National Mortgage Professional Magazine October 2016 by ambizmedia

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table of

N A T I O N A L

Stirring the Waters of the Housing Market By Phil Hall

O C T O B E R

34 KickStarting the Mortgage Broker Channel By Mat Ishbia

2 0 1 6

M O R T G

V O L U

A SPECIAL FOCUS ON “THE FUTURE OF MORTGAGE BANKING” Imminent Disruption: The Upcoming Transformations of Mortgage Banking By Bill Dallas ..................................................66 Maintaining Human Connection in the Digital Loan Process By Leif A. Boyd ..................................................................................68 The Challenge With Change By Sue Woodard ................................70 Increasing Sales Requires Front-End Muscle By Chris Backe ......74 The Mortgage Industry: The Only Constant Is Change By Amy Slotnick ................................................................................76 Getting the Design Right Before You Adopt an LOS By Lionel Urban ................................................................................78 Online Loan Trading By John Ardy ..................................................80 Game-Changing Technology By Eric Egenhoefer ............................82

50 Who’s Who in the 2016 Wholesale Marketplace

Five Subtle Ways to Increase Profitability By Shawn Von Talge ....84 What is the Future State of the Mortgage Industry? By Laura Burke ..................................................................................86 Mortgage Lending: Where Will the Technology and Regulatory Environment Take Us? By Daniel Richardson, CPA MBA ................88 Five Rising Trends in Home Loan Origination By Jim Mortensen ..90 The Age Gap By Eric Weinstein ........................................................91

FEATURES ARMCP Begins Rounding Out Steering Committee ........................6 Non-Agency Mortgage Market Moves to Correspondent Relationships By Tom Hutchens ........................................................8

54 NMP Mortgage Professional of the Month, Don Chiesa, VP of Loan Production, Quicken Loans

92 The Only Clear Path to TRID Compliance By Gregory E. Teal

The Elite Performer: Address Your Stress By Andy W. Harris, CRMS....................................................................8

V I S I T Company

Web Site

O U R

A D Page

Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................66 American Advisors Group.................................... www.aagwholesale.com ................................................89 Angel Oak Mortgage Solutions ............................ www.angeloakms.com ..............................69 & Back Cover Assurance Financial............................................ www.lendtheway.com ....................................................91 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ................................104 Caliber Home Loans.............................................. www.caliberhomeloans.com ............................................59 CallFurst.com ...................................................... www.callfurst.com ............................................................72 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................15 & 75 Citadel Servicing Corporation .............................. www.citadelservicing.com ..............................................85 Civic Financial Services/Wedgewood .................... www.civicfs.com ..............................................................9 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7 Fannie Mae ...................................................... www.fanniemae.com/solutions ......................................11 First Guaranty Mortgage Corp. ............................ www.fgmccorrespondent.com ..........Inside Front Cover & 70 Flagstar Bank .................................................... www.flagstar.com/ae ....................................................19 Freddie Mac ...................................................... www.freddiemac.com/loanadvisorsuite ............................5 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ..........................................65 Geneva Financial, LLC ........................................ www.genevafl.com ........................................................37 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................49 Lykken On Lending ............................................ www.lykkenonlending.com ............................................83

T T

of contents

R T G A G E

O L U M E

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

N U M B E R

1 0

Recruiting, Training and Mentoring Corner: The Future of Management By Dave Hershman ..............................10 The Commercial Corner: Pre-Approving Your Small Balance Commercial Lender By Michael Boggiano ......................................16

Want to Unify Your Organization’s Production (and Other) Recruiting? By Steve Rennie ........................................18 NAMB Perspective: October 2016 ..................................................20 Why Mortgage Lenders Should Take an Interest in Pinterest By Bubba Mills ..................................................................................24 Workflow-Driven Valuation Management Technology Helps Ensure Appraisal Quality By Vladimir Bien-Aime ..................26 Tales From the Closing Table By Andrew Liput ..............................28 Industry Updates: October 2016 By Gavin T. Ales ..........................36 The Mortgage Godfather: The One Reason By Ralph LoVuolo Sr. 38 Lykken on Leadership By David Lykken ..........................................46 HARP Is Back! ..................................................................................48 To Credit Repair or Lose the Deal: Understanding and Mitigating Risk By Chad Kusner................................................56 Wells Fargo Hit by Largest CFPB Fine for Privacy Breaches: What It Means for You! By Andrew Liput ........................................58 OrigiNation: Plan Ahead By Andy W. Harris, CRMS ........................60 The Best Realtors to Work With and Some Easy Ways to Find Them By Brian Sacks............................................................62 The Long & Short: The Business of Short Sales By Pam Marron ..64 Keeping Pace With Today’s Regulatory Changes By Toni Bright ..94 MBA’s Mortgage Action Alliance ....................................................96 Getting to Know: Kelly Hendricks, President, NAPMW By Phil Hall ........................................................................................98

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

Web Site

Page

MBS Highway .................................................... www.mbshighway.com/MNN ..........................................61 Moneyhouse U.S. .............................................. www.mhodportal.com ....................................................67 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ............................40 & 41 Mortgage Star Conference .................................. www.mortgage-star.net ..................................................76 NAMB+ ............................................................ www.nambplus.com ......................................................25 NAPMW ............................................................ www.napmw.org ....................................................68 & 99 NAWRB ............................................................ www.nawrb.com ............................................................71 NMP U .............................................................. www.nmpucoaching.com ........................................1 & 43 NRMLA.............................................................. www.nrmlaonline.org ....................................................78 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................33, 87 & Inside Back Cover REMN Wholesale ................................................ www.remnwholesale.com ..............................................17 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................77 Secure Insight.................................................... www.secureinsight.com ..................................................47 Silver Hill Funding ............................................ wwwsilverhillfunding.com ..............................................13 TagQuest .......................................................... www.tagquest.com ........................................................73 The Bond Exchange............................................ www.thebondexchange.com ..........................................80 UAMP................................................................ www.uampexpo.com ....................................................79 United Wholesale Mortgage ................................ www.uwm.com ..............................................................27

OCTOBER 2016 Volume 8 • Number 10

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

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ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.

SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

FROM THE

publisher’s desk

A look toward the future of mortgage banking very month, I’m proud that National Mortgage Professional Magazine brings you the stories that fuel your success, but this month is something special. It’s true that success is often a matter of getting back up after a past failure, but it’s also about having a vision for the future. That’s what we look at in this issue, the future of mortgage banking. Having just returned from NAMB National in Las Vegas—where nearly 3,000 industry brokers, loan officers, vendors and wholesale lenders turned out to network and create new business connections—I have to believe that the future of our industry is very bright. It wasn’t just that a lot of people were at the event, it was the energy level that we witnessed while we were there. We’ll be sharing some of that in this issue and the videos our sister company will share on Mortgage News Network (MortgageNewsNetwork.com). Also in this issue, you will find Matt Ishbia’s take on “Kickstarting the Mortgage Broker Channel.” A joint initiative launched at NAMB National between NAMB and United Wholesale Mortgage (UWM), the Kickstart program (NAMBKickStart.com) will grant interested and qualified individual loan originators an amount up to $10,000, with the aim of covering startup costs, such as office space and software technology, that makes it possible for them to accept loan applications. “At NAMB, our mission is to grow the mortgage broker channel, and the KickStart initiative shows how committed we are to putting our money where our mouth is,” said Don Frommeyer, chief executive officer of NAMB. “We value the industry leadership and sponsorship UWM has provided to get this program off the ground, and we hope other lenders will participate in the program as sponsors as well.” Kickstart program applicants are not required to pay back the funds. “The KickStart program is about strengthening the mortgage broker channel as a whole because it’s the best way for consumers to get a loan,” said Ishbia, president and CEO of UWM. “Wholesale currently makes up 12 percent of market share—the goal is to double that, at the least. KickStart will strengthen the market by getting more loan originators where they belong, at independent mortgage companies. We hope that our competitors will join us in this initiative to make the wholesale channel stronger.” If you were in Las Vegas for NAMB National, you know that there are a great many professionals in this industry who are working very hard to grow the home finance sector. If you missed this show and all of its fantastic networking opportunities, we hope you’re gearing up for a trip to Boston for the Mortgage Bankers Association’s (MBA) Annual Convention. It’s bound to be another example of the growth our industry is currently experiencing. Maybe you picked up this issue at the MBA Annual, if so, pay a visit to the Mortgage News Network broadcast plaza and say hello. What else will you find inside this edition? Open this issue up and find so many great stories from the industry’s leading experts, including: l A look at the coming “Imminent Disruption” from Bill Dallas, co-founder and chief executive officer of cloudvirga l Ideas for “Maintaining Human Connection” from Leif A. Boyd, executive vice president of national production at American Pacific Mortgage l Coping with “The Challenge With Change” By Sue Woodard, president and chief executive officer of Vantage Production l Ideas for “Increasing Sales” from Chris Backe, director of financial services at Velocify l ”Getting the Design Right” from Lionel Urban, CEO, founding partner and chairman of the board for PCLender LLC l Great ideas that will “Increase Profitability” from Shawn Von Talge, vice president of Flat Branch Home Loans l And much more!

That’s just a very small sample. As we always try to do in this publication, we cover every aspect possible in the industry, and we dig deep on some critical issues and key individuals who are a driving force in moving the industry forward. In this issue, you’ll find our conversations with Kelly Hendricks, vice president of St. Louis-based Delmar Financial Company and national president of the National Association of Professional Mortgage Women (NAPMW) and Don Chiesa, vice president of loan production at Quicken Loans. These two profiles will take a closer look at one of the industry’s hottest trade associations with NAPMW and get an insider perspective on one of the industry’s biggest companies in Quicken. Phil Hall provides an excellent summary of the presidential candidates’ views on our industry in his piece “Stirring the Waters of the Housing Market” and Ernst Publishing’s Gregory Teal shows us what he considers to be the clear path to TRID compliance in his article. Also, be sure to check out the many great companies bring the industry an array of competitive programs and products in our “Who’s Who in the 2016 Wholesale Marketplace” directory. As always, I hope you enjoy this issue and that it contributes to your continued success in today’s ever-shifting marketplace. Sincerely, Joel M. Berman, Publisher-CEO NMP Media Corp. l Joel@NMPMediaCorp.com National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2016 NMP Media Corp.

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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: www.namb.org

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

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

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

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

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

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

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

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

D I R E C T O R S

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

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

David Luna, CRMS Mortgage Educators & Compliance 947 South 500 E, Suite 105 American Fork, UT 84003 Phone: (877) 403-1428 E-mail: David@MortgageEducators.com

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

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

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

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

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

National Association of Professional Mortgage Women 345 North Main Street, Suite 313 l West Hartford, CT 06117 l Phone: (800) 827-3034 l E-mail: napmw1napmw.org l Web site: napmw.org

2016-2017 NAPMW NATIONAL BOARD OF DIRECTORS

OCTOBER 2016 n National Mortgage Professional Magazine n

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

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

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

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

Glenda Mooney Secretary (281) 556-9182 NatSecretary@NAPMW.org

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

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

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

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

2015-2016 BOARD OF DIRECTORS

William Bower President (800) 288-4757 WBower@continfo.com

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

Mike Brown Ex-Officio (908) 813-8555, ext. 3020 MBrown@CISinfo.net

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

Matthew Carpenter Director MCarpenter@Sarma.com

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

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

Dean Wangsgard Director (801) 487-8781 Dean@nacmint.com

Delia Zuniga Director Delia@AdvantagePlusCredit.com

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

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

Scott Ledbetter Director (214) 783-3315

ARMCP Begins Rounding Out Steering Committee he Association of Residential Mortgage Compliance Professionals (ARMCP), a not-for-profit, professional organization devoted to residential mortgage compliance professionals, has added another member to its seven-member Steering Committee. ARMCP is in need of two additional residential mortgage compliance and/or regulatory compliance professionals to join President and Founder Jonathan Foxx on the Steering Committee. “This is a leadership position,” said Foxx. “We ask that you be a member who is actually involved in residential mortgage compliance or provide regulatory compliance guidance to such persons.” The purpose of ARMCP’s Steering Committee is to: Draft and review the association’s by-laws; determine a nominating process for officers; discuss the association’s first conference; decide on subcommittees and the process for appointing committee chairs; set forth a Mission Statement; and other business relating to the association’s mission. Interested parties may contact ARMCP at Info@ARMCP.org.

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1.800.649.1362

Non-Agency Mortgage Market Moves to Correspondent Relationships By Tom Hutchens

OCTOBER 2016 n National Mortgage Professional Magazine n

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he year 2016 has been a big year for the growth of correspondent lending in the non-agency mortgage space. Retail lenders have forged new relationships with non-agency correspondent lenders in order to access new products and grow their market share. In simple terms, correspondent lending is a relationship between lenders and mortgage originators in which the lender has the ability to approve the loan before selling it on the secondary market. Unlike mortgage brokers, correspondent lenders originate, fund and brand mortgages in their own name. They also oversee the disclosure and approval process. As with most originators, a warehouse lender is often relied upon to provide short-term financing until the mortgage is sold on the secondary market. Following the Great Recession, warehouse lenders tightened standards and rejected nearly all non-agency and non-QM loan applications. Recently, however these financers have become more accepting of non-agency mortgages, as they’ve seen a resurgence in originations. Increased volume helps validate nonagency lending as a more liquid market and one that warehouse lenders can take advantage of. What has been the primary factor in warehouse lenders’ new found acceptance of non-agency loans? One word: Performance. The performance of today’s non-prime/non-QM loans have far exceeded expectations. This has been the key driver to demand and increased liquidity in the investor world. Ultimately, warehouse lenders need to have confidence there is a market for loans being put on their lines and that the market will continue to grow. It’s easy to understand why performance has been so strong. All loans are manually underwritten and are required to meet the ability-to-repay standards set forth by Dodd-Frank. With borrowers also making down payments, the final key of “skin in the game” has proven these loans to be extremely sound. The correspondent channel is a good way for lenders to grow their market share because it allows them to expand their product offering and access a larger share of the mortgage market. It gives them a means by which they can branch out into the non-agency or non-QM mortgage market while retaining control on the lending process and relying on a trusted partner to underwrite and approve the loan. It’s also easy to make the switch to correspondent lending because the mechanics of closing the loan are nearly identical to the process they’re used to with Fannie/Freddie and FHA. At Angel Oak Mortgage Solutions, we’ve seen an uptick in correspondent lending partnerships in the last few quarters as the housing market warms up to non-agency and non-QM lending. We anticipate growth in these products to continue accelerating across all lending channels. Borrower demand for non-QM loans still far exceeds supply, but we are now seeing lenders in the industry beginning to address that demand. Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 32 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or email Info@AngelOakMS.com.

SPONSORED EDITORIAL

the

elite performer Address Your Stress BY ANDY W. HARRIS, CRMS

uying or selling a home while securing a new mortgage can be one of the most stressful temporary experiences people face in life. There are a lot of mixed emotions, planning, demands and deadlines. Your clients rely on you to help them navigate through the process and at times this can feel like a burden when things outside of your control don’t go as planned. Most would agree that the mortgage industry today can be one of the most stressful occupations as a mortgage loan originator. It’s imperative that you realize this and prepare for the diversity and sometimes insanity that goes with this industry. Certainly the regulatory and appraisal environment doesn’t help when trying to manage your own stress and the stress of your clients. Finding ways of putting the process in perspective will always help dissolve conflict. I believe many in this industry truly put their clients before themselves by spending time communicating, educating, and simply applying a hard day’s work each and every minute spent at the office. This is a good thing, but only if you acknowledge and pay attention to your own level of stress internally or externally and listen to your body. Natural stress can be normal when dealing with situations and a demanding environment, which can simply become a feeling of being overwhelmed at times. Chronic stress can become an issue if not dealt with by finding ways of relaxation and separation. If your body releases adrenaline or excess levels of sustained cortisol as a stress response, it can lead to health problems. According to many some include:

l l l l

Anxiety Depression Digestive problems Headaches

l l l l

Heart disease Sleep problems Weight gain Memory and concentration impairment

What I find more fascinating is the studies that have been conducted about our mental perception versus reality on how stress can impact our health. The University of Western Ontario found that people who believe their stress is affecting their health are twice as likely to have a heart attack ten years later. Pennsylvania State University found that stress was not the problem, but how we react to stressors. If you have two people with the same amount of work to do and one is grumpy and stressed about it and the other doesn’t let it bother them, this will greatly impact the future health of the stressed out person. It’s not easy to always manage stress during demanding situations in this industry, but it is possible with perspective. If we all realize the importance of our mental perception and how we respond to these demands, I believe our health will improve as a result. Don’t let temporary transactions change the big picture. If you control and balance your stress well, you’ll find that your clients and all those around you will be able to as well more easily. 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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The Future of Management BY DAVE HERSHMAN

he focus of this particular issue of National Mortgage Professional Magazine is “The Future of Mortgage Banking.” As I am writing this, I would envision articles on technology, online originations, regulatory activity and more. But what about the future of management in the industry? Since I have been in the mortgage industry for more than 35 years, I have seen significant evolution. But I also have seen much that has not changed. What has not changed?

T OCTOBER 2016 n National Mortgage Professional Magazine n

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l It still takes a lot of work to get one loan closed. In some respects, the work is more intensive, despite a significant infusion of technology. l Our sales managers are still our top producers and because pipeline management is difficult, they have little time to recruit and mentor. l Our primary mode of recruiting is still cold calling producers and offering them bonus checks to come aboard. We have little in the way of standardized assessments to make sure we are paying checks to the right people. Two questions follow: 1. Will these fundamentals change in the future? 2. And if one of these change— what course will it take? For example, let’s say that

loans get easier to close because of the technology which is integrated into our industry. This means that top producing managers have more time. We could go in three directions from there: 1. With their free time, they spend more time recruiting and mentoring. 2. With their free time, they increase their production even more. 3. Because mortgages have become easier to close, online marketing becomes more successful on the purchase side and thus, managers must spend more time marketing to keep the same market share. What is more likely to happen between these three? Most likely a combination of the above. But we will throw in one future scenario which we know is inevitable. Because the aging of our sales force in the mortgage industry, there will be a need to bring new blood into the industry. It is certainly easier to hire rookies and place them into online sales scenarios, as opposed to integrating them on the “street” in which they will need to develop relationship with referral sources very quickly. Thus, for “street” loan officers, it will become more important for companies and managers to assess the education, experience and traits of prospects before bringing them into the industry. We have tools to assess traits, but little has been advanced within this industry to focus upon

“… for ‘street’ loan officers, it will become more important for companies and managers to assess the education, experience and traits of prospects before bringing them into the industry.” the experience and educational side of the equation. For many, hiring loan officers who are rookies means hiring out of college, and thus, the experience factor would be minimalized. But again, for street loan officers, we should not assume that a rookie means no experience. There are plenty of experiences which would help them succeed on the street—including real estate, sales, financial services and even mortgage operational experience. To succeed in the future, we must teach companies and managers how to fully assess the candidates they will have to bring on because of this need to hire new blood. This is why we have developed experience and trait assessment systems as part of our recruiting and mentorship training. One bad hire can cost a producing manager and company enormous costs in terms of time, money and reputation.

Speaking of mentorship training, in this scenario for the future we will also have to teach our managers to become mentors. No longer will they have the option to produce and supervise a group of purely experienced loan officers. The good news is that it does not have to be the managers who accomplish all of the mentoring. Enabling our senior loan officers to become mentors brings many benefits to the table, not the least of which would be bestowing management experience upon those who make up our elite sales team. In the future, there will be plenty of changes. But in the case of an aging sales force and the need to bring in new blood, the future is now. We cannot afford to wait until the end of the refinance boom to rebuild our sales resources.

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 Freddie Mac Launches New Front-End Risk Transfer Offering

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Freddie Mac has announced a new front-end credit risk transfer offering, Freddie Mac Deep MI CRT. Through a forward credit insurance policy by a panel of mortgage insurance company affiliates, this pilot structured transaction provides additional coverage beyond the primary mortgage insurance on 30-year fixed-rate mortgages (FRMs) with 80-95 percent LTVs—which is placed immediately upon their sale to Freddie Mac. Transactions are executed via a competitive, transparent auction process. “Deep MI CRT builds on the success of our Agency Credit Insurance Structure (ACIS) program and is the first credit risk transfer offering in the market with a flow-basis structure on loans purchased from our diverse lender base,” said Kevin Palmer, senior vice president of credit risk transfer at Freddie Mac. “The pricing certainty provided by day one coverage offers us an economically sensible way to transfer mortgage credit risk away from taxpayers. Deep MI CRT embodies all the core elements of our single-family credit risk transfer program, and also helps us expand our important relationships with mortgage insurers. Risk transfer outside of the capital markets is a meaningful part of our singlefamily credit risk transfer strategy and we continue to explore options to expand our front-end risk transfer offerings.” Freddie Mac has led the market in introducing new credit risk-sharing initiatives with

Structured Agency Credit Risk (STACR) debt notes, ACIS and Whole Loan Securities (WLS), and was the first agency to market these types of credit risk transfer transactions. “MBA appreciates Freddie Mac’s efforts to bring more private capital into the market through the credit-risk transfer offering they recently announced,” said David H. Stevens, CMB, president and CEO of the Mortgage Bankers Association (MBA). “In this early stage of the credit risk transfer market, it is important to experiment with different transactions and structure types to evaluate their long term economic and competitive impact. Mortgage insurance offers a well-developed, scalable solution that would benefit consumers and is something that all lenders could use today.” New Communication Tool From AFR Streamlines the Mortgage Process

American Financial Resources Inc. (AFR) has announced that it will be launching MyLoanCenter, a new B2B technology solution to streamline and improve the way brokers communicate with their customers. MyLoanCenter is a free, mobile-optimized platform that facilitates real-time communication between the broker, borrower and lender, as well as effective monitoring of the loan at every stage of the process. It can help brokers better manage their client relationships and keep track of important transactions, while

empowering the borrower by allowing them to remain constantly apprised of their loan status. The platform offers a range of innovative features, which include: l Admin Control: Customizable settings that allow brokers to apply personal branding to the platform interface, create and manage internal teams, edit branch permissions and more. l Loan Pipeline and Pipeline Management: Enables brokers to view and sort their existing loan pipeline, register new loans, access pricing, order appraisals and conduct a loan estimate review. l Loan Feed: Provides brokers and borrowers alike with the opportunity to view real-time updates pertaining to the status of their loan, and any outstanding action items. l Newsroom: Helps users to remain abreast of pertinent news regarding regulatory updates, industry news and updates to the platform. l Data Sync: MyLoanCenter enables instant upload of necessary client and broker documents. “Technology has transformed the lives of everyday Americans in recent years and, now more than ever, they require tools that simplify and streamline seemingly complex tasks such as applying for a mortgage,” said Bill Packer, CIO at American Financial Resources. “The development of this tool underscores not only American Financial Resource’s pioneering

mindset, but its commitment to ensuring an optimal experience for both brokers and lenders.” OpenClose Adds Rate Sheet Generator to DecisionAssist

OpenClose has announced that it has added a rate sheet generator to its product and pricing engine (PPE), DecisionAssist. The new functionality quickly and efficiently automates rate sheet creation for timely distribution to branches and originators. The rate sheet generator empowers lenders with straightforward point and click capability to set up programs and map products themselves without OpenClose assistance. Lenders are also able to add or remove investors as needed, and investor programs can be white-labeled or displayed, depending on lender preferences. DecisionAssist keeps pricing up-to-date in real-time to ensure that all loans are priced with precision-based accuracy. Best execution can be run on all investor products simultaneously, which appears on a single screen for ease of viewing and comparison. “OpenClose’s rate sheet generator has taken a huge, time consuming burden off of our plate by completely automating the process for us,” said Kevin Marconi, chief operating officer of United Fidelity Funding. “It has saved us a great deal of time, we know our pricing is always current and accurate and we can run best in real-time. Our branches and originators absolutely love it.” The user interface is intuitive and enables single-screen searches for ease of viewing. Prebuilt templates can be utilized to

American Dream. That’s why we’re excited to work with Freddie Mac to create a greater pathway to homeownership for more people,” said Patty Arvielo, president of New American Funding. Your Path puts affordable homeownership within reach for underserved communities: l Self-employed workers: Provides flexible selfemployment verification l Seasonal employees: Accepts shorter secondary income history

l Multi-generational families l Buyers using cash toward the purchase l Gives consideration for nontraditional income sources l Expanded guidelines

underwriting is the standard, Providing access to credit for more consumers to enjoy the benefits of homeownership companies must use both automated and manual underwriting, which allows underwriters to individually review a borrower’s financial profile in order to make sure qualified buyers aren’t denied access to credit opportunities. As a result, Freddie Mac decided to work with New American Funding and Alterra Homes Loans as a

“By collaborating we can put what matters most first, better serving underserved consumers and helping them build wealth through homeownership,” said Jason Madiedo, CEO of Alterra Home Loans. “We are excited to partner with Freddie and NAF in this effort.” In a time when automated

continued on page 18

Land More Small-Balance Commercial Mortgages Offer your clients smart solutions from Silver Hill. Partner with a proven national lender and make a big impact on your bottom line. Our team’s experience has helped professionals like you close and fund more than 35,000 transactions.

Freddie Mac Partners With New American Funding and Alterra on New Pilot Program

Make the jump. See rates and property types at silverhillfunding.com or call us at 888-988-8843

Freddie Mac, in partnership with New American Funding and Alterra Home Loans, has announced the launch of Your Path, a new loan program that makes affordable homeownership opportunities available to underserved communities. After researching the U.S. housing market, Freddie Mac identified that certain demographics were experiencing obstacles with purchasing a home. Your Path provides flexible financing options to responsible lenders who serve a diverse range of homebuyers. “We have a passion for making sure everyone has an equal opportunity to achieve the

Silver Hill Funding is a Division of Bayview Loan Servicing, LLC. NMLS# 2469.

4425 Ponce De Leon Blvd. Coral Gables, FL 33146

Silver Hill Funding programs are offered to qualified commercial lending institutions and are not applicable to the general public and/or individual consumers. This information is for lending institutions only, and not intended for use by individual consumers or borrowers. Programs may be cancelled or modified at any time without any prior notice. Programs may not be available in all jurisdictions. Licensing information may be found at www.bayviewloanservicing.com

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quickly populate the rate sheets, which can be exported to Excel or other desired formats. On-thefly changes can be made throughout the day that reflect current investor pricing and best execution can be simultaneously run on all products for all investors. The rate sheet generator leverages OpenClose’s DecisionAssist Web-based PPE, which houses an extensive library of up-to-date investor guidelines and pricing. The PPE is maintained by OpenClose’s team of mortgage business analysts. DecisionAssist integrates with OpenClose’s LOS platform, LenderAssist, or it can also be utilized as a standalone PPE. Investor programs can be privatelabeled, customized for branding, and pricing, profit margins and fees can be controlled by investor, channel, company or branch. “The response that we have been getting from lenders is that this is one of the best rate sheet automation tools they have ever seen. There is a wow factor when you see it,” said Vince Furey, senior vice president of lending solutions at OpenClose. “Working together, our rate sheet generator and DecisionAssist PPE delivers speed, accuracy, visibility and ease of use that makes lenders more profitable and efficient. Further, it instills a level of confidence in originators that they can trust.”

NEWSFLASH y OCTOBER 2016 y NMP NEWSFLASH y OCTOBER 2016 y NMP NEWSFLASH y OCTOBER

Yellen on Capitol Hill: No Timetable on Rate Hikes

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Janet Yellen has assured Congress that the Federal Reserve is not operating on a “fixed timetable” when it comes to determining when to initiate rate hikes. According to a CNBC report covering the Federal Reserve chairwoman’s testimony before Congress today, Yellen admitted that some of the central bank’s highest ranking officers advocated for rate hikes if no new economic risks were to occur. But she noted that the economy would overheat if job creation acceleration, which would force the Fed to raise rates at a speed that would create discomfort with some Fed officials. Yellen also waded into presidential politics by insisting that she was unaware of contacts between Democratic nominee Hillary Clinton and Fed Governor Lael Brainard. Republican presidential nominee Donald Trump has accused Yellen and her colleagues of maintaining an artificially low rate level in order to preserve President Obama’s economic legacy, and during this week’s debate with Clinton warned that the historically low rates were contributing to the rise of a new economic bubble. In prepared remarks delivered prior to her question-and-answer session with members of Congress, Yellen detailed efforts to ensure proper capitalization of U.S. banks through the Fed’s

Comprehensive Capital Analysis and Review (CCAR) program. “We are also considering making certain changes to the stress test assumptions used in CCAR,” she said. “For example, under the current CCAR program, a firm’s capital adequacy is assessed by assuming that the firm continues to make its baseline capital distributions over the stress test’s two-year planning horizon. We are considering changing this conservative assumption, in significant part because of the advent of the capital conservation buffer in the regulatory capital rules, which limits the ability of a firm to make capital distributions when its capital ratios are lower than the buffer requirement. Instead, we are proposing that firms simply add one year of planned dividends to their stress capital buffer requirement in recognition of the fact that firms generally are more reluctant to reduce dividends than share buybacks.” Distressed Sales Continue to Decline

Distressed sales accounted for 7.8 percent of total home sales nationally in June, according to new data from CoreLogic. This

represents a 0.8 percent decline from May and a 2.2 percent drop from June 2015. Within the distressed category, real estate-owned (REO) sales accounted for 4.9 percent, a 1.9 percent yearover-year slide and the lowest level since September 2007. Short sales accounted for 2.9 percent of total home sales in June, slight lower than May’s three percent level. Eight states recorded yearover-year increases in their distressed sales shares in June, most notably Maryland (19.4 percent), Connecticut (18.4 percent), Michigan (17.6 percent), Illinois (15.8 percent) and New Jersey (15.3 percent). North Dakota had the smallest distressed sales share at 2.5 percent, while Florida’s 5.8 percentage point drop in its distressed sales share from a year earlier was the largest decline of any state. On a metro basis, Maryland’s Baltimore-Columbia-Towson market had the largest share of distressed sales at 19.1 percent, followed by Illinois’ ChicagoNaperville-Arlington Heights market (17.7 percent), the Florida metros Tampa-St. Petersburg-Clearwater (16.6 percent) and OrlandoKissimmee-Sanford (15.4 percent) and St Louis (13.2 percent). Denver-AuroraLakewood, Colo. had the smallest distressed sales share at 2.4 percent.

MBA Task Force Proposes New Loan Mod Program

The Mortgage Bankers Association (MBA) has launched One Mod: Principles for PostHAMP Loan Modifications, which is a proposed successor program to the Home Affordable Modification Program (HAMP). One Mod draws upon the experiences of lenders familiar with HAMP to formulate universal principles that should be applied to a future program. One Mod was developed by The Future of Loss Mitigation Task Force, a diverse MBA working group consisting of representatives from 20 member companies. The program offers at least a 20 percent payment reduction for eligible borrowers while minimizing the excessive documentation requirements that have caused hardship for HAMP applicants. The Task Force is cochaired by Alex McGillis of Quicken Loans and Erik Schmitt of JP Morgan Chase. “MBA’s task force recognizes that the industry, borrowers and investors need a successor to HAMP that is consistent and can be widely scaled,” said Pete Mills, senior vice president of Residential Policy & Member Services at the Mortgage Bankers Association. “Application of the Task Force’s principles and the ‘One Modification’ or ‘One Mod,’ will go a long way towards offering deep payment relief for struggling homeowners and a

Live. More than 3,000 real estate professionals, Latino entrepreneurs and top housing executives will be in attendance at the convention. “The success our community is experiencing does not come at the hand of a single individual or organization but rather through a collective effort of many,” said Joseph Nery, president of NAHREP. “Today, our organization is proud to recognize two individuals whose efforts have positively impacted the image and prosperity of Hispanic-Americans.” The Ernest J. Reyes Award

recognizes individuals from both the public and private sectors who have made exceptional contributions towards NAHREP’s mission to advance sustainable Hispanic homeownership and who have improved the quality of life for Latinos in America. Past recipients of the Ernest J. Reyes Award include Reps. Luis Gutierrez and Xavier Becerra, and Mortgage Bankers Association (MBA) President and CEO David Stevens. Blackwell has dedicated a large portion of his time at Wells Fargo to increasing minority, low to moderate-income, and first-

time homebuyer mortgage lending. He works with key stakeholders to enhance homeownership opportunities across the full consumer spectrum and has continuously been a champion for positive change in the mortgage industry, earning him the Ernest J. Reyes Award. The Latino Vanguard Award, has been presented to recognize public figures, authors and artists who have transcended barriers in their lives and careers and whose contributions have elevated the continued on page 16

B R I N G Y OUR O LOANS A

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NAHREP to Honor Wells Fargo Exec Brad Blackwell

FOR ALL TYPES OF BORROWERS and Author Julissa Arce The National Association of Hispanic Real Estate Professionals (NAHREP) will honor two individuals who have distinguished themselves through their work and advocacy for Hispanics in America. Brad Blackwell, EVP at Wells Fargo Home Mortgage and former Wall Street executive, will be recognized with NAHREP’s Ernest J. Reyes Award. In addition, author Julissa Arce will be recognized with NAHREP’s Latino Vanguard Award. The ceremony for these awards will take place during the NAHREP National Convention, being held at the JW Marriott-LA

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positive economic outcome for investors. We look forward to continued discussions with government agencies, the GSEs and other stakeholders about these principles and the proposal.” “Developing One Mod was a tremendous collaborative effort by lenders and other stakeholders, big and small, to develop a simpler and more streamlined process that provides meaningful help to those who are under serious hardship,” said Mike Malloy, vice president of Servicing for Quicken Loans. “One Mod resolves many of the barriers that homeowners seeking payment relief faced during the process of applying for a home loan modification. Our goal is to engage lenders, regulators, investors and community groups across the industry and receive their feedback on next steps to adopt and implement One Mod.” One Mod incorporates four guiding themes that drive successful loss mitigation programs: Accessibility, Affordability, Sustainability and Transparency. “As an industry we have a shared responsibility to offer clear and consistent solutions to homeowners who are struggling,” said Peter Muriungi, head of Mortgage Banking Servicing at JPMorgan Chase. “This proposal is the product of strong industry collaboration with the common goal of providing a simpler customer experience and meaningful payment relief for families in need.”

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Pre-Approving Your Small-Balance Commercial Lender

Ask three questions before choosing your partner

By Michael Boggiano

ortgage lenders perform due diligence before they choose to fund a small-balance commercial deal. It’s only fair that you do the same when deciding which lender is best suited for your client’s loan.

As you search for the right lender option, ask yourself the following three questions to ensure a more positive experience for both you and your client. 1. Who is this lender … really? Research a lender’s corporate structure and identify their parent company if one exists. Traditional lenders–or even those owned by a traditional organization–often have loan committees and restrictions that can delay your client’s transaction or prevent it from closing altogether. Once you understand a lender’s structure, look for the products and services they provide for mortgage brokers. Customizable collateral and educational tools are evidence of a lender’s willingness to help brokers succeed.

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2. Can I rely on this lender? A lender delaying or re-trading your deal can strain your relationship with your client. Try to learn as much as you can about how a lender operates, especially when it comes to their transaction process. For instance, a lender that begins to qualify your client’s deal before any underwriting takes place reduces the likelihood of that deal being re-traded later in the transaction. If a lender has a loan committee, find out when they make their decision on a loan. You could put your client in a tough position if a lender’s committee issues a denial shortly before closing. 3. What kind of experience will my client and I have? Lenders shouldn’t just be in the business of closing transactions. They should also work to create a positive experience for brokers and their clients. Most commercial borrowers want a speedy transaction that allows them to return to business as usual. So be sure to ask a lender about their average closing time and whether or not they conduct any post-closing oversight. Then take a closer look at their customer service record. Check a lender’s Web site to see if they share broker testimonials. You can also search social channels and talk to colleagues who close these types of loans. You may find that most negative experiences with lenders are a result of poor communication. Conversely, lenders who manage expectations and communicate clearly and consistently seem to receive the most praise. Asking these three questions can help you identify quality commercial lenders and ultimately create more happy clients. Michael Boggiano is national sales manager for Silver Hill Funding, a small-balance commercial mortgage lender offering nationwide financing from $250,000 to $1 million. He may be reached by phone at (888) 988-8843 or e-mail MikeB@SilverHillFunding.com.

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image and quality of life for Latinos in America. Past recipients of the Latino Vanguard Award include the Honorable Henry Cisneros, Lt. Col. Consuelo Kickbusch and playwright Luis Valdez. Arce is an emerging leader in the fight for immigrant rights and education equality. She is the chairman and co-founder of the Ascend Educational Fund, a college scholarship and mentorship program for immigrants. Arce made national headlines when she revealed that she had achieved the American Dream of wealth and status at Goldman Sachs, all while undocumented. In the heady days of the most astronomical stockmarket rise in Wall Street history, she climbed the corporate ladder-a rare Hispanic woman in a sea of suits and ties. Arce was officially sworn in as an American citizen in August of 2014 and will vote in a presidential election for the first time in 2016. She will use her inspirational story to change the conversation around immigration in her recently published book, My (Underground) American Dream. Arce seeks to challenge the perceptions of what it means to be undocumented and to reshape national dialogue around immigration. Cordray: CFPB Boosted Credit Union Mortgage Lending

Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), has engaged in some self-congratulatory accolades in a speech highlighting the credit union industry’s recent increase in mortgage originations. Speaking today before a Washington, D.C., conference hosted by the National Association of Federal Credit Unions, Cordray insisted that the CFPB’s rules and guidelines to prevent a reprise of the 2008 crisis proved to be beneficial for credit union mortgage origination. “Our first set of mortgage rules have been in place for over two and a half years, and we are seeing great progress,” Cordray said. “In 2014, the first year of our Ability-to-Repay rule on mortgage origination, owneroccupied home purchase

mortgages increased by four percent, according to HMDA data, and growth was even stronger last year: home purchase mortgages increased by an estimated 13 percent to 14 percent. And it is notable that credit unions are thriving, with their share of mortgage lending actually growing. In fact, credit unions originated 39 percent more home purchase mortgages in the first nine months of 2015 than they did for the same period of 2014, according to recent data.” Although Cordray repeated previous assurances that he did not hold credit unions responsible for the 2008 financial meltdown, he nonetheless insisted that these institutions should be grateful for the regulatory burden that the CFPB placed upon them. “Many credit unions have focused on the compliance burdens of the new rules,” he continued. “But they have overlooked the positive benefits of the rules. A safer mortgage market that does not allow ‘nodoc’ loans, or loans that can be underwritten over misleading teaser rates, is a market that presents more favorable ground for responsible lenders like credit unions. When bad practices are rooted out, good practices are able to thrive, freed from the unfair competition of a race to the bottom. That is exactly what has happened for credit unions over the past two years. In addition, as the Consumer Bureau is building out a vigorous supervision program over non-bank mortgage lenders and mortgage servicers, you are being put on a level playing field with your competitors for the first time ever.” Cordray also acknowledged the input from credit unions for encouraging the CFPB to redefine “small creditor” and “rural area,” which he insisted was also good news for credit unions. “We raised the loan origination limit for small-creditor status for first-lien mortgage loans from 500 to 2,000 per year, and we stopped counting loans held in portfolio by smaller creditors and their affiliates toward the limit,” he said. “Under the new rule, our small creditor provisions now cover all but about 150 of the very largest credit unions.” continued on page 26

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Want to Unify Your Organization’s Production (and Other) Recruiting? By Steve Rennie

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he process of recruiting passive candidates with a transferable book of business built upon trusted relationships remains a mystery to production leadership in the mortgage industry. Questions often come up including: “Where do I find them?;” “How do we attract them?;” and most importantly, “How do we close and retain them?” These questions can be broken into individual categories with best practices and techniques, but what can you do as an organization to unify and become more effective at your strategic growth efforts overall? Here are a few ways you can begin to tackle this internally with your branch, area, region, or enterprise: 1. Train your team: Define your value proposition and Unique Selling Proposition (USP) with a single sentence. Having the language regarding your Six Core Components (Business Model, Leadership, Culture, Operations, Technology and Geography) and value proposition be uniform is crucial for your introduction. After that, you have the flexibility to freestyle. 2. Have an opener: Who are you, why are you calling, and what do you hope to accomplish? (Hint … look to develop a relationship, not hire someone over the phone). 3. Create goals: Create and use a metric to measure the activity you need to accomplish your goal. 4. Prepare for objections: We have learned that most managers dislike developing new relationships because of the rejection that can come with it. Define common objections and discuss how to overcome them. 5. Create an appropriate target list: This is not your 1,500 LinkedIn contacts. This lead list needs to be defined and targeted. 6. Scheduled review calls: Share successes, challenges and where you are finding traction with certain types of people or with specific companies. 7. Be organized: Have systems in place to compile data, as well as track and manage relationships and activity—if it cannot be measured, it cannot be managed. 8. Make it a team sport: Involve others in the process. This creates trust by helping validate the things you are presenting relative to your company value proposition and/or USPs being communicated in a similar way by all involved. This type of initiative is always best executed as a team. Creating an environment where you can provide coaching on the “soft skills” along with who and how to target those you are hunting will help you learn where your strengths are and where you have room for improvement. We have been involved in helping companies organize and execute these strategies for 16 years. There is a science and art to recruiting and retaining producers. If you have any questions or want to learn more, feel free to contact us. 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. Model Match allows companies to organize production recruiting initiatives with structure, process and accountability. Steve may be reached by phone at (949) 356-5792 or e-mail Steve.Rennie@ModelMatch.com.

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trusted lenders because of their demonstrated track record in effectively evaluating creditworthiness for the broader public.

helping mortgage professionals stay current with the news, events and regulations that are impacting the industry. Designed to be educational in nature, each short video will address a variety NAHREP Releases Englishof topics that are important to Spanish Glossary of Real mortgage companies across the Estate and Mortgage Terms country. “We created this new platform to help inform and educate industry professionals about current events, relevant issues and how they could affect our business,” said Greg Holmes, national director of sales and marketing for Credit Plus. “We believe this is a powerful format The National Association of to share valuable insights about Hispanic Real Estate Professionals what the future may hold for our (NAHREP) has released an English- industry.” Spanish Glossary of Real Estate America’s Mortgage News is Industry. Unlike other glossaries, hosted by Donald Clement Jr., the English-Spanish Glossary of Southeast regional sales manager Real Estate Industry Terms provides at Credit Plus and a mortgage both the technical translation for expert with more than 20 years of each term and colloquial experience in the industry. terminology which are most often used by customers and CIS Integrates New practitioners. Consumer Verification Tool “A home purchase is widely recognized as the most significant financial transaction most people will make in their lives. For individuals who either prefer to speak Spanish or only speak Spanish, this already complex transaction can become CIS has announced that its overwhelming,” said NAHREP InstantID is now integrated with President Joseph Nery. “This their solutions for consumer glossary is intended to be a guide verification. to corporations, practitioners and “InstantID provides clients governments looking to create competitive advantages in Spanish Language resources for catching fraudulent applicants, their clients and the general public.” accelerating onboarding and In a recent NAHREP survey, top increasing acquisition,” said Mike producing Latino agents and loan Brown, CIS president. officers indicated that 40 percent of InstantID is a solution provided their transactions make use of through LexisNexis, accessing Spanish at some point in the more than 36 billion public and transaction, and as much as 25 private records. Knowledgepercent of all transactions utilize based, superior linking and Spanish exclusively as the means intelligent data connectors of communication with their clients. instantly deliver multiple levels of In an already complex and consumer identification, including increasingly regulated environment, validating input data is real (i.e. NAHREP responded to the need to government-issued SSN, provide guidance and consistency legitimate address); verifying on Spanish-neutral translations of input data belongs to a single the words and phrases used most identity (i.e. SSN & birth date frequently over the course of a real match single name); identifying estate transaction. compromised and suspicious identities (i.e. SSN issued prior to Credit Plus Launches New DOB). Educational Video Series “The ability to instantly know your applicant is who they claim to be, immediately stops fraudulent applicants from Credit Plus has announced that it consuming resources,” said has created a new informational Brown. “In addition to catching video series, America’s Mortgage News. The video series aims at continued on page 60

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n National Mortgage Professional Magazine n OCTOBER 2016

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NAMB President’s Message: October 2016

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I’ve watched our association thrive as I’ve had the privilege to serve California state and now, NAMB—The Association of Mortgage Professionals, for the past 15 years. I’m thrilled to say this has led to an incredible opportunity to serve as your new president. I hope to take what Rocke Andrews, outgoing NAMB president, did this past year and leverage his and the board’s success. He and I have been collaborating for the last year, so the transition to the new board will be seamless. One of my goals for the upcoming year is to increase state participation. While our NAMB membership has increased as a whole, some state chapters have fallen to the side over the years. I am also looking to increase NAMB convention participation, not just among mortgage originators, but with others in our industry as well, including wholesale lenders and home appraisers. I will also be focused on increasing NAMB-coordinated education and training. As I am now beginning my tenure as the NAMB president, I can confidently say I’m ready to embark on this journey with all of you. I am truly excited to lead you and an incredible team of volunteers. I have learned so much from many of you these past years, and I have to say, I am extremely optimistic about our future as an industry of mortgage professionals. I learned to “do the right thing,” for clients and peers from my business partner, friend and past California State President Fred Arnold, over 14 years ago, and over the years, I’ve grown and refined that practice into making a difference. Each time I write and speak to loan originators, I hope that I inspire many of you to influence and motivate others as well. Your new NAMB board is filled with passionate people that I hope will inspire each and every one of you. Please lend them your advice and support, as you do for me, and I promise that it will come back to you tenfold. A couple of years ago, I attended a law school graduation where the keynote speaker had a great commencement speech on “Branding.” Now you might think, what does branding have to do with being a lawyer or mortgage professional? Well, I invite you to follow the logic behind, “What is branding?” One definition of branding is, “The process involved in creating a unique name and image for a product in the consumers’ mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.” The keynote speaker went on to say, “project yourself to 2023 (10 years from now) and what is your brand.” He began to ask seven questions of the newly minted law graduates. Most of the questions pertained to civility, ethics and integrity not just with their clients, but also to one another. Branding is based on how we as mortgage professionals interact with our clients and each other. This brings me back to my message of “gratitude” and what it means to be part of something greater, with the responsibility that all of us have to give back to our industry. I have spoken to state chapters about William Buckley’s book, Gratitude, over the last couple years. Buckley suggests that citizens of the United States ought to feel a debt of gratitude toward their country. A debt that can best be repaid by volunteer service of a charitable sort. Buckley emphasizes that volunteering extends past providing service to the needy and repaying a social debt. Volunteering leads to an enhanced sense of civic pride. The individuals who engage in volunteering will find their altruistic impulses aroused. They will learn about aspects of life they would be unlikely to encounter otherwise. They will even come to realize that there is more to life

than self-indulgence. This industry provides great prosperity and I am asking that you give back this year and beyond. Ask yourself today, how can you give back to the industry in which we have all chosen to participate? We all have to ask ourselves; what can I do in order to give back? 1. If you are not a member of your industry association, JOIN! 2. If you are a member, attend monthly chapter and state events, PARTICIPATE! 3. If you attend monthly chapter and state events, VOLUNTEER for a local board position and lend your time and thoughts on improving the organization. 4. Respond to Calls to Action. Do not let the person next to you to speak on your behalf. SPEAK UP. Your voice and message need to be heard. I know that all of us are busier now than we’ve ever been in the past. Business has been compressed and there are fewer originators than in the past. This is a fantastic opportunity and I challenge every one of you to choose one of the four tasks I just mentioned and engage. I am proud and honored to serve you, and I look forward to sharing great practices of what gratitude means to us today. I will leave you with a great quote from Theodore Roosevelt from his speech “The Man in the Arena:” “The credit belongs to the man who is actually in the arena … who spends himself in a worthy cause … so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” Thank you and Namasté ... Fred Kreger, CMC, 2016-2017 President NAMB—The Association of Mortgage Professionals Fred.Kreger@APMortgage.com • JOINNAMB.com

The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer We just got done having a great NAMB National conference and look forward to the future and 2017. We have installed a new President Fred Kreger from California, President-Elect John Stevens from Utah, Vice President Valerie Saunders from Florida, Treasurer Andy W. Harris from Oregon, and Secretary Olga Kucerak from Texas, along with Immediate Past President Rocke Andrews from Arizona. The directors for NAMB this year include Rick Bettencourt, David Luna, Michelle Velez, Chris Bettis, Robert Sweeney, Linda McCoy, Kimber White and Nathan Pierce. This is a very experienced group of people, and as I said earlier, we look forward to a great 2017. In my last two years as your CEO, I have been involved in helping to bring you great conferences with meaning and hoping that you get some education from these conferences. We are continuing that by making sure that you have a reason to continue to come to our conferences. I have to admit, when we started to do these five years ago, we have gone from 200 people attending to more than 3,000 attending NAMB National. This tells me that we are doing our job as an association that continues to help our membership. And this is our goal. At NAMB National, it was announced that NAMB is pushing for more brokers to become entrepreneurs in offering a new program called KickStart. This program is designed to help these men and women open up their own shop by providing grants up to $10,000 to open your own company. Let’s make this perfectly clear. NAMB is not going to go and advertise or solicit your loan officers to do

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these grants. This program is designed to get originators that want to get back into the ownership of a broker business or want to go out and open their own company. As I said at the Delegate Council Meeting, if someone has decided to go to and leave your company, tell them good luck and point them to NAMB to help them. Then, you can become their mentor and help them. Neither you or your employee will regret the mentorship. Please let me know if I can help you, but you can get all of the information at NAMBKickStart.com. Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at NAMB.CEO@NAMB.org.

NAMB’s Education Corner: Introductory Mortgage Origination Courses By Bob Sweeney, CRMS

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

NAMB National Wraps in Vegas, NAMB East Up Next By Linda McCoy, CRMS

Linda McCoy, CRMS of Mortgage Team 1 Inc. in Mobile, Ala. is a member of the NAMB board of directors. She may be reached by phone at (251) 650-0805 or e-mail Linda@MortgageTeam1.com.

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We have just finished with NAMB National in Las Vegas which was a huge success. We had so much positive feedback that we are taking many of those great ideas to the planning of NAMB East 2017, set for Thursday-Saturday March 16-18, 2017 at the Omni Atlanta Hotel at the CNN Center in Atlanta. We were asked to have more education that would be valuable to our members, committee meetings for our conferences, a Delegate Council Meeting, more originators and brokers from the East to participate, and to have fun things for entertainment like the band who played our party at NAMB East 2016. We are working on all of those things. This will be the first Delegate Council that we have had in the East that I can remember. Make sure that your state chooses delegates to attend so you have a voice in your association. If your state does not have an association and you would like to participate as a delegate, please contact me or someone on the board. We need members to get involved and bring back information to their state associations. NAMB is your trade association for mortgage professionals. We are also planning some really fun events, like Casino Night. We will be giving you chips if you are a member, more if you have a Professional Designation or you can buy some for our Legislative Action Fund (LAF). We will have great prizes to spend your pretend winnings on. This event is just a fun way to give to a very important cause so we can have funds for lobbying efforts in D.C. Contributions to the NAMB LAF will provide much-needed additional financial support for NAMB’s Government Affairs efforts. Friday, March 17 is St. Patrick’s Day and we are bringing the band “The Headliners” who played for us in Hilton Head to Atlanta for NAMB East 2017. We are going to find some green beer and a few Leprechauns with a Pot of Gold to add to the excitement. Atlanta is a big St. Patrick’s Day Party Town, and we plan to do our part of having fun. We hope you are marking your calendar for March 16-18, 2017 for your next NAMB conference in Atlanta. Join us for a great NAMB East 2017.

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The NAMB Education Committee has been working for months to find and partner with a company that offers Introductory Mortgage Origination Courses. I am very pleased to announce that we have partnered with America’s Mortgage Institute (AMI) to offer Introductory Mortgage Origination Courses to our membership. A little about America’s Mortgage Institute. The company was established in 2010. The mission of AMI is to provide the mortgage industry and aspiring career entrants the finest in mortgage education and training. Based in Cherry Hill, N.J., AMI is approved by the New Jersey and Delaware Departments of Education, the New Jersey Department of Military & Veterans Affairs, the New Jersey Department of Labor and Workforce Development, the Pennsylvania Bankers Association and the MBA of Greater Philadelphia, just to name a few. AMI’s Introductory Mortgage Origination Courses are an essential pre-requisite to the SAFE Act Pre-Licensing course and NAMB is making it available to our membership in two formats. Note: The SAFE Act Pre-Licensing course is still required after taking these courses. Mortgage Fundamentals is a 40-hour live, instructor-led course (utilizing NAMB-certified instructors) and offers everything a new mortgage loan originator needs to know before tackling the SAFE Act material. With a focus on the mechanics of originations, students will learn the basics of prequalification, loan program guidelines, mortgage math, taking a complete loan application, documentation requirements, advertising compliance and more! We will soon be announcing locations where this live course will be offered, so be on the lookout for class locations and dates. For those with immediate needs or for whom live classes are not feasible, Mortgage Master is a 40-hour self-paced online course and includes everything from Mortgage Fundamentals on an engaging online platform. Students are kept interested and focused in the program through a gamified platform and the immediate feedback provided by the quizzes, games and exams throughout the program. This course will available very soon on the NAMB Web site, NAMB.org, so check it out for more details. The results of taking these courses prior to taking the SAFE Act test has been astounding at over a 90 percent pass rate for firsttime test takers in the live class. Help your new mortgage loan originator not just memorizing enough information to pass a test, but actually understand the material they’re learning, how it relates to mortgage loan origination and how to be ready to originate from day one. You’ll be thrilled with the program and so will your future mortgage loan originators.

NAMB’s Education Committee envisions that the Mortgage Fundamentals course will be offered in all regions of the U.S. and we will work with our lender partners to set up classes for their mortgage broker partners. If you have an immediate need for these courses prior to being offered on the NAMB Web site, please feel free to contact me at (317) 625-3287 or e-mail Bob.Sweeney46@yahoo.com. We welcome any input from all mortgage professionals. If you would be interested in joining the Education Committee and become a part of our future success in the education of our independent mortgage companies and mortgage loan originators, please feel free to contact me. If you are not an NAMB member, now is a great time to become a member. Go to your state association Web site or visit NAMB.org and join as a professional member.

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Scenes From NAMB National 2016 September 24-26, 2016 at the Luxor Hotel and Casino in Las Vegas

01 The registration area at NAMB National in Las Vegas 02 Damon Richardson from REMN was on hand to discuss the company’s renovation product offerings 03 NAMB members at the association’s booth to discuss the benefits of NAMB membership 04 Mat Ishbia, president and CEO of United Wholesale Mortgage (UWM) delivers his presentation, “Industry Leading Strategies to Increase Your Market Share Today” to a packed house 05 NAMB CEO Don Frommeyer welcomes attendees to Vegas for NAMB National 2016 06 Carl Markman, director of national sales at REMN Wholesale, explains his company’s product selection with attendees

07 Registrants check-in prior to attending the NAMB National 2016 Trade Show 08 Attendees stop by the Caliber Home Loans booth for info on the company’s product line 09 The busy Paramount Residential Mortgage Group (PRMG) on the exhibit hall floor of The Luxor 10 Ron Vaimberg of nmpU (right) discusses his education initiative with an attendee in Vegas 11 Reps from Angel Oak Mortgage Solutions were on hand to detail the company’s many product offerings 12 Damon Richardson, renovation lending specialist from REMN, presents “Renovation Lending 101 … And Beyond” to attendees at NAMB National

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Scenes From NAMB National 2016 September 24-26, 2016 at the Luxor Hotel and Casino in Las Vegas

13 Mortgage professionals taking advantage of the many networking opportunities available during NAMB National 2016 14 Attendees re-charge at the United Wholesale Mortgage-sponsored Oxygen Bar 15 Scott Koondel from National Mortgage Professional Magazine catches up with Florida Association of Mortgage Professionals Past President David Kane in Las Vegas 16 Jeffrey Tesch, managing director of RCN Capital, presents “Turn Trash Into Treasure–Producing Profits With Private Lenders to a packed room 17 Allen Middleman of Freedom Mortgage chats with an attendee on the exhibit hall floor of The Luxor 18 Princess Leia representing REMN during the NAMB National 2016 Trade Show

19 Allen Beydoun, executive vice president of sales for United Wholesale Mortgage (UWM), with attendees during the Trade Show 20 Reps from Flagstar Bank field questions from attendees 21 NAMB President-Elect John Stevens gets caught by the Dark Side during NAMB National 2016 22 Fannie Mae was on hand to discuss their offerings during NAMB National 23 Mike Brown, Joel Berman and Scott Koondel from Mortgage News Network get in the “Viva Las Vegas” mood during NAMB National 24 Reps from Carrington Mortgage Services were on hand to discuss their product line

Why Mortgage Lenders Should Take an Interest in Pinterest BY BUBBA MILLS

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24 ne of the fun things about working in the 21st Century is technology. Every few months another tool emerges that makes marketing your services easier. One that’s catching the mortgage industry’s attention is Pinterest, the visual social media site that lets you post or “pin” photos, videos, ideas—really any information you like—on a board that’s shared with your followers. It’s simple to use: Just visit Pinterest.com, click the “Join Pinterest” button and create an account. You can “re-pin” pictures already on Pinterest or find your own pictures elsewhere. And just this summer, Pinterest started giving mortgage lenders and others in sales ways to target pinners based on the type of content they like, what they search, and other such indicators. Now you can target users who’ve shown an interest in what you’ve pinned. So if one of your followers has saved one of your pins, clicked on one, or just tapped on one for a closer look, you can now better target those folks. What’s more, Pinterest is

taking its “Lookalikes” audience offering—which can be used to help brands reach groups of people who look and act similar to their own audience—and renaming it “Actalikes.” Plus, you can target local geographic areas with your promoted (ads you buy) pins and ensure locals see your content. At last count, I heard promoted pins can be targeted to 210 U.S. cities. Since rolling out the features, Pinterest says brands have seen an 80 percent increase in their click-through rates. This means more and more people are gathering around Pinterest—and you should be too. Here’s how mortgage lenders can use Pinterest to their (and their clients’) advantage:

1. To attract and help prospective clients Mortgage lenders can create Pinterest boards that help prospective clients with pins that show examples of great staging, low-cost renovation ideas and curb appeal tips. Mortgage lenders can also create a board for different lending programs and how they can help borrowers

with specific issues. You might consider before-and-after stories of lenders who thought they wouldn’t be able to qualify for a mortgage but were able to because of your help. The “after shots” can include photos of new buyers enjoying their new home at parties in backyards or in living rooms. Mortgage lenders can also allow clients or prospects to pin directly to their boards.

2. To make themselves the local experts in mortgages Mortgage lenders can make themselves the local experts in their cities by creating boards that offer details about where prospects are looking to buy homes—information on schools, shopping, recreation, etc. Plus, lenders can pin service providers in the area like real estate agents, painters, carpenters, landscapers, restaurants, etc. In

essence, you can set up a network and partner with other businesses who can promote your services as well. Just remember, keep your pins useful and interesting. Your goal with Pinterest is the same as your other social media channels: to become top-of-mind with your target audience.

3. To help prospects get to know them Mortgage lenders can use Pinterest as a tool to forge relationships and share information about their lives. Consider humor—just a funny photo of you doing your favorite hobby, for example. You might also share favorite quotes, songs, books or movies. We all know mortgage lending is a relationship business and Pinterest is proving to be a great tool to make new friends and strengthen current friendships.

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

NAMB+ is an independent, wholly-owned, for-proﬁt marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, October is upon us, the election is just weeks away, and before we know it we will be caught-up in everything that the end of another year brings. This is why I want to take the opportunity now to inspire you to do something impactful for yourself and your business before the calendar turns to 2017! Contact just one of the NAMB+ Endorsed Providers listed below. You will see immediately the value that working with a NAMB+ Endorsed Provider can bring to your business. Not only will you almost certainly be able to save money by switching from whomever you may be working with currently, but the quality and customer service you receive from our NAMB+ Endorsed Providers is second-to-none. I know it can be tough to make a switch, whether its phone service, website and IT, compliance, education and training, or anything else you utilize regularly in your business.

Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15

As an NAMB member, Birchwood Credit Services will waive the sign up fees! It’s a “NO RISK” way to experience the Birchwood difference ﬁrsthand!

But, trust me when I say that virtually everyone I know who has made the switch to a NAMB+ Endorsed Provider has never looked back! Contact a NAMB+ Endorsed Provider today, and be sure to say you are contacting them because they are a NAMB+ Endorsed Provider, or visit www.nambplus.com! 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.

NAMB members get a $300 discount on coaching. NAMB members receive exclusive discounts training events, including live seminars and internet-based web shops

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

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.

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

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

NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership.

WhoHub (www.whohubapp.com) is a FREE marketing tool for local Realtors to refer their best Loan Officer. The service is FREE for the agent and their clients so it gets shared among local friends, family and neighbors who will see your profile. Each loan officer pays just $30/month for unlimited agent connections. Whether you connect to 1, 15 or 100 agents – still just $30/month. That’s right; one new borrower pays for the service for years! NAMB members get their first 90 days for just $1, month to month thereafter, cancel anytime.

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

NAMBPLUS Login Instructions InfoSight, Inc. offers proven and affordable cyber security, risk management, IT Infrastructure and regulatory compliance solutions. Visit www.infosightinc.com or contact us at 305-8281003 / 877-577-9703.

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.

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!

n National Mortgage Professional Magazine n OCTOBER 2016

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.

Morf Playbook™ by Morf Media is software that allows you to train your staff and customers. You can create your own training, add your policies and procedures or select courses from the Morf Partner Portal. Whether you are looking for CFPB compliance training, sales training or new loan ofﬁcer training, Morf can connect you with exactly the training you need. If you can write about it, record a video about it or talk about it…YOU can train on it with the Morf Playbook™! Find out more at www.morfmedia.com/namb.

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NAMB members receive a discount off Brokers Compliance Group compliance support programs.

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

Workflow-Driven Valuation Management Technology Helps Ensure Appraisal Quality

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Commercial, Multifamily Mortgage Debt Takes 2Q Leap

By Vladimir Bien-Aimé

n enterprise-class workflow-based valuation management platform can automate much, if not all of the appraisal process. There are many details to attend to in order for appraisals to be completed, and they of course must be done in full compliance with state and federal rules and

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regulations. One area that is of particular importance is ensuring appraisal quality by way of trigger-based automation at certain points in the workflow. While there are various checks and balances that can assist with returning quality appraisals before they go to underwriting, many of them are not typically automated, leaving organizations with a higher risk of running into appraisals issues— affecting timelines and the salability of loans. However, having a workflow-driven valuation management platform in place ensures proper timing and execution throughout the appraisal process. By leveraging such a platform, you can configure your system to automatically trigger appraisal quality reviews, thus eliminating manual intervention. The ability to run multiple review products is key, as many systems only offer one option that may not fit every given situation properly. Valuation workflow technology can be set to run appraisal quality reviews at any point in the process for real-time appraisal evaluation for completeness, compliance and consistency with GSE guidelines, USPAP, UAD and industry best practices. This significantly reduces an underwriter's time spent on the collateral review process, and it prevents issues that may result in the appraisal not being accepted, which can hold up loan approvals. As an example, collateral analytics can be set to automatically trigger at a certain point in the workflow to score the appraisal and provide reviewers and underwriters with a detailed analysis of appraisal quality, repurchase risk, valuation uncertainty, market volatility and more. Similarly, AVMs can also be automatically ordered during the workflow to perform a cursory collateral quality valuation check early on in the process by way of auto triggers. Again, human intervention is avoided. Within workflow automation technology resides a rules engine which empowers users with functionality to implement autotriggers that are action and status-based, giving you full control over appraisal orders. And, workflow rules can also be put in place to efficiently manage vendors. For instance, when a vendor uploads an appraisal, a review is automatically triggered–thus eliminating timely back and forth communications. The bottom line is that there is a lot of control that workflow automation can deliver, and more control translates to better quality appraisals. The beauty of a platform that functions utilizing a trigger-based system of workflow actions is that you can ensure appraisal quality checks are executed automatically throughout your process versus utilizing manual intervention, which is costly and risky.

Vladimir Bien-Aimé is president and CEO of Global DMS. Since founding the company, BienAime’ has grown Global DMS to capture a leading share of the valuation management segment. He may be reached by phone at (877) 866-2747, email Vlad@GlobalDMS.com or visit GlobalDMS.com.

SPONSORED EDITORIAL

Commercial and multifamily mortgage debt outstanding grew by $39.9 billion in the second quarter, according to data released by the Mortgage Bankers Association (MBA). Multifamily mortgage debt outstanding rose by 2.6 percent to reach $1.09 trillion, while the total commercial and multifamily debt outstanding increased 1.4 percent to $2.90 trillion. Commercial banks held the largest share of commercial/multifamily mortgages in the second quarter, with $1.1 trillion or 39 percent of the total, while agency and governmentsponsored enterprise (GSE) portfolios and mortgage-backed securities were the second-largest holders with $486 billion or 17 percent of the total. Commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other assetbacked securities (ABS) issues held $484 billion, or 17 percent of the total, while life insurance companies held $407 billion, or 14 percent of the total. In focusing solely on the multifamily market, the MBA noted that the $27.6 billion spike in multifamily mortgage debt outstanding between the first and second quarters was a 2.6 percent increase. Agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $13.8 billion, or 2.9 percent, while commercial banks increased their multifamily mortgage debt holdings by $13.1 billion, or 3.7 percent, and life insurance companies increased by $1.6 billion, or 2.6 percent. However, CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $1.7 billion, or down 3.1 percent. Banks and thrifts recorded the largest increase in holdings of multifamily mortgages, at 3.7 percent, while real estate investment trusts saw the biggest decrease at 12.3 percent. “The amount of commercial and

multifamily mortgage debt outstanding grew to a new record during the second quarter, despite a record drop in the balance of commercial mortgagebacked securities loans outstanding,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “The CMBS market is seeing far more loans paying off and paying down than new loans being originated.” Fannie Mae Predicts 2.6 Percent Growth for Second Half of 2016

Economic growth is on track to reach 2.6 percent in the second half of the year, according to Fannie Mae’s Economic & Strategic Research (ESR) Group’s September 2016 Economic and Housing Outlook. For the entire year, the ESR Group is forecasting 1.8 percent growth; the first half of the year only saw one percent growth. Furthermore, the ESR Group is predicting that consumer and government spending are expected to drive growth despite an ongoing slowdown consumer activity. Fannie Mae Chief Economist Doug Duncan expected nonresidential fixed investment to reverse the trend of the past three quarters and “post a modest increase” in the third quarter while residential investment declines for the second consecutive quarter. “A bright spot for housing market activity is the strengthening of new home sales, which is significantly outperforming activity in recent years,” said Duncan. “The share of new home sales that are under construction or not started has climbed to nearly 70 percent, improving the outlook for singlefamily homebuilding. Existing home sales underperformed 2015 for the first time in July, however year-to-date sales are still 2.6 percent higher than during the same period last year. Additionally, the share of for-rent multifamily building starts has trended up with recent trends in homebuilding activity favoring the rental market.” continued on page 36

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Tales From the

Closing Table

BY ANDREW LIPUT

he mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This column addresses the good, the bad and the ugly!

You can’t make this stuff up! This month, we feature some of the latest news about mortgage and closing fraud affecting our industry. These are real cases from around the country, only the names have been redacted to avoid threats of frivolous legal action …

l A California man stole a deceased person’s identity and used it to defraud banks out of millions of dollars in fraudulent

l A Massachusetts man who was the chief executive officer of a mortgage lender and Ginnie Mae seller/servicer, was sentenced for fraud for diverting $3 million in borrower payments to secret accounts for his business and personal use. l In Washington, D.C., two conspirators worked to create and record fake mortgage satisfactions to clear title and sell a residential property free and clear of liens. The paid then pocketed nearly $350,000, while the original lien holders were defrauded of their mortgage proceeds. l An organized fraud group in New Jersey has been busted, with two arrested and a third being sought for an elaborate identity theft and mortgage fraud scheme that netted them $1 million from eight fake loan transactions using fake documentation and straw buyers. 29 On the lighter side … there are never enough of lawyer jokes Q: How many lawyer jokes are there? A: Only three. The rest are true stories. Q: What’s wrong with lawyer jokes? A: Lawyers don’t think they’re funny and other people don’t think they’re jokes. Q: What do you call 25 skydiving lawyers? A: Skeet. Q: What do you call a lawyer gone bad? A: Senator. Q: What do you call a lawyer with an IQ of 70? A: Your honor.

Andrew Liput has been a corporate, real estate and banking attorney for nearly 30 years He is the founder, CEO and president of Secure Insight, the first data intelligence and risk analytics firm to offer specialized vendor management services to mortgage lenders and banks nationwide addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureInsight.com.

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l An Arizona real estate agent was recently indicted and charged with defrauding Fannie Mae by hiding the fact that she and her relatives were buying nearly 30 real estate-owned (REO) properties for their own purposes and which she was listing. The indictment also refers fraudulent settlements and notary documentation witnessing.

mortgage transactions. The “straw buyer” who had died in 1969, nevertheless purchased and mortgage multiple properties in that state which eventually defaulted.

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Top industry news … Wells Fargo pays big fine for unauthorized accounts after the Consumer Financial Protection Bureau (CFPB) uncovered an internal investigation that resulted in more than 5,200 employee terminations. Allegedly, Wells Fargo bank employees opened accounts and transferred funds without client approval for the sole purpose of meeting business quotas. The CFPB required Wells to pay $185 million as a result of the uncovered activities in early September. However, the bad news was just beginning, as at press time, it was revealed that a $2.6 billion civil lawsuit has now been filed against Wells claiming some of their people were terminated for not agreeing to comply with the illegal practice. Wells has had a hard time of it lately with the CFPB. You may recall that back in August, the CFPB took action against the bank for what it termed illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The Bureau identified breakdowns throughout Wells Fargo’s servicing process, including failing to provide important payment information to consumers, charging consumers illegal fees and failing to update inaccurate credit report information and Wells was ordered to improve its operations, provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty. Understandably, Wells Fargo is a big target, and when they are fined it makes headlines. In reality, the fines will have little impact on Wells Fargo’s bottom line, although it clearly will influence future policies and procedures internally. Word on the street is that the American Land Title Association (ALTA) will soon be releasing details of its title agent uniform registration number initiative that will allow the industry to more readily verify title agent and licensed title producer license,

underwriter affiliation and closing insurance letter data verification. This effort, which has been floated for years and gained momentum in the third-party service provider verification environment, will help move the industry towards greater transparency and accountability while supporting better operational risk management. ALTA has embraced settlement agent risk management, creating its Best Practices Program, and has offered education and assistance to title professionals on handling TRID and closing disclosure compliance issues, while also successfully representing their member’s interests during the ongoing regulator and compliance debates in Washington, D.C. Mortgage fraud on the rise? According to a report issued by CoreLogic in September, mortgage fraud rose by 3.9 percent yearover-year in the second quarter. The report went on to state that there were 12,718 applications with evidence of fraud in the quarter, which represented 0.7 percent of all mortgages. The increase in purchase business as a component of overall volume was one reason given as refinances tend to have less risk of fraud.

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Stirring the Waters of

The ripple effect on the industry with Election Day 2016 on the n the historic realm of presidential politics, federal involvement in housing is not often viewed as a front-andcenter issue that could make or break a candidate. But this year, there has been a diverse level of talk about housing and the regulatory control of lenders and servicers from both the two

major party candidates, plus a pair of candidates from highprofile outsider parties.

Donald Trump On the Republican side, Donald

Trump is the rare presidential candidate that comes from a real estate and housing industry background, through his work as the developer of luxury commercial properties and condominiums and as the driving force behind the illfated Trump Mortgage endeavor in the previous decade. In August, Trump was a guest speaker at a National

Association of Home Builders (NAHB) meeting, where he informed his audience that “Home building is close to my heart,” while praising the work of his father, whom Trump said “Built houses and did it beautifully.” Trump’s speech before the NAHB was effusive in praise of his audience. “Honestly, I’m so

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the horizon

By Phil Hall

comfortable in this business,” Trump said in an unscripted presentation. “Oh, do I know you people well. You’re great people. I’ve always said that if you can build a home, you can build anything.” The candidate switched gears briefly to cite the U.S. trade deficit, then switched back to add, “If I used homebuilders to negotiate, that

wouldn’t be happening. We would be flush. We would be rolling in the dough.” Trump has been on record citing his opposition to the Dodd-Frank Act, and he commiserated with the NAHB audience on the regulatory burdens they have carried since the legislation went into effect. “You’re being driven wild

with regulations,” he said. “In the last five years, regulations on homebuilding have increased 29 percent. I was told this stat. I couldn’t even believe it. Twenty-five percent of your total cost to build a house is in regulations—your leader told me that. I couldn’t even believe it.” As part of his campaign, Trump has called for a

moratorium on new financial regulations, which he blamed for restricting the availability of home loan financing. “It’s impossible for people to go get mortgages,” Trump said. “Unless you have a lot of money in the bank, you can’t borrow. It’s impossible with Dodd-Frank. I know people continued on page 32

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of the Housing Market

stirring the waters

continued from page 31

who can’t get houses.” To date, Trump has not stated policy proposals related to affordable housing. Rob Astorino, the county executive for New York’s Westchester County, told The Daily Caller in early August that Trump told him that he would terminate the U.S. Department of Housing & Urban Development’s (HUD) Affirmatively Furthering Fair Housing regulation that allows the federal government to mandate the quantity of affordable housing units at a local level. However, Trump has not publicly commented on that HUD regulation, nor did he confirm Astorino’s statement regarding this pledge.

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Hillary Clinton The NAHB also invited Democratic presidential nominee Hillary Clinton to address its membership this summer, but she declined to appear and instead, sent Gene Sperling, her chief economic advisor, who offered an overview of the housing aspect of Clinton’s $125 billion Economic Revitalization Plan. “For Hillary Clinton, growing middle-class jobs and middleincome security is the single lens in which she will judge economic policy,” Sperling said. “What better helps the middle-class than housing? Housing creates jobs in the United States. There is probably no other sector that creates jobs throughout income levels—from construction jobs to professional and servicing jobs.” Sperling noted the challenge in credit availability levels, stating that the challenge was to “never swing back to where we were, but to get to an equilibrium where people who are creditworthy can get the housing they need. This will lead to increased housing starts, construction and affordable housing, which we need in this country.” While Clinton has yet to give a presentation focused primarily on housing, her running mate Tim Kaine used a CNN op-ed column in August to emphasize Clinton’s promises to expand affordable housing opportunities. “We’ll expand the supply of Low-Income Housing Tax Credits that help keep rising rents in check,” Kaine wrote. “We’ll increase rental assistance for low-

income families, and help families who receive support choose from a wide range of neighborhoods to live in. We’ll provide more resources to public housing authorities, and pair these investments with broader economic development efforts. We’ll support initiatives to provide up to $10,000 in assistance on a down payment for families looking to buy their first home. And of course, we’ll bolster resources to enforce Fair Housing laws and fight housing discrimination in all its forms.” Of course, you cannot have a political campaign without attacks, and the Democratic ticket has also housing as a subject in their attacks against Trump’s campaign, with Kaine accusing him of alleged racial discrimination against African-Americans seeking rental apartments in the 1970s and Clinton—along with Sen. Elizabeth Warren (D-MA)—claiming that Trump cheered on the housing bubble collapse. To date, Trump has not counterattacked his Democratic opponents with the housing issue.

Gary Johnson This year, more attention than usual is being offered to the Libertarian Party, which has fielded former New Mexico Gov. Gary Johnson as its presidential candidate. Johnson was the Libertarian candidate in the 2012 election, when he received one percent of the popular vote. As part of his advocacy for a smaller federal government, Johnson has been a longtime opponent of HUD and called for the elimination of the Department from the executive branch. He has also championed the elimination of the U.S. Departments of Commerce and Education, albeit with the caveat that he would do this if he was presented with congressional legislation calling for the department’s demise. Johnson has been critical of the federal role in housing, and in a July speech before the FreedomFest Conference, he belittled Washington’s efforts to address the question of affordable housing. “Let me give you an example,” Johnson said. “You hear this all the time, right? Affordable housing? You hear this in your

Green presidential candidate in 2012, when she fielded 0.4 percent of the vote. It can be argued that of the major presidential candidates, Dr. Stein has offered the most in-depth policy proposals for housing, with a major increase in federal involvement. Among her proposals are “an immediate halt” to foreclosures and evictions, the creation of a federal bank that would take possession of homes with underwater mortgages and either modify the loans or rent the property to the occupants, the expansion of federal homeownership and rental assistance and the allocation of “capital grants” to non-profit developers of affordable housing. Dr. Stein also pledged to use HUD to prevent the use of LowIncome Housing Tax Credits to increase the availability of lowincome housing in “already segregated neighborhoods,” while pushing for new public housing developments in “middle-income communities that is high-quality and mixed-income.” Dr. Stein, along with Johnson, is also demanding the reinstatement of the Glass-Steagall Act. In something of a surprise, considering his party affiliation, Trump has also backed this idea. Clinton, whose Dr. Jill Stein Another outsider party gaining more husband signed the legislation that attention than usual this year is the repealed Glass-Steagall, has been actively opposed to bringing back Green Party, whose presidential Glass-Steagall, a position that put candidate is Dr. Jill Stein, a her at odds with the progressive Massachusetts physician and wing of her party. political activist. Dr. Stein was the communities all of the time, ‘Affordable housing, what we do about it?’ Just think about affordable housing for a second if the government were not involved at all in housing. If as a community, you took architects and engineers and said, ‘Design for me affordable housing without any regard … of course safety will be the regard … but without regard to any zoning; without regard to any laws.’ Can you imagine the home that’s going to be 600 square feet, as you see in IKEA, with a toilet and a shower, a place to cook, a place to sleep, and a desk? That is the kind of affordable housing that you would see that would be affordable. Unbelievably affordable. But it is not possible when you have government involvement in affordable housing because first and foremost zoning comes into play. So, so many of the solutions that are out there rely on free markets; rely on getting government out of the way.”

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

Reshaping the Housing Landscape Industry experts look to gauge fallout of 2016 Presidential Election he housing, real estate and mortgage industries, both in its major trade associations and its leading companies, are mostly taking a publicly neutral view of the presidential campaign. But that doesn’t necessarily mean that they are not paying attention. In February, the 2016 Real Estate Market Sentiment Survey issued by the New York law firm Seyfarth Shaw polled commercial real estate executives to see which candidate had their best interests in mind. Trump came out with 33 percent of the response, with

Clinton taking 12 percent. The Seyfarth Shaw poll included the other candidates from the primaries, with Jeb Bush at 13 percent, Marco Rubio at 11 percent and Bernie Sanders far behind at three percent. One month later, an early election was held at a Consumer Bankers Association conference and Clinton elbowed out Trump in a 52 percent to 48 percent poll. However, 85 percent of the bankers who participated in that vote grumbled that they were unhappy with both candidates. In May, Zillow polled 100 housing economists on the

to coordinate policy so as to encourage lenders to lend to qualified borrowers. To untangle and refocus a national effort on housing America’s families will require a President to make a certain and forceful pivot that leaves little doubt about this issue. That pivot cannot happen without a clearly articulated policy and someone empowered to use all the authority of the White House to make it happen.” Neither Clinton nor Trump commented on the Stevens proposal, but that should hardly be seen as unexpected. Ralph McLaughlin, chief economist at

Trulia, did not expect either candidate to put a priority level of attention on housing issues. “Voters shouldn’t necessarily be surprised by the little attention that Hillary Clinton and Donald Trump have paid to housing this election cycle,” McLaughlin said. “Eight years ago, housing and the economy were the main talking points of Obama and McCain because millions of homeowners were going through foreclosure and the economy was in shambles. Today, the housing market and U.S. economy look much healthier, and as such, candidates have turned their

attention to more popular issues such as immigration, gun control, and national security.” But at the end of the day, the next president’s impact on the housing, real estate and mortgage industries—for better or worse— may not be as immediate as many people would like to imagine. “While homeowner anxiety over the election is clearly mounting, the likelihood of an immediate shock to the market is slim,” said Nela Richardson, chief economist at Redfin. “It will take considerable time for our next commander-inchief to implement policies that have any impact on housing.”

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presidential election. One-third of the economists said Clinton would have a somewhat or very positive effect on their home value forecast, while 16 percent said her election would have a somewhat or very negative impact. But when it came to Trump, 59 percent of the economists said their overall economic outlook would be very or somewhat negatively impacted by a Trump presidency, and 48 percent said their expectations for housing finance reform would be somewhat or very negatively impacted if the GOP candidate was in the White House. The same economists were also negative about Sanders and Ted Cruz, but were positive in their view of what John Kasich would do for housing. While bold public endorsements are hard to find, the presidential race can still offer an opportunity to discuss big picture issues. For example, in an op-ed column published in August in The Hill, Mortgage Bankers Association (MBA) President and CEO David H. Stevens suggested that the next president create a new position within the executive branch that would focus exclusively on housing. “Undoubtedly, the next administration needs to create incentives through marketing and public messaging, down payment assistance or savings reward programs, tax incentives, or credits for appropriate real estate development,” Stevens continued. “Efforts to expand the development of affordable rental housing needs a firm Administration commitment via the expansion of the Low-Income Housing Tax Credit and public/private partnerships to encourage the development of safe, sustainable, and affordable rental workforce housing.” Stevens also stated that lenders were “being discouraged from lending to first-time home buyers by unclear rules and overly aggressive and inappropriate enforcement actions by the government agencies”—although he stopped short of openly identifying the regulatory agencies. In advocating for a White Housebased director on housing policy, Stevens envisioned a strong leader to take on this new role. “This individual should report directly to the President and have clear principal level authority to call meetings, drive results, and measure progress,” Stevens said. “He or she will play an indispensable role not just in identifying conflict points, but working with multiple agencies and compelling independent regulators

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KickStarting the Mortgage Broker Channel BY MAT ISHBIA

Target audience for KickStart The program is designed to encourage loan originators at big banks and retail lenders to open their own loan origination business. Whether it is someone who originally left the broker world following the 2008 financial crisis and wants to go back, or it is a professional who has only ever worked on the retail side

but strives for greater career flexibility and financial potential, KickStart was built for them. More wholesale lenders wanted NAMB’s goal is to have many wholesale lenders throughout the country join the KickStart program as sponsors. The greater number of lenders that are willing to contribute money to the program, the more loan originators will be able to achieve the dream of starting a business. By rallying together to support this great cause, lenders can successfully revitalize the wholesale channel to a level that hasn’t been seen since 2008. How it works Interested loan originators should

apply at NAMBKickStart.com. Following approval by the KickStart Review Committee, based on evaluations and application requirements that are listed on the Web site, qualified applicants will receive up to $10,000 in seed money to support the launch of their business. They are not required to pay this money back. There’s no question that greater pricing and product options make mortgage brokers the best choice for loan originators looking to maximize their business potential— and that proof point is magnified by the NAMB KickStart program. Loan originators looking for detailed information on the program should visit NAMBKickStart.com.

Mat Ishbia is president and chief executive officer of United Wholesale Mortgage (UWM), one of the largest independent mortgage lenders. With a vision to create a more perfect mortgage world, Mat has changed the game, turning UWM into a $10 billion company and a top national workplace. Follow Mat on Twitter @Mishbia15.

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reported that they viewed it to be as daunting of a task as Navy Seal training. Additional choices that survey participants could select from for this question included: running a 10-kilometer race (20 percent); swimming across a lake (17 percent); baking a cake (14 percent); and tying shoes (six percent). Fortunately, for those individuals who view a venture into entrepreneurialism in the same light as the rigors of Navy Seal training, the KickStart program is built to operate with their best interests in mind. NAMB— The Association of Mortgage Professionals, and the wholesale mortgage lenders throughout the country that sponsor KickStart are committed to providing the tools and ongoing support and services to help loan originators comfortably transition into their new roles as business owners and successfully grow and sustain their businesses. The objective of KickStart is to more than double the current market share of mortgage brokers in the mortgage industry, increasing their presence from 12 percent to more than 25 percent by the end of 2017. A growing number of loan originators have been leaving big banks and returning to the wholesale side of the mortgage business in recent years because they’re noticing the opportunity for more flexibility, better pay and access to more mortgage product options. Add to that the lack of any daunting regulations that create roadblocks for broker success and loan originators are seeing a wide open path to great success. The KickStart program will serve as a great resource for those individuals in hot pursuit of that opportunity for career growth and satisfy those qualified candidates with a hunger for entrepreneurialism.

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he wholesale mortgage industry is aggressively making a move to take big banks head on and reclaim its market share that was lost following the 2008 financial crisis. And this time, it’s more than chatter—industry leaders are walking the walk, opening their checkbooks and financially committing to growing the mortgage broker channel to a level that has not been seen in nearly a decade. Wholesalers are taking the fight to big banks and retail lenders by appealing to the entrepreneurial spirit that so many loan originators have fallen in love with and has helped so many of them create highly rewarding careers. They are driving the resurgence of mortgage brokers through the NAMB KickStart program—an initiative that was introduced at the recent NAMB National conference in late September. The concept behind KickStart is simple—upon approval, qualified loan originators who are interested in opening their own independent mortgage shops are granted significant seed money—up to $10,000—to “kickstart” their business. The money can go towards a variety of startup costs that a new business owner might face, such as office space rental, hiring staff, or the technology needed to originate and manage loans. While the specific uses of the funds are up to each individual participant in the program, applicants are required to identify their intentions as part of the application process. The seed money is a major benefit for loan originators who have the itch to open their own shop but are hesitant to leave the structure and job security that they have at bigger banking institutions. Similarly, while many loan originators have the client list needed to achieve success right away, they may lack the necessary funds needed to launch their business. In fact, a recent NAMB survey of loan originators found 70 percent of respondents were interested in opening their own shops, with 44 percent saying that a lack of funding was the primary obstacle. However, 60 percent said they would be more likely to open their own company if they received seed money. Despite the high percentage of respondents that are interested in running their own business and would be more inclined to take the steps necessary to make that happen, the difficulty of such a task wasn’t lost on the group of survey takers. When asked what they’d most closely compare the challenge of starting their own loan origination business to, 43 percent of people

Industry Updates: October 2016 By Gavin T. Ales USDA Reduces the Upfront and Annual Guarantee Fees On March 31, 2016, the USDA announced a reduction in the upfront guarantee fee and the annual guarantee fee, effective for all loans obligated by the USDA on or after Oct. 1, 2017. A loan is obligated when the USDA has issued Form RD 355518 “Conditional Commitment for Single Family Housing Loan Guarantee” to the lender and approved a complete loan application package. For all loans obligated on or after Oct. 1, 2017, the loan will be subject to a one percent upfront guarantee fee and a 0.35 percent annual fee. Currently, the upfront guarantee fee is 2.75 percent and the annual fee is 0.50 percent.

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Fannie Mae and Freddie Mac Release Redesigned URLA/Form 1003 Fannie Mae and Freddie Mac released to the public their redesigned Uniform Residential Loan Application (aka Form 1003, URLA) on Aug. 23, 2016. This is the first redesign by the GSEs of the URLA in more than 20 years. The form is designed to assist lenders in collecting additional information required under the HMDA revisions, which are effective beginning with applications dated Jan. 1, 2018, and after. Accordingly, the redesigned URLA is not to be used by lenders until Jan. 1, 2018, but its use is not mandatory by the GSEs at that time. For those users who are not able to use the redesigned URLA at that time, the release also includes a new Demographic Information Addendum which can be used with the existing URLA to capture additional HMDA data. The GSEs have not yet published a mandatory use date for the redesigned URLA. In addition to modifications to the fields of information collected on the URLA, the redesign also modified the form to only collect applicable information through dynamic sections. Sections that are applicable to the transaction will expand to show all pertinent data. Sections that are inapplicable to the transaction or borrower are collapsed. These features are similar to the CFPB’s Loan Estimate and Closing Disclosure which removes inapplicable disclosures to the borrower so as to prevent overloading the borrower with information. Updates to the FEMA Standard Flood Hazard Determination Form The Standard Flood Hazard Determination Form has been updated with changes by the Federal Emergency Management Agency (FEMA) on June 1, 2016. The previous form originally expired May 30, 2015. FEMA’s Web site states that the previous May 30, 2015 form can continue to be used during the "phase in" period of the updated form. However, note that FEMA’s Web site does not indicate how long the phase in period is.

Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail Gavin@DocMagic.com.

SPONSORED EDITORIAL

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PRMI Partners With Feeding America to Stamp Out Hunger in America

Primary Residential Mortgage Inc. (PRMI) has announced its first partnership with Feeding America and its nationwide network of food banks in an eight-week fundraising campaign. PRMI’s goal is to raise $150,000 to help provide 1.65 million meals to food-insecure individuals and families across America. A 2014 study concluded that 48 million Americans struggle with hunger annually, including 15 million children and 5.7 million seniors. Feeding America, the nation’s largest hunger-relief organization, is able to provide 11 meals per dollar donated to people in need. “Hunger in America is a significant issue that affects far too many and because of this, we wanted to take action and create change,” said David Zitting, president and chief executive officer of PRMI. “At PRMI, we strive to make a positive impact in our local communities through the home buying process and look to do the same as we help put up a strong fight against hunger.” PRMI kicked off the Give A Meal Team Challenge at its 7th Annual National Conference in Hilton Head, S.C., which falls during Feeding America’s Hunger Action Month. PRMI employees across the country will team up in a competition to raise funds with each donation helping the community from which it is made. “We are honored to be working with PRMI to raise more meals for people and families facing hunger,” said Nancy Curby, interim senior vice president of development for Feeding America. “Food insecurity exists in nearly every community across the United States, and with help from partners like PRMI, we can ensure that more families have the meals they need.” HUD Pushes Measure for Gender Equality in Housing

The U.S. Department of Housing & Urban Development (HUD) has published a final rule to ensure

that all individuals have equal access to many of HUD’s core shelter programs in accordance with their gender identity. Following what had previously been a practice encouraged by HUD, providers that operate singlesex projects using funds awarded through the Department’s Office of Community Planning and Development (CPD) will now be required to provide all individuals, including transgender individuals and other individuals who do not identify with the sex they were assigned at birth, with access to programs, benefits, services, and accommodations in accordance with their gender identity without being subjected to intrusive questioning or being asked to provide documentation. “Today, we take another important step to ensure full acceptance of transgender and gender non-conforming individuals in the programs HUD supports,” said HUD Secretary Julián Castro. “This new rule will ensure equal access to the very programs that help to prevent homelessness for persons who are routinely forced to choose between being placed in facilities against their gender identity or living on our streets.” HUD’s new rule will require a recipient, subrecipient, or provider to establish, amend, or maintain program admissions, occupancy, and operating policies and procedures (including policies and procedures to protect individuals’ privacy and security), so that equal access is provided to individuals based on their gender identity. This requirement includes tenant selection and admission preferences. HUD’s mission is to create inclusive communities and quality affordable housing for all. Excluding any eligible person from HUDfunded temporary, emergency shelters, buildings, facilities, housing or programs because of that person’s gender identity or non-conformance with gender stereotypes would contravene this responsibility. Survey: Three Out of Four Americans Fear Losing Their Housing

Optimism about the economy

was in very short supply in a new survey of 1,000 Americans conducted by the NHP Foundation, a not-for-profit provider of serviceenriched affordable housing. The new survey found that 75 percent of those polled expressed concern about losing their housing, with 30 percent identifying themselves as “very concerned” about a friend or relative losing their housing. The survey also found 65 percent of respondents selfidentifying as “cost-burdened” when it came to housing, with nearly 40 percent acknowledging the fear that job loss will lead to loss of housing. Other triggers that could lead to a loss of housing included the perceived lack of affordable options (28 percent), increased rents (24 percent) and retirement (21 percent). But while 80 percent of respondents welcomed the concept of affordable housing and 40 percent believed “everyone deserves” it, 20 percent stated they were unlikely to welcome the development and construction of affordable housing in their neighborhoods. “It all starts with housing,” said NHP Foundation President and CEO Dick Burns. “Without the underpinning of a secure place to live, it’s nearly impossible for an individual or head of household to find and keep a job and provide for themselves and their loved ones.”

rates and strong job gains among young adults should be translating to a higher rate of homeownership,” Yun said. “It’s not, and as a result, sales to firsttime buyers remain stuck below a third of all sales.” Separately, Quicken Loans reported that appraisals on residential properties in August were an average of 1.56 percent lower than what refinancing homeowners anticipated, even though home values increased 1.73 percent from July to August and were 8.13 percent higher than August 2015. “While a one and a half percent

difference may not seem like a big disparity of home value opinions, the gap could cause problems, especially in areas with an even wider difference,” said Quicken Loans Chief Economist Bob Walters. “In some portions of the Midwest, where appraisals are averaging two to three percent less than what was expected, this will often lead to restructuring a refinance or the homeowner needing to bring a few more thousand dollars to the closing table.” continued on page 61

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Building The Nation’s Best Mortgage Company Higher “compliant” compensation per closed loan (2.50% average compensation). Lower rates and fees to your clients. Fast turn times (24 Hours In-House Approvals, Conditions, Docs, & Funding). Ability to lock and order appraisal prior to approval. Ability to submit to underwriting without appraisal and title. CD issued at Initial Approval Open Door Policy to Underwriting, Processing, and Owners. Disclosure Desk / eDisclosures / In-House Account Executive Limited Overlays on all Agency / FHA / VA / USDA Also offering: Jumbo / Non-QM / Manufactured / Commercial / Reverse

We are building the best mortgage company in the nation, but we strive to be even better. We are now hiring PROFESSIONAL Loan Originators and Branch Managers. Call or email me today and we can talk personally about a New Way to Originate. Sincerely, Aaron VanTrojen, CEO

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n National Mortgage Professional Magazine n OCTOBER 2016

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Pessimism Pervades Buying and Appraisal Surveys With autumn now here, the latest Housing Opportunities and Market Experience survey conducted by the National Association of Realtors (NAR) gives the impression that fewer people believe that the cooler weather months are the right time for purchasing a house. In the third quarter edition of NAR’s survey, which tapped the insight of 2,761 households, 78 percent of homeowners and 60 percent of renters said it is a good time to buy. This is down from the previous quarters of the year: the second quarter had 80 percent of homeowners and 62 percent of renters, while the first quarter had 82 percent of homeowners and 62 percent of renters were optimistic about home buying. Furthermore, 63 percent of homeowners surveyed by NAR said it is a good time to sell, up from 61 percent in the second quarter,

while 91 percent of the total respondent base said prices will either stay the same or rise in their community over the next six months, down slightly from 93 percent in the previous quarter. As for financing, respondents that were 65 and older (43 percent) and under the age of 35 (37 percent) were the most likely to believe they need more than 20 percent in a down payment if they were to pursue homeownership. Lawrence Yun, NAR’s chief economist, expressed bafflement over the survey’s results. “Very affordable mortgage

The One Rea es, there is one reason why people do business with you. One reason and one reason only. It doesn’t matter what you know, who you know how you came to acquire this ability, it doesn’t matter. Even as I’ve written countless times that persistence always wins. Even though I believe that without a deep and enduring knowledge of what you do for a living, you’ll still find it difficult to do business with people, have them use your services and become really successful if you cannot develop a special relationship with your potential clients. Many years ago as I was touting my skills as a loan officer of the first quality, it came to me that I was walking down the wrong path. I tried and tried to become more knowledgeable about programs that would allow the people to buy the home of their dreams. I spoke about my knowledge of every single program to every person who I met. I did it incessantly at family gatherings, cocktail parties and boring community meetings. I could help anyone buy a home. I knew it all. Then I had to wonder why I was not doing more business (If you’re so smart, why aren’t you rich?). I had to examine my value proposition. I had to examine why. I needed to know what would make me more likely to do more business. So the self-analysis took a while. I’m sometimes a bit slow on the uptake. But when the computer and it’s new toy—the Internet—became the things to learn, to use to make lives easier, I jumped at them as if I knew how to swim in the deep end. It took me months to learn the value and benefits that would become more and more obvious to everyone. But I learned that by the combination of knowledge and a bit of chutzpa would allow me to change what I did and what others should do. I was training loan officers

The

Mortgage

Godfather

eason

and what you want and need for what you do:

BY RALPH LOVUOLO SR.

“How can you get someone who is admittedly knowledgeable about the real estate/mortgage process to trust you as quickly as possible?” in the mortgage business. They are a hard bunch to work with. Big egos fueled by the possibility of earning an enormous amount of money, stoked by the liberties available to every one of them, led them believe that they knew everything. But my persistent streak was never deterred. It slowed a bit at times, but never stopped. I asked a number of these individuals who had chosen to be in a business fraught with emotions, built on fear of failure and endless choices to listen to me and practice a new form of sales. I asked them to help their referral sources do more, produce more and become ever more successful. It was my belief, and still is, that if a salesperson helps others become more successful, they will reciprocate by sharing business. So it started with Microsoft Outlook. By asking my trainees if they knew how to use Outlook, I discovered an almost never-ending bunch of people who were ignorant and liked being that way. I asked them first to learn how to use Outlook, then taught them a very simple formula. After you’ve learned how to use it as a value for yourself, teach your referral sources what you’ve learned. Ask them to sit with you while as you put together their address book filled with names of family and friends. Include their grocer, electrician, plumber, doctor, and lawyer. Include the names of every person who would recognize their name if they got an e-mail from them. Help them market their business. Help them find clients. Help them do things that they have thought about, but never seem to “get to” because they either never

studied or when taught, were not able to absorb the concepts being taught. Evolution took place, new thoughts became ripe fruit. I developed theories and put them to the test. And the “becoming” became the basis for trust as the one real and honest reason who people did business with people. Most of you when asked, and believe me, I’ve asked a whole lot of you, think that people do business with you because they like you. Well, put that thought away. They do business with you because they trust you. The “They” is defined as people who refer clients to you that you can help by meeting with a client, taking a mortgage application, process and underwrite it through your company, deliver on the promises you make and close the loan “on time”. Let’s explore this to the most basic psychological reasons we can think of: 1. They need to trust that you can get their loan closed on time. 2. They need to trust that you will return their phone calls. 3. They want to trust that you do what you say you’ll do. 4. They automatically trust that you know what you’re doing and will give good and fair advice. 5. They trust that you will not make them look bad. 6. They trust you will not embarrass them. 7. They trust that you will not steal their deal. With all that said, how can you shortcut all these reasons? How can you get someone who is admittedly knowledgeable about the real estate/mortgage process to

trust you as quickly as possible? Get letters from referral sources who have used their services? Yes, this is a powerful tool. But can you do it without involving others? Sure you can and here’s how: Make a promise and keep it. In fact, tell them you’re going to make a promise and you’ll keep it and then you’re going to ask them for a referral. Stand on your own. Be proactive in your business. But then you ask, what kind of promise can I make? Now is the time that we merge the idea of being able to help encourage them to do things that will grow their business. Actions they have not/could not do for themselves. You need to establish a partnership of sorts. You need to help them think about the business they really are in. All of you are in the marketing business. You’re not in the mortgage business, that’s just what you do to get paid for the marketing you do. Real estate agents, attorneys, accountants etc. all are in the marketing business, but most of them refuse to acknowledge that fact. Your job, if you chose to be successful, is to help them with ideas that will help them grow their business. So, here’s the promise and the script and the concept

“Hi, [insert agent’s name], I’m [insert your name] from [insert your company’s name) I’m so glad to meet you. I’ve heard so much about you and in fact the reason I’m here is because I know so much about your business, your ethics and your success. I’d like to start our conversation by letting you know that I’m not like anyone you’ve ever met in the mortgage business. I’m not like them because of how I approach our doing business together, and believe me, I can see that happening. “I know that our doing business together is based on trust. I know that you won’t do business with me until you trust me till you know that what I say is what I do. I know there are two ways you can get to trust me. One is to give me a deal and watch me as I maneuver through the mortgage maze and get your client to close. The other way is to make a promise to you and keep it. In fact, I’m going to make a promise to you and follow it up for four weeks and then I’m going to remind you that we had this conversation and because you can then trust that I do what I say I will do. “I prefer doing it by making and keeping my promise because I will also do something for you that further separates me from any other loan officer. I’m going to come to your office every week for four weeks on the same day every week and when I come to see you, I’m going to bring you and the idea that will help you grow your business. You see, I know what will help you, and I want to share that concept with you. I want to build a relationship with you that is based on trust. “What are your thoughts?”

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.

MONDAY

Master the Markets with Barry Habib

Recap of key economic events that took place over the past week and a look ahead to events that will potentially impact interest rates in the housing market. Brought to you by CALIBER HOME LOANS Wholesale Lending

WEDNESDAY

Top Originator Secrets with Brian Sacks Closing more, making more and still enjoying life! Brought to you by

Airs every Wednesday at 11 a.m. For more information on HomeBridge Financial, visit HomeBridge.com

Airs every Monday at 7 a.m. Gain access to an exclusive FREE TRIAL OFFER from MBS Highway for Mortgage News Network viewers, visit MBSHighway.com/mnn

MONDAY

Centurion Roundtable Interviews

THURSDAY

Hash It Out

Learn the secrets of success from this elite group of high volume originators. Brought to you by

Hard-hitting, fact based look at some of the most important issues facing the home ﬁnance industry today – with a bit of humor and irreverence thrown in. Brought to you by

Airs every Monday at 11 a.m. For more information on PRMG, visit prmg.net/wholesale

Airs every Thursday at 7 a.m. For more information on REMN Wholesale visit REMNWholesale.com

TUESDAY

THURSDAY

The 60 Second Originator

Over 80% of home buyers and reﬁnance consumers start their searches online. If you don’t possess the knowledge and practices required to convert loans from the internet then you need the 60 Second Originator to grow your origination. Brought to you by

40 Under 40 Proﬁles of pioneers taking the mortgage business to the next level. An inside look at the future leaders of the mortgage industry

Brought to you by

Airs every Tuesday at 7 a.m. For more information on LoanTek visit loantek.com

Airs every Thursday at 11 a.m. For more information on Angel Oak Mortgage Solutions visit angeloakms.com.

TUESDAY

FRIDAY The Mortgage Godfather The

Mortgage

Godfather

Ralph LoVuolo Sr., “The Mortgage Godfather” shares his unique and innovative approach to mortgage origination. You better become a follower or else. It’s an offer you can’t refuse!

Compliance Matters

Lenders Compliance Group provides practical advice regarding current mortgage compliance topics. Brought to you by

Airs every Tuesday at 11 a.m. Airs every Friday at 7 a.m. For more information on Lenders Compliance Group, visit LendersComplianceGroup.com

WEDNESDAY

Private Lending Solutions

Tired of turning down deals that don’t ﬁt traditional guidelines? Learn how to supplement your business with your most commonly overlooked leads. Brought to you by Airs bi-weekly on Wednesday at 7 a.m. For more information on RCN Capital visit rcncapital.com

FRIDAY

Inside the MBA Your bi-weekly window into what’s happening at the MBA.

Airs bi-weekly on Friday at 11 a.m.

expanding our

content rich e

programming

every day

FRIDAY

Inside the NAMB

Your bi-weekly window into whatâ&#x20AC;&#x2122;s happening at NAMB.

Airs bi-weekly on Friday at 11 a.m.

n National Mortgage Professional Magazine n OCTOBER 2016

If you have a product or service for mortgage professionals you can be a sponsor for these videos. For more information about these sponsorships or Mortgage News Network custom video productions please send an email to Info@MortgageNewsNetwork.com or call Beverly Bolnick, VP-Sales & Marketing, at 516-409-5555 ext. 4 and she'll tell you how you can be part of the action!

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heard street on the

Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.

CSS Adopts DocMagic’s Total eClose Solution

OCTOBER 2016 n National Mortgage Professional Magazine n

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DocMagic Inc. has announced that Corporate Settlement Solutions (CSS), a title and settlement services company, has successfully implemented DocMagic’s Total eClose solution. As a result, CSS can offer a completely new customer experience, gain a competitive advantage, and remain 100 percent TRID compliant at all times. “We are excited that CSS is successfully leveraging our Total eClose solution to provide a completely electronic closing process for their customers,” said Dominic Iannitti, president and CEO of DocMagic. “As a settlement service provider, it is impressive that CSS has taken a leading role in promoting the benefits of eClosings and as an early adopter, they will enjoy a significant advantage over their competitors.” CSS combined DocMagic’s functionality, services and integrations into a single offering to create an easy-to-use, out-of-thebox eClosing solution. DocMagic’s Total eClose functionality unites eNote, eSignature, eNotary, MERS eRegistration, eDelivery, and eVault services to provide a highly-efficient, paperless end-to-end eClosing. In addition, documents that need to be notarized can be conveniently eSigned and eNotarized without leaving the comfort of their home. “We recognized early on that in order to differentiate ourselves from a crowded marketplace, it was paramount to offer elevated service to our clients,” said Jerome Jelinek, CEO and general counsel at CSS. “With the addition of DocMagic’s

Total eClose, we offer lenders the opportunity to transform their mortgage origination process through the elimination of paper, thereby significantly reducing costs and increasing efficiencies.” After the introduction of TRID and its increased liability for lenders and their assignees, if you originate, sell, buy or service loans, you must be able to demonstrate TRID compliance years after a loan closes. DocMagic’s system provides electronic proof and evidence of compliant transactions for future audits with a date and time stamp audit trail of everyone who has touched the transaction at any level. From the original loan application and Loan Estimate (LE) to receipt of delivery of the final Closing Disclosure (CD), data, calcs and documents are stored in an eVault to provide the ability to replicate proof of compliance. Six New Lenders Sign on With Secure Insight

Secure Insight has announced that it has successfully signed several new mortgage lenders who are adopting the company’s patented Closing Guard vendor management tool to evaluate the backgrounds, licensing, insurance and trust accounts of agents as a method to identify potential threats before a closing takes place. Companies recently adopting the Secure Insight solution include William Raveis Mortgage LLC of Westford, Mass.; Regency Mortgage Corporation in Hooksett, N.H.;

Reliance First Capital LLC, with offices in Melville, N.Y.; NTFN Inc., based in Lewisville, Texas; and Long Island, N.Y.-based lender Quick Fund Inc. These lenders join more than 100 of their peers around the U.S. who look to the Secure Insight nationwide database as a live, real-time, risk assessment tool that protects their money, documents and consumers from fraud losses. Closing Guard evaluates, rates, monitors and reports settlement agent risk in real-time in the only nationwide database of mortgage closing professionals. The Secure Insight proprietary evaluation process combines automated data analysis with live reviews by trained analysts for the most accurate and informative risk analytics in the industry. “We are honored to work with such distinguished companies who are laser-focused on utilizing critical risk management services,” said Secure Insight CEO Andrew Liput. “Each company is led by visionary professionals with a serious commitment to quality control, consumer protection and overall loan quality assurance. We are proud to be their partner in this important endeavor.” Loanwise Financial LLC has also announced that it has enhanced its risk management policies and procedures governing its retail mortgage lending business by requiring independent screening and risk monitoring for all settlement agents having access to a borrower’s loan documents and mortgage proceeds. The process will be managed for Loanwise by Secure Insight. The company chose the Closing Guard tool to evaluate the backgrounds, licensing, insurance,

and trust accounts of agents as a method to identify potential threats before a closing takes place. “We recognize our responsibility to protect consumers from harm caused by theft of funds, identity theft and mortgage fraud, and our company continually seeks to not just meet, but to exceed regulatory expectations of acceptable enterprise risk management,” said Omar Quddus, CEO at Loanwise. “We take the management of third-party service providers seriously for investor confidence and consumer protection. We spent several months evaluating various providers to help us address settlement agent risk, and were impressed with what Secure Insight has to offer in its Closing Guard product.” CBC National Bank’s Mortgage Division Surpasses $13 Billion Milestone

CBC National Bank has announced that in June, its Mortgage Division surpassed the $13 billion mark in loan production. CBC’s Mortgage Division began operations in September 2007, utilizing a conservative, risk-averse business model, originating primarily fulldocumentation, conforming mortgage loans pre-sold into the secondary market. The Division passed the $1 billion mark in loan production in June 2009 and passed the $10 billion mark in June 2015. During the second quarter of 2016, the Mortgage Division continued to achieve robust funding and profitability, with more than $551.7 million in residential mortgage loans funded and $16.4 million in mortgage banking income during the quarter. In addition to reaching the $13

billion loan production milestone, CBC’s Mortgage Division was named by The Atlanta Journal-Constitution as one of the “Best Places to Work in Atlanta” for the second consecutive year. CBC was ranked 54th out of the 150 companies receiving this honor in 2015, and in 2015, it was ranked 63rd. “Our continued growth and recognition is a testament to the quality of all of our associates during our almost nine years in business,” said Brynn Stensrud, executive vice president and head of CBC’s Mortgage Division. “Our knowledgeable mortgage professionals continue to share CBC’s overall passion and commitment to offering our customers the best products and service available. We remain committed to the residential markets in our home communities in Fernandina Beach, Ocala and The Villages, Beaufort and Port Royal, and Atlanta, and we will continue to meet the purchase and refinance needs of our customers while meeting their demands for great service and products into the future. We likewise remain proud of the Mortgage Division’s significant contributions to CBC National Bank’s earnings over the years.” Credit Plus Announces The Work Number’s Integration With Encompass

costly loan buybacks and meet GSE requirements. Parkside Lending Forms New Correspondent Advisory Board

Parkside Lending LLC has announced the launch of a new Correspondent Advisory Board. Similar to its Broker Advisory Board formed earlier this year, the Correspondent Advisory Board is comprised of Parkside Lending’s correspondent lenders.

Advisory Board members will meet quarterly with Parkside Lending’s senior management team, led by Matthew Ostrander, chairman and chief executive officer of Parkside Lending. The purpose of their discussions is to provide input that will be used to optimize Parkside Lending’s products, improve the customer experience and enhance communication. The Advisory Board members, in turn, will benefit by learning about opportunities, business strategies and peer successes and challenges. continued on page 48

NationalMortgageProfessional.com

n National Mortgage Professional Magazine n OCTOBER 2016

Credit Plus has announced that it has integrated direct access to The Work Number employment verifications for its customers in Ellie Mae’s Encompass all-in-one mortgage management solution. The Work Number is a solution offered through Equifax Workforce Solutions, a business unit of Equifax Inc., and is the largest collection of payroll records contributed directly from employers. In addition, Undisclosed Debt Verifications can now be ordered directly from Encompass. Undisclosed Debt Verification updates are available from every credit bureau and provide real-time monitoring into applicant credit activity from the initial credit file pull through closing. “By being able to access The Work Number and Undisclosed Debt Verifications directly from Encompass, our customers will have a more streamlined user experience that will ultimately save them time,” said Greg Holmes, national director of sales and marketing for Credit Plus. “Lenders will be able to proceed with closings feeling confident they have a comprehensive picture of each

borrower’s financial situation.” The Work Number database houses employment records contributed by more than 5,500 employers nationwide. It helps lenders make informed decisions by providing them with a fast, up-todate validation of employment and income. Undisclosed Debt Verifications can be received from one, two, or all three credit repositories. These verifications provide Lenders with detailed information about new tradelines, inquiries, secondary reissues, bankruptcies, judgments, liens, collections, late payments, and more. They help reduce risk for

nmp The future of corporate storytelling Angel Oak Mortgage Solutions LLC

DocMagic

3060 Peachtree Rd NW, Suite 500B Atlanta, GA 30305 855-539-4910 www.angeloakms.com

1800 West 213th Street Torrance, CA 90501 800-649-1362 www.docmagic.com

Angel Oak Mortgage Solutions is leading the way in the alternative lending space. Offering wholesale subprime and alt-doc options, Angel Oak brings safety and reliability back to the non-prime market.

Caliber Home Loans Inc.

Ernst Publishing Co., LLC

3701 Regent Blvd Irving, TX 75063 800-754-8955 CaliberWholesale.com

One Commerce Plaza 99 Washington Avenue, Suite 309, Albany, NY 12210 800-345-3822 x 0 www.ernstpublishing.com

Caliber Wholesale’s success is built on a full array of conventional, government and Portfolio loans, combined with our reputation of providing our business partners with the highest level of service.

OCTOBER 2016 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

DocMagic delivers the best end-to-end Document Preparation, eDelivery and Compliance Solutions in the industry. Over 10,000 customers in fifty states rely on us for innovation, quality, and service.

Celebrating over 1 billion transactions, Ernst Cost2Close solutions process guaranteed fees with unparalleled speed and accuracy, alerting the lender and the settlement agent of fee changes in real time.

Citadel Servicing Corporation

First Guaranty Mortgage Corporation

15707 Rockfield Blvd, Ste 320 Irvine, CA 92618 949-900-6630 www.citadelservicing.com

1900 Gallows Road, Suite 800 Tysons Corner, VA 22182 800-296-2275 fgmcorrespondent.com

Citadel Servicing is committed to the emergence of Non-QM/Non-Prime lending. Pioneering the most innovative lending programs which include Alt Doc, life events (FC, BK, and SS), $3mil loan amounts and low fico scores.

FGMC: Correspondent, Wholesale & Retail + Warehouse Lending. Full spectrum of lending products and services nationwide.

Class Appraisal

Freedom Mortgage Wholesale Division

770 S. Adams, Suite 300 Birmingham, MI 48009 866-333-8311 www.classappraisal.com

10500 Kincaid Drive Fishers, IN 46037 844-668-3830 www.freedomwholesale.com

We’re an award winning Appraisal Management Company focused on building positive relationships with our business partners. We are revolutionizing the way business is done with our new and exciting technology.

Nationally ranked lending leader – offering competitive products and pricing (Conventional, FHA, VA, USDA, Jumbo & more), best-in-class service & relevant industry training. Choose Freedom to Grow.

it’s almost tha

nmp The future of corporate storytelling Paramount Residential Mortgage Group, Inc.

United Wholesale Mortgage

1265 Corona Pointe Court Corona, CA 92879 855-PRMG-FAN! (855-7764-326) www.prmg.net

1414 E. Maple Rd. Troy, MI 48083 800-981-8898 www.uwm.com

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

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

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

coming in december 2016

are you nominated?

Secure Insight 100 Lanidex Plaza, Suite 1201 Parsippany NJ 07054 877-758-TRUST (7878) www.secureinsight.com

TagQuest Inc. 711 Medford Center # 240 Medford, OR 97504 888-717-8980 www.tagquest.com

at time of year again! HOLIDAY NETWORKING PARTY

Holiday Networking Parties dates and locations!!! Don’t miss the opportunity to network and be part of history at the largest loan originator Holiday Networking Parties! Sponsorship opportunities available NOW! For more information, see pages 52 & 53!

2016

The only thing better than a closed loan is a FREE party! ™

n National Mortgage Professional Magazine n OCTOBER 2016

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

We are seeking nominations from our readers for National Mortgage Professional Magazine's "40 Under 40" feature, slated to appear in our December 2016 edition. Anyone who is under the age of 40 and has had a major impact on the industry can qualify for this feature. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on the nominee, along with a color photo and company contact info to complete the profile. To nominate yourself or someone else, visit https://nmpmag.wufoo.com/forms/nmps-40-under-40-2016/

NationalMortgageProfessional.com

A vendor management solution. The first settlement agent vetting firm in the industry today offers a host of reliable and affordable risk tools for banks, mortgage lenders and credit unions.

Lykken on Leadership

Six Questions to Help You Clarify Your Purpose BY DAVID LYKKEN

OCTOBER 2016 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

t the end of the day, all we want to know is how to succeed. We want to know how to meet our sales goals, how to exceed our investors’ expectations, and how to gain more market share over the competition. Since this is inevitably the end game in business, we tend to seek solutions toward that end. We want to know secrets, tips and tricks that can directly contribute to success. The problem, though, is that I don’t think success is that linear. Success, for a business, is much like happiness for the individual—you cannot get at it directly; rather, it comes as the inevitable result of doing other things. In my consulting business, I place an enormous amount of focus on helping organizations define and develop their core values. In the tradition of Simon Sinek’s Start With Why, I work with organizations to uncover their ultimate purpose—the reason that they exist in the marketplace. Why do I do this? What does it have to do with the success that all organizations ultimately seek? Well, it is my belief that the strength of the purpose driving an organization is that very thing that must be properly refined before success can even be possible. Trying to achieve success without understanding your purpose is putting the cart before

“Business is a team sport. You might have coaches. You might even have star players, but success only happens when everyone crosses the finish line.” the horse. It’s like wanting to build the ornate roof of a skyscraper for everyone to see before you’ve even bothered to build the foundation. The fundamentals make everything that comes after possible. In the mortgage industry, people approach me all the time with questions about how to succeed? In my mind, these folks are asking the second question first. The primary question that should be asked is, “What is my purpose?” Once you’ve clearly understood and articulated the answer to that question, everything else should fall into place. Here are six questions to get you started in that journey of discovery that inevitably leads to success. 1. Why do you exist? This first question is perhaps the most obvious and fundamental. Why are you in business in the first place? What is your reason for competing in the mortgage industry? This question may sound ubiquitous, but you would be surprised how many people go through their entire careers

without giving it any thought. Maybe your company was started as a sort of accident. Perhaps your founders had some link to the industry and thought it would be a good way to make money. But how you came to exist is not the same thing as why you exist now. You always have the chance to redefine yourself. So, think about what your purpose is now and what you want it to be. This is the starting point, because everything else—every other decision you make in your organization—will go back to how you answer this question. 2. What are your values? A second important question to ask yourself is, “What do you believe?” This sort of question can lead to developing your own internal “code of ethics.” This, of course, is above and beyond what is necessary for compliance. Great leaders are accountable not only to regulators, but also to their own high moral standards. Knowing what your values are takes much of the risk out of doing business. As long as you are sticking to the guidelines

you’ve laid out for yourself, you’ll know that you aren’t cutting any corners. If, on the other hand, you don’t have any clearly defined values, then you never know where you might end up. 3. How do you work? After you’ve gotten the basics of why you exist down, the next step is to move on to how you work. When you ask this question, you are asking about your process. How do you go about carrying out your mission? What systems do you have in place that guide the day-to-day operations of your business? All too often, organizations work in a haphazard manner. There is no rhyme or reason to the process— it sort of just arises spontaneously. If you want to increase your chances for success, you’ve got to be more deliberate about how you get there. Take a look at your processes and see what could use some tweaking. 4. What do you offer? The next question you might ask is often the question people start

with, “What is your product?” What do you sell? What is it that your customers want that you can provide? Before you know what you sell, you should definitely know who you are. Why you are in business and how you operate should come first but, let’s face, without a product you don’t really have a business. At the end of the day, you need to have something to sell. What are the products that you can offer within the context of the mortgage industry? On one level, everyone will have relatively the same product, but you can be creative in what you offer in such a way that makes it unique? Oftentimes, the package is the product? How are you packaging what you sell?

success. It may end with meeting sales goals, exceeding investors’ expectations, or achieving the highest market share in your niche, but always remember … it all starts with why.

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.

n National Mortgage Professional Magazine n OCTOBER 2016

6. What makes you different? Even after you’ve ironed out your purpose, process, product and people, you are still left with a quandary when trying to compete with other organizations in the mortgage industry. When seeking to clarify a worthwhile purpose that serves as the foundation for success, you must ultimately ask the question, “What make us so special?” What are you doing that no one else is doing? What do you bring to the table? Of course, you believe you are unique, but is that fact obvious to those on the outside? Do

There are, of course, many more questions you could ask to help you understand your core purpose. Moreover, having solid answers for these questions won’t necessarily give you

success. It will, however, make success possible. When you can understand fully who you are, how you work, and what you do, you will have the necessary building blocks to work toward

NationalMortgageProfessional.com

5. Who is on your team? A fifth question for you to ask if you want to know that fundamentals on which you will build success is this: “Who do you have working with you?” Business is a team sport. You might have coaches. You might even have star players, but success only happens when everyone crosses the finish line. How invested are you in developing your team? Too many organizations give little attention to this question. Of course, everyone says that they want the best people, but few are willing to really devote the resources required to hire and retain them. In the mortgage industry, one great employer is worth at least five mediocre ones. The industry can be complex on both an intellectual and social level, and you need to employees that can balance both. That means hiring the best for the job and then training them to be even better. So, what about you? Have you paid enough attention to the quality of your team?

investors see you any differently than any other organization in the industry? What about customers? It’s not enough to be different; you also need to look different. This last question you must ask is how you differentiate yourself—how you refine your image to reflect a competitive advantage against others in the industry.

heard on the street

continued from page 43

HARP is Back!

he Federal Housing Finance Agency (FHFA) has just announced it is extending HARP through Sept. 30, 2017.

“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the enterprises,” said FHFA Director Melvin L. Watt. “This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.” In order to be eligible for the new high LTV program, the FHFA stated that borrowers must fit the following requirements: l Must not have missed any mortgage payments in the previous six months. l Must not have missed more than one payment in the previous 12 months. l Must have a source of income. l Must receive a benefit from the refinance in one of the following ways: l Reduced monthly principal and interest payment. l Lower interest rate. l Shorter amortization term. l More stable mortgage product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage.

OCTOBER 2016 n National Mortgage Professional Magazine n

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How to prepare yourself Plan Set them with dates and actually hold yourself accountable to attaining them. The number one reason mortgage professionals fail in the business is because they stop growing when the business is booming. The big mortgage shops grow and decline with the market but their trends are always up. This is due to riding market conditions while continuing to grow despite them. Research Most loan officers limit themselves to selling few very specific loans, when in fact they can sell everything … it’s time to diversify. There are plenty of loan products out there and the people that are closing the most loans every month are offering all the loan products. Find out what your competitors are doing to beat you every month and replicate. Then find out what they are missing and do that too! Business is often referred to as war for this reason. Market yourself and your business Call a marketing company to find out what is working. Marketing firms are the most under used and fantastic way to stay on top of market conditions. They always tell you what is working, and they have a good grasp on the state of the entire nation, not just your region. Spend some time and money getting your name out there. If you are not picking up five to 10 new leads per week, you are missing the boat. Many companies are supplying their loan originators with hundreds of leads per month. If you can close these leads at a rate of 10 to 15 percent, you are in for a really good month. 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

All quotes are guaranteed for accuracy and instantly returned in the proper TRID format. Fee quotes include transfer taxes, municipal recording charges, title insurance premiums and settlement costs across all 50 states. Clients can set up their settlement service providers’ fees in the system or quote via LodeStar’s national settlement agent partner, Res/Title. Ellie Mae’s Encompass all-in-one Top Vine Mortgage Celebrates mortgage management solution One-Year Anniversary provides one system of record that Top Vine enables banks, credit unions and Mortgage Services LLC is mortgage lenders to originate and fund mortgages and improve celebrating its compliance, loan quality and one-year efficiency. anniversary in business. Top Vine “LodeStar is delighted to partner plans to mark this milestone in with Ellie Mae,” said Jim Paolino, several ways and have already CEO and founder of LodeStar. “Our broken ground in expanding their secure, seamless integration enables current office space to our clients using Encompass to accommodate the hiring of simplify the manual fee-quoting additional loan officers. process for the Loan Estimate and “As small business owners, we are so fortunate to have successfully Closing Disclosure forms, so lenders of all sizes can process mortgage made it through this first year” said loans and grow their businesses Vincent Cervo, managing partner. faster.” “With interest rates remaining historically low, our customers have taken advantage of the relationships Mortgage Professionals to Watch we’ve built with our lenders and l A.W. Pickel III, a current member received incredible deals. They are of the MBA’s IMB (Independent savings hundreds of dollars each Mortgage Bankers) Executive month, and we couldn’t be more Council and the Freddie Mac IMB proud of our role in helping them Advisory Board, has joined navigate tough financial decisions.” Houston-based AmCap Mortgage “The majority of our customers as president of its newly-formed are referral based,” said Top Vine Midwestern Division. Pickel, also Managing Partner Tom Pasckvale. past president of NAMB—The “We greatly appreciate the loyalty Association of Mortgage and continued support of our Professionals, will be responsible customers who recommend Top for growing AmCap Mortgage’s Vine. We are excited about retail brand and physical presence improving our core services over the in the Midwestern states and next year as we strive to contribute beyond, through both acquisition to the mortgage industry and focus and organic growth. on delivering exceptional value to l HomeBridge Wholesale is our customers.” strengthening its commitment to the Southeast region with the LodeStar Announces additions of Dennis Waxman and Integration With Ellie Mae’s Rich Linderman, two noted Encompass industry veterans with wellestablished records of success in wholesale lending. Linderman joins HomeBridge as Florida area sales LodeStar Software Solutions has manager, reporting to Waxman, announced that its Loan Estimate who will oversee HomeBridge Calculator is now available through Wholesale’s Southeast sales as Ellie Mae’s Encompass all-in-one regional sales manager. mortgage management solution. The l Flagstar Bank has hired mortgage seamless integration allows lenders industry veteran Don Klein to to access LodeStar’s products expand the reach of its directly through Encompass to drive comprehensive subservicing quality and efficiency in the loan offering, joining the company as origination process. senior vice president of business Encompass users can instantly development. and securely generate a quote from LodeStar’s Loan Estimate calculator continued on page 58 without duplicating any data entry. “This new forum is a continuation of a strategy that is designed to help us better understand our customers,” said Ostrander. “At the same time, the Advisory Board will offer us useful insights that will help direct future product and service enhancements to ensure we extend the ‘Power of Caring’ to everyone with whom we do business.”

n National Mortgage Professional Magazine n OCTOBER 2016

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

NationalMortgageProfessional.com

Whoâ&#x20AC;&#x2122;s Who in the

2016

Wholesale Marketplace Company Name

Web site

Specialty or Niche

State(s) Licensed In

American Financial Resources Inc.

AFRWholesale.com

One-Time Close

Nationwide (except HI)

[INSERT: Angel_Oak_Logo]

AngelOakMS.com

Alternative Lending Solutions

[INSERT: CaliberLogo]

CaliberWholesale.com

Conventional, Government & Portfolio Products

[INSERT: CarringtonLogo]

CarringtonWholesale.com

Complex Conventional & Government Programs

Nationwide (except HI, AK, NH & MA)

[INSERT: CommerceLogo]

CHMWholesale.com

Full-Service, Fannie Mae, Freddie Mac, FHA, VA & Jumbo Specialists

AZ, CA, CO, FL, TX & UT

[INSERT: FGMC_Logo]

FGMCWholesale.com

FHA, VA, USDA, Conventional & 1X Close Construction Loans

[INSERT: Florida_Capital_Logo]

FLCBMTG.com

Jumbo, Warehouse Line, FHA, VA & USDA. Competitive and boutique platforms for broker and non-delegated correspondents.

[INSERT: Freedom_Mortgage_Logo]

FreedomWholesale.com

FHA, VA, USDA, featuring credit scores as low as 500 with our Freedom First Product; #1 FHA/VA Lender (Inside Mortgage Finance, 2Q16)

AL, AZ, CA, CO, DE, FL, GA, IL, IN, IA, KS, LA, MD, MI, MS, MN & NC

National

Nationwide (except for AL, HI & NH)

Nationwide

All 50 states, Puerto Rico & Washington, D.C.

W H O â&#x20AC;&#x2122; S

W H O

Company Name

I N

T H E

2 0 1 6

W H O L E S A L E

M A R K E T P L A C E

Web site

Specialty or Niche

State(s) Licensed In

GreenSpring Capital Inc.

GreenSpring-Capital.com

Private Equity Lending

[INSERT: HomeBridge_Logo]

HomeBridgeWholesale.com

Fannie Mae, Freddie Mac, FHA, VA, USDA, Jumbo, 203(k)/HomeStyle Renovation loans, Emerging Banker, 90% LTV to $1 Million with No MI, 80% LTV to $1 Million with Bank Statement Program, 24-Hour Purchase Underwriting

[INSERT: HomePoint_Logo]

HPFTPO.com

FHA, VA, USDA, Condo, Conventional & Jumbo

LandHome Financial Services Inc.

LHFSWholesale.com

Nationwide NHF Sapphire, Conventional, Government, Jumbo, Reverse & Expanded Products (Non-QM)

[INSERT: LDWholesale_Logo]

LDWholesale.com

With the financial strength of its parent company, loanDepot.com LLC, LDWholesale is an agency approved seller and servicer with FNMA, FHLMC and GNMA (NMLS#: 174457)

Licensed in 46 states and the District of Columbia

Motive Lending

MotiveLending.com

Approved Seller/Servicer for FNMA, GNMA & FHLMC Licensed in 32-plus states funding FHA and Conventional Loans

Licensed in 32 states & growing

Mountain West Financial Inc.

MWFInc.com

DPR, CalPATH/PATH, FHA, VA & Conventional

[INSERT: Parkside_Logo]

ParksideLending.com

Experience the power of caring with a lender that offers common sense underwriting and exceptional customer service

[INSERT: PRMG_Logo]

PRMG.net/Wholesale-Partners-2/

FHA, VA, USDA, Conventional & Jumbo

[INSERT: REMN_Logo]

REMNWholesale.com

Renovation Loans

[INSERT: ResMac_Logo]

ResMacB2B.com

Wholesale and Correspondent Lending Agency, FHA, VA & USDA

[INSERT: UWM_Logo]

UWM.com

Agency & A-Paper

CA & WA

Nationwide (except NE)

Nationwide (except for NV, UT, MO & AR)

Nationwide

CA, OR, WA, ID, TX, UT, NV, AZ, CO & WY

Nationwide (except HI & NV)

Nationwide (except for HI, MO & NY)

Nationwide

Licensed in 33 states (see Web site for details)

Nationwide

OCTOBER 2016 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

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n National Mortgage Professional Magazine n OCTOBER 2016

NMP Mortgage Professiona Don Chiesa Vice President of Loan Production Quicken Loans BY PHIL HALL

on Chiesa is vice president of loan production for Quicken Loans, based out of Anaheim, Calif. In his role, Chiesa is responsible for building and maintaining the company’s long-term relationships with community banks, credit unions and brokers by providing them the ability to enhance and expand their mortgage business through a diverse line-up of products. Chiesa spoke with National Mortgage Professional Magazine regarding his career in the mortgage profession and his view of the state of the industry.

How did you first get involved with mortgage banking? Was this your original career path? It was not my original career path. I am originally from California, but attended Columbia University in New York City and received a degree in economics. I wanted to get back to California and originally took a job with the Gallo Winery. I had a couple of friends in mortgage banking, and I took a job with Household Finance Corporation (HFC). I was an originator for them in 1989, back in the days when you had to type up contracts yourself. From there, I progressed into multiple roles: Managing the origination office, helping with merchant services, training sales staff and managing the call center. I also became involved in correspondent lending. I had left to join Contifinancial Corporation, but then came back to HFC in 1999 under the Decision One brand before it was acquired by HSBC.

How did you first become associated with Quicken Loans? I joined Quicken Loans in October of 2010, when they were getting more into mortgage originations through third parties. The company wanted to go deeper into servicing credit unions and community banks, and expand on this type of service where a client is seeking a local company to provide service. I saw this as a great opportunity, one to support banks and credit unions that previously did not have back office support. It had become a great platform for the broker community. In your opinion, what makes Quicken Loans stand out from the competition? Hopefully, this is not a cliché, but it would have to be the people and the culture. When Quicken Loans wins customer service awards year after year from J.D. Power, it is because of the culture that is driven

down by the owners of the company. Quicken Loans is famous for its “19 ISMs” [which the company defines these as the “Foundation and the philosophy that we live by”], and my favorite four ISMs are: l Obsessed with finding a better way l Every client. Every time. No exceptions. No excuses. l Simplicity is genius. l Do the right thing. We believe that everyone is special to us. Quicken maintains close to 100 percent of its servicing, and we have found that this is what our clients prefer. Some lenders look at a loan as a 30day cycle, but we look at the whole lifecycle of the loan and the impact it has on repeat business for Quicken Loans and our partner relationships. How do you see the current state of the mortgage market? And where do you

see the market heading over the next 12 months? I find it to be robust. Regarding the broker community, it is nice to see that percentage growing quarter over quarter. Going forward, I see a strong housing market—and even as rates rise, homes are more affordable today than they were in recent years. How has Quicken been able to keep on top of the many regulatory changes that have taken place in recent years? It takes a lot of people to make that happen. We have proprietary technology to address this, and this enables us to have control over the changes we needed to make. We also maintained contact with our peers in the industry and with government institutions during this process to ensure we were on track. In your opinion, what can the industry do to encourage young people to pursue careers in the field of

onal of the Month

mortgage banking? We are pushing hard, especially on the retail side, to encourage participation in our internship program. We need to start creating interest from young people in mortgage careers before they get out of college. Many students are still trying to figure out their career paths while they are still in school. With our intern program, we help students understand the mortgage industry is all about, and help them develop knowledge of the business. Many interns in the program are eager to join us after they graduate. As a follow up question, what do you look for when hiring new recruits for your company? Among the younger folks, we are looking for drive and the ability to adapt and embrace our corporate culture. In my side of the business, I am looking for more seasoned folks with knowledge of their

local markets. If they don’t have that, we’re in trouble. Looking back on your work in the industry, what do you see as your greatest accomplishments? After the market collapsed in 2007, being able to roll out an origination platform and offer the product to brokers and credit unions. We were able to take an entity that was not doing B2B and make it into the largest retail entity in the business. What do you see as the most exciting challenge facing you and the company? The younger generation has embraced technology more than previous generations. The mortgage industry needs to be able to leverage technology, as we are doing with the Rocket Mortgage product. Also, the demographics of homebuyers are shifting, with married couples as well as non-married couples, plus an increasing number of women buying

“When Quicken Loans wins customer service awards year after year from J.D. Power, it is because of the culture that is driven down by the owners of the company.” homes on their own. It will be interesting to see how that impacts the industry. Anything we can do to help the consumer is important to us as a company. Outside of work, how do you spend your leisure time? I spend as much time as I can

with my family. I have two kids who are getting into their high school years, and we like to get up into the mountains and up along the lake. I also like to squeeze in time for golf. I am a sports fan, though at my age, I sometimes find myself enjoying myself more watching rather than playing.

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

To Credit Repair or Lose the Deal: U

BY CHAD KU

hough opinions range widely on the topic, like it or not, credit repair organizations (CROs) have proven to be a valuable niche within in the industry. It’s rumored some companies generate nearly $250 million annually helping consumer’s obtain accurate credit reports and accomplish their financial goals. It would be short-sighted to subscribe to the notion that restoring a damaged credit report is easy and consumers can do it on their own. Credit reporting, credit scoring and consumer protection laws are three independent, highly complex subjects which are encompassed within the consumer credit industry. Unfortunately, the consumer credit industry has been riddled with some bad actors which has created a stigma that has stuck since the Credit Repair Organizations Act or CROA was passed in 1996. Much like predatory lending in the early and mid-2000s, compliant CROs have had an uphill battle proving their legitimacy. As my company approaches its 10th anniversary, we still have challenges differentiating ourselves from those who are less than scrupulous. My goal today is provide insight and food for thought to lenders that are considering adding a CRO to their list of vendors and to offer vetting tips to those that already engage in referring their turndowns. Finally, I want to potentially opening dialogue with those that are not open to the practice.

OCTOBER 2016 n National Mortgage Professional Magazine n

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Credit is not as simple as a number As an originator for nearly a decade, and a credit professional for an additional 10 years, I consider myself a career student and self-proclaimed credit nerd. I am a Supreme Court-accredited educator, expert witness, serve on

the board of the industry’s trade association NACSO and host a three-day annual event dedicated to higher learning in credit. Despite this experience, I still to this day learn new information and nuances regarding credit on a daily basis. This industry is fluid and changing faster now more than any time in history. Expertise is crucial and having competent and ethical credit professionals as a service provider can be invaluable to your business model. What does a CRO do as a partner? I cannot speak to the efficacy of all credit repair organizations, other than having colleagues in the industry that are serious about providing value added service to their clients. But as a referral based credit service organization, we have modeled our firm to specifically service the mortgage and real estate industries. We work together with our partners, on many levels, helping them convert their lost opportunities, educating their originators, providing CE classes to their real estate agent partners, as well as act as a point of reference for credit reporting and consumer law on a case by case basis. In most cases, our relationships are long-standing and based upon a long record of quality customer service. We take pride in our performance record and work tirelessly to maintain our accounts. With that being said, I cannot say that establishing these relationships has been easy. In today’s regulatory environment, lenders have to be cautious about who they utilize as third party vendors. To clarify, the purpose of this article is not to advertise our services or make the case about the asset a credit repair company can be as a third-party vendor. However, it makes no sense to weigh the risks if you do not see a reward. Understanding the benefits of such a relationship can provide, gives sufficient insight

to garner benefit from reading this article. From a metrics perspective, the return-on-investment (ROI) from consistently referring qualified turndowns returns approximately two or three in every 10 referrals as mortgage-ready borrowers. Breaking down the numbers, approximately 20 percent will not benefit from credit repair, half of that may benefit from the service are likely to enroll, and about half of those follow through with the

steps necessary to be successful. Our partners as a whole, are very pleased with a 20-30 percent return on opportunities they most likely would not have realized without our help. I would like to add that you should be leery of any CRO claiming higher conversion rates. Now that you have a small bite of the potential benefits, let’s move forward and discuss if the effort is worth the return on investment.

: Understanding and Mitigating Risk

HAD KUSNER

*Visual courtesy of EDRnet.com

no verbiage that prohibits a lender from referring consumers to a nonaligned third parties for credit services. However on April 13th, 2012 the CFPB did release a memo regarding referring to third party services. Above is an illustration of recommended steps to be taken in order to limit the potential for statutory or regulatory violations. Risk assessment Prior to any due diligence, you have to be sure the CRO meets basic

Due diligence There are key data points you can use when assessing the viability of using a CRO. The onboarding process, payment protocols and lifecycle of a client should have clear written methodologies. Consistent, ethical and practical systems should be demonstrated through manuals, scripts and

Onboarding The onboarding process is critical in any business and credit repair is no exception. Compliance, customer experience and tempered expectations are three key areas every CRO should focus on. Below are some questions that will provide insights: l How are the opportunities sent to the CRO? Is the process secure? l What is their criteria for approving files for sale? What are reasons they would not offer their services? A documented vetting process protects against commission sales selling services to consumers that don’t need it – which leads to the germination of most complaints generated by the industry. l Does the CRO take advance fee payment for any reason and what is their payment structure? CROs must remain compliant with the no advanced fee payment rule. l Are the CROs disclosures clear, compliant and descriptive? There should be a clear documented process that outlines these issues above. For example, in our organization, these continued on page 97

n National Mortgage Professional Magazine n OCTOBER 2016

Compliance We start with the topic that can make any good idea a non-starter. Risk officers are charged with the responsibility of keeping lenders out of harm’s way. The Consumer Financial Protection Bureau (CFPB) is a formidable agency and nobody wants to end up on their radar unduly. Charged with supervising both Dodd-Frank and CROA, the CFPB has oversight on both industries. In review of both laws, there is

The above questions are commonly asked by our partners and is similar to criteria NACSO uses when vetting compliance for our members. Most compliant CROs will be able to handily answer these questions, and if they pass this muster test you can decide if there is value moving forward with due diligence.

handbooks and disclosures. Here is some criteria you can request from your vendor:

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criteria. Below are a few questions that may reveal if the potential vendor is worth considering: l Are they in compliance with both CROA and their state’s applicable licensing law(s)? l Do they carry a minimum bond as well as Errors & Omissions insurance? l Are they brick and mortar or virtual operations? l Do they process their own files or do they outsource to a thirdparty vendors? l What is the experience of the team and what are their qualifications as a CRO? l Do they require disclosures and is advance fee accepted for any of its services?

Wells Fargo Hit by Largest CFPB Fine for Privacy Breaches: What It Means for You! By Andrew Liput

OCTOBER 2016 n National Mortgage Professional Magazine n

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n mid-September, Wells Fargo reached a $185 million settlement for what the Consumer Financial Protection Bureau (CFPB) and other federal officials called a widespread practice among employees of creating fake customer accounts, PIN numbers and e-mails in order to meet sales targets and earn bonuses. Details reveal that Wells Fargo employees may have opened as many as 1.5 million bank accounts and another half million credit card accounts not authorized by consumers. The penalty resulted after the CFPB became aware of the details from the bank’s own investigation that reviewed accounts between 2011 and 2015. Further details revealed publicly indicate that Wells Fargo employees issued debit cards with fake PINs and used phony e-mail addresses to secretly sign up customers for online banking. They then temporarily transferred customers’ money to the bogus bank accounts, sometimes leaving a low balance and triggering overdraft or other charges. Many customers also were charged annual fees and interest on the credit cards. Although more than 5000 Wells Fargo employees were terminated because of their roles in this widespread scheme, and the bank acted on its own initiative in rooting out and ending the practice, the news has added to consumer fears about how their non-public personal information is being handled by bankers generally. The Wells Fargo incident raises some key issues that are worth considering by all banks and mortgage lenders: l Enforcing corporate policies in locally managed branch offices is a daunting task that requires constant supervision and accountability. l Determining who may access consumer private data and for what purpose requires careful consideration and technological checks and balances. l Creating an environment where non-licensed and regulated employees can benefit financially by “upselling” financial products to unsophisticated consumers is dangerous. l Tying manager income or bonuses to branch financial goals could create an untenable conflict of interest that may result in consumer harm. l Viewing consumers as vehicles for advancement and financial reward rather than as individuals, neighbors, and members of your community violates the George Bailey– Bailey Savings & Loan Golden Rule: Bankers are to help lift people up, not use people to lift themselves up! Wells Fargo did the right thing by conducting an internal investigation and holding wrongdoers accountable for consumer privacy violations and unauthorized banking transactions. The CFPB has planted a stake in the ground on privacy rights that every lender of any size will do well to heed. Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureSettlements.com.

SPONSORED EDITORIAL

heard on the street l Auction.com has announced the hiring of Patrick McClain as senior vice president of Auction Portfolio Operations, where he will lead Auction.com’s portfolio management team toward establishing a “One Stop Shop” experience for sellers from onboarding to closing, regardless of disposition type. l George Mason Mortgage, a subsidiary of Cardinal Bank, has announced that Dick Koch has joined its team as managing director of strategic growth and acquisition. l Castle & Cooke Mortgage LLC has announced the addition of a new branch in Henderson, Nev., the company’s second in the state and its the eighth new branch this year. Michael Cornachio will serve as branch manager at the new Henderson office. He attributes his return to Castle & Cooke Mortgage to a number of factors, including its leadership, people, products, speed and ability to adapt to market conditions. l Gateway Mortgage Group has announced the hiring of Pete Tamoney as a new regional sales manager. Pete will serve the existing and prospective clients in the Mid-Atlantic and Eastern Midwest regions. l Resitrader Inc. has named Doug Mayers as its new national sales executive. Mayers has a broad range of experience in the secondary mortgage market, including positions in correspondent sales and sales management; whole loan and distressed asset pricing, trading and acquisitions; and loan acquisition platform development. l Capsilon Corporation has announced that Jim Obsitnik has joined the company as chief operating officer. Based in Capsilon’s San Francisco headquarters, Obsitnik will be responsible for Capsilon’s business operations including sales, marketing, product operations, support and services. l Guild Mortgage Company has selected Wendy Wong as its first senior vice president and chief marketing officer to support its national growth plan. l GSF Mortgage has announced the additions of Jessica and Brian Friis in DeWitt, Iowa, joining the company with a combined 14 years of mortgage industry experience. GSF Mortgage has also added Carl LeMaster as a mortgage loan originator, located in Ford City, Penn., joining the company with four years of experience in the

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mortgage industry. GSF has also named Carla Lewis as a mortgage loan originator in Farnham, Va., joining GSF with three years of mortgage and real estate experience, and 15 years of experience as a small business entrepreneur. Open Mortgage has named Kevin McKnight as vice president of sales, where he will work to drive growth and profitability in the Open Mortgage core business of traditional mortgages. WFG National Title Insurance Company has added Kristi Kaufman Davison to its Agency Underwriting Team in Massachusetts and the New England states, where she will be responsible for supporting WFG title agents throughout New England on underwriting issues and serve as a resource for them as well. National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings Inc., has announced that Claudia Merkle has been named chief operating officer of the company. In her new role as COO, Merkle will continue to lead underwriting, operations, servicing, sales, marketing, and business development. New American Funding has announced the appointment of Frank Fuentes as national vice president of Multicultural Lending. Fuentes will help lead the company’s Latino Focus Committee, to help improve lending experiences for Hispanic consumers, and will work on a national level to expand the company’s footprint and multicultural initiatives, while increasing homeownership in diverse markets. LRES has announced the addition of Mike Bye as vice president of Sales, where he will be responsible for reporting on all sales activities and establishing and managing client relationships.

Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

new to market

Plan Ahead By Andy W. Harris, CRMS

et’s face it, this has been a great year to be a mortgage loan originator. Everyone is busy and most days we feel like we’re drinking out of a fire hose. The trap, however, is getting caught up in working so much in your business that you’re not working on your business. It’s easy to get distracted by the here and now tasks, but you have to remember to plan your strategy, systems and marketing for the future and not just for today. In order to capture permanent and lasting market share, you have to be proactive and not just reactive to getting new business at all times. Stockpile and invest when the revenue is strong and only spend conservatively. You also want to equally stockpile and invest your time, even though it may be low on resources presently. I personally get caught up so much in daily work demands that, at times, I can neglect other items or staff training 60 that can certainly have consequences on the future. It’s vital we step away to work on our business for long-term success, even if it does not produce immediate results. Working on the business is the only way you’re able to work in the business. What are some strategies or ideas you’ve had during busy times? How have you balanced present demands to work on the business and sustain and grow volume in the future? What challenges have you faced? Please contact me to share your stories for next edition. 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.” OCTOBER 2016 n National Mortgage Professional Magazine n

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

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fraud, InstantID also increases onboarding volume by authenticating applicants overlooked by traditional credit data, making this product a winwin for revenue growth and improving efficiencies. As clients broaden their acquisition methods using online and remote channels, the necessity of catching fraud and strengthening compliance is paramount. InstantID provides an audit trail on every applicant and is the only verification and validation solution endorsed by the American Bankers Association.” ClosingCorp Offering New Packages for Small- to Mid-Sized Lenders

ClosingCorp has announced that it now offers a selection of packages for mid- to smallersized lenders. These packages provide reduced rates to lenders that close 200 loans or less each month and are using one of the key loan origination systems (LOSs) integrated with ClosingCorp’s closing cost data solutions or Web service. Lenders can choose among four distinct, preset packages of services to help streamline the loan estimate process: l Transfer tax and recording fees (non-guaranteed). l Title, settlement, transfer tax and recording fees (nonguaranteed), with access to ClosingCorp’s network of service providers to fulfill quotes and orders. l Additional real estate services that borrowers can shop for (not including AMC or inspection) as well as title, settlement, transfer tax and recording fees (nonguaranteed), with access to ClosingCorp’s network of service providers to fulfill quotes and orders. l Full access to all ClosingCorp provider fees (guaranteed), as well as ability to access to ClosingCorp’s network of service providers to fulfill quotes and orders. “Lenders are spending increasingly more time and money to comply with the TILARESPA Integrated Disclosure rule (TRID),” said Carol Crawford, SVP

of marketing, communications and inside sales at ClosingCorp. “Our new offerings allow us and our integrated partners to provide an ‘out-of-the-box’ solution at an even more competitive rate to help mid- to smaller-sized lenders remain compliant and profitable.” FirstClose Updates Its FirstClose Report

First Lenders Data Inc. has announced that it has introduced a change to its Equity Protection Program for lenders using its FirstClose Report. Equity Protection Program is a unique credit risk management solution offered through a partnership with Van Wagenen Financial Services that gives lending institutions the ability to increase loan volume by expanding loan-to-value (LTV) thresholds and underwriting guidelines without increasing exposure to risk. For a fee, lenders can expand LTVs up to 133 percent, increase their loan/line amount up to $250,000, with a debt ratio limit of 43 percent and FICO scores as low as 660 on loans and 680 on Home Equity Lines of Credit (HELOCs) while covering the entire amount of the loan in the event of default. “With Equity Protection Program, lenders can increase their home equity volume by 15 to 25 percent simply by expanding their loan to value and underwriting guidelines,” said Timothy R. Smith, chief revenue officer of First Lenders Data. “It’s a smart way for lenders to eliminate REO expenses and protect their balance sheet. And, no charge off or costly foreclosures are required.” Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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Bipartisan Effort Aims at Flood Insurance Reform

The Office of Mortgage Settlement Oversight has stated JPMorgan Chase satisfied its consumer relief obligations, providing more than $4 billion well ahead of its deadline of Dec. 31, 2017. “Chase has satisfied its consumer

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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

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U.S. Reps Ed Royce (R-CA) and Earl Blumenauer (D-OR) have introduced HR 6196, the Repeatedly Flooded Communities Preparation Act, which seeks to mitigate the financial resources expended by the National Flood Insurance Program (NFIP) and taxpayers on claims for properties that have been flooded multiple times. In presenting this bill, the representatives noted there were more than 150,000 structures classified as “Repetitive Loss Properties” (RLPs) by the Federal Emergency Management Agency (FEMA) that comprise one percent of properties insured by the NFIP but total 25 to 30 percent of all flood claims. The new bill seeks to map repeatedly flooded properties and public infrastructure to determine the specific areas that should be priorities for voluntary buyouts, drainage improvements, or other mitigation efforts. It also seeks to develop and implement plans for mitigating flood risk in these problem areas, which would be submitted to FEMA. “It’s said that insanity is doing the same thing over and over again and expecting different results, yet when it comes to the NFIP and properties that flood repeatedly, that’s what we do,” said Royce. “One NFIP-insured home valued at $69,000 flooded 34 times in 32 years and racked up $663,000 in claims; it’s time to stop the madness for policyholders and taxpayers who subsidize this cycle.” “Repetitive flood loss continues to place communities and families at risk, while shortchanging the federal taxpayer and all those who pay flood insurance premiums,” said Rep. Blumenauer. “The good news is that even as the challenges mount, we know what to do. This legislation focuses on engaging communities in simple, self-help solutions that will make them safer, save them money, and ultimately, lead to the stabilization of the National Flood Insurance Program.”

Monitor: JP Morgan Chase Satisfies $4B MBS Settlement

relief obligation,” said Joseph A. Smith, Jr., the settlement monitor. “The servicer has provided more than $4.06 billion to more than 168,000 borrowers before the deadline specified in the settlement.” This announcement marked Smith’s final progress report regarding Chase’s consumer relief obligation under its $13 billion settlement with the federal government and five states related to charges that Chase, Bear Stearns and Washington Mutual packaged and sold toxic residential mortgagebacked securities to investors before the 2008 financial crisis.

The Best Realtors to Work With an

and Some Easy Ways to Find Them BY BRIAN SACKS

ave you ever wondered if there is an easy way to determine which real estate agents you should work with and which to avoid? Yes, you read that correctly and it’s not a misprint. There are agents out there you should be avoiding, but more on that in a second. I recently met with Tracy, a seasoned real estate agent, who attended one of the classes I taught on Boomerang Buyers at her local board of Realtors. After the class, she came up to me and we exchanged business cards. This, in and of itself, is a powerful lesson. She saw me as an expert, not a desperate originator just begging for business. Tracy called me a week after the class, and honestly I had already forgotten about her other than a note I had made to myself to put her on my contact list. What’s important to realize is that she called me. This is a critical piece of the puzzle when you are trying to establish a new relationship with a real estate agent, builder or other referral partner. To be clear, your job is to create more demand for your services than you have time for. I hope you have written that one down. Lunch went well, but it was different than the lunches you may normally have. After some small talk back and forth, Tracy finally opened up and told me the reason she had asked me to lunch. What she didn’t know was that I had already done my homework before ever agreeing to have lunch with her. I looked her up on her company’s site, and I went to HomeLight.com, Zillow.com and FranklyMLS.com to see what her stats were. Was she doing mostly listings or working with buyers? Was she a rookie, a superstar or a mid-level agent. It turns out that Tracy was exactly the pro-type agent I search for. The lesson here is that not all agents are or should be on your radar. The agents I prefer are midlevel agents. Top agents always seem to be too hard to get to, but more importantly, they don’t seem to value the relationships. They are

way too busy and just want their deals done regardless of how that needs to happen. Keep in mind I am making generalizations and these may not apply to all cases. I also don’t spend time trying to attract part-time or total rookie agents. They require a large investment of time, and as we all know, these are the first group to leave whenever there is even the slightest of changes in the marketplace. So who is the ideal agent ? My ideal agent is a full-time agent who has been in the business at least three to five years. They are doing well, but they are ready to kick it up and take it to the next level. Generally they are doing seven to 10 transactions or more each year, which puts them solidly in the middle. They have a very strong desire to take it to the next level and they realize they need help and good partnerships. Compare this with the part-time agent who may not still be in the business in 12 months, or the top agent who will view you as a servant instead of a partner. You can count on this group of mid-level agents to become partners. They know enough to be closing transactions, but they feel they need more. They need the tools and partners they can count on to be there to get their deals done. The key is to form a partnership … not beg for business Think about the agents you are speaking to right now. As humans, we all tend to take the path of least resistance. We gravitate to whomever will listen to us. But generally, that is the person who does the least amount of business. The busy agents don’t have the time or a need unless you can offer them something different. Do you offer a special product that others don’t. Are you able to provide a special tool that is unique? You want to help these mid-level agents. Maybe it’s an ad you can both produce and run. Perhaps you can do a joint marketing campaign online or offline. But, the best thing you can

provide this agent to build loyalty is a pre-approved buyer. There are many ways to generate these buyers, and I cover one of the best ways in the RentersIntoLoans.com program. At the end of the day, that is truly the only thing an agent wants and needs, but you need to make sure you are providing them to the partners you want to work with. Back to Tracy and why scripts rarely work Once the small talk was out of the way, Tracy began to tell me that she had heard good things about me and had been impressed with my seminar. The lender she had been dealing with just dropped the ball on two deals. Her feeling was that he was taking her business for granted and she was upset. I asked her questions about her business. What she expected and needed in a lender. How did she market herself and her properties. What were her goals for the rest of the year, and the year after? Tracy talked for about 45 more minutes, and I did not say one single word. Please re-read that last sentence. I think it is very important to realize that there are no scripts for speaking with people. There are outcomes you want to see and structures for getting to those outcomes. The issue with scripts are that they make you seem too rehearsed and unnatural. But even worse is the fact that rarely will the other person stick to their end of the script. Just be yourself. It’s always better to be asking questions and learning what the other person’s needs are. They will tell you if you can just keep your mouth shut and listen. In fact they will tell you exactly what they want and how to sell it to them. It’s often difficult to keep quiet,

but it is critical to your success. There are three ways that every human makes a buying decision and you must clearly listen for these cues. Once you know those cues, you are able to offer your services or program using the knowledge you just gained. People need to either Hear, See or Feel. After Tracy finished talking, I told her that I was very impressed and that she seemed like a great agent with a solid plan. But I also told her that I was at my maximum with the amount of preferred real estate agent partners I was working with and would need to review the list when I got back to my office to see if I could replace one of my partners so I could add her. She looked like she had been slapped in the face Like most real estate agents, Tracy truly did not expect that response from me. She was totally used to having loan officers chase her, beg her and jump through hoops to try to earn her business. Most loan officers just start vomiting a list of all the reasons they are great, their company is great and why the real estate agent should use them. My approach was completely the opposite which is why it is so effective. Tracy is now on my preferred agent list and we are doing business together and closing deals. She is very happy with our services and would not think of using any other lender. That is mostly due to the fact that we do a good job, but more importantly, the entire arrangement was orchestrated from her knowing who I am, to meeting me, to then feeling grateful that I put her on my list of partners. I know you might find this difficult to implement or even to comprehend, but try it for yourself and let me know your results.

Brian Sacks is a mortgage loan originator with HomeBridge Financial Services Inc. He is a nationally renowned mortgage expert and loan officer trainer who has closed more than 5,900 transactions during his career. You can also watch the Top Originator Secrets show on the Mortgage News Network. He may be reached by phone at (443) 324-8424 or e-mail LoanOfficerTips@gmail.com.

The Long & Short The Business of Short Sales

The Problem With Credit Report Disputes BY PAM MARRON

any past short-sellers attempting to purchase a home are told that their short sale credit shows up as a foreclosure in the Fannie Mae and Freddie Mac automated underwriting systems. Many of these affected consumers then dispute this credit or employ a credit repair company to do so. Thus, it is not uncommon to see a credit dispute on past short sale credit. The problem with credit disputes is that they are often a temporary fix. When a credit account is disputed, the creditor is given a 30-day timeframe to respond to the dispute. If the creditor does not respond, the disputed information is taken off the credit. However, the comment “account in dispute” appears on that credit line. Dispute comments make the affected account invisible to both Fannie Mae and Freddie Mac automated underwriting systems (AUS) causing the findings to be inaccurate. This is why underwriters require that dispute comments must be deleted from the credit report before an accurate response can be provided through the Fannie Mae or Freddie Mac automated underwriting systems. When the dispute is lifted, the past negative credit appears again. Your borrower can request that the dispute is deleted from their account themselves but the timeframe to get this done start to finish can take up to 50 days. Often, there is a signed purchase

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contract that is time sensitive. Instead of having the luxury of time, a costly Rapid Rescore must be done to get the dispute comments deleted quickly. And loan originators, you must pay for this Rapid Rescore. It gets worse. On a Rapid Rescore, deleting dispute comments from a negative credit account usually results in a lower credit score. If there is time for the borrower to handle deleting dispute comments directly with creditor and credit bureaus 1. Loan originators must check every credit report for dispute comments prior to application. If dispute comments exist, start working to delete these remarks immediately and allow for a closing date that gives enough time. 2. Make sure your borrower has the name and account number of the disputed account creditor. Have the borrower contact the creditor directly to request deletion of dispute remarks. Depending on the dispute comments, deletion can take 24 hours to 30 days. 3. Make sure that your borrower states and puts in writing if necessary that no other parties can provide a new dispute notice. 4. Have your borrower contact the creditor five days later to insure the dispute has been taken off and have them retrieve a letter with contact information for verification

purposes. This letter can be used to send to the credit bureau to order a Rapid Rescore, where corrected information is merged into a new credit report at a cost and produced within two to five days. The timeframe of getting this correction on a new credit report without using Rapid Rescore is 30 to 45 days after the creditor initiates the deletion. 5. Once the creditor has confirmed that the dispute comments have been removed, have your borrower contact the live agent at the Dispute Department for each of the three credit bureaus and ask them to remove the dispute comments. Ask each credit bureau if a request to delete a dispute must be requested in writing or if this can be done over the phone. This can vary depending on the status of the dispute. If a letter is needed, the borrower will have retrieved this from the creditor: l TransUnion: (800) 916-8800 l Experian: (800) 493-1058 l Equifax: (877) 322-8228 6. Pull a new credit report 35 days after the borrower has requested that the dispute comments be deleted by the creditor. If dispute comments still show up, wait another 10 days and re-pull credit.

7. When the new credit report with deleted dispute comment comes in, check the credit score, make sure the loan still fits within program guidelines and run through Fannie Mae or Freddie Mac automated underwriting system. Retrieving the credit report with a two to five day Rapid Rescore through a credit reporting agency A new credit report can commonly be updated in two to five business days using Rapid Rescore. You, the loan originator will have to pay for this. 1. Each credit reporting agency (CRA) has a link to TransUnion, Equifax and Experian for each account on the credit report that allows you to see “which bureau” specifically has the dispute comment noted. 2. Complete the generic form for your CRA to order the deletion of dispute remarks for only those bureaus that show the dispute through a Rapid Rescore for each borrower connected to the dispute account and who is on the new mortgage. 3. When the new credit report is done, follow Step Seven above.

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

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Imminent Disruption: The Upcoming Transformations of Mortgage Banking By Bill Dallas

he old way of doing things just doesn’t cut it in the mortgage industry anymore. Lenders need a streamlined process and adaptive strategies to stay relevant with this new generation of borrowers. As change occurs, it’s important for companies to observe the transformation and adjust through advanced business models, new technology and improved communication. Innovation is the path to the future of mortgage banking, yet so many companies still rely on antiquated systems and practices that are decades old. The combination of dated workflows and new

regulations have increased the amount of time it takes to originate a mortgage. Consequently, the net cost of origination for residential loans has risen to an all-time high of $7,7473, with no end in sight, according to a survey by the Mortgage Bankers Association (MBA). It’s time to evolve to a better system of mortgage banking. However, changing the mortgage process is not an easy task, and many top players may be forced to reinvent the way they originate loans altogether. The current methods exist on a foundation of deep-rooted practices and out-ofdate technology. Companies like Quicken Loans are addressing oneoff pain points in the process, such

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as the application, but that’s only the tip of the iceberg. We need to look at all of the struggles from the initiation of a loan to close and overhaul the entire process. Enhancements in the workflow are going to be the real catalyst of change and can save lenders and consumers billions of dollars over time. Currently, the mortgage process is stressful for everyone involved due to lack of efficiency. For many, getting a mortgage seems like a daunting task filled with headaches and sleepless nights. Technology and innovation are the remedies that will satisfy customer expectations and improve our ability to complete more loans in less time. The customer is number one The future of mortgage banking will be led by those who put customer satisfaction first. A recent study by J.D. Power & Associates showed “When mortgage servicers invest in the client’s experience, they not only recapture that investment but also increase profits and raise customer satisfaction.” That means lenders have to meet customer expectations of a quick, accessible, and transparent mortgage process. The value of social media is a perfect example of how valuable a single person can be online and having a bad review of a service and either make it or break it. Paper-based business models are out of date and frustrating, especially when nearly every other industry has upgraded to provide electronic alternatives for years. The way mortgages are delivered is evolving to accommodate this expectation and doing so reveals the opportunity to expedite the entire process. One way mortgages will grow is through the elimination of assembly-line strategies. Cloud vs. assembly-line It takes an army to complete the mortgage process, and the potential for regulatory change and security breaches along the way is just part of the reason a cloudbased platform is ideal for today’s

day and age. Finding out where a mortgage lies without a cloud centered platform is like a game of telephone, being sent from one person to another. Security is a major concern when handling important documents/information and the cloud provides a location to store those valuable resources without the need to keep hardware and software on site. Keeping pace with today’s regulatory changes Over the last decade, the number of regulations for mortgage bankers has increased significantly. This plays a large role in why it takes longer than ever to originate a loan. The increased regulations make it harder to maneuver through the red tape and still ensure accuracy and efficiency. As a result, many companies are looking into automation solutions that can check through regulations and confirm compliance. The ability to auto-fill information that has been provided by the borrower can shave off days from the end-to-end process. Additionally, having automation in place lowers the chance of human error. The opportunity for automation is yet another reason why the industry is moving toward a more digital workflow and is critical to streamlining the overall process. However, digitizing everything requires quite a bit of restructuring to be effective. Remaining ahead of the technology curve will be difficult for many larger establishments unless they integrate with trusted third-party providers or completely overhaul the way they have originated loans. Mobile and paperless technologies Paperless technologies are the backbone of next-gen systems. Many of the necessary improvements stem from a datadriven strategy that requires digital implementation. This application of technology for mortgages provides an adaptable foundation to build upon as the industry continues to change. Slowly but surely, mobile has become a significant player in digital industries and will continue to grow as consumers become more comfortable using mobile devices for banking, payments and other sensitive financial

transactions. Having a digital process allows for constant communication between the lending side and the borrowers. The ability to access mortgage documents via mobile allows for countless opportunities to expedite the process as the next required task moves from person to person. The upcoming generations, will have a better grasp on the capabilities of mobile access and, unlike their predecessors, will be comfortable making large purchasing and transactional decisions on a mobile device. The holdup With all of these benefits, and considering the cost savings alone, why haven’t more adopted a new way of conducting business? There are several things that factor into the equation, leaving many of us reluctant to change. One of the primary reasons being the time and cost associated with updating a

system that has, until recently, worked for decades. Especially with larger lenders, adopting change can be a slow, challenging and expensive process. Along with employee attitudes that may naturally be reluctant to alter habits and change learned processes, the actual technology has some concerned. The mortgage process is a monster of rules and regulations that are constantly changing and ensuring that your organization is always up to date and compliant at every step of the lending process is no easy task. That fear of non-compliance has some lenders worried and hesitant to adopt new technology. It may have taken years to personally master the overwhelming amount of regulations that go into a loan. However, having technology that can check for accuracy can stop potential problems before they rear their ugly head.

What’s next? It’s time for the mortgage industry to get with the times and implement modern-day solutions to best service customers while also improving the bottom line. There is an incredible amount of unnecessary time wasted with current standard operating procedures and old-school systems like paper-based communications. Imagine a world driven by data rather than the speed at which you can manually enter personal information into your computer from a 20-page paper form. And this is just one

component of the lengthy process. Think of how much more your business could achieve in a day if you just automated that single element. The future of mortgage banking is bright. It may be accessible from your phone, computer, tablet, or even smartwatch, 24 hours a day, seven days a week. It’s time to put down the paper and embrace a simplified, technology-driven lending process. Trust me, your customers will thank you, and I guarantee you’ll see that positively impact your organization’s health and longevity!

Bill Dallas is co-founder and chief executive officer of cloudvirga. He is a visionary in the fintech industry, responsible for founding and managing more than a dozen mortgage and financial tech companies over the past 40 years. Bill holds a law degree from Santa Clara University School of Law, as well as an undergraduate degree from Bowling Green State University, where he graduated magna cum laude. Bill may be reached via LinkedIn at LinkedIn.com/in/BillDallas. 67

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Maintaining Human Connection in the Digital Loan Process By Leif A. Boyd s professionals in the mortgage industry, we must not lose sight of the fact that the human connection and how we deliver the consumer experience is critical. Despite all of the benefits that technology provides, the mortgage consumer will always need to be able to connect to their loan officer one-on-one. Technology, particularly mobile technology, has forever changed the landscape of human interaction. Consumers are constantly looking online for ways to interact through media, applications and smartphones. In terms of the loan process,

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loan officers should respect that today’s consumers wish to use technology to self-serve. For example, digital apps now feature loan calculators that allow homebuyers to immediately determine what their monthly payments would be on a home loan. Some apps provide for real-time status updates for all parties engaged in the loan process. These are very positive tools that the industry needs to adopt and utilize, all while understanding that apps will never replace human interaction. To illustrate my point, let’s look at another industry. Take tax preparers; if you analyzed 1,000 people filing their own

taxes through an online medium or app, what percentage of them would get a better return by going to a professional? That percentage is probably fairly high. A tax preparer is going to know how to package the information and itemize deductions in a certain way to get the highest refund possible. This would come as a result of having a simple conversation with their client. In our industry, a mortgage professional can ask questions about the financial goals of a mortgage consumer, and they can ask about how they earn income and explain the time frames of the loan process. More specifically, a loan officer may ask the homebuyer, “Do you plan to live in this home for 30 years? Or are you looking at this as a fixer-upper to sell in three years?” Depending on their answer, the loan program that might be best suited for them for what they are trying to accomplish couldn’t be automatically delivered through an app. If a mortgage consumer tries to completely self-serve using digital technology they will risk skipping this critical consultation from a professional. Though some apps or technology try to fill every void, human communication can’t be duplicated. This can even apply to something simple as someone who makes $60,000 a year accidentally putting down that they make $60,000 a month; or incorrectly entering other sources of income. The human eye of a loan officer is valuable. There are a lot of data points in a mortgage application, and if a mortgage consumer tries to do it completely on their own using technology, there’s a risk that they might be denied for a loan that otherwise would have been approved. Guiding people through the loan process is a skill set. As a matter of fact, packaging files

and getting loans to close on time is an art form. The percentage of loans that sail through easily is a small number. In fact, few loans go according to plan, especially when you have sellers on one end, realtors on the other, inspections, and appraisals— all these elements that need to be brought together by the loan officer who acts like a general contractor throughout the whole transaction. So what is a loan officer to do to find the right balance in today’s digital world? I offer these three tips: 1. Embrace and understand digital technology: Technology is here and it’s a fast-moving train. You either get on board or risk getting left behind for good. You could sync yourself with customers who don’t want to engage with technology, but that customer base is dwindling. By welcoming these advancements, we can move along with the customer, rather than pulling against it, and deliver a better loan experience. 2. Fight the commoditization: Loan officers now, more than ever, need to be able to articulate their value. They need to be able to talk about the pitfalls of consumers trying to navigate the loan process completely on their own and why their expertise and knowledge of the underwriting guidelines is going to be a benefit to that consumer. 3. Get out and interact with people, and use technology to do it: Using your smartphone to do a lot of your job is a liberating experience. Technology is not something that holds you back, it’s something that unleashes you. These days, you don’t need to be sitting at your computer waiting for emails or escrow

updates to complete your task. Technology grants you the opportunity to be out in the field and meeting people face-to-face. The consumers’ desire to use technology should never be misconstrued as a substitute to the fact that they really do want to know who is doing their loan. The loan process once leashed loan officers to their desks. Now, they have an opportunity to get out into the field with clients and realtors and be a fully mobile road warrior. A year ago, I would have said loan officers are slowmoving when it comes to the adoption of technology. Today, I know for a fact the majority of loan officers are adopting it. It is about the value of the tools and the tools are getting

better—they are robust and can do things like push out real-time status updates and conditions, calculate monthly payments and upload documents with ease using a cellphone camera. All of this, however, will never replace the expert who serves as the consumer’s consultant, and that is the loan officer, in the flesh. When a consumer finds a digital way of communication that they prefer the most, they may rely on that platform in various parts of their life. The mortgage industry should be able to accommodate this for today’s homebuyer, but there will always come a time when that homebuyer will need to pick up the phone or come into the office to have their loan questions answered. By understanding this and finding the right balance through the

“Despite all of the benefits that technology provides, the mortgage consumer will always need to be able to connect to their loan officer one-on-one.” tips I outlined above, mortgage professionals can build the human connection in a digital

world to deliver the best possible loan experience for the consumer.

Leif A. Boyd is executive vice president of national production at American Pacific Mortgage Corp. (NMLS #1850). Leif oversees all aspects of mortgage origination, including the oversight of the production department of more than 180 branches. He may be reached by e-mail at LBoyd@APMortgage.com or call (916) 960-1325. 69

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The Challenge With Change ow many things do we have at our disposal today that would have seemed absolutely preposterous if they had been described to us 10, 15 or 20 years ago? Walkie-talkies were once a big deal, but today we can call anywhere in the world, check video monitoring of our homes remotely, and do a million other things on devices that fit in our pockets. Quantum leaps get bigger and more frequent in the technology realm, but things don’t move quite that fast in mortgage banking. Mortgages don’t get invented, redefined or completely overhauled the way gadgets do; our product doesn’t

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change much. But the way we sell and deliver it must. With the rise of the digital mortgage and the fact that the lending industry is still a political football, the only constant the mortgage industry can count on going forward is change. How well companies fare in the future will depend on their ability to embrace and adapt to it. There are two types of change in the mortgage industry: Inherent and imposed. The cyclical nature of the economy, housing and other markets are inherent changes and companies and mortgage loan officers alike regularly adjust to shifting conditions to maintain and grow production and profit. Other changes are imposed by outside forces, such

By Sue Woodard

as government, and must also become an integral part of the mortgage industry. But these are not as readily accepted or dealt with skillfully because they’re required for survival rather than promoting success. The Dodd-Frank Wall Street Reform and Consumer Protection Act is the most sweeping imposed change in the history of the mortgage industry, imposing a compliance grip that takes hold before consumers even become clients and creating a minefield that originators and their companies must navigate all the way through closing. Though it’s understood that fines for compliance violations can incapacitate and close entire companies and end careers, mortgage companies nationwide struggle to manage all aspects of today’s requirements from marketing to closing. Resistance comes from inside and out, with in-process staff frustrated with system changes and producers who want control and variety in their marketing. Technology has made its way into the mortgage business both as a friend and a foe. Today’s demanding regulatory climate has brought forth many systems and products to help the mortgage industry comply with marketing, disclosure, archiving and other requirements. The majority of today’s compliance solutions require adjustment to work process, pattern and flow, as well as infrastructure, and the solutions can seem as daunting as the compliance challenges themselves. However, the multitude and intricacy of rules that apply to all aspects of a mortgage transaction make them necessary and indispensable. Technology has also become “the competition” with the rise of digital mortgages. Global consulting firm Accenture has been particularly diligent about chronicling the ascent of digital lenders, juxtaposing the amount of market share they’re gaining against the losses suffered by traditional lending sources. It

uses the term “Convergent Disruption” to describe what the mortgage industry must deal with to survive and succeed. In its report, “Convergent Disruption in the Credit Industry: A Roadmap to Achieving Sustainable Competitive Advantage by 2020,” Accenture lists what lenders must do today to succeed in the Era of Convergent Disruption: l Proactively invest in initiatives that will build the business rather than reactively respond to regulations, competitors and industry changes. l Fundamentally shift from a product-oriented organization to a customer-driven organization. l Rebuild bank reputations. l Embrace and integrate new technologies, channels and strategies. This is not necessarily news to companies and MLOs who have been implementing technology in varying degrees for years. Mortgage industry leaders regularly mobilize to combat obstacles in order to preserve and increase business. But enthusiasm and execution diminish exponentially when effort and attention are required to deal with conditions that don’t support or enhance the company’s bottom line. Producers and staff understandably get cranky when they must alter their routines. Changes necessary for regulatory compliance not directly tied to production or profit are dull at best; at worst, they are debilitating and costly on many levels. Technology is no longer just a tool to increase efficiency, it’s an essential safety net for survival. The best way to mitigate implications of requirements imposed on the industry by lawmakers unfamiliar with the process is to take control at the company level and deploy an enterprise solution that can be managed and monitored by leadership so that the company’s interests are protected and exposure is minimized. Additionally, it’s critical to maintain the ability of

desired result requires anticipating, acknowledging and addressing the reactions of those being charged with accepting, adopting and sustaining change. The Towers Watson 2012 Global Workforce Study exposed a significant gap here, finding that about nine out

of 10, or 87 percent, of organizations train on how to manage change, but only one in four managers say the training is effective. Too many companies implementing change initiatives continued on page 72

n National Mortgage Professional Magazine n OCTOBER 2016

l Anxiety from disruption of comfortable, mastered routines. l Embarrassment in needing

to ask questions about new processes or technology. l Discomfort with one’s ability to do the job in current and/or new conditions. l Confusion amid mixed signals from superiors about change and the future. Communicating to achieve a

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originators to produce and remain driven in a climate where common business practices of the past have become financially-crippling compliance violations, while simultaneously avoiding logjams that overwhelm support staff. Consolidating marketing along with in-process data and managing disclosure checkpoints enable companies to satisfy regulators along with their own operational and financial needs and goals. Streamlining marketing and inprocess activity into a centrally-monitored system will eliminate mistakes and free originators to produce and assist internal staff in adhering to disclosure and timeline rules. Watchdog agencies are hungry for headlines that inflame the public and fines that fill their coffers—and they’re all too eager to audit your company to get them. While technology is a solution, it’s also a change and generally not a small one. There is an abundance of information, analysis and opinions on why change initiatives fail, and two major reasons repeatedly appear: Communication by and resistance within the organization. Leadership is essential to make a successful, sustainable change in an organization, and it must begin, be monitored and be consistent from the top. Communication plans must be made almost simultaneously with decisions to make and implement change. Understand what management and your organization as a whole will be facing as you craft your message and communication plan: Resistance to change must be understood in order for it to be overcome. Just as coughing and sneezing are symptoms of an underlying illness, questioning, resisting and avoiding change are indicators of underlying concerns such as:

the challenge with change

assume that their directives will be accepted and that the reasoning behind them is sound. As a result, they fail to anticipate objections and how to overcome them. Resistance triggers must be addressed at the inception of a change initiative and factored into all training and communication checkpoints throughout implementation. We never know the full extent of inherent change in the mortgage industry until after the fact. For example, we can’t pinpoint when interest rates will bottom out in a particular cycle until they have climbed back up and vice-versa. However, with imposed change such as government regulation, we are given the guidelines as to what is

continued from page 71

affected and when, what is required and what consequences are to be expected for non-compliance. The only unknown with this type of change is what the impact will be on operations and production. Success in any business requires more than merely staying afloat. The mortgage industry will always be subject to the inherent change of market fluctuation and competition, but it doesn’t have to be dragged under by consequences and difficulty of imposed change. Effective, sustained change does not occur without planning, understanding and addressing resistance, monitoring, inprocess adjustment and

“With the rise of the digital mortgage and the fact that the lending industry is still a political football, the only constant the mortgage industry can count on going forward is change.” consistent communication through all company channels. Especially in cases of imposed change, leadership must first own the solution in order to get

organizational buy-in and the desired result. Change is unavoidable; how it is managed determines the degree of your longevity and success.

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

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Increasing Sales Requires Front-End Muscle By Chris Backe

ome readers may be too young to remember, but back in the 1970s, the American automobile industry went through a rough period similar to what the mortgage industry is going through today. That’s when new, more restrictive emission limits became law at the same time automakers were required to start using larger, heavier bumpers to make cars safer. There was also an oil crisis brought on when OPEC cut exports to the U.S. As a direct result of these events, compact, fuel-efficient, mostly foreign-

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made cars became the rage. American automakers were forced to innovate and build safer, cleaner vehicles to keep up with the new standards—and the competition. “Muscle cars” like the Pontiac GTO and the Dodge Challenger disappeared while others, like the Ford Mustang, were downsized, losing power and performance— and sales. Similarly, in the mortgage industry, recent events have forced lenders to reinvent themselves and improve their back-end processes. With stricter lending criteria and the risk of loan buybacks, plus Dodd-Frank and the Consumer

Financial Protection Bureau (CFPB) to make sure they follow the rules, lenders really have no choice. As a result, many lenders have upgraded their loan origination systems, loan auditing tools and other technologies to minimize risk and operate more efficiently. In the push to create better, safer mortgages, however, some lenders are not matching these back-end expenditures with similar investments in their sales and marketing teams. At times, it seems as if the need to create high-quality mortgages is more important than actually selling them. For sure, loan quality and compliance are important. Yet many mortgage professionals are struggling to succeed in a rapidly changing market with the same contact strategies and tools they used more than 10 years ago. By neglecting the latest sales technologies, lenders risk losing out to the growing number of competitors that are investing money into sales engines that actually fuel growth. Front end spending is growing Earlier this year, my company, in partnership with Velma Marketing and Mortgage Coach, conducted a survey of more than 500 lenders and mortgage professionals that delved into the reasons behind how growing lenders reinvested in their businesses. According to the results, a growing number of lenders are in fact planning to increase spending on technology to improve sales. Despite all the attention being placed on compliance, many lenders plan to spend more on sales and marketing than on tools to improve loan quality. Specifically, lenders with significant purchase loan volume have invested in or plan to spend on lead management, referral management, analytics and

marketing automation tools, in that order. According to our survey respondents, the most popular reasons behind their investments are to drive growth, improve sales processes and increase customer retention, also in that order. Compliance was the fourth most popular driver behind respondents’ technology investments. The survey results were very insightful. On one hand, they reflect the fact that the purchase loan market hasn’t been as strong as many had hoped. Lenders that need to grow in an increasingly competitive market understand they must maximize their existing leads and convert them at a higher rate. But the survey also showed that consumer-direct lenders had already invested significantly on sales technology and, coincidentally or not, had grown at a much faster rate than retail lenders. These lenders have embraced the Internet and new technologies such as lead management software and automated dialers much earlier and faster than the rest of the market. To me, these results are a wakeup call for retail lenders, especially those that are not reinvesting in sales and rely too heavily on referral strategies. If they hope to compete in an age of the always-online consumer, retail lenders and their sales teams need to invest as heavily in the front end of their business as they do on the back end. Speed is top priority Our survey results also suggest that speed is important to lenders. I see two trends driving this demand. One is that lenders have now replaced real estate agents as the initial point of contact for most consumers looking to buy a home. Because financing has become so complicated to the consumer, it’s more important to know if you qualify before going to look at homes. Second, research now shows that a majority of borrowers now start their search for a mortgage online. Most borrowers know they can get pre-approved online in just minutes, which means they are

only after an application is received. Technology should be leveraged to actually engage borrowers and increase applications. For some lenders, this will require a shift in thinking away from depending solely on the wits and resources of their sales teams and a reconsideration of the Internet and mobile technology as a lead channel. For others, it will require the harder lesson of watching competitors do what they won’t. To get back to our automobile

analogy, mortgage professionals should also keep in mind that, while muscle cars like the Pontiac GTO and Dodge Challenger went out of style during the 1970s, they are back with a vengeance today. Technology is a huge reason why. New innovations have made it possible to build cars that are safe, fuel efficient (or relatively so!) and capable of performing on a high level. There’s no reason why mortgage lenders cannot do the same.

Chris Backe is director of financial services at Velocify, and a sales automation expert with more than 20 years of experience offering technology solutions to multiple industries. Chris has spent the last 10 years in the financial services industry, holding various positions at companies including Ellie Mae and Salesforce. He can be reached by e-mail at CBacke@Velocify.com. 75

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Addressing the gap As part of their front-end investments, many lenders are spending heavily on marketing automation. Yet much of this money is wasted because of inconsistent sales processes and a lack of insight on the effectiveness of the marketing strategies being used. This creates fumbles and missed connections that dampen sales performance. Worse, it can

create frustration between sales and marketing teams when the results don’t live up to the hype. For example, some automated marketing tools allow lenders to track online ad response rates. This information is tracked by marketing so they can learn what messages grab a borrower’s attention. However, in most cases, this information isn’t being transferred to sales as there is no single “system.” As a result, even with automated marketing tools, most lenders have no idea why certain borrower leads result in applications and others don’t. Lenders can solve this problem with a more collaborative approach. By investing in technologies that merge sales and marketing tactics—including automated marketing tools—lenders and mortgage professionals can examine the effectiveness of their different strategies. This sounds complicated, but it really isn’t. Solutions are available today that help mortgage professionals and retail loan branches manage all marketing and sales activities on a single platform, so they are able to track individual marketing campaigns and channels and view the quality of borrower leads that come in. These tools can also weigh the readiness and motivation of each potential borrower, so that when sales professionals engage that borrower, they can be much more prepared to help them. Investing in technologies that close the gap between marketing and sales will help lenders excel in an environment in which loans take longer to close. In some cases, the time it takes for a borrower lead to result in a closed loan can be six months or longer. Every day that goes by is another opportunity for that lead to fall through the cracks. By leveraging technology, lenders will have a much easier time nurturing borrowers and keeping them engaged until they are ready to move forward. The bottom line is that technology investments should not be limited to solving business issues that take place

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less likely to wait for a lender to call them back. Lenders investing in front-end technology do not intend to miss those opportunities. When a potential borrower raises his or her hand to show interest in a loan—whether through Zillow, Realtor.com or another thirdparty site, or through the lender’s own Web site—the lender needs to engage that borrower as quickly as possible. Research has found that lead conversion rates will double if a consumer is contacted within three minutes after submitting a Web site query. During the most recent refi boom, consumerdirect lenders were able to engage borrowers in just seconds, thanks to sales technology. Mortgage sales professionals should also be savvy about how and when to respond to borrowers, and be ready to use a combination of techniques depending on each borrower’s needs. That means responding by text, phone or e-mail, whichever is appropriate, and doing so when it is convenient for the borrower. Consistency counts, too. When a borrower lead comes in, many mortgage professionals reach out to the borrower once or twice and then give up if they fail to get through. But some of our other research has found that the ideal number of borrower touches is six. The problem, however, is that few mortgage professionals can be counted on to make six touches when they need to happen. Lead management and sales acceleration platforms can ensure such contact strategies are executed correctly and consistently.

The Mortgage Industry: The Only Constant Is Change hen I entered the mortgage industry more than 30 years ago with a background in finance and economics, I could never have predicted that I was beginning a career in such a dynamic and ever-changing field. Throughout my time and experience in various facets of the mortgage industry, I have found that change is inevitable, and while it can prove challenging it has consistently made the industry stronger. Over the past 10 years, we’ve seen many changes within the mortgage industry such as the implementation of the SAFE Act, the introduction and implications of TRID, and the overall tightening of regulations to

protect consumers and lenders. While the many changes in the industry continue to present benefits and challenges, there are three major forces currently driving the mortgage industry forward: The continued advancement of technology and social media, the need to address financing options for our aging population and the need to foster professional growth within the industry. The continued adoption and evolution of mortgage technology and social media will be a driving force behind lead generation. Digital media has the potential to be the biggest research tool and relationship builder and maintainer that we’ve seen. Technological tools that create efficiencies for the borrower are being introduced and

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embraced daily. Gone are the days when a loan officer completed the mortgage application by hand sitting across the kitchen table from their client. The continued use and development of e-tools, even things as simple as e-signatures, allows the process to be more consumer friendly providing for efficiencies that previously had not been available. Joe Wilson, vice president of Advanced Technology for Fairway Independent Mortgage Corporation, is on the frontlines of increased involvement of technology in the industry. Wilson, charged with the task of assisting Fairway in moving towards increased technology use notes that, “on top of what is available today, the future of mortgages from my perspective is full automation. This is beyond clients simply connecting bank statements and tax returns to the lender; full automation is recognition of whom you are based on all available public and non-public records and utilizes big data to analyze your credit risk, profile you based on similar types of borrowers, and instantly makes a credit decision.” Full automation of the loan process however does not mean that the mortgage professional will ever be obsolete. “Obtaining a mortgage should never be as simple as ordering something from Amazon,” said Wilson. There is a level of knowledge, learning and expertise that will never be replicated by an app or online program. While the move to full automation will make the buyer experience smoother and less stressful, we shouldn’t sacrifice the ability for consumers to work with an individual who truly cares about the outcome. The need for the knowledge of the loan officer and their ability to guide a consumer through the mortgage process will never be completely replaced by technology. After all, we are talking about the largest financial decision made in most people’s lives. The human element to this is critical. In addition to the continued transition to automation of the mortgage process, social media will continue to be prevalent in the

business. As Millennials begin to make up a larger portion of the purchasing population, social media will become increasingly important. Millennials will use social media to learn more about the loan process, and also as a means of finding out more about their potential partner in that process, their loan officer. Sarah Slotnick, Fairway’s New England digital marketing specialist, charged with bringing the Millennial mindset to the region highlights that, “Approximately two thirds of the Millennial population, those 17-34 with a predicted buying power of $200 billion, has yet to purchase their first home. Given they grew up with social media playing an important role in their day-to-day lives it is expected that those they interact with will have a digital media presence. Regardless of which social platforms Millennials are currently using, they will conduct research using all platforms available. While research may be their first step, they will still look to find a personal connection with those they will trust to do their mortgage. Transparency is key to gaining and maintaining Millennial business. Having a digital presence and allowing Millennials into your digital world is imperative.” At the other end of the buying spectrum is the senior segment of buyers which accounts for approximately 15 percent of the total population. The majority of loan officers focus on originating forward mortgages and finding ways to reach the millennial population, however; as the population continues to live longer, the need to create and offer mortgage products that meet the needs of our aging citizens is critical. The reverse mortgage, available to applicants age 62 and older, is gaining popularity. This product is a tremendous financial tool for many as they face the need to finance their post retirement lives. Harlan Accola, national reverse mortgage director, CRMP, CSA, RFC for Fairway Independent Mortgage Corporation offers the following insights: “As mortgage experts, one of the things that we are always looking for is important trends in the industry and new ways to serve our clients in the best way possible. We know about the Millennials and their need to be introduced to the first homebuying experience; but we also know that there are over 10,000 folks turning 62 every day. We know that

the FHA Reverse Mortgageâ&#x20AC;&#x201D;also known as a Home Equity Conversion Mortgage (HECM)â&#x20AC;&#x201D;has been well researched by Boston College and other institutions and have overwhelmingly proved that the old idea of the reverse mortgage as a loan of last resort is simply wrong. The new research clearly shows that most seniors will have a much better retirement if they get a reverse mortgage at 62â&#x20AC;&#x201D; not 82. According to the published research, they are likely to gain three things in doing soâ&#x20AC;&#x201D;more cash flow, generally lower income tax cost and actually a larger net worth and more of a legacy to pass to the next generation.â&#x20AC;? As the industry evolves and adapts, there are two more challenges we must address: The need to attract younger people into our profession (given that the average age of the mortgage professional is 58), and the need for women to attain higher levels of

leadership in the industry. As we embrace the world of digital marketing we can leverage it to show Millennials the opportunities available in our profession from flexible work hours to unlimited earning potential. It is essential to the future of the mortgage industry for us to recruit, educate and train younger employees. In this way, we can ensure the continued health and well-being of an industry in which one can have an excellent and fulfilling career serving those in need of home financing. The other challenge we face is increasing the number of women in positions of influence. Growing up in this industry, from working in operations, to becoming my companyâ&#x20AC;&#x2122;s number one producing originator, to now managing three branches, I have seen the impact women can have in this field. Iâ&#x20AC;&#x2122;ve never felt limited by my gender, but instead, have been encouraged to consistently set and achieve my

highest goals. The opportunities that were presented to me along the way helped to shape a career that has been incredibly fulfilling. It is my aspiration to do the same for those within the industry who wish to attain positions in leadership. Sarah Middelton, a former topproducing loan originator who has taken on the executive role of expansion, development and marketing for Fairway reflects that, â&#x20AC;&#x153;as a female in the mortgage industry, there is no limitation or ceiling to success. This business provides tremendous opportunity for any person that dreams big and works hard towards their goals. From a leadership perspective while

men absolutely bring incredible strengths to the table, women have just as much to offer as managers and leaders.â&#x20AC;? Based on my experience, I encourage other women to jump into this industry and set their sights on the top. There will always be new guidelines, new products and new regulations. After 30 years, I am still eager to see how we adapt new technologies, address the needs of different demographics, and attract more women to leadership roles. The industry will always changeâ&#x20AC;&#x201D;that is the only given, I look forward to seeing where the next 30 years takes usâ&#x20AC;&#x201D;after all, I may still be working.

Amy Slotnick joined Fairway Independent Mortgage Corporation in 2007 as a loan originator. In 2014, she became the companyâ&#x20AC;&#x2122;s Newton, Mass. branch manager and has since grown the branch threefold. Slotnick has been consistently recognized as a top producer, as well as one of the first recipient of Fairwayâ&#x20AC;&#x2122;s Darryl E. Jacobson Courage in Business Award. 77

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Getting the Design Right Before You Adopt an LOS n technology, we use the term “architecture” in pretty much the same sense it is used in constructing a building. Careful engineering goes into preparing a project, consisting of many steps that will result in a solid design that can be created to last for years. In the construction industry, nothing is more important than the foundation, as the entire structure depends on a solid base. The same is true in the mortgage industry, and the most important component of a lender’s success is the loan origination system, the LOS. One notable building that has been in the news lately is the pricey condominium in San

Francisco, the Millennium Tower. The San Francisco Chronicle reported in August, “The Millennium Tower, a leading symbol of San Francisco’s new high-rise and high-end living, is sinking—setting the stage for what could be one of the most contentious and costly real estate legal battles the city has ever seen.” The units range from $1.6 million to $10 million-plus, and are owned by the likes of Joe Montana. Incredibly, the building has sunk 16 inches and taken on a northwest tilt of two inches, which is potentially disastrous given its 58-story height. It is hard to imagine a building constructed to rigid California earthquake standards suffering such a foundational problem, but there it

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is. And it’s a vivid illustration of the importance of getting the design right before you adopt. Homework is required For lenders of all sizes, the choice of an LOS is a major decision that impacts everyone in the organization, from ownership and senior management all the way to the most junior members of the team. The effects of the right choice can last for decades, and a poor choice can have adverse effects lasting three to five years or more, depending on how quickly action is taken to correct it. The process can be complex and one that requires significant reflection. Do you take the safe choice that many have followed? Do you buy into marketing hype and publicity that might mask shortfalls in real functionality? Do you approach the decision with sufficient due diligence and analysis? No doubt about it— homework is required, particularly in at least five key areas: l Components–features and functionality l Vendors l Resource requirements l Vendor strategy l Price Components This is the obvious place to start when considering an LOS, just as features and equipment would be the best starting point when looking at a new automobile. Understanding the essential components includes gaining knowledge and insight on basic items like the point of sale capabilities (does the system handle retail only, or can it also provide the lead management and follow up required for the consumer direct channel?) The LOS must be intuitive, flexible, customizable and completely reliable. The back office operations have to be fully supported and based on best practices across the industry— which means the system was designed not just by

technologists, but by mortgage professionals. Imaging has become essential over the last few years, and all imaging systems are not created equal, especially when it comes to time-consuming steps like document recognition and classification. And reporting is also critical, given the unavoidable climate of regulation; it’s not a matter of if a company will be audited by someone, it’s when. So in addition to full management reporting on an everyday basis, it is important that lenders have reporting capabilities that let them be fully transparent when auditors arrive. One of the best ways to feel comfortable about the components is to include your company’s operators in the evaluation process, not merely the tech staff. Vendors No lender can operate without third-party vendors, so the LOS has to be able to include them in the technology environment. This is accomplished with integrations, a process that has vastly improved over the years, but is one where gremlins delight in creating problems. Does the LOS already have a working slate of vendors integrated, and is it simple to seamlessly integrate the lender’s preferred vendors? Are data and document exchanges efficient and trouble free? Can items like appraisals and verifications be ordered automatically or with minimal human intervention? Can incoming data from documents like automated valuation models (AVMs) and credit reports be interpreted without having to put eyes on them? The answers to these and related questions should not be assumed, especially with changes in forms and formats on the horizon for the coming year. Data streams are amazingly reliable, but when variations come in, they must be detected and dealt with in order to avoid defects that affect closings and post-funding reviews. Resource requirements The days of having to have large IT staffs is long gone, thanks to

tremendous advances in LOS architectures and cloud-based delivery. But implementations and conversions from one system to another are not trivial processes. It is important to have a real-world understanding of how long it takes to get a new system up and running, and the LOS provider will have metrics to lay out an implementation schedule, as well as existing customers to speak with. Lenders will want to know about the support capabilities of the LOS company, as well as the expected maintenance and who will provide it. Customization is important when buying a new car—but it’s absolutely critical when looking at a loan origination system. Lenders have different ways of doing things, and though the best LOS come with best practices presets, it is vital to be able to set things up the way you want them, according to your rules.

Finally, never underestimate the power of existing client input. Legend has it that a casual observer at an auto show in 1900 asked the fellow next to him, “Is that Packard car a good one?” The man, who happened to be J.W. Packard himself, replied with “Ask the man who owns one,” a suggestion that became one of advertising’s most iconic lines. It’s also great advice. LOS providers will make available customer retention rates, satisfaction

surveys and other metrics that will aid in the lender’s decision. But it always a great idea to speak with multiple users directly—and in several disciplines, including sales, operations, QC, IT and management. There is much to consider when looking at options in loan origination systems, but there are also tremendous benefits to be gained by making an informed choice. The LOS is the foundation for any originator’s business, and there is much to be learned regarding what is evident both above and beneath the surface— if the time and energy is invested.

Lionel Urban serves as CEO, founding partner, and chairman of the board for PCLender LLC, responsible for the overall strategic direction and the vision behind the technology development of the company. Since 1987, Lionel has acquired vast mortgage banking experience in management, origination, operations, secondary marketing and compliance roles within banks, credit unions, and independent mortgage bankers. 79

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Price The industry has learned that price isn’t the only thing any longer, but it’s still obviously important. The four main cost categories to be concerned about include implementation, recurring fees, customization costs and maintenance burden. Cloud-based solutions have the benefit of being less expensive to implement, but there is still time, effort and hard cost involved. Installed systems are better for some companies, particularly if they already have significant IT staffs, but most lenders are finding that Softwareas-a-Service (SaaS) is the more attractive choice. Recurring fees are to be expected, as technology this complex needs some care and feeding to keep it at peak performance, but providers vary widely on this. Some rely on the vendor, some emphasis staff members, and others blend the two in specific roles. It’s an important area to research and understand completely, with written schedules provided for all recurring fees. Customization also comes with a cost, and it is important to consider the role of architecture here. Some systems are designed to be more readily customized than others. And while some are easy for the lender to customize, certain features will always require the vendor’s involvement. Age is also a factor to some

degree; older systems may cost more to customize, even if they seem to be lower in cost up front.

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Vendor strategy Speaking of rules, lenders want the flexibility to follow their preferred strategies on everything from the origination channels they serve to collaborations with business partners. Being able to refine workflows to make that happen means having rules-based systems that are not only flexible, but also easy to modify. Rules engines are like automobile engines—some are easy to work on and others are mystifying. You are likely to want rules systems that don’t require an IT person to set, just as you don’t want to be hampered by templates that are restrictive. Different business channels have different requirements, so depending on whether your company does retail, wholesale, correspondent, consumer direct or any combination, your LOS will have to support the channels. You might be surprised to learn that some systems are stronger in one area than another, but it’s quite true. It is wise to have your due diligence team include a representative from

each business channel in the evaluation process. Our industry has become more collaborative than ever over the last decade, with strategic partnerships and mutually beneficial alliances have becoming the standard operating procedure. These increasingly close ties among vendors, partners and collaborators mean that data sharing and bidirectional information flows can cause additional complexity on the tech side. How well does the candidate LOS play with others? Perhaps more importantly, what do the collaborative players have to say about the provider’s ease of use when sharing information? And what measures are taken to ensure security for all parties on sensitive borrower information?

Online Loan Trading: The Time for Standardization Is Now By John Ardy oes anyone remember the ‘dot-bombs’ from the late 1990s and early 2000s? CEOs right out of college with an MBA in their hand offered to revolutionize mortgage loan origination processes only to see their bubbles burst not long after the turn of the century. With the explosive growth of originations and securitization markets in the early 2000s followed by the Great Mortgage Recession, whole loan trading technology remained an “uninvested” area, continuing as a back-office function dominated by “tape crackers” and personal relationships. We learned some lessons about dot-com technology in the mortgage space, but despite the fallout in online technology, some of the tools, policies and procedures behind online mortgage origination, servicing and secondary market trading remain relevant to this day. MISMO data standards, for example, are a constant

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presence in online mortgage technology not only for loan originations and mortgage servicers but for tomorrow’s secondary market technology. We continue to make progress with data standardization because industry players recognized early the necessity for different systems and software to speak the same language. Thanks to recent technology innovations, the time has finally arrived for online automated whole loan and bulk mortgage trading. And it’s not a minute too soon, given the greater volume and complexity of loans and the need for greater compliance. Several organizations are beginning to think so, as new trading platforms are being launched and pilot programs are underway with multiple associations and banking groups. Standardizing loan data “tapes” Before whole loan trading

goes mainstream and online, however, some basic things need to be established. We need a standard process and a standard set of data. If the names of the data fields on a loan are different from one company to the next, there is no way for parties to effectively share information via a common platform. In the mortgage business, we “crack tapes” to map column headers and data formats, with the most common difficulty around loan program names. Technology can certainly facilitate loan trading, but the industry will have to adopt a common data standard first. What about the fields that are required to trade loans? It would seem that we need a slightly different set of data depending on what type of loan is being traded, whether it be a plain-vanilla agency loan or a non-performing mortgage. While those different standards are generally understood by market participants, they’re not published or enforced. Newcomers need to learn them,

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and everyone is translating (“mapping”) data to get things into their individual format. This less than optimal situation is being magnified by the growth in whole loan trading relative to other delivery options. Not only is trading volume rising and expected to keep growing, but the variety and complexity of loan types is also expanding. While payoption loans may not make a comeback soon, non-QM lending, expanded criteria loans, and the growth of the second-lien market all suggest product innovation is increasing. The secondary market will grow along with them, but only if the technology is in place to keep pace. It seems, then, that for technology to facilitate loan trading, standardized data sets by loan product will be necessary, along with common formatting of particular data fields. And if the data does become standardized, what else do we need for technology to streamline loan trading? The MLPA offers a starting point for commonality There have been numerous efforts, by both industry trade groups and large financial institutions, to take this task on by themselves, by standardizing a single version of the Mortgage Loan Purchase Agreement (MLPA). Loan sellers would love for this to happen, as it would open up more trading options with less time spent in obtaining counterparty approval. But buyers, not surprisingly, aren’t as enthusiastic, since it could mean increased risk on their part. Buyers may also look at this as driving towards common fee schedules, reducing their flexibility in negotiating with potential counterparties. After reviewing many MLPAs, it seems obvious that there is some level of commonality. Buyers and sellers frequently talk about creating a single standard document that would simplify the legal process and increase liquidity for both large and small participants. There seem to be enough common areas that, if structured broadly,

might lead to a consensus to a standard document. Importantly, however, the MLPA will still need to be a oneto-one relationship, meaning each buyer to each seller. There is consensus that a multi-party agreement will not work, but a common document for each counterparty pairing might. So, then, if we are getting closer to a standard MLPA, what’s the next step? How will technology facilitate online whole loan mortgage trading as a result? Here are six benefits we can expect from a technology-driven mortgage loan trading platform made possible by standardized data:

Trading platforms will soon become an important intersection for everyone in the secondary market. Already, dozens of major players—banks, servicers, investors, hedge funds and

others—are trading thousands of loans through a platform. The day of inefficiently using an Excel spreadsheet to track whole loan trading will soon be long gone. Two cheers to that.

John Ardy is chief executive officer of Resitrader Inc., a Calabasas, Calif.-based provider of whole loan mortgage trade management software. He can be reached by phone at (310) 469-1640 or by e-mail at John.Ardy@Resitrader.com. 81

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What’s next? Secondary market trading technology, like the technology widely in use in mortgage loan origination and servicing, has finally arrived. Its widespread adoption by the industry is not a matter of “if,” but of “when.” In order to get where we need to be, we need to adopt proper procedures for standardizing data. Eventually, we’ll be able to increase transactional speeds so that buyers and sellers can continue to increase liquidity in the marketplace.

“Secondary market trading technology, like the technology widely in use in mortgage loan origination and servicing, has finally arrived.”

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1. Greater efficiency: Standardized data and a common MLPA would dramatically increase the efficiency of the loan trading process. Technology would support this with embedded code for “tape cracking,” and document signing would become a function of the trading process. 2. Enhanced security: Emailing spreadsheets is not a secure way to trade whole loans, yet many still do it. In a trading platform, that risk is largely removed by encryption technology. Data and documents are stored in a secure, passwordprotected environment. Just like any other financial system, it removes the unknowns and dangers in transferring data and documents via unsecure email. 3. Improved communication: Rather than communicating via e-mail or telephone, buyers and sellers communicate in real-time directly through the platform, facilitating safe and transparent communication. Traders on both the buy and sell sides view the same data at the same time, and can notify each other of loans and pools they wish to trade via “chat” functionality. They can exchange loan data, documents and pricing information and settle

transactions, all without exiting the platform. 4. Wider search options: Sellers will be able to create pools from their inventory by searching multiple criteria to create offered pools. Buyers can search by loan criteria, seller or pools and create their own pool reflecting their investment criteria. If they choose to do so, they can ignore the seller’s pool and focus on an investment strategy across pools. Buyers can also create an “axe,” which is a defined search criteria that continually looks for any of the loans posted on the platform that match what the buyer wants. 5. Automated best execution in real-time: Best execution will help the seller determine the best delivery for every loan, whether that is standard delivery options or a bulk bid. One buyer might want the entire pool, another might want just a portion, while yet another might want to pick and choose. Calculating which results in the best return for the seller in a spreadsheet is tedious. A platform provides best execution automatically and in real time so traders spend more time making good decisions rather than running math scenarios. 6. More system integration: Online trading platforms enable users to directly integrate their pricing engines, loan origination systems and service providers.

Game-Changing Technology Innovative technology solutions are not on the horizon for mortgage lenders … they’re here By Eric Egenhoefer ore than two-thirds of prospective homebuyers feel overwhelme d by mortgage paperwork and financing details, according to a study by Discover Home Loans. The same poll found that 76 percent of prospective homebuyers under the age of 30, as well as 76 percent of first-time homebuyers, also feel overwhelmed and inundated with information when applying for a mortgage loan. One of the ways the mortgage lending industry can address uncertainty and confusion in homebuyers is to pursue innovative, consumerfriendly technology solutions that streamline and simplify the mortgage application and loan processes. In recent years, the mortgage industry, as a whole, has improved leaps and bounds when it comes to using technology to create a smooth loan process–but we still have a long way to go. Prospective borrowers from up-and-coming generations (such as the Millennials) have high expectations when it comes to technology solutions and information security used

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during a significant financial transaction. A major reason that generations such as the Millennials seek out mortgage lenders with innovative technology solutions is because they often value ease of use, and a streamlined, efficient process. One of the ways mortgage lenders can appeal to these values is to pursue the method of direct access to borrowers’ information and documentation. Direct data to the rescue Today, the data collection process for most mortgage lenders looks the same: when we need W-2s, bank statements, pay stubs, or other documentation from a borrower, we contact them to request it. The borrower then goes through the process of finding the documentation, scanning it, and faxing or uploading it. Once it arrives at the mortgage lender, about six pairs of eyes will eventually look at it—between the loan originators, processors, quality control team and more. This lengthy and cumbersome process is inefficient, at best. The delays that often happen while waiting

for a borrower to locate and correctly submit their paperwork—as well as the journey the paperwork takes once it makes it to the mortgage company—are too costly. This data collection process also opens up the possibility of fraud, because borrowers have the opportunity to alter documentation before sending it. Even when the correct documentation is safely in the hands of the mortgage lender, problems or issues with those documents may not be identified immediately. It takes time for loan professionals to thoroughly and carefully review each document. As we all know, in the mortgage industry, every hour matters. Fortunately, technology exists that can address this inefficiency issue. A borrower, in the process of submitting a loan application, can grant access to a mortgage lender to directly obtain certain financial documents pertaining to the mortgage loan from financial institutions or payroll services. How this process works l When submitting an online loan application, borrowers have the option to grant access to the mortgage lender by selecting their bank (for instance). l Once the borrower identifies their bank or financial institution, they can log in to their online banking and grant the lender access to certain accounts, such as checking, savings, money market, etc. l The mortgage lender then electronically receives PDFs of the borrower’s bank statements – immediately. This instant access to data has several considerable advantages. First, it’s immediate. The lender doesn’t need to wait for borrowers to

track down, scan, and send the requested documentation. This method also eliminates legibility issues, because the documents are not scanned copies of physical pieces of paper; instead, they are clear, easy-to-read electronic documents. Additionally, it’s a reliable method of data collection that drastically reduces the possibility of fraud. Because the information is coming directly from a trusted source, such as a financial institution, there is no opportunity for the borrower to manipulate the information before the lender receives it. But perhaps the most impressive, and useful, aspect of instant electronic data collection is that it allows mortgage lenders to run business rules on the documentation. Lenders can program their technology systems to instantly identify potential red flags (or items that require clarification), such as large bank deposits, name mismatches, non-sufficient funds (NSFs), and more. If any of these issues exist, within seconds the system will identify them and immediately send a notification to the borrower indicating that clarification is needed. And the best part? All of this is happening before the mortgage lender even knows that there is a new loan application. So, by the time the lender reviews the application, it is mostly complete, and all major issues have been addressed upfront. This is a significantly more streamlined and efficient way to apply for a loan. Plus, it reduces the burden on the lender to go back and forth with requests for the borrower which, understandably, frustrates the borrower. Mortgage lenders are already beginning to implement this game-changing technology. At my firm, we are actively developing and integrating solutions such as these. Overall, this process of having a borrower grant electronic access to a data

source is a huge trend that lenders need to be embracing.

on the right path, but it takes continuous work and dedication to ensure that we’re providing cutting-edge technology that simplifies and streamlines the mortgage loan process, while ensuring that confidential data is well-protected and secure. As we move to an increasingly paperless industry, everyone will benefit— from the borrower to the closer, and everyone in between.

Waterstone Mortgage Corporation President and CEO Eric Egenhoefer founded the company in 2000. He put industry best practices to work at Waterstone Mortgage, building it to sustain a responsible amount of growth in a short period of time. Egenhoefer has nearly 20 years of experience in the mortgage lending industry. 83

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Looking to the future The trend of automating data and pulling it from reliable

data sources, they would likely prefer to apply on a mobile device. Again, many lenders view mobile solutions as a “nice to have” tool, but they should be an absolute requirement. Overall, there is so much efficiency to pick up, as an industry, when we can start implementing many of these technology solutions. We are

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Complementing innovation with security Of course, with new technological innovations such as direct data comes the increased responsibility of ensuring that borrowers’ confidential and sensitive information is protected. It’s important for mortgage lenders to determine and meet consumers’ expectations when it comes to information security. Last year, Millennials were the largest generational group of homebuyers, according to the National Association of Realtors (NAR). Many first-time homebuyers in this age category (34 and younger) are accustomed to trusting technology in a different way than previous generations. Millennial homebuyers often expect a superior level of security and trust when working with a mortgage lender. Information security methods such as dual-factor authentication in order to log in to secure portals are reassuring to Millennial homebuyers. While previous generations may consider this process to be frustrating or cumbersome, Millennials typically expect this level of protection, as it creates a feeling of safety when providing their confidential data. In today’s lending environment, mortgage lenders are dealing with sophisticated e-mail phishing and hacking attempts, so information security absolutely cannot be compromised. Something as simple as allowing borrowers to e-mail bank statements or other confidential documentation is unsecure, and mortgage lenders cannot let our borrowers take those risks. As technology progresses, it’s vital that information security remains in the forefront of our minds.

sources directly and instantly will create tremendous efficiency in the industry. With this innovation will come other electronic solutions for the mortgage loan process. For instance, at this time, appraisal data comes electronically in the XML format. I can foresee a time when the review of an appraisal could be automated, instead of requiring an underwriter to look at it. When looking at risk, based on different business rules or acceptable tolerances, an appraisal could be accepted or rejected automatically. If you consider the various redundancies in the loan process, mortgage lenders also have great room for improvement in that area. Often, roles overlap, and many processors, loan originators, and underwriters are reviewing physical pieces of paper. If we’re able to obtain electronic data directly from financial institutions or payroll services, the documents could essentially be classified as trusted, since they came from a verified source. Mobile solutions are another aspect of technology that should be on every mortgage lender’s radar. Having mobile solutions that allow the borrower to interface with their loan originator, monitor the status of their loan, and potentially even apply for a mortgage are essential. At my company, we have had mobile solutions for our loan originators and production staff for several years and are now bringing them to the consumer in late 2016. Leading mortgage lenders should also be pursuing mobile applications. Today, most borrowers probably don’t prefer to apply for a loan on a mobile device, simply because it’s a lengthy process that requires uploading attachments, typing out large sections of information, etc. But if they could apply in a simplified way by inputting a username and password, clicking a few buttons, and granting their lender access to

Five Subtle Ways to Increase Profitability By Shawn Von Talge

any mortgage companies are experiencing very prosperous and perhaps even record-breaking numbers in today’s economic climate. It seems in spite of the numerous regulatory hurdles, compliance protocol and an overall difficult lending environment mortgage banks continue to adapt, implement, perfect and move forward. As we all know the mortgage business can, at times, be highly competitive. Each lender is looking to maximize every dollar while attempting to keep their pipelines full with fruitful business. Ever wonder how the really successful and efficient mortgage operations seem to constantly be firing on all cylinders? How they capture every opportunity and maximize every dollar of profitability that goes along with it? Below are a few avenues in which most successful mortgage lenders maximize every basis point of production they can muster. For those that are Ginnie Mae issuers, one way to squeeze every ounce out of your swath of loans is to consider custom low loan balance pools. The pay-up on these types of pools can be well worth the few added steps it takes to securitize them. The pool options are <85, <110, <125 and <150 with pay-ups, which are coupon and market dependent, running upwards of 125 ticks. This is especially true if you have a few broker dealers that have an appetite for this type of production. For those of you in the Midwestern states, where this type of production is more prominent, and have this type of business in the pipeline it’s a great opportunity to take advantage of better execution. As you can probably tell the increased pickup is extremely advantageous to the bottom line. Along the same vein as the avenue mentioned above is to take advantage of Fannie Mae’s

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low loan balance pickup on conventional production. During 2016 Fannie Mae implemented better execution for smaller loan amounts (i.e. below $175,000) through their cash window and it’s certainly been a welcomed surprise among those lenders that have pipelines full of this type of production. In connection with this the release of their new “HomeReady” product seems to fit the bill to support this type of business and is made especially true given you can comingle this product with the your standard 30 year products, unlike its predecessor the “My Community” mortgage. Although there are other secondary options to help increase profitability let’s move on to another aspect of the business that is never without merit and that is cost controls. As we all know technology has become a key and integral part of any efficient and profitable mortgage operation. A successful and profitable mortgage enterprise embraces these synergies to cut costs and streamline every aspect of their business. Examples of these opportunities include, but are not limited to, online secondary modeling, logistical warehouse efficiencies, eDisclosure opportunities and much more. Online secondary modeling has become an outstanding way to reduce pipeline hedge costs by eliminating the need for a hedge advisor for every aspect of your business. For those that have moderately experienced staff an online model for analyzing hedge positions, taking out trades and delivering loans is a great way to eliminate costs by reducing some of the expenses typically included with a robust hedge analyzing firm. Becoming more efficient with this aspect of the business can lead to a “cleaner” warehouse line with reduced fees, less interest and more operating capacity. There is nothing more strenuous than a tight operating line with

seasoned loans eating up profitability. Becoming more efficient on the back-end with these tools can help lead to more efficiencies which can lead to an increased bottom line. e-Disclosures isn’t a new concept, but I’m surprised how many lenders have yet to leverage this technology to their advantage. Allowing clients the opportunity to sign their preliminary disclosures electronically can, at times, be easier for them, while at the same time, reducing costs associated with printing every single document package. This is especially true for those lenders that consummate a significant amount of business. With the development of the Millennial population lenders who fail to offer this type of resource to their clients could cost themselves business, while at the same time, reducing needless expenses. Failing to adapt to developing and widely accepted technological practices are often times what lead to poor business models. Forward thinking and adaptation are a huge key in the ability to navigate today’s waters effectively. Another key to maximizing profitability is to invest, promote and utilize a CRM system. Many mortgage companies often forget this aspect of the business yet is one that may be the most important. The right customer retention management software can ensure you receive not only repeat business from a past client but also from their family, friends, colleagues, acquaintances and more. In connection with this a CRM system can help you leverage synergies to build a great referral base. After all, you

are typically marketing to individuals who know you, have done business with you and know the value of what you can bring to the mortgage lending experience. Another great feature is the ability to co-brand your referral sources to the marketing pieces that are sent to your data base. Imagine being a real estate agent and knowing that every time he or she refers a deal to you that they have free advertising on the backend from origination all the way through and beyond post-closing. The economic climate and regulatory environment that we are all saturated with has and will continue to impact key components of the single family residential mortgage business. It’s no secret that the little things in any business venture are what help build and lead the processes that define and cultivate a successful mortgage operation. It sounds so simple, but what Marcus Lemonis (star of CNBC’s “The Profit”) preaches, “People, Processes and Product” is so true. A profitable mortgage operation doesn’t happen by circumstance. It takes careful thought, great efficiencies, effective processes, the right people, utilization of technology and a plethora of other items. Take the time to honestly evaluate your business model along with the processes and techniques in which they foster and you might find some real opportunity to not only increase profitability but also production. Are there opportunities wasted, ideas that can lead to increased production, synergies that can be leveraged with a technological vision? The answers to these can transform a business and lead to a changed culture along the way. Hard conversations shouldn’t be taken lightly and are what often foster successful and profitable growth.

Shawn Von Talge is vice president of Flat Branch Home Loans, a full-service independent mortgage banker with a TPO division (Flat Branch Mortgage Services). The company currently employs 180-plus employees, is licensed in five states (Missouri, Illinois, Kansas, Arkansas and Oklahoma) and possesses strong ties to the real estate agent community. In 2011, Flat Branch was named to Inc. Magazine’s “500 Fastest Growing Companies.” Shawn may be reached by e-mail at ShawnVT@Flat-Branch.com.

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What is the Future State of the Mortgage Industry? How will it re-stock its ranks and bring newbies into the profession? By Laura Burke, MBA, MS, MIS, CFE, EA ow will a multitrillion dollar industry that consists of 300,000 employees (according to the Bureau of Labor Statistics) handle the replenishing of its human capital? Will it be viewed as an expense or an asset? How critical has the need to replenish become industrywide in an industry with the average age of its professionals in the 55-plus-year-old range? The Bureau of Labor Statistics’ (BLS) outlook for loan originators is an increase of eight percent from 20142024. The BLS data shows the average salary of a loan officer is $63,403, slightly more than $30 an hour, with at minimum, a bachelor’s degree along with additional training. The current age of the youngest Baby Boomer is 52, the oldest is 70, with Generation X ranging in age from 36-51 and Millennials’ age range from 19 to 35. What strategy will be used for hiring new loan officers? Where will they come from? How will you choose the best suited individual for the role of loan originator, underwriter,

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processor or manager? What age are Baby Boomers retiring? New statistics show that 30 percent of Baby Boomers are continuing to work after age 65. Life expectancy rates have increased, as a male’s life expectancy if currently age 65, are estimated to live to be 77and-a-half and females to the age of 88. With Baby Boomers having both knowledge and work experience, many of them are carrying debt and will continue to work. This may be seen as an opportunity for many companies to keep their employees on longer than the average retirement age of 62, with many expecting to work until they reach age 70. Social Security income often increases substantially for those who can put off the early start to a later date. In addition, the careful planning of hiring on both Generation X and Millennials could be tricky for the human resources leader. How to determine the right mix is going to be essential as the workforce becomes more diversified in age. Generation X probably has the highest amount of current employees in

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most industries. Be prepared for the increase in Millennials, with immigration adding more numbers to this group more than any other. The Millennial population is projected to peak in 2036 at 81.1 million, as quoted by Fry, The Pew Research Center. Thereafter, the oldest Millennial will be at least 56 years of age and mortality is projected to outweigh net immigration. By 2050, there will be a projected 79.2 million Millennials. What is the industry doing to attract newbies into the work force? Two of our industry leaders, Fannie Mae and Freddie Mac, shared their insight on hiring young blood. Fannie Mae says, “That they are consistently open-minded and looking to recruit and retain young and talented individuals. Fannie Mae offers two programs to assist in this endeavor, their summer internship programs and Associate Program. These originally were division-specific programs that allowed entrylevel talent to rotate through four sectors for duration of twoyears. During the two-year process, Fannie Mae associates receive on-the-job training, with additional education in soft skills and leadership. As they near the end of the two- year program, Fannie Mae’s institutes a career team who will work with them to identify a new full-time position within the Fannie Mae organization.” Jerry Weiss, Freddie Mac EVP and chief administrative officer, said, “Freddie Mac places a high priority on engaging Millennials in the workplace–it’s just smart business. Effectively harnessing their talent and skills makes us a stronger company, drives innovation, and helps us more effectively respond to changing needs in the marketplace.” The housing market has become more technology-driven,

therefore Millennial talent is being sought after with both zeal and caution. This opens the door for the talent many Millennials can offer. But technology talent isn’t enough … with new and old regulatory rules abound, the newbie must be knowledgeable in the new federal rules, as well as their own state rules. Add in the skill set of building relationships, finance and sales, it’s a lot to find in any one individual. In addition, not all companies feel warm fuzzies towards Millennials, as oftentimes the Millennial is feared as many hold the power to be independent-thinkers, and company owners. Therefore, it crosses the minds of those hiring Millennials to be wary of superstar personas. Will they later face them in a company take over, or will they gather client data to be used in the future for their personal gain? This is not to say the hiring of Millennials in any way negative. It simply holds a higher risk of self-gratification than past employees because they are smart, tech-savvy and fearless. They have faced more terror in their lives on their homeland than any Baby Boomer or even most Generation X’ers ever did in their early years of life from 911, to the Boston bomber, to current affairs of riots and police shootings … they have been forced to learn to survive! The $1 trillion mortgage industry must plan for the replenishment of human capital in such a manner that it encompasses the seasoned Baby Boomers’ experience, the Generation Xer’s work-life balance mentality, adding the power of the Millennial. Historically, the industry had an average growth rate and average attrition until 2008 when the housing crisis took hold. The housing crisis affected unemployment across the country in many industries, but the mortgage industry was hit hardest. We saw the closing of major billion dollar players in the industry, Countrywide Financial, Lehman Brothers,

underwriters, processors, social media reps, account reps, closers and more. My suggestion would be an Associate Degree in Business Administration, with a minor in Lending, or a Bachelor of Arts Degree with a Major in Lending.

Laura Burke, MBA, MS, MIS, CFE, EA is an author, with 20-plus years of experience in the mortgage arena. Laura was chosen as a member to the IRS IRPAC Committee in 2016, where she will serve a three-year term. As an enrolled agent, she is knowledgeable in tax law and provides a multidiversity, and social justice. She may be reached by e-mail at LauraLynnBurke@gmail.com.

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Wachovia, GMAC, Merrill Lynch, Bear Stearns and Washington Mutual, to name a few, either closed, filed bankruptcy or were taken over by another larger conglomerate. Hundreds of thousands of jobs were lost and the industry has been in rebuild mode ever since. I would say the state of the industry is better today than it has been in many years, but it now is facing the loss of many seasoned employees as they age, how will they replace this talent is the new dilemma. With the magnitude of the many closings that took place, it left many highly-trained and qualified individuals unemployed. Filling positions wasn’t a problem, as qualified candidates were abundant, and so the old blood was used like a much needed transfusion. The old blood gave and stood tall through the housing crisis, as the crisis is coming to its end, new light must be shed on new blood for the future state of the industry. Some thoughts would be to capitalize on the strengths of the seasoned, veteran employees by restructuring their duties to encompass training newbies. Have them play an advisory role … what worked in the past, what didn’t work in the past, what changes need to be implemented. History often repeats itself, so utilize the knowledge and talent currently held in your organization. Keep jobs open to those capable of working later than average retirement age. Attract new Millennials with the opportunity to start now, learn the ropes and add their own flair and knowledge “to make it their own” position within the company. Lastly, I see the need for an educational component within the colleges and universities to offer a program targeted for those who want to follow the mortgage industry career path. We currently have college or the like programs for cosmetology, paralegals, income tax preparation, and a multitude of other career choices, perhaps it’s time that we lobby for a two- or four-year degree program in the field of mortgagerelated positions, from the management level, to originators,

Mortgage Lending: Where Will the Technology and Regulatory Environment Take Us? By Daniel Richardson, CPA MBA he mortgage industry has increased regulations covering many different aspects and affecting all parties involved. The Consumer Financial Protection Bureau (CFPB) has now increased their oversight on financial institutions and added additional reporting and compliance requirements. By the same token, TILA-RESPA Integrated Disclosure Rule (TRID) has changed the origination and closing requirements which have impacted mortgage processing software, efficiencies in the origination process and increased the maximums on fines. These changes have increased risks when submitting data to comply with the Home Mortgage Disclosure Act (HMDA), increased legal risk, increased transparency and expenses for human capital and IT upgrades. Regulations have also affected the income earned by mortgage brokers. The industry is shrinking twofold, a significant decline in loan originators and mergers and acquisitions. Mega banks are slowly leaving the business line to reduce their risk and can’t justify the declining profits with forever changing regulations and increasing costs. Forbes.com is reporting that these mega banks represented approximately 50 percent of the market share in mid-2012 compared to 35 percent in 2014, and is expected to decline even further. This is leaving a huge space in the residential mortgage market that the small mortgage companies will compete against the online mortgage brokers like Quicken Loans and LendingTree. These companies aim to appeal nationwide in hopes that sheer volume will

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drive profitability and can’t always offer the same level of customer service as an individual broker could. In a recent discussion with Brian Jennings, president of Princeton Mortgage Corporation in Pennington, N.J., he focused on three key areas there are necessary for small companies to capture market share: l Leveraging technology as a marketing tool; l Maintaining and expanding relationships with title agencies and real estate agents; and potential borrowers; and l Retaining quality loan officers. Many of the small mortgage companies cannot afford the TV ads, professional sponsorships and giveaway promotions. The online mortgage brokers aim to appeal nationwide in hopes that sheer volume will drive profitability. It is often that their low interest rates draw potential borrowers however do not necessarily qualify for the low rates as advertised. Reverse mortgages have also made a name for themselves over the last 10 years and their volumes are expected to increase. A study performed by the National Reverse Mortgage (NRMLA) showed that based on a survey, 70 percent of reverse mortgages are to fund everyday expenses and payoff existing mortgage debt. With the Baby Boomer generation retiring over the next 10 years, the volume is expected to increase. The Baby Boomer generation is generally a demographic that prefers the face-to-face conversation, which is a benefit to the individual mortgage broker. Reverse mortgages could then become the new norm for retirement planning as

Social Security funds are expected to deplete by the third quarter in 2023, as shown in a recent report issued by the Social Security and Medicare Boards of Trustees. Not all is bad with residential lending as the regulatory bodies mentioned above are all for the protection of the borrower. TRID has shifted certain responsibilities to the lender, including a three-day window to allow the borrower to review the closing documents before arriving at the closing table. Some lenders would even argue that the shift in responsibility mitigates confusion and also create clear checkpoints along the way so that the lender, realtor and borrower are all on the same page. Dodd-Frank rules have enforced an even playing field for loan officer compensation and deter collusion between the broker and lender. The new rules prohibit brokers from generating higher income by placing borrowers in more expensive mortgage products that borrowers may not be able to afford. Where is the industry going and how can mortgage companies capture the market share that the mega banks are leaving? From a borrower’s perspective, they want easily accessible data and want the process done as quickly as possible. With that said, they also want to know the options and financial resources to make the best decisions for them. What is the optimal amount of downpayment to provide given I have two children in college? Should I buy points? Would I be better off getting a 15-year mortgage or 30-year mortgage? There are many variables to consider that the average borrower may overlook. In today’s environment, there are numerous Web sites that will compare interest rates, provide homes that fit a borrower’s

desired filters and make the application process as automated as possible. There are also services that can pool together borrower data from various online sources. As technology and the utilization of online resources increases, what will the future of the mortgage process look like and how will companies best adapt to seize market share? As we all know, housing markets and regulations differ geographically with states and municipalities having unique laws governing the housing market. The key will be to concentrate on a region that is tolerable for a smaller company to capture and stay current with. The younger generation wants information at their fingertips, from phone apps, and they want Web sites to be user-friendly. Social media can be leveraged to draw borrowers to a mortgage company’s Web site. This will be a new cost that mortgage companies are facing and may require a new marketing person to stay on top of the social media world. Facebook began charging for advertising since going public and there’s a strong likelihood that other social media outlets will begin doing the same. Mortgage companies still live and breathe on referrals from previous borrowers, real estate agents and financial services professionals. Referrals are a no-cost marketing tool, but build your brand, introduce new business and generally are a win-win for all parties involved. The key to a quality loan officer will be personality, adaptability, financial acumen and technologically savvy. There has been a significant decline in loan officers over the previous years. Borrowers with less of a personal finance background will have questions regarding tax deductions, mortgage options, home equity, the closing process and a bunch of ‘what-ifs’ which LOs are expected to be able to answer. LOs will need to stay abreast on regulations through continuing professional

a simple process like booking airfare or purchasing a vehicle, borrowers and regulators know that the general public, for the most part, need assistance in a process that will likely be a borrower’s largest investment in their lifetime.

Daniel Richardson, CPA MBA graduated from Drexel University in 2008 with a BS in accounting, and obtained his MBA from Rider University in 2013. Daniel has been with WithumSmith+Brown PC for six-plus years and is a member of the mortgage banker and governance niches within the firm. He may be reached by phone at (609) 520-1188 or e-mail DRichardson@Withum.com.

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n National Mortgage Professional Magazine n OCTOBER 2016

education and getting licenses. Many mortgage companies are relying on leads from LendingTree and the like for loan volume. This approach will provide an increase in loan volume however companies that opt out know the disadvantages of obtaining blind leads. Companies are paying for every individual lead they are receiving, many of which are window shoppers just observing the market. Companies will need to evaluate whether it’s advantageous to look into leads and determine the profitability and likelihood of leads yielding a settlement. Some professionals seem to think that the process will be completely online in the near future. If this happens, then location is irrelevant for the lender and the costs of brick and mortar will be replaced with marketing and public relation costs and IT professionals. If a potential borrower can provide the necessary information for the application, do their own property search and rate comparison, they may still need the expertise, especially for the first-time home buyer. If you’re using Quicken Loans, you may not have the same loan officer on the phone with you after the first call; you likely won’t establish a relationship with someone over the phone. People will want someone they can trust and have a sit-down with if needed. This may open the door to loan officers taking on more of a mortgage consultant role and working as a correspondent LO for a bank or even just consulting a buyer and not having a relationship with a lending institution. From my experience working at a CPA firm, CPAs and other finance professionals have advised clients when purchasing a home in addition to making referrals to lenders. This is an example that a borrower could solicit advice and go through the lending process as separate services. I don’t think that the mortgage process will ever be

Five Rising Trends in Home Loan Origination By Jim Mortensen hat do borrowers tend to think about when they consider the loan origination process? Unfortunately, it is often the paperwork and stress. As lending becomes more competitive, lenders are striving to change this perception–but that has to begin by changing the process as borrowers know it today. Modernizing the loan origination process is not only a must to accommodate borrowers’ expectations; shifting to automation can also translate into significant resources savings and risk reduction for lenders. As lenders prioritize the consumer’s experience while balancing the need to improve efficiencies and mitigate risk, there are five rising trends they should consider.

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Trend #1: Industry recognition of process inefficiencies Outdated and inefficient steps in the home loan origination process have a tangible effect on a financial institution’s profits and success. The Quarterly Mortgage Bankers Performance Report from the Mortgage Bankers Association (MBA) found that inefficiencies in the home loan origination process drove total loan production expenses to $7,747 per loan in the fourth quarter of 2015, compared to $7,080 per loan in the third quarter of that same year. In addition, data from the financial institutions included in the report showed that production profits dropped by more than 60 percent, from a net gain of $1,238 per loan to $493 per loan across the two quarters. If you look closely at the various stages of origination, it is hard to argue with the fact that one step in particular is costing lenders significantly in time and resources: Asset search and verification. This stage is also typically the one borrowers recall as a hassle and creating delays; the responsibility to locate and present paper documents and bank statements is usually anything but enjoyable. And,

while borrower frustration has always been an issue, lenders today are spending millions of dollars on this process alone. They can no longer attribute drastic shifts in profit and expenses solely to economic shifts or fluctuation in loan volume— these factors are in large part related to inefficient, manual and paperbased processes. More lenders are realizing this fact and striving to make a change. Trend #2: Millennial homebuyers demand convenience and technology Borrowers depend on the convenience and efficiency of technology, especially Millennials, who now make up the largest share of homebuyers. These digital natives simply will not accept a process that requires them to locate and submit multiple paper documents to secure a loan if there is another option. Accenture’s 2015 North America Consumer Banking Survey revealed that when selecting a bank, Millennials consider online banking services a key offering. They’ll certainly be just as choosy–if not more so–when seeking a lender for their home loan. In a 2015 J.D. Power Survey, 68 percent of customers responded that they were asked to provide additional documents after completing the application process, and 48 percent were asked to provide the same document more than once. And, in the same survey, more than a third of millennial respondents stated that they would be willing to pay more for faster loan processing. Knowing that Millennials prioritize speed and efficiency over brand loyalty, lenders are wisely turning to technology to make this possible. By identifying advanced solutions capable of leveraging collaborative bank intelligence to collect asset information directly from financial institutions rather than asking borrowers to present the information, lenders have a key opportunity to satisfy millennial borrowers and shift consumer perception of the home loan origination process.

Trend #3: Fraud is only increasing In addition to perpetuating a burdensome situation for consumers and lenders alike, outdated, manual methods create risks for lenders as well as the government-sponsored enterprises (GSEs) that may purchase the loan down the line. Fraud and financial misrepresentation can much more commonly occur when borrowers present their own asset information. CoreLogic predicts that 2016 could reach the highest mortgage fraud risk since 2010. In addition, the FBI reports that mortgage fraud remains a top priority in investigating whitecollar crime in the United States, and there is no shortage of fraudsters to be caught. Consider one example of a recently closed case: From 2005-2013, two men in Pennsylvania orchestrated a massive fraud scheme that cost local banks almost $13 million. There is no denying that all financial institutions feel the impact of loan origination fraud, but for community banks, the impact can be devastating. The cost of fraud alone is enough for lenders large and small to change how they go about the asset verification process. With the right solutions that gather data from the source–the financial institution–lenders can cut criminals off from this activity and dramatically reduce their risks. Trend #4: Rising uncertainty for GSEs The inherent risk of fraud also makes it more difficult for investors and GSEs to repurchase a loan down the line. Today, 85 percent of the 8.7 million loans originated in the U.S. are later repurchased by GSEs, and in 2015 alone, GSEs’ combined activity reached approximately $85 billion. Outdated, manual steps such as paper-based evidence of assets used in loan origination processes, only increase the uncertainty that investors face when they consider buying a loan. If lenders rely on

systematic, automated processes for obtaining asset verification data from the source, GSEs can access the exact same data and thus, have a high level of confidence as they make repurchasing decisions. Trend #5: Automating asset search and verification This trend might be a solution to all the rest, and it is important to reiterate the growing role that automation has in origination, and in particular, the asset search and verification stage. Solutions that simply speed up the process will not suffice. Automation isn’t just about speed. Data accuracy and quality are crucial to originating strong loans, as well as preventing fraud. Many automation solutions simply expedite the process on the front end through screen scraping and data aggregation, but data gathered in this way puts online credentials at risk and can lead to the underlying data being used for unintended purposes. Lenders are replacing these systems in favor of technology that merges the need for speed with the need for collaborative, shared data. Lenders have many priorities to balance–that will likely always be fact. However, these trends focused on modernizing the origination process and the methods of gathering asset verification data signify a large step toward their ability to check off multiple boxes at once. As competition continues to rise from non-traditional lenders and customers demand a high-tech, efficient process, lenders that invest in updating their asset search and verification processes can effectively address several objectives, from reducing fraud to transforming the borrower experience. What may appear as a single, small aspect of the entire loan origination process in many ways represents lenders’ biggest opportunity to positively impact their businesses and their borrowers.

Jim Mortensen is vice president of the Identity Solutions product line for Early Warning, responsible for developing and delivering new identity solutions, as well as managing their overall product lifecycle. Previously, Mortensen oversaw new product development and enhancements for all product lines, which included leading related business analysis and project management functions. Mortensen joined Early Warning in 2009, with 20 years of financial services leadership experience. Jim may be reached by e-mail at Jim.Mortensen@EarlyWarning.com.

The Age Gap

Signature disclosing, I have not left the house in a month. Why bother to shower, shave or even change pajamas if you are not meeting people? The Big Cheese is getting smellier and smellier. Even my dog refuses to sleep in my home office now. Welcome to the Brave New World. It is easier, faster and more secure … but with just a whiff of foot odor.

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. 91

Don’t miss out! November 2016 Special feature:

Compliance Today

n National Mortgage Professional Magazine n OCTOBER 2016

kill you to come over and visit your father once in a while? Still, you love them and put up with it. Just like I do with my customers. On the other hand, some of my youngster borrowers have dragged me kicking and screaming into the new millennium. Being old, it never occurred to me to advise my clients to send me their personal financial information in a secure fashion until a borrower brought up the subject. There are tons of cheap or free ways to do it like WinZip with an encryption key, Google Drive or Dropbox, to name just a few. If you don’t think e-mail security it is ask Hillary Clinton. More importantly, it lets your borrower know you care. The same I would do for any of my own offspring. Here is another way to stay ahead of the technological curve if you are ancient like me. Ever since 1991 when I first became a loan officer, I have been going to my customer’s house to take the loan application and get disclosures signed. I felt people appreciated me coming to their home to discuss their purchase or refinance over a cup of coffee at the kitchen table. It is a great bonding moment for you and your client. I always received terrific feedback on my warm personal approach and tons of referrals. Then something changed. It was called the Internet. Now I send all my borrower important, just documents through DocuSign where they can electronically e-Sign them on their phone while they are running errands! I have not noticed any drop in my referral business and conversely, the new generation tends to prefer it. Who has time for offline human interaction anymore? They tell me, “The house is a mess, the kids have the flu, but it’s been sure nice talking to you. Yes, sure nice talking to you. I don’t know

when you can come over, but we’ll get together then, we’ll have a good time, then.” And then it occurs to me. The kids today grew up just like me. Who has the time? Now here is the downside to all these mobile and paperless technologies. With all my video Webinar CE classes, online application practices, secure document transfers and e-

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just completed my eight hours of online SAFE continuing education classes, and I actually learned something this time (thank you, Uncle Aaron!). Did you know the average age of a mortgage originator is 54-years-old, the Mortgage Bankers Association’s Barbara Hanson said during a panel discussion at the MBA’s Annual Convention called “Next Generation Loan Originators: Planning for the Industry’s Future Workforce.” Now, compare that to 33years-old, which is the average age for first-time homebuyers in the United States, according to a Zillow analysis (Zillow.MediaRoom.com/201508-17-Todays-First-TimeHomebuyers-Older-MoreOften-Single). Is it me, or does that seem like a huge generational gap between the average borrower and your typical loan officer? I am 57-years-old and most of my buyers are 30somethings buying their first home. I consider myself a fine cheese, like Camembert, and not just because I am a bit smelly and covered with a fungus. Kids today are more like a slice of American cheese, technologically processed and individually wrapped up in themselves. So how do I bridge the gap? Easy, my kids are about that age. I treat my customers like I treat my own children. I try to offer them the best advice I can and explain in detail the reasoning behind what I tell them. And, like my kids, sometimes, they can be just so annoying! If you have kids, you know what I am talking about. Why is it that when you call, their voicemail is always full and they only respond to a text? Why can’t they just pick up the phone? Everything is e-mail this and e-mail that. What ever happened to face-to-face personal interaction? Would it

By Eric Weinstein

The Only Clear Path

tarting in October 2016, the Consumer Financial Protection Bureau (CFPB) will begin taking enforcement actions against lenders who violate its TILA/RESPA Integrated Disclosure (TRID) rules. Designed to provide more clarity to consumers, who have traditionally been underwhelmed with the process of closing a mortgage loan, the new rule changed everything for our industry. It’s taken most of the last year for lenders to realize how much has changed. Some have even been forced out of the business due to compliance violations. Under TRID, lenders are required to disclose accurate costs within days of the borrower’s completion of the loan application process (as defined by the CFPB). Then when the loan underwriting process is complete, lenders are tasked with disclosing again at least three days before the loan is closed. The numbers on the first disclosure, the Loan Estimate (LE), and the latter, the Closing Disclosure (CD), have to line up very well. And that’s where one of the most serious problems our industry faces, with

TRID, becomes evident. What lenders really need is the ability to create “plug and play” title networks based on their own preferences that are capable of delivering guaranteed accurate fees in time for the LE that do not change when the CD is issued. Fortunately, technology currently exists to make this possible. We wrote about it in a new White Paper that is available now on our Web site, Marketing.ErnstInfo.com. Like most modern compliance challenges, the solution is better technology. The best technology is developed by industry insiders with a long history of building workable solutions that have stood the test of time. While nothing stays the same, success follows those who continue to do those things that work. In this short article, we’ll tell you about the technology that currently provides the only clear path to TRID compliance. Connecting settlement agents and the lenders they serve After nearly 30 years in the industry and a successful track record of building technology that currently connects lenders, responsible for 90 percent of the country’s loan

volume, to the nation’s largest title underwriters and thousands of settlement agents across the country, Ernst attacked the problem of TRID compliance nearly a year before the rule went into effect. Now, after a year of use in the industry, the solution is ready to protect the industry from CFPB’s upcoming enforcement audits. Ernst’s answer to this problem is the Settlement Agent Gateway, a collaborative fee management technology that allows settlement agents to work with lenders to negotiate fees and then manage these fees in a Web-based tool. Using this tool they certify the accuracy of their fees and then make them available to lenders who need to provide Loan Estimates under the new requirements. This ensures full TRID compliance, protects the lenders from having to re-disclose later for quoting the wrong fees and protects smaller settlement agent firms from being pushed out of the market due to noncompliance concerns. The tool allows lenders to create their own proprietary network of approved settlement agents. Lenders can easily

approve and migrate all settlement service fees and providers into a software solution that integrates with their LOS, closing portal and internal programs. Lenders control all naming conventions for their required settlement service fees so there is never confusion. Simultaneously, settlement agents can easily load their service fees, importing spreadsheets if needed, certify their accuracy and become immediately networked into the lender’s system. The technology is simple to use and uses MISMO data standards to allow the settlement agent to enter pre-negotiated fees online, including values for the required services by geography, fee type multipliers and more. They then certify that the fees are accurate with a single click. Once on board, settlement agents can change and re-certify their fees at any time based on their lender agreements. Lenders are instantly notified of fee changes and have immediate access to the new rates and integrate the changes as they apply to new loan quotes. With a Lender’s approval the settlement agent fees will seamlessly be integrated into that lender’s

h to TRID Compliance

production process and automatically loaded into the required disclosures. For auditing purposes, complete logs are made available, including reports for all fee changes. Historical fee values can be retrieved and reapplied at any time for audit purposes. Rules can be created to approve fees or that apply to specific agents. Fee types can vary by fee, loan type, line of business, location and many other classifications. Monitoring programs are built in to alert the lender if a fee change would impact an existing transaction. This technology is not a closing portal. Because fees must be disclosed accurately to borrowers long before they get to the closing table, both lenders and settlement agents need a tool that will allow fees to be negotiated far in advance of the close and then locked into the lender’s closing cost search engines. This software makes that possible today. The Gateway provides lenders access to 100 percent accurate fees from the partners they choose to work with from their first quote, keeping them in full compliance with TRID and providing a better experience for their borrowers.

Best of all, the solution gives lenders this power at little to no extra cost. Advantages available to lenders now It only takes minutes for authorized users to enter information into the Ernst system, storing fees that can be accessed by lenders at any time. Settlement agents can also store their vendor information for reporting on the Loan Estimate and SSPL listings, as required by the CFPB. There are many advantages lenders and settlement agents are enjoying today, thanks to the Ernst Settlement Agent Gateway, including: l Lenders: Your fees are always accurate and 100 percent guaranteed. l Settlement agents: Become quickly networked within a lender’s proprietary program. l Ernst manages the complete process. l It’s CFPB compliant. l Our programs are fast and easy to use … it takes minutes to enroll. l All programs are lender-specific. l The cost is minimal.

For lenders, there is no fee to integrate this service into an existing Ernst platform. In fact, there is no technology implementation to perform or complete. The technology simply works and is available now. Lenders can expect to continue to pay the currently negotiated click rate for the fees, exactly as they do today. If the lender chooses to work with a settlement agent that is not currently using the Settlement Agent Gateway to provide 100 percent accurate fee quotes, it only takes a few minutes to get them signed up to use the system. While there may be no cost to the lender, there are many benefits loan originators will enjoy, perhaps the most significant of which is the ability to work with the partners they choose without fear of noncompliance. The Ernst Settlement Agent Gateway minimizes lender cures by quoting fees from a local

nmp By Gregory E. Teal

provider that apply to the area where the property is located with 100 percent accuracy. The lender can create their own custom network of settlement agents or they can use the network already established by Ernst and its partner eLynx. This technology allows loan officers to provide accurate quotes to borrowers provided by the local settlement agents they typically work with, allowing them to maintain the relationships that bring them more business. Ernst manages the network for the lender, requiring settlement agents to certify/guarantee their fees and then recertify the accuracy of their fees periodically, typically quarterly. While others will claim that a solution to TRID-related problems is possible or could be constructed, Ernst is already delivering it. Find out more by contacting the company today.

Gregory E. Teal is president and CEO of Ernst Publishing, an industry data and technology provider that processes more than 150 million transactions involving closing cost data each year. The company offers closing cost data nationwide in a variety of technology formats, including mobile. His golf handicap is four. Gregory can be reached by e-mail at Gregory.E.Teal@ErnstInfo.com.

OCTOBER 2016 n National Mortgage Professional Magazine n NationalMortgageProfessional.com

Keeping Pace With Today’s Regulatory Changes By Toni Bright

If the state determines that probable cause exists and charges are filed against the appraiser, they may settle or take it to a hearing. At this stage, in most states, it becomes public record, making it difficult for an appraiser with a disciplinary action to continue to work for many lenders. The impact It is unfortunate that any adverse board action can essentially cost an appraiser so much of his or her business. What about a disciplinary action for continuing education (CE)? Is that an action worthy of losing his or her livelihood? Maybe, maybe not. Did the appraiser intentionally report that they had completed the required CE but knew it was not complete? Would that lend itself to the morals and ethics of the appraiser? If s/he is willing to blatantly report a falsehood to the state agency, what could they put within their report? What if the appraiser is credentialed in multiple states and they confused the reporting dates for CE as a result of multiple credentials? Would that lend itself to forgiveness for human error? For a CE violation of any kind, should the appraiser be considered incompetent for appraisal work? Should a CE violation be considered the same level of discipline as a Uniform Standards of Professional Appraisal Practices (USPAP) violation? There is no such thing as a perfect appraisal report. It doesn’t mean that every report by that appraiser is bad. If the appraiser

finished a report on a bad day and a complaint resulted, should that cost him all future work? Some states review multiple reports to determine if it is a pattern of behavior. Most states do not follow this line of investigation as it is a costly and often more time intensive approach. State regulators are wrestling with disciplinary decisions. It’s no longer simply about the appraiser’s infraction, but also the potential impact to the appraiser’s career. Unless an infraction is egregious or fraudulent, regulators could be put in a position of not disciplining an appraiser. No state regulator wants to be seen as the cause of an appraiser losing his/her livelihood for a small violation that was a mistake. Rather than disciplining an appraiser, a private warning could become the new normal. Is that in the best interest of the industry? Is that making the appraiser better at his profession? Is it protecting the public? The solution Everyone needs to be educated. There are a lot of pieces in this puzzle and the majority of people wrestling this issue do not understand the thinking or logic of the others involved. State regulators prefer to use education for disciplinary measures as it is a proven and effective tool. Specific educational topics are often selected by the regulator based on the deficiencies found within the continued on page 96

n National Mortgage Professional Magazine n OCTOBER 2016

laws and rules. A state board is also required to have a final administrative decision regarding any complaint within one year of the complaint filing date. While this is possible, an efficient streamlined system is a must with minimal variables within a complaint. If a regulator has done everything for a timely investigation and process, but external sources (such as attorneys, or other state agencies) were cause for the delay, it must be documented and may be an acceptable reason. Just as every state is unique, so is the approach on accepting and processing of complaints. There is one common denominator among all: complaints are taken seriously. Some states consider the entire complaint to be an open record. The appraiser (“Respondent”) knows exactly who filed the complaint (“Complainant”) and may even get a copy of the complaint. In other states, there are various levels of confidentiality which may make the Complainant known only if probable cause is found against the Respondent. When receiving a complaint, a state will open a case or do an initial review of the complaint to determine its validity. In states that do an initial review a Respondent may only be notified if there is sufficient reason to open a complaint. Some states notify a Respondent by letter requesting a response while other states send an investigator to the Respondent’s office to ask questions and collect the data.

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The complaint process Each state, to perform federallyregulated transactions, must have an appraiser agency in place. These agencies can be standalone boards, umbrella agencies, state staff, governor-appointed volunteers, industry participants and a variety of other variations that make up the board. It is a unique dynamic, whereby state regulators, or boards, must regulate appraisers using a minimum set of guidelines imposed on the appraiser and the state, by federal regulations. The state regulatory program is reviewed by the federal Appraisal Subcommittee (ASC). While these are called compliance reviews, it is an in-depth audit of a state’s regulatory program. These reviews happen a minimum of every two years with some states required to have interim reporting, depending on the findings of their review. These reviews and ASC findings, can be seen at ASC.gov/StateAppraiserRegulatoryPrograms/StateComplia nceReviews.aspx. The goal is to make sure a state is complying with its own laws and that those laws and the state’s practices do not conflict with the requirements of the Appraisal Standards Board or the Appraiser Qualifications Board. One component of the review includes enforcement. States are not compared to one another in enforcement. A portion of the policy requires equitable enforcement within a state’s own

MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams he Mortgage Action Alliance (MAA) is a voluntary, nonpartisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). As November swiftly approaches, the political landscape is increasingly dominated by the elections. However, MAA advocacy continues to help push forward necessary reforms for the health of the mortgage industry and make sure policymakers in D.C. understand what’s going on in the real estate finance in your community. The long awaited revamp of the Uniform Residential Loan Application (URLA) was finally published—giving the mortgage industry time to analyze the new documents and implement the necessary systems changes by the Jan. 18 effective date. Mortgagerelated regulatory developments continue, including the implementation of the Telephone Consumer Protection Act and actions by the U.S. Department of Housing & Urban Development (HUD) related to downpayment assistance and HECM loans. And in an announcement sent to lenders, the USDA announced a reduction in both its upfront and annual guarantee fees for the Rural Housing Service’s Section 502 Single Family guaranteed loan program. Check out the new feature on MBA’s Advocacy Action Center, the Elections Page, to easily look up the federal and state candidates running for office in your area along with information about the election, and even register to vote. Go to Action.MBA.org or visit the Elections Page and try it out yourself! Stay updated on current events in Washington, D.C. and your state capital by connecting with the MAA on social media. Check out the MAA’s Facebook Page where the latest political news is posted, as well as MAA “Calls to Action.” You can also join the MAA group on LinkedIn to connect with fellow advocates and expand your network! The Mortgage Action Alliance recently sent out a letter asking MAA members about any personal relationships that they have with their elected officials. These relationships can be incredibly valuable to our advocacy efforts on behalf of the industry. Please consider joining MAA and helping us leverage your personal relationships to advocate on behalf of our industry. The industry’s ability to navigate and manage these policy challenges is critical to our efforts in serving consumers around the nation. Visit our Web site at Action.MBA.org to learn more. Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice! If you would like to run an MAA campaign, please contact Peter Shapiro at (202) 557-2933 or e-mail PShapiro@MBA.org to receive an Enrollment Campaign Kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs.

Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage. He may be reached by phone at (800) 851-0263 or e-mail FWilliams@CrescentMortgage.net.

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investigative process. A suspension or revocation is punitive, but does nothing to improve an appraiser’s performance. If the appraiser is not a danger to the industry, education is a solution that will promote the ultimate goal of public protection. While the initial purpose of the discipline may not have any intention of being punitive, an appraiser who holds multiple credentials is often penalized in the other jurisdictions which adds the burden of appraiser fines, more education, and additional scrutiny, as well as the loss of business. This is a concern and sometimes referred to as the “pile on” or “domino” effect. Just because another regulatory agency can discipline an appraiser doesn’t mean they should. State regulatory agencies need to use caution when reviewing an appraiser’s violation from another state and discretion in determining whether additional action is necessary. It is my opinion that the public trust and protection should be the primary and only goal of those secondary states reviewing the discipline. Going forward This is meant to initiate conversation and to challenge improvement within the industry. This is not meant to advocate for any appraiser who is a habitual offender or fraudulent. This discussion and consideration should be for the appraiser who made a mistake. Perhaps in your mind this is not relevant. Ask yourself if you would want your future income potential, or employment opportunities, to be defined by one bad day at work? Thoughts to consider and conversation starters: l If a lending institution believes disciplined appraisers should not be used for appraising properties, why aren’t lenders filing complaints with state boards? Remember, not filing a complaint with a state regulatory agency is a violation of DoddFrank. l If an appraiser is disciplined and subsequently loses clients, has justice been served? Has it made the appraiser better at his profession? Was the public protected?

l States have varying levels of tolerance for appraisal violations. Two appraisers, two states, same violation: One could receive public discipline with education and a fine the other could be given a warning with no public record. l Could the industry be inadvertently pushing the use of less experienced, less competent appraisers because the best appraisers may have a disciplinary action from years ago? l Unless it is a suspension, revocation, or voluntary surrender of a credential, not every state makes disciplinary action a public record. Just because it isn’t reported doesn’t mean it didn’t happen. Is this fair and equitable to the appraisers that live in other states? l What about crimes of moral turpitude? It’s not a regulatory action if the state board doesn’t consider it to be a matter of moral turpitude. Will your agency rely solely on the state appraiser board’s decision? l Most states do not have a disciplinary “one-size-fits-all” because they take into consideration mitigating circumstances. Should lenders consider mitigating circumstances in their own right? l Could the current method of excluding disciplined appraisers lead to a watered down state disciplinary effect? l How old must the discipline be to no longer be a consideration? Should this depend on what the infraction was? l If the appraiser is in good standing in the states of certification should that not be enough to satisfy the lender? There are fraudulent appraisers out there, there are also some very capable appraisers who have made an error. The industry’s attempt to negate the use of the unethical appraiser has created unintended consequences, which has eliminated some highly-skilled and competent appraisers. If the industry will not change its course from today’s trend of using appraisers with flawless disciplinary records, it could be creating its own appraiser shortage.

Toni Bright is chief compliance officer for CoesterVMS in Rockville, Md. Toni’s prior experience includes eight years as a real estate broker and time spent teaching junior high and high school English. She may be reached by phone at (240) 696-2467 or e-mail TBright@CoesterVMS.com.

to credit repair or lose the deal

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procedures and standards are an integral part of our sales training manual. Clearly defined culture, processes and compliance, provides consistent results and limits the potential for issues.

through the process and how do they inform the referral partner of the client’s progress? l What education, action plan and coaching is provided to the client?

Payment Advanced Fee Payment is prohibited by CROA, as well as many state laws. It is important to understand the billing process of a CRO as it’s a key factor why the CFPB initiates investigations. Below are a few cursory questions you can ask: l Do they accept any monies prior to their disclosures being completed and promised work has been completed? l Is there cost structure clearly disclosed within their agreements and their Web site? There should no ambiguity in regards to what the services will cost the consumer. l How do they classify their payments? Do they charge for clearly defined monthly services or do they offer a pay for performance service?

A well-developed program can translate into the difference between funding more clients and managing complaints. Be sure that the process your vendor has is one you would utilize if you had credit challenges.

The only exemptions for advance fee payment are credit unions, however there are few if any CROs operating under the umbrella of that status.

Here is an important point to consider on this topic. Individual loan officers refer applicants to CROs every day. Some act in accord to compliance and others may not. Would it not be in the best interests of the lender to have vetted CRO’s that are referred to consistently and compliantly? Payment defaults and buybacks Last, I want to address the potential for buying back defaulted loans for consumers that repair their credit via a CRO. Buyback for any reason are a very real concern for all lenders. What follows will hopefully reassure those that find this a risk a concern. Since the meltdown in 2007, credit scoring models have been modified to levels that have never been seen previously. A 30-day

mortgage late in 2006 may have cost the borrower approximately five to 10 points to their score. Today, a 30-day late on our home could cost up to 130 points, according to FICO data released in 2011. Moreover, without the responsible use of credit over time by the borrower, all the credit repair in the world will not give the consumer mortgage ready profile and scores. Lastly, with DU and LP recognizing when items are in dispute, it’s virtually impossible to deceptively manipulate a credit score and profile. I would like to note that in our history, we have never had knowledge of a scenario where a client we serviced resulted in a loan buyback. In fact, we have actually helped a number of clients repair errors on their borrower’s credit in order for the loan to be saleable to the servicer. Cases where errors hit the credit report post-closing do happen. This alone can be a strong enough case to look closer and having a credit service provider as a vendor. In closing, the world of lending and credit are fluid and rapidly changing. There are risks in every facet of the process and without risk there is no reward. I hope that after I have laid out the realities of the credit repair conundrum, you have enough data to make an informed decision on using a CRO as a vendor.

Chad Kusner is president of Credit Repair Resources LLC. Chad is an accredited by the State of Ohio Department of Commerce and Ohio Supreme Court as a credit educator. Chad is also an executive director of NACSO, the National Association of Credit Services Organizations. He may be reached by phone at (216) 591-1000 or e-mail Chad@crr760.com.

Join the new Facebook group by searching for “OrigiNation.” This public and open group features information that will be featured in the “OrigiNation” column in National Mortgage Professional Magazine, with your consent of course, by Andy W. Harris. People want to hear from you, the mortgage originator, from the good stories to the bad, from the funny to the serious … take this opportunity to connect and share. Search today on Facebook and join the group! 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.

n National Mortgage Professional Magazine n OCTOBER 2016

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Processing files: AKA the deliverable There is no proprietary method for repairing credit. On a high level, a CRO disputes potentially inaccurate and outdated information on behalf of its clients. As analogy, it is very similar to making the statement an accountant makes when doing your taxes. There are many levels of expertise, services and follow up accounting firms offer. A CRO should have a detailed protocol that they follow that is implemented consistently with every client. Here are key data points that should be clear and consistent: l What is the dispute methodology? How do they create their initial disputes and what is their vetting method that fully verifies the challenged information? l What are reasons they would NOT challenge or dispute an account? l Who does the investigating? Does the sales agent manage the full process? If so what are their qualifications as an expert? l What is the follow-up protocol? How do they move the client

A few more things to consider Now that we have discussed what to look forward within a CRO, I want to address a few additional talking points pertinent to this topic. The credit reporting agencies and credit resellers have strict guidelines about credit repair. Additionally, I have often been approached about the potential for loan buybacks from credit repair clients who default on their loans. I would be remiss if I did not address these all important topics. Credit reporting resellers have an agreement with the credit reporting agencies that prohibits them from allowing lenders to furnish any information obtained from a credit report to a multitude of third parties. One of these third parties are credit repair companies. With that being said, following the steps limits the potential of mistakes being made and jeopardizing your relationship with your reseller. l Do not aggregate credit reports to a credit repair company. Some agreements allow you to furnish a consumer disclosure

to the applicant. If that is the case, leave it up to that consumer if they want to forward it to a CRO. l Do not supply specific credit data derived from the credit report to the credit repair company. Let the consumer provide information about their credit challenges. l Do provide the CRO with basic contact information of the applicant that was derived from the initial lead source and not the credit report.

getting toknow KELLY HENDRICKS President National Association of Professional Women B Y

OCTOBER 2016 n National Mortgage Professional Magazine n

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elly Hendricks is vice president of St. Louis-based Delmar Financial Company and national president of the National Association of Professional Mortgage Women (NAPMW). National Mortgage Professional Magazine recently spoke with Hendricks regarding her work with NAPMW and her career in the mortgage industry.

How did you come into the mortgage profession? Was this your original career choice? Kelly Hendricks: It was not my original career choice. We all wind up in the mortgage business in a weird way. I wanted to be a nurse, and I went through junior year of nursing school before I decided that I did not want to be a nurse. So, I came home and was working at Applebee’s. My manager said that his girlfriend was looking to hire a receptionist at an independent mortgage company, so I applied and got that job. How did you first become involved with NAPMW? I was not happy being a receptionist—it was not my dream job. I got bored very

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quickly. Thankfully, I had a very good mentor. The manager at the job pulled me into the operations department and sent me to an NAPMW conference to learn more about the different parts of the mortgage industry. I attended NAPMW meetings here and there for a few years. Then, there was an individual at a mortgage insurance company that saw potential and started mentoring me. I was encouraged to grow more within this field. I attended NAPMW meetings for five years before joining the association. What titles have you held in NAPMW? At the local level, I was the Education Committee chair, then treasurer, president-elect and currently, national president. At the national level, I have been president-elect and served as president last year and this year. I will serve as NAPMW president through April 2017. What is NAPMW’s relationship with the other major mortgage profession trade groups? There is an interesting dynamic. At various local associations, the Mortgage

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Bankers Association (MBA) and NAPMW have joint meetings. There is little overlap primarily because the MBA is the driving force for lobbying and regulatory issues, and we are focused on education, personal growth and development. We also have an excellent relationship with NAMB—The Association of Mortgage Professionals. We complement each other without competing with each other. I think it’s important to note that we are the only organization focused on promoting women’s interests in the mortgage field. Speaking of personal growth and development, what is NAPMW doing to bring more young women into mortgage careers? It seems like that conversation is going on daily. At both the national and local level, there is a lot of talk about what will happen with the industry in 15 to 20 years … what is going to happen when the executive and mid-level management personnel retire? There are not a lot of younger women coming into the business. For starters, the licensing requirements are very limiting for someone right out of college. This is also happening in the ancillary fields: With appraisers, for example, it

is very hard to get people to come in. And we are also not an industry that markets itself very well—it is not like we are doing a lot to promote ourselves. We need to ask ourselves: What is the hook to bring young people in? What can entice them and make them excited about the mortgage industry? We need to emphasize that there is no ceiling on the sales side— essentially, you are your own boss. And women in executive management have become the norm. This is one of the few industries where women can walk into executive management, either at a multibillion-dollar company or a small shop. It is not uncommon for those who work hard to be elevated and have unlimited opportunities. How do you see the state of the housing market over the next 12 months? Very strong, probably stronger than it has been in a long time. The purchase market is coming back and homes are appreciating. There is so much pent-up appetite. Traditionally, the purchase market was driven by household formations. We are

“We are now seeing that the purchase season is no longer a summer season— today’s buyers are not worrying about getting in before school starts.” not seeing that right now—the dynamics of the younger generation has changed that. We are now seeing that the purchase season is no longer a summer season—today’s buyers are not worrying about getting in before school starts. Also, rates will not stay low forever. But I don’t think there will be any movement on rate hikes because the economy isn’t getting stronger, although there are some signs of improvement. I really think that the political environment is influencing the hold on federal rates.

Looking back on your work in the mortgage profession, what do you see as your greatest accomplishments? When I started in the business, I worked with low- and moderate-income customers, and there was nothing better than helping them achieve their goals. That has become my passion in bringing first-time homeownership to low- and moderate-income households. When the work day is over, how do you spend your leisure hours? I have two sons, one is 16years-old and one is 11-yearsold. They keep me very, very busy. My husband and I enjoy traveling, which helps when I need the time to recharge and relax.

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

n National Mortgage Professional Magazine n OCTOBER 2016

Outside of NAPMW, what are the challenges that you face at Delmar Financial? We are in a rapid growth mode, which is exciting and unusually challenging. Our company is celebrating its 50th anniversary. It is a family-owned business that prides itself on top level

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What is on your current agenda as NAPMW president? We just finished our APEX Leadership Conference in New Orleans, and have the Mortgage Star Conference coming in November in Park City, Utah. Both conferences are geared to encouraging and developing leadership opportunities for women, while providing insight and tips of the trade to help women succeed. We also have our annual educational conference in April.

service to customers and employees. But the company is also something of an anomaly in the mortgage business … it has never laid anyone off. I cannot say we never fired anyone without cause, but we’ve always taken good care of our employees. The challenge in being in this growth stage, however, involves finding talent. This can be hard, due to the nature of the business. We just hired our first set of Millennials with no mortgage experience, and we developed an in-house training program that focuses on hiring young smart individuals.

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REMN Wholesale

255-239-7948 www.lendtheway.com

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Assurance Financial has built a great reputation for closing loans on time. Our operations team is committed to helping our branch managers and loan officers succeed. We have immediate openings throughout the South. Join us, and experience what a huge difference our support can make to your success!

Although REMN Wholesale is part of a large corporation, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential. As a national company, REMN provides many opportunities for employment from coast to coast.

Geneva Financial, LLC.

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Geneva Financial, LLC. views our employees as our most valuable clients; and treats them as such. We pay nearly twice the national average (2.5% comp plan average), with lower rates to the borrower and great service.

Voted the #1 place to work in Metro Detroit, UWM is looking for A players to join our talented team. Our business is driven by our culture, and our people are our greatest asset. If you’re looking for the opportunity of a lifetime, apply to UWM today!

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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

calendar of events OCTOBER 2016 Friday-Saturday, October 14-15 The Arizona Mortgage Expo 2016 Wild Horse Pass Casino & Resort 5040 Wild Horse Pass Boulevard Chandler, Ariz. For more information, call (860) 719-1991 or e-mail Info@AgilityResourcesGroup.com .

Tuesday-Thursday, November 15-17 MBA’s Accounting and Financial Management Conference 2016 Manchester Grand Hyatt 1 Marketplace San Diego For more information, call (800) 793-6222 or visit MBA.org.

Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street Boston, Mass. For more information, call (800) 793-6222 or visit MBA.org.

Wednesday-Thursday, November 16-17 Mortgage Star Conference 2016 Canyons Resort 4000 Canyons Resort Drive Park City, Utah For more information, call (860) 922-3441 or visit Mortgage-Star.net.

Monday-Wednesday, November 14-16 National Reverse Mortgage Lenders Association 2016 Annual Meeting & Expo The Swissotel Chicago 323 East Upper Wacker Drive Chicago For more information, call (202) 939-1784 or visit NRMLAOnline.org.

Friday, November 18 Utah Mortgage Expo 2016 Zermatt Resort & Spa 784 Resort Drive Midway, Utah For more information, call (860) 719-1991 or visit UAMPExpo.com.

2016

Tuesday, December 6 California 2016 Holiday Networking Party Atrium Hotel 18700 MacArthur Boulevard Irvine, Calif. For more information, call (860) 922-3441 or e-mail BeverlyB@NMPMediaCorp.com.

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Thursday, December 8 Florida 2016 Holiday Networking Party DoubleTree by Hilton Hotel Sunrise-Sawgrass Mills 13400 West Sunrise Boulevard Sunrise, Fla. For more information, call (860) 922-3441 or e-mail BeverlyB@NMPMediaCorp.com.

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Thursday, December 15 New York 2016 Holiday Networking Party Long Island Marriott 101 James Doolittle Boulevard Uniondale, N.Y. For more information, call (860) 922-3441 or e-mail BeverlyB@NMPMediaCorp.com.

Thursday-Saturday, March 16-18 NAMB East 2017 Omni Atlanta Hotel at CNN Center 100 CNN Center NW Atlanta, Ga. For more information, visit NAMB.org. MAY 2017 Tuesday-Thursday, May 2-4 2017 Great River MBA Conference The Peabody 149 Union Avenue Memphis, Tenn. For more information, call (901) 321-6702 or visit GreatRiverMBA.com. OCTOBER 2017 Friday-Sunday, October 13-15 NAMB National 2017 Rio Las Vegas 3700 West Flamingo Road Las Vegas For more information, visit NAMB.org. Sunday-Wednesday, October 22-25 Mortgage Bankers Association 2017 Annual Conference & Trade Show Colorado Convention Center 700 14th Street Denver For more information, visit MBA.org.

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. *Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

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n National Mortgage Professional Magazine n OCTOBER 2016

NOVEMBER 2016 Thursday, November 10 MBA’s Whole Loan Trading Workshop 2016 Hilton Phoenix Airport Hotel 2435 South 47th Street Phoenix, Ariz. For more information, call (800) 793-6222 or visit MBA.org.

Wednesday-Thursday, November 16-17 MBA’s Summit on Diversity and Inclusion 2016 Capital Hilton 1001 16th Street NW Washington, D.C. For more information, call (800) 793-6222 or visit MBA.org.

HOLIDAY NETWORKING PARTY

MARCH 2017 Thursday, March 2 FAMP Broward Chapter’s 2017 Annual Trade Show and Masquerade Ball Bonaventure Hotel & Conference Center 250 Racquet Club Road Weston, Fla. For more information, call (954) 986-0808 or visit BrowardFAMP.com.

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Monday-Thursday, October 24-27 8th Annual Conference of Mortgage Brokers and Professionals Harrah’s Convention Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-1619 or visit MBANJ.com.

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BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com

Direct Private Money and Bridge Lender specializing in Stated Loans in CA 866-668-2663 Send Scenarios to info@CalHardMoney.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

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/CORRESPONDENT LENDERS

WHOLESALE LENDERS

Contac t: info@afr wholesale.com

888.664.2101

TagQuest www.tagquest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.

AFR Wholesale ranked #1 with the most Sponsor Originated FHA 203(k) closed loans.*

CLOSE MORE LOANS WITH:

FREE PROCESSING - NO LENDER FEES ** •Conventional •USDA •Manufac tured Housing •One -Time Close Construc tion •Freddie Mac Open Access and Fannie Mae DURP •VA and FHA, FHA 203(k) and 203(h) Rehab loans •Jumbo loans up to $2,000.000 – Ask about our Stated Jumbo Lender NMLS:2826 - 9 Sylvan Way, Parsippany - NJ, 07054 - *See website for details: www.afrwholesale.com This is not an adver tisement ex tended to the consumer as defined by Sec tion 226.2 of Regulation Z. Equal Housing Lender. Equal Opportunity Employer. **No Lender fees by AFR. Third party fees may apply. AB120313

PRIVATE FINANCING

WHOLESALE LENDERS

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

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

n National Mortgage Professional Magazine n OCTOBER 2016

PUBLICATIONS

NationalMortgageProfessional.com

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

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www.BrokersComplianceGroup.com

Looking for f more? Expand your business busineess with more non-prime non prime mortgagee oppor opportunities.

→ Visit www.angeloakms.com or call 855-539-4 4910 to learn more about Angel Oak Mortgage Solutions’ innovative products. cts.

© Angel Oak Mortgage Solutions LLC NMLS #1160240, Corporate office, 3060 Peachtree Road NW, Suite 500B, Atlanta, GA 30305. 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 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 not discriminate against individuals on the basis of race, gender, color, religion, national origin, age, disability, veteran status or other classification protected by law. 4-14-16 MBC