ACUMA July 2015 Pipeline by ACUMA

ACUMA

PIPELINE

JULY • 2015

MAGAZINE

Re-inventing the Cooperative Looking Back to See the Road Ahead By Bob Dorsa n Page 26

INSIDE: A peek at ACUMA’s Fall Conference $4.95

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Table of contents

Differentiation Can Bring Success

In the Pipeline: Insights and Observations on CU Mortgage Lending

By Bob Dorsa

Credit Unions, REALTORS® Work Together to put More Members in Homes By Tom Burton

The Single Best Way to Generate New Loans Each and Every Month By Brian Sacks

ACUMA Workshops Bring Lots to Absorb By Bob Dorsa

September 13-16, Bellagio Las Vegas

6 9

13 ACUMA 2015 Annual Conference

18 Demystifying the Federal Home Loan Banks: We’re Your GSE By David Feldhaus

26 Re-inventing the Cooperative By Bob Dorsa

32 Seeing the Future in a New Light By Larry Walker

40 In 2015, Millenials Make Their Move–to Homes of Their Own By Jim Jumpe

46 Inaccessible Credit: The New Normal By Robert M. Couch and Jennifer S. Gisi

54 Market Share: More Than the Numbers By Tracy Ashfield

46 Special Report: Scotsman Guide Top 300 Originators

July 2015 - PIPELINE 1

From the desk of ACUMA PRESIDENT BOB DORSA ACUMA

PIPELINE MAGAZINE

ACUMA Pipeline is a publication of the American Credit Union Mortgage Association, PO Box 400955, Las Vegas, NV 89140.

Differentiation Can Bring Success Credit Unions Should Emphasize Integrity to Woo Consumers Each week it seems we hear about another big bank or lender being fined for breaking the rules, while agreeing to settle the charges for a payment in the millions of dollars. While that’s worrisome—or should be—for the consumer who is ultimately footing the bill, the next step is perhaps even more troubling: It’s back to business as usual. If you’re like me, you follow the media reports of the settlements, shake your head and ask yourself, “Why do they continue to draw the business?” The obvious answer is that consumers aren’t paying attention. And the easiest path is the one of least resistance: “It’s too much work to switch to another financial institution,” consumers lament. “And how do I know my new PFI isn’t cut from the same cloth?” One very big reason for this line of reasoning is that credit unions haven’t done enough to differentiate themselves from the Big Guys. Even with the increased mortgage-lending market share, CUs have not continued to pound on the integrity theme that proved so successful in the publicity built around Bank Transfer Day. But more important than a successful theme is, it’s true: Credit unions have continued to operate with honesty and integrity—not for financial gain. As member-owned financial institutions, we put the member first, be it helping them own a home, buy a car or simply save for the future. So, yes, differentiation in a market with similar rates and terms can win battles and bring more members. More important, it can benefit those members over the long haul with any number of financial challenges requiring assistance—honest assistance—and care for their overall financial well-being. Can the Big Guys say that? You know the answer to that question. Make it part of your interaction with members, your marketing efforts, your mission statement and value proposition: Integrity and honesty helps solve financial challenges. Credit unions solve problems, not create them. The same can’t be said of many big banks and lenders. It’s a message consumers understand. Respectfully, Bob Dorsa, President/Founder

2 PIPELINE - July 2015

Bob McKay

Anheuser-Busch ECU Chairman

Mark Wilburn Truity Credit Union Vice Chairman

Pam Davis

Delta Community CU Treasurer

Barry Stricklin Tower FCU Secretary

John Reed

Maine Savings FCU Director

Tim Mislansky

Wright-Patt Credit Union Director

Michael Patterson, Financial Partners Credit Union Director

Bob Dorsa President

The information and opinions presented here should not be construed as a recommendation for any course of action regarding financial, legal or accounting matters by ACUMA, The ACUMA Pipeline or its authors. © Copyright 2015 by ACUMA. All rights reserved. Printed in the USA

Join us Pictured above: ACUMA President Bob Dorsa and Consultant Tracy Ashfield.

Why

should you join ACUMA? Because, just like you, we realize the importance of CU mortgage lending to the future of the credit union movement. ACUMA is:

v an association whose only mission is CU mortgage lending with a membership made up exclusively of credit union professionals and their primary suppliers. v dedicated to serving the mortgage needs of both current and prospective credit union members and their families. v a committed advocate of CU mortgage lending constantly promoting the benefits of our programs and the value of membership. v actively working to build relationships with REALTORS速, Home Builders and other influential housing affiliated groups. v the single most powerful resource available when it comes to networking, relationship building and growing your market share. Join us today at

www.acuma.org

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In the pipeline: Insights and observations on CU mortgage lending

Credit Unions, REALTORS® Work Together to Put More Members in Homes

Tower Federal’s 100%-Financed Loan Product TailorMade for Local Market

By Tom Burton Tower Federal Credit Union is putting home ownership within reach of more of its members by working handin-hand with local Realtors. Tower Federal, based near Annapolis, Maryland, offers a 100%-financed mortgage product, which focuses predominantly on younger members who don’t have a down payment nest egg but can afford monthly home payments. “We looked at our market—what was there a need for,” explains Tower Real Estate Sales Manager Lori Vranish. “What we found was that our members were struggling with the downpayment and the closing costs. “The credit was there, the job stability, too,” Vranish says. “To provide some relief and get more members into homes, we felt the 100% product was the best way to do that.” Tower created the 100%-financed loan in 2010 “when we noticed a real need” after the GSEs dropped their product from 100% to 95%-financed, Vranish explains. “At the same time, not many lenders were offering that,” she notes. Knowing the product’s flexibility, Realtors work with member buyers to find suitably priced homes. The result: 140 loans for $35.4 million have closed, representing home sales that might not have happened without the 100%-financed product. “For buyers that are short on liquid cash, this is a great product,” says Realtor Eric Pakulla, whose team has put many buyers in homes with the 100%-financed product.

“We haven’t set the bar so high on the credit score. … By doing this we’ve proven to [real estate] agents we’re a top player in the mortgage lending community.” Lori Vranish Pakulla notes that many Tower members can qualify for the loan with good credit scores and income, but lack the downpayment. “This is a better alternative to FHA since not all buyers have 3% (downpayment) or can get relatives’ gifts.” Both Pakulla and Tower’s Vranish say knowledge of the local market plays a key role in helping people become homeowners. And Pakulla praises Tower for engaging Realtors and making it easier to work with potential home buyers. “Tower is incredible,” Realtor Pakulla says. “They bring us in, and we work together. They educate us on the product, hold quarterly meetings with us. They communicate so well.” Realtor Tina Cheung agrees: Tower is “very proactive—anytime they roll out

a new product, we are advised. They include us in all of their discussions.” Vranish says Realtors are extremely important to Tower: “We regard them as partners. Communicating with Realtors is just as important as communicating with the member.” “We have a process in place with our mortgage loan department … to have touch points to keep the real-estate agent updated during the loan process, such as when the appraisal comes in, when the title work is done,” she explains. “At the end of the day we are all trying to put the member in a new home.” Vranish says Tower conferred with Realtors when the 100%-financed product was being developed. “We wanted to make sure Realtors were seeing the same thing that we were. And it turned out that they were.” Tower has been able to obtain 25% mortgage insurance coverage on its product with the following overlays: n Maximum debt-to-income of 41% (Fannie Mae allows 45% on 97% financing.) n Minimum FICO score of 680 (same as Fannie Mae on 97% financing). n Allowed for single-family homes in five states and condos in four. Tower’s 100%-finance product also allows for a 3% seller contribution or gifted closing costs. “Unlike Fannie’s 97, we do not assess LLPA’s [loan-level price adjustments] that compromise the impact of the higher LTV,” Vranish says. Continued on page 7

July 2015 - PIPELINE 5

In the pipeline: Insights and observations on CU mortgage lending

The Single Best Way to Generate New Loans Each and Every Month By Brian Sacks This is the question every loan officer asks themselves. It is the question that they search for online and in the publications. We look to other industries and try to copy the most successful in our own companies. Whenever I do consulting, speaking or training this is always the TOP question so let’s spend some time digging into the question itself and some possible answers, OK?

THE QUESTION ITSELF IS ONE THAT GET US IN THE MOST TROUBLE

I hate to burst any bubbles but the bottom line is that there is NO ONE SINGLE BEST WAY to generate business. Thinking that there is can be very problematic and ultimately lead to a massive and rapid decline in your originations. The other problem it creates is always looking for the “next shiny” object or magic pill that never seems to deliver what was hoped. Go back a number of years and you will remember that there were massive telemarketing rooms that were very successful. Entire business models were created based on this technique. Then the “Do Not Call Lists” were enacted and enforced and large telemarketing rooms ceased to exist and those that did remain were not as successful as they had been in the past. Do you remember fax machines? Do you remember the world before the CAN SPAM act? I could go on and on but the point is that if your entire business model is built on only 1 marketing technique then you are at major risk. For that matter if your business is all coming from one Realtor– or one builder–or 0ne office, well your

6 PIPELINE - July 2015

as tracking your success with each strategy each month.

There is no one way to get 100 loans– yet there are 100 ways to get 1 new loan each and every month.

business is not built on a very strong and lasting foundation. We all know “You are only as good as your last deal.”

WHAT SHOULD YOU BE DOING THAT WORKS?

The truth is that there is NO ONE WAY to generate a hundred loans, however there are 100 ways to generate one. Now let’s dive in and look at the ways you can generate more business and do so consistently. Look at your business as if it was a CHAIR with 4 legs. Now I realize that might sound strange so please stay with me here, OK? If you are sitting on a chair right now as you read this then it likely has 4 legs. Take away one of those legs and you likely can still sit but are a bit wobbly. Now take away 2 legs and you will immediately fall off your chair. Your marketing must be built on a similar foundation. Pick any 4 of these strategies and make a plan to implement them as well

1. Send direct mail to a targeted list of prospects offering a solution to their issues. This could be direct mail to buyers who would be appropriate for a reverse mortgage, a 203 k loan, apartment renters who could buy, first time buyer or bond programs etc. Now that fewer people are mailing your piece actually has a better chance of being read and acted on. 2. Use social media like YouTube, Facebook, Linked-In and others to connect to potential referral sources, past clients, and prospects. This can be done with posts and with ads or both. 3. Create a newsletter ( online and in print) that consistently allows you to contact past clients and other referral sources, as well as prospects you have already spoken to. 4. Get builder business. Yes, I realize that many builders have in-house companies but you might have a program they don’t offer. Maybe your guidelines and overlays allow you to approve loans their in-house company can’t. 5. Get Realtor business. Focus on just 10-15 producers that you would like to get consistent business from. This is all about personal relationships and 10-15 is a very manageable number for almost any loan officer to handle. 6. Teach courses at your local home builders and Board of Realtors. If you want to know where the Realtors are then this is the place. By teaching you will automatically be

In the pipeline: Insights and observations on CU mortgage lending

positioned as the subject expert and easily be able to make new relationships. 7. Become active in your local homebuilders and Board of Realtors. This allows you to meet these future referral partners as a peer instead of someone begging for their business. 8. Have your own radio show so that you are positioned as an expert in your area. Many radio stations will actually sell you a 30-minute or 60-minute weekly spot. You can then go out and get sponsors to help you pay the cost of the show and possibly even make a profit. 9. Become a resource for your local press on all topics related to mortgages and real-estate. Find the radio and TV producers and print media editors and offer your services as an expert on the topic of mortgage financing. 10. Create a target list of attorneys, CPA’s and financial planners and work with them to create a mutually profitable referral model that benefits both of you. 11. Conduct online webinars targeted at prospects who would be appropriate for the programs you are offering and specialize in. 12. Write a book or free pdf that provides a solution to a problem a particular set of prospects have and offer it to them via the internet. This positions you as a subject matter

... there is NO ONE SINGLE BEST WAY to generate business. Thinking that there is can be very problematic ...

expert and the book/pdf is used as a lead generation tool. 13. Create a channel on You Tube or a page on Facebook or a group on Linked-In and provide valuable and consistent content that attracts business. I could go on and on with ideas but I want you to realize that Facebook, You Tube, Linked-In, a mobile app, etc. are NOT the answers to more production. Each can be used to grow your business and each of them should be.

THE KEY TO SUCCESS IN ORIGINATING IS…

Having multiple sources of business and multiple ways of generating new business. Each of these strategies must be trackable and accountable to you . Meaning you must know what is working and what is not working for you. Then you must take the time once a month to review the prior months activities and results. If one of your 4 strategies is doing well think of ways to expand and improve it. If one of the 4 is not working well take the time to learn why. Can it be fixed? Can it be tweaked? If not then you must replace it with another strategy. There is no one way to get 100 loans yet there are 100 ways to get 1 new loan each and every month. Try 4 of them at a time and you will have a consistent and predictable marketing program that can not be impacted if one leg stops working! Brian Sacks is a nationally renowned mortgage expert who has career closing of over 5924 transactions. He has trained tens of thousands of loan officers and company owners over the past 29 years on “How to Close More Loans–Make More Money–And Still Have A Life.” He has put together a FREE REPORT on The 4 Tools You Can Use To Immediately Grow Your Business at www.AgentsChaseYou.com Or join his Linked-In group–loan Officer Tips

“Work Together” continued from pg. 5

While the 100%-financed product is not limited to first-time buyers, Tower advertises it as a solution to them, using “as many channels as possible,” Vranish says, including rate sheets, website banners, mortgage articles and in the branches. “The Realtors we work with like it because it is, really, 100% and allowable seller contributions and gift rules make it a path of minimal resistance for prospective buyers,” Vranish explains. “It is obviously not intended as a substitute for FHA.” Interestingly, the loan is attractive not only to first-time buyers, Tower’s Vranish says, but also a segment of credit union members who want to trade up but don’t have the necessary equity. And sometimes, Vranish notes, members who qualify for the 100%-financed loan also qualify— and select—other products. So the product “gets them in the door, gets them looking for a home.” “We see a number of pre-purchases start out at 100% and then end up back at 97% or 95%, which leads us to believe it may be creating business and establishing confidence to get a buyer started,” she says. Working together with knowledge of the local market, Realtors like Pakulla and Cheung have found Tower Federal Credit Union to be a great partner. “Realtors across the nation would be wise to work with their local credit unions to put more people into homes,” Pakulla says. Says Vranish: “We’ve structured the product so that it’s attainable. We haven’t set the bar so high on the credit score. … By doing this we’ve proven to [real estate] agents we’re a top player in the mortgage lending community.” © 2015 American Credit Union Mortgage Association, All Rights Reserved

July 2015 - PIPELINE 7

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In the pipeline: Insights and observations on CU mortgage lending

ACUMA Workshops Bring Lots to Absorb By Bob Dorsa, ACUMA President The two-day summer ACUMA workshops offered exceptional content and wonderful opportunities to network. The events were held on each coast— San Francisco in May and Boston in June, bringing a mix of knowledge and experience for attendees to absorb. Amanda Phillips, the top compliance expert from Accenture, opened the program at both sites. She talked in-depth about best practices around the impending implementation of TILA-RESPA changes, also known as the “Know Before You Owe” (KBYO) rules to better protect homebuyers that have made the process much more challenging for lenders. And as you know, no matter how well-intended the new regulations may be, they are a drain on resources from both a “people” and “process” perspective, affecting human resources, IT, lending and marketing. Amanda talked about the need for cross-functional

Amanda Phillips–Great Explanation and Update on TRID...

ACUMA Workshops–An intimate combination of Education and Networking...

teams from these departments to work together and be ready for any unexpected consequences resulting from KBYO implementation. Amanda’s presentation provided great information and featured Q&A exchanges that helped prepare attendees for the changes. After a break for lunch, the group was joined by David Feldhaus, Senior Vice President and Director of External Affairs for the Federal Home Loan Bank of Chicago. David crafted a great presentation that reviewed key milestones in the history of the FHLB system. He pointed out that although the 11 individual FHLBs operate separately, they collectively play a key role in helping credit unions deliver competitive mortgage loans to their members. David reviewed the Mortgage Partnership Finance program (MPF), describing how it supports the FHLBs long-term focus on home ownership—that is, achieving the American Dream. He emphasized that FHLBs are an important conduit for mortgage loans and help credit unions manage their balance sheet. The second afternoon session saw Shuaib Hassan discuss the development of best practices for loan-servicing oversight. Shuaib, who manages servicer audits, forensic loan reviews and loss analysis/servicer surveillance for Phoe-

Dave Feldhaus–Great presentation on the FHLB system

nix Capital, used case studies to uncover warning signs and remediation strategies for compliance issues. After this full day of education, attendees enjoyed a networking reception before splitting up into groups to continue discussions over dinner with ACUMA’s fine sponsors and then retiring for a good night’s rest. Day Two of the workshops opened with another tasty hot breakfast. I enjoyed being a fly on the wall, listening to the various networking and business discussions going on throughout the room. It reminded me that while ACUMA is known for its larger annual conference each fall (375 attendees), workshop at-

July 2015 - PIPELINE 9

In the pipeline: Insights and observations on CU mortgage lending

tendees sounded a very positive note in the event surveys about enjoying the smaller event (50-60 attendees) where they can take advantage of many networking and relationship-building opportunities. Then it was on to the morning’s panel discussion of “Measuring Success in the Marketplace” moderated by ACUMA’s energetic and knowledgeable consultant, Tracy Ashfield. She was joined in San Francisco by Kevin Strangman, Senior Vice President of Altra Federal Credit Union, and Todd Helmerson, Vice President of Sales at Financial Partners Credit Union; and in Boston by Alissa Sykes, Vice President of Lending at Sunmark Federal Credit Union, and Michael Spiellman, Vice President of Marketing/Business Development at Pathways Financial Credit Union. Attendees enjoyed the “up close and personal” opportunity to hear the panel discussion and listen to the questions and comments of their peers in the audience. The focus was how to measure market share, loan growth and overall marketplace success. I could look into the audience and see the intensity— people were using their iPhones, laptops and even pen-and-paper to take notes in anticipation of sharing what they learned with their colleagues back in the credit unions.

SIDEBAR

Brian Sacks–Very engaged...

Next, Brian Sacks, a nationally known mortgage and real-estate expert, shared his knowledge of the mortgage market with the group. Brian, whose comments are featured regularly on CNN and MSNBC, has closed more than 8,300 mortgage transactions totaling over $1 billion since 1985. It’s easy to see that he has earned that business in part with effective marketing strategies, and he found immediate rapport with our group. Brian thoroughly discussed many of the common mistakes made by loan

originators. He offered strategies for success and spoke about the importance of working with Realtors as well as borrowers. Perhaps the most fun of his presentation was putting him in the hot seat for “Let’s Stump Brian.” Audience members posed the toughest questions that their staff members struggle with, and Brian provided effective answers to help deal with each situation. And there was a lot at stake: the toughest questioner was rewarded with a Fitbit fitness wrist device, a prize symbolizing a credit union’s need to “keep

What Eggs-actly Is Going On?

Adding a bit of levity to the proceedings, ACUMA President Bob Dorsa made sure attendees were awake and listening when he launched into an explanation of why eggs have become so expensive to serve at events such as the ACUMA workshops. Apparently, eggs are not all they’re cracked up to be. Bob, a longtime events planner, described the impact of the Avian flu on the availability of fresh eggs for purchase by event food purveyors. He noted that ACUMA continues to offer hot breakfasts to attendees and got into some depth on how ordering is accomplished. Happily, before he could continue on the topic for too long, Bob noticed a bewildered look or two from the audience and concluded his remarks before being accused of laying an egg.

10 PIPELINE - July 2015

Beth Millstein–Fannie Mae Boston Presentation

In the pipeline: Insights and observations on CU mortgage lending

moving” forward with their mortgage loan programs. Returning to ACUMA to discuss Dodd-Frank implications, the next speaker, Kris Kully, focused on some of the consequences of recent U.S. Department of Labor rulings affecting mortgage department employees. Originally, Kully, a veteran legal counsel and partner at K&L Gates legal firm in Washington, D.C., came to ACUMA to address issues related to Dodd-Frank legislation, so we can now say that something good did come from Dodd-Frank, despite the additional work it has made for financial institutions. Kris’s presentation noted that as if we don’t already have enough lending regulations, we now also must be concerned with human resources issues and an increasingly complex formula for calculating overtime pay. It’s a slippery slope at best, but Kris has the expertise and passion to translate the regs into sound business practices. That’s not an easy topic to digest, but Kris put the audience at ease by opening her presentation with a trivia question about an event that was of huge interest to her young son: the international Pokemon convention. I’ll let you discover more about that on your own, but I do have to say that Kris certainly has her priorities in order! Day Two’s lunch brought another opportunity for sharing ideas of the work front. Then the afternoon program began with a word from experts in the NCUA’s

(l) Alissa Sykes (c) Michael Spiellman and (r) Tracy Ashfield–Great Discussion

Office of Consumer Protection—Robert Polcyn in San Francisco and Heather Murphy in Boston. Each provided insight on their experiences as Fair Lending examiners. Although this topic has not been topof-mind, the NCUA presentations made it clear that it should be. Both speakers shared examples of activities that raise red flags and corrective measures that must be taken to avoid violations. From my view it is always a privilege to work with NCUA staff. I find that a collaborative approach to business works best, especially when both parties are forthcoming. The engaging NCUA presentation was followed by another longtime friend and ACUMA member, Fannie Mae. Speaking in San Francisco was Tammy

Kris Kully–Always Post on with Legal updates

Trefny, Senior Account Manager of Business Development, and in Boston, Beth Millstein, Director of Business Development. It was a pleasure hearing their perspective on today’s market and what’s ahead. I particularly enjoyed hearing them talk about the need to keep “common sense” in lending. Tracy Ashfield returned as the final speaker. She continues to bring a wealth of knowledge. Working with many credit unions, she shared relevant examples of how CUs create meaningful and successful niches in their marketplaces. It’s a joy to watch Tracy in action, and she deserves heartfelt thanks for creating and hosting the 2015 workshops.

Tammy Trefny–Fannie Mae San Francisco Presentation

July 2015 - PIPELINE 11

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Teamwork makes our Dream Work

ACUMA

â&#x20AC;&#x2122;s Annual Conference hosts the largest gathering of mortgage lending professionals within the credit union community. Participants expand their knowledge through a program featuring nationally known speakers and a spectrum of topics tailored to current and future mortgage lending needs. Using cutting-edge technology, the three-day event provides a seamless educational experience with ample time for peer-to-peer networking.

The conference program combines general sessions featuring some of the brightest stars in the industry with in-depth breakout sessions for more extensive knowledge on individual topics. In addition, the conference blends an outstanding venue with exceptional dining to complete a truly valuable and unforgettable experience for all participants. Join us September 13-16, 2015, at The Bellagio in Las Vegas.

ACUMA 2015 Annual Conference September 13-16 Bellagio Las Vegas

Keynote Event

Featured

Liz Wiseman The Multipliers

ACUMA brings together the Are you a genius or a genius maker? We’ve all had experience with two dramatically different types of leaders. The first type drains intelligence, energy, and capability from the people around them and always needs to be the smartest person in the room. These are the idea killers, the energy sappers, the diminishers of talent and commitment. On the other side of the spectrum are leaders who use their intelligence to amplify the smarts and capabilities of the people around them. When these leaders walk into a room, light bulbs go off over people’s heads; ideas flow and problems get solved. These are the leaders who inspire employees to stretch themselves and get more from other people. These are the Multipliers. And the world needs more of them, especially now when leaders are expected to do more with less. In this highly engaging talk, Liz Wiseman will share the research behind Multipliers and illustrate the resoundingly positive and profitable effect these Multipliers have on organizations–how they get more done with fewer resources, develop and attract talent, and cultivate new ideas and energy to drive organizational change and innovation. She’ll introduce the five disciplines that distinguish Multipliers from Diminishers and provide practice tips for leading like a Multiplier. Liz Wiseman is the President of the Wiseman Group, a leadership research and development firm headquartered in Silicon Valley, California. Some of her recent clients include: Apple, Disney, Dubai Bank, Nike, PayPal, Roche/Genentech, Salesforce.com and Twitter. She is the author of “Multipliers: How the Best Leaders Make Everyone Smarter,” a Wall Street Journal bestseller and “The Multiplier Effect: Tapping the Genius Inside Our Schools.”

Mike Rayburn

Edward J. DeMarco

Jared Ihrig

Motivator - Entertainer

Milken Institute

CUNA

The “What If...” Experience

The Future of Housing Finance

Mike Rayburn’s The “What If…?” Experience presentation will inspire innovation, re-awaken your natural creativity, renew and harnesses your sense of life purpose, open your mind to all you never knew was possible, and exhort you to become the best at what you do, a master of the things that matter. The message is simple, powerful and memorable, like a great song hook that you will repeat throughout the conference. Oh, and it’s hilarious! Drawing from his success as an entrepreneur as well as a Carnegie Hall headliner, Mike is a master at increasing profitability and impact by inspiring you to become possibility thinker and a virtuoso performer... all by daring you to ask the question, “What if...?”

Ed DeMarco is a Senior Fellow in Residence at the Milken Institute Center for Financial Markets and a Visiting Professor in the Owen Graduate School of Management at Vanderbilt University. From September 2009 to January 2014 DeMarco served as Acting Director of the Federal Housing Finance Agency (FHFA), the conservator for Fannie Mae and Freddie Mac and regulator of those companies and the Federal Home Loan Banks. DeMarco was the Chief Operating Officer and Senior Deputy Director of FHFA and its predecessor from 2006 to 2009. From 2003 to 2006 he was an executive at the Social Security Administration (SSA), where he was Assistant Deputy Commissioner for Policy.

Washington, Regulation and the need for your Focus on Advocacy Issues

Platinum Sponsors

Gold Sponsors

Silver Sponsors

Jared Ihrig is Chief Compliance Officer for the Credit Union National Association. He is responsible for all Compliance-related activities relative to the CFPB, Federal Reserve Board, the Consumer Financial Protection Bureau, NCUA and other agencies in this context. Ihrig also monitors mortgage lending legal and regulatory issues as they relate to the area of consumer protection, and the potential impact to credit union lending and operation functions. Ihrig serves as the primary staff liaison to CUNA’s Consumer Protection Subcommittee. Previously, he was the Regulatory Counsel in CUNA’s Washington, D.C. legal department.

Conference

Agenda*

Speakers

Monday September 14th 7:30 - 8:30am

best minds in CU Mortgage!

Buffet Breakfast 9:00 - 10:00am

Pre-Conference Workshops - Group 1 10:30 - 11:30 am

Pre-Conference Workshops - Group 2 11:45 - 1:00pm

Welcome to Las Vegas Lunch 1:15 - 2:15pm

Washington, Regulation and the Need for Your Focus on Advocacy Jared Ihrig, CUNA 2:45pm - 4:30pm

Why Learning is Better Than Knowing in the New Game of Work

Kris D. Kully

Douglas G. Duncan

Tracy Ashfield

Partner, K & L Gates

Fannie Mae

Ashfield & Associates, LLC

Regulatory Issues

Economic and Housing Update

Session Moderator

Welcome Back to Las Vegas Reception

Tracy Jean Ashfield is President of Ashfield and Associates, a consulting and training firm that assists credit unions with mortgage lending strategy, development, policies, product design, training and strategic planning. Tracy also works with the NCUA and NASCUS to provide training and education on residential mortgage lending for examiners and regulators. Since 2001, Tracy’s consulting work has benefited credit unions and their members. She has worked with the largest mortgage-granting credit unions to enhance their programs, and she has helped credit unions new to mortgage lending establish programs. Her recommendations have propelled her clients to become efficient, profitable real estate lenders.

Tuesday September 15th

Kully concentrates her practice on federal and state regulatory compliance matters affecting providers of consumer financial services. She advises clients on compliance with licensing, consumer protection, and other practice requirements facing financial institutions including residential and commercial mortgage lenders, brokers, servicers, purchasers, and securitizers, as well as other participants in the real estate finance industries. That advice touches all aspects of the industries, including the origination, purchase, and servicing of consumer financial products, including loans, credit cards, lease agreements, retail installment contracts, receivables, and deposits. She also participates in regulatory compliance due diligence activities.

Sponsors

Douglas G. Duncan is Fannie Mae’s senior vice president and chief economist. He is responsible for providing all forecasts and analyses on the economy, housing, and mortgage markets for Fannie Mae. Duncan also oversees corporate strategy and is responsible for strategic research regarding external factors and their potential impact on the company and the housing industry. Duncan is Fannie Mae’s source for information and analyses on the external business and economic environment, the implications of changes in economic environment to the company’s strategy and execution, and forecasting for housing activity, demographics, overall economic activity, and mortgage market activity.

Liz Wiseman 5:30pm

7:30 - 8:30am

Buffet Breakfast 8:45 -10:00am

Economic and Housing Update Doug Duncan, Fannie Mae 10:30am - noon

The “What If…?” Experience Mike Rayburn Noon to -1:15pm

Lunch 1:30pm - 2:30pm

Breakouts 1) Get to Know Today’s Home Buyers 2) Understanding the Unique Compliance Risks of Online Lending 3) Your Secondary Market Loan Sale Strategy 3:00pm - 4:00pm

Breakouts 1) Managing Loan Originators–a Discussion on Best Practices 2) HMDA-How it is Changing 3) TBD - Pending Market Updates... 4:30pm – 6:00pm

Reception & Networking Extravaganza…

Wednesday, September 16th 7:30 - 8:30am

Buffet Breakfast 9:00am -10:00am

Future of Housing Ed DeMarco, Milken Institute 10:30am - 11:30am

Recruiting and Retaining Millennials Tracy Ashfield – Panel Discussion 11:30am - 12:45pm

FAREWELL LUNCH 1:00pm - 2:30pm

Success in 2016–What’s it Going to Take? A Discussion with CU’s Top Lending Executives. 3:00pm

Adjournment *Agenda subject to change. Visit acuma.org for updates

Conference Host:

The Bellagio Resort & Casino

nspired by the beautiful villages of Europe, the AAA Five Diamond Bellagio Resort & Casino overlooks a Mediterraneanblue, 8 ½-acre lake, where fountains perform a magnificent aquatic ballet choreographed to music and lights. Within Bellagio are award-winning dining experiences including two AAA Five Diamond restaurants, Julian Serrano’s Picasso and Le Cirque from the renowned Maccioni family. Bellagio is home to an impressive collection of luxury retailers including Louis Vuitton, Giorgio Armani, Gucci, Tiffany & Co., Breguet, Prada, Chanel, Dior, Fendi, Bottega Veneta, Hermès and OMEGA. A world-class art gallery, the exquisite Conservatory & Botanical Gardens, the stunning “O” by Cirque du Soleil, a luxurious spa and salon, dynamic nightlife at The Bank, Hyde Bellagio and Lily Bar & Lounge and an elegant casino all add to the extraordinary Bellagio experience.

Conference Registration Information Regular Primary ACUMA Member Individual Registration (Early Bird) . . . . . . . . . . . . . $949.00 After August 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,049.00 After September 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,099.00 Credit Union/CUSO Non-ACUMA Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,299.00 Affiliate Member – (Maximum 2 per company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500.00 (Fees are per person) NEW… ACUMA Concierge Golf Sunday September 13, 2015 Contact Bob Dorsa, bob.dorsa@acuma.org, for details. Bellagio Resort & Casino Reservations – ACUMA has a Link on the Registration site to book your room at the Bellagio online OR you may use the Group Code ACUMA2015 if you contact the Bellagio directly. You will have several options and may choose to upgrade your accommodations. Your room rate total will be $224, which includes the required Resort Fee, which includes your Guest Room Wi-Fi, Access to the Fitness Center and a newspaper each day.

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Demystifying the Federal Home Loan Banks:

Weâ&#x20AC;&#x2122;re Your GSE By David Feldhaus

Demystifying the FHLBanks

Here is a little known fact that could make a big difference to your credit union: Of the three Government Sponsored Enterprises created by Congress to encourage homeownership, only one is a cooperative. The Federal Home Loan Banks (FHLBanks), founded in 1932 during the Great Depression to promote economical housing finance, today exist to support homeownership as well as to serve a critical role as a reliable source of short-term liquidity and long-term funding for our member financial institutions in all economic cycles. m The fact that each of the 11 regional FHLBanks is owned by our member institutions, and operated on their behalf, fundamentally differentiates our organization from other entities. Credit unions understand well how our cooperative structure allows us to serve as â&#x20AC;&#x153;trusted advisorsâ&#x20AC;? for our members. We share the same passion to assist our members with their financial challenges and help them better serve their communities as you do with your members. Added to this is our GSE status, which enables us to reliably provide low-cost financial products and services to them. Together, these features make the FHLBanks a powerful partner for your credit union.

July 2015 - PIPELINE 19

Demystifying the FHLBanks

The

11 FHLBanks across the country collectively serve about 7,300 members including credit unions, banks, thrifts, insurance companies and Community Development Financial Institutions (CDFIs). Credit unions are the fastest growing membership component, accounting for 1,272 or 17% of all FHLBank members as of the beginning of the year. Why are they joining? Increasingly, many recognize the capabilities we have and how we can benefit their institutions. Some join and immediately plan to borrow from us or sell mortgages to us. Others join with no intention of ever using us–and that’s OK too. For them, we are a “break glass in case of emergency” contingency plan that allows them to sleep better at night. Either way, there is value in belonging to a GSE cooperative.

What’s in a Name?

We may lack a cute, easy-to-remember name like the other housing GSEs—Fannie Mae and Freddie Mac— but our name speaks to our historical mission and purpose. Each word denotes an important characteristic. “Federal” reflects our Congressional origin and public mission that provides the implicit backing from the U.S. government, allowing us to raise funds at the lowest possible cost. This perception of government support in the bond market also ensures we can issue debt whenever the U.S. Treasury can, making us an incredibly reliable source of liquidity no matter what the economic conditions. The liquidity crisis of 2008 convincingly demonstrated our worth. We were able to provide our members with continuous, daily access to the global bond markets, even as their other sources of wholesale liquidity dried up. “Home Loan” speaks to the importance of our traditional housing finance mission to promote and encourage

Figure 1

homeownership. Today, however, Congress has expanded our mission to facilitate broader lending for community financial institutions in areas such as small business, agriculture and agri-business, as well as support for community development activities. Finally, as lenders, each of us is a “bank,” but as memberowned cooperatives, we are operated to earn a reasonable return for our members, but not to maximize profits at their expense. Members must purchase stock to initially join and buy additional stock to capitalize their borrowings, for which they receive dividends. All FHLBank stock is bought and sold at par–it never trades. When members repay their borrowings, they can have their additional stock repurchased by their FHLBank, which often occurs on the same day. This structure allows us to expand and contract our balance sheet as our members’ needs demand, but remain safely and soundly capitalized at all times. In essence, the FHLBanks serve as financial intermediaries linking “Wall Street to Main Street.” By issuing debt in the global capital markets, we channel low-cost funding from investors around the world to our members in local communities. Although most people have never even heard of the Federal Home Loan Banks, we are quietly operating behind the scenes as a crucial part of the “plumbing” that helps the U.S. financial system ensure liquidity and funding is available when needed.

A Decentralized System, Uniquely Bound Together

Historically, there have been 12 FHLBanks with districts that follow state lines. Due to the recent voluntary merger of the Des Moines and Seattle FHLBanks, the first such combina-

FHLBank System Credit Union Members and Borrowings

20 PIPELINE - July 2015

During the housing and economic crisis, the Federal Home Loan Banks demonstrated their ability to meet the credit needs of members by increasing the amount of FHLBank advances to credit unions by $27.2 billion between Q1 2007 and Q3 2008. After declining as loan demand fell, today the level of advances to credit unions is again rising as more credit unions choose to join the FHLBanks and borrow from them.

Demystifying the FHLBanks

Figure 2

FHLBank Districts

Eleven FHLBanks serve districts that include all states, D.C. and 4 U.S. territories.

tion in 83 years, today 11 FHLBanks serve the 50 states, the District of Columbia and 4 U.S. territories. Membership is determined by the state in which members are chartered. It is important to note that each FHLBank operates as a separate entity; we are not branches of each other. Each has its own board of directors, management, culture and views reflecting the regional differences of their members. As a result, you should inquire with the FHLBank serving your district about the specific products and services they offer, because they do vary. That said, we do talk to each other continually, comparing notes and experiences, leading many of our products and services to be very similar. We also share a common regulator, the Federal Housing Finance Agency, which encourages a certain level of commonality. Additionally, we are bound together through an unique mandate that each FHLBank is jointly and severally responsible for the debt of the others. This means that if one FHLBank were not able to repay its bond obligations for any reason, the other FHLBanks would be required to ensure the debt is paid in full. This feature gives investors in our bonds an added measure of security, providing the lowest possible cost of funding. It also insulates American taxpayers from the unlikely event of a government bailout because the cost of one, or even several, FHLBank failures at the same time likely would be absorbed by the other FHLBanks. This unique tie encourages communication among the FHLBanks. We in Chicago want to know what is happening at our sister FHLBanks and they want to know what we are up to. It is a unique, self-policing system that works well for us, our members and the country.

What Products and Services are Offered?

All FHLBanks offer a menu of loan products with a wide variety of terms and structures to provide members with

same-day, low-cost funding and help them mitigate interest rate risk. Historically, our main product has been loans, called “advances,” that can be simple or structured, depending on a member’s needs. For lenders who portfolio their mortgages and other loans, FHLBank advances can be an ideal product to help match the duration of assets to liabilities. A significant benefit of advance funding is the ability to customize the loans for each member. Maturities can range from overnight to 30 years. Interest can be fixed or floating. Repayment schedules can be bullet or amortizing. If needed, advance structures can incorporate options such as caps, floors, collars, swaps, swaptions or other features to suit a member’s specific requirements. Perhaps as importantly, expert FHLBank staff is available to consult with members about these features. They can discuss not only the market implications, but the accounting consequences as well. As employees of a member-owned cooperative, their only goal is to tailor a solution that works best for you. To fully understand how advances work, you need to be aware of the prominent role that collateral plays. Unlike most lenders, our loans must be over-collateralized at all times. Borrowers are required to pledge high-quality collateral, such as 1-4 family mortgages, agency MBS and Treasury bonds, with a value in excess of their borrowings. The amount of the haircut depends on the quality of the collateral, which can be swapped out or topped up, if needed. FHLBanks are always in a secured position and we monitor the collateral value closely to ensure it is sufficient. Largely because of this, no FHLBank has ever lost money lent to a member in 83 years of existence. As a GSE lender, credit losses are not part of our core lending business. Collateral also comes into play regarding the price of an advance. As a cooperative, we seek to offer all members the same interest rate on a given day for a given term. Weaker mem-

July 2015 - PIPELINE 21

Demystifying the FHLBanks

bers who pose a greater credit risk receive the same rate as stronger members. However, the amount of the required collateral may be increased, and the method of securing it may be heightened, such as by listing or by requiring physical delivery of the documents. Beyond advances, the FHLBanks also offer products such as letters of credit that provide members a low-cost and efficient way to attract and secure agreements with third parties. Letters of credit are a way to leverage our Aaa/ AA+ long-term debt credit rating at a competitive price to help their communities. They can be used to provide liquidity by serving as an alternative form of collateral to secure municipal deposits. They can also be used to provide financing opportunities through credit enhancement to support an affordable housing or community development project. The FHLBanks also offer a wide array of products and tools to directly support the affordable housing and community lending initiatives of our members. These include down payment assistance grants to low–and moderate–income homebuyers, grants to finance affordable rental and ownership housing, low-cost credit programs to assist in the development and revitalization of communities, disaster relief programs, and revolving loan funds to economic development projects. Each FHLBank has different products designed for its region, but the intent is the same. These products demonstrate how the FHLBanks are able to harness the financial capabilities of a GSE within a cooperative structure to deliver economical and reliable financing solutions for our members. Your regional FHLBank can be a powerful partner as you seek to serve the financial needs of your members and your community.

These programs were begun to help community lenders retain more of the value of their mortgage originations. Lenders, particularly smaller lenders who know their customers better than any GSE can, have traditionally originated very high-quality fixed-rate mortgages. However, they often were not able to realize their full value when they sold them into a secondary market that priced the loans largely based on the volume delivered, rather than their credit quality. As the only other housing GSE, the FHLBanks are ideally situated to add competition to this market. We are able to raise funds at the same rates, or even slightly better rates, as our sister GSEs, and as tax-exempt cooperatives, we can offer our members the most competitive price for their mortgage loans. However, the FHLBank mortgage programs have an interesting twist consistent with the our cooperative structure: participating members have the opportunity to share the credit risk of the loans they originate with their FHLBank and get paid for it. Members sell the loans to the FHLBanks through one of the mortgage programs, alleviating members of the interest rate risk. But in the traditional products, participating members are paid by their FHLBank based on the credit performance of their loans, rather than paying guarantee fees to compensate someone else to take the credit risk. The programs use slightly different structures to essentially do the same thing. Participating members using the tradi-

The FHLBanks also offer a wide array of products and tools to directly support the affordable housing and community lending initiatives of our members.

Figure 3

Mortgage Program Participation, by FHLBank

Mortgage Programs That Reward Lenders for Their Credit Decisions

Among the more recent products the FHLBanks have begun offering are programs designed for members wishing to sell mortgage loans rather than hold them in portfolio. First begun in the 1990s by our FHLBank in Chicago, today all of the FHLBanks offer one of two mortgage programs to their members as alternatives to the secondary mortgage market. The Mortgage Partnership Finance® (MPF®) Program is currently available to members of nine FHLBanks, while the Mortgage Purchase Program (MPP) is offered by two FHLBanks. While the structures of these programs differ slightly, they both allow participating members to originate, sell, and service (if they choose) fixed-rate residential mortgage loans. Often, these programs are the only option available for low-volume lenders that have difficulty accessing the secondary market. Without these programs, many members would not be able to offer their customers long-term, fixed-rate mortgages.

22 PIPELINE - July 2015

All of the FHLBanks offer a mortgage program for members wishing to sell loans in the secondary market. Many of the FHLBanks have been offering these products since the late 1990s.

Demystifying the FHLBanks

tional MPF products receive monthly fees that vary depending on the product. A First Loss Account (FLA) is established to absorb expected losses, after the borrowers equity and any Primary Mortgage Insurance. Participating members credit enhance their loans to the equivalent of a AA-rate mortgage bond, for which they receive monthly credit enhancement (CE) fees. These CE fees can be reduced or eliminated to compensate for losses in the FLA, depending on the product. Members bear any further losses, to the AA level, by directly reimbursing the FHLBank. Catastrophic losses beyond this level are the responsibility of the FHLBank. Additional MPF products have been developed to address members’ risk-based

Figure 4

It is important to contact the regional FHLBank serving your area. Program and product availability can vary.

capital positions and other portfolio management strategies. The MPP uses a different approach to share the risks: the FHLBank establishes a Lender Risk Account (LRA) at the time the loans are sold. Funds not used to absorb losses are disbursed to the member over a predetermined schedule. The use of the LRA structure and payment schedule are capitalfriendly to MPP sellers. Regardless of the approach, all of the MPF and MPP risk-sharing products allow members to bifurcate the risks of their loans and better allocate them between originators and investors. Amore efficient mortgage financing is the result.”

MPF® Program Loan Performance

FHLBank members know their customers and understand local market conditions. They are in the best position to ensure their customers receive mortgages appropriate for their financial situations. As a result of this knowledge and the risk-sharing partnership of the MPF Program, the credit performance of MPF loans have been significantly better than the industry average for conventional loans, both before and since the financial crisis.

July 2015 - PIPELINE 23

Demystifying the FHLBanks

Options Without Risk Sharing

The FHLBanks are working to provide members with more channels to the secondary mortgage market for the mortgage loans they wish to sell.

The MPF Program also has developed several products that allow members to sell their loans to other investors without a risk-sharing structure. For example, the MPF Xtra® product allows members to sell conventional, conforming loans through the MPF Program to the FHLBank of Chicago, which in turn sells the loans to Fannie Mae in a back-to-back transaction. Aggregating larger volumes of loans from across the FHLBank System affords the opportunity for better loan execution. A similar back-to-back structure between the FHLBanks and Redwood Trust, called MPF Direct, allows members to sell their nonconforming, jumbo loans to $1.5 million. And our new MPF Government MBS product allows members to sell FHA, VA, USDA Rural Housing Service and HUD Section 184 tribal loans to their FHLBank for placement into Ginnie Mae securities. These products are designed to give members more choices by providing numerous channels for their loans into the secondary market, helping them to better serve homebuyers. Servicing for most MPF loans is performed by the participating members who sell them. Remittance options can include actual/actual, schedule/schedule or single remittance, depending on the product. Additionally, members usually can choose to sell loans servicing-released, if they wish. In that case, the servicing transfers to a third party provider that has agreed not to cross sell to the borrower. Finally, be aware that some MPF products that involve sales to other investors, such

Figure 5

A Cooperative for Cooperatives— We’re Your GSE

I hope I have cleared away enough mystery about the FHLBanks to convince you to take the next step and talk to your local FHLBank about what they can do for you. We were created to help local financial institutions, like yours. As cooperatives, we exist to help our members and their communities by delivering economical and reliable funding products. As GSEs, the FHLBanks can be powerful partners, in good times and especially in bad. I encourage you to find out for yourself. Please visit www.fhlbanks.com to determine which FHLBank could service your credit union and to learn about their membership requirements. For more information about MPF Products visit www.fhlbmpf.com.

David Feldhaus is Senior Vice President, External Affairs with the Federal Home Loan Bank of Chicago. This content is a condensed version of “Taking the Mystery Out of the Federal Home Loan Banks,” a presentation Dave shared at recent ACUMA Workshops. You can contact Dave at dfeldhaus@fhlbc.com. Mortgage Partnership Finance, MPF and MPF Xtra are registered trademarks of the Federal Home Loan Bank of Chicago.

MPF Traditional Product Credit Loss Structure

24 PIPELINE - July 2015

as MPF Direct, do not allow the servicing to be retained; only servicing-released sales currently are permitted.

The risk-sharing structure of the traditional MPF products establishes a First Loss Account to absorb expected losses, after the borrowers’ equity and any Primary Mortgage Insurance. Participating members credit enhance their loan to the “AA” level, for which they receive monthly “CE fees.” These fees can be reduced or eliminated to compensate for losses in the FLA, depending on the product. Members bear any further losses, to the “AA” level, by reimbursing the FHLBank. Catastrophic losses beyond the “AA” level are the responsibility of the FHLBank.

We are all taught to share share at at an an early early age. age.. .

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Partner Partner with with Guild Guild Mortgage Mortgage Company Companytoday. today.858.790.0701 858.790.0701www.guildcorrespondent.com www.guildcorrespondent.com Guild Mortgage use oror distribution. AZAZ BK# 0018883, Mortgage Company Company is is an an Equal Equal Housing HousingLender. Lender.Guild GuildMortgage MortgageCompany CompanyNMLS NMLS#3274 #3274For Foruse useby byReal RealEstate EstateProfessionals Professionalsonly. only.Not Notintended intendedforforgeneral generalpublic public use distribution. BK# 0018883, OR ML 176. Licensed subject to to change without notice Licensed by by the the Department Department of of Business BusinessOversight Oversightunder underthe theCalifornia CaliforniaResidential ResidentialMortgage MortgageLending LendingAct. Act.Regulated Regulatedbybythe theCO CODivision DivisionofofReal RealEstate. Estate.Guidelines Guidelines subject change without notice

Feature Article

26 PIPELINE - July 2015

Re-Inventing the cooperative

Can a renewed focus on the cooperative idea help credit unions continue to grow their mortgage lending market share?

Re-inventing the Cooperative Interpreting Past Gains to Ensure Future Success By Bob Dorsa, ACUMA President

Credit unions have done well in the past decade. Membership continues to increase. Assets continue to grow. And importantly for mortgage-lending CUs, market share continues to climb.

July 2015 - PIPELINE 27

Re-Inventing the cooperative

Consider these numbers: n This year for the first time, credit union savings balances topped the $1 trillion mark. n Credit union membership approached 103 million with an annualized growth rate around 4%. n Credit union loan delinquency rates were at their lowest level since August 2007, the date economists use to mark the beginning of the mortgage crisis. n Credit union loan-to-share ratios are expected to approach 86% by year-end 2016, the highest since 1980. n Market share for credit union first-mortgage loans rose to 8.36% in the first quarter of 2015.

ut as the indicators move upward, the going gets tougher. For continued success, credit unions need to step back and reflect on the good fortune that has come to them, specifically by examining the reasons for success and then planning how to build on it into the future Lately, much has been made about the Millennials—the next generation—and how to engage them and turn them into loyal credit union members. And while Millennials understandably seek convenient access to financial institutions

Figure 1

(think mobile banking and all the technology that goes with it), at a more basic level, they want what previous generations have wanted: someone who will be on their side, helping them instead of taking advantage of them, and making them feel a part of a larger, like-minded group. For them, as well as their older counterparts like Baby Boomers, we may want to look to the past for a glimpse of the future world.

Sheet1

Credit Union Total Members

$MIL 102000 100 100000 98 98000 96 96000 94 94000 92000 92 90000 90 88000 88

12 10 8

86000 86

6 4

2009 2010 2011 1 2 3

Source: CUNA U.S. Credit Union Profile

28 PIPELINE - July 2015

2012 4

2 0

2013 5

2014 Q1-15 6 7

Success in the 21st Century

Arguably, the biggest factor in the rise of credit unions in the 2000s can be traced to its roots. The differentiator for many consumers seems to suggest that CUs are viewed as basically different from the Big Banks and large mortgage lenders. Different and better. That’s a view taken by many consumers following the economic downturn that began in 2007-08 and largely attributed to the faulty business pracRow 1 tices of the Biggies. Throughout those tough economic times, credit unions, due in large part to their triedand-true sound business strategies to lend to the people you know, felt less of the negative impact. As a result, CUs have been perceived—many would argue rightly so—as better financial partners than profit-oriented bigger players.

Re-Inventing the cooperative

During its history in the United States, credit unions have helped millions of members obtain loans that otherwise may not have been granted.

After all, credit unions are “memberowned cooperatives”—an arrangement in which people band together to help each other under the oversight of professional financial and risk management specialists. But what value does a cooperative present for its members? It’s an important point to differentiate credit unions from Big Banks, for sure. But what does it really mean? Traditionally, it has been about member ownership. (See “Cooperative Roots” sidebar.) More deeply, it emphasizes service and commitment to members. When we talk about a cooperative arrangement, this is where the conversation should begin—this is the essence of what differentiates CUs from banks. Banks emphasize profits for its stockholders, not service to its customers. In making this distinction, we are in some way re-inventing the cooperative. Or, more accurately, re-emphasizing its original purpose, and understanding its importance. This knowledge should be used to help credit union leaders (and indeed all

Sidebar

credit union employees) differentiate the value proposition to their members. This distinction can also work well to refute the bankers’ argument that credit unions are simply banks with the advantage of a tax exemption—an extremely inaccurate and overbroad statement. As we know, credit unions pay lots of taxes; the tax “exemption” is very narrowly defined and applies generally to the federal corporate tax.

Service and Commitment Bring Trust

But a word of caution: The real distinction is not about taxes, nor is it about profits. It’s not even about who has the lower rates. It’s really about trust—that’s what service and commitment mean. And that’s what people want—Millennials, Baby Boomers and everyone in between. What differentiates credit unions from other financial institutions is the feeling that we’re in this together; we’ll look out for each other; we care about each other.

The roots of the Cooperative Movement

The

cooperative movement began in Europe in the 19th century, primarily in Britain and France. The industrial revolution and the increasing mechanism of the economy were motivating factors, transforming society and threatening the livelihoods of many workers. The concurrent labor and social movements and the issues they attempted to address also contributed to the movement.

Over a period of four months the Rochdale group struggled to pool one pound sterling per person for a total of 28 pounds of capital. On December 21, 1844, they opened their store with a meager selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon known for providing high quality, unadulterated goods.

The first documented consumer cooperative was founded in 1769 in Fenwick, East Ayrshire, when English weavers brought a sack of oatmeal into John Walker’s whitewashed front room and began selling the contents at a discount, forming the Fenwick Weavers’ Society.

An independently formulated cooperative model was developed in Germany, the credit union, by Franz Hermann SchulzeDelitzsch (1852, urban), then by Friedrich Wilhelm Raiffeisen (1864, rural). The model was carried abroad reaching the United States by 1910. By the 1930s, a national association was formed in the United States. This organization began to develop international programs, and by the 1970s, a World Council was formed.

In the decades that followed, several cooperatives or cooperative societies were formed. By 1830, there were several hundred co-operatives. In 1844 the Rochdale Society of Equitable Pioneers established the ‘Rochdale Principles’ on which they ran their cooperative, establishing the basis for development and growth of the modern cooperative movement. The Rochdale society was a small group of weavers and others in Rochdale, England. As the Industrial Revolution was forcing more and more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford. With lessons from prior failed attempts at cooperation in mind, they designed the now famous Rochdale Principles.

Cooperatives in the United States have a long history, including an early factory in the 1790s. By the 1880s, the Knights of Labor and the Grange both promoted member-owned organizations. Energy co-operatives were founded in the U.S. during the Depression and the New Deal. Diverse kinds of co-operatives were founded and have continued to perform successfully in different areas, in agriculture, wholesale purchasing, telephones, and in consumer food buying

Source: Wikipedia

July 2015 - PIPELINE 29

Re-Inventing the cooperative

Sidebar

CUs are viewed as basically different from the Big Banks and large mortgage lenders. Different and better.

1849 – Friedrich Raiffeisen, pioneer of rural credit unions, starts his first credit society in southern Germany. 1864 – Raiffeisen establishes the first rural cooperative lending institution, in effect the first rural credit union.

So when the banker says our rate is one-quarter of a basis point lower than theirs, so we’ll save you money on your loan, a credit union can say to a borrower, what is important to you, a slightly lower rate (sometimes offset by unexplainable fees) or our commitment for a better overall experience in the closing of the loan and service thereafter? We can offer to you the appropriate loan and great service and see which one fits you best. And credit unions can add: And we’ll always continue to take care of you after we make the loan, and we’ll help you in any way we can with any of your other financial services needs—for the remainder of your life and, in many cases, the lives of your family members, too. Because that’s why cooperatives were formed—to care for like-minded people who needed help, who otherwise could not afford things. By pooling resources, cooperatives allowed people to help each other. (See sidebar “The Roots of Cooperatives.”)

1900 – Alphonse Desjardins imports the idea of cooperative financial institutions from Europe to Canada, where he co-founded Caisse d’épargne Desjardins in Lévis, Quebec. The organization was a forerunner of current North American credit unions. 1908 – Edward Filene, also known for building the Filene’s department store chain, and Massachusetts banking commissioner Pierre Jay, help organize public hearings on creating credit union legislation in Massachusetts. 1909 – Desjardins forms the first credit union in the United States in New Hampshire. The first U.S. credit union law is passed. The Massachusetts Credit Union Act of 1909 is the first comprehensive credit union law in the United States. It will serve as a model for the Federal Credit Union Act of 1934 (FCU Act).

Cooperatives and Consumers

And that’s important to consumers—Millennials and Baby Boomers, for sure—being a part of a group of like-minded individuals. It helps explain the popularity of food and grocery co-ops, for example. And it reminds us that “cooperative” and “credit union” are words that resonate with consumers. And that provides a reason why we should consider emphasizing the cooperative aspect of pour business, rather than—as some credit unions have done—try to obscure that connection.

Figure 2

The History of Credit Unions

1921 – Organized and funded by Filene, and managed by Roy F. Bergengren, an attorney and pioneer of the United States credit union movement, the Credit Union National Extension Bureau (CUNEB) is founded to work toward establishing credit union laws in all states and at the federal level. The CUNEB was largely responsible for the rapid growth of credit unions in the United States.

Sheet1

Credit Union Savings Balances

$1200 BIL 1,000 1000 800 800 600 600

Row 1

400 400

June 1934 – President Roosevelt signs the FCU Act, which authorizes federally chartered credit unions in all states.

200 200 12 10 8

6 4

2009 2010 2011 1 2 3

Source: CUNA U.S. Credit Union Profile

30 PIPELINE - July 2015

2012 4

2013 5

2014 Q1-15 6 7

August 1934 – Claude R. Orchard assumes leadership of federal credit union supervision, a post he holds for 19 years.

Re-Inventing the cooperative

The History of Credit Unions 1953 – J. Dean Gannon is named director of the Bureau of Federal Credit Unions as it moves to the new Department of Health, Education and Welfare. March 10, 1970 – NCUA, National Credit Union Administration is formed to supervise federal credit unions. The National Credit Union Share Insurance Fund (NCUSIF) is formed to insure credit union deposits. 1977 – Laws allow credit unions to begin offering new services, including mortgage lending and share certificates. 1970-1979 – Assets in credit unions triple. 1980s – Credit unions are able to be more flexible in accepting members, and can offer increased services to their members. 1985 – Credit unions insured by the NCUSIF are now backed by the “full faith and credit of the United States Government,” which provides extra security to members. August 7, 1998 – The Credit Union Membership Access Act of 1998, HR 1151, was signed into law by President Clinton, which restored membership flexibility to CUs October 3, 2008 – Pursuant to 12 USC § 5241, share insurance protection increases from $100K to $250K on a temporary basis until December 31, 2013. July 21, 2010 – President Obama signs into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Section 335 of the Dodd-Frank Act amends the FCU Act to make permanent the standard maximum share insurance amount (SMSIA) of $250,000.

That’s why cooperatives were formed—to care for like-minded people who needed help, who otherwise could not afford things. By pooling resources, cooperatives allowed people to help each other. In the same way, credit unions have long been identified with helping the underserved—those who could not, for instance, qualify for a car loan from a bank. With the backing of the cooperative arrangement, the car loan became reality and worked to the benefit of the member, the member’s family, the cooperative itself, the community, etc. During its history in the United States, credit unions have helped millions of members obtain loans that otherwise may not have been granted. (See sidebar “A Short History of Credit Unions.”) More importantly, CUs have helped members improve their lives by providing financial services to those who may have been turned away by others. And although serving the underserved will continue to be an important role for credit unions, continued growth and success will hinge more on providing expanded services and delivering them through a variety of convenient channels—something competitors will also be looking at. What does that leave? The service and commitment to members that builds trust in each and every interaction between credit union and member. At its very basic essence, that difference is what needs to be promoted. It’s not advocacy, although advocacy has its place. It’s not rate-sheet comparisons, either. Service. Commitment. Trust. That’s what each individual working in every credit union must build on. It doesn’t mean CUs aren’t competitive or convenient or financially strong. Those are important. But they’re not the differentiators credit unions will need to continue being successful. Contact Bob Dorsa by emailing bob.dorsa@acuma.org or calling toll-free (877) 442-2862.

Figure 3

Sheet1

Credit Union Delinquency rates

1200 % 2

1.8 1.8 1000 1.6 1.6 1.4 1.4 800 1.2 1.2 600 1.0 1

Today – Credit unions continue to grow and fulfill the original intent of Roosevelt’s law; to create a system of not-for-profit cooperatives that promote thrift and sound financial practices.

Source: National Credit Union Administration

Row 1

0.8 0.8

400

0.6 0.6

0.4 0.4 200 0.2 0.2 00 0

12 12 10 10 8 8 6 6 4 4

2009 2010 2011 11 22 33

2012 44

2 2

2013 55

0 0

2014 Q1-15 66 7

Source: CUNA U.S. Credit Union Profile

July 2015 - PIPELINE 31

Feature Article

Seeing the Future in a New Light By Larry Walker

32 PIPELINE - July 2015

Seeing the future

It’s time for the industry to change its thinking about change.

s I read the trade journals and walk the exhibit halls at industry conferences, I keep hoping to find something new to get excited about–something that will really wow me. I’m looking for something transforming. n I’m just not finding it. n Don’t get me wrong: There are plenty of great companies doing good things in the mortgage business. But I believe we need a major breakthrough–something that will make the mortgage business exponentially better. n When I think of developments like mobile computing, peer-topeer lending, e-commerce and what the government envisions doing with the Common Securitization Platform (CSP), I see it all coming together in the future to change the landscape of the mortgage lending industry. July 2015 - PIPELINE 33

Seeing the future

That

future industry that I envision would be much more business-to-consumer (B2C) in nature. The consumer would be in the driver’s seat. I see an industry where lenders no longer focus on frantically trying to comply with every new regulatory directive that comes out. Instead, lenders will learn that regulatory compliance is a living, breathing animal that has to be fed and cared for daily. It’s not a project plan that gets assigned to a project management office (PMO) every time an investor or agency comes out with a new set of rules. The industry will also come to understand that the business has cyclical ups and downs. Like a surfer riding the waves, the industry needs to learn to ride those ups and downs without euphoria or chaos. This change in business planning and philosophy will result in a mortgage industry that can develop solid business plans that make sense and are actually executable. The mortgage industry will learn to exploit technology and the best thinking around process engineering and management to be more efficient, do things right the first time and provide superior service to win consumers’ business. The mortgage industry has always prided itself on how it innovates with technology. A fortune has been spent on process engineering and technology. With each new innovation there’s always the hope it will transform how business is done. But, with rare exception, it doesn’t happen. Fundamental change seems to be elusive in this industry. Consider this: According to the Mortgage Bankers Association (MBA), the costs to both originate and service a home loan have risen to record levels. Mortgage bankers clearly aren’t happy. Ironically, consumers aren’t happy, either. Dozens of complaints are being filed with the Consumer Financial Protection Bureau (CFPB) every day (see the CFPB’s Consumer Response Annual Report for 2013 at http://files.consumerfinance.gov/f/201403_cfpb_consumerresponseannualreportcomplaints. pdf).

THE IMPETUS FOR CHANGE

It’s 2014. Why do we still have paper in this industry? 34 PIPELINE - July 2015

Something has to change. It seems that first of all, the industry may have to start by changing how it thinks about change. There are a number of factors that affect the pace of change. In today’s environment, I think it’s safe to say that technology and regulation are the largest factors impacting the mortgage industry by a wide margin. Moreover, of the two, it would seem that technology trumps regulation. After all, it is technology that enables the processes that get regulated. During my years in the mortgage business, I’ve come to look at technology driven change as occurring in six stages (see sidebar, “The Stages of Technology Driven Change”).

Of course, all technology-driven change doesn’t move through these stages in the same way. The primary variable seems to be the speed at which the change occurs. It seems that the time required to move through these six stages of change is getting shorter and shorter. For example, it took 75 years for the telephone to reach 50 million users, but only four years for the Internet do so. The quickening pace of change is true across most industries, from auto manufacturing to healthcare delivery to the entertainment business. People in general are just getting much better at letting technology fundamentally change things for them. To be fair, there are a number of factors that can affect the speed at which technology driven change occurs. The cost of the technology is always a factor, as is the level of perceived risk associated with the change. Regulatory intervention can help–or hurt. Even the resistance put up by those who might be disenfranchised by the change can affect the speed of that change. “Now hang on there,” you’re thinking to yourself. “Not all transformation is driven by technology.” And of course it’s not. Regulation can be a huge driver of change. We’ve watched the federal government impose some game-changing regulations, such as those stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which spawned the CFPB. Regulations have created extraordinary challenges as lenders–and the vendors that support them–scramble to adjust their business models to comply.

RESISTANCE TO MORTGAGE TRANSFORMATION

What stage would you think the mortgage industry might be in with respect to some of our most important technology opportunities? How fast are we moving? Are we intentionally influencing the movement or are we just letting it happen? It seems to me that the mortgage industry tends to get stuck in the early-adopter stage across a variety of technologyenabled innovations that come its way. Someone will have a great idea and scrounge together funding to build it. But then someone else will argue why it can’t, or shouldn’t, work. Perhaps someone will sue to stop it. Or the investors or regulators or someone else in the food chain will have a problem with it. Instead of working through those issues, the industry just gets stuck. The paperless mortgage is a good example. Technology to make that happen has been available for more than 20 years. We’ve made some progress, but there is far to go. The industry is still drowning in paper, and consumers are still overwhelmed by the sea of documents that confronts them at the closing table. This should really be called out for the travesty that it is. It’s 2014. Why do we still have paper in this industry? The industry has spent a fortune innovating electronic mortgages in every way possible. Can we blame the regulators for the fact that the industry is drowning in this sea of paper? Or is there something more fundamental to this problem? I’m beginning to think it’s a matter of perspective. Perhaps the industry’s vision of change is too small and its vision of technology may be too feeble.

Seeing the future

EXPANDING INTO THE REALM OF THE POSSIBLE

Expanding into the realm of the possible Mortgage bankers tend to focus on what’s allowed–or more specifically, what’s not allowed. What will the investors or regulators allow? What will the origination or servicing system allow? They begin their thinking about change with boundaries– instead of possibilities. What if the industry were to open up its thinking to consider the possibilities, not the boundaries? Author David Levithan puts it this way in his 2004 book, The Realm of Possibility: “Here’s what I know about the realm of possibility–it is always expanding, it is never what you think it is. Everything around us was once deemed impossible. From the airplane overhead to the phones in our pockets to the choir girl putting her arm around the metalhead. As hard as it is for us to see sometimes, we all exist within the realm of possibility. Most of the limits are of our own world’s devising. And yet, every day we each do so many things that were once impossible to us.”

SIDEBAR

To think like Levithan, this is what I know about the realm of possibility and how it’s expanding around the mortgage industry. Technology is marching on with its capabilities. Few, if any, mortgage bankers are actually executing business transactions on social media. Very few mortgage bankers are actually using the data that they have access to for creating new business value or mitigating risk, but plenty of other industries– and governments–do. Could it be that the mortgage industry is trapped in the realm of the impossible? The amount of information available and accessible is changing in ways unimaginable even a few short years ago. And society is adapting to that emerging technology and information. In fact, the expectations of today’s mortgage borrowers are being shaped by the experiences that they’re having everywhere else in their lives, whether it’s with other financial transactions or through social media. What influences the pace of change? If we can identify the most relevant of those factors, we can plan business tactics and strategies. So, here are what I view as some of the most relevant change factors.

Six stages of TEchnology-driven change ing was first rolled out in 1995. The impact was huge. In fact, I’ll go so far as to say automated underwriting brought about exponential change, not merely incremental change.

Technology has the ability to be incredibly transformative. The invention of the automobile, for example, transformed how we live. The invention and evolution of telephone, television, automobile, electronic appliances, satellites, computers, manufacturing and other technologies have driven massive change. During my years in the mortgage business, I’ve come to look at technologydriven change as occurring in the following six stages. 1. Innovation: Someone has an idea. 2. Intellectual acceptance: Someone is willing to fund its development. 3. Early adopter: Someone takes the risk to prove (or discover) value proposition(s). 4. Commercial viability: The decision to use it can be costjustified. 5. Broad public acceptance: Everyone has it (or wants it). The value proposition is compelling.

Eventually someone gets to thinking, “Gee, this is so great– what else could we do with it?”

6. Exploitation: What else can we do with it? The first stage, innovation, is simply when someone has a good idea about how to use technology to make something better. I’m not talking about writing a new loan origination system (LOS) that’s better than anything else on the market. An example of real innovation would look more like using data to underwrite a home loan. That’s what happened when automated underwrit-

The second stage, intellectual acceptance, is achieved when someone with money agrees that the new technology is a good idea. Then, in the early adopter stage, the technology is built and people begin to use it. When Mortgage Electronic Registration Systems (MERS®) was launched in 1997, this early adopter stage was slow and painful. Even though the majority of the lenders and servicers embraced it, changing their business models to accommodate it took longer–and cost more–than anyone expected.

Once early adopters discover and prove the value proposition, the innovation’s cost can be justified by a larger pool of users. Once the innovation reaches commercial viability, everyone wants to change the way they’re doing business by using the technology. And with time, everyone gets it in the broad public acceptance stage (think smartphones). Eventually someone gets to thinking, “Gee, this is so great– what else could we do with it?” And so we come to the final stage of technology-driven change: exploitation. This is where the innovation itself gets innovated. Using the smartphone example, we’ve been in that final stage now for a while. We’re still finding new ways to use our smartphones. We’ll stay in that stage until someone comes up with something that makes the smartphone obsolete or redefines it.

July 2015 - PIPELINE 35

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Seeing the future

RELEVANT CHANGE FACTORS N Technology is changing. n It’s becoming wearable. n It’s becoming disposable. n It’s becoming intuitive and teachable. n It’s becoming infinitely more powerful. A pair of glasses replaces all of the functionality of your laptop, your tablet, your smartphone and maybe even your television. All of those devices can be created out of cardboard and plastic–even from tomato skins–and made with a 3D printer. Can mortgage bankers continue to spend a fortune on technology and throw it away faster than ever before?

N nformation is changing. n It’s becoming more predictive. n It’s becoming more precise. n It’s becoming more accessible and affordable. n It’s replacing knowledge. Today, mortgage bankers are drowning in information but have little intelligence to show for it.

N Society is changing. n Multitasking is the new norm. n Distracted functioning is so normal that technology is working to overcome it. n Consumers are being trained to get any information about anything, at any time, in any format, anywhere they happen to be. They’re also learning that this can be free. n Risk-taking is getting redefined as early adoption. It’s no longer cool to be the first guy on the block with all the new gadgets; it’s uncool not to be him. What are the implications for mortgage lending and servicing? How will this change the ways we communicate with and service borrowers?

N The environment is changing. n Homeownership used to be seen as key to a stable society. Now some seem to see mortgage banking as a very real threat to a stable society. n Various programs were seen as supportive to the overall housing agenda. Now they’re beginning to be viewed as enabling things besides housing–like providing the infrastructure for private capital to drive the nation’s housing agenda. n Facilitating homeownership may be shifting toward private capital and becoming less of a public policy issue.

DOING THE IMPOSSIBLE–TODAY

Borrowing a page from David Levithan’s playbook, I’m starting to envision a housing finance industry that looks and functions far differently than anything I’ve ever known. I see a mortgage industry shaped by things that already exist today, such as peer-to-peer lending, where would-be borrowers and the investors who lend to them connect in an online marketplace. The process offers both borrowers and investors significant efficiencies over the traditional banking model. Borrowers have a creditworthiness file that is validated by an independent party or parties, which they share when they need credit, and the funds come from direct investors. The one-to-one relationship offers transparency to both sides, and investors come up with their own criteria to apply to lending decisions. The peer-to-peer movement has gained traction in Europe and is starting to take off in the United States. Today there are more than 20 firms worldwide offering potential borrowers alternatives to more traditional lenders. Some peer lenders specialize in a particular type of loan, but the largest players will provide funding for any purpose. Could they be mortgage lenders tomorrow? In my future scenario for housing finance, I think the business of mortgage lending will look more like today’s peer-topeer lending. I see a new mortgage industry shaped by the emergence of the Common Securitization Platform and the trend toward mobile computing and e-commerce. All of today’s players will have redefined roles, including the lender, the servicer, the investor and even the regulators. But most of all, the mortgage industry I see in the future will revolve around the consumer.

In my future scenario for housing finance, I think the business of mortgage lending will look more like today’s peer-to-peer lending.

THE ROLE OF THE LENDER IN THE FUTURE

In this new world, consumers will originate their own loans. Their credit application information will be a collection of data points that they own and grant access to, similar to a popular online social scoring application that exists today, where users can employ scorecards to build their reputations in online marketplaces.

July 2015 - PIPELINE 37

Seeing the future

This scoring system–which can be likened to a detailed FICO® score that takes into account all of a consumer’s trustworthiness dimensions–was created for individual buyers and sellers online. In this future world, credit information could include personal data such as the kind of beer I drink and where I shop. It goes without saying that he who owns the data gets to make the rules. So borrowers won’t fill out lenders’ credit applications anymore. They will instead give lenders permission to access their trust scorecard. When it comes to shopping for a home mortgage, consumers will put their requirements for a housing finance transaction out for bid, similar to booking a hotel room on an auction-based travel website. The winning bidder will provide its requirements with their bid. When the borrower selects the lender, additional components of the transaction will go out for bid. Consumers will make decisions on other components of the mortgage loan, such as settlement services, appraisals and insurance. Do you need private mortgage insurance (PMI) for the loan? The consumer will be presented with the several companies that provide it and what they’re willing to sell it for. The same goes for things such as title insurance policies and appraisals and anything else that’s needed to complete the transaction. The way I envision it, there will be very few loan origination systems (LOS) in this future world. Those that remain will be free on popular social networks or available as mobile applications. They will be consumer-oriented, and everything in them will be controlled by the consumer. If you win the business for the loan, the appraisal, the inspection, PMI and title insurance will all be dictated by what the consumer wants. The consumer will grant you only the access that you need to provide that business that you’ve been awarded. Note that business-to-business (B2B) transactions just became B2C!

In my future scenario for housing finance, I think the business of mortgage lending will look more like today’s peer-to-peer lending. 38 PIPELINE - July 2015

THE ROLE OF THE SERVICER IN THE FUTURE

Consumers will be responsible for selecting the servicer of their loans in this new world that I see emerging. In fact, consum-

ers will have become so fed up with poor customer service that the government had to step in and redefine what mortgage servicing is. They ended up putting servicing in the consumer’s control. Don’t get me wrong–consumers won’t handle investor reporting or escrows. Investors will still have the ability to require a competent servicer perform the requisite servicing functions. But the consumer will select who will service his or her loan, and it won’t necessarily be a 15-year or 30-year commitment. If consumers aren’t happy with the way their loans are serviced, they will fire their servicer and move their loan to any one of the dozens of approved servicers in the country. Many consumers will probably pick the servicer who offers the best deal, since investors won’t pay servicing fees anymore. Oddly enough, though, many consumers won’t go for the best deals. Many will choose premium servicing packages. They may pay upward of 100 basis points or more for packages that contain things like paper statements or onshore call center support. Some will bundle the servicing deal with tax service and credit bureau reporting, and other features that they had ultimately been paying for anyway. Like cable TV or cell phone service in 2014, future mortgage servicers will advertise on television to compete for customers. Of course, since mortgage servicing is all about rules-based processing and risk mitigation, some new faces certainly will enter the game. Let’s fast-forward and see how the world becomes aghast when a social network company buys a mortgage company. It is even more aghast when a search engine provider starts a mortgage company from scratch.

THE ROLE OF THE INVESTOR IN THE FUTURE

The government-sponsored enterprises (GSEs) and other secondary market investors will have expanded roles. In the new world I envision, the investors will provide a better, more comprehensive service. Armed with their mortgage expertise, global investor credibility and other assets, the secondary market investors will set the standard for safe, sound, intelligent home lending. And this could be despite the fact that they no longer fund loans. The innovation provided by the CSP will end up working very well. In fact, it will work so well that a global e-commerce company buys it. In the new world of mortgage lending, the CSP will function on multiple levels. While mortgage-backed securities (MBS) will still be issued, it turns out that private capital will like something else even better. Instead of packaging loans and selling these bulk packages, investors will pick and choose each individual loan that goes into their portfolio. As you might guess, the GSEs will become the trusted advisers that help investors pick and choose. Because private capital will now understand and own the risk associated with mortgage investing, it will want complete transparency, which the CSP will finally enable. Interfaced with the servicers, the CSP will allow the investors to know every single thing that the servicer knows about the loan–as soon as the servicers know it.

Seeing the future

What is interesting about transparency is that it’s a twoway street. So, consumers will always know who owns their loan. If there are multiple owners, the consumer will know all of them. He will be able to communicate with them and they will be able to communicate with him. The servicer will still perform the administrative tasks of collecting payments and keeping account records, but the relationship between the investor and the consumer will be much better aligned.

THE ROLE OF THE REGULATORS IN THE FUTURE WORLD

Looking back at the year 2014 from the future, mortgage lenders and servicers will agree that the regulatory environment at that time was unprecedented. The industry was besieged with rules and more rules. Most C-suite executives didn’t know if their mortgage operations were in compliance or not, and they didn’t know how to find out. Why? Because regulations and the rules by which the mortgage business was expected to operate were changing at a dizzying pace. And nobody had the infrastructure to accommodate that. While others dithered about how to become compliant, smart lenders began to wonder whether there was a better way. They were inspired by a software-based payment system invented in 2008 as a currency that could be used without government oversight. It’s legal and yet functions as an alternative to currency. So, we will begin to finance homes with this online currency. Then we will begin to set up home exchanges, where borrowers finance shares in a trust that owns their homes. When they “buy” a house, no real estate transaction will be recorded. (Similar to Mortgage Electronic Registration Systems [MERS®], which held the lienholder rights to about 70 percent of all the mortgaged single-family homes in the country.) Then we will set up a similar organization that actually holds the houses themselves. Those who don’t want to finance with the online currency can simply buy membership shares in the new organization, which purchases the home they want to live in. All of this will redefine the role of the regulator. Sure, you’ll still be able to do business the old-fashioned way, with U.S. currency and traditional land title transfers. But more and more borrowers will be incented to switch to the alternative currency and the alternative structure for home ownership. As a result, regulations will influence a declining percentage of the transactions that occur. Real estate transactions will become redefined, and increasingly they will occur outside the authority of the regulators.

IN THE FUTURE, IT’S ALL ABOUT THE CONSUMER

Back in 2014, mortgage bankers assumed millennials would grow up and follow the traditional path to homeownership. It turns out they simply wanted financing–they didn’t really care where they got it. They were just as comfortable giving their financial information to a social network provider or ecommerce company as they were giving it to the largest banks in the country.

More importantly, those who needed housing finance were being groomed to be far more independent and self-sufficient than previous generations. They pumped their own gas, checked their own groceries, read e-books bought online, refilled prescriptions with smartphone applications and bought houses without even seeing them in person. In the future, instead of lenders and servicers at the center of a hub with thousands of customers clamoring for service, individual customers will have hundreds of lenders and servicers clamoring for their business. The customer of the future will be bold. Consumers will know what they want, and compromise won’t be on the list. They will demand and receive the same level of service in mortgage lending that other industries have taught them to expect.

FARFETCHED? MAYBE NOT

Consumers will be responsible for selecting the servicer of their loans in this new world that I see emerging.

These are the things I envision in the future. Does it seem a little crazy? I don’t think it’s that farfetched. The technology to support this new world already exists. Ironically, most of the legislation in place would allow it as well. It might even embrace it. Truth is, I don’t have a crystal ball. But I can look at the facts and begin to understand the kind of future that’s likely to unfold. Shouldn’t we all be doing that? The industry needs to get much better about understanding change and how it occurs. Perhaps more importantly, it needs to find ways to more proactively drive the change instead of just allowing it to happen. Larry Walker, Master CMB, is managing director with KPMG LLP, based in Dallas. He can be reached at larrywalker@kpmg. com. Note: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of KPMG LLP. Copyright 2014 Mortgage Banking® Magazine & Mortgage Bankers Association, All Rights Reserved.

July 2015 - PIPELINE 39

Millenials - Homes of their own

In 2015, Millennials Make Their Move–to

Homes of Their Own! By Jim Jumpe

It’s been a long time coming. The largest generational group in American history is finally entering the housing market. n The Millennials’ move from their parents’ basements to their own homes has been eagerly anticipated over the last decade by economists, policymakers, mortgage lenders and builders. With housing a crucial leg of the U.S. economy, the delayed entry of this young generation into homeownership has had serious implications for the long-term health of the country.i July 2015 - PIPELINE 41

Millenials - Homes of their own

At stake is a group of between 80 million and 92 million whose homeownership decisions and related consumer purchasing power will drive the American economy into the middle of the 21st century. Now, as mortgage rates remain low, changing market conditions mean Millennials are taking another look at homeownership. It’s the perfect opportunity for credit unions to establish themselves with this up-and-coming segment, and lock in more members for the long term.

The Worst-Off Generation?

Millennials, also known as Generation Y, enter the housing market in force after years of challenges. Born between 1980 and 2000, they’re the generation that graduated from college into, or just after, the “Great Recession” to encounter crushing student debt burdens coupled with few available job opportunities. Many returned to live with their parents or moved into shared rentals in order to manage their debt on low-wage employment. Their homebuying dreams receded even further as the mortgage industry adopted stricter underwriting guidelines in response to the housing crisis that began in 2008. With the lowest net worth of all generations, Millennials found themselves unable to accumulate the necessary funds for a down payment, and high debtto-income ratios effectively shut them out of many home loan programs. This bleak environment, widely reported by the media, shaped negative Millennial attitudes toward homeownership. This cohort, potentially battered by their parents’ struggle to survive plummeting home values and job loss, allegedly shunned the traditional path of marriage, home purchase and childrearing. Much has been made of Millennials’ perceived preference for easy mobility and low overhead, minimal responsibility and unconventional lifestyles. Taking on a mortgage for a suburban three-bedroom with a large backyard held little allure— or practical value—for this generation.

Millennials have strong feelings about their communities, both their real-life ones and the virtual ones they participate in online, making credit unions their natural allies.

From Starter Income to Starter Home

As the economy continues to improve and Millennials settle into employment and marriage, credit unions are becoming aware that this stereotype is fading. It turns out marriage and family formation—the traditional drivers for home purchases—have only been delayed, not rejected entirely, for this generation.

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Millennials may even enjoy some advantages as prospective homebuyers. They have comparatively lower credit card debt than some other generations, although their installment debt (car and student loans) may be higher. However, their student debt loads may not be as punishing as generally believed: According to the National Association of Realtors®, 70% of student loan borrowers owe less than $25,000.ii Many Millennials also have good relationships with their parents. In practical terms, this means they can live inexpensively in the family home while saving for a down payment, and they are more likely to receive parental contributions to their homebuying funds. Their overall financial situations are strengthening as the employment picture improves. According to the U.S. Labor Department, the unemployment rate for adults between 25 and 34 fell to about 5% as of February 2015. This is cheering news for Millennials hoping to achieve the job stability and steady income necessary for successful homeownership. Overall, although they are marrying late and starting their families late, Millennials appear to share core attitudes with other generations about the desirability of homeownership. In a December press release, Zillow’s chief economist said 42% of Millennials ages 18 to 34 the company surveyed planned to buy a home in the next one to five years.iii

Meanwhile, the market is coming to meet them halfway.

A Zillow report also released in December predicted 2015 conditions will dramatically affect the ability of Generation Y to purchase homesiv: n U.S. rents will outpace home values by the end of the year (home values up 2.5%, rents 3.5%). n Builders will begin constructing more lower-cost homes. n Homebuyers will have more negotiating power in 2015. Policymakers, aware that Millennials will drive the economy in a few years, and mortgage lenders who recognize the importance of this large demographic are updating industry guidelines. The GSEs recently announced they would begin accepting 97% LTV loans. Down payments of 3% are much easier to accumulate than the standard 20% down. In addition, even that 3% can often be funded by a gift or grant. New down payment assistance programs are also being unveiled by various state and community agencies with the

Millenials - Homes of their own

goal of helping first-time homebuyers qualify for various loan programs. In addition, private mortgage insurance (MI) is helping many credit unions reach out to millennial homebuyers. Credit unions can accept a 3% down payment because these loans are insured with MI, protecting the credit union against the risk of default. Moreover, special MI programs offer homebuyer

SIDEBAR

education assistance and can support eligible first-time homebuyers with broader underwriting qualifications and a range of loan terms that may lower monthly payments by taking advantage of today’s low interest rates. One option currently available to credit unions is Arch MI’s new Millennial Mortgage program. Recognizing the triple challenge unique to Generation Y—high debt loads, small

Six ways you can reach out to Millenials

Don’t

simply wait for Millennials to wake up to the benefits of credit unions. If you want their business, you must actively reach out to, engage with, and capture their trust by customizing your services and approach. Here are six ways you can make that happen: 1. Technology. Millennials are the most tech-savvy generation, moving easily among devices in search of the content that interests them. Studies have shown that homebuying Millennials check out homes online via convenient, easy-to-use mobile apps and conduct much of their home finance conversations by smartphone texting. Conditioned by the Internet, they also expect you to be ready any time they are. Are you ready—with operational resources, with technology investment, with trained staff—to meet these expectations? 2. Social Media. Closely intertwined with technology, social media is all about building an online community. Millennials are dedicated users of social media, as a generation that socializes continuously and with few inhibitions. As a credit union, you should expend as much energy and resources on developing these channels as you do on your actual community. The key is to actively engage your Millennial audience, rather than passively await their response to your posted material. As many of them are uncertain about their credit scores and don’t know what closing costs are, social media offers excellent opportunities to establish your credit union as a trusted expert on important homebuyer topics. 3. Recommendations and Testimonials. In the age of online reviews, Generation Y looks to see what others think. Polish your reputation as a credit union

by encouraging satisfied members to post reviews of your services on social media. You can also weigh the possible advantages of polling social networks for feedback, if you are confident of the response. 4. Easy Information. Millennials are big on visuals, which is why using infographics is often the way to go when making your case with them. While mortgage lending is notorious for its reams of unavoidable, closely-written disclosures, you can develop Millennial-friendly materials that satisfy their demand for fast, usable information in easy list or color formats.

Don’t simply wait for Millennials to wake up to the benefits of credit unions. If you want their business, you must actively reach out to, engage with, and capture their trust by customizing your services and approach.

5. Don’t Forget the Parents. Millennials like their parents and respect their opinions on many topics. A good reputation with the parents’ generation as an honest, approachable financial institution in your community can go a long way with their offspring. While online-focused Millennials may not be keen on attending a homebuyers’ seminar, their parents are familiar with the format. Setting up a seminar on “Helping your Adult Children Qualify for Homeownership” could be a way to indirectly facilitate Millennial home purchases. 6. Keep Up the Good Work in Your Community. According to the Brookings Institution, “63% of Millennials want their employers to contribute to social or ethical causes they felt were important.” This attitude carries over to consumer purchases, as “83% expressed a stronger likelihood that they would buy from companies that supported solutions to specific social issues.” Expand your existing communitybased outreach and charity programs to support popular Millennial causes and use social media to broadcast your credit union’s support.

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Millenials - Homes of their own

down payments, and worries about making monthly payments on modest “starter incomes”—the program offers flexible and affordable solutions like low down payments and higher debt-to-income ratios to accommodate student loans. It also permits a variety of loan amortization and extended terms that may lower monthly payments. Arch MI provides the option for credit unions to reduce the amount of MI coverage purchased, which could result in an even lower monthly home loan payment.

Leverage the Credit Union Reputation

It’s the perfect opportunity for credit unions to establish themselves with this up-and-coming segment, and lock in more members for the long term.

With the recession fresh in their memory, having suffered three sluggish years of recovery punctuated by corporate and governmental scandals, Millennials are often characterized as a cynical bunch. In a Brookings Institution survey, only 19% agreed with the statement, “Most people can be trusted.”v It’s clear that becoming a trusted advisor for your Generation Y customers may be challenging. Credit unions start out with an important advantage, though: In many cases they emerged from the recession with enhanced reputations, in contrast to their banking counterparts. This resulted from several factors: n Credit unions typically employ a more cautious, community-based approach to underwriting, which produced better-quality loans in the run-up to recession and fewer defaults in the aftermath.

This credit union “story” appeals to Generation Y. In addition, because credit unions are nonprofits, they often are able to charge lower fees and offer more advantageous interest rates than competitor banks. In some cases, they can also offer more innovative loan products with flexible guidelines to first-time homebuyers, since higher-risk loans can be kept in portfolio. Millennials constrained by tight budgets and apprehensive about the potential repercussions of homeownership in another economic downturn find credit unions’ cooperative, member-centered values and pricing a good fit for their home finance needs. Having moved beyond their original membership affiliations to embrace their larger communities with the same commitment to integrity, credit unions are perfectly positioned to attract a new generation of loyal members. Millennials have strong feelings about their communities, both their real-life ones and the virtual ones they participate in online, making credit unions their natural allies. This article was submitted by Arch MI, which provides simple and clear mortgage credit default protection using proven systems supported by experienced professionals who make customers the top priority and provide outstanding service with a personal touch. For more information, visit mi.archcapgroup.com.

Derek Thompson and Jordan Weissman, “The Cheapest Generation,” The Atlantic, September 2012

n Credit unions often keep loans in portfolio, rather than selling them to the GSEs. This means they had the freedom to work actively with delinquent borrowers with the goal of keeping them in their homes, rather than moving automatically to foreclosures.

ii Jonathan Smoke, “3 Reasons Millennials Are Driving the Housing Market,” Real Estate News, realtor.com, November 14, 2014

n Credit unions have strong ties to their membership and often know them personally, giving them added incentive to be more responsive and proactive when homeowners experience difficulties making payments, according to the Center on Race and Wealth, Howard University.vi “Credit unions are known for providing better financial guidance and better financial education to their members than banks are to their customers,” notes the Motley Fool website. “The employees of a credit union have their fellow members’ interests at heart, and (from what we hear on our message boards) most credit union members love the personalized service they receive.”vii

iv Emily Heffter, “Zillow Predicts Breakthrough Year for First-Time Buyers in 2015,” Zillow.com, December 1, 2014

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iii Zillow. (December 2014). In 2015, Millennials Will Be Biggest Home Buying Group & Rents Will Grow Faster Than Home Values [Press release]. Retrieved from Zillow.com.

Morley Winograd and Dr. Michael Hais, “How Millennials Could Upend Wall Street and Corporate America,” Governance Studies at Brookings, May 2014

vi Jessica Gordon Nembhard, Ph.D., John Jay College, CUNY, “Taking the Predator Out of Lending: The Role Played by Community Development Credit Unions in Securing and Protecting Assets.” Working Paper prepared for the Center on Race and Wealth, Howard University, August 2010 vii The Motley Fool, “Are Credit Unions Foolish?” Fool.com

Millenials - Homes of their own

SIDEBAR

MAKInG a connection with millennial homebuyers

ore than one research organization has proclaimed a stronger housing market as Millennials become motivated to form their own first households, taking advantage of historically low interest rates and a housing market that does not yet reflect the price increases of an improving economy.

On the other hand, studies show the rate of new renter households has far outpaced the creation of owner households since 2008, and first-time homebuyers made up only 29% of the housing market in 2014, compared to a normal range of roughly 40%. Regardless of what economist or statistician say, first-time buyers are out there. So how do credit unions get Millennials out of rental apartments or Mom and Dad’s basement and into homes of their own? Here are three considerations for connecting with those younger, first-time homebuyers:

While no one has a magic formula ... those that do it best are willing to trade traditional tactics for a fresh approach.

1. Cut the jargon. Consider this statement from a Loan Officer to a mortgage applicant: “A 3/1 IO ARM with 5/2/5 caps calculated on the 12-month LIBOR with a starting APR contingent on your FICO and LTV gives me pause because the DTI based on your qualifying rate will affect your ATR per QM. We might be able to find safe harbor with TQM if we try a different GSE and run your paper through the AUS LP.” Seriously? Confusion causes fear, and fear causes flight. Don’t drive young buyers away with intimidating, insider language. Make the mortgage process easy to understand: Use all the media that millennials use, including a mobile version of your website, YouTube, blogs and social platforms. They won’t buy what they don’t understand, so keep it clear.

Does your marketing look like the people you want to reach? If your communications and tactics for reaching homebuyers do not reflect these shifting demographics, you must rethink your strategies. And remember: Diversity is more than race; it’s the composition of households as well. While it’s true that approximately 54% of new households are formed by married couples, 46% are formed by single women, single men and unmarried co-borrowers of all persuasions. While no mortgage lender has a magic formula for capturing first-time buyers, those that do it best are willing to trade traditional tactics for a fresh approach. By offering low down payments, providing great education and targeting diverse populations, credit unions can ensure the ability to capture their share into the future.

This sidebar was submitted by CU Members Mortgage. For more than 30 years, CU Members has served the mortgage lending needs of credit unions, CUSOs and league partners across the nation.

2. Bust the 20% down payment myth. Many first-time homebuyers believe a 20% down payment is required. Get the word out on loans with down payments as low as 3% and 3.5%. And because first-time buyers typically do not have a lot of cash, explain clearly that gift funds for a down payment are acceptable for some programs. On top of low down payments, FHA’s recent reduction of the mortgage insurance premium by 0.50% on loans with terms greater than 15 years is making monthly payments even more affordable. This is all good news that needs to be shouted from the rooftops, or more realistically, pushed out continually on social media sites. And don’t forget the tax benefits of homeownership, down payment assistance programs, and local, state and national bond programs—all are benefits that should be brought into the conversation and consultation. Educate young buyers about their options. 3. Reflect the market. In 2012, 65% of U.S. households were occupied by white owners and 35% were occupied by minorities. However, from 2012 to 2025 the projected composition shows whites holding about 25% of household growth, while Asians, Hispanics, blacks and others will comprise 75% of household growth.

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inaccessible Credit

Inaccessible Credit: The New Normal? By Robert M. Couch and Jennifer S. Gisi

It’s hard to read today’s financial or political news without someone bemoaning the lack of access to mortgage credit. What has happened and what can be done about it? n WHY DO WE CARE? n No one really questions that homeownership is a worthy policy goal. Good for the economy and good for families, it serves as an effective way to bridge the wealth gap. n All things being equal, the affordability of homeownership over the last 20 years has been better than renting–despite the recent run–up in prices, homeownership remains financially smarter than renting. July 2015 - PIPELINE 47

No-risk lending leaves too many locked out of the market. But how much risk is the right amount to take?

Yet,

over the past 10 years, we have witnessed a plunge in homeownership rates to the lowest level in more than 20 years. There are now more renters than owners in nine of the 11 largest U.S. cities, according to the February 2015 National Affordable Rental Housing Landscape report, by the New York University (NYU) Furman Center for Real Estate and Urban Policy and Capital One Financial Corporation. Has there been a change in perception about what really is the American dream? Has there been a permanent shift in homebuying demand, with more people, particularly young adults, opting out of homeownership and “choosing” to become lifelong renters? Not according to Washington, D.C.-based NeighborWorks America’s October 2014 America at Home survey, which shows 83 percent of U.S. adults under the age of 30 still have a desire to become homeowners. According to the June 2014 State of the Nation’s Housing report from Harvard University’s Joint Center for Housing Studies, Cambridge, Massachusetts, restrictive underwriting criteria are the principal culprit, causing inaccessibility of credit and declining homeownership rates.

Figure 1

FICO® Score by Percent of Population

FICO Score

Percent of Population

Cumulative Percent of Population

700 or more 650-699 600-649 Less than 600

53.4% 12.2% 10.1% 24.4%

53.4% 65.6% 75.7% 100%

Source: FICO Risk & Compliance Blog (2013)

Figure 2

Default Rate by FICO Score

FICO Score

770 or more 720-769 690-719 660-689 640-659 620-639 580-619 Less than 580

Cumulative Default Rate* 1.72% 2.93% 4.50% 6.47% 9.71% 13.56% 16.79% 32.40%

Source: American Enterprise Institute (2014) *For loans with debt-to-income (DTI) <33 and combined loan-to-value (CLTV) ratios of 76-80

We need to broaden underwriting criteria and “expand the pie” for what is increasingly becoming a commodity product. The mantra for the mortgage lending industry is to make sure that anyone who deserves it and can sustain it can get it. So why can’t deserving people get loans today?

WHAT LEVEL OF NON-PERFORMING LOANS SHOULD WE SHOOT FOR?

The time has come to have a serious conversation about increasing access to credit. To do this, we need to define “deserves” and “sustainable.” In other words: Who should be given the opportunity to fail? From a policy standpoint, if we want to encourage broader access to credit, it will likely come with more credit risk. We must also acknowledge that lending is an imperfect science. Overall, we want to build a system that rewards those who make the difficult loans and encourages good lenders, recognizing that “good” may mean somewhat higher cumulative losses. The first step is to determine which borrowers should be given an opportunity. A purely private secondary market would set the price for credit risk, and the market would find some natural level of homeownership. However, we are in a government-controlled market, so as a policy matter we must first decide what the homeownership target should be. While some commentators have opined that the homeownership rate was dangerously high at its peak of 69.2 percent in 2004, there is near-universal agreement that its free fall since then–especially for minority families–must be reversed. Does it follow that a higher homeownership rate necessarily means higher rates of defaults, resulting in more credit losses? Yes, as illustrated in Figures 1 and 2–when the overall population is stratified by FICO® scores, almost 35 percent of the population have credit scores under 650. And cumulative losses are correlated to FICO credit scores. Thus, the more we choose to broaden underwriting criteria, the higher the level of defaults we must accept in return. How much risk is the industry willing to take on? A recent report from Edward Pinto, resident fellow with the American Enterprise Institute (AEI), Washington, D.C., and co-director of AEI’s International Center on Housing Risk, indicates that the industry is already taking on high levels of risk. In February of this year, AEI’s International Center on Housing Risk’s National Mortgage Risk Index (NMRI), which hit a recent series high in January, was still nearly double what it was in 1990. However, according to data from the U.S. Census Bureau, the homeownership rate is at its lowest level since 1994, indicating a need to loosen underwriting standards. Even with (or perhaps because of) increased government involvement, several large, national lenders have cut back on or gotten out of mortgage lending altogether. In the past, these markets were driven by private capital sources.

inaccessible Credit

The federal government got involved to broaden access to credit and increase the homeownership rate. Today approximately 73 percent of all new mortgage originations are guaranteed by the government, making the market heavily dependent on government absorption of credit risk.

RECENT DEVELOPMENTS

Significant changes in government assumption of credit risk do not seem likely.

Recent steps taken by the Federal Housing Administration (FHA) and Federal Housing Finance Agency (FHFA) may demonstrate a new focus on policies that are designed to expand access to credit. As of yet, they have not been enough to reverse the steady decline in homeownership rates. In a series of policy changes ending in November 2014, Fannie Mae and Freddie Mac provided clarifications of their representation and warranty requirements. The guidelines offer relief of certain representations and warranties for loans that have achieved a target number of timely payments or a successful full-file quality-control review by the applicable entity, with certain life-of-loan exclusions that could result in a purchase request. In January 2015, FHA announced reductions to its annual mortgage insurance premiums. While this effort will make loans more affordable for consumers, FHA estimates that, over the next three years, it will help only 250,000 additional homebuyers to purchase their first home. (Industry experts estimate that number may be optimistic). In late 2014, Fannie Mae and Freddie Mac announced new 97 percent loan-to-value ratio (LTV) loan products. While this change will provide some assistance, Freddie Mac Chief Executive Officer Donald Layton recently commented that only limited relief is expected because the 97 percent LTV option will be limited to borrowers with “very good income.” Outgoing Attorney General Eric Holder announced in February 2015 that he has asked U.S. attorneys to evaluate potential cases against individuals in connection with the 2008 financial crisis and determine whether any criminal or civil charges could successfully be brought against them, signaling a desire to devote scarce Department of Justice resources to other initiatives. A Feb. 9, 2015, Wall Street Journal article, “FHA Looks to Ease Banks’ Worry on Mortgage Mistakes,” reported that the FHA is considering proposed modifications to its annual certifications. Currently lenders must certify that all FHA-backed mortgages they originate have no errors, allowing the Department of Justice to recover large penalties for relatively minor mistakes by pursuing triple damages under the False Claims Act (FCA). The proposed changes would limit certification, and therefore liability under the FCA, to significant errors.

These and other efforts are combining to cause modest increases in the Mortgage Bankers Association (MBA)/AllRegs national Mortgage Credit Availability Index (MCAI). These increases are an indication that credit conditions in the overall mortgage market are beginning to loosen. Nevertheless, even all these steps taken together have not been sufficient to stop the homeownership rate free fall.

And how do we get there?

If the housing market adopts changes that increase the amount of credit risk in the system, the cost has to land somewhere. Historically, there are three principal ways of absorbing credit risk: 1) risk-based pricing, whereby the borrower pays through higher fees and interest; 2) cross-subsidization, which causes other borrowers in a pool of loans to pay higher fees and interest to support other, more risky, loans in the pool; and 3) government subsidies. Since the meltdown, there have been modest attempts at risk-based pricing. Fannie Mae and Freddie Mac have incorporated loan-level price adjustments (LLPA) in their loan pricing to take into account the risky nature of some lower-quality loans, but by and large, risk-based pricing has been limited by provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. As discussed in more detail later in this article, crafting policies that allow lenders to utilize risk-based pricing is particularly crucial to increasing access to credit. Cross-subsidization has limitations as well, mostly due to market conditions. Loan pricing already contains a spread to cover increased guaranty fees and compliance costs. The spread between the interest rate paid by borrowers and the rate required by investors has increased by more than 60 basis points compared with similar rates prior to the meltdown. This increased differential means that nominal mortgage rates are already relatively high. Additional assessments to cover the risk associated with expanded credit parameters would have the effect of restricting lower-risk loans by increasing the costs borne by those borrowers. In fact, FHA, rather than moving toward a risk-based system, has recently lowered its annual premium for mortgage insurance by 50 basis points across the board. Significant changes in government assumption of credit risk do not seem likely. During 2014, various factions in Congress attempted to enact sweeping housing finance reform. The proposals ranged from the Protecting American Taxpayers and Homeowners (PATH) Act, which was passed by the House Financial Services Committee and would have substantially reduced the federal government’s role in the mortgage market, to

July 2015 - PIPELINE 49

Clear pricing is the clear answer in a TRID world

As the effective date for the TILA-RESPA Integrated Disclosure rule approaches, the last thing you need is to add complexity to your process. You need an MI premium quote you can rely on when you deliver your Loan Estimate. Look to MGIC for clear, fair, transparent pricing that’s easy to understand and easy to explain to borrowers, auditors and regulators.

Clear MGIC doesn’t use a multitude of borrower variables to provide you a premium quote. The only borrower variables we require are how much the borrower is putting down (LTV) and the borrower’s credit profile (credit score). So changes after you provide the Loan Estimate to variables like debt-to-income will not affect your MI premium.

Fair We don’t differentiate our rates based on geographical risk, the number of borrowers with income or whether borrowers are self-employed. Borrower’s credit score and how much the borrower puts down are the borrower attributes that impact the MI premium price.

Transparent There’s no need for a user ID and password to find a rate with MGIC. We publish our rates on our website. You can use our rate cards, mobile app, Rate Finder or QuickPick Rates™— or the top industry loan origination systems and pricing platforms — to get your MGIC MI premium rate.

Are you TRID-ready? To help you prepare, we’ve lined up webinars with industry lawyers and created presentations you can use to help educate referral partners, among other TRID-related offerings. For more information, contact me youror go MGIC to MGIC.com/TRID. Account Manager, www.mgic.com/ directory, or go to MGIC.com/TRID.

71-43567 5/15

inaccessible Credit

the Johnson-Crapo bill adopted by the Senate Banking Committee. The Senate measure would have encouraged assumption of more risk by private capital while maintaining an important role for the government in the process. Both efforts failed to muster the necessary support, and the prospect for action in the foreseeable future is dim. Even the government’s own efforts to reduce external influences that have impeded programs established to expand access to credit have run into roadblocks. Recent press reports have suggested that officials within the Department of Housing and Urban Development (HUD) have recommended limiting lender certifications to material matters to cut down on lender exposure to False Claims Act charges. FHA is also discussing ways to prioritize common underwriting errors to bring certainty to the process. These efforts to improve the process have reportedly met resistance within the enforcement arms of HUD and the Department of Justice, and have made little progress to date.

reconsideration of the required lender certifications that have turned immaterial errors into False Claims Act charges perceived by lenders as nothing more than pretexts to wring treble damages from hapless originators. The creation of an effective alternative dispute resolution system to deal with issues that arise after a loan is closed and sold would provide greater certainty in the transaction. FHFA has been encouraging the GSEs to develop such processes for some time, and the adoption of a well-designed system would promote certainty while helping to control unnecessary costs in the process. In addition, similar efforts to bring more certainty and eliminate redundancies in the compliance process would help to shrink the pricing spreads that have increased loan rates. Other common-sense regulatory tweaks, such as allowing postfacto cures of immaterial mistakes, could help relieve the “zerodefect” environment that has caused lenders to shy away from making the more difficult loans.

We can reverse the slide in credit availability, but it will require new approaches

SOME APPROACHES TO CONSIDER

Clearly, the lack of meaningful success with broad-brush attempts to expand credit and homeownership suggests that we should look for some new approaches and reconsider existing policies that impede lending. Here are some suggestions.

N Bring more certainty to the post-closing process. When asked why they have restricted lending to only the best loans, lenders’ No. 1 complaint is that their underwriting decisions are picked apart after the fact, and even the most insignificant error will lead to bad loans landing back in their laps. As discussed earlier, the government-sponsored enterprises (GSEs) have recently announced new policies designed to address this issue and more clearly define the types of underwriting mistakes that can lead to requests that loans be repurchased by the originating lender. These new policies hold out significant promise for giving lenders the certainty they need to expand credit, but many lenders are very cautious about the application of the policies. Early reports are that repurchase requests continue to be plentiful and largely focused on trivial mistakes. Additional steps are needed to continue to bring certainty to housing finance. FHA should follow through on its recent proposal to adopt a “defect taxonomies” framework for assessing loan quality. This new approach works by identifying a defect and categorizing it based on severity. FHA should also continue its

N Bring less certainty to the pre-closing process. Lenders often point to removal of discretion in the underwriting process as a primary culprit in restricting credit. In this narrative, the loans that are not getting made are the “story” loans that don’t fit neatly into an automated underwriting environment. The poster child for this group of borrowers is former Federal Reserve Chairman Ben Bernanke, who was denied an attempt to refinance his mortgage because of his recent job change. Typically these are borrowers who previously would have been able to get a loan approval by telling their story or showing compensating factors to overcome underwriting blips. Unfortunately, these are difficult issues for drafters of regulations to grapple with and many times they boil down to a “youknow-it-when-you-see-it” intangible. Nonetheless, in a zero-defect world, these borrowers are not afforded the chance to tell the rest of the story. Another current regulatory effort that is having a perverse dampening effect on creative underwriting is recent methods of enforcing fair lending laws. In the past two years, HUD and the Consumer Financial Protection Bureau (CFPB) have begun to use disparate-impact theories to infer bias from a lender’s track record without actually proving intent to discriminate. Compliance lawyers routinely advise clients that the best defense against a disparate-impact analysis is to have a concrete set of objective lending standards and not stray from them. To the extent that protected classes of borrowers would be disproportionate beneficiaries of more liberal interpreta-

July 2015 - PIPELINE 51

inaccessible Credit

Most underwriting decisions hinge on a system of credit evaluation tied to the FICO credit-scoring model that was developed using data from the 1990s.

tions of underwriting guidelines, application of disparateimpact theories is limiting. In a similar fashion, the FHA Neighborhood Watch program operates as a significant disincentive to serve borrowers at the riskier edges of the credit spectrum. This program utilizes Compare Ratios, a tool that evaluates lenders based on how their rate of defaults compares with the average rate of defaults in the nation as a whole and in a particular area served by an FHA office. Essentially, this ranking can eliminate FHA lenders that make loans in census tracts where the average rate of defaults may be higher. Former FHA Commissioner Carol Galante proposed adding an additional performance metric that would compare a lender’s default rate within three separate credit score bands to a target rate. FHA should consider completely replacing Compare Ratios with measures that do not penalize those who serve traditionally underserved consumers.

N Revisit the 3 percent cap on points and fees One of the provisions included in the Dodd-Frank Act intended to prevent abusive loans is a 3 percent cap on points and fees for a loan to meet the definition of Qualified Mortgage (QM). There was recognition in the statute that a hard and fast cap on small loans would be unreasonably restrictive and might lead to lenders’ unwillingness to make small loans. Whether or not you agree with this artificial limitation on risk-based pricing, as currently interpreted, the allowances built into the regulations do not take into account the realities of today’s market. By way of example, MBA estimates that, on average, the cost of originating a mortgage is approximately $7,000 per loan–up from $4,000 to $5,000 per loan five years ago. Under Dodd-Frank, the fees that can be charged on a $200,000 loan, which would correspond to an “affordable” home in most markets, would be capped at a maximum of $6,000. Many times these loans entail more than average time and effort to make. Lenders should not be expected to lose money to make affordable loans.

N Consider new ways of measuring creditworthiness. Most underwriting decisions in the country today hinge on a system of credit evaluation tied to the FICO credit-scoring model that was developed using data from the 1990s. Many borrowers today come from circumstances that do not provide traditional indicia of creditworthiness. These “thin-file” and infrequent borrowers are at a distinct disadvantage when applying for credit. The housing finance

52 PIPELINE - July 2015

system needs to search for additional, trustworthy methods of determining capacity and willingness to repay debts. One such emerging methodology is Stamford, Connecticut-based VantageScore Solutions LLC’s VantageScore® 3.0 credit-scoring model, which is already widely used in other areas of consumer lending. VantageScore uses traditional information about applicants, but it also incorporates non-traditional data such as rent and utility payments when they are available on a consumer’s primary credit file. VantageScore has applied to the FHFA for approval as an acceptable method of evaluating credit for GSE loans, and has estimated that the adoption of VantageScore would expand the population of consumers with credit scores by more than 30 million borrowers. The use of VantageScore scores should be approved as a way to expand access to more Americans without lowering the credit quality of the overall pool.

TIME TO RECOMMIT

The nation must recommit to the worthwhile goal of expanding access to credit and increasing the homeownership rate. We can reverse the slide in credit availability, but it will require new approaches. Taking steps to bring more certainty to the evaluation of closed loans, taking steps to bring back discretion to underwriting, adopting new credit assessment models, raising the 3 percent cap on points and fees, and re-examining the application of the disparate-impact theory and Compare Ratios will facilitate an increase in access to credit for more Americans. Robert M. Couch, CMB, is counsel and a member of the Banking and Financial Services, Real Estate, and Governmental Affairs practice groups of Bradley Arant Boult Cummings LLP, based in Birmingham, Alabama. He previously served as a commissioner on the Bipartisan Policy Center’s Housing Commission, general counsel of the Department of Housing and Urban Development (HUD), president of Ginnie Mae and chairman of the Mortgage Bankers Association (MBA). Jennifer S. Gisi is an associate and member of Bradley Arant Boult Cummings’ Banking and Financial Services practice group, also in the Birmingham office. They can be reached at rcouch@babc.com and jgisi@babc.com. Copyright 2015 Mortgage Banking® Magazine & Mortgage Bankers Association, All Rights Reserved.

Why Join ACUMA? Why

should you join ACUMA? Because we know that to justify the investment of your valuable time and money we need to deliver value in every sense of the word. This is just a sampling of the many benefits of membership.

ACUMA Member Benefits... v A substantial discount on registration fees and priority registration to the ACUMA Annual Conference. The only conference of it’s type bringing the best of the best in CU mortgage lending together to network, learn, grow and inspire one another in an environment focused exclusively on CU mortgage lending. Membership also entitles you to discounts on all ACUMA workshops and Webinars. v Exclusive access to the National Association of REALTORS® database full of valuable insights into market trends in your area. An invaluable tool for market forecasting and marketing. v A direct connection to the nation’s leading mortgage lending experts. Got a question? We either know the answer or know who does! Join ACUMA today at

www.acuma.org

Top 300 Market Share

The Top 300

Market Share–

More Than the Numbers Tracy Ashfield

credit unions focus more on mortgage lending, it’s clear that we take our market share seriously! At ACUMA’s 2015 midyear workshops, we devoted one of our “talk show” sessions to how credit unions measure success. We learned from some of the Top Shops that it’s so much more than numbers or dollars of loans closed. For many the ability to cross-sell deposit accounts and consumer loans to mortgage borrowers is a key measure of success. We have talked for years that having a sizable percentage of your loans used for home buying rather than refinancing is also a key measure. And we’ve become accustomed to including in the Pipeline a report on the top 300 mortgage-granting credit unions. In this issue we share the first-quarter 2015 results. And there is good news here. The

... the ability to crosssell deposit accounts and consumer loans to mortgage borrowers is a key measure of success.

report shows that credit unions are continuing to hold a share above 8%. I do, however, want to remind everyone that the data we take from the 5300 call reports is not perfect. We have used it for years, but the Schedule A information is still a bit misleading. “Loans Granted” aren’t just “pure” first mortgage-granted credit union loans. Today, the call report combines them with some MBL real estate loans. I am sure there are new report fields the NCUA would like to begin collecting, but we also know new call reporting requirements can be a burden and NCUA rightly make changes only when truly necessary. What will our “new” call report look like? I suspect it will identify things like Qualified vs. Non-Qualified Mortgage data but we don’t know for sure when or how it will change. In the meantime we’ll continue to measure share consistently using Schedule A data.

July 2015 - PIPELINE 55

The Top 300

The Top 300 –

Leading the market share charge Top 300 First Mortgage Granting CU Market Share as of March 31, 2015

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable)

$ Sold 1st Mortgages

Total Assets

8,307,394,260 10,066,723,554 83

658,012,343,269 1,106,110,123,357 59.5

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

Total Assets

Top 300 1st Mortgages Originated CUs All Originating CUs (2,893 CUs)* Top 300 Share

20,761,685,171 26,156,663,681 79.4

97,757 143,643 68.1

204,619,257,501 297,578,344,770 68.8

*CUs who granted $10,000 or more 01/15 - 03/15

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

1 VA Navy 2 VA Pentagon 3 CA Kinecta 4 NC State Employees’ 5 MI Lake Michigan 6 CA First Tech 7 WA BECU 8 NY Bethpage 9 AK Alaska USA 10 CA SchoolsFirst 11 CA Logix 12 TX Security Service 13 CO Elevations 14 CA San Diego County 15 UT America First 16 CA Star One 17 OR OnPoint Community 18 ID Idaho Central 19 CA The Golden 1 20 WI Summit 21 UT Mountain America 22 MA Digital 23 WI Landmark 24 CO Ent

56 PIPELINE - July 2015

$2,519,607,647 $743,069,550 $681,028,124 $588,480,092 $468,465,508 $408,670,524 $361,442,423 $354,411,695 $250,417,037 $243,158,042 $239,055,137 $236,066,395 $235,286,149 $226,277,050 $222,704,578 $188,462,323 $188,092,298 $182,436,643 $179,982,326 $179,723,949 $165,104,203 $163,300,384 $155,694,003 $154,369,293

10004 $21,347,982,261 $628,177,179 $66,818,284,530 2275 $10,486,807,959 $232,876,907 $17,836,342,609 1655 $1,735,783,802 $438,077,881 $3,721,747,586 3934 $13,395,903,500 $0 $30,527,446,159 3248 $1,914,068,973 $346,190,473 $3,713,396,809 1232 $2,888,666,893 $289,755,899 $7,674,868,042 1399 $3,439,117,603 $68,654,900 $13,644,163,548 994 $2,175,422,343 $130,893,401 $5,996,181,563 1011 $625,325,407 $239,755,982 $5,901,166,334 764 $2,383,581,031 $59,249,743 $11,177,872,554 684 $1,962,232,613 $62,702,985 $4,013,104,379 1106 $1,231,005,341 $46,233,840 $8,310,928,367 849 $521,835,570 $168,834,755 $1,522,249,794 611 $2,975,473,449 $33,299,931 $6,905,956,228 2411 $813,986,931 $126,955,014 $6,775,126,735 450 $2,496,283,158 $0 $7,323,974,341 1778 $980,933,896 $92,507,407 $3,685,715,332 1117 $641,954,256 $128,197,506 $1,972,078,621 755 $1,713,881,589 $5,659,187 $9,145,480,800 1029 $918,901,694 $70,563,982 $2,175,463,483 1646 $1,454,212,332 $74,045,162 $4,479,776,061 538 $2,070,974,258 $47,764,123 $6,275,021,946 1040 $839,811,959 $107,690,390 $2,740,296,793 727 $1,598,571,084 $12,386,880 $4,174,035,545

The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

25 TX Randolph-Brooks 26 CA Patelco 27 WI University Of Wisconsin 28 MO CommunityAmerica 29 WI Community First 30 CA Provident 31 IL BCU 32 AZ Desert Schools 33 FL Suncoast 34 CA Redwood 35 TX University 36 NM Nusenda 37 FL VyStar 38 NY State Employees 39 OH Wright-Patt 40 MN Wings Financial 41 CA Mission 42 CA Chevron 43 NY United Nations 44 CA Technology 45 IL Alliant 46 WI Royal 47 NY CAP COM 48 CA Evangelical Christian 49 DC Bank-Fund Staff 50 MD SECU of Maryland 51 UT Utah Community 52 TN Eastman 53 CA Wescom 54 VA Northwest 55 CA Premier America 56 CA SAFE 57 CO Bellco 58 UT Goldenwest 59 CA Travis 60 AZ Arizona State 61 IN Forum 62 VT New England 63 WI Altra 64 TX Advancial 65 CA NuVision 66 OR Advantis 67 IA Veridian 68 TX TDECU 69 VA Apple 70 IL CEFCU

$153,289,856 $150,057,168 $148,329,318 $141,514,751 $134,747,971 $130,597,042 $126,634,515 $126,212,120 $120,251,695 $115,098,300 $109,934,619 $107,987,581 $107,818,900 $101,159,696 $100,897,810 $97,775,907 $96,285,800 $96,025,991 $91,419,688 $90,550,174 $89,672,467 $88,226,516 $86,616,733 $81,001,469 $80,061,295 $79,088,198 $78,525,259 $78,479,083 $78,046,350 $78,014,833 $77,009,051 $75,812,005 $75,793,255 $75,615,863 $72,912,478 $71,784,814 $70,632,533 $70,088,696 $69,918,217 $69,775,826 $69,597,879 $69,500,442 $68,649,710 $67,220,796 $67,003,241 $66,749,482

Total Assets

914 $1,835,989,069 $8,673,843 $6,357,767,315 435 $1,539,993,625 $68,159,416 $4,336,221,380 809 $359,869,275 $85,819,000 $1,949,411,673 738 $616,134,967 $106,722,878 $2,080,127,902 700 $1,256,078,808 $4,461,850 $2,151,453,601 285 $784,587,406 $68,847,373 $2,071,008,394 681 $884,097,489 $89,061,535 $2,246,464,146 752 $467,380,494 $87,367,139 $3,746,226,000 827 $1,847,305,508 $1,168,836 $6,367,070,742 359 $1,025,417,823 $48,412,650 $2,583,510,452 438 $656,788,653 $75,810,918 $1,881,861,040 610 $418,031,376 $17,832,168 $1,602,478,357 750 $1,912,673,656 $11,390,550 $5,539,767,677 626 $684,458,130 $60,300,294 $2,943,658,056 848 $510,849,064 $45,442,610 $3,095,847,895 349 $707,119,653 $13,250,414 $4,188,298,669 260 $759,389,445 $41,048,271 $2,725,200,876 300 $1,776,566,298 $0 $2,635,665,627 205 $1,091,362,985 $9,823,156 $4,223,608,740 126 $695,858,134 $1,231,038 $1,901,663,439 208 $3,169,891,589 $96,117,800 $8,320,374,695 640 $695,632,576 $52,315,182 $1,590,018,080 562 $584,667,295 $28,055,556 $1,169,072,805 18 $667,689,719 $73,335,426 $971,312,750 165 $1,755,074,973 $7,857,481 $4,055,909,776 315 $1,113,270,376 $7,184,000 $2,921,382,566 384 $198,457,694 $59,287,248 $990,812,905 701 $1,508,566,669 $59,200 $3,150,390,193 257 $807,157,403 $44,692,823 $3,216,001,377 260 $463,795,113 $51,369,143 $2,834,472,116 91 $992,108,323 $5,670,400 $1,770,793,553 293 $551,856,888 $33,101,485 $2,208,492,966 236 $810,026,354 $29,028,440 $3,264,776,447 351 $300,956,520 $48,356,768 $1,074,834,809 296 $414,151,069 $29,537,778 $2,424,088,405 372 $516,653,958 $43,633,900 $1,709,343,823 332 $275,571,322 $59,333,061 $1,058,099,973 377 $496,922,652 $46,069,392 $1,073,744,630 413 $390,923,425 $43,483,204 $1,081,974,819 234 $439,900,893 $35,231,898 $1,233,617,436 212 $472,609,745 $42,289,289 $1,377,125,443 261 $363,419,995 $49,722,479 $1,185,861,208 443 $766,824,501 $27,425,006 $2,732,814,523 458 $720,478,130 $35,237,132 $2,561,800,909 158 $705,022,112 $9,996,369 $2,068,279,975 439 $2,115,497,948 $0 $5,289,520,980

July 2015 - PIPELINE 57

Boldly going wherever you need to go.

Never fear -- the Radian Credit Union division is here! At Radian, we’re committed to being an indispensable partner to our customers – one that thinks about your business holistically, and delivers solutions for needs that span the entire mortgage process. Dedicated Credit Union division uniquely structured to support your needs and the needs of your members. Exclusive programs like Timely RewardsSM and MortgageAssureSM to help you provide members even more value. Services provided by our sister company, Clayton, help you through every step of the mortgage process, including transaction management, servicing and subservicing, and more. Contact your Radian Credit Union Division representative today to learn more!

Bill Walker

National Account Manager West bill.walker@radian.biz

David Mills

National Account Manager East david.mills@radian.biz

Denise Santa Maria

Senior Account Manager East denise.santa.maria@radian.biz

Tammy Fitzpatrick

Account Manager West tammy.fitzpatrick@radian.biz

It’s in our DNA.

The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

71 CA California Coast 72 PA Members 1st 73 NC Local Government 74 NV One Nevada 75 MN TruStone Financial 76 GA Delta Community 77 NY Teachers 78 PA Citadel 79 CA Partners 80 MI Michigan State University 81 RI Navigant 82 CA Financial Partners 83 CA California 84 PA Police And Fire 85 CA American First 86 TX American Airlines 87 FL GTE Financial 88 CA Stanford 89 CO Public Service 90 IN Purdue 91 NY Hudson Valley 92 MI DFCU Financial 93 NJ Affinity 94 CA Western 95 WA WSECU 96 ND First Community 97 FL Fairwinds 98 NC Coastal 99 NY Visions 100 WA Spokane Teachers 101 NY ESL 102 WI Westconsin 103 WA Whatcom Educational 104 IL Great Lakes 105 MN Affinity Plus 106 TX GECU 107 WI Covantage 108 SC South Carolina 109 IN Elements Financial 110 OK Truity 111 RI Pawtucket 112 VA Virginia 113 FL Space Coast 114 CA San Francisco Fire 115 IN Indiana Members 116 MI United

$65,694,683 $65,545,809 $64,850,049 $64,751,185 $63,900,392 $63,871,767 $63,025,523 $61,161,521 $61,103,480 $61,000,623 $60,498,100 $60,296,500 $59,820,980 $59,753,101 $59,346,140 $58,888,550 $57,603,478 $57,013,650 $56,479,879 $56,228,908 $55,756,906 $55,471,063 $55,229,852 $55,076,019 $54,513,115 $54,502,134 $53,957,927 $53,276,929 $51,687,306 $51,578,087 $51,346,600 $49,917,334 $49,074,393 $47,970,687 $47,733,385 $47,567,019 $47,171,583 $47,041,814 $46,903,856 $46,521,770 $46,503,209 $45,017,694 $44,556,522 $44,544,280 $44,418,123 $43,446,312

206 $586,216,493 382 $553,077,774 477 $400,698,726 335 $152,057,735 337 $300,679,832 333 $1,453,247,351 249 $1,126,181,017 224 $930,787,560 197 $407,650,237 297 $825,605,298 232 $838,288,951 169 $414,363,816 175 $448,772,446 357 $1,366,732,198 163 $215,786,333 293 $1,828,243,478 341 $376,640,178 102 $691,050,575 150 $183,089,598 181 $395,700,147 272 $705,534,001 337 $648,713,760 174 $1,248,880,095 151 $610,634,956 266 $480,256,106 270 $200,425,341 331 $550,742,346 167 $803,908,169 128 $1,208,523,173 303 $841,391,812 342 $389,333,850 372 $378,507,608 263 $516,643,860 124 $163,989,945 294 $403,485,245 443 $416,211,547 301 $539,035,665 242 $400,233,708 223 $352,696,394 226 $168,589,934 268 $1,039,546,990 271 $546,167,383 245 $804,493,973 101 $398,423,877 227 $418,475,789 259 $738,107,705

Total Assets

$18,367,210 $1,917,220,793 $31,680,344 $2,891,748,387 $38,415,119 $1,518,791,743 $61,540,785 $750,686,715 $42,678,722 $1,005,459,860 $18,208,582 $4,822,853,443 $23,313,214 $5,165,335,804 $1,703,080 $2,226,291,379 $24,598,086 $1,344,064,072 $0 $2,900,631,890 $10,623,450 $1,511,950,095 $31,848,697 $935,890,630 $30,527,939 $1,398,830,601 $18,041,755 $4,359,581,551 $14,394,135 $510,196,784 $0 $5,707,160,404 $47,261,786 $1,740,841,603 $17,125,643 $1,765,906,617 $13,949,364 $1,520,860,792 $22,895,755 $914,186,877 $32,454,976 $4,118,052,934 $40,701,012 $3,909,918,222 $0 $2,344,428,838 $7,942,207 $2,099,137,375 $28,729,463 $2,270,598,267 $4,872,669 $528,754,787 $4,422,012 $1,846,409,602 $54,287,108 $2,519,064,324 $3,931,800 $3,443,809,928 $9,968,415 $2,101,173,163 $33,207,270 $4,988,148,850 $33,985,679 $973,016,758 $53,966,692 $1,126,342,380 $16,820,058 $639,150,484 $36,900,269 $1,743,825,390 $23,191,550 $2,163,991,283 $5,813,319 $1,167,313,310 $3,267,014 $1,372,376,093 $21,052,560 $1,164,723,808 $32,902,220 $740,712,666 $6,134,112 $1,716,804,271 $18,101,776 $2,702,361,311 $15,159,955 $3,392,611,983 $18,356,650 $1,055,636,886 $2,632,171 $1,502,408,069 $12,283,379 $1,869,742,271

July 2015 - PIPELINE 59

The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

117 ND Town and Country 118 MD Tower 119 IL IH Mississippi Valley 120 WI Marine 121 MD NASA 122 CA Firefighters First 123 MA Metro 124 CO Westerra 125 PA American Heritage 126 IA Collins Community 127 OR Unitus Community 128 MT Whitefish 129 NY Melrose 130 IN Evansville Teachers 131 PA Franklin Mint 132 IA University Of Iowa Community 133 WI Educators 134 AL Redstone 135 MA Jeanne D’Arc 136 WA Gesa 137 TN ORNL 138 UT Deseret First 139 PA Pennsylvania State Employees 140 CA Meriwest 141 WA TwinStar 142 CA Orange County’s 143 FL Power Financial 144 CA Bay 145 IN Teachers 146 NY Quorum 147 CA North Island 148 VT Vermont State Employees 149 SC Sharonview 150 FL Grow Financial 151 TX Navy Army Community 152 PA TruMark Financial 153 MN Central Minnesota 154 CT American Eagle Financial 155 AZ Vantage West 156 CO Credit Union of Colorado 157 CA USE 158 GA Robins 159 GA Georgia’s Own 160 WI Capital 161 IA Dupaco Community 162 CA Ventura County

60 PIPELINE - July 2015

Total Assets

$43,160,496 218 $149,023,594 $33,245,452 $391,450,240 $42,418,094 168 $436,550,043 $29,776,309 $2,781,010,983 $41,663,905 285 $157,583,733 $18,717,103 $931,056,805 $41,599,105 552 $223,774,619 $20,325,761 $543,696,379 $41,579,051 139 $431,418,393 $22,970,596 $1,585,419,954 $41,263,856 126 $550,966,656 $9,029,217 $987,992,479 $40,811,342 135 $438,891,075 $42,294,624 $1,419,906,573 $40,499,300 423 $373,265,032 $20,823,373 $1,302,238,920 $39,779,893 153 $385,314,828 $39,345,633 $1,541,552,516 $39,369,248 230 $329,642,672 $19,096,411 $847,141,688 $39,335,919 244 $212,978,660 $27,311,226 $962,516,821 $38,919,625 190 $561,079,820 $0 $1,275,310,126 $38,914,705 30 $422,666,184 $0 $2,100,121,490 $38,684,347 331 $302,984,677 $39,883,194 $1,128,626,209 $38,413,141 142 $215,917,526 $17,981,453 $906,811,629 $37,981,208 258 $1,259,338,421 $130,774,873 $2,700,818,990 $37,472,838 338 $650,844,207 $918,920 $1,562,474,147 $37,032,764 278 $352,703,105 $29,030,170 $3,863,725,010 $36,906,059 100 $597,292,723 $18,455,356 $1,121,666,751 $36,657,808 160 $257,093,359 $18,627,074 $1,485,228,922 $36,475,900 241 $494,282,168 $17,091,200 $1,656,846,738 $36,256,653 180 $122,994,144 $25,792,512 $483,867,064 $35,214,487 234 $494,925,697 $0 $4,383,979,457 $34,197,244 54 $343,268,835 $42,448,150 $1,095,690,551 $33,567,384 183 $128,728,610 $25,626,521 $961,253,462 $33,196,440 220 $484,130,656 $47,693,193 $1,232,118,411 $33,131,867 74 $266,577,744 $0 $545,860,915 $33,050,150 116 $148,901,795 $22,328,050 $751,924,409 $32,685,785 234 $857,450,658 $1,040,928 $2,632,711,510 $32,568,383 90 $347,147,341 $6,318,187 $916,286,136 $32,358,880 60 $440,145,388 $5,908,298 $1,173,280,389 $32,207,045 146 $285,346,086 $7,353,795 $669,385,927 $31,871,049 188 $510,832,837 $99,000 $1,132,312,725 $31,486,700 194 $523,756,419 $25,900,786 $2,080,702,914 $31,325,229 275 $805,419,906 $0 $2,298,447,890 $31,165,481 136 $486,975,944 $20,415,678 $1,632,296,037 $31,081,525 198 $358,008,848 $14,351,380 $873,066,677 $31,055,625 148 $421,917,714 $21,519,146 $1,380,386,811 $30,896,518 119 $270,849,277 $2,308,855 $1,482,817,461 $30,753,423 179 $255,030,029 $8,769,249 $1,245,300,968 $30,730,751 91 $248,439,141 $17,526,886 $807,621,916 $30,644,201 168 $324,719,030 $6,739,285 $2,026,068,985 $30,511,150 145 $428,562,423 $7,816,085 $1,902,095,846 $30,279,872 271 $466,722,707 $5,048,480 $1,131,486,247 $30,223,221 321 $289,511,242 $25,190,470 $1,294,792,338 $30,000,800 98 $168,092,426 $17,911,092 $725,499,888

The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

Total Assets

163 MO First Community $29,998,840 194 $350,136,738 $14,940,842 $2,024,163,138 164 NJ Polish & Slavic $29,945,050 116 $735,644,114 $0 $1,622,174,923 165 FL Campus USA $29,925,409 243 $334,696,181 $0 $1,293,934,775 166 WA Numerica $29,767,812 178 $380,395,187 $17,655,026 $1,451,980,517 167 NY Sunmark $29,453,217 142 $143,265,675 $13,792,373 $465,983,256 168 MO Anheuser-Busch Employees $29,452,949 171 $391,478,380 $13,777,410 $1,538,412,306 169 TX Texans $29,416,985 187 $246,616,380 $5,632,728 $1,502,900,036 170 OH Superior $29,242,769 247 $198,880,342 $18,278,075 $508,545,714 171 IN Centra $29,042,414 189 $316,077,584 $9,900,085 $1,288,331,240 172 CA Xceed Financial $28,924,409 89 $409,597,833 $41,465,102 $933,241,266 173 UT University First $28,771,288 237 $110,532,057 $14,923,590 $733,974,208 174 CA First Entertainment $28,431,293 74 $357,003,174 $5,049,844 $1,178,768,606 175 KY L & N $28,379,458 208 $395,917,744 $2,277,051 $939,650,745 176 CT Charter Oak $28,346,804 184 $496,701,440 $6,484,752 $868,957,727 177 WA School Employees Credit Union Of Washington $28,172,307 159 $135,950,188 $0 $1,039,548,421 178 SC Founders $28,128,027 691 $625,076,698 $0 $1,745,214,242 179 NY Nassau Educators $27,852,050 59 $584,501,452 $11,325,100 $2,287,945,884 180 MA Rockland $27,698,164 85 $376,937,444 $10,492,795 $1,368,475,994 181 WI Fox Communities $27,651,473 276 $619,645,415 $2,986,450 $1,051,842,915 182 IL Deere Employees $27,528,231 167 $342,881,004 $8,444,000 $696,280,050 183 VA Langley $27,162,456 151 $302,193,950 $9,890,686 $2,010,880,514 184 MA Workersâ&#x20AC;&#x2122; $27,022,690 109 $480,800,124 $1,784,923 $1,180,930,383 185 CA Los Angeles Police $27,019,402 103 $252,705,089 $10,339,560 $817,324,713 186 NY Self Reliance New York $26,835,000 47 $668,665,975 $0 $1,113,853,186 187 IN Beacon $26,785,116 86 $600,517,306 $0 $1,064,125,473 188 MI Community Financial $26,776,684 144 $270,109,485 $12,207,220 $630,226,429 189 IN 3Rivers $26,734,814 175 $240,990,234 $3,884,396 $778,776,583 190 NV Silver State Schools $26,291,104 100 $313,329,500 $9,294,775 $659,078,173 191 HI Hawaii State $26,245,206 64 $180,544,813 $0 $1,375,843,657 192 NY Corning $26,139,446 202 $268,122,717 $10,284,016 $1,152,771,404 193 CA KeyPoint $26,116,801 41 $383,579,509 $14,580,399 $921,773,489 194 NE Centris $25,908,091 183 $175,337,210 $17,026,449 $573,414,333 195 NC Allegacy $25,113,540 175 $232,492,995 $16,003,593 $1,143,766,290 196 NC Self-Help $25,086,720 92 $320,643,807 $0 $608,085,571 197 WA Columbia $25,036,202 118 $336,839,492 $4,257,250 $1,059,708,322 198 OK TTCU $24,922,068 167 $175,648,815 $14,559,852 $1,564,681,866 199 PA Philadelphia $24,606,887 59 $231,469,197 $5,198,383 $952,649,072 200 IL Dupage $24,292,742 126 $16,067,219 $22,970,381 $312,818,816 201 AZ TruWest $24,245,926 112 $262,818,106 $18,171,326 $903,408,471 202 NY Empower $24,186,627 193 $225,120,281 $19,092,332 $1,335,732,058 203 NC Truliant $24,099,689 182 $464,445,737 $7,708,505 $1,846,658,211 204 CO Colorado $23,982,435 91 $24,491,028 $22,660,344 $131,295,376 205 CA Educational Employees $23,422,536 138 $258,341,809 $0 $2,391,531,875 206 FL Pen Air $23,364,001 122 $187,802,156 $2,074,601 $1,288,010,995 207 MA Hanscom $23,345,543 88 $225,096,122 $15,275,767 $1,107,424,003 208 OH Seven Seventeen $23,155,661 112 $302,615,931 $3,559,200 $859,322,662

July 2015 - PIPELINE 61

The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

209 CA Credit Union of Southern California 210 WI Connexus 211 FL Achieva 212 IN Indiana University 213 WA Salal 214 IL Consumers 215 MA Harvard University Employees 216 OR Rogue 217 VA State Department 218 MA Direct 219 CO Air Academy 220 CA First Financial 221 IA Community Choice 222 IN Interra 223 CA Kern Schools 224 TX Shell 225 MI Lake Trust 226 TN Ascend 227 MN US 228 VA Freedom First 229 WA Sound 230 TX United Heritage 231 OR First Community 232 FL MidFlorida 233 MA St. Anne’s Of Fall River 234 AL America’s First 235 WA Verity 236 CA USC 237 DC Congressional 238 UT Cyprus 239 CA Southland 240 TX Texas Bay Area 241 GA Associated 242 FL Tropical Financial 243 WA Seattle Metropolitan 244 IL Motorola Employees 245 FL IBM Southeast Employees 246 WA Solarity 247 MA Align 248 MD National Institutes of Health 249 TX First Community 250 MN Ideal 251 VA University of VA Community 252 SD Sioux Falls 253 TX Texar 254 CA Schools Financial

62 PIPELINE - July 2015

$22,932,700 $22,721,887 $22,553,190 $22,513,868 $22,509,684 $22,382,622 $22,360,127 $22,084,102 $21,896,317 $21,698,574 $21,657,624 $21,554,384 $21,501,124 $21,443,063 $21,395,774 $21,317,039 $21,141,562 $21,072,962 $20,989,529 $20,845,717 $20,759,960 $20,434,270 $20,357,842 $20,310,863 $20,293,775 $20,233,010 $20,202,605 $20,187,150 $20,115,880 $20,078,716 $20,046,750 $19,956,583 $19,877,000 $19,859,912 $19,811,473 $19,745,733 $19,733,071 $19,592,057 $19,522,907 $19,511,601 $19,386,728 $19,286,452 $19,160,460 $19,126,629 $19,117,215 $19,104,747

Total Assets

64 $273,424,872 $3,062,685 $971,393,691 164 $233,457,103 $10,074,620 $1,081,805,707 105 $197,170,216 $16,936,273 $1,125,747,499 135 $341,262,790 $3,535,245 $824,883,114 81 $107,039,807 $12,180,339 $396,626,079 80 $137,911,314 $7,381,168 $676,987,621 76 $216,095,228 $9,957,656 $485,688,995 132 $200,328,486 $16,893,579 $982,257,161 74 $481,949,121 $11,053,693 $1,652,198,363 65 $139,509,771 $9,760,726 $422,581,538 100 $124,407,985 $13,622,627 $490,391,985 68 $114,551,103 $0 $439,340,635 129 $54,585,083 $17,550,711 $445,877,900 132 $272,778,503 $2,256,975 $759,939,363 134 $340,427,537 $1,076,250 $1,336,600,364 158 $147,354,329 $5,824,536 $721,965,071 144 $521,722,375 $0 $1,646,599,490 126 $521,435,669 $0 $1,772,988,668 114 $306,180,716 $145,825 $1,018,476,856 95 $107,214,097 $6,780,754 $371,527,814 116 $199,644,368 $12,659,799 $1,190,007,770 135 $303,131,125 $6,055,597 $815,068,637 141 $215,526,577 $12,923,664 $851,008,201 88 $622,598,411 $41,092,739 $2,212,281,868 100 $419,981,661 $7,857,187 $853,185,811 162 $367,583,469 $2,575,300 $1,364,375,688 89 $138,223,513 $14,815,950 $454,699,500 58 $78,401,448 $14,930,800 $412,792,937 66 $210,765,331 $7,832,730 $840,008,668 105 $136,680,304 $10,371,795 $707,619,270 65 $162,896,955 $16,187,600 $583,520,638 167 $93,301,459 $0 $341,435,936 138 $185,242,349 $8,772,350 $1,388,382,643 81 $188,011,897 $18,756,298 $577,049,128 77 $194,195,360 $11,284,451 $630,319,714 80 $271,356,095 $9,266,358 $875,106,923 116 $226,154,014 $3,829,268 $883,993,501 105 $186,386,880 $11,113,603 $572,033,400 75 $224,670,411 $5,713,008 $571,198,966 62 $164,082,119 $16,398,220 $561,673,366 103 $193,288,413 $2,083,619 $1,100,320,630 128 $221,961,564 $4,522,349 $602,982,811 186 $108,283,413 $8,697,559 $718,770,985 117 $14,425,958 $19,274,591 $231,198,325 254 $64,961,680 $2,109,586 $324,943,917 147 $173,355,924 $8,564,247 $1,568,603,821

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noun [koh-op-er-too-ni-tee]

A favorable time or occasion when all parties involved in the mortgage process experience success.

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The Top 300

Top 300 First Mortgage Granting CU as of March 31, 2015 Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

Total Assets

255 NY Island $18,990,700 77 $208,963,517 $1,566,250 $985,824,299 256 NV Greater Nevada $18,968,614 56 $138,654,294 $37,077,551 $541,060,320 257 NH Service $18,870,630 75 $494,906,305 $0 $2,652,976,132 258 NE Liberty First $18,852,768 133 $60,511,121 $16,952,117 $184,254,790 259 MA Sharon $18,612,159 73 $219,236,230 $1,330,300 $475,905,428 260 CA CoastHills $18,571,399 121 $351,044,482 $4,570,400 $839,561,214 261 DC IDB-IIC $18,556,640 42 $288,863,380 $0 $496,702,627 262 CA Foothill $18,515,410 63 $67,415,465 $15,302,500 $330,619,300 263 VA Dupont Community $18,487,394 125 $439,114,938 $2,233,568 $979,376,011 264 AL MAX $18,174,089 101 $180,825,037 $4,989,818 $1,123,226,543 265 NY Municipal $18,146,690 71 $587,822,031 $0 $2,219,845,597 266 IL Abbott Laboratories Employees $17,944,132 93 $174,812,821 $10,810,000 $716,223,289 267 CA Caltech Employees $17,871,917 34 $223,074,291 $0 $1,360,962,342 268 WI Westby Co-op $17,851,642 237 $148,256,884 $4,073,878 $405,405,994 269 FL Community First Credit Union of Florida $17,832,697 118 $363,578,969 $1,083,530 $1,300,979,920 270 OH Directions $17,801,863 107 $212,514,143 $12,725,478 $628,381,713 271 WA iQ $17,702,746 74 $143,348,487 $9,291,257 $768,931,801 272 MI Michigan Schools and Government $17,651,876 123 $472,252,635 $0 $1,524,851,507 273 WI Kohler $17,564,393 132 $98,716,058 $13,380,379 $294,458,531 274 MA Webster First $17,560,100 45 $366,208,236 $0 $665,053,910 275 CA Coast Central $17,406,998 85 $309,685,465 $0 $1,097,140,347 276 CA SF Police $17,241,450 48 $297,025,778 $15,233,094 $794,645,900 277 NM Sandia Laboratory $17,182,748 84 $638,710,026 $1,286,482 $2,152,727,407 278 OR Oregon State $17,012,752 94 $183,602,248 $11,621,314 $938,669,736 279 NY Progressive $17,000,000 3 $113,386,497 $0 $717,369,053 280 CA Christian Community $16,941,698 43 $425,643,705 $851,000 $598,790,367 281 WI Thrivent $16,835,021 133 $182,270,809 $14,460,851 $500,570,370 282 MN Spire $16,815,528 110 $194,953,475 $9,694,640 $803,075,162 283 NH St. Maryâ&#x20AC;&#x2122;s Bank $16,767,524 93 $287,319,026 $24,585,111 $855,590,456 284 MI Dow Chemical Employees $16,722,542 105 $363,344,298 $76,000 $1,501,213,241 285 MI Honor $16,681,070 130 $206,051,566 $11,856,385 $618,447,960 286 CA LBS Financial $16,660,600 57 $225,776,821 $6,821,500 $1,186,239,846 287 WA Qualstar $16,582,367 66 $74,153,289 $12,079,171 $387,182,190 288 CA San Francisco $16,575,770 38 $309,541,422 $0 $946,719,994 289 MN TopLine $16,491,154 79 $57,869,550 $12,303,479 $369,475,565 290 OH KEMBA Financial $16,433,185 119 $259,405,048 $5,671,074 $976,465,715 291 MN Hiway $16,396,400 102 $353,194,148 $361,900 $986,015,276 292 SC SRP $16,392,334 138 $78,657,325 $9,989,350 $721,120,086 293 VT Vermont $16,383,046 153 $122,055,760 $11,938,924 $433,588,082 294 MI Advia $16,381,686 122 $265,985,404 $507,900 $1,120,043,280 295 TX Members Choice $16,275,733 38 $177,211,352 $545,491 $511,122,262 296 ID Potlatch No 1 $16,265,445 110 $80,888,503 $12,600,750 $730,995,975 297 HI HawaiiUSA $16,223,900 21 $244,006,593 $0 $1,457,261,628 298 IL NuMark $16,136,639 99 $33,328,650 $14,556,957 $208,989,218 299 CO Denver Community $16,120,307 65 $54,139,483 $12,185,666 $277,700,015 300 ID Westmark $16,112,371 101 $194,605,127 $2,998,785 $608,925,115

64 PIPELINE - July 2015

Special Report: Scotsman Guide Top 300 Originators

Congratulations!

Scotsman Guide is pleased to present Top Originators 2014, the industryâ&#x20AC;&#x2122;s most comprehensive rankings of the mortgage industryâ&#x20AC;&#x2122;s top producers. Our top originators are listed by loan volume, closed loans, Federal Housing Administration (FHA) volume, U.S. Department of Veterans Affairs (VA) volume, U.S. Department of Agriculture (USDA) volume, purchase volume, refinance volume, home equity line of credit (HELOC) volume and volume gain, 2013 to 2014. Print rankings: Scotsman Guide Residential Edition, April 2015 Online rankings: ScotsmanGuide.com/Top2014

July 2015 - PIPELINE 65

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

ScotsmanGuide.com/Top2014/Volume

State

Total Volume

Purchases vs. Refis

Closed Loans

Cohen Financial Group

$664,912,228

66%/34%

617

$607,527,516

675

Both

Wells Fargo Home Mortgage

$357,028,000

75%/25%

617

$336,923,748

720

Banker

3 Brian Minkow

Prospect Mortgage

$291,427,012

68%/32%

704

$307,042,977

792

Banker

4 Joe Caltabiano

Guaranteed Rate

$200,805,580

65%/35%

532

$238,808,659

641

Both

5 Max Leaman

PrimeLending

$197,345,747

87%/13%

839

$167,002,256

826

Banker

6 Chris Furie

Insignia Mortgage Inc.

$190,085,900

60%/40%

111

$137,460,800

100

Broker

7 John Rodgers

Prime Mortgage Lending Inc.

$189,602,278

75%/25%

877

$125,155,492

595

Banker

8 Ed Currie

Associated Bank

$186,994,448

84%/16%

257

$189,928,903

311

Banker

9 Michael Mundy

# Name

Company

1 Mark Cohen 2 Brian Scott Cohen

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz 30

Pinnacle Mortgage Inc.

$182,779,433

90%/10%

481

$245,812,762

639

Both

10 Shant Banosian

Guaranteed Rate

$179,854,942

79%/21%

532

$168,037,847

527

Both

11 Brian Blonder

Capital Bank NA

$171,755,086

25%/75%

647

$202,922,744

671

Banker

12 Risha Kilaru

Prospect Mortgage

$166,807,409

67%/33%

369

$127,543,768

306

Banker

13 Julie Long

Commonwealth Mortgage LLC

$164,953,200

39%/61%

639

$167,480,599

697

Banker

14 Michael Meena

Augusta Financial

$164,825,776

56%/44%

445

$221,892,972

665

Both

15 Matt Andre

FBC Mortgage LLC

$159,467,086

92%/8%

647

$135,163,919

610

Banker

16 Benjamin Cohen

Guaranteed Rate

$153,833,475

54%/46%

316

$142,172,031

342

Both

17 Benjamin Anderson

Guaranteed Rate

$153,718,558

5%/95%

339

$201,316,441

411

Both

18 Paul Volpe

NOVA Home Loans

$149,854,562

65%/35%

730

$208,369,345

1,020

Both

19 Rick Elmendorf

Caliber Home Loans

$144,259,117

67%/33%

367

$150,327,006

447

Banker

20 Harinder Johar

Guaranteed Rate

$142,982,808

69%/31%

397

$222,298,348

647

Both

21 Deborah Foley

Smarter Mortgages

$142,198,617

28%/72%

346

$150,798,798

541

Banker

22 Mike Hartunian

Prospect Mortgage

$141,013,898

70%/30%

299

$141,945,351

317

Banker

23 Diane Clark

PrimeLending

$140,055,603

98%/2%

444

$135,891,577

429

Banker

24 Louis Bardis

FJM Capital Inc.

$139,423,475

71%/29%

376

$78,000,000

200

Banker

25 Jacob Deegan

Flagship Financial Group

$138,422,696

0%/100%

655

$150,205,669

814

Both

26 Baret Kechian

Mortgage Master Inc.

$137,827,256

81%/19%

342

$164,229,435

414

Both

27 Roland Benson

imortgage

$136,920,181

87%/13%

554

$170,745,161

717

Banker

28 Jenny Kim

George Mason Mortgage LLC

$136,552,760

96%/4%

371

$129,131,206

344

Banker

29 Mike Roberts

City Creek Mortgage

$133,302,325

50%/50%

569

$151,980,734

671

Broker

30 Eric Magee

Union Bank

$131,990,488

62%/38%

135

$171,196,893

179

Banker

31 Rodrigo Ballon

CMG Financial

$129,742,612

80%/20%

345

$128,524,577

369

Banker

32 Damon Germanides

Insignia Mortgage Inc.

$129,311,975

50%/50%

$113,202,575

Broker

10 13

33 Dianne Crosby

RPM Mortgage Inc.

$128,256,938

58%/42%

234

$188,862,084

384

Broker

34 Scott Evans

CMG Financial

$125,831,952

73%/27%

303

$134,840,351

384

Banker

35 Hunter Marckwardt

RPM Mortgage Inc.

$124,595,296

58%/42%

217

$117,839,751

234

Broker

36 Franco Tamburrino

Coast 2 Coast Funding Group Inc.

$122,971,435

62%/38%

383

$123,607,719

427

Both

37 Tim Roach

Prospect Mortgage

$121,323,121

75%/25%

274

$138,859,010

413

Banker

38 Andrew Marquis

Prospect Mortgage

$119,542,889

81%/19%

350

$91,164,299

340

Banker

39 John Vlogianitis

Wells Fargo Home Mortgage

$113,080,000

75%/25%

206

$175,951,000

382

Banker

40 Brian Kerby

Academy Mortgage

$112,928,840

87%/13%

392

$67,752,218

272

Banker

40 Damon Johnston

Academy Mortgage

$112,928,840

87%/13%

392

$67,752,218

272

Banker

42 Bruce Salik

Prospect Lending

$110,915,020

84%/16%

339

$135,487,792

395

Banker

43 Yinan Nancy Sun

Austin First Mortgage

$110,798,254

76%/24%

515

$177,283,544

847

Both

44 Ryan Kelley

NewCastle Home Loans LLC

$109,948,117

20%/80%

620

$135,584,376

821

Banker

45 Mark Johnson

Prospect Mortgage

$108,901,215

68%/32%

260

$83,988,195

196

Banker

46 Freddy Pedrique

BBVA Compass

$108,232,135

100%/0%

442

$96,682,303

464

Banker

47 Shimmy Braun

Guaranteed Rate

$107,582,545

64%/36%

361

$200,859,809

664

Both

48 Sam Sharp

Guaranteed Rate

$107,388,175

70%/30%

340

$113,970,250

393

Both

49 Ryan Grant

imortgage

$107,194,894

74%/26%

249

$98,612,591

243

Banker

50 Kelly Malatesta

Affiliated Mortgage Co.

$106,797,754

82%/18%

323

$110,250,803

402

Banker

(continued)

66 PIPELINE - July 2015

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

(continued)

ScotsmanGuide.com/Top2014/Volume

# Name

Company

State

Total Volume

Purchases vs. Refis

Closed Loans

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz

51 Rodney Anderson

Supreme Lending

$106,124,915

57%/43%

452

$136,892,533

596

Banker

52 David Jaffe

On Q Financial

$104,096,571

53%/47%

254

$147,568,913

413

Banker

53 Justin Purpero

Wells Fargo Home Mortgage

$102,899,957

32%/68%

159

$118,894,987

195

Banker

54 Beth Lewis

Perl Mortgage Inc.

$102,503,430

72%/28%

320

$102,009,921

373

Banker

55 Brad Cohen

Capital Bank NA

$101,769,194

42%/58%

235

$152,116,103

425

Banker

56 Michael Deery

Citywide Financial Corp.

$101,450,310

40%/60%

254

$92,505,475

245

Broker

57 Neena Vlamis

A & N Mortgage Services Inc.

$101,155,161

74%/26%

363

$112,610,258

364

Banker

58 Joseph J. Mazzo

Eagle Home Mortgage

$100,900,193

84%/16%

234

$82,750,650

215

Banker

19 34

59 Linda Mister-Owens

SWBC Mortgage Corp.

$100,163,249

95%/5%

575

$78,056,625

467

Banker

60 Seth Goodwin

Wells Fargo Private Mortgage Banking

$99,604,580

81%/19%

170

$52,951,392

Banker

61 Tim Smith

Talmer Bank and Trust

$98,843,685

87%/13%

312

$87,584,978

279

Banker

62 Ric Jason Gosser

Guild Mortgage Co.

$98,595,428

89%/11%

380

$74,154,176

302

Banker

63 Joseph Smith

Guaranteed Rate

$98,000,634

75%/25%

255

$129,109,836

349

Both

64 John Peterman

George Mason Mortgage LLC

$97,197,146

37%/63%

207

$128,525,211

299

Banker

65 Shane Force

Atlantic Home Loans Inc.

$96,977,026

97%/3%

271

$102,920,396

285

Banker

66 Bill Kelso

On Q Financial

$96,865,104

83%/17%

190

$114,183,645

243

Banker

67 David Lee Johnson

Flagship Financial Group

$96,311,365

0%/100%

450

$94,145,361

536

Both

68 Greg Kingsbury

Caliber Home Loans

$96,081,652

90%/10%

216

$106,941,753

254

Banker

69 Bill Lavelle

First Federal Lakewood

$95,835,800

95%/5%

298

$119,912,889

347

Banker

70 Michael Tanionos

Wells Fargo Home Mortgage

$94,656,253

63%/37%

180

$92,589,127

212

Banker

71 Billy Winfree

F&M Bank

$94,432,875

82%/18%

382

$103,646,642

412

Banker

72 Eli Weinberger

New American Funding

$93,120,114

52%/48%

164

$62,000,000

125

Banker

73 Alicia Blackwood

Summit Funding Inc.

$92,850,251

90%/10%

278

$109,319,444

322

Banker

74 Jason Griesser

Prospect Mortgage

$92,717,728

88%/12%

310

$113,344,426

414

Banker

75 David Epstein

Primary Residential Mortgage Inc.

$92,309,054

97%/3%

306

$76,700,075

258

Both

76 Jason Renno

Wintrust Mortgage

$92,180,894

87%/13%

261

$86,000,000

232

Banker

77 Brandon Knapp

RPM Mortgage Inc.

$92,089,202

61%/39%

165

$98,888,648

200

Banker

78 Josh Cilman

Intercoastal Mortgage Co.

$91,556,413

70%/30%

198

$109,382,565

256

Banker

79 Brian Decker

Guaranteed Rate

$91,491,989

66%/34%

230

$131,665,587

345

Both

80 Allyson Kreycik

Guaranteed Rate

$91,483,037

69%/31%

251

$106,421,757

334

Both

81 Chien-Ming Pi-Young

Top One Mortgage

$91,121,666

90%/10%

374

$115,554,566

536

Both

82 Norman Calvo

Sterling National Bank

$89,342,327

68%/32%

198

$140,508,715

323

Both

83 Joshua Sigman

Legacy Mutual Mortgage

$88,463,492

90%/10%

380

$89,336,228

439

Banker

84 Caryn Grafton

Atlantic Coast Mortgage

$88,141,341

76%/24%

231

$118,811,668

296

Banker

85 Lisa Nicholas

PrimeLending

$87,661,199

83%/17%

343

$71,354,136

301

Banker

86 Brian Jessen

Guaranteed Rate

$87,513,077

70%/30%

209

$110,897,510

268

Both

87 Michael Borodinsky

Caliber Home Loans/Sun Home Loans

$87,497,115

74%/26%

289

$165,120,350

565

Banker

88 John Noldan

Guaranteed Rate

$87,071,502

82%/18%

354

$96,606,093

387

Both

89 Robby Oakes

Corporate Investors Mortgage Group

$86,493,676

81%/19%

304

$116,894,069

414

Banker

90 Kyle Ernst

Stonehaven Mortgage Inc.

$86,425,320

38%/62%

254

$73,704,538

197

Banker

91 Todd Sheinin

New America Financial

$86,123,343

59%/41%

241

$77,055,495

226

Banker

92 Shelly Logemann

RPM Mortgage Inc.

$86,009,901

46%/54%

144

$159,111,850

325

Both

93 Jessie Pachan

Fearon Financial, dba Smarter Mortgages

$85,668,706

37%/63%

237

$95,475,701

400

Banker

94 Lysa Catlin

RPM Mortgage Inc.

$85,245,124

71%/29%

203

$65,999,327

190

Broker

95 Angela Deaton

First Choice Loan Services Inc.

$85,162,134

96%/4%

283

$64,190,936

211

Banker

96 Jesse Caveney

American Pacific Mortgage

$84,823,678

10%/90%

118

$90,710,905

110

Both

97 Cameron Alan Harris

Flagship Financial Group

$83,973,277

0%/100%

369

$29,266,507

129

Both

98 Dean Vlamis

Guaranteed Rate

$83,731,743

67%/33%

255

$113,588,050

340

Both

Prospect Mortgage

$83,627,508

75%/25%

185

$108,160,391

241

Banker

Guaranteed Rate

$83,105,921

40%/60%

295

$144,177,793

564

Both

99 Michele Stanisch 100 Tom Lavallee

(continued)

July 2015 - PIPELINE 67

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

(continued)

ScotsmanGuide.com/Top2014/Volume

# Name

Company

State

Total Volume

Purchases vs. Refis

Closed Loans

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz

101 Molly Meeker

Prospect Mortgage

$82,322,602

76%/24%

343

$70,743,892

319

Banker

102 Timothy Taylor

Prospect Mortgage

$82,266,211

57%/43%

151

$104,943,283

207

Banker

20 13

103 Dan Stevens

Wells Fargo Home Mortgage

$82,251,591

55%/45%

140

$120,500,000

219

Banker

104 Phil Nguyen

George Mason Mortgage LLC

$82,160,623

89%/11%

189

$40,358,152

100

Banker

105 Joe Parisi

Prospect Mortgage

$81,729,637

73%/27%

181

$103,707,412

247

Banker

106 Eric Glick

Starkey Mortgage

$81,606,327

97%/3%

415

$65,610,555

348

Banker

107 Dan Gjeldum

Guaranteed Rate

$81,050,567

67%/33%

226

$106,974,735

307

Both

108 Mehdi Pirzadeh

EagleBank

$80,918,292

43%/57%

168

$129,441,477

313

Banker

109 Daryn Peterson

Wintrust Mortgage

$80,715,680

78%/22%

230

$79,334,885

251

Both

110 Todd Bookspan

HomeStreet

$80,469,286

95%/5%

404

$81,870,668

418

Banker

111 Michael Murgatroy

Guaranteed Rate

$80,464,216

62%/38%

300

$98,773,275

221

Both

112 Richard Scherer

MSA Mortgage LLC

$80,002,022

61%/39%

239

$68,774,398

339

Banker

113 Shayla Gifford

Guild Mortgage Co.

$79,936,844

87%/13%

369

$92,153,576

475

Broker

114 Susan Turner

Charter One Mortgage

$79,478,770

65%/35%

$97,411,326

146

Banker

20 18

115 Amanda Sessa

SWBC Mortgage Corp.

$78,070,852

64%/36%

230

$83,303,889

283

Banker

116 Keith Hapenney

Leader Bank

$77,907,468

73%/27%

210

$103,599,138

309

Banker

117 Barry Schwartz

Perl Mortgage Inc.

$76,604,233

55%/45%

215

$105,491,823

339

Banker

118 Jerry Sundt

V.I.P. Mortgage Inc.

$76,501,780

59%/41%

360

$75,672,643

408

Banker

119 David Lawver

Kal Financial

$76,452,251

63%/37%

180

$76,360,701

177

Both

120 Thomas Digan

Mortgage Master Inc.

$76,343,322

50%/50%

181

$182,710,841

505

Both

121 Shashank Shekhar

Arcus Lending

$75,652,794

56%/44%

183

$56,880,980

124

Broker

122 Michael Alexander

Citibank NA

$75,643,193

91%/9%

$52,143,000

Banker

123 Carlos Larrazabal

George Mason Mortgage LLC

$75,271,413

90%/10%

367

$80,983,683

354

Banker

124 Kelly Marsh

Broadview Mortgage

$75,036,495

51%/49%

182

$104,490,932

255

Banker

125 Patrick Pittman

PrimeLending

$75,018,869

95%/5%

251

$88,684,587

292

Banker

27 12

126 Christopher Fenoglio

Alpine Mortgage Planning

$74,615,592

71%/29%

196

$82,993,938

218

Both

127 Christina Longo

Prospect Mortgage

$74,584,406

78%/22%

246

$78,117,349

293

Banker

128 Richard Clayton

MSA Mortgage LLC

$74,562,129

63%/37%

217

$75,160,975

235

Banker

129 Cameron White-Ford

Elevations Credit Union

$74,119,317

79%/21%

290

$102,281,499

404

Banker

130 Patrick Ruffner

Guaranteed Rate

$73,992,893

62%/38%

256

$63,504,457

243

Both

131 Mark Richards

TD Bank

$73,964,635

80%/20%

141

$128,862,803

241

Banker

27 24

132 Suren Sampat

Draper and Kramer Mortgage Corp., dba 1st Advantage IL

$73,944,642

35%/65%

234

$91,615,611

329

Both

133 Peter Accolla II

McLean Mortgage Corp.

$73,777,947

66%/34%

187

$93,400,000

254

Banker

134 Catherine Haddad

Atlantic Home Loans Inc.

$73,158,965

83%/17%

165

$72,937,954

151

Banker

135 Rosella Campion

Mortgage Master Inc.

$72,901,251

69%/31%

215

$98,350,063

304

Both

136 Courtney Walker

NOVA Home Loans

$72,874,200

75%/25%

389

$97,241,432

547

Both

137 Neils Christian Jorgensen Flagship Financial Group

$72,694,837

3%/97%

333

$46,203,198

256

Both

138 Paul Harsanyi

EagleBank

$72,587,391

41%/59%

140

$82,944,857

195

Banker

139 Kory kavanewsky

CMG Financial

$72,185,556

69%/31%

144

$82,588,572

202

Both

140 Jarret Coleman

United Bank

$72,138,657

59%/41%

166

$86,603,476

234

Banker

141 Jonathan Marcoline

FBC Mortgage LLC

$71,631,436

100%/0%

314

$68,200,086

305

Banker

142 Christopher Gallo

NJ Lenders Corp.

$71,531,657

78%/22%

174

$67,525,579

197

Banker

143 Steve Siwinski

Guaranteed Rate

$71,505,317

79%/21%

395

$92,646,562

442

Both

144 Ashley Smith

Atlantic Coast Mortgage

$71,319,737

80%/20%

189

$78,581,294

206

Banker

145 Billi West

Network Funding

$71,185,901

97%/3%

345

$33,880,401

119

Banker

146 Randy Masters

Masters Team Mortgage

$70,885,813

37%/63%

241

$66,318,796

231

Broker

147 Nathaniel Lindsey

Wells Fargo Home Mortgage

$70,736,960

50%/50%

118

$105,969,793

161

Banker

148 Chris Kostoff

Mortgage Direct Corp.

$70,542,671

16%/84%

168

$85,141,176

220

Broker

149 James Pope

Wintrust Mortgage

$70,451,164

78%/22%

273

$88,289,035

314

Both

150 Penny Psencik

Crosspoint Financial

$70,397,273

0%/100%

215

$53,217,704

201

Broker

(continued)

68 PIPELINE - July 2015

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

(continued)

ScotsmanGuide.com/Top2014/Volume

# Name

Company

State

Total Volume

Purchases vs. Refis

Closed Loans

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz

151 Mary Dinkins

Cornerstone Home Lending

$70,330,731

74%/26%

177

$83,137,558

234

Banker

152 Mark Maimon

Sterling National Bank

$70,231,786

79%/21%

151

$102,759,420

205

Both

153 Jason Hunter

Guaranteed Rate

$70,161,219

82%/18%

160

$103,360,830

222

Both

154 Chris Washburn

Caliber Home Loans

$69,872,210

92%/8%

160

$91,515,563

217

Banker

155 Kevin Zhu

MLD Mortgage Inc.

$69,822,919

44%/56%

225

$175,839,268

531

Banker

156 Timothy Tusing

Northpointe Bank

$69,638,009

10%/90%

228

$30,755,914

170

Banker

157 James Lowell

Americash Bankers

$69,379,850

26%/74%

179

$72,692,150

214

Banker

158 Kelly Lindsay

Amegy Mortgage Co.

$69,259,325

84%/16%

$75,093,915

103

Banker

159 Brady Thomas

RPM Mortgage Inc., dba LaSalle Financial Services CA

$69,188,586

66%/34%

140

$9,865,563

Both

160 Chris Smith

Trident Mortgage Co.

$68,892,337

90%/10%

249

$76,637,896

287

Banker

161 Artin Babayan

PrimeLending

$68,735,680

66%/34%

166

$61,299,850

177

Banker

162 J.D. Cortese

Guaranteed Rate

$68,430,964

73%/27%

223

$87,399,470

295

Both

163 Manuel D. Corral

Golden Empire Mortgage

$68,388,310

84%/16%

310

$73,405,348

347

Banker

164 Michael Caputo

Starkey Mortgage

$67,928,578

94%/6%

374

$57,663,723

340

Banker

165 Nancy B. Davis

Supreme Lending

$67,926,009

96%/4%

477

$82,987,741

621

Banker

166 Jedediah Hardman

Low VA Rates

$67,920,902

1%/99%

294

$37,990,328

187

Broker

167 Joshua Jensen

Flagship Financial Group

$67,865,572

0%/100%

318

$3,722,611

Both

168 Lukas Andreen

Wells Fargo Home Mortgage

$67,787,885

78%/22%

329

$74,431,936

425

Banker

169 Tony Adkins

Alliance Financial Resources

$67,660,882

0%/100%

261

Banker

170 Rajan Mahajan

EagleBank

$66,344,491

57%/43%

151

$75,130,916

167

Banker

171 Ali Ghassemi

George Mason Mortgage LLC

$66,089,354

79%/21%

163

$92,774,693

243

Banker

172 Jane Floyd

NFM Lending

$65,441,834

95%/5%

302

$65,735,553

288

Banker

173 David Setti

TurnKey Mortgage Solutions

$65,003,836

73%/27%

140

$80,734,358

178

Both

174 Andrew Lunenfeld

EagleBank

$64,779,198

37%/63%

134

$96,295,111

241

Banker

175 John Downs

Caliber Home Loans

$64,736,465

81%/19%

123

$56,846,697

121

Banker

176 Mike Nielsen

Guaranteed Rate

$64,717,019

69%/31%

180

$64,272,543

213

Both

177 Tony Umholtz

SunTrust Mortgage

$64,687,983

70%/30%

150

$96,038,241

200

Banker

178 Miles Rusth

Summit Mortgage Corp.

$64,606,911

53%/47%

212

$71,645,295

254

Banker

179 Mark Raskin

PrimeLending

$64,562,400

78%/22%

241

$64,801,664

277

Banker

180 Wes Sellew

Mortgage Network

$64,199,373

79%/21%

230

$67,823,943

240

Banker

13 22

181 Shawn Huss

Talmer Bank and Trust

$64,169,074

86%/14%

420

$92,861,499

551

Banker

182 Dana Gounaris

Trident Mortgage Co.

$64,114,190

85%/15%

281

$85,260,547

357

Banker

183 Michelle Bobart

Guaranteed Rate

$64,058,658

78%/22%

200

$63,590,207

195

Both

184 Pauline Amstutz

Golden Eagle Mortgage Group

$64,051,453

74%/26%

166

$69,482,601

199

Broker

185 Jason Spears

Academy Mortgage

$63,828,921

88%/12%

290

$74,483,779

309

Banker

186 Donna H. Rumpler

Supreme Lending

$63,481,491

100%/0%

251

$43,770,538

177

Banker

187 Niki Salter

Legacy Mutual Mortgage

$63,324,424

81%/19%

236

$27,551,331

124

Banker

188 Chad Loube

Talmer Bank and Trust

$63,269,552

85%/15%

153

$61,330,758

144

Banker

189 Robert Ross

MVB Mortgage

$63,044,083

76%/24%

167

$87,362,348

242

Banker

190 Tim Lowry

Trident Mortgage Co.

$63,041,115

91%/9%

196

$67,398,373

191

Banker

191 Drew Stacey

Talmer Bank and Trust

$62,680,068

74%/26%

249

$81,317,818

551

Banker

192 Ryan Sandell

Primary Residential Mortgage Inc.

$62,439,346

98%/2%

273

$47,290,390

228

Both

193 Justin Oliver

NOVA Home Loans

$62,402,689

82%/18%

327

$58,281,277

311

Both

194 Andrew Soss

Alpine Mortgage Planning

$62,321,016

54%/46%

129

$80,433,460

196

Both

195 Dave King

SWBC Mortgage Corp.

$62,215,026

73%/27%

235

$63,314,112

267

Banker

196 Michael Sanchez

Priority Financial LLC

$61,961,463

65%/35%

143

$56,203,222

160

Broker

197 Chad Lubben

Guaranteed Rate

$61,939,708

74%/26%

189

$80,340,000

242

Both

13 30

198 Alison Freed

Mortgage Master Inc.

$61,641,450

46%/54%

144

$143,217,690

411

Both

199 Marty Bielefeld

W.J. Bradley Mortgage Capital LLC

$61,195,988

27%/73%

152

$145,359,525

378

Banker

200 Samuel Rosenblatt

Academy Mortgage

$61,148,137

68%/32%

217

$73,579,703

258

Banker

(continued)

July 2015 - PIPELINE 69

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

(continued)

ScotsmanGuide.com/Top2014/Volume

# Name

Company

State

Total Volume

Purchases vs. Refis

Closed Loans

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz

201 Michael David Hales

Flagship Financial Group

$61,055,573

0%/100%

245

$18,202,579

Both

202 Stephen Campbell

Mortgage Master Inc.

$60,684,954

13%/87%

113

$105,434,246

288

Both

203 Ryan Paquin

First Home Mortgage Corp.

$60,598,291

88%/12%

237

$61,233,638

249

Banker

204 Carl Nielsen

Mortgage Master Inc.

$60,562,116

64%/36%

155

$100,610,919

282

Both

205 Mason Minhondo

Flagship Financial Group

$60,473,235

0%/100%

296

Both

206 Hunter Zinkil

Sovereign Lending Group Inc.

$60,470,205

3%/97%

136

$29,573,705

Banker

207 Matthew Adler

Lake Michigan Credit Union

$60,466,841

90%/10%

303

$61,168,475

381

Banker

208 Eric Kulbe

Guild Mortgage Co.

$60,380,357

86%/14%

231

$73,254,429

286

Banker

209 Heather Bomar

Cornerstone Home Lending

$60,194,932

92%/8%

259

$64,447,002

299

Banker

210 Kelly Cunningham

CLM Mortgage

$60,155,871

96%/4%

224

$38,200,000

158

Banker

211 Richard Romano

Guaranteed Rate

$60,064,470

89%/11%

198

$54,099,919

213

Both

212 Thad Musser

Atlantic Coast Mortgage

$60,046,162

90%/10%

144

$37,172,461

Banker

213 Edwin Davidian

Skyline Home Loans

$59,890,884

48%/52%

142

$63,756,308

166

Broker

214 Derek Wetzel

On Q Financial

$59,565,783

71%/29%

137

$93,236,096

216

Banker

215 Carey Ann Cyr

CMG Financial

$59,513,991

90%/10%

295

$47,000,000

223

Banker

216 Kevin Diamond

PrimeLending

$59,503,001

95%/5%

174

$80,518,066

248

Banker

217 Jason Lee

CBC National Bank

$59,185,169

0%/100%

200

$19,958,325

Both

218 Jonathan Okun

Prosperity Home Mortgage

$58,898,635

84%/16%

136

$92,543,708

185

Banker

219 Aaron Jernigan

OakStar Bank

$58,614,250

63%/37%

255

$69,830,963

351

Banker

220 Scott Gilman

Prospect Mortgage

$58,611,708

53%/47%

157

$56,617,733

146

Banker

29 12

221 Jordan Must

Augusta Financial

$58,544,935

46%/54%

162

$68,976,830

184

Both

222 Louise Thaxton

Fairway Independent Mortgage Corp.

$58,406,849

93%/7%

326

$60,326,219

331

Banker

223 Brian Reeg

Prospect Mortgage

$58,375,400

71%/29%

169

$52,589,321

171

Banker

224 Peter Fickeisen

William Raveis Mortgage

$58,173,653

84%/16%

143

$62,974,390

163

Banker

225 Austin Lampson

On Q Financial

$58,103,961

69%/31%

122

$24,708,154

Banker

226 Justin Brown

NuHome Financial

$57,894,042

49%/51%

160

$55,319,865

167

Broker

227 Tyler Bahnsen

Prospect Mortgage

$57,850,253

91%/9%

257

$57,126,807

264

Banker

228 Mac Church

Fidelity Bank

$57,725,848

82%/18%

236

$68,798,030

312

Banker

229 Keane Ng

Caliber Home Loans

$57,568,570

87%/13%

225

$56,970,417

215

Both

230 Sean Logue

Trident Mortgage Co.

$57,559,521

91%/9%

188

$112,551,518

346

Banker

231 Joe Bass

Legacy Mutual Mortgage

$57,371,248

98%/2%

256

$41,117,827

197

Banker

232 Brandon Moss

PrimeLending

$57,331,091

61%/39%

126

$54,706,552

119

Banker

233 Michael Shane

Sammamish Mortgage

$57,268,180

40%/60%

195

$101,103,506

364

Both

234 John Rodrigues

W.J. Bradley Mortgage Capital LLC

$57,246,636

49%/51%

128

$93,409,947

234

Banker

235 Lisa Billings

Fearon Financial, dba Smarter Mortgages

$57,207,099

26%/74%

197

$37,021,268

173

Banker

236 Rich Holsman

Guild Mortgage Co.

$57,062,272

68%/32%

164

$55,400,443

163

Banker

237 Diana Dilallo-Tarzia

PrimeLending

$57,007,633

99%/1%

273

$50,621,391

241

Banker

238 Sean Cahan

RPM Mortgage Inc.

$56,956,750

74%/26%

154

$59,893,115

167

Banker

239 Alex Reilley

Trident Mortgage Co.

$56,718,507

85%/15%

176

$77,748,287

253

Banker

240 Jamie Tyndall

Mortgage Master Inc.

$56,577,945

68%/32%

$55,750,951

Both

241 Edward Ades

Sterling National Bank

$56,554,561

84%/16%

111

$86,142,043

181

Both

242 Craig Stelzer

Guaranteed Rate

$56,421,307

84%/16%

180

$39,579,784

158

Both

243 Brent Blaustein

Summit Funding Inc.

$56,317,520

76%/24%

163

$52,976,905

145

Banker

244 Timothy Martin

NE Moves Mortgage LLC

$56,230,820

91%/9%

115

$49,790,319

118

Banker

245 Cody Hardridge

Cornerstone Home Lending

$55,970,033

95%/5%

323

$52,442,741

322

Banker

246 Ben Fox

George Mason Mortgage LLC

$55,841,020

66%/34%

131

$93,960,198

232

Banker

247 Jeremy House

PrimeLending

$55,766,034

80%/20%

267

$55,544,487

272

Banker

248 Phillip Miller

SWBC Mortgage Corp.

$55,606,118

89%/11%

247

$52,508,285

242

Banker

249 Kathy Shaw

Northpointe Bank

$55,410,348

65%/35%

204

$70,627,903

248

Banker

250 Jeff Morgan

Academy Mortgage

$55,180,976

91%/9%

219

$43,804,571

162

Banker

(continued)

70 PIPELINE - July 2015

Special Report: Scotsman Guide Top 300 Originators

Top Dollar Volume

(continued)

ScotsmanGuide.com/Top2014/Volume

# Name

Company

State

Total Volume

Purchases vs. Refis

Closed Loans

2013 Volume

2013 Loans

Broker/ Banker

Yrs. Staff in Biz

251 Raffi Bekmezian

PrimeLending

$55,096,349

32%/68%

120

$36,843,982

105

Banker

252 Christian Emmel

Prospect Mortgage

$54,968,466

96%/4%

254

$74,171,187

336

Banker

16 14

253 Brady Yeager

Caliber Home Loans

$54,940,429

76%/24%

150

$80,091,187

212

Both

254 Ian McLellan

Northpointe Bank

$54,718,325

1%/99%

162

$16,000,000

118

Banker

255 Chuck Hage

PrimeLending

$54,715,828

86%/14%

334

$41,722,161

303

Broker

256 Laurent Berman

EagleBank

$54,602,625

57%/43%

114

$83,286,680

195

Banker

257 John Kussmaul

TD Bank

$54,593,010

82%/18%

158

$96,356,396

221

Banker

258 Jorden Brok

Mortgage Master Inc.

$54,593,000

53%/47%

132

$87,127,788

230

Both

259 Matt Weaver

PMAC Lending Services Inc.

$54,488,815

91%/9%

226

$30,332,172

127

Banker

260 Dylan Tucker

Flagship Financial Group

$54,474,477

0%/100%

241

$928,501

Both

261 Chad Baker

W.J. Bradley Mortgage Capital LLC

$54,435,698

69%/31%

136

$50,853,097

157

Banker

262 Jeff Adams

Starkey Mortgage

$54,346,957

94%/6%

247

$48,105,451

210

Banker

263 Mike Egleston

Associated Bank

$54,346,564

74%/26%

$68,394,782

151

Banker

264 Jason Yates

Low VA Rates

$54,288,774

0%/100%

221

$69,634,490

298

Both

265 Karen Nielson

Guild Mortgage Co.

$54,195,842

85%/15%

328

$68,675,581

397

Banker

266 Randy Joseph Linford

Flagship Financial Group

$54,180,506

0%/100%

248

$19,479,735

107

Both

267 Robert Rudd

McLean Mortgage Corp.

$54,147,723

79%/21%

113

$59,500,000

147

Banker

268 Jeni Pitcher

FBC Mortgage LLC

$54,147,576

90%/10%

219

$55,414,337

238

Banker

269 Troy Gindt

Mortgage and Realty Professionals

$54,056,980

39%/61%

$83,515,490

150

Broker

270 Andrew Monticone

Leader Bank

$54,029,319

77%/23%

147

$59,780,203

174

Banker

271 Chris Hutchens

Guaranteed Rate

$53,941,192

88%/12%

233

$71,080,417

322

Both

272 Cindy Laffey

Inlanta Mortgage

$53,937,505

95%/5%

202

$50,036,598

205

Banker

273 Joe McBreen

Guaranteed Rate

$53,834,412

61%/39%

205

$51,089,803

213

Both

274 James Koops

Northpointe Bank

$53,743,119

18%/82%

196

$16,549,745

Banker

275 Greg Wynn

CMG Financial

$53,711,129

61%/39%

132

$59,393,900

176

Banker

276 Brian Woolley

Prospect Mortgage

$53,569,704

65%/35%

152

$36,797,303

110

Banker

277 Steve Dykeman

Perl Mortgage Inc.

$53,531,760

75%/25%

178

$66,250,355

255

Banker

278 Patrick Collins

Atlantic Coast Mortgage

$52,990,852

83%/17%

121

$68,598,887

170

Banker

279 Jason Infanti

Trident Mortgage Co.

$52,920,357

90%/10%

251

$63,914,418

316

Banker

280 Mark Anselmo

Trident Mortgage Co.

$52,898,918

87%/13%

236

$73,862,096

337

Banker

281 Christin Luckman

Guaranteed Rate

$52,892,096

49%/51%

168

$83,907,773

273

Both

11 5

282 Austin Larr

Fairway Independent Mortgage Corp.

$52,782,422

99%/1%

378

$53,624,718

344

Banker

283 Jason Weber

Starion Financial

$52,546,640

57%/43%

197

$57,995,285

240

Banker

284 R.J. Crosby

First Choice Loan Services Inc.

$52,420,000

66%/34%

212

$83,266,508

352

Banker

285 John Grosso

William Raveis Mortgage

$52,401,955

73%/27%

$74,359,208

107

Banker

286 Joe Dunn

George Mason Mortgage LLC

$52,294,957

80%/20%

163

$40,908,597

125

Banker

287 Adam Heaney

W.J. Bradley Mortgage Capital LLC

$52,209,644

36%/64%

129

$67,636,560

197

Banker

288 Mike Stein

McLean Mortgage Corp.

$52,138,936

66%/34%

137

$76,900,000

203

Banker

289 Heather Devoto

First Home Mortgage Corp.

$52,093,793

84%/16%

112

$59,089,446

143

Banker

290 Deborah Levy

EagleBank

$51,981,405

76%/24%

$89,773,159

192

Banker

30 21

291 Craig Strent

Apex Home Loans Inc.

$51,899,480

48%/52%

124

$65,482,700

172

Both

292 Rusty Oâ&#x20AC;&#x2122;Dowd

Guaranteed Rate

$51,835,296

54%/46%

170

$73,767,754

250

Both

293 Sean Fritts

McLean Mortgage Corp.

$51,715,333

90%/10%

120

$38,400,000

Banker

14 20

294 John Cortissoz

SWBC Mortgage Corp.

$51,567,714

70%/30%

135

$38,414,698

131

Banker

295 Jennifer Ellison

RPM Mortgage Inc.

$51,514,096

47%/53%

111

$78,214,785

184

Banker

296 Scott Chapman

PrimeLending

$51,168,628

66%/34%

224

$69,565,922

302

Banker

297 Matt Tierney

Guaranteed Rate

$51,133,702

73%/27%

159

$70,412,198

239

Both

298 Danielle Young

Guaranteed Rate

$51,080,464

95%/5%

191

$40,226,071

160

Both

299 Chris Butts

Leader Bank

$51,076,003

66%/34%

158

$79,302,470

255

Banker

300 Amanda LeBoeuf

PrimeLending

$50,952,940

100%/0%

153

$48,849,692

181

Banker

July 2015 - PIPELINE 71

Special Report: Scotsman Guide Top 300 Originators

Top HELOC Volume ScotsmanGuide.com/Top2014/HELOC

# Name

Company

State

HELOC Volume

Total Volume

Percent HELOC Volume

HELOCs

Overall Closed Loans

Broker/ Banker

Yrs. Staff in Biz

1 Mitch Canada

Bank of America Home Loans

$10,694,744

$47,692,744

22%

258

Banker

2 Blair Cowan

TD Bank

$9,842,272

$47,396,522

21%

Banker

3 Michael Mundy

Pinnacle Mortgage Inc.

$5,798,500

$182,779,433

481

Both

4 Brian Blonder

Capital Bank NA

$5,400,350

$171,755,086

647

Banker

5 Mark Richards

TD Bank

$4,727,868

$73,964,635

141

Banker

6 Miles Rusth

Summit Mortgage Corp.

$3,879,209

$64,606,911

212

Banker

7 Chris Furie

Insignia Mortgage Inc.

$3,577,500

$190,085,900

111

Broker

8 David Lawver

Kal Financial

$3,374,167

$76,452,251

180

Both

9 Lisa Ziebarth

WESTconsin Credit Union

$3,167,100

$29,134,262

11%

246

Banker

10 Bill Kelso

On Q Financial

$2,753,230

$96,865,104

190

Banker

14 9

11 Jarret Coleman

United Bank

$2,526,500

$72,138,657

166

Banker

12 Keith Hapenney

Leader Bank

$2,381,040

$77,907,468

210

Banker

13 Damon Germanides

Insignia Mortgage Inc.

$2,300,000

$129,311,975

Broker

14 Brad Cohen

Capital Bank NA

$2,294,596

$101,769,194

235

Banker

15 Mark Junod

On Q Financial

$2,288,943

$38,666,481

Banker

16 Glen Edmonds

TD Bank

$2,261,817

$37,374,403

Banker

17 Chad Loube

Talmer Bank and Trust

$2,227,350

$63,269,552

153

Banker

18 Christopher Fenoglio

Alpine Mortgage Planning

$2,032,675

$74,615,592

196

Both

19 Thomas Parke

Mason-McDuffie Mortgage Corp.

$2,000,761

$43,984,006

107

Both

20 Zachary Griffin

RPM Mortgage Inc., dba LaSalle Financial Services CA

$1,950,364

$50,626,992

119

Both

21 Scott Prindle

WESTconsin Credit Union

$1,944,137

$25,315,415

296

Banker

22 Cameron White-Ford

Elevations Credit Union

$1,915,239

$74,119,317

290

Banker

23 Tony Umholtz

SunTrust Mortgage

$1,823,700

$64,687,983

150

Banker

24 Greg Roller

Elevations Credit Union

$1,721,620

$50,339,269

196

Banker

25 Jenny Kim

George Mason Mortgage LLC

$1,709,528

$136,552,760

371

Banker

72 PIPELINE - July 2015

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