May 2022 Issue

HOUSING FINANCE LEADERS HOUSINGWIRE MAGAZINE ❱ May 2022

2022

May 2022

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HOUSINGWIRE EDITOR-IN-CHIEF SARAH WHEELER MANAGING EDITOR JAMES KLEIMANN DEPUTY EDITOR KATE DOUGLAS SENIOR REAL ESTATE REPORTER MATTHEW BLAKE SENIOR MORTGAGE REPORTERS BILL CONROY, GEORGIA KROMREI REAL ESTATE & TITLE REPORTER BROOKLEE HAN MORTGAGE REPORTERS FLÁVIA FURLAN NUNES, MARIA VOLKOVA REPORTER CONNIE KIM LEAD ANALYST LOGAN MOHTASHAMI CONTRIBUTORS KADE CLARK, AMANDA HILL, ROMI MAHAJAN

REALTRENDS VICE PRESIDENT OF REAL ESTATE MARK ADAMS EDITORIAL DIRECTOR TRACEY VELT DIRECTOR OF RANKINGS PROGRAMS LIZ SMITH EXECUTIVE MANAGER, CEO PROGRAMS JILL OLMSTED SENIOR DATA ANALYST KEERI TRAMM FINLEDGER EDITOR JOE BURNS REVERSE MORTGAGE DAILY EDITOR CHRIS CLOW

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HW MEDIA CORPORATE CEO CLAYTON COLLINS COO DIEGO SANCHEZ DIRECTOR OF FINANCE ANDREW KEY DIRECTOR OF PEOPLE AND CULTURE AMY BEARD VICE PRESIDENT OF GROWTH CAREN KARRIS GROWTH MARKETING MANAGER GREG ROBERTS SENIOR GRAPHIC DESIGNER EMILY CARPENTER GRAPHIC DESIGNER BRANDON JOHNSON VICE PRESIDENT OF PRODUCT HOLDEN PAGE UX/UI MANAGER BO FRIZE WEB DIRECTOR BRENT DRIGGERS AD OPS COORDINATOR ELIZABETH LEDOUX DIRECTOR OF HW+ & EVENTS BRENA NATH SENIOR WEBINAR & EVENTS MANAGER ALLISON LAFORGIA DIRECTOR OF EVENTS TRACY GARCIA MARKETING PROGRAM MANAGER LESLEY COLLINS MEMBERSHIP COORDINATOR SARAHI DE LA CUESTA PEOPLE OPERATIONS MANAGER JAMIE BRIDGES PRODUCT MANAGER MATTHEW STAFFORD EMAIL MARKETING SPECIALIST ALI MORRISSEY GROWTH COORDINATOR SYDNEY SMITH EVENTS COORDINATOR KATIE GALBRAITH BUSINESS ANALYST WHITNI ROWE JUNIOR DIGITAL PRODUCER ELISSA BRANCH SALES SVP SALES AND OPERATIONS JENNIFER WATSON LAWS WESTERN CHRISTI HUMPHRIES, LINDSLEY HARRIS, CASS HECKEL CENTRAL & NORTHEAST MICHAEL ORME, SAMANTHA STEIN, ADINA RITTER SOUTHERN TAMARA WREN, AMINA JAHIC SALES MARKETING MANAGER TOD MOHNEY CONTENT SOLUTIONS MANAGING EDITOR MALEESA SMITH CONTENT EDITOR JESSICA DAVIS ASSOCIATE EDITOR MARNI DAVIMES MULTIMEDIA PROJECT MANAGER DALTON JOHNSON CONTENT SOLUTIONS COORDINATOR EUNICE GARCIA

HOW TO REACH US LETTERS TO THE EDITOR EDITOR@HOUSINGWIRE.COM TIPS AND STORIES EDITORIAL@HOUSINGWIRE.COM CURRENT MEMBERSHIP / SUBSCRIPTION HWPLUSMEMBER@HOUSINGWIRE.COM NEW MEMBERSHIP / SUBSCRIPTION HOUSINGWIRE.COM/MEMBERSHIP MARKETING & ADVERTISING JLAWS@HOUSINGWIRE.COM OR (469) 870-4572 ADVERTISING CLIENT SUCCESS CLIENTSUCCESS@HOUSINGWIRE.COM

MAY 2022

LETTER FROM THE EDITOR

The why behind desktop appraisals LAST OCTOBER, an in-depth look at how Federal

Starting on page 36, you can hear from guest

Housing Finance Agency Director Sandra Thomp-

author Amanda Hill, who is head of mortgage

son planned to lead the agency was the feature

solutions at Reggora, as she discusses how key

story for the magazine. Her leadership captured

stakeholders in the desktop appraisal space are

the industry’s attention for many reasons, one

navigating the shift. Lyle Radke —Fannie Mae

of those being the fact that the director leaving

senior director of collateral policy — is quoted in

office, Mark Calabria, was looking at ways to bring

the piece asking, “How do you manage the risk of

the GSEs out of conservatorship. Thompson had

not having appraiser capacity when you need it?”

no plans of continuing that conversation.

His answer: “You’ve got to find ways to make your

Instead, that same month, Thompson announced something else that changed the game for the housing industry — she announced that

appraisers either more efficient or dedicate them to the more pressing problems.”

Also featured in this issue is HousingWire’s

Fannie Mae and Freddie Mac would begin perma-

second class of Housing Finance Leaders. Spot-

nently accepting desktop appraisals for conven-

lighting top executives who are driving compa-

tional loans. The news generated mixed opinions.

nies forward, this class once again features the

While some claimed that the move was a key component in creating a digital mortgage expe-

leaders who are making sure their companies are maximizing today’s fast-paced market.

rience, appraisers, who would be using the new tool, weren’t as excited about the new process.

Tweets From The Streets Spoke to a local lender who said that most homes in this neighborhood have been selling for 10-20% over list, but these last few days have been particualrly competitive.

There is some FOMO at play before rates rise further, but also so much demand for the little that’s for sale.

4 2 31 by @odetakushi

MAY 2022

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. © 2022 by HW Media, LLC • All rights reserved

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Brena Nath Director, HW+ & Events @BrenaNath

classes for 2022 with more to come

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May 2022

People Movers

12 Sharifa Anderson joins the Fannie Mae leadership team to fill this newly created role.

Take 5

13 From golf on Sunday to navigating the capital markets on Monday, get to know Matt Garlinghouse.

Event Calendar

14 At MBA Secondary in New York, you’re invited to this cocktail event with Logan Mohtashami.

Inside Agent

15 With the median sale price of a San Diego home hitting $779,900, Alanna Strei sits in a very hot market.

Local Intel

16 The self-proclaimed ‘Energy capital of the nation,’ Gillette, Wyoming, provides roughly a third of the nation’s coal.

Trade Desk

56 Realtors from across the country descend upon the nation’s capital this month for legislative meetings.

Reverse Mortgage

60 Wade Pfau walks people through ways reverse mortgages have changed since 2018.

Real Estate

64

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We read Compass’s 10K so you don’t have to, and, boy, did it reveal some interesting nuggets.

MAY 2022

Secondary Market

68 Neither rate volatility nor war has stymied the MSR market, as MSR values remain robust.

Kudos

72 Here’s how one lender is coming together to help more Black Americans become homeowners.

Parting Shot

74

How hot is the housing market? These photos, which went viral, help showcase how hot is hot.

features

f

42

NFT mania and the future of the home sale

22 Housing Finance Leaders HousingWire is excited to recognize this year’s class of honorees.

Entering its second year, this award spotlights the top finance executives who are driving financial performance, expanding margins and improving liquidity.

36 Desktop appraisals are here to stay COVID-19 brought many changes to the housing industry, and the appraisal industry was no exception to this. Unpacking the future of desktop appraisals, this expert panel discusses trends, risks and next steps for lenders and appraisers.

All industries now have to answer for crypto.

But what worth does it have for real estate?

48

Valuation Tech Solutions

The rising tide of house prices: Avoiding the flood

The power of creating a unified approach for reducing appraisal bias

By Romi Mahajan

By Kade Clark

pg 18

pg 20 MAY 2022

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The six companies featured in this section offer innovative solutions to help appraisers work efficiently while allowing lenders to reduce operational costs and increase profitability.

G AT H E R I N G O F E A G L E S

2022

by

JUNE

26-29 COLORADO SPRINGS, COLORADO

LOCATION: THE BROADMOOR

Year after year, this event provides essential business strategy advice for the nation’s top residential real estate firm CEOs, presidents, and their C-level leadership team, as well as Realtor® association executives, and senior management from national franchises, relocation firms, and referral networks.

KEYNOTE LARRY KENDALL NINJA SELLING

DealMakers by

Find out more information at https://events.realtrends.com/gathering-of-eagles

Interested in sponsoring?

Contact Jennifer Laws jlaws@housingwire.com

PEOPLE MOVERS

Sharifa Anderson

| Fannie Mae | SVP, Chief Diversity and

Inclusion Officer

Fannie Mae has named Sharifa Anderson to fill the newly created role of senior vice president and chief diversity and inclusion officer. Anderson, who recently served as the chief diversity and inclusion officer at Federal Home Loan Bank of Pittsburgh, will lead Fannie’s efforts to create positive diversity and inclusion outcomes across the enterprise.

Patrick Rutherford |

FormFree | Chief Financial Officer

FormFree announced that it has appointed Patrick Rutherford, former finance executive at Intercontinental Exchange, as chief financial officer. In his new role at FormFree, Rutherford will lead the organization’s finance, accounting and compliance functions. Prior to joining FormFree, Rutherford served as a leader within ICE's global finance function. As a financial leader at the publicly traded Fortune 500 company, Rutherford oversaw multiple aspects of global forecasting, planning and analysis.

Sudhir Nair |

AmeriSave Mortgage Corporation | Chief Digital Officer

AmeriSave Mortgage Corporation hired global digital and technology leader Sudhir Nair as the company’s first-ever chief digital officer. Nair brings 25 years of digital transformation and automation experience and has led organizations such as loanDepot, Bank of America, Xome/Mr. Cooper, CountryWide, Amazon and others, to scale and grow.

Jamie Rey-Hipolito |

ServiceLink | VP, Single-Family Rental

ServiceLink appointed Jamie Rey-Hipolito as vice president of single-family rental, expanding its leadership team to better meet the needs of single-family rental investors. An accomplished real estate operations and asset management veteran, Rey-Hipolito brings more than 20 years’ experience in multifamily, single-family and iBuyer asset management. In this role, Rey-Hipolito will be responsible for expanding ServiceLink’s single-family rental solutions for investors and clients.

Jeff Leinan |

Plaza Home Mortgage | President of Wholesale Production

Plaza Home Mortgage, a wholesale and correspondent mortgage lender, named Jeff Leinan, former executive vice president, national wholesale production, to the newly created role of president of wholesale production. Leinan has been with Plaza for nearly 14 years, first joining the company in 2008 as a divisional executive and was promoted to executive vice president in 2018. In his new role, Jeff will be responsible for all aspects of origination, underwriting and production for the company’s wholesale lending division.

Kyle Hilton |

Mid America Mortgage | Quality Control Manager

Mid America Mortgage added mortgage industry veteran Kyle Hilton, to its team as its newest quality control manager. Hilton brings a knowledge spanning more than 20 years in mortgage underwriting and quality assurance review. In this role, Hilton will be responsible for overseeing and monitoring quality control vendors and policies which includes conducting audits and managing deficiencies in underwriting work, file documentation and compliance, both pre-funding and post-closing.

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Marcy Ash |

Down Payment Resource | Director of Strategic Projects

Down Payment Resource, a nationwide database for U.S. homebuyer assistance programs, appointed Marcy Ash, AMP, as director of strategic projects. In her role at DPR, Ash will manage relationships with state housing finance agencies and spearhead industry partnerships and strategies that help DPR deliver greater value to its customers. Prior to joining the DPR team, Ash was assistant vice president and senior product manager at Huntington Bank.

MAY 2022

TAKE 5

Matt Garlinghouse EVP, Capital Markets at Cherry Creek Mortgage With more than two decades of experience in the industry, Matt Garlinghouse is an expert in the capital markets space and 2021 HW Finance Leader. After his time at Everbank and Supreme Lending, Garlinghouse joined Cherry Creek Mortgage, where he oversees trading, product pricing and development, investor relations, post-closing and risk management for one of the fastest growing lenders in the country. He has helped enrich the company’s trade desk and introduced new concepts in the capital markets division that helped fuel Cherry Creek’s growth in production. Below, Garlinghouse answers five questions that give an inside look at his life.

1. My guilty pleasure is... listening to a Joe Rogan podcast.

2. The best thing about Saturdays is... golf in the a.m. and a cookout with the family in the p.m.

3. My favorite thing to do with my employees is... teach, praise and repeat.

4. The future is... electric! Anything is possible!

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5. I don’t ever worry about... trying to “keep up with others”.

MAY 2022

EVENT CALENDAR

Mortgage Innovators Conference 2022 May 2–4, 2022 Cost to attend: Member: $375 | Non-member: $560 Presented by the CMBA

LISTEN NOW Rene Rodriguez’s unique approach to professional growth

BY BRENA NATH

LOCATION: ANAHEIM, CA FROM TECH TALKS to innovator insights panels, the Mortgage Innovators Conference is an industry event that invites you to experience cutting-edge speakers, interactive technical demonstrations and one-to-one networking opportunities. The conference will also host an ‘Innovation Lab’, which is a 100% immersive experience designed to foster idea-sharing and build a better mortgage market.

You can even catch a panel moderated by HousingWire’s Brena Nath unpacking the critical difference between innovation and disruption.

MBA’s Secondary & Capital Markets Conference May 15–18, 2022 Cost to attend: Member: $1,249 | Non-member: $3,129 Presented by the MBA LOCATION: NEW YORK CITY

BRINGING TOGETHER real estate finance professionals in the secondary and capital markets space, the MBA’s Secondary & Capital Markets Conference offers impactful face-to-face conversations and opportunities to build partnerships to shape your future. Session highlights include hearing from key players in the industry, such as Sandra Thompson, acting director of the Federal Housing Finance Agency. In addition to the conference events, join HousingWire for “Cocktails with Logan” on May 16 to hear from Lead Analyst Logan Mohtashami about the state of the housing economy.

HW Media CEO Clayton Collins joins Rene Rodriguez, CEO of Volentum and founder of the AMPLIFII coaching and leadership advising program, on the Housing News podcast. Rodriguez’s unique background in applied behavioral science gives him a special approach to the program, which has helped over 100,000 people across many industries.

Rodriguez and Collins talk about building a personal brand through technology as work and personal life blur, Rene’s journey through the mortgage industry, and his passion for helping sales professionals grow.

Here is a small preview of the interview with Rodriguez.

Clayton Collins: Tell us about AMPLIFII and the business you're building today.

Rene Rodriguez: We look at ourselves as a company that helps good messages come to life. We help leaders and people understand that influence is a science that can be learned, and influence requires a new level of self-awareness over things that maybe they didn't realize. It's not about being an influencer, like social media. That's a different arena. That's not something that I have any interest in.

This is about creating influence as a leader: How do you drive behavior? How do you drive action?

How do you set the tone of a room? How do you cast a vision and have an entire company follow? How do you deliver bad news in a way that doesn't shut down your organization, but rather builds trust in and speeds the level or increases the level of authenticity?

Scan the code to listen now!

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Event TIP “When speaking whether virtually or in-person, I obsess over two issues. What do they care about? How can I help achieve that? This helps me create engagement organically. Most people care about experiencing joy, so this obsession compels me to make my presentation as enjoyable as I possibly can.”

—Angel Hernandez, head of industry and regulatory affairs at Stavvy

MAY 2022

INSIDE AGENT

Alanna Strei eXp Realty alanna@alannarealty.com 1225 S. Island Ave #110 92101 San Diego, CA $425,000 1 bed, 1 bath

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BY THE START OF 2022, the median sale price of a San Diego home was $779,900, according to the California Association of Realtors. The border city filled with naval bases and craft breweries is running neck and neck with San Francisco for most expensive West Coast real estate.

How expensive San Diego has become can be illustrated by its myriad of high-end properties, but also modest abodes as well. In March, Alanna Strei — an agent who specializes in working with military veterans — placed on the market a one-bedroom apartment for almost half-a-million dollars.

The home would appear to have its charms, including hardwood floors and access to an outdoor pool. But Strei is hoping for someone to pay a sum that would have seemed surreal two years ago.

Strei was a lieutenant in the U.S. Navy Reserve.

She said that she got into the industry first through Airbnb. “I was really verbal about it on Facebook, trying to help people make money,” she recalled. “They chose me for a commercial, and I got an all-expenses paid trip to Paris.”

Today Strei says that she can help make San Diego less expensive by moving her clients through the VA loan process. “The VA loan is really forgiving,” the agent said. “I just bought my third place in September,” with a mortgage payment of “$3,500 a month and a 2.25% interest rate.”

MAY 2022

LOCAL INTEL

By: Brooklee Han

Bluffton, South Carolina

Historically viewed as a place to drive through on the way to Savannah, Georgia or the popular vacation destination of Hilton Head, Bluffton has really come into its own over the past 10 years. “I believe that our market was undiscovered and undervalued for a really long time,” local Keller Williams agent, Tim Peirce said.

Since 2010, Bluffton’s population has nearly tripled to about 34,000 making it one of America’s fastest growing towns. However, this growth has come at a cost.

According to the Hilton Head Area Association of Realtors, the median home sale price jumped 15.3% in 2021 to $330,745. “It is extraordinarily hot,” emphasized Pierce. “The agents on my team are having to be extremely competitive when making offers. One of my agents has a client who is making an offer on a house that will probably end up going for over $250,000 over list price and most of what we are seeing is either all cash offers or eliminating contingencies.” This rapid increase in prices, coupled with local housing inventory dropping over 50% in 2021, has meant times are tough for buyers looking to settle in Bluffton. Despite this, Peirce remains hopeful about the upcoming season.

“As we head into spring I do expect to see continued appreciation, and I am hopeful we will continue to see more listings come on the market. But, I do believe it is going to be really competitive, and buyers are going to have to move fast to get a house.”

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Greenwich, Connecticut Boasting over 32 miles of shoreline, thousands of acres of parkland and located less than an hour commute from Manhattan, Greenwich has been a haven for buyers looking for a nearby escape from the hustle and bustle of the city that never sleeps. According to local Sotheby’s International Realty agent Joe Barbieri, this trend was accelerated by the onset of the COVID–19 pandemic. “At the start of the pandemic a lot of people coming to Greenwich were just looking to rent and then they decided to buy,” he said. “Right now, the market has low inventory and when something good comes on the market there is a flood of activity.” Barbieri explained that before the pandemic prices in Greenwich were dropping lower and lower, and there was quite a bit of inventory sitting on the market for a long period of time. “A lot of things that never could sell finally sold and that just kept continuing. Now, we have under 200 homes for sale, and a year ago, we had over 400 homes. I get people calling me all the time looking for inventory, but we just don’t have any,” he said. With The Corcoran Group announcing that it has chosen a Greenwich based brokerage as its entry point into the Nutmeg State, it is clear that New York ex-pats are not the only ones willing to bet on Greenwich’s housing market.

MAY 2022

Gillette, Wyoming

As the self-proclaimed ‘Energy capital of the nation’, Gillette is known for providing roughly a third of the nation’s coal and being a major producer of oil and natural gas. For years the energy industry has tried to entice people to move the city of roughly 33,000. But according to local ERA Priority Real Estate agent Josh McGrath, Gillette’s small-town feel, big city amenities and proximity to national parks has finally been inspiring people to move to the area.

This, of course, has come at a cost. On the day I spoke with McGrath he said that only 53 homes were on the market. “Before COVID–19 we had somewhere between 250 and 300 homes on the market,” McGrath said. “In 2016 there were some layoffs in the energy industry, and we had about 525 homes; but, it has just been declining since then.”

According to McGrath, out-of-town buyers and local move-up buyers taking advantage of low mortgage rates have decimated the area’s housing supply. As geopolitical tensions rise between Russia and Ukraine and the U.S. attempts to become less dependent on foreign oil, McGrath expects the situation to worsen as more people move to Gillette for employment opportunities in the energy industry.

Dallas-Fort Worth, Texas

Lexington, Kentucky Like markets across the country, Lexington’s housing market is hot. For local rookie Century 21 agent Luis Paredes, who felt stuck in his job at Amazon, the exciting market conditions helped inspire his jump into the real estate industry. “I had been there for about two years, and I was like, ‘Man there really isn’t anything else I can do here,’” Paredes explained. As a relatively new agent in Lexington, Paredes has had to deal with countless multiple offer situations and rapidly rising prices. “I am seeing a lot of properties going on the market at a higher price than a home down the road sold for a few weeks ago,” he said. “They are going up $25,000–$30,000 for the list prices and then when they offers come in and there will be multiple offers, it will sell for $5,000–$10,000 more than the list price.”

Low inventory is yet another issue. Paredes explained he was recently working with a client in the Nicholasville area where new listings sometimes take weeks to appear. “It was challenging for my buyer because they didn’t have that many opportunities to see homes or even many options,” he said. Despite these tough conditions, Paredes said he is still seeing people from across the country looking to move to Lexington. “A lot of people come here for the horse industry,” he explained. “There is a lot of land and farming, and people can just go outside and enjoy the fresh air.”

MAY 2022

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It seems like the Dallas-Fort Worth housing market has been making headlines for years now. According to local Brixstone Real Estate agent Mandy Nichols, it is for a good reason. “The market is just insane,” she said. “I have one buyer with a budget of $300,000–$350,000, and we are having to make room in there for up to $30,000 of gap funding in case it doesn’t appraise.”

Pre-pandemic, Nichols said multiple offer situations were rare, but now it isn’t uncommon to see homes priced under $500,000 to receive upwards of 20 offers.

While these conditions can be seen all over the Metroplex, areas with top-rated school districts are even more competitive, according to Nichols. Where are all these buyers coming from, you ask? California. “I haven’t moved anybody but Californians here,” Nichols said. “I know there are multiple areas of the country buyers are coming from, but I haven’t really heard anyone at my brokerage talk about working with anyone but Californian buyers.”

T

COMMENTARY

he rising tide of house prices: Avoiding the flood Here are three categories that provide some solutions

By Romi Mahajan

18 ❱ HOUSINGWIRE

The old conservative economist’s adage that “a rising tide lifts all boats” was quickly calledout by activists who didn’t see the trickle down effects of a “booming economy” benefit the working people of America. They changed the phrase to “a rising tide lifts all yachts,” sarcastically suggesting a society with vast disparities in wealth and assets and little by way of fairness. After the Great Recession, the phrase “one-percenters” came into the lexicon, again suggesting that the very few own the vast majority of assets and wealth in America.

While the tide analogy was meant to refer to the entire economy, it works well in the housing sector as well. After all, we are witnessing the rising tide of house prices, in a surge we’ve never seen before. Some Americans surf on the waves and others just feel the effects of the rising waters.

The question before those of us in the housing ecosystem is, “how can most Americans avoid the flood?” Put differently, how can people who aren’t in very high-paying jobs, aren’t owners of industry, aren’t affiliated with investment firms, and who might opt-out of the traditional economy still become part of the “American Dream”?

Put differently, how can people who aren’t in very high-paying jobs, aren’t owners of industry, aren’t affiliated with investment firms, and who might opt-out of the traditional economy still become part of the “American Dream”?

There are multiple, connected issues that have to be addressed in order to answer this question. Before delving deeply into them, it is important to get grounded in the numbers: • The housing market is the country’s largest asset class, worth approximately $44 trillion.

• The market rose almost 20% in 2021, adding $7 trillion in value.

While these staggering numbers certainly show the “rising tide,” the story is more complex than the aggregate numbers might suggest: • While house prices have risen across the board, about onethird of houses equal about two-thirds of the aggregate value.

• While the amount of equity Americans own in their homes has risen dramatically in aggregate, Americans still have between $15 trillion and $18 trillion in mortgage debt.

The numbers, when examined at a family-to-family level indicate a more dire story: • Despite measures to facilitate home buying, only 65% of Americans “own” their homes, with the numbers being far lower for many disadvantaged groups.

• Despite rising home equity, the total net worth of the average American household is $122,000 with 70% of that being equity in their homes. Again, the numbers for many minority groups are much lower.

• In a 2015 poll conducted by The Atlantic Magazine, twothirds of Americans making under $40,000 a year said that they’d have a hard time coming up with $400 for an emergency.

• Gig work is increasingly common in the United States, with 34% of working Americans involved in the gig economy and 40% of those who rely on gig work as their primary source of income. The average gig worker makes $29,000 per year.

There are many more statistics that can be quoted, but the net result is a massive imbalance in the housing sector. In many parts of the country, the rising house prices have made it literally impossible for most families to partake in homeownership, which

MAY 2022

On the supply-side, we need more companies willing to create affordable housing; they need to focus on median economics and not “onepercenter” economics.

Some fertile areas for change are as follows: On the supply-side, we need more companies willing to create affordable housing; they need to focus on median economics and not “one-percenter” economics. We also need to culturally socialize smaller houses with better ecological footprints. This requires concerted effort and cooperation between urban planners, builders, local governments, and financial institutions.

With regard to government policy, we need the GSEs with the backing of the federal government to work affirmatively to undo the deleterious effects of red-lining and artificial zoning to create a fair playing field and to regulate financial service companies so that it is less onerous and less credit-score dependent for working families to purchase and finance homes. This requires political will and clear follow-through.

In terms of paradigm change, we need better financial on- and off-ramps for homeowners, more abundant facilities to allow Americans to access and use equity in their homes, and creative ways to help house-poor Americans enjoy shared risk/reward models with investors.

Clearly, there is a lot more that needs to be done, but the conversations must happen and happen soon. With 2022 slated to be another year of high-growth in house prices, we need to intervene powerfully — and soon — before the rising waters prove too much for us to handle.

Romi Mahajan is an expert in the fintech marketing space. He is president at KKM Group and an advisor at Quantarium and Rook Capital.

MAY 2022

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sets off a cascade of other issues, such as those related to transience, lack of good educational opportunities, and spiraling debt. The rising tide has created a flood indeed.

So, what can be done? Solutions can be found in three categories that might appear distinct but are in fact fundamentally connected: • Category 1: Supply innovation • Category 2: Government policy innovation • Category 3: Paradigm-change innovation Supply innovation is a complex issue.

From supply chain issues to zoning rules, from dirigisme to a purely free market mentality, the issues of supply are not given to pat answers.

Yes, the U.S. is “behind” by tens of millions of housing units, but there is a perverse pressure on existing homeowners to be unsupportive of new developments, even if those new developments offer homeownership possibilities to a group of people locked out of the current system. Recent trends toward smaller and more affordable housing units are a bright light in this arena but experts are united in the notion that the need far outstrips the current capacity for development.

Government policy innovation is similarly fraught though offers a great deal of potential.

Governments, whether federal, state or local could require private builders to build more units or control prices, but the laissez-faire ethos of American government militates against a strongly interventionist policy framework. Fiscal stimulus or benefits typically accrue to precisely the populations that require help the least.

Paradigm-change innovation is not a cakewalk either. This calls for real change in the way we make finance options available to people who do not traditionally have the means to buy homes at sky-high prices or who opt out of the traditional system due to differing economic philosophies. Polls indicate that people below 40 in the United States are less likely to want to opt for the typical 30-year mortgage and traditional financing means. What is needed is offerings that reflect a new paradigm in homebuying, learning from innovations in other sectors.

Just as each of these areas has difficulties and inertia associated with it, each has enormous potential to help Americans avoid the flood.

To get there, we require the will to do so but also alignment across different parts of the ecosystem.

T

COMMENTARY

he power of creating a unified approach for reducing appraisal bias The impact of data and diversity

By Kade Clark

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There is no single silver bullet that will rectify the pernicious impact of bias in residential real estate valuations — it is a complex problem that requires a multifaceted solution. But there is the promise of a better future on the horizon. The housing industry and Biden administration have begun a full throttled effort to solve the issues contributing to inequity. By combining the power of emerging technologies like artificial intelligence (AI) and machine learning (ML) with a true commitment to diversity at every stage of the valuation chain, we can build a consciously unbiased appraisal system that delivers more equitable and accurate conclusions. Yet, this will be a time-consuming and challenging effort that will require all parties to be aligned in their goals and their approach.

First, we must acknowledge the impact that appraisal bias continues to have on minority homeowners and the broader housing system. Despite the protections enacted by the Fair Housing Act of 1968, inequality and discrimination in the housing finance system continue to shape the contemporary valuation of homes. Recent studies from Fannie Mae, Freddie Mac, and academic researchers have found appraisal disparities for communities and borrowers of color. As a result, homes located in minority neighborhoods have been chronically undervalued, exacerbating the racial wealth gap.

Fannie Mae’s “Appraising the Appraisal” study comparing appraisals to automated valuation

model (AVM) data for refinance transactions found that Black borrowers received slightly lower appraisal values relative to AVMs, while white borrowers received slightly higher appraisals.

Likewise, a 2021 Freddie Mac study of more than 12 million appraisals dating back to 2015 found that appraisers’ opinions of value were more likely to fall below the contract price in Black and Latino census tracts. Some researchers point to appraisal methodology as a culprit. According to a study published by Oxford Academic Journals in 2020, modern appraisal techniques using sales comparisons and neighborhood comparisons actually perpetuate racial inequality, and in some cases exacerbate it, citing that the sales comparison approach preserves historical racial bias in today’s home values. Similarly, the study found that neighborhood comparisons used in appraisals may be influenced by racialized assumptions of a neighborhood.

Thankfully, this topic has been getting the attention it deserves from industry leaders, regulators and the current administration.

In March, the Biden administration announced a multi-step plan to advance equity in the appraisal process. The administration’s interagency taskforce on Property Appraisal and Valuation Equity (PAVE) issued an action plan including regulatory reforms and oversight to make the appraisal industry more accountable, provide consumers with assistance and awareness, prevent algorithmic bias, drive more diversity in the appraisal industry, and leverage federal data to benefit research and policymaking. If passed, the Fair Appraisal and Inequity Reform Act of 2022 would establish a Federal Valuation Agency responsible for promoting a fair, unbiased, transparent and repeatable valuation process.

The industry is ready and willing to tackle this challenge. We all share a goal of creating a system that produces more accurate valuations free of racial and historical bias to open a more equitable path to wealth creation for all Americans. The difficulty is agreeing on exactly what a consciously unbiased appraisal

By combining the power of emerging technologies like artificial intelligence (AI) and machine learning (ML) with a true commitment to diversity at every stage of the valuation chain, we can build a consciously unbiased appraisal system that delivers more equitable and accurate conclusions.

MAY 2022

There may not be a single action or reform that can instantly solve the persistent issue of biased home appraisals, but there are ways to improve and, perhaps over time, remedy the problem using a combination of technology and diverse data.

support for this approach across the public and private sectors, from fair housing advocates to valuation industry leaders, but it remains to be seen whether the FHFA will authorize the release of GSE data.

While technology and standardization are important tools to create a more equitable valuation process, a diverse workforce is another critical check on subjectivity and unconscious bias.

There is a severe underrepresentation of diverse talent in the housing industry. According to the Department of Labor’s Bureau of Labor Statistics, the appraiser profession is 97.7% white, and women comprise only 30.4% of the workforce. Looking at the broader scale, less than 13% of the housing industry workforce is Black and Hispanic. As an industry, we need a more diverse workforce and leadership that better reflects the population we serve.

In response to this, the Appraisal Institute has launched an Appraiser Diversity Initiative with Fannie Mae, Freddie Mac, and the National Urban League. Other initiatives like Fannie Mae’s Future Housing Leaders program are focused on sourcing a more diverse talent pipeline and matching them with employment opportunities in the housing industry. It is important to also focus inclusive recruiting efforts within the valuation technology and data science field, including those building and maintaining computer-based models. These initiatives will take time, but with a consistent, united effort across the industry we can ensure there is an emphasis on promoting diversity when hiring new entrants and promoting to leadership positions.

There may not be a single action or reform that can instantly solve the persistent issue of biased home appraisals, but there are ways to improve and, perhaps over time, remedy the problem using a combination of technology and diverse data. Through a merger of expert knowledge, diversity of thought, standardized data, and advanced technology, we can develop more equitable valuation processes that are consistent, repeatable, and transparent. The scope of the challenge should not discourage us. Rather, the reward of achieving a more fair and equitable system that serves all Americans is well worth the effort.

With advances in data engineering and modeling, we now have the technology and tools available to begin correcting some of the bias and issues in the modern valuation process.

Kade Clark is the senior vice president of Red Bell Real Estate, a homegenius company. He is responsible for the daily management of digital valuations, hybrid appraisal valuations and sales within the homegenius division of Radian.

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system looks like, and how to achieve it.

Ideally, the solution leverages more advanced technology, better data, and a more diverse workforce across every sector of the valuation spectrum.

With advances in data engineering and modeling, we now have the technology and tools available to begin correcting some of the bias and issues in the modern valuation process. By working from objective data rather than information processed and curated by humans, AI and machine learning technologies can reduce subjectivity and unconscious bias from appraisals. However, every valuation technology provider has their own secret sauce when it comes to their algorithm for AVMs and other computer-based valuation tools.

A slew of agencies including the CFPB, FDIC, NCUA, and FHFA have collaborated to address this with newly proposed quality control standards for AVMs. Their proposed amendment to FIRREA aims to increase confidence scores, prevent manipulation of data, avoid conflicts of interest, and enforce random sample testing and reviews. More research is needed to determine which algorithms should be used to ensure AVMs do not introduce their own model bias. This would require extensive testing using historical and current data to determine if the estimates generated by the technology accurately reflects reality.

Additionally, the standardization of data is another crucial variable that must be addressed for this approach to succeed. Just as each valuation technology provider relies on different algorithmic models, they also rely on different data sources. It will be impossible to standardize models unless the data all models are running on comes from a single source of truth.

One proposed solution is for the GSEs to provide open access to their data sets, which constitute the most comprehensive collection of comparative real estate data nationwide.

That way, all participants are comparing apples to apples without the possibility of oranges sneaking into the data set. There has been broad

Housing Finance

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leaders

MAY 2022

MAY 2022

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LOOKING AT THE HOUSING INDUSTRY in 2021 from a bird’s-eye view, it’s easy to see the fast-paced housing market and the record-setting surge in volume. However, in the midst of that massive volume, companies were working furiously to balance demand and resources — balancing and rebalancing the books. Companies announced they were going public, acquiring companies, hiring hundreds of people to accommodate the demand, and so much more. And who were the people leading a lot of these conversations? HousingWire’s Housing Finance Leaders.

That’s why HousingWire is excited to recognize this year’s class of honorees. Entering its second year, this year’s class spotlights the top finance executives who are driving financial 24 ❱ HOUSINGWIRE

performance and helping their businesses access the capital markets.

MAY 2022

Aamer Abdullah Amber Adil Eduardo Arreaga Brooke Carillo Jeff Cassetta William Chang Kent Cheng Mike Clear Ravi Correa Victoria DeLuce Lisa Esia Neil Fenton Brian Gilpin Marc Greenberg Chryssa Halley Michael Jones Roisin Lakings Oscar Laud Patrick McClymont Susan Mello

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Michael Modell Julie Nelson Eli Novey Conor O'Donoghue Joe Ottomanelli Joseph Peterson Eric Pretzlaff Kevin Ryan Suk Shah Stacie Shirley Charlotte Simonelli Chris Staub Maksim Stavinsky Bob Telles Bryan Thompson Andrew Vassallo David Wallace Carrie Wheeler Matt Wright Sun Yee

31 32 33 34 35

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Table of Contents

Aamer Abdullah

Amber Adil

Ribbon

Altitude Home Loans

VP, Capital Markets & Finance

EVP, Capital Markets

Aamer Abdullah — Ribbon’s vice president of capital markets and finance — joined the company with the goal of democratizing access to complex financial tools. Abdullah’s leadership has led Ribbon to advance one of the first appraisal-focused solutions among the “power buyer” set in 2021. His leadership has also facilitated the expertise and relationships needed to fund sell-side products in the coming months.

In 2021, Abdullah led Ribbon’s latest funding round and secured $150 million, inclusive of $75 million in Series C equity financing and $75 million in additional working capital. This, along with Abdullah’s work to upsize Ribbon’s $500 million credit facility, will enable Ribbon to take on rapid expansion in 2022 to half of the U.S. Abdullah has brought more lending relationships to Ribbon’s roster, ensuring the full funding of financial products. He has consolidated Ribbon’s risk and portfolio operations and management with capital markets, facilitating four-times growth since joining the company.

Amber Adil, executive vice president of capital markets at Altitude Home Loans, is a veteran of the mortgage industry with 25 years of experience. This experience has allowed her to lead her team through the challenges faced by independent mortgage bankers.

When Altitude opened its doors in early 2020, the company grew rapidly to more than 130 employees, and Adil’s experience, leadership and relationships were critical to the company’s success in these early months.

Last year, Adil led Altitude and her team in navigating the agency pricing changes that were affecting independent mortgage bankers, including regional players. In 2022, Altitude is poised to grow and succeed, thanks in large part to Adil’s stable leadership in the company’s capital markets group.

Eduardo Arreaga

Brooke Carillo

Stavvy

Redwood Trust

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CFO

CFO

Stavvy’s chief financial officer, Eduardo Arreaga, joined the company in 2021 as a versatile player whose leadership and impact has extended well beyond finance. Arreaga came to Stavvy during a period of nearly unparalleled growth. Since then, he has shown a willingness to jump in and relentlessly “get his hands dirty”.

Stavvy is known for its unique culture, and Arreaga was mindful of that culture by ensuring the company’s environment went into each new project, process and policy. Arreaga’s strengths include his natural ability to do finance and his organic ability to engender trust and be a thoughtful leader and mentor. He also brings his background in technology and finance to bear every day in a way that makes his peers and the senior leadership team better.

In May 2021, Brooke Carillo took over her role as chief financial officer at Redwood Trust — a specialty finance company focused on several distinct areas of housing credit. Carillo brought with her years of industry relationships and transactional experience, which Chris Abate — Redwood’s CEO — highlighted would further strengthen the company’s executive leadership team.

Prior to her time at Redwood, Carillo served as head of Corporate Strategy at Annaly Capital Management. There she held a variety of roles for more than a decade of service, including membership on the firm’s operating committee and oversight of its corporate strategy, capital markets and investor relations departments. She also has previous experience in investment banking and worked as part of the Financial Institutions Group at Bank of America Merrill Lynch.

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Jeff Cassetta

William Chang

EVP, Chief Capital Markets Officer

Senior Managing Director, Deputy Chief Investment Officer

Ruoff Mortgage

Pennymac

Jeff Cassetta, executive vice president and chief capital markets officer, has executed the financial growth of Ruoff Mortgage for more than a decade. With 25 years of expertise in Capital Markets, Cassetta is adept at increasing profitability while navigating Ruoff's presence in the mortgage industry. His insight and judgment of the market, at all differing periods of volatility and stability, coupled with his best execution practices, allows Ruoff Mortgage to generate the most profitability while providing a seamless mortgage experience to the consumer.

Cassetta is responsible for the day-to-day hedging of a $350 million+ pipeline while managing the daily loan sales and pooling of all of Ruoff’s $5 billion+ in loan volume. His relationship building and negotiation skills have allowed Ruoff to improve its cost to hedge by adding new warehouse lines while valuing current lines. His confidence in his best practices have become critical for successful trading.

William Chang serves as the deputy chief investment officer at Pennymac — one of the nation’s largest independent mortgage banking firms and REITs. As an established senior executive leader, Chang has fostered growth and confidence within the mortgage space. His critical thinking skills and strong capital market awareness allow him to assess the strategic landscape from multiple perspectives. It also gives him the ability to understand how market changes impact executions, production volume and margins, hedging strategies, investment returns and liquidity.

Over the years, Chang’s extensive business knowledge and expertise have been valuable to the organization. He has continuously demonstrated effective leadership through his track record of leading cross-divisional teams to accomplish high-priority strategic objectives. Chang’s efforts and financial leadership have helped Pennymac to accomplish record origination volumes and profitability.

Kent Cheng

Mike Clear

eXp Realty

Realty ONE Group

CFO/COO

Kent Cheng joined eXp World Holdings as global controller in June 2020. However, the company had bigger plans for him as he was promoted to chief accounting officer (CAO) just one year later. In his role as CAO, Cheng oversees finance operations for eXp World Holdings and its subsidiaries, including the cloud-based international real estate brokerage eXp Realty; Virbela — an immersive 3-D platform that enables agents to be more connected and productive in the metaverse; and SUCCESS Enterprises.

In 2021, Cheng was instrumental in scaling the finance team as the company grew from 41,000 agents across nine countries to more than 70,000 agents across 18 countries. He helped the company navigate foreign market securities and taxation laws earning eXp recognition from the Global Equity Organization in November 2021.

Cheng oversaw the third quarter 2021 earnings report that announced record revenue of $1.1 billion, which was a 97% increase from the third quarter of 2020.

CFO and COO Mike Clear joined Realty ONE Group in 2017 with more than three decades in the industry. Clear is responsible for a majority of the functions of Realty ONE Group and oversees operations, marketing, training, accounting and finance and human resources for the company as well as company-owned real estate offices.

Clear is integral in setting the company’s short- and long-term strategies and in shaping the company’s culture. Throughout the uncertainty of the pandemic, Clear successfully drove the organization forward by mitigating loss brought on by fluctuating economic conditions. With his foresight, Realty ONE Group sustained during the challenges of the pandemic, when the real estate market shut down, and exploded when doors reopened, continuing to sell franchises, recruit real estate professionals and open in five adittional countries.

Under his direction and support, Realty ONE Group’s franchise owners were able to sustain their business and use Clear’s business financial planning guidance to remain profitable.

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Chief Accounting Officer

Ravi Correa

Victoria DeLuce

Angel Oak Lending

Princeton Mortgage

CFO

EVP, Capital Markets

Ravi Correa, chief financial officer with Angel Oak Lending, has a long-standing track record of successfully building profitability in the financial services industry. He has developed and implemented Angel Oak’s finance function with a focus on financial risk management that has been instrumental in identifying, measuring and managing risk for its lending platforms. Correa leads in the implementation of innovative solutions, leveraging technology and skill to create data-driven decisions for the success of the company.

The strength of Angel Oak’s internal teams that Correa has built, along with the processes he has implemented, are responsible for success in maintaining client relationships. Angel Oak recently surpassed $10 billion in lifetime issuance of non-QM, thanks to Correa’s leadership and efforts. Correa’s preparedness allowed Angel Oak to have a record-setting year in volume in 2021 and achieve the highest rate of growth and further development of the non-QM mortgage market.

Victoria DeLuce worked her way up from an office manager with a small hedge advisory firm to executive vice president of capital markets for Princeton Mortgage — one of the fastest-growing mortgage lenders in the country. DeLuce is also the current president of the Michigan Mortgage Lenders Association.

A self-starter, DeLuce put herself through college as a single mom while working her way up in the industry. At Princeton Mortgage, she has brought a sense of leadership and predictability from the capital markets perspective and jumped at the opportunity to lead the company’s wholesale channel. DeLuce has been an exceptional partner to the sales team by providing valuable market knowledge and insight for the entire team and on an individual basis. While DeLuce has been executive vice president, she even has used her industry connections and experience to make the company’s onboarding and recruiting efforts better than they previously were.

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Lisa Esia

Neil Fenton

SVP, Finance

Senior Managing Director, Capital Markets

Academy Mortgage Corporation

Homepoint

Academy Mortgage’s Senior Vice President of Finance Lisa Esia has a background in analyzing, designing and implementing new business systems, policies and procedures, and it has led to an increase in efficiency, productivity and accuracy at Academy. Her experience has also enabled her to make important and sound financial decisions that have positively impacted Academy’s bottom line.

Esia has championed new ways to approach financial analysis and has built a strong relationship with Academy’s production and operation teams by allowing managers across the organization to better understand the financial impact of the decisions they make. Because of this, Esia has created a spirit of financial stewardship and a feeling of independence among leaders, which has helped Academy to grow and respond to constant market changes. Esia’s ability to affect change and execute strategies has translated into success for Academy.

Leveraging more than 25 years of experience in capital markets, Neil Fenton — senior managing director of capital markets — has built strategic capital markets and MSR management teams for Homepoint.

In his current role, Fenton leads his teams in managing hedging, trading, agency and private label securitizations for total originations volume that exceeds $96 billion as well as MSR valuation, hedging and sales.

Fenton believes in growing fast and smart, which describes Homepoint’s trajectory as a young company that has grown into the third-largest wholesale lender in the country. Fenton worked to protect and optimize Homepoint’s financial position through effective hedging strategies and evaluating the MSR market to determine opportunities to monetize market segments. In 2021, he scaled Homepoint’s funding levels of under $1 billion by 10 times in the company’s peak originations levels and helped grow the MSR portfolio by 417% over the last five years.

MAY 2022

Brian Gilpin

Marc Greenberg

Embrace Home Loans

Blend

SVP, Capital Markets

CFO

With more than 20 years of experience in the mortgage industry, Brian Gilpin is senior vice president of capital markets and treasurer for Embrace Home Loans. As the leader of the company’s team of analysts and traders, Gilpin is responsible for analyzing financials, setting internal interest rates, hedging interest rate risk, integrating risk software systems and trading the $6 billion of production that closes annually and $7 billion of servicing that Embrace Home Loans currently retains. Gilpin has managed collaboration with some of the largest banks in the nation and developed relationships with Wall Street partners, while providing financial insight to the company.

Gilpin is dedicated to increasing affordable housing and is the president of a non-profit called the Wider Path Home Foundation.

The non-profit is dedicated to promoting affordable housing in minority communities through financial literacy and providing down payment assistance all while connecting communities with financial institutions.

Over three years ago, Marc Greenberg joined Blend as the company’s chief financial officer, and he is responsible for supporting the longterm vision of financial services customers and up-leveling internal capabilities and processes to help propel the financial services industry into the digital age. Through Greenberg’s guidance and leadership, Blend has been focused on delivering value to its customers.

In 2021, Greenberg led the company through a $300 million Series G funding round, a major acquisition and an IPO. During the COVID–19, Greenberg acted as the company’s interim leader for the IT services and people operations team as the company experienced a rapid increase in employee headcount.

As a leader, Greenberg has upheld a sustained, broad and material impact on Blend’s strategy and decision-making, as well as driven Blend’s success as a public company whose technology is used by large banks and more than 330 other financial services firms, credit unions, communities and independent mortgage brokers.

Chryssa Halley

Michael Jones

Fannie Mae

Thrive Mortgage

CFO

At the end of 2021, Chryssa Halley took over as executive vice president and chief financial officer at Fannie Mae. With more than a decade at Fannie Mae, Halley brings a deep knowledge of Fannie Mae's finance operations. In her new role, Halley reports to the Fannie Mae president and is responsible for the company’s financial management and economic and strategic research functions. Described as an inspirational leader by CEO Hugh R. Frater, Halley embodies Fannie Mae’s core values of listening, leading and strengthening, and she brings a mission-first mindset to the chief financial officer role.

Halley previously served as Fannie Mae's senior vice president and Controller. Since joining Fannie Mae in 2006, Halley has held a variety of positions, including senior vice president and deputy controller; vice president and assistant controller for capital markets and operations; vice president for tax, debt and derivatives and securities accounting; and vice president for corporate tax.

With an understanding of financial markets, trends and strategic vision, Chief Financial Officer Michael Jones has established Thrive Mortgage as one of the most financially sound and successful Independent Mortgage Banks in the industry. Jones’ in-depth understanding of financial markets and capital investment strategies have been foundational to the company's growth over the past five years.

Much of the product diversity Thrive enjoys is a direct result of Jones’ roots as an originator, branch manager, accountant and financial expert. His knowledge and expertise extend well beyond macroeconomics and investor relationships and go to the ground-level details of understanding what loan officers need. Jones spearheaded Thrive’s initiatives around RON eClosings and, as a result, Thrive is now one of the industry leaders in the percentage of closings that take place using this technology allowing Thrive to close files faster, more securely and with virtually no post-closing conditions.

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EVP, CFO

Roisin Lakings

Oscar Laud

CFO

SVP, Margin Management in Capital Markets

Advanced Data Corporation

First Guaranty Mortgage Corporation

Roisin Lakings — chief financial officer of Advanced Data Corporation — has played a central role in an effort that has transformed the organization. During her tenure, the company’s margins have more than doubled, net income and employee headcount have more than tripled, and the client list has expanded by nearly a factor of four.

Lakings’ influence stretches well beyond financial matters to include managing the company at all levels.

When Lakings joined ADC, she immediately reorganized the management structure while rehabilitating the company’s finances. Her decades of experience as a global executive working on multiple continents gave her the insight needed to reengineer ADC’s operations. Lakings restructured each department, providing detailed, unprecedented analysis and removing long-standing inefficiencies.

She installed best practices across the board, and remains actively involved with the day-to-day operations of each department.

Oscar Laud combines his decades-long experience in the financial services and mortgage industry with a visionary approach to leadership as senior vice president, margin management in capital markets at First Guaranty Mortgage Corporation. Laud demonstrates an ability to fuse holistic thinking, integrity and collaboration into driving FGMC forward and elevating employee growth. By challenging his team to think big, Laud has been instrumental in delivering results and sustainable growth for FGMC over the last five years.

After a challenging year, Laud navigated FGMC into continued profitability. Under his guidance, FGMC increased capacity within the FGMC lock desk, to quickly meet SLAs at all sales levels. The rampup enabled the company to enhance pricing and update turn times.

Laud also implemented new channels and non-QM and non-agency products, including a distributed retail channel, revamped wholesale channel and trailblazer plus jumbo loan option.

Patrick McClymont

Susan Mello

Orchard

Walker & Dunlop

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CFO

SVP, Group Head of Capital Markets

As a seasoned finance leader, Patrick McClymont joined Orchard in 2021 as chief financial officer to assist with plans for rapid expansion and to oversee the accounting, finance and capital markets teams.

During his tenure, McClymont has fostered relationships with multiple financial institutions to increase access to capital so Orchard can continue to bring its customers the most stress-free and simple way to buy a home through its flagship “Move First” product.

McClymont’s efforts to raise capital from current and new equity investors aided in Orchard raising $100 million in Series D funding and propelled the company to unicorn status. McClymont also collaborated internally to further Orchard’s financial gains to ensure the company can continue to recruit top talent and expand the reach of its services. This includes the growth of a finance team that will support the company’s continuous growth and to help navigate the scope and intricacies of a large organization.

As senior vice president and group head of capital markets for Walker & Dunlop, Susan Mello oversees more than 200 employees and all aspects of the company’s capital markets platform, which structures debt and equity transactions across all property sectors and through a wide range of capital sources. Mello’s insightful leadership is key to the strong performance and sustained growth of the capital markets platform at Walker & Dunlop. Mello also serves as a leader on the internal women’s resource group, WoWD and brings more than 28 years of experience in real estate investments and joint ventures.

In June 2021, Mello was recruited to continue expanding the company’s growth and achieve the ambitious goal of originating $65 billion of annual debt financing volume by 2025. She was also responsible for closing more than $27 billion of transaction volume in the same year. As one of the few female leaders to lead a national capital markets platform, Mello is known for her mentorship and growth-oriented mindset.

MAY 2022

Michael Modell

Julie Nelson

Plaza Home Mortgage

United Wholesale Mortgage

EVP, Capital Markets

SVP, Controller

As head of capital markets, Michael Modell oversees Plaza Home Mortgage’s pipeline hedging, lock desk, product development and loan and bulk acquisition and sales. In addition, his 14-person team also advises on financial analytics and strategy as well as management reporting. Over his 18-year career at Plaza Home Mortgage, Modell’s responsibilities and his contributions have grown just as the firm itself has grown. When Modell started with Plaza in 2004, it was a wholesale-only lender doing just under $100 million per month and selling to bigger aggregators. Today, Plaza is a top 15 national wholesale and correspondent lender and originates more than $1 billion per month by selling directly to the GSEs, Ginnie Mae and dozens of Wall Street dealers.

Being an aggregator with direct access to investors gives Plaza greater flexibility in market execution and product development, which Modell believes will be vital with market shifts.

As senior vice president, controller at UWM, Julie Nelson has over 35 years of experience in accounting and has spent the last 10 dedicating her knowledge to help guide the strategic financial decisions at UWM. Last year, Nelson and her team worked to develop and implement processes to ensure that financial data was reported in an accurate and timely fashion as UWM began its initial public offering. Her experience in accounting helped UWM create a solid financial foundation to navigate the new requirements of being a publicly held company.

In addition to the IPO, Nelson’s role in supporting the company’s growth while achieving greater efficiencies, maximizing revenues and managing costs has also been equally important. Nelson’s team is the hub for all financial information and collectively gathers and analyzes it to help leadership make informed business decisions. Her precise execution and strategic guidance throughout UWM’s growth has been vital to its financial performance.

Eli Novey

Conor O'Donoghue

Toorak Capital Partners

Ocrolus

CFO

Eli Novey is the chief financial officer at Toorak Capital Partners and brings over 20 years of experience in real estate finance, treasury and accounting operations to the company. Novey’s leadership at Toorak led to financing over $2 billion of real estate loans in 2021, enabled affordable housing initiatives and perpetuated small to medium size enterprise capital access.

Novey has been essential to Toorak’s recent business expansion and has been a critical driver of the company’s overall growth over the last 12 months. In 2021, he was instrumental in the launch of Toorak’s inaugural rated securitization backed by 30-year single-family rental property loans. Under Novey’s leadership, Toorak completed five securitizations of residential bridge loans totaling $1.6 billion, including the largest ever transaction in the space in 2020. Under his direction, Toorak launched a new custom-built general ledger and accelerated the company’s ability to institutionally report in a faster, more efficient manner.

Since 2019, Conor O’Donoghue — chief financial officer at Ocrolus — has helped the company grow exponentially by spearheading the go-to-market strategy for its mortgage product. O’Donoghue has also made Ocrolus a viable player in the mortgage automation industry and helped the company fortify its position in SMB lending.

Along with moving the company forward, he has played a key role in the rapid pivot to support the Paycheck Protection Program and has been focused on expanding the company’s offerings into the mortgage market for the last year. He and his team, which has doubled in size in the last year, have leveraged process improvements and software to deal with this ramp in complexity.

Beyond product growth, O’Donoghue oversaw record revenue growth at Ocrolus by tripling revenue from 2020 to 2021. In parallel with this, O’Donoghue helped lead the Series B funding in 2020 and the Series C in 2021, the latter of which was announced in September 2021 and totaled $80 million with a $500 million valuation.

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CFO

Joe Ottomanelli

Joseph Peterson

J.P. Morgan

Sagent

Managing Director, MBS Trading

CFO

Joe Ottomanelli has more than 25 years of experience working in securitized products, including more than 15 years in residential securities trading and more than 10 years in securitized products (SPG) sales. He has been with J.P. Morgan since 2008 and currently serves as a managing director and head of New York SPG sales within the firm’s corporate and investment bank. SPG sales works in conjunction with the residential structured finance team to provide independent mortgage companies lending capabilities and traditional financial solutions. In his role, Ottomanelli oversees sales coverage responsibilities of non-bank mortgage companies, residential and multi-family originators, mortgage REITs, money managers, hedge funds, insurers and mortgage servicers throughout the United States. The SPG sales team partners with product specialists throughout the firm to deliver solutions for clients across trading, structuring, syndicate and financing across the full spectrum of RMBS and ABS assets.

Joesph Peterson runs financial strategy for Sagent — a B2B SaaS that powers banks and lenders with core, default and consumer mortgage servicing platforms. As chief financial officer, Peterson powers Sagent’s homeowner-first product, customer success and dealmaking with in-the-trenches servicing expertise and a deep fundraising and M&A resume for pre- and post-IPO companies as well as Fortune 500s.

This includes ongoing financial modeling and technical ROI analysis for top servicers enabling them to make smart decisions as the market cycle turns. Peterson has helped Sagent remain profitable at scale while still rapidly innovating products.

Peterson has led by example and permeated Sagent’s core value of “deliver today while building for tomorrow” within the organization. By providing teams with the financial stability to innovate for the future while meeting every client detail in the present, Peterson has helped all of Sagent increasingly embody this core value.

Eric Pretzlaff

Kevin Ryan

PrimeLending

Better

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CFO

CFO

PrimeLending Chief Financial Officer Eric Pretzlaff leads all aspects of financial management and reporting for the national retail lender as a technician, strategist and teacher. During his 11-year tenure, Pretzlaff has not only established high standards for all financial policies and procedures, but he has also invested time and energy to ensure the entire organization understands the key financials and business drivers. He also serves as a hub linking teams across both PrimeLending and Hilltop Holdings.

Over the last two years, Pretzlaff and his team worked during the rapidly changing market conditions to make quick adjustments, demonstrating analytical excellence and seasoned intuition. Thanks to the steady leadership of Pretzlaff and PrimeLending’s capital markets team, the company has successfully navigated challenges and secured financial stability. As a result, PrimeLending saw record volume and profitability and opportunities for growth have never been stronger.

As chief financial officer, Kevin Ryan has the responsibility of ensuring that Better is set up for long-term success and has the financial support to achieve its mission of making homeownership more affordable and accessible. Ryan took on the challenge of a quickly changing, refinance-heavy housing market by securing a well-capitalized balance sheet and developing a growth strategy to pave the way for Better to become a fully integrated homeownership company.

When Ryan joined Better in October 2020, he brought insights and more than two decades of the exact experience needed to continue capitalization, growth and the goal of bringing Better to the public market. He has also been integral in navigating a rapidly changing business environment in the home finance industry. In the last 12 months, Ryan closed on a cash infusion of $750 million and shored up the balance sheet and reaffirmed plans to go public via a merger with Aurora Acquisition Corp.

MAY 2022

Suk Shah

Stacie Shirley

Guaranteed Rate Companies

Kwx

CFO

CFO

Since arriving at Guaranteed Rate Companies, Suk Shah has demonstrated a capacity to drive strategic initiatives and projects and accelerated the company’s growth and operating capabilities, all while maintaining relationships with its shareholders and equity partners.

As chief financial officer, Shah helps drive and lead the financial future of Guaranteed Rate Companies. This includes overseeing accounting, financial planning and analysis, treasury, compensation and internal audit, while also working closely with secondary marketing, trading and capital markets to support the most profitable outcomes for the business.

Since he joined the organization in 2019, Guaranteed Rate Companies has more than tripled its loan volume, with more than $116 billion this past year alone. He has also helped increase revenue three-fold in just as many years. The organization continues to scale at a record-setting pace by doubling in size since 2019.

As chief financial officer, Stacie Shirley oversees the finance team of Kwx — the holding company of Keller Williams. Her responsibilities include management of cash flow, financial planning, equity activities and profitability. Since Shirley’s appointment as CFO in early 2021, she has applied her leadership and decision-making capabilities to all financial aspects of continuing to solidify the structure of the holding company, as well as further streamlining and consolidating the financial reporting for the entire KW ecosystem of companies to include Keller Williams, Keller Williams Worldwide and Keller Home Financial Services, consisting of Keller Mortgage, Keller Covered, Keller Manage and Keller Offers.

Along with providing the crucial leadership needed to guide all financial aspects in solidifying the structure of Kwx, Shirley's guidance has driven the optimization of financial processes to support the rapid pace of M&A efforts associated with the KW family of brands.

Charlotte Simonelli

Chris Staub

Realogy

Freedom Mortgage

EVP, Finance

As chief financial officer, Charlotte Simonelli has led Realogy’s financial progress by contributing to the company’s overall transformation journey as it continues to lead into the future. She has contributed to the company’s strategic goals by simplifying and optimizing processes while making strides on the balance sheet and investing in the future of the business.

Under Simonelli’s strategic leadership, Realogy has improved its balance sheet and strengthened its financial profile. Since the end of 2019, Realogy reduced net debt by $875 million. The company continues to make progress on capital structure with a lower net leverage at 2.3 times, which is down from 5.2 times at the end of 2019. Realogy exited the third quarter in 2021 with about $700 million cash, even after deploying $435 million in September to repay near-term debt.

This progress has been recognized by the rating agencies with upgrades over the past year.

Chris Staub, executive vice president of finance, brings a deep knowledge and experience in the complexities of capital raising and debt structuring in the mortgage industry to finance at Freedom Mortgage.

Staub has developed and educated his team in finding the right financial solutions to enable the unprecedented growth of Freedom Mortgage leading to a 130% increase in origination volumes and an 85% increase in its servicing portfolio in 2020 and 2021.

Since joining Freedom Mortgage in 2017, Staub has shown he is a true leader by finding solutions and proactively sourcing opportunities for the company. He helps lead finance efforts on overall projections and budgeting and oversees relationships with ratings agencies, banking partners and the broader investor community. He also has facilitated and secured 11 corporate debt transactions, which has enabled the company to grow exponentially.

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CFO

Maksim Stavinsky

Bob Telles

Roc360

American Financial Network

Co-Founder, COO, CFO

CFO

Maksim Stavinsky — co-founder, COO and CFO of Roc360 — began his career at Deutsche Bank in the equity proprietary trading division by overseeing $1 billion of Deutsche Bank’s balance sheet. Today, Stavinsky is a key part of the leadership at Roc360 and directs a team that funded over $2 billion in 2021 alone.

In October 2021, Stavinsky was a leading force behind the closing of Roc360’s inaugural syndicated revolving securitization of residential transitional loans. Roc360 acted as sponsor and through its various wholly owned subsidiaries, underwrote, originated and table funded all of the initial mortgage loans included in the transaction.

The Roc Mortgage Trust-2021-RTL1 securitization was structured with total offered notes of approximately $200.790 million on the heels of receiving a $2 billion infusion from insurer Athene Holding Ltd. With an entrepreneurial spirit and research-driven investment strategies, Stavinsky spearheads the efforts to meet real estate investors’ need for liquidity to the market.

Bob Telles, chief financial officer for American Financial Network, has been in the mortgage banking industry for more than 40 years.

Constantly motivated to remain on top of his game, Telles has a voracious appetite for knowledge as he stays current with market trends. He is also diligent with cost reduction wherever possible and renegotiated more than a dozen contracts in AFN’s favor in 2021.

Telles’ solid relationships with lenders, investors and AFN branches make him an asset to the organization as he deals with them professionally, fairly and always in the AFN’s best interest.

As a leader, Telles connects with team members on a personal level and is determined to stay in touch with all remote workers, ensuring all remain engaged and focused. Telles offers informative, detailed presentations when necessary and provides a deep-dive explanation regarding all items that impact financials in a digestible manner so all levels of financial expertise understand.

Bryan Thompson

Andrew Vassallo

Anchor Loans

Hometap

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CFO

VP, Capital

Over the course of his more than 20-year career, Bryan Thompson has held chief financial officer positions at leading mortgage companies, including Luxury, Skyline and now Anchor Loans. As CFO, Bryan is responsible for all aspects of financial planning, management and reporting, as well as providing strategic financial guidance for the company’s growth initiatives. His expertise includes analyzing projections, creating annual budgets, raising capital, managing compliance and audit analytics, and developing robust financial modeling in order to achieve revenue goals.

During Thompson’s tenure, Anchor Loans has grown to become one of the nation’s largest fix-and-flip lenders and played a critical role in Anchor’s acquisition by Pretium this past year. Post-acquisition, Anchor has changed its financing model, moving from a portfolio approach to a sale/securitization strategy, and Thompson is leading this transition. Thompson is helping the company to be the first to set a new single-year originations record of $1.8 billion.

As one of Hometap’s co-founders and its current vice president of capital, Andrew Vassallo has worked not only to identify potential investors but to garner their support to further the company’s mission of making homeownership less stressful and more accessible. Vassallo has been the driving force behind the launch of three institutional asset funds at Hometap since helping start the company in 2017. He secured hundreds of millions of dollars in capital commitments to make home equity investments in homes across the U.S. and bring the lucrative and emerging residential real estate asset class to investors.

In the past year alone, Vassallo directly contributed to helping Hometap secure $60 million in operating capital from new and existing investors. He was also critical in the commitment of $245 million from Bain Capital and Group 1001’s Delaware Life Insurance Company as part of the company’s third institutional asset fund in January 2022.

MAY 2022

David Wallace

Carrie Wheeler

American Mortgage Network (AmNet)

Opendoor

EVP, CFO

CFO

David Wallace, EVP and CFO, built AmNet along with his co-founder from the ground up. Today, Wallace is responsible for finance and accounting teams in the execution of strategic goals as well as the day-to-day operations of managing the company’s financial planning, treasury, accounting, risk management and financial reporting. He established finance and administrative functions and is responsible for moving the company from a non-delegated to a delegated lending process. From 2020 to 2021, the company’s revenues grew over 47%.

Wallace began a hedging function at AmNet to improve everyday execution and increase revenue margins. The value of AmNet’s de novo business structure is the ability to create an organization that is unencumbered by old ways of doing business and helps foster a culture completely focused on clients and employees. As a result, volume has increased and the workforce has expanded to more than 120 professionals.

After serving as an Opendoor board member for a year, Carrie Wheeler was asked by the company to join as chief financial officer in September 2020. Now, Wheeler works closely with Eric Wu, Opendoor’s co-founder and CEO, to help drive the company’s financial model and grow its business. After the company went public, Opendoor raised nearly $1.5 billion to support its growth, and Wheeler led a follow-on equity offering in 2021 that generated another $860 million for the business in what has been the fastest equity raise for a company post-initial public offering.

Wheeler helped lead the charge for the acquisitions of three new companies: Pro.com, Skylight and RedDoor. Third quarter 2021 results showed that Opendoor has made progress in driving acquisition and revenue growth as revenue had increased 91% from the second quarter.

Matt Wright

Sun Yee

First Community Mortgage

CIVIC Financial Services

CFO

As chief financial officer at FCM, Matt Wright oversees capital markets, accounting, IT, servicing, post-closing and LOS administration.

Wright’s calculated risk assessments have led FCM to record profits over the last two years. Wright currently serves as the vice president of the Nashville Mortgage Bankers Association and holds two Mortgage Bankers Association accreditations for certified mortgage banker and mortgage professional. He will also soon move into the presidency of the NMBA for 2023.

With a wealth of experience, Wright is in tune with the market and has the ability to successfully forecast the possibilities FCM will have and the company’s opportunities for growth. Wright empowers his team to work through problems and identify solutions independently while remaining available for guidance and education to those wanting to learn more. He provides resources and support for his team while allowing them to learn, grow and fully realize their own value to FCM and all of its stakeholders.

As chief financial officer, Sun Yee has guided CIVIC Financial Services through a successful acquisition. He transitioned CIVIC from being a closely held private company to a wholly owned subsidiary of Pacific Western Bank. Yee personally spearheaded all financial and accounting aspects of the drive, which included new compliance requirements, new financial modeling and reporting needs and new accounting systems, all while managing and guiding accounting and finance team members through extraordinary changes. Yee sees opportunities within P&L by enabling CIVIC to be in the best possible capital and profitability position.

Yee’s superpower is his capacity to process and assimilate new information. He always sees opportunities within the company’s P&L that others might generally miss, from both an expense reduction to an income development perspective. In a year when CIVIC also increased loan production volume 70% over the prior year, Yee’s leadership in all aspects of finance was essential to the company’s success.

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CFO

Desktop appraisals are here to stay Experts discuss trends, risks and next steps for lenders and appraisers

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By Amanda Hill

MAY 2022

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When asked if they plan to leverage desktop appraisals in the next year, 62% of respondents said yes, 36% said maybe and only 2% said no.

COVID-19 brought many changes to the housing industry, as stay-at-home orders forced companies in the space to re-think the mortgage process. From drive-through closings to drone-guided inspections, industry experts got creative to meet the growing demand for new homes for a surge of homebuyers and homeowners who wanted to take advantage of low interest rates.

The appraisal industry was no exception, creating hybrid or remote models to conduct an appraisal and home inspection without physically entering the home as COVID19 cases rose. During the pandemic, the Federal Housing Finance Agency (FHFA) began allowing for desktop appraisals, or an appraisal that can be performed from a desktop without a physical property inspection. It is an alternative appraisal method that is essentially a compromise between an automated valuation model (AVM), entirely done by software, and a traditional appraisal.

In October, FHFA Acting Director Sandra Thompson announced at the MBA’s annual conference that Fannie Mae and Freddie Mac would begin permanently accepting desktop appraisals for conventional loans, noting that “frictions in the appraisal process” can slow down turn times, especially in rural areas.

“This can help each appraiser complete more loans in a day, and it can also help rural communities more readily obtain a necessary appraisal when the borrower is purchasing a property,” Thompson said. “This certainty should allow lenders, borrowers, and appraisers alike to take advantage of the efficiency gains that desktop appraisals can provide.”

But not everyone was happy with the news that desktop appraisals would now be a permanent option, and some appraisers have been hesitant to get onboard. However, valuation experts claim that the ability to implement the desktop appraisal could be critical for the digital mortgage experience, and therefore important for a lender’s success.

HW Media CEO and Founder Clayton Collins recently conducted a webinar, which was hosted by Reggora, with several industry leaders in the valuation space to discuss the changes and what it means for the housing industry moving forward. He was joined by Lyle Radke, Fannie Mae senior director of collateral policy; Freddie Mac Chief Appraiser Scott Reuter, Brian Zitin, Reggora co-founder and CEO; and Scot Rose, Class Valuation chief innovation officer.

The webinar was attended by nearly a thousand industry participants, including lenders, valuations experts and third-party fintech companies. When asked if they plan to leverage desktop appraisals in the next year, 62% of respondents said yes, 36% said maybe and only 2% said no.

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Assessing the risk of desktop appraisals The pandemic gave the housing industry time to test and learn the risks that could be involved with desktop appraisals. In fact, in a sense, it became one of the largest test-and-learns ever conducted, according to Reuter.

Reuter explained that when the government-sponsored enterprises (GSE) want to test a new product or initiative, they will put together a pilot program to test it out and improve it. The mortgage giants partner with several lenders to see the results of the new product.

“As awful as the pandemic was, and elements of it still are, it did afford effectively a large test-and-learn in this space,” he said. “So, we learned an awful lot from that.”

Trusting third-party data can present risks of its own, but appraisers have already been considering third-party data for quite some time, Reuter said.

“It’s incumbent on the appraiser to verify and determine they have accurate, reliable, credible information,” he said. “Appraisers can consider and develop anything they deem credible, so the appraisers are really on the front line and have been on the front line of third-party data utilization for a long time.”

But the question of risk manage-

“Appraisers can consider and develop anything they deem credible, so the appraisers are really on the front line and have been on the front line of third-party data utilization for a long time.” - Scott Reuter MAY 2022

ment can’t be solved in a one-sizefits-all scenario. First, stakeholders must identify what the risks could be, and weigh it against the risks of not doing it that way, Radke explained. For example, during COVID, the risks of a desktop appraisal would have been weighed against the risk of an appraiser physically entering a home during the pandemic.

The demographics of the appraiser profession also come into play when considering risk exposure. As loan volumes surged after interest rates hit new record lows during the pandemic, turn times for appraisers became prolonged as they struggled to keep up with demand. However, the GSEs have a mission to ensure liquidity in the housing market and promote access to credit for Americans who want to buy homes.

“When you have a bottleneck in the process that may take months in the worst-case scenarios to resolve, that is a restriction on access to credit,” Radke said. “That’s contrary to our mission. So, we’re looking at the fact that the median age of the appraiser today is somewhere in the upper fifties.

More than half of appraisers are within 10 years of traditional retirement age.

There’s a big chunk of appraisers who are already past traditional retirement age, who’ve just come through a period where we really experienced an appraiser shortage.”

“We’re doing all we can to recruit new appraisers, but in the meantime, we have a capacity issue,” Radke continued. “This is getting back to the risk question: How do you manage the risk of not having appraiser capacity when you need it? And the answer is: You’ve got to find ways to make your appraisers either more efficient or dedicate them to the more pressing problems.”

Impact of desktop appraisals on the housing industry One of the greatest impacts the desktop appraisal could have on the housing industry is to improve turn times.

During the pandemic, loans were averaging more than 45 days to close, according to data from ICE Mortgage Technology.

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Why desktop appraisals and why now?

The FHFA’s decision to permanently allow desktop appraisals was a major milestone for appraisal modernization efforts and will push fintech companies to build out product offerings on the spectrum between an AVM and a full appraisal. Today’s modernization efforts could turn the valuations industry from a binary system, where borrowers either get a waiver or a full appraisal, into a system where there are multiple options in between.

“The hope is that it makes other additional product offerings available, and it increases efficiency in the process,” Reuter said.

But appraisers are also currently at a breaking point when it comes to capacity and the amount of work they can continue to take on. Appraiser capacity issues during peak times present a complication to the mortgage process and increase turn-times for the overall mortgage process.

Coming out of the pandemic, the housing industry learned there are several ways to get through the mortgage process, and companies are now finding more flexible, innovative solutions.

“We are right off of all of our learnings from COVID flexibilities with desktop and exterior-only reports,” Reuter said. “Appraisers really did a tremendous job. We didn’t see any increased risk. In fact, when appraisers were completing these reports, they were typically going a little bit above and beyond the minimum requirements.”

Because appraisers were consis-

tently thorough and exceeded the basic requirement threshold when desktop appraisals became, in many cases, necessary, the market did not see increased levels of risk. This gives the housing industry the perfect segue into making desktop appraisals permanent.

“We’ve worked with a lot of appraisers who came in out of the gate feeling as though they were against this process. When they all of a sudden see and understand what can be delivered to them and in such a comprehensive fashion, it really inspires confidence in all of our appraisers.” - Scot Rose

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“Through the last several years that we’ve been testing this idea of keeping the appraiser at their desktop and augmenting them with third-party information, we’ve actually seen an improvement on the appraisal management side,” Rose said. “We’ve seen up to a 70% reduction in revision rates coming from our customers to us. When you compare the digital process to the traditional process, 50% less of the time we go back to the appraiser on revision requests from us to them.”

As less friction is created during the process, and the introduction of technology frees up more appraisers to complete the valuation faster, days to close could start to decrease. In fact, Rose predicts this could create the opportunity to get appraisals back in as little as 24 to 48 hours.

“By unlocking a new option that has the potential to have faster turn times, it’s going to remove that bottleneck from the overall digital mortgage process,” Zitin said. “That’s why for lenders who are looking to optimize speed to close, appraisal has to be on that checklist. Otherwise, you’re never going to get there.”

Desktop appraisals are also paving the way for a much more streamlined experience for stakeholders, including consumers, borrowers and lenders. As technology companies roll out new desktop appraisal options, making sure users feel comfortable with the technology and the process — and that the data is reliable — will be critical to success.

Appraiser education and flexibility are critical to adaptation Having the right amount of data and information that appraisers can depend on will be important in order to implement appraisal technology. If appraisers use information that is potentially false, they will still be held liable for trusting that information, according to Zitin. Earning appraisers’ trust and proving the value of data will likely take time and effort to build.

“We’ve worked with a lot of appraisers who came in out

of the gate feeling as though they were against this process,” Rose said. “When they all of a sudden see and understand what can be delivered to them and in such a comprehensive fashion, it really inspires confidence in all of our appraisers.”

As the housing industry moves forward with this next step, reliability and education will be critical to adoption. Desktop appraisals have the potential to help revolutionize the digital mortgage industry and the housing industry overall. But as fintech providers and other stakeholders begin to develop these options, they must work with appraisers to gain a better understanding of their needs and processes, and to gain trust.

Coming out of the pandemic, technology was not just an option but the only way to serve borrowers during stay-at-home orders and heightened COVID-19 cases. As the industry continues to remain flexible when it comes to work location, new technology and new processes, the valuations industry should seize the opportunity to bring change that could increase the number of homeowners and open up access to credit.

MAY 2022

be a single-family residential.

And then the last thing I would say is that there’s an LTV cap. So using the contract price as a proxy for value, the LTV cap is 90. So, taking the proposed loan amount, divided by the contract price, it needs to be 90% or less.

Q&A:

HW: Why have floor plans become a cause for concern?

HOUSINGWIRE: What exactly do appraisers not like about desktop appraisals?

LYLE RADKE: It’s a remote appraisal. When I was out in the field appraising, you were getting out in the nice, bright, sunny morning and getting a little fresh air. It’s kind of fun.

There’s an emotional attachment there. Some appraisers will miss that.

SCOT ROSE: Some of the misconceptions are prior experiences that some appraisers have had. We’ve been working through piloting. There are lots of different vendors, lots of different solutions and they’ve experienced potentially some or a few or all of them. When they get exposed to the augmented processes with advanced technologies, they tend to change their minds very quickly.

We’ve worked with many appraisers who came in feeling as though they were against this process. But when they see and understand what can be delivered to them and in such a comprehensive fashion, it really inspires confidence in all of our appraisers.

BRIAN ZITIN: Where most appraisers are getting held up is liability. And that’s because they were still liable for using the information that is potentially provided by someone who’s not themselves. So they have to trust this information or verify it. And I think that right now, disseminating the correct information around how to verify that and what is acceptable is essential. Because, to some extent, appraisers already do this today with MLS photos. They use MLS photos that they did not capture for comp, and they have to try to validate those and verify that they’re accurate.

Now there’s a slightly different version of that with these floor plans and other things like that on the subject property. It’s a liability concern that eventually will get remediated over time through continuous messaging and education like we’re doing today.

SCOTT REUTER: This is a new piece of information that we’re asking for. It’s not because of the availability that some of the appraisers have angst and concern about that. The availability of floor plans really varies market by market. In some markets, it’s very common to attach and include a floor plan on the online listing when you’re marketing the property. In many markets, however, it’s not. That does put the appraiser in the position of trying to source that.

HW: What role do desktop appraisal and valuation innovation play in the overall digitalization of mortgages?

BRIAN ZITIN: In terms of the digitalization overall, as everything else in the mortgage process continued to get better in the last two years, appraisal turn times actually got worse. Appraisal continues to be a bottleneck around the overall ideal one-click mortgage. By unlocking a new option that has the potential to have faster turn times, it’s going to remove that bottleneck from the overall digital mortgage process. That’s why lenders who are looking to optimize speed to close, appraisal has to be on that checklist. Otherwise, you’re never going to get there.

LYLE RADKE: We intend for this to be used for purchase transactions and there are some other limitations.

The reason we are requiring for purchase is because the presumption is, in most cases, a purchase would have a recent MLS listing, which is a robust data source that can help inform the appraisal process. We are not allowing it for refinances or any type of cash-out or rate-term. We’re also not allowing it for second homes or investment property purchases. From a mission perspective, we felt like it was really important to focus on homeownership. It needs to

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HW: What kinds of homes or loans will be eligible for desktop appraisals?

NFT mania and the future of the home sale All industries now have to answer for crypto. But what worth does it have for real estate?

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By Matthew Blake

MAY 2022

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February 10 may go down as a momentous day in real estate history.

That’s when a 70-year-old brick home in the St. Petersburg, Florida suburb of Gulfport sold for the equivalent of $654,310, where the asset exchanged was represented by a non-fungible token.

Worldwide sales of non-fungible tokens, better known — of course — as NFTs, catapulted from $94.9 million in 2020 to $24.9 billion in 2021, according to an analysis of 10 different blockchain ledgers by DappRadar. In the past year, NFTs pole-vaulted from mostly commodifying art and digital assets to an array of spheres including — very preliminarily — real estate.

The creation of the NFT real estate market thrusts a spotlight onto a Silicon Valley company specifically throwing itself into real estate, blockchain and NFTs. It also gives real estate agents ideas.

“Absolutely, I will offer an NFT option to sellers within the next year,” said Richard Hopen, a Compass agent in Short Hills, New Jersey. “It’s a great marketing tool for the right type of listing. NFTs are new and associating one with a house is likely to attract media attention.”

NFTs in real estate are, for the moment, a grossly impractical novelty act that, publicity aside, offer tenuous benefits to agents. But, to many, the intersection of NFTs and real estate holds great promise. And for homebuyers and agents alike, they raise the important question about what precisely is the problem NFTs and the blockchain claim to solve.

How a real estate NFT works today…

On a Facebook video chat, Amy Heckler of Heckler Realty in St. Pete Beach, Florida answered real estate agents’ questions, surrounded by a white and red Heckler Realty banner and two office plants. Heckler was the listing agent of the auctioned-off Gulfport home. As she catalogued her experience, bubbling excitement around NFTs transformative thrall slowly subdued.

The Gulfport seller, Heckler explained, created a limited liability

“But we’re making stuff up as we go along. For now, there has to be some type of separate agreement for the commission.”

- Richard Hopen

company that held ownership of the home. In creating a Delaware LLC, the Florida seller and Heckler joined forces with Propy, a five-year-old company headquartered in Palo Alto, California.

Propy then guided the seller into minting the LLC as an NFT. NFTs are digital tokens providing a certification of authenticity that you are acquiring the rights to what an NFT represents.

For example, purchasing an NFT of a JPEG of a painting transfers the intellectual property rights of the painting.

For the Gulfport home, the NFT did not represent the property itself. It represented LLC ownership of the property.

Next Propy auctioned off the NFT. Bidders were required to be cash buyers, or more precisely cryptocurrency buyers, or — more precisely still — have a virtual wallet on the Ethereum blockchain.

Unlike currencies issued by a country’s government, cryptocurrency is digital and has no central administration. A blockchain ledger facilitates and records cryptocurrency exchanges. Bitcoin is perhaps the best-known cryptocurrency. But Ethereum was the first with a blockchain that enabled NFT sales.

“Propy is blockchain agnostic,” said the company’s founder and CEO, Natalia Karayaneva. Still, Propy used

MAY 2022

Ethereum for the auction, where the winning bidder used the cryptocurrency Ether.

Generally, listing agents extract a commission from the homeseller and then split it with the buyer’s agent. In this particular sale, Heckler worked out an arrangement to receive the commission distribution after the winning bid.

But the NFT transaction between buyer and seller does not necessarily put money into the seller’s agent pocket. For now, officials with Propy acknowledged, the commission is a “case-by-case solution,” adding another layer to the process.

“Could you set up an NFT sale where there are multiple parties involved in the transaction?” said Hopen, the Compass agent who writes the Crypto News for Realtors newsletter. “That could be a solution. But we’re making stuff up as we go along. For now, there has to be some type of separate agreement for the commission.”

Meanwhile, all parties had another issue to deal with. The NFT representing ownership of an LLC representing ownership of a house is 100% legally meaningless. Pinellas County in Florida is in charge of tracking who owns the Gulfport home in question.

And Pinellas County, like every other U.S. county, does not recognize NFTs in recording property ownership but instead title deeds.

In a forthcoming paper for Florida Law Review, law professors Juliet Moringiello at Widener University Commonwealth and Christopher Odinet at the University of Iowa studied NFTs potential in real estate. What the paper wryly notes is that while the use of non-fungible tokens may be novel to the art economy, they have existed in real estate since the Henry VIII-led English government of 1536 created the deed. The deed then, as now, is a token, be it a piece of paper or PDF that represents the transfer of land.

“Blockchain technology is probably best to record ownership interests for intangible assets associated with

“Change is coming. NFTs will be part of the evolution to something different, something better likely. It’s time paper deeds go away, anyway.” - Jim Haisler

And how it may work tomorrow…

If the use of NFTs in real estate is mystifying to many, it seems self-evident to Karayaneva. Before starting Propy, Karayaneva ran a real estate investment firm in Bulgaria for 15 years and earned a master’s degree at the University of Oxford in sustainable urban development.

In a Zoom interview, Karayaneva coolly pitches the virtues of Propy, and corrects erroneous premises from a stumbling reporter.

“We understand the process very well,” Karayaneva said, in reference to the real estate sale. “We do all the heavy lifting.”

Propy touts that they can make the real estate sale instantaneous as well as secure through blockchain, and cheaper by weeding out paper-pushing middlemen. There are “so many problems” with the current process, Karayaneva said, including “short-staffed local governments” and “title companies getting a piece of the pie.”

The average time in the U.S. between signing a contract to buy a home and purchase closing is 50 days, according to a September 2021 report from ICE Mortgage Technology.

Propy envisions NFT deals on blockchain making the buying and selling of homes instant and immutable. It’s a complete overhaul of the home sale process, compared to, for example, iBuying companies speeding up one side of the deal.

To some, Propy’s vision is exciting.

“Change is coming,” said Jim Haisler of Heartland Realtors in Crystal Lake, Illinois. “NFTs will be part of the evolution to something different, something better likely.

It’s time paper deeds go away, anyway.”

Another believer is Merav Ozair, a professor at Rutgers University who focuses on blockchain and cryptocurrency.

Ozair sees two major but not insurmountable hurdles to NFT real estate sales.

The first: “You need the counties to come on board and be part of blockchain.”

Of the over 3,000 counties and, in the state of Vermont, municipalities who record deeds, none use a blockchain platform. Propy tried a pilot program with the city of Burlington, Vermont to put deeds on the blockchain, but

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intellectual property rights,” Moringiello said in an interview. “But with real estate, we already have a way to signal ownership.”

So, the winning bidder worked with Propy and Heckler in also transferring the Gulfport home’s deed. Instead of creating a simpler way to transact real estate, “The NFT is kind of acting as a redundant parallel proof of documentation,” said Christopher Wilmer, professor at the University of Pittsburgh school of engineering who studies blockchain.

A deed transfer often includes the new owner ensuring they are the property holder through title insurance. But not a single Florida title company would touch the Gulfport sale.

“A title company cannot handle this kind of transaction as an escrow account,” Heckler said, adding, “Buyer beware.”

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“is not actively working on it right now.” Still, the company contends, blockchain technology “is ready to be utilized by counties and that’s definitely needed.”

Perhaps “cash-strapped” county governments may yet use a blockchain platform on a pilot basis, Ozair said.

County deed recording can be archaic, acknowledged Steve Gottheim, general counsel of the American Land Title Association, the main trade group for title companies, with counties slow to digitize records. Historic records are recorded “on big, old ledger books that are done on paper.”

While Karayaneva described the title industry as an opponent of NFTs, Gottheim said that’s not necessarily so.

“If blockchain proves to be a better way to store records, our members are the ones who will likely put it in place,” he said.

Daniel Wallace, the general manager of lending at Figure, a company that uses blockchain for mortgage products, is skeptical that there’s political appetite for county’s relenting on deed recording. But, Wallace noted, monolithic property systems are in other countries.

“Canada, Australia and the UK have what’s called a land registry,” he said. “Whatever is in that land registry dictates who the owner is who’s entitled to the piece of property.”

The second obstacle is what Ozair calls “interoperability,” meaning NFT real estate records from different blockchains must align. In other words, a seller cannot NFT a deed of 123 Elm Street on both Ethereum and, for instance, OpenSea blockchains. And the buyer looking for the 123 Elm Street NFT must know where to search.

“We need to agree, as a society, on which blockchain we’re going to check for real estate NFTs,” said Wilmer of the University of Pittsburgh. “Checking the wrong blockchain would be akin to looking for a San Francisco property in Tokyo’s title deed database.”

Like Ozair, Wilmer said it’s conceivable governments agree upon using certain blockchains for real estate.

“I think a practical way forward is to maintain a dual system, where initially the traditional title deeds are deemed authoritative and NFTs are used as supplementary legal evidence,” Wilmer said. “Over time, as trust in the NFT-based approach grows, the roles can switch and the traditional deed documents can become supplementary evidence.”

…Or, how it may not Over President’s Day weekend, Devin Finzer, the CEO of OpenSea, which bills itself as “the largest NFT marketplace,” acknowledged that the equivalent of $1.7 million in NFTs were swiped by thieves who tricked OpenSea users into signing contracts allowing NFTs to be transferred without payment.

It was the latest in a long series of NFT thefts at OpenSea, though Finzer noted the crime was not as bad as first thought. “Importantly,” the CEO tweeted, “Rumors that this was a $200 million hack are false.”

In his October 2008 white paper heralding the arrival of Bitcoin, Satoshi Nakamoto (a presumed pseudonym) argued for the use of a blockchain to thwart third-party tampering. The ledger should “time stamp transactions by hashing them into an ongoing chain of hash-based proof of work, forming a record that cannot be changed without redoing the proof of work.”

As use of cryptocurrency has grown from its Great Recession origins, the seductive idea has persisted of blockchain creating an indelible transaction record while cutting out the deal’s fat.

An NFT record should in theory be impossible to tamper with, Wilmer said, compared to a county title deed that could be fraudulently edited. But if the recording of an NFT transaction is hard to alter, NFT thefts themselves “are happening a ton,” said Anthony Lee Zhang, an assistant professor at the University of Chicago, who studies blockchain.

These thefts can include sophisticated hackers deviously creating false certifications of authenticity. Or they can be depressingly simple. “People are just losing their passwords to their blockchain wallets all the time,” Zhang said.

Real estate, Zhang said, creates a new terrain for theft.

“You might mint an NFT of the LLC of your property,” Zhang said. “But I can go into Delaware court and take a picture of that LLC and mint it myself.”

Paradoxically, the professor added, the immutability of the blockchain ledger makes matters worse. And with real estate, hackers are not instantly transacting a stolen JPEG of a painting. They’re taking over ownership of your

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house. “Do you really want to make it easy to buy property?” Zhang said. “The current friction is in some sense a security feature.”

Zhang’s point hearkens to not just a potential NFT real estate economy, but debates in real estate over iBuying and what, precisely, self-styled disruptor companies are criticizing when they call a home sale slow and archaic.

The biggest reason home sales take almost two months to complete, Gottheim of the title trade group noted, is property inspection and mortgage underwriting.

A homebuyer carefully inspecting their massive investment before closing the deal does not strike most as a waste of time. Propy said it is not against the home inspection process. But it’s not clear if this inspection takes place before or after the NFT transfer.

The X factor is integrating mortgages.

Less than 20% of homebuyers are cash buyers, Gottheim noted, and instead must borrow money. That means that so-called power buyers such as Ribbon fund a homebuyer’s crypto wallet, or the buying and selling of real estate on the blockchain is a playground for the wealthy.

Already, cryptocurrency is even more concentrated in the hands of a rich few than traditional currency. It has been reported, for example, that about 100 individuals, so-called whales, own 18.5% of Bitcoin currency.

Propy believes blockchain real estate sales are on the path to becoming accessible to homeowners who must take out a mortgage.

“As more lenders begin to offer crypto mortgages, we will be able to integrate them into the NFT process,” the company said. “We do hope to offer this option this year, and it will be handled similarly to any other auctioned property, where the buyer has to receive financing in advance of the auction. One option is using their crypto holdings as collateral.”

But even those who operate their business on blockchain are skeptical. Figure Technologies, a San Franciscobased company, largely created the blockchain platform Provenance. Figure mints tokens of the promissory note of a mortgage, and uses Provenance to service and securitize mortgages.

But Wallace of Figure said that technology and U.S. law is not there for using blockchain to both exchange property and enforce a 30-year mortgage loan.

“When you see artwork or music, they’re trading based upon copyright law or trademark law,” Wallace pointed out.

“But that is different from the legal enforceability of property rights or promissory notes. We cannot use copyright or trademark law to collect money on a loan.”

Like Rome, Menlo Park was not built in a day. Buoyed by its first auction, Propy organized a crypto real estate conference in Miami in March, replete with agents eager to be “crypto certified” by Propy. And it is putting together other beta tests of using NFTs. “We’re looking at properties in Chicago, San Francisco, and Miami,” Karayaneva said. “We want to make sure that all these properties are in clean, attractive areas.”

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Clear Capital................................................ 50 CoreLogic...................................................... 51 homegenius................................................. 52 Incenter Appraisal Management......... 53 Opteon............................................................ 54 Reggora.......................................................... 55 MAY 2022

Valuation Tech Solutions The appraisal process is complex and time-consuming. Lenders and appraisers need technology that will not only help them remain compliant, but also reduce turnaround times.

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The six companies featured in this section offer innovative solutions to help appraisers work efficiently while allowing lenders to reduce operational costs and increase profitability.

MAY 2022

- SPECIAL REPORT -

Sponsored Content

CLEAR CAPITAL clearcapital.com

THE EXECUTIVES:

DUANE ANDREWS, CEO As CEO, Duane’s people-centric focus and passion for the mortgage industry has built Clear Capital into a leader of valuations and real estate analytics providing valuable services to nearly all top 100 U.S. lenders and nearly every mortgage investor.

KENON CHEN, EXECUTIVE VICE PRESIDENT OF CORPORATE STRATEGY

I

n February 2022, Fannie Mae and Freddie Mac added 1004 Desktop/70D Appraisal products to their Selling Guide for new purchase loans.

“The expected benefits of desktop appraisals — faster turn times and less friction for the borrower — are a much-needed piece of good news for a highly competitive market,” said Kenon Chen, executive vice president of corporate strategy at Clear Capital. “However, for lenders to take advantage of these benefits on behalf of their customers, they need to navigate new GSE requirements, such as ensuring appraisers have access to a digital floor plan.”

To support lenders and appraisers in meeting these new desktop appraisal guidelines, Clear Capital has developed two new desktop appraisal solutions, Desktop Appraisal and Desktop Data Collection, which launched April 5. For appraisers and loan originators, Clear Capital’s Desktop Data Collection assembles the trustworthy property data needed to confidently complete a GSE-compliant desktop appraisal.

Additionally, these solutions will assist with appraiser capacity concerns and reduce appraisal turnaround time while allowing appraisers to remain a vital component of the loan collateral process.

Clear Capital’s desktop appraisal solutions offer an easy way to obtain property information by pairing seasoned brokers and appraisers with innovative mobile phone technology, ClearInsight and CubiCasa. ClearInsight and CubiCasa have revolutionized property data collection for remote valuations — state-credentialed appraisers and trained property data collectors can capture the detailed property data needed for a desktop appraisal using just a mobile phone.

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As head of corporate strategy, Kenon guides Clear Capital’s growth, ensures Clear Capital delivers consistent, long-term value for customers and partners, and develops intuitive solutions that have transformed the valuation space.

Clear Capital’s new desktop appraisal solutions support appraisers in meeting new GSE guidelines

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Within these desktop appraisal solutions, users can capture photos with ClearInsight and generate high-fidelity floor plans with interior walls and an ANSIaligned digital GLA with CubiCasa to help appraisers complete a Desktop Appraisal.

Floor plans with interior walls are a requirement for GSE-compliant desktop appraisals, and CubiCasa and ClearInsight are the only solutions on the market that can execute these using a mobile phone.

“Through digitizing the property, enabling new workforces through mobile technology and using AI models, we are executing the GSE’s vision of a modernized risk-based appraisal process,” CEO Duane Andrews said.

These desktop appraisal solutions use robust property data collected by Clear Capital’s seasoned real estate broker panel and offer an easy way to obtain property information.

Using Clear Capital’s desktop appraisal solutions, desktop appraisals can be completed up to 50% faster than a traditional appraisal, with a similar risk performance as compared to traditional appraisals.

“What makes Clear Capital’s product and approach so valuable is that we can give lenders complete confidence that ordering a Desktop Appraisal will have a successful result,” Chen said. “With our nationwide network of certified data collectors using the one-of-a-kind CubiCasa automated floor plan app and our extensive property data set, we can obtain floor plans on demand, fueling completion of desktop appraisals and enabling a lender’s panel of appraisers to complete desktop appraisals as well. Our technology, data and nationwide coverage of data collectors provide a seamless transition for lenders looking to unlock the benefits of desktop appraisals.”

Sponsored Content

QuickSource from CoreLogic is a one-stop solution for importing, comparing and managing appraisal data fields and set custom formatting rules.

The SmartExchange peer data provides the appraiser many more data points, and early enough in the report-writing process to prevent some revision requests, clarifications and addenda commentary.

Additionally, discrepancies between the data sources are highlighted for the appraiser, prompting them to do further research and comment for the client on the discrepancies.

While this results in less time-consuming typing for the appraiser, the real benefits come from anticipating and commenting on potential revision requests in the report before the revision request is even needed. Because QuickSource shows users the data sources a reviewer or lender would be looking at, they can easily see what might trigger a revision request or question about comp selection and address it immediately, instead of the report potentially getting kicked back.

QuickSource and its SmartExchange data increase communication between appraiser and client, as well as reduce turn times. The solution also allows the appraiser to thread the needle of customized content and UAD/GSE requirements.

“Appraisers trust us more than any other software partner because of our forward-thinking software and industry-leading training, technical support and coaching,” said Joel Baker Sr., Professional of Product Solutions. “A la mode suite of end-to-end business tools allow the fee appraiser, usually a small business owner, to manage the day-to-day details of their company — from marketing efforts and websites to order, report writing, compliance, delivery and managing their receivables.”

THE EXECUTIVE:

JOEL BAKER, SR., PROFESSIONAL OF PRODUCT SOLUTIONS In addition to his almost two decades teaching appraiser workflow for CoreLogic, Joel Baker, Sr. has authored several continuing education courses for real estate appraisers, taught over 10,000 appraisers in live classes, spoken at dozens of real estate trade shows and seminars, and made over 300 training videos.

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A

nalyzing Comps can be a pain point for both the client and the appraiser. Neither goes inside the comps, and the data that’s generally available for these comparable properties is often scarce, incomplete, or inaccurate and much is provided from a person with a direct interest in the sale. After receiving the appraisals, lenders and their AMCs often run them against their own databases, and the GSEs and other investors run the property data against historical appraisal data, with both tending to ask the current appraiser after delivery to comment on the discrepancies they see.

Historically, appraisers haven’t had visibility into their own peers’ data, even though they’re graded on their consistency with their peers and asked to comment on their peers’ data.

CoreLogic’s QuickSource levels the field, providing visibility and allowing the appraiser to shorten turn times by anticipating and addressing the clients’ questions before they even come up.

QuickSource is a one-stop solution for easily importing, comparing and managing appraisal data from multiple credible sources. With instant data comparison of self, peer and external data sources all on one screen, the solution helps appraisers improve accuracy and avoid discrepancies in every report.

QuickSource shows the appraiser all their comp data in one place including MLS, public records, peer data (SmartExchange) and personal prior use.

The solution transforms this data into the GSEs’ UAD standard reporting format, making it automatically compliant for UCDP portal upload. Users can prioritize which data sources they prefer for specific

CORELOGIC corelogic.com/buy/appraiser-solutions/

MAY 2022

- SPECIAL REPORT -

Sponsored Content

HOMEGENIUS homegenius.com

THE EXECUTIVES:

KADE CLARK , SVP OF DIGITAL VALUATION PRODUCTS AND SALES FOR RED BELL REAL ESTATE Kade Clark manages the operations of the alternative valuation services offered by Red Bell Real Estate, which include automated, interactive and hybrid valuations.

STEVE GAENZLER, SVP OF PRODUCTS, DATA AND ANALYTICS FOR RED BELL REAL ESTATE

A

s businesses around the globe continue to streamline their processes with the help of tech advancements, residential valuation services are doing their part to keep pace.

With professionals from real estate agents and brokers to investors and lenders relying more and more on automation to accurately assess property data, Red Bell Real Estate, LLC, a homegenius Inc. subsidiary and Radian company, offers 21st-century valuation solutions that take home price estimates to a new level.

These valuation services utilize groundbreaking technology, including photo AI and computer vision, to take the guesswork out of assessing property conditions. By allowing for the automatic identification of attributes like finishes, materials, updates over time and condition, this new valuation technology is transforming the pricing process. The valuation technology uses machine learning and deep learning that analyze data, identify patterns and refine conclusions based on new and changing data, which reduces bias and makes for more accurate predictive modeling.

“By using proprietary technology, our valuations services are designed with unparalleled data coverage and next-level analytics to deliver unmatched insights quickly and easily, offering real estate professionals the information they need to make decisions regarding the price of a property,” said Steve Gaenzler, SVP of Products, Data and Analytics for Red Bell Real Estate.

Some examples of this technology at work include the Radian Automated Valuation Model (AVM) which uses sophisticated modeling to quickly and accurately price virtually any single-family property in the U.S., or the Radian Interactive Value (RIV) which combines sophisticat-

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As head of the homegenius SaaS Product organization, Steve Gaenzler leads and facilitates the roadmap and creation of all homegenius SaaS products as well as the customer success teams that ensure value is delivered. In addition, he leads the Data and Analytics teams focused on the development of advanced analytics and data products.

homegenius offers 21st-century valuation solutions that take home price estimates to a new level

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ed automation and user-driven input to quickly deliver pricing estimates. These allow mortgage lenders and investors to obtain the vital information they need when evaluating a home or portfolio. Red Bell also utilizes computer vision and sophisticated analytics in the Radian Home Price Index, or HPI, that is driven by artificial intelligence and machine learning, offering results weeks ahead of other indices.

Agents and real estate brokers can also make use of these impressive analytics, modeling and more in geniusprice technology, an intelligent pricing engine for real estate that makes the traditional Comparative Market Analysis (CMA) report feel obsolete. By marrying advanced valuation automation with local property data in an innovative and exciting way, this allows agents and brokers to leverage these insights and have more confident pricing conversations with their clients.

When it comes to the array of valuation services, real estate professionals can feel confident that they’re in good hands with the homegenius family of companies. The collection of valuation services has a strong reputation for providing fast and accurate results. For instance, the Radian AVM has been tested, verified and approved by Fitch Ratings as one of only five approved providers of AVMs for residential mortgage-backed securities (RMBS) transactions.

With an eye toward the future, homegenius has realized the importance of valuation tech, offering services that are unique in scope, user-friendly and accurate to keep step with the evolving needs of real estate professionals. As technology perpetually evolves, homegenius and Red Bell Real Estate plan to evolve alongside and look forward to continued enhancements.

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T

he industry has a huge demand for appraisals but an ever-shrinking number of appraisers available to conduct them.

Incenter Appra isal Ma nagement ’s RemoteVal technology allows appraisers to cut out all physical travel and get more inspections done, in turn generating more orders per day that they can complete.

The RemoteVal solution leverages the technology that homeowners and agents have with them already — their Apple or Android smartphones. It eliminates the need to send third-party property data collectors to a home or to bring special devices into a home. This greatly reduces time and cost to all parties, as well as allowing appraisers to generate the needed inspection data to complete valuations remotely.

“The real difference with RemoteVal is that it keeps appraisers in full control of the appraisal inspection,” said Erik Pogwist, Chief Appraiser. “Appraisers can greatly reduce their turnaround times by taking photos and capturing data remotely using their own smartphone.”

RemoteVal’s built-in digital measuring tape makes it easy for appraisers to determine the square footage/GLA, and its 3-D scanning technology enables the application to generate and deliver floor plans quickly and efficiently for lenders and appraisers alike.

“No other remote valuation solution offers this combination of appraiser-centric features and functionality,” Pogwist said.

The primary benefit of RemoteVal is speed for the lender. The inspection process can take days to weeks to complete, but RemoteVal reduces that time, allowing the appraiser to deliver a faster report for the lender. And investors buying the loan

from a lender benefit from reduced risk, knowing the appraiser saw the property and signed off on its condition.

Consumers want an easy process that doesn’t require them to measure or photograph a home. GSEs want the desktop appraisal and other remote valuations to increase the veracity and the speed of appraisals.

RemoteVal delivers on both fronts.

Because the appraiser is visually viewing the home in real-time on the effective date of inspection, they can more reliably and accurately verify the property condition and attest to that. It lowers risk and increases report veracity while eliminating the need to visit the property.

It also enables appraisers to complete reports without driving to the property. In an era of rising gas prices, environmental consciousness and concern for pollution, they can reduce their impact on the environment by ordering virtual appraisal inspections like RemoteVal. “RemoteVal is easy to adopt and use for appraisers and homeowners,” said Mark Walser, President. “We made it highly effective but also simple. And because appraisers are still in control and personally verifying all the data, the increase in speed doesn’t come at a reduction in accuracy or integrity.”

With RemoteVal, Incenter can bring appraisers into the digital age while still preserving and enhancing their role in the remote inspection process.

This, in turn, will help drive the adoption of the GSE desktop appraisal and increase usage of it, creating efficiency for appraisers, reducing driving time, gas usage and environmental impact, and providing lenders with the speed and scalability they need to make loans faster.

INCENTER APPRAISAL MANAGEMENT incenteram.com

THE EXECUTIVES:

MARK WALSER, PRESIDENT Mark Walser is President of Incenter Appraisal Management and is responsible for the direction of the company and its strategic growth and technology initiatives.

NIKKITA PHANDA, SENIOR VICE PRESIDENT OF OPERATIONS Nikkita Phanda is Senior Vice President of Operations, and runs all aspects of the company’s customer service and appraisal fulfillment functions.

ERIK POGWIST, CHIEF APPRAISER Erik Pogwist is Chief Appraiser of Incenter Appraisal Management, with over 30 years of experience as an active field appraiser and expert in appraisal review, overseeing the company’s appraisal compliance and quality control department.

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Incenter Appraisal Management’s RemoteVal solution keeps appraisers in full control of the inspection

- SPECIAL REPORT -

Sponsored Content

OPTEON opteonusa.com

THE EXECUTIVES:

CHRIS KNIGHT, GROUP CEO After a decade with Opteon, Knight took on the role of CEO in 2016. Since then, he has used his experience as an appraiser and his qualifications in accounting, real estate, valuations, a Master of Business Property, and a Master of Business Administration to bring same-day turn times to real estate markets across the globe.

NICK CONTEDUCA, SVP OF TECH INNOVATION

T

echnology has radically disrupted many industries in recent years. The valuation services market has yet to see that same level of impact, but the pace of change is ramping up. With advances in automation bolstering speed and accuracy in other fields, some within the industry believe that technology should reduce or eliminate the role of appraisers. But is it truly the best way forward?

Opteon, a cutting-edge appraisal provider, offers an alternative solution and a bold vision of same-day turn times.

“We can’t continue to provide appraisal services the same way we have been. The market has moved into the digital realm, and businesses require on-demand access and rapid results,” said Chris Knight, Group CEO of Opteon. “However, the traditional way provides an important human element that includes critical thinking and a strong knowledge base. Value and marketability are not purely a math equation.”

While many stakeholders look to algorithms and third-party property inspectors, Opteon takes a different approach. By equipping experienced appraisers with a holistically engineered ecosystem of technology, process and data management, they merge AI and human expertise. This approach delivers dramatically improved accuracy while maintaining the irreplaceable human touch.

“The real estate industry faces juxtaposed issues: Outdated processes like constant phone calls, physical tools and long turn times, versus new technological solutions intended to replace the human element. The Opteon solution lives at the crossroads of these options,” said Nick Conteduca, Opteon’s SVP of Tech Innovation.

Opteon’s appraisal ordering platform is a prime example of this synergy. On

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Both a certified appraiser and licensed real estate broker, Nick Conteduca brings his unique perspective to the appraisal industry.

With nearly 20 years industry experience, he creates a distinct advantage in the appraisal business by leveraging technology. Under his direction, Opteon is introducing cutting-edge solutions to stay ahead of the curve in an evolving industry.

Opteon’s appraiser-facing software allows appraisers to submit reports from the field in real-time

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the surface, their platform offers performance-based appraiser selection and a rapid AI review tool that covers over 200 QC points — but attention to detail is where their proprietary software shines.

Improved interfaces and smart integrations reduce common frustrations found in other software. Hundreds of minute differences compound to deliver an experience that inspires user confidence.

“Don’t take our word for it,” Knight said.

“Trial our competitor’s ordering platform, and then trial ours. The difference will quickly become apparent.”

Opteon’s appraiser-facing software has a similar impact. By automating data imports and other tedious elements, their process-centric software frees appraisers to focus on tasks requiring human critical thinking. This technology is accessible via smartphone or tablet, empowering appraisers to submit reports from the field in real-time.

Opteon USA’s rapidly growing team employs over 250 staff appraisers, and their Opteon University program is fostering a new generation of professionals to utilize this technology. Their expanding team will soon use Opteon software across the country with the ultimate goal of same-day turn times.

To those doubting their vision, Opteon USA points to the brand’s counterparts in Australia and New Zealand. These industries also wrestled with cumbersome inefficiencies until investment in people, processes and technology paved the way for a more efficient system. For over a decade, Opteon has maintained a two-day average turn time in these markets.

Today in the U.S., Opteon is uniquely merging process, technology, data and human critical thinking to drive a brighter future for the industry at large.

Sponsored Content

W

hen it comes to innovative appraisal tech, there’s no denying that Reggora continually has its finger on the pulse. With firsthand knowledge of how complex and time consuming appraisals can be, Reggora is motivated to streamline and modernize the process, benefiting appraisers, lenders and buyers themselves.

The leaders behind the continually evolving appraisal tech solutions at Reggora know exactly what it’s like to deal with inefficient appraisal processes. Before founding Reggora, Brian Zitin and Will Denslow, co-founders, launched a successful real estate brokerage. It was during this time that the two were exposed to the shortcomings of the appraisal and valuation process and took the initiative to transform it themselves.

“The biggest pain point that Reggora addresses is the amount of time and effort it currently takes to complete an appraisal,” Zitin said. “From ordering, scheduling, reviews, and delivery and payments, we are on a mission to deliver drastically shorter turn times.”

With its modern appraisal management platform, Reggora is focused on reducing cycle times so that lenders can reduce operational costs and increase profitability — incredibly important in today’s shifting market. Lenders on the Reggora platform have reduced turn times by up to 35%, reduced revision rates by up to 50% and claim that they could not have survived the refi-boom without it.

Faster turn times, along with features such as streamlined payment processing, are also incredibly important to the borrower experience. In addition, loan officers can act as trusted advisors to the borrower and keep referral centers happy, with 24/7 visibility into the ap-

praisal process, which historically has been considered the “black box” of the mortgage process.

The Reggora platform also uses Uberstyle algorithms to help ensure that appraisers are assigned to jobs in the right locations and at the right times. Reggora’s modern framework has the ability to seamlessly integrate with each lender’s current tech stack, helping guarantee that stakeholders are given the information they need when they need it.

While Reggora focuses on the future of appraisal and valuation, the founders understand that the best tech isn’t rushed.

“We are hyper-focused on streamlining and shortening the overall appraisal process; however, it’s crucial that speed does not come at the expense of quality,” Zitin said.

Reggora’s platform automation helps lenders manage requirements such as fee redisclosures and document delivery while speeding up the early part of the appraisal process and allowing for configurable automation.

Lenders and appraisers alike continue to count on Reggora’s reputation for future-ready modernization and top tier technology that saves time, reduces costs and improves their bottom line. By helping clients eliminate the need for manual work, Reggora has received shining reports from customers who have benefited big from the automated platform.

As appraisal modernization continues to take shape, Reggora is uniquely positioned to lead its customers through the ever-changing landscape. While the world of real estate increases its reliance on tech products, Reggora is eager to continue providing innovative and adaptable solutions for lenders and appraisers as they forge into the future of automation.

MAY 2022

REGGORA reggora.com

THE EXECUTIVES:

BRIAN ZITIN, CO-FOUNDER AND CEO Brian Zitin is responsible for the company’s overall vision and direction, ensuring Reggora stays focused on serving the best interests of the industry and its customers.

WILL DENSLOW, CO-FOUNDER AND CTO Will Denslow leads all engineering strategies and initiatives, ensuring Reggora delivers innovative, agile and scalable solutions to its lender customers and appraisal vendors.

KEVIN FLYNN, VICE PRESIDENT, PRODUCT Kevin Flynn leads product innovation and development for Reggora and works with a team of people focused on user feedback to ensure the best possible product is delivered to customers.

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Reggora is on a mission to deliver shorter turn times with its modern appraisal management platform

TRADE DESK

Trade associations from across the housing industry are on the front lines of issues that lenders, real estate agents and everyone in between face every day. In these letters, they give their members an inside look at what they are working on, and the most important issues facing each industry today.

AIME......................................57 MBA ......................................57 NAHB ....................................58 NAMMBA...............................58

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NAR.......................................59

MAY 2022

TRADE DESK

Marc Summers

President Association of Independent Mortgage Experts

AIME members, It’s no secret that owning a home is a very big decision in terms of finances and the future. Homeownership allows investment in the long term and an establishment in a stable foundation.

Yet many people do not believe they are capable of achieving the American dream. There are many obstacles to buying a home, from a lack of down payment to credit problems.

As we follow Financial Literacy Month and we’re in the thick of purchase season, it’s still essential to be an advisor to your clients every step of the way.

Before purchasing a home, consumers need to evaluate their readiness and how to manage their home and finances afterward. If they aren’t prepared, you can coach your client to improve their finances and prepare them for

homeownership.

The probability of foreclosure drops when a borrower completes homebuyer education. Important items are learning how to manage money; knowing how credit works; saving to buy a home; searching for a home; securing investments; and, understanding the mortgage process. As a mortgage broker, you should be able to answer the borrower’s question, “How much money should I budget for my first home?”

The initial months of homeownership are a learning curve for a lot of borrowers. As a broker, provide a helping hand through counseling and answer any questions that the borrower may have. By doing so, you’re setting up your business to gain a refinance down the road and potential referrals.

Association of Independent Mortgage Experts mortgage servicers and their employees. They delivered for borrowers while working from home and dealing with the pandemic. Unlike the last recession, when far more homeowners were underwater, servicers have used every tool at their disposal to help struggling borrowers, including payment deferrals, partial claims, low- or nodoc modifications, and unlocking their equity to improve their financial situation.

The economy is much stronger today, and higher wages, low unemployment, and increased labor force participation should continue to support financially healthy households. As they have done for the past two years, servicers will continue to work with those homeowners who are still struggling, going above and beyond to help them successfully emerge from the pandemic.

Mortgage Bankers Association

Robert Broeksmit President and CEO Mortgage Bankers Association

MAY 2022

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MBA members, This spring marks the two-year anniversary of the beginning of the COVID-19 pandemic, which swiftly upended our lives.

The months leading up to March 2020 saw some of the lowest mortgage delinquencies ever recorded.

But in a flash, millions of homeowners faced unemployment or lost wages and risked falling behind on their mortgage payments. The servicing industry stepped up, fielding record call volumes and putting distressed borrowers in a first-of-its-kind nationwide forbearance program.

In June 2020, the number of homeowners in forbearance peaked at 4.3 million, according to MBA’s Forbearance and Call Volume Survey.

As of this writing, roughly 650,000 homeowners remain in forbearance, and the delinquency rate — which peaked at a staggering 8.2% — has fallen back below 5%.

The progress has been astounding and could not have happened without the dedication and drive of

Jerry Konter

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Chairman National Association of Home Builders

National Association of Home Builders

TRADE DESK

NAHB members, Implementing creative solutions that address our nation’s housing affordability crisis is a top priority at the National Association of Home Builders. It’s also one we share with the current administration in Washington.

While there is no “silver bullet” solution to the problem, new building methods are helping to lower the cost of producing quality housing. NAHB and the U.S. Department of Housing and Urban Development will team up for a second “Innovative Housing Showcase” that will highlight some of these new home-building technologies. The event will take place June 10-12, 2022, on the National Mall in Washington, D.C. The Innovative Housing Showcase is a three-day event that will give policymakers and the public a firsthand look at some of the building technologies and solutions that are changing the future of housing. In addition to exhibits on the National Mall, discus-

NAMMBA members, It’s no secret that our industry has an age problem.

More and more of our leadership is aging out and retiring…while more and more students graduate from college with debt, a degree, and no real plan forward after the cap and gown ceremony.

This is a great opportunity to grab the attention of young, ambitious talent who needs guidance in not only financial education but also career development — specifically in the real estate and finance market.

We all know it was a mad scramble the last couple of years, trying to find capable professionals to fill the demand of an overheated market. Now that things have equalized again, it’s time to start developing a professional career pipeline to fill current and future needs with college students and graduates. We don’t need another mad scramble. We need a plan!

I know that when I first got started, I had to learn everything on the job…it was like drinking from a fire hose. I was used to being the smartest guy in the room, but when it came to mortgage finance, I was lost for a bit. My employer was great about it, made sure that I knew this was the process for everyone… but what if it didn’t have to be? Or what if not everyone was as fortunate as I was to have a boss who could take the critical time with their employees?

Talent Hub was developed specifically for college

sions with lawmakers and thought leaders from the industry will round out the weekend. The first Innovative Housing Showcase was held in 2019 and included exhibitors from around the country showcasing prototypes of state-of-the-art homes and products that highlighted innovative building methods including green building and panelized homes.

Comprehensive strategies are needed at the federal, state and local levels to reduce building costs, boost supply and encourage a mix of housing choices to help address rising home costs that are pricing more buyers out of the American Dream of homeownership.

The purpose of this event is to educate the public and decision makers on the importance of housing opportunity and to demonstrate some solutions that can help bridge the gap.

However, long-term solutions are still needed. NAHB will continue to work with policymakers in the search for viable solutions. I hope to see you in Washington, D.C., in June.

students and recent graduates, not only to help them understand mortgage finance but to help them choose it as a career.

When students and grads sign up for Talent Hub, they have access to mentorship, financial education, mental health and wellness tools, scholarships, webinars, events and networking opportunities, community and industry news, as well as job opportunities for grads getting their feet under them.

It’s like LinkedIn for college students. Talent Hub is a part of NAMMBA’s ambitious Mission2025, to get 50,000+ college students into the mortgage finance industry by 2025. With Talent Hub as an online recruitment platform for our partners, as well as a tool for potential employees, NAMMBA can support the leadership of the future by givNAMMBA Founder/CEO ing them a hand up National Association of Minority at the beginning of Mortgage Bankers of America their careers.

Tony Thompson

National Association of Minority Mortgage Bankers of America MAY 2022

TRADE DESK

NAR members, As Realtors® from across the country descend upon the nation’s capital this week for the Realtors Legislative Meetings, I am so proud of all of the accomplishments NAR has already achieved on behalf of our members and homeowners. Rather than resting on laurels, we are preparing to tackle the additional work required to advance NAR’s policy agenda.

To that point, NAR is intently focused on building upon our advocacy efforts. That includes improving access to homeownership, bringing about economic recovery, ensuring that fair and affordable housing is accessible to all, and creating strong, resilient communities and businesses.

To improve this framework, I’ve proposed three themes — all beginning with the letter “S” — to focus on in 2022.

The first is safety. We support our members’ livelihoods, as well as in their day-to-day lives, by helping lawmakers and other stakeholders better understand our members’ work. We must convey the inherent risks of this profession, and that will allow us to work collaboratively to find solutions. Realtors work hard and want nothing more than to return home safe every night.

The second is strength. There is power in numbers.

When our 1.5-million dedicated members come together, we are a strong force that fights for the good of consumers and our industry. We have tremendous reach and influence which allows us to continue to be servant leaders in our communities, while tending to our businesses, clients and families. But in order to maintain that strength, we must be mindful to take care of ourselves and take care of one another.

Finally, the third is sustainability. As Realtors, we pursue policies and innovations that will ultimately better preserve the land and resources we have. It will take the voices, input and expertise of all real estate professionals to move our industry forward, toward a more efficient and sustainable future. The industry has survived and even thrived in difficult times, solely because of President the dedication and creativNational Association of Realtors ity of its professionals.

Leslie Rouda Smith

National Association of Realtors

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REVERSE MORTGAGE

MAY 2022

REVERSE MORTGAGE

Wade Pfau walks people through ways reverse mortgages have changed since 2018

BY CHRIS CLOW

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Wade Pfau — professor of retirement income at the American College of Financial Services and founder of RetirementResearcher.com — has long been seen as an authority on how reverse mortgages can be well-implemented into a senior’s retirement plans to reach financial goals. Because of his general dedication to understanding the space, Pfau has observed a series of changes that the reverse mortgage program has undergone over the

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“The new intuition that the new edition of the book benefits from comes down to the length that financial resources last in retirement,” Pfau says.

Part of this comes from the incorporation of a Home

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years, both from within and from external entities like regulators.

Pfau shared some of these observations and additional intuition he has gained over the past few years which have informed revisions to the latest edition of his reverse mortgage book, "Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement." The new intuition comes in the form of additional methods that can be employed for incorporating a reverse mortgage into a retirement plan, and how a reverse mortgage can be used as a "buffer asset" during a bear market.

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Equity Conversion Mortgage (HECM) into an existing portfolio, while the other part comes down to strategic use of a reverse mortgage’s proceeds in certain situations.

“If you can just lower the distribution rate from the investment portfolio slightly, I show how that can work to have so much greater sustainability for the portfolio,” Pfau explains. “Or how, instead of ending up with $0 at the end, you might still have a million dollars out of an initial million dollars by just making a small change to the portfolio distribution. And the other angle there too, is this idea of the buffer asset, where maybe you’re spending at a regular rate from the investment portfolio.

But if in certain circumstances, you could skip a distribution from the portfolio at a key moment in the retirement, [such as] after a big market downturn, that can provide so much positive impact to sustaining and prolonging the investment portfolio.”

Where a reverse mortgage could then come into view during this time is if it can be used as an asset to draw from to cover the spending that would have otherwise come from the investment portfolio either on an ongoing basis, or for a specific time period, he says.

“Where the reverse mortgage steps into that is [if a retiree asks] ‘what if I could use the reverse mortgage to cover spending either just on an ongoing basis that can help to reduce the spending rate from the investments, or with that buffer asset idea at key moments in retirement?

Can I preserve my investment portfolio by taking the distribution instead from the reverse mortgage?’”

"Yes, there are costs associated with the reverse mortgage in terms of upfront costs and interest on the loan balance, but if the gains in preserving the portfolio are greater than the cost of the reverse mortgage, you can create a net positive impact."

- Wade Pfau

MAY 2022

Demonstrating that these synergies can have a demonstrable impact to portfolio sustainability is a key component of the new intuition, Pfau explains. These synergies don’t erase the upfront costs that are associated with such a loan, but weighing those costs against the future potential benefits that a reverse mortgage could provide is an important part of determining whether or not this is the right option for an individual senior, he says.

“Yes, there are costs associated with the reverse mortgage in terms of upfront costs and interest on the loan balance,” he explains. “But if the gains in preserving the portfolio are greater than the cost of the reverse mortgage, you can create a net positive impact. You pay off the loan balance and still have money left over, and have a better retirement outcome by strategically using the reverse mortgage throughout retirement versus using it as the last resort.”

The “last resort” phrase is one likely very familiar to most reverse mortgage professionals, and is often described as the only scenario that a reverse mortgage is a viable option by outside observers.

The last resort option in direct comparison with a more nuanced, comprehensive retirement strategy which uses a reverse mortgage should be weighed based on the benefit to the end-user, Pfau explains.

“I’m trying to give more intuition about why that last resort doesn’t work as well as a more coordinated type of strategy,” he explains. “The intuition is just because of these benefits that [loan] can create in helping to preserve the investments.

It’s not a reverse mortgage in isolation, but it’s the reverse mortgage within the context of [the idea that if a senior] spends from the reverse mortgage, they

REVERSE MORTGAGE

don’t have to spend from the investments.

That can help to create a better overall outcome for the financial plan.”

Another new addition to the book’s third edition is a section on proprietary reverse mortgage products, which lenders offer without a direct association with the Federal Housing Administration (FHA)backed HECM program. Since the last edition of the book, several major reverse mor tgage lenders have expanded their proprietary product suites, which warranted a mention in the book, Pfau says.

“That section is not extremely long, but I tried to get a sense of the different products out there,” Pfau says. “There’s definitely been a lot of developments since the second edition in terms of wider acceptance or use of different proprietary options, which on a state-by-state basis [could] potentially give access [to reverse mortgages] to people at age 55 or 60 instead of having to wait to 62. We’re starting to see the development of a line of credit as part of a proprietary option, which doesn’t work in the same way as the HECM line of credit. But at least it’s a starting point.”

Originators may have a harder time generating proprietary business since those products do not have federal insurance guarantees backing them, so the terms are not as “generous” as the HECM program, Pfau says. Still, lenders focusing on the proprietary space as a ground for industry innovation is certainly noticed.

“I think we’re seeing a lot of innovation where there are increasingly proprietary options available to help people in a number of different circumstances,

"I think we’re seeing a lot of innovation where there are increasingly proprietary options available to help people in a number of different circumstances." - Wade Pfau

whether it’s because they’re too young for the HECM or because they may have an outstanding mortgage balance that exceeds what they could get through the HECM, and so forth,” Pfau says. “So, I think it’s an important option. And, it was time to include more coverage of that in the book in a way that was not there in the past editions.”

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REAL ESTATE

MAY 2022

REAL ESTATE

We read Compass’s 10K so you don’t have to AND, BOY, DID IT REVEAL SOME INTERESTING NUGGETS ABOUT THE COMPANY'S EXPENSES AND LITIGATION

BY MATTHEW BLAKE

Though Compass had lost $494 million in net income, they made a $2 million profit through adjusted EBITDA

MAY 2022

provided by Barclay’s Bank.

Here are the five biggest takeaways from the 2021 10K report. Compass did not respond to messages for this story.

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Under Securities and Exchange Commission law, companies must apply generally accepted accounting principles, or GAAP, in reporting their finances. In other words, companies cannot make stuff up. However, while companies cannot lie, they can have fun and devise non-GAAP measurements.

No less than 16 times during its February earnings call, Reffkin and CFO Kristen Ankerbrandt mentioned “adjusted EBITDA” or adjusted earnings before interest, taxes, depreciation and amortization. Though Compass had lost $494 million in net income, they made a $2 million profit

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“ Pe o p l e u s e d to talk about Compass all the time,” said Jonathan Miller — a real estate appraiser at Miller Samuel — who compiles housing market reports for Douglas Elliman, a Compass rival. “Now, you don’t really hear about them.”

If Miller is right and Compass, after raising $1.5 billion and flying to a $6.4 billion valuation in 2019, is a stale subject, then that’s a shame because now anyone can become a Compass expert.

The real estate brokerage unveiled its first annual report on Monday. It unveils everything from CEO Robert Reffkin’s ability to soon control 67% of the company to an all-you-can-eat buffet of details on an up to $600 million revolving line of credit

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"The difference with Compass is that they regularly seek input and feedback, and testing from the agents." - Matt McKee

through adjusted EBITDA. Compass arrives at its adjusted EBITDA figure by subtracting $386 million in stock-based compensation, though the majority of this expense is recurring annually. It also takes out $24 million in “acquisition-related expenses” despite the report stating Compass intends more acquisitions. And there’s a $21.3 million “litigation charge” (more on that in a sec).

Instead of justifying dropping these expenses, the report warns about adjusted EBITDA’s limitations. “In evaluating adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this presentation,” the report reads, later adding that Compass’s adjusted EBITDA “varies from others in the industry.”

Indeed, most other brokerages either do not provide an adjusted EBITDA figure or give one at less variance to net income. eXp World Holding’s yearly report, for instance, gives an adjusted EBITDA measurement of $4 million less than its $82 million in annual income.

“All expenses should be included in their EBITDA,” said Michael Nourmand, president of Nourmand & Associates Realtors, a brokerage headquartered in Beverly Hills. “I run a privately owned company and we include all expenses in our profit and loss. In particular, I don’t see any reason to exclude litigation costs other than to make their numbers appear better.”

Compass, though, is hardly reinventing the non-GAAP wheel. Office subleasing company, WeWork, became a punchline in 2018 partly because its “community

adjusted EBITDA” took out marketing and even administrative costs as expenses.

And Opendoor turned a $662 million loss in 2021 to a $58 million gain under adjusted EBITDA. Perhaps coincidentally, all three companies grew after venture capital funding from the SoftBank Vision Fund.

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As The Real Deal Magazine first reported in November, Compass settled its lawsuit with Avi Dorfman who claimed that, along with Reffkin and Ori Allon, he co-founded the company. The yearly report reveals that the settlement was for $21.3 million, the aforementioned litigation charge.

But while Compass is done duking it out with Dorfman, the company is locked in a three-year-old lawsuit with brokerage conglomerate Realogy. Compass has repeatedly lost motions to compel arbitration and take the case out of the public eye, according to the report. They are now in the discovery, or fact-finding stage, which is scheduled to last until October. Meanwhile, Compass is fending off with a stick trade secret lawsuits from brokerages, and even breach of contract cases from Compass’s own agents.

Litigation, as Nourmand argued, may be a recurring expense.

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Compass has made agent productivity a calling card — the firm’s principal agents do 2.7 times the deals of the average agent, the report states.

And agents who work at Compass say the brokerage gives them tools to be productive. User-friendly templates for social media, email, and digital ads plus the ability to quickly customize videos are part of what “Compass has to offer that those other brokerages may not,” said Beatrice Stambulski, a Compass agent based in Sherman Oaks, California who spent a decade at Realogy-owned Coldwell Banker.

Other agents praise Compass for listening. “The difference with Compass is that they regularly seek input and feedback, and testing from the agents,” said Matt McKee, a Compass broker in Orlando. “They do not deliver their product until it has been thoroughly

"I would think that the leaders of teams would be doing many multiples more than the rest of the pack — 2.7 seems modest."

- Jonathan Miller

REAL ESTATE

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Compass announced to some fanfare in July a partnership with Guaranteed Rate, a mortgage lender in Chicago that already partners with Realogy and

@properties. For some observers, the joint venture holds promise as a path to the brokerage’s profitability.

But the impact of the mortgage lender, OriginPoint, is so far minimal.

Compass has invested just $3.7 million in a company for which it owns 49.9%, though this number could swell in 2022.

Compass expects OriginPoint to be available in the majority of the company’s markets by year’s end.

chairman and chief executive officer.”

“I’m clearly biased, but I just don’t understand their business plan,” Miller said. “They were in one of the biggest housing booms ever and didn’t make money. It’s hard not to be cynical.”

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There may not be a sharper critic of Compass than the company’s own investor warning.

“We have incurred net losses on an annual basis since we were founded, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” the report explains.

Compass has $618 million in cash, and $1.6 billion in debt. Its future success, the report states, “depends upon the continued service of our senior management team, including, in particular, Robert Reffkin, our founder,

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tested by agents.”

To ineptly paraphrase F. Scott Fitzgerald, one can hold two seemingly opposed thoughts about Compass — a financially troubled company admired by agents.

Still, those agents are not necessarily more productive. Principal agents refer to agents either working as lone wolves or heading a team. At Compass, agent teams can include the Aaron Kirman Group, a Los Angeles outfit that consists of Kirman and 84 additional agents. Whether that 2.7 number refers to deals Kirman did or deals Kirman and the 84 other agents did combined is not explained.

Compass’s agents do not appear more productive than the average agent who does 10 deals a year, Miller said, declaring, “I would think that the leaders of teams would be doing many multiples more than the rest of the pack — 2.7 seems modest.”

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SECONDARY MARKET

MAY 2022

SECONDARY MARKET

Neither rate volatility nor war has stymied the MSR market MSR VALUES REMAIN ROBUST EVEN AS THE WORLD COPES WITH HEIGHTENED UPHEAVAL

BY BILL CONROY

MAY 2022

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espite the global turmoil sparked by Russia’s recent invasion of Ukraine and the volatility in interest rates that has followed, the mortgage servicing rights (MSR) market remains on track to record one of its most dynamic runs in decades, according to multiple market experts.

That’s because even as mortgage rates have fluctuated in recent days, they remain well above mortgage rates in prior months. This means prepayment speeds will continue to favor sellers and buyers alike.

In addition, MSR sales are a fast and sure way for sellers — originators and other holders of the assets — to raise cash to ride out the current volatile rate environment and to address longer-term earnings pressures. In the year ahead, many lenders will need to adjust operations to cope with the stillanticipated long-term uptick in rates and the resulting move away from a refinancing-dominated market and toward a purchase market, and MSR experts agree.

SECONDARY MARKET

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“As we’ve seen U.S. Treasury rates — and, more specifically, 10-year Treasuries — move down, so have MSR values, but not significantly."

- Tom Piercy

The value of MSRs, which represent a small slice of the interest rate on a mortgage, tend to increase in a risingrate environment because higher rates stifle prepayment speeds.

“For a while now [the concern] was inflation, inflation, inflation and now you throw in [Vladimir] Putin and a war, it creates a flight to quality, which pushes the ball back in the other direction, and rates go back down,” said John Toohig — head of whole-loan trading at Raymond James. “So, there’s a lot of noise out there — talk about a whipsaw... In my opinion, inflation is still the bigger issue, but for now, you have these two conflicting forces.”

The conflicting pressures whipsawing the market currently are disconcerting on many fronts, but they also should be kept in perspective with respect to the MSR market and the dynamics that make it tick.

“While the [rate] environment is scary, that’s the environment we find ourselves in now,” said Michael Carnes, managing director of the MSR valuation group at the New York-based Mortgage Industry Advisory Corp. (MIAC). “It’s kind of one of those things that if you don’t like it, wait five minutes, and it’ll change — like the weather.

“In the case of mortgage servicing rights, you have to remember that a lot of these MSRs being transacted today were 100 basis points out of the money, and if they [fall to] 85 basis points out of the money [because of rate volatility], they are still out of the money and not at serious risk for repayment.... Also, you’re looking at multiple Fed rate hikes this year, and the general market consensus is that rates will continue to go higher.”

Carnes added that 2022 is shaping up to be a record year for MSR bulk transactions at prices that “are very, very competitive” — with some deals commanding a price, calculated as a percentage of the MSR loan pool

MAY 2022

"While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty."

- Sam Khater

involved, that is up to five times the net servicing fee.

He said MIAC is looking at eight to 10 potential MSR sales deals over the next couple of months, “and that’s a lot of volume, considering we’re not the only ones transacting MSRs.” In fact, this week alone, Carnes said MIAC expects to close two MSR deals with a combined value exceeding $6 billion. “One of them is a smaller $500 million government [Ginnie Mae MSR] deal, and the other is a $5.7 billion agency [Fannie Mae/Freddie Mac] deal,” he said.

In March, The Prestwick Mortgage Group — an Alexandria Virginia-based MSR advisory and brokerage firm — has put at least three MSR bulk packages on the market, according to bid documents.

Two of those deals involve servicing rights on pools of Fannie Mae loans with a combined value of $610 million — a $242 million deal being brokered for an undisclosed Michigan bank and the other a $368 million offering by an undisclosed Pennsylvania bank.

The third MSR deal, also being offered by an undisclosed seller — an independent mortgage banker — involves both Fannie Mae and Freddie Mac mortgages with a combined value of $640 million.

Tom Piercy, managing director of

SECONDARY MARKET

remain, the cascading impacts of the war in Ukraine have created market uncertainty.

“Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”

It’s difficult to forecast with a high degree of certainty the fate of the MSR market through the balance of the year, but one MSR expert who preferred to remain in the background, predicted that it will continue to remain healthy at least through the second quarter of this year.

“Right now, people are taking advantage of being able to sell these MSRs at levels that we haven’t seen since prior to the financial crisis.”

- Michael Carnes

Carnes has another take, informed both by the extremely favorable pricing levels for MSRs currently and the eventual need for some lenders to bolster earnings in what promises to be a diminished yet still healthy mortgage-production environment in 2022, compared with the 2021.

“Right now, people are taking advantage of being able to sell these MSRs at levels that we haven’t seen since prior to the financial crisis [some 15 years ago],” he said. “As we get later into the year, their reasons for selling might be for earnings purposes.

“I don’t really want to make any predictions on the staying power of this type of [MSR deal] volume that we’re seeing today. But I do believe some combination of the eventual need for earnings [stability] and the ability to sell MSRs at substantial gains will continue to keep the market strong for the duration of this year.”

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Denver-based Incenter Mor tgage Advisors, said his firm completed a dozen transactions in January involving agency MSR loan pools with a combined value of $113.2 billion, which is close to what Incenter historically has sold in an entire year. As of late February, Incenter had put out to bid at least an additional two MSR deals with a combined value of $24 billion and had another $40 billion worth of MSR deals in the pipeline.

Although the overall impact of the current volatile market conditions is not expected to derail the exuberant MSR market, it is having an impact around the edges, according to Piercy.

“The war in Ukraine has created volatility across all global markets and specific sectors of each of those markets,” he said. “Here in the U.S., we have seen the Treasury market impacted as many investors, both domestic and foreign, have invested in the safety of U.S. Treasuries, which drives those rates down.

“As we’ve seen U.S. Treasury rates — and, more specifically, 10-year Treasuries — move down, so have MSR values, but not significantly. The reason is that we have not seen primary mortgage rates move [significantly] during this volatile period in Ukraine, so this props up optimism on forward-looking prepayment curves.”

Piercy adds, however, that the instruments used to hedge MSR assets “are more volatile, hence the slight impact to price.”

Freddie Mac reported on Thursday, March 3, that the 30-year fixed-rate mortgage averaged 3.76%, down from 3.89% a week prior. A year earlier, the average rate on a 30-year fixed-rate mortgage was 3.02%.

“Geopolitical tensions caused U.S. Treasury yields to recede this week as investors moved to the safety of bonds, leading to a drop in mortgage rates,” said Freddie Mac’s chief economist, Sam Khater. “While inflationary pressures

KUDOS

Here’s how one lender is coming together to help more Black Americans become homeowners Inside Movement Mortgage’s Grab the Key program

By Sarahi De La Cuesta

kud

Movement Mortgage was founded in 2008 with a mission to create a “movement of change” in the mortgage industry after one of the hardest financial episodes in American history. This mindset is still present, as they continue to move forward to tackle some of the biggest problems in the industry today.

Montell Watson, director of Movement Direct at Movement Mortgage, breaks down one of their newest programs, Grab the Key, explaining the history and goals of the program. Below, Watson answers questions about Grab the Key and Mortgage Movement.

HOUSINGWIRE: Can you share the history behind Grab the Key? MONTELL WATSON: Grab the Key started as an educational and awareness video for the industry to share at large. Movement Mortgage wanted to bring awareness to the history of racial inequities within our industry while highlighting the many people who risked their life for equality in housing to ensure all people have the chance of grabbing the keys of homeownership. Grab the Key is now a program at Movement designed to make homeownership a reality for more Black Americans.

HW: What are some of the specific goals within Movement Mortgage in helping close that gap in homeownership and how does this relate to Grab the Key? MW: Movement Mortgage wants to make homeownership attainable for everyone. We have a goal of increasing our market share within diverse communities along with bringing more diverse loan officers into the industry.

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HW: What moment stood out to you about the Grab the Key event?

MW: One thing that stood out was how the community rallied around the event. It showed there is a need to get into the actual communities at large to break down the misconceptions and build trust.

MAY 2022

HW: What do you hope future Grab the Key events accomplish?

MW: We hope Grab the Key helps thousands of people to take their next step toward homeownership. This may look different for each person, but we want everyone to know that no matter the pathway, Movement will be walking beside them to shepherd the way.

HW: If you were sitting in a room full of LOs and agents, what is one thing you would want them to understand when it comes to minority homeownership?

MW: Treat each person that you encounter on their homeownership journey as if they are your mother, father, or close family member.

Approaching with a loving mentality first can change the life of one person who we might overlook in a normal scenario. Giving them some extra guidance on what to do to prepare can be a game changer.

HW: Is there anything else you would like to add?

MW: In the next few decades, minorities within our country will be the majority. As lenders, we need to start now in meeting diverse markets where they are and ensuring we are doing everything possible to make homeownership available for all people.

Homeownership changes lives.

dos

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KUDOS

MAY 2022

parting shot

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❱ HOW HOT IS HOT? How hot is the housing market? These photos, which went viral on Twitter earlier this year, give an example of exactly how high demand is for homes right now. Shared by HousingWire Lead Analyst Logan Mohtashami, the photos are of a home that was listed for sale for $575,000 in Pico Rivera, California, which is right outside of Los Angeles. This type of line-out-thedoor home listing captures the multiple factors that are colliding in the market right now, which include little inventory, the largest age demographic looking to buy homes and low mortgage rates.

MAY 2022

October 3-5, 2022 Fairmont Princess Scottsdale, AZ

All Things Housing HousingWire Annual Heads to Scottsdale Register today! housingwireannual.com

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