June 2017 Issue by HousingWire

HOUSINGWIRE MAGAZINE ❱ JUNE 2017

BLOCKCHAIN Find out how this ledger technology could benefit the mortgage industry.

P.48

THE TRUMP EFFECT What to expect in real estate.

P.54 HOUSINGWIRE MAGAZINE ❱ JUNE 2017

2017

40 young leaders energizing the housing economy P.30 Andrea Hall, SVP, Operations at United Wholesale Mortgage

HOUSINGWIRE JUNE 2017 EDITORIAL EDITOR-IN-CHIEF Jacob Gaffney MAGAZINE EDITOR Sarah Wheeler ASSOCIATE EDITOR Caroline Basile SENIOR FINANCIAL REPORTER Ben Lane DIGITAL REPORTER Brena Swanson REPORTER Kelsey Ramirez CONTRIBUTORS Casey Cunningham, Sean Dobson, Debbie Hoffman, Deborah Huso, Jim Jumpe, Matt Oguz, Kate Raetsch

CREATIVE CREATIVE ASSOCIATE Chantae Arrington

SALES AND MARKETING NATIONAL SALES DIRECTOR Jennifer Watson Laws jlaws@HousingWire.com MARKETING DIRECTOR C. Scott Smith DIGITAL MARKETING SPECIALIST Caren Karris SALES DIRECTORS Christi Lingard clingard@HousingWire.com Tyson Bennett tbennett@HousingWire.com AD OPERATIONS MANAGER Kristy Figueroa SALES COORDINATOR Lydia Bellows

CORPORATE PRESIDENT AND CEO Clayton Collins

RISING HIGHER AWARD PROGRAMS are some of our favorite projects to work on at HousingWire. This month we feature the Rising Stars class of 2017, 40 young leaders under 40 who couldn’t be more impressive. Consider Joel Gottsegen, our youngest winner ever at age 24, who co-founded Qualia and leads their product development. The Stanford grad, who has a degree in computer science specializing in AI, and his co-founders Nate Barker and Lucas Hansen, have secured $10 million in funding in the last two years and expanded product usage to 30 states. This while he’s still young enough to pay an age surcharge when he rents a car. Or Ashley Gunn, associate director of the Mortgage Bankers Association, who started a nonprofit that bought abandoned homes via donation or tax liens, recruited help to rehab the homes into like-new condition and then provided financing for low-income single mothers to buy the homes — when she was still in high school. And then there’s Matt Humphrey, who is on his seventh startup, LendingHome, at age 30, or our cover subject, Andrea Hall, vice president of operations at United Wholesale Mortgage, who you can read about on page 35. Find out who else made the list and rest assured — the industry’s future is in good hands! But that’s not all. We recruited industry veteran Debbie Hoffman, chief legal officer of Digital Risk, and venture capitalist Matt Oguz, founding partner of Venture-Science, to explain the technology you keep hearing about but don’t really understand — blockchain — and its potential in the mortgage space. Read the feature starting on page 52 and you’ll be prepared to explain it to all your friends. This issue also includes a feature by Deborah Huso on how President Donald Trump is affecting the real estate industry, starting on page 58, and four commentary pieces from industry experts at Amherst Holdings, Arch MI, Xinnix and Radian. It’s chock full of the information you need, available nowhere else. Enjoy!

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 1-800869-6882 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 Barclays CEO responded to emails from an imposter pretending to be the chairman, @FT reports by Bloomberg @business HOUSINGWIRE ❱ JUNE 2017 5

JUNE 2017 48 BLOCKCHAIN FOR MORTGAGES Find out what blockchain technology has to offer to the mortgage industry. Two industry experts explain the benefits of the ledger system. By Debbie Hoffman and Matt Oguz

RISING STARS Meet the Class of 2017 Rising Stars: 40 of the most promising leaders under 40 in the housing economy. By Caroline Basile

54 THE TRUMP EFFECT ON REAL ESTATE He’s known as a real estate mogul, but the new president’s impact on the real estate market is still far from clear. By Deborah Huso HOUSINGWIRE ❱ JUNE 2017 7

CONTENTS

12 THE LINEUP 12 PEOPLE MOVERS

22 VIEWPOINTS 22 INNOVATION Sean Dobson, CEO of Amherst Holdings, on creating a sustainable housing future.

24 LIFESTYLE RENTERS Jim Jumpe of Arch MI on converting lifestyle renters into homebuyers.

26 TOP PRODUCERS Find out what sets apart top producer Todd Hennessey.

28 TRAINING SHIFT Kate Raetsch of Radian on how to train Millennials.

Casey Hurbis leaves FIAT to join Quicken Loans as its chief marketing officer.

14 EVENT CALENDAR IMN’s Second Annual Residential Notes Symposium kicks off in Dana Point on June 8.

15 ON THE SHELF We review two titles that reflect our times: Rogues of Wall Street and Everybody Lies.

16 SOUNDING BOARD Builders are shut out of some markets, contributing to the already tight inventory of homes.

18 DISPATCH 1 Servicing company DEVAL helps at-risk veteran borrowers to find options to foreclosure.

20 DISPATCH 2 United Wholesale Mortgage outlines how brokers can reach Millennial borrowers.

TWEETS FROM THE STREET MISSION NEARLY IMPOSSIBLE THIS SPRING: FINDING A HOME TO BUY by Daren Blomquist @Darenjblomquist

HOUSINGWIRE ❱ JUNE 2017 9

CONTENTS

62 BACK DEPARTMENTS 60 COMPANY SPOTLIGHT

TWEETS FROM THE STREET

Superior Home Services created a solution to manage the remediation of damaged properties.

62 INSIDE BASEBALL Pam Patenaude’s nomination for deputy HUD secretary is a welcome win for housing.

66 KUDOS BofI promotes financial literacy for San Diego elementary students with new program.

68 INDUSTRY PULSE

I need to grow up and stop doing shots and get a mortgage or something by Brighton Girl @BtonGirlProbs

The Supreme Court’s decision to allow cities to sue banks under the Fair Lending law draws fire.

72 KNOWLEDGE CENTER

Fannie Mae’s decision to reimburse for clear boarding in preforeclosure impacts values.

74 Q&A Our executive conversation with Caroline Reaves of MCS.

76 COMPANIES/ PEOPLE INDEX 77 AD INDEX 78 PARTING SHOT HOUSINGWIRE ❱ JUNE 2017 11

Casey Hurbis Quicken Loans

12 HOUSINGWIRE ❱ JUNE 2017

MILLER

NUNNERY WEGMANN

MCCOY RUDNICKI

INA NCIA L services industry veteran Michele McCoy has joined OrangeGrid as its vice president of business development. McCoy brings more than 30 years of experience to OrangeGrid, a business process workflow provider for the financial services industry. McCoy previously served as vice president of client relations for Nations Default Service and as senior vice president of default and special servicing for Fifth Third Bank. Former Federal Housing Finance Agency Acting Director Ed DeMarco joins the Financial Services Roundtable leadership team as FSR’s Housing Policy Council president, effective June 1. Since 2014, DeMarco was a Senior Fellow in Residence with the Milken Institute’s Center for Financial Markets, where he actively engaged in a variety of housing policy issues. CIVIC Financial Services has hired William Tessar as its new president and CEO. Tessar brings more than 30 years of mortgage experience to CIVIC. Prior to joining CIVIC, he founded and served as president at three lending companies, including

TESSAR

JOHNSON POWELL

Casey Hurbis is joining Quicken Loans as its chief marketing officer and will lead the company's consumer-facing marketing team. Hurbis, who has 24 years of experience, previously led FIAT’s North American brand’s reintroduction to the U.S. auto market after an absence of more than 25 years.

Capital Line, which was recognized as a top originating brokerage in California. J.G. Wentworth has added three new vice presidents to its management team. Jeff Frutkin was named senior vice president of home lending marketing and direct-to-consumer and will oversee all marketing for J.G. Wentworth’s home lending business and direct-to-consumer channel. Eliot Rudnicki was named vice president of business development, national accounts, where he will manage national partnerships and focus on engaging affinity organizations and building value-add programs. John Ritz Miller was named senior vice president and national head of retail lending and will lead J.G. Wentworth Home Lending’s retail network. LRES has named Mark Johnson as its new chief strategy officer. Johnson will oversee the creation and implementation of new strategic priorities and ensure core company initiatives, services and partnerships. A seasoned executive, Johnson has more than 20 years of executive experience including serving as division president of Nationstar Mortgage Holdings. Previously, he served

as division president and chief operating officer of Lender Processing Services (now Black Knight Financial Services). Texas Capital Bank has announced that Gary Ort, president of its mortgage finance division, will retire at the end of June. He will be succeeded by Jack Nunnery, the bank’s director of correspondent lending. Ort presided over the company's newly launched correspondent lending business. During his tenure, the bank built its mortgage warehouse unit into one of the largest national providers of mortgage warehouse credit facilities. Banc of California has selected Doug Bowers to serve as the bank’s new president and chief executive officer. Bowers will also serve on the bank’s board of directors. He brings more than 35 years of experience to the position. Most recently, Bowers served as president and chief executive officer of Square 1 Bank from 2011 until its sale to PacWest Bancorp in 2015. David Wegmann and John Powell have been hired by national appraisal management company United States Appraisals as business development managers. Wegmann brings more than 20 years of experience in regional and national account sales, sales management, and executive-level relationship building within multiple business environments and previously worked in sales management positions with Nadlan Valuation, Buyers Access and Spectrus Real Estate Group, as well as a litigation analyst for JPMorgan Chase. Powell has previous experience in sales management, senior leadership and origination and previously owned Bedford Paulownia Partners, leading a sales force of 19 with annual originations exceeding $450 million.

EVENT CALENDAR

2ND ANNUAL RESIDENTIAL MORTGAGE NOTES, NON- & RE-PERFORMING LOANS SYMPOSIUM JUNE 8-9, 2017 Host: Information Management Network (IMN) Location: Monarch Beach Resort, Dana Point, California Cost: $1,395-$1,995 On the agenda: The symposium, hosted by IMN, features panels and sessions on topics like Trump’s effect on the economy and regulation, government notes, NPL buying and selling and more. Attendees can also check out sessions covering institutional level buying, acquisition due diligence, securitizing NPLs and business model strategy. Speakers and presenters at this year’s conference include Domonic Purviance, a senior financial policy analyst from the Atlanta Federal Reserve Bank, and Sandor Lau, chief inspiration officer for Noted Financial. 14 HOUSINGWIRE ❱ JUNE 2017

DANA POINT, CALIFORNIA Don’t forget to soak up some of the Orange County sun and sand! While in Dana Point, conference attendees can take a summer stroll through the city’s namesake harbor, which is home to a variety of boutiques, marinas and restaurants. The harbor has a full menu of activities to partake in, such as boat rentals, coastal cruises, fishing and year-round whale watching cruises. www.danapointharbor.com/

ON THE SHELF “Rogues of Wall Street: How to Manage Risk in the Cognitive Era” ANDREW WAXMAN WILEY

Waxman, a veteran risk, compliance and governance specialist, offers in-depth insight and identifies the tools financial institutions have at their disposal to manage operational risk. Waxman shows how to leverage these tools to create an environment that can mitigate or prevent catastrophic events. Waxman offers insight and detailed guidance to leaders seeking more effective risk management and addresses how to analyze major operational risk incidents. Readers can also learn how to optimize culture to support effective risk management.

“Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are” SETH STEPHENSDAVIDOWITZ DEY STREET BOOKS

Each day, Internet searches total 8 trillion gigabytes of data. This staggering amount of information can tell us much about who we are as human beings — from the fears, desires and behaviors motivating us to the conscious and unconscious decisions we make. Stephens-Davidowitz uses studies and experiments on how we really live and think to demonstrate, in a fascinating and witty way, the extent to which our world is like a giant lab.

HOUSINGWIRE ❱ JUNE 2017 15

Where experts and pundits sound off on a key industry issue

HOME ECONOMICS

"MILLENNIAL

household formation is beginning to have meaningful impact on housing demand and will likely only increase. Currently, I estimate that the amount of housing supply necessary to just keep pace with demand is probably around 1.5 million housing units a year. The fact that [March’s] housing completions were 1.2 million, an increase from just over 1 million a year ago, is good news, but still not enough.” — Mark Fleming, First American Financial Corp. chief economist “Buyers have turned out in force for the start of Orlando’s traditional spring/summer buying season, enough to drive sales up by nearly 40% compared to last month. Inventory remains a challenge for buyers, especially in the under-$300,000 range where choices are minimal and prices are being bid higher by multiple offers.” — Bruce Elliott, Orlando Regional Realtor Association president

“March sales were the highest they’ve been since 2006, and the same is true for total first-quarter sales. Buyers were facing a market where inventory remained low by historic standards, but that didn’t slow them down much. I’m optimistic that we can maintain this momentum at least through the second quarter.”

“Our economic forecast remains unchanged in April as we continue to await details on the new administration’s plans. We’re intrigued by the disparity between elevated consumer and business optimism and signs of decelerating first-quarter economic growth.” — Doug Duncan, Fannie Mae chief economist

— Jack Kreider, RE/MAX Northern Illinois network executive vice president and regional director “Home prices have risen by 41% and rents have climbed 17% over the past five years at a time when the typical worker wage has grown by only 11%. To relieve housing costs, there simply needs to be more homes built.”

“Local, state and federal housing regulations have made it all but impossible for builders to meet housing demand in California’s growing economy. Conceptually, the solutions to California’s affordability crisis are simple, but politically we should expect the current situation to continue for the foreseeable future.”

— Lawrence Yun, National Association of Realtors chief economist

— Madeline Schnapp, Property Radar director of economic research

41%

“The strong housing demand, coupled with a shortage of available homes for sale, is pushing prices higher as would-be buyers try to purchase before affordability gets worse.” — Geoff McIntosh, California Association of Realtors president

CFPB

DEMAND

REGULATION

“Congress should require the CFPB to establish and abide by a consistent framework for providing industry with authoritative written guidance that facilitates efficient compliance, reduces implementation costs, and ensures consistent consumer treatment across the market.”

“Despite the fact that credit unions played no part in causing the financial crisis, they are still heavily regulated and affected by many of the regulations that have come from it. Unfortunately, every credit union dollar spent on compliance with regulatory burdens is a dollar that can't be used to help consumers through member service, better rates or additional money to lend.”

— Mortgage Bankers Association letter to the Senate Banking Committee

— Dan Berger, National Association of Federally-Insured Credit Unions president and chief economist

16 HOUSINGWIRE ❱ JUNE 2017

CREDIT UNIONS

DEVAL | SPONSORED CONTENT

DEVAL assists at-risk borrowers before foreclosure, homelessness become a reality Servicing company provides resources, options to veteran borrowers

ortgage servicer DEVAL helps at-risk borrowers find affordable housing options by collaborating with a variety of government programs and resources that support loss-mitigation efforts and enable borrowers to find alternative housing solutions if, and when, a loan modification or solution is not viable. One of these resources is Veteran Affairs Supportive Housing, or VASH. VASH is a nationwide veterans voucher program which covers the continental U.S. and its territories. The program encompasses the Department of Housing and Urban Development’s housing mission by providing housing choice vouchers and rental assistance for homeless veterans, while the VA adds to this support by providing case management and clinical services. Since 2008, more than 85,000 vouchers have been awarded by VASH. DEVAL recognized that there is a particular set of needs when servicing veterans. Founder and CEO Deborah Garcia-Gratacos said that one of the particular needs DEVAL sees while servicing veterans is understanding that they represent servicing situations that require a non-traditional approach. Garcia-Gratacos explained that the company’s mission is not just to service the loans for its borrowers, but also to provide housing solutions outside of the normal servicing spectrum. “Many times, these solutions require using a more ‘high-touch’ approach that includes discussions with a housing counselor so that a long-term solution is reached,” she said. In addition to VASH, DEVAL works alongside other affordable housing programs, including HUD’s Section 8 program and state and local housing programs administered by the 18 HOUSINGWIRE ❱ JUNE 2017

Housing Authority, to provide solutions to borrowers at risk of homelessness. DEVAL, a Hispanic, woman-owned loan servicer, also has an internal affordable housing unit which provides counseling, training and housing solutions to a range of clients including HUD and Housing Authorities nationwide. If a homeowner or family is facing homelessness, DEVAL offers solutions to borrowers by connecting them to HUD’s Information Resource Center, providing information on local and state housing programs, area housing authorities and matching borrowers to local housing counselors. DEVAL’s evolution into a housing counselor for its clients gives them the ability to marshal a wide range of services for borrowers. “This experience has allowed us to approach housing matters holistically since we focus on providing long-term housing solutions,” Garcia-Gratacos said. The DEVAL team has provided affordable housing support and technical expertise for multiple HUD offices, including: the Office of Public Housing and Voucher Programs; the Office of Field Operations; the Office of Policy, Programs and Legislative Initiatives; the Real Estate Assessment Center, and the Office of Native American Programs. Garcia-Gratacos said DEVAL’s early beginnings in the affordable housing space has provided the company the opportunity to work with programs which allow Americans to keep a roof over their heads. “In servicing, that need is still prevalent and we work hard to find ways to maintain housing options after loss mitigation efforts are exhausted,” she said.

UNITED WHOLESALE MORTGAGE | SPONSORED CONTENT

Here’s how brokers can reach Millennials Younger generation needs to know why brokers are the best option

illennials are expected to make up nearly one-third of the buyer pool in 2017, which should be another solid year for purchases. Mortgage brokers have a great opportunity to do more business with home-buying Millennials in 2017, and will be an easier task than one might have expected. It comes down to educating them on the mortgage process and why brokers are the best option, as opposed to overhauling their mindset. It is more a matter of coaching them through the process and dispelling myths versus giving them the hard sell. A recent study conducted by Michigan State University revealed that a combined 51% of Millennials that have not yet purchased a home have either never heard of mortgage brokers, or have very little understanding of what they do. Along those same lines, 68% of those surveyed reported that they would be inclined to use a bank when purchasing their first home. The correlation between those statistics is pretty clear, as it’s easy to identify low broker awareness as the key driver in banks’ popularity in the minds of younger people – especially first-time homebuyers. The concept of brokers being relatively unknown to people in their 20s and early 30s is understandable, especially among first-time homebuyers. That demographic has grown up watching movies and television shows where the concept of buying a home is stereotypically portrayed by a character throwing on a suit and going to the nearby big bank to apply for a loan. Whether it is through marketing, community outreach or some other means, there needs to be more awareness created among Millennials, increasing their knowledge of the mortgage process and the mortgage broker’s role in it. A buyer’s default mindset shouldn’t be to settle for a big bank just because they already have a savings account there, or because it’s the only way they have heard of to apply for a mortgage. The idea of relying on a mortgage professional’s expertise goes against the grain of the modern “do it-yourself” mindset that tech-savvy Millennials are hardwired with. Although, many homebuyers don’t realize that mortgage brokers offer those same technological capabilities. They consistently have access to new tools that make it easier to apply for a mortgage because they partner with lenders who stay on the forefront of industry technology. With a serious life-changing financial decision like a mortgage, the first move should be to connect with a professional who can provide the borrower the best possible product and rate, someone committed specifically to focus on their mortgage. That reshaped mindset isn’t that far off. The study categorized survey-takers into two groups – Millennials who had

20 HOUSINGWIRE ❱ JUNE 2017

already purchased a home, and Millennials who aren’t homeowners yet, but plan to buy in the next two to three years. Here are a couple of promising results that highlight brokers being in a good position among Millennials: • 72% of future Millennial homeowners agreed that mortgage brokers make the mortgage application process easier • 60% conceded that a broker can find better loan options than they could find themselves Ultimately, the ability of brokers to gain market share among younger first-time homebuyers comes down to getting in front of them, increasing awareness and making sure they understand the benefits that brokers deliver more than big banks and retail lenders. Data shows that they’re not opposed to using a broker; they just aren’t aware of them, how to find them, or the value they provide. By explaining the ‘why’ behind the benefits and each step of the mortgage process, brokers have a great opportunity to break through to Millennials and capitalize on that growing segment of the market this year.

VIEWPOINTS

Sean Dobson

The case for innovation in housing For the last 30 years, transaction costs have grown at a faster pace than inflation

Every day we are bombarded with news and information about the newest gadgets, developments in sophisticated technology, who said what on which television show and the latest political upheaval. Yet seemingly overlooked in the daily hustle and bustle is a piece of our lives that is both necessary for our livelihoods and nevertheless too often underappreciated for its substantial size, importance and presence in the overall U.S. economy. Iâ&#x20AC;&#x2122;m talking, of course, about the U.S. housing market. Consider these statistics: Housing accounts for more than one-third, about 35%, of all U.S. consumer spending, according to the 2013 Bureau of Labor Statistics Consumer Expenditure Survey, and BLS estimated that the average U.S. consumer spent $17,798 on housing expenses during 2014. American consumers spend more on housing each year than on any other single class of expenses. Given this reality and the dramatic changes that technology has stirred across the economy, the lack of innovation in U.S. housing is quite shocking. 22 HOUSINGWIRE â?ą JUNE 2017

Consider for a moment that in the last 30 years, transaction costs, including brokerage and loan origination, have not declined on a percentage basis but have actually grown at a faster rate than inflation. At the same time, borrowers are sold the same home and loan offered to their grandparents via a chain of intermediaries that operate with significant frictions in scale and cost of capital. Further consider that the taxpayers are seemingly required to backstop approximately 70% of the mortgage market. The largest most sophisticated economy on the planet canâ&#x20AC;&#x2122;t seem to figure out how to connect buyers and sellers for less than $14,000 in expenses or savers with bor-

rowers without $8,000 in fees and taxpayer support. This is not a sustainable system. To complicate matters, the U.S. residential market is experiencing significant cross-currents that will require a more responsive housing ecosystem. SUPPLY/DEMAND IMBALANCE This problem begins with the physical housing stock available in the market. The average age of a U.S. home is 42 years, and 40% of all homes are more than 50 years old. In many markets, housing built before 1978 is loaded with environmental issues, code violations, and sub-standard ameni-

Sean Dobson is chairman and CEO of Amherst Holdings, LLC, a research and analytics driven financial services holding company that sponsors and develops a broad array of companies assisting institutional investors with their U.S. real estate related exposures.

ties. In many cases these homes are truly crumbling and this aged stock has not been properly supplemented post-crisis. We estimate that between 2 and 5 million new homes are missing from the market, due to a lack of development capital and mortgage credit. To make matters worse, the demand for housing has grown. Americans are living longer, retiring later and living independently until later in life than previous generations – creating a longer use cycle for their homes. Millennials, born between 1981-2000, the largest generation ever, are accelerating their pace of household formation and will soon be looking for housing with family-friendly amenities. The number of net new housing units is not keeping up with household formation. This has created a significant gap between supply and demand for a broad swath of U.S. housing markets. Perhaps the most noteworthy change in the housing market over the last two decades is the secular shift away from homeownership toward rentals. The U.S. homeownership rate fell to 63.1% in 2015, from 66.2% in 2000, according to the U.S. Census and the 2015 American Community Survey, as every age group under 64 years experienced declines in homeownership rates during that time. This was the first time in decades we saw declining numbers of total homeowners, despite a growing number of households. Nearly 8 million new renter households entered the market even as homes occupied by owners went down. In addition to the undesirable supply, consumer credit constraints, changing demographics and flat wage growth for Millennials have all played a role in this shift. Demographic shifts will also push many more of future households to be renters. According to the Urban Institute, about 88% of net new households formed by 2030 will likely be minority households. These groups have historically owned homes at a lower rate than other demographics and, while an unfortunate real-

ity, typically have lower average household incomes. This has and will continue to drive rental rates and demand higher in parts of Southwestern U.S., including Arizona and Texas, and Southeastern U.S., notably Georgia and North Carolina, Amherst data shows. Even with this change well underway, there exists a shocking lack of infrastructure for managing, maintaining and financing single family rental real estate. The vast majority of these rental units are owner-operated, which is not required to be managed in compliance with the Fair Housing Act and in many cases does not contribute to borrowers’ credit histories that might ultimately broaden and lower the cost of its capital base. This lack of transparency can lead to unfair practices for consumers. INNOVATION FOR A SUSTAINABLE HOUSING FUTURE Innovation in housing has stalled on all fronts and the existing ecosystem is no longer effective in serving U.S. consumers or investors. Various layers of local, state and federal regulations, as well as powerful incumbent industry players, have created significant barriers to entry for new disruptors. Policy makers should focus on these barriers in order to build a more modern and efficient U.S. housing market. For instance, if consumer financial information was mandated to be more readily accessible, and in a form that met regulatory requirements, lenders could become more efficient in credit decisioning and monitoring. Today, this information is spread across banks, brokerage firms and the IRS in electronic form, and yet, consumers find themselves copying statements and returns only to have mortgage banks manually re-enter the information back into their own loan origination system. This error-prone process creates unnecessary costs. Fundamentally changing the flow of information during the loan origination process would be a substantial improve-

ment. Today, a growing share of all loans are originated by independent mortgage bankers, who serve borrowers during the origination process by gathering financial information and completing the required steps to create a compliant, fungible loan. During this process, these organizations become a permanent part of the loan by guaranteeing the borrowers’ qualifications, in effect turning an auxiliary function into a critical aspect of the loan’s credit quality. This is the weak link in the credit transfer process. A better system would consist of independent verification of loan details, thus removing risk that a seller might make errors or intentionally misrepresent a loan being sold. Finally, a vital area for innovation is in improved coordination between local, state and federal governments regarding housing construction and finance. The NIMBY (“Not in My Back Yard”) mentality and local zoning laws have driven up the cost of land and construction, limiting the ability to build affordable housing. Due to these restrictions, the nation’s aging housing stock is in many cases toxic, energy inefficient and often obsolete. Local governments should embrace policies that encourage renovation, demolition and construction so that homeowners can efficiently improve the quality of their housing. In discussions of housing finance reform, the federal government should thoughtfully amend the Dodd-Frank Act to create a better environment for more varied forms of lending that better serve a broader selection of consumers. Safe, quality and affordable housing is essential. Yet, the current housing ecosystem is ill-suited to adequately address consumers’ growing preferences for rentals and the financial realities of those most likely to purchase housing over the next 15 years. Our mission should be to devote our collective energy, brainpower, technology and resources to develop innovative solutions that allow the U.S. housing ecosystem to evolve and meet the needs of consumers once again. HOUSINGWIRE ❱ JUNE 2017 23

VIEWPOINTS

By Jim Jumpe

How to turn the lifestyle renter into a homeowner Lenders and Realtors can partner to educate and offer affordable mortgage solutions

In May, REALTOR Magazine announced that “for the first time in a decade, more new households chose to buy a home rather than rent one in the first quarter of 2017, according to the Census Bureau.” Is this the news the housing industry has been waiting for? Are Millennials at last making their move? Maybe. But the news came in the wake of a sobering study by Freddie Mac in March 2017, which concluded that renters, particularly Millennial renters, seemed set to continue renting for the foreseeable future. For lenders and Realtors, the situation is both promising and frustrating. As the largest cohort in American history, Generation Y is crucial to the continuing health of U.S. housing and its allied industries. Yet despite REALTOR Magazine’s sunny outlook, they continue to lag behind their predecessors in their rates of home ownership. Lenders and Realtors can work together to change this. 24 HOUSINGWIRE ❱ JUNE 2017

Their mission is to persuade Millennials of the value of home ownership, reassure them about their ability to qualify and provide the tools and means to successfully achieve it. It’s generally agreed that the economy’s future health depends most of all on the behavior of the largest generation in American history: Millennials. Their consumption patterns have been eagerly analyzed by every business sector, but for many traditional industries the resulting conclusions are not very comforting. Unlike previous generations, members of Generation Y are less likely to own cars, to marry and especially to own homes – the traditional milestones by which American consumers measure their per-

sonal success, and in doing so, revitalize the U.S. economy. For both lenders and Realtors, this sluggishness is baffling. As reported by Realtor. com in May 2017, the median price of a first home is $182,500, the median household income needed for first-time homebuyers is $72,000 and the median age of a firsttime homebuyer is 32.3 With interest rates expected to rise, it would seem to be the perfect time for many Millennials to invest in a home. However, the situation warrants deeper analysis. Millennials with the most stable jobs tend to be those living in urban areas, thriving job markets where home prices are highest. Although their paychecks may be impressive, they’re often coping with student debt, credit-card debt and a lifestyle that values travel, adventure, group activities and other social commitments that drain their disposable income. There’s a post-recession dread that good

Jim Jumpe is senior vice president and chief marketing officer at Arch Mortgage Insurance Co.

times and good jobs may not last, discouraging long-term planning. And the interest rate on savings continues to be low, disincentivizing the steady accumulation of spare cash. In Freddie Mac’s report, 69% of Millennials agree that “renting is a good choice for me now.” Renting may work for them in the short term, but economists agree that with the housing supply at its tightest, rents are on the rise for the foreseeable future. However, when asked what they would do if they faced a rent increase, 46% of Millennials surveyed in the Freddie Mac study said they would cut down on “nonessential expenses.” Even though 45% of Millennial respondents are paying more than a third of their income in rent, 67% view renting as more affordable than owning. One in five renters says they have no interest in ever owning a home. This is a cohort that simply does not see homeownership as the solution to rising rents. It’s clear that the existing Millennial problem is being compounded by the rise of the “lifestyle renter.” What is needed is a compelling way to make home ownership a valid and sensible alternative to renting, one that harmonizes with millennial preferences and preconceptions. HOME-BUYING EDUCATION AND AFFORDABLE FINANCING OPTIONS Combating the lifestyle renter and persuading Generation Y to buy into home buying on a large scale demands a twopronged strategy. Education: The lack of awareness or forward-thinking among Millennial renters is one issue. Rents rise; landlords sell their properties, convert them to condos or move in themselves; a singleton could suddenly find themselves with a family and the need for more space. Campaign to impress upon these lifestyle renters that circumstances change and a stable residence with a reliable monthly payment can be vital to ensuring their financial security and achieving their long-term goals. The next hurdle is convincing these potential home buyers that owning a home

is neither an impossible dream nor a financial trap. Explaining the process in simple terms, offering real-life, affordable financing solutions and making each step easy should be priorities for both lenders and Realtors. • Reach out to Millennials where they live, on the Internet: Any first-time homebuyer program should run in tandem with a robust social media campaign that works across devices and platforms. › E ngage Generation Y clients with real-life stories and testimonials › Capture their attention with videos, photos and interactive features rather than simply web pages of text. › P romote a can-do mindset among borrowers that will be met with a can-help attitude from loan officers and the Realtor team. • Bring them into the community. For many Millennials, a bank is the place with the ATM outside. Lenders can change that viewpoint by rebranding their institutions as a one-stop community resource for firsttime homebuyers. They can partner with a local food retailer – Starbucks, etc. – and entice potential borrowers with: › E ducational seminars that take would-be purchasers step by step through the process. › “Meet and greets” featuring real-life homebuyers in the community who can share their experience with affordable loan programs. › P resentations by local Realtors to highlight different neighborhoods, types of homes and the relative affordability involved. Affordability: Lenders are well-positioned to offer practical solutions on a local level with first-time home buyer programs like Fannie Mae’s HomeReady or Freddie Mac’s Home Possible or through their own in-house loan programs tailored to this market. The loan programs and down payment assistance programs offered by state and city housing finance agencies are another option for the Millennial borrower. These programs’ more flexible underwriting guidelines accept expanded ratios, lower credit score requirements and

accommodate special circumstances, such as multi-generational households. The obstacle of small down payments can be tackled by working with private mortgage insurers, which offer their own set of flexible guidelines directed at the first-time buyer. Mortgage insurers can also help with portfolio lending programs aimed at Millennials, a generation that doesn’t necessarily check all the boxes on the average home loan application. The FHA is a popular option, but its restrictive mortgage insurance (generally for the life of the loan) may not make financial sense for some homebuyers. Private mortgage insurance on a conventional loan is automatically cancelled when a borrower’s equity reaches 78% of property’s original value (and borrowers may request cancellation when equity reaches 80%). Arch MI offers a free toolkit, Roadmap to Home Ownership (RtHO), that can be used by both loan originators and Realtors to work with Millennial renters. It consists of a set of customizable presentation materials that lenders can use to organize and promote their own in-house home-buying seminars in cooperation with local Realtors. It explains the home-buying process in straightforward, step-by-step language that includes easy calculations for down payments, credit scores, debtto-income ratios and other important components. A steady supply of first-time homebuyers is critical for the long-term health of the housing market, so the participation of Millennials is essential. Homeownership has always been a challenge for first-timers, but by choosing affordable, responsible home ownership they can help to secure their future. Despite the plunging home values of 20082009, actual declines in property prices were short lived in most areas. As Ralph DeFranco, author of Arch MI’s Housing and Mortgage Market Review, points out, “With future interest rates increases set to hurt affordability … the sooner someone who is willing and able to make the jump from renting to owning, the better.” HOUSINGWIRE ❱ JUNE 2017 25

VIEWPOINTS

Casey Cunningham

Inside the mind of a top producer Todd Hennessey outlines the details that make all the difference in customer service

Todd Hennessey has proven himself as a true top producer. He has ranked No. 1 in sales for two years in a row with GMH Mortgage Services. His production in 2015 was more than $37 million. In 2016, he raised the bar for himself, ending the year with an annual production of more than $55 million. He has spent the last 14 years in the mortgage industry, but he was involved in sales long before. After working as a real estate agent and in the snowboard business, he discovered his true calling as a loan officer. 26 HOUSINGWIRE â?ą JUNE 2017

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

Hennessey was actually following the influence of his mother, a very successful real estate agent. He remembers, “I thought it was so cool. My mom had a mobile phone in her car. As a young kid, nobody had that in those days. I always thought she had a neat job.” After college, Hennessey started to realize he inherited his mother’s knack for selling. His track record shows that this realization was accurate. So what is the secret to his success? Does he employ complicated sales strategies or elaborate marketing campaigns? Actually, the answer is much simpler. For Todd Hennessey, business comes down to a tried-and-true philosophy: relationships come first. BUILDING RELATIONSHIPS Hennessey focuses on building strong relationships with his referral partners. According to him, he works with 10 real estate agents who give him all of their business, and another 15 give him the majority of their business. His strategy for finding these referral partners and bonding with them may surprise you: he looks for people he likes. “Find people whose relationship style fits yours,” Hennessey explained. “You can form a long-term relationship with people that you will want to work with. A lot of folks aren’t going to refer you right away, or they won’t work the way you’re going to work. You are just going to spin your tires and waste time. Move on and find somebody who is more likely to work with you.” MARKETING Hennessey’s approach to marketing his business falls closely in line with his focus on forming close relationships with his referral sources. His aim is to bring great value to those he serves. One way he does this is by holding events that bring his partners together. “I’ll get four or five of my real estate agents together in a group, ones I know are having similar issues in growth. We’ll just have dinner and drinks, sitting and

talking about those common ideas. I pick people from different markets so none of them are directly in competition with each other.” According to Hennessey, these gatherings are hugely successful. Holding relationship-based events reinforces the idea that his goal is to add legitimate value to his partners’ business. Additionally, by creating a fun and engaging environment, he deepens his connection with the people who bring him the most production. SALES PROCESS Hennessey takes this same philosophy of developing relationships through face-toface interaction and applies it to his process for selling to homebuyers. Unlike the industry at large, which primarily conducts business online, he instead personally meets with every client. After one of his assistants takes the application over the phone, they schedule a

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possible to their relationship. His philosophy is simply to provide amazing service for every homebuyer and real estate agent he works with. Hennessey knows that by creating an outstanding client experience, he is furthering his relationship with his referral partner. “Our philosophy is that we have to deliver service every single time that compels the client to refer their real estate agent again to friends and family. We just want to take the client’s experience and make it smooth and helpful. We really hope to make it a celebration rather than a stress-filled, anxiety-ridden process. You actually have to deliver an exceptional experience in the end.” COACHING Todd Hennessey is a top producer for a reason. His attention to customer relationships and outstanding service prove that he is a mortgage professional at the top of

Find people whose relationship style fits yours. You can form long-term relationships with people that you will want to work with.”

meeting for the homebuyer to come in the office and have a conversation. For Hennessey, this is a way to make sure he and the client are on the same page. “If the client poses a challenge and asks why they need to meet with us, we simply say, ‘Why wouldn’t you want to meet somebody who is trying to help you structure a loan program that might affect you for the next 30 years?’ People almost always agree. Nine-and-a-half times out of 10, they have no problem meeting us.” CUSTOMER SERVICE Obviously, customer service is the foundational aspect of Hennessey’s operation. He wants to get to know each of his clients and referral partners personally to be sure he is bringing the most value

his game. However, he hasn’t reached this remarkable success on his natural ability alone. In fact, he says that one of the most important decisions he made in his career was hiring a sales coach. “I think everybody who gets in this business who has a level of success has the gift of gab, or whatever you want to call it. But once you realize you’ve got a knack of sales in some way, shape, or form, it would greatly benefit you to hire a sales coach to develop you even further.” For Hennessey, the sales coach serves as a reminder of what is at stake. “I stay motivated because my sales coach and I always say this to each other: I’ve got no options. I’ve got no excuses mentally. I’ve got to get up every day and make this happen because no one else is going to do it for me.” HOUSINGWIRE ❱ JUNE 2017 27

VIEWPOINTS

Kate Raetsch

Industry shifts in workforce are sparking demand for a modernized approach to training Investing in people development is critical for success in our industry The past decade has been tough on the mortgage industry. Boom turned to bust followed by a long period during which routine refinancing was practically the only game left in town. Today, purchase originations are hot again and mortgage professionals and processors who can build customer relationships are in high demand. 28 HOUSINGWIRE â?ą JUNE 2017

Kate Raetsch is vice president, national training, at Radian Group Inc.

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Getting new people up to speed quickly and keeping experienced staff sharp has never been more important. What’s more, many lenders are infusing their workforces with talent from outside the mortgage industry and casting them in their own culture and model rather than hiring seasoned people who have to unlearn legacy practices. This trend has led to new energy and urgency by many lenders to reevaluate how they can enhance their approach to training. Attracting top talent and keeping them engaged and motivated is key to the suc-

A Microsoft study in 2015 showed that the average attention span of an adult has decreased in the last decade from about 12 seconds to just eight.”

cess of any organization. Employees coming up the ranks are looking for new ways to learn and advance. Some, especially Millennials, want training tools that they can access on or off the job so they can own their own learning and development opportunities. And across all generations there is a consistent need to “cross skill” or broaden their expertise so they can slip into and out of specialized roles on their way up. While demand for training has increased, the way we train is also changing. As business leaders, we have to think differently about the learning that we are providing based on the needs of the audience that is consuming it. Training needs to be easy to digest in smaller segments so that time constrained talent can easily weave it into their daily priorities. In addition, it is time consuming and expensive to create in-house training programs that offer quality learning to busy mortgage professionals. While education and training are not Radian’s core business, we saw the need for a flexible, cost-effective and off-the-shelf training program that could be adapted and implemented based on the needs of each institution or individual learner. Today, we offer our customers a suite of five training curricula called “Foundations On-Demand” — a series of videos and workbooks that can flex to provide essential industry knowledge to the rookie or the highly seasoned pro. We’re also taking advantage of advances in digital channels, video content, and a mobile-first mindset to help deliver high-quality training in a more accessible manner, regardless of organization size or budget.

Smaller lenders are now able to take advantage of training opportunities previously only afforded through trainee programs at larger institutions. And larger institutions can supplement their robust training programs with smaller specialty modules now available digitally. However, just because online courses can now deliver knowledge directly to employees who need it doesn’t mean they’ll take advantage of it. A Microsoft study in 2015 showed that the average attention span of an adult has decreased in the last decade from about 12 seconds to just eight. That means training materials have to be interesting, informative and short or they will be a wasted effort. Foundations On-Demand was designed with smartphone-era attention spans in mind. We use “active learning” techniques that combine short video lessons – most five minutes or less – followed by exercises that allow participants to follow along or immediately apply what they just learned in the video. Active learning is an effective strategy because it breaks instruction into bitesized chunks and then imprints them on the mind through relevant and practical activity. This makes the information stick. Investing in people development is critical to the success of any organization, especially during these transformative times. But what about the downside? A common concern among employers goes something like this: “What happens if we train them and they leave?” But the real concern should be, “What if we don’t and they stay?” HOUSINGWIRE ❱ JUNE 2017 29

2017

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THE 2017 RISING STARS represent the best young leaders in the mortgage industry â&#x20AC;&#x201C; in lending, servicing, investing and real estate. Many of our 40 winners are leading their companies as C-level executives, making strategic decisions for their organizations and developing new and inventive ways to get things done. Others are contributing through innovation, product development, enhancing processes and data analysis. Across the board, their efforts and accomplishments are making waves through the industry.

LUMINARIES 36

Nicole Abraham Grier Allen Abhinav Asthana

Bob Hart Matt Humphrey Jonathan Kirst

Jeff Sandman Phil Shoemaker Jeremy Stewart

Nina Church-Adams Dennis Cisterna Zach Dawson

Ted Krus Cheri Lines Todd McGowan

Troy Tomas Justin Tucker Ali Vafai

Maria Earley Sean Faries Andrew Flachner

Fenn Meents Darius Mirshahzadeh Aaron Moody

Drew Vandermay Jorge Vidaurrazaga Sarah Volling

Vishal Garg Luke Glass Joel Gottsegen

Jessica Murray Julie Norberg Leo Pareja

Kyle Gunderlock Ashley Gunn Alec Hanson

Lance Poole Erik Richard Jesse Roth

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A Rising Star at United Wholesale Mortgage ANDREA HALL LEADS HER TEAM WITH PURPOSE AND PASSION United Wholesale Mortgage reported impressive results in 2016, growing loan volume by 77% to become the No. 1 wholesale mortgage lender in the country. That growth was facilitated by employees like Andrea Hall, senior vice president of operations at United Wholesale Mortgage, who leads a team of 300 people with passion and purpose. In the course of one year, the 31-year-old and her team improved efficiency and output by 50%, a major factor in UWM’s $23 billion in loan volume. Hall centralized the mortgage insurance ordering process, which decreased the time spent on each loan from 10 minutes to four minutes, saving more than 8,000 hours of production time in one year. Ultimately, Hall led her team to successfully service and close 320 daily loan volume levels on average, a number that was previously typical of the last week of a month. Hall got her start in the mortgage business by working at a bank, then found an entry-level mortgage opportunity at a local office headquarters. She has worked in the industry for 12 years, serving as both director of operations and vice president of capital markets at UWM before being promoted to her current role. HousingWire asked Hall about what drives her success. Q. The Rising Stars program recognizes people in our industry who have accomplished a lot at a relatively young age. What has been one of the habits that has helped you succeed? A. One of the mantras I’ve lived by is “You are entirely up to you.” I’ve always believed that each of us, as individuals, is in control of our own path, our own success and our own future. Don’t wait around for opportunity, create your own. I’ve always sought out every chance I could to learn something new, or to be a part of something big that I’m passionate about. I’m grateful that leaders throughout my career were willing to teach me and let me be a part of as much as I wanted and could contribute to. Q. What are some of the things you learned as you built up your team and now lead 300 people? A. Think and approach your process and all aspects of your business as if you are your own client. Be your own disruptor. Make sure your team understands their “why,” their impact. The team has to understand that what they are doing is important and the work matters. It’s not a task, it’s a client. It’s not just a job, it’s a career to grow. Leaders remind people about the big picture. Q. What excites you about your job and this industry? A. It’s constantly evolving! It’s exciting. Our operations team gets the unique opportunity to touch every loan that comes through the door, so we have a lot of chances to impact a client, make a dream come true and place another building block on a career path for someone.

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Grier Allen CEO and President BoomTown

REAL ESTATE | AGE 37

Nicole Abraham VP, Production Operations Academy Mortgage Corp. LENDING | AGE 39

Nicole Abraham started in the mortgage business right out of high school as a receptionist, eventually rising through the ranks first as a processor and then an underwriter. Abraham joined Academy in 2012 and took over as vice president of production operations in 2016. She oversees operations for 11 regions consisting of more than 400 employees. Her responsibilities also include coaching and growing individuals throughout the organization. Since Abraham joined Academy’s executive team, the company has experienced record-breaking growth, with an all-time high of $9.2 billion in loan volume in 2016. Academy is now licensed to originate loans in 49 states and the District of Columbia, with over 260 branches and 2,400 employees nationwide. Abraham serves on committees for several of Academy’s highest priority initiatives. She was tasked with building the process development team, co-chaired the Encompass core committee and was an instrumental member of the TRID core team. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? Lead with trust. The moment you extend trust, you begin a relationship like no other. Information-sharing flows more easily. Those you lead become more loyal. The speed in which things are accomplished increases. This is a relationship-based business. The more we can all learn to trust in each other, the more that can be accomplished together. 34 HOUSINGWIRE ❱ JUNE 2017

Grier Allen is the co-founder, president and CEO of BoomTown, a sales and marketing platform for real estate professionals that uses patented technology and proprietary algorithms. The company, founded in 2006, was recognized on the Inc. 500 list of fastest growing companies in 2011, 2012 and 2013. In 2015, the company took on $20 million in funding and in 2016 launched an open platform initiative that provided an API to build an ecosystem of partners to its central platform. The company’s software is used by 25% of the Real Trends top 500 teams and current partners include BombBomb, Mojo Dialer, RPR and Bandwidth. BoomTown recently released a mobile app, BoomTown NOW. WHAT IS ONE THING YOU HAD TO OVERCOME TO SUCCEED IN THIS INDUSTRY? The original ideation for BoomTown began in 2006, but we did not get the product to market until mid-2008. It can be an intimidating issue when the industry you’re trying to service takes a nosedive, you have no institutional capital, and you have mortgaged your home to bring your dream to reality. Thankfully, we had built a product that offered a lifeline: finding buyers online during very tough times ended up being exactly what they needed. As companies became more desperate, they were willing to take a risk and try something new, and the industry as a whole was ripe for disruption.

Abhinav Asthana Director, Consumer Lending Practice and Products Tavant Technologies LENDING | AGE 34

Abhinav Asthana is head of product innovation and strategy for Tavant Technologies’ consumer lending product suite, VELOX. The suite builds an enterprise data connector for the mortgage industry to provide lenders with a one-stop shop for all the data they need for a mortgage transaction, including credit, assets, verification of employment and income, appraisals, flood and title. Prior to Tavant, Asthana ran product strategy and headed the innovation roadmap for a leading loan origination product suite. He also executed product innovation strategies and delivered on roadmaps for enterprise mobility in lending, omnichannel loan origination (device, loan product and lending channel agnostic) and digital strategy for enterprise lending in the U.S., Europe and Australia. In this capacity, Asthana enabled a sub-30-day loan application process for three of the top 100 lenders in the U.S. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I have always kept myself updated with the latest developments in industry verticals such as retail, interactive media and high technology. I am an avid follower of design thinking concepts from across the world, which has helped me bring some of the most cutting-edge changes from other geographies and industry verticals into the U.S. mortgage industry.

Nina Church-Adams VP, Head of Product Marketing, Global Lending Solutions D+H LENDING | AGE 36

Nina Church-Adams plays an integral role in enhancing the customer experience for D+H’s mortgage lending clients. In 2015, as the mortgage industry faced one of the biggest regulatory changes in more than 20 years, Church-Adams and her team worked to provide lending clients and prospects with the latest information on TRID and to develop resources that helped keep clients informed and prepared throughout the journey. Church-Adams listened closely to the 1,400 clients that use D+H’s MortgagebotLOS leading up to and following TRID. Partnering with industry expert David Lykken, she oversaw educational webinars that included more than 1,000 participants at a time and also launched D+H’s TRID microsite. In addition, Church-Adams and her team were responsible for the activation and rollout of MortgagebotMobile, ensuring that D+H’s customer relationship managers working directly with lenders fully understood the power of mobile mortgage technology. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Being intentional about assessing and leveraging my own strengths, as well as the strengths of my team. Working with my team members to identify and nurture their natural talents, instead of over-investing in shortcomings, has a multiplier effect. It both delivers stronger results for the business and is more productive and fulfilling for each individual.

Dennis Cisterna Chief Revenue Officer Investability Real Estate REAL ESTATE | AGE 39

As the chief revenue officer of Investability Real Estate and RentRange Data Services, Dennis Cisterna leads all revenue-related functions, including sales, marketing and strategic planning. Prior to joining Investability, Cisterna served as managing director of FirstKey Lending, a portfolio company of Cerberus Capital Management. There, he managed the West Coast regional office and oversaw the first multi-borrower securitization completed in the single-family rental sector, which totaled just over $240 million. He has also served in key roles with Johnson Capital, Lennar and Toll Brothers. Cisterna has served in a variety of leadership and advisory positions, including the Southern California Urban Land Institute’s Young Leaders Group, the National Association of Homebuilders, Mortgage Bankers Association and International Council of Shopping Centers. Cisterna hosts a weekly podcast, The Real Investor, where he shares his knowledge and perspective with investors in the SFR space. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Both life and business rarely go as planned and I think it is easy to become full of yourself when you succeed and lose faith when you experience failure. Whether I am winning or losing, I try to maintain composure as I know neither lasts forever.

Zach Dawson

Director, Collateral Policy and Strategy Fannie Mae LENDING | AGE 39

Zach Dawson leads Fannie Mae’s collateral policy and strategy team, which is responsible for single-family collateral strategy as a whole. This includes both Selling Guide policy and the use of collateral technology tools such as Collateral Underwriter. Dawson also oversees the appraiser quality monitoring program, collateral reporting and analytics, engagement with the appraisal community, and other strategic valuation initiatives. Dawson worked closely with the Fannie Mae Innovation Lab in the creation of CU and was instrumental in developing and executing a successful go-to-market strategy. He also played a lead role in the launch of Day 1 Certainty. Prior to joining Fannie Mae in 2012, Dawson managed appraisal fulfillment and collateral underwriting at GMAC Mortgage. He started his career as a licensed appraiser and real estate salesperson in Minnesota. Those experiences have been critical in helping shape effective policies and innovative collateral risk management tools for the industry. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I’ve made a conscious effort to build a team of people with extensive primary market experience. Most have spent many years in the field — either as appraisers, working for mortgage lenders, or both. That perspective allows us to better understand our customers’ needs as we develop policies and risk-management solutions.

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Sean Faries CEO Land Gorilla

LENDING | AGE 38

Maria Earley

Partner, CFPB Practice Group Co-chair Reed Smith SERVICING | AGE 39

As a partner at Reed Smith, Maria Earley advises and represents financial services companies in enforcement, examination, litigation, transactional and counseling matters. She is a former CFPB enforcement attorney with broad knowledge of federal and state consumer financial laws. Earley leverages her experience to help her clients navigate the complex and unique issues that often arise when interfacing with the CFPB. During her tenure at the CFPB, Earley led a number of enforcement matters involving a variety of federal consumer financial laws and emerging legal theories regarding the scope and application of the CFPB’s Unfair, Deceptive and Abusive Acts and Practices authority. She participated in several financial institution examinations, as well as the CFPB’s extensive mortgage rulemaking process. Prior to joining the CFPB, Earley focused on the defense of financial institutions in complex civil litigation matters. WHAT IS ONE THING YOU HAD TO OVERCOME TO SUCCEED IN THIS INDUSTRY? I had to overcome a fear of failure to succeed in my career and personal life. Failure has been both an opportunity and a gift. It has taught me humility, responsibility, courage, and faith. My biggest failures have simply been stepping stones on the path to something greater.

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Sean Faries is CEO of Land Gorilla, which provides comprehensive construction loan management solutions. The company looks to streamline the construction lending process and help lenders manage 3.5 times more loans with built-in automation tools, program development and pre-close services. Land Gorilla’s Construction Loan Manager provides cloud-based construction loan software to smooth post-close loan management workflow. In the last three years, Faries has grown Land Gorilla more than 1,700%, ranking as high as No. 230 on the Inc. 5000 list of America’s fastest growing companies. In addition, the company is ranked No. 10 in the list of top construction-related companies by Inc. Magazine. Faries takes an active role in his community, organizing charitable events that have included the delivery of Thanksgiving dinners to a homeless shelter and donating computers to a local school after the theft of their laptops. WHAT’S THE BEST PIECE OF ADVICE YOU’VE EVER RECEIVED? Always take the high road. My father taught me this at a young age. Servicing the mortgage industry takes integrity and character. Taking the high road means making the tough decisions even though they may not be popular or easy. This piece of advice has been instrumental in my life and the growth of Land Gorilla. I hope that some day my son finds it as valuable as I have.

Andrew Flachner CEO and Co-founder RealScout

REAL ESTATE | AGE 29

Andrew Flachner, a former real estate agent and repeat tech entrepreneur who combines the insights and connections of an insider with the fresh perspective of an outsider, wants to transform the massive residential real estate market. Unlike many traditional tech startups, RealScout isn’t about disintermediating players in legacy ecosystems. Instead, it embraces the broker-driven residential real estate process and works to empower the agent-client relationship through a powerful collaborative home-search platform. This approach has enabled RealScout to power billions of dollars in home transactions, which represent nearly 10% of transactions in select markets. To date, RealScout has closed $15 million in early-stage funding led by DCM Ventures and Formation 8. Prior to RealScout, Flachner was CEO at the double dating website DuoDater and co-founder of Natural Cravings, a healthy vending company that was acquired in 2012. WHAT IS ONE THING YOU HAD TO OVERCOME TO SUCCEED IN THIS INDUSTRY? Initially, I remember feeling intimidated by the multi-billion dollar incumbents in our industry. Over time, I learned that big companies have hurdles to overcome that startups typically don’t have to deal with – like moving slowly due to organizational complexity and pressure from Wall Street.

Vishal Garg Founder and CEO Better Mortgage

LENDING | AGE 39

Vishal Garg founded Better Mortgage in 2014 to improve the speed, transparency and customer satisfaction in the mortgage loan process. The company officially launched as Better Mortgage on better.com in mid-December 2015, and started 2016 with its new brand. Since then, the company has grown its platform from a rate engine that still had significant manual processing to a fully integrated platform that allows borrowers to complete a series of automated tasks based on the information submitted. It also enables borrowers to link bank accounts and upload documents directly for underwriting review and see an official loan estimate in seconds. Some critical milestones have been the close of Series A funding for $30 million led by Goldman Sachs in June 2016 and a Series B funding for $15 million, which included Kleiner Perkins Caufield Byers (known for investing in Amazon and Google) in February of this year, setting the company’s new valuation at $220 million. In the past three months, the company has launched service in five new states, doubling its coverage. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I strive to relentlessly question and challenge the status quo. I ask “why is it this way or that way? Who made that happen? And why?” There is a natural order to everything, and without understanding the past, there is no way to shape the future.

Luke Glass Executive Vice President Move, Inc./realtor.com REAL ESTATE | AGE 38

As vice president and general manager of ListHub, which was purchased by Move in 2010, Luke Glass grew the platform into the nation’s largest online real estate listing syndicator. Glass expanded his role into Move’s software business in 2014, spearheading the integration of software products within the company and facilitating interoperability with external vendors. In 2016, Glass shepherded the development of the industry’s first complete solution for transaction management, resulting from the integration between Reesio (transaction management software acquired by Move in 2015), Top Producer, the company’s CRM platform, and transaction forms made available through an agreement with ZipLogix. In September 2016, the company added integration with LoneWolf accounting management software, completing the process through to commissions allocation and payment. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? Knowing something is different from thinking you know something! The conviction that comes from knowing something to its core makes decisions easier, teams more empowered and success more achievable. Then the recipe is simple: Make a good product, take care of your customers and advertise — in that order.

Joel Gottsegen Co-founder Qualia

REAL ESTATE | AGE 24

As co-founder of Qualia, which provides title and closing software, the past two years have been a whirlwind for Joel Gottsegen. He leads Qualia’s product development and in less than two years, Gottsegen and his cofounders, Nate Baker and Lucas Hansen, have secured $10 million in funding, grown the team to 50 people and expanded product usage to 30 states. Gottsegen, who received his degree in computer science specializing in artificial intelligence from Stanford, uses his advanced technical skills to guide Qualia’s product roadmap and execution. On a daily basis, he works across the sales, support and product teams to ensure Qualia’s features are accurately communicated, customer issues are properly addressed and product functionality exceeds customer expectations. He also spends a substantial amount of time on-site with Qualia customers. To date, Gottsegen has led the team to develop dozens of seamless vendor integrations which allow title agents to be connected at every stage of the real estate transaction. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Obsessing about every part of our business gives me a full view of our customers’ experiences. I build product, train our sales team, and answer support calls. This has given me a unique perspective on how to continue to steer the product in the best direction.

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Ashley Gunn Associate Director Mortgage Bankers Association REAL ESTATE | AGE 29

Kyle Gunderlock President and COO Citadel Servicing Corp. LENDING | AGE 39

Kyle Gunderlock has built Citadel Servicing Corp. from a three-person operation to more than 150 nationwide. CSC was formed in 2003 as a sister company to First Street Financial, Inc. FSFI was a top 20 subprime originator and top three hard money originator by volume through 2007. As part of the FSFI business model, servicing was retained during loan sales and housed on CSC’s platform. In February 2007, FSFI ceased operations but CSC continued to thrive and in September 2007 partnered with a distressed asset fund purchasing whole loans on the scratch and dent secondary market. Since 2013, the company has funded more than $1 billion worth of non-QM/ non-prime loans. Until 2013, secondary market participants did not exist for this loan product, but four years later there are multiple major Wall Street banks and hedge funds looking for this asset class due to the efforts of Gunderlock’s team. For 2017, CSC is on a run rate to fund more than $1 billion in this year alone. WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? Challenge; don’t turn a blind eye to mediocrity. When something isn’t to your expectations, correct it. Success won’t come to the status quo.

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Ashley Gunn started a nonprofit to provide homes to low-income, inner-city families when she was still in high school. Gunn was recognized for her efforts as the country’s National Young Entrepreneur of the year and spoke at the 2008 Republican National Convention. While attending the Wharton School at the University of Pennsylvania she worked and interned with financial services companies and the White House’s National Economic Council. Upon graduation she worked at Bank of America Merrill Lynch (BOA). In 2014, Gunn pivoted careers by joining the American Bankers Association, where she launched and supervised ABA’s Commercial Real Estate Lending Committee, ultimately growing it to over 150 members and created the CRE Lending Bulletin for ABA members. Gunn also authored Congressional testimony and published articles. In May 2016, Gunn joined the Mortgage Bankers Association where she has launched the Community Bank Roundtable, created the independent mortgage banker newsletter, and leads MBA’s Young Professional outreach. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? My father, a quintessential politician, ingrained in me at an early age to always ask questions and to get people to talk about themselves. He taught me, it’s not about me. It’s about them. Learning to listen has helped me strengthen my relationships with clients, work better with colleagues and ultimately develop a strong professional network.

Alec Hanson

VP, Regional Production loanDepot’s retail imortgage division LENDING | AGE 35

Alec Hanson joined loanDepot in 2010, managing three branches and 65 employees. His volume has since grown 225% and branch infrastructure has grown 456% — now including 14 total branches. Hanson spent years in production as a nationally ranked, top 1% loan originator, organically creating top-producing branches for large, national lenders and he now coaches many loan officers. In addition to being the No. 1 rookie originator in 2005, according to Mortgage Originator, he has been a top percentage producer annually and has received numerous loanDepot President’s Club awards. Hanson was an active part of the Orange County and Newport Beach Associations of Realtors when he was a loan originator. In 2010, he joined the board of directors for the breast cancer awareness group, Barbells for Boobs, to honor his mother who has breast cancer. The group raises $2 million to $4 million a year and grants the money to a variety of major foundations such as Susan G. Komen. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Undeniably the single most important habit that led to my success is a relentless work ethic. If you want to be successful, you have to work extremely hard. You also have to be tenacious in seeking feedback and in finding ways to improve your performance by learning from those who came before.

Bob Hart VP, Partner Development Ellie Mae LENDING | AGE 38

Bob Hart is vice president of partner development at Ellie Mae, with a focus on supporting Ellie Mae partnerships and ensuring they have a pathway to success. Hart is also responsible for identifying new partners that provide Ellie Mae customers with an operational or compliance lift in their process. Hart has been in the real estate and mortgage tech space for the past 16 years, and worked for a partner of Ellie Mae’s before joining the team. He has been instrumental in helping hundreds of Ellie Mae’s network partners and clients realize the benefits the Ellie Mae network provides to their business. As a growing organization, Hart has helped foster deeper engagement with Ellie Mae’s partners to bring even more value to Ellie Mae’s customers. Within the first year of being at Ellie Mae, Hart has achieved recognition by Ellie Mae to not only be included in the Ellie Mae Circle of Excellence, but the elite Inner Circle of Excellence as well. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? For me, the best advice I ever received is that to be an effective communicator, you must be a good listener. This is something that I constantly have to remind myself of and work on because it is easy to be focused on the message you want to deliver and forget to listen.

Matt Humphrey Co-founder and CEO LendingHome LENDING | AGE 30

Matt Humphrey co-founded LendingHome in late 2013 with a mission to reimagine the mortgage process from end to end. Humphrey started his first business at 17 and LendingHome is his seventh tech startup. He founded his previous company, an e-commerce platform called HomeRun, when he was 23 years old and successfully exited for north of $100 million less than 18 months later. Humphrey and his team spent almost a year building LendingHome’s proprietary mortgage platform, which has become the largest and fastest-growing marketplace lender in the nearly three years since it launched. So far, the company has funded over $1 billion in mortgage loans and returned over $410 million in principal and $35 million in interest to investors. Borrowers can receive their rate in 60 seconds, complete their application in 20 minutes, and close in under 15 days. LendingHome has also secured over $100 million in equity funding from investors including Foundation Capital, Ribbit Capital, and Renren. WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? The entrepreneurial road is going to be a long and difficult one, filled with tons of ups and downs. Get ready to learn from failure and try to get a little bit better each time. And, more than anything, enjoy the journey. That’s what it’s all about.

Jonathan Kirst Co-founder and CTO Roostify LENDING | AGE 29

Jonathan Kirst is the co-founder and CTO of Roostify, an online home loan application software that takes a borrower from application to funding in a single, dynamic experience tailored for each borrower. Kirst has been the driving force behind product development with the company as it has evolved from a bare-bones startup to a thriving company with a robust sales team, product management team and a customer success team. Under Kirst, the Roostify engineering team has matured from just a handful of programmers to a sophisticated, multi-faceted organization capable of supporting some of the nation’s largest financial services providers. Kirst has overseen integrations with companies, including DocMagic, for automated disclosure generation and e-signatures. Under Kirst, the company has also integrated with Encompass, PCLender and other leading Loan Origination Systems, as well as forging an exclusive partnership with Genworth.

WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? The world will always be full of fascinating problems — but you can’t solve problems you don’t know exist. Keep an open and interested mind engaged with the people around you. The next big opportunity is a conversation or experience away, if only you take the time to have it.

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Cheri Lines VP of Technology Nexsys

SERVICING | AGE 38

Ted Krus

Director of Executive Projects Flagstar Bank LENDING | AGE 36

As director of executive projects for Flagstar Bank, Ted Krus has led the sale of more than $1 billion in high-risk, underperforming assets. This move transformed the bank’s balance sheet and resulted in the lowest level of non-performing assets in Flagstar Bank’s 30-year history. Krus, who has worked at Flagstar since 2014, also led the project to create the Michigan-based bank’s appraisal panel for its retail mortgage channel, enhancing the customer experience and overall quality of originations. Krus also serves as an M&A core leadership team member for Flagstar, evaluating acquisitions for the bank, including its most recent acquisition, Stearns Lending, in April 2017. Krus also oversaw and completed a project with the company’s vendor services for the physical and electronic storage of the bank’s records management functions, resulting in reduced costs and increased efficiencies.

WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? “It is not necessary to do extraordinary things to get extraordinary results.” This quote from Warren Buffett has always resonated with me. Details matter. Being able to see the big picture and put all the details together matters —and usually brings success.

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Cheri Lines reached the director level in her career at the age of 33. While working with Nexsys’ sister-company Title Source, Lines created a unique-to-the-industry technology platform, Nexsys Clear Path, from the ground up. She also influenced the implementation of the new technology with another sister-company and major industry lender. Between 2015 and 2016, the platform transaction volume saw growth of 120% and the Nexsys Clear Path platform provider network now has more than 52,000 users. Lines oversaw the growth of Nexsys’ IT team from two team members in 2012 to more than 30 in 2017. With a strong business development skill set, she has worked to incorporate full-time marketing, sales and BI/BA team members to support the Nexsys information technology team. Lines expanded and developed platform scope from simple AMC management to a fully-fledged closing portal featuring robust analytics and reporting, real-time order allocation and automated fee calculation. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? One habit that I have made over the years is deeply understanding the ins and outs of our business and where the industry is heading in addition to my day-to-day operations and technical systems expertise. Truly understanding our business has allowed me to build solutions that appeal to everyone.

Todd McGowan SVP, Origination Division Business Director First American Mortgage Solutions LENDING | AGE 40

Market share for Todd McGowan’s centralized title and settlement business lines saw substantial growth from 2015 to 2016, which he credits to a “non-sales” approach. McGowan leads with an eye for process improvement, personally visiting clients to help identify and troubleshoot process inefficiencies. McGowan’s focus on efficiency helped the centralized title and settlement business line increase revenue per employee, while simultaneously reducing total costs per open order. He was a key member of the quality management team that led First American to achieve ISO 9001 certification in 2016. Additionally, McGowan oversees a full suite of products designed to support lenders with all aspects of the home equity loan cycle. Business revenue for the fulfillment services business line significantly grew in 2016, driven in part by large-scale staff augmentation engagements with top-tier lenders. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Putting the interests of my teammates first, whether it’s empowering them to have ownership, listening to their ideas and following through to ensure suggestions for improvement get implemented, or challenging them to help foster personal and professional growth. Because only by supporting my team’s success can I create my own.

Fenn Meents Chief Growth Officer iEmergent LENDING | AGE 37

In July 2016, Fenn Meents joined the iEmergent executive team as its chief growth officer. He has developed and launched a strategic growth plan for iEmergent, including a content marketing strategy, a five-year resource plan, and a structure for improving client partnerships – all of which have resulted in 100% retention and a tenfold increase in sales activity. Additionally, Meents has single-handedly designed a new strategic solution that uses iEmergent’s analytics to help lenders improve their digital marketing and correspondent lending channels. Prior to joining iEmergent, Meents achieved success as a strategic projects leader at Primary Capital Mortgage. During that time, he utilized iEmergent’s predictive analytics and strategic tools to grow Primary Capital Mortgage’s annualized production from $600 million to $1.95 billion in 29 months. He has been featured in and contributed to many of the top industry publications and has been asked to speak at multiple events on how technology and analytics can and will shape the future of housing finance. WHAT IS ONE THING YOU HAD TO OVERCOME TO SUCCEED IN THIS INDUSTRY? Surviving, adapting and leading through the mortgage meltdown has given me the resolve to accomplish many goals. My success in this industry has been a series of events where I needed to not only overcome change, but anticipate and lead through it.

Darius Mirshahzadeh

CEO The Money Source

LENDING | AGE 39

Under Darius Mirshahzadeh’s leadership, The Money Source has grown into one of the largest nonbank mortgage lenders in the nation and is a Top 15 Ginnie Mae mortgage servicer. During the past year, he has overseen the launch of The Money Source’s retail division and launched innovative technologies, releasing a SIME mortgage subservicing platform. Under Mirshahzadeh’s leadership, the Money Source has grown to seven offices across the country. In 2016, The Money Source hired 500 new employees to satisfy the needs of its new retail lending and subservicing divisions, while still maintaining best-in-class employee engagement scores. Mirshahzadeh is a proponent of core value-driven leadership — a reason the company has maintained its award-winning employee engagement while growing its business at a record fast pace. Mirshahzadeh is also the president of The Pink Unicorn Foundation, a nonprofit that directs The Money Source’s philanthropy. In 2016, the foundation donated more than $30,000 to numerous causes, including United Way and national food banks. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I am extremely disciplined when it comes to using my calendar. I set reminders for reminders. I believe this is one of the tools to moving the ball forward on projects big and small.

Aaron Moody VP, REO Operations Xome

REAL ESTATE | AGE 38

Since joining Xome in 2013, each leadership challenge continues to redefine operational excellence for Aaron Moody. For Moody, who serves as vice president of REO operations, his current success is built upon more than 10 years of industry experience in operations. Most recently, Moody’s leadership contribution drove impressive operational efficiency objectives for REO inventory turn-rate, contract closing efficiency, downstream vendor performance and revenue and EBITDA success for the company. Moody also recently assumed leadership over Xome’s full service REO asset management business unit. Moody’s continual success at Xome includes standing up a distressed asset management business unit tasked with streamlining and simplifying complex processes. In early 2015, Moody was assigned Xome’s REO title and closing operations and within a few months, Moody successfully implemented data-driven and consumer-friendly approaches to title and closing management, greatly enhancing Xome’s monthly closed unit forecasting methodology. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I am laser focused on the key inputs, outputs and details of what drives operational excellence — that is, allowing numbers to tell the story versus anecdotal responses such as “the way we’ve always done it.” Honing in on these factors allows me to help Xome provide a positive experience for our customers.

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Julie Norberg VP, Planning and Analytics National MI LENDING | AGE 40

Jessica Murray VP, Strategy and Operations PeerStreet LENDING | AGE 29

Jessica Murray has broken records at PeerStreet, becoming the fastest-promoted person in the company’s history. In January 2017, she was promoted from head of corporate communications to vice president of strategy for the company, an investment platform that enables accredited investors to easily invest in high-yield real estate loans. Murray established PeerStreet’s voice on social media, blog, customer communications and placed media channels and she built out all marketing, social, communications and internal press channels. Murray is now managing new business and capital markets, utilizing her previous experience at J.P. Morgan as a commercial mortgage-backed securities trader. Murray was responsible for PeerStreet’s communications through the company’s 2016 $15 million Series A funding round, led by Andreessen Horowitz. Her efforts resulted in more than 50 press articles in 2016 and millions of investment dollars added in the platform within the year. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? “Never wear flip flops to work.” Advice your mom gives you is often the advice that actually sticks with you. Given I work at a startup not too far from the beach, flip flops definitely do make their appearance! But I took this insight as more than a professional fashion tip. I come to work each day focused on the quality of my work, my team, my clients and hold myself to a high level of professionalism. 42 HOUSINGWIRE ❱ JUNE 2017

From a successful college career at Portland State University studying business administration and accounting to her achievements throughout her professional career, achievement is a habit that’s hard to break for Julie Norberg, vice president of planning and analytics at National MI, one of the nation’s fastest-growing private mortgage insurance companies. Norberg joined National MI in 2012, becoming one of the startup’s first hires. She helped develop National MI’s finance department from scratch, establishing the company’s accounting system and leading recruitment of the finance department. As National MI’s vice president of planning and analytics, Norberg works with the company’s front line sales and operation teams and is responsible for developing sales plans and revenue projections in addition to developing the company’s expense plan. Norberg was instrumental in defining system functionality to account for mortgage insurance premiums, she helped incorporate revenue recognition principles into the company’s client transaction system. WHAT IS THE BEST PIECE OF ADVICE YOU’VE EVER RECEIVED? A former colleague advised me to ‘Just be myself. Don’t try to change anything or pretend to be someone different as being yourself has gotten you this far.’ I’ve carried that advice with me and whenever my confidence is shaken, I remind myself that being true to myself has not failed me yet.

Leo Pareja

CEO of Remine Co-founder of Washington Capital Partners REAL ESTATE | AGE 34

By the time Leo Pareja celebrated his 28th birthday, he was the No. 1 Keller Williams agent in the world. During his 15-year career of selling, Pareja transacted close to 4,000 homes, representing around $750 million in transactional volume. In 2012, Pareja co-founded Washington Capital Partners, which provides financing to buy, fix and flip for investors of single-family rentals by focusing on a seamless process leveraged through a proprietary technology platform. The company delivers debt-to-liquidity conduits in the secondary market, which is uncommon in a space dominated by small mom-and-pop operators. As CEO of Remine, Pareja has become a full-blown technologist. Remine delivers big data visualizations and predictive analytics to agents exclusively through their MLS. Demand for Remine from the MLSs is strong and more than half of all Realtors will have access to Remine through their MLS by the end of the 2017. Pareja is actively engaged with the National Association of Hispanic Real Estate Professionals and is serving as its national president in 2017. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Modeling. Anytime I have wanted to do something new or learn something new I find someone who has achieved what it is I want to accomplish. I then go visit with them and ask them to share with me how they would do it again if they knew what they know now.

Lance Poole Co-founder, Head of Product Maxwell LENDING | AGE 36

As the youngest vice president at a Fortune 1000 financial services company, Lance Poole led the company’s product group through a revolutionary change in product development approach, increasing sales by more than 80% to over $2 billion. His strategy was deep in design-thinking theory, a skill he honed as a graduate of Stanford’s Institute of Design. Poole is a demanded TEDx speaker on design thinking and has been recognized for his work in behavior design at Voya, Edward Jones and healthcare companies like Baptist Health Systems. In 2015, Poole co-founded Maxwell, where he brought the principle of empathy to product design. During product development, the Maxwell team spoke to more than 1,000 mortgage professionals and homebuyers. Poole himself spent days shadowing loan officers and their teams, understanding their core pain points and where technology could relieve friction in the process. Now, since its commercial launch in August 2016, Maxwell’s product has facilitated over $1.4 billion of loan volume. WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? One of the most important lessons I have learned involves having patience. At 25, it seemed like everything needed to happen now. At 36, it’s clear that most people (my younger self included!) underestimate what can be accomplished in three to five years and over estimate what is possible in the short term. Invest in the long term.

Erik Richard Founder and CEO Landmark Network LENDING | AGE 40

Erik Richard has been in the financial industry for 22 years, with the last 10 specifically in the appraisal industry. Richard founded Landmark Network in 2007 and has been instrumental in expanding the company through the acquisition of five companies (a tech firm and four AMCs). His efforts have helped the company secure a place for three years on Inc.’s fastest growing companies listing. In fact, Richard has helped the company’s revenue grow 62% during the last year. Under his leadership, Landmark has become the No. 1 AMC in the reverse mortgage industry. Richard is a former board member of Five Star Institute’s National Appraisal Congress, which is comprised of experts within the real estate appraisal industry. He is leading the charge in diversity and was appointed by the MBA board of directors to the association’s Diversity Inclusion Committee. Richard is also the senior policy and program adviser for the American Mortgage Diversity Council. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I believe in always finding ways to help other people achieve their business goals, whether it is through strategic introductions for business ventures or help with employee issues. This has helped me develop long-term relationships that, more often than not, turn into opportunities in the future.

Jesse Roth SVP, Business Development Auction.com REAL ESTATE | AGE 38

Jesse Roth joined Auction.com in 2012 as the senior vice president of business development and client management, where he oversees the business development and strategic initiatives of Auction. com’s national real estate disposition business. Roth’s leadership has helped build Auction.com into the nation’s leading real estate marketplace, with more than 200,000 residential and commercial sales and $46 billion in transactions. Under his leadership, Auction.com’s client base increased over 200% and asset volume increase over 270%. Prior to joining Auction.com, Roth has held senior management positions in portfolio management, capital markets and servicing roles with mortgage industry leaders Citigroup, Fannie Mae and GMAC. At Fannie Mae, he was a director of servicing management, overseeing a team of 22 portfolio managers and contractors specifically assigned to various functional areas including collections, foreclosure, loss mitigation and system enhancements. He managed a combined portfolio of 4.7 million loans worth $3 trillion with an estimated credit loss of $45 billion. WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? Don’t worry so much. Concern yourself with doing the next right thing and taking care of the people around you. Be real and honestly consider the needs of your clients and coworkers. If you do that, it will all work out in the end. HOUSINGWIRE ❱ JUNE 2017 43

Phil Shoemaker EVP, Wholesale Lending Caliber Home Loans LENDING | AGE 38

Jeff Sandman Co-founder Pendo

SERVICING | AGE 40

Jeff Sandman is co-founder of Pendo, a nationwide appraisal management company, where he and his partner, Mike Peck, developed a standardized process for employee and appraiser relations which produced a significantly higher quality professional appraiser network and employee base. In addition to selecting the best-of-breed appraisal management software, Pendo has developed its own proprietary process for managing investor ineligibility, appraiser recruiting, client scorecards and appraisal quality review. In addition, they are 100% cloud-based so clients can be helped 24 hours a day, seven days a week. While most AMC staff members spend a lot of time tracking down appraisal status and following up on appraisal assignments, Pendo’s process alleviates the inefficiencies and allows its client success team to provide proactive communication, dedicated support and a sense of urgency when unforeseen issues arise. Sandman was instrumental in establishing the company’s pay scales, which are significantly above the industry average. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? Tenacity. I have never been one to take no for an answer, which has proven to be an asset many times in my career. From landing clients after being told “no” many times, to finding creative solutions out of necessity, my tenacious spirit has always been a constant.

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Phil Shoemaker has been in the mortgage industry for over 20 years and is one of Caliber’s founding members. Initially, Shoemaker was responsible for the design and build of Caliber’s proprietary technology system. He later went on to run operations as the senior vice president of national operations, where he helped navigate the company through the 2010 regulatory changes. As the company grew, he moved into the role of senior vice president of business strategy, where he drove the Caliber agency approvals, the strategy to retain servicing, the build-out of the correspondent lending platform and was instrumental in recruiting and growing Caliber’s retail platform. He assumed the role of executive vice president in 2014, and has since doubled the sales force and led Caliber from the No. 7 lender nationwide to No. 2, with a 291% increase in volume. Caliber Wholesale also achieved their biggest funding month during his tenure, funding $1.6 billion in total volume for August 2016. WHAT IS ONE THING YOU WOULD TELL A YOUNGER VERSION OF YOURSELF? Don’t take yourself so seriously and don’t sweat the small stuff. It’s amazing how many nights of sleep I’ve lost over the years on things that turned out to be so small and trivial.

Jeremy Stewart President Orion Lending

LENDING | AGE 40

Jeremy Stewart is president of Orion Lending, a national wholesale lender and DBA of American Financial Network, which funded its first loan in January 2015. That year, the company funded 1,105 loans at $273 million, then grew significantly in 2016 to 4,467 loans at $1.328 billion. For 2017, the company projects a loan volume of $2 billion. The company combines innovative technology, products and competitive pricing to assist its network of originators grow and develop their referral business and clientele. Stewart began as an investment advisor at Smith Barney, then successfully managed investment portfolios and mortgage sales growth for Citigroup before joining Acoustic Home Loans. Stewart helped grow the company into the 27th largest wholesale lender in the country with 325 employees. Prior to launching Orion Lending, Stewart spent over four years building ClearVision from just eight employees and three licensed states to 210 employees across 36 states. Under his leadership, ClearVision has achieved a 20% month-over-month production growth and funded more than $2 billion per year. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? There’s a lot to accomplish before 6 a.m. Rising early, having a game plan and attacking it has been a habit that’s helped me execute both in business and outside of my work family, at home. I find creative strategy and tactical thoughts to be especially pure and rich before 6 am.

Troy Tomas

VP, Solutions Services and Sales Engineering Ellie Mae LENDING | AGE 33

Troy Tomas has been with Ellie Mae for 10 years in roles with increasing impact and responsibility. Currently, Tomas leads the solutions team responsible for building business solutions for Ellie Mae customers, the fastest growing practice in Ellie Mae PSO. He has been instrumental in driving the requirements for Ellie Mae’s Developer Connect portal, which launched in March, that allows lenders and service providers to utilize APIs and improve visibility and collaboration between loan officer, homebuyers, third-party originators and developers. Tomas’ technical expertise, coupled with his deep knowledge of Encompass, gives him a unique perspective. He seeks to represent the voice of the customer and his relationships with peers in the engineering community give him influence with regard to product roadmap. Tomas is a member of Ellie Mae’s Circle of Excellence. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? The mortgage industry is full of acronyms, proprietary processes, and technical terminology that you won’t find in any university curriculum. The habit of being inquisitive is the single most important quality that helped me establish a deep understanding of the industry.

Justin Tucker Chief Marketing Officer west, a WFG Company SERVICING | AGE 36

Justin Tucker was employee No. 4 of a now 1,000-person company, and instrumental in creating the vision, message and direction of WFG National Title Insurance Company. Tucker was one of the visionaries behind WFG’s MyHome Consumer Dashboard and a principal architect in WFG’s TIP’s Ecosystem. He was also the driving force behind the SPARK and REFRESH conferences — onsite events for title agents and Realtors. As CMO, he spearheaded WFG’s growth to become the nation’s sixth-largest underwriter within only a few years, receiving the WFG WOW award, the most prestigious award given by WFG. He consistently championed a marketing approach unique to the title industry, based upon introducing new sales technology to the clients of WFG’s clients. After its successful launch and expansion, Tucker was named CMO for sister company west in 2016 and charged with its roll-out and branding.

Ali Vafai President The Money Source

LENDING | AGE 36

Ali Vafai has led the rapid growth of The Money Source into a top 20 government lender, top 15 correspondent lender and top 40 wholesale leader. He has spearheaded the nation and industry-wide expansion of the company, growing it to encompass seven offices and a total of over 110,000 square feet of office space. He also led the way for The Money Source to hire more than 500 employees in 2016 alone. Vafai not only launched The Money Source’s retail lending division, he has also led the charge for innovation at the company, developing new technological assets, including SIME subservicing technology. Under Vafai, The Money Source had a record-breaking year in 2016, funding $1 billion in originations in a single month, and $10 billion total. Prior to his position at The Money Source, Vafai was the president of Pacific Union Financial, where he grew volume by 450% in 18 months while increasing profit margins. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? The greatest habit I have created, that is now a huge part of the success of our business, is partnering with the right people whose strengths complement my strengths.

WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? I’ve really worked hard on the habit of listening. Far too often we find ourselves planning our response as the other person is speaking — completely missing what the other person has to say. There are incredibly bright people in this industry. I work hard every day at learning from everyone I can — inside and outside of our industry — and using critical thinking as well as emotional intelligence as a filter for where to focus. I never want to get the feeling that I have it all figured out because I plan on being better tomorrow than I am today. HOUSINGWIRE ❱ JUNE 2017 45

Jorge Vidaurrazaga VP, Information Technology Columbus Capital Lending LENDING | AGE 32

Drew Vandermay Senior Director, Valuations Digital Risk INVESTMENTS | AGE 32

Drew Vandermay runs operations for the valuation department of Digital Risk, which performs more than 6,000 valuation reviews per month for top banks and lenders and is responsible for more than $275,000 in monthly revenues. When he joined Digital Risk in 2009, valuation services were viewed as a labor source, but due to the appraisal team’s accomplishments, appraisal services became its own revenue-generating entity and eventually transformed into its own unit (DRVS). Vandermay was a large part of that transition, as he was responsible for managing several successful client relationships and project scopes. In 2014, Vandermay and his team had to retool DRVS’s entire solutions suite to transition from a forensic shop to an originations-centric shop. He led efforts to identify best-suited market opportunities, partnered with Digital Risk sales teams, worked with the client to develop and customize the project’s scope and managed the client on-boarding, project implementation and continuous project execution. In addition, he has mentored his direct reports in the areas of business development, facilitating over 50 promotions during his tenure at Digital Risk. WHAT IS ONE HABIT THAT HAS HELPED YOU SUCCEED? In a fast-paced environment, organization is key. Always drive for perfection while working smarter, not harder.

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Since joining Columbus Capital Lending in 2013 as its first employee, Jorge Vidaurrazaga, the company’s vice president of information technology, has implemented technological advances that have increased the company’s production and decreased closing times post-TRID by over 16%, which represents a multimillion dollar revenue gain. Vidaurrazaga started in the industry as a mortgage loan originator back in 2002 at the age of 18. After receiving a degree in IT, he has applied his education to mortgage lending while operating in different capacities, from secondary marketing, loan boarding, operations, human resources and even to accounting. He has been nominated twice to Ellie Mae’s Hall of Fame for Exceptional Achievement in Loan Quality, once in 2015 and again in 2016. During the 2016 Ellie Mae Experience in Las Vegas, the Columbus Capital Lending team was awarded the top spot in loan quality. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? One of the best pieces of advice I have received throughout my lifetime was this great line, ‘If someone does wrong by you, don’t ever be revengeful, but be successful. As success is the most powerful way of saying thank you to them with a smile.’

Sarah Volling Marketing Lead Mortgage Cadence LENDING | AGE 29

Sarah Volling began her career at Mortgage Cadence in 2007 as a marketing specialist, generating three times the amount of leads as any other specialist during a tumultuous time for the mortgage industry. Over the next four and a half years, Volling consistently demonstrated commitment to the company’s success by developing original marketing content, solidifying brand development, and creating strategies that brought the company’s vision and direction to life. In May 2015, she became the marketing lead for Mortgage Cadence. In 2016, Mortgage Cadence was spun off from Accenture to become Mortgage Cadence, an Accenture company. During this process, Volling spearheaded a full rebrand of Mortgage Cadence, uniting the company around a unified brand and positioning Mortgage Cadence’s return to the industry as a go-to-market leader. Her efforts were not only well received by the Mortgage Cadence staff and customer base, but also earned national recognition through the Midas and MarCom awards. WHAT’S THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED? “Success comes from hard work and perseverance.” Millennials are often portrayed as expecting rewards and recognition. True for some, but not me. I always perform to the highest of my ability, while seeking out improvement opportunities. As long as I’m putting in my best, that’s all the recognition I need.

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Bitcoin Blockchain FROM

How it will pay in the mortgage industry

BY DEBBIE HOFFMAN, CHIEF LEGAL OFFICER, DIGITAL RISK & MATT OGUZ, FOUNDING PARTNER, VENTURE-SCIENCE

itcoin — that is what most people think of when they hear the term blockchain. However, blockchain has morphed into an incredible technology tool that can be utilized across industries in a variety of capacities, including in mortgage

lending. Blockchain is a ledger system stored on a decentralized database which can consist of one or multiple owners across many computers or “nodes” linked together. Records are linked in the form of time-stamped blocks. It was originally utilized in the technology used by bitcoin – the electronic cash system. When the open source code for bitcoin was released in January 2009, the technology of blockchain was brought forth.

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â&#x20AC;&#x153;Entries on a blockchain ledger become time-stamped blocks which means that there cannot be hidden alterations to the chain.â&#x20AC;? This technology allows for documents to be stored and transferred in a process that cannot be altered or tampered with, enables validation and is less error-prone than current processes. The decentralized nature of blockchain can result in increased productivity since multiple parties can access the network and are able to work on files simultaneously.

What does blockchain have to offer? Blockchain promises many advantages; two of the most important ones are cyber breach protection and document security, both critical to the mortgage process. For mortgage lending, this could mean saving millions of dollars.

50 HOUSINGWIRE â?ą JUNE 2017

First, in addition to a more streamlined and technology workflow, there could be a reduction in the cost of using third-party vendors due to automation. Second, blockchain allows for transparency in the storage of data. Entries on a blockchain ledger become time-stamped blocks which means that there cannot be hidden alterations to the chain. By using blockchain for document management, such immutable data could help in regulatory compliance tracking and ultimately in customer confidence because of the transparency of such data. Another benefit to using blockchain is the characteristic of document authentication which confirms that data being placed upon the network belongs there. When data is placed on the network, the document blocks are

coded with specific hash sequences which must match the specific hash sequence of the network. If the sequence does not match, the data will not be saved onto the blockchain. Blockchain technology is highly versatile and can be applied to many industries, including those that utilize payment and money transfers, stock trading, voting capabilities and reliance on secure storage of data. Such industries include law, healthcare, insurance, car leasing and sales, online music, stock trading, supply chain management, storage and, of course, mortgage lending.

The downside to blockchain While blockchain offers many advantages, there are a few factors that need to be considered, including the “51% attack,” energy consumption of the networks and regulatory oversight. The proposition that blockchain offers a secure network relies on the principal that the network cannot be tampered with by cyber criminals unless they have the energy resources to hack into a majority, or 51%, of the computers on the network to gain control of the blockchain. Thus data and records that are stored on each computer that has access to a particular blockchain would not be very valuable to a cyber thief. While an attack on a full network of computer nodes is unlikely, private blockchains have an added layer of security by requiring credentials and permissions to gain access to nodes. Should a cyber attacker have the computing power and time to gain control of the nodes, these permissions and credentials further the difficulty needed to enter the network and manipulate the blockchain. In a 51% attack, the majority of the computing power on the network is attacked and hackers are able to interfere with the process of recording new blocks. The interference prevents other users of the blockchain from completing new blocks, allowing these cyber attackers to monopolize the input of data on the blockchain. While this type of attack could be devastating, the amount of computing power a hacker would need to possess in order to launch an attack on a blockchain is massive. With regard to energy consumption, the distributed nature of the network calls for continued power in the multiple locations housing the nodes. According to environmental researcher Sebastiaan Deetman, the blockchain network that bitcoin is housed upon is expected to consume energy somewhere between an amount equal to the output of a small power plant and the consumption

of a small country such as Denmark by the year 2020. Deetman’s study further cites that the bitcoin network currently consumes enough electricity to power 280,000 homes in America. Given that blockchain is an emerging technology, there are not yet formal regulations pertaining to it, however there is guidance that addresses its characteristics, such as privacy and security, as well as governance of its use and implementation. U.S. regulators, including the Securities and Exchange Commission and the Treasury Department have indicated that there are risks and uncertainties, such as cybersecurity and regulatory oversight associated with blockchain which will need to be monitored. The Treasury Department’s Financial Crimes Enforcement Network issued a guidance in 2013 that discusses the applicability of the Bank Secrecy Act regulations to blockchain and individuals distributing, exchanging or transmitting virtual currency. While the Consumer Finance Protection Bureau has not yet made a statement about the use of blockchain, it has issued warnings to consumers regarding risks associated with bitcoin. Transaction processing time is also a concern among those developing blockchain networks. Currently the size of a block is one megabyte and the blocks are mined every 10 minutes. With the limited size of the blocks HOUSINGWIRE ❱ JUNE 2017 51

and mining time of 10 minutes, this means that only about seven transactions per second can be recorded. The limited number of transactions may be a barrier to entry for the blockchain network in the mortgage industry; however as the technology advances, blocks with larger storage capacity and increased computing power in mining blocks should make blockchain a more attractive option for the industry.

Use of blockchain in mortgages In the mortgage industry, blockchain can be utilized across the entire loan lifecycle from origination to audit and all the way through servicing. First, blockchain allows for document authentication, tracking and correction on data inputs and data storage. These features capture the borrower’s data points throughout the life of the mortgage more accurately than the conventional process. Thus, if blockchain technology was adopted across the mortgage lifecycle at application, through origination, fulfillment, servicing and secondary functions, it would create an efficient, streamlined and accurate process for a mortgage to be processed. The challenge, however, is the complexity of the mortgage lending infrastructure, including all the various type of industry participants – lenders, loan purchasers, servicers, title companies, county recorders and others. Since the blockchain process helps prevent altercation or falsification, there will be fewer data input errors. When inputting data, each transaction is verified by “miners” or the individual users that control the network from each of the decentralized network of nodes on the blockchain. Through various algorithms used for entry of the transactions and verification, if a transaction is entered incorrectly, such transaction will not appear or will not display correctly on the blockchain. This alerts the user immediately, whether unintentional or fraudulent, and the user can fix or investigate the error and re-enter the transaction on the block accurately. Another significant benefit to using blockchain is document verification. The verification process is used to determine if the data input on the blockchain actually belongs on it. This works by assigning a hash sequence to each block placed on the network. When subsequent blocks are placed on the blockchain the hash sequence needs to match the previous block or the data is rejected. In summary, incorporating blockchain into the lending process inherently will create more automation in the mortgage loan lifecycle and less reliance on third parties, 52 HOUSINGWIRE ❱ JUNE 2017

“The challenge, however, is the complexity of the mortgage lending infrastructure, including all the various type of industry participants – lenders, loan purchasers, servicers, title companies, county recorders and others.” thus resulting in a lower cost to the lender in mortgage production. In addition, the lender will have more control of the entire process, utilizing an in-house approach, and less reliance on third party intermediaries. A 2015 study by Capgemini Group estimated that if blockchain was utilized, based upon the average cost for a $200,000 mortgage loan of $4,350 in lender processing fees per loan, there would have been a reduction ranging from $480 to $960 per loan in fees. The report, which utilizes 2015 data prior to the implementation of TRID, which increased the cost of processing fees per loan, concludes that lenders could have saved $1.5 billion during 2015 on loan processing.

Market participants While the concept of blockchain is relatively new to the financial and lending industry, there are already several participants that are moving forward in such endeavors. Companies such as Factom, Mphasis, ThoughtMachine, HSBC, Context Labs, Coin and Chain are paving the way. Factom promises data validation and data audit solutions to the mortgage industry, and the company has developed the Factom blockchain, a decentralized open-source public network that the company uses to secure its applications and data. Factom markets that this network can be used for auditing, data and systems integrity, IoT security protections (such as protections against denial- of-service or “DoS” attacks) and public infrastructure testing. Factom also offers an audit and due diligence room to aid in collecting data which can assist in regulatory compliance, quality control and servicing. Mphasis, a technology services provider, has created the first center of excellence for blockchain-based services

and solutions in India. The focus is on enterprise solutions based on private/permissioned blockchain. Mphasis’ center is primarily experimenting with different platforms and horizontal integrations for financial services. Use cases initially developed are in the areas or industries of trade finance, loyalty, mortgage, pharmaceutical, airline and insurance. Mphasis has developed three use cases to be used in the mortgage industry including: storing loan origination data to the Mphasis blockchain, authenticity of documents, and record keeping and fraudulent transaction detection. ThoughtMachine markets that it is creating Vault OS, a technology seeking to provide an end-to-end banking system that can manage loans, mortgages and other financial products. Furthermore, the company promotes that the Vault OS systems utilizes smart contracts – self-executing electronic contracts – to enable parties to digitally sign contracts that are securely coded onto the blockchain. There are many entities developing new ways to utilize blockchain that parallel the mortgage industry. HSBC has partnered with the Bank of China to implement blockchain technologies for property valuation services. JPMorgan Chase and Citigroup have completed a blockchain trial where the technology was used in tracking credit-swap defaults. Barclays and Santander Bank have joined fintech startup R3 to investigate different use cases to tackle payments and securities settlements. Attorneys discussing blockchain are intrigued by the benefits that it potentially has to offer in the legal profession, including authentication and timestamp validation. For example, this could be extremely beneficial to a litigator who needs to tackle discovery and evidentiary burdens, particularly because of the transparency into who has access to the blockchain, the time period and what is stored on it. The uses of blockchain are being explored worldwide in China, India, Europe, Central America and the Middle East. The Dubai government announced that it has recently launched the Dubai Blockchain Strategy and plans to use the technology for all government documents to make the government more efficient while achieving global leadership in the blockchain technology field. Factom has partnered with the Honduran government and title software firm Epigraph. The partnership aims to develop a secure and permanent land title record system in the hope of curbing the alleged corruption and mismanagement within the Latin American country’s government over land rights.

The United Kingdom’s government has launched a blockchain competition seeking distributed ledger technologies and has offered to award up to 15 million pounds to companies that develop technology to increase productivity and performance. Blockchain is quickly expanding across the globe and in a variety of industries. The mortgage industry has not historically been one that embraces technology advancements ahead of other industries, but it finally seems to be catching up as the cost savings are irrefutable. The question is whether now, as the lending industry embraces technology development, it is also able to take a giant leap forward and take hold of a new technology that has across the board advantages in the mortgage lifecycle for document storage and transmittal as the industry knows it today. HOUSINGWIRE ❱ JUNE 2017 53

the Trump effect (on real estate)

by deborah huso

He’s known as a real estate mogul, but with proposals that could both boost or blast the housing market, Trump makes it far from clear what his presidency will do for housing, and even industry professionals don’t agree on what the future may hold. 54 HOUSINGWIRE ❱ JUNE 2017

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f you ask Jim Jacobs, president of Jacobs Realty Group in Philadelphia, what he thinks the presidency of Donald J. Trump will do for residential real estate, he’s quick to say the market is going to grow. “The No. 1 thing the Trump presidency brings is restoring the confidence of the American worker,” said Jacobs. “Confidence is why people purchase.” He adds, “They’re not afraid to take a mortgage out anymore. Working class people are getting more jobs because there are not illegal immigrants working at Home Depot for half the price.” Meanwhile Billy Nash, who specializes in commercial and luxury real estate sales with The Keyes Company in Palm Beach, Fla., noted, “We are seeing a positive impact on Palm Beach County for both buyers and sellers of luxury real estate. Corporate tax cuts will have a huge impact on our real estate market.” While many of those working in real estate are positive about the potential for a growing housing economy under the Trump administration, Jamie Gregory, chief lobbyist for the National Association of Realtors (NAR), is a bit more measured in his assessment of the new administration’s

policies and proposals: “I think so far we haven’t seen anything that’s going to have a big impact [on the housing economy].” He added, “A lot of it has to do with what’s happening on Capitol Hill. Is tax reform going to be comprehensive? We have serious concerns with how the blueprint will play out.”

hits to HUD If one looks at the blueprint for Trump’s proposed budget, released in March, it’s definitely what Office of Management and Budget Director Mick Mulvaney calls “the America First budget” in its approach. Whether or not Congress will go along with the administration’s aims, however, remains to be seen. In order to meet his objective of increasing defense spending by 10% (or $54 billion), Trump is calling not for an increase in taxes but cuts in other areas of government, including a 13% ($6 billion) cut to

the budget of the Department of Housing and Urban Development, now headed by Dr. Ben Carson. The White House proposes eliminating HUD’s Community Development Block Grant, the Home Investments Partnership Program, the Choice Neighborhoods Program, and the Self-Help Homeownership Opportunity Program, all of which help create and sustain affordable housing in this country. Gregory believes the proposed HUD cuts would deeply impact housing, particularly for lower-income Americans and first-time homebuyers, but he’s not convinced all the cuts will be accepted by Congress. “I think Capitol Hill will create their own version of the budget,” he said. “We’ve tried not to overreact. We hope that cuts proposed for HUD are not implemented. That would be catastrophic. HUD couldn’t fill its function.” Gregory said that NAR is stemming alarm for now. “The administration hasn’t staffed up yet,” he said. “At HUD, there’s

“A lot of it has to do with what’s happening on Capitol Hill. Is tax reform going to be comprehensive? We have serious concerns with how the blueprint will play out” — Jamie Gregory, chief lobbyist for the National Association of Realtors

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nobody to talk to over there. We’re sort of in a holding pattern. We’re waiting for personnel to get in place.” Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals (NAHREP), said he’s “cautiously optimistic,” adding that no one really has “a clear sense of the direction of the administration. It’s been a very slow start in that regard.” And Acosta thinks it may be premature to worry. “Dr. Carson isn’t really a housing person,” he said, “so he’ll surround himself with experts in the housing field.”

impacts of tax reform There has also been plenty of debate about changing the popular mortgage interest deduction (MID), though Jacobs doesn’t think the Trump administration will follow through on that, at least not in terms of elimination. “I can’t see that happening,” he said. “Trump has learned quickly there are battles to fight and battles not to fight.” And while Gregory doesn’t believe the MID will be eliminated either, he noted that the House Republicans’ blueprint for

tax reform, while not killing the deduction, will make it less relevant because it will double the amount taxpayers can take for the standard deduction. That means fewer people would take the MID and, perhaps, would be less inclined to move from renting to buying. The White House is also looking at eliminating the deduction for state and local taxes, which can be a pretty big tax cut in high-end communities and in states like New York and California. But Aaron Terrazas, senior economist at Zillow, doesn’t think those tax cuts make much difference to homeowners and buyers. “When people buy houses, they’re not factoring in these marginal things,” he said. “That’s not going to make or break a deal.” “If you take away the state or local tax deduction and double the standard deduction, less than 5% of tax filers will itemize,” Gregory warned. “You’ve essentially made no difference between renters and owners. We’re taking it seriously.” Gregory said if Congress takes away that incentive, he believes it would slow down the housing economy. “You’ll have fewer buyers, so home values will drop,” he points out. “As a result, you’ll have lots of people that will lose equity in their houses.”

“More money in people’s pockets gives them more ability to buy regardless of how [the money] gets there. Most economists agree the MID doesn’t really incentivize people to go from renting to buying.” — Aaron Terrazas, senior economist at Zillow Terrazas doesn’t think proposed legislation on the MID will have much impact, however. “More money in people’s pockets gives them more ability to buy regardless of how [the money] gets there,” he said. “Most economists agree the MID doesn’t really incentivize people to go from renting to buying.” What it might impact, he said, is homeowners upgrading to more expensive residences.

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When it comes to first-time buyers, the elimination of the student loan interest deduction would be the biggest damper on the market. NAR is in the process of collecting numbers to produce a full analysis of the impacts of the House Republican blueprint for tax reform (which is substantially similar to that of the White House). Those figures were not available by press time but NAR Spokesperson Jon Boughtin shared early findings from PricewaterhouseCoopers’ study, noting that home-owning families with incomes between $50,000 and $200,000 would face average tax hikes of $815 the year after enactment while non-homeowners in the same income category would see tax cuts of $516. “Home values could fall in the short run by more than 10%,” Boughtin added, if the House blueprint for tax reform is fully enacted, and that drop in values could be steeper in high-cost housing areas. Gregory said he hopes Congress will extend mortgage debt forgiveness for

think that will stimulate jobs more than anything else,” he explained. “Jobs are issue No. 1 when it comes to housing and homeownership.” He also hopes for tax relief for the middle class: “That could make the difference in being able to afford a home or not. We have a very complicated tax system, and anything that simplifies it is good. I see tax relief for the middle class and corporations as positives.”

the immigrant conundrum Meanwhile, things might not be looking so great for the nation’s immigrants, documented and undocumented. While Harvard University’s Joint Center for Housing Studies reports that immigrants have been responsible for 40% of housing growth since 2010, Jacobs minimizes the impacts from immigration on the housing economy. He said he thinks areas like

“A measured rollback of regulatory apparatus would be a positive thing for the marketplace.” — Gary Acosta, CEO of NAHREP homeowners that sell their houses at a loss. He also hopes to see the capital gains tax exemption of the Taxpayer Relief Act (1997) for home sellers extended, whereby couples who sell a primary residence don’t have to pay capital gains on the first $500,000 of profit. It’s $250,000 for single sellers. Jacobs is more optimist ic about proposed tax cuts and believes, if implemented, they will be good for the economy and will make it easier to build and grow businesses and, likewise, create jobs. “Money is a reward for the service you give or the product you sell,” he said. “Trump doesn’t want to penalize that but encourage it.” Acosta said he’s long been a proponent of reducing the corporate tax rate. “I 58 HOUSINGWIRE ❱ JUNE 2017

southern Texas will feel an impact, “but around the country, no.” Currently, 25% of the nation’s construction workers are immigrants, and there’s no telling how many of them are undocumented. But Jacobs doesn’t think construction companies will feel too much pain. “There’s still a way to make a profit,” he said. “Construction companies will find another way, and if undocumented workers are building houses, then their elimination will mean more documented Americans working.” He also thinks that eliminating illegal immigrants will boost American wages. Aaron Terrazas, senior economist at Zillow, isn’t convinced immigration restrictions are a net positive, however. “The housing market in general now is strong,

and the labor market is tight, so incomes are growing,” he said. “A lot of people who have been renting are looking to buy and are able to buy.” But given the tightening inventory, the housing market overall is very competitive right now. “A big unknown is the extent to which new construction will or will not begin to take off to meet that demand,” Terrazas added. “New construction has been flat on average.” That means eliminating a chunk of the industry’s labor force could slow things even further. Terrazas said Zillow conducted research recently on the significance of the immigrant workforce to new construction, looking at a law in Georgia passed in 2011 designed to reduce unauthorized immigration. “The premium price on new construction over existing homes jumped about 20% in the year after the law passed,” he explained. “Georgia was a relatively cheap place to build previously. Now it costs as much to build there as Connecticut.” Gregory points out that “a big portion of first-time homebuyers are immigrants, too, and that’s something we’re watching [at NAR].” Acosta said the NAHREP has concerns about the way the Trump administration’s immigration policies are being implemented. He fears a significant impact on the first-time homebuyer population given how many of them are Hispanics, and he also points out that undocumented immigrants’ status impacts the larger community of legal immigrants. “Many households have more than one family living together, and if one person is vulnerable to deportation, that could affect the whole household’s income,” he explained. He expects basic human psychology will reduce home-buying demand in communities with substantial immigrant populations because would-be homeowners will be reluctant to purchase with so many uncertainties, and would-be immigrants will be putting off plans to relocate to the United States. “That’s a big deal,” Acosta said. “We have an aging population. New birth rates are not keeping up in replenishing the American

workforce.” He points out first-time home buyers, in particular, have a big impact on the overall housing market because they also impact the “move-up” buyers.

relief for lenders? While there has been a lot of strong-arm talk, not just by Trump but by Republicans in Congress, about rolling back a lot of the initiatives of the Dodd-Frank Act (2010), Gregory said the NAR doesn’t see those proposals impacting housing very much. “A lot of what they’re talking about doesn’t have to do with the housing part of financial services like capital ratios,” he explains, noting that the NAR is reviewing the latest version of the Financial CHOICE Act (H.R. 5983). “The first version from last year,” he noted, “had very little impact on housing.” The latest version of the CHOICE Act, introduced by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, would, among other things, exempt some banks from newly instituted regulatory standards if they maintain a certain ratio of capital to total assets. Jacobs said complete elimination of Dodd-Frank would be a boon to banks, particularly smaller community banks. “Jobs are number one,” he said, “but lending is number two. In some countries, you have to put down 30 to 50% [on a home purchase], but here, everything revolves around debt.” He sees the thinking that real estate only goes up in value as the major factor in the recent housing crisis, noting “bankers seem to have short memories.” But he said the loan standards now are entirely too tight. “It’s been so tough for existing business to get lending because banks want their last three years’ financials. “There’s absolutely no question that Dodd-Frank’s elimination would be a boon for smaller banks,” Jacobs added. “They’re the ones who do lending locally. They’re local people who understand the area and have better lending criteria.”

Acosta agrees: “We need community banks. They know their marketplace. They can make decisions relevant to their local communities and understand local nuances. If you just have big players, the marketplace is affected negatively. A lot of the community banks pulled back on lending or sold out because they anticipated an excessive regulatory burden [with Dodd-Frank].” Gregory agrees that any legislation or legislation rollbacks that help community banks would be good for housing and the economy at large. “For a lot of our members, it’s the local banks that do a lot of the lending,” he said. “A measured rollback of regulatory apparatus would be a positive thing for the marketplace,” Acosta added. He points out that major lenders have abandoned Federal Housing Administration (FHA) programs because of the level of regulation involved and fears of unintentionally making violations.

the future looks so...uncertain Meanwhile mortgage interest rates are slowly increasing, though Jacobs says he isn’t terribly concerned about it. “It will probably slow down housing growth to sane levels,” he remarked. “Rates have been artificially low for so long.” He said the recent housing crisis clarified

that it’s abnormal to buy a $200,000 house and see it appreciate to $350,000 a year later. The housing economy, he believes, will normalize now, and that the increase in interest rates is actually a good thing in helping it do so. Gregory points out, however, that interest rate creeps have historically knocked firsttime buyers out of the market. But Terrazas said that only happens when interest rates get up toward 5% or higher, and he doesn’t see rates going above 4.2 to 4.3% before year’s end. Where interest rates will have the most impact, he thinks, is in terms of homeowners upgrading: “They’ll be less willing to sell if their next home has substantially higher mortgage rates.” Jacobs expects to see housing growth in areas where there is strong job creation and believes those jobs will increase home values and continue to grow the housing economy. “It won’t be because interest rates are artificially low,” he remarked. “Jobs are going to be the real driver.” He still sees homeownership as the best investment for the average American. “Across the board, the best place to have your money is going to be your home because it will appreciate,” he said. “A house is a great place for a financial nest egg for when you retire.” As homeowners, real estate professionals, and economists look on, they’re all equally hopeful the Trump administration won’t damage the centrality of homeownership to the American Dream and the American pocketbook. HOUSINGWIRE ❱ JUNE 2017 59

C O M PA N Y S P O T L I G H T:

SUPERIOR HOME SERVICES | SPONSORED CONTENT

Company Spotlight: Superior Home Services Leveraging technology to provide a transparent, managed workflow Not long ago, default rates required that mortgage servicers partner with field service providers capable of managing large volumes of distressed properties, many of which languished in foreclosure for years. With the number of properties in default declining and overall volumes shrinking, the future of default servicing will require a more programmatic approach. Moving forward, the strategy will focus on cost control and operational efficiencies. This new approach is especially important when managing portfolios of vacant, damaged properties in the default cycle that are insured by the Federal Housing Administration. One company, Superior Home Services, offers the experience and solutions to manage remediation of damaged properties with a focus on reducing the amount of corporate funds needed for repairs. Superior has pioneered the only programmatic solution for managing damaged FHA properties in default and that solution has stood the test of time for more than 30 years. “It is a completely unique approach to a long-standing problem, and combines the expertise of managing the hazard claim recovery in synergy with the property repair process,” said Dave Cook, president and CEO at Superior. “To fully understand the rationale for applying this type of programmatic approach, you need only examine how the typical hazard insurance contract operates, specifically how the recoverable depreciation and overhead and profit benefits can be utilized to mitigate servicer costs,” Cook added. Under a dwelling policy, every hazard claim settlement is subject to depreciation. The insurance company settling the loss 60 HOUSINGWIRE ❱ JUNE 2017

depreciates the value of the claim because the items that need to be remediated or replaced have a decrease in value based on age, decay or wear and tear. Unless the repairs are completed, the insurer will withhold money from the settlement funds. That withheld money is called recoverable depreciation. Accordingly, the money a servicer obtains from a hazard claim settlement is the cost to repair or replace the damaged property, minus depreciation, which is referred to as the actual cash value (ACV). When mortgage servicers repair the property to the adjuster’s scope of work, the servicer can then claim the recoverable depreciation as long as they remediate within the time period allotted by the insurance policy. This approach yields two benefits: It limits, if not offsets, the corporate contribution that many servicers incur in property remediation; and by securing the recoverable depreciation, the servicer has verified that it has completed repairs pursuant to the adjuster’s scope of work. Release of the recoverable depreciation not only offsets corporate costs; it confirms that the servicer completed all the work according to the adjuster’s scope, aligning perfectly with the FHA’s latest requirement to convey properties to the U.S. Department of Housing and Urban Development. If the servicer does not repair the property according to the adjuster’s scope of work, the servicer has accepted a fraction of the money available to it under the insurance policy to remediate the property. Additionally, the property must still be repaired and the costs to do so in the future will likely require corporate contribution. Superior, which was founded in 1984

by David and Bobbie Cook, has pioneered the process of managing hazard insurance claims to ensure that the servicer is made whole after a vacant property suffered a loss. This includes not only recovering the ACV, but also a process to recover the recoverable depreciation (RCV) along with the overhead and profit component. The overhead and profit piece is how Superior is compensated for the work that they do on behalf of the servicer. Ideally, the servicer’s only cost to remediate the property is the deductible amount of the insurance contract. “Superior understands the time and expense associated with remediation of these properties,” Cook said. “Accordingly, no other vendor can better represent the mortgagee’s interests in the hazard claim process and remediation process than Superior.” Superior’s field services network is designed with the ability to identify the difference between insurable damages and damages that must be dealt with to satisfy HUD conveyance requirements. Traditional field networks are built to execute high-volume, high-frequency tasks such as lawn maintenance, securing the property, or doing inspections, and are paid according to work orders that specify exactly which tasks need to get done. In contrast, Superior’s national network of vendors is equipped to work on bigger, high-dollar jobs where contractors work on draws. Instead of mowing lawns or changing locks, Superior’s vendors may work on one house for a month and perform more significant repairs. “When you hire Superior to manage insurable repairs, or put a property in conveyance condition, or to do both, we know what needs to be done and how to address

S P ON S OR E D C ON T E N T | C O M PA N Y S P O T L I G H T: S U P E R I O R H O M E S E RV I C E S

those specific, unique issues. Our field network understands the process, understands the expectations of an insurer and those of HUD, can work off a draw system, and has the experience dealing with complex municipal regulatory requirements. Our program is structured to complete substantive repairs,” Cook said. Many of the providers in Superior’s field network are general contractors, or have been independent single-family homebuilders. This kind of prior knowledge and experience means Superior field vendors know how to work with municipal regulators as they cure code violations and satisfy code upgrades. “When considering the number of parties involved, the need to adhere to the required timelines in managing the insurance claim, and bringing a vacant property back to a conveyable condition, it only makes sense to leverage a technology-driven platform. To leverage a process that provides transparency, communication, and a managed workflow. That is exactly the value proposition we offer at Superior,” said Cook. In a recent example of this kind of high-level service, Superior’s office received a call from a client addressing a

re-conveyance in New Jersey. During the default process, the property suffered damage and had received several code violations from the local township. Superior’s office was able to file a hazard claim on the new damages and address the code issues with the township enforcement representatives, as well as the building department. The company was able to remediate the property to meet regulation and code requirements in just one estimate. “We were able to, with one estimate, remediate the property to the satisfaction of the local regulatory bodies, offset corporate expense by addressing some of the damage with hazard claim proceeds, and place the property in conveyance condition per HUD standards,” Cook said. “As a result, the mortgagee was able to convey the property according to HUD guidelines.” Superior’s expertise in FHA defaults ensures that its clients are well prepared to receive the full benefit of the hazard claim, which is crucial in an environment where servicers are looking for increased efficiencies and ways to reduce the overall cost of servicing default loans. “Our clients are ecstatic about our repair contingency program,” Cook said. “Many

Superior Home Services at a glance: • F ounded in 1984 by David and Bobbie Cook •N ationwide provider of hazard insurance recovery solutions for all investors and guarantors •N ationwide provider of FHA default program for vacant damaged properties • Vendor network designed for repair and conveyance default managers in a conveyance department, or sometimes in a REO department, must account for any corporate expenditure in property remediation. Our unique program provides a mitigation and conveyance solution without the need to justify corporate contribution and third-party fees.” HOUSINGWIRE ❱ JUNE 2017 61

Inside Baseball

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Inside Baseball

PA M PAT E N AU D E N O M I N AT E D FOR DEPU T Y HUD SECR ETARY POWERFUL POSITION GOES TO ONE OF HOUSING’S OWN BY BEN LANE

THERE AREN’T MANY AREAS where you can get a consensus in the U.S. right now, even less so in Washington, D.C. But President Donald Trump has done the seemingly impossible by nominating Pam Patenaude to the position of deputy secretary of the Department of Housing and Urban Development. Leaders from every side of the housing industry agree Patenaude is a great fit for the position. Patenaude, a HousingWire Woman of Influence in 2013, was originally shortlisted to serve as HUD secretary, but that position ended up going to Ben Carson. The HUD secretary, like many other Cabinet positions, is the public face of the department, conducting meetings with housing leaders around the country, listening to local concerns, and celebrating milestones. The deputy secretary, however, handles most of the day-to-day operations, an ideal fit for someone with such an extensive housing resume. Readers of HousingWire will likely be familiar with Patenaude, as she was featured on the cover of HousingWire Magazine last year in a feature about affordable housing, as well as one of our Women of Influence winners. In fact, Patenaude’s inclusion as a HousingWire Woman of Influence was actually noted in the White House’s announcement of her appointment. From the White House: Ms. Patenaude is currently the President of the J. Ronald Terwilliger Foundation for America’s Families. Previously, she served as Director of the Bipartisan Policy Center Housing Commission. Ms. Patenaude earned her B.S. from Saint Anselm College and her Master of Science Community Economic Development degree from Southern New Hampshire University. Her awards include: HousingWire 2013 Woman of Influence and the Saint Anselm College Alumni Award of Merit 2006. Patenaude is a former adviser to Presidents Ronald Reagan

and George W. Bush. During the younger Bush’s administration, Patenaude served as HUD assistant secretary for community, planning and development. Here’s a more complete look at her bio: • Current president of the J. Ronald Terwilliger Foundation for Housing America’s Families • Director of housing policy at the Bipartisan Policy Center • Executive vice president of the Urban Land Institute and founding executive director of the ULI Terwilliger Center for Workforce Housing • HUD assistant deputy secretary for field policy and management • HUD assistant secretary for community, planning and development • State director and deputy chief of staff for U.S. Senator Bob Smith • Vice president of Manor Homes Builders • Administered the Section 8 rental assistance program at the New Hampshire Housing Finance Authority Patenaude will now go through a Senate confirmation before taking over officially at HUD, if approved. Declarations of support for Patenaude came in quickly after the White House’s announcement of her nomination, including from some of the housing industry’s biggest groups, and from Patenaude’s potential boss at HUD. “Pam’s extensive knowledge of housing issues and dedicated service to this Department under two previous administrations makes her an exceptional choice for the position of Deputy Secretary,” HUD Secretary Ben Carson said in a statement. “Most recently, Pam led the Department’s field operations and served as Assistant Secretary for the Office of Community Planning and Development,” Carson continued. HOUSINGWIRE ❱ JUNE 2017 63

Inside Baseball

“

Pamela Patenaude is someone who has not only the desire to make housing opportunities better for all people, she has the skill-set to get the job done.”

“She will bring a wealth of experience and steady leadership to HUD in her new role,” Carson added. “I look forward to working with her to achieve more efficient and effective housing policies that create jobs, strengthen communities, and ensure safe, affordable housing for all Americans.” David Stevens, president and CEO of the Mortgage Bankers Association and a former HUD Assistant Secretary for Housing and Federal Housing Commissioner, said that Patenaude is an “exceptional choice” for the position. “Personally, I have worked with her for a number of years and she is exactly the kind of leader who will help support the secretary and also address the critical issues ahead for HUD,” Stevens said in a statement. “She has a well-informed understanding of the agency, and essential technical knowledge of the real-estate finance industry. I would encourage the Senate to move swiftly in confirming her nomination.” The National Association of Realtors declared Patenaude an “ideal” choice. “Pam’s extensive and strong background in real estate and housing will be an asset, and NAR has long enjoyed a strong relationship with Pam working on and advancing regulatory and policy initiatives,” NAR President William Brown said in a statement. “Pam is an ideal candidate for the position; she understands the issues that impact the industry and our Realtor members, and we look forward to continuing our work together with HUD and Pam upon her confirmation to ensure that owning a home remains accessible and affordable so that more individuals can realize their dream of homeownership,” Brown concluded. Granger MacDonald, the chairman of the National Association of Home Builders, also praised Patenaude. “NAHB commends the choice of Pamela Hughes Patenaude to become HUD deputy secretary,” MacDonald said. “NAHB has had the opportunity to work with Pamela Patenaude in the past on important housing issues during her time as president of the J. Ronald Terwilliger Foundation for America’s Families,” MacDonald continued. “We look forward to continuing this productive relationship with Ms. Patenaude to address the 64 HOUSINGWIRE ❱ JUNE 2017

nation’s critical housing needs as she takes on a new leadership role at HUD.” The National Association of Hispanic Real Estate Professionals also lent its support to Patenaude’s nomination. “Pam is well versed on the issues related to Hispanic homeownership and will do an outstanding job serving the nation’s housing needs,” said Gary Acosta, co-founder and CEO of NAHREP, adding that NAHREP “looks forward to working with Patenaude and HUD to advance the association’s mission in the coming years.” Not only did leaders from across the housing industry praise the nomination, affordable housing advocates also declared their support for Patenaude. The National Housing Conference joined in supporting Patenaude, who has served on the organization’s board of governors. “The National Housing Conference is pleased to see Pamela Hughes Patenaude nominated as Deputy Secretary of Housing and Urban Development,” NHC President and CEO Chris Estes said. “She has been a housing leader in a variety of roles, not least of them a member of NHC’s Board of Governors,” Estes said. “She knows both the business of affordable housing and the powerful role it plays to help people and communities prosper. There is great potential for bipartisan solutions to the nation’s housing challenges, and we hope Ms. Patenaude can help lead the department in those efforts. NHC congratulates her and urges the Senate to confirm her swiftly.” Diane Yentel, the president and CEO of the National Low Income Housing Coalition, also celebrated Patenaude’s nomination. “The National Low Income Housing Coalition congratulates Pam Patenaude on her nomination as deputy secretary of HUD,” Yentel said. “Ms. Patenaude is a strong leader with decades of experience cultivating bipartisan solutions to America’s affordable rental housing crisis. She has deep knowledge of, experience with and appreciation for the critical programs she will oversee.” Yentel also said that the organization urges the Senate to confirm Patenaude. “We look forward to working with her to preserve, improve and expand the critical programs necessary to end homelessness and housing poverty for the millions of families who struggle to pay their rent each month,” Yentel added. The National Fair Housing Alliance also threw its full support behind Patenaude. “Pamela Hughes Patenaude is eminently qualified to serve as the Deputy Secretary of HUD,” Shanna Smith, president and CEO of the National Fair Housing Alliance, said. “Mrs. Patenaude is a person who possesses keen insight and a broad vision for ways to expand equal housing opportunities in America,” Smith continued. “She knows that we are recovering from a critical housing crisis.

Inside Baseball

The National Fair Housing Alliance and HUD estimate that each year there are over 4 million instances of housing discrimination and only 28,000 complaints are reported to federal, state and private non-profit fair housing agencies,” Smith said. “Moreover, in Washington, D.C. a person with a minimum wage job would have to work 138 hours per week to afford the average one-bedroom apartment. This horrendous expense has become the norm in cities with high priced housing and low availability,” Smith continued. “Pamela Patenaude is someone who has not only the desire to make housing opportunities better for all people, she has the skill-set to get the job done,” Smith concluded. “The National Fair Housing Alliance welcomes this announcement from the White House and eagerly looks forward to working with Secretary Ben Carson and Deputy Secretary Pamela Patenaude to make every neighborhood a place full of opportunity.” Terri Ludwig, president & CEO of Enterprise Community Partners, also declared support for Patenaude. “Pam’s deep understanding of affordable housing challenges and remarkable expertise make her an exemplary choice for

deputy secretary of the U.S. Department of Housing and Urban Development,” Ludwig said. “Her commitment to creating communities in which all people have a fair shot at success, her expertise in forging bipartisan policy solutions and the heart that she brings to her work every day will serve HUD and America well. Making well-designed homes affordable must be a part of America’s economic agenda,” Ludwig continued. “She is a long-time supporter of bipartisan solutions to America’s housing challenges and rightfully known as someone who draws on and builds support for good ideas, wherever they are found,” Ludwig added. “Pam recognizes that investments in quality, affordable homes must be a part of America’s economic agenda. Enterprise will work with the Administration, HUD and Congress to increase opportunity in communities across the country, beginning with making well-designed homes affordable and connected to resources like quality healthcare, jobs, schools and transit,” Ludwig concluded. With this kind of support across the housing spectrum, Patenaude’s reign at HUD could be momentous indeed.

Kudos

MILESTONES

• Margaret Manetti, supervising attorney for COOK COUNTY AT CODILIS & ASSOCIATES, which specializes in legal services for lenders and servicers, was recently elected director of the WOMEN’S BAR ASSOCIATION of Illinois. Manetti will assist in determining the policies and conduct of the WBAI, including determination of the qualifications of judges and judicial candidates, community outreach initiatives and scholarships.

LAUNCHES • Mortgage origination software company FLOIFY has released a new mobile app to give lenders the ability to attract and better serve more mobile-focused borrowers. The app enables lenders to manage their loan pipelines and allows borrowers to take photos of documents and securely upload to their lenders. Lenders, real estate agents and borrowers receive instant notifications on loan progress on any smart device, such as Android phone, iPhone or Apple Watch.

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GIVING BACK • BOFI partnered with HOPE LEADERSHIP FOUNDATION to promote financial literacy to elementary school students in San Diego. Once a week during April, BofI employees volunteered to teach financial literacy courses to students at Laurel Elementary School through an after-school program. The courses focused on topics, including budgeting, basic banking products and services, entrepreneurship, and financial independence. This is the first year BofI is launching the Hope Leadership Academy at Laurel Elementary School. “We are excited to partner with BofI to launch the Hope Leadership Academy at Laurel Elementary,” said Willie Briscoe, founder of Hope Leadership

Foundation. “Their support and commitment to the kids in our community allows us to help more kids and families to have successful lives.” Anthony Hsieh, CEO of LOANDEPOT, hosted a group of seven military veterans for a fishing trip in Cabo San Lucas, Mexico. Hsieh flew the group of veterans on his personal Gulfstream jet to Mexico, where they boarded his tournament-rigged yacht for the threeday fishing trip. The trip will also be featured on Destination: Baja Sur, a travel and fishing series on the World Fishing Network.

In April, several employees from NATIONWIDE TITLE CLEARING helped to create more than 5,000 meals with the Starbucks Community team at Feeding Tampa Bay. The food rescue and distribution organization serves every food pantry in 10 counties across the Tampa Bay, Florida, area, covering an estimated 700,000 hungry people.

adoption of energyefficient policies and practices in multifamily housing. NEW AMERICAN FUNDING has been named a winner in nine categories for the

15th annual STEVIE AMERICAN BUSINESS AWARDS. The California-based lender was recognized with two gold, two silver, and five bronze Stevies and was one of the leading winners of the 2017 business awards season.

AWARDS • FANNIE MAE was awarded the 2017 ENERGY STAR Partner of the Year Sustained Excellence Award by the ENVIRONMENTAL PROTECTION AGENCY. Fannie Mae received the award for commitment and efforts to increase

Industry

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Industry Pulse

Cities can now sue banks for predatory lending BUT SUPREME COURT RULING SETS A HIGH BAR FOR BURDEN OF PROOF

BY BEN LANE

THE U.S. SUPREME COURT handed down a landmark ruling on May 1, stating that cities can sue banks for discriminatory mortgage lending practices, but cautioned that the burden of proof could be difficult to achieve. In a 5-3 ruling, the Court ruled cities hold the right to sue banks over the banks’ lending practices, if an alleged violation of the Fair Housing Act is claimed. The ruling stems from a lawsuit brought by city of Miami, which sued Bank of America, Wells Fargo, and Citigroup in 2013, stating that the banks engaged in predatory lending to minority borrowers in the city. In its original lawsuit, Miami accused the lenders of “reverse redlining,” which led to a large number of foreclosures, lower property tax collections, and increased cost to the city to deal with the resulting property value loss and blight. Per the Supreme Court’s decision, Miami claimed: The City’s complaints charge that the Banks intentionally targeted predatory practices at African-American and Latino neighborhoods and residents, lending to minority borrowers on

worse terms than equally creditworthy nonminority borrowers and inducing defaults by failing to extend refinancing and loan modifications to minority borrowers on fair terms. The City alleges that the Banks’ discriminatory conduct led to a disproportionate number of foreclosures and vacancies in majority minority neighborhoods, which impaired the City’s effort to assure racial integration, diminished the City’s propertytax revenue, and increased demand for police, fire, and other municipal services. The District Court dismissed the complaints on the grounds that (1) the harms alleged fell outside the zone of interests the FHA protects and (2) the complaints failed to show a sufficient causal connection between the City’s injuries and the Banks’ discriminatory conduct. U.S. District Judge William Dimitrouleas initially dismissed the lawsuits in July 2014, ruling that the city lacked standing to sue, and that the alleged harm was too remote from the banks’ conduct. Then, the city appealed Dimitrouleas’s ruling to a higher HOUSINGWIRE ❱ JUNE 2017 69

Industry

Pulse

JULY

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U.S. District Judge William Dimitrouleas dismisses the cases against all three banks

Supreme Court agrees to hear Miami’s case

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Miami sues Bank of America, Wells Fargo and Citigroup, alleging discriminatory lending under Fair Housing Act

The U.S. Court of Appeals for the 11th Circuit, in Atlanta, reverses those rulings. Bank of America and Wells Fargo appeals this decision to the Supreme Court.

Supreme Court rules that cities can sue banks under Fair Housing Act

court. And in September 2015, the 11th U.S. Circuit Court of Appeals reversed the lower court’s dismissal of the city’s claims under the federal Fair Housing Act. Bank of America and Wells Fargo then appealed the Court of Appeals decision to the Supreme Court, while Citigroup elected not to appeal. And in June of last year, the Supreme Court agreed to hear the case, stating that it would not rule on the merits of the city’s lawsuits, but rather whether Miami was allowed to bring the lawsuits in the first place. The Supreme Court’s ruling combined Miami’s lawsuits against Bank of America and Wells Fargo into one decision, and handed the city a partial victory on whether it could sue the banks, but established a standard that could be difficult to prove. The majority decision, authored by Justice Stephen Breyer, states the following (emphasis added by HousingWire): We hold that the City’s claimed injuries fall within the zone of interests that the FHA arguably protects. Hence, the City is an “aggrieved person” able to bring suit under the statute. We also hold that, to establish proximate cause under the FHA, a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory violation. The remaining question is one of causation: Did the Banks’ allegedly discriminatory lending practices proximately cause the City to lose property-tax revenue and spend more on municipal services? The Eleventh Circuit concluded that the answer is “yes” because the City plausibly alleged that its financial injuries were foreseeable results of the Banks’ misconduct. 70 HOUSINGWIRE ❱ JUNE 2017

We conclude that foreseeability alone is not sufficient to establish proximate cause under the FHA, and therefore vacate the judgment below. We conclude that the Eleventh Circuit erred in holding that foreseeability is sufficient to establish proximate cause under the FHA. As we have explained, proximate cause “generally bars suits for alleged harm that is ‘too remote’ from the defendant’s unlawful conduct.” Lexmark, supra, at ___ (slip op., at 14). In the context of the FHA, foreseeability alone does not ensure the close connection that proximate cause requires. The housing market is interconnected with economic and social life. A violation of the FHA may, therefore, “‘be expected to cause ripples of harm to flow’” far beyond the defendant’s misconduct. Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519, 534 (1983). Nothing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel. And entertaining suits to recover damages for any foreseeable result of an FHA violation would risk “massive and complex damages litigation.” Id., at 545. Rather, proximate cause under the FHA requires “some direct relation between the injury asserted and the injurious conduct alleged.” Chief Justice John Roberts, along with Justices Elena Kagan, Ruth Bader Ginsburg, and Sonia Sotomayor, joined Breyer in the ruling. Justices Anthony Kennedy, Samuel Alito, and Clarence Thomas dissented. Thomas, in the dissenting opinion, wrote: The Court today holds

Industry Pulse

that Congress intended to remedy those kinds of injuries when it enacted the FHA, but leaves open the question whether Miami sufficiently alleged that the discriminatory lending practices caused its injuries. For the reasons explained below, I would hold that Miami’s injuries fall outside the FHA’s zone of interests. I would also hold that, in any event, Miami’s alleged injuries are too remote to satisfy the FHA’s proximate cause requirement. In a statement provided to HousingWire, Bank of America spokesperson Lawrence Grayson said that the bank will continue to defend itself against the city’s claims. “Bank of America is committed to the goals and intent of the Fair Housing Act,” Grayson said. “We believe these claims are without merit, and we will continue to defend our interests in this matter.” In a separate statement, Wells Fargo stated that the standard established by the court required to prove that a bank is responsible for the effects of its lending practices will be difficult to achieve. “The Supreme Court has brought us one step closer to ending the litigation brought by the city of Miami and other municipalities under the Fair Housing Act,” a Wells Fargo spokesperson said in a statement.

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Bank of America is committed to the goals and intent of the Fair Housing Act,” — Bank of America spokesperson Lawrence Grayson

“We believe that under the stringent standards articulated by the Supreme Court, it will be very difficult for Miami or any other municipality to show the required connection between the claimed damages and unsubstantiated allegations about our lending practices, which do not reflect how we operate in the communities we serve,” the spokesperson continued. “We intend to continue to focus on helping customers succeed financially and expanding homeownership in Florida and across the United States.”

Knowledge

Center

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Knowledge Center

W H I T E PA PE R: Secur eView | SP ONSOR E D CON T E N T

SERVICING GAME CHANGER HOW FANNIE MAE’S DECISION TO REIMBURSE FOR POLYCARBONATE BOARDING IN PRE-FORECLOSURE COULD REVERSE DECADES OF BLIGHT INTRODUCTION

THE SCOPE OF THE PROBLEM

For decades, the only choice servicers had when securing a vacant or abandoned property was plywood. Boarding up windows and doors with plywood was supposed to keep the asset safe, but the effect was often the opposite — the boarded-up home advertised vacancy, which invited looting and other criminal activity. This unsightly plywood fix was bad enough in normal housing cycles, but it devastated whole communities after the financial crisis. As a tidal wave of foreclosures swept through neighborhoods across the nation, it left behind a mass of vacant and abandoned properties boarded with plywood. Even one plywood-boarded house on a street lowers property values around it, but during the foreclosure crisis, neighborhoods in the hardest-hit areas saw dozens of houses boarded with plywood. Property values in these areas plummeted, leading to more losses and more abandoned properties.1 Although foreclosures are now back to pre-crisis levels in many cities, the number of plywood-boarded houses that remain continues to depress home values and stall economic recovery in many areas. A new alternative to plywood — polycarbonate boarding — promises to reverse the cycle of blight while better securing properties. The clear industrial-grade sheet material was developed by SecureView in 2010 and has been adopted by servicers across the country. However, because polycarbonate boarding costs more on the front end, many servicers have continued to use plywood. But in late 2016 the battle against blight got a huge shot in the arm as Fannie Mae announced that it would reimburse servicers for installing polycarbonate boarding in pre-foreclosure.2 This one action could prove to be a game-changer for communities throughout the nation, reversing decades of blight.

Foreclosures hit a high in 2010, when filings peaked at 2.9 million properties nationwide.3 By 2012 that number was down to 1.8 million homes, and by the end of 2015 the total was 1.1 million properties. But while there has been a definite decrease in new foreclosures, millions of homes are still sitting vacant across the country, pulling down property values for whole neighborhoods. Vacant homes present a huge problem nationwide. Las Vegas and unincorporated Clark County still had more than 13,000 vacant houses in May 2016, and the city boards an average of 100 additional homes each year.5 In Chicago there were 600 abandoned buildings in one district alone in April 2016.6 In Trenton, New Jersey, roughly one out of every five homes has been foreclosed on since 2006 and the overall housing vacancy level has remained consistent at 13% to 15%.7 Thousands of vacant properties spell disaster for hard-hit communities and the people who live in them. These homes aren’t just an eyesore — they are magnets for criminal activity. In Las Vegas, for example, police received at least 4,458 squatter-related service calls in 2015, which was an increase of 24% from 2014, 69% from 2013 and 169% from 2012. According to Las Vegas planning director Tom Perrigo, about 10% to 20% of abandoned homes in that city are “constantly” vandalized. Las Vegas Inc. profiled one such property, noting that in one year the police had five calls for service at the property, resulting in a narcotics arrest and finding a deceased person.5

To read the entire white paper, visit the Knowledge Center at knowledge.housingwire.com. HOUSINGWIRE ❱ JUNE 2017 73