February/March 2023

THE SERVICING ISSUE

HW Media announced in December that it has closed on the strategic acquisition of Altos Research, the premier resource for real-time real estate data, providing weekly market statistics, analysis and reporting for 99% of the zip codes in the U.S.

HW Media is focused on building a mission-critical resource that enables housing market professionals to make better decisions, stay informed and engaged, and grow their businesses. By acquiring Altos, HW Media will expand the breadth and depth of its product offering to help to create the most powerful and comprehensive media and data company serving the housing market.

“The velocity of the housing market has dramatically accelerated over the past few years, driving the need for more real-time data on a national and local level,” said Clayton Collins, Founder and CEO of HW Media. “Altos has a long history of bringing the real-time pulse of the housing economy to real estate professionals across the country, with the widest and most up-to-date data on housing markets available today. We believe this technology will provide massive benefits to our audience of housing professionals who rely on our insights and analysis to inform their most important business decisions.”

Altos founder and CEO Mike Simonsen will join the HW Media executive team as President of Altos Research, further strengthening the company’s leadership team and adding nearly 20 years of housing market research and technology expertise to the organization.

HW Media will continue investing in Altos products and bringing Altos’ real-time housing market intelligence to professionals and enterprises across the housing sector. Altos will continue to provide weekly market statistics, analysis and reporting to its customer base of real estate professionals, real estate technology providers and financial institutions, as well as tens of thousands of subscribers.

“When we started Altos Research 16 years ago, our goal was to bring much better housing market information to people who needed it now. So when the opportunity arose for us to join forces with HW Media, I immediately saw that the vision and capabilities of our companies we’re perfectly aligned,” Mike Simonsen, President of Altos Research. “Together, we’ll not only be able to provide customers with access to Altos’ unique, real-time data, but we’ll also have a team of journalists and analysts who can turn this data into meaningful insights at scale. It’s a powerful combination that will have a big impact for the market and for our customers.”

Hear more about this game-changing alignment from Clayton Collins and Mike Simonsen on a recent episode of our Housing News podcast.

2023

FORGING OPPORTUNITIES

June 18 – 21 Omni Barton Creek, Austin, TX

HousingWire

MANAGING EDITOR JAMES KLEIMANN

EDITOR ANGELICA LEICHT

SENIOR MORTGAGE REPORTER BILL CONROY

REAL ESTATE & TITLE REPORTER BROOKLEE HAN

MORTGAGE REPORTER FLÁVIA FURLAN NUNES

REPORTERS CONNIE KIM, TANNISTHA SINHA

LEAD ANALYST LOGAN MOHTASHAMI

PRESIDENT MIKE SIMONSEN

REALTRENDS

VICE PRESIDENT OF REAL ESTATE MARK ADAMS EDITORIAL DIRECTOR TRACEY VELT DIRECTOR OF RANKINGS PROGRAMS LIZ SMITH

TECHNICAL DIRECTOR KEERI TRAMM

RESEARCH AND RANKINGS COORDINATOR ALICIA WYNTERSEND

REVERSE MORTGAGE DAILY EDITOR CHRIS CLOW

EDITOR-IN-CHIEF SARAH WHEELER

CORPORATE

CEO CLAYTON COLLINS

CHIEF OPERATING OFFICER DIEGO SANCHEZ

VICE PRESIDENT OF FINANCE ANDREW KEY

DIRECTOR OF PEOPLE AND CULTURE AMY BEARD

VICE PRESIDENT OF GROWTH CAREN KARRIS

SENIOR MARKETING MANAGER GREG ROBERTS

SENIOR GRAPHIC DESIGNER EMILY CARPENTER

GRAPHIC DESIGNER BRANDON JOHNSON

VICE PRESIDENT OF PRODUCT HOLDEN PAGE

UX/UI MANAGER BO FRIZE

AD OPS COORDINATOR ELIZABETH LEDOUX

DIRECTOR OF HW+ & EVENTS BRENA NATH

SENIOR WEBINAR & EVENTS MANAGER ALLISON LAFORGIA

MARKETING PROGRAM MANAGER LESLEY COLLINS

MEMBERSHIP COORDINATOR SARAHI DE LA CUESTA

PEOPLE OPERATIONS MANAGER JAMIE BRIDGES

AD OPS MANAGER MATTHEW STAFFORD

MEMBERSHIP DEVELOPMENT SPECIALIST CAROLINE ABAD

EMAIL MARKETING SPECIALIST ALI MORRISSEY

GROWTH COORDINATOR SYDNEY SMITH

SENIOR EVENTS MANAGER KATIE GALBRAITH

EVENT SPECIALIST MAKENNA CLAY

BUSINESS ANALYST WHITNI ROWE

SOCIAL MEDIA STRATEGIST KENNEDY BENJAMIN

SALES

SVP SALES AND OPERATIONS JENNIFER WATSON LAWS

VICE PRESIDENT SALES MICHAEL ORME

WESTERN CHRISTI HUMPHRIES, LINDSLEY HARRIS, CASS HECKEL

CENTRAL & NORTHEAST SAMANTHA STEIN

CLIENT STRATEGY MANAGER ADINA RITTER

STRATEGIC ACCOUNT MANAGER BRIA SOYELE

SALES MARKETING MANAGER TOD MOHNEY

CONTENT SOLUTIONS

MANAGING EDITOR MALEESA SMITH

CONTENT EDITOR JESSICA DAVIS

MAGAZINE EDITOR AUDREY LEE

MULTIMEDIA PROJECT MANAGER DALTON JOHNSON

JUNIOR DIGITAL PRODUCER ELISSA BRANCH

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

LETTER FROM THE EDITOR

Keeping homeowners in their homes

WHO WOULD YOU SAY carries the longest relationship with the homebuyer? From the real estate agent to the title agent, the real estate transaction is one of the largest money transactions that also has the highest number of people involved. My answer would be your mortgage servicer. But even my answer is debatable and might be changing.

Historically there has been so much focus on choosing the right real estate agent and loan officer. And that relationship has never been more important than in times of economic distress or recession.

The February magazine has long focused on the servicer and borrower relationship. In this issue, we dive into the latest trends in mortgage defaults and examine why they occur. From the red

flags warning that forbearance is coming to the life shocks that cause them, everyone from regulators to loan officers are focused on preserving homeowners’ ability to stay in their homes. The housing market may be going through tough times, but that doesn’t mean there’s a tidal wave of forbearance headed our way. You can learn why in the feature that starts on page 30.

After following the state of servicing at the start of each year since the magazine first launched, I’m excited for you to see what makes this year unique.

Brena Nath Director, HW+ & Events @BrenaNath

In the December 2022/January 2023 issue of HousingWire Magazine, we misspelled the name of Miki Adams, president of CBC Mortgage, in the feature article, “What does the future hold for the housing industry?” This error has been corrected in the digital version of the story.

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.

© 2023 by HW Media, LLC • All rights reserved

Retweet! Check out posts from Logan Mohtashami, Realtor.com and other housing industry leaders.

Real

54

The tips and tricks you need for improving your referral network in 2023 and beyond.

Kudos

58

AIME addresses underrepresented borrowers in Women’s History Month and Black History Month.

Leaders in the reverse mortgage space share their thoughts on the state of the industry in 2023.

Hope Through Housing is changing the lives of impoverished students one day at a time.

Checklist

60

Jason Kwasny, chief servicing officer at TMS, shares his five servicing best practices.

Housing History

61

Mortgage experts know 2023 will be tough, but there is still a silver lining to look forward to.

Throw it back to 1993 when the interest rates were 7.42% and VHS tapes were all the rage.

Parting Shot

62

HW Media wishes all our readers a happy new year and, fingers crossed, a healing housing market.

Courtney Thompson

Dave Howard 20

Jeff Shores

Brian Covey | Revolution Mortgage | Executive Vice President

Revolution Mortgage hired Brian Covey as its executive vice president of strategy and development. Covey was previously a vice president at loanDepot, where he led sales teams to grow sales from $1.25 million in 2017 to $2.45 billion in 2021. Covey has also served as a regional director at Movement Mortgage and competed on the United States Olympic Soccer team. He is the author of several books and hosts his own podcast.

Lyra Waggoner | Movement Mortgage | Chief Information Officer

Movement Mortgage hired Lyra Waggoner as its chief information officer. In her new role, she will focus on technology to drive the company’s growth. Her professional career spans 18 years in the mortgage industry. Prior to Movement Mortgage, she served as a sales manager at Wells Fargo, senior vice president of originations technology at Caliber Home Loans, and executive vice president of technology and partner at Level Capital. In all her roles, she focused on technology for loan origination software platforms.

Kristin Broadley | QC Ally | Chief Innovation Officer

QC Ally hired Kristin Broadley as its new chief innovation officer. Broadley will help QC Ally expand its tech-enabled loan quality initiatives and audit services. Her most recent role was vice president of enterprise risk at Rocket Central, where she supervised tech-enabled enterprise loan quality and audit services. Broadley also worked in loan origination and processing and the wholesale market. She worked at Quicken Loans in 2002 (now Rocket Mortgage), where she focused on the various stages of origination.

Dave Parker | LoanLogics | CEO

Data-driven mortgage audit, income calculation and loan quality software provider LoanLogics hired Dave Parker as its new CEO. Parker will focus on automation and new technologies to help lenders manage high costs and any downturns in mortgage originations. In 2019, Parker joined LoanLogics as the senior vice president of product management and later became the executive vice president of product. He was a HousingWire Vanguard honoree the same year. His professional career spans three decades.

Austin Niemiec | Rocket Mortgage | Chief Revenue Officer

Rocket Mortgage promoted Austin Niemiec, formerly executive vice president, to the role of chief revenue officer. In his new role Niemiec will focus on leading strategy for all of Rocket Mortgage’s home lending business. Niemiec has worked with Rocket Mortgage (originally Quicken Loans) since 2009. During his tenure with the company, Niemiec has served in several leadership positions including regional vice president of wholesale lending and executive vice president of market development.

Ravi Shankar | Freddie Mac | Senior Vice President and Head of Single-family Portfolio and Servicing

Freddie Mac appointed Ravi Shankar as its senior vice president and head of its single-family portfolio and servicing in November. Shankar has more than 30 years of experience in financial management, capital markets, portfolios and mortgage trading operations. In his new role, Shankar will be responsible for portfolio management, servicing and processes and technology.

Lisa Picard | Sway Ventures | Partner

Lisa Picard recently joined venture capital firm Sway Ventures as a partner. In her new role, she will contribute to proptech investing at Sway Ventures, the Blackstone-backed commercial real estate operator. Picard’s professional career spans 25 years in the real estate industry with prior experience in multifamily, office, hotel and mixed-use projects. At EQ Office, she strategized for a portfolio valued at over $27 billion. While at Skanska Commercial Development, she launched $3 billion worth of development deals.

James Polinori

Chief Marketing Officer, Geneva Financial

James Polinori is the chief marketing officer at Geneva Financial. As a marketing executive, author and speaker, he has over 20 years of experience working in the financial and real estate services industry. Polinori is also part of the Forbes Communication Council and serves as president of Loan Officers of America Network.

Below, Polinori answers five questions that give an inside look at his life.

1. My most useful tech tool is... Geneva Financial’s Customer Data Platform.

2. If I had picked a different career path I would be a... rock singer or producer. I trained vocally for 12 years and had big dreams.

3. I felt like a success at my job when... I completed the first phase of data marketing plans, integration and automation right as the COVID-19 pandemic hit. Our system was generating so much business that the originators were drowning in applications.

4. My favorite thing to do with my employees is... brainstorming sessions.

5. The book I can’t stop recommending is... "Building a StoryBrand" by Donald Miller. Many of the theories I’ve been practicing throughout my career are contained in its pages.

ALTA Springboard

Dates: March 20-23, 2023

Cost to attend: Member $675 | Non-member $875

Presented by ALTA

LOCATION: SAN DIEGO, CA

The American Land and Title Association’s spring conference offers attendees a customizable conference experience. The event is meant for title and settlement industry professionals who want to connect with colleagues across the industry, learn valuable new skills and hear from top performers in the space. ALTA is also introducing Braindate, a one-on-one meeting with another event attendee. Attendees can post Braindate topics on the platform and match with others who want to discuss the topic in depth at the conference. The schedule for Springboard is filled with speakers and panels that will educate attendees on the latest trends in the title industry. These panels include sessions on information security and career advancement.

MBA Multi-family Finance Convention

Dates: February 12-15, 2023

Cost to attend: Member $1299 | Non-member $3,199

Presented by MBA

LOCATION: SAN DIEGO, CA

The Commercial/Multi-family Finance Convention and Expo from MBA draws together all real estate finance professionals. At CREF, attendees will hear on-stage presentations from industry professionals like Matthew Rocco, the 2023 MBA chairman, and Michele Evans, the executive vice president at Fannie Mae. Throughout the conference, attendees will have the opportunity to take new headshots, explore exhibiting products and listen in on eye-opening sessions like Navigating Economic Uncertainty or Multifamily Leadership. Plus, CREF includes a special mPower event for attendees to celebrate women in the industry. Registration fees are discounted to MBA members under 35; check their website to see if you qualify for the special rate.

Event TIP

Housing News

Bright MLS Chief Economist Lisa Sturtevant on her 2023 market forecast

BY ELISSA BRANCH

On this episode of the Housing News podcast, Clayton Collins interviews Lisa Sturtevant, who is the chief economist of Bright MLS. The two cover everything from economic data to innovations in mortgage lending, valuation trends in the real estate brokerage industry and market data local to Bright as well as national trends.

Sturtevant also takes some time to provide her predictions for the 2023 market, including her forecast for interest rates and home prices.

Clayton Collins: I think some early 2023 forecasts might actually be fitting here. What are you expecting for the housing market in terms of home prices, volume or other industry dynamics for 2023? What are you preparing for?

Lisa Sturtevant: I definitely think transactions are going to be down next year compared to where we were 2022. We’re down in the mid-Atlantic. We’re going to be down about 19% in terms of transactions compared to 2021. 2021 was such a busy year, it doesn’t really say exactly what’s going on, but we’re going to see home sales still down in 2023 compared to where were in 2021 and 2022.

There are two main reasons for that. We had a lot of buyers thinking they were going to buy in 2023, they just pushed it up. You saw rates at 2.75%, let’s do it now. We saw a lot of those sales already happen.

And then the second thing — this is going to be a constraint on the market for the next five, seven years — is that there is still not going to be anything to buy. Demand is going to rebound in 2023 because of that low inventory.

Listen

"The most important thing is to prepare for events in advance. You need to do your research on attendees and be laser-focused on what you want to achieve. Have a goal in mind, such as a number of meaningful contacts that you want to leave with. Hope is not a strategy."

- Micheal Martirena, luxury real estate broker associate, Compass

Jason Saphire HomeZu, an Entry Only Partner jason@HomeZu.com

JASON SAPHIRE grew up working in his family’s rental property and banquet hall businesses. He was first licensed in real estate in 1998 and has been a broker since 2006, doing well over 10,000 real estate transactions all throughout New England.

Saphire believes agents in today’s market should be as responsive as possible. “Make sure your phone is always answered by a live person, even if you have to employ a receptionist service,” he said. “At the least, responsiveness will always earn you word-of-mouth as a reliable agent.”

The home for sale on Narragansett's Boon Street stands out as a unique property in a converted, historic building in a very popular tourist destination, Saphire said.

The property has been promoted through social media channels, listed as a Featured Property on RILiving.com and includes virtual and 3-D tours online. There have even been a variety of newspaper articles written about the property due to the historical significance of the building.

“It’s a rare find for a newly renovated unit of this square footage in a great location,” he said.

Currently, Saphire said, the market in his area is seeing stagnation in prices and inventory, if not a slight downward trend. He attributes this to rising interest rates and the winter cycle in New England. He believes inventory will increase in spring as the snow melts; “However, my prediction for 2023 is the average sales price remains the same.”

114 Boon Street Narragansett, RI 02882

$3.49 million

4 bedrooms, 4 bathrooms

By Brooklee Han

In many ways the spring of 2022 marked the full return of New York City and for a real estate agent like Johnson Tsai, a lead agent at REAL, this meant a massive uptick in rental demand. “We are typically super busy from March through August and sometimes even into October,” Tsai said. “This seasonal trend came back last year and then we had even more people moving back who had left at the onset of the COVID-19 pandemic. Things finally slowed down in November and I expect them to pick back up in the spring. It is still kind of a weird market, but it is going back to a little bit more normal.”

Tsai works with both homebuyers and tenants and while he says his business is typically split 50/50 between buyers and tenants, he has noticed a shift as mortgage rates have risen over the past six months. “Given the current market, my business is at least about 60% renters and the other 30% to 40% is buyers and sellers,” Tsai said. He also noted that he expects this ratio to continue in 2023 and the ratio of his business to potentially increase this spring.

New York City Sarasota, Florida

On Florida’s Gulf Coast, Sarasota is the gateway to some of the state’s most famous beaches, including Lido Key and Siesta Key. The sugar-white sands of the local beaches have always been a draw for both tourists and prospective homebuyers, but according to local eXp Realty agent Sandy Williamson they have been enticing even more buyers than usual over the past few years. “A lot of people are moving here from other places,” she said. “They want to avoid state income tax and they don’t want to live in all that bad weather anymore.” Although Sarasota is on the coast, Williamson said the fact that it lies about 20 miles inland helps protect it from flood waters during hurricane season.

Williamson noted that the housing market slowed down in the fall, following typical seasonal trends. But, home prices were still up over 15% year over year, according to Redfin. As we head further into 2023, Williamson said she expects to see the usual increase in demand, but buyers are less optimistic than they were a year ago. “Buyers are a little scared because the majority of the people moving here are going to retire soon or are retired, so they may be living off investments in the stock market and that has been a bit touch and go lately, so I think buyers might be a bit more conservative in their budgets and look at getting a mortgage instead of paying cash for their home and having all their money tied up,” Williamson explained.

Seattle, Washington

The Pacific Northwest and Seattle, in particular, get a bad rap for being perpetually overcast and constantly rainy, but Amy Breach, a local Keller Williams agent and member of The Hill Team, says that the stereotype isn’t accurate. “We have mild temperatures — it's not too extreme in any direction and yet we have the beauty of all four seasons,” Breach said. “Summers just come to life here. You can feel the energy shift during the summer when the sun is out and the whole city is just shining.” In addition to great weather, Breach also noted the wide variety of environments within a few hours of the city, from beaches, to mountains, forests and deserts. The area’s natural beauty as well as abundance of job opportunities has been attracting homebuyers to Seattle for years, and while many migration studies have noted that people have left Seattle for more affordable metros, Breach said that she has not noticed a major change in demand.

“There are always flocks of buyers from out of state and out of county.” Although Breach says the market cooled off recently as interest rates rose to some of their highest levels in decades, she said it had not turned into a buyer’s market and didn’t expect it to switch in the near future. “The market is more of a balance market now,” she said. “We have more inventory than we have had in years, and we have almost enough buyers to support that inventory.”

Racine, Wisconsin Middlesex County, Connecticut

Marcia Ricchio, a RE/MAX Newport Elite agent, was surprised to find out that her market of Racine, Wisconsin, was one of the hottest housing markets in the country this past fall, according to Realtor. com. For Ricchio, the most challenging part of the housing market slowdown has been trying to bridge the gap between sellers, who are still expecting sky-high prices and multiple offer situations, and buyers, who are grappling with rising mortgage rates and mounting affordability issues. Despite these challenges, Ricchio said homes that are move-in ready and priced right are still moving quickly and can still result in bidding wars.

“We have to be a lot more diligent in pricing homes and getting sellers to understand that if they really want to sell, then my proposed price is a realistic number,” she said. “If they say yes and their home looks amazing, it is gone almost immediately.” Located on the shores of Lake Michigan and between Milwaukee in the north and Chicago in the south, Racine has been attracting homebuyers looking for a bit more bang for their buck for years. “We have a downtown that is small but not too small with lots of activities and great restaurants, and then we also have the lake and some of the nicest beaches in the country — I just love this city,” Ricchio said.

Including the Greater Hartford metropolitan area, Middlesex County is home to some of the largest cities in Connecticut, including Middletown, East Hartford and the state capital of Hartford. Since the onset of the COVID-19 pandemic, the Connecticut real estate market has witnessed somewhat of a renaissance after slowing to a near halt in the mid to late2010s. “During the pandemic, a lot of New York residents wanted to get out of the city and just have more land for themselves and their families,” Michael Sklutovsky, a local eXp Realty agent, said.

“Connecticut is close enough to the city that they could still work in the city once things opened up, but it also had the benefit of being more rural. That combination brought a lot of more business to Connecticut.” Despite this upward momentum, market conditions in Connecticut have cooled in recent months as interest rates have gone up on top of typical seasonal trends. “February is usually my slowest month,” he said. “But I feel it will pick up in the summer like it usually does. Supply is still short, so I don’t expect prices to go down too much. It is still a good time to sell.”

Social media is inseparable from doing business in the housing industry today. HousingWire has collected some of the most-liked, most informative and must-read posts on all your favorite platforms, below. Follow your colleagues across the industry, and keep up with HW Media on Facebook, Instagram, Twitter, TikTok and LinkedIn. Have a trending post you want us to feature? Reach out to us @HousingWire

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A single percentage point decline in rates has the same impact on affordability as an 11% decline in house prices.

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"Sorry, I can't. Saving up for a home." This will get you out of anything, I promise.

Just a reminder that everyone who said home prices would crash from 2012 - 2022 every year still hasn't shown me their 2023 price forecast. There is a reason why these people never forecast anything with their real names.

Awesome catching up with Dave Savage today! Always love collaborating and comparing notes with Dave. We have always shared a passion for moving the industry foward with innovation — not by trying to replace humans with technology — butusing technology to enable leaders to become THE trusted advisor by helping consumers make better financial decisions via education and quality advice.

W hy fintech “disruption” doesn’t work in mortgage servicing

By Courtney Thompson

America’s $13.3 trillion mortgage servicing sector shouldn’t be “disrupted” by financial technology, it should be reimagined with fintech. Most new-to-mortgage fintech folks who overuse the word “disruptor” will start by asking, “What are your requirements?” but that’s the wrong question. The right questions — asked by the right servicing fintech experts — clarify how to improve operational, customer service and compliance models. Only then can the tech solutions begin.

In mortgage servicing, it’s not about “disruption” for the sake of sounding innovative. It’s about nuanced innovation — knowing what changes must happen and when, and executing with no mistakes across scale operations where every tiny detail is highly regulated, all within an ancient infrastructure. It’s about building pathways within the old infrastructure and incrementally replacing it with the new. So, let’s explore three ways this plays out.

GOOD TECH WON’T FIX BAD PROCESSES

The mortgage servicing industry, out of almost every industry, has taken the longest to innovate because of its complexity. Customer expectations have evolved, but old processes have been dragged along within legacy technologies.

For this reason, we don’t have only a technology problem in servicing; we have

process and technology problems that distract our best asset — our humans — from building long-term trust with homeowners and guiding them through all of their good times and hardships. Some dominant mortgage fintech players haven’t built tech to solve root issues plaguing our processes. They’ve built shiny, new point solutions addressing small mortgage servicing process issues that are a mere Band-Aid on a bullet wound.

Truly innovative servicing technology must be built by those with the war wounds to understand how the regulatory environment has evolved to lead nearly all servicing operations decisions.

I believe that servicers — and the fintech partners that power them — should incrementally innovate by bringing real-time solutions to real-time policy making. For example, when the CARES Act went into effect to provide mortgage payment relief as the COVID-19 pandemic spiked in 2020, servicers powered by Sagent were ready with push-button forbearances on day one of the CARES relief effective date.

Since then, we’ve continued to add the best minds in fintech and servicing operations to help servicers identify operational opportunities, build systems that can adapt in real-time to policy making and markets and superpower the servicing operators who serve homeowners, regulators and investors.

Good tech won’t fix flawed processes created to accommodate old tech.

COMBINING FINTECH & SERVICING OPS EXPERTISE

Any fintech team evaluating a mortgage servicer will quickly discover that big parts of the servicer’s tech stack are decades old.

This isn’t for lack of creativity. It’s because servicers are taking care of real-time borrower, regulator and investor needs every day. These needs must be met with, or without, modernized technology.

As I noted above, processes (for meeting these needs) can become flawed and all-consuming when they’re formed around tech limitations.

“Good tech won’t fix flawed processes created to accommodate old tech.”

Of course, the goal is to make servicer processes easier with technology, and we’ll get there by blending fintech and servicing operations expertise. This is a more appropriate innovation model in our complex space than the fintech “disruptor” team coming to you with their non-mortgage resumes telling you how you’re doing it wrong.

Combining fintech and servicing operations expertise means today’s most effective servicing fintech leaders were yesterday’s most effective servicing operators.

I’m living proof of this, having run scale servicing operations for two decades before moving into fintech.

In my introduction, I said that servicing innovation is about building pathways within the old infrastructure and incrementally replacing it with the new system. Servicing operatorsturned-fintech product pros are the teams who can carve these pathways.

CONSUMER DATA: A HIGHER STANDARD(IZATION)

Immense regulatory complexity and lack of data standardization across the industry also slowed down innovation in servicing.

Entrenched legacy systems stand in the way of accessing data, and data access — as well as data protection requirements — will only grow in importance as federal and state regulations proliferate and evolve.

To stay ahead on data needs, mortgage servicing fintech solutions must address three areas.

First, homeowners should be able to access their data easily and securely from any device to manage every aspect of their homeowning lives. This includes making payments, analyzing and adjusting tax and insurance escrow accounts in real-time, requesting and processing help for hardships, and viewing and taking action on home value and available home equity.

Second, servicers should be able to deliver all of this to homeowners in their own branded experience, and have customer service teams available to help in real-time, using multiple communications channels (desktop, phone, SMS, etc.), and see the same data their customer is seeing.

Third, all of these servicer and homeowner experiences — and data sharing — must work

across the full performing and default life cycle of every loan, seamlessly cover every compliance and investor detail and enable real-time processing and reporting of all compliance and investor requirements.

One example of how this all comes together to serve homeowners can be seen in the Servicemembers Civil Relief Act (SCRA), which offers U.S. servicemembers the benefit of capping their interest rates at 6% — a timely solution in our current high rate cycle.

Smart, real-time consumer, regulatory compliance and investor data can enable servicers to be aware of who in their portfolios may qualify, speed up offers and ensure compliant execution on administering benefits like SCRA.

Great process and tech execution in the areas of data, servicer operations, loan program, compliance and customer service needs add up to true innovation.

We need to standardize how data is stored and accessed to pave the way for future innovation — and to stay ahead of renewed regulator focus on consumer data privacy in early 2023.

TRUE INNOVATION IS PEOPLE, PROCESS, PRODUCT, PATHWAYS

The future of the servicing industry demands tech innovation fueled by functional expertise on servicing ops, regulatory management and the actual rules of mortgage servicing — not a one-size-fits-all tech “disruption” model.

It’s about using people, processes and fintech products in tandem to meet the needs and exceed the expectations of servicers, homeowners, regulators and investors.

On the ground with servicers, I’m increasingly seeing that the answer is a dual-track model with equal emphasis on:

• Fintech product development and scale tech stack execution run by servicing subject matter experts.

• Servicing operations consulting and advisory partnerships to drive people and process improvements as we build the tech solutions to supercharge those efforts.

At $13 trillion, mortgage servicing is one of the largest markets in the world, and the opportunity to improve how it works for all its participants is commensurately giant.

But as we can see from the evidence above, it’s not about “disruption” for the sake of sounding innovative. It’s about nuanced innovation to build pathways within the old infrastructure so we can replace it with the new.

That’s what some of us have dedicated our careers to, and I couldn’t be more excited to accelerate this process with America’s top servicers in 2023.

Courtney Thompson is the chief product officer at Sagent

By Dave Howard

T he time is right for origination modernization

The industry is buzzing with conversations around appraisal modernization — for good reason. Appraisal modernization reduces origination cycle time, bolsters appraiser capacity and helps lenders deliver a more seamless and transparent borrower experience. It also holds great promise in attracting a new generation of bright, talented appraisers who may have otherwise not given the mortgage valuations industry a second look.

But for all of the extraordinary potential of appraisal modernization, the valuation space is just one area where modernization is at a critical inflection point for the mortgage industry.

Lenders who are modernizing across the entire scope of the origination journey — digitizing processes from application and title through close and post-close — are building unprecedented momentum for their businesses. Origination modernization holds the promise of streamlining operations and reducing costs, serving as a point of differentiation for lenders and redefining the lender – vendor relationship.

HOW ORIGINATION MODERNIZATION BENEFITS LENDERS

The mortgage application and preapproval processes have been digitized for some time, to the benefit of borrowers and lenders alike. But the adoption of automation in subsequent steps has been slower to gain traction.

Much of the reason for this is that lenders have been so caught up in the frenzy of market demand the past couple of years that they haven’t had a moment to think about modernizing their processes, let alone implementing them.

Today is a different day. Demand has calmed, so there is not only the time but also the need to digitize processes as lenders face tighter margins and greater competition in today’s low-

volume environment. If you’re a lender facing these challenges, there is no more important time than now to explore automating your processes across the origination spectrum. Here’s a quick rundown of how this modernization can support your success.

STREAMLINING OPERATIONS

Once a borrower is approved for a mortgage loan, the process should run like clockwork. It should keep the consumer happy and minimize the cost of originating the loan. Technology makes this possible as it builds new effciencies. This is what that process can look like:

• Title - Instant title technology determines clear-to-close readiness in seconds. This enables you to set borrower expectations for the timeline right out of the gate and streamline your workflows by routing loans that qualify into the instant title fast lane, while more complex loans go the curative route.

• Valuations - Hybrid and desktop appraisals allow appraisers to focus on appraisal quality and output rather than losing precious hours in transit. Real estate agents, brokers and other qualified third parties offer inspection support, aided by sophisticated cameras and guided by GSE-mandated standards for data collection.

• Self-scheduling - Digital scheduling technology revolutionizes the valuations and closing processes by empowering consumers to schedule the date and time of their inspection and signing. For appraisals, the automated confirmation can include the inspector’s photo and vehicle type. For signings, borrowers have the option of selecting in-person signing or their choice of eClose services (RON, RIN, hybrid, IPEN or LPOA).

• Closing – Automation speeds the generation of closing documents and reduces errors in post-close review. eClose capabilities streamline signing and free notaries to certify more documents in less time. They also provide one more way to satisfy customer demands for convenience.

DIFFERENTIATING LENDERS

Now that the pool of borrowers is so much smaller than during the mortgage boom, lenders need to truly stand out to win the business. Origination modernization can give them the edge.

Simply put, if two lenders offer a borrower the same rate on a loan, will that borrower choose the lender offering a faster, more transparent digitized experience or the one whose traditional manual processes slow the process down?

People have become accustomed to digitization in all aspects of their lives, from online banking and shopping to making restaurant reservations or catching a ride with Uber. All other things being equal, they are likely to choose the lender whose process fits their lifestyle and expectations for convenience and speed.

This isn’t just a theory. We’ve done our own research, asking thousands of consumers what they expect of the mortgage process. Their preference for an efficient, technologydriven process comes through loud and clear. Results documented in the 2022 ServiceLink State of Homebuying Report include 83% of respondents saying that, given the option, they would use an app to self-schedule their closing appointment.

When asked about the benefits they appreciate when using technology in the mortgage process, 72% cited convenience and ease of use. 60% cited speed.

As the borrowing base continues to skew younger, lenders who modernize will reap the benefits of being more competitive. Those who don’t will get left behind.

REDEFINING THE LENDER – VENDOR RELATIONSHIP

Digital scheduling technology removes the middleman from the equation as it enables lenders to provide borrowers, real estate agents and loan officers with direct access to the

nation’s network of appraisers and signing agents. This direct connection truly changes the game, speeding borrowers to the closing table and providing more transparency into the process than was ever possible before. Thanks to advanced AI-driven scoring engines, the lender’s specific rules, preferences, quality expectations and geographic requirements can all be factored into vendor selection. Then self-schedulers are given exact date and time options.

WHERE TO GO FROM HERE

We all saw consumers gradually shifting toward a digital mindset prior to the COVID-19 pandemic. Then we watched that shift accelerate exponentially during the COVID-19 pandemic. Today, consumers don’t just appreciate digitized solutions; they expect them. As a lender, you can fulfill their expectations by modernizing your origination process from end to end. It doesn’t have to be difficult. The right technology partner will bring assets, knowledge and skills to help you assess your current processes and apply new leading-edge solutions. Look for a partner with financial backing, stability, technology and people you know you can rely on.

And think about whether your other vendors, whom you may have brought on to help you manage the volume surge of 2020-21, have the level of sophistication needed to support your new vision.

In your modernized scenario, any partner you work with must be able to keep pace with your digitized processes and support your goal of implementing a consistent, optimal production path. The quiet market offers an ideal opportunity to explore your origination modernization options.

Even small, incremental improvements can help you strengthen your competitive stance, boost your profitability and fuel your growth. And with every lender who takes the modernization plunge, the mortgage industry moves another step forward.

“All other things being equal, they are likely to choose the lender whose process fits their lifestyle and expectations for convenience and speed.”

Dave Howard is the executive vice president of origination services at ServiceLink

By Jeff Shores

F ive keys to effective customer communication with borrowers

Any mortgage lender will tell you that clear and rapid borrower communication is critical to effective customer care.

Homebuyers think about their purchase journey 24/7, and any delay in communication tends to leave the borrower worried that something has gone wrong or that they are missing some key piece of information.

Homebuyers have seemingly countless tasks and responsibilities in the process of purchasing a home and obtaining a mortgage. Now, consider the fact that these customers are in foreign territory. They simply do not know how to navigate the mortgage terrain without clear guidance.

Consider, for example, just one aspect of purchasing a new home in 2023: obtaining mortgage insurance. Most borrowers don’t even know what mortgage insurance is, let alone how much it adds to their cost. Then try “selling” mortgage insurance to someone who is required to pay for it but who receives zero benefits from that costly investment.

The same holds true for a borrower who is tasked with redefining a personal monthly budget. That is a conversation that rarely comes up with a loan officer, and yet the consideration of higher monthly costs weighs heavily on the customer’s mind. What compromises will they have to introduce to their lifestyle? What are the unexpected new costs? Can they still enjoy their

lives when they are saddled with a costly mortgage payment?

These are considerations that a customer carries privately and adds to their mental strain. How much additional stress is introduced in the absence of quality communication from their lender?

Lenders must place a premium on both the speed and quality of their communication. Below are five strategies to help any lender accomplish that goal.

KEY COMMUNICATION STRATEGY #1: UPDATE CALLS ARE SALES CALLS

The objective for the lender is to sustain the positive emotional state of the customer throughout the entire purchase transaction. A customer’s emotional altitude is a measurement of their positive emotional engagement throughout the process. At the time of purchase, that emotional altitude is elevated, but after the contract is written and the mortgage is applied for, the emotional altitude tends to wane.

For that reason, every update call must be seen first and foremost as a sales call. The updates should represent an exciting and emotionally elevated conversation with the customer.

Start with a comfortable chat about their life, not about their loan. Congratulate them and encourage them at every opportunity. Keep the overall strategy in mind, and that is to elevate the emotional altitude.

That can only happen when the lender and the builder are on the same page. Anthony Grasst, national sales director at Homebridge Financial, suggests that communication with the builder sales rep is critical. “Lenders must integrate into the sales process. They can no longer be outside or ancillary services after the buying decisions get made.”

KEY COMMUNICATION STRATEGY #2: THE BORROWER GOES FIRST

Borrowers are thinking about their purchase process all the time. There is always a question on their mind and they always have a concern they are processing. You may have something important

“Lenders must place a premium on both the speed and quality of their communication.”

to communicate in an update call, but you will not get the benefit of their full attention until they first feel heard. For this reason, keep this principle in mind during any update call: the borrower goes first.

The customer will respond better to your updates if they’ve had a chance to share their concerns first.

You can say to a customer, “I’ve got some things that I want to update you on, but why don’t you go first and tell me anything that’s on your mind and any concerns that you might have.”

KEY COMMUNICATION STRATEGY #3: UPDATE WITHOUT UPDATES

Your customer desires constant and continued communication and updates. But sometimes there are no updates to offer.

Call them anyway. Call them to simply say, “I don’t have anything new to add, but I want to check and see what questions you have and any concerns that you might be dealing with right now.”

The fact is that proactive communication, even with no “new news,” keeps the customer from experiencing unnecessary anxiety.

KEY COMMUNICATION STRATEGY #4: MAKING PROMISES YOU CAN BEAT

You don’t get credit for meeting expectations. You only get credit for exceeding expectations. When you only meet the expectations you set, you are rewarded with customer satisfaction. But when you exceed those promises, you get customer elation — and that should be our goal. For that reason I offer this advice: only make promises that you know you can beat. Not meet. Beat.

Think about a restaurant host telling you that it’s going to be 30 minutes before you are sat. If they seat you exactly at 30 minutes, your response is, “well, that’s what they said they were going to do. I’m satisfied.”

If they seat you at 32 minutes you say, “They’re late; I’m not happy.” But if they seat you in 20 minutes, you’re delighted that they exceeded your expectations.

It’s the same thing for you. Only make

promises that you know you can beat. If you promise to call them by 4 p.m., call them by 2 p.m. If you expect something done by Wednesday, promise Thursday.

KEY COMMUNICATION STRATEGY #5: SPEED IS YOUR SECRET WEAPON

Borrowers are experts when it comes to obsessing over their concerns. They think about those issues every waking hour.

When they ask a question of their lender, they can’t truly rest until they have an answer.

Speed in buyer communication is absolutely critical. Do not let an extended amount of time go by without getting the buyer at least some information. It’s better to give part of the answer to their question now while you’re gathering more intel.

You can always say to the customer, “Let me address what I can right now, and then I’ll do some homework and I will reach back out to you by four today.” Of course, that means that you’ll be reaching out to them by two today.

Grasst puts it this way. “Respond immediately to any buyer inquiry — by text or by call. Fast responses convey importance and value to the buyer.”

Buying a home and obtaining a mortgage is destined to create numerous stress points in the buyer’s mind. Effective communication can ease so much of that stress and provide needed cognitive comfort. Empathy for the customer’s emotional journey is critical to first understanding the experience and then responding appropriately.

Put yourself in your customer’s shoes. Effective and speedy communication is what you would value more than anything else.

Your borrower is going through a stressful and emotional experience. Whatever you can do to increase the speed and the quality of your communication will make the purchase experience far more enjoyable.

Jeff Shores is the author of “From Contract to Close” and founder of Shore Consulting

“Speed in buyer communication is absolutely critical. Do not let an extended amount of time go by without getting the buyer at least some information. It’s better to give part of the answer to their question now while you’re gathering more intel.”

% Lasting

Real estate leaders through the years

Impact $

By Steve Murray and Tracey Velt

In 2022,

I finished the 45th year of my career in the residential brokerage industry. What a glorious, fascinating time it’s been for all of us in this business. One that’s undergone enormous change, and yet, one where the fundamentals of delivering service to consumers through real estate agents haven’t changed all that much.

Nearly three years after I began my career in the relocation management and franchise sales business, I found myself piloting one of the leading networks of large, independent brokerage firms, known then as InterCommunity Relocation (ICR). I led ICR from 1979 until departing to co-found RealTrends in 1987.

As a result of the early exposure to leaders from across the country in my position running ICR, followed by 35 years leading RealTrends, I had a frontrow seat to the executives and organizations that shaped the last 45 years.

The people have been the most fascinating part of my journey. It is the women and men who looked at our industry and forged great change within it, finding new and different ways to grow their businesses.

In many cases, their path to success was met with fierce resistance from existing real estate organizations. I watched as the industry fought Merrill Lynch, then fought RE/MAX then switched their fight to Keller Williams. The dislike for modern-day entrants like Zillow, eXp and Compass continues this tradition. Through it all, some of the new competitors struggled through their early years to become

successful, dominant firms in their own right.

The industry has learned that technology and capital have an impact on every level. However, it is the leaders who made decisions as to how to deploy those resources that have formed the industry as we know it today.

Several of these leaders built new ways of doing business, rearranged relationships between the agent and the brokerage firm, brought ways to use technology to drive business growth, used capital to accomplish growth faster than ever before, saw new and different ways of doing business and had a lasting impact on our industry over the past 45 years.

In the following collection of biographies, I will examine the key leaders in our industry. By that I mean, in my opinion, these are men and women who, through their creativity, drive and passion, impacted the business in ways that will survive their tenure in the industry.

This list is not meant to encompass those who merely have influence but those professionals who created something that permanently changed the competitive field in some significant way. The real estate industry would not be the same without them.

Rich Barton

Zillow co-founder Rich Barton built the most-visited online residential real estate site in the country, along with the most-used online valuation tool by consumers. He elevated Zillow into a new household name in less than ten years and in 2021 had over

two billion visits to its various websites.

Barton had extensive experience in building disruptive online businesses before he and a partner launched Zillow in 2006. He played a major role in the creation of Expedia and worked at Microsoft.

Zillow was not the first national online real estate portal, but the Zestimate tool was the first truly automated home valuation tool. Its popularity with consumers drove Zillow to record levels of consumer engagement well before the company became a major source for online listings.

Zillow built an enormous online advertising and lead generation business for agents and brokerage firms in its first 15 years. Despite shuttering the company’s iBuying segment in early 2022, the company is now growing its lead generation business, having moved downstream in the process of working with agents and teams.

Looking solely at revenues outside of the home-buying business, Zillow has grown to be one of the five largest residential real estate brokerage services in the U.S. They are currently building a housing super app that will provide mortgage pre-approval, “immersive shopping,” facilitate in-person touring and home financing.

More importantly, Zillow has, in a relatively brief period of time, introduced the power of the internet into residential real estate as no others have before. Their presence in the minds of homebuyers will continue to position them as a formidable competitor in the years to come.

Weston Edwards

Merrill Lynch’s Weston Edwards brought the first wave of outside capital to the industry.

Merrill Lynch’s entry into residential brokerage began a massive wave of investment from other companies in residential brokerage. Edwards led that effort, beginning in 1977 and on for the next 10 years, he and his team solidified the term “one-stop” shopping for residential real estate and acquired dozens of leading residential brokerage firms. By mid-1980 they were among the top five residential brokerage firms in the country.

Later Merrill Lynch would be recognized as one of the most powerful and well-run investment/securities firms in the world. Their move into residential real estate opened the door to a wave of acquisitions by such firms as Sears (through Coldwell Banker), Anywhere Real Estate and Berkshire Hathaway

HomeServices, among others.

Pam O’Connor

Pam O’Connor built a national organization of independent brokerage firms beyond referrals to encompass marketing, education and other services enabling the firms to remain competitive in the industry.

At the dawn of the 1980s, independent brokerage firms ruled most markets. National franchise organizations had yet to impact the industry. At that time, O’Connor was leading one of five major networks of independent brokerage firms (AllPoints, ICR, Relo, Nationwide and Translo) which each had more than 300 member firms.

By the early 1990s, after acquisitions by Merrill Lynch and Coldwell Banker, it was apparent that the declining number of independent brokerage firms needed to band together. The growth of national franchises and the growth of relocation management firms’ own networks added up to trouble for independent firms.

O’Connor was in the middle of the mergers that created one major national network of such firms. More importantly, she led the organization to rebrand away from a “referral focus” and into other services that independent brokerage firms needed to implement in order to compete with the growing national real estate franchise systems.

In addition to these efforts, she teamed up strong, leading independents into one network, even when there was more than one in each market.

Thanks to O’Connor’s efforts, Leading Real Estate Companies of the World continues to grow and retains its status as the full-service home for independent brokerage firms.

Gary Keller

Gary Keller introduced the concept of profit sharing for agents. He built the largest training program in the industry and the country’s largest real estate organization.

Early experience in the emerging, highly competitive brokerage market caused Gary Keller, founder of Keller Williams Real Estate, to reimagine and redesign the relationship between brokerage firms and their agents to one of interdependence.

Beginning in the late 1980s, Keller focused on building a unique and new profit-sharing program where agents could build their own downline by re -

cruiting and developing other agents.

Keller systemized virtually every part of the franchise, including an online technology platform, which put him well ahead of his competitors in being able to measure franchisee performance.

Along the way, Keller built an in-house training and education system. He also wrote several best-selling books still in circulation today, including “The Millionaire Real Estate Agent” and “The One Thing.”

Today, Keller Williams is the largest seller of homes in the U.S. and runs a rapidly expanding business overseas.

Keller’s invention of the profit-sharing system has led others to offer financial compensation apart from commission income, including eXp Realty, Fathom Realty, Compass and others.

The number of national real estate organizations offering equity to agents has multiplied significantly over the past few years, thanks to Keller’s early trailblazing.

Larry Kendall

Larry Kendall developed a comprehensive guide that encompasses leadership, sales, business and personal growth: Ninja Selling. Over 90,000 agents and teams ascribe to his practices. Kendall trained and guided the development of Ninja instructors who deliver a variety of Ninja courses, including the Ninja installation.

Kendall also co-founded The Group Inc., one of the most productive brokerage firms in the nation. The company has a unique ownership model where all agents and many staff are equal shareholders.

From his experiences at the brokerage, Kendall developed the concept of Ninja Selling and Ninja Leadership along with a few colleagues. Key features of the Ninja brand are the methodologies and practices that develop the Ninja agent or leader, which are consistent throughout the program.

Ninja is also unique in that, rather than being open to any real estate agent or team, it is generally only available to agents and teams with a brokerage firm that signs on to embrace the Ninja program. Instructors work as much with the brokerage leadership as they do the agents and teams to build a long-term program and strong foundation focused on core Ninja teachings.

While there are many superb coaching organizations, Ninja is unique in that it is not based on the skills and experience of its founder but very much based on the core concepts of how to manage one’s

business and life.

Dave Liniger

Dave Liniger, co-founder of RE/MAX, forever changed the relationships between brokerage firms and their agents with his 100% business model.

From its founding in 1973, Dave Liniger’s organization supported the notion that agents should receive the bulk of the compensation since they did most of the work building a client database, handling the sale or purchase of homes for their customers and getting deals closed.

Despite fierce and overwhelming resistance to his agent-focused business model, RE/MAX and Liniger succeeded in becoming the largest firm in the U.S. and later the world.

His model changed the entire brokerage industry, particularly the economics of agents and brokerage firms, and it built an organization that outpaced the competition of “average agent productivity” for nearly 40 years.

The growth and development of RE/MAX caused every incumbent brokerage organization to change their compensation offerings.

It was instrumental in the 30-year increase in the agent’s share of the commission revenues. Now, the agent is prioritized and recognized in every transaction in the industry, thanks to Liniger.

Henry Silverman

Henry Silverman established that a brokerage enterprise could operate multiple real estate brands across markets.

Before diving into real estate, Silverman led the development of a firm with multiple hotel brands, a practice originally known as HFS (Hospitality Franchise Systems). Later, he brought that thinking to the real estate brokerage franchise business.

Between 1995 and 1996 he quickly acquired CENTURY 21, ERA and Coldwell Banker. Shortly thereafter, he added the nation’s largest relocation management business — Homequity — to his stable of companies.

Between 2005 to 2007, the firm added license agreements for both Sotheby’s and Better Homes and Gardens Real Estate brands. The company also moved into online real estate with the acquisition of Zip Realty.

The industry’s reaction to Silverman’s moves was initially one of skepticism. There had been no true thought that this was possible. Today, Silverman’s

behemoth of a company is known as Anywhere, and it is the largest combined seller of homes in the U.S., has more agents than anyone in the country and has two brands ranked in the top four in terms of transactions closed.

Anywhere’s luxury brand — Sotheby’s — has been one of the fastest-growing franchises in the country over the past few years.

Silverman’s decision to manage multiple brands within the same market opened the door for others to do the same in subsequent years.

One example, Berkshire Hathaway HomeServices, operates in numerous markets with both Berkshire Hathaway branded firms and independent brokerage firms, some of which are owned by the parent company. Other regional brokerage firms, such as Keyes and Real Estate One also operate more than one brand in their regional markets.

Mortgage servicing in a recession

Surging mortgage rates and economic uncertainties have spurred a discussion on new tools to help struggling borrowers

By Flávia Furlan Nunes

In the late 1990s, housing researchers were quick to attribute foreclosures to borrowers making strategic financial choices: borrowers stopped making mortgage payments when they were “underwater” and owed more than the equity in their homes was worth.

Over time, the theories on why foreclosures occur evolved. Researchers later determined that being underwater itself was not enough to push homeowners into nonpayment.

They began to theorize that a “double trigger” was also necessary, such as a divorce, medical condition or job loss — a theory that endured for decades.

Within the last five years, however, research has shown that "strategic default" and "double-trigger" cases are actually less common than expected. These days, the common belief among housing policy experts is that most foreclosures are caused by life shocks, such as unemployment and death of a co-borrower, regardless of whether the borrower is underwater. Recent studies conclude that life shocks are behind 70% of the foreclosure cases in the U.S.

Research into the main causes of foreclosures is important because it’s the first step in effectively helping borrowers who are at risk. When borrowers are underwater, restoring their equity position, such as forgiving an amount of the loan, is a potential solution. When borrowers are at risk of foreclosure due to an external shock, successful policies can provide time to recover.

To help temper foreclosure issues in 2023, regulators, government enterprises, company executives, trade associations and borrower advocacy groups have worked together to develop new tools for the loss mitigation waterfall, which provides tiers of assistance to help borrowers pay their mortgages.

Here’s a look at some of their ideas — and why these lifelines may be vital to help borrowers at risk of default

The COVID-19 pandemic appears to confirm the theory

that life shocks are the leading cause of foreclosure issues in the U.S.

Over 22 million Americans lost their jobs between January 2020 and April 2020, the highest level since the Great Depression. The delinquency rate on single-family residential mortgages, which declined from 10.5% in 2012 to 2.33% in 2019, subsequently increased, hovering closer to 3% in 2020.

Amid unprecedented economic woes, national forbearance strategies were put in place. Servicers negotiated mortgage loan pauses with over 9 million borrowers from March 2020 through September 2022, according to a report by the Federal Reserve Bank of Philadelphia. Meanwhile, evictions were banned to avoid another national housing crisis.

"At the beginning of the pandemic, we had a huge spike in the unemployment rate and, as a consequence, a spike in delinquencies. But it was for a brief period of time as forbearance programs were quickly put in place after the CARES Act was passed," said Marina Walsh, Mortgage Bankers Association's vice president of industry analysis.

The effort continued after the COVID-19 forbearance plans were in place.

"About four out of five borrowers in a post-forbearance workout plan are performing," Walsh said.

The Federal Reserve Bank of Philadelphia reported that of the 9 million borrowers that entered forbearance from March 2020 through September 2022, 92% have avoided foreclosure or redefault. In turn, 47% of the loans are performing, 29% have been paid off, 10% had a servicing transfer and 6% are still in active forbearance. A total of 8% are delinquent or have defaulted.

Based on the current data, one might conclude that the landscape should be easy to navigate for the mortgage industry — especially given the overall impact that the COVID-19 pandemic had on the economy.

However, just a few years after the start of the pandemic, there are other shocks hitting mortgage borrowers. Among them are surging mortgage rates, economic uncertainties and natural disasters.

"We already see a bit of a deterioration in terms of the performance of servicers' portfolios: the percentage of current loans declined in 44 states in September," Walsh said. "We are at the lowest level for delinquencies in the history of the National Delinquency Survey going back to 1979. So, is that sustainable? Probably not. We do expect to see a pickup in delinquencies, although it's not going to spike."

The MBA forecasts the unemployment rate will be at 5.5% in the fourth quarter of 2023, up from 3.5% in the third

quarter of 2022 — with tighter monetary policy and more restrictive financial conditions causing a recession in the first half of 2023.

Meanwhile, the consumer credit reporting agency TransUnion expects the 60-day-plus delinquency rate to rise from 0.9% in 2022 to 1.4% by December 2023.

While that uptick in delinquencies is low compared to the 7% level during the Great Recession, the data has still raised a red flag to the mortgage industry.

Rock solid forbearances

One of the main hopes in the industry is normalizing forbearance, an idea that all stakeholders have supported.

The current national forbearance plan deadline is slated to expire when the COVID-19 pandemic national emergency declaration ends. But as of December 2022, there were no indications as to when that could happen. It’s a source of anxiety for some market participants.

"The biggest lesson I have from the investor perspective, coming out of COVID, is that when we look at a solution, we should do it holistically," said Michael Bright, chief executive officer at the Structured Finance Association, during a webinar on the future of loss mitigation. "We want something we can stick to in the pricing model, because that's where the system breaks."

According to Bright, forbearance plans, which were supposed to be a temporary solution, were extended several times during the COVID-19 pandemic, while investors were looking for real, meaningful and lasting solutions.

The Urban Institute released a proposal in July to move the discussion on permanent forbearance forward. It does not require congressional action or significant rulemaking.

According to the Urban Institute's proposal, borrowers wouldn’t need to wait until they are late or missing payments to get a forbearance plan. They could contact their servicers at any time, and servicers would be obligated to extend forbearance for up to four months without a negative report to the credit bureaus. During the COVID-19 pandemic, borrowers could pause their payments for up to 18 months. The forbearance would occur at the start of the waterfall.

However, the forbearance would be available only in certain cases, including: job loss, death of a co-borrower, start of divorce proceedings (including filing in court or with state authorities for legal separation or an alternative) or a health issue that qualifies for leave under the Family and Medical Leave Act (FMLA).

The servicer would be responsible for advancing both the payments to investors and for the borrower's escrow

of hazard insurance and property taxes, which would be reimbursed later.

"When someone loses their home, it is most often because something else in their life has gone wrong. Ninetyfour percent of mortgage defaults occur when a homeowner loses income to extenuating circumstances," the institute's researchers wrote in the report. "The GSEs, the FHA and the VA should consider applying the lessons from the pandemic to institute a forbearance program that homeowners can rely on to maintain stability, even when life takes a turn."

Government-sponsored enterprises Fannie Mae and Freddie Mac, the government agency FHA and the US Department of Veterans Affairs (VA) have the authority to change their respective servicing handbooks to reflect the proposal terms. Portfolio lenders can voluntarily adopt the proposal.

Despite consensus on a permanent forbearance solution, some industry executives have differing views on related factors, such as the impact to borrowers' credit scores, the number of months forbearance should be available for borrowers and whether the forbearance should occur at the start of the waterfall.

"Forbearance has shown itself to be a good tool to help borrowers while they're trying to figure out their situation," Adam Saab, vice president and head of early-stage default at the subservicer Cenlar FSB, said. "If you already know the end state, it's just delaying the inevitable. Servicers need to go and do a workout. So, the forbearance could go first in a waterfall in the normal perspective, but we need flexibility."

According to Saab, the industry needs to find a solution as soon as possible.

"There's a lot of borrowers impacted early on in the COVID-19 pandemic who utilized their available options. Now they may be impacted by something else and don't have options. Bad things happen to good people," Saab said.

"If the unemployment rate skyrockets in 2023, that would have a huge impact on the market. If we don't have other tools in the waterfall, it could get pretty bad."

More layers to the waterfall

Forbearance is intended to provide temporary relief to allow a borrower to overcome a hardship, not permanent relief due to a dramatic change of circumstance. That’s why the industry needs to get creative in order to help borrowers, according to industry executives interviewed by HousingWire.

The FHFA said Fannie Mae and Freddie Mac’s long standing forbearance programs allowed them to quickly implement the plans during the pandemic and, at the con-

clusion, to transition borrowers to sustainable options to resume payments.

“Still, we are working closely with the Enterprises to ensure that the loss mitigation products are able to provide sustainable solutions for borrowers in challenging economic circumstances,” a spokesperson for the agency wrote HousingWire. “For example, we have found the COVID-19 payment deferral to be extremely successful and are considering its utility in the standard loss mitigation toolkit.”

However, the recent rise in mortgage rates presents a real challenge when servicers are trying to assist customers who are delinquent or in imminent default.

Many borrowers had access to refinancing and purchase loans at 2% and 3% during the pandemic. Modifying these loans may mean increasing rates for borrowers, which is counterproductive when they are already struggling.

According to industry experts, government-sponsored enterprises have modifications that cap the mortgage rate at the customer's existing rates. The larger potential problem is with government loans.

"When you look forward, there's economic uncertainty," Tom Land, vice president for agency relations and government servicing at JPMorgan Chase & Co, said. "The government space, where you have high loan-to-value and high debt-to-income customers, will be more sensitive to economic fluctuation."

In a recent report on forbearance, data from the Federal Reserve Bank of Philadelphia makes clear that the FHA portfolio has taken a bigger hit as the economy has sputtered.

The GSEs portfolios — with narrower credit boxes — had 0.5% of its total loans in forbearance, 0.4% in loss mitigation and 0.5% delinquent from 30 to 60 days at the end of September 2022. FHA and VA had 1.4% of loans in the portfolio in forbearance, 1.4% in loss mitigation and 2.8% delinquent from 30-60 days.

Creating solutions for FHA borrowers is also challenging because when a servicer modifies a loan, it has to buy that loan out of the current pool in the secondary market, according to the Ginnie Mae rules.

"Then, the servicer has to either hold that loan on their balance sheet or redeliver it into a new Ginnie Mae security," said Kurt Johnson, chief risk and compliance officer at Mr. Cooper. "The issue is that delivering the loan into a new Ginnie Mae security may mean the servicer will take significant losses in this market (with surging rates)."

As a result, the industry is formulating alternatives to help the borrowers by modifying the loans but leaving the loans in the existing Ginnie Mae securities.

So far, the most advanced proposal is changing the partial claim rules. A partial claim is an interest-free loan from

the U.S. Department of Housing and Urban Development (HUD) that borrowers can take to make their mortgage current.

Borrowers can add the remainder of the late payments to their principal loan balance and extend the term for 30 years at a fixed interest rate. The partial claims funds come from FHA mortgage premiums.

A partial claim can pay up to 30% of the borrowers’ existing unpaid principal balance. However, increasing the percentage for those who reached the limit during the pandemic requires congressional action, which experts say has low chances to happen.

Industry executives say that, with a proposal dubbed "payment supplement account," servicers would take that partial claim balance, deposit it in an account and draw it monthly to supplement the customer's payment.

"If the customer had a $1,000 payment for principal and interest, and you want to reduce that payment by 25%, the servicer would supplement the monthly payment with a partial claim. The servicer would require the customer to make a $750 payment and then would pull from that partial claim to make the remaining $250 of principal and interest," Land said.

Servicers are still estimating how many borrowers would have the 30% partial claim available to support the payment supplement account — and how to operationalize the payment supplement account.

Navigating a tough landscape

Either way, one thing is clear: any solution will take time to be put in place.

"Even if they launch a new solution today, they usually allow many months for ser vicers to op erational ize the new

option. I don't have a crystal ball, but it's not going to be in the first quarter of 2023," Adel Issa, senior vice president of customer contact and loss mitigation at Carrington Mortgage Services, said. "I don't think it will be that quick."

That may not be ideal considering that the macroeconomic landscape is expected to deteriorate soon.

Jackie Boies, senior director in partner relations at credit counseling consultancy firm Money Management International, said that in the 2008 crisis days, defaults were often a result of the borrower being underwater on their mortgages. Borrowers needing to sell their home couldn't and default rates rose, she said.

That’s not the case now.

According to Black Knight, only about 8% of purchase mortgages originated in 2022 were marginally underwater, with another 20% in low equity positions.

However, according to Boies, "while home values have been high in recent years, there are some signs of declining values and that doesn't bode well for the future."

Another red flag, she said, is that the loss of income or employment is the main reason borrowers cite for being unable to maintain their mortgage payments now.

And, “post-pandemic, many borrowers' income has yet to return to earlier levels,” Boies added.

Loan Servicing Product Guide

Servicing is a complex process, and many servicers still rely on a patched-together system of solutions to complete their work, resulting in friction and disconnected teams. With risk and compliance on the line, servicers can’t afford to keep holding onto systems and processes that work less than ideally.

What servicers need today are technological solutions that deliver value quickly, whether they’re focused on customer experience, lien releases or loss mitigation. The four companies in this product guide offer products and solutions that streamline workflow processes for servicers and allow them to work more efficiently while providing better insights for borrowers. TABLE

QUICK FACTS:

• The only solution to orchestrate and synchronize mortgage servicing

• End-to-end default servicing solutions and borrower engagement

• Eliminate process breaks and save millions

• Trusted by the largest servicers

PRODUCT SUMMARY:

Aspen Grove tracks and manages performing and non-performing servicing processes while providing next-generation customer engagement, all of which improves speed and compliance, eliminates process breaks, engages borrowers and saves millions.

With Aspen Grove, servicers can streamline systems and processes to integrate all servicing

MORTGAGE SERVICING IS COMPLEX, EXPENSIVE AND RISKY, involving a heavy compliance burden. Many servicers today rely on a legacy patchwork quilt of systems with disconnected processes, data and teams.

What servicers need on the back end is plug-in technology that delivers value quickly and easily. They need technology that provides out-of-the-box solutions, that can easily pull and push data from the servicing and third-party platforms, that can keep pace with regulatory changes — and that combines all of those functions with easy-to-use, multichannel journeys for borrowers.

Aspen Grove Solutions delivers all of this to its customers.

Aspen Grove orchestrates and synchronizes servicing. Many servicers have functional solutions in some areas but are challenged by multiple systems and disconnected teams. Aspen Grove eliminates this friction by creating one file and orchestrating across existing systems and servicing platforms end-to-end.

Using Aspen Grove, servicers can eliminate and streamline systems and processes that don’t work well, keep systems that do and integrate all servicing. It also eliminates more manual checklists, disconnected processes, process breaks, compliance issues and costly hold-ups to servicing. Team members using Aspen can process more files, are more productive and are presented with exceptions to manage.

Here’s how Aspen Grove synchronizes servicing operations across systems and across teams with one file:

• Eliminates process breaks: With synchronization of all processes across the asset, every task is automated or presented to the team as an exception to act upon.

• Implements automation and integration: Automates rules to keep the file moving and serve up exceptions for the team to act upon. Pulls and pushes key data from and to existing systems to ensure the work is flowing across teams and across systems properly.

• Normalizes data: Uses a single data model across servicing systems, enabling portfolio analysis and management reporting.

• Auto-scales: Cloud-native micro-services architecture enables scalability

• Partnership model: Aspen Grove is with its clients every step of the way.

With more than 200 industry integrations, Aspen has already done the heavy lifting for ease of connectivity and seamless, easy integration. Users can get their system up and running in weeks with a mortgage servicing solution that synchronizes operations, streamlines workflow and improves servicing outcomes for all stakeholders.

Aspen Grove offers products and modules that include:

• Life of Loan Servicing & Borrower Engagement

• Collections

• Loss Mitigation

• Bankruptcy and Foreclosure

• Inspection and Preservation

• Property Registration and Deregistration

• Hazard Claims

• Capital Repairs

• REO

• CWCOT

• Auction

• Advance Tracking

Black Knight Servicing Digital helps servicers deliver a convenient customer experience

BLACK KNIGHT SERVICING DIGITAL IS A POWERFUL, WHITE-LABELED SOLUTION

that allows servicers to provide consumers with information about their home value and how to grow and leverage wealth from their property. The solution is a convenient resource that leverages Black Knight’s vast repository of mortgage and public records data, coupled with leading analytics.

It can increase customer retention by fostering interactivity, delivering an exceptional customer experience and offering the convenience of digital capabilities to view pertinent information or make loan payments. Servicing Digital can also facilitate longer, more profitable customer relationships by giving consumers data that can help them make decisions about lowering monthly payments while providing a direct connection to the financial institution for more information.

“Servicing Digital has created a new way for consumers and servicers to interact regularly with each other, adding value and ‘stickiness’ to this important relationship,” said Sandra Madigan, chief digital officer at Black Knight. “Designed specifically with the end-user in mind, Servicing Digital helps servicers deliver an outstanding, convenient and modern customer experience, which enhances growth and retention.”

Consumers can make payments directly through the Servicing Digital app, which streamlines the payment process for them. And because the app provides them with relevant information, it can help reduce the volume of consumer calls for the servicer’s customer service center.

Servicers can leverage Black Knight data to make personalized scenarios for consumers regarding home equity, refinance and loss mitigation directly in the app. This is designed to help increase acceptance, allow the consumer to take advantage with the click of a button and streamline the communication process for the financial institution. And it keeps customers on the financial institution’s website, so other scenarios can be presented.

“Servicing Digital can present customer-specific ‘what if’ scenarios for refinancing, getting a home equity loan or purchasing another property, and positions a servicer’s lending division for additional business if a customer decides to pursue any of the home financing options presented,” Madigan said.

By offering comprehensive neighborhood and real estate information in the app, consumers can gain more insight about the value of their home and neighborhood, allowing them to be better informed about the best next step based on their situation.

“Black Knight strives to lead our industry in providing clients with tools that facilitate homeownership,” Madigan said. “With Servicing Digital, borrowers have the self-service tools they need to manage their homeownership and understand and grow the value of their most valuable asset — their home — and it helps strengthen the trusted relationship with their servicer.”

BLACK KNIGHT, INC.

QUICK FACTS:

• Used by 90 Black Knight clients to allow their customers to make payments and request payment assistance on their mortgages digitally.

• Used by 21 Black Knight clients to offer payment assistance programs more than 340,000 consumers have used Servicing Digital to request payment assistance since August 2020.

• Allows consumers to learn more about the value of their home and neighborhood by providing access to comprehensive neighborhood and real estate information, which leverages Black Knight’s comprehensive public records data and full suite of AVMs.

• Provides servicers the ability to offer consumers personalized refinance, home equity and loss mitigation offers directly through this powerful tool, and consumers can respond in

PRODUCT SUMMARY:

Black Knight’s Servicing Digital allows servicers to offer their customers self-serve options, anytime, anywhere by providing customers access to detailed information about their home, loan and neighborhood. Using this intuitive app, customers can make mortgage payments directly from their phones or other digital devices, and get fast, simple, seamless access to timely, relevant information to better understand their home value, and how to grow and leverage their home equity.

“Servicing Digital helps servicers deliver an outstanding, convenient and modern customer experience...”

QUICK FACTS:

• End-to-end suite of services for your paid-in-full process

• Less than 1% rejection rate for releases and assignments

• 90% eRecord coverage

• Industry-leading controls and standards

PRODUCT SUMMARY:

In a complete or partial outsource environment or simply as a trusted partner and support/backup provider, NTC’s lien release processing and management services include a full-service solution for preparing and recording the documentation to cancel a mortgage as the final step in the payoff or charge-off process.

NTC’s PerfectDocs platform makes real-time county requirements readily available

LIEN RELEASES ARE INVOLVED IN SEVERAL much larger regulated processes related to paid-in-full loans, charged-off loans, loan forgiveness and other default-related scenarios that require a mortgage to be discharged. Each of these processes involves specific documentation, compliance requirements and service levels throughout the payoff or charge-off.

Additionally, each state and county may have varying requirements for documents and data, complex recording fees, or extra processes required to get a document recorded. These requirements constantly change throughout the thousands of recording jurisdictions and require updating regularly.

NTC can serve as a critical business partner, building successful lien release processes that help clients reduce costs and potentially avoid expenses, such as penalties, judgments or fines.

NTC offers a paid-in-full suite of services, including lien release, borrower mailings, collateral file management and title curative, plus a self-service platform, PerfectDocs. The company is an expert at managing the ever-changing requirements of more than 4,000 recording jurisdictions, states, investors and MERS, as well as mitigating the risks of getting it wrong. Taking this off a client’s hands is valuable, as most clients do not have the resources or knowledge to do it effectively themselves.

The company’s proven track record and reputation as a premier partner speak for themselves.

During the pandemic, many of NTC’s clients shifted 100% of their volume to the company, more than doubling normal volumes. NTC completed the work on time and maintained a 99% compliance rate with MERS and associated data while reviewing each document for accuracy before execution.

Additionally, NTC’s PerfectDocs platform, designed with 30 years of knowledge and expertise, makes real-time county requirements readily available, which means that clients don’t have to purchase or maintain costly infrastructure but can still maintain certain processes in-house if desired. When included with NTC’s suite of lien release services, PerfectDocs becomes a solution factor for any business disaster recovery or continuity plan, including plans addressing resource considerations, work-from-home requirements or simply an influx of volume.

NTC has expanded its offerings to provide more flexibility and options in designing the perfect lien release solution, which ultimately results in lower costs and less risk for its clients. The company advises on best practices and process implementation, from solving chain of title issues and managing paid-in-full collateral to sending recorded documents and collateral to the borrower.

NTC is a cornerstone for lien release processing and management services in today’s challenging market. The company maintains scale and infrastructure and is investing in more service capabilities at a time when many clients are not able to maintain the industry knowledge or infrastructure on their own. NTC can eliminate redundancies and inefficiencies along the way, as the company can support clients whether they prefer a one-stop shop or a share-the-work approach.

“NTC is a cornerstone for lien release processing and management services...”

The mortgage servicing experts at Sagent are building the future of fintech

BUILDING THE FUTURE OF MORTGAGE SERVICING technology is about granular, nuanced innovation — knowing what changes must happen and when, and executing with no mistakes across scale operations where every tiny detail is highly regulated.

And doing all of this within aging infrastructure — it’s about building pathways within the aging infrastructure and incrementally replacing it with the new.

That is what Sagent stands for, and it executes credibly alongside America’s largest mortgage servicers because its fintech engineering and product teams are comprised of servicing experts with deep resumes in the servicing trenches.

Sagent uses the phrase “Visionaries Who Get The Details” to describe this combination of ambitious homeowner-first fintech vision and mortgage servicing operations expertise.

To this end, Sagent believes servicing fintech must address three areas to set a modern data standard in 2023 and beyond.

First, homeowners should be able to access their data easily and securely from any device to manage every aspect of their home-owning lives.

This includes making payments, analyzing and adjusting tax and insurance escrow accounts in real-time, requesting and processing help for hardships, and viewing and taking action on home value and available home equity.

Second, servicers should be able to deliver all of this to homeowners in their own branded experience, and also be able to have their customer service teams help in real-time, at any moment, using multiple communications channels (desktop, phone, SMS, etc.), and see the same data their customer is seeing.

Third, all of these servicer and homeowner experiences — and data sharing — must work across the full performing and default life cycle of every loan, seamlessly cover every compliance and investor detail, and enable real-time processing and reporting of all compliance and investor requirements.

Sagent executes on these three areas primarily through its three flagship software platforms powering enterprise, consumer and default servicing.

The formula that sets Sagent apart building the future of servicing fintech is its consulting and advisory approach.

The company is regularly working with servicers on operations, compliance and other specialty projects even before they’ve come onto its flagship platforms.

Sagent’s technology and engineering, product and customer success groups are the knowledge and execution leaders in its firm and industry. And its product and customer success teams have responsibility for sales and growth.

Why? Because its product and customer success teams are iterating on new product roadmaps and existing product improvements in real-time as they work with new and existing customers.

Sagent can’t wait to show you what they’re building and learn what you’re building.

Connect with them in 2023 and build the future of servicing fintech together.

Please reach out here: sagent.com/leadership.

QUICK FACTS:

• Sagent’s open-API enterprise platform makes 7,952 consumer-owned data points available so you can configure workflows tailored to your customer service, team process and investor reporting needs.

• Sagent’s consumer platform streamlines 1+ million homeowner interactions, processes $1.15+ billion in one-time payments and facilitates 49,000+ recurring automated payments monthly, 45% of which happen on a mobile device.

• Sagent’s default platform handles the full non-performing life cycle, enabling homeowners and servicers to work together from hardship request to resolution, and servicers to configure all customer service and compliance workflows to fit their processes.

PRODUCT SUMMARY:

Sagent’s mortgage servicing experts have built and are moving faster than ever in 2023 to improve the industry’s only enterprise, default and consumer platforms that are all synced by real-time-data. This enables servicers, consumers, investors, regulators and partners to take real-time action using instant insight without missing any fine detail that’s required for customer satisfaction, servicer operations excellence and regulatory compliance.

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 members,

The first quarter of the year is a time when many organizations are implementing carefully laid plans from the previous quarter. We’re preparing for purchase season to begin in a few weeks, and we are focused on ways we can better reach borrowers in communities across the nation.

With that, my team is particularly focused on supporting borrowers in new ways, educating them about mortgages and building up our members with the tools they need to share financial information and guidance in their neighborhoods.

But one thing that’s often overlooked in this process is — what do communities actually need? With Black History Month and Women’s History Month celebrated in February and March, respectively, we are taking a hard look at these borrowers who are often

underrepresented and, therefore, underserved.

Diversity is a term that is often thrown out casually during these month-long celebrations, but what does it actually mean to you? What does it mean to your business, your team and your community? For our organization, it’s a challenge for us to help independent mortgage brokers do what they do best — be the local mortgage experts. With that charge in mind, we are excited to focus on consumer outreach and education through our Brokers Are Better website which specifically tailors mortgage information for Black homeowners, female borrowers and anyone who has the desire to take part in the American Dream.

We hope you’ll join us in championing homeownership for all Americans in need — this month, next month and throughout the entire year.

Association of Independent Mortgage Experts

MBA members,

The mortgage industry’s standards organization (MISMO), a subsidiary of MBA, continues to work tirelessly to lay the groundwork for technologies and initiatives to bolster mortgage businesses in 2023. In today’s challenging market environment, this work takes on even greater importance.

The core of MISMO’s mission this year is to enhance the interoperability of systems, which will in turn improve efficiency, reduce costs and accelerate the digital transformation of the mortgage industry. The industry can expect consequential progress on high-priority issues, including the initiative to standardize Servicing Transfers, a longtime pain point both for the industry and the borrowers we serve. These efforts are even more urgent given the record number of servicing transfers being executed.

In the coming months, MISMO will also finalize its work on the Regulatory Loan Examination File submitted by lenders to state regulators, which will help to ease a significant point of friction for lenders.

Improving communications between lenders and their title and settlement partners remains another key

Mortgage Bankers Association

focus area. MISMO is continuing to facilitate important work among all the stakeholders to standardize the data for pre-closing, closing and post-closing title documents.

MISMO cannot do all this very important work on its own and is grateful to the more than 1,600 lenders last year who invested in our industry’s future by paying the Innovation Investment Fee. As in prior years, as a service to the industry, MERSCORP is acting, free of charge, as the billing agent for this $0.75 fee for all new loans. It is important to the future of our business that lenders continue to support MISMO by paying the fee in 2023.

Thanks to the support of volunteers, members, champions and partners, MISMO is increasing efficiency and reducing costs for participants and consumers. With your support and leadership, all of us will benefit in 2023 and beyond.

Robert Broeksmit President and CEO Mortgage Bankers Association

Katie Sweeney CEO

Association of Independent Mortgage Experts

Alicia Huey

President and CEO

National Association of Home Builders

NAHB members,

The incredibly positive turnout at the International Builders’ Show® (IBS) and Design & Construction Week® (DCW) earlier this month in Las Vegas was a clear sign that the housing market is prepared for what lies ahead despite some recent economic slowing and forecasts for a shaky 2023.

Housing professionals from around the country took advantage of the amazing offerings of DCW, the largest annual gathering of the residential and light construction industry. They also attended the Kitchen & Bath Industry Show®, the National Hardware Show and the International Surface Event.

As the newly elected 2023 NAHB Chairman, I will work with our members, our state and local affiliate associations and other industry partners to keep the industry moving forward, even as high inflation and rising interest rates dim the economic picture. As they have in past economic slowdowns, NAHB’s economists, tax experts, financial specialists, regulatory specialists and other staff professionals will provide re -

NAMMBA members, Partnerships are more than just warm and fuzzy. Diversity, Equity, and Inclusion (DEI) might not have been on your radar when you started working in the real estate finance industry. It seemed like a topic reserved for HR or the C-Suite to handle exclusively, while you could just focus on hitting your sales goals. But now, you’ve started realizing that DEI impacts the sales goals of your team, your market growth strategy and your talent acquisitions.

That’s where NAMMBA comes in.

At every level, we help our partners and members plan for the future they want to build within their company culture and the communities they serve. NAMMBA helps position you and your company to meet the radical changes coming to the real estate finance market. True, a Partnership with NAMMBA does have a warm-fuzzy feeling to it. Our work is dedicated to bringing more talent from more diverse backgrounds to the table.

That talent that we at NAMMBA spend our time nurturing? They see our partner companies as desirable

search and guidance for our members, policymakers and the public.

Workforce development efforts of NAHB and the Home Builders Institute, our workforce development arm, will help build the next generation of skilled workers who will be key to the future success of the home building industry. Networking opportunities at local, state and national meetings, as well as the annual IBS, help our members build relationships with fellow builders, remodelers and other housing professionals that will help our association remain strong during challenging times.

If you’re not a member of your local home builders association, I encourage you to join and become a part of the largest network of individuals involved in home building

I’m excited to join my fellow NAHB members around the country as we strive to protect the American dream of homeownership and to expand housing opportunities for all. Meeting the housing needs of 330 million people is no easy task, but I know America’s home builders are up to the challenge.

places to work. That expanding population of borrowers we keep going on about?

They want to work with realtors and lending companies they share values with, that they see similarities with and that they can trust.

When your organization partners with NAMMBA, you are shouting out to your competition, and more importantly, to your prospects, that you are invested in diversifying your talent pool and your client base.

The future of the mortgage and real estate industry will be forged by companies that embrace a broader spectrum of employees and clients. And you don’t have to expand your horizons alone.

Partnerships with NAMMBA are not just a savvy marketing strategy for attracting new clients. It’s also how you cultivate the next generation of talent to replace the generation that is now retiring.

Tony Green President National Association of Minority Mortgage Bankers of America

National Association of Minority Mortgage Bankers of America

National Association of Home Builders

NAR members,

The brand is us and we all bring something to the brand. It’s important that the more than 1.5 million members of the National Association of Realtors® (NAR) know how integral they are to the brand that is NAR. This brand—a representation of the American Dream and the American spirit of entrepreneurialism—means so much to me as NAR’s president.

Late last year, NAR launched “Riding with the Brand,” a nationwide, multi-stop, association member-activation tour to remind our members about the power of our brand. A motor coach tour, Riding with the Brand will make coordinated stops or facilitate affiliated events in every U.S. state in 2023.

This initiative broadcasts NAR’s vast array of services and resources available to members. It also conveys that our powerful voice in local, state and national government depends on participation. We’re not governed by the majority but by the majority who participate. During each stop of the Riding with the Brand tour, we’ll highlight our advocacy, Member Value Plus (MVP) program and all the

other things we do for our members.

While NAR’s membership count remains at an all-time high, the COVID-19 pandemic and increased virtual communication reduced face-to-face interaction between NAR and our members. We want to reconnect with our members in every state and remind them about the importance of continuing to engage policymakers in support of American consumers.

Our country is in the midst of a six-million-unit housing shortage, pushing homeownership out of reach for too many Americans. Consumers count on REALTORS® to advocate on their behalf and help ensure the dream of home and property ownership remains available and possible for many. That is what our brand is all about. And it’s exactly what we will continue to do.

National Association of Realtors Kenny Parcell

President National Association of Realtors

NRMLA members,

A guiding principle of the National Reverse Mortgage Lenders Association (NRMLA) is that reverse mortgages be presented to consumers by highly trained, competent and ethical salespeople.

The average age of a reverse mortgage borrower is about 74. While an increasing percentage of our prospective clientele are financially savvy homeowners who are using reverse mortgages to enhance their retirement plans, most applicants still need a helping hand from dedicated professionals to guide them through the process.

So, NRMLA developed the Certified Reverse Mortgage Professional (CRMP) designation in 2010. To become a CRMP, candidates must earn continuing education credits, participate in a specialized ethics class and pass an exam plus a background check. To maintain their CRMP status, designees must earn 8 CE annually, attend an approved ethics class and submit to a new background check every three years.

The development process was guided by the highly experienced staff of psychometricians at Professional Testing, Inc. of Orlando, FL, and working with a dedicated group of volunteers with expertise in reverse mortgage counseling, operations, origination, processing, under-

writing and servicing.

Today, all loan officer candidates must have a minimum of three years’ experience originating reverse mortgages or have closed 50+ reverse mortgages, whichever comes first.

All other applicants who are not loan officers must have a minimum of five years’ experience in the reverse mortgage business in counseling, underwriting, processing, management and operations, title and closing services, appraisals and/or loan servicing.

The guidelines have evolved slightly over time, but we still want candidates to possess a certain level of experience and commitment to the reverse mortgage business before they can be eligible for the CRMP. If the CRMP is something you might be interested in pursuing, please visit our member site for more information.

Steve Irwin President and CEO National Reverse Mortgage Lenders Association

National Reverse Mortgage Lenders Association

Reverse mortgage pros are optimistic about the new year

WHAT DOES 2023 HAVE IN STORE FROM A PROFESSIONAL PERSPECTIVE

BY CHRIS CLOW

Despite the current challenges, reverse mortgage professionals across a range of companies and positions say they are optimistic about business prospects in 2023.

Throughout 2022, the industry has faced a challenging rate environment, reduced volume, the bankruptcy of a major lender and the impending consolidation of two other leading players.

Still, the prevailing attitude is that the reverse mortgage business is no stranger to disruption and challenge — and it stands ready to weather the storms it may face.

The recent industry headwinds have not dampened enthusiasm for the business developments that set the stage for 2023. Including an increased Home

Equity Conversion Mortgage (HECM) limit of over $1 million, renewed commitments of appealing to forward professionals to add reverse into the product mix, a strong demographic and more referral partnership prospects.

Below, reverse mortgage professionals, including company executives, reverse mortgage division leaders, loan originators, managers and educators, discuss their feelings on the opportunities and challenges that await them in 2023.

TThe same challenges that plagued the forward business throughout 2022 also impacted the reverse side, and they have led to numerous questions to tackle in the new year, according to Kristen Sieffert, president of Finance of America Reverse (FAR).

In particular, how to bring more loan originators

D“The reverse mortgage business is no stranger to disruption and challenge.”

- Chris Clow

who understand reverse mortgages into the fold; what new products might be necessary for addressing the needs of the senior demographic; how to best leverage educational partnerships to increase product awareness; and how to streamline the customer experience.

“Ultimately the recurring themes in our strategic questions center around education, innovation and empowerment,” Sieffert told Reverse Mortgage Daily (RMD).

“We believe that in order to build broad adoption of home equity utilization for pre-retirees and retirees, we need to continue to focus on and invest in these three areas, and they will be central to our 2023 plan.

“While our industry is still navigating some headwinds, there is reason to be optimistic for the year ahead,” she said. “If 2022 has shown us anything, it has shown that the need for our solutions will only increase. As long as we collectively continue to prioritize creating positive and sustainable outcomes for those we serve, we will be resilient.”

Don Currie, president of HighTechLending, is also optimistic.

“Efficiency, efficiency, efficiency,” Currie said. “It’s time to get lean and mean, to look at all of your vendor contracts. You have to operate at your lowest cost-toproduce as possible. My statement to my people is to prepare for the next surge by being the very best you can be today. Be ready, because it’s going to come back.”

Currie said that while the current challenges are real, he has seen his share of boom and bust cycles over the course of his career.

“I’ve been doing this for 40 years,” he said. “I’ve been to the height and I’ve been to the bottom, and it’s always been cyclical. Right now, I feel that we are at the bottom of the trough. We might stay down here for a period of time, but we will be coming out. And when you come out, if you want to be a player and grab

market share, you have to be diversified with a low cost-to-produce, and you have to be well capitalized.”

Having benefited from an uptick in the reverse mortgage talent pool, Currie said he hopes that professionals looking for a new home will take the time to determine which company will provide the most longevity.

“For producers looking for a new home, don’t be too hasty,” he said. “Vet the companies and make sure your decision is right for the long run, not just for right now. Every time you change companies, you lose production time.”

Mortgage in Alcoa, Tenn., said his team has experienced increased demand for the product due to many seniors needing additional cash flow.

“Now that we have the attention and respect of the forward business, we’re telling them that it is absolutely not the time to hunker down and batten down the hatches,” he said. “If you’re a forward person only, then you need to figure out how to get into reverse.”

For Jesse Allen, president of 55+ lending at OneTrust Home Loans in San Diego, it’s important to maximize the efficiency of the basics of mortgage lending in order to navigate current uncertainties.

“We’re also focused on helping our team and partners remain relentlessly focused on customers, facts and opportunities,” he said. “For example, there are somewhere between 47-60 million (depending on the sourced study) active adult homeowners who are not sufficiently saved for retirement but control significant amounts of housing wealth.”

The current economic climate tends to exacerbate uncertainty, which has led OneTrust to develop a partnership with retirement advising firm Wealthcare Capital Management as a way to help expand home equity options for borrowers and advisors, he said.

SSue Milligan, a reverse mortgage loan originator with Draper & Kramer Mortgage Corp., has a strong belief in the product’s ability to help seniors and a devotion to the space.

She remains generally optimistic about business prospects. However, what concerns Milligan is the possibility that

LLoren Riddick, national director of reverse mortgage lending at Thrive

“If 2022 has shown us anything, it has shown that the need for our solutions will only increase. As long as we collectively continue to prioritize creating positive and sustainable outcomes for those we serve, we will be resilient."

- Kristin Sieffert

when rates begin to moderate, it could lead to another surge in HECM-to-HECM refinance business.

“And that’s what scares me the most because that is what put our industry in this predicament that we’re in,” she said. “That’s a terrible market to be in because that doesn’t lead to long-term growth.”

For Milligan, the name of the game is identifying where the bulk of the business came from before, during and after the COVID-19 pandemic.

That information may help her when she moves from Louisiana to Texas next year, she said.

Jim Cullen is a reverse mortgage originator with University Bank in Green Bay, Wis. Cullen, who has been in the reverse space for 18 years, is cautiously optimistic.

Cullen sees the shifts happening at other companies, but remains focused on serving senior borrowers through his referral-based business.

“I’m feeling a little uncertain,” Cullen told RMD. “Obviously, we’ve gone through a lot of ups and downs; it’s been kind of a wild ride here. I don’t know if things are going to settle down anytime soon. There are still a lot of questions out there regarding whether or not we’re headed for a full-blown recession, or whether property values are going to level out or drop.”

Planning at the University of Illinois Urbana-Champaign.

The best thing for industry professionals to do is to focus on their book of business

throughout the year, which means borrowers are qualifying for a little bit less,” Hultquist said. “But those who qualify for a reverse mortgage get the advantage

WWhile the current industry challenges are disruptive, they are not calamitous in comparison to other challenges the business has gone through, including the collapse of home values following the 2008-09 financial crisis, according to Shelley Giordano, co-founder of the Academy for Home Equity in Financial

and helping seniors, she said.

“From my perspective, it’s just better to put your nose down and deal with what you can deal with every day,” Giordano said.

“The successful originators out there are the people who get up every day and just do their activities, and the outside world doesn’t affect them very much because they’re doing all the right stuff. So, I wouldn’t even begin to try to predict what the economy, interest rates or inflation are going to do. I have absolutely no idea.”

That said, the reverse mortgage industry is “tournament-tested” when it comes to adversity, she said.

Plus, the general priorities have not changed: get in touch with referral partners, reach out to prospects and remain visible in your community as a reverse mortgage leader.

When asked to assess the biggest impact on the reverse mortgage business in 2022, "Understanding Reverse" author Dan Hultquist said it was the rate environment.

Most HECM loans have two rates: the expected rate, which is tied to the 10-year CMT index, and the note rate, which is tied to the one-year CMT.

The 10-year CMT climbed throughout 2022, but Hultquist said that doesn’t diminish a reverse mortgage’s value proposition for the right homeowner.

“We saw the 10-year CMT climb

that their line of credit is growing at the note rate. And so, there are advantages in getting a reverse mortgage right now. You’re going to get less money than you could last year upfront, but you have to look at the long play.”

The long play is for a borrower to get a reverse mortgage when they can qualify for it and then watch the line of credit grow over time at the same rate their loan balance grows, he said.

And, Hultquist said, originators and borrowers would be well-served by keeping an eye on expected rates because they can lock one in at the time of application.

“The successful originators out there are the people who get up every day and just do their activities." Shelley Giordano

Inside mortgage lenders' strategies for 2023

THE REFI PARTY IS OVER, NOW LENDERS FIGHT FOR MARKET SHARE

BY FLAVIA FURLAN NUNES

EExecutives at Plaza Home Mortgage expect things to get worse before they get better.

During the first three quarters of 2022, their originations declined by about 38% compared to the same period of 2021, ending at $5.5 billion, according to Inside Mortgage Finance.

Like many competitors, Plaza is losing money operationally. In turn, it has reduced its workforce and sold mortgage servicing rights (MSRs) to add some extra revenue, top executives said.

“Obviously we had a very negative impact on the business compared to the previous year, which would be expected given the rapid rise of interest rates in 2022,” said Kevin Parra, who co-founded the mortgage lender two decades ago with James Cutri.

“I’ve been in the business since 1985, and mortgage rates are still historically low. It’s just a matter of the homebuyer psyche and, of course, an affordability problem,” Parra added.

Parra expects the landscape to remain tough for a while.

“Builders aren’t building because they are pessimistic about buyers being able to buy homes. Sellers aren’t selling because they got a great mortgage rate in 2020 and 2021 and there’s less reason to move. So, activity will remain subdued, and home prices will fall in certain markets, but not radically,” he said.

What Parra described are a few of the reasons that 2023 will be a challenging year for mortgage lenders — and strategies will have to pivot to accommodate for the rough landscape.

Over the last few weeks, HousingWire interviewed analysts and executives to hear their expectations for 2023 and find out how they plan to run their businesses successfully in spite of challenges.

"I’ve been in the business since 1985, and mortgage rates are still historically low. It's just a matter of the homebuyer psyche."

- Kevin Parra

bringing relief to the mortgage market in the second half of 2023. If not, the market may become a scary place.

DDavid Battany, executive vice president of capital markets at Guild Mortgage, defines 2022 as the year the U.S. exited the “largest government stimulus for the mortgage market in history.”

That’s because the Federal Reserve, as part of its inflation-busting strategy, has decided to hike rates and cease new purchases of agency mortgage-backed securities, or MBS, dialing back from a program launched in 2020.

As a result, the mortgage industry also “exited the largest refi boom in U.S. history,” according to Battany.

To illustrate, mortgage originations reached $4.4 trillion in 2021, with a 62% share of refinancing.

This year, the volume is expected to decline to $2.2 trillion, with the percentage of refis at 33%, per the Mortgage Bankers Association (MBA).

For those who survived 2022, there’s a crossroads to face at the start of 2023, Battany said.

“We will find out, in the next few months, if the Fed's strategy to get inflation under control is working or not,” he said.

“The markets are betting there’s an 80% chance the Fed's strategy will work and we will have a recession. But what if the 20% that doesn’t work, happens? I think there’s a lot of hope that the strategy will work, but it’s not certain. And that uncertainty will result in volatility,” Battany added.

Questions on the efficiency of the monetary policy were raised because, among the causes of inflation, there are many factors that the Fed does not control.

These factors include the war between Russia and Ukraine and other supply chain issues.

If the monetary policy works, mortgage rates can start a downward trend,

AAmid uncertainties, economists and analysts have already started to make their estimates for 2023.

The MBA expects mortgage originations will decline 14% year over year to $1.9 trillion in 2023 — with tighter monetary policy and more restrictive financial conditions causing a recession in the first half of the year. The trade group estimates that mortgage rates will be 5.2% in December 2023.

Analysts at Keefe, Bruyette and Woods (KBW) believe that volumes will decline 23%, with home prices down by 12.5%.

“Overcapacity was the case this year, and it’s going into year-end. So, it seems like that won’t get resolved anytime soon,” said Bose George, mortgage sector analyst at KBW.

“At the same time, we’ve seen meaningful competition continue among the larger players, which is set up for a pretty challenging first half of the year,” George added.

KBW’s baseline scenario doesn’t forecast that the Fed will cut rates next year, and anticipates that mortgage rates will be between “5.75% to 6% something,” according to George.

“The MBA is assuming mortgage rates are down to the low fives in the next year. Their volume expectations are a little more positive than ours because that leads to an improvement in the back half of next year. But we’re not building that in at the moment,” he added.

For analysts at the credit analysis agency Fitch, the first quarter of 2023 may be the bottom line for the industry,

“We’ve seen meaningful competition continue among the larger players, which is set up for a pretty challenging first half of the year."

- Bose George

despite volatility and uncertainty.

In terms of volume, “2023 is setting up to be at least lower than 2022 in the first half, but we will need to see what happens in the second half,” Shampa Bhattacharya, director for U.S. nonbank financial institutions, said during a webinar.

“We are going into the seasonally lower winter months, so we should expect lower volumes to continue at least for the next two quarters,” Bhattacharya said.

Bhattacharya added that for mortgage lenders, the main challenge in 2023 is to execute their strategies successfully. But what are these strategies?

“Retail loan officers continue to convert over to wholesale, and this ‘Game On’ initiative was an extra incentive,” Elezaj said.

For Elezaj, 2023 will be challenging, but UWM’s executives will focus more on what they can control.

“I think we’ll be hovering around 6% to 8% for a little while. I don’t see any major items that would cause mortgage rates to drop in 2023,” he said.

purchase loans portfolio and market penetration in the Midwest.

The financial terms of the acquisition were not disclosed.

TThe strategy for United Wholesale Mortgage (UWM), the largest mortgage lender in the country, to win in the purchase market is crystal clear.

In June, the company announced an initiative dubbed ‘Game On,’ in which UWM slashed prices across all loans by 50 to 100 basis points, wreaking havoc on competitors with already compressed margins.

The company, which had about $800 million in cash as of the third quarter of 2022, intends to keep pushing its rivals in 2023.

“We don’t have any intention right now to stop ‘Game On,’ which has been a big win for our company,” said UWM’s chief strategy officer, Alex Elezaj. “I don’t think we need to get more aggressive on it because we are very comfortable with where we are.”

The company’s executives say cutting prices led to attracting more loan officers to the wholesale channel and gaining market share when the market has been down.

“Nobody has the crystal ball to know, but we are making sure that as the next refi opportunity comes, our wholesale brokers have the tools to execute for their borrowers.”

The growth strategy at the retail lender Guild Mortgage is quite different. With Guild, the company has an appetite for acquisitions.

“Whenever you see cycles like this, the value of two companies merging to become more efficient, there’s a lot of benefit to doing that,” Battany said.

He added, “As a company, we are very much committed to the mortgage market. We want to continue to grow and we look at acquisitions with companies of similar values and cultures that are highquality retail lenders with a high customer service focus.”

Guild reported a total in-house origination of $4.4 billion in the third quarter of 2022, compared to $5.7 billion in the previous quarter.

In December, Guild announced its acquisition of the Wisconsin-based lender Inlanta Mortgage — which said earlier that it would be winding down operations in 2023 — to increase its

PProvidence, R.I.-based Citizens Bank is the 25th largest mortgage lender in the country.

The bank originated $18 billion in the first three quarters of the year — a 44% decline compared to the same period in 2021.

“The first half of 2022 was very robust and the second half was challenging. We believe next year is going to be the flip prototype,” Sonu Mittal, head of mortgages, said.

“We expect the market to normalize in the second half of 2023.”

According to Mittal, despite the changes in the landscape for 2022 and 2023, the company will stick to its strategy based on taking care of customers, building relationships and right-sizing the business.

A challenge is that the execution is among three different channels, as Citizens is one of a few banks that operate in retail, wholesale and correspondent.

Mittal said that the bank continues to believe in all three channels: retail is here to serve customers; the correspondent is continuing to build healthy MSRs; and wholesale, which we know has had some intense competition, is almost 20% of the market.

“The first half of 2022 was very robust and the second half was challenging. We believe next year is going to be the flip prototype."

- Sonu Mittal

Real Estate

7 strategies to strengthen your referral network

BUILD A NETWORK TO HELP YOUR BUSINESS WITHSTAND HEADWINDS

BY CHRIS HELLER

Real estate brokers work in a challenging and dynamic industry where short-term success only sometimes translates into a life-long and consistent career.

Headwinds that both rookie and veteran brokers will inevitably face include changing interest rates, changes in the economy and unpredictable government policies.

Building a referral network is a keystone of every successful real estate agent’s business.

As an agent’s referral network strengthens and grows, so do prospects for consistent and longterm success in real estate, regardless of external factors.

As you add more referral members to the mix, you

will pick up clients in new ways that don’t require you to provide those ancillary services directly.

AA referral network is a group of past customers, real estate agents and ancillary business professionals who refer your agency to interested leads.

The primary goal of a referral network is to consistently bring in new business by encouraging referral partners to share your brand and skill set. When executed correctly, a referral network provides a very high ROI and a self-perpetuating cycle of new and repeat clients.

By working with other real estate agents, you can pick up or be exposed to a larger client base. If you specialize in residential properties, by working with a commercial real estate client you’ll get referrals

A“As an agent's referral network strengthens and grows, so do prospects for consistent and long-term success in real estate."

without working directly in commercial real estate.

Partnering with businesses that provide ancillary services to the real estate industry is a great idea.

By partnering with a roofing company, you may receive a referral for a customer who would prefer to move in to a new house instead of dealing with repairs.

The following seven best practices will inspire you with new ways to grow and nurture your referral network.

1. Show gratitude for referrals

When building a referral network, it is important to consider what your referrers get out of partnering with you. It’s key to add value to your network. By adding value to colleagues across the industry,

you ensure that your network consistently returns that value back to you.

It’s a good idea to brainstorm different ways to appeal to your audience. Depending on their role, it may be prudent to provide different rewards. Consider sending sports or events tickets if you wish to build connections with related businesses or fellow agents. Or, at closing, you can send gift cards to a home improvement store to the referrer. The amount can be a percentage of your commission or sale price.

Some referral networks also include tiered profit-sharing programs.

It’s a small gesture that shows appreciation and reminds your past clients about the relationship you shared. Small gestures are an organic way of encouraging an ongoing relationship.

Even if you opt not to have a rewards program for referrals, it’s highly recommended to find a way to show personal appreciation for any referrals. Even if a referral does not convert to a sale, just send a “thank you” note!

This keeps the referral relationship alive. Open channels of friendly communication are a healthy way to provide feedback and updates.

2. Never stop networking

A body at rest will remain at rest, and a body in motion at a constant velocity will remain in motion. In the modern interconnected world, there is no reason to stop networking.

For the stay-at-home agents, there are ample virtual networking events. And, some of these virtual networking events have in-person components. In-person conferences represent an opportunity

to travel outside of your home base and greatly expand your sphere of potential clients.

Two of the most essential real estate conferences include:

NAR Broker Summit — The National Association of Realtors (NAR) caters exclusively to the needs and special interests of brokers with a real estate agency. No virtual option.

Tom Ferry’s Success Summit — According to Tom Ferry, “What you say matters.” At this summit, you learn and practice ways to have high-value conversations with clients, leads and referral network prospects. Virtual option available.

The above list is not definitive but should help you understand that there is a wide range of conferences you can attend, in-person or virtually, to grow your referral network.

3. Use cloud-based services

There is an assortment of paid tools that you can use to track and streamline your referral network. It’s easy to find these with a quick search.

Instead of using a paid service, I recommend using Google’s cloud-based products. Using Google’s services is a great way to bring your agency with you, anywhere you go.

Use Google Sheets to build a spreadsheet that tracks your referral partners and the clients they’ve recommended. Add relevant information, such as business, relationship, location, contact information and clients referred.

Google Drive can be a centralized repository of your documents and any agency-related information. With both Sheets and Drive, you can view and edit

"In the modern, interconnected world, there is no reason to stop networking."

files from anywhere and share access links with anybody.

With Google Forms, you can create referral sheets that allow you to collect key information; anything from name and contact information to price range and desired neighborhood.

Your form can have bulleted choices, multi-select answers, text input fields, date selection and more. Information entered into a Form is placed into a spreadsheet, which means all this information can be checked in one digital file.

4. Use social media

If the idea of sending out timed newsletters or using software to manage your referral network is unappealing, consider turning to social media.

While LinkedIn, Twitter, Facebook and Instagram will not always translate into sales, these tools still provide an efficient way to post updates and stay in touch

with past clients and your network.

An additional benefit of regularly using social media is that you will build a public portfolio. This portfolio provides new clients and members of your network with an easy way to reference your past business and imagine what you can do for them in the future.

It’s a great idea to set up a Business Profile on Google. Your agency will show up on search results and Google Maps. Plus, your reviews will be publicly visible. You can offer a review incentive to increase review traffic.

A profile takes minutes to set up, is free and acts as a great point of reference. Some lead generation companies also provide this service of helping obtain the reviews and referrals of past clients to add to your social media.

5. Nurture your network

It’s natural to have top-referring members and others you only get occasional clients from. It’s key to consider how you will stay in touch with and reward top performers. Most real estate agents have success developing a closer relationship with their referral network’s top performers.

Reaching out to your quieter members may be both a contrarian and beneficial option to consider. These members may be unsure of what differentiates your agency from others, or they may have so much business they’ve forgotten to send you referrals.

It’s great to celebrate success with your network. However, being comfortable with guiding your network may provide even greater value to your agency.

6. Just do it

Asking for referrals may seem strange. Just ask for referrals and don’t be shy! Every real estate agent is trying to grow their business. Most businesses want to keep their customers happy; connecting customers with reputable partners helps achieve this.

And, past clients would be delighted to help their friends and family find their dream home or office.

If you have a good professional relationship with someone it is natural to expand it to others. Just remember: you are offering a service that benefits others.

7. Keep it simple

At the end of the day, you are building a referral network to benefit your real estate agency.

For the most part, a successful referral network should self-perpetuate; you should be in a position where managing your network feels like a natural process of your real estate sales channel. Your referral network should complement your agency without becoming it. If you feel that you are focusing or spending too many resources on your referral network, it’s okay to take a step back and refocus on your agency.

“A successful referral network should self-perpetuate; you should be in a position where managing your network feels like a natural process of your real estate sales channel."

Hope through Housing uses MLK grant to fund afterschool programs

kudos

The affordable housing advocacy group is changing lives in Texas and California.

By Audrey Lee

Hope through Housing is a non-profit organization whose mission is to end generational poverty through affordable housing, educational programs and advocacy. In 2022, they were the recipients of an MLK grant which will be used to fund their youth development initiative. As people across the country celebrated MLK day on January 16th, Greg Bradbard, president of Hope Through Housing, sat down with HousingWire to talk about the impact the grant will have on his organization and the affordable housing community at large.

HOUSINGWIRE: WHAT CAN YOU TELL US ABOUT THE MISSION OF HOPE THROUGH HOUSING? HOW WILL THE MLK GRANT ENHANCE THIS MISSION?

GREG BRADBARD: The Hope through Housing Foundation (Hope) is dedicated to breaking the generational cycle of poverty by providing quality services within affordable housing communities that empower individuals and families. Hope delivers an array of programs, activities and resources to children, adults and seniors within 100 apartment communities throughout California, Texas and Florida. The key to creating generational change is preparing children and teens for future self-sufficiency through our Building Bright Futures initiative.

The MLK grant we received last year is helping to enhance our youth development initiatives in the Houston area. Specifically, the grant has helped us create a reading corner to increase access to books while supporting our development of additional community partners to support afterschool programming for children in our Angleton, Texas, community. This grant is directly aligned with our goal to provide the tools, guidance and resources needed for youth to realize their full potential.

HW: WHICH OF HOPE THROUGH HOUSING’S ACCOMPLISHMENTS IN 2022 ARE YOU MOST PROUD OF?

GB: In the past year, Hope added several new after-school program sites serving children and teens in both California and Texas. Students now have a safe place — right inside the community room within their apartment complexes

— where they have positive role models, homework help, a nutritious snack and other enrichment activities.

From science and technology experiments to the arts to career conversations with local businesspeople, these programs introduce young people to new possibilities for their future. We regularly see students become the first in their families to head to college as a result of our work. Additionally, in 2022 we launched CORE Academy, a workforce training program designed to introduce non-traditional candidates to the property management industry.

The program is aimed at recruiting residents of affordable housing to become employees who help operate affordable housing communities. CORE Academy provides the basic skills to enter the property management or property maintenance industry.

HW: LOOKING FORWARD TO 2023, WHAT ARE THE BIGGEST INITIATIVES YOU ARE FOCUSED ON?

GB: As we transition from the COVID-19 pandemic to a period of record inflation, meeting the financial needs of our residents is critical. Therefore, we are providing both basic needs assistance to help families pay for food, schooling, transportation and maintaining their housing, as well as expanding our support employment and job searching resources. We have just hired a new director of workforce development who is increasing resources and partnerships to connect our residents with job training and new career opportunities.

kudos

HW: HOW CAN OTHER HOUSING INDUSTRY PROFESSIONALS GET INVOLVED WITH HOPE?

GB: At the local level, we rely on volunteers and donors to help with special events, volunteer in our after-school programs and serve as community ambassadors. On a national level, there is a great need for strong advocates to help increase funding specifically for resident services within affordable housing. Thanks to the leadership of Rep. Pete Aguilar (D-CA), Congress just authorized $2.5 million in funding to demonstrate the importance of community services within affordable housing. It is a great starting point, but we must continue advocating for increased funding in the future to enhance these services which have the power to transform lives across affordable housing communities.

HW: IS THERE ANYTHING ELSE YOU’D LIKE TO INCLUDE, ABOUT WINNING THE MLK GRANT OR ANY OTHER INFORMATION ABOUT HOPE?

GB: As we observe MLK Day this time of year, we are reminded of the importance of empowering residents of all backgrounds to reach dreams they never thought possible. Hope serves a diverse population of children and adults including many ethnicities, veterans, formerly homeless and individuals with disabilities. Our goal is to provide any resources needed to help our residents overcome obstacles and build bright futures. We are grateful for our many partners who help to make this work possible.

TOP 5 SERVICING BEST PRACTICES

Whether you are a veteran servicer or just got in the game, everyone could use a refresher on their skills headed into the new year. Mortgage rates may be fluctuating, but one thing never changes: the need for quality customer service. Jason Kwasny, chief servicing officer at TMS shares his five servicing best practices that will keep your clients and your team members satisfied in 2023 and beyond.

✔ Put the customer at the center of all decision-making.

All decisions must provide a benefit and value for your customers and their experience with you as a subservicer. Not only is it good for business for the long term, but it’s also just the right thing to do.

✔ Live a true partnership with all your clients regardless of their portfolio size.

What you discover through your partnerships with one client will usually benefit every client. So treat them all like family.

✔ Be honest and transparent.

Honesty is truly the best policy. No one, not your people, your customers or your clients like fallacies or spin.

✔ Deliver on your promises and exceed expectations.

Be the apple in the sea of oranges and overdeliver. Create a culture of success. You can’t just say, or even worse, start to believe you are performing better than you are. Do what you say you are going to do and then prove it.

✔ Never stop investing in your people.

Enough said.

By Jason Kwasny, chief servicing officer at The Money Source (TMS)

History of Housing

The early 1990s were a hotbed of housing industry changes. After a booming decade in the 1980s, housing prices were declining, and the kinds of homes consumers purchased were changing. The sentiments from the National Association of Realtors and other professionals were similar to the takes on the market in 2023: prices are dropping, mortgage rates are rising and homebuyers are wary to take on this kind of debt.

- Washington Post

- AVERAGE HOME PRICE: $126,500 (ADJUSTED FOR INFLATION, THAT’S $212,442 IN 2023’S DOLLARS)

- MORTGAGE RATES: 7.3%

- RESIDENTIAL CONSTRUCTION: $200 BILLION

- AVERAGE INCOME OF HOMEOWNERS: $36,845

- AVERAGE MONTHLY MORTGAGE PAYMENT: $800

- MEDIAN SQUARE FOOTAGE: 1,800

“The June rate was the lowest since October 1972, when it also stood at 7.42 percent.”

parting shot

❱ A YEAR FILLED WITH HOUSING NEWS

Happy new year from all of us at HW Media to you, our loyal HW+ members. We are excited to see what 2023 has in store for our community and the housing industry as a whole. HousingWire will continue to publish the need-to-read stories for you to stay up to date on all the important news in the industry. In 2023, we will publish six, bimonthly issues of HousingWire magazine featuring the same awards, local stories and industry-wide trends you’ve come to rely on.

Thanks for being a part of our community. If you have any concerns or questions regarding your subscription, reach out to us HWPLUSMEMBER@HousingWire.com.

Photo by Wide Eye Creative

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