenty of talented, yet affordable, Web designs, developers, writers and designers who will be more than happy to take the lead. Jonathan Blackwell is chief engagement officer for BoldCopy.net. Jonathan may be reached by phone at (404) 551-3845 or email jonathan.blackwell@gmail.com.
calendar of events N A T I O N A L
JUNE 2014 Monday-Friday, June 2-6 MISMO’s 2014 Spring Summit Dallas/Addison Marriott Quorum by the Galleria 14901 Dallas Parkway Addison, Texas For more information, call (202) 557-2715 or visit www.mismo.org. Wednesday-Thursday, June 4-5 2014 Mastermind Summit The Palms Hotel 4321 West Flamingo Road Las Vegas, Nev. For more information, visit mastermindsummit.com.
Wednesday, July 16 “Let’s Make A Deal” Tri-State Wholesale Lending Fair Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com. Thursday-Friday, July 17-18 California Association of Mortgage Professionals 2014 Summer Convention Thunder Valley Casino & Resort 1200 Athens Avenue Lincoln, Calif. For more information, call (916) 448-8236 or visit www.ca-amp.org. AUGUST 2014 Thursday-Friday, August 7-8 2014 Louisiana Mortgage Lenders Association Education Conference New Orleans Hilton Riverside 2 Poydras Street New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.
Thursday, August 28 Hawaii Association of Mortgage Brokers (HAMB) 2014 Annual Conference & Trade Show Japanese Cultural Center of Hawaii 2454 Beretania Street Honolulu, Hawaii For more information, call (808) 783-4442 or visit www.hamb.org. SEPTEMBER 2014 Thursday-Saturday, September 4-6 Florida Association of Mortgage Professionals 2014 Convention & Trade Show Rosen’s Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.famb.org. Saturday-Monday, September 13-15 NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail vvalvo@agilityresourcesgroup.com or visit www.nambnational.com.
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.
OCTOBER 2014 Wednesday-Saturday, October 15-18 American Land Title Association (ALTA) 2014 Annual Convention The Westin Seattle 1900 5th Avenue Seattle, Wash. For more information, call (202) 296-3671 or visit www.alta.org.
Sunday-Wednesday, October 19-22 MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit www.mortgagebankers.org. MARCH 2015 Sunday-Thursday, March 8-12 32nd Annual Regional Conference of MBAs Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.
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Monday-Wednesday, June 23-25 2014 Valuation Expo The Flamingo Hotel 3555 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (513) 919-4700 or e-mail jim@allterragroup.com.
JULY 2014 Monday-Wednesday, July 7-9 Ultimate Mortgage Expo 2014 Hotel Monteleone 214 Royal Street New Orleans, La. For more information, call (860) 922-3441 or e-mail info@agilityresourcesgroup.com.
P R O F E S S I O N A L
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Friday, June 13 The Great Northwest Mortgage Expo Spirit Mountain Casino 27100 Salmon River Highway Grand Ronde, Ore. For more information, call (503) 567-9326 or visit www.greatnorthwestexpo.com.
M O R T G A G E
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Y YOU OU ORIGINATE, ORIGIN NATE, T W WE EC CLOSE, LOSE, ITâ&#x20AC;&#x2122;S THA THAT AT S SIMPLE. IMPLE. 877.552.8737 www www.afrwholesale.com/wd .afrwholesale.com/w d Lender NMLS 2826. AFR Wholesale, a division of American Financial Resources, Inc. is a nationwide wholesale residential mortgage lender and an approved lending institution. The company is a GNMA issuer, FNMA seller/servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. This information is provided to assist business professionals. This is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. - Equal Housing Lender - Equal Opportunity Employer. Corporate office located at 9 Sylvan Way, Parsippany, NJ 07054. AB020714