National Mortgage Professional Magazine May 2017 by ambizmedia

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NationalMortgageProfessional.com

MLS LinkTM is a "set it and forrget it" feaature

table of N A T I O N A L

50 Leadership vs. Management By Matt Henson

M A Y

52 Legal Entity Identifiers and HMDA 2018: Questions & Answers By Jonathan Foxx

2 0 1 7

M O R T G

V O L U M

A SPECIAL FOCUS ON “TRENDS IN MORTGAGE LENDING”

Mastering the Millennial Market By Rey Maninang................................ 60

C t

A New Wave of Homebuyers By Rick Arvielo........................................ 64

Are You Ready to Conquer the Next Frontier? By David Zitting.......... 66 Helping First-Time Buyers Get That First Home Sweet Home By Laura Brandao...................................................................................... 68

T Y

Sabbath Setting By Eric Weinstein.......................................................... 69

Adapting and Marketing to the Hispanic Community By Javier Mendoza.................................................................................... 70

Mortgage Insurance Goes Mobile By Craig Anderson.......................... 72

84 NMP’s Mortgage Professional of the Month: Brian D. Minkow, HomeBridge Financial Services By Phil Hall

Gaining Market Share Through Diverse Segments By L. Maria Zywiciel.................................................................................. 74

L T

Is the Mortgage Industry Painting With Too Broad a Brush? By Desirée Patno........................................................................................ 76

Valuation Sector Challenges in 2017 and Beyond By Greg Stephens, SRA, MNAA, CDEI...................................................... 78

M M

FEATURES

Who Needs Non-QM Lending? By Tom Hutchens....................................8

I M

The Elite Performer: History Lessons By Andy W. Harris, CRMS.......... 8

Recruiting, Training and Mentoring Corner: Five Management Trends in the Industry By Dave Hershman.......................................................... 10

Snail Mail? We Want Leads!.................................................................... 16

86 MBA’s 2017 National Secondary Market Conference Survey: A Report of Findings By Tom LaMalfa

90 NCAP: What Mortgage Professionals Need to Know By Dave Chung & Terry W. Clemans

Branch Managers Have the Hardest Job in Our Industry By Steve Rennie........................................................................................ 18

V I S I T Company

Web Site

O U R

A D Page

Agility Resources Group...................................... www.agilityresourcesgroup.com ......................................59 Angel Oak Mortgage Solutions............................ www.angeloakms.com .............................. 80 & Back Cover Brokers Compliance Group.................................. www.brokerscompliancegroup.com ................................ 104 Caliber Home Loans.............................................. www.caliberwholesale.com .............................................. 55 CallFurst.com...................................................... www.callfurst.com ............................................................65 Carrington Mortgage Services, LLC...................... www.carringtonwholesale.com .............................. 27 & 72 Champions School of Real Estate........................ www.championsschool.com/loan .................................... 71 Citadel Servicing Corporation.............................. www.citadelservicing.com .............................................. 57 Document Systems, Inc./DocMagic...................... www.docmagic.com ...................................................... 11 FAMP................................................................ www.myfamp.org .......................................................... 76 Finance of America Commercial.......................... www.foacommercial.com/nmp05 ....................................63 First Guaranty Mortgage Corp. ............................ www.fgmccorrespondent.com .......... Inside Front Cover & 62 First Tennessee Bank.......................................... www.ftb.com/warehouselending ...................................... 7 Flagstar Bank.................................................... www.flagstar.com/why .................................................. 17 Franklin Flood.................................................. www.premierflood.com ..................................................74 Freddie Mac...................................................... www.freddiemac.com/loanadvisorsuite ............................ 5 Freedom Mortgage Corporation.......................... www.freedomwholesale.com .......................................... 41 HomeBridge Wholesale...................................... www.homebridgewholesale.com ...................................... 9 Lykken On Lending............................................ www.lykkenonlending.com ............................................ 44 MBA of NY ........................................................ www.mbany.org ............................................................ 30

T T

of contents

R T G A G E

U M E

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

N U M B E R

NAMB Perspective....................................................................................20 3 Points With Mat Ishbia.......................................................................... 24 CFPB Proposes Technical Corrections and Clarifying Amendments to 2015 HMDA Rule By Gavin T. Ales...................................................... 26

Blockchain Technology to Eliminate Financial Fraud? By Andrew Liput........................................................................................ 28 The Renter Pool Is Growing: Dive in and Swim (and Sell) Your Way to Riches By Bubba Mills........................................................ 32 Pathway to Leadership By Gary Martell Jr............................................. 34 Modernizing Appraisal Regulation: Reducing Compliance Costs By Jim Amorin, MAI, SRA, AI-GRS............................................................ 38 OrigiNation: Whistleblowing By Andy W. Harris, CRMS........................ 40 Lykken on Leadership: Three Reasons Why You Should Work Toward Building a More Efficient Organization By David Lykken........ 46 The Mortgage Godfather: What’s Happening Today By Ralph LoVuolo Sr................................................................................. 48 The Long & Short: The Business of Short Sales By Pam Marron........ 54 MBA’s Mortgage Action Alliance: A Message From MAA Chairman Gene M. Lugat................................................................56 Compliance Matters: Telemarketing Liability By Jonathan Foxx..........82 Is Public Record Data the Next Big Change for the Mortgage Industry? By Ben Derouchie.................................................... 92 A Softer Hammer Makes An E&O Settlement Decision Easier By Dean L. Milber, JD, MA........................................................................ 96 What Can We Learn From Ford Motors and McDonalds? By Brian Sacks.......................................................................................... 98

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

Web Site

Page

MBS Highway.................................................... www.mbshighway.com/MNN .......................................... 79 Mortgage News Network (MNN).......................... www.mortgagenewsnetwork.com ............................ 36 & 37 NAMB+............................................................ www.nambplus.com ...................................................... 25 NAMB Kickstart.................................................. www.nambkickstart.com ................................................19 NAPMW............................................................ www.napmw.org ....................................................47 & 77 NAWRB............................................................ www.nawrb.com ............................................................75 New York Community Bancorp. Inc..................... www.nycbmortgage.com ................................................ 81 NMP U.............................................................. www.nmpucoaching.com ........................................31 & 95 NRMLA.............................................................. www.nrmlaonline.org .................................................... 30 OSI Express........................................................ www.osiexpress.com/mlslink ............................................ 1 Paramount Residential Mortgage Group, Inc....... www.prmg.net .......................... 13, 73 & Inside Back Cover RealtyShares...................................................... www.realtyshares.com/broker ........................................ 29 REMN................................................................ www.remnwholesale.com .............................................. 15 ResMac, Inc....................................................... www.resmacb2b.com .................................................... 45 Ridgewood Savings Bank.................................... www.ridgewoodbank.com .............................................. 67 Secure Insight.................................................... www.secureinsight.com ..................................................43 TagQuest.......................................................... www.tagquest.com ........................................................ 89 The Bond Exchange............................................ www.thebondexchange.com .......................................... 69 UAMP................................................................ www.uampexpo.eventbrite.com ......................................44

MAY 2017 Volume 9 • Number 5

FROM THE

publisher’s desk

Trend spotting in the mortgage industry Leadership is about many things, but among the more important qualities of a leader is the 1220 Wantagh Avenue • Wantagh, NY 11793-2202 ability to know the likely outcome of events in order to maximize the success of command Phone: (516) 409-5555 • Fax: (516) 409-4600 and control efforts. That’s a fancy way of saying that you have to spot the trends and make Web site: NationalMortgageProfessional.com educated guesses about the future if you want to succeed. Naturally, those executives who STAFF Eric C. Peck Joel M. Berman are better at identifying the trends that matter achieve the highest degree of success. Editor-in-Chief Publisher - CEO (516) 409-5555, ext. 312 (516) 409-5555, ext. 310 As publisher of National Mortgage Professional Magazine and from the other work I do in ericp@mortgagenewsnetwork.com joel@mortgagenewsnetwork.com the industry, I’ve been fortunate enough to meet a great many excellent mortgage industry Joey Arendt Beverly Bolnick executives. I’m proud to call many of them friends and openly admit that I admire their Art Director VP-Sales & Marketing (516) 409-5555, ext. 307 (516) 409-5555, ext. 316 ability to look at the same events others see and come away with an understanding of the joeya@mortgagenewsnetwork.com beverlyb@mortgagenewsnetwork.com underlying trends that are at work in the environment. They can see what others cannot Scott Koondel Phil Hall VP of Operations Managing Editor and we should learn from them when we can. (516) 409-5555, ext. 324 (516) 409-5555, ext. 312 This is one of the reasons why I’m so proud to bring you this month’s issue. Within these scottk@mortgagenewsnetwork.com philh@mortgagenewsnetwork.com covers, you have the opportunity to hear from industry leaders who have studied the Richard Zyta Francine Miller Social Media Ambassador Advertising Coordinator current environment and who are willing to share their take on the underlying trends that (516) 409-5555 (516) 409-5555, ext. 301 richardz@mortgagenewsnetwork.com francinem@mortgagenewsnetwork.com will affect everyone’s business in the days ahead. Here’s a sample of what we bring you in Rick Grant Dylan Pollock this issue. Special Reports Editor Administrative Assistant Mobile technology is the new normal. Today, the majority of mortgage vendors currently (570) 497-1026 (direct) (516) 409-5555, ext. 314 (516) 409-555, ext. 311 dylanp@mortgagenewsnetwork.com have a mobile strategy or are in the development stages. But what about mortgage rickg@mortgagenewsnetwork.com insurance? To see how this trend is impacting that business, we turn to Genworth Mortgage ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Insurance’s Craig Anderson’s feature “Mortgage Insurance Goes Mobile” on page 72. VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@mortgageMany of these mobile-ready consumers are coming from two key demographics: newsnetwork.com. Underserved markets and Millennials. Together, they comprise the impending wave of ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck homebuyers who could change everything about the way we do business. This trend at (516) 409-5555, ext. 312 or e-mail ericp@mortgagenewsnetwork.com. The deadline for submissions comes to us from New American Funding CEO Rick Arvielo in his article “A New Wave of is the first of the month prior to the target issue. Homebuyers” on page 64. SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@mortgageA significant number of these new homebuyers will be purchasing a property for the very newsnetwork.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. first time. Meeting their expectations could determine how likely they are to trade up Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the quickly so the experience matters. Laura Brandao, COO of American Financial Resources, authors alone and do not imply the opinion or endorsement of Mortgage News Network Inc., or the offiwrites about “Helping First-Time Buyers Get That First Home Sweet Home” on page 68 of cers 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) this issue. and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activLenders have been working to serve the underserved and emerging markets for quite ities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement some time, but the Millennials are something different. What will it take for the lender intent of the product and/or services by Mortgage News Network Inc., NAMB, NAPMW, NCRA, and other state mortgage trade associations. on “Mastering the Millennial Market?” We turn to Rey Maninang of Carrington Mortgage for National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage his take on this trend beginning on page 60. In a related article, David Zitting of PRMI asks, trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in Mortgage “Are You Ready to Conquer the Next Frontier?” In his article on page 66, David points out News Network Inc. publications. National Mortgage Professional Magazine and Mortgage News Network Inc. reserve the right to edit, reject and/or postpone the publication of any articles, information or data. that Millennials are the biggest force in the housing market today. He’s right. Despite the fact that we’ve been watching growth in the Hispanic community for some time, there is still a lot lenders have to learn and changes that will be required if we hope to serve them well. This is covered in Javier Mendoza of Inlanta Mortgage’s article, “Adapting and Marketing to the Hispanic Community,” on page 70. In a related story entitled, “Gaining Market Share Through Diverse Segments,” L. Maria Zywiciel, president of NAHREP Consulting Services, writes about why we need to be thinking not just about loaning in these markets, but also recruiting in them beginning on page 74. One of the issues that stands between the industry and better relationships with these demographics and, in fact, much of the middle class, is the regulatory burden that lenders are operating under. In her article “Is the Mortgage Industry Painting With Too Broad a Brush?” Desirée Patno, president and CEO of the National Association of Women in Real Estate Businesses (NAWREB), takes us deeper into this issue beginning on page 76. No mortgage publication focusing on trends could be complete without a look into the changes we’re seeing in the appraisal business. Property valuation has been on dangerous ground for some time now, and some have questioned whether we can overcome the challenges we face here. Greg Stephens of Metro-West Appraisal looks into this in “Valuation Sector Challenges in 2017 and Beyond” on page 78. Finally, we bring you the other great departments you rely on each month, including news from the trade groups, recent industry news briefs and our NMP Mortgage Professional of the Month on page 84, Brian D. Minkow, vice president of the Pacific Division and mortgage loan originator for HomeBridge Financial Services. Also, find Tom LaMalfa’s article about the MBA’s 2017 National Secondary Market Conference in New York beginning on page 86, along with the results of his survey of senior mortgage banking executives conducted during the event. And for something a little different, don’t miss Eric Weinstein’s article, “Sabbath Setting,” in which he asks what his processor’s oven “Sabbath Setting” has to do with the mortgage lending industry on page 69. Trust me, you’ll want to know. We’re all very proud to bring you this month’s issue. I hope the trends we illuminate for you here will guide you to ever greater success in the days ahead. Sincerely,

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

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

NAMB 2016-2017 BOARD OF DIRECTORS E X E C U T I V E

Fred Kreger, CMC President American Pacific Mortgage 3000 Lava Ridge Court, Suite 200 Roseville, CA 95661 (916) 960-5824 Fred.Kreger@APMortgage.com

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

Valerie Saunders, CRMS Vice President RE Financial Services Inc. 25 Causeway Boulevard #101 Clearwater Beach, FL 33767 (727) 853-1000 Valerie@REFinServ.com

Olga Kucerak, CRMS Secretary Crown Lending Inc. 10 Broadway, Suite 110 San Antonio, TX 78205 (210) 828-3384 CrownLending@gmail.com

B O A R D

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

Harry H. Dinham, CMC NAMB COO Dinham Consulting 2701 West 15th Street, Suite 536 Plano, TX 75075 (972) 758-1151 Consulting@DinhamCompanies.com

Rocke Andrews, CMC, CRMS Immediate Past President Fairway Independent Mortgage Inc. 5151 East Broadway, #1700 Tucson, AZ 85711 (520) 886-7283 RAndrews@LendingArizona.net

D I R E C T O R S

Rick Bettencourt, CRMS Mortgage Network Inc. 52 Maple Street Danvers, MA 01923 (978) 304-0818 RBettencourt@MortgageNetwork.com

Chris Bettis Precision Capital 4710 Village Plaza Loop, Suite 140 Eugene, OR 97441 (541) 284-8098 Chris@PrecisionCapital.net

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

Michele Velez, CMC Supreme Lending 1300 San Mateo, CA 94402 (650) 409-5347 Michelle.Velez@SupremeLending.com

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

Robert Sweeney, CRMS Teachers Credit Union 600 East Carmel Drive, Suite 116 Carmel, IN 46032 (317) 625-3287 RSweeney@tcunet.com

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

National Association of Professional Mortgage Women 345 North Main Street, Suite 313 l West Hartford, CT 06117 l Phone: (800) 827-3034 l E-mail: NAPMW1@NAPMW.org l Web site: NAPMW.org

2017-2018 NAPMW NATIONAL BOARD OF DIRECTORS 6

MAY 2017 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

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

Laurel Knight President-Elect (425) 426-2028 PresElect@NAPMW.org

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

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

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

Lynne Sparks Parliamentarian (678) 872-9000, ext. 10611 LSparks@SKWRLaw.com

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

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

2016-2017 BOARD OF DIRECTORS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ First Tennessee Mortgage Warehouse Lending stands committed to meet the evolving needs of the nation’s independent mortgage bankers. We offer a dedicated team, supported by proprietary systems and specialists at every level. We believe our reputation of consistency and fairness has been built over many years, and we seek ways to improve every day.”

JEFF VOYLES VP, Relationship Manager, Warehouse Lending

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Let us show you the First Tennessee advantage.

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Our warehouse lending program has been proving its commitment to our customers since 1998.

Who Needs Non-QM Lending? By Tom Hutchens

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hen mortgage lenders ask, “Why should we implement a non-QM lending program,” I offer one simple response– $100 billion. That is the potential annual volume of the non-QM market. Given the current size of this market is less than $3 billion per year, it is easy to understand why so many lenders are racing to join in the growth of non-QM lending. However, I have found that the question many lenders are actually asking is, “What kind of borrowers will I attract to my business with non-QM lending?” The answer to that question is also simple–creditworthy borrowers who do not fit the tight lending standards of today’s agency loan market. The number of borrowers who fit that profile is huge. In fact, according to the Mortgage Bankers Association (MBA), currently seven million potential homebuyers are unaware that they are able to qualify for a mortgage. Take, for example, a borrower who has had a past foreclosure. Under agency standards, that borrower would have to wait seven years before they can obtain a mortgage. However, non-QM programs can help that borrower navigate his or her way out of the tight credit box and get a mortgage today. Another group that is dependent on non-QM lending is the self-employed. Because these workers cannot verify their income through W-2 forms, the self-employed may be shut out of the agency market despite having good credit. With non-QM products like Angel Oak Mortgage Solutions’ Bank Statement Program, borrowers working in the “gig” economy can get approved using bank statements. Still, others struggle to meet minimum down payment requirements or minimum FICO scores. Again, non-QM programs can help lenders close loans for these borrowers. Smart lenders already realize that non-QM products are not just a last resort for borrowers who do not fit the agency mold. Rather, non-QM lending is an opportunity to reach new clients and grow loan volume. The bottom line is that there are millions of potential borrowers across the country that need non-QM lending to purchase a home. Angel Oak Mortgage Solutions can help lenders identify these borrowers and start closing new loans right away. Loan officers should act as consultants to the borrower, helping them to find the best loan for their needs. Lenders who do not have access to the full range of products available cannot be true borrower consultants. To learn how you can partner with the experts at Angel Oak Mortgage Solutions to uncover new business opportunities with non-QM lending, read their latest white paper at http://Signup.NMPMag.com/Now.

Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale/correspondent lender licensed in more than 35 states and operating in the non-QM space for over three years. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail Info@AngelOakMS.com.

SPONSORED EDITORIAL

elite performer the

History Lessons BY ANDY W. HARRIS, CRMS

t’s a little crazy to think that this is the 70th Elite Performer article that originally started nearly six years ago. Looking back, it’s interesting to see the topics I have shared and what lessons I learned as I put these thoughts in writing. Documenting and revisiting this information is motivating for me, as I’ve seen where I have applied many of info this in my own business and personal outlook. We can certainly learn things from the past by our own individual experiences and also the experiences documented by others. As I type this, I’m sitting in an airplane at 35,000 feet, headed back home from visiting our Nation’s Capitol in Washington, D.C. If you have not been to D.C., I highly suggest you put it in your travel plans for the near future. The history there is amazing and seeing these impactful monuments created in the memory of those that have built, protected and served our country is nothing you can truly experience without physically going there. Every year I visit, I learn something new and leave with a new perspective of how great our country truly is. This got me thinking about perspective today. Most everything we know today is learned by experiences from the past which help guide our behaviors in the future. It could be positive experiences and development, or negative experiences and lessons learned. What is vitally clear is that we can all learn lessons from all forms of history. Ignoring your own personal historical experiences or experiences from others can result in repeating the same mistakes or not finding a faster path to a solution. Today, we have immediate access to an abundant amount of historical information and reference material through technology. The ability to research literally anything within seconds not only can expand education and awareness, but better prepare us for anything we may be dealing with today or tomorrow in our personal and professional lives. When you seek answers, history will often give you an answer or a path to finding your answer. Don’t ignore the past, and embrace the data to better position yourself for the future.

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

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Recruiting, Training and Mentoring Corner

Five Management Trends in the Industry BY DAVE HERSHMAN

his month’s issue is focusing on industry trends. And certainly, there are plenty of trends to assess. In my 35 years within the industry, the only constant has been change. The question for today is how do these changes affect us as managers?

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Trend #1: Technology We have always been integrating technology into the industry. However, each year the technology comes more quickly and makes a bigger impact. Massive changes in technology will affect the way that you manage. Here are two examples: l You will be managing technology upgrades constantly. If the technological changes are hard for you to grasp as a producing manager, imagine what it like for your office or organization. This means that you will need to be an expert in the technology, and also an expert in managing change. l Each new technology brings additional management tools. You will need to decide which of these tools you will use, just as you will have to decide what tools to use in your marketing. Certainly, you can’t make use of them all, otherwise you can’t be effective. These tools might range from using LinkedIn to gather information within the recruitment process, to the production of more detailed reports on your sales force’s

activities and productivity. The behavior of consumers is affect by technology as more Americans search for mortgages online, or check out your Web site. They will be reviewing your record online as well–from testimonials to complaints. This means that your marketing support must be upgraded to match the technology. Trend #2: Diversity No one can deny the fact that our population is becoming more diverse by the day. The mortgage industry has lagged behind this trend, though certainly we have come a long way from being a totally dominated “White Boys Club” some three decades ago. But now the changes must come more quickly. And that will affect your recruiting task and management style. Managing diversity can be challenging, but very rewarding as well. Trend #3: Age We have spoken at length about the aging of the industry. We need to get younger, and that includes managing those with less experience and the promotion of younger managers as well. In either case, this means more coaching and mentorship skills are needed for our present managers. If there is a dearth of success training in the industry, there is even a larger void with regard to management training. Trend #4: Purchases While we have had plenty of refinance booms and transitions to purchase cycles in the past

three to four decades, no refinance cycle has lasted as long as the one we are currently moving out of. While there will be refinances every year, we need to move to manage two separate cycles: l Refinances for reasons other than lowering one’s rate and mortgage payment. Today’s refinance marketing will take advantage of increases in equity to consolidate debts, finance major life events such as college, or getting rid of mortgage insurance. There will be refinances to build up equity more quickly or move from adjustable rate mortgages (ARMs) to fixed rates. These types of refinances require more expertise on the advisor side of the equation. l The move to a purchase market will mean teaching loan officers how to deliver more value to the real estate community. Every company claims they have great programs, rates and service. The key is to add value that increases a real estate agent’s business. True value is found within the interests

and needs of those you serve—and more business is what agents want. Again, this will require a different level of marketing support from management, as well as coaching and training support. Trend #5: Consolidation Every cycle to purchases is usually accompanied by less volume and also has led to industry consolidations. In reality, consolidation is an ongoing evolution within our industry. We have had consolidations due to the financial crisis and more during the recovery as compliance requirements were piled on. For managers, consolidations will bring even more changes which you will have to manage through. Consolidations also bring up retention issues, as well as other decisions that have to be made. In short, there is not one change within the industry that does not affect managers. And changes will never stop taking place in the mortgage industry. That is what makes it so fun!

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

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newtomarket DocMagic Announces Partnership With BeSmartee

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DocMagic Inc. has announced that it has completed an integration with BeSmartee, a provider of mortgage automation technology. This integration will create a seamless connection between the two technologies. DocMagic and BeSmartee will enable borrowers to complete a loan application and receive disclosures in a matter of minutes, rather than the days or weeks that is typical with manual processes. Once the application is complete, disclosures are automatically created and presented to the borrower for electronic signature, with no additional effort by the lender. “eMortgages offer better speeds, security, quality and accuracy, which translate to a better borrower experience and more efficient, economical operations for the lender,” said Dominic Iannitti, chief executive officer of DocMagic. “This integration further escalates those benefits by allowing two great technologies to operate at their peak collaborative performance.” BeSmartee connects borrowers and lenders directly with providers that instantly validates the borrower’s income, asset and credit information, such as the IRS, financial institutions, and credit bureaus. The technology’s auto-population feature helps borrowers complete the application in a fraction of the time, while its validation feature provides lenders with vetted information for a faster underwriting process. “A true eMortgage uses no paper at all. It’s a start-to-finish

electronic process that requires collaboration among certain technology providers,” said Iannitti. “DocMagic is proud to be the solution that connects not only those technologies, but also all of the entities that use them, to enable a truly electronic process. It’s great to partner with progressive companies like BeSmartee who are helping to make eMortgages possible.” DocMagic technology saves time by generating an electronic disclosure package based on the borrower’s information in a matter of minutes. That package is then presented to the borrower, who can review and execute the documents onscreen. “The BeSmartee/DocMagic integration avails a level of speed that the industry hasn’t experienced before but that, as more lenders discover its impact on sales and operations, more borrowers will come to expect,” said Tim Nguyen, co-founder and CEO of BeSmartee. “Together, we’re delivering the type of speed and service that Millennials have come to expect, which is key to securing new business from this coveted group of borrowers.” Parkside Lending Now Offering VA Loan Programs

Parkside Lending has announced that it has begun to offer VA home loan programs. “We’re excited that we can now partner with mortgage professionals to help eligible

service men and women, veterans and their families become homeowners with a VA home loan from Parkside Lending,” said Matt Ostrander, CEO at Parkside Lending. “Our program takes a commonsense approach to underwriting whereby we review each veteran’s individual situation while making sensible loans.” Parkside Lending’s team has an exceptional level of VA expertise–some with more than 40 years of experience. The program is led by Linda Jacopetti, Parkside’s head of Underwriting and Government Operations, who has leveraged a proven track record of building VA programs from the ground up to design Parkside’s VA program. Marcy Neves, government underwriting manager at Parkside Lending, will lead Parkside’s VA underwriting team. Highlights of Parkside’s VA program include: Cash out up to $200,000; max loan amount $1.5 million; a minimum FICO score of 620 (700 FICO over $1 million); and no DTI cap (subject to VA requirements and compensating factors apply). Interest Rate Reduction Refinance Loan (IRRRL) program highlights include: No AVM or appraisals on owner-occupied primary residence transactions; and payoff existing VA loan plus closing costs and funding fees. PCLender and MCT Integrate Solutions and Services

has announced that it has completed an integration between its secondary marketing solution and PCLender’s loan origination system (LOS), an integration that will seamlessly transmit hedge pipeline data, saving time and enhancing information security. The integration will enable mutual lender clients to streamline an otherwise manual data transfer process, allowing them to pass and populate loan details from PCLender’s LOS to MCT’s hedge model, reducing the risk of market movement and ensuring the optimization of mutual clients’ hedge positions. “We are excited to offer this new integration to lenders that are utilizing our secondary marketing advisory services and PCLender’s LOS,” said Chris Anderson, chief administrative officer at MCT. “Developing integrations with mortgage technology platforms in order to provide the best service to our clients is paramount to MCT’s mission.” Lionel Urban, chief executive officer of PCLender, said, “Standardizing data integrations is valuable to lenders because they can then focus their business analysts and IT resources on other projects. We believe MCT is a leader in the secondary marketing services and look forward to streamlining operations for our mutual customers.” The Money Source Launches Web-Based SIME Platform

Mortgage Capital Trading (MCT) The Money Source Inc. has announced the launch of SIME (Servicing Intelligence Managed Easily), a Web-based servicing

platform that integrates into legacy systems and dramatically changes how loans are serviced. “SIME (pronounced Sim-mee) consolidates layers of loan servicing, typically accessed through dated platforms, into a simple format with intuitive dashboards and reports,” said Ali Vafai, president of The Money Source. “The enhanced field-level access has allowed us to reduce delinquencies and manage smarter and more efficiently.” With SIME, clients of The Money Source can see everything that The Money Source servicing staff see on each loan. Clients can listen to recorded calls, see all notes, download documents in an instant, all over a Web browser. Custom reports can be created on the spot without any programming experience. “As lenders we need full transparency along with the reassurance we are meeting all regulatory guidelines. We are pleased to share the SIME experience with our new subservicing clients,” Vafai said.

and exceptions in their queue in an easy-to-read format. ACES Dashboards’ visual charts and graphs help users to quickly identify issues and determine pipeline status in real-time. Its live audit-level filtering enables users to customize the experience according to their unique goals and demands. “Industry requirements keep expanding and the number of audit questions are increasing,” said McCall. “In response, we made considerable improvements to ACES IQ technology, which include pre-set and user-defined audit

questions, to help lenders streamline efficiencies.” ACES IQ has been enhanced to include multiple layers of automation, including audit, loan and borrower level dependencies, supported by data-driven triggers that will support an efficient and streamlined workflow. With this enhancement, ARMCO clients are reporting reductions in post-closing audit times of up to 30 percent. “When you combine a contracting market with a regulation-heavy environment—and that’s exactly what the mortgage industry is facing right now—

lenders need operations that aren’t just powerful, but also lean,” said Avi Naider, CEO of ARMCO. “This update enhances quality and compliance, while also providing the efficiency and speed for a leaner, more economical process.” Zillow Launches Site for First-Time Homebuyers

Zillow Group has announced the debut of RealEstate.com, a new consumer real estate brand continued on page 18

ARMCO Enhances ACES Audit Technology to Support Impending HMDA Changes 13

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ACES Risk Management (ARMCO) has announced that it has upgraded its ACES Audit Technology solution with more than 15 new enhancements. The major enhancements include support for the HMDA changes scheduled for 2018, at-a-glance dashboards, and heightened automation for the system’s ACES Intelligent Questionnaire (ACES IQ), which has been shown to reduce QC audit times by an average of 30 percent. “Regulatory compliance has emerged as a number one concern for most lenders, and many will see our enhancements to support the upcoming HMDA changes as a huge benefit of this release,” said Phil McCall, COO of ARMCO. “The HMDA updates don’t go into effect until 2018, but lenders that want to protect their profits and longevity don’t wait for the last minute to adapt. Our customers rely on ACES Audit Technology because we help them stay compliant, regardless of changing regulations, well before any deadlines.” ACES Audit Technology also includes new at-a-glance dashboards that provide users with a high-level view of the loans

NEWSFLASH y MAY 2017 y NMP NEWSFLASH y MAY 2017 y NMP NEWSFLASH y MAY 2017 y NMP NE

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Barry Habib Awarded Prestigious Pulsenomics Crystal Ball Award MBS Highway has announced that its Chief Executive Officer Barry Habib has received the prestigious 2016 Pulsenomics Crystal Ball Award as part of the Zillow Home Price Expectations Survey. The Award is presented in connection with Pulsenomics survey of more than 100 of the nation’s top economists, investment strategists, and housing market analysts, who then rank the winners based on the accuracy of their predictions of future real estate trends. Barry’s forecasts were the most accurate of all the experts polled. Habib is an entrepreneur and frequent media resource for his mortgage and housing expertise. Barry has had a long tenure in the media with numerous appearances on various financial TV networks. For more than 25 years, Barry has also been a well-known professional speaker on the financial and real estate markets. “I could not be more pleased by this award,” said Habib. “It’s a credit to all of us at MBS Highway who work hard every day to give our clients the most accurate mortgage, interest

rate, and real estate information and forecasts. We have received many kudos over the years for making accurate forecasts on home prices and on the direction of interest rates, but this award ranks above them all and is quite an honor for all of us at MBS Highway.” Winners receive the coveted Pulsenomics Crystal Ball Award, a genuine crystal ball complete with a crystal stand and an engraved plaque to commemorate each winner’s accomplishment. Foreclosure Activity at 12-Year Low

Residential foreclosure activity last month dropped to its lowest level since November 2005, according to new statistics released by ATTOM Data Solutions. There were 77,049 foreclosure filings—including default notices, scheduled auctions and bank repossessions—reported in April, a seven percent drop from the previous month and a 23 percent plummet from April 2016. One in every 1,723 housing units had a foreclosure filing in April. During April, 34,085 residential properties started the foreclosure process, a six percent decline

from March and a 22 percent yearover-year decline. Lenders completed foreclosure on 25,990 residential properties in April, which was nine percent lower than March’s level and 22 percent below the April 2016 level—it was also the lowest level since February 2015. New Jersey had the highest foreclosure rate among the states, with one in every 562 housing units burdened by a foreclosure filing), while that state’s ailing seaside resort Atlantic City had the highest metro foreclosure rate with one in every 237 housing units. “Foreclosure activity continued to search for a new post-recession floor in April thanks in large part to the above-par performance of mortgages originated in the past seven years,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile we are seeing an elevated share of repeat foreclosures on homeowners who often fell into default several years ago but have not been able to avoid foreclosure despite the housing recovery.” Ocwen Seeks to Have CFPB Declared Unconstitutional

action brought against it by the Consumer Financial Protection Bureau (CFPB) by filing two related motions for an early court ruling that would void the enforcement action while declaring the regulatory agency unconstitutional. Ocwen has also filed a separate motion asking the D.C. Court of Appeals to invite the Department of Justice to participate in the case. In a statement issued by the West Palm Beach, Fla.-based company, Ocwen accused the CFPB of “filing a lawsuit without factual or legal merit, apparently in an effort to bolster its own political agenda.” It added that it “believes that the CFPB is unconstitutionally structured because it vests too much unfettered power in the hands of the CFPB’s Director and the Bureau itself, without any meaningful oversight by the President or Congress.” Ocwen also defended its business performance, citing “the well-documented positive results from Ocwen’s borrower-assistance efforts,” including more than 735,000 loan modifications during the past years and 20 percent of all modifications under the federal Home Affordable Modification Program, the federal government’s leading modification program. Trade Groups Support Upgrade to PACE Loan Protections

Ocwen Financial Corp. is responding to an enforcement

More than two dozen national and

Embrace Home Loans has embarked on a “Going Green” initiative where the company will

borrowers, as well as position it as both a highly innovative and environmentally conscientious employer of Rhode Island and within the mortgage industry. “Rhode Island is a leader in renewable energy and Embrace wants to be a good steward of our environment,” said Deanna Roy, vice president of Embrace Home Loans. “We try to do our part in reducing our footprint through various green programs like recycling, reducing our consumptions by updating our lighting to efficient LED and now leading the way with renewable

solar energy. We’re thrilled to be partnering with Direct Energy Solar and look forward to their help in further meeting our ‘Going Green’ initiative.” Direct Energy Solar will be the first solar integrator to implement the C-PACE program in Rhode Island, ensuring that Embrace has the most beneficial environmental impact. C-PACE is an innovative and affordable way for commercial building owners to pay for renewable, energy efficient upgrades, immediately continued on page 16

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Embrace Home Loans Goes Green

participate in the new Commercial Property Assessed Clean Energy (C-PACE) program by partnering with Direct Energy Solar to install solar panels on its roofs. This clean energy project facilitates energy efficiency, lowered operating costs and reduced consumption of fuels, saving Embrace an estimated $2 million over the course of 25 years. The solar panels will ultimately improve overall business operations, allowing the lender to continue to serve the needs of its employees and

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regional trade groups representing the mortgage and real estate industries have joined together to support new legislation that is designed to improve consumer protection requirements for Property Assessed Clean Energy (PACE) loans. In a joint letter to the U.S. Senate and House of Representatives, sponsors of S. 838 and H.R. 1958, the Protecting Americans from Credit Entanglements Act of 2017, the trade groups voiced their appreciation for the legislation’s goal of providing PACE loans with the Truth-in-Lending Act (TILA) consumer protections required of other mortgage products. “Although PACE loan obligations have all the attributes of a mortgage product, they are not subject to federal consumer protection requirements—as this alternative financing structure has been misclassified as a tax assessment rather than a loan,” the letter said. “Consequently, a standardized, comprehensive disclosure framework does not exist for PACE loans. Moreover, there are no requirements for an assessment of a borrower’s income, credit history, outstanding credit obligations, or expected monthly payments in connection with PACE products. Instead, PACE financing today is often based on a borrower’s equity in their property and their mortgage and property tax payment history, rather than on their true ability to repay their financial debt.” Among the groups supporting the legislation are the American Bankers Association, American Land Title Association, Appraisal Institute, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders and National Association of Realtors. The legislation is sponsored in the Senate by Sens. Tom Cotton (R-AR), John Boozman (R-AR) and Marco Rubio (R-FL) and in the House by Reps. Brad Sherman (DCA) and Edward Royce (R-CA).

Snail Mail? We Want Leads

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e all want quality leads, right? Why is it so hard to find a good quality lead? It’s purchase season again and now is the time to capitalize. Here are what top companies around the country are doing.

With as much as 97 percent of the population on the DoNot-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 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 mail 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! 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. l Marketing method: Direct mail l Volume: 14,000 pieces dropped bi-weekly l Results: 0.85 percent response rate, a 30 percent application rate on in-bound 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 to anyone.”

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

IMAGINE • INNOVATE • SUCCEED SPONSORED EDITORIAL

nmp news flash

continued from page 15

increase cash flow and improve their building’s overall value. Embrace Home Loans will be the first in Rhode Island to participate in the C-PACE program, embracing an initiative that is good for the economy and the environment. This initiative is part of Embrace’s commitment to supporting the local community, economy and environment. In fact, Embrace and its employees continuously help support local families in need, school supply drives, the families of active military members, and friends or families of Embrace employees who have had sudden emergencies such as a medical crisis, to name just a few. Embrace has raised thousands of dollars through this simple tradition of giving, and now aims to “go green” in the quest to become environmentally responsible. Most Americans Predict House Price Increases in Near-Future

A new Gallup poll found 61 percent of Americans believe housing prices in their area will rise in the next 12 months, a six percent point increase from a similar poll conducted last year. Twenty-eight percent of the poll’s respondents predicted prices will stay the same and 10 percent believe they will decrease. Among the different regions, 74 percent of respondents in the West predicted home price increases, 61 percent in the South, 54 percent in the East and 53 percent in the Midwest. Sixtyseven percent of respondents felt that now is a good time to buy a house, while 30 percent said it was a bad time. In comparison, this is down from the 2012-2014 period when the positive sentiment was 74 percent compared with 24 percent negative. “The continued increase in housing prices leads to questions of whether another housing bubble could occur,” said Jeffrey M. Jones, an assistant director and research director at Gallup. “While prices now are nearly where they were a decade ago,

houses are more affordable because of lower interest rates, and banks are more reluctant to issue risky mortgages than they were before the mid-2000s housing market crash. Still, if housing prices continue to rise and interest rates increase, the potential for a new housing bubble will grow.” Gallup surveyed 1,019 adults for this poll. FHFA’s Watt: Congress Needs to Move on GSE Reform

The Director of the Federal Housing Finance Agency (FHFA) urged Congress needs to take responsibility for housing finance reform and offer a strategy to end federal conservatorship of the government-sponsored enterprises (GSEs). In an appearance before the U.S. Senate Committee on Banking, Housing and Urban Affairs, FHFA Director Mel Watt noted that while his regulatory can take credit for “many reforms” to the business models and operations of Fannie Mae and Freddie Mac, their conservatorship is not sustainable. Going forward, Watt stated that Congress must take the next step in determining the GSEs’ future. “So, I want to reaffirm my strong belief that it is the role of Congress, not FHFA, to make these tough decisions that chart the path out of conservatorship and to the future housing finance system,” he said, adding that Congress needed to ask difficult questions on the future structure of the GSEs and to determine the depth and scope of their role in federal housing policy. Watt also warned of the possibility that the GSEs could slip back into financial tumult. “Like any business, the Enterprises need some kind of buffer to shield against shortterm operating losses,” Watt said. “In fact, it is especially irresponsible for the Enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw continued on page 24

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requires a high-tech toolbox. For the last thirty years, Flagstar Bank has been an industry-leading mortgage lender. We are a top 10 correspondent investor1 and the #1 FHA wholesale lender2 in the country. Put our decades of experience to work for you today.

Est. 1987

Equal Housing Lender

Member FDIC

Some restrictions may apply. All borrowers are subject to credit approval. Programs subject to change. The information provided herein is for dissemination to and for real estate and ﬁnancial business entities only, and is not an advertisement for the extension of credit to customers. 1 Source: Inside Mortgage (Q4 2016) 2 Source: FHA Neighborhood Watch (Q4 2016)

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Discover more advantages at: flagstar.com/why

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Branch Managers Have the Hardest Job in Our Industry By Steve Rennie

“How do I make time to recruit when I’m producing and managing my team?” his is a common quote we have heard over the years. Branch managers juggle managing their own relationships with referral partners, local operations/support staff and other producers, plus their production (not to mention every issue that comes up along the way). How do you find the time to execute a plan that doesn’t blow up your work-life balance? The quick answer is to time block–but that’s easier said than done. Successful managers are able to balance their current business, while simultaneously adding to their team. This is made possible with consistent Model Matching processes and systems. In addition, the ability to confidently communicate the overall value proposition of the company and unique selling points puts those managers in a position to more effectively build trust, while showing the recruit how their “value” can impact them and their referral partners. The reality is that you cannot always control someone else’s sense of urgency, but by sticking to a process, you put yourself in a much better position to win the relationship in the long run. Here are five things you can do to replicate what the pros do: l Time block: Start with two weekly 30-minute time slots. Focus and be intentional about making contact with new prospects. Save additional time during the week to call back the voicemails that come from this work. l Know your story: Communication around the company’s core components should be consistent with how your leadership tells the story. l Script: Have your new relationship/cold call message script down, so that it comes out confidently and comfortably. l Target list: Work on and consistently add to a market target list, in much the same way you coach your LO’s to target new referral partners. l Have an accountability partner: Leverage leadership to help keep you on track in hitting your goals.

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Recruiting is a process, not an event. Your chances of “winning” a recruit are much higher if you have already established a relationship with them BEFORE they begin to seriously evaluate options. Applying tips like these will help you form habits to support the future growth of your production team. As always, feel free to contact us with questions or other tips and techniques on how you can build relationships with relevant producers in your market, ultimately leading to hires.

Steve Rennie is chief sales officer with Model Match Inc., a technology platform and business plan used internally by sales leaders and executives at banks and mortgage companies to grow and retain production organically. He may be reached by e-mail at Steve.Rennie@ModelMatch.com.

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new to market

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designed on first-time homebuyers, with a particular focus on Millennials. According to the company, RealEstate.com users can search for homes by the monthly payment and down payment they can afford. RealEstate.com calculates an “All-In Monthly Price” for every home and breaks out estimated expenses that would go into a monthly payment, including principal and interest, property taxes, homeowner’s insurance, HOA fees and utilities, and closing costs. Online searches can be conducted in English, Spanish or Chinese. Buyers using the new site will be able to connect with real estate agents directly from the listing details page on the site. The listings will come from multiple listing services, real estate brokerages and franchisors, and agents will receive the same listing treatment they currently have on Zillow and Trulia. “RealEstate.com is designed to equip the next generation of homebuyers to find a home that suits their needs and budget,” said Jeremy Wacksman, CMO at Zillow Group. “We know from our research that affordability is a huge driver for homebuyers, and that first-time buyers are more likely to go over budget. By tailoring the home search experience on RealEstate.com around a home’s monthly cost, we hope to make the homebuying experience less daunting and even more transparent for first-time buyers.” CBCInnovis Announces Day 1 Certainty From Fannie Mae

CBCInnovis, a provider of mortgage credit and data validation services, has announced the availability of its 4506-T IRS tax transcript verification services with Day 1 Certainty from Fannie Mae. With direct ties to sister company DataVerify, an authorized report supplier for Day 1 Certainty, CBCInnovis is able to provide clients this critical verification service as part of this important initiative. In addition to greater efficiency

in the lending process, Day 1 Certainty from Fannie Mae provides customers with freedom from representations and warranties on key aspects of the mortgage origination process. “CBCInnovis offers our clients products and services focused on enhancing processing efficiencies and reducing costs. Participating in Fannie Mae’s Day 1 Certainty is a result of our customer focus,” said Pam Lahr, senior vice president of sales for CBCInnovis. Fannie Mae Addresses Student Loan Debt Obstacles

Fannie Mae has introduced policies designed to help more borrowers with student debt qualify for a home loan. The new policies will provide different options to borrowers based on their individual circumstances. Among the changes offered by Fannie Mae are a student loan cash-out refinance that allows homeowners to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate, the ability for a borrower to qualify for a home loan by excluding non-mortgage debt from the debt-to-income ratio calculation, and the ability for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports. “We understand the significant role that a monthly student loan payment plays in a potential homebuyer’s consideration to take on a mortgage, and we want to be a part of the solution,” said Jonathan Lawless, Fannie Mae’s vice president of customer solutions. “These new policies provide three flexible payment solutions to future and current homeowners and, in turn, allow lenders to serve more borrowers.” continued on page 26

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Lisa Wa Warren President LW L W Financial Services

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NAMB President’s Message: May 2017

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Up, Up and Away to GA! The pre-game warm up … flying out to D.C. I love this time of year for us as originating advocators. NAMB is congregating all of its state leaders in Washington, D.C. to advocate and educate our elected officials and regulators. I have finished writing my opening remarks and “State of NAMB” speech for what is always an incredible week of passionate minds getting together. NAMB’s Legislative & Regulatory Conference is not just another conference for the sake of meeting. This is our obligation as leaders and stakeholders in the mortgage industry. We must go to our federal and state elected officials and tell the story of how we promote homeownership in a safe and ethical matter. This is our story, and we cannot allow anyone else tell it. This is how we got where we are today with over-reaching regulation. We have now reached, what I judge, is the apex of regulation in our industry. We have seen rules like HVCC (now appraisal independence rule) and the CFPB creation become institutionalized. We all need to take a moment and advocate for the consumers whom we serve day to day. What is in their best interest for achieving their dream of homeownership? When we talk to our legislators, they want to hear from us on how we think we could provide those tools and resources without over-regulation. We have that responsibility. Many of us have heard when we come to D.C. from our co-workers or others in our industry, “Good luck,” “Thank you” or even “Go repeal Dodd-Frank” and “Remove the CFPB.” Our immediate response should be, “Why aren’t you going with me?” I know I have said that we are a grassroots organization, but I don’t mean a stealth one. Speak up! Challenge your peers! Tell them that they need to come with you to D.C. next year! This year, we have close to 50 bills that have something related to mortgages, and NAMB is on top of those bills to make sure that overregulation does not seep back into our industry. We have coordinated with our members to present multiple bills on behalf of the industry and our consumers.

NAMB Education Corner: Dust Off Your Bookshelf By Bob Sweeney, CRMS

Recently, I was asked by one on my mortgage loan originators to help her to a path of improved sales performance and sales management. As we discussed these topics, I asked the question: How many books have you read relating to sales success or sales management? To my surprise, the answer was very few. So I offered to share my library of sales books I have gathered over the past 20-25 years. I proceeded to take inventory of all the sales books in my library. Some were in boxes, but the most important ones to me were still in my office. These books had a great influence on my career. One of my favorite series of sales books is authored by Jeffrey Gitomer. Gitomer is as humorous and blunt as they come. If you ever get a chance to attend one of his seminars or read his books, you will understand what I mean. So I pulled the books off the shelf, dusted them off and stacked them up to share with my co-worker and waited for her to pick them up. As I stared at the stack for a few hours, I decided to start rereading them. I chose to start with the eight books authored by Gitomer because they are very easy reading. I had forgotten a great deal of the content to his books, so it was very enjoyable to reread them again. These books are an awesome start to sales success. In case you are interested, the book titles are as follows: l The Sales Bible–The Ultimate Sales Resource l Little Green Book of Getting Your Way: How to Speak, Write, Present, Persuade, Influence and Sell Your Point of View to Others l Little Red Book of Selling: 12.5 Principles of Sales Greatness l Little Gold Book of YES! Attitude: How to Find, Build and Keep a YES! Attitude for a Lifetime of SUCCESS l Little Black Book of Connections: 6.5 ASSETS for Networking Your Way to RICH Relationships l Little Red Book of Sales ANSWERS: 99.5 Real World Answers That Make Sense, Make Sales and MAKE Money l Little Platinum Book of CHA-CHING!: 32.5 Strategies to Ring Your Own (Cash) Register of Business and Personal Success l Very Little But Very Powerful Book of Closings: Ask the Right Questions, Transfer the Value, Create the Urgency and Win the Sale

As you can see from his titles, he is a very interesting character, but his content is amazing and full of common sense and are ever-lasting. One of Post-game: Flying back from D.C. my favorite excerpts in The Sales Bible that applies to all sales Our 2017 Legislative & Regulatory Conference was a success on the professionals is as follows: Hill in respect to being heard and getting positive feedback from our legislators, but we offered so much in terms of speakers. Everyone “As you look to succeed in your career, you have to believe in the was amazed that our Legislative & Regulatory Conference packed in company that you represent, and you have to believe that it’s the best so much content into one event. We had the Conference of State company in the marketplace offering or creating what you’re trying to sell. Bank Supervisors (CSBS) and Consumer Financial Protection Bureau You have to believe in their ethics. You have to believe in their ease of (CFPB) give us a great update on their respective bureaus and doing business. You have to believe in your co-workers. And you have to oversight. I had a great “Fireside Chat” with Norbert Michel from the believe that the company will deliver what you sell in a manner the will Heritage Foundation about the CFPB, Dodd-Frank, the future of the create customer loyalty. GSEs, and the future of technology and how it impacts today’s loan “You have to believe that your products and services are not just the originator. best in the marketplace, but that they’re the best value for the customer. Thank you to those NAMB members who joined us on the Hill this You have to believe that you can differentiate yourself from your year. I know you were not disappointed in the content or the results we got from our elected officials and regulators. For those who did not competitor, and that you can prove (through testimonials) that your product is what you say it is.” or could not join us this year, mark your calendar for next year. For you as guardians of the industry and advocates for your consumers, Sales success is a journey, but you need to start somewhere. In you need to make this trip and experience this event. previous articles, I have mentioned numerous times the need for nonThank you and Namaste’ credit education. Here is another perfect example of this. Start your journey to success today. Fred Kreger is vice president of Enterprise Retail Production at We welcome any input from all mortgage professionals. If you would American Pacific Mortgage. He is currently president of NAMB—The be interested in joining NAMB’s Education Committee and become part Association of Mortgage Professionals and past president of the of our future success in the education of our independent mortgage California Association of Mortgage Professionals (CAMP). He can be companies and mortgage loan originators, please feel free to contact me contacted by e-mail at Fred.Kreger@APMortgage.com or call (661) at RSweeney@TCUnet.com. If you are not an NAMB member, now is a 400-8905

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great time to become a member. Go to your state association Web site or NAMB.org and join as a Professional Member today. Bob Sweeney, CRMS is the mortgage sales manager for Teachers Credit Union, director for NAMB–The Association of Mortgage Professionals and serves as NAMB Education Committee chairman. He can be reached by phone at (317) 625-3287 or e-mail at RSweeney@tcunet.com.

NAMB Government Affairs Update By Michelle Velez, CMC

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

It’s Time to Join NAMB! By Rocke Andrews, CMC, CRMS

Rocke Andrews, CMC, CRMS is immediate past president of NAMB—The Association of Mortgage Professionals. He may be reached by e-mail at RAndrews@LendingArizona.net.

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NAMB is the only non-profit association that represents small business originators. Even if your company is large, you need to consider yourself a small business. For marketing, sales and your future, you need to treat your origination team as a small business, and you need to invest in your business. Part of that is protecting your future in the industry, and by joining NAMB, you are doing just that. NAMB represents small business interests in Washington, D.C. to the regulators and legislators. Membership is a small price to pay to insure your profession will be there going forward. Business insurance is a small part of what you get from NAMB. Outstanding conferences, such as NAMB National at the Rio in Las Vegas in October, the premier originator event of the year, is another benefit of membership. This year promises a return to the big events of the recent past: A huge convention floor and industry partner booths, along with fabulous parties, including the Voodoo Lounge on top of the Rio and many other exciting spots such as the UWM-5 Ice Bar and REMN Night Club parties of the last few years. Every room is a suite, so get your reservations in early. If your state does not have a NAMB affiliated association, let us know and NAMB will be happy to help get one started and even handle the duties of an executive director if you need. The NAMB Convention Committee will be happy to help get a state or regional vendor showcase/education opportunity for your members. With our current partnerships with Fannie Mae and Freddie Mac, we can get valuable information to help your small business grow. If you want to truly become a small business, NAMB can help with up to a $10,000 grant to start your company through the generous donations of our industry partners, such as United Wholesale Mortgage (UWM). So join NAMB now and put your small business origination company on the track to becoming a professional industry component with a professional association to help you. Go to NAMB.org and click “Join Now!”

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Although we are only part of the way into the second quarter of 2017, it is hard to believe it is only May. My favorite time of year is being able to go to Washington, D.C. and speak to our legislators. The ability to walk the halls and through the underground tunnels where there is just so much history is one of the highlights of my year. The Legislative & Regulatory Conference held its annual Political Action Fundraiser, but this year, we added a twist. NAMB added a Lip Sync contest where states competed against each other and were able to choose their own song. There were six acts that competed. I have to say, each state went all out. NAMB would like to extend a special thank you to all contestants who participated. Also, we would like to give a big shout out and huge congratulations to Texas, who won the contest. If you missed it, you will have the opportunity to join us in Las Vegas this October. This will be one event you will not want to miss. This year, there have been almost 50 bills introduced into the 115th Congress that could affect the mortgage industry. Not all of them affect NAMB members, but know that we are watching all bills which could affect our industry. We are closely monitoring all the bills. For the Legislative & Regulatory Conference, we chose the items that are most important to all of our members. First, we have been talking about the Flood Insurance Reauthorization and Restructuring. This is a top priority for NAMB. There have been many large scale flood disasters for which the cost the flood insurance policy claim costs have far exceeded the amount of premiums and fees received. NAMB supports the reauthorization of the National Flood Insurance Program (NFIP) before September of this year. We support a strengthened NFIP along with a robust private market to offer choices and maintain access to flood insurance in all markets. Second, we are looking for legislative changes to the three percent Qualified Mortgage (QM) Rule. NAMB is seeking a correction to the definitional error that occurred while formulating the QM definitions of the Wall Street Reform and Consumer Protection Act of 2009. We are seeking a technical correction to the three percent points and fees cap of a QM. The QM was not intended to include creditor payments to the mortgage brokerage entities, provided those payments were already included in the rate offered by and set by the creditor. Doing so only harms the prospective borrower. NAMB is seeking bi-partisan support for this bill which will be introduced within the next couple of weeks. Third, NAMB is seeking legislative changes to amend the SAFE Act. As an NAMB member, we all need to take and pass our NMLS National UST. In some states, you still need to pass a state test as well. Last year, the transitional licensing bill was passed by the House. Depository bank loan originators are only required to be registered by the Nationwide Multi-State Licensing System. They are internally trained on just the loan products that are available at the bank and on all facets of banking. They are not required to take ethics training. There is little or no training on VA, FHA, USDA or Housing Bond offerings. There are approximately 400,000 mortgage originators who work for depository institutions. NAMB has always been a huge proponent of LO licensing and worked closely with the language for the SAFE ACT. We are seeking that all loan originators who work for depository banks of $10 billion or more to take and pass the NMLS National UST. There will be a bill that will be introduced within the next month for this. Lastly, NAMB is seeking written guidance for compliance with Consumer

Finance Protection Bureau (CFPB) regulations. One of the main reasons the cost of creating a mortgage is approaching $7,500 is in part due to the cost of legal and compliance burdens. These costs are pushing lenders to take the most risk-adverse position on the interpreting regulations coming from the CFPB. This is caused by the fact the CFPB does not provide clear written guidance on their regulations. Most companies find out the interpretation when they have been audited and fined by the CFPB. NAMB asserts the mortgage industry needs regulatory guidance it can rely on in order to operate efficiently and bring new products to the consumer. Congress should require any written interpretive or legislative rule, interim rule, bulletin, statement of policy, letter, examination manual, frequently asked questions, or other document issued by the Bureau regarding compliance with the federal consumer finance law be accompanied with interpretive guidance within a set timeframe after publication. Compliance questions from industry should be answered in writing within a reasonable time. There will be a bill that will be introduced within the next month making these corrections. We need to have bi-partisan support. While we are looking forward to much change of the next couple of years, it’s important to note that your voice makes a difference. Please make sure to watch your e-mails for upcoming Calls to Action regarding some of the different legislation we are facing. Should you have any questions, please feel free to reach out to me directly at Michelle.Velez@SupremeLending.com.

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Scenes From the NAMB 2017 Legislative & Regulatory Conference April 22-25 in Washington, D.C.

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Scenes From the NAMB 2017 Legislative & Regulatory Conference April 22-25 in Washington, D.C.

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By Mat Ishbia

Fannie Mae enhancements annie Mae recently made some great enhancements that will help more consumers get mortgages, whether it’s a purchase or refinance. Here are a few examples:

l Condos: For condos where the LTV is up to 80, projects no longer need to be approved if it is already a Fannie Mae-approved condo. If a family already has a condo through Fannie Mae and they are doing a rate and term below 80 LTV, they don’t need to produce any documentation. l Student loans: They’re making it easier for people with student loans to get loans by basing it off one percent of the total student loan amount, or whatever is on the credit report, instead of a weird calculation of amortization. l Debts paid by others: If someone is paying off a nonmortgage debt for a borrower (auto, credit card, student loans, etc.), the account no longer needs to be jointly held by both parties. Now, they just need to produce 12 canceled checks and they’re good to go. l Home previously listed for sale: Fannie Mae has increased the maximum LTV from 70 to 80 for homes that were listed for sale in the last six months.

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Closing times getting faster Ellie Mae came out with a report that closing times in March 2017 were the fastest they had been in over two years, down to 43 days from application to closing. If the average in the industry is 43 days, that’s way too long. That stat is an opportunity for brokers to go to real estate agents and borrowers to differentiate themselves. Let them to know that you’re closing loans in 30 or 35 days. Use that data to get more business. Purchase season in full swing Purchase season is humming right now. First-time homebuyers made up 32 percent of all purchases in March, which was a 30 percent increase from a year ago. Seventythree percent of all Millennials go online to buy their home. Make sure your online presence is sharp and that you offer low downpayment programs like conventional one percent and three percent down, FHA and VA. It is important that you understand that Millennials are looking for these programs and that you are marketing to them accordingly.

Mat Ishbia is president/CEO of United Wholesale Mortgage (UWM), the nation’s number one wholesale lender. A leading advocate of mortgage brokers, Mat has changed the lending platform, turning UWM into a $23 billion company and a top national workplace.

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of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the Enterprises. We reasonably foresee that this could erode investor confidence. This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.” What Type of Millennials Are Buying Homes?

What does the average Millennial look like? According to data from Ellie Mae, the typical Millennial homebuyer is a man just under the age of 30. The latest report from the Ellie Mae Millennial Tracker concluded the average age of a homebuyer was 29.5-years-old, while men were more likely to be listed as the primary borrower (65 percent) than women (32 percent). Fiftyone percent of Millennials who bought homes in March were married while 49 percent were single. Furthermore, the average FICO score for Millennial borrowers in March was 720, down from 723 in February and 724 in January. The average loan amount for purchases for this demographic was $181,154, down from February’s annual high of $185,566, while 60 percent of youthful buyers opted for conventional loans as 36 percent went the FHA and two percent called on the VA mortgage program. As for the most popular destination for Millennial homebuyers in March, the greatest level of property purchasing was in Mount Vernon, Ill., which boasts a population of approximately 15,000. “What this data shows is where there is an inventory of affordable homes, the Millennial buyers are ready to enter the market,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “We expect to see this trend continue as average FICO scores decline and affordable loan options become more available to Millennial homebuyers.”

New Bill Seeks to Expand Housing Protection to LGBT Community

New legislation introduced in Congress seeks to expand housing discrimination protection classes to include sexual orientation and gender identity. The Equality Act of 2017 would provide federal protections for the LGBT community in housing and credit access, as well as in employment and public accommodations. Forty-six Democrats and two Independents in the Senate back the bill, while companion legislation in the House of Representatives is backed by 194 representatives. While the Fair Housing Act was never amended to include the rights of LGBT Americans, the Department of Housing and Urban Development issued rules relating to protections in federally funded housing developments. According to the nonprofit Human Rights Campaign, the Equality Act was introduced with the most congressional support for any piece of pro-LGBT legislation. Five Percent of Homeowners Are Behind on Their Mortgage Payments

Five percent of mortgages were delinquent by 30 days or more during February, according to new data from CoreLogic. This represents a 0.5 percent drop from the 5.5 percent overall delinquency rate in February 2016. As of February, the foreclosure inventory rate was 0.8 percent, down from 1.1 percent one year earlier, while the serious delinquency rate—defined as 90 days or more past due including loans in foreclosure—was 2.2 percent, down from 2.8 percent in February 2016. However, earlystage delinquencies, defined as 30-59 days past due, were at 2.14 percent in February, up from continued on page 28

NAMB+ is an independent, wholly-owned, for-profit marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, Have you ever wondered what the “+” stands for in NAMB+? Well, simply put, it represents the bonus or tangible (i.e., monetary) benefits that every member is entitled to take advantage of immediately when they join NAMB. Virtually every one of our NAMB+ Endorsed Providers offers significant money-saving discounts or other special product/service offerings exclusively to NAMB Members. And, in most cases, these are products and services that you are already using in some form or fashion in your daily operations. More and more people are taking advantage of these special offers, and in many cases, they are discovering that the cost savings in just one month of working with NAMB+ EPs more than pays for the $120 annual membership in NAMB. NAMB stands for education, advocacy and outreach for mortgage professionals

nationwide. And in joining NAMB you become part of a larger network of originators, business owners, managers and others throughout the industry who are committed to sharing knowledge, advancing the profession and working passionately for the consumers we all serve. Whether you are currently a NAMB Member or someone who has either let your membership lapse or never even considered joining, I urge you to take a practical look at NAMB Membership and ask yourself, for $120/year, is it costing you more money to not join NAMB? Sincerely,

Nathan Pierce, CRMS, CMP, President NAMB+, Inc. l npierce@advfund.com

See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information. Full-service mortgage credit reporting company serving the nation’s financial community. Avantus provides custom mortgage credit reports, fraud and compliance solutions, and innovative lead generation products available exclusively to Avantus customers. Learn more at Avantus.com. NAMB members receive a discount off Brokers Compliance Group compliance support programs.

NAMB members receive a 15% discount on all Custom Canvas Prints products and services!

InfoSight, Inc. offers proven and affordable cyber security, risk management, IT Infrastructure and regulatory

MortgageHippo Swift allows loan originators of all sizes to deliver a modern borrowing experience, significantly improve borrower conversions, reduce origination costs and integrate with other innovative technologies in the mortgage industry. NAMB members will receive a 25% discount. Please visit www.mortgagehippo.com/swift/.

Sarma gives you access to their extensive resources including: merged reports from the three top credit bureaus, CreditXpert tools, AVM Reports, SocialValidate, TRV Verification, Interface with over 30 LOS, Fannie and Freddie connection, Verification of employment/deposit and much more. Please visit http://www.sarma.com/quickqual/ NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership. Simplii VOIP business phone solutions include all the features and functionality of a high end business phone system without the high costs. We offer all NAMB members a 10% discount off their phone services. For more information please e-mail stevew@simplii.net

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

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

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

NAMBPLUS Login Instructions Username = Member Number Password = First initial of your ﬁrst name capitalized and your last name with the ﬁrst letter of the last name capitalized (example = JStevens)

If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many beneﬁts NAMB members receive!

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

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

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

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

compliance solutions. Visit www.infosightinc.com or contact us at 305-828-1003 / 877-577-9703.

CFPB Proposes Technical Corrections and Clarifying Amendments to 2015 HMDA Rule By Gavin T. Ales

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n April 13, 2017, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule that would amend Regulation C, the implementing regulation for the Home Mortgage Disclosure Act (HMDA).

The CFPB previously issued a final rule to amend Regulation C on Oct. 15, 2015 (2015 Final Rule) that has yet to take effect. The new proposed rule would further amend Regulation C, and the CFPB proposes the new amendments to also be effective on Jan. 1, 2018. The CFPB notes this clarifying rule is the result of feedback received from the mortgage industry through its participation in conferences and other events as well as its own review of the rules. The proposal makes technical corrections needed for the 2015 Final Rule in addition to clarifying amendments to address concerns identified by the industry. The new rule would allow some flexibility in reporting requirements in certain situations. The October 2015 Final Rule added an additional loan purpose category of “other” for cash-out refinances. The proposed rule, recognizing a burden that the new loan purpose category may place on reporters for loans purchased before the category was required to be reported, will allow purchasers of loans originated prior to Jan. 1, 2018, to report the loan purpose as “N/A.” The rule also would allow purchasers of loans originated prior to Jan. 10, 2014, to opt not to report the loan originator’s unique identifier. The rule also clarifies the meaning of “extension of credit” and its relation to New York Consolidation, Extension and Modification Agreements (CEMAs). The 2015 Final Rule included a narrow exception to the definition, stating that an extension of credit only occurred when there was a new debt obligation involved in the transaction. While the CFPB believes a CEMA transaction does create a new debt obligation, the proposed rule adds a limited exclusion for preliminary transactions providing new funds prior to consolidation as part of a CEMA transaction. The CFPB is also proposing additional commentary to clarify the meaning of a “bona fide error” regarding reporting of a census tract for a property address. Current HMDA regulation already includes in the definition of “bona fide error” the situation when a reporter provides an incorrect census tract number that was unintentional and occurred despite procedures reasonably adapted to avoid such an error. The new commentary includes reporting of a census tract using the CFPB’s forthcoming geocoding tool as constituting “procedures reasonably adapted to avoid such an error,” so long as there was no error in inputting the property address. However, the commentary does not exempt failure to report a census tract because the CFPB’s geocoding tool did not return one.

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.

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continued from page 18

Bank Offers Mortgages to Immigrants Without U.S. Credit History

San Francisco-based Bank of the West has expanded its mortgage program to international clients who have no U.S. credit history, but meet employment and financial requirements for a home loan. The bank’s Global Mobility platform is being offered with a team of multilingual specialists trained in meeting what is described as “international clients’ unique needs. Thierry Gabadou, head of international banking at Bank of the West, noted that many immigrants often face high costs of living that become exacerbated by an inability to access credit. “At Bank of the West we are focused on our clients and their ever-evolving needs,” said Gabadou. “Our local presence combined with our global capabilities, through our parent company BNP Paribas, positions Bank of the West in a prime spot to help those, coming from abroad, who are looking to settle and establish credit here in the U.S.” Embrace Home Loans Launches Digital Marketing Division

According to the company, the new division will work with the other Embrace divisions to “build a digital marketing ecosystem that will integrate with the customer relationship platform.” This new omni-channel strategy will combine all customer touchpoints across the online, telephone, mail and in-person sales channels. “Under this new Division, we aim to create digital awareness and intelligently target various market segments and audiences,” said Tony Branda, chief data and analytics officer. “This will not only better meet the needs of today’s borrowers, but also drive performance. Borrowers will be able to complete online lead forms that we can integrate into our CRM, enabling us to further nurture those leads digitally. Over time, we’ll increase efficiency and drive digital traffic. This is an exciting time for Embrace and the lending industry as a whole.” 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@MortgageNewsNetwork.com

Embrace Home Loans, headquartered in Middletown, R.I., has created a new Digital Marketing Division that will be located in New York City.

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

We are once again looking for the Most Connected Mortgage Professionals. These are individuals who have a large number of followers on Twitter or likes on Facebook or maybe have a very popular blog or video show. These individuals will be featured in our July 2017 edition, which has a special focus on Social Media.

Go to https://nmpmag.wufoo.com/forms/50-most-connectedmortgage-professionals-for-2017/

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n National Mortgage Professional Magazine n MAY 2017

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Blockchain Technology to Eliminate Financial Fraud? By Andrew Liput

MAY 2017 n National Mortgage Professional Magazine n

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ever heard of “blockchain” technology? Well then you better start Googling it, because like the fax machine, personal computer and the Internet, blockchain data authentication, storage and sharing technology promises to change the way financial transactions occur in a transformational way. Along the way the manner in which banks make loans, and how we access public data (including property title information) could be radically changed, many say for the better. A blockchain facilitates secure online transactions. It refers to a decentralized and distributed digital ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively. Data can be distributed but not copied, can be shared but not stolen, can be personal but because any confidential data will be registered in a unique code to you. This code or “keys” as referred to in blockchain lingo, consists of a long, randomlygenerated string of numbers and characters that one day you may carry with you in an Orwellian manner so that you can unlock all of your own personal information in this database structure. (“Hi there, I am number 679K0iYZX56!34721#, what is your code?”) Information held on a blockchain exists as a shared and continually reconciled database over a global network of computers that makes it nearly impossible to be corrupted and hacked. Data is not stored in any single location, meaning the records it keeps are truly public and easily verifiable. Hosted by millions of computers simultaneously, its data is accessible to anyone on the Internet. There has been some talk about how blockchain technology could prevent financial fraud, reducing that risk for lenders, and also to manage public property records. This latter idea could radically alter the title industry by eliminating the need for a “middle man” to verify authenticated property information and thereby making that information available to everyone using a simple blockchain data search tool. In May 2016, Forbes Magazine published an article titled “How Blockchain Technology Could Change the World.” Author Bernard Marr wrote: “We have become used to sharing information through a decentralized online platform (the Internet). But when it comes to transferring value–for example money–we are usually forced to fall back on oldfashioned, centralized financial establishments such as banks. Even online payment methods [such as] PayPal … generally require integration with a bank account or credit card to be useful. Blockchain technology [could] eliminate this [need] by filling three important roles—recording transactions, establishing identity and establishing contracts—traditionally carried out by the financial services sector.” A September 2015 World Economic Forum report predicted that by 2025, 10 percent of GDP will be stored on blockchain technology. That is $20 billion reasons to pay attention.

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

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continued from page 24

2.08 percent one year before. And the share of mortgages that transitioned from current to 30-days past due was one percent in February, up from 0.8 percent in February 2016. “While national-level delinquency rates declined, the serious delinquency rate remained elevated in many mid-Atlantic and northeast states led by New York and New Jersey,” said Frank Martell, president and CEO of CoreLogic. “February-toFebruary increases in both 30day-or-more delinquency rates and in serious delinquency rates were also observed in Alaska, Louisiana and Wyoming relating to the impact of the downturn in the global oil market.” Builder Confidence Wanes in 55+ Housing

Builder confidence in the single-family 55+ housing market took a 12-point dive in the first quarter of with a reading of 55, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI). However, the NAHB stressed that this was the 12th consecutive quarter with a reading above 50, which signifies builders still view conditions as good rather than poor. “We saw an unusually high 55+ single-family HMI in the 4th quarter of 2016 due to a postelection surge in optimism,” said NAHB Chief Economist Robert Dietz. “As this wears off, confidence is returning to a more sustainable level. Although builders are struggling with shortages of labor and lots, as well as higher lumber prices, market conditions on balance remain favorable, and we expect solid growth in the 55+ housing sector.” Still, it was difficult to overlook the pessimism in the first quarter. All three components of the 55+ singlefamily HMI posted decreases from the previous quarter: present sales dropped 12 points to 62, expected sales for the next six months fell by seven points to 68 and traffic

of prospective buyers sank 15 points to 34. The 55+ multifamily condo HMI remained even at 46, with the three components showing mixed results: present sales remained even at 50, expected sales for the next six months fell five points to 47 and traffic of prospective buyers rose two points to 37. But all four indices tracking production and demand of 55+ multifamily rentals took a downturn: Present production dipped four points to 50, expected future production dropped 16 points to 44, current demand for existing units decreased seven points to 64 and expected future production fell 14 points to 62. 1.2M Fewer Underwater Homes From One Year Ago

Nearly 5.5 million residential properties were seriously underwater during the first quarter, up from the 5.4 million level in the fourth quarter of 2016 but lower than the 6.7 million level in the first quarter of 2016, according to new statistics form ATTOM Data Solutions. Seriously underwater properties at the end of first quarter represented 9.7 percent of all properties with a mortgage, up from 9.6 percent in the previous quarter but down 12 percent year-overyear. The states with the highest share of seriously underwater properties as of the end of the first quarter were Nevada (18.9 percent), Ohio (17.1 percent), Illinois (16.5 percent), Louisiana (16.4 percent) and Missouri (14.5 percent). Among the nation’s largest metro areas, the biggest quarterly increase in the number of seriously underwater homes were found in Baltimore (up 26,974), Philadelphia (up 8,919), McAllen, Texas (up 7,746), Cleveland (up 7,631) and St. Louis (up 6,844). On the flip side, ATTOM Data Solutions reported that the first quarter had more than 13.7 million properties categorized continued on page 30

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n National Mortgage Professional Magazine n MAY 2017

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as equity richâ&#x20AC;&#x201D;defined as having the combined loan amount secured by the property is 50 percent or less than the estimated market value of the property. This represents 24.3 percent of all properties with a mortgage. The first quarter level was down from nearly 13.9 million equity rich properties representing 24.6 percent of all properties with a mortgage in the previous quarter, but was up by nearly 1.4 million from a year ago, when there 12.4 million equity rich properties representing 22 percent of all properties with a mortgage. â&#x20AC;&#x153;While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets of the housing market,â&#x20AC;? said Daren Blomquist, senior vice president at ATTOM Data Solutions. â&#x20AC;&#x153;For example, we continue to see one in five properties seriously underwater in several Rust Belt cities along with Las Vegas and central Florida. Additionally, close to one-third of homes valued below $100,000 are still seriously underwater. Several of the cities with the biggest quarterly increases in underwater properties saw a corresponding increase in share of distressed sales in the first quarter, creating a drag on overall home values, and in the case of Baton Rouge that increase in distressed sales may be in part attributable to the catastrophic flooding there in August 2016. Across the country, the share of seriously underwater homes was higher in high-risk flood zones.â&#x20AC;? Commercial and Multifamily Mortgage Originations Up Nine Percent

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Originations of commercial and multifamily mortgages were up by nine percent on a yearover-year basis during the first quarter, according to new data from the Mortgage Bankers Associationâ&#x20AC;&#x2122;s (MBA). However,

the first quarterâ&#x20AC;&#x2122;s origination levels were 27 percent lower than the fourth quarter of 2016. The year-over-year spike was fueled by the rise of originations in three sectors: a 40 percent year-over-year boost for industrial properties, a 22 percent upswing for health care properties and a 14 percent increase for multifamily properties; office properties saw a modest two percent uptick in originations. However, hotel property loans decreased by 40 percent while retail property loans declined by 23 percent. Among investor types, the dollar volume of loans originated for the governmentsponsored enterprises increased by 33 percent yearover-year while commercial bank portfolio loans increased 11 percent. But life insurance companiesâ&#x20AC;&#x2122; loans were flat year-over-year while loans originated for commercial mortgage-backed securities were down 17 percent. â&#x20AC;&#x153;Commercial real estate borrowing and lending started 2017 on much the same footing it ended 2016,â&#x20AC;? said Jamie Woodwell, MBAâ&#x20AC;&#x2122;s vice president of commercial real estate research. â&#x20AC;&#x153;Multifamily properties remain the key force behind overall originations trends, and the GSEs continue to drive multifamily originations. Matching broader investment themes, financing backed by industrial properties also picked up, while retail declined.â&#x20AC;? CFPB Alleges â&#x20AC;&#x153;Slipshod Practicesâ&#x20AC;? in Servicing

The Consumer Financial Protection Bureau (CFPB) has issued a statement claiming that some mortgage servicers were in violation of federal laws â&#x20AC;&#x153;by failing to provide struggling borrowers with legal protections.â&#x20AC;? In the Spring 2017 edition of the agencyâ&#x20AC;&#x2122;s â&#x20AC;&#x153;Supervisory Highlightsâ&#x20AC;? report, the CFPB did not identify which servicers were supposedly running afoul of the law, nor did it cite the depth and scope of financial stress created by these

actions. But the agency insisted that some servicers either failed to provide borrowers with information on foreclosure alternatives, prematurely launched the foreclosure process, mishandled escrow accounts and offered incorrect periodic statements. The CFPB also took student loan servicers to task for alleged problems in their business practices. “We found that some mortgage and student loan servicers are violating the law by failing to provide protections to borrowers,” said CFPB Director Richard Cordray. “Their slipshod practices are putting borrowers at risk of financial failure and we will hold them accountable.”

and educates students on avoiding debt, budgeting with intention and investing and building wealth. The curriculum is an easy-to-use, turn-key program that meets education standards and benchmarks in all 50 states and Jump$tart national standards. More than three million students have taken Foundations in Personal Finance curriculum nationwide. “When established early in life, healthy financial habits can make a monumental difference in quality of life. These habits would not be possible without powerful educational resources

like Ramsey Solutions’ Foundations in Personal Finance curriculum and nationwide initiatives like Financial Literacy Month,” said Mike Hardwick, president of Churchill Mortgage. “At Churchill, we’re dedicated to educating and helping people achieve financial freedom with the heart of a teacher. Providing this curriculum to these schools is our way of giving back and for these students, it is the first and most important step to building a strong financial foundation.”

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@MortgageNewsNetwork.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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n National Mortgage Professional Magazine n MAY 2017

In recognition of Financial Literacy Month and as part of its commitment to financial health and education, Churchill Mortgage is providing four high schools with Ramsey Solutions’ Foundations in Personal Finance, a full curriculum that teaches students how to manage their finances and build wealth to achieve a sound financial future. The high schools include: Brentwood High School (Brentwood, Tenn.), Greenwood High School (Greenwood, S.C.), Pine Creek High School (Colorado Springs, Colo.) and South Ridge High School (Beaverton, Ore.). According to the Council for Economic Education, only five states require high school students to complete a standalone semester personal finance course before they graduate, illustrating a greater need for financial literacy initiatives. A survey of more than 76,000 high school students (conducted by Ramsey Solutions) shows that high schoolers who take personal finance courses have a greater understanding of financial concepts. Launched in 2008 by financial expert Dave Ramsey, Foundations in Personal Finance is taught in one-inthree high schools nationwide

MAY 2017 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

The Renter Pool Is Growing: Dive in and Swim (and Sell) Your Way to Riches By Bubba Mills

Create “rent versus buy” events: Yes, you’ve heard about rent vs. buy over and over. But now there’s news on this front: A new Rent.com survey says 51 percent of Millennials are spending more than 40 percent of their annual income on rent. And 24 percent of Millennials are

Update your marketing materials and listings with a splash of visuals and video: Let’s face it, the print marketing materials simply don’t work like they used to. Today’s renters are younger and find their information online like practically everyone else. We now know marketing efforts need to be digital and include top-notch photography and video. To get renters off the fence, they need to be persuaded by what their ownership options are. Make them pop off the screen!

Connect with property

managers: Sure, you always want to rub shoulders with Realtors, but don’t forget property managers. Hanging with them is an obvious way to have access to a steady and fresh crop of potential buyers. I know many property managers who track lease dates and hit up renters 90 days before their leases are up with emails and other marketing materials reminding them their leases are expiring and explain the benefits of buying versus continuing to rent.

Stay up on the latest mortgages: What it all comes down to is affordability—can a renter truly afford to buy a home. That means mortgages. That also means you need to be on top of changes in the mortgage industry. Take time to learn the newest programs, and when you think you know it all, go right back to learning more. There’s always changes coming down the pipe, and the mortgage pro with the latest information will be the one with the larger bank account, too! So, you still in for the swim? You willing to put in the extra effort to attract and convert renters to buyers? E-mail me at Article@CorcoranCoaching.com and I’ll send you a free “Guide to Creating Buyer Urgency.”

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

n National Mortgage Professional Magazine n MAY 2017

willing to dish out an additional $400 a month just to continue in a rental. Run the numbers and that’s roughly $85,000 more home they can afford. You must become an educator in this scenario—add this information to your Web site, your e-mails, ads, etc. And use real-life examples and testimonials from past renters you’ve helped move into a home. But to get in front of renters, consider events: Happy hours, seminars, classes, etc. The days of mailers are long gone and simply getting lost with all the marketing noise out there. Live, faceto-face conversations can help you close the deal.

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ome on in. The water is fine. After all, it is summertime— always a good time for home sales. And this summer, you might find the water is particularly inviting. That’s because you have more people to approach, specifically renters. Sure, renters have always been a juicy target for mortgage professionals. But now they’re a bigger target. Get this: Fifty-two of the 100 largest U.S. cities have more renters than owners. Why? One reason is that the foreclosure crisis turned millions of owners into renters. Another reason: Demographic shifts—Millennials moving out of their parents’ basements and a rising Hispanic population. And there’s something else brewing that’s making the water even better: New home sales rose 5.8 percent monthly and 15.6 percent annually during the spring, and experts say that may cause builders to add new homes. That means better prices for those renters. In the meantime, analysts predict consumers—including renters—are also likely to take advantage of mortgage rates as they remain low. So how can you capitalize on renters and turn them into buyers? Here are a few tips:

MAY 2017 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

Pathway to Leadership By Gary Martell Jr.

consequences as a driving force to motivate their people. They convince their team that if they do not perform their role they can be easily replaced and failure will be on their shoulders. The other, and I believe the more sustainable and successful, is someone who leads through inspiration. This is where the leader is so passionate about their vision and the people around them that there is an attraction to the cause or vision. People not only follow this person, but they are inspired to do more than required for the good of the whole. There are many variations of these styles, and both styles require a variety of skills including strength, diplomacy, discipline and passion, just to name a few. The two styles get a team, group or company motivated

“Many leaders fail several times as they grow into leadership. How they handle and learn from their failures is what shapes them.” but do it in different ways. Just like there are different leaders, there are different people that are drawn to different leadership styles. Leading from power and force gets things done and does allow allegiance, but in many times, lacks long-term success and loyalty. Leading from inspiration allows other team members to feel part of the vision. This builds the longterm success and loyalty. As I said, very few leaders are born that way. Through life experience, interactions with other people and situations, a person can gain the positive attitude and stature of a leader. Many times, I see this happens gradually as opposed to waking up one day and announcing, “I am a leader.” I know several people in leadership roles who when asked how did you get here they would say, “It just happened.” The ability to take a vision, communicate it to

continued on page 44

n National Mortgage Professional Magazine n MAY 2017

others, and be able to influence and motivate them to achieve it, does not come easy. Some people have better instincts than others. All of us are blessed with a set of skills from birth. Some are mathematically inclined, some have language skills, others can paint or play music, and some have common sense or the ability to effectively communicate. We are all blessed with some combination of these abilities, but many of these skills need time and practice to be truly mastered. I have a saying that some people “just get it.” This could be in accounting, IT, general problem-solving or working through personnel challenges … they just get it. This means that they are able to analyze or understand a situation and know how to react, what direction to take, or simply what to do. It might also be called social instinct. If they “get it” in leadership skills, they have the best chance of being great leaders. Identifying the skills may be difficult. Not all people who have the skills are in leadership roles. At least not initially. They can be in almost any department. They may currently be in shipping, marketing, IT, origination or even underwriting, but odds are they are in most organizations. Some folks have the ability, but have not had the opportunity or coaching, to develop their talents. Some people lack the confidence to try, so they might need a gentle nudge. Based on life circumstances, you may have a potential leader that, because of other obligations, may not have had the opportunity to grow into that role or have been limited to the time they could allocate to leadership activities. Those people can be just as important and effective in a lesser leadership role, but will perhaps arrive at some time in the future. We should all be careful who we believe are leaders. First, many people mistake a good supervisor or manager as a good leader. Although they

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eaders come in many shapes and sizes. Even though we may say someone is a born leader, very few, if anyone, is truly born a leader. That may happen if they are born into a royal family, which may make them a leader in name, but not necessarily in reality. People may be born with some of the tendencies, attributes, instincts or skills required of a leader, but they will still need to refine or practice those skills. It is only after we acquire the knowledge and desire that we have the ability to lead. When we take the knowledge, experience and practice, eventually through trial and error, people can become leaders. Many leaders fail several times as they grow into leadership. How they handle and learn from their failures is what shapes them. Not only is there a variety of skills required, but there must also be a desire or drive. Many people are not driven immediately. It could take a maturing process or a triggering event that enables a person to be driven toward a vision. The skill sets are also acquired in many ways, some through formal education, some from social interaction, and the school of hard knocks. In any event, if you look back historically, leaders have a variety of backgrounds, upbringing and life paths. A leader is a person who has a vision, a goal, and many times the ability to see things from a unique perspective. They need the ability to effectively communicate their goal and vision for the future in such a way that their people can also believe in and relate to their goal. Finally, they are able to achieve this vision because they motivate, inspire and at times even force others to work toward that vision. There are two types of leadership styles and multiple variations of both. One that leads from a power or strength position and the other that inspires others. The first is a leader who leads strictly by force. A dictator would be the extreme example of this. In our business, that is obviously not the case. There are however, leaders that use negative

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THURSDAY

Modernizing Appraisal Regulation: Reducing Compliance Costs

By Jim Amorin, MAI, SRA, AI-GRS

ne of the biggest compliance challenges for commercial and residential mortgage lenders and appraisal service providers is the application and renewal of appraisal licenses. Not only do appraisers have to keep track of continuing education requirements in each state, but new wrinkles in licensure requirements, such as state-by-state background checks, have imposed new and frustrating burdens to the entire service chain in recent years. This is of acute interest to many financial institutions because mortgage financing has more of a national footprint today than it did 20-30 years ago. As financial institutions compete on a regional and national basis, service providers expand their coverage areas to align themselves with the needs of their clients. Further, many banks and mortgage companies maintain appraisal departments staffed by licensed appraisers. In fact, eight percent of all appraisers are employed by financial institutions. One can only imagine what it is like to maintain licenses in all 50 states, as many institutional appraisal departments do. Of course, many appraisal service providers also maintain a variety of appraisal licenses and certifications, depending on their service area and specialties. Today, nearly 25 percent of all appraisers hold licenses in more than one state, up sharply in recent years as demand for appraisal services has outstripped supply in some markets and appraisal service providers appear to have expanded operations in response.

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Many financial institutions also often require portfolio valuations of properties located all over the country, which continuously requires appraisal service providers to maintain license application and renewal compliance operations. Lastly, appraisal management companies also must maintain registrations at the state level with all but seven states now requiring registration. Last November, the House Financial Services Committee Subcommittee on Housing and Insurance held a hearing on “Modernizing Appraisals: A Regulatory Review and Future of the Industry.” At the hearing, the Appraisal Institute reiterated a suggestion it first made in 2011 that has been gaining traction within professional appraisal circles: Realigning the appraisal regulatory structure to a nationwide licensing platform or portal such as the Nationwide Mortgage Licensing System. The NMLS, and other systems like the National Association of Registered Agents and Brokers, offer solutions to a common problem found in industries whose markets are national in scope, but contend with states’ rights to regulate commerce under the 10th Amendment of the United States Constitution. Such licensing platforms enable national industries to create efficiencies with one of the lessefficient aspects of business management, and also may provide a guide for the appraisal profession to follow. Realigning appraisal regulation will require an act of Congress, as the current structure which was enacted in 1989 under the Federal Financial Institutions Reform, Recovery and Enforcement Act, did not consider licensing efficiency

across state lines as the mortgage origination and insurance industries did in recent years. However, such a move is not as complicated as other industries in that appraisal has had a functional system of state licensure for more than 25 years. The mechanics of processing licenses is relatively straightforward in appraisal—at least as compared with mortgage origination, which operated largely without state registration requirements until passage of the Secure and Fair Enforcement of Mortgage Licensing Act of 2008. Where real estate appraisal greatly differs from the mortgage origination and insurance industries today is in relation to the federal role in its regulatory structure. The Appraisal Subcommittee is a federal agency—a component of the Federal Financial Institutions Examination Council comprised of the federal bank regulatory agencies, the Federal Housing Administration, the Federal Housing Finance Agency and the Consumer Financial Protection Bureau. The Appraisal Subcommittee conducts audits of state appraiser regulatory agencies for compliance with FIRREA requirements. This puts the federal government in the unusual position of auditing sovereign state agencies. No similar federal agency is found in mortgage origination or insurance. For example, no “Mortgage Licensing Subcommittee” or “Insurance Producer Subcommittee” exists within the federal superstructure. So, in that sense, the Appraisal Subcommittee is an anomaly as the model never has been replicated by another industry. In contrast with the NMLS, a federal role exists but it is one of a backstop authority. Only if

state licensing agencies fail to carry out their state registration requirements—which has not occurred—has Congress authorized a federal agency to step in to stand up a federallybacked licensing program. One might argue that the Appraisal Subcommittee could be authorized by Congress to set up a nationwide platform, as it already maintains the National Registry of Appraisers and is working to establish a National Registry of AMCs. The Appraisal Foundation, a non-profit organization that carries FIRREA authorizations for appraisal standards and qualifications testified at the November hearing that it was beginning discussions about establishing a nationwide licensing system that could utilize funds from the Appraisal Subcommittee. However, this assumes that maintaining the current regulatory structure that involves direct federal oversight is in the best interests of users of appraisal services and the appraisal profession itself. At the November congressional hearing, the Appraisal Institute raised its concerns about the “layering effect” of new rules and regulations that negatively have impacted the appraisal profession, the appraiser population and the bottom line for practicing appraisers, in part, because of the existence of the direct federal role. U.S. appraiser population estimates, compiled for the past decade by the Appraisal Institute confirm that since 2007 through the end of 2016 some 25,000 real estate appraisers have left the business. The long-term trend is one of continual decline in the number of licensed and certified real estate appraisers in the U.S., with an annual decrease of

resetting of the federal role—may offer the appraisal profession just what it needs to curb recent industry population trends. Such a move dramatically would reduce compliance costs and allow licensees “one-stop-shopping” for licensing applications. It also would help establish a strong foundation for practitioners to work with users of appraisal services on other important matters, such as technology integration, enhanced and targeted services and a renewed energy and focus on professionalism over compliance.

Jim Amorin, MAI, SRA, AI-GRS, is the 2017 president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. Based in Chicago, the Appraisal Institute has nearly 19,000 professionals in almost 60 countries.

n National Mortgage Professional Magazine n MAY 2017

statutorily restricted from developing or delivering education to practitioners to help maintain neutrality within their respective industries. In contrast, FIRREA imposes no comparable limitations on either the Appraisal Subcommittee or The Appraisal Foundation. Clearly, the appraisal profession is in need of a fresh look at its regulatory structure, as compliance costs have increased while the industry continues to shrink. Rather than add layers to an outdated system, a realignment to a system like the NMLS—and a

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nearly three percent. A broader analysis suggests that the number of appraisers could decrease at a comparable or higher annual rate over the next five to 10 years. There are many business dynamics involved in these recent declines, but government regulations clearly are part of the problem, too. One does not have to look further than a recent proposed rulemaking issued by the Appraisal Subcommittee to understand why some are pursuing other career opportunities, particularly in residential appraisal. That notice entitled, “To Implement Collection and Transmission of Annual AMC Registry Fees” proposes to assess AMC companies $25 for every appraiser on the current panel of approved appraisers. Unless prohibited by state law, it is highly likely that these AMC registry fees would be passed through to practicing real estate appraisers who already have paid licensing registry fees to the Appraisal Subcommittee and who also are facing severe economic strain. As many appraisers work for multiple AMCs, they would be forced to pay multiple AMC registry fees to continue doing business with most major mortgage lenders. The notice issued by the Appraisal Subcommittee did not consider

the negative impact the rule would have on small business appraisal practitioners, nor how the money would be used beyond establishment of the AMC registry; only that it would further existing authorizations. The rule, as noticed, clearly would result in a multi-million dollar transfer from small business appraisal practitioners to an expanded federal footprint. Other problems resulting from the current regulatory structure include newly imposed background check requirements in many states that were established merely in anticipation of a need to be responsive to federal audit requirements. This has imposed a frustrating compliance burden on appraisers carrying licenses in multiple states, as background check requirements can hinder appraisers even with simple tasks like applying for a temporary practice permit or a reciprocal license. On this point, the appraisal profession has faced a nearly constant rate of change, from a bevy of rulemakings to constantly changing licensing requirements and standards obligations— appraisers are in need not only of regulatory relief, but more stability from their regulatory environment. One also might argue that other entities may be able to establish a nationwide licensing platform, but this ignores the clear efficiencies that would exist in integrating with an existing platform like the NMLS as well as a willingness to accept limitations in other domains within the profession. For instance, both the NMLS and NARAB are

Whistleblowing

MAY 2017 n National Mortgage Professional Magazine n

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By Andy W. Harris, CRMS

s many know, the Consumer Financial Protection Bureau (CFPB) has a clear and simple e-mail industry professionals can use to report what they believe to be illegal activity from competitors or others (Whistleblower@CFPB.gov). From a recent meeting in Washington, D.C., a CFPB official stated the two largest issues are Section 8 RESPA kick-back violations and violations in originator compensation laws. This certainly does not surprise me, as I agree that these are the two largest violations that exist in the residential primary mortgage market today. You can report these violations anonymously or participate by sharing your contact information if applicable. The CFPB encourages the industry to report any illegal activity from competitors and present or past employers (which also seems to be a large source of these submissions). I would assume

that the level of the allegation and size of the company involved for consumer impact would warrant the level of response. I am sure it will not be clearly released, but I would be interested to see how many enforcements were made as a result of whistleblower exposure. Certainly there is not enough boots on the ground when it comes to regulators with a larger volume of these submissions, but we also don’t want to see any unintended consequences or unfair treatment and regulation. However, when it comes to Section 8 RESPA violations and illegal kick-backs that steer consumers into higher-cost loans, I believe this is the largest consumer harming activity that requires those participating to be exposed and accountable. If consumers were refunded as a result of enforcement or educated about these laws, this would help them not fall for these scams in the future. Imagine if every ethical originator and those with

integrity collectively as a group gathered data on the specific real estate companies, mortgage companies and builders violating these laws. If the CFPB was to receive hundreds of e-mails at once from numerous sources exposing each violator, I can only imagine our industry would change for the better and these behaviors would immediately stop. This is not a matter of being a ‘rat,’ but instead protecting our trade and the consumers we represent. What are your thoughts? Have you exposed anyone and want to share that experience anonymously? What are the

good and bad things associated with whistleblowing and is there a fear of assumption without supporting evidence? Share your stories and I can share in next edition if we have enough content. Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup .com. These can be confidential or your name and company can be referenced if you wish. You can also join the Facebook group by searching for “OrigiNation.”

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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.

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NAMB Announces United Wholesale Mortgage as Double Diamond Industry Partner NAMB—The Association of Mortgage Professionals has announced that Troy, Mich.based lender United Wholesale Mortgage (UWM) has become NAMB’s first Double Diamond Industry Partner under the association’s recently re-launched Industry Partnership Program. “United Wholesale Mortgage is a big supporter and advocate of independent mortgage brokers and NAMB,” said Fred Kreger, president of NAMB. “We value their partnership, and this Double Diamond Industry Partnership, NAMB’s highest level of sponsorship, will help the association deliver more resources and platforms to our mortgage broker members so they can most effectively grow market share.” UWM, the nation’s top lender for the past two years, also committed $500,000 to NAMB in 2016 to help the association launch its new KickStart program and become a founding sponsor of the program. NAMB KickStart is an initiative aimed at helping entrepreneurialminded loan originators defray some of the costs of opening their own independent mortgage broker shops by providing approved applicants grants in amounts up to $10,000. “Our partnership with NAMB and KickStart, along with all of our efforts to streamline the loan process, have been designed to accelerate the success of mortgage brokers nationwide and educate borrowers on why brokers are the best option,” said Mat Ishbia, president and CEO of UWM. “It’s an honor to have this prestigious partnership with NAMB.”

Angel Oak Mortgage Adds 12 New AEs Nationwide

As the first quarter of 2017 comes to a close, Angel Oak Mortgage Solutions is continuing their aggressive growth with the addition of 12 new account executives. Coming on board in February were Eric Prange in Connecticut and Tracy Colin in Georgia. Recognized as the leaders in the non-agency space, Angel Oak added seven additional AEs in March, with the addition of Cynthia Buckman in Tennessee, Bill Parnell in Ohio, Brian Head and Christopher Pion in California, Frank Nolin and Scott Friedberg in Texas and Mike Fehrenbacher in Illinois. “Angel Oak is a true visionary in the non-agency space,” said Buckman. “The industry needed common sense underwriting and proprietary loan products in this new era of mortgage lending.” Parnell said, “I am excited for the growth opportunities and the ability to work with an industry leader like Angel Oak.” With aggressive growth plans for 2017, Angel Oak is continuing to hire AEs in markets across the country and underwriters/support staff in their Atlanta headquarters. “In 2017 we have continued to see a tremendous increase in demand for non-QM products,” said Tom Hutchens, SVP of Sales and Marketing for Angel Oak Mortgage Solutions. “We’ve also seen a similar increase in the quality of the applicants we have for our AE positions. We anticipate these new

AEs will immediately bring an extraordinary level of service to our geographic footprint across the U.S.” Texas Capital Bank Implements DocMagic Solution for eWarehouse Lending

DocMagic Inc. has announced that Texas Capital Bank has implemented its Total eClose solution, enabling the bank to function as an eWarehouse lender. Texas Capital can now accept and fund eNotes from its lender customers that want to drastically speed up the process of closing and selling loans. Total eClose is a single-source, centralized platform that provides all the necessary components to enable a completely paperless digital closing. Texas Capital Bank is a provider of warehouse credit facilities to fund mortgage origination and acquisition. “It’s very rewarding to support Texas Capital Bank as they move forward and break ground as an eWarehouse leader,” said Dominic Iannitti, president and CEO of DocMagic. “In this industry, it’s forward-thinking, tech-savvy organizations like this that thrive, set the pace and reach their goals. They understand the fundamental role that advanced technology plays in their—and the industry’s— progress. We look forward to collaborating further as we help drive true end-to-end eMortgage adoption.” Texas Capital Bank recently

funded its first eNote with a key lender client using DocMagic’s eMortgage technology suite. The eNote was instantly delivered to the bank, registered with MERS, and securely stored in DocMagic’s eVault. They completed the entire transaction electronically and transferred the eNote to Fannie Mae in minutes, rather than days. “DocMagic’s eClosing and eMortgage solutions have provided Texas Capital Bank with the tools necessary to incorporate the funding of eNotes into our everyday operational procedures,” said Donnie Martin, executive vice president at Texas Capital Bank. “We believe the digital mortgage revolution and acceptance of eNotes will continue to grow. We are pleased to have partnered with DocMagic to build out the infrastructure needed to support the eNote funding process at the bank, which in turn supports the trend towards digital mortgages. Matthew Keyworth to Lead Castle & Cooke Mortgage’s New Consumer Direct Team

Castle & Cooke Mortgage has announced the launch of its new Consumer Direct team, designed to improve retention of clients in the company’s expansive servicing portfolio and ensure the mortgage needs of all Castle & Cooke Mortgage’s current borrowers are being met. In addition to portfolio retention activities, the new Consumer Direct team will originate loans to consumers across Castle & Cooke Mortgage’s nationwide footprint. With loan originators licensed in all states in which Castle & Cooke Mortgage does business, the team

is able to accommodate clients across the country, providing them with access to conventional, FHA, VA and USDA purchase and refinance loans, renovation loans, energy-efficient mortgages, zero downpayment options and other loan programs. The new, rapidly-growing team of highly experienced loan originators will be led by Matthew Keyworth, who joined the company in late 2016 as managing director of Consumer Direct Sales. Matthew brings more than 15 years of mortgage industry experience working for national lenders, most recently serving as vice president of retail sales and channel management for PennyMac. He has overseen the funding of billions of dollars in residential loans and helped other call centers and consumer direct groups grow exponentially during his career. “Matthew’s experience in mortgage servicing portfolio defense and his familiarity working with multiple departments to improve business processes and ensure an optimal customer experience made him the ideal choice to lead our Consumer Direct team,” said company President and COO Adam Thorpe. “His leadership and the excellent team of talented originators behind him will make great strides toward Castle & Cooke Mortgage becoming an industry leader in both purchase and refinance business.”

Mortgage Professionals to Watch l REMN Wholesale has added David Margulies in the role of director of national sales of Financial Institutions and Strategic Alliances. Margulies has more than 30 years of experience in the mortgage industry. l Primary Residential Mortgage Inc. (PRMI) continues to grow its footprint in Maryland by announcing the opening of a new brick-and-mortar branch located in Severna Park, Md. under the management of Kyndle S.

Quinones. She is joined by Genie Bapisteller, head processor; Carolyn Rose, loan officer assistant; and Sara Tinker, paralegal. l Mid-Island Mortgage has hired several new employees as part of its larger corporate expansion initiative, including Stacey Canderelli as director of marketing; Christopher Ostrowski as director of business development; Maria Estrada as senior loan officer; Leander Nyack as a loan officer; and Kimberly Benson as loan continued on page 59

n National Mortgage Professional Magazine n MAY 2017

New American Funding has expanded in the Midwest region with its latest branch in Naperville, Ill. This newest branch marks the second Chicagoland grand opening for New American in six months. The Naperville branch will be a fullservice location that caters to the residential mortgage needs of local consumers and real estate agents. It will offer a complete spectrum of purchase and refinance options to the Chicago metropolitan housing market. Jose Rincon, who has been a mortgage professional in that community for more than a decade, will serve as the Naperville branch manager. Rincon is a top-producing loan originator who ranks 24th on the National Association of Hispanic Real Estate Professionals’ (NAHREP) Top 250 Latino Mortgage Originators list. “We’re excited to be a part of New American Funding’s expansion in the Chicagoland area,” said Rincon. “We look forward to

with our second-to-none service.”

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New American Funding Continues Midwest Expansion

growing with an industry powerhouse that integrates innovative technology with superior customer service to provide a pleasant experience to all of our clients.” Rincon will be joined by an experienced mortgage team, who will service consumers in Chicago’s western suburbs. “We’re thrilled because this location has been long awaited,” said Hamid Hamrah, New American Funding Regional VP. “We look forward to interacting with the members of the community and finding out how we can provide local homebuyers

pathway to leadership

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MAY 2017 n National Mortgage Professional Magazine n

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may share some of the same qualities or skills, managerssupervisors are not always good leaders. Supervisors and managers are more projectdriven. They are focused on the more granular tasks and much of it is the day-to-day supervision of a project or people. Most of them are great doers but they do not have or see the vision. Elevating these people to leadership roles can lead to an organization being stale with its growth and ability to see the necessary changes. In our industry, an organization will only survive long- term if the leaders have the vision and ability make the changes necessary to get there I am not saying that these people cannot be great leaders because many of them can. I do see some organizations make the mistake of promoting these people simply because they have been there the longest, are able to get projects completed, or have the most expertise in a specific area. There might be other incentives for these folks, but they may not be best suited for a leadership role above manager or supervisor. Remember, a true leader is setting the goals or vision and inspiring others to see it through. Many people in sales are viewed as leaders because they are outgoing and engaging. Those are great qualities for a sales person and may be helpful for a leader, but are not a requirement. The advantage successful salespeople have had is that they are used to putting ideas out there and influencing others to either buy or commit to certain ideas. A great leader may also engage or hire a sales team to communicate or sell their vision. If a leader can inspire a sales team to see and embrace their vision, then they will help broadcast or communicate it to the organization. Other characteristics that would-be leaders have is strong

continued from page 35

character, trustworthiness, positive attitude, the ability to think outside the box and create an emotional bond. Many of them have a passion to develop others. If you have potential leaders in your organization, they should be encouraged to test their skills. They should be given projects with limited nonnegotiables, so you can see how they accomplish them. See what they can do with limited instructions. How someone handles failure and success are both important to growth as a leader. A future leader may not know they have those skills unless they test them. All companies should constantly be investing in their personnel at all levels to provide opportunities to grow. Many of the supplemental skills can be obtained from sources outside the company. Some leaders have the ability to lead but lack in some common areas like time management, conflict resolution or delegating. Our organizations and the industry need to fill the leadership roles that are being vacated by an aging population. It is incumbent on all of us to identify, recruit, cultivate and develop our existing talent pool. Many of them will need time, experience and guidance to hone their leadership skills. We need to inspire them to grow and contribute, not only to our prospective companies, but also to the industry as a whole. As we go into this next generation of lending, technology and competition will create unique challenges. There must be a strong vision of doing the right thing, expanding homeownership possibilities while being vigilant to safeguard against those that would take advantage of our industry and the homeowner population that we serve. Strong leadership is not a born characteristic, it is something we as a village must foster.

Gary Martell Jr. is co-founder and president of Mountain West Financial Inc., and has been in the mortgage industry for more than 30 years. He oversees the origination process, including production, underwriting, quality control, compliance and investor relations.

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Lykken on Leadership

Three Reasons Why You Should Work Toward Building a More Efficient Organization BY DAVID LYKKEN

MAY 2017 n National Mortgage Professional Magazine n

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anagement guru Peter Drucker is famous for most poignantly highlighting the difference between effectiveness and efficiency: “Effectiveness is often referred to as doing the right thing, while efficiency is doing things right.” Another wellknown personality in the leadership world, Stephen Covey, draws a distinction between the two with an illustration. Suppose you are trying to climb a wall. You construct the sturdiest, most reliable ladder and prop it up against the wall. It gets the job done; you climb the wall and reach the other side without any issues. You are efficient. However, if you go through the process only to realize at the end that you’ve climbed the wrong wall, you aren’t effective. Efficiency is climbing the wall quickly; effectiveness is making sure it’s the right wall in the first place. I agree wholeheartedly with this assessment of the “efficiency vs. effectiveness” debate. Before you try to do things quicker and with less mistakes, you’ve got to make sure you’re doing the right things in the first place. Clearly, strategy must always precede execution. That being said, I

“Effectiveness is often referred to as doing the right thing, while efficiency is doing things right.” think this “effectiveness is more important than efficiency” mantra has done us a great disservice in business. There has been a backlash against being an efficient organization, because people often assume it’s either one or the other—if you focus on efficiency, you cannot also focus on effectiveness. I would disagree. It is entirely possible to develop a robust and effective strategy and then subsequently work on making the nuts and bolts more efficient. Of course, we’ll always need to reexamine our strategies to make sure they’re still valid but, in the meantime, we can always work toward greater efficiency. Here’s the thing: The market is more competitive than ever before. Competitive pressures have driven organizations across all industries to become more effective in their work by necessity. If companies don’t have a reasonably effective approach to serving their customers, they will quickly be eliminated from the competition. These days, it almost seems as if being effective is table stakes

… it’s the cost of entry that everyone must pay just for the opportunity to compete. So, if all of your competitors are just as effective as you are, what can you do to get ahead of them? In the current marketplace, success is achieved on the margin. In other words, success is achieved by becoming more efficient. In the mortgage industry, we face this challenge to perhaps an even higher degree. Business is won or lost by the slightest variations. It could show up in the form of a slightly better rate, but it’s more than that. The competition has just slightly better response time, slightly better follow-up, slightly better organization, slightly better customer service—the list goes on and on. Most of us in the mortgage industry lose business not because we’re really bad but rather because the competition is just slightly better. In other words, we’re losing the battle on efficiency. Perhaps you have gotten sucked into placing too great an emphasis on effectiveness and have let the more detailed

operations in your company go unchecked. If you’re losing by just a little here and there, that probably describes you. Placing a greater emphasis on becoming more efficient can completely turn things around for you. Here are three reasons why you may want to place a greater emphasis on efficiency in your organization. Efficiency improves service levels Are things taking too long to get from one department to another? Are there lapses in communication that cause confusion about who’s responsible for what? Is there inconsistency with regard to commitments made both internally and externally? All of these are efficiency problems. When you improve your efficiency, service levels will naturally go up. In the mortgage industry, everyone tends to be in a non-stop flurry of motion. If we don’t take the time to refine our processes, things will naturally become chaotic. Developing a workflow map, clearly delineating

responsibilities, and setting reasonable goals all contribute to reducing that chaos. Little by little, one step at a time, making your process more efficient can give you the edge you need to oust the competition. How well are your current processes delivering on your customers’ expectations? Are you measuring your efficiency with your service levels? That’s one important thing to do if you really want to improve: track what you’re doing and how well you’re doing. Develop some key performance indicators that you can use a proxy for success. If you don’t have some hard, concrete numbers to be accountable to, then “efficiency” will just be an abstract concept. Make sure you are measuring something that impacts your business. Work on getting better at those Key Performance Indicators (KPIs), and I guarantee you’ll see your service levels improve dramatically.

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

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Efficiency reduces costs Finally, the most obvious reason for placing greater emphasis on efficiency is the oldest reason in the book: Greater efficiency reduces costs. As leaders in the mortgage industry, this has got to be one of our top priorities. Especially in a competitive environment, reducing costs increases profits. When business is slow, become more efficient can help you stay afloat just by gaining the cost savings from fixing the leaks in your business processes. You know what they say: A penny saved is a penny earned. Increasing profits may not seem like the most inspiring thing to think about—it’s not something that the public really likes to think about. They want to hear about how you’re “giving back to society.” That’s all fine a good, but first things first. Profit is the engine the drives business. As leaders, we are accountable to our investors, to our employees, to our customers, and to society at large. If we cannot keep the engine running, then we let all of those stakeholders down. If we can reduce costs, boost profits and make our companies sustainable, we’ll be more equipped to make a greater contribution to the industry and to society at large. And that all starts with efficiency. So, how about it? You’ve gotten to the point where you are effective. You’re doing the right things, but are you doing those things right? How about placing a greater emphasis on efficiency? You never know quite how big of a difference it can make.

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Efficiency builds morale Now that we’ve gotten the obvious benefit out of the way, that’s talk about the more intangible benefit: Improving the organizational culture. When people think of efficiency in business, they often think that it makes work more boring or unfulfilling for employees. Systematizing and optimizing tasks, they argue, will turn employees into mindless machines without any real human autonomy. Efficiency necessarily imposes on the human freedom employees would like to feel in their work. Is this true? Well, I would agree that you could go overboard in micromanaging people. There does need to be room for creativity and autonomy. However, if you ask most employees what stresses them out the most in their work, I don’t think it’s going to be the lack of autonomy; I think it will more likely be the lack of direction. People often fail to understand what’s expected of them, when things are due, and why they’re assigned the tasks they’re

assigned. Greater efficiency takes the pressure of uncertainty out of work. When people know what they’re responsible for and can clearly see how their contributions fit in with the bigger picture, they will naturally become happier in their work. Efficiency improves morale by reducing the confusion surrounding the lack of clarity employees experience in their work.

What’s Ha BY RALPH LOVUOLO SR.

oday, I am sending a series of e-mails in date order that I’ve exchanged with a new client. He is experienced, with 15 years in the mortgage industry. He is a mortgage broker and has a full-time marketing assistant (Cat) who is devoted exclusively to marketing his brand, setting meetings, signing up brokers to utilize the one online product he is using. The marketing assistant is extremely adept at using the Internet and has a well-rounded knowledge of Twitter, LinkedIn, Facebook and more. The broker is operating his business with limited dollars, but is keyed on growing his business. Most of his business this past five years has been from just one real estate broker, who has monopolized his time and makes unreasonable requests of him (they think he is their servant). He is hell bent on growth and efficiency of time. I thought it would be good for your readers to see how some people think, what changes are being made and to see what is actually being done in the “war room.” I am extremely proud of his advancement in just two weeks and I haven’t even charged him a dime. This issue focuses on what is “trending” in the industry so to speak. What follows is an actual set of information that all your readers will find really interesting and very helpful. More than that, they will find it difficult to associate with because most of them don’t have a coach/mentor who cares and pushes them to succeed as they say they want. There are many wonderful ways to originate business. More and more Millennials want to use the Internet to generate business. Although this strategy has its merits for those who have a fear of one-on-one conversation, having been raised with a smartphone in their hands and believe that software is the answer to all their needs, we’re not there yet. Buyers do spend a great deal of time searching the Web before calling anyone and being first to capture their attention is definitely important. I know of ways to accomplish these are available

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The

Mortgage

Godfather

Happening Today and I’m sure that many readers will find those companies advertising here in this issue. But with there being all the ways to generate the loan application, there is still the need for personal contact and actual words of advice being transmitted (spoken) to the prospective buyer by the mortgage loan officer.

April 6 This message was on my computer when I returned to my office. I had spent about two hours, face to face, discussing his issues, his future, his wants and needs. I had opined on some of those issues, but for the most part, we were establishing my value and exploring his future and present marketing strategy or lack thereof. There was much back and forth that day. It was all meant to help HIM and HIS business focus. He already had a coaching contract with another company that he had interaction with every other week (only by phone). He told me he would cancel the existing contract and begin actual coaching with me because he was looking for someone who knew the mortgage industry and understood better how to work with referral sources like real estate brokers:

That same day, he sent the following to his marketing assistant with a copy to me:

I added the following: You might want to add that she avoid any other contacts for the time being. Also ask her to set up groups of e-mail lists. See attached procedure you can give her. Ask her to read my book on Amazon and sign up for my videos and the other stuff I’m sending you to sign up for. FREE stuff. GREAT stuff.

Attached were six articles and instructions on how to build a business plan. I wasn’t done, I sent him this link: Entrepreneur.com/Article/235054, an additional article on the eight elements that a business plan needs. April 13 Me: BTW, I was talking to an old client today who uses Facebook in connection with ListingBooster to produce massive leads. Maybe Cat will know what to do. Him: Sent to all his Realtors. “It is literally10x harder to find new prospects than just to make sure our current and past customers use us again in the future.”— Amanda Johns Vaden, author of Selling, Quick Tips for Growing Your Income and Exceeding Client Expectations. Let me know if I can help you or anyone you know with a home loan. April 14 Him: We use Facebook right now, but we can use any tips we can get. Right now, when we have a listing lead from a Realtor, Cat calls the sellers and asks the sellers to share our Facebook post of their house with their friends and families. Plus, we post it on our business page, which is associated with all major groups around us (church groups, PTA, single parents, schools etc.) April 15 Cat: Ralph. That’s exactly what we’re doing. I use the “Boosted” ad from ListingBooster to post on Facebook and Craigslist. That means the Text Acquisition tool to the 878787 number IS not only displayed on the rider, but on those identical postings that go on Craigslist twice a day and FB twice a week. When I post to Facebook, I also tag each Realtor in the post so it shows up on their feeds as well. Me: ABSOLUTELY PERFECT! That is similar to what the guy I spoke with in Oregon is doing. Then he calls the broker to tell them what he did and then he has something to discuss rather than rates and also shows that he is a partner in continued on page 56

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Cat: Please add this to your daily to do: 1. Get one testimonial a day 2. Send out 50 friend requests on my LinkedIn page. The types of people you are looking for: Lawyers, accountants, financial planners, insurance companies/agents 3. Contact FSBO

April 7

As part of an e-mail I send to all my clients and people I want to coach, he received this: Someone I love attended a financial forum in Sacramento While I was with him, I noticed a large photo of lower Manhattan today. They had a panel of four very successful Realtors who and commented on it and my were asked about MLOs they like connection with many of the to do business with and why. I buildings in the photo. One think every LO should listen to structure that was predominant this. You don’t need to watch the was the iconic Flatiron Building. first 44 minutes. I intend to do Originally the Fuller Building, the Flatiron Building is a triangular 22- multiple videos on this stuff (Facebook.com/SacRealtor/Video story steel-framed landmarked s/10154716073696747). building located at 175 Fifth In response to my mass e-mail, Avenue in the borough of the producer of my videos sent Manhattan, and is considered to me this: Coming from a deep be a groundbreaking skyscraper. technology based background, it seems to me that common I sent: concept among RE agents is to It is possible that the pic could have been taken from the Empire be informed, but not treated with State Building. They are 10 blocks template e-mail loaded with information. I heard this in NAMB apart. East seminars where many wholesale lenders are starting to His reply: provide brokers with portals Possibly. I am reading your book where they can clearly see the now … progress of each loan. I think this is the future, and LOs should have Me: something similar for RE agents. Thank you! I’m not saying to take the Attached for you to complete personal relationship out of the and return to me. equation, but offer your Realtor a My Goals Form for managers portal with current progress and and MLOs. You can use them to projected dates for all parts. help write a business plan. It will take about 30 days to create a I responded: strong business plan. Take your time, think it out. Attachments: (1) Excellent. I think this sort of software has been available for Friends and Family E-mail quite some time. procedure; (2) A Planning Form that basically asks what ways you April 11 want to use to get business; and Him: (3) My list of ideas. You can pick Can you send me a sample some from this list that you want business plan for a mortgage me to explain or have your own. office? Liberally using Cat to get a lot done will free you up to get out to see people. And I still believe that Me: I’m looking forward to work with although everyone wants to use you. I can tell you have what it social media and apps to find takes to be a real success. We’ll customers, your referral sources work on your reluctance item (to require some hand-holding with ask Realtors for business, face to the goal of a long-term face) and strengthen your relationship. Here is the goal with every new checkbook. Here are a couple of referral source. You want to get to things that you can use to help remind yourself of what you need the point where when they have to refer someone to you they say. to consider to build a great business plan. Please take the “Call this mortgage broker. He’s time to read all this. I know it is a the best I’ve ever known: Professional and caring. He’ll take lot. I promise I know. But you’re no longer dealing with anyone care of you and your mortgage who doesn’t only understand your needs. He’ll always give you the business, and I have helped many best deal possible and beyond

people build their businesses. It takes time and great effort. But the rewards are awesome.

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“Thanks for taking the time to meet with me Ralph. I look forward to working with you.” Regards

(The procedure is on how to send e-mails to friends and family. There is not enough room here to include it, but if you want it, send me a request).

question, he’ll get you the money to buy that home you love so much.” Additionally, I attached (4) My contract; and (5) a Goals Form for Realtors. If you need anything else, just ask.

s leadership the same as managing? Does being a good leader equate to being a good manager? While I believe there are tenets of both that are similar and at times overlap, these are really two different skill sets. Differentiated leaders have the ability to flex between both skill sets effectively. In order to understand the similarities and disparities, first we must understand what they both are, and by extension what they are not. In the context of this article, we will focus on the peoplemanaging leader.

Management Management is defined by the Oxford Dictionary as “The process of dealing with or controlling things or people.” This is being more driven around a process of oversight of how something is accomplished. At the core of effective management is the ability to deliver, either via process, people or both, a product that meets quality standards with a defined timeline. Managing is more about reducing or removing errors, while maintaining or increasing productivity.

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Leadership Leadership is defined by the Oxford Dictionary as “The action of leading a group of people or an organization.” Leadership is about engaging people with a vision or target by which they can align themselves and their actions to. Effective leaders set out the course for enrolling the hearts and minds of the group such that they want to give their 100 percent effort—that they are aligned to a higher purpose than just getting the base tenets of the job done. Strong leaders are focused on maximizing potential at the individual, team, department or company level. It is this focus on leveraging others in a coordinated fashion that creates the environment where employees want to be a part of something larger than themselves and by extension, freely give of their discretionary effort.

Leadership vs.

Why is this important? Direct management, supervision and oversight is extremely important, however it is focused on the transactional event. Organizations must deliver quality products timely. High-performing teams have the clarity of purpose, defined ownership and accountability that drives them to embody the leader’s vision. Discretionary effort is defined when the employee goes above just getting the job done; rather wants to see it done well and engage without being told to do so. High performing teams will give their discretionary effort because they are operating not just for themselves, but the good of the whole. The leading manager is one who is able to flex between the responsibilities of the tactical manager/direct supervisor and the strategic visionary leader. Typical manager Given this line of thought around the role of the manager, one must question where organizations typically find their next manager. In many cases, organizations simply take the most qualified technician or practitioner and then promote them into the role of manager. Once the employee has been promoted, often they are left to their own devices with little or no training as to how to manage. This technical expert will most likely revert to what they are the most comfortable with, which is personally dealing in the

details and minutia of the job. Typically they will take on the most complex tasks and/or play the role of the relief valve/hero that swoops in to the save the day when all else was going wrong. Often the typical manager is only operating with the experience and knowledge that has been provided to them either through the example of their past or current manager. In the vacuum of organizations having well-defined managerial expectations, processes, training, vision or support, the typical manager will emulate the behaviors that works for them. We have all seen or at least heard of the manager who believes in the “do as I say not as I do.” Or the manager who reigns from a position of micro-managing or fear for your job. These managers will never fully reach the discretionary effort that is the hallmark of the truly engaged employee. Differentiated managing leader Good leaders need to be able to accurately assess the current situation, have a plan for the future state, be able to communicate and then execute the plan. Good leaders need to be able to meet people where they are and recognize that one size does not fit all. Simply put, good leaders need to be able to engage with their

Step 1: Examine current state of leadership team One must have an objective view of not only the output of the team but also how they are being led. Once you have an understanding of what is happening and how the team is being led, you should compare to your desired state. Typical questions would be: l Are there any performance issues? Any personnel issues? l Is there a high turnover rate? Is there no turnover? l What is their management/leadership style? How much do they know about their employees? l Are one on one sessions being held? If so, how regularly and what are the topics being covered? l Have you participated in a 360 type review? l How many people have been promoted within the department? l Is there a strategic plan and is it being implemented?

What’s next? The natural next question is what should I do now? There are several levers that should be applied depending on your current state. Remember that Rome was not built in a day. Change will only come from deliberate, purposeful action through examination and evaluation of your team, training and hiring practices.

Conclusion True natural born leaders are written about the history books. The rest of us learn through observation, trial and error. By investing in training and strong support, you will be shaping and defining what it means to be a strong leading manager. By holding your leaders accountable and being invested in their success, you will re-define what it means to be a leader. It all starts with you … leading.

Matt Henson has more than 18 years of progressive expertise in human resources strategy and related disciplines. He is responsible for leading the Human Resources Department and has direct oversight of the strategic processes and day-to-day operations for all of Angel Oak Companies, the management company for one of the nation’s top non-QM lenders, Angel Oak Mortgage Solutions. He can be reached by e-mail at Matt.Henson@AngealOakCapital.com.

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employees and listen to them to understand what drives each employee. Once the strengths and areas of opportunity have been identified, the good leader is able to align these to the needs of the organization. It is this alignment that brings the opportunity to maximize each employee’s potential. My father used to say that one’s actions spoke louder than any words. The differentiated manager leads in this manner both through their example and their words. The differentiated manager doesn’t always tell their employee how to do something, they ask them how they want to do it. Strong leaders have to have the confidence to let go of full control, empower their employees and hold them accountable. The old adage of teaching someone to fish vs. giving them a fish applies here.

Step 3: Examine current state of hiring practices What are the skills and attributes that you are looking for in the successful candidate? What types of questions are you asking? If you are solely focused on technical knowledge, you By Matt Henson are missing the factors that separate the highly performing professional from the managing leader of people. You should be asking about how they have handled delivering a bad performance review or if they have ever had to discipline an employee.

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s. Management

Step 2: Examine current state of training and support This seems like something we all should know but the reality is that many companies invest little or nothing into training their managers. On-the-job training with no support will beget you the typical manager as described earlier in the article. No one comes out of the gate wanting to be a poor or lackluster manager. However, if you have not defined what good looks like and have left the manager to their 51 own devices, it is hard to blame them for being a poor manager. Invest time into ensuring that your leadership team knows what is expected of them and how you want them to get it done.

Legal Entity Identifiers An he Legal Entity Identifier (LEI) is a unique 20-character code that identifies distinct legal entities which engage in financial transactions. The LEI is a global standard, designed to be non-proprietary data that is freely accessible to all. Many financial institutions have not obtained an LEI. A financial institution must provide with the following information in its HMDA submission on or after Jan. 1, 2018:

T l l

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Its name; The calendar year the data submission covers pursuant to paragraph (a)(1)(i) of this

l l

section or calendar quarter and year the data submission covers pursuant to paragraph (a)(1)(ii) of this section; The name and contact information of a person who may be contacted with questions about the institution’s submission; Its appropriate federal agency; The total number of entries contained in the submission; Its Federal Taxpayer Identification number; and Its Legal Entity Identifier (LEI) as described in § 1003.4(a)(1)(i)(A) [Emphasis added. See 5(a)(3)(vii)—Legal Entity Identifier (LEI)]

For purposes of the submission requirement, “appropriate Federal agency” means the appropriate agency for the financial institution as determined pursuant to §304(h)(2) of the Home Mortgage Disclosure Act [12 U.S.C. 2803(h)(2)] or a financial institution subject to the Consumer Financial Protection Bureau’s (CFPB) supervisory authority under §1025(a) of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5515(a)]. Please see the footnotes for helpful hyperlinks! If your financial institution needs an LEI, the GMEI Utility1 is endorsed by the Global LEI Foundation and also has a search function.2 There are some

Ques Frequently Asked Questions3 on their Web site and we provide below a few highlights derived from that resource. l

Who can register the financial institution? You must currently be an employee of the financial institution you are registering and authorized by the financial institution to register for an LEI. Alternatively, financial institutions may use a third party through an assisted registration process.

And HMDA 2018:

stions & Answers By Jonathan Foxx

The person registering the financial institution will need a user account, which may be created at GMEIUtility.org/Login.jsp?acti on=register. l

What information is needed to register? The basic information includes the financial institution’s legal name, registered address, headquarters address, legal form, and so forth. What is the cost? The GMEI

Utility charges $200 for each registration request, plus a $19 surcharge. To maintain and keep the LEI registration active, the fee for each registration is $100 plus a $19 surcharge. For more information, visit the FAQs specific to payment.4 Once payment is processed, the GMEI will validate the financial institution using public sources. Once this process is complete, it takes about three business days for an LEI to be issued in the GMEI database.

Overall, the GMEI Utility’s FAQs state that most requests are “cleared” within three to five business days. It is advisable to review the CFPB’s HMDA implementation Web page for more information.5 Frequently Asked Questions Q: Why do we need an LEI? A: The Bureau has taken the position that an LEI could improve the ability to identify a financial institution reporting data and correlate it to its corporate configuration. In addition, the

Bureau has stated that “facilitating identification of a financial institution’s corporate family could help data users identify possible discriminatory lending patterns and assist in identifying market activity and risks by related companies.” By facilitating identification, this requirement apparently is also meant to help data users identify whether financial institutions are serving the housing needs of their communities. [§ 1003.5(a)(3)] continued on page 58

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The Long & Short The Business of Short Sales

Pre-Purchase Help Coming From HUD-Approved Housing Counselors BY PAM MARRON

collaborative initiative has begun that connects loan originators who have clients with a past short sale or modification with HUD-approved housing counselors who can make sure that common credit issues are resolved before clients sign a home purchase agreement. The goal is to provide correction to a continued problem of foreclosure credit code that incorrectly shows up on short sale and modification credit, and often results in a loan denial and loss of contract. Worse yet, a foreclosure coding delays a new conventional mortgage for seven years, rather than the four-year wait required after a short sale. And recently, it has been found that modification credit is being affected with the same foreclosure code. More than one million past short-sellers are now beyond the four-year time frame and are eligible to purchase a home again. Another 950,000 will become eligible over the next three years. For those with modifications, no wait timeframe is required and more than one million have been put in place from March 2009 to March 2017. Correcting continued credit issues ahead of signing a contract for eligible past shortsellers is the focus of a small group of loan originators and housing counselors who are preparing this initiative. Too many times, past shortsellers are told within the processing time and during a live

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contract that their short sale shows up as a foreclosure, and that they need to go get it fixed and come back. A service is needed for affected clients to get this credit issue permanently resolved ahead of time so that these clients are mortgage ready. Fannie Mae developed a workaround in August 2014, but not all lenders know about it. There is no workaround in Freddie Mac. And though both Fannie Mae and Freddie Mac note there may be exceptions when inaccurate credit exists, lenders are reluctant to address this. Additional credit issues commonly grow out of the inaccurate foreclosure code for most of these clients when they either attempt to remedy the problem themselves or go to credit repair companies. A “dispute,” the most common fix, temporarily masks the short sale credit and appears to work when credit scores go up. However, when the consumer applies for a mortgage, either the underwriter, Fannie Mae or Freddie Mac automated system findings require that the dispute be taken off. The result is that credit scores plummet, a conventional mortgage denial is received and a delay to fix often occurs and can be a serious problem if a contract deadline is looming. If the consumer is in a contract, the quickest remedy is a Rapid Rescore that must be paid for by the lender. Often, the resulting credit scores are lower and the consequence is a higher interest rate.

A second problem is a more recent “Date Reported” when the short sale credit is reopened in order to get it corrected. The more recent date reported often falls within the four-year wait timeframe causing the Fannie Mae and Freddie Mac automated systems to issue a denial due to the wait timeframe not being met. I think this service coming from third-party HUD-approved housing counselors is a perfect fit. Loan originators are driven by contract deadlines, while housing counselors are not. Solutions for correcting the credit issues discussed are already available, but assisting those who have had a past short sale or modification is the best way to find more ways for correction. Jim McMahan, a loan

originator in Georgia, along with myself, will begin taking calls for consumers with a past short sale or a modification this month. The National Foundation for Credit Counseling (NFCC.org) will start this effort and utilize HUDapproved housing counselors to work with affected consumers to ensure the credit issues of a past short sale will not hamper their ability to get a new conventional mortgage. There will be a fee for the oneon-one counseling and a credit towards closing costs can be provided. Contact me at (727) 375-8986 or e-mail Pam.M.Marron@gmail.com or Jim McMahan at (404) 808-0945 or email Jim@McMahanMortgage.com. Stay tuned.

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

MBA’s Mortgage Action Alliance A Message From MAA Chairman Gene M. Lugat s the 2017-2018 chair of the Mortgage Action Alliance (MAA), it is my honor to lead this voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). There are a variety of ways you and your company can get involved with MAA that I encourage you to try. MAA regularly sends updates to members on legislative activity that would affect our industry and issues Calls to Action asking our members to contact their elected representatives with one unified, powerful voice. I can tell you that when constituents contact their elected officials, they listen. MAA members put a face on the challenges our industry faces in helping customers obtain affordable housing finance. Last month, MAA issued a Call to Action, urging its members to encourage Congress to read MBA’s new GSE reform white paper and act on this important issue. So far, over 1,000 MAA members have contacted their elected officials. If you haven’t done so, please take action now at Action.MBA.org. Comprehensive GSE reform will also be a major topic at MBA’s National Advocacy Conference (NAC), being held June 20-21 at the Grand Hyatt Washington. NAC attendees will hear from MBA’s policy experts about GSE reform, and also attend meetings with their local elected officials. The remainder of the NAC program will include thoughts on the new Presidential Administration, as well as potential congressional actions affecting our industry. We will be also launching our new MAA Mobile App, which will make getting involved in advocacy even easier, by sending notifications directly to your phone when a Call to Action is issued. You can also connect with MAA on social media. Check out our Facebook page at Facebook.com/MortgageActionAlliance. Stay updated on current events in Washington, D.C. and your state capital. We will post the latest political news as well as MAA “Calls to Action.” You can also join our group on LinkedIn to connect with fellow advocates and expand your network. 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 at MBA.org/JoinMAA, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice!

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

the mortgage godfather

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helping the Realtor do more every day.

Me: How many people get this?

April 18 Him: Sent to all his Realtors: “If you are talking, you are just selling; if they are talking, they are buying.”

Him: About 90.

Me: We could have a long discussion about this. How long have you been doing this and who is receiving these e-mails? Him: The e-mails I am sending with quotes are blast e-mails to the Realtors I work with and am in contact with and recognize me immediately. April 19 Him: Sent to all his Realtors: “Remember, prospects become customers and customers are your best prospects.”—Amanda Johns Vaden, author of Selling, Quick Tips for Growing Your Income and Exceeding Client Expectations. Me: You must know I love this stuff. Him: Thank you. I am just blasting emails to my Realtors and lead sources. April 20 Him: Sent to all his Realtors: Quote for the day “If you don’t schedule it, it won’t get done. FHA-approved condos in Broward … Hallmark of Hollywood, Parc Village Condo, The Preserve at Walnut Creek Make money idea: Let’s talk about sending mailers to these condos, twice a month about either listing with you or converting a renter into a buyer? Let’s talk … when can I call you about this? April 21 Him: Sent to all his past clients: Good morning, let me know if you still haven’t homesteaded your home and I can help you. You can go to www.bcpa.net and get it done quickly!

Me: Okay, so here is where I think I’m going with this stuff. My experience with Realtors is that if they are big producers, we should target them. It is a great strategy long-term. Trying to get business from non-producers is generally not a good way to spend our time. The big producers want to get bigger and we can help them do that. They have good business they can refer over and over (they have figured out how to be disciplined and have good marketing techniques), we can get their attention; we can help them grow to be what they obviously want to be. BUT when we go after the public, then we would be spreading out more because they are most often a one off kind of deal with regard to referrals. They might of course be good referral sources, but not anywhere near the value of a producing Realtor. Him: I completely agree and that is why I have a new broker in the office. She has a ton of experience, but doesn’t have a lead source. I give her my files that are taking too long to get docs, get info or loan sizes are too small or from new Realtors. I pick out the best leads and lead sources I get. This way, she can help build those Realtors or close the small loans. So, for all of you, regardless of your experience, there is panoply of information here that you need to absorb and make part of your daily routine. But as I’ve written so many times over the years, you probably won’t do all that is here because you don’t have the interchange with someone who will push you, hold you accountable, ask you questions about your daily routines, help you stay focused on personal and business goals, give ideas to bounce around and consider and debate and then implement. Your world can become bucolic if you change what you’re doing and become disciplined, innovative and get a coach.

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

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legal entity identifiers

Q: Should we be getting our LEI as soon as possible? Can we get an LEI before we have to start using it, or do we have to use it as soon as we obtain it? A: We recommend that you obtain your LEI by the first or second quarter of 2017. There is no reason to delay. We don’t anticipate the price to change. However, you must have an LEI for all loans submitted for HMDA on or after Jan. 1, 2018.

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Q: Do you anticipate the Uniform Loan Identifier (ULI) to be calculated by Loan Origination Systems? A: We do anticipate that many LOSs will offer to provide this number. However, it is very possible that they may leave this to the vendor collecting your HMDA data. Some concern has been raised about commercial or consumer systems needing such a programming solution. It is our understanding that the Bureau is evaluating this requirement with respect to a compliance effective date for calculating and verifying the ULI and ensuring it has not been previously used. Q: Where would we find the LEI and ULI numbers you spoke of? Do we get it from the Nationwide Mortgage Licensing System & Registry or some other Web site? A: As indicated above, the LEI is available at GMEIUtility.org and the ULI may be determined by you, possibly in conjunction with your loan origination system. The Bureau considered the Nationwide Mortgage Licensing System & Registry identifier to be an appropriate alternative to the LEI. In the proposal stage of the rule, there were some concerns voiced about the cost to obtain an LEI, mostly citing the cost associated with obtaining an LEI and the availability of alternative identifiers. But, because the LEI system is predicated on a “cost recovery model,” it was believed that the cost associated with obtaining an LEI could decrease as the LEI identifier is used more widely. So, despite the cost, the Bureau concluded that the benefit of all HMDA reporters using an LEI would justify the associated cost. Q: What about assigning an LEI to commercial reportable loans

continued from page 53

that are not processed through our LOS? A: Some commercial or consumer loan origination products may add this functionality. However, for financial institutions that may onboard certain loans with document programs and Excel spreadsheets, some HMDA collection services seem to be considering whether they can add this ability. The Bureau has indicated it will be offering an integration tool. This is not needed until Jan. 1, 2018, so it appears to not yet be a high priority for the Bureau. Q: If we purchase loans, which entity reports the ULI, the new entity or the one for the company we purchased the loans from? A: The institution that is selling the loan to you has the responsibility to provide the ULI for all loans sold or purchased on or after Jan. 1, 2018. However, that company may not have originated the loan. There may be situations in the early part of this process where your institution may have to assign a ULI to a loan funded prior to Jan. 1, 2018. However, for loans originally funded on or after Jan. 1, 2018 you should insist on a valid ULI from the entity selling the loan. Q: We report HMDA quarterly. When we purchase loans from other financial institutions, do we have to put in their ULI number when doing our quarterly HMDA filing? A: You must use the ULI assigned to the loan that the other financial institution originated. The ULI will contain the other company’s LEI. In some cases, you may be buying loans from entities that did not originate the loans (i.e., you may buy a loan from an entity who bought the loan from another entity who originated it). Some loans may end up with Action Code 6 (viz., loan purchased by the institution) multiple times during the life cycle of a particular loan. Others may only be sold once. Portfolio loans may not be sold at all. Q: We have separate business lines that use very different underwriting guidelines. Can a financial institution register for an LEI for each business unit and submit a Loan Application Register (LAR) for each? A: For each LAR, you will need an

LEI. The LEI is issued to a financial institution and that financial institution should use its LEI for the LAR submission. Q: Will we need to obtain an LEI for each of our DBAs or will it be the parent company’s LEI that all DBAs under us will use? A: You will need to provide one LEI for each legal entity involved in the origination of loans or that is subject to HMDA reporting (i.e., a “financial institution” as defined in the new rule). However, your question refers to “DBAs” on the one hand and then “Parent Company” on the other. Are the DBAs part of a single company? Are there other subsidiaries that already have different Respondent IDs? The answers to these questions matter. We suggest you start your analysis with any company that today has an NMLSR ID. Then you might expand to any company that purchases loans. That said, the Bureau has determined that requiring the parent company of a financial institution to obtain an LEI would not be appropriate. Requiring the parent company to obtain an LEI specifically for HMDA purposes, except if the parent company is also a HMDA reporter, and requiring the financial institution to submit its parent company’s LEI with its HMDA data submission, would be an unnecessary additional burden because once the LEI is fully implemented, information regarding the parent company is expected to become available. Thus, the Bureau’s position seems to be that the benefit of requiring parent information does not justify the burden, since information about the parent company most likely will be available through an alternative source. Accordingly, the Bureau does not require a financial institution to identify its parent company.

Q: What is the Reporter’s Identification Number? A: Regulation C currently requires financial institutions to provide a Reporter’s Identification Number (HMDA RID) in their transmittal sheet and LAR. The HMDA RID consists of an entity identifier specified by the financial institution’s appropriate Federal agency combined with a code that designates the agency. Each Federal agency chooses the entity identifier that its supervised financial institutions would use in reporting their HMDA data. Currently, the Research Statistics Supervision and Discount (RSSD) number is used by institutions supervised by the Federal Reserve Board (FRB) and depository institutions supervised by the Bureau; the Federal Tax Identification number is used by non-depository institutions supervised by agencies other than the FRB; the charter number is used by depository institutions supervised by the National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC); and, the certificate number is used by depository institutions supervised by the FDIC. Q: Where can I find more information about LEI and HMDA? A: The Bureau moved HMDA filing instructions to 5(a)(2) in proposed Appendix A and incorporated it into § 1003.5(a)(3) because of the removal of Appendix A from the Final Rule. Pursuant to its authority under section HMDA 305(a), the Bureau also added certain information related to the data submission that is currently provided on an institution’s transmittal sheet, as illustrated in Appendix A of § 1003.5(a)(3). There may be other relevant requirements set forth in certain Federal Register issuances from time to time.

Footnotes 1—GMEIUtility.org 2—GMEIUtility.org/Search.jsp 3—GMEIUtility.org/FrequentlyAskedQuestions.jsp 4—GMEIUtility.org/FrequentlyAskedQuestions.jsp#plus6_7 5—Home Mortgage Disclosure Act Rule Implementation (ConsumerFinance.gov/Policy-Compliance/Guidance/ImplementationGuidance/HMDA-Implementation)

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

heard on the street

Prior to joining Fifth Third, Adam served as executive vice president at Stearns Lending. l Simplifile has announced the addition of title and settlement industry veteran Toni Carroll as national settlement account manager, where she will maintain and improve Simplifile’s national vendor relationships, while supporting the sales effort to deliver settlement collaboration to the real estate industry. l Lenders Compliance Group (LCG) has announced that continued on page 94

n National Mortgage Professional Magazine n MAY 2017

has also joined The StoneHill Group where he will oversee the training of all quality control (QC) and outsourcing staff, ensuring they are up-to-date on current and future industry standards and regulations. l LenderLive has announced that David Tiberio and George Schultz have joined the company as vice presidents of National Sales for the company’s LenderLive Settlement Services line of business, responsible for developing new

client relationships and supporting existing ones for the business line. l The Data & Analytics Division of Black Knight Financial Services (BKFS) has announced that Dave Hurt has joined the company to lead business development activities in the capital markets and government sectors. In this role, he will work with Black Knight’s sales teams to develop new and existing client relationships. l Fifth Third Bancorp has announced that John Adam has been named Fifth Third Mortgage national sales leader.

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officer. Each of these new team members will be based in the company’s Westbury, N.Y. headquarters. Jorge Valencia has joined Academy Mortgage as regional manager for the Upper Midwest. This is a new region for the company, in which Valencia will be responsible for directing Academy’s sales, recruiting, personnel management, market expansion and business development, among other responsibilities. Carrington Real Estate Services LLC has announced two new additions, Lisa Harris as area assistant vice president and manager to lead and continue to grow Carrington Real Estate Services’ market share and team of real estate professionals in the Las Vegas market; and Jason Demers as assistant vice president and manager to lead the company’s team in the Northern Virginia area. Top Vine Mortgage Services LLC has announced the addition of Loan Consultant Andrew (AJ) Befumo Jr. to their mortgage team. Mortgage Network Inc. has relocated its West Chester, Penn. branch office to Exton, in the heart of Chester County. The new office will be led by Chris Blanchard, who has been a district sales manager for Mortgage Network for the past three years. Mortgage Capital Trading Inc. (MCT) has announced that Cara Krause has joined the company as regional sales director, responsible for business development efforts and client management for new lender clients in the Northeast region of the country. Quicken Loans has announced the hiring of a new chief marketing officer (CMO), native Detroiter Casey Hurbis, who will lead the company’s consumer-facing marketing team and be responsible for all online and traditional marketing initiatives. Kirk Bockoven has joined The StoneHill Group as director of outsourcing operations where he will be responsible for ensuring that the company’s operational processes remain within the budgets and timelines of its outsourcing clients. William “Bill” Wood

continued from page 43

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S P E C I A L

F O C U S

O N

Trends in Mortgage Lending Mastering the Millennial Market Learn to work with and find financing for the next generation of homeowners By Rey Maninang

Working with Millennials As the signs continue to point to improved market conditions for Millennials, mortgage professionals should be aware of what these potential homeowners are looking for in their homebuying experiences. Most lenders and originators acknowledge they need the latest technology to entice the Millennial market, but it goes beyond that for these consumers. “Know your customer” is the adage that has driven industries for a long time and this continued on page 62

n National Mortgage Professional Magazine n MAY 2017

The Millennial market According to the National Association of Realtors (NAR) 2017 Home Buyer and Seller Generational Trends Report, the Millennial generation (defined as buyers 36 years and younger by NAR) represents the largest segment of homebuyers at 34 percent—and 66 percent of these were first-time buyers.2 As such, the market for young homebuyers has long been expected to be the next big wave in residential real estate, but their progress into homeownership has been stalled for some time. Recent indicators, however, may finally point to some forward momentum with this group. According to the U.S. Census Bureau, new household formation favored buying over renting significantly in the first quarter of 2017—the first time since the third quarter of 2006. Roughly 854,000 new households bought a home in that timeframe, compared to the 365,000 new households that rented.3 In addition, new residential construction is increasing, providing more inventory for move-up buyers to progress up the property ladder. According to the U.S. Census Bureau, new single-family residential housing starts were at 821,000 in March 2017, up from 751,000 in March 2016.4 As this new construction is purchased by move-up buyers, it creates more inventory for first-time homebuyers.

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hen it comes to working with emerging markets, the millennial sector is commanding a lot of attention these days. But as this cohort begins finally entering the housing market, buying a home may be easier said than done. Because of years of underemployment and heavy student loan debt, Millennials in particular face significant credit challenges. According to TransUnion, more than 38 percent of Millennials have subprime credit, which they define as a credit score between 300 and 600.1 Across generations, however, just 27 percent of people carry sub-prime credit nationally. Fortunately, as this market segment begins to demand more attention, increased options are emerging to help these potential homebuyers. As this market sector continues to grow, mortgage professionals must learn not only the various financing programs available to credit-challenged Millennials buying a home, but also how to best work with this pool of potential homeowners, who have different needs and expectations than other generations of homebuyers.

a special focus on TRENDS IN MORTGAGE LENDING

mastering the millennial market

continued from page 61

holds true for Millennials and the homebuying experience. As for all clients, mortgage professionals and their lending partners should be prepared to provide the best in customer service, but it is also critical to know these key points:

purchasing behavior. Mortgage professionals who know the thinking, behaviors and expectations of the Millennial market will be armed to beat the competition and earn their business.

l Technology is critical, and customer-facing tools must be easy to use and simple to understand. l The mortgage lender should provide self-service options for assistance. l For Millennials, buying decisions are a social experience. l This group seeks authentic and personalized experiences. They look for service that is genuine and that goes beyond cookiecutter options. l These consumers research company values and their assessments drive their

Overcoming credit challenges In addition to providing the tools and services that Millennials want, mortgage professionals must also be prepared to work with the credit challenges that many Millennials face, including lack of savings for downpayments, lower credit scores, and student-loan debts. Fortunately, there has been an increase in the number of programs that address these issues, and originators should become knowledgeable about the options available to help their clients.

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For many Millennials, coming up with a downpayment can be a significant hurdle to overcome. This has led many in this market sector to turn to loans from the Federal Housing Administration (FHA), which offers loan programs with downpayments as low as 3.5 percent and allows for FICO scores below 600. Because of this, FHA loans are particularly popular with Millennials. In fact, according to Ellie Mae, 35 percent of Millennials chose FHA mortgages to finance their homes in January 2017, which is significantly higher than the FHA’s overall market share of 21 percent.5 While government loan programs often offer attractive packages, they are not the only players in the field. Fannie Mae and Freddie Mac also offer low downpayment loans, some as low as just three percent, but they frequently require higher credit scores. For Fannie or Freddie loans closed this past January, the average FICO score for Millennial first-time homeowners was 748, but for FHA loans, the average was 690.6 This can be a significant difference for young consumers trying to get into their first home and is one reason why FHA loans are so popular with this cohort. Overcoming student debt Another serious issue for Millennial clients is student loan debt. The U.S. currently has more than $1.4 trillion in student debt, carried by about 43 million Americans.7 According to the NAR generational trends report, 46 percent of Millennials have

student debt and the typical balance was roughly $25,000. In addition, 55 percent of the market segment cited student debt as its primary reason for having to delay saving for a downpayment.8 This is a problem that’s not going away any time soon. The mortgage finance industry is beginning to move forward on this issue, however, and buyers with student-loan debt have reason for optimism. In April 2017, Fannie Mae put forth several new policies aimed at borrowers with student debt, offering more flexible payment options for consumers and assisting lenders to serve a wider swath of borrowers. These rule changes include three new policies:9 l Student loan cash-out refinance: This option is aimed at helping current homeowners by offering the opportunity to pay off highinterest student debt with a “cash-out” refinance package. Fannie has eliminated the extra fee it typically tacks on for cashouts—if the funds are used to pay off student loan debts. l Debt paid by others: This policy helps increase borrower eligibility by excluding non-mortgage debt paid by someone else from the borrower’s debt-toincome ratio. So, if consumers have debts that are being paid by someone else, they will no longer be included in the calculation of their debt-to-income ratio, as long as the payments have been made steadily for the past 12 months. l Student debt payment calculation: This policy makes a move toward more

Footnotes

CORRESPONDENT LENDING fgmccorrespondent.com

WHOLESALE LENDING fgmcwholesale.com

This information is solely for mor tgage professionals and should not be provided to consumers or thi rd par ties. Information is subject to change without notice. This is not a commitment to lend and there is no guarantee that all bor rowers will qualif y. All loans are subject to credit, under wr iting, and proper t y approval. Other restr ictions may apply. FGMC is not acting on behalf of HUD, VA, FHA or any other agency of the federal government. Fi rst Guarant y Mor tgage Corporation (Company NMLS ID 2917) is licensed by the Depar tment of Business Oversight under the California Residential Mor tgage Lending Act; Regulated by the Division of Real Estate in the Sttate of Colorado; Licensed by the Delaware State Bank Commissioner to engage in business in this State under License No. 24 03 (renewed through 2015); Georgia Residential Mor tgage Licensee; Illinois Residential Mor tgage Licensee; Kansas- Licensed Mor tgage Company; Licensed by the Mississippi Depar tment of Banking and Consumer Finance; Licensed by the Nevada Division of Mor tgage Lending to make loans secured by liens on real proper t y; Licensed by the New Jersey Depar tment of Banking and Insurance; Licensed Mor tgage Banker – NYS Depar tment of Financial Ser vices, Licensee No. B50 0 8 0 0 (d/b/a FGMC In Lieu of Tr ue Corporate Name Fi rst Guarant y Mor tgage Corporation); Rhode Island Licensed Lender. For complete corporate and branch licensing information, visit w w w.fgmc.com or w w w.nmlsconsumeraccess.org.

1—Newsroom.TransUnion.com/Federal-Interest-Rate-Hikes-Delaying-Millennial-HomeBuying 2—NAR.Realtor/Reports/Home-Buyer-and-Seller-Generational-Trends 3—RealtorMag.Realtor.org/Daily-News/2017/05/01/New-Households-FavoringHomeownership 4—Census.gov/Construction/NRC/XLS/Newresconst.xls 5—WashingtonPost.com/RealEstate/For-Many-Millennials-FHA-Is-the-Place-to-Go-fora-Home-Mortgage/2017/03/14/b8ed35c6-07f4-11e7-b77c-0047d15a24e0_story.html 6—WashingtonPost.com/RealEstate/For-Many-Millennials-FHA-Is-the-Place-to-Go-fora-Home-Mortgage/2017/03/14/b8ed35c6-07f4-11e7-b77c-0047d15a24e0_story.html 7—ChicagoTribune.com/Classified/RealEstate/ct-re-0507-Kenneth-Harney-20170502column.html 8—NAR.Realtor/News-Releases/2017/03/NAR-Survey-Finds-Gen-X-on-the-MendMore-Children-Living-With-Millennials-and-Boomers 9—FannieMae.com/Portal/Media/Financial-News/2017/Student-Loan-Debt-6546.html

MORTGAGE LENDING

a special focus on

common-sense underwriting. Previously, lenders had to factor in one percent of a borrower’s student-loan balance as the monthly payment for the loan, even if the borrower was participating in reduced-payment plans that meant the monthly payment was significantly less than that. Under the newly introduced policy, the actual monthly payments as reported to the credit bureaus will be what are counted toward debt-toincome ratio computations. These policy changes could have a significant impact on Millennial buyers looking to purchase a home despite student loan debt, and mortgage professionals must help their clients take advantage of these new opportunities.

now secure financing for borrowers with FICO scores as low as 550. Some lenders have also reduced overlays and extended eligibility to more property types, to further help borrowers get the financing they need. Mortgage professionals who partner with lenders offering products like these can capitalize on the growing Millennial market and help more potential homeowners

overcome the credit challenges that may have kept them out of

homeownership for far too long.

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

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Finding the right lenders Of course, these policies and programs won’t help Millennial buyers if they cannot find lenders who participate and provide the financing they need to enter the housing market. This is where experienced and knowledgeable mortgage professionals must show their value and expertise to today’s potential homeowners. Originators must partner with lenders that offer a wide range of loan products that not only incorporate programs like those offered by Fannie Mae and the FHA, but go beyond to provide their own products to help serve creditchallenged borrowers. Mortgage professionals should look for lenders that have created loan products that work with consumers with lower credit scores and smaller downpayments. For instance, some lenders offer simplified loans that have no lender closing costs for borrowers. Because of this, mortgage originators will not have to modify the rate presented to borrowers to offset loan costs and fees, and unexpected increases to estimated closing costs aren’t an issue. Additionally, originators should partner with lenders that have lowered their minimum credit requirements—some lenders

a special focus on TRENDS IN MORTGAGE LEND

a special focus on TRENDS IN MORTGAGE LENDING

A New Wave of Homebuyers By Rick Arvielo he landscape of America is shifting, and with this change, comes a new wave of homebuyers who are entering the housing market that are expected to be primary players. They’ve already started emerging and making their presence known but are going to do so in an even more significant way over the coming years. This impending wave of homebuyers will predominantly stem from two key demographics: underserved markets and Millennials. Over the past several years as America has become increasingly diverse, minorities have become the majority in many areas of the country. In fact, by 2043, it’s projected that America will be a minority-majority nation. Alongside this transition, another key cohort is rapidly rising: The Millennial Generation. This massive age group is not only the largest living generation with more than 83 million individuals between 20 and 36, but they also account for more than 1/4 of the nation’s population. With this considerable surge of minorities and Millennials on the horizon, a transition is simultaneously taking place in the housing industry. The dynamics are changing. What used to be a market heavily dominated by an older, less diverse population, is evolving into a housing market that’s filled with a younger, diverse consumer. This demographic shift offers new business opportunities for mortgage lenders, at least for those lenders who understand the trends and are prepared for them. To effectively engage with each of these consumer groups requires a different approach. With minorities it’s necessary to have mirrors in the market; yet when it comes to Millennials, it begins with having an ability to provide instant access to information. The key is having the right strategy in place if you’re going to gear your business toward the future.

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Mirrors in the market In the coming decade, Latinos are expected to be a significant

a special focus on TRENDS IN MORT

part of the rapid growth amongst minority households. The Urban Institute anticipates that more than half of all new homeowners will be Latinos, with blacks and other races accounting for another 40 percent. As this influx of minorities enters the housing arena, it’s essential that mortgage companies have a workforce that looks like and accurately reflects these

income ratio has as times held them back from homeownership. Therefore, loan officers have to understand their financial background and be ready to equip them with tools to overcome any hurdles to homeownership. Each minority group has a different way of handling money and transacting business, which is often influenced by their culture, but if you don’t have a loan team who can relate to these cultural nuances, it will be difficult to serve this housing consumer, especially Latinos. Since many speak Spanish,

communities, if lenders want to capture this swiftly expanding market. A multicultural loan team gives a mortgage company a competitive advantage in an increasingly diverse marketplace. Lenders can more effectively attract minority consumers when they employ mortgage professionals who are not only diverse but are culturally aware, which means they know how to connect with and how to best serve the distinct needs of underserved communities. As first-time homeowners, many minorities will need workshops or educational resources that prepare them for the homebuying process. According to Pew Research limited credit or a high debt-to-

being culturally in tune with this group also means removing language barriers by employing bilingual loan officers. When you have originators who are not only young and diverse but speak the language fluently, it’s a game changer. That’s because when you’re doing business with Latino borrowers, you’re typically working with more than one consumer. A second and third generation are often involved when they’re buying a home, which means the loan process becomes a multigenerational transaction. As a result, when a loan officer is able to connect culturally, it opens the door to build trust with an entire family. Once trust is earned, it can lead to establishing multiple long-term

customer relationships as a credible lender. Service providers reviews Today’s consumer makes decisions heavily influenced by the experiences of other customers. That’s why building good customer relations is essential. Satisfied homebuyers share their experiences with other family and friends, and with their online community, as do unsatisfied consumers. According to Adweek, 93 percent of Millennials turn to these consumer reviews before making a purchase decision and more than 70 percent of them trust what they read. Since Millennials care about online reviews, so should lenders if they expect to tap into this growing population of homebuyers. Millennials want to research their prospective loan officer and mortgage lender before doing business with them. That’s why lenders have to invest in establishing an online reputation not only for their company but for their originators as well. When loan originators don’t have a solid online brand, they won’t remain competitive in a vast mortgage field. Reviews have to be readily available in the places where borrowers are looking, from your company Web site to social media pages and thirdparty platforms. Dominating search engine results and generating positive reviews begins with how you close your customers’ loan. When you provide excellent service, customers are more inclined to write a favorable review when you seek their feedback. To continue producing a steady stream of user-generated content, you have to initiate contact with customers every time you fund a loan and make it as easy as possible for them to share their experience; in conjunction with this, you have to have a solid process in place to handle any negative reviews. The key is to build a solid brand over a period of time so you’re able to eventually convert your Millennials into loyal customers. Instant access to information More than any other generation, Millennials utilize the internet and mobile devices when connecting with businesses. They’ve grown up in a digital world and have

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grown accustomed to having instant access to information; therefore, it shouldn’t come as a surprise that this push-button generation wants to work with mortgage companies that are fast with updates, create transparency throughout the lending process, and efficiently close loans. If lenders are going to meet the demands of this generation, it’s vital that they develop intuitive technology such as a user-friendly mobile website and easy-to-use apps that enable loan officers to quickly pass along information. This sort of mobility is a necessity for mortgage professionals in the 21st Century. As more consumers start the homebuying process online, originators need be able to conduct business on the go. Whether that’s running a credit check, sending a prequalification letter, or providing a loan update, originators need mobile technology that allows them to deliver real-time information to both real estate agent partners and borrowers. Millennials are

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looking for the type of convenience that allows them to use their handheld device to see what’s happening with their loan, anytime, anywhere. They will choose to work with lenders who can quickly deliver this and are highly responsive. As time progresses, it will be more important than ever for lenders to continue advancing their technology so mortgage professionals are equipped with the ability to be just as effective in the field, as in the office. Loan officers who cannot provide instant access will be at a disadvantage in this competitive digital world. Value ads and education Millennials are eager for information. They’re the most educated generation and as they step into homeownership, it will also be their first-time purchase so they will want to consume information that enables them to make an informed decision. An impersonal sales ad that lacks substance isn’t an effective way to reach them; instead, they want

quality content like blogs that offer lending tips or videos that cover the basics of the mortgage process. They want to work with mortgage professionals who can equip them with information that adds value throughout the loan process like property details, attributes of a neighborhood, and insight on the school district. Attracting the Millennial consumer means not only delivering this useful information, but making it highly personalized to their search. When you can accomplish this, Millennials will not only value you as a loan officer, but as their go-to resource as well.

Preparing for the future The key to having your business ready for this new wave of homebuyers begins with taking action now. Tomorrow’s success depends on today’s preparation. Lenders who want to serve future customers have to actively prepare because it takes time to implement and execute successful business strategies. Even though it can be challenging to make changes and requires tremendous work to remain progressive with the latest mortgage trends, success in the industry rides on it.

Rick Arvielo is chief executive officer of New American Funding. In 2003, Rick and his wife Patty began doing business as New American Funding, a 40-employee, refinance call-center. In 2011, Rick introduced purchase transactions to the company’s operations, and in 2012, New American Funding opened their first branch. Their retail division has since exploded, adding 130-plus retail branches and more than 750 loan officers focused on purchase transactions in only four years. 65

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Are You Ready to Conquer the Next Frontier? By David Zitting here’s no doubt about it: Millennials are the biggest force in the housing market today. They represent approximately one-third of all homebuyers, the largest share for any single generation. They make up nearly two-thirds of all first-time homebuyers, and their influence is starting to take off. This group of young tech-savvy, adults is poised to drive the majority of all home sales within the next 10 years. Millennials are the largest generation in U.S. history—even bigger than the Baby Boomers—and are starting to enter into their peak earning years. For most, purchasing a home is their top priority. Surprised? There are a lot of myths about Millennials, and any real estate professional needs to know the facts in order to properly serve this unique consumer and to grow his or her business in the coming years. Let’s start with Millennials’ desire to buy a home. One enduring myth about Millennials is that they prefer to rent, not buy. But just because Millennials love Spotify, Netflix and Uber, it doesn’t mean they don’t buy cars and homes. It’s estimated that about 60 percent of those born in the early 1980s to the late 1990s or early 2000s are renting or living with roommates. You’ve probably heard that a number of them are living with their parents. That’s true, but research also tells us that a whopping 80 percent to 90 percent of those in their 20s and 30s want to buy a home and many are saving to do just that. For Millennials, much like the previous generations, the American Dream centers around homeownership—along with a fulfilling career, of course. Yet many financial institutions continue to write off Millennials as a demographic group that aren’t good candidates for homeownership. It’s a disastrous marketing decision that over the long term can have a profound negative effect on a financial institution’s effort to grow its home loan business. In a recent Fannie Mae

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survey, more than 90 percent of renters between the ages of 25 and 34 said they want to own their own home. In another survey conducted by Qualtrics, a Utah-based survey software company, and Accel Partners, a venture capital firm, 88 percent of Millennials who do not own a home have a goal to buy one. With their desire for homeownership established, can

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home. Millennials as a group actually have less student loan debt than Generation X. A new National Association of Realtors (NAR) survey shows that while Millennials are the most likely to have some level of student loan debt, their typical balance of $25,000 is lower than that of Generation X, which has a typical balance of $30,000. Not all Millennial buyers are crippled financially by student loan debt and a number of surveys show that Millennials save a higher percentage of their income than older generations, including Baby Boomers.

“Simply put, young adults are committed to the idea of homeownership and many have the means to buy—or at the very least have a solid financial plan to get there.”

young adults qualify for a mortgage? The answer to that question may surprise you as well. You may have heard that Millennials are crippled by student loan debt and aren’t committed to saving. But the data just doesn’t support these two stereotypes about young adults. In fact, studies show that while Millennials do have student loan debt, many don’t have a debtto-income ratio high enough to prevent them from buying a

Simply put, young adults are committed to the idea of homeownership and many have the means to buy—or at the very least have a solid financial plan to get there. There are some issues holding them back, which the housing industry must address and solve. One important factor that is preventing more Millennials from purchasing homes is the belief that in order to buy a home, you must have a 20 percent downpayment. This is a

significant psychological obstacle when in reality, the median downpayment for firsttime buyers is only six percent (14 percent for repeat buyers). Surveys show that more than 80 percent of nonhomeowners—including many Millennials—believe that a downpayment of 10 percent or more is required to buy a home. The 20 percent downpayment myth is especially pervasive in the Millennial population and prevents many young adults from visiting a loan officer to understand their many options. As an industry, we must tailor our marketing efforts to educate the Millennial population—not about the joy of homeownership, but about how attainable the American Dream can be. We must blast away at the myths preventing Millennials from even visiting with a mortgage lender. More so than previous generations, Millennials don’t have the knowledge required to purchase a home. They don’t know about low and even no-downpayment home loan options or other programs designed to help first-time homebuyers. Complicating matters is that Millennial buyers are more likely, compared to other generations, to wait to get married or to remain unmarried indefinitely. Today, women on average get married at age 27, men at age 29. That compares with 21 and 23 in the early 1960s, according to Pew Research. Unmarried couples are even more convinced than married Millennials that the obstacles to homeownership are too high. In addition, many single Millennial men and women with high incomes and the ability to purchase a home worry that they wouldn’t qualify on their own and believe homeownership will have to wait until they are married or in a committed relationship. Millennials’ perceptions of the home loan process and the perceptions many real estate professionals have of Millennials have definitely created a disconnect. For example, some Realtors and mortgage professionals have focused their marketing efforts on an older clientele, thinking

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that tech-savvy Millennials prefer to look for homes and apply for mortgages primarily online; bypassing the personal experience that real estate agents and loan professionals can provide and that first-time homebuyers often need. This couldn’t be further from the truth. While research supports the idea that Millennials love doing research online, National Association of Realtor (NAR) data shows that 90 percent of this age group use an agent to buy a home, a higher percentage than all other generations. Other surveys show Millennials prefer working with a mortgage professional in-person instead of applying for a mortgage over the Internet. With changing homebuyer demographics come abundant opportunities for those who take the time to understand this generation. Case in point: Millennial homebuyers are more likely than any other age group to be open to purchasing a home that needs work. Whereas move-in condition is a priority to

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other age groups, Realtors nationwide say Millennials aren’t afraid to purchase a fixer-upper if it’s perceived to be a good value. Survey results released earlier this year by Better Homes & Gardens magazine show that Millennial first-time homeowners are showing more willingness than previous generations to complete do-ityourself projects around the house. They purchase homes that may need work and wait until they can afford to make desired improvements. Fifty percent of those surveyed said that at move-in, their current home required some degree of repair or remodeling. This data undermines the stereotype of the demanding and unrealistic Millennial home buyer. And it underscores the importance of educating Millennial homebuyers about the wide variety of lending options available to them, including the FHA 203(k) home loan program. Ultimately, real estate

professionals also must realize that this is a generation that’s extremely receptive to guidance and mentoring and are loyal to those who provide it. A Millennial homebuyer who doesn’t currently qualify for a home loan, but is told how he or she may have a better chance later down the road, is likely to return to the lender when they are ready to reapply for a mortgage and are likely to send their friends and family to that lender as well. As a housing industry, we need to realize that most of us don’t understand the young

adult home buyer. It’s vital that we better understand Millennials and educate them about the various paths to homeownership. We don’t need to convince them that it’s in their best interest to purchase a home; homeownership is already a priority. What we need to do is show them that owning their own “Home Sweet Home” is very attainable. Millennials are looking to you to educate and help them understand the homebuying and mortgage process. Are you up for the challenge?

David Zitting has been in the mortgage industry for more than 20 years and is the CEO and president of Primary Residential Mortgage Inc. (PRMI), a nationwide, multibillion-dollar mortgage lender headquartered in Salt Lake City, Utah. 67

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Helping First-Time Buyers Get That First Home Sweet Home By Laura Brandao ery attractive rates, a lack of affordable housing inventory and the fresh-faced, Millennial-dominated homebuyer, have combined to create a unique, but intriguing mortgage marketplace in America right now. The statistics paint an interesting picture that has left lenders scrambling to find solutions that will allow these rookie would-be-homeowners a path to purchase. Nearly 60 percent of firsthomebuyers are Millennials, between the ages of 25-34 years old. According to the National Association of Realtors (NAR), Millennials began purchasing houses in large numbers during 2016, making up 61 percent of firsttime buyers. This trend is expected to continue through 2017, as more Millennials become homeowners, and consequently drive up the homeownership rate. Affordability remains the primary concern for this growing marketplace, with a recent Fannie Mae survey revealing that 62 percent of Millennials stated that they were not confident they could afford a downpayment. No matter how much the government drops rates, people just are not buying as expected. As a percentage of all homebuyers, the number of first-time owners has fallen significantly since the Great Recession. NAR reports that firsttime homeowners make up 32 percent of all buyers—compared with a historical average of 40 percent, the lowest percentage since 1987. The correlation of home prices to the budget they can afford, has forced first-time buyers to immediately decide between buying a new or existing home. According to the latest figures, the median cost of buying an existing single-family house is $223,000. Buying or building new construction will set you back an average of $289,415. That’s $66,415 more than the cost of an existing home! The percentage of affordable homes for first-time buyers is small, making the marketplace even more competitive. When a home comes on the market that is in the price

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range for a first-time buyer, it is often in disarray and needs renovation to make it livable, yet these properties are in such high demand that they often go for above market and sell extremely quickly. So, with a hot market for sellers, what’s a buyer supposed to do. The answer is to take advantage of new types of loans structured to make

existing homes more attractive, and new homes more affordable. Some properties are almost perfect, the location is good, and the property has potential, but significant improvements need to be made. Without those repairs, the home might not be suitable for living, and lenders might be unwilling to fund loans on a property with problems. A FHA 203k loan makes it possible for buyers to turn that property into a home. An FHA 203k loan allows buyers to borrow money, using only one loan, for both home improvement and a home purchase. While the interest rates will vary, depending on rates and buyer credit, in general the 203k loan, like other FHA loans,

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can be secured with as little as 3.5 percent upfront. Additionally, the majority of FHA 203k clients are establishing instant equity. The FHA 203k loan program provides homebuyers the opportunity to buy and fix up a property, without exhausting their personal savings. Homebuyers can purchase a property and include whatever costs to make required repairs, desired updates, or to fully renovate the property, all into one simple 30-year fixed loan. But, contrary to what so many people believe about the FHA 203k loan, it is not just for repairs. Any singlefamily home, townhome or even

multi-unit (up to four units) property can be financed with FHA 203k financing, so long as the buyer is buying the property as their primary residence. While the FHA 203k loan makes buying affordably realistic for firsttime buyers, especially the creditchallenged Millennials, the one-time close loan is a great option for buyers looking to purchase a home from a builder or to put a home on their existing land. A one-time close loan is a type of mortgage available for those who are building a house. If they were to get a traditional

construction loan, they would have to go through two different closings during the process. Whenever they initially start building the property, they are going to have to go through one closing with a lender. Then, whenever the property is completed, they are going to have to go through a second closing to get funds so they can pay off the initial construction loan. The second loan will then be a traditional mortgage loan that they can will pay for over many years. By utilizing a one-time close loan, they eliminate paying two sets of closing costs. Outside the major metropolitan areas, where there actually is land to be purchased, the one-time close loan offers the opportunity to secure your ideal location, then build a home. For instance, a buyer finds the piece of land where they’ve always dreamed of living, they can now roll the construction of purchase of the home they want to build on that land into one loan. Also, potential homebuyers who were gifted or given land, can use that land as equity for a loan to construct or build on that land. All over Middle America, people are buying kit, modular or manufactured homes and putting them on land they were gifted, willed or bought at a very reasonable price, thanks to the existence of the onetime close. The most important aspect for first-time homebuyers in choosing the right type of loan for their needs is avoid choosing an inexperienced FHA 203k or one-time close lender. These programs weren’t needed until now, so many lenders have chosen not to provide either the FHA 203k or one-time close loan, whether because they don’t know how, don’t want to invest in learning how or don’t want to do the extra paperwork. Either way, working with a lender who isn’t experienced with FHA 203k and one-time close loans is something you should avoid at all costs. Both the FHA 203k loan, with onetime close, and the one-time close loan are a perfect path by which smart mortgage industry professionals are leading and helping first-time buyers. Whether it be new, existing, needing renovation or combining land purchase with construction cost, whatever that new home sweet home looks like for a first-time buyer, the right loan can get them home.

Laura Brandao is chief operating officer at American Financial Resources (AFR). She is the driving force that has catapulted AFR Wholesale to the top of manufactured home, one-time close and renovation lending markets in the USA.

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Sabbath Setting

By Eric Weinstein

really effected new doctors who were the only ones burdened by big student loans, Then, during the financial crises, guidelines got strict and you DID have to factor them in. Then college costs exploded. To combat this, the student loan people got smart and came out with a “graduated payment plan”, where you pay a little now and a more later after you are financially established. So to parry this, FHA guidelines changed to where payments that do not fully amortize the student loan are to be replaced by one percent of the balance for underwriting purposes. Point, counterpoint. This is particularly hard felt by Millennials saddled with huge student loans in our present era. So what is the solution? Have you noticed DU will give you an approve/eligible on FHA loans with a DTI at 55 percent now with a fairly decent credit score? The more things change, the more they stay the same. The one “Trend in the Mortgage Industry” I have found is that guidelines are a pendulum. They swing to too strict, and then to excessively loose depending on the economic times. Like the Bible, they are interpreted and reinterpreted constantly to keep them relevant to the changing mores and values of the

population. I am not saying it is wrong or right, just a truism of life. It has never ceased to amaze me, the ingenuity of mankind to overcome obstacles and improve the efficiency of operations by adapting and changing through technology. When I was a kid, an Orthodox Jewish family would keep the gas flame on their stove at a very low burn over the Sabbath so as not to go astray of a Commandment. Now we have an electronic setting for this. In FHA loans, you had ratio problems, but now you can

accommodate Millennials with massive student loan debts by going beyond the normal back end ratios were all taught to respect and obey. Robots are terrific that way. Going back to even when that original caveman thought to put on that first animal skin when it started getting nippy outside, as the environment changes, people seem to make due and survive and thrive. The next time you have a problem, find YOUR “Sabbath Setting,” and figure it out. I will bet a robot is somehow involved.

“The one ‘Trend in the Mortgage Industry’ I have found is that guidelines are a pendulum. They swing to too strict, and then to excessively loose depending on the economic times.”

Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. Eric is semi-retired, doing mortgages by referral only. He may be reached by phone at (703) 505-8692 or e-mail EWeinstein4U@gmail.com.

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o I got a call from my wonderful and beautiful processor Renee this morning totally unrelated to mortgages. She wanted to know what the “Sabbath Setting” on her oven meant. Being the resident, and only, Jewish person in the office, the question fell to me. What does this have to do with “Trends in the Mortgage Industry?” Keep reading … The answer starts about 3,000 years ago when the Jewish people left Egypt. This is celebrated, coincidently, by Passover, which is only a few days from now as I write this. After the Jewish slaves left the Land of Bondage and Pyramid building, the Lord gave Moses the Ten Commandments. Number Five Commandment was keeping the Sabbath holy. Keeping it holy meant you could not work on Saturday. Starting a fire was considered work. You could keep a fire going, but you could not start one. Fair enough. Of course, this was written a long time ago, before electricity. Jewish scholars have now determined that electricity is considered a form of fire, so, if you are strict in your interpretation and Jewish, you cannot turn on any electricity on a Saturday. But consider a dimmer switch. With that you can keep a light on at a very low point and turn it up, because you are not technically starting a new light, just feeding an existing one. That is what the “Sabbath Setting” on an oven does. The oven is on, but on too small for you to notice. Similarly, FHA guidelines were originally written in a different day and age seemly thousands of years ago. Guidelines evolve with the times, but they still contain that original concept. Rules are continually re-interpreted for a modern age with new circumstances which could never ever been envisioned when first written. On FHA loans, it used to be that you didn’t have to count student loans that were deferred. At that time, it only

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Adapting and Marketing to the Hispanic Community By Javier Mendoza

s mortgage professionals, we are always looking for the next customer to help. We look for the latest marketing tools and newest technologies to serve the needs of our clients, but there is one sector of our market that is still underserved: Hispanics. The Hispanic population is the second largest ethnic group in the Unites States, totaling 52 million or 16.7 percent of the national population. Based on the 2010 National Census, Hispanics are now the largest minority group in 191 of out 366 metropolitan areas in the U.S. The projected Hispanic population of the Unites States for July 2050 is 132.8 million people or 30.2 percent of the nation’s total projected population. It is important to understand that nearly six out 10 Hispanics are Millennials or younger. According to a 2014 Pew Research Center analysis of U.S. Census Bureau data, the Hispanic population is the youngest in the nation. The median age of Hispanics is 28years-old. So if the Hispanic population is such a large segment of the market, how do we, as mortgage industry professionals, adapt and market to their needs? First, we must understand not only the Hispanic consumer’s financial needs, but also their cultural needs. When I meet with potential Hispanic borrowers, I ask them to tell me their top priorities in seeking a mortgage. The response is almost always the same: To realize the American dream of homeownership. With young Hispanics, I am often told that they want to provide for their young children and their parents. Like many American homebuyers, they are looking for a place to call their own and raise their families. Once we understand what drives their desire to become homeowners, we need to start putting practices into place that help them achieve their dreams.

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To gain the trust of a Hispanic borrower, it is important to dedicate time at the beginning of the loan process to educate them on the Five C’s of mortgage underwriting. The objective here is to educate them on the elements of their credit and relate it to the Hispanic culture. We need to emphasize how cosigning for a parent, sibling, or

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elder family member. It is a matter of providing education and communicating all aspects of the transaction as early as possible. A primary reason Hispanic consumers do not understand the mortgage process is simply because they have not been educated on it. Hispanic consumers need more education on how credit, income, and assets are analyzed. Many young Hispanics grow up in households where credit is not understood, so when it comes time to buy a home, they are at a loss of what to do next. They do not know how the process works or may

“… now that we understand the struggles the Hispanic market faces, what other challenges do we face as an industry?”

other family member has a direct impact on their borrowing power. When it comes to the term “cash” for the asset portion of the conversation, we must understand that from the lender’s perspective, “cash” means assets. However, many Hispanics take the term literally, as in physical money. We have to explain to them that lending guidelines require that all assets are verified, specifically the assets to be verified in the applicant’s name. In many cases, the assets are in the name of an

not have the established credit history to even get a mortgage. As mortgage professionals, we need to emphasize the importance of credit and provide them with more education and resources on the mortgage process and establishing good credit. Consider hosting homebuying seminars specifically for your Hispanic community members to give them opportunities to learn about the process before they begin. Next, we need to understand

the language challenges that Hispanic consumers face when seeking a mortgage. Second only to English, Spanish is the most used language in the United States with 38 million U.S. residents speaking Spanish at home. Since a majority of mortgage professionals only speak English, documentation and marketing materials are primarily printed in English, which creates a language barrier that leaves many Hispanic consumers confused about the process and their options. If Spanish-speaking consumers have difficulty understanding what they are agreeing to as far as mortgage rates, terms, conditions, etc., due to the fact that they are not spoken to or provided documents in a language they completely understand, it may lead to confusion and a fear of being taken advantage of. We, as mortgage professionals, need to understand that in many cases, the English-speaking Hispanic borrower relies on non-English speaking family members to make mortgage decisions. Therefore, the more material that can be provided in both English and Spanish, the better. Although we have seen improvement in recent years, the Hispanic market has been slower to adapt to technology than most non-Hispanic homebuyers. Utilizing a Client Relationship Management (CRM) system (e.g., automated e-mails) to reach the Hispanic market has not been as efficient as it has been for the non-Hispanic market. Again, one primary reason is the language barrier— there are simply not enough materials in Spanish to send to the Hispanic consumer. This means that if you only have enough Spanish materials to email a Hispanic borrower once a month while you have enough to send a non-Hispanic consumer an e-mail once a week, your system won’t be as effective in reaching that market. Another reason is that Hispanic consumers have limited access to technology, which means that even if you are sending out frequent e-mails, they may not be getting them. So, now that we understand the struggles the Hispanic market faces, what other challenges do we face as an industry?

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Mortgage companies have compliance departments that find it difficult to translate English marketing material to Spanish as there are mortgagespecific words and phrases in English that are not easily translated into Spanish. This causes concern that, if not properly translated, the marketing material may be in violation of company, state and federal compliance regulations. Many Hispanics live in multigenerational households. As a result, they pool all household income and assets together. This can cause issues when providing mortgages to Hispanic buyers and homeowners as many agency and investor guidelines do not accommodate these situations. The industry needs to reevaluate how to address these non-traditional households to better serve the Hispanic market. How do we address these issues, both for our consumers and in the industry? The first step is to alleviate language barriers by hiring more Spanish-

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speaking professionals in every aspect of the industry. From sales and operations, to marketing and compliance, to company and industry leadership, we need employees who understand the needs of the Hispanic consumer and how to properly communicate with them. We also need to create marketing materials, disclosures and documentation in Spanish and provide these consumers with the education and resources needed to make informed decisions. Having people on staff who can speak, read and write the language makes providing these materials much easier. When it comes to Hispanic buyers, itâ&#x20AC;&#x2122;s important for the mortgage industry to understand and adapt to their unique needs to better serve them. In general, a Hispanic client is very loyal. Hispanics in the U.S. have huge purchasing power. This purchasing power is estimated to be $1.3 trillion, and it is expected to grow by 50 percent over the next five years.

According to the Experian Simmons Summer 2011 National Hispanic Consumer Study, 56 percent of Spanish speakers agree that when a company advertises to them in Spanish, the consumer will show loyalty as the company is showing respect to their heritage. A Hispanic borrower will relate better to a company that demonstrates the importance in providing marketing in Spanish. Regardless of their demographic, when your consumer feels like they are

understood, have all the facts, and that you are on their side, they feel more confident in their decisions and are more likely to trust you throughout the process. Remember that borrowers take pride in referring a good loan officer to their family and friends. When you close their loan, keep in touch with them after the closing and continue to market to them. If they had great service, they will become clients for life and keep coming back to you for all of their mortgage needs.

Javier Mendoza is the branch manager of Inlanta Mortgageâ&#x20AC;&#x2122;s Carpentersville, Ill. location. Javier joined Inlanta in January 2015 as a senior loan officer, and has more than 14 years of mortgage industry experience. He is a member of the National Association of Minority Mortgage Bankers of America (NAMMBA) and is passionate about helping immigrants achieve their dream of homeownership. 71

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Mortgage Insurance Goes Mobile By Craig Anderson cross all generations, from Baby Boomers to Millennials, people demand answers to their online questions in a matter of seconds. Whether looking for a restaurant, a hotel or even a mortgage, they want results quickly and with several options from which to choose. According to the National Association of Realtors (NAR), almost 90 percent of all homebuyers utilize some sort of mobile device to initiate their research. I recently attended the Mortgage Bankers Association’s Technology Conference in Chicago, and had several discussions relating to the utilization of mobile technologies in the mortgage industry. Without exception, conversations centered on lender adoption and why a mobile strategy is no longer a luxury, but rather an absolute

necessity to remain competitive in today’s consumer-driven environment. Mortgage technology vendors have historically created technology platforms based on the needs and desires of mortgage lenders, tailoring features to the purchasing clients who utilized the system. Today, technology vendors are forced to create new products or enhance existing systems to meet the demands and convenience of today’s consumer. Mobile technology is the new normal. No longer are consumers left out of the technology design, they are at the forefront. Today, the majority of mortgage vendors currently have a mobile strategy or are in the development stages. Without this focus on the borrower, it will be very hard for mortgage lenders to attract new customers. With more than 75 million Millennials in the U.S., they now outnumber Baby Boomers, and they have changed the entire

“Today, technology vendors are forced to create new products or enhance existing systems to meet the demands and convenience of today’s consumer. Mobile technology is the new normal.”

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homebuying process from beginning to end. According to a Nielsen survey, when asked what makes their generation unique, Millennials ranked “Technology Use” first, while Boomers ranked “Work Ethic” as the most defining characteristic of their generation. A lender without a mobile strategy is at a huge disadvantage. Everything today is researched online, primarily via a mobile device. Millennials grew up as digital natives, they take technology for granted and aren’t intimidated by it. They have a more positive view of how digital technology affects their lives than any other generation before them. Their expectation is for their mobile experience to be convenient and personalized to them, with multiple buying options to choose from, and they expect to be educated on things they aren’t familiar with. In the case of homeownership, most Millennials have never purchased a home before and are unfamiliar with the process, as well as all the different mortgage products available: Fixed versus ARM, what type of ARM, first-time homebuyer programs, and so on. Now let’s introduce the concept

of mortgage insurance, or MI, to the consumer. Most people today have little knowledge of what mortgage insurance is, why it is needed and who it covers. If a homebuyer puts down less than 20 percent, they will be required to have mortgage insurance added to their loan. This is to protect the lender in the event the borrower defaults on their loan, in which case the insurance company will cover a portion of the lender’s loss. I polled 10 of my neighbors who have a mortgage and asked them if they knew what mortgage insurance is and why it’s needed. Eight out of 10 could not answer completely. These are people in their second and third homes who have gone through the mortgage process before. When needed, mortgage insurance is a vital component of the loan, but few truly know why. To that end, how many mortgage professionals actually know that there are several different types of mortgage insurance programs available to their borrowers? Most private mortgage insurance companies have about 15 different product variations for the borrower to choose from. Some of the basic plans for

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As a result, more and more borrowers will be researching the different types of mortgage insurance in advance and choosing the product which best suits their needs. Today’s borrowers, especially Millennials, demand to be better informed during the mortgage process Lenders will have to be more transparent and provide their customers with information about a wide array of mortgage products. This includes more

choices for mortgage insurance plans and payment options. Industry leaders are always looking for ways to stand out and provide the consumer with the best possible experience. Presenting outstanding options,

like MI, and doing so while utilizing the mobile technology tools that today’s borrowers are using every day, is a guaranteed way for a lender to emerge head and shoulders above the competitors.

Craig Anderson is the director of Client Integrations for Genworth Mortgage Insurance, a provider of mortgage insurance and technology solutions. Craig has more than 23 years of experience in the mortgage industry, with the last 15 years focused on technology. He holds five Microsoft certifications.

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borrower-paid MI include a monthly premium option, a standard annual premium option, a single premium option, or even a split premium option where a portion of the premium is paid up front and followed by lower monthly payments, much like an FHA loan. There are also options for the borrower to have the lender pay for the MI, which is then typically offset with a bump in the interest rate. The point is, in most circumstances, the borrower has no idea that these product options are available. The lender is in charge of choosing the mortgage insurance company and the lender chooses the MI product. This is where MI goes mobile. Mortgage insurance is now being integrated with online product and pricing engines to show the MI payment. Potential borrowers who utilize online companies like Zillow, can search for a home and use online mortgage tools to see what their mortgage payment will be, including the mortgage insurance. My company partners with mobile technology providers like Roostify, a Web and mobile platform that streamlines and accelerates the homebuying process, to integrate different mortgage insurance options into their solutions. This allows banks, credit unions and other lenders to offer a true online mortgage experience for their borrowers. No more payment surprises for the consumer when reviewing the final documents. It wasn’t long ago when the mortgage loan officer would choose the mortgage program they felt was the best option for their borrower. Often, this was the best option for the loan officer and not the borrower. With all the financial tools available online and via a mobile device, consumers are researching which mortgage program is best for them and their situation before meeting with their lender. Being better educated allows the consumer to choose the best mortgage option available for their situation. This includes choosing mortgage insurance. Within the MI industry, rates and comparison tools are available online or as a mobile app. They are designed to educate mortgage professionals on each provider’s own MI premium plans, but consumers can benefit as well. Better education, mobile availability and access to MI quotes will transform the process.

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Gaining Market Share Through Diverse Segments By L. Maria Zywiciel

n April 27, 2017, the Consumer Financial Protection Bureau (CFPB) released a report outlining strategies to promote diversity and inclusion in the mortgage industry. Representatives from the industry, the bureau’s Office of Minority and Women Inclusion (OMWI) and the Mortgage Bankers Association (MBA) discussed the importance of developing “a strong business case for diversity and inclusion.” Data and dollars can usually create the strongest case for any business imperative. A few such reports have been the most compelling, in my opinion. First, “The State of Hispanic Homeownership Report,” an annual publication by The National Association of Hispanic Real Estate Professionals

(NAHREP), recently cited that for the second year in a row, the Latino homeownership growth rate increased, while overall homeownership rates declined to a 51-year low. Second, Latinos will account for 52 percent of new homeowners between 2010 and 2030. Third, according to the Joint Center for Housing at Harvard’s New Home Demand Projections, diverse markets will represent 13 of the 17 million new household formations in the U.S. between 2010-2025. So the question is really not “Why?” but “How?” How can an organization move from acknowledging the demographic shift that is shaping the housing industry to really beginning to do something to address it? 1. Know your people Many opinions will logically point out the need to recruit more professionals into lending or real

“How can an organization move from acknowledging the demographic shift that is shaping the housing industry to really beginning to do something to address it?”

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estate. That is true, as the number of diverse professionals in these fields are still in single digits. However, that takes a long time to cultivate. Also, the irony is that if you are not currently diverse, it may be hard to find diversity as people will want to see others like them who have been successful in the company. Yes, please go and look for talent. Look for the talent in similar fields (like title companies, insurance sales, etc.) but in the meantime, look within. Make note of current employees that perhaps have been in operations or finance, etc. that show potential and can learn new skills. You may have a great bench team you don’t even realize within your own organization. Outline the career pathing available to them. Let them have the choice of being part of a larger initiative to recruit diverse talent in your sales ranks. 2. Know your markets Opening branches (either for a lender or real estate) where you’ve identified talent can be limiting. You may be hiring the same type of producers you’ve

always hired in the markets you’ve always sold in. Conducting a market share opportunity analysis can give you ideas on where you may want to shift your business development or your recruiting focus. 3. Know your products There are so many underutilized programs out there that can help qualified individuals with down payment or closing cost programs and yet sometimes they are so hard to find out about. If you are a lender, you should have them prominently displayed on your website. Why a customer, or a loan officer for that matter should, go combing through pages of web before they find out about these programs? Real estate professionals should also be aware of lender partner programs. The more education on program and products we can give to not only customers but also professionals, the better off everyone is. 4. Know your process Most companies have net

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promoter scores or customer scoring surveys at the end of the lending/buying cycle. It’s always good to see the rave reviews. How do we know how the experience is for a client who has Limited English Proficiency (LEP)? Data shows that many minority populations (especially among Asian and Latino communities) live in extended family households. Wouldn’t it be safe to assume that a delighted customer with LEP who was surveyed would refer all their friends and family? If not, would we even know how to fix it?

create detailed, informative profiles for every city in the United States: City-Data.com l Downpayment Resource creates opportunity for

homebuyers, Realtors and lenders by uncovering programs that get people into homes, check them out at DownpaymentResource.com.

L. Maria Zywiciel is president of NAHREP Consulting Services, a marketing consulting firm specializing in the Hispanic segment and housing industry. For more information, visit NAHREPConsulting.com.

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l The National Association of Hispanic Real Estate Professionals: NAHREP.org l The Asian Real Estate Association of America: AREAA.org l The National Association of Real Estate Brokers: NAREB.com l The FFIEC Geocoding/Mapping System (System) helps financial institutions meet their legal requirement to report

information on mortgage, business, and farm loan applications: GeoMap.FFIEC.gov/FFIECGeo cMap/GeocodeMap1.aspx l NCS is a multicultural strategy and marketing consulting firm that can assist you in creating effective market strategies: NAHREPConsulting.com l By collecting and analyzing data from a variety of government and private sources, they’re able to

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5. Know what you don’t know There’s no shame in feeling uncomfortable in pursuing a business development opportunity that doesn’t come natural to you. It’s human nature. I never considered myself a great golfer, but I learned how to not embarrass myself on a golf course through golf lessons, hanging out with golfers and being at the golf club. That’s the same with diverse segments. Unless you put yourself out there, you won’t learn. Go to a diverse after hour mixer to get to know local professionals, or get involved in a chamber or a chapter of a diverse trade association. Unless you’re learning about the culture(s), hanging out with diverse colleagues, or socializing with some local connectors, you won’t ever make those inroads. Many organizations hire business development officers to do this specifically. Whether it’s you or someone your organization will hire, make it worthwhile and maximize the power of relationships. Here are some resources for you and ways in which you can get plugged in:

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Is the Mortgage Industry Painting With Too Broad a Brush? By Desirée Patno omeownership has and will continue to be a meaningful way to create wealth and stability in a person’s life. Whether it’s being utilized to diversify assets or make space for a growing family, owning a home is an achievement and important step to a better life. Becoming a homeowner helps safeguard a person’s professional achievements and can pull them out of poverty. However, current mortgage lending trends show that a significant portion of Americans are being all but excluded from homeownership by stringent credit-assessing practices leading to mortgage rejections. The Great Recession, which

saw nearly eight million American homes fall into foreclosure, highlighted the risks and issues in housing boom mortgage lending; it was this financial crisis that set the scene for the Dodd-Frank Act of 2010, which imposed rigid standards for home loan qualification. Recent research by Alberto Rossi and Francesco D’Aunto, assistant professors of finance from the University of Maryland’s Robert H. Smith School of Business, shows that following the passage of Dodd-Frank, mortgages obtained by middleclass households decreased by 15 percent. Aiming to protect the economy, financial institutions and prospective homebuyers, these regulations have at times overburdened the mortgage process, leaving Americans

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stagnant in their journey to a better future. When it comes to lending, is the mortgage industry painting with too broad a brush? Minorities Pew Research Center data reveals that Black and Hispanic homebuyers experience significantly higher difficulty obtaining conventional mortgages than whites and Asians, and usually pay higher interest rates when they are approved. Mortgage rejection is one contributor to the homeownership rate disparity of Black (41.3 percent) and Hispanic (47 percent) households in comparison with White households (71.9 percent). According to Pew Research Center analysis of Home Mortgage Disclosure Act (HMDA) data, in 2015, 19.2 percent of Hispanic applicants and 27.4 percent of black applicants were denied mortgages, compared to 11 percent of White and Asian applicants. For Blacks, credit history is the number one cited reason for mortgage rejections; for the three other groups, debtto-income ratio was the foremost explanation. Contributing to lower affordability, mortgage rates also enact an uneven impact on homebuyers. In 2015: l Sixty percent of Black householders and 65 percent of Hispanic householders had mortgage rates below five percent, compared to 73 percent of White householders and 83 percent of Asian householders l Eighteen percent of Hispanic householders and 23 percent of Black householders had mortgage rates of six percent or more, compared to 13 percent of White householders and six percent of Asian householders

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In addition to these mortgage difficulties, an emerging trend is a significantly smaller and less diverse mortgage applicant pool. Pew reports that in 2005, about 10 percent of conventional mortgage applications were from Black households, and 14 percent came from Hispanic households. In 2015, less than four percent of these applications came from Black households, and fewer than

seven percent were from Hispanic households. The inequality in mortgage accessibility and interest rates is formidable, meaning that a disparate amount of Black and Hispanic households are unable to achieve homeownership like their White and Asian counterparts. One issue that must be understood in order to successfully navigate the future of the industry is the reason behind the sharp decline in conventional mortgage applications. Is poverty the main factor? U.S. Census Bureau data shows that poverty levels of Hispanic and Black households are actually decreasing. From 2014 to 2015, Hispanic poverty level declined from 23.6 to 21.4 percent, and the median annual income of Hispanic-origin households rose 6.1 percent, from $42,540 to $45,148. Similarly, the poverty level of Black households decreased to 24.1 percent from 26.2, and their median annual income increased 4.1 percent, from $35,439 to $36,898. Are Americans losing the desire to own homes? While the role of poverty cannot be underestimated, it is necessary to assess the other aspects at play. As recent U.S. Census Bureau data affirms, the 63.6 percent homeownership rate in the first quarter of 2017 was not statistically different from the 63.5 percent rate in the first quarter of 2016 or the 63.7 percent rate in last year’s fourth quarter. This means that in the past year, the homeownership rate has neither worsened nor improved, but it has been on a steady decline since 2006. Mortgage rates, which have hit historic lows in recent years, add another piece to the puzzle. According to the Federal Housing Finance Agency (FHFA), the average interest rate on all mortgage loans increased in December (3.91 percent), January (4.17 percent) and February (4.25 percent) before dropping 13 basis points in March (4.12 percent). The FHFA House Price Index (HPI) also reveals that home prices went up 6.2 percent from the fourth quarter of 2015 to the fourth quarter of 2016. These turbulent interest rates and rising prices

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could be outweighing the benefits of homeownership for prospective buyers.

experience a tougher time paying back their loans, and their interest rates make accumulating wealth through homeownership a discouraging task. It isn’t difficult to recognize that for some women, homeownership can seem like a more prudent step in the future. Credit On the road to access mortgages, Americans’ relationship with banks is often center stage. The FDIC’s 2016 biennial “National Survey of Unbanked and Underbanked Households” shows: l Seven percent of households were unbanked, having no account relationship with an insured institution l Approximately 19.9 percent of households were underbanked, encompassing households in which a person had a bank account, but still resorted to alternative financial services providers throughout the year l The survey found that 27 percent of households, or 90 million Americans, were unbanked or underbanked l The following segments have a higher probability of being unbanked or underbanked: 42 percent of households with incomes below $30,000 per year; 49 percent of AfricanAmerican households; 46 percent of Hispanic households; and 46 percent of households headed by a working-age individual with a disability.

creating better lives. People capable of repaying home loans should be allowed the opportunity to do so, and those not in a position to obtain mortgages need to make the necessary changes to situate themselves for homeownership, such as opening a bank account. With rising prices, unpredictable interest rates and a stagnant homeownership rate, actions need to be mindful in order to empower today’s American homebuyers and would-be homebuyers.

Desirée Patno is president and CEO of the National Association of Women in Real Estate Businesses (NAWRB). With more than 25 years in real estate and championing gender equality, Patno brings insider knowledge to NAWRB’s mission of advocating on behalf of women and women-owned and small businesses in the housing ecosystem. She may be reached by phone at (949) 559-9800 or e-mail Info@NAWRB.com. 77

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Without a solid baking relationship, it is hard for a person to have credit scores that satisfy current mortgage lending standards. Unbanked and underbanked describes millions of families in the United States, meaning millions of people without the benefits of homeownership and an economy missing out on their buying power. The recent Bankrate Financial Security Index found that only 52 percent of Americans have more money in emergency savings than credit card debt, and 24 percent have more credit card debt than emergency savings; 17 percent remain in the middle with no savings or debt. These figures emphasize the importance of protecting

what little savings consumers have. As the U.S. continues to recover from a recession that saw millions of people’s homes and life savings slip out of their hands, the need for banks and financial institutions that protect consumers’ savings through sound financial practices is paramount. Irresponsible lending led to the worst recession in recent history, but stringent standards are effectively preventing Americans from accessing mortgages, homeownership, and

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Women Women are another market expressing uncertainty towards the housing market. Like minorities, women face roadblocks when procuring mortgages. A new study from the Urban Institute, “Women Are Better than Men at Paying Their Mortgages,” describes that when examining loan performance for the first time by gender, women’s lower credit scores do not indicate weaker performances, and women actually perform better than men. The report found that female-only borrowers actually default less than maleonly borrowers. For mortgages originated from 2004 to 2007, the default rate for female-only borrowers was 24.6 percent, compared with 25.4 percent for male-only borrowers. Despite this repayment performance, single borrowers, particularly women, have higher mortgage rates; from 2004 to 2014, the average rate for female-only borrowers was 5.48 percent compared to 5.41 percent for male-only borrowers. A 2011 Journal of Real Estate Finance and Economics study also shows that on average, women pay more for mortgages than men; women’s mean interest rates are 0.4 percent higher than men’s. While the repayment figures are not statistically different, women perform on par with men, emphasizing the lack of evidence-based explanation for the higher mortgage rates women experience. In some demographics women even depict higher homeownership rates than men. In 2015, the homeownership rate of female householders in oneperson households was 24.56 percent higher than the homeownership rate of male householders in the same category, according to Census Bureau data on national household demographics. There remains the question; do women want to become homeowners? When analyzing the benefits, homeownership may not be a desired step, especially if women are single and have only one paycheck. With lower incomes and higher mortgage rates, women

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Valuation Sector Challenges in 2017 and Beyond By Greg Stephens, SRA, MNAA, CDEI his article focuses on recent developments within the mortgage industry valuation sector and the impact to the other industry stakeholders and ultimately, consumers. Areas covered include appraiser shortages in certain markets, increased appraisal fees, extended turn times, use of Trainees, acceptance of licensed appraisers, valuation challenges in rapidly rising markets.

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Appraiser population trending In recent years, staff at The Appraisal Foundation (TAF), the Appraisal Subcommittee (ASC) and even the largest national appraisal organization, the Appraisal Institute were stating there is no shortage of appraisers. Those opinions were based upon the aggregate numbers of credentials reflected in the ASC National Registry where all credentialed appraisers are required to be registered. What was not taken into consideration were the dynamics of regional market activity where lenders were beginning to experience delays in the delivery of residential appraisals and significant increases in appraisal fees. Recognition of a pending shortage of appraisers began to surface in industry-related articles such as Market Watch in November 2015 citing the 20 percent decrease in credentialed appraisers from 2007 to 2015. National Association of Realtors President Tom Salome was quoted in an article by Rob Chrisman in the Mortgage News Daily in August of 2016 where he wrote Mr. Salome stated, “... in addition to affordability concerns, an issue seen earlier in the housing recovery may be reemerging. Realtors are indicating that appraisal complications are appearing

more frequently as the reason why some home sales settlements are being delayed ...” “Appraisal-related contract issues have notably risen over the past year, and were the root cause of over a quarter of contract delays in the past three months … This is likely a combination of sharply growing

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revealed extended turn times and increased fees in Montana, Oregon, Washington, Colorado, North Dakota, and some areas of Texas and Utah. This regional market shift has been impacting all industry participants. Lenders were reporting the adverse impact on rate locks. Homebuilders were reporting buyers being delayed moving into purchased homes, due either to a delay in the appraisal of the new home purchase, or the appraisal for the sale of the home the purchasers were selling to buy the new construction property.

“… the numbers suggest there are enough appraisers to service the volume of loan transactions in reality the supply side of the equation is unable to respond to market surges as evidenced in several markets around the country.” home prices in some areas, the uptick in home sales this year, and the strong refinance market overworking the already reduced number of practicing appraisers. Realtors are carefully monitoring this trend.” In October 2016, a lender reported 45-day turn times in the Denver market, and being quoted $900 appraisal fees for a “normal” 1004 appraisal in the Washington/Oregon markets and $2,000 for rush orders. Also in October 2016, another lender

Realtors have been reporting the challenges of waiting for an appraisal to be completed 30 to 45 days after a contract was written only to discover the appraised value was less than the agreed-upon purchase price, thus impacting the buyer, the seller, the listing agent, the selling agent, the lender, and if the transaction involved new construction—the builder. So, although on the surface, the numbers suggest there are enough appraisers to service the

volume of loan transactions in reality the supply side of the equation is unable to respond to market surges as evidenced in several markets around the country. What lies ahead? To better understand what most likely lies ahead both short term and long term requires a review of what market forces had the greatest influence on the appraisal industry that go us to where we are today. It has been no secret the population of appraisers is aging. This, however, is not unique to the appraisal profession. Other industries and professions are experiencing an aging of their population as well. However, real estate appraisal appears to be at the apex of a perfect storm where a multitude of events produced devastating unintended consequences. To begin with, it is one of the most regulated industries in the country, especially after increased requirements for entry into the profession by The Appraisal Foundation Appraiser Qualifications Board (AQB) in 2008 and 2015. In 2008, the Licensed Appraiser Credential required 75 Hours of Qualifying Education (QE) and 2,000 hours of experience, obtained in not less than 12 months. The Certified Residential Credential required 125 hours of QE and 2,500 hours of experience, obtained in not less than 24 months. The Certified General Credential required 225 hours of QE and 3,000 hours of experience obtained in not less than 30 months, and 1,500 hours must be in non-residential appraisal work. The Trainee Appraiser Credential required 75 hours of QE, which included successful completion of the 15 Hour USPAP Course. Effective Jan. 1, 2015, the Licensed Appraiser Credential QE requirement was increased from 75 hours to 150 hours. That surpassed the previous Certified Residential requirement by 25 hours. The Certified Residential Credential QE requirement was increased from 125 hours to 200 hours and also requires a fouryear college degree. Attracting college graduates

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applying for a Trainee Credential or upgrading to a higher level of credential. Inability to respond I recently celebrated my 40th year in the appraisal profession. What I observed in that time period has been a continual ebb and flow of mortgage-lending volumes. That erratic predictability is right up there with death and taxes. Prior to the existence of the

current regulations and restrictions appraisers could hire trainees and in a matter of months have them providing competent assistance as a force-multiplier. In my career, I personally trained in excess of 50 individuals to become appraisers and can attest to the viability and success of such a system. It is the opinion of several industry leaders, the current restrictions and regulations

impacting Trainees is the greatest contributor to the challenges many lenders are experiencing regarding extended turn times and significant increases in appraisal fees. Through the combination of lender and regulatory restrictions we no longer have the ability to quickly respond to market upswings that could have continued on page 80

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has been problematic. Spending two years being identified as a “Trainee” has been viewed as demeaning for recent college graduates seeking to enter a profession. But even more importantly, the economic viability of the program has been impacted by the proliferation of appraisal management companies as an unintended consequence of the Home Valuation Code of Conduct (HVCC) implemented in May 2009. Recent published numbers are showing lenders using AMCs to complete over 80 percent of all residential mortgage loan appraisal assignments. Unfortunately, in many cases, the fee paid by the lender to the AMC is the same fee the lender was paying the appraiser when they were directly engaging the appraiser. This has had an impact on the income streams of appraisers, to such an extent that many appraisers left the profession or realigned their business models into other valuation industries and away from mortgage lending. Others are either struggling to survive financially or if they are surviving financially, it is not to such a degree they can take on the expense of directly supervising a trainee through the required two-year supervision period until the appraiser is appropriately credentialed. This has also been exacerbated by the misperception among lenders they could not utilize Trainees in the appraisal process, thereby prohibiting the use of a Trainee. Additional requirements of three to five years of experience as a credentialed appraiser prior to being accepted on the lender appraiser panel has also diminished the incentive of appraisers to take on a trainee. Another culprit has been the state appraiser regulators who implemented restrictive and burdensome statutes and rules for Supervisory Appraisers and Trainees, or in some instances–no Trainee credentialing program at all. In a survey of state appraiser regulators conducted in 2016, twenty states reported significant reductions in the number of Trainees either

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a new wave of homebuyers

averted the shortages experienced in several markets in 2016 and into 2017. We do not advocate going back to an un-regulated industry but it is quite evident the pendulum has swung too far to the extreme with devastating consequences for many appraisers, the users of appraisal services, related industry stakeholders and the public. The demise of licensed appraisers Another contributor to the market challenges can be traced to when Congress mandated that the Federal Housing Administration (FHA) restrict their panel of fee appraisers to only those practitioners with a certified credential. The unintended consequence was the industry reaction to exclude licensed appraisers from appraisal

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assignments in the event a possible conventional loan would be converted to FHA. The results have been catastrophic for licensed appraisers. In a presentation at a conference of state appraiser regulators in Tampa Florida in April 2017, The Appraisal Foundation President David Bunton indicated that in 2007 there were 30,286 licensed appraisers registered on the Appraisal Subcommittee National Registry. In 2017, that number had diminished to 7,854, a decline of 74 percent. So what now? Regulatory changes take time. The AQB is currently scrambling to respond to the devastating impact of previously implemented requirements to the Real Property Appraiser Qualification Criteria. They have a Third Exposure Draft published with written public

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comments due by May 12, 2017. Any final published change will not be implemented prior to 2018. Industry participants are encouraging lenders to accept trainees in the development of appraisals, signing appraisal reports and independently inspecting properties when they

meet the competency requirements. Appraisal fees have been increasing over the past year and hopefully with lender acceptability of appraiser trainees more appraisers will be willing to take on the next generation of appraisers and put us in a much better position to respond to future lending surges.

Greg Stephens, SRA, MNAA, CDEI is chief appraiser and senior vice president of Compliance for Metro-West Appraisal Company. Greg also serves as chair of Government and Legislative Affairs for the National Appraisal Congress; vice chair of the Government Affairs Council for Collateral Risk Network; and is a member of the Government Relations Committee for the National Association of Appraisers.

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Telemarketing Liability ompliance Matters, presented by Lenders Compliance Group, airs every Friday at 7:00 a.m. Eastern on MortgageNewsNetwork.com. Compliance Matters is brought to you by Mortgage News Network, and the program provides practical advice regarding current mortgage compliance topics. If you would like to contribute a question, please submit it to Compliance@LendersComplianceG roup.com.

C Question

We are telemarketers and sell our leads to mortgage lenders. The issue for us is whether we can avoid liability if we are in error, suc—h as if we place a call to a person who has made a request not to be called. What can be done to limit or avoid our liability in these instances? Answer The regulatory framework that is responsive to this inquiry is called the Telemarketing Sales Rule (TSR). The way to characterize this scenario is to emphasize that the

call has been made in error either person who has made a do not call list; to a person who has requested a company-specific request not to l The seller or telemarketer uses, company not to call or where the be called or calls a number on the and maintains records person has listed the contact National Do Not Call Registry: documenting, a process to number in the National Do Not Call prevent calls to any telephone Registry. The former is known as a l The seller or telemarketer has number on a company-specific company-specific request. established and implemented do not call list or the National A company-specific request to written procedures to honor Do Not Call Registry, a copy of not be called must be maintained requests that a person not be which Registry was obtained on a list. These are persons who called; from the FTC no more than have directly advised the l The seller or telemarketer has thirty-one days before the date company not to contact them by trained its personnel, and any of any calls made; telephone. A seller that calls a entity assisting the seller or l The seller, telemarketer, or person who is on (or should have telemarketer in its compliance, someone else acting on behalf been placed on) the seller’s in the procedures; of the seller monitors and company-specific do not call list l The seller, telemarketer, or enforces compliance with the engages in an abusive someone else acting on behalf entity’s written do not call telemarketing practice in violation of the seller has maintained and procedures; and 1 of the Telemarketing Sales Rule. recorded a company-specific l The call is a result of error.3 The National Do Not Call Registry is the registry maintained Footnotes 1—16 CFR § 310.4(b)(1)(iii)(A) by the FTC and FCC of persons 2—16 CFR § 310.4(b)(1)(iii)(B); 14 CFR § 64.1200 et seq. who place their telephone 3—16 CFR § 310.4(b)(1)(iv) numbers on it so as not to be called by any company subject to Jonathan Foxx, Ph.D., MBA, is the managing director of the do not call restrictions.2 Lenders Compliance Group, the first and only full-service, If a seller or telemarketer can mortgage risk management firm in the United States, establish that as part of its specializing exclusively in outsourced mortgage compliance routine business practice it meets and offering a suite of services in residential mortgage the following requirements, it may banking for banks and non-banks. Information contained in not be found liable for engaging this article is not intended to be and is not a source of legal in an abusive act or practice advice. If you would like to contribute a question, please under the TSR if the seller or continued on page 36 submit it to Compliance@LendersComplianceGroup.com. telemarketer, in error, calls a

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NMP Mortgage Professiona Brian D. Minkow Vice President of the Pacific Division and Mortgage Loan Originator HomeBridge Financial Services BY PHIL HALL

rian D. Minkow is vice president of the Pacific Division and mortgage loan originator at Sherman Oaks, Calif.-based HomeBridge Financial Services. National Mortgage Professional Magazine recently spoke with him regarding his career in mortgage banking and his views on the state of the industry.

How did you first get involved with mortgage banking? Was this your original career path? I didn’t really have a career path. I barely got out of high school and I had no clue what I wanted to do in my life. I thought about being a professional golfer, but later realized I wasn’t good enough to pursue that route. I’d been working with my father in the telecommunications business for a few years, when a guy I knew told me about the mortgage industry and how unbelievably incredible it was. He got me a single interview at Home Savings of America and the rest is history. How did you first become associated with HomeBridge Financial Services? Washington Mutual was coming to an end, so I happened to

have a friend, John Stewart, and he suggested I meet with Don Rosselli. Don was still part of Metrocities Mortgage, which then became Prospect Mortgage and is now HomeBridge Financial Services. I called Don, interviewed with him and genuinely liked the guy. He was personable and I could tell he was a man of integrity. He hired me. In your opinion, what makes HomeBridge stand out from the competition? HomeBridge is a company that cares about the consumer. You know the American Dream? We’re sincere about it. The company culture is incredible and the leadership is second to none. How do you see the current

state of the wholesale and retail markets? I can’t speak to the wholesale market, but the retail market is very good right now. There isn’t a ton of inventory, so you’re seeing multiple offers on a single property. It’s very competitive right now. How has HomeBridge been able to keep on top of the many regulatory changes that have taken place in recent years? We have an extensive legal and compliance team. They ensure HomeBridge keeps a pulse on the Consumer Financial Protection Bureau and makes changes internally to lead the charge and ensure for as smooth a transition as possible. When regulatory changes go into effect, we’re already two steps ahead.

In your opinion, what can the industry do to encourage young people to pursue careers in mortgage banking? It could be helped by having top-producing mortgage loan originators speak at high school events, college events and career fairs. The industry needs to get creative if they want to engage the next generation. The landscape of communication has changed drastically, so we need to think outside the box if we want to reach them. If someone created a fun social marketing campaign around this career path that went viral, it’d be awesome! Looking back on your work in the industry, what do you see as your greatest challenges and your greatest accomplishments? My greatest challenges are

onal of the Month

following the constant regulatory changes in the industry. Like I mentioned earlier, change isn’t easy, but it’s a good thing our company stays on top of it. It’s funny because my greatest challenge goes handin-hand with my greatest accomplishment. There are some mortgage loan originators that do $1 million, $2 million or $3 million homes and will close maybe one to two deals a month, which is great! My business model is the opposite. I close on average about 180 loans a month in significantly lower price points. I love putting “normal” people in “normal” homes. And what I mean is that my clients are the average, everyday person who works hard every single day to get into a home. I find it

“HomeBridge is a company that cares about the consumer. You know the American Dream? We’re sincere about it. The company culture is incredible and the leadership is second to none.” incredibly fulfilling to know I’m part of their American dream. That said, closing well over 100 loans a month requires you to be extremely organized and efficient and you absolutely must have the best people on your team to support. Thankfully, I do. What do you see as the nearterm future for the mortgage banking industry? I see it continuing to thrive. Regulations might soften up a little bit, given the political landscape, but nothing is for certain.

Outside of work, how do you spend your leisure time? Leisure time? Closing sometimes 180 loans a month

really doesn’t leave extra hours in the day, so what little time I do have I spend with family.

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at PhilH@MortgageNewsNetwork.com.

MBA’s 2017 National Secondary Market Conference Survey:

A Report of Findings By Tom LaMalfa

his is the 18th time since 2008 that this survey of senior mortgage banking executives has been conducted and distributed. It is completed twice annually, at the MBA’s Annual Convention in October and at the MBA’s National Secondary Market Conference each May. My conference experience this year consisted of attending the Capital and Secondary Market Committee Meeting; attending the special session about the MBA’s plans for GSE reform; lunching with an MBA executive; meeting for an hour with an executive of Fannie Mae; and completing 31 surveys over three days. For those reading this who don’t know me, I’ve been a fulltime observer and student of the mortgage banking industry since 1977 when I worked for MGIC and wrote a weekly newsletter on the secondary market for a decade plus. The Secondary Conference was my 36th in 40 years in the industry. The purpose of this survey is to capture some basic production data and gather the opinions, ideas, values and expectations of senior mortgage banking executives on many of the business and industry’s key issues, topics and concerns. A second purpose of this series is to bring senior executives further into a public discussion of key industry issues and topics without drama and despite the sometimes controversial nature of the underlying issues. This industry is vast, important, difficult to manage and beholden. For this year’s convention, 31 meetings and calls were arranged

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and an equal number of surveys were completed. The surveyed group consisted of nine CEOs/presidents, eight EVPs, 10 SVPs and four VPs. Excluding the CEOs/presidents, all of those surveyed this year work in capital markets, production or operations. Of the firms represented in the survey, 10 produced more than $10 billion in 2016, another 10 originated $29.9 billion, and 11 produced less than $2 billion. The smallest firm produced $200 million, and the largest did in excess of $200 billion. The surveyed group’s mean was $10 billion of volume and the median was $4.5 billion. The executives surveyed represent 16 banks and 15 nonbanks. Included were two homebuilder-owned firms, one realtor-owned firm, three private equity-fund-owned companies, four owned by hedge funds, and five privately owned firms. One of the firms runs an Internet-based call center. Twelve of the firms originate through one channel, 12 produce loans in two channels, and seven of the 31 originate in retail, correspondent and broker wholesale. About half operate call centers. The surveyed group is carefully structured to be representative of the lending industry in terms of the size of firms, their reach and scope, physical location, product menus and operating channels. All efforts are made to mimic the membership profile of the MBA as best I see it. The 69-question survey used in New York was drafted in the weeks before the conference, tested and run past several industry folks for completeness and clarity. Input into the

questions was sought and received from past and present members of RESBOG and MBA officers, and from several past chairs of the Capital and Secondary Market Committee. Except for the telephoned group, all the surveys were completed face to face during meetings at the conference held late Aprilearly May 2017. On average, 35 minutes was required to complete each survey. My survey process starts with reading the questions to the executive, recording the responses, then later compiling the information in a spreadsheet, examining the data, preparing a report of surface findings, and distributing the write-up to those surveyed and other interested parties. Information extracted from these questionnaires had been used for a years-old serial article–“The Corner Office Outlook”–which was published periodically in Mortgage Banking. As for the survey group, it consists almost exclusively of longstanding industry associates, clients and friends. All are industry veterans. Many of those surveyed have participated in this bi-annual survey since its inception. Most are close industry contacts that have helped me stay abreast of intraindustry issues, trends and developments over the course of decades. Only one of the 31 executives was surveyed for the first time and no new firms were included in the survey group this time around. However, more than a half dozen changes in the survey group were made in the past several years to adjust for the major secular shift from bank

originators to independent mortgage banks (IMBs). Although some of the questions are time specific and appear on these surveys only once or twice, others are included in every survey. Datadriven questions like Q3-12 and 41, 43 and 67 are always included in the survey. Other questions may be asked once and then jettisoned, while still others are asked multiple times. Frequency depends on the importance and sustainability of the topic or issue. Collected surveys provide a dataset of queries and responses over time. Analysis of the resulting longitudinal data shows patterns and trends, and may signal new developments in the business and industry. For example, will the business discover a strong resurgence of mortgage brokers and brokering? Or, is concern over the risk characteristics of mortgage loans a growing worry? This latest survey shows little industry growth in production volume this year compared to 2016’s strong origination activity. It need be said that given who is being polled, it is understood that the findings reflect only the responses within the mortgage banking industry, not a broader cross-section of the U.S. population. Not a random survey, there is nothing in these results that would necessarily be germane outside the mortgage finance industry. It also deserves mention that survey results are only valid as of a specific point in time. Things can change, sometimes quickly. That said, I believe as a long-standing industry observer, the findings

direct and call center activity. Do the executives’ firms operate online consumer portals, asked Question 9? The results were mixed; with 17 saying they did and 14 saying they did not have online portals for consumers to complete an application. Questions 10-12 wanted to know whether they were originating more mortgages with high-LTVs, high-DTIs and more low FICO scores. Seventeen of those surveyed reported doing more high LTVs versus 13 who reported the same or fewer. As for high DTIs, 24 reported the same number or fewer compared to four who said more. Seven reported doing more low FICOs versus 23 who reported the same number or fewer. Has secondary market pricing become more efficient (competitive) in recent years, wondered Question 13. Agreement was almost universal, with 28 of 30 saying pricing was more efficient. Question 14 asked if their firms were retaining, selling or buying servicing. Twelve firms were only holding, while nine were selling and five each were retaining and selling or retaining and buying MSRs. Questions 15 and 16 dealt with cash-out refinances and home equity lending respectively. The yes’s and no’s were split 50/50 concerning cash outs, at 15 each; while twice as many respondents were seeing or hearing about a measurable pickup in home equity lending as weren’t. Gains-on-sale were better in 2016 than this year to date, said 13 executives versus 17 who reported in Question 17 that they were better this year than in

2016. Question 18 inquired about operating expenses and if they were up or down last year. They were higher in 2016 said 19 respondents, compared to 12 who reported operating expenses were unchanged or down slightly. As for profits at their firms, Question 19, 18 said they were down to date this year versus 12 who indicated they were higher, most of whom qualified their answers with a “slightly,” whether up or down. Question 20 sought to know if the executives thought industry profits would rise in 2017 compared to 2016. Only two of 31 expect profits to be better this year than last. Questions 21-23 focused on the firms’ employees, specifically if they were adding or reducing personnel, whether they were satisfied with their loan officers, and if they were adding IT staff. Total employment is rising at about twice as many firms as not; satisfaction with LOs was a 6.4 on a scale of 1-10; and nearly three times as many firms were adding IT staff as weren’t. Is the market moving toward point-of-sale technology, preorigination, Question 24 inquired? All but one respondent agreed that pre-origination pointof-sale technology was one direction in which the mortgage market was heading. In response to Question 25, more than three times as many of those surveyed reported a shortage of appraisers in at least some of the markets in which they operated. Questions 26-27 wondered continued on page 88

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Question 1 asked whether respondents expected mortgage rates to rise by more than 50 basis points this year. No, said more than five times as many as not. Question 2 inquired if production was up, down or flat to date this year compared to 2016. Most of the 31 executives surveyed reported production dollar volumes were flat to down. Only eight of 31 reported higher production volume. Questions 3 to 5 dealt with origination volume, specifically what portions represented each of three categories of production. Purchase business accounted for an average (unweighted by volume in this or any of the questions) of 72.6 percent of the entire group’s origination activity. The range of responses was wide: From 35 percent-99 percent. The median was 70. Agency, defined as Fannie Mae and Freddie Mac, conventional volume accounted for 61.7 percent of production, with a range of 40 percent-85 percent; government-insured volume, which ranged from three percent60 percent, averaged 28.9 percent for the group as a whole. FHA volume for the year was reported up at seven firms, down at 13 and unchanged at 11 others. Question 7 inquired about the percentage of their firm’s conventional business that was over 80 percent LTV. The average was 33.5 percent amid an eight percent-75 percent range and a median of 25. Question 8 asked about growth in call center and consumer direct business. The responses were mixed, with almost the almost the same number of respondents reporting growth or no growth in

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well represent the facts, expectations and thinking of the mortgage industry as a whole. Indeed, most readers of this report will find many, many more confirmations to their own thinking about the subjects herein than any real major surprises in the survey findings. That said there were several surprises in the findings for you to uncover. From my perch, the mood of this year’s conference was upbeat, but cautious. With refi activity slowing, volume won’t match 2016’s $1.9 trillion. Modest optimism among market participants was my key takeaway from this conference. The MBA’s white paper—GSE Reform: Creating a Sustainable, More Vibrant Secondary Mortgage Market—was the conference’s most discussed topic and stole the show. Thus prefaced, it’s on to the questions. Note that what follows is not an analysis; rather, it’s a straight-forward iteration of the collected responses. No attempt is made to provide any color on the issues or topics included in the questionnaire. None of the complexity of so many of these issues, or of the various nuances in topics or responses, is dealt with in this report. These are surface findings only. Finally, readers are advised to use the Scorecard to follow along as a guide in reading the text as I often group questions along the same topic and thus omit a direct link to every single query. Responses not adding to 31 acknowledge that not all the respondents could answer every question or that the question was not applicable to their firms.

mba’s conference survey

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about concerns over the liquidity and value of conventional and Ginnie Mae servicing. Concern is substantially higher for Ginnie servicing than for agency servicing. The group averages were 4.5 and 7.3 with ranges of concern of 1-9 and 4-10, respectively. Questions 28-33 dealt with Fannie Mae and Freddie Mac, specifically about their recent initiatives, whether the executives’ firms were selling each GSE more or fewer loans this year than last, if these initiatives were clarifying underwriting risk and lowering origination costs, and which—if you had to choose but one of them—was providing better service and price, all-in. Freddie’s Loan Advisor Suite scored a group average of 7.1 on the 1-10 scale, a median of seven, and a range of from 5-9. Fourteen respondents reported selling more loans to Freddie this year than last, with another 14 indicating the same number or fewer. Day One Certainty earned Fannie a 7.7 average and a median 7.5 score of a possible 10, with 12 firms reporting selling more loans to the two agencies versus another 16 who were selling the same number or fewer to Fannie. The range of responses was from 3-10. In Question 32, twice as many executives said that the two aforementioned initiatives were both risk clarifying and cost reducing than those disagreeing. As for best all-in service and price at this point in time, Fannie received exactly twice as many cites as Freddie. Questions 34-35 asked about the use of trended credit data and if it increased originations. Nearly twice as many of those surveyed weren’t using trended credit data as were, and about two-thirds of these felt it was too early to know if it was resulting in more originations. Of the 10 executives brave enough to hazard an answer, nine indicated no more originations resulted from using trended credit data. Questions 36-39 sought letter grades based on the respondents’ assessments of the overall performance year-overyear of four federal agencies. Fannie received 26 As and Bs and a group average grade of a B+; Freddie received 24 As and Bs and a group average grade of B; Ginnie received 14 As and Bs

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and a group average score of C+; FHFA received 10 As and Bs and a group average grade of C. Has your firm had undergone an audit from the CFPB, Question 40 asked. “We have,” said 16 respondents’ versus 14 who hadn’t yet been audited by the Consumer Bureau. An almost equal number of banks and nonbanks were audited: Nine banks and seven non-banks. Questions 41-43 focused on various costs: Namely, compliance, automation and regulatory expense, and the gross added cost of a mortgage postDodd Frank. Compliance costs— on average among the 31 firms— consume 21.4 percent of the group’s total operating expenses. The median was 23. Automation is thought to be reducing the cost of writing a mortgage at 16 of the firms, but not at 15 others. On average, regulation has increased the cost of a mortgage by $1,768 since 2008, with a median of $1,700. The ranges were four to 40 percent of total operating expenses and $450-$4,000 added to the total cost of a mortgage, depending on which of the 31 surveyed offered the amount. Concern over different aspects and components of regulation was addressed in Questions 4449. Regulations are slowing closing times, said 22 respondents versus seven who reported no slowing; more than three times as many felt TRID disclosures weren’t a significant improvement for consumers; all 29 of those responding thought that HMDA’s expansion would make compliance more difficult; 13 of 31 executives thought that consumers were safer today thanks to all the new rules; regulation is adversely affecting mortgage production and consumer credit availability reported 30, with only one naysayer; and that regulations were creating impediments to lending scored a 7.2 of 10, with the range of scores being 4-9. IMBs’ market share prospects was the central issue in Question 50, and specifically, if those surveyed saw their share growing in coming years. Yes indeed, said 25 executives, five times more than those not seeing green grass ahead for the independents. Questions 51-53 inquired about technology: About going all digital, about tech and its cost, and about the level of industry concern over cybersecurity. More

than nine times more respondents see the mortgage industry moving toward all-digital platforms versus not. Seven more executives thought that lenders were embracing next generation technology (in spite of its high cost), than the number of those who disagreed. There was no difference in attitude between banks and independents. And cybersecurity scored an 8.5 on the 10-point scale of how big a concern it is for mortgage bankers. The response range was 5-10. Questions 54-57 asked about the CFPB’s survival, the commercial real estate market’s health, whether the role of the government in housing was likely to change ahead, and the likelihood that GSE reform would occur by the end of 2018. Nine times more of those surveyed thought that the CFPB would look quite different in two to three years. Executives were nearly split in their opinion about the likelihood of a looming downturn in commercial real estate—15 ayes and 13 nays. The role of the government in housing will change markedly, said 18 respondents, while 12 thought not. And the biggie: Will GSE reform happen by the end of 2018? (Sadly) it won’t, reported 21 of 30 executives answering the question. Fed policy expectations and house prices were the heart of Questions 58 and 59. Nearly all those surveyed expect the Fed to tighten monetary policy further in 2017—27 to four. All but one executive sees house prices, especially in the lower price range, rising further this year, 30 to one. Questions 60-62 focused on Fannie and Freddie, and specifically if they should stop paying dividends; whether reform should precede recapitalization; and whether lenders are overly dependent on them. Respectively: 25 of 29 think the payment of dividends to Treasury should end; nearly three times as many respondents think that reform should precede recapitalization as not; and almost everyone—28 of 31—surveyed believe that lenders are overly dependent on Fannie and Freddie. Question 63 sought to know if those surveyed were pleased with

the MBA white paper on GSE reform. And pleased they are, with 24 of 26 answering “yes.” The remainder hadn’t yet read it. Expected change in the home ownership rate was the topic of Question 64—has it bottomed? Thirteen executives see more decline coming, versus the 17 who think the market has already bottomed. Question 65 wanted to know what those polled thought refis would account for as a percentage of total originations in 2017. The group average was 30.1 percent, the median was 30, inside a response range of 10-40 percent. What was your firm’s production volume in 2016 and do you expect to exceed that total in 2017 were Questions 66 and 67. The group average volume of those surveyed was $10 billion last year, with a range of from $200 million to over $200 billion. Respondents are closely divided about whether their firms will exceed 2016’s production volume this year. Of the 31 executives answering, 17 think their firm will originate more mortgages this year compared to 14 who don’t think they will. Remarkably (to this observer), of the 17 firms, all but four were non-banks! By comparison, of those not expecting to exceed 2016’s volume, only two of the 14 were independents. What does that tell us? Question 68 asked if the executives expected to see more mortgage brokers and mortgage brokering in the next several years. Yes, reported 13 versus nine who thought otherwise. The remaining nine surveyed wouldn’t hazard an educated guess. The final query, Question 69, inquired if each of those surveyed thought that President Trump would complete his four-year term in office. To my surprise, only four of 30 thought he would not leave office early. There you have it, an overview of the findings, sans an analysis, of what was learned from this survey research project from last week’s conference, April 30 to May 3. Finally, should you want a copy of my notes from the committee meeting or the special session, please send an e-mail to me at Tom.LaMalfa@gmail.com.

Tom LaMalfa is a 35-plus-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. He may be reached by e-mail at Tom.LaMalfa@gmail.com.

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NCAP: What Professionals N

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The following article is based on a presentation by Dave Chung, managing director of CreditXpert Inc., at the 2017 NAMB Legislative & Regulatory Conference in Washington, D.C. in April. he National Consumer Assistance Plan (NCAP) is an initiative launched by the “Big Three” consumer credit reporting bureaus–Equifax, Experian and TransUnion as a settlement to an investigation by 31 state attorneys general. If you’ve heard about it, you may wonder: What does NCAP mean? How and why will credit scores change? How will NCAP impact mortgage applicants and the work I do on their behalf? Simply put, credit-reporting rules for public records will change this year due to NCAP. Beginning July 1, some civil judgment and tax lien information that historically has been reported won’t be anymore. Some people will see specific data removed from their credit reports; for others, that data

won’t be reported in the first place (more about the data in a moment). The bottom line: Credit scores will be different for these individuals, impacting their credit applications going forward. Before getting into the details about NCAP and its impact on the mortgage industry, let’s start with a few basics. How did we get here? NCAP’s trajectory is tied to the cumulative impact of legislation and government agencies that target consumer protection and the rise in identity theft in the U.S. Such legislation includes the Fair and Accurate Credit Transactions Act (FACTA) and agencies focused on consumer protections, including the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). In particular, the CFPB–authorized in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the financial crisis of 2007-08 and consequent recession–shed a bright light on consumer complaints, the most common being inaccuracies on credit reports.

As the CFPB uncovered and documented more and more complaints, 31 state attorneys general began an investigation, led by New York Attorney General Eric Schneiderman. The big three credit bureaus agreed with the findings of the AGs’ investigation and together launched NCAP, a three-year initiative, in March 2015. NCAP’s purpose is twopronged: 1. Improve data accuracy on credit reports 2. Make it easier for consumers to correct errors on their credit reports Next up: changes to public record data There’s a major change coming this summer in the way public data is handled as a result of NCAP’s enhanced public record data standards. Beginning July 1, all public records must include the following Personally Identifiable Information (PII): l Name l Address l Social Security Number (SSN) or Date of Birth (DOB)

It may come as a surprise that some public records don’t already contain this information. However, considering the context, it makes sense: The PII to match these records was lost due to changes made over the last few decades to curb identity theft. Also, Credit Reporting Agencies (CRAs) obtain information from myriad sources, including the more than 3,300 county courthouses nationwide, which collect public record data differently throughout the country. The fact is some court files and official records are on modern computer-based systems, while others are on older computer or paper systems and contain incomplete or outdated information. Processes are now being implemented to improve PII on each record. If someone’s public record does not include the required PII, the data must be removed from the person’s record or not reported. This is to protect consumers from incorrectly matched public records. So when the changes occur in July, credit for some applicants

at Mortgage Need to Know

By Dave Chung & Terry W. Clemans

While both can breathe sighs of relief, the second person essentially won the lottery, as negative information that should have been reported wasn’t due to incomplete PII. These missed public records could pose a problem for mortgage brokers and loan officers. What if, later in the application process, someone else uses another service provider that obtains a public

understand why some creditors are not up to industry-wide standards and to identify ways to improve accuracy for everyone across the board. A second change will create a special department within each credit bureau to handle “mixed” consumer credit files in a more sophisticated manner. Such targeted attention will address issues related to mistaken identity, where consumers with the same name are “mixed” or commingled with another person of a similar name. Mortgage originators will be very familiar with this issue, as anyone who has been in the industry at least a year or more has experienced members of a multi-generational family with a similar name and very frequently when that person is living at the same address as the one with whom they are “mixed”. A “Jonathan S. Smith, Sr.” and “Jonathan S. Smith, Jr.” living together is very difficult for the credit bureaus to septate, and even more difficult when they sometimes apply for credit as only “John Smith.” Consumers with common names can assist in keeping the files correct by

always applying for credit with their exact full name and generational identifier if applicable. We’ll have to wait and see how this will play out in a practical sense, but addressing these scenarios as special problems should lead to greater improvements in overall data quality. What industry players say So far, Fannie Mae and Freddie Mac haven’t commented on NCAP, although they are expected to do so soon. TransUnion and FICO both said their scores will work fine without the data in question. “TransUnion’s internal impact analysis findings demonstrate that the majority of consumers will be unaffected,” the company said. While there won’t be any change relative to bankruptcy public records data, TransUnion will remove all civil judgments data and at least 60 percent of tax liens data. As for FICO’s view: “No observed material impact to the continued on page 94

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l A person has a tax lien on her report that shouldn’t be there. Now, the consumer’s credit won’t be falsely damaged by it. l Another person has a legitimate tax lien, but the data can’t be matched because of incomplete PII on her public report.

record and the tax lien shows up at that point? Think about it: The benefit of having the credit report upfront is that if there’s a problem, you can deal with it right away. But if the issue pops up later in the closing, titleservices or even post-origination phase, it can have negative repercussions that cause you headaches down the line. Some mortgage professionals may wonder whether they should engage a supplemental public records search service to avoid such a scenario. That’s a business decision based on how risk-averse the particular professional or business is. Some may believe having that extra level of screening is worth it even if few people are affected, while others don’t believe it matters because they only work with prime candidates. NCAP also requires two other changes that have the potential to bring major improvements to data quality in the years to come. First, credit bureaus will track the number of disputes per creditor and compare that across the creditor’s industry to uncover abnormalities. The goal is to

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in your current pipeline might immediately improve. You’ll also start seeing better quality data and won’t have to deal with as many disputes due to mismatched data. In the long term, there’s a big question relative to these higher data standards. Consider the following two scenarios:

Is Public Record Data the Next Big Change for the Mortgage Industry? By Ben Derouchie

ccording to recent articles in the Wall Street Journal and other publications, the nation’s credit repositories will no longer report tax liens and civil judgments on a consumer’s credit report if it doesn’t contain the consumer’s full identifying information. For example, if the tax lien or judgment was filed without the consumer’s name, date of birth, social security number, or address, it will be purged from all three of the repositories’ databases: Equifax, Experian and TransUnion. A preliminary analysis conducted by Experian showed that approximately 96 percent of civil judgment public record data will no longer be included on credit reports, and almost 50 percent of tax lien information will not meet the new criteria. The absence of this information may make individuals appear lower risk than they really are. An internal study by public records data provider LexisNexis Risk Solutions found that borrowers who have a judgment or a tax lien are 5.5 times more likely to end up in serious default or foreclosure compared with other borrowers. This new inability by lenders to get an accurate representation of the risk posed by an individual is compounded by the fact that the removal of this information could also artificially inflate a borrower’s credit score. According to the Wall Street Journal citing FICO data, the removal of tax lien and judgment information could boost the credit scores for roughly 12 million consumers by 40 points or more. Analyses conducted by the credit repositories, FICO and VantageScore showed more modest credit scoring impacts.

Challenges ahead The possible impact to FICO scores will create challenges for lenders, since most lenders have

created their decisions matrix and risk tolerances based on FICO score data. Both Fannie Mae and Freddie Mac may need to adjust their risk assessments now that this data is no longer going to be delivered as part of the consumer’s credit report and FICO score. Not having this data will cause underwriting and decision challenges for the secondary market. There are other sources for public record data. However, the governmentsponsored enterprises (GSEs) will face the same challenging question that the rest of the industry already faces: “Does this public record belong to this borrower?” Working towards solutions What can lenders do to solve this problem? It appears that the credit reporting industry, specifically credit resellers, must lead the charge to find an acceptable solution. My company, Avantus, is a credit reseller that serves the mortgage industry. One such solution would allow for credit resellers to supplement the bureaus’ credit report with additional public record data for clients that still require it. We believe the data should be easily available to lenders, giving lenders the full picture needed to make an informed decision. In order to make this happen, the data must be Fair Credit Reporting Act (FCRA) compliant. The new source of this public record data must be able to ensure its accuracy and have processes and procedures in place to allow consumers to dispute questionable records. We believe that this public record data can be sourced and delivered responsibly, and will ensure that lenders can continue making wellinformed and secure lending decisions. As we approach the July 1 deadline, rest assured that the entire credit reporting industry will be working towards a solution.

Ben Derouchie is a senior account executive with Avantus, a mortgage credit reporting company serving the financial industry for over 75 years. Ben’s experience in credit reporting spans nearly 20 years. He may be reached by phone at (800) 243-0120, ext 147 or e-mail BDerouchie@Avantus.com.

ncap

FICO Score due to expected NCAP changes.” FICO believes NCAP will affect six to seven percent of its scorable population, impacting scores by less than 20 points. It also believes affected consumers are very likely to have low scores even after the public records are removed.

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heard on the street

continued from page 91

What we say We estimate these NCAP changes will impact roughly one percent of mortgage applications. Most affected customers have multiple collection accounts and derogatory tradelines, and many have bankruptcy records. Most will have scores below 550, and it is unlikely NCAP changes will bring them out of the 500s. One important matter to keep in mind is that frequency is very different from impact. Although 1 percent of mortgage applications may not seem substantial in the aggregate, it is highly significant for the individuals in that one percent. And for the person who, for example, has a credit score hovering around 550, a 20-point increase after incorrect data is removed represents a real boost. That person is making a big step on the road to recovery and, in our opinion, deserves consideration. Also, even though most people affected by the NCAP change have a lot of other negative information on their credit reports, some do not. Those people will see a dramatic improvement. Coming soon: medical collections This September, there will be two changes relative to medical collections. First, payments scheduled to be paid by an individual’s health insurance will be removed. Such collections can be a heavy anchor on people’s credit, and removing

them will have a positive impact on those individuals. In addition, reporting of medical collections will be deferred 180 days, allowing time for insurance companies to pay if they’re supposed to do so. Now what? So, what should mortgage professionals do about all of this? First and foremost, relax. You can keep using credit reports the way you currently do. Data standards should improve for everyone, which is better in the long run for consumers. Over time, the change in data requirements will likely have a ripple effect upstream on the people who gather and record data at courthouses. Data collection and reporting should improve, so information will be more accurately captured in credit reports. This will reduce the risk of records not being reported that should have been. In the short-term, there will be some risk and it is worth consulting with your Credit Reporting Agency regarding supplemental public records search services. NCAP recap While these changes won’t impact mortgage applications very often, some people will no longer suffer from false negative information and others will have missing data that could show up later in the process. Each mortgage professional will need to approach this new world in a way that best fits his or her individual business philosophy. While it’s true the changes may not affect a large proportion of consumers, we believe it is important to also consider those consumers who will be impacted and those for whom this makes a huge difference.

l Dave Chung is co-founder and managing director of CreditXpert Inc. Combining a background in engineering with nearly 20 years of experience in the credit software industry, he oversees CreditXpert’s business fields and user experience. Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail TClemans@NCRAInc.org.

Kimberly A. Braman has joined the firm as director of Human Resources Compliance to offer human resources risk management guidance to the financial services industry. Supreme Lending has expanded its northeast territory with a new branch in Exeter, N.H. Industry veterans Mike Behan and David Cote have been selected to comanage the branch, which will focus on serving communities in New Hampshire, Massachusetts and Maine. Inlanta Mortgage Inc. has promoted Kevin Laffey to the role of regional production manager. Plaza Home Mortgage has announced that Eric Macwan has accepted the new position of vice president, chief information officer, responsible for strategic planning, oversight and continuous improvement of Plaza’s technology efforts. In addition, Eric will oversee the project management and business continuity areas of the business. The Lenders One Cooperative has announced Matthew T. Orlando has joined as vice president of National Programs. Assurant has named Kevin Raney managing director of Assurant Valuations and Mortgage Technology, under the company’s Mortgage Solutions Group. Raney has responsibility for operations and strategy for Assurant Valuations and Mortgage Technology, with a specific focus on the origination channel. Assurant has also named Jerry Rowell managing director of Assurant Field Services, under the company’s Mortgage Solutions Group. Rowell will have responsibility for operations and strategy for Assurant Field Services, with a focus on advancing its position as a field services industry leader. Texas Capital Bank has announced that Gary Ort, president of its Mortgage Finance Division, is retiring at the end of June and will be succeeded by Director of Correspondent Lending Jack Nunnery. Alterra Home Loans has announced that Gerry Fernandez, a 20-year veteran of the mortgage industry, has joined the company as vice president of Sales, where he will head up a national sales team offering a full range of mortgage products to borrowers in 26 states across the country.

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l Roostify has announced that it has named Frank Gelbart as chief revenue officer, responsible for driving new and existing revenue streams, as well as managing partner relationships for Roostify. l NewDay USA has announced the promotion of Gary Morrison to the position of executive director of the NewDay USA Foundation, the non-profit organization that serves as the principle instrument of philanthropy for the company. l LRES has announced that Mark R. Johnson has been named as its chief strategy officer to create and implement new strategic priorities and ensure core company initiatives, services and partnerships that reflect the company’s plans for growth. l GSF Mortgage has named Leo Spanuello as director of ThirdParty Origination. With more than 12 years of successful TPO development throughout Wisconsin, Spanuello will be responsible for establishing partnerships with banks, credit unions, mortgage bankers and brokers and service their loans. l Norcom Mortgage has continued its expansion, opening a new branch in the Western United States in Denver, and has appointed Andrew J. Hulko, who has worked in the mortgage industry since 2000, as branch manager of the new Denver office. l WFG National Title Insurance Company has added Bernadette Walsh as agency representative serving WFG title agents in Massachusetts. In her new role, Walsh will support existing WFG agents in Massachusetts, while working to grow the company’s presence in the New England market. 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@MortgageNewsNetwork.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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ven a cursory search on the Internet will lead to pages of Web sites containing complaints by home purchasers against mortgage brokers and originators, as well as lists of law firms advertising their expertise in pursuing claims for alleged damages an individual sustains due to the negligence of a broker or originator. These claims often arise out of the failure to (i) comply with regulatory guidelines; (ii) explain all available options; (iii) advise of all ancillary charges; or, (iv) make sure income levels were sufficient to obtain and/or afford the recommended loan product. I read a recent complaint where a home purchaser contended a broker’s negligence associated with the rate on a good faith estimate cost him more than $20,000, with a choice to accept a higher rate or simply lose the house and downpayment. Another complaint was for an originator purportedly representing that a loan did not include a prepayment penalty and, upon attempting to refinance, a borrower discovered that the load did include such a penalty, resulting in a financial loss in the refinance transaction. At some point in your career, you will likely find yourself the subject of this type of complaint or lawsuit brought by a former client and/or one of these predatory law firms. This however does not mean the allegations of wrongdoing are true, and there may be legal and factual defenses to defeat these claims. Should you have a professional liability insurance policy (also called an errors & omissions policy), your insurance company should assist you to defend these alleged acts of wrongdoing, subject to the terms and conditions of the insurance policy, including retaining an attorney to represent you in the event of a lawsuit. This does not mean that you and your insurance company will always see eye to

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eye on your liability or how to respond to such a claim or lawsuit. A disagreement between you and your insurance company will often come up when there is an opportunity to settle a claim or lawsuit, with an insurance company wanting to settle whereas you, feeling you have done nothing wrong, may not want to pay the claimant any money. It is within this context you should be aware that many errors & omissions policies contain a condition known as the “consent to settle” or “hammer” clause. This provision generally provides both the insurer and you as the insured with certain protections such as requiring an insurance company to obtain your approval before settling a claim. This clause, however, is also designed to protect the insurer in the event you as the insured do not “consent” to a settlement demand that the insurer would like to accept. There is no standard to “consent to settle” clause, and clauses vary on what could happen if an insured does not provide his or her consent to settle. An example of such a clause follows: We (the insurance company) will compromise any claim hereunder (the insurance policy) without the consent of the Insured. If you refuse to consent to a good faith settlement recommendation by us (the insurance company) and elect to continue to defend the claim or continue any legal proceeding in connection with the claim, our duty to pay claims expenses is limited to the total amount incurred to the date of our recommendation to settle. As you can see the “consent to settle” clause typically places a

cap on the amount of money an insurer will be responsible to pay, usually holding an insured responsible in the event of an adverse judgment greater than a settlement demand for (i) the difference between the adverse judgment and the amount for which the claim could have been settled; and, (ii) the legal fees incurred to continue with the defense from the time the insured refuses to provide consent. Such a provision can have a significant impact on an insured’s decision to accept or reject a settlement demand, with potentially significant financial repercussions leading to the term “hammer clause” if invoked by the insurer. Over the last several years, courts have been watering down what is perceived by insureds to be the harsh results of invoking the “hammer clause,” especially when the provision uses the “reasonableness” standard to evaluate an insured’s conduct. For example, in Freedman v. United National Insurance Company, the U.S. District Court, Central District of California held that an insurer could invoke the “hammer clause” only if the insured unreasonably refuses to consent to a settlement. I have recently heard from professionals who have been given

advice on the potential impact of a “consent to settle clause” that it does not have the teeth it once had based on the Freedman decision and others like it. I have always been reluctant to make such a broad-brush conclusion, and a Federal Appeals Court decision from earlier this year lends support that a professional insured should not put his/her head in the sand with respect to potential impact of a “hammer clause.” In Security National Insurance Company v. City of Montebello, the municipality refused to settle and rejected Security National’s contribution to a $1.5 million settlement of a discrimination lawsuit. Under the “hammer clause” at issue, even if the settlement demand is not acceptable to an insured, Security National (an excess insurer) could offer the City of Montebello an amount equal to the insured’s retained limit, less defense costs, and be discharged from liability. In the decision, the 9th Circuit For The United States Court of Appeals reversed a lower Court decision, finding that the settlement demand was made in good faith and would have resulted in a final disposition. As a result, the Appeals Court concluded that Security National had the

By Dean L. Milber, JD, MA

recommendation. There are different variations of the “soft hammer clause” option. Depending on the insurer, the “soft hammer clause” can range from a percentage (e.g, 50 percent or 75 percent) of the costs exceeding the rejected settlement amount to still be the insurer’s responsibility, to an insured retaining the “underage” if there is a litigation settlement or judgment for less than the settlement demand that was rejected.

Dean L. Milber, JD, MA is director of Claims and Business Development for CalSurance/Lancer Claims Services, a Division of Brown & Brown Program Insurance Services Inc. He may be reached by phone at (714) 939-7380 or email DMilber@LancerClaims.com.

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contractual right to invoke the clause as to “hold otherwise would impermissibly rewrite the hammer clause to the policyholder’s benefit.” Therefore, when shopping for a professional liability policy, you should, as a prudent professional insured, not only look at premium and deducible costs in evaluating overall insurance costs, but also explore whether an insurer offers a “soft hammer clause” or other “consent to settle” options. This provision provides that, for an additional premium (an amount that is typically a relatively small percentage of the premium), the insurer is responsible for a greater percentage of the litigation and/or judgment costs even if an insured rejects a settlement

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A Softer Hammer Makes An E&O Settlement Decision Easier

What Can We Learn From Ford Motors and McDo By Brian Sacks

enry Ford was known as the person who created and perfected the assembly line for the mass production of cars. It made him filthy rich. Ray Kroc copied this idea, applied to the hamburger business and it made him rich as well. Each of these businesses has processes and systems in place. They are not dependent on any one particular person. The system works when the business is busy or slow. Many years ago, I had a loan officer working for me whose father invented that Sandler Sales System. If you aren’t familiar with it let me explain the core of the system. “If you don’t have a system for selling than you are subject to the buyer’s system of buying.” When you stop and think about that, it’s a pretty powerful statement and one that affects your business and your income each and every day. Loan officers need to think about our business as an assembly line too. We can never allow ourselves to be subject to a buyers or referral partners way of buying. But our business requires many more touches than building a car or a hamburger. There is often a long time between the time a buyer calls us, gets pre-qualified, finds a home and then settles. If you are a successful loan officer, then you also realize that settlement is not the end of the process.

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Here are the areas that you must create systems for to be a top originator 1. Systems that generate new business You must have a plan and a systematic way of generating new business. Hoping that business will come is not a plan. So here are a few ways that I share with the members of my Top Originator Secrets community. l Teach classes and meet real

estate agents. l Have a radio show or podcast. l Market to renters: In fact, I have an entire system for doing this at RentersIntoLoans.com. You must pick the right renters in the right complexes. You then send them to your Web site where they get a free report with information they need to convince them to buy rather than renting. They then are followed with automatically until they call to schedule an appointment. I could go on for pages of the various systems I have in place, but the point is they are systems. They are not “once in a while when I have time” activities. 2. Systems that generate referrals You know that you need referrals, but what systems do you have in place to produce them. I use a system called Social Survey that sends out reviews on social media all using their automated system. Often I don’t even know it happened until I log in to Facebook. I also send regular weekly newsletters and quarterly letters filled with good information and actually asking for a referral. 3. System for pre-qualifying borrowers When I meet with a borrower, I have created an actual form that I have all of their information written on. It’s not an application but a pre-qualification form that I created and use. When I meet with a borrower to pre-qualify them, there is a bio and other informational pieces that are educational that are given to them at the beginning of the meeting to position me as the obvious expert. If I am speaking with them on the phone, these forms are sent to them with a thank you note for meeting me. 4. A system for what happens after you pre-qualify and keep in touch to convert new business After I prequalify a client they are sent a nice letter thanking them for

the meeting. A file is then created and they are placed into my database. Once a month a member of my team will call them for an update or to gather information that was requested. The team member will then also call the Realtor to let them know of the call and any updates. 5. A system for what happens when you take an application Once an application is taken, a call is made to the buyer’s agent, thanking them for the referral or introducing ourselves. A letter is sent to the listing agent along with an e-mail introducing ourselves and letting them know we will provide a weekly status update.

Both agents and any other referral sources, like attorneys, CPAs or financial planners, are also sent letters of introduction and all are added to our database. 6. A system for following up Each week, the listing agent, selling agent and borrowers, are provided with a status update on their files. I conduct my status updates once a week on Thursday at 2:00 p.m., and these dates are set with my team for the entire year. 7. A systems for what happens when the loan closes When a loan closes, we call the borrower, the agents and everyone

cDonalds?

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relationship. Everyone is now entered into a new database of clients and taken out of the prospect list. A survey, small gift and links for a Zillow review are all sent to the buyers. Five days later, 20 “We’ve Moved” postcards are sent to the buyers which almost forces them to refer us since it includes our contact information right on the card.

8. A systems for what happens after the loan closes When the loan closes, the listing agent is sent another package of information and a thank you note telling them how great it was to work with them. The same is sent to the selling agent if it is a new

Let’s face it, we are all busy and these are items that are easily put off until later or never done at all. That is exactly why you must have systems in place and why systems are the key to your success. These items must happen, and systematizing them will allow you

or hopefully your assistant to do this for you daily. Don’t have the time? Get help! There are numerous high school and college students who might want to become an intern. There are also soccer moms and dads who can assist since these

activities can all be done on flexible schedules. You could also look at sites like Upwork or others for a virtual assistant. But the bottom line is … you must treat our business like an assembly line and have systems in place. Otherwise, your production will never live up to its fullest potential.

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

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involved in the transaction. That sounds simple, but I am always surprised at how many loan officers miss this critical time. This is also a great time to ask for referrals from all involved. If you are able to attend the closing, that is also a great thing to do. Take a photo and post it to social media and use it for your own page of satisfied clients.

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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

calendar of events

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

Monday-Wednesday, June 12-14 2017 Indiana Mortgage Bankers Association State Convention Morris Inn on Notre Dame’s Campus 1399 North Notre Dame Avenue South Bend, Ind. For more information, call (317) 773-7344 or visit IndianaMBA.org.

Wednesday, June 28 2017 “Let’s Make a Deal” Tri-State Wholesale Lending Fair Caesar’s Atlantic City 2100 Pacific Avenue Atlantic City, N.J. For more information, call (732) 596-1619 or visit MBANJ.com.

Thursday-Friday, August 17-18 Mortgage Star Conference for Women Planet Hollywood Las Vegas Resort & Casino 3667 Las Vegas Boulevard South Las Vegas For more information, call (860) 922-3441 or visit MortgageStar.biz. Friday-Sunday, August 18-20 Originator Connect Planet Hollywood Las Vegas Resort & Casino 3667 Las Vegas Boulevard South Las Vegas For more information, call (860) 922-3441 or visit OriginatorConnect.com. Thursday, August 31 UAMP Expo 2017 Salt Lake Marriott Downtown at City Creek 75 South West Temple Salt Lake City For more information, call (904) 651-3143 or e-mail valsaun@gmail.com.

Sunday-Wednesday, October 22-25 Mortgage Bankers Association 2017 Annual Conference & Trade Show Colorado Convention Center 700 14th Street Denver For more information, visit MBA.org.

Tuesday, September 19 Colorado Mortgage Summit Denver Marriott Tech Center 4900 South Syracuse Street Denver For more information, call (860) 719-1991 or visit COMortgageSummit.com.

NOVEMBER 2017 Monday-Wednesday, November 13-15 2017 NRMLA Annual Meeting & Expo The Palace Hotel 2 New Montgomery Street San Francisco, Calif. For more information, call (202) 939-1783 or visit NRMLAOnline.org.

Friday, September 22 2017 NW Mortgage Expo & Real Estate Summit MOTIF Seattle Hotel 1415 5th Avenue Seattle For more information, call (206) 484-6442 or visit MyWAMP.org. OCTOBER 2017 Monday-Thursday, October 9-12 Northeast Conference of Mortgage Brokers & Professionals 2017 Harrah’s Resort & Convention Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-7642 or visit MBANJ.com.

DECEMBER 2017 Tuesday, December 5 2017 California Holiday Networking Party The Atrium Hotel 18700 Macarthur Boulevard Irvine, Calif. For more information, call (516) 409-5555.

Friday-Monday, October 13-16 NAMB National 2017 Rio Las Vegas 3700 West Flamingo Road Las Vegas For more information, visit NAMB.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@mortgagenewsnetwork.com. *Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

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Thursday, June 15 Mortgage Bankers Association of New York’s 2017 Annual Strategic Real Estate & Lending Summit The Stewart Hotel 371 7th Avenue New York, N.Y. For more information, call (516) 997.3707 or visit MBANY.org.

AUGUST 2017 Monday-Tuesday, August 7-8 California Association of Mortgage Professionals Presents Summer CAMP 2017 Coronado Island Marriott 2000 2nd Street Coronado, Calif. For more information, call (916) 448-8236 or visit TheCAMPSite.org.

SEPTEMBER 2017 Wednesday, September 6 Texas Mortgage Roundup–Dallas DoubleTree by Hilton Dallas Near the Galleria 4099 Valley View Lane Dallas For more information, call (860) 922-3441 or visit TXMortgageRoundup.com.

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Tuesday, June 13 The Great Northwest Mortgage Expo Embassy Suites Washington Square 9000 SW Washington Square Road Tigard, Ore. For more information, call (860) 922-3441 or visit GreatNorthwestExpo.com.

JULY 2017 Monday-Tuesday, July 10-11 Ultimate Mortgage Expo Hotel Monteleone 214 Royal Street New Orleans For more information, call (860) 922-3441 or visit UltimateMortgageExpo.com.

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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!

www.classappraisal.com

APPRAISAL MANAGEMENT COMPANY

CHURCH FINANCING

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: Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.

EDUCATION

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Concord Church Finance www.concordchurchfinance.com 800-926-0399

A loan to a Church can result in an "open door" opportunity for Residential loans to Church members.

BOOTS ACROSS AMERICA TOUR 2016-2017 Beverly@BootsAcrossAmerica.org Certified Military Home Specialist Beverly Ray Frase "Training Boots on the Ground" Since 2009 • Trained 3,000 CMHS course grads • Trained for Depts of HUD, Treasury & more • 20+ years' experience in real estate & finance, military life COMING TO YOUR CITY!

AUDIT DEFENSE AND RESPONSE

MORTGAGE BROKER AND LENDER COMPLIANCE AUDIT, MLO POLICIES and UPDATES Our fees are less than the big national firms that don’t call you back. Program includes all Manuals including QC, MLO Policies and Comp Plans, AML, GLB, Social Media and Web audits, on-line training sessions, governance documents, and our audit protection plan. Available in all 50 states. We have hands-on experience with 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) 656-4584. Or you may e-mail us at nl@lockelaw.us 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.

COMPLIANCE CONSULTANTS

BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com 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. Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews

EDUCATION

HARD MONEY/PRIVATE LENDING

PUBLICATIONS

WHOLESALE LENDERS

Direct Private Money and Bridge Lender specializing in Stated Loans in CA 866-668-2663 Send Scenarios to info@CalHardMoney.com LENDING CRITERIA · Collateral: Stated 1st and 2nd position loans on N/O/O invest. properties (SFR, Condo, 1-4 units), Mixed-use, 5+ units, Retail, Industrial, Warehouse and Etc. · Fix & Flip program up to 70%-80% of the Purchase price on all types of properties · Loan amounts/Terms: $50,000 up to $5,000,000 and loans from 6 months to 10 years. · LTV: Purchases up to 70%-80% LTV; Refinances up to 60-65% LTV; 2nd Position up to 65% CLTV · BROKERS ALWAYS PROTECTED AND RATES STARTING AS LOW AS 8.50%

MARKETING

WHOLESALE LENDERS

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TagQuest www.tagquest.com 888-717-8980

Now Hiring Wholesale Sales Managers/Account Executives Nationwide Please send resumes to Marketing@HomeBrridge.com

WHOLESALE LENDERS

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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PRIVATE FINANCING

HomeBridge Wholesale iis a national wholesale lender offeering Conventional, G J b and dR i Loans. L W are comm mitted to providing Government, Jumbo, Renovation We ng, unique product the highest value to our clients through competitive pricin offerings, superior customer service, and state-of-the-art technology.

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

5 Park Plaza, 10th Floor Irvine, CA 92614 www..HomeBridgeWholesale.com m

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En njoy more loans, fo for more people with non-QM M opportunities. B Benefit from the fastest growing segment in the mortgage industry by vvisiting www.AngelOakMS.com or calling 855-539-4910.

Get MORE with Angel Oak Mortgage Solutions.

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