February 2017 Issue by HousingWire

HOUSINGWIRE MAGAZINE ❱ FEBRUARY 2017

SERVICING UNDER TRUMP What mortgage servicers should expect for the next four years.

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POWER PLAYERS: SERVICE PROVIDERS HOUSINGWIRE MAGAZINE ❱ FEBRUARY 2017

Nine companies transforming mortgage servicing.

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MORTGAGE

SERVICING

BOOM

SERVICING IS PRIMED TO TAKE OFF IN 2017, SPURRING BANKS TO JUMP BACK INTO THE BUSINESS

HOUSINGWIRE FEBRUARY 2017 EDITORIAL EDITOR-IN-CHIEF Jacob Gaffney MAGAZINE EDITOR Sarah Wheeler SENIOR FINANCIAL REPORTER Ben Lane DIGITAL REPORTER Brena Swanson REPORTER Kelsey Ramirez CONTRIBUTORS Casey Cunningham, Andy Pollock, Nicolas Retsinas EDITORIAL ASSISTANT Caroline Basile

CREATIVE CREATIVE ASSOCIATE Chantae Arrington

SALES AND MARKETING NATIONAL SALES DIRECTOR Jennifer Watson Laws jlaws@HousingWire.com MARKETING DIRECTOR C. Scott Smith SALES DIRECTORS Christi Lingard clingard@HousingWire.com David Wilson dwilson@HousingWire.com AD OPERATIONS MANAGER Kristy Figueroa

CHANGE IS AFOOT A NEW YEAR presents a fresh start, and at HousingWire Magazine we are excited to announce some significant changes that we hope will make our layout and content even more engaging for you, our readers. First, we have consolidated our table of contents for each section into one longer section at the front of the magazine. We’ve also upped the point size to a readable 9 points. And we’re featuring more people and companies than ever before, in sections like Take 5, which lets industry leaders tell us about themselves in the answers to five questions, and Sounding Board, a roundup of quotes from notables across the industry. One of the most profound changes we’ve made reflects a philosophical shift on our part. In past magazines, our Law & Order section featured stories from HousingWire.com about various lawsuits and the misdeeds of people connected to housing. While we will still cover those stories on HousingWire.com, we wanted to use the print magazine to memorialize the good that people and companies in mortgage finance are accomplishing. To that end, we’ve introduced a new section, Kudos, that celebrates the positive contributions of those in our industry. Let us know about your company’s good deeds by emailing editorial@ housingwire.com and putting “Kudos” in the subject line. We look forward to reading and showcasing these inspiring stories in future issues. Finally, we continue to cover the very significant changes that come with a new president. In this issue we specifically look at what a Trump presidency means for servicing regulations, starting on page 44.

CORPORATE PRESIDENT AND CEO Clayton Collins CONTROLLER Kimberly Hudson OFFICE ADMINISTRATOR Stephanny Morales

Subscriptions are available for $149.00 for one year. A subscription includes the print magazine and online access to the digital magazine. Canada and foreign are only eligible to purchase the “Digital Only” subscription plan at $149 for one year. For subscription orders, call 1-800-869-6882 or email HW@kmpsgroup.com. Postmaster: Send change of address to HW Media, P.O. Box 47627, Plymouth, MN 55447. Subscribers: Please send last magazine label along with change of address requests. The information contained within should not be construed as a recommendation for any course of action regarding legal, financial or accounting matters. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. HW Media does not guarantee the accuracy of information provided, and is not liable for any damages, losses or other detriment that may result from the use of these materials. © 2017 by HW Media, LLC • All rights reserved

Sarah Wheeler Editor @swheelerHW

TWEETS FROM THE STREET “Liars are known to prefer third-person pronouns...Honest individuals are more likely to use profanity.” Frank Luntz @FrankLuntz HOUSINGWIRE ❱ FEBRUARY 2017 7

CONTENTS

FEATURE MORTGAGE SERVICING BOOM

44 FEATURE

SERVICING UNDER TRUMP With Trump in the Oval Office, regulatory reform is a certainty. So what changes should mortgage servicers expect regarding oversight and enforcement in the next four years? By Sarah Wheeler

After a 10-year exodus out of the mortgage servicing business, financial institutions are starting to reverse course. Rising interest rates and the prospect of looser regulations under President Trump make servicing a smart play again, providing companies with an alternative as refinances dry up. By Sarah Wheeler

50 FEATURE POWER PLAYERS: SERVICE PROVIDERS We profile nine companies that are bringing their A game to mortgage servicing. HOUSINGWIRE â?ą FEBRUARY 2017 9

CONTENTS

14 THE LINEUP

14 PEOPLE MOVERS Inlanta Mortgage hires Chad Gomoll as the new senior vice president of business development.

16 EVENT CALENDAR

Roger Staubach will speak at the MBA’s National Mortgage Servicing Conference & Expo in Grapevine, Texas.

17 ON THE SHELF Michael Lewis has a new book out about two scientists who and revolutionized Big Data studies.

18 HOT SEAT

Michael Danlag of Sutherland Mortgage Services discusses process transformation and how it bolsters innovation.

20 DISPATCH Discover how servicers can reduce the risk of default properties and why servicers should be focused on recruiting Hispanics.

25 HOT OR NOT Airbnb gains ground with a new law that says cities, towns and counties can’t put restrictions on the rental service.

VIEWPOINTS 30 NON-QM LENDING

26 TECH INNOVATORS

Andy Pollock, chief revenue officer for Clayton Holdings, discusses creating an expanded environment where non-QM lending can once again become a viable option for loan originators.

Fannie Mae rolls out its Day 1 Certainty program to give lenders the ability to validate income, assets and employment.

32 THE RENTAL CRISIS

28 SOUNDING BOARD

Nicolas Retsinas, former Federal Housing commissioner, explores ways to help extremely low-income renters who pay over 50% of income for rent.

Industry insiders weigh in on Trump and what his presidency means for housing.

34 CUSTOMER SERVICE TRENDS

29 THE A-LIST

Casey Cunningham looks at the three trends driving borrowers to choose certain lenders. Spoiler: it’s not about the lowest rates.

Here’s where Millennials are buying the most houses.

TWEETS FROM THE STREET Senate panel overwhelmingly approves Trump’s choice of retired Gen. James Mattis to run the Pentagon. The Associated Press @AP

HOUSINGWIRE ❱ FEBRUARY 2017 11

62 BACK DEPARTMENTS 62 CFPB WATCH Ronald Rubin confirms the mortgage industry’s worst fears about what really happens inside the CFPB.

68 TAKE 5

Andrew Kernan, CEO of American Property Guard, opines on surfing, his last vacation, and what’s on his workout playlist.

69 INSIDE BASEBALL Are we seeing the end of plywood boarding? Two huge wins for clear boarding advocates spell the beginning of a new era in property preservation.

70 KUDOS Celebrate the milestones and good deeds of companies in the mortgage space.

72 KNOWLEDGE CENTER

eSignLive explains how E-Signatures help build a secure and compliant eMortgage foundation.

74 Q&A Catching up with Andy Higginbotham at Freddie Mac and Melinda Wilner at United Wholesale Mortgage.

76 COMPANIES/PEOPLE INDEX 77 AD INDEX 78 PARTING SHOT

HOUSINGWIRE ❱ FEBRUARY 2017 13

Chad Gomoll Inlanta Mortgage

14 HOUSINGWIRE ❱ FEBRUARY 2017

FENSKE

HART WITTE

BROWN LUGAT

T A R K E Y M O R T G A G E a nnounced three new branch managers: Jason Browning, Adam Hart and Ken Witte all joined Starkey as branch managers of Plano, Texas, Savannah, Georgia and Atlanta respectively. Browning brings over 18 years of experience in mortgage management to Starkey. Before joining Starkey, Browning served as vice president and area manager at The Oak Group with SWBC Mortgage. Hart brings 15 years of mortgage experience to the company. Previously, he served as vice president and regional sales manager at United Community Bank in Savannah. Witte brings 28 years of mortgage experience to the company. Most recently, Witte served as a sales manager at Element Funding. MetaSource announced it promoted Mary Kladde to senior vice president of mortgage services. Previously, Kladde was CEO of Titan Lenders Corp before it was acquired by MetaSource. Before co-founding Titan in 2007, Kladde spent over 15 years in the mortgage industry.

SMITH

ALLEN KLADDE

Inlanta Mortgage hired Chad Gomoll as its new SVP of business development. Previously, he worked for Genworth Mortgage Insurance and Franklin American Mortgage. He currently serves on the secondary committee for the Residential Board of Governors at the MBA.

The Mortgage Bankers Association announced Gene Lugat, PrimeLending executive vice president of the eastern division, national industry and political relations, as its new chairman of the Mortgage Action Alliance. Previously, he served as president of the Maryland Mortgage Bankers Association. Waterstone Mortgage promoted Lisa Fenske to senior vice president of marketing and communications. Fenske holds five years of experience working for Waterstone Mortgage, where she worked to develop the growth of the marketing department, which she managed for the past three years. Fenske brings a total of 20 years of experience to her new position. Woodforest National Bank, based in Charlotte, North Carolina, named Julie Dargani as its new senior vice president and middle market relationship manager. Dargani brings 17 years of finance experience to the bank. Her background includes work in corporate and equity sponsored transactions andcapital markets strategies. The Collingwood Group recently announced Meg Burns was promoted to

partner. Burns joined the firm two years ago as managing director. Before joining the company, Burns served as senior associate director for housing and regulatory policy at the Federal Housing Finance Agency. She also served as FHFA’s senior associate director for congressional affairs and communications. Burns previously held key positions with the Federal Housing Administration and the Department of Housing and Urban Development. Mercury Network recently announced Mike Brown as its new senior vice president of sales. With more than 10 years of experience, Brown brings experience assisting lenders and AMCs with vendor management and technology. Previously, he served with companies such as StreetLinks and RealEC. U.S. Bank announced Gunjan Kedia as its new vice chairman of its wealth management and securities services division. Kedia brings over 20 years of experience to the position including her most recent time as executive vice president at State Street. Before that she served as partner at McKinsey & Company and as an associate at PricewaterhouseCoopers. American Advisors Group, a provider of reverse mortgages, named Jesse Allen as its new senior vice president of national field sales.Previously, Allen was responsible for Bank of America’s reverse mortgage line of business. His most recent position was senior vice president of sales enablement. ComplianceEase recently promoted Dan Smith to its new senior vice president of sales. He joined the company in 2005 as its sales director, and has more than 20 years of industry experience. Before joining ComplianceEase, Smith worked as a lead product consultant at Fiserv.

EVENT CALENDAR

MBA’S NATIONAL MORTGAGE SERVICING CONFERENCE & EXPO FEB. 14-17, 2017 Host: Mortgage Bankers Association Location: Gaylord Texan, Grapevine, Texas Cost: $600-$2,500 On the agenda: Some of the featured speakers on the roster for this year’s event include Super Bowl MVP Roger Staubach, Federal Home Loan Bank of Dallas CEO Sanjay Bhasin, J.D. Power Director Craig Martin, JPMorgan executive director Erik Schmitt and many more. The conference includes sessions on preparing for servicing exams, improving customer experience and amendments to the servicing rule. Look for the Women in Mortgage Servicing Networking Reception near the end of the first day.

GRAPEVINE, TEXAS If sitting outside gazing at the amazing Texas skies isn’t enough for you during your visit, you may want to spice things up a little with a visit to the Glass Cactus Nightclub. This music bar and lounge, located inside the Gaylord Texan, features local bands, dancing, creative cocktails and club cuisine. And you can still enjoy that wide open Texas sky since the nightclub features an outdoor deck which overlooks Lake Grapevine. www.marriott.com/hotel-restaurants/dalgt-gaylord-texan-resort-and-convention-center/ glass-cactus-nightclub/5428937/home-page.mi

SFIG VEGAS 2017 FEB. 26-MARCH 1, 2017 Host: SFIG and IMN Location: Aria Resort & Casino Las Vegas, Nevada Cost: $0-$2,495 On the agenda: The conference this year features keynote speaker Gerardo “Jerry” Ascencio, broker-owner of San Fernando Realty and chairman of the National Association of Hispanic Real Estate Professionals. The agenda includes 101 sessions for beginners and deeper topics for industry veterans, including sessions such as Assessing the Scope of The Non-Performing Loan Market and the Role of Securitization.

LAS VEGAS Beatlemania is alive and well in Las Vegas, offering a virtual time machine for Beatles fans. You can choose from the Beatles Orchestra, which performs the band's greatest hits on Monday and Thursday nights at the Saxe Theater in Planet Hollywood, or go all out and see the Beatles Love musical performed by Cirque du Soleil at the Mirage. The three-time Grammy Award winning musical, described as a rock 'n' roll poem, has been revamped with new acts, costumes and choreography for a more engaging experience. www.beatleshowvegas.com/ www.cirquedusoleil.com/beatles-love 16 HOUSINGWIRE ❱ FEBRUARY 2017

ON THE SHELF Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons and World-Class Performers TIM FERRISS HOUGHTON MIFFLIN HARCOURT

The author of the 4-Hour Workweek distills the interviews heâ&#x20AC;&#x2122;s done with the super successful on his podcast into lessons for his newest book. Ferriss has interviewed everyone from actors to athletes to special operations commanders in order to glean insights and life lessons of the super successful. Find out what the 1% do in the first 60 minutes of their day, and what they find to be the biggest wasters of their time. Ferriss chose the tools in the book with an eye to actionable details. "If I can't test something and replicate results in the messy reality of everyday life, I'm not interested," Ferriss writes in his intro.

The Undoing Project: A Friendship that Changed our Minds MICHAEL LEWIS W.W. NORTON & COMPANY

Michael Lewis, known for breaking down arcane subjects into enjoyable reading in books such as The Big Short, Flash Boys and Liarâ&#x20AC;&#x2122;s Poker, examines the unlikely friendship between two very different scientists who created the field of behavioral economics and revolutionized Big Data studies. Amos Tversky and Daniel Kahneman, who wrote Thinking Fast and Slow, were opposites who found magic in their collaboration. The title reflects the way they have influenced and changed how we all think about decision making.

HOTSEAT

SPONSORED CONTENT

Michael Danlag Global Service Delivery Head of Mortgage Servicing

Sutherland Mortgage Services

rocess transformation continues to be a trending topic in the mortgage industry as companies look to improve their overall performance. We sat down with Michael Danlag, global service delivery head for Sutherland Mortgage Services, to define process transformation and discuss how it can bolster service and innovation for mortgage lenders. HOUSINGWIRE: What does “process transformation” mean in the mortgage industry? MICHAEL DANLAG: Process transformation is the improvement of technology, speed, and effectiveness of executing critical back-office functions for mortgage lenders. Process transformation requires a balance between automated processes and those handled by mortgage professionals. A partner with the proper onshore and offshore mortgage experience will structure the framework for maximum efficiency in accordance with the lender’s specific needs. Sutherland is at the forefront of leading the process transformation revolution. Our teams are advancing our solutions by leveraging digital applications, machine learning, analytics, robotics, and automation to support the full lifecycle of a loan.

Q&A

HW: What are some of the most important areas that should be improved through process transformation? MD: First, it is paramount to ensure little to no disruption to the end consumer when loans shift lenders. When this occurs, consumers often fear their new lender may not have the necessary information to properly service their loan. We combat this by auditing the lender handoff process for our clients, mining data holistically before and after transfers to ensure no data is lost. Another area to consider is portfolio retention. With advanced analytics, we can identify at-risk customers 18 HOUSINGWIRE ❱ FEBRUARY 2017

who have shopped for new rates and others who qualify for a lower interest rate. Sutherland then handles the end-to-end refinance process with outbound calls, processing, underwriting, and closing for customers. Lenders can then expect a higher rate of customer retention, satisfaction, and increased lifetime value across their entire portfolio. HW: How does working with a process transformation partner like Sutherland improve overall performance for your mortgage industry clients? MD: We are mortgage bankers serving mortgage bankers. Our solutions are customized to fit our clients’ needs versus a one-size-fits-all approach. Whether lenders require a full end-to-end or component model, we deliver onshore, offshore or dual-shore to meet their requirements. Lenders can shine in the eyes of customers by leveraging design thinking to develop a delivery model that keeps loans in motion overnight between skilled resources onshore and offshore. Sutherland also continually enhances our portfolio of solutions across multiple industries including information technology, telecommunications, insurance, and more. When innovation occurs for one vertical, we determine how it applies to the mortgage space. HW: How do you provide high-level service as you take on clients’ critical day-to-day functions? MD: Sutherland delivers outstanding service to our clients by configuring customized solutions for our clients. We follow a solution delivery process that includes steps such as discover, design, develop, and deliver. This enables Sutherland to understand the desired solution, test prototypes, architect the solution, and bring it to market for the client. Our client and solutions team agree upon the end solution upfront, allowing us to instill client confidence in the proposed solution before implementation. We also establish an effective governance structure to ensure the proper stewardship and fiduciary responsibility for each client engagement. Our team reviews key performance indicators, discusses process improvements, and consistently works with each client to ensure their needs are exceeded on a regular basis.

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Ways servicers can reduce financial risk of default properties

Aspen Grove Solutions: Consolidating multiple systems improves overall vendor management

he number of houses in foreclosure continues to drop across the country, but dealing with properties in default is an ongoing challenge for servicers. The sheer volume of properties during the crisis drove servicers into creating and using multiple systems to manage the process. Unfortunately, this makes the job of managing the property much more difficult, as creating a transparent, easy-tofollow audit trail is very difficult when data is housed in different systems. With increased scrutiny from investors and regulators, servicers have to be proactive about managing their default properties in a way that also manages their risk. Ron Briggs, senior vice president of business development at Aspen Grove Solutions, outlined four areas servicers should focus on as they look to not only gain efficiencies in vendor management, but also significantly reduce their financial risk: 1. Consolidate data and workflows A web-based, fit-for-purpose, enterprise property management platform offering multiple workflows is crucial to solve the inefficiency of using multiple systems to house data. Aspen iProperty is easy to use and quick to implement. The platform provides a workflow management system encompassing inspections, property preservation and maintenance, repairs, HUD conveyance and claims without conveyance of title (CWCOT), thus allowing teams to remain in one system as they manage the different aspects of properties in default. Servicers can issue work orders through Aspen Grove’s vendor portal, which pushes out to mobile devices so that data and information flows into the management platform directly from the field. Data is continuously fed into the Loan Servicing platform, keeping the loan system of record seamlessly up to date. 2. Gain transparency into vendor management Through a platform like Aspen iProperty, servicers can see the progress of the vendor throughout the process. Servicers can issue a work order, track when it was accepted, see when vendors have signed in at a property, and review before and after photos of the vendors’ work. Furthermore, they can view reports across the property portfolio that aggregate data in any way they want. 20 HOUSINGWIRE ❱ FEBRUARY 2017

3. Require quick integration to limit disruption Servicers who want to implement a new system are rightly concerned about the disruption that could mean for their operations. To limit any effect on current work, servicers should look for an experienced team that has dedicated resources for integration and migration. Aspen Grove Solutions provides a full integration team that is solely focused on quick, thorough integration using APIs for third-party integrations. The team can integrate its platform with multiple systems, including clients’ current proprietary systems and legacy servicing platforms for increased efficiency. 4. Make the most of the slowdown in default and foreclosures The level of default inventory rises and falls in cycles, and the best time to invest in processes and systems is in the midst of a down cycle. But servicers don’t have to wait years to see other benefits from implementing changes now. The foreclosure crisis put the entire industry under a regulatory microscope, which means that even with a smaller inventory of properties in default, servicers now face greater compliance risk. “The financial risk to servicers for not adhering to investor or insurer guidelines is huge, because the seller/servicer can incur curtailments on claims, repurchase demands from GSEs and reconveyance from HUD, if they don’t follow the guidelines,” Briggs said.

How technology can reduce mortgage loan turn times Kofax: Reduce the time from application to closing with the right tools

THE RIGHT PEOPLE When it comes to the mortgage loan process, time is everything. A key measurement of mortgage loan processing efficiency is the time required to move a mortgage loan package from application submission to the closing table. When they went into effect in 2015, the TILA-RESPA Integrated Disclosure (TRID) regulations called for new timelines for the creation and release of the Loan Estimate (LE) and Closing Disclosures (CDs). In turn, this has prompted mortgage lending companies to look for opportunities to improve loan processing timeframes by leveraging technology. The move to a more heavily focused purchase loan market has imposed pressure to meet the changing demands of the market place. Borrowers and real estate professionals expect to set more accurate target closing dates and mortgage lending companies must be able to consistently meet these target close dates. The Ellie Mae, Inc. Originations Insight Report for April 2016 reported an average of 44 days “time to close” for all loans and 45 days “time to close” for purchase transactions. As the market continues to move to a purchase loan focus, the pressure that mortgage lending companies feel is squarely on the time needed to close a loan. The purchase-focused market will also require mortgage companies to reduce their “time to close” to the range of 30 to 35 days – which may seem a daunting task to some. To achieve these significant reductions in processing times, mortgage companies should look at internal processes and workflows, as well as technology solutions, that can assist in 22 HOUSINGWIRE ❱ FEBRUARY 2017

eliminating days and potentially weeks of processing time. Both existing and emerging technology solutions will be significant for reducing the time required to complete individual mortgage processing tasks. Some new technology solutions have entered the market in response to TRID, and others have been around for some time. Mortgage lending companies must be able to adapt to these new technology solutions and – in some cases – develop their own customized solutions. SETTING AND MEASURING TASK AND MILESTONE STANDARDS Prior to implementing any new technology opportunities, the first step mortgage lending companies should take is setting standards for moving the loan from milestone to milestone, and then measure against expected dates determined by their standard processing times or goals. Loan Origination Systems (LOS) have historically been adept at reporting completed milestone events and looking in the rearview mirror. When every day in the loan process is critical, the focus needs to be on the planned activities; for instance: what is critical today, what tasks are behind schedule, and where should resources be focused. Loan schedules can be driven by three key dates: loan application date, CD due date, and scheduled closing date. All other milestones and tasks can be determined using standard processing times that are calculated based on these key dates. Creating and communicating a schedule or loan calendar for each loan allows the entire organization – as well as the bor-

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rower, real estate professionals, and other interested parties – to understand the tasks that are required to achieve the target close date. While the calendar could be configured within the LOS, this is something that will likely need to be custom-developed and integrated to pull real-time data from the LOS using the APIs provided by the LOS. REPORTING ON STATUS AND ALERTING TO EXCEPTIONS Once the schedule or loan calendar is established, exception conditions and alerts regarding at-risk activities need to be communicated and acted on immediately. Information can be shared via daily reports on key activity and other immediate tasks requiring completion. During the course of the day, urgent alerts can also be generated when activities are in danger of falling behind schedule. The loan calendar is also one component of measuring the performance of those assigned to specific tasks throughout the loan process. While quality is an imperative factor and a key measure of performance, thorough and timely completion of assigned tasks is also critical to achieve on-time closings. TRANSPARENCY AND CONSTANT ACCESS TO INFORMATION Another important factor of efficiency during the loan process, as it relates to technology, is that the loan originator and other team members who are supporting the loan application must have access to the loan data at all times throughout the day. Likewise, borrowers and real estate professionals expect that they will be able to access loan schedule status and achievement of key tasks at all times throughout the loan process. This requires that information be accessible from mobile devices to meet the standard expectation that has been established in a mobile-friendly society. Modern systems are built using adaptive technology, meaning any data from web based applications can be accessed and presented on any device, including PCs, tablets or mobile phones. Consumers who are accustomed to tracking order and delivery schedules for any item they purchase online have the expectation that they should also be able to instantly access information for one of the largest financial transactions of their lifetimes. As a result, mortgage lending companies must provide transparency regarding the loan status throughout the life of the loan to all interested parties, including the borrower, buyer and seller real estate professionals, attorney, closing agent, etc. The information systems within mortgage lending companies need to be constructed with this viewpoint; with the appropriate security restrictions and controls in place, data needs to be accessible via the web and mobile devices to all interested parties. BORROWER DOCUMENT COLLECTION Every day in the loan processing cycle has equal value – whether at the beginning of the process or as the CD is issued and closing documents are finalized. At times, tasks are delayed early in the process because borrowers are searching for the documents required to support their application. This is an area where tech-

nology can also assist and eliminate or reduce the unproductive waiting period for documents to be submitted. The current generation of document management solutions allow the borrower to: • Capture documents using mobile image capture features of cell phones • Submit documents to a secure portal • Allow mortgage companies to request documents immediately through the same portal as part of the application process • Eliminate need for paper documents by accessing data directly from appropriate data sources- bank accounts, investment accounts, payroll processing systems, tax return data, etc. In addition, these document management solutions: • Allow the information systems to perform intelligent character recognition and “lift” data off the submitted forms to populate the loan application and perform quality inspection of the documents and react immediately to exception conditions • Provide a consistent borrower portal for requesting trailing documents and to provide loan status alerts • Optimize the process for mortgage lending companies to chase down documents from the borrower • Help avoid delays caused when incorrect or incomplete documents were submitted • Automate many existing mortgage loan processes ESIGN, EDOCUMENTS, ECLOSING, AND NEXT STEPS From eSign consent to electronic alerts to electronic submission of documents and eClosing, there are many existing and emerging technologies solutions that can reduce processing times and improve “application to close” schedules. The only question remaining is: which solutions are right for your mortgage lending company and the goals that you hope to achieve? Evaluation of your company’s priorities is the first step to answering this question. One viable solution is the Kofax Lighthouse Account Program, which offers industry leaders the chance to help shape the requirements of new smart process applications for the business critical First Mile of customer interactions. Participation in this program helped to provide input into the development of Kofax Mortgage Agility, a solution designed to radically transform and simplify the mortgage application process. Kofax Mortgage Agility combines a robust set of multichannel capture, business process management, mobile, analytics and data integration capabilities on a single platform. It’s designed to provide a less frustrating and more convenient customer experience for applicants. It allows mortgage lending companies to achieve their final goal: completing the loan process in a timely, efficient manner so closings can occur on their scheduled dates. Careful selection and effective usage of technological solutions are necessary to stay competitive and to achieve borrower expectations. Contrary to a popular misconception, these technology solutions don’t eliminate personalization or reduce rapport for loan professionals who are working with their borrowers, but instead improve and streamline the communication process. HOUSINGWIRE ❱ FEBRUARY 2017 23

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Why servicers should be focused on recruiting Hispanics The advantages of hiring a diverse workforce

s the United States undergoes a seismic demographic shift to a younger, more ethnically diverse population, mortgage lenders and servicers who want to grow the scope and quality of their business need to reflect that diversity in their workforce. The U.S. Hispanic population reached 57 million in 2015, according to the Pew Research Center, and the newest generation of homebuyers — Millennials — are the most racially diverse population in our history, with 43% of adults born after 1980 listed as non-white. By 2024, more than a third of new households being created will be Hispanic, according to the Mortgage Bankers Association. But Deborah Garcia-Gratacos, founder and president of Deval LLC, which specializes in subservicing for residential real estate assets, said even those stats don’t capture the scope of the opportunity for lenders and servicers. “The influence that Hispanics have on housing is even bigger than that number suggests, since they accounted for 69% of the total net growth in homeownership in 2015,” Garcia-Gratacos said. “This is the future for our industry, and those who can understand and serve this market are going to reap the biggest benefits.” Effectively serving Hispanics — whether through lending or servicing — starts with hiring and retaining minority talent. A recent study by Forbes found that a diverse and inclusive workforce can “ensure that a company’s products and services are respectful of their clients’ cultures.” This is especially important for those companies involved in helping clients buy and remain in their homes. “Culturally, servicers often don’t understand the multi-generational aspect of Hispanic households, which differs from the typical non-Hispanic household,” Garcia-Gratacos said. “There may be multiple points of view and multiple decision makers, so a more involved approach is called for.” Hispanic employees can assist companies as they develop operations that take these cultural considerations into account, and help navigate the potential barriers these clients face, especially as it relates to communication. “Unfortunately, a majority of the documentation in our industry that gets sent to borrowers is in English, which is likely to get discarded if someone’s dominant language is Spanish,” GarciaGratacos said. “In addition, when borrowers have questions about their loan, they often have no one to call who speaks Spanish. These are significant areas that could devastate Hispanic homeownership, because borrowers will not know if and when terms change, or what remediation is available.” Fannie Mae echoed these concerns in early 2016 in a story on 24 HOUSINGWIRE ❱ FEBRUARY 2017

its site, quoting Zach Oppenheimer, senior vice president and head of customer engagement at Fannie Mae. “The lenders that are best at serving diverse markets have multilingual staff and collateral materials that allow them to reach borrowers in their native language, whether it’s Spanish, Russian, or Mandarin,” Oppenheimer said. What are the keys to recruiting and retaining Hispanics? GarciaGratacos outlined three essentials: • Management buy-in: There has to be a commitment from the top that is visible throughout the company and its operations that this is a priority. • Partnerships with Hispanic professional organizations: Networking with these groups can help companies present employment opportunities identify potential opportunities as well as offer scholarships, internships and fellowships for some of the best and brightest while they are still students. • A mentorship program: Pairing up new employees with more senior players they can identify with helps illustrate the growth potential within a company. Hiring Hispanic employees should be just one critical aspect of serving Hispanic clients, Garcia-Gratacos said. To be effective, companies need a comprehensive strategy, not just a scattershot effort at diversity. “It’s not just a matter of having communications here or there that can be transcribed into Spanish. It is a full-on effort to provide bilingual single-points of contact for the Hispanic book of business,” she said. Online tools need to be converted as well, which means providing a Spanish website portal, as well as FAQs addressing hardships, with step-by-step action points fully translated in Spanish. “Servicers also need to be equipped with a complete library of documentation covering all of the alternatives available under loss mitigation,” Garcia-Gratacos said. The development of such an extensive program to serve Hispanics is beyond the scope of many lenders and servicers, and many would rather outsource these functions to subservicers like Deval, Garcia-Gratacos said. Deval was built specifically to serve the underserved Hispanic homeowner, employing a team of skilled bilingual underwriters, quality control, customer service and loss mitigation personnel. The company provides clients with real estate, financial, accounting and management consulting expertise, including due diligence, debt collection, and loan servicing and asset management. “We also maintain a complete catalogue of documents fully translated into Spanish to run parallel with the current version of English legal documents,” Garcia-Gratacos said.

Hot SIZZLE? Not FIZZLE? 1 1 WHY THE

WHY THE

THE CFPB'S FUTURE

As President Donald Trump moves into the Oval Office, the fate of Dodd-Frank and the Consumer Financial Protection Bureau could hang in the balance. Of particular interest has been the future of CFPB Director Richard Cordray. In fact, Democrats in Congress are banding together to make sure he won’t be prematurely unseated amid strengthening calls from Republicans to have the director fired. Congressional Democrats made public statements to defend and support Cordray’s full five-year term at the CFPB, which ends July 2018.



REDLINING



HOME AFFORDABILITY The FHA reversed course in January and announced plans to cut its annual mortgage insurance premiums, less than two months after saying it was not planning further cuts. Most new mortgages with a closing or disbursement date after Jan. 27, 2017, will see a 25 basis point cut to annual mortgage premiums. The FHA said the cut will lower the cost of housing and significantly expand mortgage credit availability. "Every time we cut the cost of mortgage insurance it means more borrowers meet the debt-to-income ratio required to purchase a home,” NAR President William Brown said.

REALTOR HORROR STORIES

At first glance, it’s a simple question: What’s the most disturbing history you’ve learned about a house you were selling? But what started out as a question on share-site Reddit spiraled into long, unsettling responses from tons of users, generating more than 5,000 responses in only 48 hours. One of the most horrible? Liquified bodies found on the carpet which, instead of being replaced, was only steam-cleaned before being sold. The real estate business is not for the faint of heart.

HUD is charging Bank of America and two employees with discriminating against Hispanic mortgage borrowers. The charges stem from a complaint filed by the National Fair Housing Alliance, which conducted a series of “secret shopper” tests where Hispanic and non-Hispanic individuals attempted to get a mortgage from a BofA branch in Charleston, South Carolina. NFHA claimed the bank failed to provide the Hispanic borrowers with information about loan products or offered them loans with less attractive terms than non-Hispanic borrowers.

HOUSING SENTIMENT

Consumers are less optimistic about housing for the fifth month in a row, according to Fannie Mae’s Home Purchase Sentiment Index. Despite overall consumer confidence that sits at the highest level since 2001, housing expectations fell short. After decreasing 0.5 percentage points in November, the HPSI decreased again in December to 80.7 points. “Despite the postelection bump in general consumer attitudes, a rapid rise in mortgage rate expectations has tamped down home purchase sentiment,” said Doug Duncan, Fannie Mae SVP and chief economist.

AIRBNB RESTRICTIONS

Airbnb restrictions are a thing of the past in Arizona, thanks to a new law that took effect on Jan. 1 which stipulates that cities, towns, and counties cannot put any restrictions on short-term rentals “simply because the property is not classified as a hotel.” There is not even a limit to the number of properties an investor can purchase or the number of days a home can be rented out. There has been pushback from some lawmakers who worry about the “house next door” turning into a “weekly rental property.”

HOUSINGWIRE ❱ FEBRUARY 2017 25

TECH INNOVATORS

SPONSORED CONTENT

Day 1 Certainty taps technology solutions to transform mortgage process Fannie Mae program empowers lending confidence The move toward digitization and a paperless mortgage process to create efficiencies, manage risk, reduce costs and improve the borrower experience has been under way in the mortgage industry for a while. Fannie Mae’s Day 1 Certainty, introduced at MBA Annual in October, is one of the latest efforts to push the technology envelope while managing risk for lenders, adding certainty to their process, and improving the mortgage experience for all parties. “We are seeing the mortgage industry move away from paper documentation and embrace automation to provide information more efficiently and cost-effectively,” said Leslie Arrington, vice president, third-party risk management, at Fannie Mae. One component of Day 1 Certainty is helping lenders validate income, assets, and employment electronically in Fannie Mae’s automated underwriting system, Desktop Underwriter (DU). Validation is performed through designated vendors and provides relief from representations and warranties on validated loan components, addressing risk up front in the lending process. This change allows mortgage originators to lend with confidence. Day 1 Certainty’s other components include enhanced property inspection waivers (PIWs) on certain refinances with rep-and-warrant relief on property value, condition, and marketability. Day 1 Certainty also provides freedom from reps and warrants on property value via Collateral Underwriter (CU) when the CU score on the appraisal is 2.5 or lower. CU is a free appraisal risk assessment application from Fannie Mae.

LEVERAGING INNOVATION “Fannie Mae is leveraging all of that great innovative work from mortgage industry vendors to facilitate Day 1 Certainty, granting lenders representations and warranties 26 HOUSINGWIRE ❱ FEBRUARY 2017

our lenders also currently work with vendors that have agreements in place with the vendors integrated into our platform, so lenders can access Day 1 Certainty in this way, which also expands choice for our customers.”

VENDOR SELECTION PROCESS

relief on the front end,” Arrington said. “Our goal is to continue identifying and on-boarding vendors who provide a service that is valuable to our customers,” she said. “We are interested in increasing the options and have established a structured process to allow vendor participation while managing risk.” Fannie Mae introduced Day 1 Certainty with FormFree’s AccountChek as the first designated vendor to manage asset verification through DU. Equifax was selected as a designated vendor to provide employment and income verification (through its The Work Number service) and IRS tax transcript fulfillment. The use of electronic validation eliminates the need for borrowers (and lenders) to gather paper documents such as paystubs, W-2s, or bank statements. Fannie Mae will be vetting additional vendors, Arrington said. It seeks vendors that specialize in electronically validating income, assets, or employment, especially those already serving Fannie Mae’s lender base. “We want to expand choice for our lenders and are seeking to add vendors to provide more options,” she said. “Many of

Fannie Mae is working to make the onboarding of new vendors efficient while at the same time doing thorough due diligence on each to make sure the vendors have the right processes in place for risk management. “We are trying to strike a balance between being efficient in getting as many vendors engaged as appropriate while ensuring they have the right structures and processes in place from a risk management perspective,” Arrington said. Fannie Mae has established a process for vendors that want to participate in Day 1 Certainty. Once interest is expressed, Fannie Mae will follow up with more information on the vetting process. “We put this into place so vendors that are interested in Day 1 Certainty can learn more about the process and how to work with us,” she said.

LEADING THE INDUSTRY “To date, the speed, efficiency, and freedom from reps and warrants the program offers have been popular with lenders that are looking for ways to grow their businesses in a competitive and robust housing market,” Arrington said. “We believe automated verification is an idea whose time has certainly arrived, not just because it promotes efficiency and cost savings, but because it reduces human error in the verification process,” she added. Visit www.fanniemae.com/singlefamily/ day-1-certainty for more information.

Where experts and pundits sound off on a key industry issue

ON THE TOPIC OF TRUMP “Donald Trump ran a campaign on anti-Wall Street rhetoric, but appointing a former hedge fund manager, Goldman Sachs executive, and bank CEO as Treasury Secretary shows his true colors. Mr. Mnuchin is a Wall Street insider with ties to big banks that have a troubling past of putting profits

“This is very much a step into the unknown because we simply can't know what type of President Trump will be. Will he be the demagogue from the campaign trail, who threatened to lock up his political opponents, punish the media, build border walls and start a global trade war? Or is he capable of becoming a statesmanlike figure who leads in a more measured manner?” —Paul Ashworth, Chief Economist, Capital Economics

“The world is heading into a profound (and longer term) geopolitical recession. A Trump presidency means the most significant hit to American power and leadership globally than any other event since the collapse of the Soviet Union.”

“Perhaps most uncertain about a Trump presidency is what will happen to housing markets because of policy change. Trump hasn’t much discussed housing policy during his campaign, but he has hinted to ‘Make America Great Again’ by boosting the homeownership rate through demand-side policies, such as financial deregulation, rather than through supply-side policies such as reducing local impediments to new supply.”

—Ian Bremmer, President of Eurasia Group

—Ralph McLaughlin, Chief Economist for Trulia

ahead of consumers and taxpayers.” — Rep. Maxine Waters, D-Calif.

28 HOUSINGWIRE ❱ FEBRUARY 2017

“Global markets were shaken earlier in the day after Trump swept to victory ahead of Hillary Clinton. This was expected as Trump was the outsider who represents uncertainty, which always creates volatility in the markets.” —Nigel Green, CEO of deVere Group

“It is critical that President Trump focus on three main areas – ensuring an adequate supply of affordable housing, bringing first time homebuyers back into the housing market and ensuring certainty in regulations.” —Scott Buchta, head of fixed income strategy at Brean Capital

“I will put aside our differences and I will work with him to accomplish that goal. I offer to work as hard as I can and to pull as many people as I can into this effort. If Trump is ready to go on rebuilding economic security for millions of Americans, so am I and so are a lot of other people — Democrats and Republicans.” —Sen. Elizabeth Warren, D-Mass.

CITIES WITH THE MOST MILLENNIAL HOMEBUYERS 2

1 SIOUX FALLS, SOUTH DAKOTA

ELK GROVE, CALIFORNIA

44.95%

60.76%

100

10 OMAHA, NEBRASKA

88.32 29.51%

9 ANCHORAGE, ALASKA

90.22 32.32%

99.73

Here are the Top 10 cities with the highest homeownership rate among Millennials: MILLENNIALS, 75 MILLION STRONG, are the clear future of the housing market, and some cities boast homeownership rates among Millennials that are much higher than the national average, according to the second annual study by SmartAsset, which used data from the U.S. Census Bureau’s 2015 survey. The study ranked the 200 largest U.S. cities according to the under-35 homeownership rate in 2015 and the change in the under-35 homeownership rate between 2006 and 2015. It then averaged those rankings, giving equal weighting to both factors and assigned a score based on the final average ranking. The city with the highest ranking received a score of 100 and the city with the lowest ranking received a score of 0. SCORE MILLENNIAL HOMEOWNERSHIP RATE

8 CHATTANOOGA, TENNESSEE

90.76 30.81%

FORT WAYNE, INDIANA

91.85 36.8%

3 BAKERSFIELD, CALIFORNIA

98.37 40.29%

4 ROSEVILLE, CALIFORNIA

98.1 41.2%

5 PEORIA, ILLINOIS

95.65 34.9%

6 CARY, NORTH CAROLINA

92.39 35.51%

HOUSINGWIRE ❱ FEBRUARY 2017 29

VIEWPOINTS

Andy Pollock Andy Pollock is chief revenue officer for Clayton Holdings, a wholly owned subsidiary of Radian Group Inc.

Non-QM lending Moving from story-telling underwriting to mainstream loan program

For the past couple of years, non-QM lending has been largely a private or hard money loan program for mortgage production. As we move into 2017, we’re seeing a lot of economic forces coming together to create an expanded environment where non-QM lending can once again become a viable option for loan originators. With interest rates ticking up, refinance volumes shrinking and total originations projected to drop nearly 30%, originators and investors are looking for ways to keep volume flowing. Non-QM may not be the full answer, but there are several factors that indicate there is both interest and opportunity — if it’s done right. Among these factors are “boomerang borrowers” who were impacted in the 2008-2010 period and went through foreclosure and/or bankruptcy. Many of these consumers have repaired their damaged FICOs, re-establishing their credit worthiness, and are now looking to re-enter the homeownership market. In addition, by most estimates, Millennials will comprise one in three homebuyers in 2017. While both groups were negatively impacted by the tight cred30 HOUSINGWIRE ❱ FEBRUARY 2017

it guidelines established in the wake of the housing recession, many now have good cash flow and/or savings and can qualify for lower LTV programs. Another factor creating opportunity in non-QM is increasing rates, which is predicted to spur an approximately 47% decrease in the refinance market in 2017. This will also cause originators to look at developing new lending policies, which will be shaped by the need to look at the credit window from both a traditional and evolutionary viewpoint for boomerang borrowers and Millennials. The opportunity to grow non-QM safely in a tighter regulatory environment will not only take credit, collateral, and capital, but also intent and integrity. Products are being revisited in today’s market for Alt-A and non-prime with a look

to the future — tempered by the lessons learned from the past. Portfolio managers and investors also have a vested interest in the expansion of the non-QM market. They have an appetite for non-QM assets as they represent an attractive yield opportunity. That’s why we’re seeing more “hold” strategies at work with current non-QM production. So how can the industry move toward growth in non-QM and at the same time promote an environment where non-agency securitization can expand? First, originators, warehouse lenders, servicers, rating agencies and investors need to be on the same page about creating a standardized method of determining if a non-QM asset is investment quality. This standardization to create a set of protocols in a consistent and systematic manner entails a fresh look at ATR (Ability to Repay), collateral review, underwriting, and closing/post-closing. With some of the ambiguity created by overlapping regulation, every one of these market participants needs confidence that by using standardized and recognized policies it will be able to grow the non-QM channel in a fully compliant manner while adhering to TRID. These “best practices” can assure market participants at each step in the mortgage cycle. Second, originators and their LOs need to create awareness of non-QM lending that targets both the boomerang and Millennial borrower. Educating the consumer and what options they have open to them besides traditional QM products and how to qualify will become a competitive edge. Our company has been in a unique position of facilitating the discussion around non-QM by conducting assessments of originators and loan-level review for investors and deal agents. We’ve also been very active in the discussion of how best to grow non-QM lending — and turn it into a featured or mainstream loan program.

VIEWPOINTS

By Nicolas Retsinas

America’s rental crisis How we could help extremely low-income tenants

Eighteen years. That is how long the city of Providence, Rhode Island’s waiting list for housing vouchers had been closed. This November the list opened. In less than a week, over 13,000 people signed up. The city gives out roughly 300 vouchers a year – leaving most of today’s list intact for another decade. Providence is not unique. Nationally, more than 53% of the voucher waiting lists are closed. Applicants typically wait at least three years. In a post-recession America, as we hope for an economic resurgence, a return of 32 HOUSINGWIRE ❱ FEBRUARY 2017

manufacturing jobs, and restoration of our crumbling infrastructure, we should know: the most dramatic recovery will not eliminate these waiting lists. In swathes of the country, desperate people will still queue.

They are queuing for a subsidy. A household with a low income can sign up for help: the renter will pay 30% of income toward the rent; the government will pay the rest, up to a “fair market” figure. Today three-quarters of households on waiting

Nicolas Retsinas, former Federal Housing commissioner, chairs the Providence (RI) Housing Authority and the Rhode Island Housing Finance Agency.

lists report “extremely low incomes” (up to 30% of area median income). (In Orwellian jargon, we tier the poor into low-income, moderately low-income, and extremely low-income.) Almost two-thirds of extremely low-income renters pay over 50% of income for rent. On the upper-income side, the percentage paid for housing is not crucial. A household netting $200,000 annually can pay half for housing, leaving enough

for food, health care, transportation, even private schools for children. On the lower end, try to pay half of $30,000 a year for housing: the rest will barely cover food, transportation, or emergency medical expenses. Indeed, when landlords evict tenants, the cause is often that they did not or could not pay the rent on time. The plight of desperation-renters — 10.5 million extremely low-income households — did not capture headlines in this long political campaign. The candidates did mention the homeless, who are visible, camping out beside bridges, highways, and city parks. Officials at all levels worry about them. They constitute a crisis. Officials do not worry so much about the desperation-renters. After all, those renters have a roof over their heads. The roof may be in a crime-ridden neighborhood, in a substandard building, near failing schools — but it is a roof. So our political discourse, and our will, move on to more pressing issues. The Terwilliger Foundation calls it the “The Silent Housing Crisis.” Yet these renters need help. We have no single-bullet solution. Higher wages would help, but only marginally. With two children, a couple, each earning the minimum wage, cannot afford a two-bedroom apartment in much of the country. (Indeed, in parts of the country, like Portland, Oregon, rents are so high that the “fair market rent” exceeds government limits; and renters cannot easily use vouchers). More housing would help: we don’t build much new housing for low- to middle-income renters. We ended the construction of public housing in the 1960s. Experts suggest we need an additional 7.2 million “affordable” rental units. A developer faces the same costs for land, labor and materials, whether building luxury or modest housing. To build the latter, he needs either a social conscience-spur (behind the nation’s nonprofit developers) or a governmental monetary spur, such as the low income housing tax credit. To some extent, any new rental housing — whatever the income level of renters — will help, in

Officials do not worry so much about the desperation-renters. After all, those renters have a roof over their heads. The roof may be in a crime-ridden neighborhood, in a substandard building, near failing schools, but it is a roof. that it will free up housing down the chain. Yet many communities fight “multi-family” apartments, erecting zoning barriers, as residents argue that those developments will destroy the “nature” of their communities. More housing vouchers would help. Currently more than 3 million households hold vouchers; but they reach only a quarter of the low-income population. The word “entitlement” is anathema to many politicians; yet the Bipartisan Housing Commission recommended making these vouchers available for all extremely low-income families. More jobs obviously would help. In parts of the Rust Belt, rents are affordable, vacancies high. Once jobs return, people can live comfortably. Yet for much of the country, jobs will not be a panacea. Some conservative legislators want to tie subsidies to work, adding time limits as a further incentive. We do it for welfare; we could do it for housing. Yet even if this policy-prod encouraged tenants’ entrepreneurial oomph, jobs won’t necessarily reduce the gap between income and rents. If tenants earn too little to pay the rents, they will still queue for vouchers. The desperation-renters yield no campaign sound bites, no photo-ops. They live a catastrophe away from eviction, dreading a broken car, an illness, or a pink slip. Will helping them cost money? Absolutely. But most of us are well-housed. Homeowners get a $77 billion subsidy, in the form of the mortgage interest deduction. Surely we can help the desperation-renters. HOUSINGWIRE ❱ FEBRUARY 2017 33

VIEWPOINTS

By Casey Cunningham

Trends focus back on customer service Borrowers are looking for more than just the lowest rates

Over the past few years, the mortgage industry has undergone drastic changes. From the housing market crash to the mainstreaming of the digital marketplace, the landscape for modern lenders is very different than it was a decade ago. 2017 brings its own set of unique trends and challenges, but this can still be the year for a business breakthrough. Instead of fighting against industry shifts, the most successful loan officers will embrace them, learn to adapt, and finish the year strong. So what are the market trends that are driving business? Many might assume that borrowers are flocking toward lenders with the lowest rates. However, research from STRATMOR Group paints a different picture. According to STRATMOR, 33% of 34 HOUSINGWIRE â?ą FEBRUARY 2017

borrowers make their mortgage decision based on their interaction with the originator. Another 22% make their choices based on Realtor referrals, and 11% follow the referrals of family and friends. Contrarily, only 2% choose a lender based

on the lenderâ&#x20AC;&#x2122;s fee, and 4% choose based on interest rates. These statistics show that the driving force behind doing great business is having great customer service with lenders and referral partners. Even more than a low interest rate, borrowers

Casey Cunningham is the CEO and founder of Xinnix, the No. 1 mortgage academy in the nation.

But what is the best way for loan officers to communicate with their clients? With more business taking place online, the impulse might be to lean heavily on email. While thorough communication through any medium is good, STRATMOR reports that lenders who primarily speak with clients over the phone initially have the highest customer satisfaction rating at 95%. Using the phone is especially advantageous when speaking with potential or new clients. When price objections occur — and they will — lenders should pivot back toward the quality of their service. This is where the spontaneous nature of phone conversation is helpful. What might seem like avoiding the question through text or email can seem like a natural progression in conversation over the phone. The number of satisfied customers begin to drop dramatically as loan officers become less communicative. When a customer has to call a lender for a status update, the customer satisfaction rating drops to 65%. And when the customer doesn’t receive a checklist for completing the loan at the beginning of the process, their satisfaction rating sinks down to 57%. These statistics show just how important it is for borrowers and referral partners to feel in the know and not have to guess at what is happening with their loan. Simply picking up the phone can be the difference between building or breaking a business partnership.

TURN TIMES want to be wowed. Today’s top producers have earned their position in the industry by putting customer satisfaction first.

COMMUNICATION The number one way to turn a borrower or referral partner into a raving fan is by communicating with them openly and frequently. No one likes to be left in the dark. When lenders keep clients well-informed through every step of the loan process, they are building strong relationships that are far more likely to continue into the future.

Trust is one of the most important elements of any relationship. This is especially true when it comes to the relationship between borrowers and lenders. When a loan officer sets a closing date, they need to be able to deliver. And the faster they can deliver, the better. According to a STRATMOR survey of over 150,000 borrowers, only 20% of loans close in less than 30 days. Being able to close quickly allows mortgage professionals to set themselves apart from their competition. They can increase their loan turnover rates, manage smaller pipelines

and, of course, gain higher levels of customer satisfaction. Unsurprisingly, there is a strong correlation between how quickly lenders close and the satisfaction of the client, especially for refinances. Clients who are refinancing are looking to lower their mortgage payments, so a lengthy process is bound to frustrate them. An efficient closing shows lenders are competent, but it also shows they value the time and money of their customers.

DIGITAL PLATFORMS When loan officers implement these practices and build positive relationships with their customers, their business is bound to increase. Referrals from real estate agents, friends and family are still a huge source of business for most lenders. However, the digital market has given mortgage professionals a way they can appeal directly to new customers, one that bypasses the referral system. STRATMOR reports that today, over 50% of real estate searches are now done through Zillow. More than 75% of those searches are pre-Realtor. Having a high rating on digital platforms is now vital in order to be successful in today’s market. When lenders are communicative and prompt, they need to ask their customers to leave positive reviews and ratings online. Homebuyers will automatically assume that a loan officer with a five-star rating is a knowledgeable professional they should be interested in working with, opening the door for communication. A third of borrowers choose their lender based on a good interaction. The digital world gives mortgage professionals the opportunity to have those interactions with people they would not have connected with otherwise. In order for this strategy to be successful, loan officers must be actively working to ensure a high customer satisfaction rating. Trends will shift over time, but building relationships will always be the backbone of dynamic business. By energizing their approach to service, mortgage professionals will always elevate their results. HOUSINGWIRE ❱ FEBRUARY 2017 35

MORTGAGE

SERVICING

BOOM SERVICING IS PRIMED TO TAKE OFF IN 2017, SPURRING BANKS TO JUMP BACK INTO THE BUSINESS

38 HOUSINGWIRE ❱ FEBRUARY 2017

I “[RISING INTEREST RATES] SHOULD BE GREAT FOR THE SERVICING BUSINESS. AND FRANKLY, THAT WAS ONE OF OUR INITIAL INVESTMENT PIECES WHEN WE BOUGHT THESE PORTFOLIOS — THAT RATES CAN’T STAY LOW FOREVER.” — Jay Bray, president and CEO of Nationstar

40 HOUSINGWIRE ❱ FEBRUARY 2017

n the aftermath of the financial crisis, low interest rates and strict capital requirements combined to make servicing a losing proposition for many banks, who sold off their mortgage servicing rights at every opportunity. The sharp glare of regulators didn’t help either, as banks and nonbanks navigated the already thankless waters of servicing with a new target on their backs. But all that changed abruptly in the fourth quarter of 2016 with the one-two punch of a Trump win and a rate hike by the Federal Reserve. Seemingly overnight, the economic outlook for servicing was once again sunny, and companies that held tight to servicing rights over the last decade are facing a bright future indeed. In fact, the new environment might just be enough to lure banks back to expand their servicing business again. RISING INTEREST RATES On December 14, 2016, the Federal Open Market Committee raised the federal funds rate for only the second time in 10 years, moving the target range from 0.5% to 0.75%. The Fed had been waiting to see better employment numbers and a return to 2% inflation before making the move, but, although inflation was still at about 1.5%, the Fed felt optimistic enough to act in December. “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has

been expanding at a moderate pace since midyear,” the Fed said in a statement. “Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft,” it continued. “Inflation has increased since earlier this year but is still below the committee’s 2% longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.” The last time the Fed had raised the federal funds rate, in 2015, was the first increase since June 2006. In its latest December meeting, the Fed indicated that it expected to raise rates three times in 2017, although some in the industry remain skeptical. Jason Obradovich, executive vice president at New American Funding, said he couldn’t see three rate hikes “unless there’s some massive tax cuts or infrastructure spending or deficit spending by the Trump administration.” Rising interest rates are good news for servicers. In a low-rate environment, the cost and trouble of mortgage servicing could easily outweigh the benefits. With low interest rates, borrowers can pay off their loans sooner, cutting the value of mortgage servicing rights. Yet compliance costs increased tremendously during this same period. In 2007, the average cost to service a mortgage loan was $55 per loan per year, according to the MBA’s Servicing Operations Study. By 2016, that cost had grown to $208 per loan per year. As a result, the largest banks consistently cut their mortgage servicing portfolios,

particularly third-party mortgages, over the last six or seven years. Nasdaq.com reported in November that there were around $8.9 trillion in outstanding mortgages in the U.S. at the end of Q3 2016, and 40% of those are serviced by the five largest banks in the country. “However, these banks have seen a notable reduction in their total mortgage servicing portfolio over recent years, as the figure has fallen from over $3.8 trillion at the end of Q3 2015 to below $3.6 trillion now — a year-on-year reduction of 7%. “This is because stricter regulatory requirements since the economic downturn have made the mortgage servicing business less profitable — resulting in banks running off their third-party mortgage servicing portfolios,” the article concluded. Some of that reduction is due to Basel III requirements, rules that address capital shortfall, leverage risk and liquidity risk for banks, but don’t apply to nonbanks. Marshall Lux and Robert Greene wrote about the servicing trend in a working paper for the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School in 2015. “In recent years, pressures that exclusively affect depository institutions – including capital requirement adjustments and regulatory scrutiny – have driven them to sell MSRs to nonbanks,” Lux and Greene wrote. “In 2014, non-banks held 28.2% ($2.02 trillion) of outstanding servicing obligations amongst the top 40 servicers ($7.16 trillion); yet in 2010, non-banks held just 7.9% ($657 billion) and in 2005 held only 14.2% ($947 billion).” As just one example, the report notes that Citigroup sold 21% of its MSRs in 2013, worth $63 billion at the time. A REGULATORY QUAGMIRE Capital requirements aren’t the only regulations banks have had to contend with — they have also been under intense scrutiny from the Consumer Financial Protection Bureau and other regulators for how they treat consumers in the servicing process. In the National Mortgage Settlement of 2012, five of the country’s largest mortgage servicers during the financial crisis — Ally/GMAC, Bank of American, Citi, JPMortgan Chase and Wells Fargo — paid $25 billion in fines for their abuse of consumers.

SERVICING PORTFOLIOS AS OF JUNE 30, 2016 (BILLIONS) WELLS FARGO CHASE BANK OF AMERICA NATIONSTAR

U.S. BANK

$1,599 $ 880 $ 611 $ 369 $ 304 SOURCE: MORTGAGE DAILY

“Goldman Sachs research notes that the fines and penalties incurred by depository institutions engaged in servicing are driving their exit, and today’s nonbanks – which were largely not active in pre-crisis origination and servicing – enjoy a regulatory advantage, driving their growth in market share,” Lux and Greene wrote. But although it’s true that nonbanks weren’t part of the National Mortgage Settlement, they have felt their share of regulators’ wrath when it comes to servicing practices. HOUSINGWIRE ❱ FEBRUARY 2017 41

SERVICING EVOLUTION OF THE 40 LARGEST SERVICERS 8%

BANKS NONBANKS

2010

92%

28%

BANKS NONBANKS

2014

72%

SOURCE: JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY

LARGE BANKS THAT HAVE INVESTED MILLIONS IN THIS PROCESS ARE BETTER ABLE TO COMPETE WITH INDEPENDENT NONBANKS THAN EVER BEFORE. 42 HOUSINGWIRE ❱ FEBRUARY 2017

Three of the banks named in the settlement — JPMorgan Chase, Bank of America and Ally Bank — sold much of their MSRs to Ocwen Financial, which became the fourth-largest servicer and the largest nonbank servicer as a result. In doing so, Ocwen also invited intense regulator scrutiny, becoming a frequent target of legal action from the Securities and Exchange Commission, the CFPB and the New York Department of Financial Services. After a barrage of legal challenges and settlements, Ocwen decided to exit agency servicing in December of 2014. In a conference call to investors that month, Ocwen’s CEO, Ron Faris, said, “We estimate the difference between our $1.1 billion book value and fair value of our agency MSRs is between $400 and $500 million dollars.” And Ocwen is far from the only nonbank that regulators have scrutinized. After purchasing MSRs from Bank of America, Green Tree Servicing, a subsidiary of Walter Investment Corp. (now merged with another Walter subsidiary, Ditech) paid $63 million to resolve Federal Trade Commission and CFPB charges in 2015. And in November 2016, the NYDFS fined PHH $28 million for “shoddy mortgage origination and servicing practices,” which PHH maintains were related to “legacy” issues that took place from 2010-2014. PHH decided to sell “substantially all” of its Ginnie Mae MSR portfolio and related servicing advances to Lakeview Loan

Servicing, and said it expects the proceeds of the deal, excluding transaction and other costs, to be $122 million. Both federal and state regulators have stepped up their oversight of nonbanks in the past few years. In 2013, the CFPB issued mortgage servicing rules that applied to both kinds of financial institutions, thus limiting some of the advantage the non-depository institutions had servicing loans. THE NEW AGE OF SERVICING So what do experts expect the new servicing landscape to look like? For one thing, it’s likely that both banks and nonbanks will increase their servicing portfolio with loans they originate. The regulatory oversight may loosen under Pres. Donald Trump (see related feature on page 44), but the risk involved in third-party servicing is still high. During an RMBS servicer roundtable hosted by Fitch Ratings in November, industry experts predicted more business for nonbanks. According to a Yahoo Finance article, “The overwhelming consensus (89%) of panelists at Fitch’s roundtable agreed that nonbank servicers will continue to take market share from banks in 2017. That said, the source of nonbank portfolio growth is evolving.” The Yahoo article quotes Fitch Managing Director Roelof Slump: “Whereas MSR sales and subservicing had in the past driven servicing growth among nonbanks, future activity will

be driven by new loan origination activity by competitive nonbanks who also service loans. Servicing sales from banks who want to reduce the associated regulatory impact on capital will also drive growth.” One of those competitive nonbanks is surely Quicken Loans, the nation’s largest online retail mortgage lender, and the second-largest retail mortgage lender overall. The company not only closed $220 billion of mortgage volume from 2013-2015, but has won all sorts of customer accolades doing it. Quicken has been ranked highest in customer satisfaction for primary mortgage origination for seven straight years by J.D. Power — from 2010 through 2016. It was also ranked highest in the nation for client satisfaction among mortgage servicers for three consecutive years. The Detroit-based company, like other nonbanks, uses technology not only to make it easy for customers to navigate their loan process, but to create effective loan modification programs. From the Harvard working paper: “Most notably, Quicken has leveraged technology to predict the risk of default and determine loss reduction strategies. Technological innovation has also enabled other servicers – such as Walter Investment Management (ninth largest) and Nationstar (fifth largest) – to become more competitive by improving customer experience and channel efficiency; nonbanks have lowered delinquency rates by leveraging technology to improve borrower education, streamline processes, and determine loan modification processes that effectively work. “State regulators note that nonbanks’ ‘advanced servicing technology systems’ can improve ‘loss mitigation alternatives to troubled borrowers.’” The study singled out Ocwen Financial, the fourth largest servicer, for its application of technology in servicing some of the most difficult loans. “Ocwen was able to grow its servicing market share through a ‘superior level of technology,’ according to Morningstar. It was able to perform rapid loan modification due to proprietary technology and has designed software that transformed how a servicer interacts with an at-risk borrower.” These tech innovations may be easier for nonbank servicers to develop and sustain than large legacy lenders, but the big banks haven’t been

idle either. The net effect of increasing regulation is to hardwire efficiency into every part of the process. Large banks that have invested millions in this process are better able to compete with independent nonbanks than ever before. The increasing interest rates that create a more welcoming servicing landscape have the opposite effect on overall origination volume. The MBA is projecting a sharp decline in refinancing volumes to just $145 billion in the first quarter of 2017, according to a Kroll Bond Rating Agency report. “Purchase mortgages are projected by the MBA to rise to $1.1 trillion in 2017, but refinancing volumes will be cut in half for the full year, leading to an overall decline in mortgage origination volumes of 20% next year compared with 2016.”

“Whereas MSR sales and subservicing had in the past driven servicing growth among nonbanks, future activity will be driven by new loan origination activity by competitive nonbanks who also service loans. Servicing sales from banks who want to reduce the associated regulatory impact on capital will also drive growth.” — Roelof Slump, managing director of Fitch Ratings

The jump in purchase mortgages will increase the opportunity for all kinds of servicers, and rising interest rates are a welcome change from the last decade. “You’re going to see prepays slow down and you’ll see amortization expense go down, which will result in higher profits,” said Jay Bray, president and CEO of Nationstar. “It should be great for the servicing business. And frankly, that was one of our initial investment pieces when we bought these portfolios — that rates can’t stay low forever. It’s just taken 10 years. But now that it’s happened, I think we’re going to benefit significantly,” Bray said. HOUSINGWIRE ❱ FEBRUARY 2017 43

SERVICING UNDER TRUMP WHAT SHOULD MORTGAGE SERVICERS EXPECT IN THE NEXT FOUR YEARS?

BY BEN LANE, BRENA SWANSON AND SARAH WHEELER

W h a t a d i f f e r e n c e a y e a r m a k e s . At t h e M o r t g a g e B a n k e r s A ss o ciati o n’s N ati o nal M o r tga g e S e r v icin g Co nf e re n ce in 2016 , the overriding theme was regulator y compliance. Looking ahead to the f inal mor tgage ser vicing rules from the Consumer Financial Protec tion Bureau, which were issued in August, ser vicers were investing significant amounts of time, money and effort to comply. It was a daunting task, but at least it was clear. One year later, the election of Donald Trump has thrown the whole co mp lian ce e quati o n o f f b alan ce, l eav in g s e r v i ce r s to wo n d e r w hich re gulatio ns might b e ro ll e d b ack an d how th ey should operate in a more dynamic regulatory landscape.

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HOUSINGWIRE ❱ FEBRUARY 2017 45

D o n a l d Tr u m p ’s s u r p r i s e w i n i n t h e presidential ele c tion upset more than a few apple car ts, especially in the mortgage industry. It’s safe to say that few predicted a Trump victory and most businesses had made plans with the idea that Hillary Clinton would continue the policies of Pres. Barack Obama, which included strong support for the CFPB and other regulatory bodies. In the course of one day, however, the certainty of oversight and enforcement was suddenly in question. Now, servicers, along with the rest of the mortgage industry, have to weigh their potential investment against the very real possibility of less, not more, regulation in the next four years.

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NO LOVE LOST From its inception, the CFPB made it clear that servicing was in for a rough ride. The CFPB was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2011. When the bureau released its initial servicing rules in 2013, the bureau’s director, Richard Cordray, said, “For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures. Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.” Just one month later, the bureau issued another bulletin warning servicers about their obligations in servicing transfers, noting that the CFPB had a “heightened concern” about these practices. “Consumers should not be collateral damage in the mortgage servicing transfer process,” Cordray stated. “This guidance directs all mortgage servicers, both banks and nonbanks, to follow the laws protecting borrowers from the risks of such transfers, and makes clear that we will be monitoring them for compliance.” In 2014, during a speech at the MBA’s servicing conference, Steven Antonakes, deputy director of the CFPB, delivered a scathing speech summarizing the bureau’s view of the servicing industry. “Nearly eight years have passed and I remain deeply disappointed by the lack of progress the mortgage servicing industry has made,” Antonakes said. After outlining a number of problem areas, Antonakes closed with this: “But please understand: if you choose to operate in this space, the fundamental rules have changed forever... We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.” Over the next several years the bureau

proved how serious it was about that enforcement, taking decisive action against servicers and continuing to issue guidance. By the MBA servicing conference in 2015, Kim Yowell, senior vice president of servicing at BOK Financial, summed up the servicing environment. “In the past, we always served three masters — investors, shareholders and customers. Now we also have compliance.” Those compliance requirements were expanded even further in 2016 when the CFPB released its final mortgage servicing rule in August. The 900-page rule, which has to be implemented by mid-2018, requires a long list of new servicer actions, including providing certain borrowers with foreclosure protections more than once over the life of the loan, providing more loan information to borrowers in bankruptcy and extending consumer protection to surviving family members.

its director on notice that they are the targets of intense scrutiny and possible elimination. What does that mean for servicing? A NEW DAY With Trump in the Oval Office, regulatory reform is a certainty. Trump was straightforward during his campaign about his desire to deregulate the financial services industry, and singled out the Dodd-Frank Act early on as overreaching legislation. Before the inauguration, the website for Trump’s transition team listed a number of priority items his administration would tackle, including financial regulatory reform. “Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

CORDRAY WOULD SEEM TO BE IN THE MOST PRECARIOUS POSITION. Cordray reminded servicers at the MBA Annual conference in October 2016 that the CFPB would be monitoring servicer actions in light of the final rule, and said that while some servicers have made good progress, “many troubling issues persist.” He also took the opportunity to once again call out servicers for their role in the financial crisis. “It is regrettable that much of the damage could have been contained by a more efficient servicing system, but servicers were ill-prepared and unable to address the best interests of their clients — the investors — much less consumers.” In the frosty relationship between the CFPB and servicers, the regulator has always had a decided advantage. But now the Trump administration has turned the tables, putting the CFPB and

Singling out the law that created the CFPB generated a backlash from Congressional Democrats, but with Republicans in the majority in both houses, it remains to be seen what Democrats can do to stop the Trump juggernaut. Cordray would seem to be in the most precarious position. Even before the election, the director and the bureau were under fire, with House Republicans proposing a number of reforms to the bureau in the Financial CHOICE Act, which would replace the director with a multi-member, bipartisan commission. Cordray’s position was further eroded when the U.S. Court of Appeals for the District of Columbia Circuit handed PHH a victory in its suit against the bureau, declaring the CFPB’s leadership

Here’s what mortgage servicers can do Mike Jones, director of financial services at Navigant, which collaborates with banking, insurance and investment management clients to manage opportunities and risks, sat down with HousingWire to discuss what servicers can do in the midst of the uncertain regulatory environment. Right now, servicers are investing heavily to comply with the new mortgage servicing rules, but this is tempered somewhat by the fact that the bureau is under siege by all three branches of the government and there is a bullseye on Director Cordray’s back, figuratively speaking. Servicers have roughly a year to 18 months until the mortgage servicing rules start to be enforced. Servicers have to make an assessment of how seriously the bureau is going to be enforcing those rules in the timeframe. The CFPB has levied billions of dollars in civil money penalties since its inception, so I don’t think servicers can wait and see. They really have to apply themselves right now to prepare for compliance with these rules, because the future is uncertain. A number of things could happen in the near term. Cordray could be replaced with a five-member commission that is perhaps more business-friendly, and at the same time, Congress could pass legislation to significantly reform the bureau. If this happens, the question becomes, what will the bureau do with enforcement? Even if rules remain in place, chances are that in the future there’s going to be less emphasis on enforcement. That doesn’t mean no enforcement, continued on pg. 49

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IN ADDITION TO THE CFPB, THERE IS ALSO UNCERTAINTY REGARDING THE BASEL III ACCORDS, WHICH REQUIRE BANKS TO ADHERE TO CERTAIN CAPITAL STANDARDS WITH COORDINATED INTERNATIONAL OVERSIGHT.

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structure unconstitutional and vacating a $103 million fine against PHH. The CFPB is appealing the PHH ruling, asking the court for an en banc review, but some feel that Trump could fire Cordray even during the appeal process. For his part, Trump has made his desire to replace Cordray crystal clear, meeting with former Rep. Randy Neugebauer, R-Texas, in January about the post. Neugebauer’s ties to the CFPB go way back, as he was one of the original proponents against the unusual power of the CFPB. When the bureau was looking for a director back in 2011, Neugebauer expressed his concerns over the agency’s lack of oversight, a concern that’s plagued the agency since its creation. At the time, before the bureau had a director, Neugebauer tried to pass a law that would merge the CFPB into the Treasury Department. “Given the significant and perhaps over-regulating powers the CFPB has been given by the Obama administration, Congress must have a say on the appropriation of taxpayer money funding this agency’s operation,” Neugebauer said at the time. The CFPB is currently under the purview of the

Federal Reserve Board. Neugebauer said moving the agency will allow Congress to examine the CFPB’s actions and their effects on the overall market. Meanwhile, if PHH wins its suit against the CFPB, the president will be empowered to remove the director at any time for any reason. Even if that doesn’t happen, under the current law, the president may remove the director for “inefficiency, neglect of duty, or malfeasance in office.” No president has removed an appointee for cause, but breaking with protocol is a Trump hallmark. Despite the forces arrayed against him, Cordray shows no sign of leaving of his own accord. CFPB spokesperson Jen Howard said in a statement, “Director Cordray was confirmed by a bipartisan group of 66 senators to serve a term until July 2018 and has no plans to step down.” Senate Democrats are adamantly fighting back against growing calls for Trump to fire Cordray. In mid-January, Senate Democratic Leader Charles Schumer, D-New York, Sen. Sherrod Brown, D-Ohio, and Banking Committee Ranking Member Sen. Elizabeth Warren,

D-Massachusetts, reinforced their previous assertions that firing Cordray would shatter Trump’s promise to keep Wall Street accountable. The three senators, along with other Senate Banking Committee Democrats, sent to a letter to Cordray, praising him for his outstanding work as director of the CFPB and emphasizing the need for his leadership at the agency in Trump’s Administration. Warren emphasized during the call that “no agency has been fired for cause. It’s an extreme and unprecedented step.” “To make it clear, under Richard Cordray, the CFPB is doing its job on behalf of the American people. The CFPB is working, and Cordray has been a successful leader of the agency,” Warren said. “If he tries to act outside of the law, there would be a real battle in court. This isn’t the thing where he can say you’re fired and cut to commercial.” In addition to the CFPB, there is also uncertainty regarding the Basel III accords, which require banks to adhere to certain capital standards with coordinated international oversight. An article from MLex Market Insight quoted Simon Johnson, a management

professor at the Massachusetts Institute of Technology who was chief economist of the International Monetary Fund. “All the financial regulations will be rolled up and tossed into the wind,” Johnson said. “He [Trump] hasn’t offered details, but the Republicancontrolled Congress is considering a bill that would replace the 2010 law. “ T hat leg i slat ion, wh ich ha s passed the House Financial Services Committee, would provide an ‘off-ramp’ from the Basel III capital and liquidity standards for banks that choose to keep high levels of capital. This is the biggest possible win for Wall Street.” A December article in Bloomberg echoed that possibility. “Basel Committee members including the U.S. Federal Reserve and the European Central Bank are under enormous industry pressure to soften the rules,” the article stated. “The process to put Basel Committee standards into national rules can easily take years to accomplish, however, and this is where Trump and Republicans in the U.S. Congress will have the most sway. Trump will eventually get a chance to install new faces in the Fed, FDIC and the Office of the Comptroller of the Currency, the other U.S. Basel member.” The article quoted Karen Shaw Petrou, managing partner at Federal Financial Analytics, who said that Trump would be able to influence the process “not only through what Treasury says, but also who comes to be head of the OCC and FDIC and vice chair of supervision at the Fed. Indeed, with his picks for the EPA and other agencies, Trump has already demonstrated his willingness to appoint leaders of regulatory bodies that could undermine the very mission of those agencies. Trump’s presidency will defang much of the oversight and enforcement seen since the financial crisis. For servicers, the rough ride just got a whole lot smoother.

but it could mean not as frequently or aggressively. Then there’s the possible repeal of Dodd-Frank and that changes the rules. I think that servicers should remain vigilant in their attention to compliance while at the same time keeping an eye on the political environment. When it comes to the government, things usually take time to change. Some people would say that the CFPB is moving to double down, since it is appealing the recent court case that found its structure unconstitutional. This presents an interesting variable: Are there things that can be done to make the rules more difficult to unwind? That remains to be seen. Looking at the 2013 mortgage servicing rules, there are nine major areas and four of those — less than half — have substantial process and implementation considerations and implications. In other words, companies will have to do a lot of planning and effort to implement those. The other five rules are not insignificant, but less so than the four main ones. If I was taking a measured approach to this, I would make sure I did due diligence and prepared to implement the ones with greater operational significance, while remaining aware. I would at least have a plan for implementation because here’s what going to happen. If the rules don’t change substantially, there will be significant process design system changes to undertake. Not only that, servicers will have to train employees, document the policies and procedures and implement QA procedures that are compliant going forward. The train is moving already. It’s time for servicers to start to plan what they’re going to do with compliance. If they miss that train and wait too long, they may not have enough time. They need to have some level of diligence and activity starting now. The big question is how much.

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POWER PLAYERS S E R V I C E

P R O V I D E R S

Mortgage service providers walk a tightrope of regulatory demands while delivering a full spectrum of services and solutions to their clients. In this section we profile nine companies creating new products, new efficiencies and new opportunities in a dynamic mortgage servicing market.

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52 CHRONOS SOLUTIONS 53 FIRST AMERICAN MORTGAGE SOLUTIONS 54 LERETA 55 M&M MORTGAGE 56 QUALITY CLAIMS MANAGEMENT CORP. 57 RES.NET 58 SAFEGUARD PROPERTIES MANAGEMENT 59 SUPERIOR HOME SERVICES 60 VENTURE SOLUTIONS

HOUSINGWIRE ❱ FEBRUARY 2017 51

POWER PLAYERS | SPONSORED CONTENT

Chronos Solutions

1199 S. Belt Line Road, Suite 105 Coppell, TX 75019 800.647.1190 chronossolutions.com

The

FAST FACTS: • Founded in 2007 in Washington, D.C. • National provider of services spanning the mortgage continuum, including every service listed on the HUD-1. • 800+ lender and servicer customers. • With a company-wide philosophy that our clients are our partners, Chronos Solutions provides superior technology, products and services for the mortgage and real estate industries backed by highly personalized service and support. Through innovation and acquisition, Chronos now offers solutions that span the mortgage continuum and enhance security, compliance, customer satisfaction and profitability, all while fostering a collaborative environment for our team members. 52 HOUSINGWIRE ❱ FEBRUARY 2017

C OM PA N Y

In today’s complex mortgage origination and servicing environment, lending companies need a service provider that isn’t afraid to roll up its sleeves and get deeply involved in order to work smarter, leaner and faster. A company that will not only respond to an organization’s unique needs, but also provide dependable, flexible, high-quality and cost-effective solutions that enhance the overall experience for all transaction participants, including customers. Chronos Solutions is the industry’s one-stop shop for comprehensive, end-to-end solutions that span the mortgage continuum – from application through loan servicing, default and REO disposition. Every product and service Chronos offers is designed to streamline processes, reduce risk and enhance efficiencies, and can be delivered individually or bundled. Chronos offers complete integrated solutions for the management, marketing and disposition of distressed and REO assets, including comprehensive auction, asset management and disposition services. Through its Trustee Sale Plus (TSPSM) program customers are able to leverage the company’s additional services – including Title Curative and Closing, HOA Lien Identification and Resolution and Eviction/Occupied Management services – to increase third-party sales and decrease claims-related losses. Chronos Solutions’ Asset Disposition services enhance net proceeds by maximizing asset exposure, reducing expenses, ensuring compliance, and expediting the entire process. The REO Asset Management team works in partnership with its servicer clients, assessing each property individually and providing solid strategies to market and manage its disposition for optimal efficiency and profitability. Chronos oversees the purchase negotiation, recommends an optimal title and closing process, and handles the remittance of funds. Chronos Solutions takes assets through the REO process with a technology-enhanced process that uses proven models to evaluate and analyze each property, expedite the disposition process and maximize returns. The REO asset management and disposition solutions are customized to each client’s unique

needs and supported by Chronos’ nationwide partner network. Key components of that network include a cash-for-keys program that generates accurate offers and cost analysis based upon local market, regulations, ordinances and history; a wide range of valuation hybrids to ensure accuracy; eviction management with nationwide large-portfolio experience and full support, including attorney communications; and auction services on RealtyBid.com, the online real estate auction pioneer, moves even the most difficult assets at a record pace. Since 2001, RealtyBid.com has sold more REO and defaulted properties to real estate investors than any other online service. The web-based auction platform currently has thousands of properties listed for sale, in excess of 200 million total site visitors and delivers real-time reporting for an auction process averaging 53 days or less, from start to finish. RealtyBid.com expedites asset liquidation for leading servicers, HUD and the U.S. Marshals. Big enough to execute, yet small enough to care, Chronos Solutions delivers the solutions lenders need to succeed in today’s challenging regulatory environment. The

EXECUTIVES

MATT SLONAKER, EVP Matt Slonaker, has held senior leadership positions in the financial industry for nearly a quarter century. A key member of the company’s executive committee, Slonaker leads Chronos Solutions’ business development, product development and marketing teams. Previously, he held senior level operation and business development positions at Solutionstar, Carrington, EMC Mortgage, Countrywide and others. TERRI HUNTER, SVP Terri Hunter manages Chronos Solutions’ REO product vertical, which provides marketing, management, disposition, title and closing, property stabilization, and lien research and curative services for more than 20 clients, including the Department of Justice and Ginnie Mae. Previously, Hunter, who joined Chronos Solutions in 2013, worked at Ocwen Financial Corp., Indymac Bank in Pasadena and then at OneWest Bank.

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First American Mortgage Solutions 3 First American Way Santa Ana, CA 92707 800.333.4510 firstam.com/mortgagesolutions

The

C OM PA N Y

Despite what evolutionary changes may be in store for mortgage servicing, one constant that will remain is the need for quality. Having the right tools and resources designed to improve quality and efficiency while reducing costs can help lenders and servicers mitigate risk and deliver an optimal consumer experience. First American Mortgage Solutions provides single-source post-closing and servicing solutions covering both performing and non-performing loans. This includes document services, quality control, assignment services, property valuations, loss mitigation, foreclosure and REO title and settlement services. To help bring clarity and insight to servicing business decisions, the company also delivers real estate data, property reports and recorded document images through its DataTree property research solution, providing access to more than 5.5 billion document images. First American Mortgage Solutions continues to bolster its capabilities through a series of strategic investments and by harnessing deep assets across the First American enterprise. Here are three prime examples: 1. It expanded its existing mortgage post-closing technology, products and services to help deliver loan perfection with the acquisition of TD Service Financial Corp., a provider of post-closing and document management services, along with its subsidiaries, including Security Connections, Inc. Since then, Mortgage Solutions has been undergoing a transformation by applying the post-closing and default assets of TD Service Financial and SCI to augment its existing resources. 2. First American Mortgage Solutions is excited to announce the debut of CleanFile Solutions at the MBA’s National Mortgage Servicing Conference & Expo. Created with mortgage servicers in mind, this comprehensive suite of offerings combines post-closing document services, loan quality control, file perfection and lien release. CleanFile Solutions will provide one consolidated source of innovative, data-driven solutions to help lenders and servicers achieve the cleanest loan files imaginable. 3. The company continues to strengthen its automated process solution that solves for cost and

risk in loan modification fulfillment. The FirstMod loan modification solution allows clients to focus on communicating with borrowers and identifying the best possible program according to the borrower’s unique needs and situation. Complementary to its broad growth strategy is the company’s emphasis on continual improvement, which has led to unmatched quality standards that received independent third-party validation. As the only title and settlement operation to achieve ISO 9001 certification in origination and servicing, First American Mortgage Solutions reports zero operational issues following external audits by clients in 2016. This achievement is a result of its quality framework, despite an increase in audit scrutiny due to regulatory pressures. Working with a single provider enables lenders and servicers to maximize efficiency without sacrificing quality. It allows for a more consistent process, better quality product, less expensive delivery, and a single counterparty to manage all title issues related to a property. Only First American Mortgage Solutions can provide comprehensive servicing compliance review across all areas; access to 100% of U.S. property ownership data; and advanced, scalable service delivery from boarding through foreclosure sales, with loan scoring and reporting that allows for the identification of compliance issues. To learn more, stop by Booth 704 at the MBA National Mortgage Servicing Conference & Expo. The

EXECUTIVES

MONIKA PELTZ, VP, DIVISION OPERATIONS Monika Peltz oversees default title products for modifications, document creation, signing services, and recording of modifications. ROBERT PHELPS, VP, DIVISION OPERATIONS Bob Phelps came to First American through the acquisition of TD Service Financial Corporation and leads the post-closing and document services group. KRISTEN SONGRATH, VP, DIVISION OPERATIONS Kristen Songrath oversees trustee services, foreclosure title, nationwide posting and publication, servicing QC, deed in lieu, and the national REO asset closing services group.

FAST FACTS: • Single-source post-closing and servicing solutions covering both performing and non-performing loans. • The first and only real estate data provider to offer 100% U.S. coverage in property ownership data. • First American is proud to have been named by Fortune magazine in 2016 to the Fortune 100 Best Companies to Work For list, as one of the Best Workplaces for Women, and as a Fortune 500 company – one of only seven companies named to all three lists. HOUSINGWIRE ❱ FEBRUARY 2017 53

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LERETA

1123 Park View Drive Covina, CA 91724 855.395.1726 lereta.com

The

FAST FACTS: • Founded in Southern California in 1986. • LERETA serves over 4,000 customers in the mortgage industry, providing flexible property tax and flood determination solutions. Every month it onboards 10-20 new customers. • LERETA was founded with the goal of providing extraordinary service and today this remains its primary commitment.

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C OM PA N Y

LERETA, a nationwide provider of real estate tax and flood zone determination services, remains dedicated to providing extraordinary customer service even as it continues to evolve its products and offerings. The company has served the mortgage industry for almost 31 years and adds 10 to 20 new clients each month to an already robust list of more than 4,000 mortgage industry and insurance customers. LERETA’s comprehensive spectrum of property tax services range from tax insourcing to standard tax tracking for both escrowed and non-escrowed loans, as well as a complete tax outsourcing program for loan servicers. It also provides real-time flood zone determination services that range from simple delivery of flood zone determinations to complete portfolio life-of-loan tracking. “With almost 31 years in business and a management team with an average of 20 years in the industry, LERETA is the industry’s most experienced tax vendor,” said CEO John Walsh, who took the helm in September 2015. “LERETA exclusively focuses on tax and flood services, allowing us to provide the best services and customer experience. These products and services help generate significant cost reductions for lenders and servicers, increasing operational efficiencies and improving their relationship with borrowers, investors and regulators. And all of LERETA’s services, whether they involve product, delivery or technology, are available on a flexible basis to meet customers’ individual needs. “We understand that customers have different needs. Our services are offered through a menu approach, allowing customers to select only those services that work for them,” Walsh said. The company helps customers navigate through the maze of system architecture options and data exchange alternatives by performing continuous research, deploying advanced systems and engaging in strategic partnerships. In addition, LERETA keeps a close eye on compliance. “We remain vigilant to insure we comply with all CFPB rules. Specifically, our disaster

recovery program, business continuity and IT security are all state-of-the art, providing our customers with peace of mind,” Walsh said. Going forward, the company’s biggest opportunity for growth lies in its ability to reduce risk for its customers while protecting their portfolio from potential penalties or property losses. Tax tracking and reporting, especially for states with multiple tax cycles, has become a liability that financial institutions simply don’t want to risk. “The simplest solution is to utilize LERETA tax services, which can augment the existing institution’s services without increasing costs,” Walsh said. “As this is LERETA’s core business, we see nothing but the opportunity to help our customers and help their borrowers.” The

EXECUTIVES

JOHN WALSH, CEO John Walsh assumed the role of CEO in September 2015. Walsh has more than 20 years of senior management experience in the financial services industry and more than 10 years leading technology firms. This includes previously serving as president of San Diego-based companies DataQuick and Del Mar Database. JIM MICALI, COO Jim Micali, MBA, started his professional career as a turnaround consultant assisting distressed manufacturing and service companies. In 2002, he was recruited by Countrywide Financial Corp. and over the next 10 years held a variety of leadership positions throughout Countrywide and Bank of America. In 2013, he joined LERETA as COO to lead the tax and flood services divisions. RICHARD YONIS, SVP AND NATIONAL SALES DIRECTOR In 1995, Richard Yonis began his career in the mortgage industry by opening several retail loan origination branch offices for National First Mortgage. In 2000, Yonis co-founded and operated a private medical records and accounts receivable software company. In 2007, he became the national sales director for Henry Schein Medical Systems. At LERETA, Yonis is actively involved in building and mentoring the sales team and vast external network of resellers.

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M&M Mortgage

12901 SW 132nd Avenue, Miami, FL 33186 800.336.4890 mmmortgage.com

The

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Miami-based M&M Mortgage provides its clients a full range of property inspection and preservation services across all 50 states, including utility management and vacant property registrations. M&M Mortgage’s team carefully reviews a property and provides a comprehensive and complete report to the client. The report outlines interior and exterior conditions, if there are any appliances or if they have been removed, damages, plumbing conditions and any other adverse conditions or information pertaining to the property. In addition to the property review, M&M provides a variety of services to ensure property preservation, including code violation abatement, eviction services, debris removal, HUD conveyance preparation, winterization and more. George Mencia, co-founder and president of M&M Mortgage, said the company takes pride in the service it provides to its clients and to communities across the country. “The biggest value is for the communities that do not have to deal with the upkeep of vacant properties,” he said. As the industry faces a potential regulatory upheaval, Mencia said M&M will stay on its current course and make changes to meet new compliance or regulatory challenges, as necessary. “As with any change in any administration, regulatory change is expected,” Mencia added. “However, it is still unknown what regulatory changes will come. For now, we will continue on the current path and adjust as needed as compliance requirements change.” Mencia said the company lives by two key principles: honesty and integrity. “We go out of our way to protect our clients’ interests and ensure their needs are taken care of,” Mencia said. “We make it a point every day to make sure our clients have all the information they need in a timely and efficient manner.” The company culture at M&M Mortgage is one of team work and collaboration. The company constantly promotes a team dynamic and encourages all team members to be active participants in everything the company does. Additionally, M&M provides team-building

events, company picnics and catered lunches, as well as robust benefits to encourage long-term employment. The biggest opportunity for M&M will be advancements in technology. The industry has a history of being ahead of the curve when it comes to technology. “As technology has evolved it has allowed us to create the tools to more effectively and efficiently service our clients and communities across the country,” Mencia said. “The evolution of technology slows for no one and we are excited to move forward with new technological advances.” The

EXECUTIVES

GEORGE MENCIA, FOUNDER George Mencia is one of the founders of M&M Mortgage Services. With over 30 years of experience in the mortgage industry, his knowledge, vision and leadership has allowed M&M to grow from a local field service company in 1987 to a nationwide company servicing some of the largest financial institutions in the country. Prior to opening up M&M, Mencia was vice president of default management at Amerifirst Savings, and later held the same position at Kislak. JORGE MARTIN, FOUNDER Jorge Martin is one of the founders of M&M Mortgage Services. Martin has over 30 years of experience in the finance and collection industries. Prior to opening up M&M, he was a manager at LOR Finance, collection supervisor at Haytt, Haytt & Landau, and skip tracing supervisor for Amerifirst Savings in Florida. From 1992-1998 Martin served as a member of the City of West Miami Zoning Board. ARMANDO SANZ, VP OF OPERATIONS Armando Sanz joined M&M Mortgage Services in 1992 as a field representative. In his role as vice president of operations, Sanz oversees all functions of the company including inspections, property preservation, business development, vendor management, human resources and accounting. Having worked several years out in the field, he has first-hand experience in all aspects of our business.

FAST FACTS: • M&M was founded July 20, 1987 in Miami, Florida, as a local inspection and preservation provider. • In 1989 the company expanded nationally and has enjoyed continued success as a national provider of field services. • The company focuses on using an exceptional personal touch to everything it does.

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Quality Claims Management Corp. 2763 Camino del Rio South San Diego, CA 92108 619.450.8600 qualityclaims.com

The

FAST FACTS: • Founded in 2007 in San Diego, California. • Oldest provider of nationwide licensed public adjusting services for mortgagees. • Since launching as a hazard insurance recovery firm, its service offerings have expanded to include private mortgage insurance claims, investor and government claims, loss analysis, and a variety of risk and compliance audits. • Quality Claims’ mission is to provide premier insurance recovery, compliance and consulting services to our clients through unrivaled diligence, expertise, integrity and a passion for excellence.

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Quality Claims Management Corp. (Quality) provides insurance recovery solutions, specializing in licensed hazard insurance recovery for servicers, investors and homeowners. Additionally, Quality offers management and support for the entire suite of investor and insurer claims: mortgage insurance claims, FNMA, FHLMC, and all government claim types including FHA, VA, and USDA. Investor claims represent a growing area of concern for servicers. Government loans constitute a large share of servicers’ delinquent portfolio and are governed by frequently changing regulations. It is challenging for servicers to keep up with the requirements and most servicers are not familiar with the numerous claim steps to follow to avoid curtailment by FHA or VA. If servicers wait until claim submission to understand the requirements, it is too late to prevent unnecessary costs or curtailments. On HUD loans, there are a number of things servicers can do upstream to fix downstream costs. These include ensuring first legal action is not missed, confirming the title is clean, using approved extensions of timelines and keeping HUD’s system updated. Servicers can also validate that their preservation vendor is maintaining the property and providing accurate reporting, ensure all documentation to support the claim is accessible online to vendors, and adhere to claim filing timeframes. Some of these may be self-evident, but many are not done consistently. Quality believes that a better focus on claims at the end of the default life cycle and integrating lessons learned back upstream are crucial to curbing future losses and additional expenses. For example, if a servicer can expedite conveyance timelines by cleaning up title and ensuring the property is in conveyance condition earlier, they can save months of property preservation costs, personnel expense and property devaluation. These preventable expenses add millions of

dollars annually to severity losses. Servicers should also provide ongoing feedback to HUD, FHFA and the CFPB, as well as other investors and insurers, to support changes to methodology where it makes sense and saves costs. These savings can ultimately cede back to taxpayers and homeowners. “We offer creative, customized solutions, understanding that there is space for innovation on the back end of the default timeline,” said Bob Hora, executive consultant for the company. “Quality can help servicers do more than just ‘stay out of trouble’ with regulators. We can reduce costs and help servicers better understand the relationships between the different internal departments and external vendors after a sale and how to coordinate activities.” While Quality Claims’ business is growing, it remains committed to maintaining personalized attention to every client at every level of the relationship. In addition to Quality’s sterling reputation in the industry, it has deep insurance and servicing expertise and a seasoned team. Clients especially appreciate Quality’s full transparency to simplify their vendor audits and scorecard processes. “Quality’s culture is one of passion and innovation,” Hora said. “We are very team-oriented and everyone is willing to roll up their sleeves and get the work out the door, and still have time to think of better ways to do things.” The

EXECUTIVE

BOB HORA, EXECUTIVE CONSULTANT Bob Hora is an executive consultant to Quality Claims Management. Hora has more than two decades of executive and operational experience in default management including positions with Wells Fargo, GMAC Mortgage, Homecomings Financial, Fannie Mae and most recently Bank of America. His areas of specialty include: FHA, VA, GSE servicing, loss mitigation, default liquidation management and servicing finance.

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RES.NET

25520 Commercentre Dr. Lake Forest, CA 92630 949.598.9920 res.net

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Based in California, RES.NET provides the mortgage banking industry with a suite of services including portals for REO, loss mitigation and valuations. The company’s newest offering, PropertyCure Data Portal, provides clients with the tools to tackle challenges in the more niche segments of the industry. PropertyCure is designed to give RES.NET’s customers the power to address operational challenges in areas that are not currently benefiting from centralized technology. The portal’s intuitive dashboard provides additional oversight by allowing users to track foreclosures, GSE files, and multiple investor portfolios. Through PropertyCure, servicers gain the ability to oversee property preservation vendors as they address servicing errors, violations, utilities, bids, and property registration, not to mention additional trackable processes including claims and inspections. With configurable checklists that can be attached to each process and configured by investor, RES.NET’s PropertyCure Data Portal ensures maximum oversight on every file. RES.NET has a reputation as a technology provider that was built by industry professionals. Last year the company released its Deed In Lieu solution, and with PropertyCure they continue to work towards providing a complete end to end technology solution. RES.NET’s system architecture is designed to allow the company to quickly expand into new areas as the needs of the market change, and the company looks forward to working together with future partners to determine which areas the portal will address next. Following founder and CEO Keith Guenther’s lead, RES.NET provides customers with not only the best products, but also superior support. The RES.NET staff places customer service as a top priority and goes out of the way to cater to the specific needs of each customer. “Clients know that when they partner with us, they are receiving more than just a technology solution. They are also gaining the assistance of our experienced customer service team,” Guenther said.

“Our staff offers support that ranges from vendor support to dedicated account managers who can assist each customer as they augment the system to meet their individual needs.” As RES.NET heads into 2017, the company is looking forward to expanding the PropertyCure Data Portal into new areas. “Too often, we see segments of loan servicing that are still being tracked through a cumbersome series of spreadsheets where errors are bound to occur,” Guenther said. “We firmly believe that supporting our customers at every turn, including niche segments, is vital to providing a comprehensive suite of services.” The

EXECUTIVES

KEITH GUENTHER, FOUNDER AND CEO Keith Guenther, who established the company in 1992, first entered the real estate market in the 1980s as an agent and also held executive-level positions at Tarbell. Bringing nearly 30 years of real estate and business experience to the company, Guenther is focused on building steady growth for USRES by identifying and fostering key relationships. Guenther views the experience and dedication of his entire staff as the key to USRES’ longtime success. ANGELA HURST, SVP, BUSINESS DEVELOPMENT Angela Hurst is responsible for managing and expanding the company’s existing client relationships. Hurst brings more than 25 years of experience in the mortgage banking, title insurance, and closing services industries to the company. Prior to joining USRES, Hurst was a senior vice president of business development at NDeX, LP, and Barrett Daffin Frappier Turner & Engel, LLP. R O B PA J O N , S V P, M A R K E T I N G A N D P R O D U C T DEVELOPMENT Rob Pajon oversees all marketing and product development initiatives for RES.NET while also overseeing the national sales team. Pajon started his career at USRES, and has worked with all facets of RES.NET business support and project management.

FAST FACTS: • Founded in Lake Forest, California, in 1992. • Its mission is to provide each of our clients with an end-to-end technology solution. RES.NET products are created to work in concert with one another because the greatest gains are realized when a client’s business operates through one centralized technology platform. With a variety of customizable offerings, RES.NET is exceptionally qualified to address the challenges associated with running a flexible, cost-conscious operation.

HOUSINGWIRE ❱ FEBRUARY 2017 57

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Safeguard Properties Management 7887 Safeguard Circle Valley View, OH 44125 800.852.8306 safeguardproperties.com

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FAST FACTS: • Founded in 1990 by Robert Klein and based in the suburbs of Cleveland, Ohio. • The largest mortgage default field services company in the U.S. • Safeguard provides its clients with excellence in the industry through leadership on key issues, ongoing training for employees and contractors, the development of industry-leading technologies, and providing outstanding client service. Safeguard will remain true to its founding spirit and corporate motto of Customer Service = Resolution. 58 HOUSINGWIRE ❱ FEBRUARY 2017

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Safeguard Properties is the mortgage field services industry leader, inspecting and preserving vacant and foreclosed properties across the U.S. Founded in 1990 by Robert Klein and headquartered in Ohio, Safeguard leverages technology to develop industry best practices and quality control procedures. “Technology plays a strategic role at Safeguard and within the field services industry,” said Alan Jaffa, Safeguard CEO. “We have invested in providing state-of-the-art systems and programs to ensure we continuously remain technologically advanced.” The company’s technologies improve quality of work using geo-location services; big data analytics and workflow distribution; state-ofthe-art data centers that ensure stability and redundancy; and mobile capabilities that provide real-time results. Recently, Safeguard introduced major advances in its mobile platform. The company’s goal is to create a real-time two-way conversation with its contractors utilizing the latest advances in video, GPS, and smart scripting – which is no longer a back-office function for its contractors. They are now able to capture the property condition in real-time on-site and communicate it back to Safeguard within minutes. Next in the evolution of technology for the industry, Safeguard plans to work with mortgage servicers and investors to extend this automation into their back-office workflow so they can have better visibility and make important time-sensitive decisions. Through extensive beta testing, Safeguard has concluded that video will be the future for documenting property condition and “telling the story of a property.” However, it is important that the video app — and the corresponding business process to review the results — are carefully designed for simplicity and speed. “The result for our clients is going to be a game-changer in terms of quality and our ability to communicate property condition,” said Jaffa. “By critically looking at current issues and those on the horizon, Safeguard provides solutions to minimize risks to clients and properties.”

The

EXECUTIVES

ROBERT KLEIN, FOUNDER AND CHAIRMAN Robert Klein is the founder and chairman of the board for Safeguard. Under Klein’s leadership, Safeguard grew from a handful of employees in 1990 into the largest field services company in the industry, with an extensive network of contractors throughout the United States. Klein serves as chair of the National Vacant Properties Registration Committee of the MBA and he represents not only Safeguard, but the industry as a whole in national associations including MBA, USFN, CMBA and REOMAC. He also is the founder of the National Property Preservation Conference. In 2009, Klein received the prestigious Ernst & Young Entrepreneur of the Year Award. ALAN JAFFA, CEO Alan Jaffa is the CEO for Safeguard, a role he assumed in May 2010. Previously he served as chief operating officer.He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complementary markets. Under his leadership, Safeguard has doubled in size and, in 2010 and 2011, it was recognized as the fastest-growing large company in Northeast Ohio. GREGORY ROBINSON, CPA, CHIEF FINANCIAL OFFICER AND EXECUTIVE VICE PRESIDENT Gregory Robinson directs all accounting and financial management activities at Safeguard, including financial reporting, planning, budgeting, forecasting, cash management, lender relationships, internal control processes and oversight and analysis of financial results. He also oversees quality assurance, information security, internal audit, corporate communications and support services, and serves on the board of advisors for SCG Partners. Previously, Robinson led successful consulting practices at CGI Inc., NetGov Inc. and ORION Consulting. In 2010, he was recognized by Crain’s Cleveland Business as CFO of the Year in the category of large private companies.

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Superior Home Services

15279 N. Scottsdale Road, Suite 400 Scottsdale, AZ 85254 480.391.5500 supersvcs.com

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Superior Home Services is the industry’s leading provider of hazard claim management and property repair management solutions. For more than 32 years, the company has provided flexible and reliable outsourcing solutions that continue to outperform industry metrics and client expectations. Superior, which has been well known for its property repair management solution, now provides a stand-alone hazard claim program as well. This program manages the entire hazard claim process,providing a full insurable damage review of all loans in default, foreclosure and REO. “While we still provide a valuable resource for FHA servicers, our solutions have grown to include all portfolios, including Fannie Mae, Freddie Mac, government, private investor, bank-owned, and investor-owned properties,” said Patrick Nackley, senior vice president of strategic initiatives. Superior leverages its experience managing hazard claim recoveries to ensure the validity and thoroughness of the scope of damage, confirm all insurable items are included in the claim settlement and memorialize the progress of the claim using its proprietary technology. The company’s office manages the entire repair process on vacant, damaged FHA properties and ensures the client has a conveyable property, having used the insurance funds to repair. “By repairing the property with the insurance funds, the servicer avails itself to the recoverable depreciation benefit, and the overhead and profit, that are part of the insurance contract,” Nackley said. “This benefit can only be realized when the property is repaired.” Superior’s attention to maximizing the depreciation benefit is typical of its proactive approach. The company puts a premium on providing excellent customer service. “We are fortunate to have one of the most tenured and experienced teams in the industry, which allows us to execute our mission quickly and effectively, reducing cost and risk for our clients,” said Ruth Delgado, vice president of global operations.

As the number of properties in default has normalized, mortgage servicers and real estate investors have the opportunity to review their service provider relationships and make decisions that are more reflective of quality performance instead of quantity. “Superior has always engineered our solutions to provide real client value instead of adding products just to be a ‘one-stop shop,” Delgado said. In 2017, the company will continue to develop processes that comply with the myriad of state and federal regulations that govern default management. “We continue to focus on providing transparency: to ensure that our clients have access to real-time information regarding each file and that internal processes are in full compliance with local, state, and national laws and regulations,” Nackley said. The

EXECUTIVES

PATRICK NACKLEY, SVP, STRATEGIC INITIATIVES Patrick Nackley joined Superior in 2007 as corporate counsel, and has managed several strategic initiatives and business units within the company. His current role includes oversight, process efficiency and the development of longterm relationships with existing and prospective clients. He continues to manage the legal department. RUTH DELGADO, VP, GLOBAL OPERATIONS Ruth Delgado manages field vendors and remediation, hazard claim resolution, data management and risk. Previously, Delgado served as vice president, default servicing and asset management for Wells Fargo for 14 years. THOMAS VAUGHN, DIRECTOR, MARKETING AND BUSINESS DEVELOPMENT Thomas Vaughn joined Superior in 2016. His primary responsibility is establishing and nurturing key relationships with existing and prospective clients. Vaughn has more than 27 years of sales and operations management experience. Prior to joining Superior, he served as vice president for Selene Finance.

FAST FACTS: • Founded in 1984 in Houston, Texas • Superior is the industry pioneer in hazard claim recovery and introduced using hazard claim funds to manage remediation of damaged FHA properties to conveyance condition. • Over the past 30+ years, Superior has managed over 60,000 repair jobs and helped servicers recover more than $1 billion dollars in claim funds on FHA insured properties alone.

HOUSINGWIRE ❱ FEBRUARY 2017 59

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Venture Solutions

1170 Grey Fox Road, Arden Hills, MN 55112 800.728.2615 venturesolutions.com

The

FAST FACTS: • Venture provides data, print, eSolutions, and mail, solutions to more than half of the top 20 residential mortgage loan-servicing providers. Venture Solutions is part of the Taylor Corporation, one of the largest privately-held companies in the U.S. and provides integrated communications, marketing and interactive solutions to over half of the Fortune 500 companies.

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From data-driven program strategies to self-service content management portals, Venture Solutions remains at the forefront of critical communications practices more than 50 years after its founding. As market conditions have evolved, so has Venture’s approach, expanding to keep pace with advancements in technology, security and compliance. “There is a high demand for security, expertise in market compliance and end-to-end quality control,” explains Vice President of Sales Matt Krueger. “We’re the best at what we do in part because we constantly seek out new systems and technology to meet these demands, while navigating safely within regulatory requirements.” This steadfast pursuit of industry-leading tools and systems gives Venture the advantage in helping its clients create, deliver and integrate a growing number of customer touchpoints— including statements, letters, welcome kits, checks, year-end tax documents, escrow statements and modification packages. “Whether a critical communication takes place on a printed document, in an email, via SMS, or through an app, our tools keep each transaction secure, compliant, and aligned with the client’s brand promise,” says Krueger. Many of Venture’s tools directly support client self-service—a must-have in the mortgage industry. “More than half of today’s consumers prefer paying their bills online,” explains Krueger. “Our Electronic Bill Presentment and Payment (EBPP) solutions let clients offer an easy-to-use option for online bill payment.” Venture can either build these full-service solutions or support existing systems with customer viewing options for current and past statements. With Venture’s Preference Center, a client’s customers access the self-service hub through a branded web portal, email, or SMS. From there, they choose their preferred delivery method for their documents and communications. The trend toward multi-channel delivery goes beyond customer preference—it also represents a more sustainable customer service model. “Print is still a big deal in the world of critical communications, but there’s just no better

tool than multi-channel deployment for meeting customers on their terms—or for ensuring a consistent brand experience,” says Krueger. “Our multi-channel capabilities let us create a communication once and publish in different platforms. Synchronizing channels provides a better customer experience along with more control over the communication, from personalization to updates, performance tracking and audit trails. “We’re also doing more in terms of planning and deploying mobile communications strategies so our clients can connect with consumers in more immediate ways—such as using an SMS text message that includes a link to a document or a self-service payment portal. “Finally, we see more companies adding messaging on a statement or inserts into their mailings for better retention, cross-selling and revenue generation. Since critical communications have higher open and read rates than other mailings, this step reduces costs while improving visibility and engagement. “Every strategy we apply and every tool we integrate loops back to this goal of making the most of each client communication while keeping data secure and meeting regulations,” Krueger says. “The key is using client data to personalize as much as possible through customer targeting. “At Venture, we know how to make these targeted messages relevant, sync them across channels, and then optimize them for each of those channels without compromising the data. This end-to-end, vision-to-implementation work is where we really shine as a strategic partner for our clients—and where they realize the biggest gains in their programs.” The

EXECUTIVE

MATT KRUEGER, VICE PRESIDENT OF SALES Matt Krueger is an accomplished strategic leader with nearly 20 years of experience improving sales. Before joining Venture in 2016, he served as executive director of sales and client management with a local mid-sized corporation. In this role, he guided overall sales strategy, as well as strategic planning, forecasting, and customer life-cycle solutions.

CFPB Watch

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CFPB Watch

Former CFPB attorney confirms the worst fears of the mortgage industry CHOICE OF ENFORCE M EN T TA RGETS, R EV EN UE-BA SED PENA LTIES QUESTIONED

BY JACOB GA FFN E Y

SINCE THE INCEPTION OF THE CFPB, my desk has received voluminous feedback from the mortgage industry on the insider operations at the Consumer Financial Protection Bureau. The HousingWire newsroom’s efforts to work with the CFPB on addressing these issues resulted in a mixed bag of responses, ranging from super helpful to highly combative. Without naming names, the two most common complaints (referred to as “worst fears” in the headline) I heard from the mortgage industry about the CFPB were as follows: 1. The CFPB targets lenders for enforcement action based on opaque internal decisioning The CFPB targets those who harm the most consumers first, right? Well, we don’t know and their enforcement patterns don’t tell us much. HousingWire and other publications go to great lengths to set up a crystal ball to see inside the CFPB. We once even managed to get CFPB representatives to do a webinar, who then at the

last moment declared they would not take questions from participants. 2. Monetary penalties seemed determined by revenue, not equal application of said enforcement action In other words, lawyers told me that clients hand over, and sign, sensitive documents in an effort to show eagerness to comply with CFPB provisions. Those documents, they feared, are then used against them; penalties felt levied at the highest level a company could pay, without putting the target out of business. The CFPB wanted to be viewed as a protector, yes, but not a bankrupter. In a January piece in the National Review, Ronald Rubin discusses at length said internal processes. He should know, Rubin served as an enforcement attorney at the Consumer Financial Protection Bureau and the chief advisor on regulatory policy at the House Financial Services Committee. Rubin’s main objective in writing “The Tragic Downfall of the Consumer Financial Protection Bureau” was to highlight what

he calls the heavy politicization of the CFPB. In doing so, Rubin also just confirmed the worst fears of the mortgage industry. For complaint No. 1, Rubin offers the example of the Wells Fargo accounts scandal as harming millions for years before action was taken. Why didn’t the CFPB act sooner? The bank wasn’t in its sights. Rubin explains in more detail, but here in brief: “Congressional hearings revealed that two years of examinations, thousands of bank-employee firings, and numerous complaints had failed to get the bureau’s attention before the Los Angeles Times published a detailed exposé late in 2013. Worse yet, from 2013 to 2016, the CFPB took no action while the bank continued the incentive program that drove the unauthorized account openings.” For complaint No. 2, Rubin mentions the trajectory of PHH Corp. v. Consumer Financial Protection Bureau as an example of break-but-don’t-bust violators (last line). HOUSINGWIRE ❱ FEBRUARY 2017 63

CFPB Watch

“

As an independent agency with just a single director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision making, and poses a far greater threat to individual liberty than does a multi-member independent agency.”

— United States Court of Appeals Fortunately for PHH, the CFPB had accused it of violating a specific mortgage law. For two decades, HUD had interpreted the law and provided guidance that allowed business relationships like the ones Enforcement had investigated at PHH; payments to the company and its affiliates above the reasonable market value of services rendered were deemed illegal kickbacks. An administrative-law judge, following HUD’s interpretation, ordered PHH to refund consumers $6.4 million in excess payments. PHH appealed to the director. Cordray’s decision was stunning: HUD’s interpretation was wrong; the CFPB was not bound by the mortgage law’s threeyear statute of limitations; all payments during the last eight years were kickbacks; PHH didn’t owe $6.4 million, it owed $109 million. Targets were almost certain to write a check, especially if they were accused of subjective “unfair, deceptive, or abusive acts or practices.” Even the size of the checks didn’t depend on actual wrongdoing — during investigations, Enforcement demanded targets’ financial statements to calculate the maximum fines they could afford to pay. Rubin’s account may seem to some the rants of a disgruntled former employee; we all have our share of those. There is 64 HOUSINGWIRE ❱ FEBRUARY 2017

no doubt in my mind the CFPB is staffed with primarily able-bodied regulators who make prudent decisions on a daily basis — with the vision of leaving the American consumer with more protection tomorrow than today. So it’s not the starting point that’s the problem, it is the CFPB as a means to an end. And if that continues to operate outside additional checks and balances, then the due process of the law will continue to be pushed aside to achieve the wrong kind of vision under a masquerade of consumer protection. The CFPB needs reminding that in order to be needed, one should behave with necessity. Until that day, the complaints of the mortgage industry should not be disregarded; we are in this too. The best door to great financial responsibility should swing both ways. q

HousingWire readers have strong feelings about the CFPB, and shared these comments about the story online: EVIAN NOMORE Focus on the content of the article. Inside sources indicate that this article is true and just the tip of the iceberg. What ever happened to the CFPB manag-

er who was found guilty of discrimination? Why is Cordray still at the helm of this unchecked charade? He should get the same treatment as other CEOs, despite that the CFPB is much smaller than Wells, yet Stumpf was forced out due to politics. Lynn Effinger The bottom line is that the CFPB has been out of control since its inception and needs to be dismantled, as should nearly all of Dodd-Frank. The unintended (I hope) consequences of far too many government programs, agencies, regulations, et al, continue to be more problematic than the issues they attempt to correct. Blitz111 Thanks for writing about this article, Jacob. It was enlightening, but unsurprising when I read it. My complaint is that CFPB goes beyond statutory language in order to meet their goals. Whether it was pretending that statutes of limitation don’t apply to administrative actions in the PHH case or whether it was dealing with auto lending (even though they have no right to do so per Dodd,Frank) by claiming discrimination based on people’s last names (certain names “sounded black” to them), they have abused their authority. They also are known to discriminate against their own employees by race, for crying out loud. This all goes back to Cordray. He runs a rogue agency, unfortunately. An agency that really could be good if they had some moderating influences. But when you only hire liberal Democrats with an agenda and no concern about what the law says, you get the situation we have now. JS The CFPB, unfortunately, resembles many of the large, unwieldy, bureaucratic institutions in Washington, D.C that have abused their power and funding for de-

CFPB Watch

cades....the problem, the CFPB is a newly created Agency. The political influence from Congress corrupted both the CFPB and Justice Dept. in their pursuit of violations. I have no respect for either organization when I heard of the illegal tactics they employed — as there is little recourse to businesses when you’re being sued by the U.S. Government. It’s an abuse of power; the institution needs oversight, or should be shut down. Veteran Lender Here is further proof the CFPB is out of control. PHH is having a fire sale with it’s assets to pay fees and fines to the government. Wells was getting a free ride for 5 years (1 guess who they were donating

money to) CFPB is putting organized crime bosses to shame. TruthPatriotInTX The CFPB was created to be a partisan enforcement agency under the guise of consumer protection during the housing crisis. It is the job of congress to create laws and regulations to protect citizens from predatory lending, wrongful foreclosure, excessive fees, etc. Specific committees exist for this purpose and it makes the CFPB look redundant in function. But nonetheless, the biggest issue with the CFPB is that it is run and decisions made by a single person. Those decisions are not always based on what is best for the consumer, as Rubin points out and it is highly unconstitutional in its organization.

With no real consistent criteria of regulations or enforcement, the CFPB is akin to the IRS in who they go after and why. Trump needs to dissolve this agency, save the money and make congress do their job.

THE ORIGINAL AUTHOR RESPONDS Ronald Rubin served as an enforcement attorney at the Consumer Financial Protection Bureau and the chief advisor on regulatory policy at the House Financial Services Committee. After reading HousingWire coverage, he wrote the following: I would like to thank Jacob Gaffney for calling HousingWire readers’ attention to my National Review article, “The Tragic Downfall of the Consumer Financial Protection Bureau.” u

CFPB Watch His [Jacob’s] post speculated about my reasons for writing the article. “Highlighting the heavy politicization of the CFPB,” as Jacob observed, was a goal, but only one of many. The first was pure storytelling – the anecdotes are interesting, funny, and sad, and the time was right to tell them. Also, I enjoy helping the general public understand complicated issues, like I did in my 2014 Wall Street Journal article, “How the Wolf of Wall Street Really Did It,” and my 2016 Weekly Standard article, “The Rogue Regulator.” “Tragic Downfall” was a story set in the CFPB as much as a story about the CFPB. The facts allowed me to illustrate many important ideas: absolute power corrupts absolutely; intellectual diversity is healthy, while groupthink weakens organizations;

sunlight and transparency make institutions stronger, while secrecy promotes decay and dishonesty; and extreme partisanship hurts our society and government institutions. Finally, the article contains a very human story about how Washington can change even the best people – what “Mr. Smith Goes to Washington” might have looked like if its director had been Ingmar Bergman rather than Frank Capra. The clarity with which I came to view the forest rather than the trees was a gradual process that took many years. For example, it wasn’t always obvious that the CFPB was destined to be a one-party government agency, or just how detrimental that would be to its mission. Nor that the bureau’s investigation

process made guilt and consumer harm almost irrelevant to prosecution and punishment – which is quite Orwellian, and exactly what the founding fathers sought to prevent. I certainly hope that readers don’t consider my article to be, in Jacob’s words, “the rants of a disgruntled former employee.” I consider my target audience to be the left as much as the right. Preaching to the choir is not a challenge, and not very interesting. Since the article’s publication, a surprising number of current CFPB employees – both friends and strangers – have reached out to thank me. From these conversations, I fear morale may be even worse than I thought. It is heartbreaking to hear an employee – not low level – say the only

CFPB Watch

reason for coming to work is the paycheck. Less surprising were the many business people who told me they had lost all hope before learning that others were experiencing similar nightmares they could not make public. Jacob’s article did get one important point wrong. The CFPB is staffed with many able-bodied regulators, and I never implied otherwise. Their biggest complaint is that their superiors make them do their jobs in what they feel is an unprofessional manner. One of the first things these employees usually say to me is “I really do believe in the mission, but...” Anyone who has read my articles carefully knows that my point is never “the CFPB is bad and should be shut down,”

and rarely that the agency is unfair to businesses (nobody seems to care about that anymore) – it’s usually that something specific the CFPB is doing hurts rather than helps consumers. For example, how could a regulator harm consumers more than by sending businesses the message that their compliance efforts have little effect on their guilt or punishment? Why bother trying to improve if the most successful companies are always guilty, the smaller companies receive little scrutiny, and the standard penalty is “whatever you can afford to pay?” On the other hand, I would compliment the CFPB when it did things well if its External Affairs Division didn’t exaggerate and advertise the bureau’s accom-

plishments so aggressively. I couldn’t possibly add anything to the CFPB’s own self-congratulation. It is unfortunate that anyone who criticizes the CFPB is labeled an “enemy” or “hater,” and that supporters feel obligated to say everything the bureau does is magnificent. My National Review article has attracted so much attention because people who have seen the real CFPB rarely have the luxury of writing about it honestly and objectively. Someday soon, other knowledgeable writers will be free to express themselves and offer the bureau advice without fear of reprisal. That will be a good day for CFPB employees, businesses, consumers, and the Constitution.

Take 5

Industry leaders answer five revealing questions.

If I had picked a different career path I would be a

guide for traveling surfers

ANDREW KERNAN CEO, American Property Guard

My guilty pleasure is

riding in cross-country motocross races

3 5

My workout playlist includes

Andy Grammer - Good to Be Alive (Hallelujah)

My last vacation was

open ocean scuba diving with my wife and our two teenage boys on a Caribbean Cruise

68 HOUSINGWIRE ❱ FEBRUARY 2017

The book I can’t stop recommending is

Patrick Rothfuss The Name of the Wind

Inside Baseball

THE END OF P LY WO O D B OA R D I N G? TWO HUGE WINS FOR CLEAR BOARDING ADVOCATES SPELL THE BEGINNING OF A NEW ERA IN PROPERTY PRESERVATION BY BEN LANE

THE BLIGHT OF VACANT PROPERTIES boarded with plywood still casts a shadow over much of the country. Although the foreclosure crisis is over, its legacy still looms large in states like Ohio, Florida, Nevada, New York and New Jersey, which have tens of thousands of plywood-boarded homes from that era. Vacant homes boarded with plywood have been the norm in property preservation for decades, but two recent major developments have swung the momentum in favor of polycarbonate boarding. First, Fannie Mae announced in November that it will allow mortgage servicers to use clear boarding instead of plywood on vacant homes in pre-foreclosure. Previously, mortgage servicers and field services providers were required to use the clear boarding, which provides a more visually appealing and more secure alternative to plywood, on homes in REO status, but not in pre-foreclosure. Fannie Mae put that policy in place in 2013, rolling it out gradually until it went nationwide in 2014. Now, Fannie Mae is changing its “allowables,” which are products and services that do not require pre-approval as long as they are at a certain dollar value and below, to allow servicers to use clear boarding when securing vacant properties. Under the new policy, Fannie Mae will reimburse mortgage field servicers for the added upfront cost of using polycarbonate windows and doors or other clear boarding alternatives to plywood.Servicers and vendors will be granted a 90-day adoption period to implement on new inventory, which means polycarbonate boarding should be implemented starting this month.

SecureView, which Fannie Mae chose in 2014 to provide clear boarding for its REO properties, hailed the announcement. “Fannie Mae’s decision to reimburse for the use of clear boarding to secure all vacant properties is a game changer,” said Robert Klein, founder and chairman of Safeguard Properties, Community Blight Solutions and SecureView. “It will have a tremendous impact on returning properties to the market more quickly in a more stable and marketable condition.” The second victory for clear boarding was announced in January, when Ohio became the first state to ban the use of plywood on vacant and abandoned properties. Under the state’s new laws, “no person shall use plywood to secure real property that is deemed vacant and abandoned.” Mortgage servicers operating in Ohio have just three months to discontinue their use of plywood to secure abandoned properties. “This is a significant advancement for those engaged in the battle against neighborhood blight in Ohio,” Klein said. “Plywood is an outdated solution to a growing modern-day problem. We need to apply 21st century solutions to reverse the trends that are decimating our neighborhoods.” In May 2015, Phoenix became one of the first cities to ban plywood, stipulating that servicers must use sheets of polycarbonate to cover the windows in abandoned homes. The move away from plywood, which has long been the standard material for securing vacant properties, has been a long time coming, according to Klein. “It is my hope that other states will follow Ohio’s leadership and enact similar legislation.” HOUSINGWIRE ❱ FEBRUARY 2017 69

Kudos • WORLD CLASS REALTY, based in Hampton Roads, Virginia, surpassed $100 million in sales in 2016, growing to more than 80 licensed agents. The company, a woman, minority, veteran, and LGBT-owned firm, opened four years ago.

Giving Back • Over 30 employees from Salt Lake City-based PRIMARY RESIDENTIAL MORTGAGE, INC. (PRMI) flew to Montego Bay, Jamaica in December to aid 79 children living at the SOS CHILDREN’S VILLAGE, an international organization established to protect vulnerable children. PRMI employees, headed by CEO David Zitting, planted fruit trees, shrubs and a garden, painted homes, served food and provided early Christmas gifts to the children and caretakers.

• California-based MOUNTAIN WEST FINANCIAL, INC. was named as one of The Press Enterprise’s Top Workplaces of 2016 for a third time. The company, which reached $2 billion in funding in 2016, assisted more than 5,000 homebuyers, many of whom were first-time homeowners.

• NATIONWIDE TITLE CLEARING, INC, also known as NTC, celebrated its 25th anniversary in 2016. The company earned recognition as a Tampa Bay Times Top 100 Workplace in 2016 for the fifth time. The company was also named to the Tampa Bay Business Journal 200 Private Companies in 2016.

• In December, NATIONWIDE TITLE CLEARING donated toys and giftTEL cardsLIG to THE • IN EN T Q C CHILDREN’S HOME and California-based MOUNTAIN TOYSFINANCIAL, FOR TOTS.INC. The was WEST company alsooffilled up named as one The Press donated cars presentsof Enterprise’s Topwith Workplaces for for HANDS THE 2016 a thirdACROSS time. The comBAY,which a nonprofit that pany, reached $2 billion in supports funding inother 2016,nonprofits assisted through more thanmentoring, 5,000 homebuyers, advocacy andwere support. many of whom first-time homeowners.

70 HOUSINGWIRE ❱ FEBRUARY 2017

• THE MORTGAGE COLLABORATIVE, an independent mortgage cooperative, doubled its lender member companies from 40 at the start of 2016 to 85 organizations to close out the year, in addition to almost 60 best-inclass preferred partner companies.

• The Orange County Register

• INDECOMM GLOBAL SERVICES demonstrated its new IncomeGenius webbased platform for income calculation and analysis at Digital Mortgage 2016. IncomeGenius offers digitized, standardized and compliant income analysis, including for self-employed borrower loans, and is integrated with selfemployment training through Indecomm-Mortgage U.

• San Francisco-based UNISON HOME OWNERSHIP INVESTORS, formerly FIRSTREX, has expanded its HomeBuyer program to 13 states with eight lenders, and is targeting eight additional states in 2017. With the HomeBuyer program, Unison puts up part of the down payment and shares in any appreciation when the home sells, giving homebuyers more buying power and eliminating the need for mortgage insurance.

named NEW AMERICAN FUNDING No. 1 in its 2016 Top Workplaces Award. This is the fifth consecutive year the company made the list, ranking No. 3 last year. The company also won four awards in the 6th annual Best in Biz Awards for fastest growing company of the year (gold), best place to work (silver), marketing executive of the year (silver) and marketing department of the year (bronze). The Best in Biz Awards are judged by national business and financial journalists.

Knowledge

Center

72 HOUSINGWIRE ❱ FEBRUARY 2017

W H I T E PA PE R: e SignLi v e | SP ONSOR E D CON T E N T

Knowledge Center

PATHWAYS TO EMORTGAGE HOW E-SIGNATURES HELP BUILD A SECURE AND COMPLIANT EMORTGAGE FOUNDATION

INTRODUCTION Although bankers have been talking about paperless mortgages for years, the complexity of the process, legal ambiguities and an overall hesitancy in an uncertain environment have inhibited progress. Digitizing the upfront application process has been the main focus, but new regulations, digital technologies and customer expectations are creating renewed urgency for removing paper all the way through to the closing table. Success with the up-front application and eDisclosure delivery process has spurred more investment in eClosing. Hybrid closings are becoming more popular following the CFPB pilot in 2015. Two-thirds of U.S. households reside in jurisdictions that enable eRecordings. And investors are actively participating. The MERS eRegistry is a good indicator: 328,642 eNotes1 have been registered since February 2015 and that number continues to grow. Today, the end-to-end eMortgage is within reach. By embracing eMortgages, banks not only accelerate and simplify the mortgage process; they improve the customer experience for a generation of consumers who expect the speed of the Internet and the convenience of mobile devices. On the back-end, banks benefit from greater efficiency, visibility, and centralized control over the mortgage process, imposing consistent standards for compliance and security. In the past, the need for deep IT investments left many small- to medium-sized banks and lenders out of the eMortgage loop. Today, however, that has changed. Even the smallest banks can no longer afford to stay on paper. TRID regulations demand precise documentation that must be delivered and/or signed within strict timeframes. And borrowers accustomed to online services are becoming increasingly impatient with slow, paper-based transactions.

Fortunately, all banks can catch up through new technologies and secure cloud services like e-signature. By applying the right e-signature solution — the core component of any electronic documentation process — banks can make quick wins by taking a phased approach to eMortgage.

STEPS TO E-MORTGAGE Start fast and scale over time The vision of an end-to-end digital mortgage process is to provide greater convenience to the consumer and more efficient workflows for the lender. Taken as a whole, the complexity of regulatory requirements and the technology necessary for automating the process can appear intimidating. Yet there’s good cause for optimism. The eMortgage can be progressively automated in a series of steps. By examining each step, banks and lenders can better understand how to start fast and scale over time. Electronic signatures and eMortgage are hardly new to the industry. Originators big and small have successfully automated the initial stages of the mortgage process. If your bank hasn’t started to automate, leveraging e-signatures for the application is a logical and easy first step for two key reasons: 1. It’s a faster way to collect signatures and improve customer experience The application is a cumbersome package composed of many documents. Removing paper entirely at this stage and giving customers the ability to complete and sign the application online has an immediate impact on customer experience. To read the entire white paper, visit the Knowledge Center on HousingWire.com at knowledge.housingwire.com. HOUSINGWIRE ❱ FEBRUARY 2017 73

SPONSORED CONTENT

Melinda Wilner is COO at United Wholesale Mortgage.

Executive Conversation: Melinda Wilner on operational excellence in wholesale mortgage lending United Wholesale Mortgage focuses on service and turn times Question: What does operational excellence look like for mortgage lending? Answer: I categorize operational excellence into two buckets. The operation itself needs to run smoothly. Here at United Wholesale Mortgage, a couple of our biggest selling points are service and turn times, so it’s very important that our underwriting and closing processes run as smoothly as possible. The second part of operational excellence that is equally important is the ability for team members to realize when something is wrong and to be aware that they should bring it to your attention. It’s critical that our team members understand if something is working differently than it did previously, so we can find a way to make it better and improve our efficiency. Q: What makes operational excellence critical in the current mortgage-lending environment? A: The wholesale mortgage-lending environment is competitive and the old adage of people wanting to do business with people they like is accurate. For us, we have a gigantic focus on service as well as operational excellence. We celebrate service, but with that, we have to be operationally excellent in order to deliver in tight timeframes. In the current lending market, it’s critical that we work efficiently and produce a superior product. We want to ensure that every mortgage broker has a great lending experience, and part of that, for us, is to 74 HOUSINGWIRE ❱ FEBRUARY 2017

make sure we do the work quickly and in a friendly and consistent manner. Q: What are some areas where these unsung heroes make such a difference? A: Some of our operations teams are very client facing. Not all lenders do that. We like to have our operations teams — the people doing the work on each loan — as available to our clients as possible so they get questions answered more quickly. Let the people who know the file the best work together to get the job done well. Operationally, we don’t hide our people behind the curtain, but we utilize our technology and client service to be a difference maker. Q: How have these teams led to UWM’s success? A: We’re known in the business for speed, consistency and great client service, and it’s up to our operations teams to deliver that experience in order to keep brokers coming back. Brokers love our technology but they also love the processes that our operations teams make possible every day. Q: At UWM, what do you do to support your operations teams? A: Our leaders are very hands-on and involved in day-to-day activities. So as a leader of the operations teams, I’m in the weeds of the business. I’m always talking with people to figure out how we can make processes better or how new technology can improve our capabilities. We’re con-

stantly asking our team members for feedback. In everything we do, we analyze how it will positively impact our brokers — and we challenge our team members to keep that mindset in everything they do. Q: Why is it important for lenders to invest in the best technology for their operations teams? A: Investment in tools for operations is big, both from a client service and loan-quality standpoint. The two are related. If someone makes a mistake, you’d rather discover that human error earlier in a loan file than later, because it impacts the service we deliver. So we use technology to ensure underwriting accuracy and a positive client service experience. Technology enables us to create news ways for our brokers to enjoy faster, more consistent service. Q: In what ways is the communication between a broker and operations the most important channel of communication? A: I think that our operations teams, collectively, have a lot of communication with our brokers over the course of each loan. For instance, every time our underwriters touch a loan file, they call the broker to review the approval and discuss any remaining conditions that need to be cleared. So they have a lot of one-on-one contact, which facilitates communication, strong relationships and helps the loan process run as smoothly and efficiently as possible for our brokers.

SPONSORED CONTENT

Andy Higginbotham is senior vice president of strategic delivery at Freddie Mac.

Executive Conversation: Andy Higginbotham on Freddie Mac’s Loan Advisor Suite Freddie Mac’s integrated technology solution helps reduce costs and provide certainty Question: How does Freddie Mac Loan Advisor Suite help lenders gain more certainty around the quality of their loans? Answer: Loan Advisor Suite was designed to give lenders a comprehensive view of Freddie Mac’s requirements and feedback about their loans’ alignment with our requirements. Our goal is to help lenders understand their overall underwriting risk, provide them with greater certainty and reduce their origination costs. The Suite includes Loan Product Advisor, Loan Collateral Advisor, Loan Quality Advisor, Loan Closing Advisor, Loan Coverage Advisor and our Selling System. It also includes a new capability, Business Intelligence. These tools provide insight into quality, risk and alignment with Freddie Mac eligibility, which results in more efficiency. Q: What kind of reaction have you had from the industry so far? A: We have received very positive feedback from lenders using Loan Advisor Suite about its ability to give them confidence as they look to sell their loans to Freddie Mac. The Suite gives them access to powerful solutions for every stage of the loan production process, which helps them increase production while reducing risk. With all the change happening in our industry, Loan Advisor Suite is symbolic of what lenders need — innovation.

Q: Freddie Mac will require that lenders use Loan Closing Advisor by Sept. 25, 2017, but what benefits do lenders gain by being early adopters? A: Loan Closing Advisor helps lenders validate their closing data against the Uniform Closing Dataset (UCD). It’s our collection solution for the UCD, but it goes further, giving lenders a clearer picture of the completeness and accuracy of their data. By having access to this information ahead of the closing date, lenders can address any closing data defects be-

“We built it so the data can be updated in near real-time at multiple points ...” fore closing. Lenders need to start getting ready now in order to be ready next September. It can take six months or more to build a UCD XML file. Those who start now will have a higher level of comfort with their process. Q: Why is Business Intelligence such a critical part of Loan Advisor Suite? A: It’s about adding speed and increasing a lender’s ability to deliver loans of impeccable data quality. Our Business Intelligence capability enables lenders to identify loan origination issues at a glance by using visual reporting.

Its built-in heat maps help identify the primary areas of concern. We built it so the data can be updated in near real-time at multiple points throughout the loan process. This gives lenders the ability to track problems in real time and perform source cause analysis as loans are being processed during the day. We’re also developing a mobile Business Intelligence iPad app that will let lenders annotate reports and then email them directly to staff. Q: What are some of the future capabilities you will be adding to the Suite? A: We’re focused on using big data and advanced analytics to create powerful new Loan Advisor Suite capabilities that will take costs out of the loan origination process, and provide certainty through representations and warranty relief. We will broadly offer collateral representation and warranty relief. Over the course of the next year we’ll be introducing a no-cost automated appraisal alternative, automated borrower income and asset verification, and automated assessment of borrowers without credit scores. We have more than 40 years of historical data that is the foundation of Loan Advisor Suite. By pairing big data with advanced analytics that allow us to automate processes, we’re creating efficiencies and reducing costs for lenders and borrowers. And since every Loan Advisor Suite tool and capability is free, we aren’t adding to a lender’s cost through usage fees. HOUSINGWIRE ❱ FEBRUARY 2017 75

INDEX

SERVICING BOOM

The conditions are right for banks to jump in p38

COMPANIES

J.D. Power...................................................................................16, 43, 76 JPMorgan.................................................................................... 16, 41, 76

Tampa Bay Business Journal.................................................70, 76 Tampa Bay Times........................................................................70, 76 Tarbell..................................................................................................57, 76 Taylor Corporation......................................................................60, 76 TD Service Financial Corporation.......................................53, 76 Terwilliger Foundation..............................................................33, 76 The Collingwood Group.............................................................14, 76 The Mortgage Collaborative.................................................70, 76 The Oak Group................................................................................14, 76 The Press Enterprise...................................................................70, 76 Titan Lenders Corp.......................................................................14, 76 Trulia....................................................................................................28, 76

Airbnb............................................................................................11, 25, 76 Ally.................................................................................................41-42, 76 American Bankers Association.............................................41, 76 Amerifirst Savings........................................................................55, 76 Aspen Grove Solutions..............................................................20, 76

B Bank of America..............................................25, 41-42, 54, 56, 76 Bipartisan Housing Commission.........................................33, 76 BOK Financial..................................................................................47, 76 Brean Capital..................................................................................28, 76 Buffini & Company........................................................................14, 76

K Kislak...................................................................................................55, 76 Kofax...................................................................................................23, 76 Kroll Bond Rating Agency.......................................................43, 76

L Lakeview Loan Servicing.........................................................42, 76 LERETA........................................................................................51, 54, 76 LOR Finance....................................................................................55, 76 Los Angeles Times.......................................................................63, 76

Capital Economics.......................................................................28, 76 Carrington.........................................................................................52, 76 CFPB................................13, 25, 42, 46-49, 54, 56, 62-67, 73, 76 Chronos Solutions..................................................................51-52, 76 Citi..........................................................................................................41, 76 Clayton Holdings.................................................................... 11, 30, 76 CMBA...................................................................................................58, 76 Community Blight Solutions................................................ 69, 76 ComplianceEase............................................................................14, 76 Consumer Financial Protection Bureau..25, 41, 44, 63, 65, 76 Corporate Graphics Direct Marketing Solutions........60, 76 Countrywide...........................................................................52, 54, 76

M&M Mortgage....................................................................... 51, 55, 76 Massachusetts Institute of Technology..........................49, 76 Mercury Network...........................................................................14, 76 MetaSource......................................................................................14, 76 MLex Market....................................................................................49, 76 Mortgage Bankers Association.....................16, 24, 40, 44, 76

D DataQuick.........................................................................................54, 76 Del Mar Database........................................................................54, 76 Department of Housing and Urban Development....14, 76 Department of Justice...............................................................52, 76 Deval LLC..........................................................................................24, 76 deVere Group..................................................................................28, 76 Disney...................................................................................................14, 76 Ditech..................................................................................................42, 76

E Element Funding...........................................................................14, 76 Ellie Mae, Inc....................................................................................22, 76 EMC Mortgage...............................................................................52, 76 Ernst & Young.................................................................................58, 76 eSignLive.....................................................................................13, 73, 76 Eurasia Group.................................................................................28, 76

F Fannie Mae...................................................11, 24-26, 56, 59, 69, 76 FDIC......................................................................................................49, 76 Federal Financial Analytics....................................................49, 76 Federal Home Loan Bank of Dallas....................................16, 76 Federal Housing Administration..........................................14, 76 Federal Housing Finance Agency........................................14, 76 Federal Open Market Committee......................................40, 76 Federal Reserve...........................................................40, 48-49, 76 FirstREX.............................................................................................70, 76 Fiserv....................................................................................................14, 76 Fitch Ratings........................................................................... 42-43, 76 Forbes.................................................................................................24, 76 FormFree...........................................................................................26, 76 Fortune magazine.......................................................................53, 76 Franklin American Mortgage.................................................14, 76 Freddie Mac....................................................................... 13, 59, 75-76

G Genworth Mortgage Insurance.............................................14, 76 Ginnie Mae................................................................................ 42, 52, 76 Goldman Sachs......................................................................28, 41, 76 Green Tree Servicing...................................................................42, 76 Guinness.............................................................................................14, 76

H Haytt, Haytt & Landau..............................................................55, 76 Henry Schein Medical Systems............................................54, 76

I IMN.........................................................................................................16, 76 Indecomm Global Services.....................................................70, 76 Indymac Bank................................................................................52, 76 Inlanta Mortgage.....................................................................11, 14, 76 IRS.................................................................................................26, 65, 76

76 HOUSINGWIRE â?ą FEBRUARY 2017

N NAR......................................................................................................25, 76 Nasdaq.com...................................................................................40, 76 National Association of Hispanic Real Estate Professionals..................................................................................................16, 76 National Fair Housing Alliance..............................................25, 76 National First Mortgage...........................................................54, 76 National Review.............................................................63, 65, 67, 76 Nationstar.........................................................................40-41, 43, 76 Nationwide Title Clearing........................................................70, 76 Navigant.............................................................................................47, 76 New American Funding............................................................70, 76 New York Department of Financial Services...............42, 76 Nickelodeon.....................................................................................14, 76

O Ocwen Financial Corp................................................................52, 76 Office of the Comptroller of the Currency......................49, 76 OneWest Bank...............................................................................52, 76 Orange County Register...........................................................70, 76

P Pew Research Center.................................................................24, 76 PHH..............................................................................42, 48, 63-65, 76 PricewaterhouseCoopers.........................................................14, 76 Primary Residential Mortgage, Inc.....................................70, 76 Providence (RI) Housing Authority....................................33, 76

Q Quality Claims.........................................................................51, 56, 76 Quicken Loans................................................................................43, 76

R Radian Group Inc..........................................................................30, 76 RealEC..................................................................................................14, 76 RealtyBid.com................................................................................52, 76 Reddit.................................................................................................25, 76 REOMAC.............................................................................................58, 76 RES.NET.......................................................................................51, 57, 76 Residential Board of Governors............................................14, 76 Rhode Island Housing Finance Agency...........................33, 76

S Safeguard..........................................................................51, 58, 69, 76 San Fernando Realty..................................................................16, 76 SCG Partners...................................................................................58, 76 SCICOM Data Services..............................................................60, 76 SecureView..................................................................................... 69, 76 Securities and Exchange Commission.............................42, 76 Security Connections, Inc........................................................53, 76 SFIG.......................................................................................................16, 76 SmartAsset.....................................................................................29, 76 Solutionstar.....................................................................................52, 76 Starkey Mortgage.........................................................................14, 76 State Street......................................................................................14, 76 STRATMOR Group.......................................................................34, 76 StreetLinks........................................................................................14, 76 Superior Home Services.................................................... 51, 59, 76 SWBC Mortgage............................................................................14, 76

U U.S. Bank..................................................................................... 14, 41, 76 U.S. Census Bureau......................................................................29, 76 Unison Home Ownership Investors...................................70, 76 United Community Bank..........................................................14, 76 United Wholesale Mortgage...........................................13, 74, 76 USDA............................................................................................56, 76, 78 USFN....................................................................................................58, 76 USRES..................................................................................................57, 76

V Venture Encoding........................................................................60, 76 Venture Solutions.................................................................51, 60, 76

W Wall Street Journal..................................................................... 66, 76 Walter Investment Corp...........................................................42, 76 Weekly Standard......................................................................... 66, 76 Wells Fargo................................................................41, 56, 59, 63, 76 West Financial, Inc.......................................................................70, 76 Woodforest National Bank.....................................................14, 76 World Class Realty......................................................................70, 76

X Xinnix...................................................................................................35, 76

Y Yahoo Finance...............................................................................42, 76

Z Zillow...................................................................................................35, 76

PEOPLE A Antonakes, Steven.............................................................................46 Arrington, Leslie...................................................................................26 Ashworth, Paul.....................................................................................28

G Garcia-Gratacos, Deborah............................................................. 24 Gomoll, Chad............................................................................................11 Green, Nigel.............................................................................................28 Greene, Robert....................................................................................... 41 Guenther, Keith......................................................................................57

H Hart, Adam...............................................................................................14 Higginbotham, Andy...........................................................................13 Hora, Bob.................................................................................................56 Howard, Jen............................................................................................48 Hunter, Terri............................................................................................ 52 Hurst, Angela..........................................................................................57

J Jaffa, Alan................................................................................................58 Johnson, Simon....................................................................................49 Jones, Mike...............................................................................................47

K Kahneman, Daniel................................................................................17 Kedia, Gunjan..........................................................................................14 King, Terri...................................................................................................14 Kladde, Mary...........................................................................................14 Klein, Robert...........................................................................................58 Krueger, Matt.........................................................................................60

L Lewis, Michael..........................................................................................11 Lux, Marshall........................................................................................... 41

M Martin, Craig............................................................................................16 Martin, Jorge........................................................................................... 55 McLaughlin, Ralph..............................................................................28 Mencia, George..................................................................................... 55 Micali, Jim.................................................................................................54

N Nackley, Patrick....................................................................................59 Neugebauer, Randy............................................................................48 Nixon, John...............................................................................................14

O Obama, Barack.....................................................................................46 Oppenheimer, Zach........................................................................... 24

P Pajon, Rob................................................................................................57 Peltz, Monika......................................................................................... 53 Phelps, Robert...................................................................................... 53

R Rubin, Ronald..........................................................................................13

Bergman, Ingmar.................................................................................66 Bhasin, Sanjay........................................................................................16 Bray, Jay....................................................................................................40 Bremmer, Ian.........................................................................................28 Briggs, Ron..............................................................................................20 Brown, Mike.............................................................................................14 Brown, Sherrod.....................................................................................48 Brown, William..................................................................................... 25 Browning, Jason....................................................................................14 Buchta, Scott.........................................................................................28 Burns, Meg................................................................................................14

Capra, Frank...........................................................................................66 Clinton, Hillary.......................................................................................28 Cordray, Richard................................................................................... 25

Trump, Donald.....................................................................................25, Tversky, Amos..........................................................................................17

Sanz, Armando..................................................................................... 55 Schmitt, Erik............................................................................................16 Schumer, Charles.................................................................................48 Shaw Petrou, Karen...........................................................................49 Slonaker, Matt....................................................................................... 52 Slump, Roelof.................................................................................42-43 Smith, Dan................................................................................................14 Songrath, Kristen................................................................................ 53 Staubach, Roger....................................................................................11,

Danlag, Michael.......................................................................................11 Dargani, Julie...........................................................................................14 Delgado, Ruth.......................................................................................59 Duncan, Doug........................................................................................ 25

Walsh, John............................................................................................54 Warren, Elizabeth...............................................................................28, Waters, Maxine.....................................................................................28 Wilner, Melinda......................................................................................13, Witte, Ken.................................................................................................14

Fenske, Lisa..............................................................................................14 Ferriss, Timothy......................................................................................17

Yonis, Richard........................................................................................54 Yowell, Kim..............................................................................................47

AD INDEX A Altisource.....................................................................................71 Arch MI...........................................................................................4

B Black Knight Financial Services..........................................2

C Chronos.........................................................................................8

E Ellie Mae.......................................................................................5

F Fannie Mae................................................................................27 First Guaranty Mortgage.......................................................3 Freddie Mac........................................................................21, 36

LOOKING FOR A SERVICE PROVIDER?

L Loan Protector.........................................................................19 LoanLogics...................................................................................6

M M&M Mortgage Services......................................................10 Mortgage Connect..................................................................31

LOOK NO FURTHER.

Mortgage Contract Services..............................................65

N National Field Representatives....................................... 79

S Safeguard Properties............................................................67 SecureView.................................................................. Gatefold

HOUSINGWIRE’S MORTGAGE SERVICES GUIDE Over 600 different product & service providers, spanning more than 50 different mortgage industry specialties!

Superior Home Services...................................................... 15

T The Mortgage Collaborative.............................................66 Timios, Inc...................................................................................12

HOUSINGWIRE.COM/SERVICES-GUIDE

VRM............................................................................. Bellyband

Making sense of the real estate economy HOUSINGWIRE ❱ FEBRUARY 2017 77

PARTING SHOT

❱ BRINGING UP BABY A new USDA report released in January shows that the average cost to raise a child born in 2015 is $233,610. The largest child-raising expense? Housing at 29%. Food is next on the list, taking up 18%.

78 HOUSINGWIRE ❱ FEBRUARY 2017