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n National Mortgage Professional Magazine n MAY 2015
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10 # (Hashtag) Reaching the Millennial Market Through Social Media By Bubba Mills
M A Y
24 Tales From the Closing Table By Andrew Liput
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A SPECIAL FOCUS ON “TRENDS IN MORTGAGE LENDING”
Perceptual and Regulatory Changes Spark Resurgence of Brokers in the Mortgage Industry By Mat Ishbia ................................................48 A New Landscape Emerges for Wholesale Lending By Matt Ostrander ....................................................................................50 Are You Ready? Five Things to do to Prepare for TRID By Jorge Sauri ..........................................................................................52 Merging With Caution: Lessons Learned in Mergers and Acquisitions By Jeff Bode ..............................................................54 Millennials: Attracting a New Generation By Ashley Lubey ................56 How to Build Loyal Customers in a Capricious Era By C. Richard Triola..................................................................................57 In the Year 2525 By Eric Weinstein ........................................................58
26 Who’s Afraid of the CFPB? By Phil Hall
FEATURES Settlement Agent Compliance and Cooperation With Lender TRID Preparation By Andrew Liput ..........................................................8 The Elite Performer: Experience: Quality vs. Quantity By Andy W. Harris, CRMS..........................................................................8 Snail Mail? We Want Leads! ..................................................................16 Direct Mail Campaign Ideas for Mortgage Professionals (Part II) By K. Justin Restaino ..............................................................................18 NAMB Perspective..................................................................................20 Emotional Intelligence and Mortgage Advertising By Brent Emler ....28 Industry Updates By Gavin T. Ales ........................................................30
36 Does Sub-Prime Equal Non-Prime? By Tom Hutchens
V I S I T Company
Web Site
O U R
A Page
Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................52 American Financial Resources ............................ www.afrwholesale.com/partnership ....................Back Cover Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................72 CallFurst.com ...................................................... www.callfurst.com ............................................................53 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................29 & 49 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7 Equity Prime LLC................................................ www.equityprime.com ..........................................42 & 55
64 NMP’s Mortgage Professional of the Month: Rey Maninang, SVP & National Sales Director for Wholesale Lending, Carrington Mortgage Services By Phil Hall
First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 50 Flagstar Bank .................................................... www.wholesale.flagstar.com ..........................................19 Home Point Financial Corporation ...................... www.homepointfinancial.com ........................................13 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................35 iServe Residential Lending, LLC .......................... www.joiniserve.com ......................................................17 Lykken On Lending ............................................ www.lykkenonlending.com ............................................65 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................31 Monroe Capital, Inc. .......................................... www.monroecap.net ......................................................34 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ......................................1 Movetube.......................................................... www.movetube.com ......................................................39
f contents
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From Broadway to MBS Highway: A Chat With Barry Habib By Dave Sullivan ......................................................................................32 NMP’s Economic Commentary: The Three Bears Jobs Report By Dave Hershman ..................................................................................34
NAHREF Annual Conference Maps Out the Future of Hispanic Homeownership ................................................................38 Lykken on Leadership: Seven Ways to Motivate Your Team When Times Are Tight By David Lykken................................................42 The Long & Short: The Business of Short Sales By Pam Marron ......44 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ......................46 NMP’s Literary Corner By Tom LaMalfa ................................................59 How to Increase Your Business by 80 Percent in Just Eight Weeks By Dr. Kerry Johnson ................................................60 Three Keys to Attracting Great Sales Leaders By David Williams ......62 MBA’s Mortgage Action Alliance: A Message From MAA Chairman Fowler Williams ............................................................66
COLUMNS New to Market..............................................................................12 News Flash: May 2015 ................................................................14 Heard on the Street ....................................................................40 Outstanding Places to Work ......................................................68 NMP Calendar of Events ............................................................69 NMP Resource Registry..............................................................70
D V E R T I S E R S Company
Web Site
Page
NAMB+ ............................................................ www.nambplus.com ......................................................27 NAMBPAC.......................................................... www.namb.org ..............................................................25 NAPMW ............................................................ www.napmw.org ....................................................58 & 63 NAWRB ............................................................ www.nawrb.com ............................................................67 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 41 & Inside Back Cover PB Financial Group Corp..................................... www.calhardmoney.com ................................................43 PreApprovalLetter.com ...................................... www.preapprovalletter.com/lender ................................48 REMN Wholesale ................................................ www.remnwholesale.com ................................................5 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................51 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................33 Southwest Mortgage Fest .................................... www.swmortgagefest.com ..............................................65 TagQuest .......................................................... www.tagquest.com ........................................................45 The Bond Exchange............................................ www.thebondexchange.com ..........................................47 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..............................54 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 Ultimate Mortgage Expo .................................... www.ultimatemortgageexpo.com ..............................3 & 61 United Wholesale Mortgage ................................ www.uwm.com ..............................................................11
MAY 2015 Volume 7 • Number 5
FROM THE
Trends and their imprint on the future
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com
Trends, by design and definition, come and go. That small car battery that you called a cellphone in the 1980s evolved over time to the more pocket-friendly and portable cellphones and now, iWatches, that we cannot seem to live without today. The evolution of this technology started with an idea, was crafted and morphed over the years and is now a necessary evil at times that we cannot function without. The same applies for fashion. The tie-dyed and bellbottom gear of the 60s and 70s morphed into the neon and Day-Glo of the 80s. Google Oscar Gamble of the New York Yankees fame and his hairstyle from 70s. It may have decreased in size, but his puffy locks found new life in the 1990s. I am 6’4” and can remember (and luckily have no photos to be blackmailed with!) that I gave into the trend of platform shoes and an oversized afro. Trends seem like boomerangs in our society … what comes around goes around. Such is the same in the mortgage marketplace. And while the industry has adopted technology as a necessity in everyone’s day to day life, the personal touch of a mortgage professional, guiding the homebuyer though the homebuying process, will always remain the same. Some things never do change, and as trends blow through the marketplace, the guidance of a well-educated mortgage professional is a must and standard. And as we have seen these trends come and go, each trend leaves behind a trait that has gone to help the formation of what the industry is today. The aforementioned technologies that have been introduced are constantly evolving, yet each left a small piece of itself to form the near-paperless transactions that exist today. While some may still like the old school feel of a business card, PDAs of the mid-1990s allowed us to replace the stack of business contacts and allow us to carry them in one small portable digital device for our convenience. The contacts stored in one’s PDA eventually married cellphone technology, thus merging one’s contact info with the ability to contact a client in an easy-to-use handheld device. Add apps to that cellphone and we are on the cusp of a full mortgage transaction, from application to presenting the buyer the keys to their new home, taking place virtually in the palms of our hands. Technology aside, sweeping compliance changes too have swept through the industry, in some cases, completely revamping a firm’s structure. The advent of Dodd-Frank and the impending TRID rules have shaped the mortgage companies from the days of old into the compliance-laden structures that exist today. These trends in compliance have reshaped the smaller shops to now have a compliance arm to guide them as they wade through the ever-shifting waters of today’s regulatory waters. And let’s not forget marketing. The way we get prospective homebuyers to deal with us and not the competition has evolved as well. From the always tried and tested staple of direct mail, to reaching your audience through the social media channels of today, the industry’s methods of marketing has felt the impact of sweeping trends as well. Despite the method and hot marketing trend at the time, the end result is to get clients into homes and the ability to create a customer for life. No matter what aspect of life or society is touched by the trends of the day, they all have a common thread. Whether it be hairstyles, fashion, marketing, technology, the trends of the past provide integral pieces in shaping a better future. Sincerely, Joel M. Berman, Publisher-CEO • NMP Media Corp. joel@nmpmediacorp.com
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 VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com
Scott Koondel VP of Operations (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com
Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com
Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@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.
MAY 2015 n National Mortgage Professional Magazine n
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National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2015 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Rocke Andrews, CMC, CRMS
Fred Kreger, CMC
Laura Burke, EA, MBA, MS
Ashley Lubey
Eric Weinstein
David Lykken
Brent Emler
Bubba Mills
David Williams
Pam Marron
Tom Hutchens
K. Justin Restaino
Fowler Williams
Linda McCoy, CRMS
Mat Ishbia
Jorge Sauri
Dr. Kerry Johnson
Dave Sullivan
Andrew Liput
C. Richard Triola
John Councilman, CMC, CRMS
Donald J. Frommeyer, CRMS
Phil Hall
Andy W. Harris, CRMS
Dave Hershman
Editorial Contributors Gavin T. Ales
Jeff Bode
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NAMB The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org
2014-2015 NAPMW National Board of Directors
NAMB 2014-2015 Board of Directors OFFICERS John Councilman, CMC, CRMS—President AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS—President-Elect Lending Arizona LLC 3531 North Pantano Road l Tucson, AZ 85750 Phone: (520) 886-7283 l E-mail: randrews@lendingarizona.net Fred Kreger, CMC—Vice President American Family Funding 28368 Constellation Road, Suite 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Rick Bettencourt, CRMS—Secretary Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l E-mail: rbettencourt@mortgagenetwork.com Andy W. Harris, CRMS—Treasurer Vantage Mortgage Group Inc. 15962 SW Boones Ferry Rd., Ste 100 l Lake Oswego, Oregon 97035 Phone: (503) 496-0431, ext. 302 E-mail: aharris@vantagemortgagegroup.com
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Donald J. Frommeyer, CRMS—Immediate Past President/NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A l Carmel, IN 46032 Phone: (317) 575-4355 l E-mail: donald.frommeyer@gmail.com
P.O. Box 451718 l Garland, TX 75045 Phone: (800) 827-3034 Web site: www.napmw.org
National President Christine Pollard (607) 226-1046 president@napmw.org
Vice President–Western Region Anna Mackovska (323) 321-2222 westernregion@napmw.org
President-Elect Kelly Hendricks (314) 398-6840 preselect@napmw.org
Secretary Cynthia Nutter (360) 258-2206 natsecretary@napmw.org
Vice President–Central Region Judy Alderson (918) 250-9080, ext. 300
Treasurer Kimberly Rozell, CME (607) 229-5008 nattreasurer@napmw.org
Vice President–Eastern Region Cathy Kantrowitz (845) 463-3011 easternregion@napmw.org
Parliamentarian Dawn Adams, GML, CMI (607) 329-4622 dawnvadams@live.com
Vice President–Northwestern Region William “Bill” Sanderson, CME, CMI (360) 713-9264
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
2014-2015 Board of Directors
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DIRECTORS Kay A. Cleland, CMC, CRMS KC Mortgage LLC 2041 North Highway 83, Unit CPO Box 783 l Franktown, CO 80116 Phone: (720) 670-0124 l E-mail: kay@kcmortgagecolorado.com
Mike Brown President (908) 813-8555, ext. 3020 mbrown@cisinfo.net
Judy Ryan Director Credit Plus (800) 258-3488 judy.ryan@creditplus.com
John H.P. Hudson, CRMS Premier Nationwide Lending 1202 W. Bitters Road, Bldg. 1, Ste. 1205 San Antonio, TX 78216 Phone: (817) 247-4766 l E-mail: jhudson@pnlending.com
William Bower Vice President (800) 288-4757 wbower@continfo.com
Mike Thomas Director (615) 386-2285, ext. 285 mthomas@ciccredit.com
Maureen Devine Ex-Officio (413) 736-4511 mdevine@strategicinfo.com
Dean Wangsgard Director (801) 487-8781 dean@nacmint.com
Julie Wink Treasurer (901) 259-5105 julie@datafacts.com
Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org
Renee Erickson Conference Chair (866) 932-2715 renee@zipreports.com
Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org
Olga Kucerak, CRMS Crown Lending 110 Broadway, Suite 360 l San Antonio, TX 78205 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com John Stevens, CRMS Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com
Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com
Scott Ledbetter Director (801) 375-5522 sledbetter@propertysolutions.com
We wish to thank our loyal employees, computer wizards, amazingly supportive clients and every other person that has been a part of DocMagic becoming the company it is today. Excited about the future, we have new magic up our sleeves for the innovative solutions our industry will be needing next.
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Settlement Agent Compliance and Cooperation With Lender TRID Preparation By Andrew Liput
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As anyone who is breathing in our industry is aware, beginning Aug. 1, 2015, all lenders must replace existing GFE, TILA and REPSA disclosure forms with two new Integrated Closing Disclosures. The new disclosures are a combination of the existing Good Faith Estimate (GFE), Truth-in-Lending (TIL) disclosure and the HUD-1 Settlement Statement and are intended to provide more transparency and a clearer description of closing costs and fees so that borrowers better understand the total cost of mortgage financing. The requirement places a burden on settlement agents who must work with a lender to ensure that the documents are properly executed and returned for compliance. Wells Fargo recently announced it will manage the process directly through its Closing Insight platform developed with Real EC, and will register and manage agent activities and to avoid compliance lapses. Similar collaborative efforts are underway with other large banks and settlement and technology firms. For smaller lenders, the time is now to evaluate their settlement agent relationships. Effective Aug. 1, all settlement agents will be required to use the new integrated closing disclosure forms. The new forms include a Loan Estimate that must be delivered or placed in the mail by a lender no later than the third business day after receiving the consumer's application, and a Closing Disclosure that must be provided to the consumer (and properly completed by the lender and/or the settlement agent) at least three business days prior to consummation. Certain changes made to the loan terms may cause the three-day period to restart. If a lender makes changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods), changes the loan product, or adds a prepayment penalty to the loan—the consumer must be provided a new form and an additional three-business day waiting period after receipt of the new form. Less significant changes can be disclosed on a revised Closing Disclosure form provided to the consumer at or before closing, without delaying the closing. This requirement will provide the important protection to consumers of an additional three-day waiting period for the three significant changes, but will not cause closing delays for less significant costs that may frequently change. Lenders are also being called upon to verify disbursements, which means in the absence of electronic integration with a closer’s trust account reconciliation software, they must obtain a certified closing check disbursement list with check numbers or wire info and names of payees, and copies of checks and wire receipts as part of the closing package. The new rule does not apply to home equity lines of credit (HELOCs), reverse mortgages, and chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling not attached to real property. The rule also does not apply to loans made by a person or entity that makes five or fewer mortgages in a calendar year. Settlement agents must immediately: l Become familiar with the new Closing Disclosure form; l Train operations staff on the format and proper completion of the new form; and l Reach out to lender clients and work with them to develop a process to meet the timely requirement to deliver a complete and accurate disclosure within the new regulatory notice time frame. Expect some confusion after Aug. 1. Also expect some changes and modifications to the requirements to eventually become adopted. Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, CEO and president of SSI, 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.
THE
elite performer Experience: Quality vs. Quantity By Andy W. Harris, CRMS
Many salespeople in the real estate and mortgage industry use the word “experience” quite loosely when referring to themselves or attempting to influence others during daily interactions. I find it fascinating when people reference this word in defending a mistake they made or having difficulties understanding something that is taking place in their field of so-called expertise. Quantity certainly does not equal quality when it comes to experience, yet a combination of both is most favorable. Let’s uncover some common myths and misunderstanding of what true experience is for those in our industry. Experience has many definitions and is usually defined by an individual’s interpretation. My favorite definition for “experience” as a noun related to our industry is “Knowledge or practical wisdom gained from what one has observed, encountered, or undergone.” Certainly, this knowledge is vital in an industry where consumer interaction and producing a positive outcome during such as large financial transaction is critical. Let’s look at some of the dangers “quantity experience” has over “quality experience.” Quantity (number of years) experience solely can be dangerous. Many of those who have been in the industry for a very long time have not only been stuck in old and outdated ways, but have the hardest time understanding and adapting to the rapid changes they are required to understand. This stubbornness can be devastating to their clients and potentially their business if they don’t change and seek modern knowledge. Unintentional ignorance combined with arrogance certainly is a recipe for disaster. Open-mindedness and adapting to change is vital. Quality experience I believe is defined by self-motivation to seek knowledge and education and not only have a clear understanding of the industry and ability to change, but maximize production and growth each year. Those who check their ego at the door and seek understanding and knowledge with an internal drive will always outperform competitors. Knowledge certainly is power and the more client interactions and diverse scenarios one faces, the more they productively grow in their careers. Current production volume (over the last 12 months and not years ago) can certainly be important also to build quality experience related to today’s industry. Lack of recent production can cause one to lose the related experiences they need to meet current industry requirements. The defensive statement about how long they have been in the industry to others usually comes when mistakes are made or consumers are negatively impacted by bad or inaccurate communication and advice. As an overview, experience is best defined by having quality and quantity combined. However, someone with less quantity, but greater quality experience, can certainly outperform others that have been in the industry for decades that may lack current knowledge. Remember to seek this level of combined experience and help others do the same. We all carry a very important role in the housing market and owe it to our clients to be the very best we can be during their largest financial investment. 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.
SPONSORED EDITORIAL
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# (Hashtag) Reaching the Millennial Market Through Social Media
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By Bubba Mills The old adage in marketing says if you aim at everyone, you’ll miss them all. I know lenders sometimes fall into the trap of attempting to reach everyone and then scratch their heads when they only hear crickets chirping. If you are one of those (or even if you’re not), stick with me and I might just be able to help you. Let me start with one word: Millennials—those 18 to 34 years of age. The National Association of Realtors (NAR) has found that Millennials represent the largest share of recent buyers (32 percent of all buyers last year were Millennials). Are lights and bells going off in your head? If not, check your pulse. So, a great place to sharpen your marketing aim is with Millennials. That’s half the equation—knowing who to go after. The second half is to know how to reach them. For that part, I’ll share two words: Social media. Many surveys have confirmed that social media is the Millennials’ dominant source of information, even above search engines. So the best way to build
relationships and trust with Millennials first is via social media. The true beauty of social media is not only its reach, but its implied advocacy. When Millennials find content they relate to, they often share it with their peers. So if one person shares your message, it could instantly go to hundreds (or even thousands) of people with the inferred praise of the sharer. If you’re not using social media … again … check your pulse. Then, start learning about it and getting active on it. I promise, it’ll be well worth your time. The big ones are Facebook, Twitter, Pinterest, Tumblr and Instagram. You can Google each and get a feel for which ones make the most sense for you, but all of them have something to offer mortgage lenders. Now I’m not one to toot my own horn, but for this topic I will only with the hope that you give what I say a little more weight. Last year, National
Mortgage Professional Magazine named me to its “25 Most Connected Mortgage Professionals” list. I’m proud of that because I know (and the magazine’s staff knows) in this day and age those in the mortgage industry must be open to technology and specifically to social media. Here are some tips you can start using to reach Millennials on their terms: 1. First, take time to understand social media: Join them (they’re free!) and just take it all in. See what it’s all about and what kind of information people share. Spend at least several days learning before you share info. 2. Make sure what you share fits the specific social media outlet: For example, Facebook and Twitter are primarily personal tidbits, news and they’re both fairly casual, while Instagram is geared
“The true beauty of social media is not only its reach, but its implied advocacy.”
exclusively to photos and visuals. 3. Make sure your information is relevant and useful to improve the chance it gets shared: Millennials understand marketers and they’re open to their messages on social media if the messages are relevant to their lives. Otherwise, they simply ignore it. 4. Make it interesting: Instead of saying, ‘Gee, I can get you a great mortgage.’ Why not just share a feel-good story of you helping someone who didn’t think they could qualify for a mortgage.
Share what’s on your mind Are you using social media as a marketing tool? If not, why not? Too much of a learning curve? Just not interested? Do you know other lenders who are using social media? What do you think of their efforts? Do you believe it would help your business if you were more active on social media? Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 9578353 or visit www.corcorancoaching.com.
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United Wholesale Mortgage Launches New Client Services Team
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United Wholesale Mortgage (UWM) has announced that it has launched Pronto, an expert help desk for its partners that gets any and all loan questions answered fast and efficiently. Pronto is an all-encompassing help desk that brings together UWM’s client relationship managers, underwriting experts, closings experts, and leaders in every aspect of wholesale lending onto a centralized platform. It gives brokers and correspondents an opportunity for second opinion, when they want it. UWM still provides direct access to underwriters and all the mortgage professionals that touch the loan, Pronto simply compliments the current process with a comprehensive solution-focused team. “We continue to build on our companywide mantra of Lending Made Easy,” said Mat Ishbia, president and CEO at UWM. “Wowing clients is what we do at UWM and Pronto is yet another step we have taken to ensure that our partners receive the best, most responsive service in the industry. Every single team within our company is laser-focused on providing superior client service.” Anytime a UWM partner calls in, Pronto ensures that a live person picks up and quickly provides answers or issue resolution on loans. If the client prefers to send an e-mail to the Pronto desk, they are guaranteed to be answered within 30 minutes or less. “Sometimes our partners have oneoff questions that they may not know exactly where to go to get them answered,” said Allen Beydoun, EVP of sales at UWM. “Whatever type of question needs to be answered, we want it done expeditiously and efficiently, and that’s what Pronto accomplishes.”
DocMagic Releases New TRID Functionality
DocMagic Inc. has announced that it has completed all required TILA-RESPA
Integrated Disclosure (TRID) rule software development and testing, and the new TRID enhancements have been officially released into DocMagic’s production environment. The new TRID offering is available to all DocMagic clients and all LOS partners for in-depth testing. DocMagic wants each of its clients and partners to become acquainted with the TRID enhancements and functionality that was recently incorporated into its suite of web-based document production systems. “We are giving our clients and partners the ability to be well-prepared for TRID far in advance of the Aug. 1 deadline,” said Dominic Iannitti, president and CEO of DocMagic. “After extensive internal testing, re-testing, and BETA testing by a select group of lenders, we perfected the changes required for TRID compliance and are now ready to open the flood gates. We are confident that our systems are now fully compliant with TRID, and we are excited to have our clients and LOS partners access and get used to the new TRID screens and functionality.” DocMagic provides a step-by-step TRID testing guide to all lenders and its support team has already successfully fielded hundreds of questions since the release last month. The company reports that lender testing with DocMagic has been going as planned and no software issues have been unearthed. DocMagic says that it has already started client training sessions on the new loan estimate and closing disclosures, has made available detailed training videos, and is presenting regular educational Webinars on TRID.
Carrington Mortgage Services Expands Wholesale Offerings
Carrington Mortgage Services LLC has announced that it will offer the FHA 203k Full loan program through its
national wholesale lending division. Carrington’s new 203k Full renovation loan program is a program through which borrowers can take out a single loan to finance both the cost of buying the home and the renovation costs. The 203k Fullprogram, further delivering on Carrington’s commitment to provide innovative products for underserved applicants, is available for borrowers with a minimum FICO score of 550, and provides an option for firsttime homebuyers and other underserved consumers to enter the market. This initiative presents additional opportunities for purchase-focused brokers to work directly with real estate agents, consumers and investors to extend their purchase home loan offerings. Carrington will provide 203k training to its broker partners beginning in April and throughout the program’s launch period. Mortgage brokers can sign up for the company’s “Daily Rate Report” at www.CarringtonWholesale.com. This new loan program completes Carrington’s 203k suite of offerings, which also includes FHA 203k Streamline loans for properties needing minor repairs and upgrades. The total amount of the 203k Full renovation loan is determined before the repairs or renovations are made, with a maximum eligible repair cost of 50 percent of the “subject-to” value. With this program, lenders will need a professional estimate, or an “asrepaired appraisal,” of what the fair market value of the home will be after the repairs are completed. Structural repairs qualify, including room additions. “We are pleased to add the 203k Full program to our existing FHA offering through our wholesale business,” said Carrington Mortgage Services LLC’s Mortgage Lending Division Executive Vice President Ray Brousseau. “By enabling our customers to buy lower priced homes, fix them up and apply the financing toward those improvements, we’re expanding the accessibility of homeownership to borrowers—
especially those in the underserved market.”
Parkside Adds FHA Loan Program to Its Suite Parkside Lending has announced that it is now offering Federal Housing Administration (FHA) loans, designed to help creditworthy lower and moderate income individuals and families buy or refinance a home. FHA loans offer greater flexibility in terms of borrower qualifications including lower minimum down-payment requirements. By offering these products Parkside Lending is contributing to the stabilization of the housing market, aligning with HUD’s mission—to create strong, sustainable, inclusive communities and quality affordable homes for all. “By offering FHA loans, we are able to support a larger percentage of our clients’ business and broaden homeownership opportunities for qualified borrowers,” said Matthew Ostrander, chairman and chief executive officer of Parkside Lending. “We will deliver the same great customer experience with FHA loans that our clients have become accustomed to with our suite of conforming, jumbo and non-QM loans.”
Accurate Group Launches iValueNet Solution for Property Inspections
Accurate Group has introduced its iValueNet solution, part of the ValueNet appraisal suite designed to give banks, credit unions and mortgage lenders an alternative to traditional home appraisals. Lenders have a choice on interior property inspections that saves time and money without sacrificing quality or compliance. Accurate Group has developed a technology platform combined with proven processes to transform how real estate lenders
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EWSFLASH l MAY 2015 l NMP NEWSFLASH l MAY 2015 NMP NEWSFLASH l MAY HAMP and HARP Extended for One More Year
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The Federal Housing Finance Agency (FHFA) is not ready to pull the plug on either the Home Affordable Modification Program (HAMP) or the Home Affordable Refinance Program (HARP). In a speech delivered in Los Angeles before the Greenlining Institute’s 22nd Annual Economic Summit, FHFA Director Mel Watt announced that HAMP and HARP were extended for another year and will run through the end of 2016. “Although the number of new borrowers entering these two programs continues to decline, in part because many eligible borrowers have already taken advantage of them and in part because of recovering house prices, lenders and servicers are continuing to approve new HAMP modifications and HARP refinances,” said Watt. “Extending HAMP and HARP through the end of 2016 will provide real relief for borrowers who continue to face challenges either paying their mortgage or refinancing their loan.” Watt insisted that the programs “were never intended to be permanent programs” and stated this extension will be the final one.
NAR: Homeownership Decline Fuels Income Inequality Divide The often rancorous political debate over the widening gap of income inequality detoured into the housing market, as new research by the National Association of Realtors (NAR) determined that “the continued decline in homeownership means the gains are going to fewer people and likely leading to worsening inequality in the U.S.” In an analysis of 2010 to 2013 homeownership rates, single-family median home price fluctuations and the Gini index measure of inequality across 100 major metropolitan markets, NAR found
that all but seven of these metro areas experienced declining homeownership rates amid rising home values and stagnant wages. The situation was most acute in the area with the homeownership rates, most notably the expensive housing markets of Los Angeles, New York and San Diego. “Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle class families,” said Lawrence Yun, NAR’s chief economist. “Unfortunately, due to an underperforming labor market, insufficient housing supply and overly-stringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen.” Yun added that the situation was exacerbated because many renter households cannot make the financial leap into homeownership and, thus, are unable to enjoy the financial rewards of rising home values and declining mortgage rates. “Changes in wealth during this period are especially profound in high cost metro areas that have seen robust price growth,” said Yun. “For instance, a typical homeowner in San Jose, Calif., enjoyed an increase of $210,671 in housing wealth while renters were left behind and likely exposed to annual rent increases.” NAR also analyzed the 100 major markets against the Gini Index, which is often used by economists to measure income inequality. According to its data, NAR found 93 out of the 100 reviewed metro areas were burdened with a growing level of inequality; Connecticut’s Bridgeport-Stamford-Norwalk corridor plus New York, Miami and New Orleans were identified as having the most unequal distribution of income. “The decline in homeownership has serious implications for our economy and is currently leading to a more
unequal America,” said Yun. “Although better economic conditions should eventually open the door for more prospective buyers, improving access to mortgage products to creditworthy borrowers and ramping up new home construction–especially to entry-level buyers–will help ensure the opportunity is there for more American households to enjoy the potential wealth benefits and long-term stability homeownership provides.”
SWBC Mortgage Makes Generous Donation to MBA Opens Doors Foundation SWBC Mortgage Corporation has made a sizable donation to the MBA Opens Doors Foundation in Washington, D.C. Opens Doors is a non-profit organization run by the Mortgage Bankers Association (MBA) and dedicated to providing assistance to families with a critically ill or injured child by making their mortgage or rent payment. “Opens Doors has an important mission, and we were honored to make a serious contribution to that mission,” said Susan Stewart, chief executive officer of SWBC Mortgage. “When a family has to care for a child in a critical medical condition, they should be able to do so without fear that they will lose their home.” SWBC Mortgage Corporation is a wholly-owned subsidiary of SWBC, a diversified financial services company providing a range of insurance, mortgage and investment services to financial institutions, businesses and individuals. “On behalf of everyone working with the MBA Opens Doors Foundation, I want to thank Susan Stewart and the entire SWBC Mortgage team for this generous donation,” said Debra Still, chairman of the MBA Opens Doors Foundation, and president and chief executive officer of PulteMortgage. “Every penny of this significant contribution will go towards keeping families in
their homes during one of the worst personal crises anyone can imagine and allow those families to focus one hundred percent of their energy on getting their child healthy again.” The MBA Opens Doors Foundation was developed as an industry association model for utilizing both expertise and resources to help individuals and families facing housing challenges associated with the significant cost of care for a seriously ill child. Opens Doors is currently able to pass 100 percent of the donations it receives on to families in need of assistance. The Foundation’s ongoing relationship with Washington, D.C.’s Children’s National Medical Center provides a partner organization to help identify potential grant recipients.
Fannie Mae Reaps $1.9B Q1 Harvest The first quarter of this year was very, very good for Fannie Mae: The government-sponsored enterprise (GSE) reported net income of $1.9 billion–up from $1.3 billion in the fourth quarter of 2014–and comprehensive income of $1.8 billion–also up from $1.3 billion in the previous quarter. Fannie Mae’s positive net worth of $3.6 billion as of March 31 resulted in a dividend obligation to U.S. Department of Treasury of $1.8 billion, which it expects to pay in June 2015. “This was another quarter of strong financial performance,” said Timothy J. Mayopoulos, Fannie Mae’s president and chief executive officer. “We continued to have solid revenues. While we experienced some interest rate volatility again this quarter, we expect to remain profitable on an annual basis for the foreseeable future, we continued to make progress against our goals, and we are managing the company on a basis that produces good economic value for the taxpayer. We are focused on delivering value to our business partners and making it simpler and easier for lenders to serve the housing market safely, efficiently and profitably.” However, on a year-over-year basis, Fannie Mae is far below its first quarter 2014 levels of $5.4 billion in net income
and $5.7 billion in comprehensive income. Fannie Mae’s strong quarterover-quarter and weak year-over-year performance echoed Tuesday’s first quarter earnings report from Freddie Mac, which generated a quarterly net income of $524 million, which was up from the fourth quarter of 2014’s $227 million but down dramatically from the $4 billion in the first quarter of 2014. Freddie Mac said it would send the U.S. Treasury $746 million in June, the smallest dividend payment back to the government since 2009. “Fannie Mae expects to remain profitable on an annual basis for the foreseeable future,” said Fannie Mae in its earnings report. “However, the company expects its earnings in 2015 and future years will be substantially lower than its earnings for 2014, due primarily to the company’s expectation of substantially lower income from resolution agreements, continued declines in net interest income from its retained mortgage portfolio assets, and lower credit-related income. In addition, certain factors, such as changes in interest rates or home prices, could result in significant volatility in the company’s financial results from quarter to quarter or year to year.”
ulated AMC) must meet the same minimum requirements as state-regulated AMCs except for the requirement to register with a state. This final rule will become effective 60 days after publication in the Federal Register. The compliance date for federally regulated AMCs is no later than 12 months from the effective date of this rule. A participating state will specify the compliance deadline for state-regulated AMCs. The final rule is being issued jointly by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB), the Federal
Housing Finance Agency (FHFA), and the National Credit Union Administration (NCUA).
Quicken Loans Files Suit Against HUD and the DOJ Quicken Loans has filed suit in Federal District Court against the U.S. Department of Justice (DOJ) and U.S. Department of Housing & Urban Development (HUD). The company was left with no alternative but to take this action after the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal
action. By the FHA’s own objective public reporting, Quicken Loans has been, and is currently, ranked the highest quality (lowest default rate) lender of any FHA originator in the country—closing significant volume. Quicken Loans has originated the government agency’s best performing loan portfolio. According to the FHA’s publicly available data, Quicken Loans maintains the lowest compare ratio—the default rate of a single lender compared to FHA’s total mortgage portfolio. In addition, through Quicken Loans’ participation in FHA’s program, the government is projected to receive more continued on page 16
Feds Issue Final Rule on AMC Requirements
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Six federal financial regulatory agencies have jointly issued a final rule that implements minimum requirements for state registration and supervision of appraisal management companies (AMCs). The final rule implements amendments to Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the rule, states may elect to register and supervise AMCs. The AMC minimum requirements in the final rule apply to states that elect to register and supervise AMCs, as AMCs are defined in the rule. The final rule does not compel a state to establish an AMC registration and supervision program, and no penalty is imposed on a state that does not establish a regulatory structure for AMCs. However, in states that have not established a regulatory structure after 36 months from the effective date of this final rule, any non-federally regulated AMC is barred by Section 1124 of Title XI from providing appraisal management services for federally related transactions. A state may adopt a regulatory structure for AMCs after this 36-month period, which would lift this restriction. Under the final rule, participating states must apply certain minimum requirements in the registration and supervision of appraisal management companies. An AMC that is a subsidiary of an insured depository institution and is regulated by a federal financial institution regulatory agency (a federally-reg-
Snail Mail? We Want Leads!
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We all want quality leads right? Why is it so hard to find a good quality lead? It’s FHA streamline season again and now is the time to capitalize. Here is what top companies around the country are doing to close FHA streamlines with the new guidelines in place. With as much at 97 percent of the population on the Do-Not-Call List (DNC), it is becoming increasingly difficult to generate leads via telephone. Until 2013, telemarketing was a major contributor to the mortgage industry. Telemarketing was used to generate interest and also to verify leads and ensure accuracy. With the new Telephone Consumer Protection Act (TCPA) guidelines in effect since 2013, telemarketing is much less cost-effective, and in some cases, it’s even illegal. Internet leads are losing their luster. Somehow, it has become almost impossible to find an Internet lead that will close any higher than five percent to eight percent. Even if you pay for premium leads, there’s a good chance they are being generated or sold by a company that’s also a licensed mortgage lender. How effective are you at buying secondhand leads? It’s no wonder they don’t work as well as they used to. Leads used to be bought from lead generators. Now they are being sold by your competitors! And these are the leads that we depend on to grow our business? So, here is a tip that all the nation’s leading mortgage lenders do not want you to know about: Traditional marketing methods, such as direct mail and telemarketing, are working again. And here’s the trick to making sure it works: Use them together! Send your mail to everyone that matches the new guidelines for FHA MIP removal and call the people who aren’t registered to the DNC List. One hundred phone calls will produce at least one closed loan. One thousand letters will produce at least one closed loan. Get the data, get it in the mail, and get to work. There is plenty of business to be had. Make sure your marketing director knows the right qualifications you need and let them go to work for you!
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TagQuest customer spotlight: Zack M., a Nevada mortgage lender Each month, we talk with our clients to see how their campaigns are performing. Here is what we heard from Zack M., a mortgage lender from Nevada. Marketing method: Direct mail l Volume: 14,000 pieces dropped bi-weekly l Results: 0.85 percent response rate–30 percent application rate on inbound calls Highlights of the campaign that worked well “Ease of the process. Everything from ordering, to taking calls takes little effort on my part.” Highlights of the campaign that may appeal to others “One-stop shopping with proven results. I would recommend it to anyone.” Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 7178980 or visit www.tagquest.com.
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than $5.7 billion in net profits from the insurance premiums collected above and beyond claims made from over $40 billion in FHA home loan volume closed by Quicken Loans during the 2007-2013 timeframe. Quicken Loans has achieved FHA’s highest quality ranking which has led to extraordinary profitability for FHA’s insurance program due to its robust attention and focus on quality control along with its thousands of highly trained and experienced team members and industry leading processes and technology. Quicken Loans’ success in originating the industry’s top-quality FHA mortgages has not gone unnoticed. On multiple occasions, representatives from FHA have visited Quicken Loans’ office to study the company’s underwriting processes and best-practices to learn how Quicken Loans’ FHA lending has grown substantially, while at the same time becoming the gold-standard in quality for FHA lending. “After three years of struggling to understand the DOJ’s position and methodology that would warrant the country’s largest and highest quality FHA lender to make untrue admissions and pay an inexplicable penalty or face public legal action, it is time to ask the court to intervene,” said Quicken Loans CEO Bill Emerson. “No threat, including highprofile senseless lawsuits from powerful federal officials, will deter our company and its leadership from doing the right thing. We will stand in defense of our impeccable reputation established by thousands of hard-working ethical team members over our 30-year history.” Quicken Loans has provided the DOJ with more than 85,000 documents, including 55,000 e-mails. In addition, the DOJ has conducted hundreds of hours of depositions from numerous Quicken Loans team members. Three years later, the DOJ inquiry has resulted in the threat of a federal lawsuit based on faulty analysis of a miniscule number of cherry picked mortgages from the nearly 250,000 FHA loans the company has closed since 2007. “The Constitution provides for checks and balances among the three branches of government. We are hopeful and confident that after examining the facts, the judicial branch will exercise their authority to provide just relief from this misuse of power,” Emerson said.
CFPB Issues Guidance on Housing Counseling
SPONSORED EDITORIAL
The Consumer Financial Protection Bureau (CFPB) has issued a final interpretive rule on how to provide mortgage applicants with a list of local homeownership counseling organizations. The interpretive rule restates guidance the CFPB issued in 2013, and provides further guidance for
lenders who are building their own lists of housing counselors. The rule also includes guidance on the qualifications for providing high-cost mortgage counseling and for lender participation in such counseling. “Buying a home is often the largest financial decision in a consumer’s lifetime, and we want to ensure that consumers can access the independent and informed advice they deserve before making that decision,” said CFPB Director Richard Cordray. “Housing counselors are a crucial source of that helpful advice. We will continue to work to improve the home-buying experience for consumers, and today’s interpretive rule will help industry comply with these important protections.” Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, and credit issues. Advice from housing counselors can be provided at little or no cost to consumers. The Dodd-Frank Wall Street Reform and Consumer Protection Act included a requirement that mortgage lenders provide applicants with a list of local housing counselors. Consumers will receive the list shortly after they apply for a mortgage so they know where to get help when deciding what loan is best for them. Lenders may fulfill the requirement by using CFPBdeveloped housing counseling lists, which are available through an online tool the Bureau created in 2013, or by generating their own lists using the same U.S. Department of Housing & Urban Development (HUD) data that the CFPB uses to build its lists. Lenders choosing to build their own lists can look to today’s interpretive rule for instructions. The interpretive rule restates the detailed guidance from 2013. It also includes new instructions about: how to provide applicants abroad with homeownership counseling lists; permissible geolocation tools; combining the homeownership counseling list with other disclosures; use of a consumer’s mailing address to provide the list; and high-cost mortgage counseling qualifications and lender participation in such counseling.
Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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Direct Mail Campaign Ideas for Mortgage Professionals (Part II) By K. Justin Restaino Direct mail has been an important marketing medium for several decades now and even though many corporations and firms have turned to social media, e-mail and Internet marketing, a targeted and well-produced mail campaign continues to be highly effective for mortgage lenders. Your Direct Mail Campaign should aim to do three things: 1. Generate new leads 2. Nurture existing leads and 3. Cross-selling new customers
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Direct mail campaigns can be used to generate leads, promote special offers, support other campaigns, communicate with customers and raise your visibility in the mortgage lender market. Unlike e-mail or other digital marketing tactics, personalized direct mail puts a tangible offer in the prospect’s hand. Where it is quite easy to delete or forget an e-mail, a tangible piece gives the prospect the opportunity to save the letter for a later time. Think of the consumer who puts your letter on the fridge under a magnet for a later date. You cannot do that with e-mail or digital marketing! Why does personalization work? Think of the times you have picked up a call and the salesperson on the line completely butchers your last name. How likely are you to either hang up or correct them? The reason for your reaction is that it’s evident from the start that it isn’t a personal call, as you were just another person on a long list of prospects. This is a terrible start to a sales pitch. There is a similar response and feeling when one opens a piece of mail that is addressed to “Current Resident’’ or “Fellow Neighbor.’’ Simply having a name on each letter or note makes recipients more likely to engage with the content. The following checklist will ensure an image to set you apart from the banks and other lenders: l Confirm that your message matches the needs of the target: Does your offer of services match the needs of the recipient? Establish that your message is going to the right person. l Get to the point. Be clear and concise: The main goal of the letter is that it should grab the attention of the reader. Right away, the letter should be impressive and should not bore the customer. Also, make sure you explain your points to the customer with a clear note. l Keep it personal and casual: Given today's access to current data, there is no excuse for sending out non-personalized letters. Personalize each letter you send out in your direct mail campaign. l Use letters to generate leads, not deals: The goal of a direct mail letter is to generate a response, not a sale—whether it be a return mail card, a fax, email, phone call or social post. The purpose is to open doors and the sale is the next step in the process. Conclusion Remember when getting a letter in the mail was exciting? So do we. It’s up to you on how to recreate that feeling and get customers excited about your mortgage business when they’re facing a sea of junk mail, flyers and credit card offers. Stand out from the crowd with these tips and ideas and see how many prospects get in your pipeline. Digital marketing is the shiny new toy, but direct mail campaigns can be and are beneficial! K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 15 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.
SPONSORED EDITORIAL
new to market continued from page 12
manage property appraisals, title information and regulatory compliance. “iValueNet delivers lenders a detailed interior property inspection at a lower cost and with faster turnaround time than a traditional appraisal, while still ensuring regulatory compliance,” said Scott Waxman, chief appraiser and president of the ValueNet division of Accurate Group. “By using the ValueNet appraisal suite, lenders who are not already partnering with Accurate Group can expect to see a decrease in overall appraisal costs and an improvement in home equity profit margins, while also gaining access to the next generation technology platform they need for future growth.” ValueNet is built around a USPAPcompliant desktop valuation process and is the leading desktop valuation solution on the market due to its speed, accuracy and quality. The ValueNet technology platform is complemented by Accurate Group’s vetted, nationwide network of property inspection professionals and certified appraisers. An iValueNet appraisal report includes multiple photos of the property, neighborhood and key interior features. It also includes professional measurements to ensure accurate GLA calculations and a home pricing trend graph. With iValueNet, lenders get a level of research and analysis similar to a traditional interior appraisal at a fraction of the cost and with faster turnaround.
Lender ProLink Launches New Co-Brandable App
Lender ProLink has announced the addition of their new Forever Free Plan on their Break Out Mortgage App for Google Android and iOS Devices. Users can use their Lender ProLink e-mail templates to e-mail the new app to their entire network, with simple instructions on how to download. The app is co-branded, so it highlights referral partners inside the app’s home screen. It includes rate check, mortgage loan scenarios and comparisons, apply now and much more. It takes less than one minute to download the app and about five minutes to set up. The app includes: Unlimited app downloads; the ability to create unlimited co-branded apps to share with referral partners; a custom app builder to upload logos, headshots and personal info (publishes on Android and iOS); the ability to connect social media, Web sites, Yelp Reviews, Redfin and more to be found and socially validated; the ability to automatically generate e-mail templates with app photos to send to a network; automatically generated cobrandable loan comparison PDFs from
mobile devices; and a back office admin portal to track activities. Lender ProLink was created by mortgage professionals who have worked in the mortgage industry for 15 years and who understand the challenges and difficulties that all mortgage professionals face. The firm created Lender ProLink to boost a mortgage professional’s branding, making it easier for their clients and referral partners to remember them when mortgages are needed.
eLynx Announces TRID-Specific Compliance Solution
eLynx has announced Expedite ID (Integrated Disclosures), a compliance solution that fulfills lenders’ requirements for complying with the CFPB’s TILA/RESPA Integrated Disclosures (TRID) rule on Aug. 1, 2015. New compliance features, combined with the proven capabilities of eLynx’s Expedite services platform, provide lenders with a comprehensive compliance solution for TRID while enhancing quality throughout the loan lifecycle. Expedite ID unites TRID-specific functionality with the proven foundation of eLynx’s collaboration services which are already in production, including the Expedite suite of integrated on-demand services; eCN, the electronic closing network used by over 85,000 registered closing professionals; and Expedite Inbox, a lender-branded consumer portal that streamlines interactions with consumers. “Having a long-established consumer portal with the Expedite Inbox and a huge, existing database of registered closing professionals gives us a definite advantage in helping our customers prepare for TRID. There’s less worry about getting agents registered and more emphasis on the collaboration process itself,” said Sharon Matthews, eLynx president and CEO.
LRES Launches New HOA Services
LRES has announced the launch of homeowners’ association (HOA) services to aid originators, servicers and investors from potential risks associated with HOA defaults and liens. This new service is designed to uncover lien status for stakeholders by identifying delinquent HOA fees or liens and mitigate the risks associated with superliens, saving servicers and investor clients significant losses. LRES’ HOA services also provide loan originators continued on page 30
Wholesale
FHA Lender1
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Send us your FHA deals today. Visit wholesale.flagstar.com to find an account executive near you.
Source: FHA Neighborhood Watch, December 2014.
Member FDIC
Some restrictions may apply. All borrowers are subject to credit approval. Programs subject to change. The information provided in this flyer is for dissemination to and for the use of real estate and financial business entities only and is not an advertisement for the extension of credit to customers.
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New policy changes and near-historic low interest rates have made it an ideal time to purchase or refinance with FHA loans. With more than two decades of industry know-how, Flagstar Bank is a national leader—and a partner you can rely on.
NAMB PERSPECTIVE The President’s Message: May 2015 The State of NAMB Presented at NAMB Delegate Council • April 13, 2015
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l I have pushed NAMB’s board and staff to loftier goals this year. We are moving beyond our comfort zone to achieve new heights. I do not expect more from those around me than the goals I set for myself. This means hard work and sacrifice to accomplish great things. We have a passion for our industry that shows. NAMB is providing information virtually every day. Members are updated through e-mails and the NAMB Web site as a direct benefit. When asked at conferences if they are receiving too many emails from NAMB, the answer was a resounding “No.” They believed these emails are useful information, not just solicitations. I am proud to report that NAMB is financially sound. NAMB has sufficient liquid assets in the bank to operate for one year with no revenue. NAMB operates on a budget prepared by our CPA firm. The CPA firm prepares monthly statements for review by NAMB’s board and which are presented at Delegate Council Meetings. NAMB is growing, having grown membership by 14 percent last year. State associations are reviving. Many state associations are again very vibrant, holding conferences, and participating in Delegate Council Meetings. Most wholesale lenders are participating
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in NAMB events such as our conferences and sponsoring NAMB initiatives. NAMB held its first conference just for the leaders of wholesale lending companies, “The NAMB Wholesale Summit,” which was a resounding success. NAMB is driven to excellence. Every area of NAMB is operated with improvements year-over-year. NAMB is the envy of other small trade associations with an interlinked, decentralized base of staffing that is lean and efficient. For the first time in NAMB’s history, we can tell within minutes who is a member, if they have paid, and what our finances are. We have set a goal of dozens of new certified members. To accomplish that goal, we have created a CMC/CRMS test prep course. In its rollout at the Legislative & Regulatory Conference, we had 13 people attend to obtain their certification. It will be held again at NAMB National. NAMB presented the greatest Legislative & Regulatory Conference since the market collapsed. It was full of useful teaching on the first day, a star-studded cast of speakers on the second day, and more than 200 Capitol Hill visits on the third day. NAMBPAC is pushing new levels of participation. We believe it will double the previous year. NAMBPAC allows us to be heard by members of Congress. We have introduced the Legislative Action Fund that allows companies to donate.
The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer, CRMS It is hard to believe that we just finished the fourth month of the year. We are just starting to come into the summer months and that means that everyone is going to get busy. This year seems to be setting up for one of the best years I have seen in a long time. If only the inventory can stay active, we are going to be closing a lot of loans. I continue to work hard on several different things as my job as CEO of NAMB. First and foremost is the completion of our first Wholesale Mortgage Summit that took place in March. We are just completing the wrap up of putting everything together for those who were there and getting ready to have a conference call to go over all of this with them. Our goal
with this Mortgage Summit was to bring together a diverse group of wholesalers and open the discussion. I think we more than opened up the questions and the continued meetings and conversations will continue for the minimum of two years we are willing to put this together and promote the wholesale industry. I am currently in the middle of finalizing the nominations for the new NAMB board. The committee is very hard at work interviewing, analyzing and having conversations with all of the candidates. To hear some of the comments that were discussed with these people is impressive and I am glad to see the open minds that are expressing interest in the success of our association. The one slot that is automatic is the president-elect to president transition. Rocke Andrews is slated to be the next
l NAMB has created the Diversity Committee that has drawn in minorities and young people to our ranks. The Diversity Committee shows NAMB’s commitment to equal opportunity. l We have recreated the Technology Committee, which will be working to reinvent NAMB’s Web site and make certain we are using every available technology. l NAMB has an extremely active social media presence. Between its two LinkedIn sites, NAMB has nearly 21,000 members. Our Facebook posts reach tens of thousands, and we have restarted Twitter feeds. l NAMB has two widely read newsletters every week. The “Monday Morning Messenger” covers happenings at NAMB, and “News From NAMB” brings industry news geared specifically to the originator. l NAMB continues to be a powerhouse in legislative and regulatory issues. NAMB added a second lobbyist this year who is also a government-related social media expert. Both of NAMB’s lobbyists have vast experience on Capitol Hill. l NAMB National is the largest gathering of mortgage originators in the nation. All booths are sold and only a few sponsorship opportunities remain for the coming year. l NAMB is in media everywhere. The association is quoted or interviewed in every industry trade publication. This year, NAMB was quoted in The Wall Street Journal several times, The New York Times, The Washington Post and other prestigious news outlets. l NAMB is defending the industry. When Consumer Reports recommended that consumers not go to mortgage brokers, NAMB confronted them. The article was
president of NAMB and he has already begun to gather his facts and start putting his year together. Rocke will take office at NAMB National in October and you are going to want to be at this event. Later in the month of May, we will be opening up the registration and hotel reservations for you to make your arrangements. We are going to have an outstanding agenda along with education for the CMC/CRMS designation testing. The first class in Washington, D.C. at the Legislative & Regulatory Conference was a big success. At the time this article was written, we have had several people take the test and pass it after taking this class. Rocke Andrews and David Luna did a fantastic job as instructors. I continue to travel to several conferences across the nation, and John Councilman and I will be traveling to your state as time will permit. John is attending the St. Louis Conference, the Oregon Conference and the upcoming New Mexico Conference. If your state is having a conference, please let us know so we can get you on the list. We want to attend
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changed to recommend that consumers not only shop mortgage brokers but other non-bank originators. Previously, the article had recommended only going to a bank. NAMB wrote a formal letter to President Obama protesting his broker bashing. We intend to continue to defend all originators in the media and in government. NAMB submitted testimony to the Senate Banking Committee and the House Financial Services Committee explaining why various provisions of the Dodd-Frank Act are harmful to consumers, the industry and the economy in general. NAMB created NAMB+ to give members discounts on services or provide special services that originators and small companies need. NAMB+ also helps to reduce membership dues by bringing in advertising revenue to NAMB. NAMB provides the framework for the largest, most news-packed publication in the industry, National Mortgage Professional Magazine. This publication provides both a national edition and state editions, raising state chapters’ visibility. I have spoken at many state conferences this year and have many more upcoming visits. I personally return all e-mails and send an e-mail to every member who is late renewing by more than 30 days. I believe the NAMB president should be accessible and responsive. Respectfully submitted,
John Councilman, CMC, CRMS NAMB President president@namb.org www.joinnamb.com your conference, but unless you let us know, we cannot be mind-readers. As a final note, the Executive Director Call is held the third Tuesday of every month. If your state does not have an executive director, the president of the state should participate in the call. This is a great call to pass along a lot of information to the states and you need to be on it. Mark your calendars for May 19 and June 16 for the next two calls. I will be mentioning this in my Monday Morning Messenger with the contact number to get on this call. Remember, your state wants you to be on this call so you get all of the information that is being transferred to them for your states. And one last thing, please join NAMB by visiting www.joinnamb.com. The cost is minimal and you do get so much more. And if you are a member, THANKS for being a member, and if you are not a member, please join today! Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at namb.ceo@namb.org.
NAMB PERSPECTIVE Join America’s Homeowner Alliance and Get $10 Gift Card By Rocke Andrews, CMC, CRMS America’s Homeowner Alliance is the only nonprofit to represent American homeowners in Washington, D.C. It is the first ever national advocacy and member benefits alliance representing the exclusive interests of homeowners
and aspiring homeowners of America. Those of you who attended the Legislative & Regulatory Conference in Washington, D.C. in April had the chance to hear America’s Homeowner Alliance Chairman and Founder Phil Bracken speak of his passion and goals for betterment of our nation’s homeowners. They are firm proponents of the mortgage interest deduction, low downpayment mortgages, less
Embrace the Change By Linda McCoy, CRMS Change is inevitable. Whether we like it or not, things change. If you are reading this article and your business is involved in the mortgage industry, then you know this is far too true. Honestly, since the housing crisis of 2008, it has been a challenge for me, from time to time, to keep a positive outlook on the mortgage broker industry. Those of you who know me, know I absolutely love
being a mortgage broker and providing a personal, viable option for my clients when it comes to their home financing needs as I am sure you do as well. For me, being an active member of the Alabama Mortgage Professionals Association (AMPA) and NAMB has been my power supply throughout our industry changes. Month by month, year by year, the mortgage broker has learned to embrace the changes our industry has experienced since the housing crisis. This is something each of us in our industry should be extremely proud of.
By Fred Kreger, CMC
The anticipation– April 10, 2015
Gratification– April 15, 2015 I am now writing on my way home from what I can say was a great and rewarding
Together as mortgage professionals, we need to communicate and work together throughout this next change we are soon to experience. The TILA-RESPA Integrated Disclosure (TRID) Rule goes into effect Aug. 1, 2015, and with this change comes a wonderful opportunity. We have the knowledge and history that led to this change, and now we get to implement it and share it with each customer. Many of us have looked at the new Loan Estimate Form that replaces the current Good Faith Estimate (GFE) and the initial Truth-in-Lending (TIL), and we all have our concerns with how the transition will go with this change. However, our mindset should be that it is a disclosure that is easier for our customers to
understand and it presents them the information they want to know. In this “transitional phase,” I think mortgage professionals need to take a lead role in the communicating process throughout to assist in smoother closings. I have learned with each transitional change our industry has faced over the years, things move much easier if I “embrace the change!”
Legislative & Regulatory Conference. The Conference lead off with great updates from both the VA and FHA. Along with a dynamic panel of housing professionals. Our members were treated to members of Congress, both Rep. Sean Duffy from Wisconsin and Rep. Bill Posey from Florida. Great to know that we and homeowners have some great champions on the Hill. NAMB truly appreciates our congressional members who stand out and really help fulfill the American dream of homeownership for some many Americans. Our Government Affairs team had more than 100 NAMB members descend upon the Hill on Tuesday to address three key concerns, and quite frankly, as I hoped and for and am happy to confess, were met mostly with overwhelming support. Our talking points were:
limits. By allowing for current limits to go back to the 2014 VA loan limits, they would help our 84 counties in the U.S. that were impacted by this reduction.
1. Correcting how compensation flowing from a wholesaler to a mortgage company is counted in the current qualified mortgage (QM) rule. We presented that this compensation is already counted in the interest rate received by a consumer and thus should be eliminated from the points and fees test in a current QM rule. 2. We asked Congress to initiate legislation to correct the decrease in VA loan
Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is presidentelect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or email randrews@lendingarizona.net.
Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a member of the NAMB Board of Directors and serves as NAMB Industry Partners Committee co-chair. She may be reached by phone at (251) 650-0805 or e-mail linda@mortgageteam1.com.
3. Asked for support in the delay of enforcement of the new TILA/RESPA Integrated Disclosure (TRID) rule being implemented Aug. 1. We do not want it delayed because NAMB likes the new disclosure, but wants industry participants to not halt or delay transactions for a better understanding of how this rule will be implemented come Aug. 1. From the feedback after our meetings on the Hill, we were pleased with the positive and supportive results from our talking points. We also heard from our members that the engagement from our NAMB members with their congressional members led to some fantastic dialog on housing. This is why we show up and why over the last couple of years, we have led the charge for changing the perception of mortgage originators with lawmakers. This is also why I am so committed to advocating on behalf of our consumers and our industry. The results we get are a resurgence of faith that our system of advocacy works and we can affect change for the better. We saw what happens when we remain quiet and let others trample over us, we get things like the
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It begins with making my way to Washington, D.C. for NAMB’s Legislative & Regulatory Conference. This has always been an exciting time of the year for me and more than 100 other members converging on Capitol Hill to advocate on behalf of the mortgage originator. In my previous article last month, I pointed out that no matter where you derive your money to lend; we all have the same issues when it comes to ensuring our clients get as many choices as possible when it comes to homebuying and borrowing. This is the greatest time for all of us to tell our stories. The stories of how we as originators help our economy and place congressional member’s constituents into home and communities. Once in these communities, they spend money and participate in their dreams of homeownership. We cannot allow other groups to speak for us or allow painting us in negative light. In the past, we were thought of as greedy
mortgage brokers who took advantage of everyone. We know this is not the case. When you have dialog with your congressional members, you need to tell them that you are helping their constituents and community. Do not be quiet about your role. Each year, this conference brings me hope and optimism. Especially these last couple of years. I know this statement may surprise you, but we do have members of Congress who get what we do for our clients and their constituents. They want to know what we think as originators on how to fix the housing problem and get people into homes. The past Congress did bring up the Dodd-Frank Act because of past transgressions of the banking industry as a whole. Now, they want to know how to lessen the blow that this act and the new agency, the Consumer Financial Protection Bureau (CFPB), has controlled every aspect of lending money in the U.S.
There is a link and explanation of the program on the NAMB home page at www.namb.org. If you have questions or need help, you can also reach me by email at randrews@lendingarizona.net. This is a great organization representing the homeowner in Washington and a way to get a great rebate program for you and your customers.
NationalMortgageProfessional.com
NAMB’s Legislative & Regulatory Conference Recap
government-sponsored enterprise (GSE) add-on fees, and less government domination in the mortgage credit arena. By joining now through their alliance with NAMB, you get a free first year’s membership and a $10 gift card once you sign up for E-Bates on the Web site. Ebates is a consumer rebate program where you get discounts and rebates on most of your online purchases, up to 12 percent cash back. In addition, through your NAMB membership, you can offer the same terms including $10 gift card to your employees, family and customers. What a great reason to e-mail all of your past customers.
NAMB PERSPECTIVE Dodd-Frank Act and non-consumerfriendly aspects of the bill. Yes, we needed the industry to change, but we did not speak up and give our opinion on consumer protection as it relates to mortgage origination. Instead, we had the consumer groups and others paint us in a corner of the bad actors in the tale of downturn in economic downturn.
We learned our lesson, and now we can come out and tell our side of the story. We are the partners in our client’s lives who advise them in good faith on how to get into their first home and remain in that home for years. We are the mortgage professionals and I am proud to call myself one and will continue that advocacy for every mortgage originator in
front of Congress and our nation’s consumers. I look forward in seeing twice the amount of originators next year and thank everyone who came out of their busy offices to Washington, D.C. Thank you and Namaste. Fred Kreger, CMC is branch manager at American Family Funding, a Division of
American Pacific Mortgage. He is also a past statewide president of the California Association of Mortgage Professionals (CAMP) and currently is the vice president and Government Affairs vice chairman for NAMB—The Association of Mortgage Professionals. He may be reached by phone at (661) 505-4311 or e-mail fred.kreger@affloans.com.
Scenes From the 2015 NAMB Legislative & Regulatory Conference April 11-14 at the Hyatt Place Hotel in Washington, D.C. NAMB President John L. Councilman, CMC, CRMS with Edward L. Golding, Principal Deputy Assistant Secretary, Office of Housing & Urban Development
NAMB VP Fred Kreger, CMC; NAMB Secretary Rick Bettencourt, CRMS; and NAMB Lobbyist Roy DeLoach provide some talking points to NAMB members prior to Lobby Day
MAY 2015 n National Mortgage Professional Magazine n
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Phil Bracken, America’s Homeowner Alliance’s chairman and founder, discusses his firm’s programs with attendees Wisconsin Rep. Sean Duffy discusses industry issues with attendees of the NAMB Legislative & Regulatory Conference
NAMB President-Elect Rocke Andrews, CMC, CRMS discusses the upcoming TRID rule in Washington, D.C.
NAMB CEO Don Frommeyer, CRMS welcomes Terry Clemans, executive director of the National Consumer Reporting Association (NCRA), to the Legislative Conference
Jonathan Foxx of Lenders Compliance Group breaks down regulatory issues prior to the march on Capitol Hill
NAMB PERSPECTIVE Is It Safe to Advertise? (Part II)
ment to use the title affiliate was enough to trigger a violation. This is hardly an exhaustive list of possible violations of the many laws and rules that exist regarding advertising. With UDAAP being thrown in, virtually anything could be construed as unfair and deceptive. There is no question that marketing that we took for granted as legal a few years ago may very well be illegal in the CFPB’s eyes. You will notice that most of these practices involve larger companies attempting to make extra money from a borrower or use their considerable financial strength to gain a marketing advantage. As long as the CFPB heads down this road, it tends to level the playing field for small companies who do not have the resources to enter into many of these agreements. As large companies are forced to stop leveraging their wealth to gain an advantage, it opens opportunities for smaller companies to compete. As they say, “Every cloud has a silver lining.” John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or email jlc@amcmortgage.com. 23
Why Do I Need NAMB? l NAMB Testifies Before Congress l NAMB Works With the CFPB l NAMB Participates in Multiple Regulatory/CFPB Panels l NAMB Webinars l Full-Time NAMB Lobbyist on Capitol Hill l NAMB Protects Your Business l NAMB Forms Industry Coalitions l NAMB Education
For detailed information, visit www.namb.org.
n National Mortgage Professional Magazine n MAY 2015
www.namb.org … JOIN TODAY!
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based on a certain number of expected referrals, it is illegal. According to the CFPB, if “the companies, on average, referred significantly more business to Last month, I discussed the Lighthouse when they had MSAs than pitfalls of media advertis- when they did not” it was a problem. ing. If you missed that article, you can Are we to assume that you should not read it online at http://goo.gl/ofajfK. This expect more business from a realty month, I will warn about the many other office where you are advertising? MSAs should never be entered into forms of advertising and promotion. Perhaps the most dangerous type of between individual real estate agents advertising today is the Marketing and mortgage originators or even mortServices Agreement (MSA). This is where gage companies. It appears there is no a mortgage lender or broker enters reliable way to have this type of agreeinto an agreement with another ment not violate RESPA. We were told provider of settlement services to at NAMB’s Legislative & Regulatory that the National advertise or promote the mortgage Conference company’s products. Typically, mort- Association of Realtors (NAR) has said gage companies pay a real estate office publicly for individual Realtors not to to have a presence at the realty office enter into MSAs. Only companies that will drive customers to the mort- should be parties to MSAs. Legal gurus are advising that both gage company. However, it can also be parties should contract with an outside where the mortgage company receives money to promote some other product evaluation firm to determine what the fair market value of the advertising in such as title services. Over the years, we have seen many an MSA is worth. Simply looking at what attempts at MSAs in varying forms. Very other people may be paying still may common over many years was the not be enough unless that is commen“desk rental.” The mortgage company surate with what general market adverwould rent desk space or even a room tising rates charge. The CFPB broke new RESPA ground at the realty office that would grant their originator complete access to that in a consent order with New Day office. It was a very effective way to Financial. New Day bought leads from a originate loans. The problem that “mortgage broker” that was, in reality, arose from this type of arrangement nothing more than a lead generation was proper valuation of the space company. The lead generation comparental. If the realty firm was paying ny had rights to use the mark and $5,000 per month to rent their 5,000- names, addresses and e-mails of square-foot space, the rental of a desk Veterans of Foreign Wars (VFW) memmay only legitimately be worth two bers. What was different in this case percent of the monthly rent or $100. was a third-party lead generation comMortgage companies often were paying pany sending clients for a fee was conthousands of dollars for these arrange- strued to be a violation of RESPA. This could mean that any lead generator ments which is a recipe for trouble. Next, we have the joint advertising who is paid for each lead or referral MSA. An example of this type of agree- would be violating RESPA. Normally, ment was the mailing of a flyer that this had been considered a form of costs $5,000. If the flyer primarily pro- advertising payment. Attorneys are moted the real estate company with especially concerned about live-transjust a little space for the mortgage fer leads for this and other reasons. Another interesting twist to this case company at the bottom, this is considered a RESPA violation. Any form of is the charge under the Dodd-Frank advertising falls under this same type Act’s UDAAP provisions that an omission of a payment for services is unacof assessment. An absolute no-no is any agreement ceptable. The VFW claimed it was where there is any relationship endorsing New Day for its quality of between the amount of business that is service, when the consent order says it generated by the arrangement. An was because New Day was paying the example of an illegal referral would be VFW. This is considered an unfair and where the mortgage company pays deceptive practice by the CFPB. I can understand why the CFPB failed to $100 for every loan that comes from the realty office. The Consumer implicate the VFW in the wrongdoing since Financial Protection Bureau (CFPB) has they had relied on the lead generation taken that one step further in the company to sort out the legality of this Lighthouse Title consent order. If the arrangement. What I don’t understand is agreement even considers the value why the lead generation company was also By John L. Councilman, CMC, CRMS
not fined since they allegedly accepted, and apparently demanded, an illegal kickback. In both the Lighthouse case and the New Day case, only the company paying the referral was penalized. When Chase and Wells Fargo were deemed to have received kickbacks from a title company, they were fined $37.5 million. It is clear that listening to your lead generation company for guidance is not a good idea. It is surprising to me that lead generators who pose as mortgage brokers are not being fined. They are taking sensitive personal information with no intent to actually broker a loan. Many lead generators make no attempt to be licensed although they appear to be lender or broker in their online advertising. We will have to wait and see where this takes us. Affiliated business referrals need to be closely checked. Realty South had put in their contract “Title Insurance. Seller agrees to furnish Buyer a standard form owner’s title insurance policy issued by TitleSouth LLC in the amount of the purchase price.” That phrase was construed as requiring the borrower to use TitleSouth and resulted in a fine of $500,000. Even though borrowers were allowed to opt out, the fact that the wording implied a require-
TALES FROM THE
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By Andrew Liput he 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 column addresses the good, the bad and the ugly!
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Top industry news … Big banks, underwriters, Real EC announce Closing Insight initiative To help meet the new disclosure and delivery requirements under the TILARESPA integrated disclosure rule, RealEC Technologies launched a new online solution in April for lenders and settlement providers to collaborate and reconcile Closing Disclosure fees on a single platform. For participating lenders, settlement agents must provide company and user information, including company name and primary address, software application utilized and any applicable software license IDs. Settlement agents using proprietary software
or commercial software outside of RealEC’s Partner Network will be given access to Closing Insight through RealEC’s service provider Web portal. Closing Insight will permit settlement agents to efficiently and effectively collaborate with lenders and other interested parties in the preparation of the Closing Disclosure. Those lenders not utilizing the Closing Insight program are scrambling to create and implement new policies and procedures to manage the integrated disclosure rules and assure compliance by the Aug. 1, 2015 deadline established by the Consumer Financial Protection Bureau (CFPB).
You can’t make this stuff up! l In California, an escrow officer has been indicted for assisting a property developer in multiple counts of mortgage fraud causing millions of dollars in losses through inflated sales and straw buyer schemes. The escrow agent manipulated trust funds in support of the scheme. l A Maryland title company owner who took tens of thousands of dollars from her clients’ escrow accounts to pay her personal bills pleaded guilty in the Circuit Court for Baltimore County to one count each of felony theft and felony theft scheme. She was sentenced to five years in prison.
E CLOSING TABLE l An attorney from Florida has had his law license revoked over allegations of mortgage fraud involving the support of various schemes causing millions of dollars of losses to lenders. l A D.C. and Maryland area settlement agent has been found guilty by a jury of 10 counts of conspiracy, bank fraud and mail fraud stemming from a multi-million-dollar mortgage fraud scheme involving 45 properties and $16 million in mortgage loans used for the purchase of residential real estate in the District of Columbia and Maryland.
darkness was upon the face of the bankers and they spaketh amongst themselves, saying “It is a crock of dung and it stinketh.” And the bankers went unto their associations and the associations went unto the sub-committees who went unto their Congressmen and Senators and sayeth, “it is a vessel of fertilizer, and none may abide its strength.” And the Congressmen and Senators spoke amongst themselves, saying one
to another. “It contains that which aids plant growth, and it is very strong, promotes growth and is very powerful.” And the Congressmen and Senators went unto the President and sayeth unto him, “This new rule will actively promote the growth and efficiency of all banks, and these areas in particular, and will serve as a comfort and protection of the people, who are our constituents.” And the President looked upon the rule and saw
that is was good and the rule became … DODD-FRANK. Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, CEO and president of SSI, 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 email at aliput@securesettlements.com.
l Five Texas defendants, including an attorney, have been sentenced for their roles in a mortgage fraud conspiracy perpetrated involving illegal property flipping, falsification of documents, including HUD-1 Settlement Statements, downpayment fraud and loan application misrepresentations.
Regulatory updates … CFPB launches “Know Before you Owe” consumer education program
In the beginning was the proposed rule, and then came the assumptions and the assumptions were without form, and the proposed rule was completely without substance and the
Richard Abazia Todd Allen Tanner Allen Chuck Anderson Rocke Andrews Mike Aon Joseph Archer John Ardito Joe Ashton Mark Atanasoff James Bagnell Roshe Barooni Jim Barry Dave Beach Allycyn Bennett Joel Berman Rick Bettencourt Jr. Jeannine Bland Kenneth Blaudow Audrey Boissonou Douglas Braden David Bradley Tiffany Bradley Andy Brikho Lee Bruner Andrea Buck Michael Burroughs
Mark Cahoone Kenneth Campbell Joseph Cannarozzi Terry Casey Dana Chahidi Jim Chapman Eric Chauhan Alan Cicchetti Brent Coleman John L. Councilman Ronald Crary Dawn Cychner Tom Cychner Brady Day Keith DeLatte Michael Delzer Ray DeMar Donald DeRespinis Michael Desantis Harry Dinham Bruce Dittmer James Dorney Jeffrey Drawdy Tammy Engel Jim Ezell FAMB Federal PAC Virginia Ferguson
Antonina Friedland Don Frommeyer Mary Jane Galbiso Jill Gallagher Rick Gilbert Victoria Greer Martin Hackford Steve Hakes Kelly Haney Mark Harcrow Andy Harris Melissa Hayes Lisa Hernandez Howard Howland John Hudson Marvin Hudson David Hughson Ed Irwin Everett Ives Erik Janeczko Peaches Jensen Ryan Jones Jon Kaempfer Jason Kauffman David Kane Michael Kanuka Mike Kelso
Jonathan Kimura Wayne King Linda Knowlton Michael Kopiecki Fred Kreger Marci LaBorde Shane Lester Kim Lewis Bobbie Lindner Anthony Lombardo David Luna Lisa Lund Kelly Lynch Angela MacKinnon Paul Marsh Steve Matthews Linda McCoy John McCully Ashby McDonald Howard Miselman Joe Moody Jim Morris Vernon Morrison Vicki Murphy Robert Murray Elena Neis Gary Ogami
Matt Oliver Donald Opeka Dennis Oshiro Raymond Oshman Norm Ottley Jim Pair Carrie Panacek Carlos Pazos Chris Peck Dawn Pemberton Richard Petano Jill Pfeiffer Claude Phillips Nathan Pierce John Porter Dean Rathbun Kathy Raven Donald Rizzo Jeanine A. Robbins Heather Rose Joan F. Ruth Hartley Sappol Valerie Saunders Gary Schiller Julia Schloss Guy Schwartz Lisa Severseike
Jeff Shealey Chris Shedd Mark Sheridan Ann Shipley Shawn Sidhu Timothy Simko Kane Smeltz Lynette Staley Mitch Stam Marc Starr John G. Stevens Marve Stockert Diana Tardif Donald Thomas Douglas Turner Forrest Van Benthuysen Dan Van Winkle Casey Van Winkle Michelle Velez Debbie Villarreal Bryan Ward Charles West Kimber White James Wilson Edward Zadeh Benita Zimmerman
For additional information about NAMBPAC, please feel free to contact me or visit namb.org. John G. Stevens, CRMS • 2014-2015 NAMBPAC Committee Chair John@JohnGStevens.com * NAMBPAC is the non-partisan political action committee for NAMB, The Association of Mortgage Professionals. NAMB is the recognized and respected voice of the mortgage originator on Capitol Hill and throughout Washington, D.C., and NAMB supports the operation of NAMBPAC as authorized by, and in accordance with, federal law.
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On the lighter side … The Creation
THANK YOU to all who contributed to NAMBPAC in the first quarter of 2015!
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The CFPB released a toolkit in April that guides consumers through the process of shopping for a mortgage and buying a house. Developed as part of the CFPB’s “Know Before You Owe” mortgage initiative, the toolkit is designed to help consumers take full advantage of the new Loan Estimate and Closing Disclosure forms that lenders are required to begin providing in August. According to CFPB Director Richard Cordray, “This toolkit is a great resource for consumers navigating the home-buying process, and will help consumers make well-informed decisions about the biggest financial transaction of their life. The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules.” One thing most industry experts agree on is that at least initially the integrated disclosure rules, especially as they impact the closing of residential loans, will cause some confusion with borrowers, particularly when the threeday delivery period must be restarted and closings delayed.
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BY PHIL HALL
This July marks the fifth anniversary of the passage of the Dodd-Frank Act, which set forth the creation of the Consumer Financial Protection Bureau (CFPB). While it has only been operational for a relatively short time, the CFPB has made a profound impact on the mortgage banking industry. During the period leading up to its official launch, the CFPB was positioned as a regulatory agency that would bring structure and stability to a chaotic
“Small banks are not as able to do what the CFPB wants. The smaller companies that NAMB has as members have not fared as well [under the CFPB] as they should have.” —John Councilman, CMC, CRMS, president of NAMB-The Association of Mortgage Professionals Warren’s original analogy when considering criticism of the Bureau. “Everyone likes the policeman until they write them a ticket,” Benson said.
A few encouraging words So, in fairness to the CFPB, what are the
Bureau’s strong points and where is it in need of improvement? For Murin, the CFPB deserves to be cut some slack for taking on a regulatory task of unprecedented proportions. “They had a humongous hill to climb, based on the Dodd-Frank
requirements,” he said. “This was complicated by the number of investigations done across the mortgage spectrum. I don’t think the CFPB knew what it was getting into when it opened the Pandora’s Box on mortgage lending and mortgage servicing.” Jeanne Erickson, senior attorney at Minneapolis-based Wolters Kluwer Financial Services (WKFS), noted that the CFPB was also burdened by a surplus of duties and a beat-the-clock approach to getting them handled. “They had a lot of regulations to implement—for most of them, they had a pretty tight timeline to do it,” Erickson said. “By January 2014, eight continued on page 66
NAMB+ is an independent, wholly-owned, for-profit marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, In my recent travels to the Texas Mortgage Roundup in San Antonio and the NAMB Legislative & Regulatory Conference in Washington, D.C., I had a chance to hear from countless colleagues and friends who are taking advantage of the special pricing, products and services offered by NAMB+ Endorsed Providers. Each of these individuals shared with me how utilizing different NAMB+ Endorsed Providers is saving them money. But perhaps even more importantly, these individuals also feel that they are receiving superior customer service from the NAMB+ Endorsed Providers they are working with. If you are not yet saving money, increasing your productivity and supporting our industry by working with one of the NAMB+ Endorsed Providers listed below, what’s holding you back?
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27 Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15
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The Bond Exchange is a national surety agency specializing in providing mortgage license bonds to thousands of mortgage professionals across the country.
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NAMB members receive a 10% discount off regular prices for Warm Welcome LLC services. For more information visit WarmWelcomeLLC.com.
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As an NAMB member, Birchwood Credit Services will waive the sign up fees! It’s a “NO RISK” way to experience the Birchwood difference firsthand!
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environment. Elizabeth Warren, the Harvard law professor credited as the Bureau’s chief architect, repeatedly spoke of the CFPB as being a “cop on the beat”—a less-than-subtle insinuation that the financial services world was overpopulated by miscreants and malfeasance. Perhaps Warren’s commentary was a little too caustic—the Obama Administration bypassed Warren and nominated Richard Cordray, a non-controversial former Ohio attorney general, as the Bureau’s first director. Throughout its relatively brief life, the CFPB has attracted what seems to be a surplus amount of problematic attention: The controversial presidential recess appointment that put Cordray into office in January 2012 after a GOP blockage of his nominating process; complaints by Capitol Hill Republicans ranging from a lack of transparency to an absence of accountability with the new Bureau; Director Cordray is paid approximately $180,000 per year; the rising costs for the design and construction of the Bureau’s headquarters; and allegations of discrimination within the Bureau’s workforce. To date, the mortgage banking industry’s leading figures have not offered any comment on these thorny matters. And the relatively rare public rebukes of the CFPB’s actions have been enveloped in careful language—most notably after CFPB Deputy Director Steve Antonakes’ harsh critique of servicers at the 2014 Mortgage Bankers Association’s National Mortgage Servicing Conference, which the trade group’s leader, David H. Stevens, diplomatically viewed as going “just a bit too far.” On a personal note, this writer has encountered a large number of industry leaders that have declined to go on record to rebuke the CFPB, citing a fear of enforcement reprisals. Is it accurate for the CFPB to be considered vindictive enough to target mortgage bankers that call its actions into question? “Vindictive might be a strong word, but it is not a word that I’d think as being inaccurate,” said Mark A. Calabria, director of financial regulation studies at the Cato Institute in Washington, D.C. “But that’s true for all agencies. You rarely see big banks criticize the Federal Reserve. When Jamie Dimon criticized Ben Bernanke, it was big news—it was pretty unusual.” But Joseph Murin, chairman of Fulton, Md.-based Chrysalis Holdings LLC and a former Ginnie Mae president, does not see the CFPB as being eager to punish its critics. “I don’t think that’s it at all,” Murin commented. “This is the first time mortgage bankers had this type of oversight. It had been like the Wild West in a lot of cases. And people don’t want to upset the regulator—any regulator, not just CFPB. Especially folks in mortgage banking, who are not used to dealing with regulators.” Brian Benson, CEO of La Jolla, Calif.based ClosingCorp, recalled Elizabeth
Emotional Intelligence and Mortgage Advertising By Brent Emler s more companies vie for customer attention through highly intelligent techniques, sales and marketing have become increasingly competitive. Do you have what it takes to keep up with the pack? While emotional intelligence and behavioral sales/marketing techniques are a relatively new phenomenon, they are really less of a trend and more of a paradigm shift. Here’s the
A
great news, you can develop your emotional intelligence. According to Colleen Stanley, author of Emotional Intelligence for Sales Success, “Your EQ (Emotional Intelligence Quotient) helps you sell bigger deals, in less time, at full margin.” Who doesn’t want that!? So, what is Emotional Intelligence? And how do you develop yours? Most consumers live under the belief that the purchasing choices they make are the result of rationally analyzing available alternatives. However, they’re wrong. Not only do emotions influence
us, in many cases, they determine our decisions. Whenever we are faced with making a decision, emotions from previous similar experiences give weight and value to the options we are considering. Although we’re largely unconscious of that happening, those emotions create the preferences on which we base our decisions. Emotion is the main reason that consumers prefer to buy brand name products. You have to wonder why so many of the products we buy are available both as generic and name brand. Both
have same ingredients, but generic is available at a lesser price. So, why is it we decide to pay more for brand name products? Emotion. Whether it’s in response to the color of the packaging, or an ad you’ve been seeing, or a coworker told you what great stuff it is, or because it’s what your mother used and it reminds you of home—it all boils down to emotion. Nationally advertised brands control the power in the marketplace in large part because of the emotional connections they create with consumers.
“Marketing to Millennials requires that you do it on their turf and their terms— they need trust and reassurance.”
Applying the principles of EQ will help you interpret and read your customers’ emotions thereby giving you the ability to adapt within a selling situation in several ways. Being able to recognize your customers’ emotions will help you adjust your own emotional response which will naturally generate a more solid rapport. It will help you make your clients feel more valued,
at the core of emotional intelligence. Do a self-evaluation. What are your strengths and weaknesses, and how can you improve them? Have the courage to look at yourself honestly—it will change your life.
build stronger personal connections, and improve your lead-conversion rates. The good news is that Emotional Intelligence can be learned and developed. There are three basic tenets to get you on your way:
l Empathy is an extremely powerful way to raise your emotional intelligence: Put yourself in the other person’s place, be aware and listen carefully to what they are saying, and be perceptive of their needs. By showing someone that you understand where they’re coming from, you’re able to gain their trust and respect.
l Self-awareness: Being able to identify how you feel and who you are—is
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© Copyright 2007-2015 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 website: 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 413 0904. CO: Check 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. KS: Supervised Loan License SL.0000313. KY: Mortgage Loan Company License MC21112. 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 ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC5382. WA: Consumer Loan License CL2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, MT, NM, NC, OK, SC, TN, TX, UT, WV and WI. NOTICE: All loans 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.
n National Mortgage Professional Magazine n MAY 2015
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However, if you think about it, brands are really little more than the mental representations of products in the consumer’s mind. Given that concept, it follows that if there are no emotional links to influence a consumer’s action, if the product representation consists only of the product itself, then there is really nothing there to influence the consumer. The higher the emotional saturation of a brand’s mental representation, the more likely it will generate loyal consumers. It’s easy to see how emotion can be communicated effectively in print ads or commercials, but there are other significant elements to brands that also have emotional dimensions. For instance, every brand has a personality and the most powerful representation of that brand includes its personality. Studies have shown that consumers assign the same types of personality characteristics to brands as they do to other people. We know that, when it comes to people, we are attracted to some personality types more than others. Most of the time those attractions are based on emotion, not rational thought. Brand personality is no different and that personality is communicated by marketers with packaging, visual imagery, and the words used to describe the brand. Another significant basis for a brand’s emotions can be found in the “story” that it communicates—the story of who (the brand personality) it is, what it means to the consumer, and why the consumer should care about it. This narrative sets the foundation for brand advertising and promotion. So, what does all this mean to you personally? As a loan officer, you have a personal brand that has a great deal of impact when it comes to driving the emotional buying decisions your customers make. From your values, personal mission, and unique attributes, to how you behave and interact with other people, everything is tied to your overall brand. By spending time learning about yourself, you will have an advantage when it comes to utilizing EQ to market your brand to others. In effect, your personal brand is its own person. Your brand acts to promote your business, connects you with your customer base, and differentiates 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. Consider that a consumer’s emotional reaction to your brand is formed from the very first experience with you and that every interaction is a chance to augment that brand.
Industry Updates By Gavin T. Ales CFPB’s New “Know Before You Owe” Mortgage Toolkit On March 31, 2015, the Consumer Financial Protection Bureau (CFPB) released a new toolkit that guides consumers through the process of shopping for a mortgage and buying a house. The new Toolkit replaces the existing settlement cost booklet that is provided to mortgage applicants. The Toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them, and find their best mortgage. The Toolkit features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information. Creditors will be required to provide the new Toolkit in place of the existing settlement cost booklet to all mortgage applicants, beginning Aug. 1, 2015. New Jersey Increases Maximum Principal Loan Amount Subject to High Cost Act for 2015 On Feb. 17, 2015, the New Jersey Department of Banking and Insurance published Bulletin No. 15-02, which provides the annual adjustment to the maximum principal amount of a loan that will be subject to the New Jersey Home Ownership Security Act of 2002 (the Act). For 2015, the maximum principal amount has been increased to $461,087.86. Loans with principal amounts exceeding this figure will not be subject to the Act's provisions. The revised amount is effective for all completed applications received by a lender on or after Jan. 1, 2015.
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Some TRID FAQs Following are some frequently asked questions (FAQs) related to the TILARESPA Integrated Disclosure Rule (TRID) that many of you, hopefully, find informative as you prepare to implement the Rule. Q: Confirm that the definition of "interest" in Total Interest Percentage (TIP) includes only per diem interest and interest paid monthly (and not other prepaid finance charges, such as discount.) A: TIP only includes the periodic interest and per diem interest. It wouldn't include other charges that would be considered settlement charges, such as points or a buydown. Q: Is there a character limitation for a fee name/description on the new forms? A: A maximum of 23 characters is allowed to cover all scenarios. Explanation: (1) On the LE/CD, the width of the columns depends on whether there is a seller or not. The column can be expanded when no seller is present, allowing more characters. (2) The fill font used on both forms is the required Myriad-Pro, which is a proportional font where each character is a different width unlike the fixed width courier fill font where each character width is the same. Therefore, one fee description with more characters may fit where a different fee with fewer characters will not. Q: Is the Total of Payments calculation different from the current calculation? A: Yes, the new Total of Payment calculation is different. It includes principal, interest, MI, and Loan Costs (the total Loan Costs paid by the consumer under Regulation Z Section 1026.38(f)—note that this does not incorporate any general Lender Credit). Today, our Total of Payments is total payments of P&I and MI paid after closing, but doesn't include upfront MI or other loan costs paid before closing. Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail gavin@docmagic.com.
SPONSORED EDITORIAL
new to market continued from page 18
with quick and cost effective verification of the HOA status during refinance. HOA services centralize the HOA contact/validation process, establish best practices for information retrieval from HOA companies, and ensure compliance with state statues when dealing with negotiation of delinquent HOA dues and fees. Additionally, these services support research and identification capabilities, which catalogs the HOA(s) associated with properties and includes contact details for HOA companies. At the time of closing, LRES will reconcile amounts paid to the HOA versus what is outstanding and obtain a final settlement confirmation and satisfaction letter from the HOA. “Our new product helps a variety of mortgage professionals with the HOA contact and validation process,” said Roger Beane, LRES founder and chief executive officer. “We believe this tool will provide mortgage stakeholders a proactive process in mitigating losses as well as complying with HUD and Fannie’s requirements in resolving HOA delinquencies.”
LoanLogics Unveils New TRID Reference Guide
LoanLogics has announced the release of their quick reference compliance guide, “Are You TRID Ready?” The deadline to comply with TILA-RESPA Integrated Disclosures (TRID) is Aug. 1, 2015. “In my work consulting with lenders on the challenges of complying with TRID, I came to the conclusion that a quick reference guide and interactive online tools would help them and their staff better understand the new disclosure requirements. Anything that can help individuals get up to speed more quickly will benefit them, as well as the entire mortgage industry,” said Mike Vitali, SVP/chief compliance officer at LoanLogics and author of the guide. The purpose of the TRID Guide is to provide a useful lender resource that is easy to follow and helps relieve some of the pressure they are feeling regarding getting prepared. That is critical; because of how pervasively this impacts a lender’s operations and the challenge of meeting the deadline and staying compliant once the rule goes live. Additionally, this guide may be downloaded and distributed to staff as a handy quick reference tool for day-to-day reference when needed. “We’ve provided this reference guide, as well as online interactive tools, that will address many of the concerns Lenders face in preparing their staff to comply with these new rules,” said Vitali. Some of the topics covered in the guide and the interactive Web site include: A detailed explanation of both the new Loan Estimate and Closing Disclosure forms; interactive tools with line-by-line refer-
ences for how to complete the new disclosure forms; a sample TRID disclosure calendar; and LoanLogics’ newsletter articles with perspectives on TRID compliance and questions lenders need to consider regarding their TRID readiness.
Ginnie Mae Enhances USDA Multifamily MBS Program
Ginnie Mae has announced an improvement to its securitization program for U.S. Department of Agriculture (USDA) Section 538 loans. Effective June 1, 2015, USDA Section 538 Multifamily loans with a maximum loan amount of 70 percent of total development costs will be eligible for pooling into Ginnie Mae mortgage-backed securities (MBS). This is an increase from the previously allowable maximum loan amount of 50 percent of the total development costs. “This is an important and substantial change to the program,” said Ginnie Mae President Ted Tozer. “It is a real opportunity to help the USDA ensure the continued affordability and availability of multifamily rural housing projects for low and moderate income families. Since more of the development costs will be eligible for pooling, the securities will generate additional liquidity for more multifamily projects.” The Ginnie Mae Multifamily MBS Program enables lenders to reduce mortgage interest rates paid by property owners and developers of apartment buildings, hospitals, nursing homes, assisted living facilities and other types of housing. These lower interest rates provide the necessary incentive for many developers to construct new projects or substantially rehabilitate existing structures. Under the Section 538 Guaranteed Rural Rental Housing Program (GRRHP), the USDA provides credit enhancements through government guarantees to encourage lenders to make new loans to multifamily developers for the construction and preservation of affordable rental properties for low-and moderate-income tenants in rural areas of the country. The USDA program provides loan guarantees up to 90 percent to construct or rehabilitate affordable rural multi-family rental housing. Since 2009, the program has helped rehabilitate or build over 14,000 housing units.
Fannie Mae Launches New First-Time Homebuyer Program
Fannie Mae has announced the HomePath Ready Buyer program, qualifying first-time homebuyers to receive up to three percent of the purchase price in closing cost assistance toward the purchase of a HomePath property, upon completion of an online homebuyer education course. On a $150,000 home, this could result in up to
$4,500 in savings for the buyer. In addition, Fannie Mae will reimburse the $75 cost of the homebuyer education course at the time of closing. “Purchasing your first home can be an overwhelming process,” said Jay Ryan, vice president of real estate-owned (REO) sales for Fannie Mae. “We developed the HomePath Ready Buyer program to provide first-time homebuyers with the knowledge to make informed decisions as they navigate the complexities of the homebuying process. Closing cost assistance provides a cushion many first-time buyers need to more confidently face the financial responsibilities of homeownership.” Fannie Mae has partnered with Framework, a non-profit created by the Housing Partnership Network and the Minnesota Homeownership Center, to offer homebuyers a homeownership education course that covers both the complexities of home buying and the responsibilities of owning a home. The course contains nine, 30-minute sessions and is conducted entirely online. To be eligible for the closing cost assistance and the reimbursement of the training cost: Buyers must complete the full online HomePath Ready Buyer training course on www.homepath.com and receive the Certificate of Completion; the buyer must be a first-time homebuyer (did not own a property in the past three years) with plans to reside in the property as their primary residence. Auction, pool and investor sales are not eligible; and the request for closing cost assistance must be made at the initial offer, submitted on or after April 14, 2015.
VirPack Announces Release of Updated Doc Management and Delivery System
work collaboratively on these reports, increasing transparency into the actions and progress of other users involved in the fraud review process. The risk management process is then easily exported into a final, clear and concise Alerts Summary that can be attached to the loan file. “Lenders and investors rely on LoanSafe to identify potential fraud and collateral risk factors associated with the loans they are originating or acquiring. But until now, there was no seamless way to capture the steps taken to investigate and remediate these risks,” said Susan Allen, senior vice president of mortgage analytics at CoreLogic. “The new LoanSafe Connect feature elegantly addresses this, creating an easy-to-fol-
low audit trail that shows what was done, by whom and when.”
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.
Why choose MBS Highway? BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country. STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.
EASILY SHAREABLE CONTENT With a touch of a button members are able to share charts showing the latest economic and housing data.
REAL ESTATE DATA & INSIDER CONTENT Show the housing opportunity in your local market to customers and real estate agents. We will provide you with affordability levels, appreciation, resale volume, new construction, and job growth…updated monthly and easily shared. There is also additional content from Art Cashin, Kiplinger letters, and much more.
MOBILE WEB APP
CALCULATORS AND TOOLS Powerful and unique calculators to help you when presenting to customers. Buy vs. Rent, ARM vs. Fixed, Paying Points, and Amortization calculator are a few examples. You can save and share the results to beat your competition.
What you're getting with your MBS Highway trial l Bond Quotes l Daily Video and Transcript l Interactive Charts l Lock/Float Advice l SMS Updates l Real Time Market News l Cashin's Corner l The Kiplinger Letters l Real Estate Market Data l By The Number$ l MBS TrendTRAKR l Social Share
CoreLogic Upgrades Its Fraud Management Solutions
CoreLogic has announced that it has added LoanSafe Connect to CoreLogic LoanSafe Risk Manager and LoanSafe Fraud Manager, its
Try it FREE for 14 days at MBSHighway.com/MNN
n National Mortgage Professional Magazine n MAY 2015
Always stay in touch with the market when on the go with our Mobile Web App. It's fast and easy to use. Whether you have an iPhone, Android, Blackberry, Windows Phone, you'll always have access to MBS Highway. No downloads, no annoying updates, just visit m.mbshighway.com in your phone or tablet's browser.
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VirPack has announced that it has released Version 3.4 of its Document Management and Delivery System (DMDS). The new release includes new capabilities and enhancements to key functionality to further automate loan origination and underwriting and improve communication among lenders, borrowers and originators. “DMDS Version 3.4 enables lenders to further automate their loan origination and underwriting processes by synchronizing condition generation, tracking and approval between their LOS and DMDS and simplifying communication between lenders, borrowers and originators,” said Cy Brinn, chief operating officer at VirPack. “These enhancements combined with our expanded web services functionality and automated document indexing process, further improve a lender’s operational efficiency and reduce per loan costs while improving borrower and originator satisfaction.”
fraud and collateral risk solutions. LoanSafe Connect is a secure, innovative, Web-based portal that offers the ability to review and interact with LoanSafe reports in real time, delivering maximum efficiency. Underwriters and risk analysts can now make electronic notations and document actions they have taken to “clear” the alerts delivered by LoanSafe Risk Manager and Fraud Manager, creating an audit trail of the review activities. Risk executives can create customized requirements for actions that are important to their compliance initiatives and they can see the supporting documentation required to address specific LoanSafe alerts. LoanSafe Connect allows users to
FROM BROADWAY TO MBS HIGHWAY
a Chat With
Barry Habib NMP: That would be awkward. Habib: We do that every day. We ask things like, “How much do you have in the bank?” Things you would normally never ask of people you just met. It is crazy, yet we get to do that all of the time and we need to harness that power. It is so important to build trust early on in the relationship.
By Dave Sullivan
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Dave Sullivan, special correspondent for National Mortgage Professional Magazine, recently sat down with Barry Habib of MBS Highway for a chat about the state of the industry and exactly what direction the industry is headed. As founder and CEO of MBS Highway, Barry has also enjoyed a long tenure as a market commentator on FOX and CNBC Networks. He can be seen presenting his Monthly Mortgage Report on “Squawk Box,” the early-morning CNBC business news show. Barry has also delved into the world of show business in both film and theater. His projects have been honored with awards and recognition at the Sundance Film Festival and on Broadway with Tony Award nominations. Barry is the lead producer, managing partner and majority shareholder in “Rock of Ages,” which, in 2012, was released as a major motion picture starring Tom Cruise. NMP: We want to find out a little bit of your background, from how you started in the mortgage business up until now. I also wanted to discuss how you have transitioned into the role of consultant for the entire mortgage industry. Barry Habib: I got into the business probably pretty much like everybody else, by accident. Nobody goes to school for this, we all kind of fall into the mortgage business. I sat down with a mortgage lender who was writing my mortgage one night and said, “How do guys in your business do?” The next thing you know, I was in the mortgage business. I started out trying to visit real estate agents and they didn’t really want to talk to a young kid who didn’t know what he was doing. I actually started to knock on people’s doors. NMP: That takes a lot of guts. Habib: Yes … my third week in the business, I wrote 16 loans by knocking on homeowners’ doors, I just tried talking to everybody I could. I think that still holds true today in fact. When you talk to as many people as you can and tell them what you do, that will ideally translate
“…very early on, I understood that an important way to differentiate myself was being more than just a loan officer. I think that we still need to differentiate ourselves in some way and people are really starved for knowledge in 2015.” —Barry Habib into some business. I actually use to give my card out to everyone, including New Jersey Turnpike toll collectors. People laughed at me, until one time when the toll both collector called, I did his mortgage. Then the whole Triborough Bridge and Tunnel Authority started to call me for their mortgage needs. After I learned the business, I started Certified Mortgage Associates in my 20s. We grew it quickly and it was a great company. I had a lot of fun helping buyers and homeowners get the best loan possible. Certified Mortgage was doing very well with some good numbers. I was doing some of the best numbers in the country at the time, which I’m very proud of. Later, I sold the company because I had this dream, a vision to start up Mortgage Market Guide. We grew it quickly and obviously sold that. Now I am working on MBS Highway. As far as the consultative sales approach, very early on, I understood that an important way to differentiate myself was being more than just a loan officer. I think that we still need to differentiate ourselves in some way and people are really starved for knowledge in 2015. Information is everywhere these days, but wisdom is a very valuable commodity. NMP: Was there something that triggered you to say “I want to make this transition
and become the “Oracle of the interest rate” for the mortgage industry? Habib: I love the financial markets and I felt that getting a mortgage was less about qualifying and the technical aspects. It should be more about what can you do with the money that you are borrowing or saving. It is the largest financial transaction people will make in their lives, yet they were treating it like a commodity. What I tried to do is show them ways that they can look at this in terms of wealth creation. How can I structure this debt as far as maximizing tax benefit, retirement planning, kid’s college education and cash flow? We took that very different approach at that time in the industry. People used to tell me e that you shouldn’t really be doing that, as that type of advice should come from an accountant or a financial advisor. You know what, I am their financial advisor. NMP: Probably more than anybody else. Habib: Nobody knows more about your customer than you do, sometimes not even their spouse. Really, when you think about all their dirty laundry, all their history and all the financial information, we need to provide funding based on that information. Think about meeting somebody for the first time and asking, “Nice to meet you … how much money do you make?”
NMP: Tell me about when you struggled during a difficult time in your career. What strategies did you use to get yourself back on track? Habib: This is a great question, because sometimes when people see someone successful in any field, they wonder if they had it handed to them as all they see is the success. They don’t see all of the struggles they went through. Most of the time, it is that struggle you endure that guides your path in a prosperous direction. It is something we can all relate to. How many times you have gone through a miserable time and said to yourself, “Why am I doing this? Why is this happening to me? How am I going to get through this?” Then, over time, you reflect back and say, “My goodness, while that was a miserable time, thank goodness that happened to me because that caused me to do this and it turned out unbelievable.” You have to count your blessings, think about how truly blessed you are and how lucky you are. When things don’t go your way, we always want it to get better, but I have to tell you, the thing we most often forget is how much worse it could possibly be. Just remember, things could be much worse. You must have the faith and trust to keep you going through this tough period. You are going through this period to get something great out of it. Just like when you are driving down the road at night with the headlights on … there is only so much you can see from the headlights’ shine. There is a lot going on beyond the headlights. Trust that what is beyond the headlights is going to be great. That should keep you going. NMP: I know you are very good at predicting short-term moves in interest rates. Where do you think rates will be in 2020? Habib: It is very hard to say when you go out five years. I think interest rates stay
low for a long time just because the way the world is right now. It could change and five years out is a very long time. I would imagine that at some point in time, the excessive debt the world is creating and the market will demand a higher rate of return to be compensated for it. How much is that going to be? It is difficult to say, the markets have a way of inflicting the most pain at the worse time. I have a feeling that this year will be a very good year for rates. I think next year will be a very good year for rates as well. It seems to me that it always takes a lot longer than we thought for things to unfold, but once they start unfolding, it tends to happen a lot faster than we ever imagined. If we do see a move up in interest rates when it happens two years, three years, five years or seven years from now, it is going to happen a lot faster and be a lot worse than people thought. I don’t see that happening as far as what we can tell over the next 12 to 24 months. Rates are going to stay really low for a while, beyond that, it gets very hard to forecast.
NMP: You have transitioned back over to the mortgage industry and MBS Highway, tell me a little bit about MBS Highway and how people can follow you now. Habib: Thank you for asking about MBS Highway, I am really proud of it. I think it’s something that encompasses, all of my years of originating which you asked that question earlier, more than 20 years originating $2 billion-plus in personal production. That’s me writing apps or me and my assistant. Don’t forget, we had much lower loan amounts back then by the way. MBS Highway encompasses
everything that I understand about the financial markets. I provide members five minutes of coaching every day by video. It contains amazing loan officer presentation tools, it is everything you need to really make a difference in your customer’s life, beat your competition and improves your production. MBS Highway is a communication tool, and not just an information tool. We help you turn calls into applications, and discussions with real estate agents into referrals. Dave Sullivan is special correspondent for National Mortgage Professional Magazine and marketing director for Credit Technologies Inc. He may be reached by phone at (248) 891-2205 or email dsullivan@credittechnologies.com.
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NMP: Was there anything you learned on Broadway that can help us in the mortgage business? Habib: Yes I think so, as it is with any industry and any business. I have had a successful business in the medical imaging industry. I have very simple philosophies, in that you spoil your customers, you spoil your employees. If you can have loyalty and trust, you will have an advantage over your competitors and can really overcome a tremendous amount of obstacles. If you have those two things, you will be successful. How you build those things is the same way with Broadway as with any other business. The way you teach people, when you give them
NMP: Is Constantine from American Idol in some sort of role with the musical? Habib: Believe it or not, I am in a band called “The Rock of Ages Band.” I have Constantine signing in the band, I sing as well and we have a great time togeth-
er. We will actually be in Las Vegas playing Steven Marshall’s Mastermind Summit event, set for June 2-4 … it should be fun!
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NMP: Let’s talk about the Broadway musical “Rock of Ages” that you invested in. Habib: Well, you know I did some acting. I got a role in a movie called “Barry Munday.” If you pull up the trailer for “Barry Munday,” I’m in the trailer as a doctor. I really enjoyed my role in that movie and the writer of the movie, Christopher Derenzo, he brought me the script of “Rock of Ages.” We reviewed it and I loved it. So a group of five of us took it off Broadway. The audiences went nuts for it, and after a short time, we said let’s take a shot and took it to Broadway. I was general partner and lead producer on “Rock of Ages: The Musical.” We recently closed it, but after a run of six years, we had the 27th longest run in Broadway history. You would be very surprised at the wide demographic that the show appealed to. Everybody loved it, from young kids to people who are quite a bit older than I am. They all really enjoyed it because it was so much fun. We are still running in Las Vegas and in London, and we have a Norwegian Cruise Line show that we are working on and are hoping to do something with a tour, but not yet.
things they don’t ask for, when they feel that you are their advocate—you get loyalty. It is that way with your customers, tell your customers everything bad upfront, be in the position where you are not trying to sell them as you are not trying to convince them. Look at that customer as if they were your child, your parent, someone who really needs help and you are just trying to guide them. If you have that you will build trust pretty quickly.
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 By Dave Hershman fter a disappointing March jobs report, we will go back to the old nursery library to describe April’s numbers. Everyone knows the story about “Goldilocks and the Three Bears.” One chair was too big and one chair was too small. But the last chair was “just right.” We think that an increase of approximately a quarter of a million jobs for April is just about right as well. Why is that? With regard to the Federal Reserve Board raising interest rates, the last quarter of 2014 had the economy adding an average of over 300,000 jobs per month, or just about a million for the quarter. If that level had continued, the Fed proba-
A
THREE
BEARS
bly would have raised rates by now. The first quarter of this year, we added just under 200,000 jobs per month. While not shabby, it is just not enough jobs to keep the economy improving fast enough. Thus, 223,000 jobs is just right. Not too fast to scare the Fed and strong enough to move the economy forward. This is especially true considering the fact that hourly wage growth was lower than expected. However, the good signs included an increase in the labor force participation rate and a decrease in the unemployment rate to 5.4 percent, the lowest since May of 2008. Leading up to the report, rates and oil prices had increased pretty steeply. While this report may give us some breathing room, it reminds us that these ridiculously low rates will not be with us forever. Statements from the Fed more recent-
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JOBS
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ly have tempered enthusiasm regarding if the economy is about to explode with growth. In a recent speech, Federal Reserve Chair Janet Yellen said she thinks the economy is improving ... but that it should be doing much better. Yellen was more blunt than usual in her assessment of the economy. “If underlying conditions had truly returned to normal, the economy should be booming,” she said. Even if the Fed does raise rates this year, the attention will immediately turn to questions such as–how quickly will the raise rates again and by how much? Yellen’s statements seem to be designed to allay the fears of the markets in this regard. The next question is: What if rates don’t come back and they keep going up? The marketing don’t need the Fed to move for the markets to react. Sometimes we lose our perspective. While rates on
Gary Robinson Vice President, Commercial Loans
Taylor Wold Commercial Loan Officer
585.424.2750 l www.monroecap.net 3445 Winton Place, Suite 228 l Rochester, New York 14623
Sarah Montz Commercial Loan Operations
home loans did increase in late April and early May before coming back down a bit, if you read the headlines, it seems like everyone thought that rates were really high. They were not. According to the Freddie Mac survey of home loans, the 30-year fixed-rate loan averaged over five percent every year from 1975 until 2010, a period of 35 years. That is a generation in which rates have averaged more than seven percent in the long haul. It is only since the financial crisis hit that rates averaged below five percent and for the past five years, the average has been a little more than four percent. Yes, there were a few periods where rates dropped below four percent, including early this year. However, when you look at the difference between seven percent and four percent, rates are more than 40 percent below where they have been historically. This is why renting is more expensive than owning right now in most areas of the country. There is another message here that we have been delivering for a while. These low rates are not expected to last forever. Eventually, the Federal Reserve Board will increase rates. Until then, every time rates increase, we ask ourselves—is this the end of the super low rates? We hope not. However, the message today is that we need to caution our prospects that rates are great right now and if they are thinking about purchasing a home, refinancing or even purchasing a car, now is an excellent time. If they wait they may winding up missing the biggest boat they could have gotten on … 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 email at dave@hershmangroup.com or visit www.originationpro.com.
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n National Mortgage Professional Magazine n MAY 2015
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Jumbo Loans to $2.5 Million
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Does Sub-Prime Equal Non-Prime? By Tom Hutchens
When the average person hears the word “subprime,” they inevitably think—and for good reason—of the reckless lending products from a decade ago that led to the housing crash and propelled millions of homeowners into foreclosure. The sub-prime meltdown, as it was labeled, resulted from a combination of factors, including lenders extending credit to highly risky borrowers, lending without requiring a downpayment or proof of income, and very little regulatory oversight. Added to that mix was a confluence of untimely negative economic events that would lead to what we all know as “The Great Financial Crisis.” Though sub-prime was just one ingredient in the economic maelstrom of 2007 and 2008, it has become a dirty word associated with the financial calamity that affected so many people in the U.S. and across the globe. Fast-forward to 2014. Sub-prime makes its big debut back into the mortgage world after hibernating for six years. Headlines start cropping up stat-
ing that “Sub-Prime Is Back!” Without a doubt, people are rolling their eyes and thinking, “Here we go again.” Fortunately, the situation really is different this time around. When comparing the product called sub-prime that was rampant prior to the financial crisis to the recently issued, non-prime or non-qualified mortgages (non-QM) of today, the difference is stark.
What does the new sub-prime look like? An extremely tight credit market has raised lending standards to unprecedented levels. Today, non-prime credit scores average over 660, which generally is not considered a “sub-prime” score. Everyone has preconceived notions about what sub-prime means, but it’s basically a loan that does not fit the “prime” standards, as defined by the government-sponsored enterprises (GSEs). The new product really resembles how sub-prime first began: The borrowers have equity in the transactions and documented incomes. The kinds of non-QM loans we (and many other nonbank lenders) are now offering look more like the sub-prime of the late
1990s than those of the mid-2000s. Our program benefits borrowers who have experienced a recent credit event, such as a foreclosure or short sale. These borrowers, however, are required to put least 20 percent equity into the transaction. The product is offered on a wholesale basis for borrowers with credit scores as low as 500 and with debt-to-income (DTI) ratios as high as 50 percent, but those borrowers are exceptions to the rule and must still pass due diligence.
What does the potential market look like? Sub-prime lending was a huge market prior to the 2007 mortgage crisis. From 2004 through 2006, it was responsible for over $500 billion per year in lending. Non-agency lending was at its peak, hitting nearly $2 trillion in originations in 2005 and outpacing agency lending. Now, sub-prime is comparatively nonexistent at less than $1 billion per year. There’s no doubt that a large market for these products has not been served at all for seven years, but those borrowers didn’t disappear. Part of our mission is to educate not only our brokers, but the public about
the benefits of these loans. We create customizable materials for our partners to market to real estate agents, attorneys, and other mortgage professionals in an effort to spread the word not only about our programs, but about the new availability of non-QM loans in the market. Many mortgage companies today are focusing on increasing their non-agency and non-QM mortgage business. The biggest category of customers being targeted consists of borrowers who do not qualify for a prime loan because of a single foreclosure or bankruptcy related to the recession. They’re not bad people; they’ve just had an unfortunate life event. This applies not only to non-QM, but also to other areas of the market that lenders have shied away from due to post-downturn liability risks. Companies are using this approach to carefully develop products that ultimately only the private market would be able to satisfy.
Common sense underwriting. At Angel Oak Mortgage Solutions, we take safety in lending standards to a new level through a practice called
The Sub-Prime Market: Then and Now 2006 Average credit score: 580
2015 Average credit score: 660
Loans were made without requiring a downpayment
Loans require no less than a 20 percent downpayment
Income was undocumented
Income must be fully documented
Volume: $600 billion
Volume: $250 million and growing
Limited oversight and regulation requirements
Tighter regulation and ATR (ability-to-repay)
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most importantly, the borrower level. It’s critical for our sales force to train our customers, but also to help brokers maneuver through the process.
Is it safe?
What’s in it for me? Depending on the risk of the borrower, these mortgages carry interest rates between five and nine percent. In today’s ultra-low rate environment, it’s no surprise that all types of private investors are interested in non-QM products at these interest rates. Anyone who is looking to participate in the mortgage business at higher coupons is going to look to sub-prime. We are at the beginning of a new credit cycle in which investors are looking for new ways to create return. Tapping this dormant market not only provides investors with higher yields, but also provides brokers with a variety of new products that enable them to satisfy the needs of borrowers outside of agency lending guidelines.
What’s next? Public perception continues to soften
Tom Hutchens is senior vice president of Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. Previously, Tom was a senior sales executive with Atlanta-based SouthStar Funding, where he helped build one of the nation’s largest sub-prime lenders. In 2014, Tom joined Angel Oak Mortgage Solutions and is responsible for sales and marketing for the company.
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When sub-prime lending was rereleased in early 2014, there were new regulations put in place to help it make a smooth transition back to market. Stricter regulations on ATR requirements as well as more prudent loan-tovalue (LTV) ratios have led to a significantly decreased number of loan defaults. Although sub-prime mortgages fall outside the QM safe harbor, the next generation of sub-prime lending is still safer than before, mostly because of the lessons learned in the past. Despite all the new regulations, we feel the real key to mitigating non-QM risk is using well-documented, manual underwriting and avoiding the excessive layering of multiple risks that decimated loan performance during the mortgage crisis. With a disciplined approach to offering these programs, they can take their rightful place back at the mortgage table.
on sub-prime as more people realize the differences between products being offered today and those prior to the crisis. Non-agency and sub-prime lending is even more relevant now than before the recession since so many American’s no longer fit the tight agency requirements. We expect 2015 to see significant growth in the subprime/non-QM arena as demand for and awareness of these products continues to grow.
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“common sense underwriting.” It’s important that lenders check to see that all income and assets are documented. Non-QM loans are not loans that can be underwritten by a computer; all of our loans are looked at individually by an underwriter who reviews all documentation. Due diligence on non-QM loans is a manual process that takes time and energy, but our commitment to those practices has resulted in a track record of strong performance and no defaults to date. We adhere to ability-to-repay (ATR) regulations with every loan, and help our partners to understand why our loans not only make sense, but also meet all regulatory requirements. We like to say that we’re taking risks with our eyes wide open. We want everyone involved to have their eyes wide open as well. That’s why education is a top priority for us. Though we may call the loans “nonprime” or “non-QM,” this does not mean we are running from the word “sub-prime.” We strive to educate people about what 2015 sub-prime is, no matter their predisposition. The nonQM lending process requires education at the lender, broker and, perhaps
NAHREP 1
Annual Conference Maps Out the Future of Hispanic Homeownership
T
he National Association of Hispanic Real Estate Professionals (NAHREP) released its State of Hispanic Homeownership report revealing barriers Latinos confront in attaining homeownership at its Annual Housing Policy
and Hispanic Lending Conference last month. Also presented at the Conference was the NAHREP Foundation’s Hispanic Wealth Project Blueprint, an initiative to triple Latino household wealth in the next 10 years. NAHREP’s mission is to create opportunities for sustainable Latino homeownership through business development for real
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estate agents and mortgage originators who work with Latino buyers. NAHREP also educates its members, industry leaders and policy makers about issues affecting Latinos in housing. The State of Hispanic Homeownership report is an analysis of Latino homeownership growth and household formation rates as
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well as other issues relevant to home attainment such as educational achievements, entrepreneurship, labor force and purchasing power. The Hispanic Wealth Project aims to provide an “ecosystem” of
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employment, income, education, credit, saving and other variables that foster Latino wealth creation. NAHREP’s Housing Policy and Hispanic Lending Conference provided attendees with an additional opportunity to view the theatrical performance of 53 Million & One, a story of one man’s
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trajectory from rural Mexico to succeeding as a real estate entrepreneur in the U.S. This performance will be touring nationwide in 2015. 1-A panel at the 2015 NAHREP Housing Policy & Hispanic Lending Conference discusses the findings from the 2014 State of Hispanic Homeownership report (from left to right) Joseph Nery, NAHREP 2015 incoming president; Gary Acosta, NAHREP co-founder and CEO; Marisa Calderon, NAHREP chief of staff/deputy director; and Alejandro Becerra, NAHREP director of research 2-Hispanic Wealth Project Advisory Chair, the Hon. Henry Cisneros, previous Secretary of the U.S. Department of Housing & Urban Development (HUD), opens the release of the project blueprint 3-The NAHREP North County San Diego Board leaders gather with attendees in the foyer at the Fairmont, D.C. before the Presidential Installation Gala that welcomed the 2015 national board of directors 4-John Quiñones, ABC’s first ever Latino correspondent, delivers a special address during the Keynote Luncheon at the 2015 NAHREP Housing Policy & Hispanic Lending Conference on overcoming difficulty and thriving in the U.S. despite socioeconomic barriers
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5-Gerardo “Jerry” Ascencio featured in the encore presentation of NAHREP’s 53 Million & One, an original theatrical performance of one man’s journey from rural Mexico to become a successful real estate entrepreneur
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www.movetube.com
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.
ISGN Partners With Sovereign Lending to Streamline Compliance
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ISGN Corporation has announced that Sovereign Lending Group is leveraging the company’s consulting services through its Professional Services Group, which is dedicated to assessing compliance and operational risks and providing mortgage lenders with process optimization and cost reduction strategies. Based in Irvine, Calif., Sovereign Lending Group partnered with ISGN to optimize operational efficiency and compliance management. After an onsite efficiency review, ISGN assisted in the development of a comprehensive policy manual to help the lender maintain regulatory compliance as they expand. In addition, ISGN created a quality control (QC) plan and manual as well as identified compliance training needs, including developing a plan for mandatory staff training. Sovereign partnered with ISGN to support much of its day-to-day compliance needs. With more than 25 years of industry experience, ISGN’s professional services group led by SVP Lisa Weaver, CMB supports the lender with compliance resources, HMDA reporting, QC plan design and development and compliance management, which includes guidance on CFPB and other regulatory guidelines to help ensure Sovereign Lending is driving an aggressive initiative to support the lenders compliance department. Furthermore, Sovereign Lending Group benefits from ISGN’s deep knowledge of regulatory compliance with ISGN not only providing guidance into what the CFPB is currently requiring, but also advises on new and changing guidelines. “The market continues to be a challenging one, making it critical that we find a trusted advisor to provide thorough consultation and help us build a sustainable framework,” said Joe Pirro, principal owner of Sovereign Lending. “With ISGN, we’ve not only optimized performance, but we’re also streamlin-
ing processes to reduce costs, mitigate risk and avoid potential regulatory violations. We’re extremely pleased with the results so far, and look forward to a long-term partnership.”
Waterstone Mortgage Opens New Regional HQ in Sunshine State
Waterstone Mortgage Corporation has announced that the company will open its new regional headquarters in a new location in Winter Park, Fla. “The move to our new space marks the beginning of a new chapter in our business,” said David Holbrook, regional manager of Waterstone Mortgage. “Dustin Owen, Mike Smalley and I opened our first Florida branch with only five employees in 2008. Today, we have 13 offices across the state and employ over 120 mortgage professionals. Our Winter Park office is the largest office, which made Winter Park the obvious choice to house the Regional Headquarters. This new office will give every one of our employees an opportunity to do an even better job of serving Florida homeowners.” In the seven years since Waterstone first expanded into Florida, the company’s operations in the state have grown to contribute 20 percent of the total Waterstone Mortgage Corporation production. In 2015, the company will extend an estimated $550 million in home financing to homeowners in Florida. The company’s Winter Park branch was the largest producing company branch in 2014, making it the perfect location for the new regional headquarters. Holbrook, Owen and Smalley share the management responsibilities for the region. Waterstone offers a broad range of
products for purchases and refinances, including FHA, VA, USDA, and conventional loans, bank portfolio lending products, jumbo products, and condo financing. As a Fannie Mae, Freddie Mac, and Ginnie Mae approved lender, Waterstone Mortgage is able to deliver loans directly and get its customers to the closing table on time. Waterstone has also announced the addition of two new branches to its national direct lending branch network, as well as the opening of its new Florida regional headquarters. The company now has new branches in Charlottesville, Va., and Tallahassee, Fla., bringing its total number of branches to 64. “We continue to seek out opportunities to expand our mortgage operation and have greatly enjoyed the security and returns that bringing on new branches offers us,” said Waterstone Mortgage President and CEO Eric Egenhoefer. “There are many fine mortgage originators in this business who want to become part of a larger network. Reducing compliance costs is just one of the many reasons that owners of mid-tier mortgage companies reach out to us. I’m always pleased when they do.”
Altisource Launches Residential Investor One Cooperative
investment market historically has been fragmented, lacking the buying power to reduce the costs for the products and services needed to buy, manage, improve and sell properties,” said David Wisen, senior vice president of cooperatives and origination services for Altisource. “We have applied the expertise in obtaining best in class services that we developed with our mortgage banking cooperatives, Lenders One and Wholesale One, and applied that to the residential home investor market. Members will benefit from working with our preferred vendors including Altisource with its end to end real estate and renovation services.” Residential Investor One is a national cooperative that offers members the opportunity to leverage group purchasing power and achieve reduced pricing on the products and services needed for the purchase, renovation, management and resale of residential investment properties. “Residential Investor One is providing investors the bargaining power and access to resources that were not previously available on a single platform,” said Tom O’Sullivan, chief executive officer of Residential Investor One. “Together, this community can share best practices and optimize their investments. We look forward to helping our members grow their portfolios and increase their profits.”
ReverseVision Adds New Operations Team Altisource Portfolio Solutions has announced the launch of Residential Investor One—an innovative new cooperative designed to deliver savings and efficiencies for its members that will range from individual residential real estate “fix and flippers” to institutional investors managing larger home portfolios. “The residential rental and resale
[INSERT: ReverseVision_Logo] ReverseVision has added a new Operations Team to their growing company, focused on product operations, system monitoring, capacity planning, backup, recovery, hosting management and product release. Leading the team, and joining ReverseVision, will be Tim O’Neal as VP of operations. O’Neal’s experience includes such roles as AVP of Infrastructure & Platform Operations at Bridgepoint Education, director of
Samantha Buschman as branch development specialist.
OSTRANDER
Operations & Enterprise Infrastructure at Intuit and VP eCommerce at New Century Mortgage. Also joining the team, ReverseVision welcomes new hire David Perkins, who will join Ron Potter, on the Operations Team. Perkins recently worked for Atlas REO, a repossessed property management Software as a Service (SaaS) company. “ReverseVision is committed to providing the most powerful and reliable technology to support the RV Exchange system today and in the future,” said ReverseVision President John Button. “The addition of the Operations Team ensures we are best positioned for reliable growth to support our customer and the industry.”
l Parkside Lending has announced that its CEO, Matthew Ostrander, has accepted an invitation to join the Independent Mortgage Bankers Advisory Board (IMBAB). l ServiceLink has named Tony Ebers as new division president of originations.
l Stephen Mackey has been named executive vice president, chief risk officer for Mortgage Guaranty Insurance Corporation (MGIC). l Venable LLP has named Richard Andrew Arculin, former senior counsel at the Consumer Financial Protection Bureau (CFPB), as counsel in the firm’s Washington, D.C. office. l Primary Capital Mortgage has expanded its management team with the addition of Walt Carter as chief information officer. l Guild Mortgage Company has named David Battany, a former executive with PennyMac and Fannie Mae, as executive vice president of capital markets.
l David J. O’Malley has been named director of loan quality solutions for LoanLogics. l Accurate Group has announced that it has hired two former executives from the FirstMerit Title Agency that was recently closed due to FirstMerit Bank’s decision to exit the title business. Kelly R. Westbury, FirstMerit Title’s former president and Laurice Petit, FirstMerit Title’s former commercial relationship manager joined Accurate Group. l Bay Equity Home Loans has announced the promotion of Casey McGovern to the role of company continued on page 44
RICHARDSON
Mortgage Professionals to Watch
SPEIGHT BUSCHMAN
l Inlanta Mortgage has named Rob Speight manager of the company’s new branch office in Carpentersville, Ill. Inlanta has also named
n National Mortgage Professional Magazine n MAY 2015
l Tim Krichbaum has been named branch manager of the new Independence, Ohio location for HomeBridge Financial Services. HomeBridge has also announced the addition of a new location in Cincinnati, to be led by Branch Manager Jerry Crowder.
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CROWDER
KRICHBAUM
l REMN Wholesale has announced the hiring of Damon Richardson to the newly created role of renovation lending specialist.
LYKKEN ON
leadership
Seven Ways to Motivate Your Team When Times Are Tough By David Lykken ur industry has fallen on some hard times in recent years, and the recovery has been much slower
O
than most of us have hoped. As leaders in the industry, few of us haven’t felt the pinch. We’ve risked losing our businesses and cutting back on staff. But if these times are challenging for those of us who are leaders in the industry, how much more frustrating do you
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TM
PRIME MORTGAGE
Partner with
EQUITY PRIME MORTGAGE, We Keep up the Pace!
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think it is for our people? Much of what is going to lead to recovery in the mortgage industry is out of our control. In order to restore the industry to its previous levels of success, we do need all of the stars to align in the regulatory world and the economy. But, we will also need the people who are working in the industry to believe in what they are doing and to work hard to accomplish their goals. We need to keep our people motivated to push on through tough times. So, how do we do that? Here are seven recommendations … First and foremost, we as leaders in the industry need to thank our team members for the work they’ve already done. It can be grueling trying to put deals together in a financially challenged and highly regulated economy. Our people can feel like they are taking one step forward and two steps back. It can be hard to find the motivation to keep working hard when you feel like you’re on a treadmill. As leaders in the industry, we need to recognize our people for what they’ve already accomplished. How many times a day do you say, “Thank you?” It doesn’t matter how small of a task it is, if you get into the habit of thanking people for their accomplishments, they will want to do more. Guaranteed. Another way to encourage your people is to share optimistic news with them. I’m not saying that you need to sugar coat everything, but they will get all of the negative information about how bad things are without even to try. There is still good news no matter how things get, but we tend to ignore it and focus instead only on the bad news. Be a filter for your team and try to get them to see the positive side of things. Sometimes, all you need is a light at the end of the tunnel to motivate you to
keep crawling through. Take every opportunity to share that light with your team. Put them on an e-mail list in which you share encouraging tips and tricks. Share something upbeat during a meeting. If your team is going to pull through, they need to keep their spirits up. It’s our job as leaders to make sure that happens. The obvious way to motivate people is to provide incentives. Most of the time, they are financial—like bonuses and raises. But they can also be non-financial, like flexible schedules and increased autonomy. But the problem with incentives is often that they come along with unrealistic expectations. The incentives may be great but, if the goals that make them possible are unattainable, people aren’t even going to try. It’s best to give small incentives for small accomplishments—to keep people moving forward, inch by inch. By all means, challenge your team. Make it challenging, but also make it possible. If they feel like they can’t win, they won’t even bother trying. This make sound like I’m stating the obvious, but when work is just work, it’s just work. In other words, when people feel like their jobs are nothing but a means to a paycheck, they’re not going to be very passionate about their work. If that’s the case, there is always a temptation to cut corners and not try very hard when the boss isn’t looking. You don’t want those kinds of people working for you, but if you make them feel like their jobs are drudgeries, you might just be creating those kinds of people. When your people show up to work, do they feel like they’re fulfilling a greater purpose than earning a paycheck? Give them something bigger to strive for. They’re putting people into homes. They’re strengthening the econ-
“You may refer to your people as your ‘team,’ but do they feel like a team? Working in an office where people are isolated in the cubicles are behind the walls of offices, it can be easy to start to feel disconnected.” economy will improve and the regulatory environment will stabilize. But your team isn’t going to stay motivated unless you proactively push them in that direction. That’s what being a leader is all about. David Lykken is 40-year mortgage industry veteran who has been an owner oper-
ator in three mortgage banking companies and a software company. As a former business owner/operator, today David loves helping C-Level executives and business owners achieve extraordinary results via consulting, coaching and communications, with the objective of eliminating corporate dysfunction, establishing and communicating
a clear corporate strategy while focusing on process improvement and operational efficiencies resulting in increased profitability. David has been a regular contributor on CNBC and Fox Business News and currently hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He produces a daily one-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites across America. He may be reached by phone at (512) 5012810 or by e-mail at dlykken@mbsteam.com.
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omy. Whatever story you want to build your organization around, make sure your people know it. Work is one thing; purpose is quite another. Give your people purpose, not just work. You may refer to your people as your “team,” but do they feel like a team? Working in an office where people are isolated in the cubicles are behind the walls of offices, it can be easy to start to feel disconnected. When people feel like they are on their own, it may become easier for them to give up and leave your company or the industry altogether. Building a sense of camaraderie in your team is essential. You want to cultivate a “we’re all in this together” mentality. Do you have regular meetings in which everyone has an opportunity to contribute and share ideas? What about team projects? You may want to get different people to work together on different projects so that bonds are solidified between them. However you choose to build community in your organization, it may be just what your people need to convince them to stick it out. It’s easy to leave your job. It may even be easy to leave your industry. But it’s really hard to leave your team. If you want your people to keep trying even when the situation seems hopeless, another way to motivate them is to cut them a little slack. Be patient with your team. Of course, you want to challenge them and set expectations to get them to push their limits, but you also want to show them grace when they come up short. Don’t punish people for their failures. Instead, help them use those failures as learning experiences. Show your people compassion. When their jobs are hard enough, a merciless boss is only going to drive them away. If you want them to keep working for you and to put their hearts into that work, show them you care. Be patient with them. One final way to motivate your team is a little intangible and somewhat difficult to simply check off a list, but I think it’s important: Leading by example. If you want to motivate your people to do their work, they need to be able to see that you are doing yours. Are you barricaded in the corner office in the ivory tower of the workplace while your team is out slaving away on the shop floor? Or, are you working just as hard as everyone else? If you are, can your team see it? You want your people to see you getting your hands dirty. You should never expect them to do something that you wouldn’t be willing to do yourself. “Do as I say, not as I do,” doesn’t cut it in the world of leadership. People are going to do what they see you doing. If you want them to work hard, then you’ve got to put your hands to the plow. This isn’t an all-inclusive list—there are obviously countless other ways to motivate your team. But, this should provide a good starting point. No matter how dreary things seem, there are always ways to encourage your people to push through. Sooner or later, the
The Long & Short: The Business of Short Sales
heard on the street continued from page 41
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KITTLE
For past short sellers who have gone through the loss of a home and are eligible to return, criteria needed for a new mortgage is vague. The result is a partial story. Proving “extenuating circumstances” and confining the timeline for an economic event is a struggle for loan originators and underwriters trying to comply with vague criteria. Because of so many variables, lenders deny new loans for borrowers with a short sale or foreclosure in their past even when they may be eligible to repurchase again. We must get this right. Detailing why the loss of a home is the hardest thing for affected consumers to provide ... not because they can’t remember, but because they relive it. In attempting to originate the FHA “Back to Work” loans, it would seem the process is simple. The criteria for “Back to Work” is to show a 20 percent reduction in income sustained for six months minimum that resulted from a loss of employment or reduction in income, which is considered the “economic 44 event.” Here’s the bigger problem. Most who had an “economic event” tried to hang on, wiping out assets along the way. But, while trying to hang on, homeowners accumulated more debt to stay solvent and in most cases, to stay current on their mortgage. Then, another “economic event” hit, assets were gone and debt is so excessive that there is no choice but to short sell. As a mortgage broker in Florida where it is common to see Boomerang Buyers (those eligible to re-enter the housing market after a short sale or foreclosure), I often hear the full story for those who have lost a home and want to re-try home ownership again. An economic event followed by a prolonged period of trying to stay put, finally ended with another event where funds were no longer available and the only choice was to short sale, occurred in a great deal of these cases. Proof also exists to show a good number of these folks had excessive debt that pushed up debt to income ratios incredibly high prior to the sale of their underwater home. But, it gets confusing for a new mortgage. For the FHA “Back to Work” program, the U.S. Department of Housing & Urban Development (HUD)-approved counselors are able to determine hardship and can provide those who attempt a re-purchase one year after a short sale, foreclosure or bankruptcy with a housing counseling certificate. However, that doesn’t mean the mortgage company will approve the mortgage. Because the economic event may have occurred years ago and short sale processes took months or years, documentation such as tax returns and bank statements needed to show a lack of assets may stretch over the previous five to seven years rather than the most recent two years that lenders are accustomed to evaluating. Mortgage companies who offer FHA “Back to Work” loans are reluctant to promote this almost two-year-old program due to few of these loans getting approved. Part of this is because loan originators don’t provide enough documentation, and the other problem is that there seems to be wide discrepancy between underwriting opinion on these files. Varying opinion also exists for “extenuating circumstances” noted in Fannie Mae and Freddie Mac guidelines for eligibility of a new mortgage under four years. Underwriting interpretation of these guidelines vary greatly from lender to lender for the few mortgage companies who offer these loans. For loans submitted with what seems to be an iron clad “extenuating cir-
STILL
By Pam Marron
l Phil Tocci has joined Academy Mortgage as a district manager where he will help lead the growth in loan officers and branches in the company’s New England District.
l The Mortgage Collaborative has bolstered its executive team, adding David G. Kittle, CMB as vice chairman of the board and Debra Still as secretary of the board. The Mortgage Collaborative has also added Rich Swerbinsky as executive vice president of national sales and strategic alliances, and Nancee Mueller, CMB, as vice president of member and vendor services.
LITZEL
Better Details Needed for FHA’s Back to Work Program and Conventional “Extenuating Circumstances”
TOCCI
president. He has served several roles since the formation of the company, most recently as chief production officer.
l LenderLive Network Inc. has announced the addition of Mark Litzel as vice president of national sales for the company’s Settlement Services Division. l Mortgage Network Inc. has named Sam Cavanaugh a loan officer in the company’s Hilton Head Island, S.C. branch. l Brian Biglin has been named chief risk officer for loanDepot LLC. l MCT Trading Inc. (MCT) has announced that Joel Dulmage has joined the company as regional sales director where he will be responsible for new business development and client service management in the Midwest territory. l OpenClose has announced the addition of Ken Ellis as director of business development.
l GSF Mortgage has announced the addition of Nelson Kass to its branch in Hypoluxo, Fla., joining the firm with 28 years of mortgage industry experience, working under Rob Scolnick, branch manager. GSF has also announced the addition of Bradley Burt as senior mortgage loan originator in Sarasota, Fla., working under Ruth Watkins, GSF regional manager. Dan Currie has also joined the GSF team, as a loan officer in the firm’s Indianapolis branch working under Branch Manager Nicole Lissade. Dave Nuckolls has joined the GSF team as a loan officer in the firm’s Bolivar, Tenn. branch. l Dart Appraisal has named Michael Fisk to the company’s executive team as chief financial officer. l The Mortgage Bankers Association (MBA) has announced the appointment of Bradley S. Padratzik as director of member engagement. l Caliber Home Loans Inc. has announced that Sarah Johanns has joined the company as an account executive covering Minnesota and the surrounding Midwest territory. Caliber has also named Cathy Gibb as regional vice president for the Houston, Texas and southern Louisiana regions. l Churchill Mortgage has announced the promotion of Jason Dickson to Texas regional manager, where he will help develop and execute the lender’s statewide strategic growth strategy. l Valuation Partners has announced the addition of Tim Bartek as vice president, national account executive, to expand sales in the Eastern U.S. region, responsible for selling real estate valuation services to mortgage bankers, banks and credit unions. l Mid America Mortgage Inc. has announced that Adam Rieke has joined the organization as director of national TPO lending.
Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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Just Ask
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By
Eric Weinstein & Laura Burke nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you. This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal
K
counsel or the advice of a tax professional. Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!
Uncertain in Bethesda, Md. asks … I am in the process of closing a nonowner occupied streamline refinance right now. I just realized that the insurance my borrower provided is not a “Landlord Policy.” The bank, however, accepted the policy and scheduled the loan “Clear to Close.” Here is my moral conundrum. Do I bring it to the bank’s attention and
maybe delay closing or just let it slide. Eric’s reply to Uncertain … I can’t tell if you work directly for the bank or are a broker selling the loan to the bank, but my answer is still the same. You must tell the bank they made a mistake and help get it rectified before you close that loan. Whether the problem is a tiny problem or major mortgage fraud, it is your duty and obligation to assist the bank in producing a good, salable product. I am sure the bank has multiple levels of quality assurance, but you don’t feel you are one of them. Everyone up and down the line must
work in the bank’s best interest. It is the right thing to do. Look at it this way. If you let it slide and it gets picked up by some closer at the settlement table, it will cause more hassles at that point, then now, where it may not slow things down one iota. I am a big proponent of doing things the right, moral way. Not because I am a saint, but because you make more money that way. If doing things the right way in life were easy, everyone would do it. For further research on the topic, consult your local bible. Laura’s reply to Uncertain … Eric is spot on with this one. It will be
k Eric & Laura caught either prior to closing, at closing, or post-closing audit, but most importantly your client could risk not being properly insured. What if something happened, like a fire (and it does happen) the insurance company could say, it was improperly insured, and who wants to get an attorney during a crisis to validate if their insurance was actually in affect.
Eric in Virginia asks … I work at home in a small apartment with my two dogs whom I love very much. The problem is that sometimes I will get on the phone with a customer or real estate agent and they will start barking uncontrollably at a squirrel in a tree or a neighbor walking their dog. It is so embarrassing when the other person asks “Are you at home now?” What do I do?
Laura’s reply to Candy … In my younger, cockier days I would say, absolutely let her know you are not satisfied with her referrals and that you don’t like being taken advantage of. Now in my wisdom days, I would respond differently. My first question is, “Do you like the real estate agent?” Second question, “Would you like to do business with the real estate agent?” If you answered yes to either question, do the open house. It’s an investment of what probably less than $100 bucks and some time. Time invested with the possibility of either networking with other real estate agents from his/her office, or gaining new buyers from the open house. Even if you never got a deal from the agent, but you got one, two or even three good leads from the open house it would be worth your time. Unless you walk in someone else’s shoes, you may not really know why the real estate agent didn’t send you a referral. Maybe their business has been down and they are uncomfortable letting you know their sales are down. Maybe they didn’t have control of their last buyers, there are numerous reasons real estate agents may not have control. So give the agent the benefit of doubt, and while working together on details for the open house, or food, whatever you are doing, try to strengthen your rapport, and build a stronger relationship. It does work. Happy spring! Eric’s reply to Candy … This time, I partially agree with Laura
bond and maybe REALLY get her business. Do it for you, not for her. Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional. 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. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage arena. She may be reached by e-mail at lauralynnburke@gmail.com.
Eric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com. 47
n National Mortgage Professional Magazine n MAY 2015
Laura’s reply to Eric … I agree in part with Eric, but not entirely. I also have a dog, and frequently work from home, and yes my dog can be annoying occasionally when the neighbor’s cat struts over here to peer in at her, or a squirrel gets to close. Of course it’s always when you least expect it, and I can easily be embarrassed by it. I believe that if I choose to work from home, I still need to deliver the same element of professional standards I would if working from an office. I personally find it irritating to speak to a client who is so busy directing or yelling at their children than paying attention to our conversation, that I feel to be an important conversation, not chit chat. I would assume a
Candy in Illinois asks … I have a question for you guys. I have a real estate agent who never really sent me much business yet when she needs someone to help her sponsor (monetarily contribute) or physically man an open house she call me, with a promise to send business my way. Should I be glad to participate in hopes I get a client or two while working the open house, or should I be offended and let her know I haven’t gotten any business from her in quite a while?
… only backwards. In my younger days, I was so desperate for business. I went to everything and did anything chasing a lead to support my family. In my dithering old age, I have now gotten more selective in my time management. I have spent literally thousands on joint advertising with a real estate agent, only later to be told she was “Sharing the leads with her favorite loan officer.” I have known agents for years who promised me some business, but just never got around to doing it. My girlfriend’s mother is a real estate agent and I am still waiting for her loan officer to retire or have an unfortunate accident so I can get my first deal. When the fishing is not good in one spot, move to another spot. Saying all that, I think you should go. One reason is that you might get some leads out of it. The second reason is that by spending so much time with the agents, it give you time to
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Eric’s reply to Eric … Eric, I know exactly how you feel. That happens to me all the time. I have tried stepping out in the hallway, locking myself in a bedroom closing and even pantomiming smacking the dogs. This is what I found works the best. Be honest. “Yes, I work from home. Do you have dogs?” Invariable, they will answer “yes” or say they have cats and we will get on the subject of how annoying they can get. It is a good bonding moment. I am not exceedingly handsome, I do not dress like the cover of GQ Magazine and my nose is bigger than a small baby’s arm, but as Popeye says, “I am what I am.” Luckily, people are not as harsh on you as you may be on them. Some people find it endearing. If they don’t want to use me because I work at home or have a dog, well, I think the technical phrase in the industry is “screw them!”
client would expect the same of me. So with that being said I would find it inappropriate to expect a client to tolerate me trying to speak over my dog barking. I have used two methods that often work, I say excuse me, and I get a treat or two to distract my dog, and I close the blinds or curtains so she can longer see out, and most of the time she has forgotten what she was barking at. Secondly, if I am on my cell, I simply walk outside away from her. One of the pitfalls of working from home.
“Indicators point to an upswing in the number of loan officers going back to broker shops, existing brokers successfully growing their business portfolios and more borrowers realizing the benefits of using brokers.”
Perceptual and Regulatory Changes Spark Resurgence of Brokers in Mortgage Industry By Mat Ishbia The wholesale-broker channel is experiencing a wave of positive momentum within the mortgage industry. Regulatory changes and a shift in perception among borrowers and Wall Street investors have mortgage brokers
MAY 2015 n National Mortgage Professional Magazine n
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and the wholesale market poised to make a major comeback. Quarterly increases in loan volume throughout 2014 and into 2015 indicate that the steady consumption of market share by brokers is likely to intensify.
Mortgage brokers, which had seen their market share dip from 30 percent in 2007 to nine percent in early 2014, have begun to show signs of consistent growth for the first time since the housing market crisis caused their numbers to plunge. The wholesalebroker channel was the only sector of the mortgage industry to grow from Q3 to Q4 in 2014, posting gains of 6.3 percent–a clip that considerably outpaced large retail lenders and correspondent lenders, which declined by 0.5 percent and 5.7 percent, respectively, in that timespan. On a larger scale, total loan volume for brokers grew by more than 50 percent throughout 2014, jumping from $22 billion in Q1 to $34 billion in Q4. Following Q1 of 2015, market share for brokers has elevated to 12.9 percent. Indicators point to an upswing in the number of loan officers going back to broker shops, existing brokers successfully growing their business portfolios and more borrowers realizing the benefits of using brokers. The positive trend for the broker channel can be attributed largely to the increasingly level playing field that is being forged between the retail and wholesale sectors.
Perceptions are improving When the housing market began to decline in 2007, it wasn’t the quality of service or loan quality that caused mortgage brokers to lose nearly 22 percent of their market share. Large banks and retail institutions simply had more formidable advertising budgets that allowed them to paint a better picture publically of their business practices, whereas brokers didn’t have that luxury. Licensing regulations were established to regulate broker shops – restrictions that were not assigned to banks and credit unions, reinforcing the narrative that brokers were risky and volatile, given the uncertainty in the market. But perceptions have begun to change among borrowers and Wall Street investors. People are now realizing that loans originated by brokers
perform just as well as retail loans. Furthermore, because brokers have been so highly regulated and scrutinized by such high standards for so long, their loans are oftentimes found to be of higher quality than those originated by retail lenders. Borrowers are recognizing that brokers are out in the community and can provide hands-on service to facilitate the loan process, as opposed to retail institutions that limit themselves to phone calls or online services. The uptick in the wholesale-broker channel extends beyond borrowers and into the workforce, as an increasing number of loan officers are forgoing opportunities at large banks and retail institutions to kickstart their careers in broker shops. Similar to the benefits that brokers present borrowers, loan officers are finding that broker shops present opportunities to make more money, build stronger relationships with clients, and explore more flexibility in the market. And that’s a huge positive for wholesale lenders throughout the country. With 10 percent of market share, there is still so much opportunity to grow. As brokers continue to land more business, the perception of borrowers will change from banks being the primary option for seeking a loan to mortgage brokers getting an initial look because of their variety and reputation for elite topnotch client service.
Regulatory changes making an impact Mortgage brokers don’t need an advantage over banks and retail lenders; they just need a level playing field. They will advance in that regard beginning Aug. 1, as the TILARESPA Integrated Disclosure (TRID) rule will go into effect. The new regulation will allow lenders to combine Good Faith Estimates (GFE) and Truth-in-Lending (TIL) into one document, called the loan estimate. Additionally, brokers will no longer be required to dis-
close lender-paid compensation on the loan estimate. This is a major boon for brokers, as they’ve been at a severe disadvantage compared to retail lenders since rules were enforced in 2007 that forced brokers to include total compensation on origination forms, while retail lenders were not held to the same standards. In reality, retail lenders and brokers had the same compensation on a loan, but because retail lenders had the ability to hide it from borrowers, they were able to make themselves look better in comparison. These regulatory changes will place a spotlight on the more carefully crafted, hands-on client service that brokers are able to provide consumers.
Wholesale-broker channel proving its value
maintain their loans and stay in contact with their borrowers. In recent years, brokers have faced an uphill battle, as they’ve had to be weary of large lenders’ portfolio retention programs. If the mortgage broker market is going to continue to climb to 15 percent, or get back to its level of 30 percent, brokers must stay vigilant and partner with lenders who prioritize the growth of broker business. They should do business with lenders that value the long-term business relationship over the individual transaction, and provide services that help the brokers consistently stay updated on their loans.
Mat Ishbia is president and chief executive officer of United Wholesale Mortgage (UWM), one of the largest independent mortgage lenders. With a vision to create a more perfect mortgage world, Mat has changed the game, turning UWM into a What’s next? $10 billion company and a top national The wholesale-broker channel is workplace. Follow Mat on Twitter trending upward in perception and @Mishbia15. 49
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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.
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Companies all across the country tout the value of their customer service, but that’s not the end game–profit and business growth are what every bank, lender and credit union in the country are pursuing; customer service is the vehicle needed to get them there. While brokers are positioned to provide high-quality, customized service to each client, their business growth potential is tied to the lender they choose to partner with on a given loan. It’s imperative that brokers partner with lenders that help them, not hurt them. Instances of large institutions in the wholesale market manipulating brokers and then stealing their loans in order to grow their own in-house retail channels have become more commonplace throughout the industry. This is in contrast to pre-2007 operations, when lenders viewed brokers as partners and utilized a variety of resources to help brokers
market share, and that should continue into the future. As perceptions of brokers continue to improve and regulatory changes continue to level the playing field, brokers are going to add market share, more borrowers are going to use brokers, and more loan officers are going to leave large retail institutions to join broker shops. The future looks very bright for the resurgence of brokers in the mortgage industry.
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As the playing field continues to become more level between the retail and wholesale mortgage sectors, the light is beginning to shine more brightly on the advantages that broker shops provide for borrowers. As the scare tactics engineered by large banks and retail institutions continue to dwindle, consumers are becoming increasingly aware that the wholesale-broker channel is the smarter route to go for the best possible solution. Brokers actually made up 20 percent of the overall purchase business in 2014, up from nine percent previously–a spike that can be attributed to brokers being the preferred choice of real estate agents, a group that largely controls the purchase business. It is much easier for brokers to get involved in local communities and build relationships with real estate agents. Of all consumers who go to real estate agents to purchase a house, 55 percent are referred to a specific mortgage provider–and 37 percent of that segment end up closing their loan with the originator they were referred to by the real estate agent. That’s a huge number, and a positive representation of brokers’ value to borrowers and real estate agents. It makes complete sense–when making a high-involvement purchase decision, a savvy consumer will
research a myriad of options and compare important factors, such as price, features, timing, and so on. Mortgage brokers offer consumers the most flexibility and diversity of loan options, and are the most capable of catering to individuals’ specific needs. Like true free agents, brokers can customize each client’s experience and shop for the best rates available throughout the entire country–as opposed to banks and retail lenders, which are handcuffed by their own restrictions. Brokers are more nimble in the marketplace, able to take advantage of rate drops more quickly and get loans done at a faster clip. Unlike a bank or retail lender, which offer one set of pricing, products and turn times, brokers have access to hundreds of lenders throughout the country, which allow them to find the best options based on each individuals’ situation. The benefits of flexibility and variety of options also make broker shops the ideal spots for loan officers looking to maximize their portfolios. They are realizing that it’s much easier to land prospective clients and provide elite, hands-on service by accessing hundreds of options to best cater to client needs.
“With a redefined landscape, wholesale is uniquely qualified to take advantage of new opportunities.”
A New Landscape Emerges for Wholesale Lending
Sweeping consolidation
By Matt Ostrander During the past eight years, the U.S. mortgage industry endured its most tumultuous and evolutionary time period since the great depression. Consolidation, new rules, compliance regulations and structural changes disrupted and revolutionized the entire industry, as well as the cus-
tomer experience. Many believed that wholesale lending was on its deathbed. However, the players that redefined themselves to meet industry changes are now finding themselves well positioned to identify and capture future opportunities in the new landscape.
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After the housing collapse of 2008 swept through the mortgage industry, many banks that offered wholesale mortgage lending started getting out of the market. Wholesale loans provided lower compensation than retail products, Basel III reform was on the horizon, and Dodd-Frank’s regulatory compliance requirements were difficult to navigate. This perfect storm of circumstances made it more challenging than ever for banks to be profitable in wholesale lending while taking on added responsibility for the quality of their third-party loans. As a result, many lending institutions decided the cost of compliance and risk outweighed the benefits, and they eliminated their wholesale lending channels. They focused instead on increasing capital while concentrating on dealing directly with consumers and correspondent banks. Once the storm had passed, many presumed the market impact of wholesale lending consolidation would not be a favorable one. Most assumed fewer players in the wholesale channel would negatively affect borrowers because of fewer choices and higher costs. Others believed wholesale lending would go away entirely. But in reality, the changes haven’t had the negative effect that most people thought. In fact, it’s been a good thing for the mortgage industry and we have seen and will continue to see many new entrants into this segment of the market.
New opportunities arise When large banks began exiting wholesale in 2008, the resulting consolidation began to push wholesale lending into mortgage banks and other non-bank entities. These institutions could now offer customers the lending options without competition from the larger banking operations. A significant effect of the aggregation was that the industry became much more diverse. This allowed many small-to-mid-sized, independent wholesale institutions to thrive and gain market share. Today, the
wholesale segment accounts for eight to nine percent of the U.S. lending market. The consolidation also resulted in increased competition. Three or four years ago, there wasn’t much competition in wholesale lending. Fewer players, made up of predominantly larger institutions, shared the majority of the market. But within the last five years, strong regional banks have begun to return, and now the competitive landscape consists of more players comprised mostly of smaller institutions. Whether this trend continues, time will ultimately tell. Perhaps if interest rates begin rising, wholesale lending may become more appealing to large lenders because they will be looking for a product that they may not be able to get from their current channels. Today, wholesale lending is more expensive than before, primarily because sweeping reforms and regulations from Dodd-Frank and the CFPB have significantly increased compliance costs compared to five years ago. But that is the case for every lending channel right now, not just wholesale. It is part of the new lending landscape and in some ways wholesale is uniquely qualified to adapt to this environment
A new way of lending With the CFPB’s recent, newly created profiles for qualified and nonqualified mortgages, we can expect that wholesale lending will remain a minority part of the overall national marketplace. But it will serve an important and growing niche in the alternatives market. Wholesale lending is positioned to offer viable options for financially disadvantaged and very wealthy borrowers who collectively comprise approximately 20 percent of the marketplace and do not meet the requirements for mainstream mortgages. When interest rates begin to increase, many believe there is going to be tremendous demand for volume and growth in lending.
Private money is greatly needed to meet the demand in this segment on a national level, and wholesale lenders are poised to play a leading role in making this happen. Because of their legacy-free profile the remaining smaller operators: wholesale lenders, in conjunction with small regional banks, independent banks, REITS, and other non-bank entities, are better suited than large banks to develop the new and creative lending solutions needed for this segment. Many of the big banks are still mired in lawsuits from 2008 and do not have an appetite for risky loans. Additionally, many wholesale institutions are now holding their own book of servicing, similar to the traditional mortgage banking model, which requires the borrower
to perform in order for the institution to realize full value of its investments in the servicing. In this model, wholesale lenders make their money through a residual payment process over multiple years and are not selling their servicing or relinquishing any responsibility, so their decisions are much more conservative or at least well thought through in terms of risk. This is good for the industry and the U.S. economy and it, along with new industry regulations, will help improve credit quality and liquidity for the consumers in the future.
New era on the horizon With a redefined competitive landscape, a new regulatory framework, and a revised qualified mortgage (QM) rule in place, the wholesale
channel is set to capture new opportunities. Two important areas are serving the steadily growing Latino and Asian populations. By 2040, the Latino population in California alone is projected to be the majority population. Nationwide, these populations present an enormous growth opportunity for most lending institutions, and there will be a push to develop marketing materials and lending programs specifically designed for them. Moving forward after a disaster often requires a new approach and wholesale lenders may have an advantage that allows them to achieve greater efficiencies internally and within the market. However, their greatest challenge will be ensuring the right systems are in place to monitor counterparty risk and pre-
clude another market catastrophe. Technology will play an important role in this, and the players who optimize it will greatly enhance their ability to thrive. Wholesale lenders who innovate, are nimble and have integrated technology as part of their new business models, are the ones that will succeed and provide a better experience in this new era. Matt Ostrander is cChairman and chief executive officer of Parkside Lending, a national wholesale and correspondent lender. He also is a director for the California Mortgage Bankers Association (CMBA), where he serves as the president of residential real estate, and was recently appointed as a board member of the Freddie Mac Advisory Board. He can be reached by e-mail at info@parksidelending.com. 51
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“Remember that impacts will extend beyond your walls to vendors and other service providers. Technology integrations with third-party providers will need to be evaluated and updated.”
Are You Ready? Five Things to do to Prepare for TRID By Jorge Sauri
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Mere months remain before the implementation of the TILA-RESPA Integrated Disclosure (TRID). As lenders work to revamp processes and policies, and technology providers wrap up upgrades to their systems, the extent of the operational impacts remain unclear. We do know they will be extensive, potentially costly and absolutely necessary. The Consumer Financial Protection Bureau (CFPB) has
made it clear that institutions will be expected to comply with the new rules on the Aug. 1, 2015 effective date. It was the CFPB that was required under the Dodd-Frank Act to combine the Truthin-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures. The new Loan Estimate form replaces the early Truth-in-Lending (TIL) disclosure and the Good Faith Estimate
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(GFE). The new Closing Disclosure Form replaces the HUD-1 Settlement Statement and the final TIL disclosure. The CFPB says that combining several forms into the two new ones will reduce both paperwork and confusion. Predictably, the mortgage industry is braced for plenty of both. “Many in the industry agree that these new rules are going to have a much greater impact on lenders’ operations compared to the CFPB’s ability-to-repay/qualified mortgage rules that went into effect in January, particularly from an operations standpoint,” wrote MortgageOrb.com, a real estate finance industry news site. “What’s more, they are going to be many times more costly and time-consuming to implement, as they will require significant technology upgrades and staff training.” What should loan originators and closing departments do to prepare for “Know Before You Owe?” Plenty, based on our experience and CFPB guidance. To simplify a topic that seems to defy simplification, we offer these five steps as we prepare for Aug. 1.
1. Assess the impact of the changes on your operation The natural starting point for an evaluation of how the new rules will affect your business is to list the services you offer and determine which of the regulatory amendments applies to each one. The CFPB has made available a range of guides, bulletins and updates; and they continue to be published as rules are amended. It’s worth noting that there are exemptions to the rules, so check for those as well. With the complete information about impacts and exemptions in hand, it’s time to discuss both with compliance counsel. Ultimately, this assessment will extend to loan populations, processes and procedures, controls, and staffs. Approaches will vary. What is clear is that some re-mapping of borrower information and loan data will be required to produce the new disclosure forms. Also to be dealt with are new content requirements such as the new estimates of total principal paid off in five years and the total interest paid over the term of the loan expressed as a percentage of the loan amount. Remember that impacts will extend beyond your walls to vendors and other
service providers. Technology integrations with third-party providers will need to be evaluated and updated. A key question to ask is whether those third-party providers will be ready by the deadline with compliant–and tested–application releases. If not, it may be time to consider other options.
2. Consider your compliance workflow The new disclosure rules, which impact nearly every player in the home mortgage process, will demand fast, secure and complaint exchanges of information. The new rules on the closing disclosure, which will have to be in the hands of the borrower three days before the closing, are especially onerous. Lenders and closing agents will have to develop new systems to facilitate those exchanges. Under the existing rules, negotiations between buyer and seller can continue right up until the closing, leading to lastminute changes. The new pre-delivery requirements will surely curtail those kinds of changes, so customer expectations will have to be managed. Remember, the new rules cover not just timeliness but also accuracy. New process and operational controls may be required to ensure both. Additionally, preventive and defective controls may need updating to ensure the organization has the proper safeguards in place to meet the requirements.
3. Develop plans for implementation Implementation planning should be based on a gap analysis that reveals what processes need to change as a result of the new rules. The plan developed based on that analysis should identify who will be responsible for its development, who will ensure adherence and who will monitor compliance going forward. As with any planning process, this one should involve all the impacted stakeholders and gain the approval of senior management. Progress tracking and reporting should also be included, as well as testing procedures and reporting of results. Again, plans need to be shared with third-party providers, who should be willing to provide versions of their own plan-
ning. If that can’t happen, contingencies should be considered.
4. Train staff A major component of any implementation plan is staff training. In this particular case, loan originators are seeing a threepage form that they only recently learned how to explain be replaced by a new-five page form. They’ll need to know how to explain this new form to customers without having many opportunities to work with it beforehand. Deciding who will need training and in what areas is the obvious first step. Also to be decided are exactly what information will be covered, whether the training will be instructor-led or online, and how it will be varied based on employees’ duties. Remember that training should include instruction in areas where company employees have responsibility for the
actions of third-parties. Part of the process of course content development and approval should include a mechanism to determine the effectiveness of the training and making necessary modifications. Given the complexities, it may make sense to consider purchasing training content from a vendor experienced in its design, implementation and evaluation.
5. Review your loan origination software The last step in this process, a review of your organization’s loan origination software, should answer three key questions. l Is it ready for TRID on Aug. 1? Be sure your loan origination software (LOS) not only produces the new disclosures but also provides the necessary data and documentation to evidence compliance. It is not enough to just produce the disclosures; you must be able to
track re-disclosure and re-setting of tolerances and know when a lender credit will be needed in the event of a tolerance violation. l Does it facilitate communication in operational relationships? Be sure your loan origination software allows you to communicate with third-party settlement service providers, particularly settlement agents. The flow of the closing process changes dramatically under the new rules–today, the settlement agent prepares the HUD-1 and gets the lender’s approval. With the new rule, the lender is responsible for the Closing Disclosure. And with the waiting periods, it is more important than ever to ensure data integrity and accurate fee disclosure to the consumer. l Is it a workflow that matches your company? Your LOS should work with your processes, not in conflict with them.
Having systems and processes work together seamlessly will help to ensure forward movement of your mortgage loan files, increasing efficiency and consumer satisfaction. Ensuring you have accurate fees from the initial Loan Estimate through to the Closing Disclosure is essential. Knowing when waiting periods expire and when disclosures have to be out to make a specific closing date is crucial. Having your system support you in all this gives you peace of mind, especially given the liability under the Truth in Lending Act. As chief technology officer and founder, Jorge Sauri is responsible for the development and direction of MortgageDashboard, a cloudbased end-to-end mortgage loan origination system built on a Software as a Service (SaaS) platform. He may be reached by e-mail at jorges@mortgagedashboard.com. 53
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“The best opportunities for acquisition targets are found in smaller mortgage companies operating numerous branches, owned by a sole proprietor or small group of investors.”
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mation that could put the deal in jeopardy. However, with complete honesty, both companies were able to meet their immediate needs and long-term goals through compromises that provided benefits to each. What also helped complete the integration was that each side only involved those with decision-making ability. “Decision by committee” often hampers these kinds of transactions, especially when each decision must be run up the chain of command or is exposed to criticism by others that have very little influence on the outcome. By keeping intermediaries out of the discussions, the principals were able to talk through issues at the executive level and make swift decisions. Keeping Mid America and Affinity’s mutual warehouse line in the loop was also a good call. Keeping the warehouse line provider informed of how the transaction was progressing prepared them to take the necessary steps regarding loans that were still on Affinity’s line when the transaction was complete. To mitigate the negative impact of the transaction on Affinity’s customers, and as a sign of good faith, Mid America chose to honor the locks they had received from Affinity on their loans in progress. Mid America was under no obligation to do so, but management felt it would make the transition easier and provide a positive first introduction to Affinity’s customers.
MAY 2015 n National Mortgage Professional Magazine n
Merging With Caution: Lessons Learned in Mergers AND Acquisitions
Though overall the transaction was considered a success, it was not without its challenges. As with any project that involves people, success is largely based on communication. To use a mortgage analogy, there was an abrupt change of circumstance for Affinity’s employees that was probably inadequately disclosed upfront. Affinity had been looking for someone to acquire them for some time, and the management may have assumed that everyone in the company either knew of the company’s intentions or would be happy with the prospect of new ownership. For the most part, the employees were aware, but for several people, the acquisition seemed to be a shock. One of the anticipated benefits of the integration was the transition of staff from Affinity to Mid America. Thus, management at both firms were surprised when some of
By Jeff Bode
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“The key to making acquisitions is being ready because you really never know when the right big one is going to come along.”— James W. McNerney Jr., CEO, Boeing In December 2014, Mid America Mortgage completed an integration with Houstonbased Affinity Lending Solutions LLC. For us, the deal was unexpected, though ultimately welcome. In the process of com-
pleting this transaction, we uncovered some valuable lessons on how to merge two mortgage lending companies. Here’s what we learned:
The good Above all, transparency was critical to successfully completing the integration–even when transparency meant sharing infor-
Affinity’s employees did not accept offers from Mid America Mortgage, despite an improved benefits package, wider opportunities for growth within the company and a more extensive product selection thanks to numerous agency approvals. To make matters worse, recruiters began calling Affinity employees the minute the news was out, which may have also pulled loan officers away. In this particular instance, Mid America may have been better served by more self-promotion to the Affinity staff. By better communicating the benefits of working for Mid America, as well as outlining Mid America’s post-integration vision for the company, prospective employees from Affinity may have better understood the opportunity and been more likely to stay on board. In addition, timing also posed a challenge to the transaction. The deal was inked days before Thanksgiving, which is busy enough due to month-end closings, but this also happened to be a time where many employees were either on vacation for the holidays or out sick, a common occurrence in any office during winter. The additional work that this kind of transaction brings, along with the difficulty of communicating with people who are not in the office, presented problems that may not have been an issue had it been another time of year.
The bad
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The pitfalls The pitfalls of acquisitions are the result of misunderstandings, ignorance of pertinent facts and lack of attention to important details. Every seller feels their company is worth more than any buyer is willing to pay, but more than that, the seller has a tendency to put value on things that are not valuable to buyers. For companies looking to be acquired, learning to speak the language of the buyer can help make the difference between a sale and remaining on the market. When it comes to mortgage companies, there are two main components of value other than cash–the servicing portfolio and the production engine. Without the sales people and sales management, there are not a lot of other contributors to revenue for mortgage origination companies. Affinity attracted some excellent pro-
duction branches, and there was also value in some relationships the company had built with trade groups. In this transaction, the relationships with these groups was dependent on certain individuals, and for Mid America to keep and further build these relationships, it was incumbent upon them to identify the relationships, determine the value, and determine the key people who had those relationships. After that, Mid America had only an instant to woo those key people before they could be recruited away.
The benefits Overall, the integration provided benefits to each of the parties. Affinity employees who moved over to Mid America gained a comprehensive employee benefits package and a wider selection of loan products. Mid America added several branches to its network and also gained talent that not only added immediate production to Mid
America’s pipeline, but also long-term value as part of Mid America’s footprint expansion. The value of the production offices Mid America gained in the transaction cannot be overstated. Proven originating branches are in high demand as lenders continue to fight shrinking volumes, and finding offices that are owned by small proprietors is difficult. Finding offices owned by a larger company seeking a new home is more common, but the process of pulling a branch away from another company is fraught with risks. The best opportunities for acquisition targets are found in smaller mortgage companies operating numerous branches, owned by a sole proprietor or small group of investors. For a well-capitalized company, a firm like Affinity was an easy acquisition to finance, and for the most part, the branches acquired did not compete with existing Mid America
offices. It was a win-win situation.
Trailing thoughts From the time the letter of intent is signed, not everything will turn out as planned for both the seller and the buyer. New information will surface, new people issues will bubble up and personalities often change under the stress of deadlines and financial concerns. As things change, it is important to resynchronize expectations and to continue to work together. Often, an intermediary between the seller and buyer can help in keeping both sides reasonable in their expectations, especially as inevitable changes occur. For this transaction, a mortgage advisory firm with more than a decade of experience in every phase of the merger and acquisition process was brought in. This firm fully understood the issues we were facing and helped both sides navigate the road as operations were merged, pipelines closed
and transitions at every level were planned and executed. For other companies considering a merger and/or acquisition, we would highly recommend engaging an internal or external resource with a similar skill set, as they can drastically reduce the time, money and human resources required to finalize a deal and then completely integrate operations of the two companies. Since December, the integration with Affinity has continued to bear fruit. Hindsight being what it is, there are certainly things we could have done differently. However, the path we chose got us to where we are today, and the end result was absolutely worth whatever challenges, obstacles and missteps we overcame to get here. Jeff Bode is owner and chief executive officer of Addison, Texas-based lender Mid America Mortgage Inc. He can be reached by e-mail at jeff.bode@midamericamortgage.com.
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“While the mortgage industry is developing loans that accommodate the financial needs to attract Millennials into becoming first-time homebuyers, the marketing of mortgages and educating this audience needs to also become more accommodating.”
Millennials: Attracting a New Generation A time for change By Ashley Lubey
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As the focus shifts, we all turn to watch Millennials and how they affect and engage with the housing market. It is important to understand how different this generation is from previous generations in order to adjust the traditional way of marketing and selling a mortgage loan. The focus should be on learning how to appropriately appeal to this new target audience and implementing practices that keep you in the game. Millennials are changing the way things are done, altering perceptions on how buying a home has been traditionally handled, and shaking up the market and economy as a whole. With this shuffling comes disorientation on how to adapt while simultaneously maintaining credibility and reinforcing your brand. In order to be successful in today’s market, lenders must make a significant change to their business practices and strategies to properly attract and serve millennials. There are multiple factors contributing to the stall of Millennials entering the housing market. Their lower net worth, personally experiencing repercussions of the housing market crash, and dedication to individualism all play crucial roles in how they interact with lenders before taking the plunge and purchasing a home. Recognizing how these factors come into play and adjusting your business model accordingly is the key to your success. Millennials’ average net worth is significantly less than previous generations, meaning they have less to spend in a market that already has them weary of its stability. The reason for this lower net worth is because of the fact that jobs were taken at lower pay simply because so few opportunities were available as they entered the workforce.
While earning less, interest on student loans remained high therefore leaving the idea of savings accounts a goal to reach at a later date. While the economy and housing market may be recovering now, not all Millennials’ bank accounts have had the opportunity to catch up yet. This lower net worth is resulting in the inability to afford down payments and mortgage insurance on homes. While the mortgage industry is developing loans that accommodate the financial needs to attract Millennials into becoming first-time homebuyers, the marketing of mortgages and educating this audience needs to also become more accommodating. Many Millennials were graduating college and entering the work force as the housing market and economy sped uncontrollably downhill. College graduates in the classes of 2008 and 2009 were hit the hardest and entered one of the worst job markets in American history. After witnessing firsthand the catastrophic implosion of our economic system, few Millennials have the confidence or desire to put their focus on becoming homeowners and are turning their efforts to growing their careers. To say Millennials are weary of the economy is an understatement. For those who can afford homes, many are putting this financial investment first before getting married and starting families, thereby also shifting the dynamic of traditional homebuyers. Today, many homebuyers are unmarried couples looking to escape the competitive and expensive renting cycle. The traditional steps taken in life have been overturned by this generation. Getting married, buying a home, and starting a family is no longer the only travelled route in life. The concept of what constitutes a family is being
debated. What people deem as important is shifting. And new lifestyles are being created and followed with more zest. So it is understandable that the traditional sales pitch and the mentality that certain goals must be reached by a certain point in life are no longer valid. As a generation that has constant access to everyone and everything in their lives, creating a steady flow of communication is important to them, especially as they make one of the biggest financial decisions of their lives. While a traditional sales pitch might get them thinking, this will not be the deciding factor in buying a home. Lenders need to be a source of information. Being able to recognize the difference between how homebuying is handled now versus previous generations can make or break your business. Do not get stuck marketing your business in a dated style. Millennials turn to trusted connections in their lives to provide quality referrals and advice. The use of apps also plays a major role too. Today, there is an app for virtually every task in life. Know where Millennials go to find information and be present in that space. Establishing yourself as a trusted source of information with the ability to provide the tools they need to succeed will be much more effective. Millennials seek advice on how to be financially savvy but at the same time are dedicated to maintaining their independence. They will go to more sources and do more research than previous generations just to ensure they are making the best, most educated decision possible. They rely heavily on social connections to help them evaluate possibilities and outcomes. As a whole, this group has a strong desire to succeed. With 63 percent of Millennials having earned a bachelor’s degree, this group of homebuyers is the most educated group in America’s history. From startups to world-saving ideas, Millennials are focused on the big picture and making a difference. With that said, they take each major life-decision very seriously. And since buying a home is a major financial investment, the process will be heavily researched and discussed before taking the plunge. Know that you
will not be the only source they turn to for assistance. Instead, focus on being the best and providing them the service they want, not what you think they want. Millennials have grown up with instantaneous connection to the world, top-notch technology, fastpaced lifestyles, and the idea that they can achieve anything they put their minds to. When entering the housing market, these ideas and ways of life will not be pushed to the wayside. Instead, lenders and mortgage professionals need to embrace this mentality and lifestyle to better serve this generation. With these factors in mind, it makes sense that traditional ways of reaching out to potential buyers is relatively ineffective. While we look at Millennials to see their behaviors, we should also be anticipating the best way to readjust and connect with them in a way they find to be resourceful and that meshes with their needs. Offer resources they can use. Be able to point to apps, articles, and business partners to help them through the process. Be available in the space they are most comfortable. Do they prefer to be texted rather than called? Make the adjustment to be the lender they need. Homeownership is still a desirable goal for most but they may not realize just how attainable it is. Combine your knowledge of the industry with your knowledge of the millennial generation. In doing so, you will be able to successfully attract a new generation to homebuying. Be relatable as well as understanding of their concerns and hesitations. What may have worked for you buying your first home is most likely no longer relevant. The times have changed drastically just in the last decade. Has your business strategy kept up? Ashley Lubey is copywriter and public relations specialist for CMG Financial. She graduated from Saint Mary’s College of California with a bachelor’s degree in communications. She may be reached by phone at (925) 983-3207 or e-mail alubey@cmgfi.com.
“Wayne Gretzky famously said he skates to where the puck is supposed to be, not to where it’s been. Similarly, online lenders seem to know where the end game is and are getting there faster.”
How to Build Loyal Customers in a Capricious Era By C. Richard Triola
C. Richard Triola is president, CEO and founder of NotaryCam Inc., an innovation leader in online real estate eClosings and online notary services. He may be reached by phone at (949) 289-3299 or e-mail at rick@notarycam.com or visit www.notarycam.com.
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Millenials don’t want to walk into a bank to talk to somebody about a loan. They want to get a loan on their smartphone. This means their lenders cannot keep “bankers hours,” they must be available at all hours. Technology isn’t going to put lenders out of business, but the lender with the best technology will win. To ensure the best tech, you must invest in your Web presence the way you would invest in a bricks and mortar building–because customers are not just shopping around for prices, they’re shopping around for the best user experience. If a Web page takes more than 30 seconds to upload, you’ve just lost a customer (or a whole generation of customers who measure time in the milliseconds and view “slow” with suspicion). The evolution in the expectations of buyers is what inspired the development of remote online notary services and other tools to help buyers close on their homes, no matter where they are in the world. Five years from now, Millenials will look at you slack-jawed if you tell them that you once had to spend an entire day signing papers at some building to close on your home. The shopping practices of new homebuyers is also allowing online lenders to capitalize on quick and cheap leads, attract serious buyers and vet their applications before the borrower has even finished breakfast. Wayne Gretzky famously said he skates to where the puck is supposed to be, not to where it’s been. Similarly, online lenders seem to know where the end game is and are getting there faster. To compete successfully, traditional lenders will need to extend that level of speed and accessibility to all areas of the lending experience. Ask any vice president of customer service and
Wells Fargo wants to make sure that everyone who appears to represent the lender looks and acts the part. For years, we have heard horror stories about signing agents showing up to people’s homes in flip-flops and beachwear, acting unprofessionally and making buyers uncomfortable. The buyer generally has no idea that this person is not affiliated with the lender, so everybody gets a bad rap. By taking control of the closing, Wells Fargo is also taking control over who represents them, ensuring that the bank’s professionalism and customer service extends to the very end of the home buying experience. The move also gives customers access to someone who can answer crucial questions at the “11th hour.” While signing documents at 8:00 p.m., if a buyer has a question, the independent contractor working as a settlement agent can’t legally answer it, and the question might have to wait until morning. This potentially puts the loan at risk and threatens the entire purchase. By deploying a knowledgeable professional, banks will be able to take care of their customers’ questions on the spot. This brings us back to that oldtime type bank on the corner. Today’s homebuyers expect an experience that is fast, convenient and transparent. But they also expect excellent customer service and a personal touch commensurate with the enormity of the purchase they’re about to make. A homebuyer’s trust in the lender and her feeling of being supported through this monumental process has to be as powerful as it was back in the era of the handshake deal … even if that handshake has been replaced by a click.
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In the old days, if you wanted a home loan, you didn’t go into a big bank – and you definitely didn’t go online. You walked down the block and talked to the small banker who had done business with your father and your grandfather. They knew you, you knew them and you both trusted each other. While this image of a bygone era might seem quaint, the smart lender will squint past the fedoras and handshake deals to take a closer look at the details: That old fashioned scene could serve as the blueprint of banking’s future. As business grows faster and more competitive, customer-obsessed details are roaring back into fashion. You see it in the emergence of banks hiring vice presidents of customer service–a title that didn’t exist 10 years ago, but now is essential to a lender’s success. You see it lending “concierge” services. And you see it in actions like the one Wells Fargo plans for August to take control of closing services. Of course, some customer-centric moves are being made to keep banks in compliance with the Consumer Financial Protection Bureau (CFPB), but much of what banks are doing they would have to do simply to keep up in this evolving Age of the Customer. Among the top 40 lenders of 2014, non-banks accounted for 37.5 percent of originations. This is partly due to differences in regulations faced by banks versus non-bank lenders. But much of it has to do with user experience. With banking loyalty a mere speck in the review mirror, lenders need to make sure their customer service is as high-touch and trustworthy as that handshake deal at the corner bank. This means understanding how your potential customers shop.
they’ll tell you that every innovation must serve the customer. Tech has to create transparency and efficiency in a process that has never been known for either. Immediately after the housing bubble burst, borrowers complained that– with moving trucks in the driveway and the clock ticking on their loan lock– they felt rushed into putting their signature on documents without really understanding what they were signing. The federal government’s response was the Dodd-Frank financial reform law and the CFPB. The smart lenders’ approach has been “concierge” services. By dedicating borrowers to hold a buyers’ hands through the entire purchasing process and take the time to really explain every step, concierge services build trust–and maybe even that lost sense of loyalty–in a lender and help borrowers through the most significant purchase of their lives. This is where traditional lenders have an advantage and can leverage their customer service experience to create that personal approach customers desire. To that end, Wells Fargo’s decision to deliver the Closing Disclosure Form is brilliant. Due to the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule, lenders will resume responsibility for the actions of all parties at the closing table on Aug. 1. TRID requires that the Closing Disclosure be provided by either the creditor or a settlement agent–but it places the ultimate responsibility and liability for ensuring that the disclosure is provided in accordance with the rule squarely on the creditor. So on its face, Wells Fargo’s decision looks like a matter of compliance and expedience. In fact, Wells Fargo has explained the reason they will be delivering the Closing Disclosure Form is because they want to maintain evidence the borrower received the disclosure at least three days prior to the closing. But the move does more than prove that a critical compliance requirement is met. The unstated motive here is that
“It is my opinion that technological advances are good and fear of them is unwarranted.”
In the Year 2525 By Eric Weinstein This month, we talk about “paperless origination, processing, closing and cloud-based systems.” Every day, it seems, we get closer to Sarah Connor and the “technological singularity” seen in “The Terminator” movies. In case you don’t know about this, look it up in Wikipedia: “The technological singularity is the hypothesis that accelerating progress in
technologies will cause a runaway effect, wherein artificial intelligence will exceed human intellectual capacity and control, thus radically changing civilization in an event called “the singularity.” From all the science fiction I have read, this does not sound good. For further research on the topic, I downloaded the song “In the Year 2525” which was written by Evans,
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Richard Lee. It reached number one on the Billboard Hot 100 for six weeks commencing July 12, 1969. I was 11-yearsold and remember it vividly. The song postulates in part: In the year 2525, if man is still alive, If woman can survive, they may find In the year 3535 Ain’t gonna need to tell the truth, tell no lie, Everything you think, do and say Is in the pill you took today In the year 4545 You ain’t gonna need your teeth, won’t need your eyes You won’t find a thing to chew Nobody’s gonna look at you In the year 5555 Your arms hangin’ limp at your sides Your legs got nothin’ to do Some machine’s doin’ that for you Now, I don’t know how advanced evolutionary theory was back in 1968, but simple logic would tell you that the physical body of mankind has NOT changed that much in the last three and a half millennium and probably won’t in the next 3,500 years. Did the ancient Greeks and Egyptians look any different than us now? Have we lost the appendix from lack of use in 100,000 years? No. I think what sums up our fears about new technology and advancement the best is the fairy tale “The Princess and the Pea.” In case you were brought up on another planet, again look it up in Wikipedia, this is a literary fairy tale by Hans Christian Andersen about a young woman whose royal identity is established by a test of her physical sensitivity. The story tells of a prince who wants to marry a princess, but is having difficulty finding a suitable wife. Something is always wrong with those he meets, and he cannot be certain they are real princesses. One stormy night, a young woman drenched with rain seeks shelter in the prince’s castle. She claims to be a princess, so the prince’s mother decides to test their unexpected unwitting guest by placing a pea in the bed she is offered for
the night, covered by 20 mattresses and 20 feather-beds. In the morning, the guest tells her hosts that she endured a sleepless night, kept awake by something hard in the bed; which she is certain has bruised her. The prince rejoices. Only a real princess would have the sensitivity to feel a pea through such a quantity of bedding. The two are married. It is my opinion that technological advances are good and fear of them is unwarranted. If anything, we have evolved into the “Delicate Flower” stage of evolution. This is where we feel we are more worthy because we get upset easily. For goodness sake, if you find a pea under you mattress, just get up and get rid of it. I am sick and tired of people whining about how things are changing. If you want to eat at the grownups table and use metal forks and knifes than drink from your sippy cup, face your fears and anxieties. Will you demand the world remain the same just to accommodate you? Yes, there is a definite shift from a refi to a purchase-based market. Yes, the upcoming TRID requirements will be a bear. Yes, there is a proliferation of social media and it will impact on your marketing. Don’t just sit there like a whining child, get off your butt and start doing something about it. “There ain’t no computer that gonna be doin’ it for you.” Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com.
NMP’S LITERARY CORNER
Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why it Could Happen Again By Peter J. Wallison BY TOM LAMALFA
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underwriting standards; why the affordable housing goals were the singular reason Fannie and Freddie failed; and how weakened underwriting standards spread beyond Fannie and Freddie to Wall Street and Main Street. Wallison demonstrates that the only way to meet ever increasing housing goals was to loosen underwriting standards—LTVs, credit scores and DTIs— and reduce traditional documentation. The chapter on the FCIC smacks the Commission, and especially its chairman Angelides, upside the head with a proverbial two-by-four. According to Wallison, the Commission was led from the beginning to consider only one theory: “The crisis was caused by the risk-taking and greed of the private sector and could have been prevented … with more regulatory control of the financial system.” Moreover, he adds, Angelides repeatedly undercut the inquiry by: providing the Republicans with only one of the commission’s 80 staffers and none for interviewing witnesses, conducting research, and drafting the report; failing to inform commissioners about who was being interviewed; precluding the commissioners from cross-examining
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Mae and Freddie Mac became insolvent: Too many weak and non-performing mortgages. And the central fact: In the quarter before being put into conservatorship, the government housing agencies together guaranteed 23.8 million of the 31 million of such loans outstanding. The total number of mortgages outstanding as of June 30, 2008 was 55 million. In other words, 57 percent of all mortgages outstanding were not prime loans and of those, the two GSEs, the FHA and CRA lenders accounted for 77 percent. Fannie Mae and Freddie Mac alone guaranteed 16.5 million or 69 percent of the 31 million. How this all came to pass is the focus of Wallison’s research. The book is divided into four parts. Part 1 covers “The Basics,” his premise as to what caused the financial crisis, the difference between prime and non-prime mortgages, the FCIC’s investigation and conclusions, and a brief post-Depression history of housing finance in the U.S. Each of these topics is examined in some detail. Part II, “Government Housing Policies Take Effect,” deals with HUD’s role in the housing crisis; the gradual lowering of
the witnesses; and never objecting to the Congress’s passage of legislation to address the causes of the crisis six months before the Commission issued its final report on causation, thereby undermining the Commission’s efforts. Part III, “The Financial Crisis and its Accelerants,” explains the decade-long run up in house prices; the failure of Fannie and Freddie to fully and truthfully disclose the real composition of their mortgage holdings; how 31 million—to use the author’s term, non-traditional mortgages (NTMs)—came into being; and the role of fair-value or mark-to-market accounting in the wake of the panic of 2008. Wallison’s examination of what gave rise to the bubble in house prices is notable as is his treatment of Fannie Mae’s misrepresentation of the mortgages it guaranteed. What the GSE reported having purchased before the conservatorship was a world apart from what it admitted purchasing post-takeover. The final section, Part IV, “From Bad to Worse,” consists of two chapters. The first highlights the government’s blunders that turned a bad situation into a crisis. It was the Keystone Cops revisited, and directly involved Treasury Secretary Paulson, Fed Chairman Bernanke and New York Fed President Geithner. The second chapter explains why the failure to deal with the real first-cause of the crisis portends setting up the U.S. economy for a repeat performance in the future, while slowing the economic recovery due to a heavy and wrong-headed regulatory burden. Hidden in Plain Sight should be required reading for the Administration, the Congress, the 50 state AGs, all regulators and the informed public. Wallison proves conclusively with important and
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f Chairman Phil Angelides and the other members of the Federal Crisis Inquiry Commission (FCIC) aren’t already shaking in their shoes, they should be. Former FCIC member Peter J. Wallison’s book, Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why it Could Happen Again, about the cause of the financial crisis exposes the Commission’s collective stupidity in not examining to any extent the critical role housing finance played in the crisis, even though it was common and widespread knowledge that it was the mortgage market meltdown that took down the economy and led to the Great Recession from which we are only now, nearly seven years later, still recovering The brilliant attorney that he is, Wallison deftly pieces together the story of the financial crisis, a narrative that cogently points out the many errors of both federal housing policy and the FCIC. In 14 detailed and cleverly-crafted chapters, the case against the Democratic Congress’s legislative response—The Wall Street Reform and Consumer Protection Act of 2010—and both the Commission’s majority report and less directly minority report are laid out and slowly discredited throughout 361 well-annotated pages that produce 30 pages of notes. Deregulation, shadow banking, credit default swaps, securitization, CDOs, credit rating agencies and predatory lending are each examined and discarded as firstcause causes. The Democratic Congress and the Angelides Commission both blamed the crash on a lack of regulation of mortgage lenders and Wall Street. Not so argues Wallison in Hidden in Plain Sight. What really caused the financial crisis was the same reason that Fannie
How to Increase Your Business by 80 Percent in Just Eight Weeks
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By Dr. Kerry Johnson Tim was struggling. After 2008, and the subsequent regulation increases, selling loans became harder and harder. Still, Tim didn’t want to have to start a new career. Real estate agents seemed to spin his wheels. While he was able to meet with CPAs and financial advisors, they seemed more willing to receive referrals than to give them. Tim did five loans in October and only three in November. A classic downward spiral. Not enough business even to keep the doors open. Then he decided to do something about it. He became proactive about sales instead of reactive, hoping business would just call in. He became a sales focused mortgage broker instead of one waiting for the phone to ring. This month, Tim put 25 loans in the pipeline. He hired another five proactive sales focused loan officers (Los), instead of standard cookie-cutter LOs waiting for the phone to ring. Tim is on track to originate 400 loans this year, while many other brokers are closing their doors. How did Tim do it? How did he turn his company around from a money loser to a cash cow? When your clients first approached you years ago, they shopped your fees. If you had the lowest rates available, you got the business. Often, prospects
would even call, ask your price, and then hang up without even saying thank you. Prospects haven’t changed, but you should. According to the University of Connecticut, 87 percent of your past customers care more about a relationship with you than about the price they paid. That seems illogical if you only consider why they bought in the first place. Al was like that. He refinanced my house in 1999 and didn’t even so much as dial the phone to say thank you for the business. Although I did get a postcard telling me how much his company has grown. I have refinanced once since then, with another lender. Two years ago, I added 3,500-square feet to my home, did a new first for $1 million with still another lender. I didn’t use Al. Why? Didn’t Al do a good job? Yes. Didn’t he lower my monthly payment? Yes. Why did I use the competition? Al lost the relationship. He didn’t keep in touch. While Al still sends a postcard every six months, isn’t that good enough? Al made me a transaction, instead of a client.
What clients want According to the National Consumers Union, only 17 percent of products purchased last year for more than $500 were purchased from the vendor they purchased from last year. This means that you have likely lost contact with your
clients. Many producers are still waiting for the phone to ring. But when customers were asked if they would purchase again from the last vendor, 89 percent said yes, if their vender had bothered to follow up on the relationship. According to Forrester Research, the three key items your clients want most are: 1. An understanding of the loan product they have: Not to become an expert, but well enough to explain it cogently to their friends. Your clients really want to know what they bought and want to know more about other service and product options. They don’t want to become experts. They depend on you for that. But they do want to know what they have and what is available. 2. They want you to monitor their purchase or service as if it was your own: You are constantly looking for ways to gain more value. You are privy to the most current products and services on the market. Your clients want the same consideration. 3. They want frequency in a relationship: They want to hear from you at least every three months. I mentioned this to one mortgage broker who told me he sends a newsletter every quarter, didn’t that make a difference? The answer is, would you rather hear from a trusted advisor personally or see her
name on a sheet of paper every once in a while?
How to triple your sales this year Peter, a mortgage broker in Atlanta, has 3,000 clients from business he has refinanced over the past four years. A treasure chest in future business. Lately, he has been striking out calling real estate agents who are also suffering. The problem is they are sometimes rude and often flaky. So Peter started calling his past borrowers. At first it was awkward. He felt guilty calling a borrower who hadn’t heard from him in the past three years. But he sucked up his call reluctance and did the dials. Surprisingly, nearly everyone seemed glad to hear from him. They asked about his family and even expressed gratitude for the great job Peter did on their last loan. Peter is now using a three-step process that is earning him a 21 percent closing rate on all past borrower calls. He is closing 21 applications out of every 100 phone calls to past borrowers. Here is his three-part strategy:
Catch up, update, referrals 1. Catch up: Peter calls the client and catches up on their family. He asks about little Johnny’s soccer schedule and did dad volunteer this year again to
be Johnny’s coach. Is mom working or did she realize her dream of being a stay at home mother. 2. Update: Peter then tells the client where rates are right now and how that will affect their home value. This appraisal estimate is the silver bullet for real estate agents helping them motivate sellers to list their home. But even when the client doesn’t want to sell, they still want to hear about their home’s value and what is likely to happen over the next year. Peter did some research on their rate before the phone call. He also knows ahead of time if he can save them money. He asks them if they would like to save another $500 a month on their mortgage. Most say yes. But even when he cannot offer savings, he knows how to follow up with a product they cannot say no to. The average American household has $23,000 in credit card debt. Peter pitches that for effect. He then asks if the client has more or less than $23,000 to get the conversation started. He then trial closes by asking if they could write off the interest payments on their credit card debt and save 30 percent, would they be interested. At that point, Peter starts the discussion about a home equity line of credit and/or a second mortgage. Twenty-one percent of all past borrowers ask to start an application.
We know that a typical consumer makes a car purchase every five years, leases a car every 3.2 years, refinances their mortgage every 3.3 years, makes a major financial investment every nine months and purchases an insurance product every 10 to 18 months. Mortgage broker David’s formula for success is 5-2-25 … five contacts a day, one application per day, and 20 closed sales each month. The math is simple. The results are spectacular. David cannot hire enough new sales producers to take up the overflow. The ones who will make the outgoing phone calls are hard to find. But the ones who do are now making $60,000 a month. Even in a bad economy.
over the last three years. Your business now is all about relationship, rapport and trust. The better you can manage them, the more business you will gain. Dr. Kerry Johnson is a frequent speaker at mortgage industry conferences on topics like “How to Read Your Clients Mind” and “How to Increase Your Sales by 80 Percent in Eight Weeks”. He is the author of six books, including Mastering the Game: The Human Edge in Sales and Marketing, WILLPOWER: The Secrets of Self-Discipline and his newest book, Why Smart People Make Dumb Mistakes With Their Money. For more information, visit www.kerryjohnson.com/coaching, call (714) 368-3650 or e-mail kerry@kerryjohnson.com.
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Five-hundred committed relationships
Making your business profitable is all about relationships, rapport and trust. That is easy to agree with. But would you like to get an even better return on your time than Tim and Peter. Then see your customers face to face. David did that. At first, he started the three-month call script. He was also shy about forcing himself on those who didn’t have a need. But through coaching, we encouraged David to try to book appointments to get to know his customers better. Then magic happened. Even those who didn’t have a need for a new product on the phone decided to buy when David met face to face with them. While David was able to close 21 percent of his past customers
on the phone, he closed 36 percent of those he saw face to face. His closing rate on referrals was even higher. But why would you see someone in person when you can save time on the phone? Would you rather see your real estate agent face to face, or would you be able to gain the same level of trust only on the phone. Would you rather see your lawyer face to face on an important case, or is the phone just fine. The answer is obvious. Your closing ratio face to face will always be higher in person. Your business has changed … no longer will you be able to stare at the telephone hoping it will ring. There are strategies you can use to even double the business you were able to snare
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3. Referrals: After the questions about loan programs and consolidating debt, Peter asks for referrals. He knows that every client knows 250 friends, relatives and neighbors they could refer. So he expects to get three referrals on every phone call. In fact, 55 percent of all his clients will refer at least five. All Peter has to do is ask. But he doesn’t make the mistake of advertising for referrals as most LOs do. He doesn’t say, “If you know anybody, please tell them about me.” He says, “Who do you know who could benefit from the kind of relationship we have had so far.” You don’t have to be a mortgage broker to use this three-step process. There is no industry on Earth that couldn’t increase market share and sales by keeping in better personal contact with customers.
Getting to the next level
Three Keys to Attracting Great Sales Leaders By David Williams
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Almost by definition, a sales career requires one to be an optimist. Yet, I don’t think many people in our industry realize just how valuable this character trait is and what a difference it can make to the sales effort and the overall success of the company. In the mid-1980s, MetLife insurance could not find enough agents who could pass the company’s entrance exam, so it hired candidates who had scored in the top half of an “Attributional Style Questionnaire” (ASQ), which was designed to measure how confident they were in their abilities and future success. Later, when optimism scores were compared to the actual sales performance of MetLife agents, it was discovered that agents who scored in the top half for optimism had 37 percent more sales than those in the bottom. At my company, optimism is only one of the key attributes we look for in the branch managers we are recruiting to grow our retail business. In return, we offer an environment where leaders can flourish, by providing superior tools and resources that allow them and their staffs to reach their full potential. Because if we don’t, we risk squandering the very optimism that makes great sales leaders great.
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Respect the all-around game Next to optimism, the second most important quality a mortgage leader must have is versatility, or what they describe in basketball as “all-around game.” These are the players who can do it all—pass, score from the paint or outside the key, rebound, set picks, get steals and block shots. Some of the best players in the sport were those who had an allaround game, and were the leaders teammates looked to for direction and encouragement on the court. Today’s mortgage companies need these kinds of leaders. But they also need to understand and respect the demands these leaders face. In a retail environment, for example, the branch manager is ultimately responsible for creating a great customer experience. But they must do much, much more. They must know the loan production value chain inside and out, and be up to date on all compliance issues and loan guideline requirements. They must manage budgets as well as loan officers, processors and support staff. Many branch managers are themselves producers who must keep up their own pipeline of clients and referrals. Most of all, branch managers must be constantly motivating and supporting their entire team—no small feat given the challenges of today’s lending environment and less-than-stellar loan volumes. In today’s lending environment, the
branch manager is responsible for balancing production with sanity. They must ensure the people they hire understand the new rules of the game and that they receive the proper training and support. Lenders need leaders who are current with all regulatory changes such as the TILA-RESPA Integrated Disclosure (TRID), as well as ever-changing loan product guidelines. They must not only be knowledgeable, but able to serve as resources to their staffs and their real estate partners, while also having the self-awareness to find the answers they don’t already know. They are versatile enough to understand that what they don’t know can hurt them and the team, so they make the effort to get the details right.
Create an environment of excellence It’s not enough to hire a great sales leader and expect him or her to do it all. Today’s mortgage companies have a responsibility to provide them with the tools and resources to help everyone avoid the negative attention of the Consumer Financial Protection Bureau (CFPB) and investors. Over the past two years, there has been a lot of migration in our industry, in no small part because lenders and mortgage professionals have not seen eye-to-eye on this issue. In many of these cases, it’s the lender that has fallen short of providing the proper support and controls necessary in today’s lending environment. Every lender needs to have up-to-date policies and procedures that encompass their entire operations and every staff person. Branch managers need to not only know what the policies and procedures are, but must understand them thoroughly, as they are the ones ultimate-
ly responsible for conveying them to staff and ensuring they are followed on a day to day basis. Likewise, as new regulations continue to be rolled out, such as new integrated disclosure forms this summer, branch managers need to be able to coach their loan officers on how to explain these new requirements to borrowers in a compliant manner. For leaders to succeed, lenders must also consistently offer competitive products and be able to target new markets or channels. Several years ago, the lenders that first got approvals and made the transition to sell FHA products found themselves ahead of the game when FHA became virtually the only product for first-time buyers. As the GSEs begin adjusting down-payment requirements lower and as new products hit the market, lenders that are able to adapt quickly to these new opportunities will find themselves better able to attract top sales talent.
Tune up the engine Every automobile has an engine, but not all engines perform equally. The same holds true for the technology a lender chooses to run its business. Very few companies have kept pace with innovation. Many that survived the downturn with businesses intact are so cash-strapped from weak volumes and having to hire additional compliance staff that they were unable to make sufficient investments in technology to save money and generate more business. Lenders need tools that allow sales leaders and their teams to sell loans quickly, efficiently and compliantly. In today’s terms, they absolutely must have automated underwriting platforms with
the capability to lock rates in an instant. These platforms must be online, too, not only so their teams can reach them anytime and anywhere, but so lenders can avoid spending money on hardware and the IT staff to support it. It’s also critically important to provide mortgage sales leaders with CRM technology that allow their teams to spend less time on tasks that can be automated— such as delivering file status updates— and spend more time building relationships with borrowers and referral partners. In order to ensure compliance and protect the company’s brand, the CRM solution a lender chooses should also provide branch managers the ability to advise the staff and oversee how they are communicating with borrowers without getting in the way. Ultimately, technology is what enables lenders to close loans quickly, which is a huge advantage in today’s market. Keep in mind that many of today’s first-time homebuyers are part of the Millennial generation, and therefore, children of The Internet Age. They expect things to be done quickly, and when shopping, they are just as likely to choose based on speed of service as on cost. It’s extremely powerful to be able to offer and deliver 15-day closings and automated government-sponsored enterprise (GSE) approvals. The sales leaders in our industry know it too, and are seeking out lenders with the technology to make it happen. For this reason, our company has made technology a huge focus. No matter how small the transaction, we don’t like finishing second and because we continue to invest in our own technology, we rarely do. Smart lenders today are also automating the disclosure process through technology, which not only relieves day-to-day compliance headaches, but provides a faster, more efficient experience for the customer, as well. And they augment loan officer training with online courses, which is an efficient complement to a branch manager’s responsibility in this regard. As the average mortgage transaction grows increasingly more complex, talented and optimistic sales leaders are more in demand than ever. But optimism cannot survive in a vacuum. Without the proper environment, support, and tools, even the most optimistic sales leaders won’t succeed. If they hope to recruit such leaders, lenders must meet them halfway and equip them to win. 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. Williams has 18 years of experience in all aspects of the mortgage business. He can be reached via e-mail at dwilliams@rightstartmortgage.com.
nmp’s literary corner continued from page 59
unimpeachable data that federal housing policy, as well-intentioned as it may have been in theory, backfired and created the Great Recession, imposing much suffering on all Americans, but especially on the low and moderate income families and households who were the hoped-for beneficiaries of the government policy’s objective, building housing wealth. In achieving that objective it was an abject failure. The National Home Ownership Strategy was tried and proved a disaster. It failed to either increase homeownership or create wealth for the policy’s beneficiaries. History clearly shows that. As a result, no redo of past policy is needed or wanted prospectively. Hard not to agree … Postscript: For me, Wallison’s premise that it was errant housing policy that collapsed the economy makes complete sense since it provides rich detail to what I saw developing all along. And what I know comes from my observations working since 1977 as a mortgage market analyst and researcher. I watched the crisis unfold and wrote about it frequently from 1996 until September 2008. I warned the MBA about Fannie and Freddie’s dominance at its Annual Convention in 1996; wrote to the Fed Chairman Greenspan in 2000 asking him to take a closer look at Fannie and Freddie; wrote to Treasury Secretary O’Neill in 2001 to explain that contrary to his public pronouncements, Fannie and Freddie did receive subsidies, huge ones; and wrote to HUD Secretary Jackson in August 2005 asking him to cool the cheerleading for homeownership—
for the mortgage market meltdown was nearing. These are but four of the two dozen letters sent to the Washington elite, the decision makers, asking them to look at what was going on at Fannie Mae and Freddie Mac. And for the FCIC, I prepared a white paper linking all my letters, speeches, articles and Congressional testimony between two covers. The contemporaneous correspondence offers proof that I witnessed the crisis unfold first hand and wrote about it over more than a decade. Wallison has the story right. Fellow Democrats, you need to read this book. However, in the end this causation debate is a clear Wallison-Pinto victory. On this issue the Democrats are wrong and have been all along, as none other than former congressman Barney Frank has now admitted. His admission is quoted in the book. Tom LaMalfa is a 34-year veteran mortgage-market analyst and researcher. He has done pioneering work in the areas of secondary markets, wholesale mortgage banking, mortgage brokerages, financial benchmarking and GSE reform. Tom continues since 1977 to co-author an old-fashioned mail newsletter, The Holm Mortgage Finance Report. In the aftermath of the financial crisis, his focus is on Washington, D.C. and the regulatory burden it is imposing on consumers and lenders. His 20-plusyear-old research firm, TSl Consulting, does survey research. He may be reached by email at tom.lamalfa@gmail.com.
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If there is a singular feeling that causes people to do business with you, it is trust—the feeling a customer has in knowing they can depend on you and that you have their best interest at heart. You can give your client all the necessary information, however, the information itself is not as important as the emotional effect the information has on your customer. This distinction is particularly essential in terms of working with Millennials (the generation of folks born between about 1980-1995). They were raised during a recession and saw the mortgage industry fall apart, which means they don’t have much faith in financial
institutions. Marketing to Millennials requires that you do it on their turf and their terms—they need trust and reassurance. Millennials don‘t react as much as they interact, which means that you will need to engage them on an emotional level. No matter what someone is buying, the decision to buy is based on an emotional judgment that they’ve made about the product. If you, as a marketer, take this to heart, it will have a huge impact on your marketing skills. Products typically touted for their basic usefulness might instead be extolled for their emotional benefits. That doesn’t mean you’re only effective if you’re tugging on heartstrings, but what it does mean is that you would do well to focus more on connecting with your clients on an emotional as well as intellectual level. 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.
n National Mortgage Professional Magazine n MAY 2015
l Change your motivation: Show a willingness to defer immediate results in order to establish longterm success. Learn and know when to trust your intuition. Take criticism and use it to improve performance. Be passionate, but look at a problem and find a resolution in a calm and rational way.
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NMP M O R T G A G E P R O F E S S I O N A L
Rey Maninang
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SVP & National Sales Director for Wholesale Lending Carrington Mortgage Services BY PHIL HALL
n August 2013, Santa Ana, Calif.based Carrington Mortgage Services announced that Rey Maninang would become its senior vice president and national sales director for wholesale lending. The company’s leadership noted Maninang’s 20-plus years of experience in lending, along with his “knowledge, passion and enthusiasm” for the industry. National Mortgage Professional Magazine sought out Maninang to learn about the secrets of his career success and to gain insight from his perspective on the state of wholesale and the wider industry.
I
How did you first get involved in mortgage banking? And how did you first become associated with Carrington? Rey Maninang: I began my lending career with a consumer finance company in the late 1980s. I underwrote, funded and serviced the very loans I originated. I then had a great opportunity to enter the mortgage banking industry with a company called Fremont Investment & Loan. Although some may argue that lending is lend-
“My proudest achievements are and will always be contributing to a work environment that fosters trust, collaboration and positivity.”
ing, I quickly learned the vast differences between consumer finance and mortgage banking, as I was charged with overseeing both operations and sales in the Western U.S. I joined Carrington Mortgage Services in the summer of 2013. What intrigued me about the firm is that they had more than 15 companies that all focused on a single-family residential asset. They serviced their own loans, they were a real estate agent, they owned a title and escrow company, had a property preservation and management division, and, of course, had a mortgage lending side which they recently started. Many of my
former colleagues, whom I respected, already worked at the firm. So when the opportunity was presented to grow their Wholesale Division into a strong national competitor, I felt confident that I had the support from those familiar to me. How does Carrington set itself apart from its competition? Maninang: What differentiates Carrington from others is our focus on assisting the underserved market. We made a formal announcement in March 2013 that we would focus on originating FHA, VA and USDA loans, and reduce our FICO requirements down to
550. Critics were very skeptical, as both conventional and jumbo offerings were eliminated. But, we knew that if we specialized in a segment of the market that was underserved and did it better than others, it would be a “win-winwin” for borrowers, our broker community and us. We also knew there was pent-up demand for government loans down to 550 FICOs and, sure enough, our business has significantly grown due to this strategic shift. We also took steps to better educate consumers about the mortgage transaction they are entering into. So we developed a tool called, MyLoanDetail™. In a nutshell, this program is administered to every borrower and it walks them through the specific details of their loan. Our goal is to bring clarity and transparency to their transaction, so they enter into it fully informed. How would you categorize the state of wholesale lending today? And where does Carrington fit in within the wholesale sector? Maninang: Today’s wholesale environ-
OF THE MONTH ment continues to improve with each year since the 2007 crisis. Brokers are recovering from the downturn and they seem to be getting stronger— partly because those who survived and remained in the industry are the most proficient and competent professionals the industry has ever seen. Also, banks continue to mitigate what they perceive as reputational risk by adding excessive overlays and conditions that, at the end of the day, prevent loan eligibility to many welldeserving borrowers. Thus, consumers are realizing that the broker outlet provides more options, less barriers and transactions with a highly-skilled originator. This, in turn, fairs well for the future of wholesale. Our strategy of focusing on the underserved market fits perfectly with what our brokers need to remain as the first option within their communities.
My proudest achievements are and will always be contributing to a work environment that fosters trust, collaboration and positivity.
How has Carrington adapted to the numerous regulatory changes that have been put in place during the past several years? Maninang: As a company that emphasizes compliance, we devote significant resources to balancing regulatory requirements with our quest to serve the underserved market. Our mantra is: “Carrington will always do the right thing, even when no one is looking.” We continue to monitor and implement changing requirements to maintain strict compliance, but we do so without imposing unnecessary restrictions that prohibit hard-working Americans from participating in the market.
In your opinion, what can be done to bring more young people into mortgage banking careers? Maninang: I think there are three things we can do as an industry. First, do a better job of branding ourselves. Our real estate partners advertise on TV, radio and print and the National Association of Realtors (NAR) continues to have a strong appeal with up and coming professionals. We need to collaborate as an industry and promote this career choice that has been so good to many of us. Second, we should have college degree options for mortgage banking. Again, referring to the real estate industry, you can obtain an undergrad or grad school degree in real estate, yet our industry—which deals with trillions of dollars each year—doesn’t have this vocation as a degree option. Lastly, companies should develop an in-house training program geared towards training individuals who want to enter, but don’t have the experience. Yes, it’s an expense that may or may not reap a consistent benefit. But in my opinion, the cost of taking no action is a greater risk.
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by email at philh@nmpmediacorp.com.
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n National Mortgage Professional Magazine n MAY 2015
Outside of your work, how do you spend your leisure time? Maninang: I tend to migrate towards social activities. I’m fortunate to have family and friends who share the same values, so you will often find me on excursions with friends, family gatherings or sporting events with the ones I care about most.
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In your career, what do you see as your greatest challenges? And on the flip side, what have been your proudest achievements? Maninang: My greatest challenge is leading my management team through ever-shifting cultural and generational changes. Leading in today’s environment is much different from over 20 years ago when I started in the business. During our parents’ era, most people only worked for one company and the sentiment was that you took care of the company and the company will take care of you. Many couldn’t even fathom defecting to a competitor. Today’s workforce is more transient. They have seen 100-year-oldplus American institutions either go out of business—like Woolworth, Lehman Brothers and Pan Am—or reduce their workforce at the first sign of trouble. What’s important to them is not how iconic your logo or brand is, but how they are treated and the trust they have in the senior leadership.
Speaking of the work environment, what do you look for when hiring members of your team? Maninang: Experience and educational pedigree is something that most look for. I hold some value to these and it may get you in the door, but what’s more important to me is trying to identify those with a strong work ethic and sincere care. The staff should not just care for the firm, but care for their colleagues who will be side-by-side with them for, hopefully, a long time. It’s sometimes challenging to convey this during a onehour interview, but if they are successful, they certainly garner my attention.
MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams he Mortgage Action Alliance (MAA) is a free, voluntary and non-partisan nationwide grassroots lobbying network dedicated to strengthening the industry’s voice and lobbying power in Washington, D.C. and state capitals across America. The policies and legislation the industry faces impact our day-to-day jobs in tangible ways. We have a right and duty to join that conversation. Earlier this month, a bipartisan group of House Financial Services Committee members introduced HR 2121, the SAFE Transitional Licensing Act, which would amend the SAFE Mortgage Licensing Act of 2008 to provide a temporary license for registered loan originators transitioning between federally-insured depositories and non-depositories, as well as for licensed loan originators moving across state lines. Led by Rep. Steve Stivers (R-OH), Reps. Terri Sewell (D-AL), Lynn Westmoreland (R-GA), Joyce Beatty (D-OH), Luke Messer (R-IN), Kyrsten Sinema (DAZ) and Ed Perlmutter (D-CO) joined the bill as original cosponsors. HR 2121 is a narrow and simple solution that would allow individuals to continue working and originating loans, while in no way weakening the important consumer protections of the SAFE Act. But without your voice being added to the conversation through membership in the MAA, common sense solutions like this can be overcome by opposition. With your voice, we can win a victory for the industry. In the midst of MBA’s National Advocacy Conference (NAC), the House of Representatives gave overwhelming approval to HR 685, the Mortgage Choice Act—passing the legislation by a vote of 286 to 140, despite a veto threat by the White House the day before. This bipartisan legislation would make important changes to the QM definition in the Dodd-Frank Act by removing affiliated title charges from the three percent cap on points and fees. Throughout NAC, Mortgage Bankers Association (MBA) members advocated for this legislation and members of the MAA lent their own support by urging their Representatives to vote for the bill. Additionally, the House approved HR 650, the Preserving Access to Manufactured Housing Act, by a vote of 263 to 162. This legislation, which was also supported by MBA, would allow more manufactured housing loans to fit within the Home Ownership and Equity Protection Act (HOEPA) cap on points and fees. The next step for both bills will be consideration by the Senate, where passage is far from assured. We need your voice. Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice! If you would like to run an MAA campaign, please contact Stephanie Graham at (202) 557-2818 or e-mail sgraham@mba.org to receive an enrollment campaign kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs. Real estate finance industry professionals who wish to join or learn more about MAA can do so at www.mortgageactionalliance.org. If you have any questions regarding MBA’s advocacy programs, please contact MBA’s Associate Director of Political Affairs Annie Gawkowski at (202) 557-2816 or e-mail agawkowski@mba.org.
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Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage. Williams speaks regularly to financial institutions and their respective organizations on compliance, regulatory changes in mortgage lending, and assessing their overall mortgage operations to maximize income, while minimizing the risks associated in today’s mortgage lending environment. He may be reached by phone at (800) 8510263 or e-mail fwilliams@crescentmortgage.net.
who’s afraid of the cfpb? continued from page 27
“This is the first time mortgage bankers had this type of oversight. It had been like the Wild West in a lot of cases.” —Joseph Murin, chairman of Chrysalis Holdings LLC and a former Ginnie Mae president different regulations took effect.” Erickson added that one crucial duty was not tied to an impossibly tight deadline. “For the changes to TILA/RESPA, they did not have a timeline,” she continued. “I appreciate the fact they recognized industry was awfully busy and gave it more time to implement TILA/RESPA than you might get from a regulator. In past situations, regulators put regulations out and said, ‘Just deal with it.’ I’ve felt the CFPB was more responsive to interested parties like vendors and lenders.” Rocke Andrews, vice president of NAMB—The Association of Mortgage Professionals and a mortgage specialist with Tucson, Ariz.-based Lending Arizona LLC, pointed out that CFPB was not tasked with replacing a single agency, but in inheriting workloads that were shifted across Washington, D.C. “Before the CFPB, regulations used to be overseen by seven or eight agencies,” Andrews said. Andrews added that the Bureau has established a professional working relationship with trade groups like NAMB. “They listen well and appreciate genuine conversation with the intent of improving overall, rather than getting angry responses saying all is no good,” Andrews said. Andy W. Harris, president of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and treasurer of NAMB, noted that the Bureau is particularly responsive when it comes to number-crunching. “They like data,” Harris said. “We try to collect more and more data for them to show where there may be consumer harm.” Brian Coester, CEO of Rockville, Md.-based Coester Valuation Management Services, observed that while the CFPB is a dominant force in the mortgage industry, it also has a responsibility to regulate other corners of the consumer credit world. “They have a massive undertaking,” Coester said. “Think about the scope of what they do, specifically to drill down to mortgage industry. They’ve made their presence felt— look at all the industries they cover and their presence resonated within these industries. When I travel to mortgage industry events, the CFPB is brought up all the time.” And whereas now-defunct regula-
tors such as the Office of Thrift Supervision (OTS) and the Office of Federal Housing Enterprise Oversight (OFHEO) deteriorated into inefficient entities, the CFPB has been a positioned as a muscular force that is not to be ignored. “They sent a message throughout the industry for people to take regulations more seriously and not dance in the grey areas,” Coester added.
A few discouraging words But chief among the problems that many industry figures have with the CFPB includes the Bureau’s movement through its own grey areas— especially in regard to enforcement. Coester noted that under the CFPB, its “cop on the beat” reputation suggests that it will pursue a no-nonsense approach to those that it considers to be in error. “It has a level of implied enforcements,” Coester said. “It does not have to fine or regulate everyone for its presence to be felt.” But to many, this presents a new problem: A presumption of guilt, especially in regard to regulatory parameters that are still fairly new. “They seem to be getting into an area of interpretation through enforcement rather than transparency up front, or telling us what is expected of those persons under the jurisdiction of the bureau,” complained Chuck Cain, senior vice president and, agency manager for the Midwest region at WFC National Title Insurance Company, based in Lake Oswego, Ore. “People are now being penalized when they never knew where the sidelines of the field were before.” “They are not issuing guidance to the industry,” said Andrews. “They want the industry to err on the side of conservatism. But everyone feels like they are waiting for someone to get hit.” John Lawson, senior vice president of compliance at Commerce Home Mortgage, based in San Ramon, Calif., faulted the CFPB for sometimes being too vague or even uncommunicative in stating what it expects from the mortgage industry. “When they’re closed up, you get more information from reading your horoscope,” Lawson stated. “They could do a better job in reaching out and telling people what they’re looking for.”
tion, there is no private label market, so we do not know the full impact of risk retention on QM.” “I believed the CFPB should have the authority to monitor the FHFA,” said Logan Mohtashami, an Irvine, Calif.-based senior loan manager at AMC Lending and a financial blogger at LoganMohtashami.com. “If they were given the power to go in and investigate these put-backs—in my view, some of these put-backs are petty—they could provide better service to the U.S. in terms of housing.” Of course, the CFPB was created to help the general public and not financial institutions. But John Stevens, Utah area manager for ENG Lending, questioned whether the pursuit of this goal created new problems. “The CFPB’s main focus was to protect consumers from predatory lending and steering and continuing to keep the American Dream alive,” said Stevens. “But it created a more costly environment for homebuyers. It now costs $2,000 more to do a loan than before the CFPB implemented all of its regulations.” “Costs of doing business increased across the board,” added Schwartz. Yet Logan Mohtashami acknowledged that the CFPB is still a young agency, and over time it could mature in a way that irons out its current problems. “It has growing pains in terms of not understanding how the marketplace works in the real world,” Mohtashami said. “They might have good intentions, but they are just not realistic to what they want to achieve as an agency. They’re relative new and it shows a lack of experience as a government agency.” Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
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cumstance” or proof of the 20 percent reduction in income for six months minimum for FHA’s “Back to Work” program, underwriter opinion seems to vary widely. Some underwriters think the decision to short sale was too soon, while others wonder why homeowners waited. It seems they are trying to justify the sale was “not strategic.” The income, current credit and assets of borrowers who have gone through a short sale and are trying to re-enter the housing market is more than acceptable per current guidelines. They have to be next to perfect, and they know it. Other than knowledge of the past short sale, these are loans that
any lender would want to have on their books. Those who make policy need to talk directly with affected past short sellers. They need to come to where underwater home problems still exist and see for themselves what is really happening. This can truly help the housing industry recover. Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail pmarron@tampabay.rr.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.
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John Councilman, CMC, CRMS, president of NAMB and president of Fort Myers, Fla.-based AMC Mortgage Corporation, has concerns that smaller companies are bearing a surplus amount of the brunt of the CFPB’s power. “Their policies are tilted in favor of large entities versus small entities,” Councilman said. “Small banks are not as able to do what the CFPB wants. The smaller companies that NAMB has as members have not fared as well [under the CFPB] as they should have.” But there are large sections of the mortgage space where the CFPB’s enforcement authority is completely absent—and some people are not pleased about that. “The number one harm to consumers is RESPA Section 8 violations,” said Harris. “Real estate builders and mortgage companies—I can talk about this in Oregon—violate RESPA through illegal marketing service agreements. The CFPB needs to put a lot more focus to hold real estate agents and builders accountable.” “The FHA makes very risky loans— it is ground zero for deceptive lending practices,” said Edward Pinto, codirector and chief risk officer of the International Center on Housing Risk at the American Enterprise Institute in Washington, D.C. “They compound the problem by not pricing loans for the risk. That is deceptive to the consumer and the CFPB has done nothing to deal with this deception. The CFPB is supposed to consult with the FHA on it, but I think the CFPB believes the FHA should be allowed to do whatever they want.” “The fact the GSEs and HUD are exempt from the [CFPB’s] QM rule is a big deal because they dominate the market,” said Faith Schwartz, senior vice president of government affairs at Irvine, Calif.-based CoreLogic. “In terms of risk reten-
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calendar of events 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
MAY 2015
Monday-Wednesday, June 22-24
SEPTEMBER 2015
NOVEMBER 2015
Monday-Wednesday, May 18-20
Ultimate Mortgage Expo 2015 The Hotel Monteleone 214 Royal Street New Orleans, La. For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.ultimatemortgageexpo.com.
Wednesday-Friday, September 9-11
Wednesday-Thursday, November 18-19
MBA’s Risk Management, QA & Fraud Prevention Forum 2015 Omni Dallas 555 Lamar Street Dallas, Texas For more information, call (800) 793-6222 or visit www.mba.org.
2015 Mortgage Star Conference Canyons Resort 4000 Canyon Resort Drive Park City, Utah For more information, call (860) 719-1991 or visit www.mortgage-star.net.
Sunday-Tuesday, September 20-22
Wednesday-Friday, November 18-20
American Land Title Association 2015 Federal Conference and Lobby Day Mandarin Oriental Hotel 1330 Maryland Avenue SW Washington, D.C. For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.
Wednesday-Thursday, June 24-25 Sunday-Wednesday, May 31-June 3 National Notary Association’s 37th Annual Conference Hilton Orlando Bonnet Creek 14100 Bonnet Creek Resort Lane Orlando, Fla. For more information, call (844) 466-2266, visit www.nationalnotary.org/conference or e-mail conference@nationalnotary.org. JUNE 2015
Friday, June 5
Sunday-Wednesday, June 7-10
Thursday-Friday, August 6-7
OCTOBER 2015
2015 California Association of Mortgage Professionals Summer Convention Manhattan Beach Marriott 1400 Parkview Avenue Manhattan Beach, Calif. For more information, call (916) 448-8236 or visit www.ca-amp.org.
Wednesday-Friday, October 7-10 American Land Title Association 2015 Annual Convention Westin Copley Place Boston 10 Huntington Avenue • Boston, Mass. For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.
Thursday-Friday, August 20-21
Saturday-Monday, October 17-19
Louisiana Mortgage Lenders Association (LMLA) 2015 Education Conference The Hilton New Orleans Riverside Hotel 2 Poydras Street • New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.
2015 NAMB National Conference Luxor Resort and Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.nambnational.com.
Wednesday-Saturday, August 26-29 2015 Florida Association of Mortgage Professionals (FAMP) Convention & Trade Show Omni Orlando Resort at Champions Gate 1500 Masters Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.myfamp.org.
To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.
Sunday-Wednesday, October 18-21 Mortgage Bankers Association Annual Convention and Expo 2015 San Diego Convention Center 111 West Harbor Drive San Diego, Calif. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
2015 Mortgage Bankers Association Accounting and Financial Management Conference The Roosevelt New Orleans 130 Roosevelt Way New Orleans, La. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
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DECEMBER 2015
Wednesday-Friday, December 2-4 MBA 2015 Independent Mortgage Bankers Conference Omni Nashville 250 5th Avenue S Nashville, Tenn. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. JANUARY 2016
Sunday-Wednesday, January 31-February 3 MBA’s 2016 CREF/Multifamily Housing Convention & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. FEBRUARY 2016
Tuesday-Friday, February 16-19 MBA’s 2016 National Mortgage Servicing Conference & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
n National Mortgage Professional Magazine n MAY 2015
MBA’s 2015 Chairman’s Conference The Ritz-Carlton Lodge, Reynolds Plantation 1 Lake Oconee Trail Greensboro, Ga. For more information, call (800) 793-6222 or visit www.mba.org.
AUGUST 2015
MBA’s 2015 Regulatory Compliance Conference Grand Hyatt Washington 1000 H Street Washington, D.C. For more information, call (800) 793-6222 or visit www.mba.org.
NationalMortgageProfessional.com
2015 Southwest Mortgage Fest Embassy Suites Hotel & Spa 1000 Woodward Place Northeast Albuquerque, N.M. For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.swmortgagefest.com.
MBA’s Strategic Markets and Diversity Summit 2015 Marriott Marquis Washington 901 Massachusetts Avenue NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mba.org.
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COMPLIANCE CONSULTANTS
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BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com
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Division of Lenders Compliance Group, BCG is the first and only mortgage risk management firm in the U.S. devoted to supporting the unique compliance needs of residential mortgage brokers.
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CFPB Audit Preparation and Defense
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We provide required CFPB manuals and customized policies. Our fees are less than the big national firms that don’t call you back. With us you receive 3 months FREE
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regulators and audits. No theories here; we were Bankers. If you find yourself in federal court, we can handle that as well. Contact Nelson Locke at (800) 557-6580. Or you may email us at nl@lockelaw.us
FHA guideline news to keep you updated FHA Marketing tips and downloads that are easily customized Personal development tips to help you develop your character Full access to all previous FHA marketing downloads!
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DIRECT MAIL
LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance. Our Compliance Team Will:
of Q & A Hot Line support. Available in all 50 states. We have hands-on experience with
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All inquiries will be kept strictly confidential. This is not an offer for legal services, but rather for his expert review and opinion about your particular compliance situation. All fact patterns are different so the results will vary. No guarantees are expressed or implied. Licensed by California and Federal Bar. NMLS 149450.
Titan List & Mailing Services, Inc. 1020 NW 6th St Suite D, Deerfield Beach, FL. 33442 (800) 544-8060 www.TitanLists.com Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services. The firm specializes in data lists (mail/phone), printing, direct mail, graphic and website design as well as internet and SEO marketing. Starting in 1998, the company has, since then employed highly skilled individuals who have considerable experience regarding marketing trends. The company manages the complete in-house campaign themselves including Design, Data Lists, Printing, Postage, and Mailing.
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BONDS & LICENSING
The Bond Exchange www.bondedwithnamb.org (501) 224-8895 LOWEST-COST STATE MORTGAGE LICENSE BONDS Support NAMB in supporting you! Online surety bond applications, instant underwriting approval, and credit card payments administered through The Bond Exchange NAMB's exclusive partner provider for state license surety bonds. The Bond Exchange is a national surety agency specializing in servicing mortgage license bonds for thousands of mortgage professionals across the country. Low prices and fantastic service. You really can have them both at the same time!
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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MARKETING
TagQuest www.myharpleads.com TagQuest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.
RETAIL BRANCH
WHOLESALE LENDERS
Maaverick Funding Corp. is a direct mortgage lender licensed in 30 states across the country. Haavving obttained FHA, VA A, USDA and Fannie Mae appro ovals, Maaverick is growing and seeking top talent for their expanding nationwide footprint.
Phone: 855.422.5917 ny NJ NJ,, 07054 9 Entin Rd., Parsippany Visit us at www w.Ma . averickFundingg.com
WHOLESALE/CORRESPONDENT
WANT MORE
REMN Wholesale www.remnwholesale.com 866-933-6342 REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time. Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com
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n National Mortgage Professional Magazine n MAY 2015
WHOLESALE/CORRESPONDENT LENDERS
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NationalMortgageProfessional.com
DEALS? PRIVATE FINANCING
HomeBridge Wholesale is a national wholesale lender offering Conventional, Government, Jumbo, and Renovation Loans. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.
Now Hiring Wholesale Sales Managers/Account Executives Nationwide Please send resumes to Marketing@HomeBridge.com
Maverick Fundingg Corp. NMLS# 7706
Online Marketing
5 Park Plaza, 10th Floor Irvine, CA 92614 www.HomeBridgeWholesale.com
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www.BrokersComplianceGroup.com
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