NMP MEDIA CORP. 1220 WANTAGH AVENUE WANTAGH, NEW YORK 11793
PRESORTED STANDARD U.S. POSTAGE PAID NMP MEDIA CORP.
CALIFORNIA EDITION
California Association of Mortgage Professionals 1225 8th Street #425 v Sacramento, CA 95814 Phone #: (916) 448-8236 v Fax #: (916) 442-3616 Web site: www.ca-amp.org
Board of Directors Phone #
Anthony Lombardo
President
(916) 422-5900
anthony@hi-techmortgage.com
Scott Griffin
President-Elect
(310) 456-4494
scott@scottgriffin.com
Karen Bates
Treasurer
(619) 422-5900
Brian Weide
Secretary
(909) 483-3212, ext. 243
Michele Velez
Immediate Past President
karen@mil-loans.com
_________
brianweide@prodigy.net shellvelez@yahoo.com
Chapter Leadership Constance Griggs Lazzeroni Central Valley Chapter President
(559) 436-6880
constance@elitemortgageloans.com
Audrey Boissonou
East Bay Chapter President
(925) 788-1351
loansbyaudrey@msn.com
Leo Whitton
Greater Sacramento Area Chapter President
(916) 804-4768
leo.whitton@plazahomemortgage.com
Michael O’Connor
Greater Ventura County Chapter President
(805) 409-0554
michael@teamoconnor.com
Bill Moore
Inland Empire Chapter President
(951) 547-6379
bmoore@prmg.net
Frank Williams
Los Angeles Metro Chapter President (626) 688-8444
frankw.biz@gmail.com
Rick Reith
North Bay Chapter President
(415) 740-8834
rick@amex.net
Gene Lanier
North Los Angeles County Chapter President
(818) 425-5581
gnlanier@gmail.com
Shabi Asghar
Orange County Chapter President
(949) 933-4543
shabi@commercemtgwholesale.com
Tom Conklin
San Diego Chapter President
(732) 738-7100
tom.conklin@lhfs.com
Alan Kirth
San Francisco Peninsula Chapter President
(650) 239-4004
alank@guaranteemortgage.com
Patricia Covarrubias
San Gabriel Valley Chapter President (626) 926-3551
ptrish@maximummortgageco.com
Richard Wang
Silicon Valley Chapter President
(408) 567-0808
richard@theloanstory.com
Nelson Otero
Southern Los Angeles County Chapter President
(714) 373-5700
notero@firstalliedfinancialservices.com
Donna R. Aldrich
Education Chair
(415) 345.4320
donna@donnaaldrich.com
Dana Chahidi
VP/Government Affairs
(408) 985-6400
loansbydana@hotmail.com
Dawn E. Cychner
VP/Membership
(626) 653-1800
decychner@cscaliforniacapital.com
Audrey J. Boissonou
Public Relations Chair
(925) 788.1351
loansbyaudrey@msn.com
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Committee Chairs
(707) 341-6275
mayton@axis-amc.com
T. Kevin Casey
(415) 441-5050
kcasey@guaranteemortgage.com
Jon Kaempfer
(916) 486-6516
jon@californiacap.com
AUGUST 2016 Sunday-Wednesday, August 7-10 Summer CAMP 2016: Destination Napa The Westin Verasa: Napa 1314 McKinstry Street Napa, Calif.
For information on all CAMP events, call (916) 448-8236, e-mail info@thecampsite.org or visit TheCAMPSite.org.
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calendar of events CAMP
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State Representatives Mark Ayton
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California Housing Became More Affordable in Q1 The ongoing problem of housing affordability in California seemed to during the first quarter, according to new data from the California Association of Realtors (CAR). California homebuyers needed to earn a minimum annual income of $92,571 to qualify for the purchase of a $465,280 statewide median-priced, existing single-family home in the first quarter of 2016, according to CAR. Over in the condo market, 41 percent of California households earned the CAR-measured minimum income to qualify for the purchase of a condominium or townhome in the first quarter, up from 39 percent from the fourth quarter of 2015. The organization’s Housing Affordability Index (HAI), which measures the percentage of home buyers who could afford to purchase a median-priced, existing single-family home, rose during the first quarter to 34 percent, up from 30 percent recorded in the fourth quarter of 2015; year-over-year, the level was unchanged. This is the 12th consecutive quarter that the index has been below 40 percent and is close to the 29 percent low level from mid-2008. At its peak in the first quarter of 2012, the index hit 56 percent. During the first quarter, the five most affordable counties in California were Kings (58 percent), San Bernardino (57 percent), Merced (55 percent), and Kern (55 percent). The least affordable counties were San Francisco (13 percent), San Mateo (16 percent) and Santa Cruz (18 percent).
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Save the date … Sunday-Wednesday, August 7-10
Summer CAMP 2016: Destination Napa The Westin Verasa: Napa 1314 McKinstry Street • Napa, Calif. For more information, call (916) 448-8236, e-mail info@thecampsite.org or visit TheCAMPsite.org.
Featured Industry Leader Scott Griffin
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Statewide President-Elect of the California Association of Mortgage Professionals BY PHIL HALL
Why do you feel members of the mortgage profession in California should join CAMP? You get results. It is the power to keep your doors open. And let’s not forget that CAMP works for consumers, too! This educational outreach is important because there are so many things happening now that must be understood. We are on the forefront of education, explaining how things work and don’t work. When we have an answer as to why things are happening, we are in a better position to explain it to our consumers. Can you highlight the association’s role in the state legislative and regulatory environment? Not only do we travel to
Washington, D.C. as mentioned earlier, but we also go up to the state capitol in Sacramento. As bills are introduced, we make sure to review them and educate our state legislators on what these bills mean to mortgage professionals and to consumers. We are fortunate to have incredible relationships with our state legislators. This year, we had a lot of our members go to Sacramento to speak with the legislators on the issues that are important to all of us. Are you still making trips to Capitol Hill as well? I just got back from a trip to Washington at the NAMB Legislative & Regulatory Conference. I was sitting with members of Congress behind closed doors discussing HB 2121. If you start visiting with lawmakers and go a little bit deeper, they can see the other side of the same story and make better decisions. Is there value in CAMP being a state affiliate of NAMB? You bet there is! NAMB is an
integral part of the industry. We view NAMB as a partner, and their success if very important to all of us. In your opinion, what can be done to bring more young people into the mortgage profession? It is always important to bring in fresh blood. We partnered with Ginger Bell to work with a new association called The Young Mortgage Professionals Association, which is seeking to bring more young people into the industry. What is the housing market like in your area of California? Here in Los Angeles, it is exploding. I’m hearing a lot of communities are experiencing high levels of multiple offers. People are trying so hard to get into homes that offers are going much higher than list prices. Phil Hall is managing editor of California Mortgage Professional Magazine. He may be reached by e-mail at PhilH@NMPMediaCorp.com.
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How and why did you get involved with the California Association of Mortgage Professionals (CAMP)? In 2010 and 2011, the loan officer compensation rule was being rolled out. I had not been to a CAMP meeting in a while, but felt it was time to go back. I had a choice: I could either stand by or participate in the process. After that meeting, I was invited to travel to Washington, D.C. with CAMP to discuss this issue with legislators. California is the only state that had lobbyists on Capitol Hill. I met with all of our legislators, and they wanted to learn how to
get it right. Shortly after, bills were being written that benefited our industry. When I was able to witness to power of change that was possible through the association, I knew I had better continue to show up and become an active part of CAMP.
NationalMortgageProfessional.com
Scott Griffin began his career 30 years ago a residential property specialist leasing and managing large luxury apartment communities for real estate investment management firms. In 2003, he opened his self-named mortgage broker company, and is currently president-elect of the California Association of Mortgage Professionals (CAMP). California Mortgage Professional Magazine spoke with him about CAMP’s role in the California mortgage industry.
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LOCAL KNOWLEDGE. NATIONAL PRESENCE.
USA
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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE PRESENTS
NMP University Your Complete Success Resource for Mortgage Professional Top Performance
LOAN OFFICER ELITE COACHING
AE TRAINING
RECRUITING TRAINING BRANCH MANAGER ELITE COACHING
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NMLS LICENSING COURSES
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N A T I O N A L
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M O R T
NMP Next: Leading the Industry to What’s Next
M A Y
48 Mortgage Makeover: The New Look of Appraisal Management in Lending By Mike Floyd
2 0 1 6
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V O L U
A SPECIAL FOCUS ON “TRENDS IN MORTGAGE LENDING” Can Technology Replace the Originator? By Rey Maninang ................66 Automation: The Blessing, the Curse, and the Way to Use It to Your Best Advantage By Chad Jampedro ......................................................68 Three Ways to Stay Ahead of This Recruiting Trend By Casey Cunningham ............................................................................70 The Game Changer By Sarah Valentini ..................................................72 Lending’s Best Trends in 2016: Identifying and Communicating With Borrowers By Whitney Blessington ................................................74 Is the Borrower Point-of-Sale Experience the Most Important Thing … or the Only Thing? By Alec Cheung ........................................76 Adapting to TRID By Brian Rogerson ....................................................78 Where Are the MLOs? By Ralph LoVuolo Sr. ........................................79
50 To Survive, Diversify By Kimberly Smith
Why 2016 Is the Year for the Mortgage Industry to Go Digital By Valentin Saportas................................................................................80 What Is Mortgage Trended Data, and Why Should Mortgage Professionals Care? By Julie Wink ........................................................82 Three Lucrative Mortgage-Lending Trends By Wes Miller ..................84 Trends in the Mortgage Industry: No Body Mortgage By Eric Weinstein ....................................................................................86
FEATURES ARMCP Announces National Mortgage Professional Magazine as Its Official Publication ........................................................................6 The Elite Performer By Andy W. Harris, CRMS ........................................8 How to Survive the Impending Refinance Cliff By Tom Hutchens ........8 Recruiting, Training and Mentoring Corner By Dave Hershman ..........10
58 E-mail Marketing is Dead (or So They Say) By Brent Emler
88 Advertising Compliance: Getting Ready for the Banking Examination (Part One) By Jonathan Foxx
V I S I T Company
Web Site
O U R
A Page
American Advisors Group.................................... www.aagwholesale.com ................................................15 Angel Oak Mortgage Solutions ............................ www.angeloakms.com ......................................Back Cover Assurance Financial............................................ www.lendtheway.com ....................................................33 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ................................104 CAMP .................................................................. www.thecampsite.org/summercamp2016 ........................CA8 Caliber Home Loans.............................................. www.caliberwholesale.com ......................................61 & 66 CallFurst.com ...................................................... www.callfurst.com ............................................................79 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................39 & 76 Citadel Servicing Corporation .............................. www.citadelservicing.com ..............................................63 Civic Financial Services/Wedgewood .................... www.civicfs.com ..............................................................9 Comergence Compliance Monitoring LLC .............. www.comergencecompliance.com ..................................67 CoupOut............................................................ www.getcoupout.com ....................................................57 Document Systems, Inc./DocMagic ...................... www.docmagic.com ......................................................11 FAMP ................................................................ www.myfamp.org ..........................................................75 First Guaranty Mortgage Corp. ............................ www.fgmccorrespondent.com ..........Inside Front Cover & 69 Flagstar Bank .................................................... www.flagstar.com/ae ......................................................7 Great Northwest Mortgage Expo .......................... wwwgreatnorthwestexpo.com ..............................CA5 & 77 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................17 Lykken On Lending ............................................ www.lykkenonlending.com ............................................78 MBA of NY & ESMBA .......................................... www.mbany.org ............................................................70 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................25
T G A G E
P R O F E S S I O N A L
Dear Readers: t is my absolute pleasure to announce the launch of NMP University (NMPU), a division of NMP Media Corp. devoted to the hands-on professional development of retail and wholesale mortgage professionals. NMP University is an extension of National Mortgage Professional Magazine in that NMPU was created to provide all of the working resources every mortgage professional may need to succeed at the highest level.
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Industry Updates: May 2016 By Melanie A. Feliciano Esq. ....................16 The CFPB Under Attack By Andrew Liput..............................................18 NAMB Perspective: May 2016 ..............................................................20 Step Inside Ginnie Mae: The Ginnie Mae Difference By Ted W. Tozer ......................................................................................26 Whose Cow is That? Five Tips for Branding in the Digital Age By Bubba Mills ........................................................................................30 Time to Take Action ..............................................................................32 Lead Management Systems and the LOS: A Marriage Made in Heaven By Scott Payne ......................................................................34 The Commercial Corner: Playing Matchmaker With Small-Balance Borrowers By Michael Boggiano ............................................................46 Lykken on Leadership: Seven Tips for More Effective Time Management By David Lykken ......................................................54
Who NMPU serves NMP University, focused on serving both wholesale and retail mortgage professionals, provides on-site success training, elite coaching, NMLS pre-licensing and continuing education courses powered by Mortgage Educators and Compliance (MEC), training products, and so much more. How did NMPU evolve? As executive directing partner and head coach of NMP University, I am often asked, “How did the idea for NMPU come to fruition?” The answer is rather simple: In looking at the needs of both the wholesale and retail mortgage industries, it was clear that there was no single place to obtain the bulk of the success resources a company owner, branch manager, loan officer, or account executive may need. It started as a casual conversation between myself, Joel M. Berman, CEO and publisher of NMP Media Corp., publishers of National Mortgage Professional Magazine and executive producer of Mortgage News Network, and Andrew T. Berman, founder of NMP Media Corp. and Mortgage News Network. Together, we realized that by combining the marketing power of NMP Media Corp., Mortgage News Network, and high level success courses presented through Ron Vaimberg International, that we would be a perfect fit to work together to not only bring together all of these resources a mortgage professional may ever need, but we can do it for less and save the industry money.
The Long & Short: The Business of Short Sales By Pam Marron ........62 Overcoming Challenges in Valuation of Green Residential Properties By Scott Robinson, MAI, SRA, AI-GRS..................................64 Should You Really Care About This? By Brian Sacks ..........................90 MBA’s Mortgage Action Alliance ..........................................................92 OrigiNation: Bidding Wars By Andy W. Harris, CRMS ..........................94
COLUMNS New to Market..........................................................................................12 News Flash: May 2016 ............................................................................14 Heard on the Street ................................................................................38 Outstanding Places to Work ..................................................................98 NMP Calendar of Events ........................................................................99 NMP Resource Registry ........................................................................102
D V E R T I S E R S Company
Web Site
Page
Moneyhouse U.S. .............................................. www.moneyhouseus.com ..............................................71 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ............................36 & 37 NAMB+ ............................................................ www.nambplus.com ......................................................23 NAMBPAC.......................................................... www.namb.org ..............................................................27 NAPMW ............................................................ www.napmw.org ....................................................60 & 72 NAWRB ............................................................ www.nawrb.com ............................................................95 New York Community Bancorp, Inc. .................... www.nycbmortgage.com ................................................19 NMP University .................................................. www.nmpmag.com/nmpu ................................................1 NRMLA.............................................................. www.nrmlaonline.org ....................................................68 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................13, 97 & Inside Back Cover PrimeLending .................................................... www.primelending.com ................................................55 Radian Guaranty ................................................ www.radian.biz ............................................................47 REMN Wholesale ................................................ www.remnwholesale.com ......................................CA1 & 5 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................73 Secure Insight.................................................... www.secureinsight.com ..................................................93 TagQuest .......................................................... www.tagquest.com ........................................................87 The Bond Exchange............................................ www.thebondexchange.com ..........................................83 The Nationwide Group........................................ www.inhouseusa.com ..................................................CA9 Ultimate Mortgage Expo .................................... www.ultimatemortgageexpo.com ..................................101 United Wholesale Mortgage ................................ www.uwm.com ........................................................52-53
Giving you access to the best resources Although NMP University is new, the combined experience and success of all the partners involved makes it instantly a veteran team able to provide many of the products and services a mortgage professional may need. NMP University always focus on providing cutting-edge training, products and service for the professional development of retail and wholesale mortgage professionals. We will be constantly adding more resources for YOU, the mortgage professional, to make sure that you always have access to the best of the best within the industry. The principles in which NMP University is founded upon is honesty, integrity and accessibility. Please feel free to reach out to me directly to find out exactly what we have to offer and how we can assist you or your organization To your success, Ron Vaimberg NMP University l Executive Director & Head Coach RonV@NMPMediaCorp.com | 866-360-6645 PS: For decades I’ve been helping great mortgage professionals find their peak performance. I’m excited to be expanding my ability to help the professional development of retail and wholesale mortgage professionals via cutting-edge training, coaching, products and service. Let’s talk about taking you and your team from GREAT to EXCELLENCE!
MAY 2016 Volume 8 • Number 5 FROM THE
Spotting trends in the mortgage industry By now, spring is in the air, even for our readers living in the northern parts of the country. Spring is a time of change, which is a topic people working in the mortgage industry are becoming very familiar with. The work we are doing today bears little resemblance to the way we originated and serviced mortgage loans just a few years ago. And there are more changes on the horizon. The companies that continue to be the most successful are the ones that can see change coming and take appropriate action. That’s what this issue is really all about, spotting the trends that will give us clues about what we’ll be dealing with next. I’m very proud to bring you the stories in this issue because the experts who contributed really know how to identify the trends that matter. You’ll also find that they are more than capable of advising our readers on strategies that are most likely to lead to success in a changing environment.
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com
Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com
Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com
Beverly Bolnick VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com
Scott Koondel VP of Operations (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com
Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com
Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com
Rick Grant Special Reports Editor (570) 497-1026 (direct) (516) 409-555, ext. 311 rickg@nmpmediacorp.com
Dylan Pollock Administrative Assistant (516) 409-5555, ext. 314 dylanp@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@nmpmediacorp.com.
ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.
SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.
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Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
Inside this issue As you flip through our May edition, you’ll find stories about the changing nature of the origination market as we continue to shift from a refinance business model to a solid purchase market. You’ll read about the continued consolidation of the industry and what we’ve learned about TRID now that lenders have been dealing with it for a couple of quarters. As you might expect, the hard-working board members in our national trade associations are working tirelessly to provide guidance and support for mortgage professionals nationwide, and we’re proud to bring you some of their stories as well. This month, you’ll get timely information from the experts you’ve come to expect to find in our publication, as they give you their take on the future trends that will impact our business for years to come. Being a trendsetter Of course, one of the surest ways to be ahead of a trend is to set it yourself. That’s what our new NMP Next section is all about. We introduced it last month, and I’m very pleased with all of the positive feedback we have received and the additional support for the section that is already coming in. This month, we’ll bring you more stories about the companies that are leading us into the future and about the technologies that are most likely to get us there. No one can expect to be a true trendsetter if they are not playing at the top of their game. That’s why I am pleased to announce the launch of NMP University (NMPU). Ron Vaimberg serves as executive director and head coach of NMPU, and we couldn’t hope for a better leader. He’s been helping great mortgage professionals discover their peak performance for decades. You’ll find out more about what NMPU offers you in this issue as well. See page 1 for more information. As always, thank you for reading, thanks for your continued support of our publication and please continue to provide us with your feedback. Enjoy the issue. Sincerely, Joel M. Berman, Publisher-CEO • NMP Media Corp. • Joel@NMPMediaCorp.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2016 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Jonathan Foxx
Andy W. Harris, CRMS
Ted W. Tozer
Editorial Contributors Whitney Blessington
Dave Hershman
Michael Boggiano
Ralph LoVuolo Sr.
Alec Cheung
David Lykken
Casey Cunningham
Pam Marron
Brent Emler
Melanie A. Feliciano Esq.
Wes Miller
Valentin Saportas
Mike Floyd
Bubba Mills
Kimberly Smith
Tom Hutchens
Scott Payne
Sarah Valentini
Chad Jampedro
Scott Robinson, MAI, SRA, AI-GRS
Eric Weinstein
Andrew Liput
Brian Rogerson
Fowler Williams
Rey Maninang
Brian Sacks
Julie Wink
RENO STRIKES BACK
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n Texas Mortgage Professional Magazine n MAY 2016
NAMB—The Association of Mortgage Professionals 2701 West 15th Street, Suite 536 l Plano, Texas 75075 l Phone: (972) 758-1151 l Fax: (530) 484-2906 l Web site: www.namb.org
NAMB 2015-2016 BOARD OF DIRECTORS O F F I C E R S
Rocke Andrews, CMC, CRMS President Lending Arizona LLC 3531 North Pantano Road Tucson, AZ 85750 (520) 886-7283 randrews@lendingarizona.net
Fred Kreger, CMC President-Elect American Family Funding 28368 Constellation Road, Suite 398 Santa Clarita, CA 91350 (661) 505-4311 fred.kreger@affloans.com
John Stevens, CRMS Vice President Mountain West Financial 380 North 600 East Pleasant Grove, UT 84062 (801) 427-7111 johngstevens@gmail.com
Rick Bettencourt, CRMS Secretary Mortgage Network 300 Rosewood Drive Danvers, MA 01923 (978) 777-7500 rbettencourt@mortgagenetwork.com
Andy W. Harris, CRMS Treasurer Vantage Mortgage Group Inc. 16325 Boones Ferry Road, #100 Lake Oswego, OR 97035 (503) 496-0431, ext. 302 aharris@vantagemortgagegroup.com
John Councilman, CMC, CRMS Immediate Past President AMC Mortgage Corporation 10136 Avalon Lake Circle Fort Myers, FL 33913 (239) 267-2400 jlc@amcmortgage.com
Donald J. Frommeyer, CRMS NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A Carmel, IN 46032 (317) 575-4355 donald.frommeyer@gmail.com
D I R E C T O R S
Kimber White RE Financial Services Inc. 1620 West Oakland Park Blvd. #201 Oakland Park, FL 33311 (954) 306-3553 kimber.lmt@gmail.com
Olga Kucerak, CRMS Crown Lending 328 West Mistletoe San Antonio, TX 78212 (210) 828-3384 olga@crownlending.com
Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue Tampa, FL 33626 (866) 992-0785 valsaun@gmail.com
David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 American Fork, UT 84003 (877) 403-1428 david@mortgageeducators.com
Robert Sweeney, CRMS 600 East Carmel Drive Carmel, IN 46032 (317) 625-3287 bob.sweeney46@yahoo.com
Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive Mobile, AL 36609 (251) 650-0805 linda@mortgageteam1.com
Michele Velez, CMC 1300 South El Camino Real, Suite 505 San Mateo, CA 94402 (650) 409-2850 shellvelez@gmail.com
Nathan Pierce, CRMS Advanced Funding Home Mortgage Loans 6589 South 1300 East, Suite 200 Salt Lake City, UT 84121 (801) 272-0600 npierce@advfund.com
Mike Anderson, CRMS Mortgage Financial Services 11940 Bricksome Ave., Suite B Baton Rouge, LA 70816 (504) 451-3339 manderson@mfsus.com
National Association of Professional Mortgage Women 1851 South Lakeline Boulevard, Suite 104, Box 303 l Phone: (800) 827-3034 l E-mail: napmw2napmw.org l Web site: www.napmw.org
2015-2016 NAPMW NATIONAL BOARD OF DIRECTORS 6
MAY 2016 n Texas Mortgage Professional Magazine n
NationalMortgageProfessional.com
National President Kelly Hendricks (314) 398-6840 president@napmw.org
President-Elect Nikki Bell (678) 442-3966 preselect@napmw.org
Vice President Cathy Kantrowitz (845) 463-3011 nvp1@napmw.org
Vice President Laurel Knight (425) 412-6787 nvp2@napmw.org
Secretary Windee Falla (281) 556-9182 natsecretary@napmw.org
Treasurer Judy Alderson (918) 250-9080, ext. 300 nattreasurer@napmw.org
Parliamentarian Frances Reinhardt (678) 331-1384 freinhardt@firstservicetitle.net
National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 l Phone: (630) 539-1525 l Fax: (630) 539-1526 l Web site: www.ncrainc.org
2015-2016 BOARD OF DIRECTORS
William Bower President (800) 288-4757 WBower@continfo.com
Julie Wink Vice President/Treasurer (901) 259-5105 Julie@DataFacts.com
Mike Brown Ex-Officio (908) 813-8555, ext. 3020 MBrown@CISinfo.net
Mary Campbell Director (701) 239-9977 Mary@AdvantageCreditBureau.com
Matthew Carpenter Director MCarpenter@Sarma.com
Maureen Devine Director (413) 736-4511 MDevine@StrategicInfo.com
Mike Thomas Director (615) 386-2285, ext. 285 MThomas@CICCredit.com
Dean Wangsgard Director (801) 487-8781 Dean@nacmint.com
Delia Zuniga Director Delia@AdvantagePlusCredit.com
Terry Clemans Executive Director (630) 539-1525 TClemans@NCRAInc.org
Jan Gerber Office Manager/Member Services (630) 539-1525 JGerber@ NCRAInc.org
Scott Ledbetter Director (214) 783-3315
ARMCP Announces National Mortgage Professional Magazine as Its Official Publication he Association of Residential Mortgage Compliance Professionals (ARMCP), a not-for-profit, professional organization devoted exclusively to residential mortgage compliance professionals, has announced that National Mortgage Professional Magazine will serve as the association’s Official Publication. Established in 2009, ARMCP offers public discussion groups, educational forums, panels, lectures, advocacy, and networking venues for residential mortgage compliance professionals. Currently consisting of 1,530 members, the organization is limited to residential mortgage compliance professionals and vendors that provide mortgage compliance services. “I am pleased to confirm that National Mortgage Professional Magazine is now the Official Publication of ARMCP,” said Jonathan Foxx, ARMCP’s president and founder. “This unique publication has the widest range of readership in mortgage banking, and especially amongst residential mortgage compliance professionals. We look forward to working with NMP Media as a means to further our commitment toward serving our membership.” Membership in ARMCP may be requested by joining the group on LinkedIn.
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How to Survive the Impending Refinance Cliff By Tom Hutchens
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The late economist Herbert Stein's Law states that, “If something cannot go on forever, it will stop.” Time and time again, analysts have called for the end of the refinancing boom, and they’ve been proven wrong each time, leading lenders to become complacent. One thing is for certain, however; mortgage refinancing won’t go on forever. Despite the Federal Reserve recently instituting the first rate hike in nearly a decade, interest rates have continued to slide even lower. This is due in part to market volatility early in the year leading the Fed to issue more dovish comments on the pace of future increases. The resulting drop in mortgage rates has sustained the refinance party, yet again. However, the Fed will eventually have to embark on a path of renormalization and when they do, mortgage rates will drift above the refinance threshold. When that time comes, we’ll likely see an abrupt drop off in refinance volume because the math will no longer make sense for borrowers. Volume will dry up as mortgage rates reverse their 34-year down trend from the high teens of the early 1980s. Lenders that rely heavily on refinancing need to come up with a way to bolster their mortgage pipeline in order to replace lost volume. The best way to do this is by diversifying into non-agency mortgage products. Diversification is risk management at its most basic level and the same concept that one applies to an investment portfolio is relevant for mortgage lenders. If you rely too heavily on one source for volume (in this case, refinancing) and that source goes away, you’ll be left scrambling to fill the void. Since the housing crisis, lenders’ hands have been tied as they’ve had limited options to issue loans not eligible for sale to the government-sponsored enterprises (GSEs). Within the last few years, however, there has been a reemergence in the non-agency market, as lenders are once again offering these products to their networks. Now, there exists a diverse mortgage product mix on the market that can meet the needs of many more borrowers. Here are some examples of the types of borrowers that can be tapped with non-agency products: l Borrowers who have experienced a recent credit event, such as a foreclosure or short sale. l Borrowers who don’t have W-2 income and instead rely on income from investment properties. l Self-employed borrowers whose tax returns may not necessarily reflect their true income due to business write-offs. l Foreign nationals who don’t have credit in the U.S. system. l Borrowers who have significant savings, but limited income. Lenders should start taking advantage of these new products if they want to survive in a low-refi world. With a wider product offering, they stand to increase their reach to a subset of buyers that are underserved. If all they offer is traditional loans, they’re stuck competing with the masses in a shrinking pool of borrowers. Furthermore, they run the risk of their referral partners changing to a provider offering these new products.
the
elite performer You Don’t Know What You Don’t Know BY ANDY W. HARRIS, CRMS
umility is one of the most difficult traits, but also one of the most powerful ones. If you are in a position of influence to your clients or especially in a leadership role this is important. Thinking you know all of the answers can lead to questions later about how you came to fail. The worst part about not knowing something is that you truly don’t know what you don’t know. This means you either accept you won’t have all the answers by seeking them or to deny that humility and combine ignorance with arrogance. The latter is not a good combination for any professional or business leader. Many times, leaders will feel as though they must have all the answers to effectively lead a team or influence others. The problem is that if they don’t have the right answers or provide inaccurate information, then this is not leading, it’s misleading. To lead employees or clients effectively, one must always be open-minded and seek new information. Problem solving and getting the right answer upfront requires effort, but can avoid additional work or problems later. Failure is often a result of being hard-headed and blocking the idea that there may be another way or a better way of doing things. A humble and selfless leader will be the best leader. Admitting when you are wrong by taking responsibility and accountability, as well as holding others accountable, produces the most innovative and effective ways to lead. Embrace the unknown and take on challenges with an outside perspective. Seek answers and lead by supporting from the bottom rather than from the top. True respect is developed in leaders who can embrace humility and not being a “know-it-all.” This is a strong reminder for all of us including myself. You must step outside your business in order to look in. Use a macro approach when seeking information versus a micro approach between the walls of your office. Your employees or your clients will be very thankful that you do.
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Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail Info@AngelOakMS.com.
SPONSORED EDITORIAL
Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 4960431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.
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n Texas Mortgage Professional Magazine n MAY 2016
In this business, it’s survival of the fastest. To succeed, you need a
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SOME LOAN OFFICERS MOVE AT THEIR OWN PACE. (THEY WILL SOON BE EXTINCT.)
Recruiting, Training and Mentoring Corner
The Biggest Trend the Mortgage Industry Faces BY DAVE HERSHMAN
ctually, I have been talking about this trend for quite some time. Many would point to technology or compliance or even immigration, but this trend is even bigger. It is … The aging of the mortgage industry I have heard different numbers bantered about, but it appears that the average age of our sales force in this industry is in the 50s. This means that during the next several years, we will lose a large portion of our sales force. What does this mean for the industry?
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l For one, competition for experienced loan officers is about to get even more fierce. And it is pretty fierce today. l We will have to bring new blood into the industry. Why has this aging occurred? There are several reasons. The financial crisis made sure that this was not a profession of choice of many and the reaction of adding licensing made it even harder to enter the industry. But the biggest issue has been the reticence of Millennials to purchase a home. Good loan officers are experienced homeowners and many enter our industry after purchasing a home–some because they were either inspired by their real estate agent and/or loan officer and some because they felt that they could do are job better than we did.
As Millennials delayed life decisions, including owning a home, a giant entry point to our industry closed. As Millennials get older, they will purchase homes, but many of them will have found the career of their choice by that point in life because they are older than when we purchased homes. Some will enter our industry, but not in the same numbers as previous generations. Regardless of what caused the issue and the entry point, we will need to bring new blood into the industry and that means we need to change the way we go about training. Because our sales managers tend to be top producers, it does not give them much time for training. In the past, our training programs have consisted of “follow me around and learn.” With the addition of layers of technology and compliance, we need more training than ever. Add the fact that one of the largest trends we will face in the future is the growth of minority segments of the population. This trend will change our training needs as well, both because our targets will change and so will the composition of our sales force. What will our training need to look like in the future? l Licensing and continuing education: Even though all loan officers are not required to be licensed, certainly every company should be participating in the equivalent of what is required for licensing. Licensing is not
success-based, it’s compliance-based. And this is essential. l Orientation: Orientation would be part of the on-boarding process and would introduce the loan officer to the organization, procedures and technology. The more technology the industry adopts, the more important this training will become.
playing exercises. And we are not just talking about “following someone around.” We are talking about formal mentorship programs. Again, let’s move back to our point that our sales managers do not have time for all of this. Thus we must understand two things:
l Classroom: Today, classroom training may be face-to-face, online or via Webinar. Certainly, the need for training of novices is absolutely obvious and essential. But our industry as also lacked in its delivery of advanced technical training and sales and marketing success training for its experienced loan officers as well.
l The ability to find synergy in training is very important. How can our training help us to our own jobs better? That is a topic for another day. l The field training must be formalized and it does not have to be conducted by the sales managers. What we need to do in this industry is formally training mentors. Certainly, we have plenty of experienced producers who will want to help others as they wind up their careers.
l Field training: Just a bit ago, I made light of the “follow-me around” aspect of training. However, the truth is, a loan officer can’t learn the job from a course. They need to observe and practice. This would include everything from sitting in on closings to role
Going through a training class and then coming back to a company without a trained mentor is a recipe for disaster. In future columns, we will be elaborating on what comprises a mentorship program, as well as the components of orientation and other types of training.
Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.
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www.DocMagic.com
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1.800.649.1362
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Silver Hill Launches New Multifamily Streamline Program Silver Hill Funding has launched its new Multifamily Streamline Program for small-balance commercial mortgage loans from $250,000 to $1 million. With no tax returns or 4506T required, this program appeals to a historically underserved group of creditworthy investors who may be unable to provide sufficient income verification. “We are excited to offer a program that gives mortgage origination companies an opportunity to grow their businesses and close more multifamily deals,” said Michael Boggiano, senior vice president, national sales manager for Silver Hill Funding. According to Boggiano, the Streamline Program is a smart solution for a wide range of deserving borrower types, such as those who cannot meet traditional documentation requirements or investors whose tax returns do not accurately reflect the success of their businesses. “These loans represent a significant income opportunity for mortgage brokers and other originators, thanks to the pent up demand for small-balance commercial and the streamlined process Silver Hill has brought to the program,” Boggiano said. “It is the right product at the right time for the mortgage origination industry.” Financing is available for multifamily properties that have at least five units with terms of five, seven and 10 years. Loans can be amortized up to 25 years, feature unlimited cash-outs and have no seasoning requirements.
Ellie Mae Launches Latest Version of Encompass
Ellie Mae has announced that it has launched a new version of Encompass, its all-in-one mortgage management solution. Encompass 16.1 includes new trade management reporting, a new eSign platform, and expanded construction lending support. Additionally, enhancements to integrations with Fannie Mae, FHA, and Freddie Mac will improve efficiency for clients. “This spring, our latest version of our Encompass all-in-one mortgage management solution will offer more powerful trade management reporting, broader construction lending support and expanded Fannie Mae, and Freddie Mac integrations. Our new eSign platform and FHA integrations will be available later this spring,” said Jonathan Corr, president and CEO of Ellie Mae. “With this new release of Encompass we’re providing new capabilities that enable our banks, credit unions and mortgage lenders to originate and fund mortgages with improved compliance, loan quality and efficiency.” Encompass now provides access to all fields in Trade Management with the addition of a new “Trades” Data Source in Encompass. This gives lenders the flexibility to create custom reports to manage their trade positions more effectively. In addition, these Trade Management fields are available to enable a programmatic interface to other systems.
A new, more secure eSign platform, a result of Ellie Mae’s partnership with DocuSign, is coming to Encompass later this spring. Ellie Mae has chosen to partner with DocuSign, the leader in global standard for digital transaction management, to accelerate transactions with the easiest, fastest, most secure network for sending, signing, tracking, and storing documents in the Cloud. To support new calculations and forms stipulated by Know Before You Owe, Encompass 16.1 includes automated calculations for the Loan Estimate and Closing Disclosure forms for construction only and construction-to-perm loans. Additional enhancements and management tools will be available in the upcoming Encompass 16.3 release. The new version of Encompass provides availability to Fannie Mae’s EarlyCheck (EC) tool for the Uniform Loan Delivery Dataset (ULDD) in addition to the 1003/MISMO AUS format previously available. EC provides users with access to Fannie Mae eligibility, data quality, and delivery edits at any point in the lender’s business process. The addition of delivery edits checks within Encompass will provide our clients with the ability to better detect and resolve data quality issues earlier in the loan cycle. In addition, the new version of Encompass offers a new Fannie Mae “opt in” workflow with automated service ordering for EC and Desktop Underwriter (DU), the mortgage industry’s leading automated underwriting system. The new workflow will
create efficiency for users as automated submissions will keep loan data in sync with Fannie Mae underwriting and data quality tools. This is the first of several enhancements planned to streamline the origination process within Encompass for Fannie Mae loans. New Penn Financial Selects LoanScoreCard’s AIS for Jumbo Loans
LoanScoreCard, a leading provider of automated underwriting and compliance solutions, has announced that Plymouth Meeting, Penn.-based New Penn Financial has selected LoanScoreCard’s custom underwriting engine, Custom AUS, for its non-agency loans. LoanScoreCard’s Custom AUS is an automated underwriting solution that allows lenders to customize credit decisioning and safely originate compliant assets. The system delivers an underwriting decision and provides an assessment report that includes a breakdown of every rule applied and whether the loan passed or failed a particular guideline—creating an audit trail for underwriting and ability-to-repay decisions. It also accommodates third-party origination programs and helps ensure consistent, transparent application of credit policy. “LoanScoreCard’s Custom AUS will help us underwrite our jumbo, non-agency loans in a timely and efficient manner,” said Terri Merlino, chief credit officer at New Penn. “Underwriting these loans manually meant that just one loan could take hours. We needed a solution that could keep up with the increased volume and demand, and free up
our underwriters’ time to focus on the more complex transactions.” Founded in 2008, New Penn Financial is a ShellPoint Partners Company and is licensed in 48 states. The company offers a full line of mortgage finance products including government, conforming, jumbo, non-QM and HARP loans. In 2015, New Penn originated over $7 billion. “LoanScoreCard’s Custom AUS is designed to increase efficiency and accelerate the origination and investment processes,” said Ben Wu, executive director at LoanScoreCard. “At the same time, it helps assure compliance and creates an auditable trail of the steps that went into the underwriting and ability to repay decisions.”
included in the app to help familiarize users with the basic information on lead, indoor air quality, mold, and many other housing-related hazards. Toxins such as lead, asbestos, and household chemicals are detrimental to health in many ways. Invisible poisonous gases such as carbon monoxide and radon also pose serious threats to family health. Since most residents spend 70 percent or more of their time inside their home, this app was developed to provide tips on how to make and keep homes safe from health hazards.
ComplianceEase Launches FloodAnalyzer Solution
ComplianceEase has announced that it has launched FloodAnalyzer, a new solution that helps mitigate risk by providing flood zone determination services. FloodAnalyzer independently identifies a property’s flood-zone status and performs comprehensive analysis using the most current Federal Emergency Management Agency’s (FEMA) Flood Insurance
Rate Maps and Flood Hazard Boundary Maps. Two levels of certification are offered, including Basic Flood Certification and Life of Loan Flood Certification. Basic Flood Certification provides a single, fixed-in-time status of a property’s flood zone with findings that are based on continuously updated data outlining the risk of flood-zone exposure. Life of Loan Certification includes all of the findings in Basic Flood Certification along with an alert of flood zone status changes continued on page 18
HUD Unveils News Healthy Homes App
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The U.S. Department of Housing & Urban Development (HUD) has unveiled a new mobile app to help educate the public about hidden home hazards that can impact the health of their families. The Healthy Homes App is designed to raise awareness about potentially serious health and safety problems in the home and the steps consumers can take to protect themselves. As consumers increasingly rely upon smartphones and other mobile devices to access information, this Healthy Homes app offers a convenient tool for users to learn about common health and safety risks in the home. The app provides extensive content in clear, simple language so that users can quickly understand the potential hazards throughout a home. The app also helps residents who live in condominiums, single-family detached homes, townhouses, or in apartment buildings. “There are many potential hazards that can be found in our homes such as mold and lead based paint,” said Michelle Miller, Acting Director of the Office of Lead Hazard Control and Healthy Homes. “Our new app helps identify these potential problems and offers simple steps that consumers can take to fix them.” A series of quizzes have been
WSFLASH y MAY 2016 y NMP NEWSFLASH y MAY 2016 y NMP NEWSFLASH y MAY 2016 y NMP
CFPB Agrees to Possible TRID Rewrite
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The Consumer Financial Protection Bureau (CFPB) has quietly informed the financial services industry that it has acknowledged complaints and concerns relating to the TILARESPA Integrated Disclosure (TRID) rule, also referred to as the “Know Before You Owe” rule, and plans to seek their input on making updates to this federal policy. In a letter to a coalition of industry trade groups, CFPB Director Richard Cordray admitted that this rule “poses many operational challenges” and insisted that the agency was cognizant of how lenders, mortgage professionals and other housing-related businesses were being impacted by the rule. “We also believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity,” Cordray wrote. “Accordingly, we have begun drafting a Notice of Proposed Rulemaking (NPFM) on the Know Before you Owe rule. We hope to issue the NPRM in late July and look forward to your comments on it then.” Cordray also stated that the CFPB would arrange either one or two meetings in late May or early June to further discuss updating the rule. However, he offered no specifics on locations or what would be open for discussion. The CFPB did not issue any media announcement
on the proposed NPFM. Fred Kreger, CMC, presidentelect of NAMB—The Association of Mortgage Professionals, said, “NAMB applauds the CFPB for listening to feedback from stakeholders like NAMB regarding the Know Before You Owe mortgage disclosures. We are mortgage loan originators who listen and counsel our clients daily on the best product that is in their best interest. When we see that there can be better ways to inform consumers and the process itself, we are happy to share that with the CFPB. We look forward in offering further dialog with the CFPB to assist them in their mission of helping consumers understand the process.” “MBA is very pleased with CFPB’s letter and believes the approach laid out should provide a swift path to issuing a final rule that will give lenders, the secondary market and consumers the clarity and consistency of disclosures the market needs,” said Pete Mills, senior vice president of Residential Policy and Member Services for the Mortgage Bankers Association (MBA). “In the meantime we appreciate that the Bureau’s “diagnostic period” for the Know Before You Owe rule will continue to accommodate good faith compliance efforts. Finally, we look forward to continuing to work with the Bureau on this and other issues in hopes of protecting consumers and
strengthening the real estate finance industry.” Rob Nichols, president and CEO of the American Bankers Association (ABA), welcomed Cordray’s offer. “We appreciate Director Cordray’s responsiveness to our concerns about the CFPB’s Know Before You Owe rule,” he said in a statement. “The agency’s interim steps and guidance efforts are welcome, and we agree that several issues will be best resolved in the rulemaking process that is being initiated. We are particularly pleased that the notice of proposed rulemaking is on a fast track, which will accelerate and strengthen strong compliance regimes. Many of the elements the industry identified for clarification or amendment were developed in ABA’s compliance working group meetings, and we look forward to the opportunity to continue sharing banker feedback with the CFPB.” The American Land Title Association (ALTA) weighed in on the CFPB’s consideration as well. “The complexity of TRID makes it difficult for mortgage originators and secondary market investors to determine if they have complied with this massive regulation,” said ALTA. “ALTA will use this opportunity to work with the CFPB to ease this uncertainty for our members.” “Wolters Kluwer appreciates the CFPB’s willingness to provide additional clarity and formal
guidance to the TRID rule,” said Art Tyszka, senior director and general manager of Mortgage Lending at Wolters Kluwer. “As Director Cordray shared in his letter to industry associations and their members, there have been operational challenges with the new disclosures caused by differing interpretations of specific requirements. We are confident that if the informal guidance provided to us by the bureau is formally incorporated it will reduce the operational challenges and improve the consumer’s experience of shopping for and obtaining a mortgage loan.” Q1 Mortgage Write-Offs Hit Nine-Year Low
The total balance of write-offs for first mortgages, home equity lines of credit and home equity loans during the first quarter was $9.5 billion, according to new data from Equifax. This represents a 22.7 percent yearover-year drop and a nine-year low for first-quarter write-offs. Severe delinquency rates also experienced strong year-overyear declines during the first quarter, impacting first mortgages (from 2.35 percent to 1.65 percent), home equity installment loans (from 1.98 percent to 1.59 percent) and home equity revolving lines of credit (from 1.47 percent to 1.33
percent). The shrinking severe delinquency rate on first mortgages was particularly dramatic, reaching their lowest level since September 2007. “Homeowners are in the best financial shape they’ve been in since well before the start of the Great Recession,� said Amy Crews Cutts, senior vice president and chief economist at Equifax. “Total mortgage debt is down over $1 trillion, owner’s equity is up to $12.5 trillion, nearly double the amount held in 2011, and low inventories of homes for sale are driving prices up at a modest pace. Moreover, the average interest rate on outstanding mortgage loans keeps falling as more and more homeowners refinance into rates below four percent, giving borrowers more spending capacity each month.� Closing Times for Loans Down to 44 Days
Consumers Spending Less Time Researching Mortgages
one hour or less shopping for their mortgage. But more time was spent researching the costs of buying a car (11 hours) and looking into potential vacation destinations (eight hours). Among demographic groups, Millennials spend the most time researching or shopping for a mortgage, obtaining an average When it comes to researching of six quotes on home loans, lending options, it appears that versus an average of four quotes Americans spend more time by Gen X shoppers and three analyzing auto loans than home quotes by Baby Boomers. loans. “When it comes to spending According to new survey from money on our daily expenses, we Zillow, one in five respondents (18 all understand the value in taking percent) admitted spending only time to shop around, compare
product reviews online, or research retailers to ensure we are making a wise purchase,� said Erin Lantz, vice president of mortgages for Zillow Group. “Yet surprisingly, very few prospective homebuyers apply that same diligence to choosing a lender and a home loan, despite the fact that is likely the largest purchase they will ever undertake. Unfortunately, that mistake could be costly–a small difference in the interest rate can add tens of thousands of dollars to your mortgage.� continued on page 16
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n Texas Mortgage Professional Magazine n MAY 2016
Closing times on residential home loans averaged 44 days in March, the shortest time to close since March 2015, according to new data from Ellie Mae. March represented a faster closing time rate than February, which saw an average of 46 days. Among product types, the average time to close a purchase decreased from 48 days in February to 45 days in March, while time to close a refinance also decreased from 44 days in February to 41 days in March. On the government loan program side of the business, the average time to close FHA loans decreased from 47 days in February to 44 days in March, while closing on VA loans decreased from 50 days to 48 days. Refinance closing rates increased to 66.2 percent, while purchase closing rates increased to just over 75 percent. “In addition, the percentage of loans closing are continuing their upswing, increasing one percentage point to just over 70 percent, which is the highest closing rate we’ve seen since we began tracking data in August of 2011,� said Jonathan Corr, president and CEO of Ellie Mae. “However, we’re still seeing credit remain relatively tight with 67 percent of closed loans having FICO scores of 700 or above.�
Industry Updates: May 2016
nmp news flash
continued from page 15
Multifamily Lending Caps Increased
By Melanie A. Feliciano Esq. New 203(k) Calculator available Pursuant to FHA INFO #16-25, the Federal Housing Administration (FHA) implemented a series of updates to its FHA Connection (FHAC) system on April 18, 2016 that includes a new 203(k) Calculator that automates Maximum Mortgage Amount calculations required for both the Standard and Limited 203(k) programs. The new 203(k) Calculator is accessible in both a public version on HUD.gov and a secure version within the FHAC system. Note that the FHA is offering a Webinar on April 28, 2016, to discuss the 203(k) Calculator as well as the other enhancements to the FHAC system. VA announces new Mandatory Stacking Order for Purchases, Cash-Out Refis and IRRRLs Circular 26-16-12 announces the Department of Veterans Affairs’ (VA) new mandatory Stacking Order for Purchases or Cash-Out Refinances and Interest Rate Reduction Refinance Loans (IRRRLs) for a full file loan review of all loan applications submitted to the VA on or after June 1, 2016. Please visit the VA’s Web site to view the Circular and Exhibits.
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VA clarifies policy on itemizing fees on TRID’s Closing Disclosure Circular 26-16-11 explains the Department of Veterans Affairs’ (VA) requirements regarding the completion of the Closing Disclosure (CD) under the TRID Rule. The requirements set out in this Circular will apply to all VAguaranteed home loans originated on or after June 1, 2016. In addition, this Circular clarifies how to treat loan expenses not expressly permitted by VA regulations. Circular 26-16-11 provides sample Closing Disclosures as Exhibit A and Exhibit B. Please visit the VA’s Web site to view the Circular and Exhibits.
MAY 2016 n Texas Mortgage Professional Magazine n
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Selling Guide announcement SEL-2016-03 Fannie Mae announced through its Selling Guide Announcement SEL2016-03 changes to the following topics in its Selling Guide: 1. HomeStyle Energy Mortgages; 2. Multiple Financed Properties; 3. Updates to Texas Section 50(a)(6) Loans; 4. Co-op Policies; 5. Flood Insurance Coverage Requirements; and 6. Miscellaneous Selling Guide Updates Please visit Fannie Mae’s Web site to view Announcement SEL-2016-03 and the corresponding Executive Overview. Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail Melanie@DocMagic.com.
SPONSORED EDITORIAL
Multifamily housing was the center of attention via a new policy change from the Federal Housing Finance Agency (FHFA) and a new report from the Mortgage Bankers Association (MBA). The FHFA announced the 2016 multifamily lending caps for Fannie Mae and Freddie Mac has been raised from $31 billion to $35 billion. The changes, which are now in effect, were based on increased estimates of the overall size of the 2016 multifamily finance market. “FHFA engaged in a thorough analysis of the multifamily market and determined that, to adjust to the realities of the market and ensure that Fannie Mae and Freddie Mac have the flexibility to continue supporting this important sector, an increase in the lending caps is warranted,” said FHFA Director Mel Watt. “Supporting liquidity in the multifamily housing finance market remains a priority for FHFA and we will also continue to ensure that Fannie Mae and Freddie Mac maintain their strong support for financing of affordable and workforce housing.” David H. Stevens, president and CEO of the MBA, welcomed the move. “Current consensus projections for the size of the 2016 market, including MBA’s own, have increased to approximately $260 billion from earlier projections in the $220 billion range,” Stevens said in a statement. “FHFA’s review and adjustment mechanism in its 2016 Scorecard and its close monitoring of changing market conditions will support continued liquidity in workforce rental housing, help avoid market disruptions, and allow for competition among capital sources that finance this vital market.” Separately, the MBA’s Research Institute for Housing America (RIHA) put multifamily rental housing in the spotlight
with its new report “Diverted Homeowners, the Rental Crisis, and Foregone Household Formation.” The report determined that a sharp downturn in homeowner growth over the past 10 years would suggest that six million potential homeowners have either shifted to renting or left the housing market. Roughly one-third of these diverted homeowners were most likely absorbed into single-family rentals, especially among households aged 25 to 54. Complicating matters was the slowdown in new construction while rental demand increased, although the RIHA report determined that multifamily construction volume nearly doubled in 2012 compared to 2010, and increased by another third in 2014 compared to 2012. “Demand for rental housing has greatly outstripped supply, rapidly pushing vacancies down and rents up even as incomes fell. The supply is still trying to catch up with the demand,” said Lynn Fisher, RIHA’s executive director and MBA’s vice president for research and economics. “In the middle of the last decade, right as the Millennials were anticipated to begin forming their own households and increase demand for rental housing, the supply side of the market stalled due to the turmoil in credit markets. At the same time, homeowners diverted from ownership piled into the rental market. The single family rental sector certainly grew, but was only able to accommodate some of the increase.” Fannie Mae Reports Q1 Earnings Drop
Fannie Mae experienced a significant earnings dip during the first quarter, with a reported net income of $1.1 billion and comprehensive income of $936 million, down considerably from its fourth quarter 2015 net income of $2.5 billion and comprehensive income of $2.3 billion. Fannie Mae attributed its continued on page 26
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The CFPB Under Attack: Fallout From PHH Brings Hope for Change By Andrew Liput
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There have been several news stories lately that may indicate a seismic shift in what some have called unrestrained regulatory and enforcement pressure from the Consumer Financial Protection Bureau (CFPB). Although no one is predicting that the CFPB is going away, or will be severely re-imagined and re-organized, these stories have brought a glimmer of hope to lenders that the last four years of increasing pressure backed by intensive audits and expensive enforcement penalties, may be signaling some relief. There have been efforts in the past by Congress to attack the CFPB and its mandate, with everything from inquiries into its spending on offices and office furnishings, to claims that it engaged in discriminatory hiring and employment related practices and efforts to replace the director with a bi-partisan commission. While these efforts have been largely ineffectual and barely made a chink in the Bureau’s armor, the PHH lawsuit may have drawn some blood. PHH went into full frontal attack against the constitutionality of the Bureau in its lawsuit. Their attorneys contended that “The CFPB combines vast authority for the director with unprecedented insulation.” Unlike every other federal agency, the CFPB is headed by a single independent director and with no direct oversight by the president or Congress. The argument seemed to impress the D.C. Circuit Court and could very well result in a decision that would keep the agency but change how it is managed and supervised. Perhaps feeling the heat a bit, and also bristling from an onslaught of complaints from industry groups decrying the TRID regulations as burdensome, costly and more confusing than transparent, last month the CFPB stated that in July it will announce changes to its mortgage disclosure rule to provide "greater certainty and clarity." In a letter to trade groups who have been clamoring for TRID adjustments, CFPB Director Richard Cordray said the Bureau is presently drafting the proposal on TRID rules that went into effect in October 2015. Though no details were provided, the industry as a whole has continually sought guidance on issues such as how to cure errors, how to account for lender credits, and how to calculate cash-to-close transactions. More recently, a federal appeals court ruled that the CFPB overstepped its bounds when issuing a Civil Investigation Demand (CID) to the Accrediting Council for Independent Colleges and Schools (ACICS). The Bureau, you will recall, was established to address financial services regulations, and has over time interpreted that mandate very broadly. In this case, the Bureau apparently asserted that it has the right to determine if any unlawful acts were being committed in connection with accrediting for-profit colleges, a position the court rejected. With a difficult year unfolding for the CFPB, what can the industry truly expect will ultimately result from these legal challenges? Some industry insiders are suggesting that we may see Congress take a renewed interest in CFPB reform. This may include transforming the Bureau into a bipartisan commission with political balance and diverse viewpoints, passing new legislation taking control of funding while clarifying the CFPB’s jurisdiction by clearly defining the scope of their reach, statutes of limitations on violations and enforcement actions, and limiting its current ability to create rules on the fly. Throw in a presidential election year and we can only predict with certainty that anything can happen. Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureSettlements.com.
SPONSORED EDITORIAL
new to market
continued from page 13
for a property, flood zone status tracking based on the changes to the Flood Insurance Rate Map (FIRM) for the life of the loan and monitoring of FEMA flood map revisions and National Flood Insurance Program (NFIP) community participation status changes. “Missing flood certs continue to be a common pain point for clients especially when the defects create loan suspensions and even make the loan unsalable,” said John Vong, president of ComplianceEase. “FloodAnalyzer addresses this need directly by being able to retrieve flood status information with the speed and accuracy needed to close loans in today’s post-TRID environment.”
sharing appraisal files via unsecured e-mail, or generally outside of UCDP, and improves system efficiency as compared to the manual retrieval of SSR data in the UCDP Web interface. This feature also allows third-party originators to initiate the UCDP submission process without complicating the ownership of the appraisal document when it is time to securitize the loan. “As many correspondents and aggregators may be aware, Veros is the official technology provider to Fannie Mae and Freddie Mac for the UCDP,” said Rasmussen. “As the technology provider for this important initiative, Veros was contracted to build this Correspondent functionality into the Veros Launches New GSEs’ portal, we have now made Appraisal Sharing Solution similar functionality available in our Veros Real proprietary system which is directly Estate integrated to UCDP to provide a Solutions more automated approach to has sharing.” launched an appraisal sharing PATHWAY is a system-to-system capability through its PATHWAY connection that allows for the system-to-system connection to the seamless delivery of appraisal Uniform Collateral Data Portal submissions to the Uniform (UCDP). The PATHWAY system’s Collateral Data Portal (UCDP) and “Simply Smarter Appraisal Sharing” the Electronic Appraisal Delivery is now available to all customers who (EAD) portal. Requiring minimal use PATHWAY to deliver their technology integration, the system appraisal data to Fannie Mae and allows lenders to submit UAD and Freddie Mac (GSEs), and allows for non-UAD reports and includes both fully-integrated system calls making a UAD compliance quality check and the process to share and retrieve a Preview function that allows for the appraisal data between third-party advanced view and resolution of mortgage originators (or expected pre-submission errors for correspondent lenders) and loan both UCDP and EAD. PATHWAY aggregators easier and more secure. offers an automated submission “The ‘Simply Smarter Appraisal solution to entities with volumes too Sharing’ functionality provides a fully large for manual submission to the automated, reliable, and secure way portals, and it provides a single entry for correspondents and aggregators point for all appraisals headed to the with high-volume submissions to secondary market. The platform also share appraisal information as it provides fully automated appraisal flows through the portals,” said score reports for enhanced quality David Rasmussen, senior vice control and processes firstpresident of operations for Veros. generation PDF extractions for “The enhancement consolidates UCDP delivery. appraisal sharing into one seamless process and provides both parties Your turn greater access to real-time UCDP National Mortgage Professional appraisal status on a loan-by-loan Magazine invites you to submit any basis.” information promoting new “niche” The new capability allows thirdloan programs, new products or any party mortgage originators to share other announcement related to the files with designated aggregators by introduction of a new program, to making one small enhancement to the attention of: their PATHWAY submission process. Loan aggregators, meanwhile, can New to Market column utilize PATHWAY to receive an Phone #: (516) 409-5555 automated list of correspondentE-mail: shared appraisals and are able to newsroom@nmpmediacorp.com check the status, retrieve findings, and view Submission Summary Note: Submissions sent via e-mail Reports (SSRs) with the most up-to- are preferred. The deadline for date data. This automation submissions is the 1st of the eliminates the existing process of month prior to the target issue.
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NAMB President’s Message: May 2016
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HR 2121: The SAFE Transitional Licensing Act HR 2121, The SAFE Transitional Licensing Act, is purported to be a way to allow federallyregistered loan originators to transition to state licensed loan originators over a 120-day period. It would allow them to originate loans without a license following a credit and background check. The reason for this bill is to allow independent mortgage bankers to recruit employees to make them competitive with federal banks. It seems they cannot compete without allowing for unlicensed origination. The federally-registered loan originators are not asking for the exemption. The bill has many unanswered questions. What happens if the LO is not licensed in the 120-day period? Many originators that were unable or unwilling to pass the national exam went to work for the banks. In fact, many banks advertised to come work for them as no license was required. In addition to allowing federally-registered LOs to transition, the bill allows state-licensed originators a 120-day period to get licensed in another state. What prevents them for applying for another state license, doing their one loan in that state and dropping the license application? State regulators are not fond of unlicensed origination activity and this bill would require them to allow the transitional licensing and would eliminate their ability to have more restrictive requirements. The proponents of the bill state that they have discussed with the Conference of State Bank Supervisors (CSBS) and they do not oppose. Not opposing is not the same as supporting. Many state regulators are not aware they are giving up some of their state authority through HR 2121. The main issue is why is this needed when federally-registered LOs can easily get their license while still employed. It requires some extra time over their 40 hours at the bank, but it is attainable. This legislation does not benefit most brokers, but small bankers that want to be able to quickly move into a new state and get underway immediately competing with those small business originators that took the time and energy to get licensed. If the transitioning originators do not get licensed, they will merely hire more transitional originators to take their place or have them start the process over with a new 120-day period. HR 2121 disregards the SAFE Act that NAMB supported to end unlicensed activities. It does not help the consumer or the registered loan originator, but helps independent mortgage bankers to compete with banks and small business originators. Sincerely, Rocke Andrews, CMC, CRMS, President NAMB—The Association of Mortgage Professionals RAndrews@LendingArizona.net • JOINNAMB.com
The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer This has really become an exciting time at NAMB—The Association of Mortgage Professionals. All of the board members, committee chairs and committee members are gearing up for a fantastic last half of the year. I cannot tell you yet what is going on, but NAMB is about to take steps to make being a member downright totally important to you, the mortgage originator. As we are gearing up for our Nominations and Awards Committees to really kick it in gear, we are reaching out for new people to become involved. We had a great turnout at NAMB East in Hilton
Head, S.C. and another great turnout at the 2016 Legislative & Regulatory Conference in Washington, D.C. So my question to you is … have you already looked at attending NAMB National in Las Vegas? Those dates would be Sept. 24-27, 2016 at the Luxor. This is our last year of the contract with the Luxor, and it will be one of the better ones dating back to 2004. You might ask, why do we hold these conferences? To be truthful, it is to help you, the NAMB member. One of our missions for NAMB is to help you be a better originator and to do it at a reduced cost to you. So to put this into perspective … the cost of attending the conference should be approximately $595. But, the committee takes care of that for you by having the exhibitors give you free registration. We also host the conference at a destination city like Las Vegas and that means that if you get your ticket early, it isn’t that expensive. I got my tickets last week for $132 each way from Indianapolis, $264 round trip. The cost of the rooms average $50 per night. Just think, they are now asking for $140 per night if you are not in the NAMB Hotel Block. And what do you get? You get access to 70 exhibitors, great speakers, great breakouts, good friends and great networking opportunities. And in all of this, you can actually learn something, take your continuing education, have fun in a city that never sleeps, and be part of the great camaraderie of originators who make their livelihoods just as you do. So do not hesitate. Information to register should be out right about now and you can be looking for those cheap flights to attend. I really hope to see you in Vegas. Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professionals. He may be reached by e-mail at NAMB.CEO@NAMB.org.
A Look Back at NAMB’s Legislative & Regulatory Conference By Fred Kreger, CMC LAX-DCA This time of year is exciting for all of our advocates across the country. We are coming from all over the states to attend NAMB’s Legislative & Regulatory Conference in Washington, D.C. Throughout the years, I always start this article with a pre-event anticipation note. At 30,000-feet, I am so looking forward to sharing thoughts as the leaders of our industry meet for the next couple of days. As “thought leaders,” we make that difference in our industry. We, as mortgage professional, are invited to the tables of decision-makers that shape our industry and help our clients. This year, we have a packed conference, to make sure all of our leaders are well-equipped to talk to their members of congress and take back incredible information, to their states to help them run and advocate for their membership. I wanted to also challenge everyone to be that participant in your industry. I have advocated for years that everyone that enjoys the fruits of the mortgage industry, should pay it back with association membership and participation. We all need to have gratitude for the opportunities that we all receive because of our career that place families into homes and satisfy their life goals. DCA-LAX Now flying home from the Legislative & Regulatory Conference. It certainly did not disappoint. It was great to spend time with friends around the country who have like-minded views, advocating on behalf of the mortgage industry. Our meetings on the Hill were received very well amongst our representatives and their staff. We, as
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the mortgage industry, advocate for our peers and clients, and have found out that there is a balancing act between regulator and legislator. Both need to dialog when it comes to client and industry advocacy. Our client’s stories need to be told to both groups of decision-makers. This is still something relatively new in D.C. I have to tell you that the process is faster, but takes some learning on all of our parts on how to navigate this new system of governance. The Conference itself was even better and more successful with each coming year. I can see that, as an industry, we are getting stronger. More professionals see the need and find their place in becoming active within NAMB and their own state association. We sold out the Conference and the hotel. We are definitely looking into expanding the Conference next year with a bigger venue. This is always a great problem to have and fix. Make sure that you participate next year,
because NAMB is going to make this event even bigger. So what are you all waiting for? Join your state association, join NAMB, become a committee member, make a call to your member of Congress and GET INVOLVED. It really does matter. Thank you all for all of your support and advocacy on behalf of the industry and your clients. Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is a past president for the California Association of Mortgage Professionals (CAMP), and currently president-elect and Government Affairs Vice chairman for NAMB—The Association of Mortgage Professionals. He can be reached by e-mail at Fred.Kreger@AFFLoans.com or call (661) 505-4311.
Scenes From the 2016 NAMB Legislative & Regulatory Conference April 9-13 in Washington, D.C.
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Terry Clemans, executive director of the National Consumer Reporting Association (NCRA), with NAMB Director David Luna
Brian Montgomery, former FHA Commissioner, and current vice chairman of The Collingwood Group, details the latest news from the FHA NAMBPAC Chair John Stevens details the work of the PAC on Capitol Hill
NAMB CEO Don Frommeyer welcomes attendees to D.C. for the 2016 Legislative & Regulatory Conference
Dennis Oshiro and Cathy Lee from the Hawaii Association of Mortgage Professionals (HAMP) with David Luna
Paul Mondor from the CFPB’s Office of Regulations with David Luna
Dave Luna with Wayne King, president of the Greater Houston Association of Mortgage Professionals (GHAMP)
NAMB President Rocke Andrews briefs attendees prior to their trips to Capitol Hill
N A M B Living in the Digital World
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P E R S P E C T I V E
By David Luna, CRMS
When I started in the mortgage industry, we would dial the credit bureau, verbally request a credit report and the credit bureau would read the credit report to me, and I’d have to write as fast as I could what would be read to me on paper. How happy I was when telex machines, whisper writers and then thermo-fax paper came out. Well, we’ve come a long way in the credit world and with trended credit data rolling out the weekend of June 25, our credit world will change again. I also remember that mortgage loans took longer than they do today in the digital age. We have all seen the commercials regarding the “Rocket” loan or the “World’s First Digital Mortgage.” Are we moving too fast or it is the natural progression of our industry? I recently read an article by Peter G. Miller entitled “Is Mortgage Shopping Too Quick?” He asks, “Has mortgage shopping become too quick and easy? Or, are speedy mortgages a good thing, evidence that automated loan services are a growing success, making it easier to get financing with fewer hassles?” Are mortgages too easy? It seems with the qualified mortgage (QM) and the set of guidelines for a QM is really just a checklist. Either the borrower “qualifies” or doesn’t. Do they meet the guidelines of a QM or not? If we have a set of values, we need to hit and if we hit them, we are in the safe harbor and all is well. The National Association of Realtors (NAR) reported that by the end of 2015, 98.5 percent of all real estate loans were QMs. In order to have a QM, we need to make sure the borrower has the ability to repay (ATR), the ratio at 43 percent, we have charged less than the three percent in points and fees if the loan is $100,000 or above, we have not put the borrower in a loan with any negative features, have a term of 30 years or less and have the borrower on a fixed-interest rate or if an adjustable-rate mortgage (ARM), have used the highest rate the loan could go to in the first five years. So, if we comply with a limited set of rules, couldn’t we create a fairly straight forward loan approach? Let’s go back to an earlier thought with the TV commercials touting a very simple mortgage that is both quick and easy and Peter Miller’s article. Zillow reports that “Americans spend just eight hours researching their home loan.” Zillow continued, “One in five of those surveyed spent an hour or less shopping for their home loan.” I don’t know about you, but I think I spend more time researching my next movie or restaurant. In fact, I may spend more time looking for my next car than some spend looking for a lender. With the use of the Internet and Google so easily searchable, why can’t getting a mortgage take just a short time to complete? It’s not like shopping for a vehicle loan that can move. Houses don’t move and are not easily stolen. The aging of new buyers into the mortgage space is exciting. Millennials have moved the needle and need to be considered. The Millennial or Generation Y have now passed the Baby Boomers in size. They are a group that will continue to drive many changes in all of our lives. As a group, they originated more than 30 percent of all purchases last year and will be poised to do much more that that as they age, become move-up buyers and have larger families. One in four Millennials are parents today. Seventy percent of them feel a responsibility to share feedback with companies after a good or bad experience. Social media is part of our future as Millennials will find us via social media and will use this to rate their experience with us as mortgage professionals. According to Nielsen and the Demand Institute, Millennials will spend $2 trillion on home purchases over the next five years. Today, there are 13 million Millennial households, and by 2018, there will be 22 million. Eight in 10 Millennials say they plan on becoming homeowners. The Millennial borrower is a texting, Google searching, powerhouse that we need to consider as we move forward in this great industry we call the mortgage industry. Will timeframes continue to
consolidate? In a word “Yes.” Even with TRID, we are seeing timeframes begin to shorten now that we have six to seven months of TRID experience under our belt. Technology will continue to improve, industries will continue to collaborate, and we will get these and all in the future changing. We are a strong and adaptive industry, and living in the digital age is amazing and fantastic. I will keep my seatbelt fastened as we move into the future. David Luna, CRMS, president of Mortgage Educators and Compliance, an NMLS-approved education provider, is a member of the board of directors of NAMB—The Association of Mortgage Professionals. He can be reached by phone at (801) 676-2520 or e-mail David@MortgageEducators.com.
NAMB’s Education Corner: AE Certification By Bob Sweeney, CRMS During NAMB’s Wholesale Summit this past September, our wholesale partners requested that NAMB take the lead role in promoting and offering education and certification to all mortgage professionals. It became very clear that they wanted NAMB to create a certification for account executives and offer continuing education (CE) and pre-licensing classes in all states where NAMB state affiliates are not offering classes. The Education Committee will be starting the AE Certification process very soon. We have suggested to our wholesale partners that we adopt the Certified Residential Mortgage Specialist (CRMS) Certification Exam as the basis for the AE Certification. At the most recent Wholesale Summit in February, we distributed the CRMS Exam Specifications asking for the input of our wholesale partners. We have requested that they review the content and make suggestions on any changes. We hope to have all of their input very soon and make a decision in the very near future whether to adopt the CRMS Designation for our AE Certification Why the CRMS exam for AEs? Guy Schwartz, CMC, NAMB Certification Committee Chair, says it best: “Across the United States, and in a wide range of occupations, certification programs have enabled professionals to distinguish themselves from the competition. As the number of certified individuals has increased, customers and employers have learned to look for credentials when choosing a business partner. By meeting the stringent eligibility standards, passing the rigorous exam, satisfying the recertification requirements, and adhering to the NAMB Code of Ethics, the CRMS certification will enable you to prove your skill and promote your business. “There has never been a better time for mortgage professionals to seek certification for a number of reasons. Our industry is under increased scrutiny and it is important for those of us who are true professionals to conduct business with honesty and integrity, putting the best interests of our clients at the forefront of all we do. This year, NAMB is working to raise awareness of our credentialing programs to NAMB members, other brokers, and our industry partners. There is no doubt—certification will benefit you professionally.” We welcome any input from all mortgage professionals or wholesale partners. If you are not a member, now is a great time to become a member. Go to your state association Web site or NAMB.org to join as a Professional Member. Bob Sweeney, CRMS is senior sales manager at CrossCountry Mortgage, is director on the board of directors for NAMB–The Association of Mortgage Professionals and serves as NAMB’s Education Committee Chair. He can be reached by phone at (317) 625-3287 or e-mail Bob.Sweeney46@yahoo.com.
NAMB+ is an independent, wholly-owned, for-profit marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, This month marks the four-year anniversary of NAMB+! As you know, NAMB+ is the for-profit marketing and communications subsidiary of NAMB, the Association of Mortgage Professionals. NAMB+ was created to build relationships and enhance the benefits of being a member. NAMB+ also provides additional revenue to support NAMB’s mission, and by leveraging its resources to improve NAMB’s ability to communicate with mortgage professionals. I am proud of NAMB+’s evolution, energy, and the support we have to continue growing and exploring new and innovative ways to fulfill our mission. Thank you to everyone who has contributed to the success of NAMB+, particularly the NAMB Board of Directors, our Endorsed Providers, and the mortgage professionals who support our Association. I will close by extending a special thank you to two of our Endorsed Providers who
Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15
have been with us since the beginning. The Bond Exchange and USA Business Lending were our first Endorsed Providers and they remain with us four years later. Please support these great companies and all of the Endorsed Providers featured on NAMBPLUS.com. Sincerely,
Nathan Pierce, CRMS, CMP, President NAMB+, Inc. npierce@advfund.com See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information.
MBS Highway provides daily guidance and insights from Mortgage Market expert Barry Habib who predicted the bottom of the Housing Market. Exclusive NAMB Members offer to try MBS Highway FREE for 30 days. Visit MBSHighway.com/registration/namb-plus-registration
SYNCRO connects mobile salespeople to their office website leads. NAMB Members receive a 10% discount off regular prices for monthly unlimited SYNCRO Web Chat packages.
NAMB members get special pricing plus 1 month FREE. BetterLoanOfficers.com is free to get started with the option to upgrade if you’d like. As an NAMB member optional upgrades are discounted by 10%.
As an NAMB member, Birchwood Credit Services will waive the sign up fees! It’s a “NO RISK” way to experience the Birchwood difference firsthand!
Mortgage Currentcy is a subscription-based ezine that interprets the mortgage underwriting and compliance rules in plain, easy-to-understand language and how they affect your files in process. NAMB Members save $70 on annual subscription option. Visit the Website at www.mortgagecurrentcy.com/tour.php
NAMB members receive a 15% discount on all Custom Canvas Prints products and services!
The Bond Exchange is a national surety agency specializing in providing mortgage license bonds to thousands of mortgage professionals across the country.
USA Business Lending is the nation’s premier commercial brokerage firm representing over 3500 lenders.
NAMB members receive a 10% discount off regular prices for Warm Welcome LLC services. For more information visit WarmWelcomeLLC.com.
InfoSight, Inc. offers proven and affordable cyber security, risk management, IT Infrastructure and regulatory compliance solutions. Visit www.infosightinc.com or contact us at 305-8281003 / 877-577-9703.
LoanTek’s platform is designed to save time, create better leads, and convert leads into new business.
Simplii VOIP business phone solutions include all the features and functionality of a high end business phone system without the high costs. We offer all NAMB members a 10% discount off their phone services. For more information please e-mail stevew@simplii.net
WhoHub (www.whohubapp.com) is a FREE marketing tool for local Realtors to refer their best Loan Officer. The service is FREE for the agent and their clients so it gets shared among local friends, family and neighbors who will see your profile. Each loan officer pays just $30/month for unlimited agent connections. Whether you connect to 1, 15 or 100 agents – still just $30/month. That’s right; one new borrower pays for the service for years! NAMB members get their first 90 days for just $1, month to month thereafter, cancel anytime.
NAMBPLUS Login Instructions NAMB members get a $300 discount on coaching. NAMB members receive exclusive discounts training events, including live seminars and internet-based web shops
If you want a social and mobile marketing strategy that gets noticed contact Social5 today for a FREE consultation and demo and to receive your NAMB member discount pricing.
Username = Member Number Password = First initial of your first name capitalized and your last name with the first letter of the last name capitalized (example = JStevens) *If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many benefits NAMB members receive!
n Texas Mortgage Professional Magazine n MAY 2016
NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership.
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NAMB members receive a discount off Brokers Compliance Group compliance support programs.
Morf Playbook™ by Morf Media is software that allows you to train your staff and customers. You can create your own training, add your policies and procedures or select courses from the Morf Partner Portal. Whether you are looking for CFPB compliance training, sales training or new loan officer training, Morf can connect you with exactly the training you need. If you can write about it, record a video about it or talk about it…YOU can train on it with the Morf Playbook™! Find out more at www.morfmedia.com/namb.
N A M B
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getting toknow DAVID LUNA Director of NAMB B Y
P H I L
H A L L
MAY 2016 n Texas Mortgage Professional Magazine n
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24 avid Luna is chief executive officer of Mortgage Educators & Compliance, an American Fork, Utah-based national education provider of mortgage and real estate professional development and state-approved continuing education. He is also a director of NAMB—The Association of Mortgage Professionals and has been a prominent figure within the Utah Association of Mortgage Professionals (UAMP). National Mortgage Professional Magazine recently spoke with Luna about his career and his involvement with the industry and its trade associations.
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How did you first get involved with the mortgage profession? Was it your original career choice? Actually, it was. I just returned from a couple of years in the Caribbean as part of a church service mission, and I needed to settle down. I wanted to start a family, and needed a job with flexibility. I am also proficient in several languages, and I went to work at Mellon Bank in Los Angeles because they needed
think, “Hey, I can do this myself,” but that thought is flawed. If there is a piece of legislation on Capitol Hill, one person’s voice is nice, What roles have you played in the but if you can combine that with state and national trade groups? thousands of other voices, it is much more effective. That is why With the Utah Association of we have an association. One Mortgage Professionals (UAMP), I person alone cannot do it—I have served as chairman of cannot do it by myself. But if you probably every committee and the have an entire group on the same statewide president twice. With page, you are able to move an NAMB, I have been on the agenda forward. Certification Committee, Credit Committee, NAMB National What do you see as the state of Committee, Membership today’s mortgage world? Committee, and now, I am a I’ve been doing this for a long member of the board of directors. time, and I think now is a very good time for refinances. But I What are your duties as a hope people understand that the director of NAMB? low rates will not last forever. If As a director, I am currently the mortgage professionals use this Communications Committee time to build their business, it chairman, responsible for public could be a fundamental year for relations for the association. I am also on the Technology Committee, the future growth of the industry. where I am overseeing the RFP for Many in the industry have been the upgrading of the NAMB Web concerned about efforts to bring site. I am also involved in putting together a television commercial for more young people into mortgage careers. How do you NAMB that will be shown on PBS. view this issue? More individuals are coming into Why should mortgage industry now. But we are seeing a professionals become involved trend regarding the people coming with NAMB? When it comes to making a change into the industry … they tend to stay together. We see hundreds for the better, many people like to someone who spoke Spanish. This was in 1980 and I have been in the industry ever since.
and hundreds of new people coming in, but they are going to shops that have young people. We are not seeing a lot of new people going into the wellestablished shops. You can walk into a shop and see hundreds of loan officers, but none are over the age of 35. Why is this happening? There are companies that are very successful in attracting individuals because they understand the different mindset of the new young professionals. They’re more tech-oriented, they don’t wear ties to work, and don’t really leave for lunch. They’re aggressive, and want to work hard and work smart. But, yes, there is a division in industry: The older, more established shops can attract young people, but they need to recognize that the young people think differently. They want to make a difference and want to feel their efforts are making a positive effect. What is the housing market like in the state of Utah? Utah did not experience the highest of highs and the lowest of lows of several states. We stayed at a steady four- to
N A M B seven-percent appreciation rate, and we have the highest credit rating in the nation. The state has experienced slow and steady growth. Utah has high job creation—we call ourselves “The Silicon Slopes” because tech companies like Oracle, eBay and American Express have relocated here. Young people come out of college and get jobs where they can make $60,000-$80,000 a year. There is a problem: There is just not enough inventory. We have a major intersection that goes through the center of the state—the eastern side of the intersection is built up, but on the western side, there is land available for miles and miles and miles. Some builders are a little gun shy about coming back to an industry that was devastated in 2007 and 2008. We expect to see faster inventory growth to offset demand. Now, some young people are still staying at home after they finish school, but we will see that loosen up.
What projects do you have on the horizon? I am concentrating on Mortgage Educators and Compliance, the NMLS School we are growing. Our goal is to be a top three school by end of the year. We are also launching a school for real estate agents, which we hope will be approved by fall.
You are certainly very busy—how do you spend your leisure time? I call it The Three Gs: Gardening (I
worked my way through college at a nursery), Grandchildren (I have 10 of them) and Golf!
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
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What do you see as the major accomplishments of your career? After serving as UAMP statewide president, Gov. Mike Leavitt asked me to be the Commissioner for the Department of Commerce’s Division of Real Estate, a position which I held from 2000-2004. After serving that term, I went back to private practice. After that, Gov. Olene Walker asked me to serve on the Utah Housing Trust Fund Board, which was tasked with helping homeless veterans and ending chronic homelessness in the state. I am happy to report that we are able to identify all 636 individuals who were left homeless—they were the ones we couldn’t help, but at least we know who they are and how many there are. In 2012, Gov. Gary Herbert appointed me to state’s Prison Relocation Committee, which was a $1 billion project to move the state prison. I was appointed to help with the project’s real estate loan, title and appraisal expertise for the prison relocation. I’ve also helped in the creation and funding of the Honoring Heroes Foundation, which ensures that the men and women who put lives on the line for us are taken care of when they need our help.
P E R S P E C T I V E
nmp news flash
Step Inside Ginnie Mae The Ginnie Mae Difference By Ted W. Tozer
innie Mae is a self-sustaining government corporation that provides access to mortgage credit for millions of families. Our common security leads to increased competition among lenders in the Ginnie Mae program. Ultimately, borrowers from students to seniors get the lowest possible rates. Like the Federal Deposit Insurance Corporation (FDIC), Ginnie Mae monitors the safety and soundness of every lender authorized to issue a Ginnie Mae mortgage-backed security (MBS). This is how we safeguard our government backing and the “30-year mortgage.” We return money to the government every year, helping to reduce the deficit. And, unlike the government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—we’ve never needed a bailout. The Ginnie Mae difference has been critical to supporting the housing recovery. From the 10 million loans in our MBS to the $21.5 billion, we’ve returned to the United States Treasury, Ginnie Mae will continue to play a key role supporting the U.S. housing industry.
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decrease in net income to fair value losses driven by decreases in longer-term interest rates. Its net revenues were $5 billion for the first quarter, compared with $5.3 billion for the fourth quarter of 2015, while its net interest income was $4.8 billion for the first quarter, down from $5.1 billion in the previous quarter. However, Fannie Mae’s creditrelated income was $850 million in the first quarter, up from $732 million in the fourth quarter. Although its first quarter earnings declined, the government-sponsored enterprise is forecasting a $919 million dividend payment to the Department of the Treasury in June. “We continue to run our business well while supporting the improving housing market,” said Timothy J. Mayopoulos, president and CEO of Fannie Mae. “The changes we have made to the company have put us in a stronger position to fulfill our responsibility to deliver safe, affordable mortgage financing for our customers, in all markets at all times. We will continue to execute on behalf of our partners, drive further improvements to housing finance and our company, and serve those who house America.” Earlier in the week, Freddie Mac reported a net loss of $354 million for the first quarter, a hefty drop from the net income of $2.2 billion in the fourth quarter of 2015. Freddie Mac also reported a comprehensive loss of $200 million for the first quarter, a dramatic plummet from the comprehensive income of $1.6 billion in the previous quarter. Commercial Real Estate Leaders Mostly Optimistic on Future
Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.
Commercial real estate executives have faith in their sector, according to the “2016 Commercial Real Estate Outlook” released by CIT Group Inc. The new report finds 52 percent of surveyed commercial real estate executives believed their sector is either strong or very strong, while 71 percent said adequate capital is available for
investment and 24 percent believed capital is available for “the right” deals only. When asked about financing, slightly over half of respondents say that they are lengthening the duration of their financing in an effort to lock in today’s relatively low rates over a longer period of time. Furthermore, 34 percent of surveyed executives said that green tax credits and cash grants are having a significant influence over their design/renovation and related commercial real estate investment choices. But executives expressed mixed feelings on the impact that the new inclusionary housing mandate trend would have on future residential developments, with 31 percent stating it was a positive development and 26 percent claiming otherwise. “Commercial real estate executives appear relatively optimistic about the general state of the market in 2016, with many predicting higher than average deal volumes for their firms,” said Matt Galligan, president of CIT Real Estate Finance. “Further, when considering the adoption of new technology, most believe that the influx of commercial real estate tech companies is revolutionizing the industry.” Loan Application Defect Index Shows Uptick
There was an increased level of problematic lending inquiries last month, according to the latest First American Loan Application Defect Index report. This Index increased 1.3 percent in March over the previous, the first uptick since July 2015, but it was down by 2.6 percent as compared with March 2015. The Defect Index for refinance transactions upticked 1.5 percent month-over-month but was 5.7 percent lower than a year ago. The Defect Index for purchase transactions increased 1.2 percent month-over-month, but was 3.4 percent below the March 2015 level. The five states with the highest year-over-year increase in defect frequency in March are North continued on page 32
Dear Mortgage Professional, We are a little more than a quarter of the way through this pivotal election year and I wanted to take this opportunity to update you on the efforts of NAMBPAC. I also want to recognize and thank all of the very generous contributors who have supported NAMBPAC already this year! So far in 2016, NAMBPAC has contributed to eleven different and bipartisan candidates in both House and Senate races; and, we anticipate participating in as many as twenty or more additional races this election cycle. For more information about NAMBPAC and NAMB’s overall legislative advocacy
efforts, please feel free to contact me, or NAMB Government Affairs Chair Valerie Saunders, or visit www.namb.org. Sincerely,
John G. Stevens, CRMS 2015-2016 NAMBPAC Committee Chair JohnGStevens@gmail.com
Thank You to Our 2016 NAMBPAC Contributors Year-to-Date Diamond-level Contributors ($5,000 maximum annual contribution) Olga Kucerak, CRMS ..........................................TX Shane Lester, CMC, CRMS ..................................AR Kimber White ......................................................FL Platinum-level Contributors ($2,500+ annual contribution) Ginny Ferguson, CMC ........................................CA Lisa Lund............................................................AZ John Porter........................................................WA
Note: Contributions received and pledged between January 1, 2016 and April 30, 2016.
For additional information about NAMBPAC, please feel free to contact me or visit namb.org. John G. Stevens, CRMS • 2015-2016 NAMBPAC Chair JohnGStevens@Gmail.com * Federal Election Law requires NAMBPAC to use its best efforts to collect and report the name, address, occupation and employer of everyone who contributes $200 or more in a single year. If your contribution to NAMBPAC to-date in 2016 is less than $200, your name may not appear on this list, but NAMBPAC is still very grateful for your generous support!
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Sustaining Contributors Chuck Anderson ..................................................ID Joe Ashton..........................................................AZ Jayne Bail ..........................................................CO Audrey Boissonou ..............................................CA Louis Borsellino..................................................NY Jessi Bostic ........................................................UT Doug Braden ......................................................CO Teresa Buckman ................................................CA John Burke ........................................................CT Michael Burroughs ............................................OH Joseph Cannarozzi ............................................SC Dana Chahidi......................................................CA Thomas Cullen ..................................................SC Harry Dinham, CMC ............................................TX Tammy Engel......................................................CA Don Fader ..........................................................NC Melinda Gregory ................................................TX Kelly Haney ........................................................TX Roger Hope ........................................................PA Damion Hughes ..................................................TX Wayne King ........................................................TX
Steven Lang ......................................................CA Corey Leonard ....................................................IL Kim Lewis ..........................................................TX Anthony Lombardo ............................................CA Heidi Martin ......................................................OR Tiffany McCoy ....................................................AL Brion McDermott ................................................FL Ross Miller..........................................................LA Marshall Moody ..................................................TX Anthony Moore....................................................FL Nelson Otero ......................................................CA Terry Pogofsky, CRMS ..........................................IL Jeanine A. Robbins ............................................AZ Nancy Romfh ......................................................TX Marlene Rouen ..................................................LA Kathy Rubin ........................................................TX Joan Ruth ..........................................................AZ Einat Sadot ........................................................CA Anna Salser ........................................................AL Julia Schloss ......................................................CA Guy Schwartz, CMC ............................................CA Jeff Shealey, GMA ..............................................TX Shawn Sidhu ......................................................CA Adam Stein..........................................................ID Donald Thomas ..................................................TX Steve Tilkin ........................................................FL Roland Varblow ..................................................VA Brady Webb ........................................................KY Cynthia Wingo ....................................................CA
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Gold-level Contributors ($1,000+ annual contribution) Joel Berman ......................................................NY Rick Bettencourt, CRMS ....................................MA Jhonny Bravo......................................................FL George W. Burkley III............................................IN John Councilman, CMC, CRMS............................FL Dale Di Gennaro ................................................CA Flagstar Bank Federal PAC ..................................MI Andy Harris, CRMS ............................................OR Erik Janeczko....................................................MO David Kane ........................................................FL Fred Kreger, CMC ..............................................CA Cathy Lee ............................................................HI Linda McCoy, CRMS............................................AL Jim Nabors, II, CMC, CRMS ................................OH Nathan Pierce, CRMS..........................................UT Valerie Saunders, CRMS......................................FL Lisa Severseike ..................................................IA John G. Stevens, CRMS ......................................UT
Silver-level Contributors ($500+ annual contribution) Rocke Andrews, CMC, CRMS ..............................AZ Joe Archer ..........................................................PA Keith Bilodeau ....................................................WI Don Frommeyer, CRMS........................................IN Scott Griffin ........................................................CA Paul Marsh, CMC, CRMS ....................................TX Michelle Velez ....................................................CA
The NMP Daily Email Newsletter is your source for breaking news, insights and tips. Get free access to full articles including the hottest industry headlines, featured articles and other mission critical mortgage industry stories delivered to your inbox each day. The NMP Mortgage News Ticker is a daily news feed that gives you a snapshot of the hottest mortgage news stories from around the web. Stay informed of the most recent headlines and blogs, all compiled into one convenient daily email. Your State SpeciďŹ c Digital Edition Want to stay informed on a more local level? The contents of our state e-editions include all of the content from our national publication plus state-specific mortgage association information, including the President's Message, which highlights local issues, such as regulatory and legislative matters, along with the state calendar of events. Mortgage News Network (MNN) features regularly scheduled and special event video programming with industry experts sharing insights that impact your business today and in the future. MNN provides market forecasts, proven sales and marketing strategies, interviews with industry leaders and more.
MAY 2016 n Texas Mortgage Professional Magazine n
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Whose Cow is That? Five Tips for Branding in the Digital Age BY BUBBA MILLS
“
W
hose cow is that?”
“Well, let’s take a closer look. Oh, looks like it’s old Bubba Mills’ cow; it’s got a big ‘BM’ sizzled on its rear.” All summed up in a few words … branding is all about identity. For mortgage professionals, branding is vital because there are so many of you out there who you have to let people know whose cow is yours. Branding is also more complicated than a swift, blistering poke with a hot iron. The Internet–with Web sites, social media, mobile technology, etc.–has added layer upon layer of added to-dos to your marketing to-do list. The digital age has drastically changed how people learn about mortgages. Today, the vast majority of those seeking mortgage assistance start their search with the Web—browsing Web sites, blogs, reviews, articles, etc. so they’re less likely to believe you’re the best lender just because you say you are. Plus, consumers are now much more likely to ignore traditional, interruption-based marketing messages. How can you brand more effectively in this complex digital age to let people know which cow is yours? Well, fire up your poker because here are five tips you can start using today: 1. Accept and become a student of the digital world First and foremost, you have to accept we live in a digital world now and practically all
you. Any money you put into your site to make it more appealing, educational, interactive and persuasive will be money well spent. And beyond your site, adopt and use other online media such as blogs, e-mail, social media, enewsletters, etc. and give them all the same look and feel with your design and copy. 4. Appreciate and capitalize on the mobile revolution Yes, I said “Revolution.” That’s a strong word, but in this instance, it fits. Wherever you are right now, if there are people around, check out what they’re doing. Yep, looking at their phone. The phone is quickly replacing TVs, desktops, laptops, tablets, iPads, books– everything but the kitchen sink. What’s this mean? All your digital communications better work on mobile devices. consumers get most of their information online. Traditional media now supports digital, not vice-versa. The more you learn about digital marketing communications, the better you’ll be at promoting yourself and your services. 2. Forget the push and remember the pull The old world of branding was all about pushing information to prospects. Now it’s all about pulling. By that, I mean consumers want valuable information, not volumes of information. So think of pulling consumers to you with content that’s useful and practical— information they may not easily find online. Before you send
anything out or post to your Website or on social media, ask if a potential buyer or seller would find this information valuable. If not, trash it. 3. Know that your Web site is integral to your brand Now, more than ever, your Web site is the first sizzle of your brand online. When people learn your name where will they turn? The newspaper? The Yellow Pages (what are those anyway)? No, of course not. They’ll visit your site to learn more about
5. Adopt lightning-quick responses One reason digital communications has caught on is that it’s efficient. But it’s also fast. So your responses to inquiries have to be fast. Digital communication is also much more about customer experiences and interactions. Think about all the places where a potential client might interact with you: your e-mail, your website, your Facebook and then develop a strategy to engage them from those touch points.
Bubba Mills is CEO of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit CorcoranCoaching.com.
nmp news flash
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Time to Take Action
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The month of April was a history-making month for the Post Office. The price of a stamp in the United States decreased for the first time in nearly 100 years. Time to take action … direct mail response rates have been on the rise since late summer have returned to historically high response rates and close ratios. Finding a marketing campaign that can produce consistent results is more important than ever. In today’s fast-paced environment, there’s just no time to shop around for marketing products and services in hopes of finding one that works. Your time needs to be spent closing loans. What’s going to consistently bring you the highest volume of calls while keeping the return-on-investment (ROI) you need to be profitable? A campaign you can track? One that provides reports that will keep you ahead of industry trends? Lead management tools that will allow you to work five to 10 times more loans at once? Direct mail incorporates all of these. This is why it has risen back to the most frequently used marketing method for today’s top mortgage brokers. In order for mail to work effectively, it needs to be dropped consistently. Companies that only drop mail three to four times per year (or less) usually see varied results, while people who drop mail weekly or bi-weekly all year long seem to have much more consistent, scalable and profitable results. Plan your growth and marketing efforts accordingly and keep it consistent throughout the year. Starting and stopping will decrease the effectiveness of your campaigns. You need consistent results so you can effectively follow trends in the market. Just sending out mailers is not doing the trick anymore. You need to get a hold of your customers in multi-channels. Multi-channel marketing is the use of several marketing platforms to interact with potential customers in several ways within the same marketing campaign. For example: Direct Mail + Direct Mail Voice + PURL would be a multi-channel marketing campaign. Everyone gets a letter. Some get an additional follow-up phone call, and a “PURL” is an easyto-use, easy-to-set up guaranteed lead capture point. It offers a personal experience to your personal leads. The crucial part of an effective multichannel marketing campaign is getting in front of them in a multitude of ways. Each month, we like to talk with our clients and find out how their campaigns are going. Here’s what we heard from one of our mortgage pros, Hana Girgis president of Anchor Mortgage Group, (314) 739-3333. Marketing method: Direct mail campaign Results: A 1.6 percent response rate, with four loans closed and five applications.
Dakota (19.6 percent), Kentucky (15.9 percent), Utah (14.1 percent), Missouri (13.4 percent) and the District of Columbia (9.2 percent). The five largest metro markets with the highest yearover-year increase in defect frequency are Louisville (23.1 percent), Salt Lake City (17.6 percent), Houston (16.3 percent), St. Louis (14.9 percent) and Memphis (9.1 percent). “While February 2016 is now the new low point for the index, it’s too early to know if the increase in misrepresentation and fraud risk in March is the beginning of a long-term upward trend or a short-term adjustment,” said Mark Fleming, chief economist at First American. “One possibility for the reversal of direction is the month-over-month increase in risk among Federal Housing Administration (FHA), Veterans Administration, and United States Department of Agriculture loans. The defect risk for these loan transaction types increased 1.4 percent from February to March, as opposed to conventional loans that had no change month-overmonth. The share of FHA mortgage originations increased after a reduction in the premium last year, making them relatively more competitive for borrowers with low downpayments and low credit scores, which also typically have higher defect risk.” Zillow Points First-Time Homeowners to Indianapolis
Highlights of the campaign that worked well … “Very targeted campaign and clientele with the criteria you desire.” Highlights of the campaign that may appeal to others in the industry … “I have been working with TagQuest for eight years, and their commitment to the success of their customers still amazes me. Great customer with great follow up.” Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm offering the most up-to-date, cutting-edge marketing solutions for the everchanging mortgage industry. Utilizing more than 12 years of marketing expertise, along with an intimate knowledge of the mortgage industry and the very best technology available, TagQuest consistently produces new customers for its mortgage clients. TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 717-8980 or visit TagQuest.com.
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First-time homebuyers looking for a great deal should consider Indianapolis, according to new data from Zillow, which crowned that Hoosier State metro as the nation’s best market for neophyte homeowners. Zillow determined that Indianapolis home buyers can expect to spend 11 percent of their income on a monthly mortgage payment, which four percentage points below the national average. But those savings do not carry over for renters, who can expect to spend 26 percent of their income on monthly rent. Joining Indianapolis in the top 10 list of best markets for first-time home buyers are Pittsburgh,
Memphis, Cleveland, Chicago, Oklahoma City, St. Louis, Houston, Tampa and Birmingham, Ala. At the other end of the spectrum, markets including San Jose, Seattle and Austin were cited as being among the hardest places for first-time home buyers to get a house. “Buying your first home is a big decision that takes a lot of planning,” said Zillow Chief Economist Svenja Gudell. “Firsttime buyers across the U.S. are up against high prices and low inventory, but these are the places where the availability of affordable, entry-level homes and the presence of cash-buyers are less of an issue. First-time buyers in these markets won’t have to deal with as many bidding wars or run-away prices; they’ll be able to find a first home that fits their needs with less stress. With record low mortgage rates, it’s a good time to buy a home and certainly worth considering.” However, homebuyers—first-time and otherwise—were not in the market for property last week. The Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending April 22 found the Market Composite Index down 4.1 percent on a seasonally adjusted basis and down three percent on an unadjusted basis compared with the previous week. The seasonally adjusted Purchase Index decreased two percent from one week earlier, while the unadjusted index decreased one percent compared with the previous week, but was nonetheless 14 percent higher than the same week one year ago. And the Refinance Index decreased five percent from the previous week as the refinance share of mortgage activity decreased to 54.4 percent of total applications from 55.4 percent the previous week. Pinto: Lose the 30-Year Fixed-Rate Mortgage
One of the most prominent thought leaders in the housing industry is calling for the discontinuation of the 30-year fixed-rate mortgage (FRM). In a column published on Forbes.com, Edward Pinto, the codirector of the Internal Center on Housing Risk at the American Enterprise Institute, stated that this mortgage product “fails to build up
accounted for about 41 percent of all completed foreclosures nationally. “Delinquencies and foreclosure rates are now at pre-crash levels as the benefits of higher home prices, improving economic fundamentals and years of cautious underwriting are being felt across the country,” said Anand Nallathambi, president and CEO of CoreLogic. “Longer term, as loans made since 2009 account for a larger share of outstanding debt, we anticipate that the serious delinquency rate will have further substantive declines.”
The folks that run Assurance Financial make you feel like you matter. They do what they say they’re going to do, and they work hard to do it. People are really pulling for you to do well, including the underwriters. Everybody truly tries to help each other. These are great people to work with, which makes a huge difference in the long run.
Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
Working at Assurance Financial has been such a positive experience! I used to work for lenders where it was standard to be stressed and you’d have to quarterback your own loans. Here, I have my own processor. She handles everything so I can go out and sell.
Stacey McCrory Loan Officer Jackson, MS
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The U.S. foreclosure inventory in March fell by 23.2 percent from and completed foreclosures declined by 14.9 percent compared with one year earlier, according to new data from CoreLogic. As of March, the
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n Texas Mortgage Professional Magazine n MAY 2016
Foreclosure Levels Continue to Plummet
national foreclosure inventory included approximately 427,000, or 1.1 percent, of all homes with a mortgage, a 1.4 decline from one year earlier and the lowest level since October 2007. The number of mortgages in serious delinquency also fell, taking a 19.1 percent year-over-year tumble. The 1.2 million mortgages in serious delinquency is the lowest level since November 2007. The five states with the highest number of completed foreclosures for the 12 months ending in March—Florida (69,000), Michigan (48,000), Texas (28,000), Georgia (23,000) and California (23,000)—
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wealth for the most disadvantaged Americans,” adding that the 30-year aspect of the loan results in a debt burden carried by homeowners well into their 50s and 60s. Pinto also observed that the product seems inappropriate for many would-be homeowners flummoxed by today’s home prices. “It should come as no surprise that home prices are rising much faster than both inflation and incomes,” Pinto wrote. “More troubling, entry-level home prices are rising the fastest and moderate household income growth is lagging behind income growth generally. These moderate and low-income borrowers, many of whom are minority, face a dilemma: Buy now and take on more debt, or delay and see the price of your dream home rise to a level beyond your reach.” Furthermore, Pinto blamed the product for being at the core of the two great housing-related catastrophes of modern times. “The United States’ two biggest taxpayer bailouts, the savings and loan industry in the early 1990s and the GSEs in 2008, were the result of the government’s fixation with slowly amortizing terms like the 30-year loan,” he said. Pinto also warned against a proposal raised by well-respected economists including Gene Sperling and Mark Zandi that would reanimate Fannie Mae and Freddie Mac in a configuration built on the prominence of 30-year fixed rate mortgages. “The authors’ reform plan, like virtually all the others before it, fails to acknowledge the government’s role in past housing finance failures,” Pinto wrote. “Failures include the savings and loan debacle of the 1980s, Fannie and Freddie’s collapse into conservatorship, and the Federal Housing Administration’s 3.4 million foreclosures (almost all with 30-year fixed rate loan terms). These crashes did not come about in spite of government support for housing finance, but because of government backing.”
t one time or another, many of us have heard of an impending marriage and suspected it may not work out. Of course, love is often blind, and those closest to the matter are unable to see clearly enough to predict their future. The marriage of software technologies can be no different, and in our industry, we’re seeing a lot of compatibility problems right now. To deal with compliance costs and lagging volumes, a growing number of lenders are turning to lead management software for help. Besides being an investment in new business, lead management systems can provide consistency to a lender’s branding campaigns. The problem is that most lead management solutions don’t work well with most LOS systems. The reasons why are very similar to the reasons why many marriages don’t work. And the problems are so significant that these unions often end poorly. Unfortunately, I’ve seen a lot of these sort of “toxic” relationships up close. But I also see how they can work. From my perspective, I’ve identified the characteristics that a healthy marriage between lead management and LOS software should have.
A
They talk to each other It’s extremely common for software providers to market how friendly their products are with other software. Everything is always described as “easily integrated.” However, it’s one thing to be able to export leads into your LOS from your lead management platform, but quite another to have a truly closed loop integration of all data available on a 24/7 basis. This issue goes deeper than software. Marketing and sales staffs within mortgage organizations traditionally haven’t communicated with each other very well. They need each other, but their roles are naturally different. Technology integration challenges exaggerate this issue. For a lender’s marketing and sales operations to work in harmony, both the people and the systems must have access to the same data, regardless of which system someone is using. For example, LOS users who are working with a borrower to get them pre-approved for a mortgage, can benefit greatly by having access to the calls,
emails, rate information, and marketing campaigns that drove the borrower into the application phase. And lead management system users want to know if the opportunity they drove converts into a funded loan. This two way communication helps both sides work smarter and optimize their efforts for better results. They prioritize If one looks closely at how a happily married couple “works,” it usually boils down to prioritization. Individually, we all have our own needs and goals. When two people get married, neither one can be constantly putting their needs ahead of the other. They need to prioritize. For example, no lender can afford to miss an opportunity to reach out to highly motivated buyers, or get an application started when a borrower is ready to move. A lender’s LOS must be sensitive to these needs. Likewise, a lender’s lead management software must know which loans are important to process immediately due to TRID timelines or other factors. Lastly, both sides should understand that compliance with CFPB mandates or any other critical rule or guideline supersedes all other concerns. Prioritization is particularly critical for lenders that lack a defined contact strategy for reaching out to borrowers. Until the recent past, lenders have followed up with borrowers by using Outlook reminders and Post-It notes. In fact, many still do. The only surefire method is to use technology that automatically reminds users when to reach out to prospects at the right time, so they never miss an opportunity. Another example … I talk to many loan officers who don’t have a concrete strategy for staying in contact with borrowers after taking their prequalification information. They tell me that they generally just wait for these pre-qualified borrowers to call them back when they are ready to move forward. When digging in deeper, these loan officers tell me that they would love having a list that shows which pre-qualified borrowers are most important to call. When the marriage between a lender’s LOS and lead management is strong, the loan officer can prioritize the list of borrowers according to things like the current interest level of the borrower, the referral source the lead came from, or the time of the day the lead originally came into the system.
Le Syste A
two tec
One popular idea is to call pre-qualified borrowers on Friday afternoon, before they go house hunting, and again on Monday morning, to see how their house hunt went. Loan officers can also use a borrower’s pre-qualification status and other status updates—delivered from the LOS—to create specific emails or text messages to borrowers to keep them engaged throughout their home search. But these levels of prioritization only occur if a lender’s LOS and lead management software are closely aligned.
The marriage creates value for others It’s probably obvious that happily married couples communicate and have their priorities balanced. What may not be so obvious is the benefit to others of a happy marriage. A successful LOS/lead management relationship creates a higher level of value than either system can create by itself. For example, if a lender’s lead management and LOS software are completely in sync, they create real-time transparency into reliable data that benefits more than just the day-to-day
ad Management ems and the LOS: A Marriage Made in Heaven
Creating a happy union between chnologies that don’t typically get along BY SCOTT PAYNE
users of the systems. The lender’s management team now has access to reliable data at any time and can make key business decisions on the fly. Even real estate agents can be kept updated with the progress of their customer’s loan status, information that makes them look smarter to their clients and other agents. This also helps the lender earn the agent’s trust and future referral business. Of course, whether one is talking about human beings or software, it takes considerable forethought to know whether both sides in a relationship have what it
takes to make things work. We all have high hopes when a new relationship is getting started, but lenders need to ask honest questions about what their providers can actually do, and whether communication, prioritization, and collaboration are truly possible. While so many “marriages” between lead management and LOS software are struggling, I believe it is possible to reach marital harmony. A common thread to success to a successful software partnership is technology, and right now, there are enormous innovations happening between
marketing and sales software that are likely to increase the odds of marital bliss. One more thing … most of us seem to accept the statement that half of all marriages in the U.S. end in divorce. But according to the latest statistics, the divorce rate has actually decreased over the
past several decades. There could be many possible reasons for this, but one of them might be that our society is constantly learning and paying more attention to what makes relationships work. When it comes to making software relationships work, maybe lenders can do this too.
Scott Payne joined Velocify in 2014 as an enterprise account manager, collaborating with Velocify clients on the implementation and management of lead management strategies and analytics to help drive a maximum return on investment. Prior to Velocify, Scott spent 10 years at Nationstar Mortgage, including time as a loan officer, sales manager, and vice president of Originations Marketing. Scott can be reached by e-mail at SPayne@Velocify.com.
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First Guaranty Mortgage Acquires goodmortgage.com
MAY 2016 n Texas Mortgage Professional Magazine n
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First Guaranty Mortgage Corporation (FGMC) has acquired the assets of goodmortgage.com, an Internet-based mortgage lender headquartered in Charlotte, N.C. Founded in 1999, goodmortgage.com provides residential mortgage lending in 18 states and the District of Columbia. goodmortgage.com provides consumer-direct personalized mortgage services, while simultaneously delivering to the consumer a fast, efficient, and helpful mortgage experience. goodmortgage.com is designed to be faster, less cumbersome and considerably less stressful than typical, offline loan services. By utilizing the Internet and advanced technology processes, goodmortgage.com enables consumers to obtain purchase and refinance loans from the convenience of their own homes. “goodmortgage.com is one of the leading consumer-direct lenders in the country and an excellent fit with our strategic initiatives,” said Andrew Peters, chief executive officer of First Guaranty Mortgage. “This acquisition is yet another positive step in FGMC’s continued growth and we are confident our clients and partners will benefit substantially as a result.” goodmortgage.com is one of the early pioneers in the build out and development of the “online” mortgage-lending platform. The Charlotte-based headquarters provides a 45,000-square foot campus that supports a healthy
“Live-Work-Play” environment where motivation meets enthusiasm. This team-building atmosphere breeds productivity, efficiency and overall employment satisfaction. goodmortgage.com will operate as a separate division of FGMC, retaining the name goodmortgage.com. “First Guaranty’s acquisition of goodmortgage.com is in itself an extraordinarily ‘goodmortgage’ business decision,” said Ken Jones, executive vice president of Consumer and Warehouse Lending. “Keith Luedeman and his talented team have successfully built a platform that meets the demands of today’s ever-changing consumer. Our goal is to continue the growth of their retail lending success while tactically expanding the goodmortgage.com cyberfootprint.” “First Guaranty and goodmortgage.com make perfect sense together,” said Luedeman, CEO and founder of goodmortgage.com. “Both brands share the same emphasis on steady growth, elite service, strong strategic decision-making and efficient, tech-enabled operations. Together, we expect to see only continued growth and success.”
Gold Star Mortgage Partners With Secure Insight to Manage Closing Agent Risk
Gold Star Mortgage Financial
Group has announced that it has enhanced its risk management policies and procedures governing its retail mortgage lending business by requiring independent screening and risk monitoring for all settlement agents having access to a borrower’s loan documents and mortgage proceeds, a process that will be managed by Secure Settlements Inc., d/b/a Secure Insight. Gold Star Mortgage chose the ClosingGuard tool to evaluate the backgrounds, licensing, insurance, and trust accounts of agents as a method to identify potential threats before a closing takes place. ClosingGuard evaluates, rates, monitors and reports settlement gent risk in real-time in the only nationwide database of mortgage closing professionals. The Secure Insight proprietary evaluation process combines automated data analysis with live reviews by trained analysts for the most accurate and informative risk analytics in the industry. “We are pleased and honored to have been chosen by Gold Star Mortgage for these critical risk management services,” said Secure Insight Chief Operating Officer Wayne Doctor. “In our extensive dealings with their leadership team we saw firsthand their serious commitment to quality control, consumer protection and overall loan quality assurance. We are proud to be their partner in this important endeavor.”
Parkside Lending Begins Issuing Ginnie Mae Securities
Parkside Lending LLC has announced that it recently expanded its securitization program and is now issuing Ginnie Mae securities. As an approved Ginnie Mae issuer, Parkside Lending can offer more products to borrowers who are using government insured loan programs and can service government loans that are issued into Ginnie Mae securities. “We are especially proud to partner with Ginnie Mae in broadening the availability of affordable housing to creditworthy borrowers,” said Matthew Ostrander, chairman and chief executive officer of Parkside Lending. “This is a good example of how Parkside is constantly endeavoring to extend the power of caring to a larger group of people to help them achieve their dream of homeownership.” In order to secure Ginnie Mae’s approval, Parkside Lending participated in an extensive screening process. As a result, the company was deemed to have broad experience in originations, underwriting, and loan servicing as well as strong management and financial capacity. “Customer care is at the core of our mission. By meeting Ginnie Mae’s high standards and becoming an issuer, we’ll be able to offer more products at more competitive rates,” Ostrander said.
Easy Mortgage Apps Forms Partnership With Optimal Blue
Primary Residential Mortgage Inc. (PRMI) has announced that it
professional excellence and training in residential mortgage loan underwriting. Through the curriculum of this program, students learn tangible skills to increase accuracy in underwriting and risk management. “PRMI has taken a strong leadership stand by enrolling its underwriters in the CRU designation program,” said Jeff Schummer, VP of Education Development at MBA. “This designation is the industry ‘seal of quality’ for underwriting loans, and we’re thrilled to work with continued on page 46
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n Texas Mortgage Professional Magazine n MAY 2016
PRMI Teams With MBA on Certified Residential Underwriter Designation Program
for new opportunities and methods to improve the home loan process and working with the MBA was an easy decision on our part,” said Dave Zitting, chief executive officer and president of PRMI. “We want to invest in our team members and their future and this program will provide them with the knowledge, tools and training courses to succeed.” The MBA has worked with more than 500 underwriters nationwide since it began the CRU program in 2003. The progressive CRU curriculum establishes the standard for
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Optimal Blue has announced a technology partnership with Easy Mortgage Apps to provide loan officers, real estate agents and consumers with the flexibility to utilize the Optimal Blue platform within a lender’s native application, powered by Easy Mortgage Apps. The result is the ability to easily generate eligibility and rate quotes directly on preferred devices, including smartphones. This integration represents a valuable opportunity for lenders to communicate vital information with all relevant parties, including product and rate information, as well as track application statuses and share time-sensitive data between loan officers and borrowers via mobile channels. “Easy Mortgage Apps looks forward to building this partnership with industry leader, Optimal Blue, to offer all parties involved in the mortgage process a mobile-centric and more efficient way to instantly provide loan options for consumers,” said Michael Kelleher, president and founder of Easy Mortgage Apps. “The result is a more engaged borrower. Companies who are looking to attract the millennial mortgage applicant need to review and evaluate mobile strategies designed to enhance the consumer experience, versus lead generation. We will continue to focus on developing strategic relationships with companies like Optimal Blue, which share the vision of a technically evolved lending industry.” “We’re excited about this strategic alliance,” said Mark Coupland, vice president of Business Development for Optimal Blue. “Easy Mortgage Apps shares our passion for creating new technology and mobile experiences that will continue to reduce friction in the lending process! The added transparency and clarity resulting from this strong integration will only further enhance the lending experience for lenders and consumers alike.”
would strengthen its underwriting process by enrolling their employees into the Certified Residential Underwriter Designation program (CRU) operated by the Mortgage Bankers Association (MBA). This program will advance the underwriter’s processes and efficiencies to create a smoother, quicker and more efficient loan process for all involved, and will help reduce error rates, increase productivity, and teaches how to make better, more informed loan file decisions. “We are continuously looking
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May 2016 l Written and compiled by Rick Grant
NMP Next: Leading the Industry to What’s Next f we could only put out this special section once each year, it would probably live in the issue where we focus on leadership and what it means to be a leader in an industry that seems to be dealing with change on a daily basis. Fortunately, we bring you NMP Next in every issue (making it a great value for those that support this sponsored section) and we’re always focused on the firms that are taking a leadership role in the mortgage business. And make no mistake about it, leading in this business is different than just about any other. Leaders here often enjoy the unwanted attention of consumer groups, regulators and politicians, many of whom assume that if we’re doing well, we must be doing harm to someone else. Over the years—especially the years following the financial crash and the subsequent foreclosure crisis—I’ve talked to many executives who, in any other business, would have been celebrated for their accomplishments, but who chose to remain quiet about what they were doing. It was very frustrating because what the leaders in our industry have always done is enable borrowers to afford to purchase homes, and consumers to profit from real estate investments. In the past, those stories were difficult to tell. Fortunately, that’s starting to change. Executives here have learned to harness the same social media tools that detractors have used for years and are now attracting audiences of followers that understand what they do and appreciate it. More executives are standing up and talking about the innovations they are bringing to market and the new benefits they’re bringing to both individual consumers and entire communities. We’ll be telling you many of their stories here. But we will also provide what we hope will be creative fuel to aid you in your own processes of innovation. These stories will come from different perspectives and often from outside of our industry. If you like what you read here and feel like your company deserves to be covered in detail within this special section, reach out to Scott Koondel (scottk@nmpmediacorp.com) or Beverly Bolnick (beverlyb@nmpmediacorp.com) and find out more about sponsoring NMP Next. I cannot wait to learn more about how your firm is leading the industry.
I
nmpNEXT is the future of corporate storytelling. It melds the sponsored content that publications depend upon with the editorial focus that lends credibility to the sponsor's most important stories. In NEXT, Rick Grant, NMP’s Special Feature Editor, will look at what's just around the curve by telling stories about the firms that are leading the way. A variety of sponsorship levels allow advertisers to balance budget with reach and puts marketing managers in control of one of the most powerful channels available for advancing their brands. nmpNEXT is a monthly feature in National Mortgage Professional Magazine. Don't miss this opportunity to brand your company, products and leaders as progressive & forward thinkers. For more information on nmpNEXT packages, please contact Scott Koondel at 516.409.5555, ext. 324 or e-mail ScottK@NMPMediaCorp.com
nmp The future of corporate storytelling Angel Oak Mortgage Solutions LLC
First Guaranty Mortgage Corporation
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United Wholesale Mortgage
One Commerce Plaza 99 Washington Avenue, Suite 309, Albany, NY 12210 800-345-3822 x 0 www.ernstpublishing.com
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Celebrating over 1 billion transactions, Ernst Cost2Close solutions process guaranteed fees with unparalleled speed and accuracy, alerting the lender and the settlement agent of fee changes in real time.
UWM is a forward-thinking, fast-moving and innovatively inspired lender that is always working to champion mortgage brokers and change the game with the latest and greatest technology and services.
The Rise of Artificial Intelligence and its Impact on the Mortgage Marketplace Samuel Jerrold Kaplan, Ph.D., author of Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence
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Bringing in a Stanford educator who happens to be an expert in computer science to teach executives in the mortgage industry about automation seems … well, unnecessary. If anyone knows about the power of automated systems, it’s the home finance industry. These are the people who invented automated underwriting and then took it further with sub-prime automated underwriting. We can pull credit, order an AVM, get a tax transcript and send out the required disclosures seconds after getting the signed loan application—which we can get signed electronically. What do we need to know about computers? Well, a lot as it turns out. Samuel Jerrold Kaplan, Ph.D., keynote speaker for the Mortgage Bankers Association’s Technology in Mortgage Banking Conference this past March, is a best-selling author, entrepreneur, technical innovator and futurist. He made his name working on tablet computers and founded a company that developed some of the technology used in the first smartphone and tablet PC. Ernst & Young made him their Emerging Entrepreneur of the Year in 1998. Today, he specializes in artificial intelligence (AI). Last year, he published a book entitled Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, which is probably what brought him to the attention of the MBA’s conference planners. Kaplan started his address by defining AI, according to Google, as “The theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.” That message, he told the audience, falls short. AI isn’t about developing computers that can do tasks that normally require human intelligence, or even humans. In fact, AI is about developing computers that do what humans would never want to do. A better definition of AI in action is Google itself. Google’s search protocols are not software tools that perform tasks that would ever require a human. Google search is about computers doing what Kaplan says computers always do, outperform humans. He must have known the chilling effect that would have on his audience because he paused to let it sink in. Then, he splashed a familiar image up on the giant screens at the front of the room: An army of Terminator robots from the popular motion picture franchise. If it seems like AI is about building an army of intelligent computers that are capable of taking over the world, he said, that’s nonsense. “This always makes me laugh,” Dr. Kaplan said. “If you were going to invent AI for the battlefield, wouldn’t you put eyes all around their heads so no one could sneak up on them?” The audience chuckled politely, but the idea of battlefield tech might have struck too close to home for many, given the new compliance systems the industry has been forced to bring online just to stay in business.
Attendees listen in at the recent MBA Technology in Mortgage Banking Conference
Over the course of the next hour or so, Dr. Kaplan took attendees on an interesting trek through the history of computer science. Later in the morning, he appeared on the exhibit hall floor to answer questions. He started by introducing us to John McCarthy (1927-2011), one of the founders of the AI discipline. In fact, it was McCarthy who coined the term “Artificial Intelligence.” He was the winner of the Turing Award, the U.S. National Medal of Science and the Kyoto Prize. McCarthy thought about AI in terms of mathematical logic. That approach led to many of the advances we have made in computer science since then, including Big Blue, an IMB computer that bested the world’s best human chess player. This is the approach that allows us to put rules and regulations into computational form that a computer can understand. It helps the IRS navigate our incredibly complex tax law, puts a cop in the backseat of selfdriving cars, and, he says, should allow the mortgage industry to shift the regulatory burden back onto regulators to make sure that the rules they create are consistent (forgive him, he’s not from our industry). Mathematical logic was the first of three key concepts he shared with the audience. The other two were expert systems and machine learning. Together, these three legs form the foundation upon which modern AI is built. IMB Watson is an example of an expert system. Kaplan says Watson does for computational thinking what relational databases did for data. That system beat the best human Jeopardy player and has played a part in leading the newest generation away from human advisors. Millennials, he said, are more comfortable getting their information from online systems. This, he added, could be very good for Quicken’s Rocket Mortgage. The third leg for modern AI is machine learning, which allows our computational systems to analyze and learn from real time data streams. The applications to our industry are massive, he said, and include better consumer credit information, more accurate property valuation and easier determination of the risk of default or prepayment. Kaplan did a great job of keeping his audience engaged and many followed him into the exhibit all afterward for the Q&A. The fact that he’s a fellow at the Stanford Center for Legal Informatics likely contributed to his positive view of the power of computers to solve many of man’s problems, even if they do so in ways don’t fit every definition of Artificial Intelligence. Most mortgage executives will probably be less enthusiastic. New technology implementations are difficult, expensive and often don’t deliver the promised results. Anyone in the audience
The Future of Corporate Storytelling
nmp
Disrupting the Mortgage Lender’s Database of Record
Dr. Jerry Kaplan being interviewed by MBA VP of Industry Technology Rick Hill during the Q&A Session of the Technology in Mortgage Banking Conference
In the end, the biggest obstacle to more intelligent systems, at least for our industry, may be the people who use them. As Finely put it, “How we perceive AI at work may not be so blatantly destructive — but still illustrates our unease. In 1934, Upton Sinclair wrote that people can’t understand new ideas if their livelihood depends on the old ones.”
cloudvirga CEO Bill Dallas sketches out his vision for the future of mortgage technology Fintech firms, many of which were simply tech firms before they discovered the fields of gold hiding in financial services, are expert at watching consumers and seeing what they are likely to want next. Will it be plowing virtual farms, pitching angry birds or crushing candies in a Tetris-like waterfall of smartphone-based color? Will it be reading a historic novel on their handheld or finding a historic mansion on Zillow’s app? Not only are most lenders not equipped to answer these questions, they don’t find them remotely relevant. For mortgage loan originators, the customer base they serve includes real estate agents, financial planners and accountants, and investors. No one in this group is likely to spend a lot of time playing games on their phones. If they need financing for a project or want to buy an originator’s closed loans, they’ll use the phone, but probably to call them— something you can’t get a Millennial to do if you offer them money, a coffee shop gift card or hipster beard conditioner. So, while some large LOS providers are pulling their software out from behind the lenders’ firewalls to store it on their own SaaS servers, a few are pushing their software out to consumers directly. Perhaps surprisingly, some of these players are actually from inside our industry. Kyle: Save functionality. I can run rules without people waiting and let thousands of things happen in the background, rerun rules check tolerances, everything, and then bubble up if there are any exceptions. All is well and when you save, we check it all. Then you can revert back.
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“Artificial intelligence is the next obvious controversy. It’s around us every day, helping singles find a mate, or routing traffic or diagnosing disease. But will it one day take over like the Terminator? Make us obsolete and slothful like WALL-E? Enslave us like The Matrix? In a world of truly challenging problems like famine, terror and disease, it’s hard to argue that more intelligence will leave us worse off.”
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who has been in the industry for more than a few years has experienced this first hand. Executives working here witnessed the sub-prime crisis, when sub-prime automated underwriting systems, set to match the requirements of Wall Street investors starving for product, started using the borrower’s vital signs as the most stringent requirement for loan approval (well, it wasn’t quite that bad, but you remember, right?). They also watched computerized equity trading systems piggyback on each other as stocks weakened, speeding up the devaluation process and throwing the market into panic. It is conceivable that an expert system programmed to learn from the big data streams available to lenders today would return results that can only be interpreted as fair lending violations. As Kaplan pointed out, these systems can’t steer clear of gender, for instance. They will return whatever answer they feel is right, even if we wish it wasn’t. It may appear that the computer is denying a request for credit on the basis of race or gender or some other illegal borrower attribute, when in fact it’s because the system has identified a higher probability of default among people of the borrower’s height or television preferences or birth month. And how would our regulators deal with that? In the end, computers are getting smarter, though Kaplan promises that without goals of their own they will never become the army of robotic doom that we read about in science fiction. Crunch Network contributor Mike Finley agreed last month when he wrote his post, “Be kind to artificial intelligence” on Techcrunch.com. He wrote:
It’s not always easy to see trends coming, to know what’s most likely to impact your business next. But if you’re a mortgage lender who has been using your current loan origination system (LOS) for more than three years, it becomes much easier to guess. For the vast majority of originators, about every five years or so, they are working on implementing a new database of record. Since I’ve been reporting on mortgage technology (since about 1997), I’ve read a number of pieces that attempted to explain why this happens so frequently here, as opposed to the servicing side where a huge swath of the market is still using Black Knight’s MSP and has been since Alltel released it as a DOS-based program for deployment on a bunch of green screens. On the origination side, LOSs are less like platforms and more like sidearms. Every gunslinger has his favorite piece and when he comes to town, he brings his hardware with him. Every time a company changes the C-level executive in charge of the origination division, you can pretty much count on a new LOS making an appearance. But lately, it’s starting to look like the next person to weigh in on the technology decision won’t even work inside the mortgage company, rather it will be the consumer.
When you live in an LOS flat file system and do a loan, you go through the process to build a loan and you’re constantly going back in and changing your object, the record. You have to know what you’re changing. Now with our platform, I can do all kinds of what if scenarios without actually tainting the record. If I like it, then I can run rules around it and ask the consumer if we want to make this the new object.
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Innovation from the inside I mentioned Jorge Sauri and his new company briefly last month. LendSmart is one of the companies that is focused on providing the borrower with a sense of control. Sauri has built borrower-facing process automation with built in document management designed to provide all of the information today’s borrowers are seeking while it allows lenders to get quality loan files started quickly. The goal is to put the lender’s LOS—or at least the front end of it—where the borrower is most likely to be. It’s smart if he can get lenders to buy into the idea. Bill Dallas (left) got around that problem by developing his new technology for his own loan origination company. The product is called intelligent Mortgage Platform (iMP) and was developed by his new firm cloudvirga. Dallas calls iMP the industry’s first comprehensive digital mortgage platform effectively alleviating the pain points, cost and time associated with the mortgage process. Dallas, who you may know from his long tenure in the origination industry, most recently at Ownit, teamed up with Kyle Kamrooz and Mark Attaway to develop the new platform. He told me that he originally developed it for Skyline, a firm he was trying to build into what he calls “the next generation mortgage lender.” One problem he faced was that the origination technology Skyline was using when he bought it was last generation tech. With cloudvirga, he set out to build something better and has, as of last month anyway, originated over $5 billion worth of mortgages on iMP. “My costs in 2000 were $2,000 per loan; in 2006 they were $4,000 per loan and today, they are probably $8,000 per loan,” Dallas told me. “The solution was for us to try to lower our costs, integrate services, get to the cloud, go digital, use big data, be mobile and factor it for the purchase money market.” No small task. When their current LOS wasn’t up to the task, the Skyline team started building their own. According to Dallas, they built it three times. The first time in C++, the second time on Microsoft’s .NET framework and finally on the latest web-based tech, Google’s Angular JS. Angular was designed to make it easy to build Model-ViewController structured in web-friendly Javascript. Two way data exchange between the database and the consumer-facing view makes it easy to offer what-if scenarios that make mortgage borrowers feel like they have their hands on the wheel. With cloudvirga, Dallas says Skyline is tackling the mortgage process with a platform that delivers an improved experience for consumers. Lenders are able to increase volume and reduce cost by streamlining and automating 50-60 percent of the front- and back-end processes. And by the way, the database isn’t flat. Today’s LOSs are the gateways to databases made up of loan files, each of which can be modified by one person at any given time, generally dependent upon that person’s role and certain milestones built into the system. The result is a pipeline report where workers made decisions about what they will work on next, perhaps based on the easiest task or the person they are most willing to help at the moment. Dallas told me this is crazy and it’s the primary reason that compliance is a nightmare and loans take 49 days to close. In a flat file world, anyone who changes the loan record must know what they are
doing and that it is compliant. A better approach is to load the rules into the system, split the work into parallel workflows and let the software respond to events, like the completion of a task, intelligently routing the work to the next station. By doing this, Dallas claims he can do 40 percent of the work of originating a loan in 45 minutes. As the work is being completed, the rules are running in the background, checking and rechecking tolerances and loan program guidelines and if exceptions occur they bubble up. As the loan changes, a record is stored, allowing the lender or borrower to go back to it if necessary. When everyone approves changes, the new record is saved into the database of record. Dallas says this approach speeds up everything. Which saves money. His team estimates that every day they can shave off the loan origination cycle will save the lender $55. “If you can save 20 days per loan, that’s significant,” Dallas said. Going deeper into the LOS I hope to go deeper into cloudvirga in a future story. Because the LOS is so important to the industry, any real innovation that our industry achieves in the future will be either helped or hindered by this technology platform. What cloudvirga if offering is interesting because it opens the door to rethink the LOS into something more akin to what today’s consumers seem to be embracing online. For now, I’ll leave you with Kyle Kamrooz thoughts: “Consumers want the mortgage process to be painless, simple, cheaper, transparent at all times; lenders want to reduce overall cost to produce and increase loans per full time employee or FTE. It’s a digital workflow engine that has been thought through for the 21st Century. Systems should be driving workflow, not people driving workflow. This is a movement to totally change mortgage lending and we are passionate about solving this problem.” That’s way disrupters talk. At NMP Next, we like it.
A Critical Tool for Trend Spotters One of the risks reporters face when they dig too deep into the stories of so-called innovators is that not everyone who believes they are innovating actually are doing so. It’s easy to get caught up in our own hype sometimes and it’s really easy for a publication to publish stories about dreams when they think they’re actually bringing you stories about accomplishment. Naturally, we’re very careful about that and even though most of the companies you read about here are sponsoring the section, they still have to let us uncover actual stories about their leadership exploits. Thus far, it’s working well, but this is one of the tools we use to guard against hype. It might be something you can use. First, a tip of the hat to Open Culture. This website is an example of what’s best about an open and free internet. Creative individuals flock to this website for inspiration, creative ideas and a glimpse into popular trends that might impact the future. Recently, the website offered up an excellent piece based on a book by Carl Sagan entitled “The Fine Art of Baloney Detection.” In his book, Sagan provides a framework that he used to separate fact from fiction (two worlds that he was equally comfortable in). I encourage you to find out more on Open Culture or in his book, but here are a few of his rules that we live by at NMP Next: 1. Facts should be independently confirmed when possible. 2. Arguments from “authorities” carry little weight. 3. Avoided attachment to a hypothesis just because it’s yours. 4. Remember Occam’s Razor: when the data explain a number of hypotheses, choose the simpler.
The Future of Corporate Storytelling
This is important in our industry because trends are based on data and data hits our industry like a California mudslide. Making sense of the information we have is challenging, which is why we’ll see one expert telling us that prices are rising while another cries out the warning of the next bubble. Knowing exactly what trendline is suggested by the data we have is challenging. Taking action on that information can be scary. But it’s what leaders do every day. I miss Carl Sagan.
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Transforming your organization is challenging, but not impossible. Tighten your resolve, apply the innovation, and see new success. Thomas Ward Lynch is CEO and co-founder of Empire Media Partners. He is a skilled I/T Influencer Relations professional with more than 25 years of experience in the tech ecosystem. He investigates and summarizes trends, key industry messaging and the collective focus of the I/T industry on a global scale. He may be reached by e-mail at TLynch@EmpireMediaPartners.com.
For True Technology Innovation, Steal Successful Ideas From Next in NMP Next Another Industry By Thomas Ward Lynch
Rick Grant is NMP special features editor for nmpNext and National Mortgage Professional Magazine. He may be reached by e-mail at RickG@NMPMediacorp.com.
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Next month will be a busy one for many in our industry. The spring buying season will give way to the summer buying season and, if the pundits are to be believed, we’ll see an even stronger purchase market. Mortgage Executives will busy for much of the summer, as we have a number of interesting events coming up over the next couple of months. The Mortgage Bankers Association (MBA) just wrapped its Secondary Market Conference in New York City. The National Notary Association will hold its Annual Conference. October Research will put on NS3 down in Charlotte. The MBA of New York will hold its Strategic Lending Conference, and out in Oregon, the Great Northwest Mortgage Expo will take place on the 21st. So much for summer vacation. For our part, we’ll be working on bringing you some great stories in June. Now that we have a couple of months under our belts, we’re ready to start going deeper on the leading companies that are supporting this special section. Among the first to appear will be Ernst Publishing, Class Appraisal and Freedom Mortgage. I’m looking forward to taking readers deeper into the inner workings of Ernst Publishing. What started as a California firm that sold giant phone book sized lists of closing cost information for jurisdictions all across the country, 25 years later has become the leading provider of closing cost and real estate fee information in the country. It’s technology is core to the systems in use by all 10 of the nation’s top banks, all 5 of the top title underwriters and 9 out of 10 originators nationwide and has been used on over 1 billion transactions! So, while most may already know about Ernst, only some know how the firm is making it easier for lenders and settlement agents to be TRID compliant. In the meantime, find them on Twitter at @ErsntInfo. If you know much about social media, you probably know Class Appraisal as one of the nation’s fastest growing and respected Appraisal Management Companies. The company has an awesome Twitter account at @ClassAppraisal. I was visiting with Marketing Director Brian Dietderich the other day and while I’m not certain yet how much I’ll be able to tell you about what they’re doing, let me just say that this firm is taking transparency to a level seldom seen in our industry, despite the lip service just about everyone is always willing to pay to the concept. I’ll bring you the story soon. And I’m particularly looking forward to Freedom’s story. Having the lenders and servicers that are leading our industry stand up and accept the recognition they deserve for the hard work they do has been too long in coming. So, watch for that. Until next time, keep innovating and let us know if you want to share your stories here in the future.
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Industry cross-benchmarking is nothing new, but it’s time that the mortgage banking industry revisit the practice. Looking past the artificial boundaries of the banking industry can yield surprisingly positive results. The requirements: An open mind and strong leadership. As early as 2001, the healthcare industry was studying how to bring greater efficiency to the operating room. Their crossbenchmarking model was the airline industry. And how did the airline industry begin to gain efficiency in the mid-90s? They too looked to another industry to slash their downtime and boarding to half the original time. The find a better model, the airline industry studied racing team pit crews on race day. First, airlines identified the most expensive part of their business process, which was the downtime at the gate. They needed ideas on how to more quickly clean the plane and board the next set of passengers. Pit stops are lightning fast. Airlines began to organize their cleaning crews and flight attendants to be in complete sync with the deplaning and the onboarding of passengers, just like pit crews are with their racecar drivers. The next time you’re on a flight, notice what is happening from the moment the seat belt light goes off. You are bid farewell while the attendants are cleaning up behind you. The next flight’s provisions are being loaded before you even get off the plane. And nearly all airlines now board in groups (another incentive to be at the gate ahead of time). Imagine that kind of synchronicity happening in your workplace. By engaging in cross-benchmarking (researching an award-winning racing team), airlines now keep a tighter schedule, which means more flight hours logged, higher profits, competitive rates and more satisfied customers. The mortgage banking industry certainly could use cross-benchmarking engagements to improve its processes, customer interaction and agility. The internal resistance will no doubt come from the strict regulation which now guides every process and that cannot be changed. Challenge that notion with the fact that every industry is now heavily regulated and there is always room for improvement in business processes that can lead to higher customer satisfaction and profitability, and customer loyalty (all factors that have reached record lows in the mortgage banking industry). The first step is to do exactly what the airlines did: Identify the most expensive part of your business process and how it is costing the organization. The requirement is that it must be a core business problem, not a lofty mission statement. Narrow that down to no more than five bullet points. If you can write the core business problem on the back of a cocktail napkin, you know you’ve got it. Second, start looking beyond the mortgage banking industry. Look at Energy & Utilities; Retail; Transportation; and Manufacturing. There are some game-changing innovations happening in these industries right now. It’s very likely the solution involves a technology implementation, but it will only be successful if the technology is tied directly to solving the core business issue.
co the m m er c
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Playing Matchmaker With Small-Balance Borrowers
Close more deals by pairing your commercial client
with the right program
By Michael Boggiano Matching your commercial borrower to a program that best suits his or her needs has a direct effect on whether the deal actually closes. Brokers who take the time to educate themselves on the loan programs available will be best prepared to make a sensible match between borrower and program. Personalize the borrower’s scenario First, understand your borrowers’ needs. Do they intend to use the mortgage for a purchase, cash-out or refinance? How long do they intend to keep the property? Knowing their rate and loan-to-value (LTV) expectations are also important considerations, depending on their specific situations. For example, in the case of an owner-occupied purchase where the borrower is planning to stay in the property for a long period of time, a fixedrate loan with a long-term or an interest-only program will give the buyer a smaller principal and interest (P&I) payment. Conversely, an adjustablerate program may be more suitable for property investors who intend to own the property for a limited time. Keep in mind that these needs can change over time. A hard money loan could have made sense for a borrower when they were under a stiff time constraint. However, they will likely want a lower rate and more attractive terms when it comes time to refinance. They may still be unable to work with a traditional lender, but you can help by identifying nonbank lender options with competitive rates.
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Educate on rate Take the focus off rate and look instead at the big-picture scenario. Consumers are typically focused on the “lowest rate” because the assumption is that the lower the rate, the lower the payment. However, this is not always the case. Keep in mind that in order to truly compare rates, the “allin” costs of the loan must be considered. “All-in” costs include the costs of factors such as annual audited financial statements, tax returns, structural reports, inflated closing costs and lost opportunity costs of re-qualifying. Re-qualifications are costly to the borrower in many ways: A new appraisal, audited financial statements, and tax returns are all needed again. Finally, underwriting can be more stringent with lower-rate programs, terms may not be as favorable and debt-to-income (DTI) may not be permitted to qualify the borrower and property. Generally speaking, if a borrower amortizes a loan over a longer period of time, such as a 30-year term, the P&I payment will be lower than if he or she had selected a program with a slightly lower rate amortized for 15 years. The goal is to educate your borrowers so they understand why a particular program is a match for them. When you’re perceived as a knowledgeable professional, borrowers will feel more comfortable doing business with you. Naturally, you will close more deals, provide better customer service and reap the benefits of repeat business and referrals. Michael Boggiano is national sales manager for Silver Hill Funding, a smallbalance commercial mortgage lender offering nationwide financing from $250,000 to $1 million. He may be reached by phone at (888) 988-8843 or e-mail MikeB@SilverHillFunding.com.
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heard on the street
PRMI on extending and enhancing its use at their company and within the industry in general.” In addition, the CRU Designation is recognized by the Department of Veterans Affairs and will allow an underwriter to replace the requirement of the one year supervision with the successful completion of the CRU designation. SoFi Named an Approved Fannie Mae Servicer/Seller
SoFi has announced that its wholly-owned subsidiary SoFi Lending Corp. has been approved as a seller and servicer with Fannie Mae. SoFi and Fannie Mae are both highly committed to promoting homeownership, and this new designation will help the company in its mission to help financially responsible consumers buy the home they want. “While we launched our mortgage business focused on larger ‘jumbo’ loans, the certainty and efficiency offered by Fannie Mae will enable us to serve more members by expanding geographically and into smaller loan amounts,” said Michael Tannenbaum, VP of Mortgage at SoFi. “Sixty-five percent of SoFi’s purchase customers are first-time homeowners who have what we call a ‘Millennial mindset.’ We’ve designed our mortgage products for them—they value convenience and speed, and they want a range of purchase-focused products that help them to be competitive in the attractive real estate markets in which they live. We’re excited do this through Fannie Mae.” SoFi has been lending in the mortgage space since Fall of 2014 and is now available in 26 states and Washington, D.C.
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automation, initially for mortgage lenders to revolutionize the Point of Sale by facilitating AI-driven mortgages. “Rick understands mortgage technology and he was able to quickly see what sets LendSmart apart,” Sauri said. “RGA is known for only working with companies that Rick believes have strong value propositions and the ability to follow through on their brand promises. We are confident that if Rick can see why LendSmart makes sense in today’s mortgage business, he can help us get that message out to the industry.” The LendSmart POS is clientfacing process automation with built in document management. It provides all of the information today’s borrowers are seeking and allows lenders to get quality loan files started quickly. The company is currently signing integration agreements that will allow the technology to put more control of the application process into the hands of consumers, who have shown they are eager to accept it. In fact, consumers are demanding it. “I was writing about Jorge and his work when I was editing Mortgage Technology magazine,” Grant said. “He has always been future focused, which has at times put him out on the bleeding edge. But today, consumers and the government are pushing for more consumer control and LendSmart has the technology to enable that, at the same time it protects lenders with integrated quality control. I’m very excited about working with Jorge and LendSmart.” “The industry has finally embraced the concept of the digital mortgage,” Sauri said. “Fortunately for us, American consumers have been ready for it for some time. It’s time to deliver it. We will be the company that provides the financial technology to make that happen and RGA will help us tell that story.” RealtyTrac Forms Partnership With RE/MAX
LendSmart Taps RGA for Content Marketing Support
RGA Public Relations Inc. has announced that Frisco, Texasbased LendSmart has chosen the company to provide communications consulting and marketing content. LendSmart, founded by veteran industry technology developer Jorge Sauri provides cloud-based process
RealtyTrac and RE/MAX have announced the signing of an agreement to offer discounted bulk access to HomeDisclosure.com property pre-diligence reports to 3,500 continued on page 56
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Mortgage Ma
The New Look of Ap
akeover:
ppraisal Management in Lending BY MIKE FLOYD sk any mortgage professional what the main catalyst of change in the mortgage industry is and their answer will almost certainly be “compliance.” Regulations brought on by the government have resulted in organizational changes for many businesses in the mortgage sector, including lenders, servicing vendors, appraisal management companies and more, in an effort to create more transparency in what can sometimes be an opaque industry. When implementation of these new regulations first began after the sub-prime mortgage crisis, many lenders, both large and small, scrambled to build full departments and teams to better manage the workload. These teams were effective at first— creating multiple processes aimed at keeping the lending organization compliant and operationally stable. However, as regulatory adherence slowly transitioned into the “new normal” of mortgage, the processes once initiated to manage regulations, in turn, made it more difficult for lenders to see a clear picture of their compliance. This became especially evident during audits, when the redundant crossover between departments created confusion and delays. Now that the mortgage industry has accepted new regulations and rules as a standard operating procedure, more lenders are revisiting their processes and streamlining where possible to create a clearer compliance overview. One facet of mortgage that has seen such realignment is the appraisal industry. Many larger-scale lenders are now combining origination and servicing appraisals into one joint department. While origination and servicing appraisals differ greatly in how they’re processed, both require ample review and management oversight. The
A
compliance commonalities between origination and servicing appraisals indicate that it is an excellent starting point for testing the effectiveness of joint departments. The operational processes may be different, but the desired end result—timely, high quality appraisal reports—is the same. How do these departmental mergers translate to the appraisal industry at-large? As is standard in the mortgage industry, new processes in appraisal management more often than not result in changes for the greater appraiser population. While appraisers do work independently from lenders and appraisal management companies, actions taken by the latter often trickle down and impact daily processes for appraisers themselves. When confronted with industry-scale changes, appraisers should take an inventory of their own systems, timelines and workflow. Keeping a pulse on the actions of large-scale lenders will help the appraiser population better manage their future expectations and goals, and ensure that they aren’t blindsided to a point where business is impacted. Outlined below are three changes that appraisers should expect as a result of large lenders merging their appraisal departments, and how it could potentially impact their business. The appraisal review process will involve more scrutiny Appraisal review could be considered the greatest source of delay and confusion between lenders, appraisers and appraisal management vendors. Review rules differ between lenders and loan types, and new compliance regulations add increased scrutiny to appraisal reports that, at one point, would have been deemed acceptable. When merging origination and servicing appraisal departments, we expect lenders to craft a highly knowledgeable and specialized core staff to manage
collateral underwriting across the department. No longer will several people from different teams manage the review of a single appraisal report, but appraisers should expect the lender’s specialized collateral underwriting team to closely inspect and scrub every report against their individual rules. While this may mean more scrutiny from lenders during the review process, these focused checks and balances will hopefully lead to reduced revisions per order and a smoother report submittal process. Appraisers and AMCs will now consistently work with the same lender team In addition to compliance, the current high demand for appraisals has led to many lenders and vendors streamlining their departments into a teambased format in an effort to manage the expectations and results of a specific area or locale. Rather than entire departments processing appraisal orders as they arrive, teams are now being established based on market or client. These teams have full ownership of their market, which makes pulling reports, data and other essential information much easier during compliance audits and reviews. When reaching out to lenders, AMCs should expect to encounter the same people time and time again. Not only will this allow appraisers and vendors to build rapport with specific team members, but it will also establish primary points of contact if any issues arise.
Staff appraiser opportunities will grow nationwide As lenders embark on this operational overhaul, the value of establishing a staff appraiser team has become more evident. Adding staff appraisers to a joint origination and servicing appraisal department has the potential to streamline operations significantly. Many lenders and appraisal management companies are now considering this format for a few reasons. Staff appraisers can provide immediate relief for markets that are difficult to assign—in turn, creating a more effective operational process. Having appraisers on staff can also provide lenders and AMCs with valuable information on the current state of a specific market and what can be done to improve turn-times. Finally, staff appraisers can provide valuable insight on current regulations and how future compliance changes can impact origination, servicing and the industry at large. Having this kind of insight immediately on hand could be the key determinant in the success of a joint appraisal department. As most have come to learn over the last few years, change is the only constant in mortgage. Adaptability and a willingness to alter processes to better suit the current market will help companies thrive and move forward. Appraisers who monitor these trends and make the most of the opportunities that accompany them will be best positioned for a long, successful career in the mortgage industry.
Mike Floyd is chief appraiser, SVP of Compliance for StreetLinks Lender Solutions. A practicing appraiser for nearly 20 years, Floyd currently holds Certified Residential Appraiser credentials in the states of Indiana and Virginia. His expertise helped grow StreetLinks from a local appraisal firm into one of the largest direct appraisal providers in the Midwest–and eventually, one of the largest and fastest growing AMCs in the country.
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To Survive, Diversify
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BY KIMBERLY SMITH t’s no secret that TRID has turned the mortgage lending world upside down. The new consumer disclosure rules have created a compliance quagmire for many, lengthening back-office processes and increasing post-closing costs. And while recent news reports indicate that adjustments may be made to the regulation in the future, efforts to comply with TRID have been challenging for the mortgage industry as a whole. Attempting to quantify the extent of TRID’s impact, the Mortgage Bankers Association (MBA) reported a 60 percent decline in profits for mortgage lenders nationwide. TRID requirements have increased costs for lenders by an average of $209 per loan, according to a recent STRATMOR Group study, with most lenders claiming that losses cannot be recouped by other means. In a post-TRID world, business for many has become more frustrating and less profitable. To offset losses, lenders need to diversify. If you haven’t considered including reverse mortgage loans in your portfolio of product offerings, perhaps you should.
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A shout out to reverse mortgage loans Reverse mortgage loans, also known as Home Equity Conversion Mortgages (HECMs), offer qualified homeowners age 62 and over access to a portion of their home equity without the burden of monthly repayment—as long as loan terms are complied with. Unlike a traditional home equity loan or a HELOC, a HECM doesn’t need to be repaid until the borrower moves, sells, passes away or fails to comply with loan terms. Further, there is no TRID requirement eating away your profits. The homeowner retains title to the home and is obligated to make tax and insurance payments, maintain the home in good repair and otherwise comply with loan terms. Most people have heard of reverse mortgages, but few have a solid understanding of the loan, often harboring common misconceptions about the product. The truth is, in the past, reverse mortgage loans were perceived negatively and it was clear to invested parties that policy changes were needed to fine-tune the program and ensure its longevity for the millions of seniors who could benefit from this type of loan. After extensive and productive dialogue between the industry and lawmakers, new rules have been adopted to safeguard reverse mortgage loans from the problems that plagued them in the past. With new protections in place for non-borrowing spouses, expanded rules to police industry participants and a financial assessment to ensure a borrower’s suitability, reverse mortgages are a better, stronger and safer product than ever before. HECM loans of today are not a product of last resort, but a financial planning tool to be used strategically in retirement. With a widely praised line of credit option, borrowers can use the loan to leverage their home equity and hedge against dips in the market. Accessing home equity through a reverse mortgage loan can also provide the funds needed to age in place—the overwhelming preference for most Americans—enabling them to make home renovations or pay for in-home care. Or, borrowers can take a HECM for Purchase Loan, which allows them to use the equity in their current home to purchase a new one more suitable for their needs as they age.
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Promote your business among your clients with free, customizable marketing materials
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YOUNITED IS MORE THAN 1,500 ACCOUNT EXECUTIVES, SERVICE SPECIALISTS, TECH DEVELOPERS, UNDERWRITERS, MARKETERS, CLOSERS AND MORE. ALL CHAMPIONING YOUR SUCCESS.
United Wholesale Mortgage (UWM) ranked #1 wholesale mortgage lender in the nation for 2015 by Inside Mortgage Finance. This information is provided to mortgage and real estate professionals only and is not intended nor is it authorized for consumer distribution. NMLS #3038.
n Texas Mortgage Professional Magazine n MAY 2016
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GET YOUNITED WITH THE #1 WHOLESALE LENDER IN THE NATION. At UWM, we never stop looking for new ways to support our network. We continually develop exclusive tools and products that give our members a competitive edge and we train every day to deliver superior service through dedicated Account Executives and direct access to your Underwriters. We created a client service supergroup to help you look like a hero with your borrowers and we enhanced our Marketing Center to help you build relationships that grow your business. What else could we do to champion your success? Let’s work on it together. Get YOUNITED with UWM today.
Lykken on Leadership
Seven Tips for More Effective Time Management BY DAVID LYKKEN
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ivilization has come a long way over the last century, especially over the last several decades. Our technological advancements have made it possible to accomplish things that generations before could not have even dreamed. We’ve turned space travel into a routine activity. We’ve made it possible to have real-time, face-to-face conversations with people on the opposite side of the planet. We’ve cured diseases that once wiped out entire populations. We’ve been able to do all sorts of great things, but there is one thing that has remained exactly the same. And, no matter how sophisticated or powerful we become, we’ll never be able to change it. Despite our technological prowess, we still have precisely the same amount of hours in a day as we’ve had throughout all human history. Try as we may, we cannot manufacture more time. In the mortgage industry, as in much of the business world, time constraints are felt especially strongly. We’ve come up with all sorts of ways to make businesses more efficient. Technology continues to be a central focus of contemporary organizations seeking to gain a competitive edge. And, the best organizations have adapted the latest technology to improve their
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operations and squeeze as much out of their days as they can. Nevertheless, we still face that same good old-fashioned constraint of time. The sun rises and the sun sets, regardless of the technologies we employ. So, the question is this: How can we, as leaders in the mortgage industry, best take advantage of the time that we do have? Here are seven tips for leaders in the mortgage industry to manage time more effectively … 1. Keep track of how you spend your time When we start to measure something, we are often surprised by the results. For example, when people go on diets and start counting calories, they realize that they’ve been eating much more than they had thought before they started keeping track of it. Something amazing happens when we start measuring how we spend your time—we realize just how wasteful we’ve been! When we’re busy in the hustle and bustle of everyday activities, the high stress and flurry of motion can make us feel that we’re accomplishing more than we actually are. When we actually start keeping track of how our time is spent, we start to understand that being busy isn’t the same thing as being productive. When you have a firm handle on how your time is being spent,
you’ll be able to make positive changes that align your time allocation more closely with your priorities. All too often, we allow things that aren’t as important to us to take up too much of our time. Measuring how we spend our time can help us focus more of our time and attention on what really matters. 2. Get up early in the morning It’s probably true that some people are “morning people,” and some people just are not. I’ve met some people who sleep in as late as possible and simply have more energy late at night. Nevertheless, I think there is some truth to the saying, “The early bird gets the worm.” When you get up early in the morning and start preparing your work day before everyone else is even out of bed, you’ll be much less likely to be blindsided by unforeseen events. Extra time in the morning allows you to collect your thoughts, plan your day, and think strategically about where your organization is headed. Besides, in the modern world, breaking news happens overnight. If you can at least get the headlines before getting into the office, you may be able to make some important spur-of-the-moment decisions with the information you receive from having gotten up early enough to review it.
3. Take advantage of idle time When you first start keeping track of how you spend your time, what will probably surprise you most is how much time you spend accomplishing nothing. Of course, there are many things throughout the course of your daily life that you must do in order to meet some sort of end, but these everyday activities can sure feel like a waste of time. These include your daily commute, mowing your lawn, walking your dog, waiting in lines, riding on the plane, and so on. You can probably name a specific activity in your life that falls into this category. What if, instead of writing this time off as lost time, you did something more with it? You could, for example, use this idle time to catch up on some of the latest news, do some strategic planning, or make some key phone calls. In short, there is probably a significant portion of your time that you can use to accomplish multiple things at once. Use all of it that you can. 4. Pay attention to diet and exercise This may seem like something that doesn’t below in a leadership article, let alone leadership in the mortgage industry. And I’m not a nutritionist or a fitness expert, but it does seem pretty clear from decades of research that
diet and exercise does influence productivity. You know the old adage, “You are what you eat.” Eating well and staying active can prevent us from becoming sluggish and enable us to have more energy in our work. Making the most of time isn’t just about having more time, it’s also about having more energy to use that time effectively. Diet and exercise, I think, can certainly help. 5. Pay attention to your sleep schedule Another thing related to your physical well-being that can impact your performance in the workplace is your sleep schedule. I don’t know what the right amount of sleep is, and it probably depends on the person. Most experts say you need more sleep, but you also hear about highly successful people thriving on just a few hours each night. One thing that I think is important, though, is consistency. Go to sleep at the same time every night and get up
at the same time every morning. Doing so will get your body used to a certain pattern and prevent you from becoming too tired or, worse, getting sick. When you’re trying to squeeze out every hour in a day, you really don’t want to lose a week due to illness. 6. Be more cautious with your commitments It’s hard for a person in a leadership position to say, “No.” But, when you start to measure how you allocate your time, you’ll realize that you’re probably committing to things you shouldn’t be. Obviously, you want to be as giving as possible with your time. The best leaders go out of their way to serve others and aid them in their success. That being said, we’ve got to realize that time is a zero sum game. Time spent in one area is time deprived from another. Commit to the things that matter the most, and don’t be afraid to say, “No,” when something more important deserves your attention.
7. Schedule leisure time for yourself One last thing to keep in mind is what often gets neglected … your personal time. With leaders in the mortgage industry, as in many others, we often place too much of an emphasis on work and not enough on our personal lives. We can become neglectful of our families, friends, religious organizations or other commitments that comprise who we are as human beings. But, if we really want to have the kind
of integrity to which great leaders aspire, we’ll take commitments outside of work just as seriously as the ones we do in the workplace. If we wouldn’t miss that 10 o’clock appointment at the office, then we shouldn’t miss that seven o’clock appointment at our child’s school. Leaders are people too. And, if we don’t take care of ourselves personally and socially, that neglect will inevitably sooner or later bleed itself into the workplace.
David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken on Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is David@TMS-Advisors.com.
Correction … In the April 2016 edition of National Mortgage Professional Magazine, the incorrect Web site appeared for PrimeLending on page 60 of NMP’s Visionary Organizations 2016 section. Please see the correct entry below. 55
How the company has changed the mortgage industry: Over the years, we’ve experienced countless innovations and changes—the emergence of smartphones and mobile apps, more stringent federal regulations and changing perceptions about traditional banks, to name just a few. But more things have remained the same—integrity is priceless, personal service makes a difference and Americans still dream of owning a home. We are proud to have been a stable, reliable lender since 1986. Part of our approach to serving the changing needs of home buyers is to provide technology with a warm touch. We continually invest in developing the most secure, innovative and efficient systems and processes. From its Web-based application process, to mobile apps for
consumers and business partners, to customized home loan scenario proposals, we leverage innovation to help our customers make smart decisions. However, with every new automated step or enhancement, we never lose sight of the value of personal service provided by our experienced, knowledgeable loan officers. Without a doubt, our talented, dedicated employees set us apart in the industry. We know having a passionate, motivated team that cares about our customers, business partners and each other is our greatest asset. We work together to have a profound and positive impact on the lives of all we serve. We are known for a spirit of service, heart, respect and purpose throughout the organization. Collectively, we are focused on caring more, dreaming bigger, setting our goals higher and achieving them. It’s the secret to PrimeLending’s longevity and success, and the reason so many homebuyers trust us to guide them through the mortgage process.
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How the company started: Thirty years ago, PrimeLending opened its doors with a staff of 20 people in Dallas, Texas. Today, the company has more than 2,500 employees working in branches across 41 states, serving the needs of homeowners throughout the country. Since 1986, PrimeLending has helped more than 500,000 families with their homeownerships goals, consistently earning a 96 percent customer satisfaction rating (based on its customers’ rating of loan officers) and ranked nationally as a top 10 purchase lender by MarketTrac (JanuaryDecember 2015). PrimeLending is proud of its numbers, but is even more inspired by its track record of award-winning employee satisfaction. In 2015, PrimeLending ranked fourth nationally among top 10 large companies on the Great Rated! People’s Picks: 20 Great Workplaces in Finances Services. We were named one of the “100 Best Workplaces for Women” and ranked 11th among the “50 Best Workplaces for Camaraderie,” both by Great Place to Work and Fortune.
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RE/MAX offices and nearly 60,000 agents across the U.S. “We are very pleased to be working with RE/MAX, and we believe that Home Disclosure reports will provide their brokers, agents and ultimately clients with the most comprehensive property report available today,” said Michael Sawtell, executive vice president and general manager of RealtyTrac. “Home Disclosure reports offer critical, transformational data, highlighting the necessary details of 117 million homes and their respective neighborhoods across the nation. The industry is moving towards transparency, and RE/MAX appears to be at the forefront of that movement.” HomeDisclosure.com is a new property pre-diligence site launched by RealtyTrac that enables the real estate industry and consumers alike to conduct due diligence on a property early in the process of buying, selling or renting a home. Its popularity has taken off since its Jan. 26 beta launch, generating more than 51,000 reports for 20,500, users across the country. Home Disclosure reports have hyperlocal information about nearby sex offenders, crime ratings, nearby drug labs, school ratings, estimated equity, tax information—in all over 42 categories of home and neighborhood data—all easily consumable within a mobile device. “We are very excited to offer our RE/MAX Affiliates access to Home Disclosure reports,” said Mike Ryan, executive vice president of RE/MAX. “The more information everyone has about a certain property, the smoother the transaction will be. Such transparency provides trust and fosters solid long-term relationships between our agents and their clients.” In addition to nearby registered criminals and drug labs, the report also provides hyperlocal neighborhood data on natural hazard risk, environmental hazard risk, crime level, school quality, median income and much more. View sample report. RealtyTrac built Home Disclosure from the ground up using public record real estate data (sales deed, mortgage, tax and foreclosure data), along with neighborhood risk data. The result is a very compelling data set, packaged within a
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convenient mobile-first user interface specifically designed for real estate professionals or consumers who are performing pro-active, pre-diligence on a home—whether they are looking at that home for purchase or rental, or whether they already own or rent the home. Chronos Solutions Expands Into Alabama
Chronos Solutions has announced the opening of a new office in suburban Birmingham, Ala. The new Rainbow City office will house the company’s national Home Owners Association (HOA) Solutions Group. A ribbon-cutting ceremony took place at the Rainbow City office in mid-April, and in attendance were the Hon. Terry John Calhoun, mayor of Rainbow City, as well as the members of Rainbow City Council and the Chamber of Commerce for Rainbow City, and executives from Chronos Solutions’ HOA Solutions group, including VP of HOA Operations Duke Odom. “It has been a period of intense growth for Chronos Solutions, and our homeowners’ association solutions have seen a real surge in demand,” said Matt Martin, chief executive officer of Chronos Solutions. “Accordingly, we’ve been ramping up our resources to maintain our high levels of service.” Martin also noted the company has made several acquisitions in the past 18 months, including Realty Bid Inc., a leading real estate auction platform; and Cogent Road, a developer of multiple mortgage origination and tax verification software solutions, including Funding Suite and Taxdoor. “Right now, lenders and servicers are demanding flexible service providers who move quickly and efficiently without compromising quality or compliance,” Martin said. “Those firms that are able to grow and adapt with the changing demands of the market are the firms that are having the greatest success.”
The Federal Savings Bank Acquires ICC Mortgage Services’ Assets and Employees
The Federal Savings Bank has announced that it has acquired the assets and employees of ICC Mortgage Services, a 22-year-old mortgage banking company from Long Island, N.Y. that has funded billions in residential home loans. The deal will significantly increase The Federal Savings Bank’s work with and offerings to unions, fraternal organizations, and associations of teachers, law enforcement, members of our military, etc. ICC long has supported these groups of individuals through homebuyer education, relocation, first-time homebuyer programs, down payment assistance programs, construction and bridge loans, and home loans. Now this work will expand through The Federal Savings Bank’s national lending platform. ICC’s customers have included employees of the Department of Homeland Security U.S. Customs and Border Protection, Columbia University in New York City, the New York City Police Department, its many unions as well as its fraternal organizations, the San Diego Police Department, the Los Angeles Police Department, the United Federation of Teachers, and New York State United Teachers. With this acquisition, all of these groups will have access to more lending solutions, nationwide lending, and cutting edge technology through The Federal Savings Bank. “The decades of ICC’s experience supporting these special union, association and fraternal organizations will be enhanced by The Federal Savings Bank’s national lending platform and our wide array of unique products and services that most national mortgage banks and brokers can’t or won’t offer,” said Steve Calk, chairman and CEO of The Federal Savings Bank. Jason Rappaport, former ICC secretary/treasurer with almost 30 years of mortgage finance experience, and Dean Sourial former president of ICC, have joined The Federal Savings Bank as senior regional vice presidents. Dean Sourial will remain in New York to lead the
Bank’s newly formed lending platform dedicated to associations, fraternal organizations, unions, etc. Jason Rappaport has relocated to The Federal Savings Bank’s Scottsdale office to focus on existing relationships with the LAPD, SDPD and Homeland Security (CBP), as well as developing new relationships with these groups in the southwestern U.S. All other ICC employees have joined The Federal Savings Bank’s Melville, NY office. The Federal Savings Bank is committed to adding 100 jobs to the New York and Scottsdale offices by the end of 2017. “As part of The Federal Savings Bank, I look forward to continuing our dedication to serving our nation’s law enforcement, teachers, healthcare professionals, and military,” said Jason Rappaport, senior regional vice president at The Federal Savings Bank. “Customers now can benefit from the Bank’s national lending platform that includes a wide array of products and services to help them achieve the American Dream of homeownership.” LoanLogics Integrates With Mortgage Coach
LoanLogics has integrated its LoanDecisions Product Eligibility and Loan Pricing platform with mobile application provider Mortgage Coach and their interactive app. After the originator prices a loan scenario in LoanDecisions, the details are seamlessly updated in Mortgage Coach, creating engaging interactive loan comparison presentations that clearly explain all of the borrower’s eligible loan options. Mortgage Coach illustrates investment strategies, such as asset accumulation and term reduction, that help originators educate their borrowers on how a mortgage aligns with their personal financial goals. This integration, now available within LoanDecisions, helps any mortgage professional create a great presentation fast, replacing a number of steps that traditionally take time with a single click. Overnight, lenders with thousands of professionals can ensure their clients and prospects can make informed decisions. “Mortgage Coach
presentations bring loan options to life with intuitive, easy to use mobile apps, interactive charts, and video narration,” said Joseph Puthur, president of Mortgage Coach. “The result is that borrowers understand mortgages far better than has been possible in the past. When borrowers are more comfortable and confident, client satisfaction increases and referrals for our clients grow.” With this integration, mortgage originators will have access to a suite of presentations and mobile app experiences right at the point where eligible loan product pricing is presented. Originators can view and illustrate all loan options effortlessly in LoanDecisions, having every option in front of borrowers in seconds. “Our integration with Mortgage Coach enables originators to demonstrate the options borrowers have and the merits of each. Now, borrowers working with our clients’ mortgage professionals can more confidently make an informed choice, the choice that is the best for them,” said Matt Thoman, LoanLogics product manager of Origination Technologies. “We are committed to ensuring that our clients have the best possible tools to maximize their results.”
market. We believe it will become an anchor location for further expansion in the region,” said Matthew Reid, branch manager. “Our branch is committed to delivering a full suite of competitively priced loans that will undoubtedly strengthen our brand and relationships in the community for years to come.” Branch Managers Dan Moschetti and Matthew Reid are leading a team of lending professionals who will include Jonathan Coccia, Ann Marie Manfredi, Alicia McKean and Todd Newman. The New City branch offers all
of the State of New York Mortgage Agency (SONYMA) loan products for first-time homebuyers. Making home purchases more affordable, SONYMA mortgage programs feature reasonably priced interest rates, low downpayment requirements, flexible underwriting guidelines, no prepayment penalties and down payment assistance. All SONYMA loans are financed through the sale of tax exempt bonds. “As the housing market continues to improve, loanDepot is ready to support the lending needs of our local real estate
partners and their clients,” said Dan Moschetti, branch manager. “We’ve mastered processing loans quickly and efficiently from beginning to end.” Financial Funding Solutions Chooses PathSoftware as Its LOS
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loanDepot has announced the opening of its newest lending branch in the New City, N.Y. area, part of the company’s expanding footprint in the upstate New York region. Strong buyer demand drove the median sales price in New City, New York to $535,000 in December 2015, up 14 percent from a year ago. loanDepot’s optimism about housing trends made this the right time to move into the area. Exclusive to the New City branch are a series of industry workshops titled “Connect and Collaborate” for real estate agents and brokers held at the branch office, on the third Thursday of every month at 3:00 p.m. Future topics include team building, understanding generational home buying preferences, new negotiating strategies, the power of video marketing and more. “We are really excited to have opened a branch in the New City
(or So The BY BRENT EMLER
Marketing Is Dead
eyy Say)
he MerriamWebster Dictionary definition of “dead” is either a) No longer alive or b) Very tired. Anyone who spends time researching marketing trends has heard the rumor that e-mail marketing is dead, or at the very least, dying. Presumably when people say e-mail marketing is dead, they are not saying e-mail is no longer a viable marketing tool, but instead they’re indicating e-mail marketing is very tired. They’re right. Our inboxes are cluttered and it’s hard to distinguish between valuable marketing and worthless junk. E-mail marketing isn’t dead, it’s just tired. More than that though, the services that provide us the ability to read our e-mails—Gmail, Outlook, Yahoo, AOL, Apple Mail—are beginning to employ machine learning to help us presort our e-mail. E-mail marketing is old, tired and crotchety. It’s a carnival barker standing on a milk crate yelling, “Hurry, hurry, hurry, step right up, step into the tent and buy your mortgage from me today.” Consumers are too smart for that now. Consumers don’t want to be told what to do, they want to be engaged; they want to have a conversation about their lives, their needs, their fears, their desires. Those who say e-mail marketing is dead or dying claim social media, pay-perclick, banner ads, and even text marketing will precipitate the eventual demise of e-mail marketing. However, when you look at the numbers and the technology opportunities available to e-mail marketers, it’s clear: E-mail marketing is certainly not dead. It’s not even dying. E-mail marketing is evolving from the carnival barker pitching a new act to an engaging personalized conversation built on collaboration and timely delivery of appropriate
T
opportunities to help consumers become happily involved with products and services. The Holy Grail of marketing is creating a segment of one: To market as broadly as possible while connecting on a highly personalized level, so that it feels less like a pitch and more like a conversation. Contrary to the rumors, e-mail marketing is perfectly positioned to be an essential component of the conversation between marketer and consumer.
message; correspondence that will elicit a conversation. Instead of a generic postcard with an offer to refinance, it’s a series of highly targeted marketing pieces providing local offers, local market data and even highly personalized offers based on an amalgamation of credit, housing, and rate data. Print marketing isn’t dead either … it’s evolving. Its evolution has been slow and the ravages of time have been cruel; e-mail marketing would suffer the same fate if not for the exciting new technologies emerging.
History repeats itself Keep your e-mail marketing alive Interestingly, e-mail marketing is suffering the same fate of the marketing medium it supplanted. It’s handling the evolutionary pressures more effectively, but the pressures are the same: Oversaturation, alternative mediums, and boring, repetitive content. Print marketing was once the darling of the direct marketing world. In May 2003, the Global Mail Project Institute for the Future wrote a report for the President’s Commission on the United States Postal Service. The report looks like a mix between science fiction and a romance novel. It acknowledges the possibility that email and other forms of digital advertising would have relatively nominal impact on print marketing spending. The report was wrong; print marketing has suffered cataclysmically. It was right about the future of print marketing though: Highly segmented, higher quality, lower costs, and personalized. What it didn’t predict is print marketing’s fall from grace would be, in part, reversed by the advent of technologies that make even a postcard in your mailbox feel like a personal
Model the mind and match it with technology. Understanding consumer behavior and the underlying technology behind e-mail are essential for keeping your e-mail marketing alive. If that sounds difficult, don’t worry, the software industry is replete with services who take complex tasks and make them easy to understand and implement. Is all this effort and investment worth it? The answer is an unadulterated, yes! Depending on the report you read, you’ll see ROI numbers between 300-3,800 percent for e-mail marketing. It’s an incredibly cost-effective marketing medium and, when done right, is incredibly powerful, too. When you think about marketing, think about it in terms of having a conversation. If you were at a business event and saw a previous customer, you wouldn’t walk up and continued on page 97
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CalyxSoftware, has announced that Financial Funding Solutions Inc. (FFS), d/b/a 1st Mortgages, Littleton, Colo., has selected Path as its LOS. FFS is a brokerage and correspondent lender that operates in Arizona, Colorado, Illinois, Iowa, Kansas, Nebraska, Texas, Utah and Wyoming. The company has partnerships with more than 60 credit unions and builders, and has successfully closed more than 10,000 loans since it was founded in 2002. “At FFS, we’re committed to helping our customers secure loan programs that are best suited for their individual needs, so we needed an LOS that could give our customers quick, compliant answers and grow with us at the same time,” said Anne Marie Lee, director of Builder/Real Estate Sales & Marketing at FFS. “We selected Path for its user-friendly platform, multi-channel origination capabilities and structured workflows, as well as the ability to access it anywhere. We’re confident this will make us more productive and better able to serve our customers.” PathSoftware was designed to simplify and streamline mid-tier to enterprise-level, multi-channel loan origination. As a portal with a single point of entry, all loan data, lock data, products, pricing, AUS findings, disclosure documents, compliance assurances and closing documents emanate and are reconciled within one system. This enhances visibility and improves productivity across multiple business channels— wholesale, retail and correspondent. Path is also the first completely data-driven, not form-driven, LOS. It collects all of the borrower and property information individually and then uses those fields to populate forms, making it easier to adapt to and comply with new regulations. “Increasingly, forward-looking originators like FFS are looking for cloud-based solutions that can support 24/7 access from multiple devices without compromising the highlystructured, role-based workflows to better serve their customers,” said Dennis Boggs, executive vice president of Path. “Path is not only simple to use and easily accessible, but also delivers uniquely configurable workflows that give them the control and
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visibility they need to manage and grow their business.” LRES Acquires Commercial and Residential Evaluation Provider InsideValuation
LRES has announced that it has acquired InsideValuation, a provider of commercial and residential evaluations. Headquartered in Reno, Nev., InsideValuation brings to LRES its commercial and residential interagency-compliant evaluations, performed by its strong network of more than 25,000 field agents. Through this acquisition, InsideValuation’s hybrid and appraisals products can now be produced under LRES’ AMC licenses with jurisdictions in all 50 U.S. states and complying with state regulations. This acquisition of InsideValuation by LRES will further enhance LRES’ product offerings and client base. In addition, InsideValuation customers also now have access to LRES’ technology solutions through LRES DirectConnect Integration Hub, which optimizes and accelerates the valuation ordering process. “InsideValuation looks forward to becoming a part of the LRES family. We are pleased with the match of our company cultures, which will ensure that our clients continue to receive the high level of service that they have grown to expect,” said Susan Chauncy, CEO of InsideValuation. “This merger is a win-win, as InsideValuation’s commercial valuation experts will strengthen LRES’ commercial unit and LRES’ diverse product line will enhance our overall product offerings.” “We are excited that InsideValuation is joining our team at LRES as we continue to expand our markets,” said Roger Beane, founder and CEO of LRES. “We know this acquisition will strengthen our mission at LRES and offer expanded service offerings to various business channels to our valued customers. continued on page 96
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*R *Rankings ankings Sour Source: ce: Insid Inside e Mortgage Mortgage FFinance. inance. Caliber Home Loans, Inc., 33701 701 R Regent egent Boulevard, Boulevard, Irving, Irving, TX 75063 75063 (NMLS # #15622). 15622). 1-800-40 1-800-401-6587. 1-6587. C Copyright opyright ©20 ©2016. 16. All Rights R Reserved. eserved. Equal Housing Lend Lender. er. FFor or rreal eal estat estate e and llending ending professionals professionals only and not ffor or distribution tto o cconsumers. onsumers. This ccommunication ommunication ma mayy ccontain ontain inf information ormation that is privil privileged, eged, cconfidential, onfidential, legally legally privileged, privileged, and/ and/or or e exempt xempt fr from om discl disclosure osure und under er applicabl applicable e la law. w. Distribution to to the general general public is pr ohibited. Caliber Home Loans is an Equal Oppor tunity Empl oyerr. prohibited. Opportunity Employer.
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The Long & Short The Business of Short Sales
Refinance Sought for Millions Trying to Remain in Underwater Homes BY PAM MARRON ete Smith1, an underwater homeowner in Chicago, Ill.,2 is frustrated by the only option available for homeowners who have negative equity on their second mortgage. “I’ve tried to find a refinance option, a modification option, and the only advice that my lender has given me is to go delinquent,” said Smith. “They claim that as long as I pay on time, I have no option as far as a modification with them.” This same response is heard again and again by homeowners with these three types of negative equity mortgages:
P
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1. Portfolio conventional first mortgages (non-Fannie Mae and non-Freddie Mac) 2. Second mortgages 3. Home equity lines of credit (HELOCs) A refinance is what many of these folks are looking for to stay put in underwater homes, where the mortgage is greater than the value of the home. Most are stunned to find that the only option available is not a refinance, but a modification that requires mortgage delinquency first and proof of hardship. Affected homeowners with these three mortgages are either still living with initial, higher interest rates from years ago, or their loans may be interest-only and are now resetting to fullyamortized, higher payments. Underwater elderly homeowners on fixed incomes are most at-risk and struggle to pay the steep increase when the interest-only payment changes to a fully amortized payment.
The difference between a refinance and a modification A refinance allows underwater mortgage holders to stay current on their payment and take advantage of today’s lower rates, enabling homeowners to stay put and avoid a short sale. A modification requires mortgage delinquency, resulting in the inability to get future credit, prolonged time-frames in order to get a refinance or a new mortgage, and the possibility of erroneous foreclosure codes on their credit when delinquent mortgage payments go past 120 days late. If the underwater homeowner must ultimately short sell the home, they often pay higher rent due to damaged credit as a result of the required mortgage delinquency required to modify. A modification also requires proof of hardship. Underwater homeowners seeking a refinance may not be experiencing a defined hardship and are most often told they cannot receive help unless they are delinquent on their mortgage. How a refinance can be done Putting two finance programs in place at the same time is key to how this refinance can be accomplished. Using government entity funds as a new, replacement second mortgage; and combining these funds with five existing mortgages, can provide a refinance for second mortgages and HELOCs, and can accommodate a restructure of funds to allow an FHA Short Refinance to replace an underwater portfolio conventional first mortgage. The combination of government entity funds with these mortgages allows for an
unlimited combined loan-to-value (CLTV) of the first and secondary loans together, a replacement refinance of the secondary loans, and the availability of a new refinance for the portfolio conventional first mortgage. These five existing first mortgage programs are: 1. Fannie Mae DU Refi-Plus Home Affordable Refinance Program (HARP): For negative equity Fannie Mae first mortgage. No maximum loan-to-value (LTV) or CLTV. 2. Freddie Mac Relief Refinance Open Access (HARP): For negative equity Freddie Mac first mortgage. No maximum LTV or CLTV. 3. FHA Short Refinance: Available for negative equity non-FHA mortgages, the new loan’s maximum LTV ratio is 97.75 percent of the current property value and the maximum CLTV is 115 percent of the current property value. However, there is no maximum CLTV ratio3 for second loans held by government entities or instrumentalities of government.
4. FHA Streamline Refinance: Available for negative equity FHA mortgages. 5. VA Interest Rate Reduction Refinance Loan (IRRRL): Available for negative equity VA mortgages. Note: the USDA Refinance was also researched. Their correspondence directs the homeowner to the specific lender who is responsible for servicing their loan. Strategic default concerns do not exist when underwater homeowners are trying to stay put in homes. A large number of the 6.4 million underwater homeowners that still exist throughout the U.S. have the three types of loans where no refinance exists. Most of these homeowners are simply trying to stay put in their home seeking a sustainable refinance option to better rates that does not require mortgage delinquency first. Because there are still so many seeking sustainable payments and program expiration deadlines are looming, diligent effort is being made to work on solutions with current programs available … stay tuned.
Footnotes 1—Pete Smith, Chicago underwater homeowner: YouTube: https://youtu.be/w25BVA8QvU. 2—Underwater homeowner has negative equity. Owes more on the mortgage than the home is valued for. 3—Consumer Fact Sheet for FHA Short Refinance: http://goo.gl/8hL8ES.
Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail Pam.M.Marron@gmail.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.
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Overcoming Challenges in Valuation of Green Residential Properties By Scott Robinson, MAI, SRA, AI-GRS
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housing, has many definitions, creating difficulty in the marketplace. This rapidly growing and changing field can cause confusion among homeowners, lenders and appraisers on what “green” means, and how to potentially get its maximum value during a purchase or sale. A more descriptive term, and one that’s used by the U.S. Environmental Protection Agency (EPA), is “high-performance.” Calling a house high-performance sets it apart from conventionally built homes. It’s important for lenders and appraisers to know the difference. While energy-efficient features are aspects of a highperformance structure, their presence doesn’t automatically turn a conventionally built house into a green one. A house with energy-saving appliances, for example, doesn’t meet the definition for green. To be a highperformance property, it needs to meet minimum requirements in these six categories:
Green built vs. conventionally built The concept of “green,” particularly when it comes to
l l l l
Site Water efficiency Energy efficiency Indoor air quality
l Materials and l Operations and maintenance Need for more data Lenders, sellers and buyers all benefit when appraisers generate credible opinions of value. Information is the lifeblood of the valuation profession. Only with sufficient data are appraisers able to perform the analysis necessary to provide those value opinions. In many cases, data on sustainable development and on buildings’ green enhancement either is nonexistent or is not shared with appraisers. In an article appearing in The Appraisal Journal, Sandra K. Adomatis, SRA, wrote that some appraisers have reported that lending institution representatives have told them to ignore green features and value green properties as if they were traditionally built. Professional associations like The Appraisal Institute have been working on ways that will make sharing green information easier and more complete for continued on page 100
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making major improvements on adding green fields to their databases. MLS organizations owned and operated by local Realtor associations, for example, since June 2009 have been mandated to comply with the Real Estate Transaction Standards and to implement the standard’s new versions within one year. However, there is currently no central repository for green data. In a quickly developing field, it can be difficult for appraisers to access the information they need to stay ahead of market developments. There is a disconnect between lenders’ expectations about valuing green features, and the tools, techniques and requirements appraisers use when generating credible, reliable opinions of value for such properties. However, organizations like the Appraisal Institute are taking steps to make the connection that could benefit all real estate professions.
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long with location, design and price, homebuyers are increasingly ranking energy efficiency as one of the most desirable features in a new property. In a 2015 National Association of Home Builders’ (NAHB) nationwide survey of homebuyers, energy efficiency placed second on the list of top influencers in a home purchase decision; it followed a “safe community.” Rounding out the list were: low maintenance, lower operating costs and durable/resilient. Studies also indicate that potential homebuyers are willing to pay more for green construction. A 2014 study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory found that homebuyers have been consistently willing to pay more for homes with host-owned solar photovoltaic energy systems. As consumer demand for green, also known as “highperformance,” homes continues to increase, the valuation of such homes is lagging behind the trend. Multiple listing services are
Can Technology Replace the Originator? As new apps and sites move into the industry, originators must prove their worth By Rey Maninang ew technology often generates a lot of speculation about whether the latest software, gadget or application will replace the human element in any given situation. The mortgage industry is no different. As various third-party sites make their presence known in the real estate market, so, too, are apps and sites making a splash with mortgage originations. Quick online pre-approvals are fast becoming the norm, and companies are racing to come up with bigger and better ways to insert technology, efficiency and transparency into the mortgage process.
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The questions is: With all the new technology available for consumers looking to finance a home, from Web sites to apps and everything in between, will the market squeeze out of the role of the mortgage originator? Luckily, the answer, quite simply, is no. A mortgage is one of the most complex financial instruments most people will encounter, and the role of the originator to guide consumers through the process is invaluable. That doesn’t mean mortgage professionals can keep doing business as usual, however. In today’s market, originators must embrace the available technology, while still proving their worth to the consumer.
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The value of technology Just as technology can help make our day-to-day lives easier and better, with everything from apps that let us pay for our morning coffee with our smartphones to being able to sync data across multiple devices, so too can advancements help make the mortgage process easier and more efficient—both for originators and borrowers. This past March, closing times for all loans fell to 44 days, the shortest closing times in a year, according to the March 2016 Ellie Mae Origination Insight Report. Many in the industry point to improved technology as one explanation for the faster closing times. Probably the most common and well-known technological application in use in the mortgage process is the prequalification or pre-approval tool. Most companies and Web sites can capture a potential borrower’s basic data and give them an estimate of what kind of mortgage they might qualify for. This simple step is a critical one, as it’s often the first glimpse a borrower has into the financial realities they’ll experience when undertaking a mortgage. Lenders should make sure any app or tool they offer is simple and easy for borrowers to understand and use. These apps and tools are often the initial interaction a client has with your company; and they are particularly good for getting borrowers intrigued with a company—the first step toward getting them to submit a loan application. Of course, there’s a lot more technology where that came from. Of particular note are applications or websites designed to educate consumers on the overall mortgage process itself, as well as what it may mean for borrowers. Some tools tailor their information to individual borrowers so they can actually properly budget a mortgage in with their other financial obligations, as well as explain such core ideas as interest rates, transactions costs and principal amounts. Apps or Web sites like these can be effective in
helping clients to understand the complexities of financing a home at their own speed and on their own timetable. Such apps and Web sites also are particularly helpful when accompanied by the guidance and advice of an expert mortgage originator who can answer additional, and individual, questions or clarify financial points. Although staying informed about the latest technology and advances in the field is critical for mortgage professionals, don’t be seduced by the lure of what’s new and shiny. Make sure any technology you introduce—either for yourself or your clients—actually improves the process. Do your research and consider how any tool will be perceived and used by clients. Otherwise, you’re just creating another hurdle for your borrowers, and more work for yourself as you try to walk them through the technology. And remember this critical point: When it comes to the actual mortgage transaction, a colorful user interface can never replace a seasoned mortgage professional. Be sure you show every client the true value of a seasoned and committed mortgage originator. Your expertise and hands-on work is what will set you apart from the sea of 1s and 0s. The value of an originator Although originators may work with the latest and greatest technology, it’s not going to replace them anytime soon. The mortgage transaction as we know it today is extremely complicated; and the average borrower has only a minimal understanding of how it works and the kind of information that is needed. A mortgage is one of the largest financial transactions that most people will undertake in their lifetime. In fact, this past March, the median sales price of an existing single-family home was $224,300, according to the National Association of Realtors. Having an app walk you through a $200,000 or more transaction is just not feasible. People want to be guided through such an important transaction by other people—people they can trust. But the ability to assist a borrower during the mortgage transaction, while an important skill, is not the only asset a seasoned mortgage originator brings to the table. When you’re working with borrowers, make
sure you not only offer them quality loans, but the best service as well. That’s something that technology can never replace. Be responsive to clients’ calls and e-mails, and be as thorough as you can whenever you’re answering a question. If you don’t know the answer right away, let them know you’ll research it for them, and be sure to get back to them promptly. In addition to stellar customer service, seasoned originators can help clients find the best product for their financial situation. A mortgage professional has the ability to look at a wide range of products and help clients determine the best mortgage for them based on factors other than just straight numbers. Perhaps the borrower wants a lower down payment or a quick close. A good originator knows the different loan types available from different lenders, and can help borrowers identify exactly what they need. If a borrower has an unusual financial situation that a
computer application would reject out of hand, a savvy mortgage originator will know what lenders offer manual underwriting and which lenders offer lower credit requirements. This kind of market expertise is invaluable for today’s borrowers. Of course, to be able to provide this kind of stellar service for borrowers, originators will need to do some work of their own. Be sure to keep up to date on not only the latest technology, but also what’s happening in the market— and not just where interest rates are today and where they’re headed (although that’s important, too). Keep up-to-date on state and national regulatory changes that could affect your work and the kinds of loans available to borrowers. Work with a multitude of lenders that offer a wide variety of loan products. If you have access to a wide breadth of mortgage programs, you can help borrowers get the right product for
them and their particular financial situation. Know which lenders focus on turn times—and not just underwriting turn times, but how long it takes to go from initial application to closing—so you can help clients who may be working with an accelerated timetable. Borrowers’ heads may be turned by the latest clever app or gadget, but once they’ve moved past the brightly colored home screen they can be quickly turned off by technology that is cumbersome to use or doesn’t offer any real value. By working hard to get them the loan they need to buy the home they want, borrowers will be truly impressed by the wide suite of services and expert advice offered by a seasoned mortgage originator.
Conclusion By effectively and thoughtfully embracing technology originators can maximize their value to today’s borrowers. Use technology to the advantage of your business and your clients. If an app helps shorten closing times, use it. If it simply confuses your borrowers, skip it. The real value in the originator equation is what you bring to the table, including your market knowledge and the variety of loans you offer and lenders you partner with. If you work with clients to get them the best loans at the best rates, while at the same time offering your expertise and individualized, personal service, you’ll not only prove your worth to clients, you’ll grow your business, too.
Rey Maninang is senior vice president and national sales director of Carrington Mortgage Services LLC’s Wholesale Mortgage Lending Division. Under Rey’s leadership, Carrington’s Wholesale Division has increased volume production by over 100 percent within a two-year period, and successfully launched several strategic initiatives resulting in consistent profit increases. 67
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Automation: The Blessing, the Curse, and the Way to Use It to Your Best Advantage By Chad Jampedro ew would argue that technology has made life easier for most all of us–from FaceTime and texting, to mobile banking and online shopping– interactions with businesses and one another have become faster, more streamlined and efficient. Whether you are chatting online or ordering a pizza, technology has changed how we do things. At the same time, we must acknowledge that there are some instances where technology can be a burden, even a detriment, when communicating with other individuals. We’ve all experienced a fully automated
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phone system that makes if difficult, if not impossible, to speak with a human being. Or, how about a Web site that only offers customer service assistance via e-mail or live chat? What does that say about that company? The mortgage industry, like all other industries, has certainly benefited from the efficiencies technological advances have made to the lending process. When you consider how things were once done, it is simply amazing that now a significant portion of that process is automated. People inquire about mortgages from tablets and iPhones. They complete
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paperwork and receive, sign and send documents electronically. And, they can even move through the entire process without laying eyes on their lender–or stepping foot in their offices. But, is a move toward full automation truly a good thing? Is it an acceptable and effective replacement for the mortgage professional-borrower relationship? How and where technology has enhanced the lenderborrower relationship While there’s no denying that automating the mortgage process is saving lenders money, time and manpower, the lack of personal interaction that comes with it can cause real problems. With solely an automated connection, a lender’s ability to accurately assess and react to personalities becomes quite difficult. Borrowers, on the other hand, consider their circumstances to be unique to them and expect their lender to understand and appreciate that. When one is trying to convey emotion–be it urgency, concern, confusion, empathy, sincerity, etc., e-mails and texts simply don’t cut it. Let’s face it, there are some pivotal points in the lending process that require a “high touch” interaction between the lender and borrower. Video conferencing is proving to be a time, overhead, and effort saving tool that is immensely helpful at these critical junctures. The first point in the process is when a borrower initially engages with a lender. By offering technological efficiency and marrying it with a personal touch, video conferencing can actually improve conversion rates. Borrowers no longer have to leave work, find childcare, and travel across town to a lender’s office for that crucial initial meeting. Instead, that engagement is now often accomplished via video chat. The reasons that force many borrowers to cancel those
important first meetings have effectively been eliminated with online meetings. And as we know, if too much time transpires between the first expression of interest and that first meeting, the opportunity is lost. But, platforms such as GoToMeeting and JoinMe have facilitated this process improvement and contributed to the decline of cancellations and rescheduled appointments–and translated to an increase in conversions. This technology is also particularly effective with firsttime homeowners who often need to be taught how the credit and appraisal process work. Video chat accomplishes this quite well as the presentation tools inherent in these platforms are fairly sophisticated. A second pivotal point in the process is throughout the last phase of the loan transaction. This is when borrowers need to be guided through rebuttals to appraisals, locking the interest rate, home inspection issues, scheduling the timing of closing, the arrival of funds, and taking occupancy. These things can become quite complicated, and are more effectively addressed with the aid of video technology. The growing use of mobile apps is another technological advance that is changing the industry. Now borrowers can use an app to move through the paperless lending process via their smartphones. They can gather information, review the status of their application and loan approval, and securely scan and send documents right from their phone–without having to attach them to an email. In fact, there is a real demand for this capability among borrowers now–especially Millennials. The improved, more streamlined transfer of information from the lender to the borrower, and viceversa, will likely make mortgage mobile apps the preferred communication platform among millennial borrowers for years to come. Win over your borrowers by fostering a personal relationship There is no substitute for
“While there’s no denying that automating the mortgage process is saving lenders money, time and manpower, the lack of personal interaction that comes with it can cause real problems.” inflated assets, fabricated income or employment, and undisclosed debt. And, in the spirit of giving credit where credit is due, automation has helped us stop these attempts much more quickly. Mortgage professionals should use technology to enhance, not
Chad Jampedro is president of GSF Mortgage Corp. With more than 20 years in business, GSF Mortgage has embraced the next generation of homeowners with its GoGSF brand, continuing its dedication to flexible and transparent lending. They call this: “Lending in Your Favor.” Chad may be reached by e-mail at CJampedro@GoGSF.com. 69
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Where the industry is heading and what the next decade might bring As time marches on so, too, will technological advances. There will be attempts to automate the entire loan process simply because the capability exists. Indeed, those attempts have already started. But, just because a procedure can be automated does not mean it should be. While advancements have made our collective lives easier, the sales groups that hold borrowers’ hands cannot be cast aside. Fannie Mae and Freddie Mac are also making movements toward e-mortgages. Today, when a borrower signs a note and mortgage, a physical signature is required. But, if bonds with electronic signatures become the accepted norm, even more efficiency will be created in terms of the way borrowers interact with their lenders. In addition, more attention will need to be directed at how to better secure data. Though we’ve made great strides in this area, this is not a one-time concern. Online and information security is something mortgage professionals must continuously address each and every day. Hackers are clever criminals that are relentless when it comes to stealing the data they are seeking. Large scale breaches of personal data simply cannot be risked. As more preventative measures are developed, more companies will successfully ensure their systems are secure. At the same time, we, as lenders, are in the unique position to help prevent fraud–simply by virtue of what we do. With our daily utilization of fraud detectors, we can identify and prevent attempts at money laundering–
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connecting with your clients on a personal level. After all, the loan process can be intimidating and stressful. Chances are, many of your clients came to you by way of referrals. Assuming that’s the case, you obviously brought something positive to the process. So, don’t be tempted to let automation take over your relationships. If you are not already, consider working closely with just a handful of real estate agents. Get to know how they operate, areas in which they specialize, and become their “go-to” lender of choice. You can specialize in certain niches too, becoming a product expert of sorts, which will cause certain borrowers to seek you out. This can be a very effective way to foster relationships. Then there are the standard rules to live by–attend closings, send personal notes, provide closing gifts, etc. By staying engaged with your borrowers before, during and after each transaction, you’ll be in a better position to maintain client relationships for the long term. However, in this age of automation, the most important thing you can do is to unite technology with your expertise. Systems are efficient and can be immensely helpful, but they also can fail. Therefore, relying solely on an automated system is not only foolish, but dangerous. Technology can be used to leverage the transaction, but behind that technology must be an expert: you. Your diligence, personal interest and genuine concern cannot be substituted. Remember, a successful, involved lender refers to each of their loans not as a number, but as a name – and one that has a face to it.
replace, their relationships with borrowers. Despite the industry’s movement toward complete automation, parts of the process will always require a mortgage professional’s savvy and experience. The relationship between a lender and borrower can be enhanced with apps, smartphones and laptops, but there’s no substitute for personal interaction when tricky issues arise or more technical things need to be explained. Knowing when, where and how to use technology is paramount to building your business and attracting–and deepening– borrower relationships.
Three Ways to Stay Ahead of This Recruiting Trend By Casey Cunningham n recent years, it has become painfully clear that the mortgage industry is in the midst of a “Recruiting War.” While some managers are targeting loan officers that have already found success, a new trend has begun to take root. Many managers have gone away from hiring loan officers who already have their own way of doing business, to hiring fresh new talent. They are hiring new loan officers they can build to become their future Top Producers. At my company, XINNIX, we have noticed this trend and have committed ourselves to helping managers do this very thing–hire and train successful new loan
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officers. But where do you start? Where are the best places to find a new loan officer and how do you know they are right for the job? After that, how do you train them to be the most successful they can be? In this article, I will address these questions to provide you insights on best practices from our industry. Sourcing To start, you have to find ideal candidates. A great place to begin your search is to ask your sphere of influence. Consider your past customers, business associates and current employees. Send an e-mail to your entire database announcing you are hiring new loan officers and will be providing training for
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qualified candidates. This is important because in my experience, when you explain you are hiring and training, you receive much higher quality referrals. Another avenue to take when you are looking for candidates is to consider targeting specific professions. Our company conducted an extensive study to confirm the professions that have proven to transition quite successfully into the mortgage industry as loan officers. Just two of the many discovered are stockbrokers and real estate agents. Stockbrokers are highly trained sales professionals and are financially astute. Their industry most often provides extensive, structured sales training including relational selling skills, contact management and database mining. Look for candidates with already well-developed client databases, which can be leveraged to jumpstart their career as a loan officer. Real estate agents are also great candidates because they understand the other side of the mortgage transaction. Successful agents are used to working the number of hours necessary and understand the need to invest in their business. High quality candidates have little call reluctance and are skilled at networking. Most importantly, they understand the most coveted referral source, as they have been one. Screening Once you have found a few candidates, screening them is essential to not wasting time. Use their resume and social media, especially LinkedIn, to do your initial screening. You should be looking for criteria such as employment history and stability, earnings history, sales background, size of database, business success and personal drive. Some of this criteria is going to have to be answered on the initial phone interview.
When conducting an initial phone interview, it should take no more than 30 minutes. Have them answer questions so you can assess their skill level and motivation. Open-ended questions such as, “What do you truly excel at doing?” and “What motivates you?” can be very telling. These questions can also help you to determine if they are a good cultural fit for your organization. In addition, their phone voice is a great indicator for how they will sound speaking to your customers. After they have passed the phone interview, the in-person interview is where you will be able to go deeper into questions and assess their sales abilities and drive for success. Two assessments I have used throughout my career are the DriveTest and Sales Call Reluctance Assessment. The DriveTest helps determine whether candidates have the most critical personality trait for success in sales: drive. In order to do this, it tests three elements: need for achievement, competitiveness, and optimism. After these are tested, the assessment combines them into a total Drive score. The Sales Call Reluctance Assessment reflects the barrier to prospecting, if any. With this assessment, managers don’t have to worry about spending money on salespeople who eventually decide a sales position is not for them. Now that you have sourced, assessed and hired your new loan officer, training is your next step. Training With the complexity of the mortgage industry, all potential risk must be minimized by professionally training new loan officers beyond the minimum requirements of licensing. Highly professional training instills core fundamentals, creates predictable success, and protects a company’s brand. Training should begin in which new loan officers are assigned a qualified mentor within your company. A good mentor is vital in setting a proper example of what you expect from your loan
“Mentors should possess attributes such as a positive attitude, strong technical skills and excellent communication skills.” officers. Mentors should possess attributes such as a positive attitude, strong technical skills and excellent communication skills. Professional training in mortgage knowledge, guidelines and sales is essential for a new loan officer’s success. A successful training program should also prepare Loan Officers to expertly recommend solutions to their clients and effectively make database calls. He or she must learn how to take thoroughly complete loan applications, successfully prospect for business from referral sources, attend networking events, and operate
with a completed business plan that includes clear and measurable goals. Along with professional training, a new loan officer must go through your company training to be familiar with your LOS, products, pricing, guideline overlays, etc. Of course, licensing is a necessary part of training new loan officers. The professional training we have been sharing should be a strong foundation for successfully passing the NMLS test. Now that your new loan officer is trained and ready to go, you must continue to assimilate him or her into the
real world. For at least the first 90 days, set expectations, continue to teach sales strategies, help with comprehensive business planning, establish accountability and review quality. Proper assimilation will determine the ultimate success of your new loan officer. All of your
sourcing, screening, interviewing, training and licensing will be completely irrelevant if your new loan officer does not get properly assimilated into the marketplace. Once these phases are complete, your new loan officer is ready to begin producing and being successful! As trends have proven, the mortgage industry will continue to be built with new talent, however they must be carefully selected, properly trained and effectively assimilated into the workplace for the best chance of success.
Casey Cunningham is CEO of XINNIX, having co-founded the company in 2002. She has more than 26 years of diverse retail mortgage sales and leadership experience, beginning her career as a loan officer and quickly became a top producer with an annualized production of $60 million and 500 closed loans. 71
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The Game Changer s they say in New England, if you don’t like the weather, just wait a few minutes. Similarly, it seems as if our industry is changing by the hour, as well. Then again, there are some things that remain constant in our particular arena, primarily the loan officer position. And though our industry has undergone drastic change, the key fundamental practice of a loan officer is today what it was 20 years ago: Focusing on a purchase business. Sure, the ways to capture business have evolved over the years, but the fundamentals remain the same. And after all, we’ve endured throughout the past 15 years, I still believe the loan officer
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By Sarah Valentini
position is one of the best careers around. Projections look good for a strong purchase market and rather than panicking about the unexpected blip of refinances going away, it’s a great way to embrace the purchases.
luxury of technology, assistants or marketing departments back then. From this perspective, it should be much easier to become a solid producer and capture purchase business today. Production of $12 million annually should be a layup!
The more things change the more they stay the same Twenty-five years ago, the average size loan amount was approximately $155,000. Today, that number sits at $295,000.Twenty-five years ago, a loan officer who produced $12 million per year was considered a steady producer. Those production numbers still hold true today. That’s almost 50 percent fewer units. To think, loan officers didn’t have the
Know your market In many markets, it’s cheaper to own than it is to rent right now. Many prospective homeowners don’t think about how much money they have cumulatively spent on rent when they are considering owning a home. It is a relationship business I know “self-serve” is the latest hot issue. I can also remember back in 2003 when someone asked me what I was going to do when a machine replaced me, as consumers would be getting their loans through ATMs. It’s evident that the market is changing and online mortgage management will continue to be a growing factor, especially for the next-generation of homebuyers. However, there will be a large number of consumers who realize their home is one of the largest investments they’ll ever make and will, more likely than not, want to work with someone who is an expert in the process. You often get what you pay for How many times do you hear loan officers crying that they need lower rates? I’ve listened to countless loan officers blurt out rates before they even ask a single question. Now, more than ever, getting a clearer picture of your borrowers is more important than throwing out a generic rate. Loan officers that spend the time getting to know a borrower’s situation tend to recommend the better rates and programs, which, in turn, alleviates push back on rates and cultivates a stronger relationship. Getting a loan to the closing table on time and providing good service is imperative. Loan officers must
recognize that they’re more likely to be rewarded with clients who want to work with them as opposed to ones who think they’re going through a drivethru window for one of the most important purchases they’ll ever make. Underwriting starts with the loan officer You cannot expect to establish relationships and proliferate business if you don’t do a great job on a consistent basis. A good loan officer that desires to grow their business should never “hope” a loan gets approved. Hope is never a good plan in this industry. Not only will loans get approved faster with fewer headaches, but also your operations staff will likely be more willing to work on your files. When it’s 4:00 p.m. on a Friday and an underwriter has time to review one more file before calling it a day, do you think they want the welldocumented file or the disaster that was thrown together with duct tape, dental floss and prayers? Of course, we all have loans that are submitted in “hopes” that underwriting agrees with our thought process, but loan officers have a lot more credibility when they are diligent in their originations as opposed to order-takers. Many years ago, I was given the advice to treat my loan files as if I were a presenting a case with one shot in front of a judge. Sadly, there are a lot of innocent people who suffer bad outcomes because they simply had lousy attorneys. Be an ardent advocate for your clients’ best interests and you won’t have to work so hard to create new business. Loans breed loans Ever notice how top performers are always busy in any market? I don’t care if it is purchase, refinance, or generally slow times. Loan officers who do a great job and garner strong relationships get more business by simply doing a better job than the rest of the competition. When people are experiencing good service they are happy to talk about it. When they are experiencing bad service they
feel compelled to talk about it. On which side of the coin do you want to be? Be a trusted advisor to the real estate community There no need to deliver donuts or host luncheons to build relationships with real estate agents. Be the expert they can confidently call for guidance when needed. Even when it’s not your transaction, always present yourself as the expert. There’s the distinct possibility that a real estate agent may have clients dealing with an unfamiliar lender and may want reassurance. Don’t take that as an opportunity to “steal a deal.� Instead, do the right thing and it will surely come back to you tenfold. There are always refinances in purchase markets If you ignore them, someone else will be happy to take them off your hands. There are countless
loan officers who “don’t like dealing with refinances.� That’s something I never quite fully understood. A loan is a loan and a client is a client. The more you have, the more you will continue to accumulate. It doesn’t matter where rates are, there will always be people who need to refinance because of life’s circumstances. If you stay in touch with your clients on a regular basis, you enable yourself to be there for them when such issues arise.
individuals working with everchanging technologies, guidelines and compliance requirements. It’s not an easy job, not by any stretch of the imagination. It seemed a lot easier in 2005 and look what happened. Loan officers should be rejoicing in this purchase market where knowledge and expertise is once again valued. Successful loan officers can still make it to see their kid’s soccer games while earning a great living. If you aren’t doing everything you
Technology is your friend I wish we had CRM’s and other great inventions way back when. It’s easier than ever to stay in front of your clients, and most of them appreciate hearing from you every now and again. It takes minimal effort and the rewards are exponential. The role of the loan officer has certainly evolved from taking a handwritten 1003 to licensed
should be doing, the concept isn’t rocket science and you can start instituting change today. Most people get fired for not doing a good job. Loan officers can often get away with mediocrity, yet it would only take a few simple steps, such as the ones mentioned above, to stand out as one of the best. With “self-serve� getting all the attention, it might be a good time for some self-assessment to start taking those necessary steps to go from good to great.
Sarah Valentini is a leading mortgage professional with 20 years of experience in residential and commercial lending. In 1999, she launched radius financial group inc., where she serves today as the company’s president and principal. Under Sarah’s leadership, radius has grown from a small, local lender to one of New England’s leading, private mortgage banks. 73
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Lending’s Best Trends in 2016: Identifying and Communicating With Borrowers By Whitney Blessington s lenders, identifying prospective customers begins by assessing the current financial environment and finding the segments that most likely need our services. Once complete, we can determine how to best contact and communicate with them in a relevant and meaningful way.
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The current environment Earlier this year, Fannie Mae announced the findings from its Home Purchase Sentiment Index (HPSI), which is designed to improve, understand and
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forecast housing outcomes for housing prices, sales, starts, purchase volume and consumer attitudes about housing. The HPSI showed that attitudes toward the housing market are improving: 72 percent of survey respondents have confidence that they will not lose their job in the next year and there was a four percent increase in the number of consumers whose household income was higher than the previous year. But even with higher job confidence and increasing incomes, only 35 percent of respondents said that they thought it was a good time to buy a home.
True to form, the warmer months will bring about increased lending activity. For some lenders, that approach might be enough to satisfy their goals. For many others, however, growth-by-trend is not a sustainable business plan, underscoring the importance of recognizing emerging and existing subsets of borrowers and connecting with them in the most effective ways. Identifying and targeting the right borrowers A mortgage is one of the biggest financial commitments an individual will make in his or her lifetime and the decision to buy a home impacts everyone differently. Understanding the impact that a mortgage will have on a borrower isn’t possible without first understanding the different types of borrowers. Specifically, the Millennial and Hispanic populations are two of the most predominant groups and present a great deal of opportunity for lenders. According to the National Association of Realtors (NAR), buyers 35 years and younger continue to be the largest generational group of homebuyers (at 35 percent of total buyers). NAR also reported that 67 percent of buyers 35 and younger were first-time homebuyers and 89 percent of Millennials purchased their home through an agent. Many Millennials are still renting because they want the freedom and flexibility that comes with leases, but this group avoided the housing market in the years following the financial crisis and are beginning to show signs that they are eager to exchange the convenience of renting for the stability of ownership. In its Q4 2015 Consumer and Lender Key Findings, Fannie Mae stated that “younger renters are likely to aspire to own a home, but they report financial constraints, such as credit and
downpayment and are frequently looking to income growth to determine the right time to buy.” In March, the Hispanic Wealth Project, in collaboration with the National Association of Hispanic Real Estate Professionals (NAHREP), released data in its State of Hispanic Homeownership Report showing an increase in both Hispanic homeownership rates and number of owner Hispanic households–both of which were higher than the national average. NAHREP also reported that Hispanics represented nearly 70 percent of all new homeownership gains in 2015. According to Chris Herbert, managing director of the Harvard Joint Center for Housing Studies, the report “highlights how important the Hispanic population has become in driving overall housing demand in the U.S., and how this influence will only continue to grow as their share of the population increases.” The Urban Institute projects that by 2019, Hispanics will account for 55.5 percent of new homeowners alone and, similar to its statement about Millennials, Fannie Mae said that “Hispanics prefer homeownership” and that they are “renting now in order to prepare financially to own in the future.” Connecting and communicating with borrowers Once identified, lenders must adopt a relationship-based approach to lending. As with all buyer segments, communicating with Millennial and Hispanic borrowers requires an understanding of their preferences. For instance, firsttime homebuyers prefer to be self-educated and will do their research before choosing a lender, making it critical to have a welcoming and credible digital presence. Of note, Fannie Mae reported in its Mortgage Lender Sentiment Survey that “most lenders consider traditional marketing channels, such as loan officers’ networking and contacts and retail offices in
“Understanding the impact that a mortgage will have on a borrower isn’t possible without first understanding the different types of borrowers.” lender and see what they have to offer. From the lender’s perspective, smart data on existing borrowers provides insight into how to find others like them. This data can be applied to anticipate needs and deliver messages in a timely manner to maximize the prospective borrower’s experience.
Whitney Blessington is vice president of Marketing for Churchill Mortgage, providing conventional, FHA, VA and USDA residential mortgages across 36 states. As heard on personal finance expert and author Dave Ramsey’s nationally-syndicated radio show, the lender focuses on the right loan product for each borrower, providing the education and tools necessary to ensure borrowers’ financial stability through its consultative approach to lending and strong commitment to local communities.
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Where to look To identify and connect with these borrower segments, lenders must know where to look. Helping to better focus marketing efforts, CoreLogic recently ranked all U.S. counties with a population greater than 200,000 to determine the areas with the highest percentage of mortgage applications completed by Millennials. The top 10 were: Clay County, Mo.; Denver County, Colo.; Fayette County, Ky.; Kent County, Mich.; Linn County, Iowa; Polk County, Iowa; Saint Louis City County, Mo.; Utah County, Utah; Weber County, Utah; and Weld County, Colo. Regarding the Hispanic segment, the U.S. Census Bureau recently reported that this group is moving into municipalities and counties, often replacing residents that are heading to other places in search of better jobs or a lower cost of living. Specifically, the Bureau’s data showed surging Hispanic populations in New Jersey, Ohio and Western Pennsylvania, while the states with traditionally larger Hispanic populations (Arizona California, Colorado, Florida and Texas) remain a source of strong prospect. Lending is cyclical–activity increases with the warmer months and relatively low interest rates will drive
borrowers to the market. But relying on the weather or appealing rates to improve business is a static approach in
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their top methods of marketing mortgage products to consumers. Digital channels are of lower priority.” Lenders need to offer multiple options for how prospective borrowers learn who they are and what they offer. Engage prospects without pressuring them and make sure that the experience is transparent and communicative. Connecting within the community is also critical to spreading a lender’s message. Hosting events for consumers provides a direct channel of engagement with prospective borrowers and is a very effective method for establishing a strong local presence. In this setting, education is key–the industry has evolved within the past few years and many prospective borrowers might not be aware that the mortgage process has changed. In addition to providing insight into the home buying process, localized events can open up opportunities to dispel myths and explain how to complete a mortgage application, the impact of interest rates or the variety of programs and different types of loans that are in place to make homeownership more accessible. In fact, Fannie Mae said in its Q4 2015 Consumer and Lender Key Findings that 75 percent of consumers were “not aware of low down payment programs.” Finally, a relationship-based approach is by far the strongest way to build a network of word-of-mouth references to help connect with prospective borrowers. From a consumer’s perspective, if a friend or colleague suggests a lender, it is likely that they will– at the very least–investigate the
a dynamic lending environment. Instead, lenders must employ progressive strategies to maintain ongoing success. This includes recognizing the incredible potential with Millennial and Hispanic borrower segments and developing strategic marketing and communication paths to reach them. Equally important are education-based initiatives to prepare prospective borrowers to make one of the best decisions of their lives.
Is the Borrower Point-of-Sale Experience the Most Important Thing … or the Only Thing? By Alec Cheung erhaps it all started with the eCommerce revolution in the last decade. Americans were seeing a seismic shift away from bricks and mortar toward online shopping experiences that brought economy and immediacy to an ever-greater number of their routine transactions. Need a shirt? Find it online and have it delivered in a day or two. Want the latest book? Head to Amazon and pick between a hard copy or an eReader version that can be enjoyed instantly. Need to find exactly the right car? Search online and pick it up
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at a local dealership at a fleet price. eCommerce’s assault on the status quo not only disrupted the bulk of our transactions, it permanently changed the expectations of multigenerational consumers around the world. Convenience reigns today to the extent that the customer point-of-sale experience has become the most important thing. In the mortgage industry, it may well be on its way to becoming the only thing. Mortgages, of course, must operate within a tightly matrixed regulatory environment, but that environment is focused on consumer satisfaction and ease
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mortgage origination space believe that significant change is on the horizon. The current mortgage point-of-sale paradigm can be painful for experienced borrowers and even more so for a huge generation that is of use–as exemplified by the accustomed to doing everything CFPB’s motivation behind TRID. via mobile devices. Creating Make it simple for consumers to positive borrower experiences has understand and access, make it never been more important for economical and transparent, and mortgage companies than it is the future is yours. The problem, now–particularly with companies as we all know, is that this has all like Quicken already touting been terribly difficult to bring origination-simplifying about. technologies like the Rocket app Fortunately, momentum is on and Wells Fargo’s newly our side, particularly with a announced mobile foray. We know number of industry initiatives that that things like inspections, are well under way. Just as the appraisals and various approvals autonomous automobile is take time, but we also are fast expected to become realizing that the more digital our commonplace within 10 years or transactions, the better our less, the truly streamlined chances to craft positive, mortgage is on its way to being shareable experiences among fully realized. borrowers. Numerous steps remain to be Achieving such a digital taken, but it is undeniable that experience also has a second and consumer front-end expectations, equally important benefit beyond particularly those of Millennials, the consumer experience. When are demanding that the industry you have a mortgage in which all becomes digital as soon as steps in the process are possible. As noted on the May 1, conducted in a digital format, it 2016 broadcast of 60 Minutes, isn’t only the consumer that financial technology is moving benefits. This makes important very fast to suit the requirements mortgage data and metadata of a generation that was raised on accessible and useable by any immediacy rather than mortgage workflow participant bureaucracy. Ireland’s Collison who needs to leverage that Brothers, John and Patrick, information during the loan described a frustratingly outdated process. This has huge experience trying to establish a ramifications for enhancing loan billing account in a traditional quality, compliance and investor bank. It was so cumbersome and transparency. At eLynx, we have maddening that it led them to termed such a mortgage a “Datacreate Stripe, which streamlines Validated Mortgage” because of online payments. Like Paypal its ability to use such data to before it, Stripe and its innovative verify that regulatory and apps are challenging the status operational standards have been quo and currently handle billions met. in payments for major and minor It has taken years of industry corporate users around the world. effort to assemble the needed In the interview with Lesley components, but the DataStahl, Patrick Collison, 27, said, Validated Mortgage is now a “In a world where people can reality, thanks in no small part to send a Facebook message or ... the efforts of MISMO, the MBA’s upload an Instagram photo and Mortgage Industry Standards have it available to anyone Maintenance Organization. anywhere in the world like that MISMO has spent over a decade (snapping his fingers), I think that developing electronic mortgage the fact that that doesn’t work for documents that carry data and money is something that seems metadata enabling users to increasingly, honestly, evaluate, analyze, slice and dice unacceptable to people.” virtually every data element in the He has a very compelling point, loan file. Countless hours have which is why so many in the gone into this effort, and its
“Americans were seeing a seismic shift away from bricks and mortar toward online shopping experiences that brought economy and immediacy to an ever-greater number of their routine transactions.” term care and feeding. The standardized MISMO format means that the incompatibilities of various proprietary systems no longer compromise data integrity or process fluidity, as in the past. Most importantly, the fully electronic, Data-Validated Mortgage allows the industry to provide the level of service and convenience at the point-of-sale
Alec Cheung oversees product management, marketing communications and public relations for Cincinnati-based eLynx. He can be reached by e-mail at ACheung@eLynx.com.
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convenience factor. After all, it is both easier and faster to deliver a link to a secure virtual “room” where initial disclosures await eSignatures than it is to wrangle paper from Point A to Point B. Our experience indicates an acceptance rate of about 85 percent on these electronic processes among borrowers if the processes are well designed and executed. This follows the trend general consumers have set in driving the eCommerce revolution and moving the status quo away from brick and mortar shopping. When electronic processes move broadly into the closing phase– and we anticipate this will start to happen soon—we can expect those who offer eClosings will be judged more charitably by customers than those who remain paperbound. One thing is clear: DataValidated Mortgages fit the needs of up-and-coming borrowers who prefer online and electronic processes over paper-based ones. Does this mean any less direct customer contact by mortgage originators? Certainly not. Mortgages remain mysterious to virtually everyone outside of the industry as to their economic scenarios, ratios, requirements and supporting documentation. As such, borrowers need guidance during the selection phase and throughout the process. But the simple shift from paper to electronic files is an enormous leap forward over the industry’s position of just a few years ago. Today, originators are accustomed to dealing with screens, not papers, and the modern LOS handles most of the digitization part of the process. With the Data-Validated Mortgage, warehousing and shipping are kept digital, as is boarding the loan onto the servicing platform for its long-
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benefits are just now becoming understood by people outside the lending industry, notably the investors we need to bring back into the fold. Up to now, digitized information being conveyed from lenders to servicers lacked a key element–data standardization– and that meant that inconsistent data point formats, inaccurate field mapping and content disparities caused all manner of expensive glitches. The widespread adoption of MISMO standards should make all that go away, saving significant time and expense. On the front end, it means precision, speed and cost savings for originators. The FHFA and the GSEs understand the importance of the Data-Validated Mortgage quite well–and they are requiring more and more information to be submitted in MISMO format electronically every year as part of the Uniform Mortgage Data Program (UMDP). Eventually all aspects of the loan will be electronic, increasing safety for investors, borrowers and lenders alike. Many industry observers believe this sort of transparency is the single most basic requirement for securities investors to once again consider mortgage bonds. Some time ago we arrived at the point in loan processing where most loans are “papered out” only towards the end of the cycle when it comes time to sign on the dotted line at closing. With the true Data-Validated Mortgage, that step is no longer necessary. This moves us closer to a full eMortgage which is far more in line with emerging borrower preferences. As evidence, the early step most associated with paper–the disclosure phase–is already seeing fast adoption of electronic processes, mainly because of the
that customers are coming to demand. With up to 12,000 Millennials coming of age every day, ignoring their preferences in favor of the status quo is hazardous. It is far safer to embrace the new processes and technologies that are already available and create the experiences that meet their expectations. If we have learned anything during the last decade, it is that most institutions that refuse to change are replaced with disruptors focused on upending the status quo in every industry, including ours. The customer experience is no longer the most important thing–it is the only thing we can count on to guide our future innovations.
Adapting to TRID RID: That little fourletter acronym was on the tip of every industry professional’s tongue in 2015. It was the buzzword of meetings, the topic of procedure changes and system overhauls, the subject of countless e-mails, Google searches, articles, Web sites, PowerPoint presentations, Webinars, and even jokes: “’TRID’ is ‘DIRT’ spelled backwards.” In 2015, TRID was inescapable in the mortgage industry, it was everywhere. It was coming to change the landscape of the mortgage process and you could chose to embrace it or fight it, but there was nothing you could do to stop it.
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By Brian Rogerson
Having been in the mortgage industry since 1987, I have personally witnessed just about every significant change that has taken place. Protecting the client should always be a top priority, but unfortunately, that has not always been the case. After the financial meltdown of 2008, our industry deserved the reputation it was given based on the way many of the people behaved and/or chose to operate. The irresponsible and predatory practices by banks forced the government to step in and stand up for the consumers. This needed to happen. At the end of the day, the mortgage industry is a service industry, a simple fact that often gets overlooked. One of the first lessons I was ever taught as a brand new loan
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conversation for another time. Opinions on the impact of TRID vary wildly depending on how you ask. However, the realty is simple … the process and rules now officer was that of the client exist, so get over it. needs to “Qualify to Buy.” Adapting to TRID is not an Somewhere along the way, we option. It is not a suggestion. It lost track of that simple can quite honestly be the philosophy. All of a sudden, difference between staying in anyone could buy a house, or business (from both a regulation multiple properties, whether and customer service standpoint) qualified or not. That simple and going out of business (either philosophy became secondary. self-inflicted or with some help And the results of which, at least from the CFPB). Adapting to TRID in part, contributed to the crash is a choice. You can choose to of the mortgage industry. The industry forced the government to complain about all that is required to close a mortgage in get involved, and as a result, we 2016, or you can choose to have no one to blame but develop procedures that make ourselves. The current state and regulation of just about our every TRID a non-factor to your operation. I would suggest you move is our own doing. Rather do the latter. Analyze where your than continuing to fight a battle “weak spots” are in your loan the industry will not win in my opinion, we would all be better off manufacturing process. Identify where the issues are and then do accepting the changes, embracing the reasons behind the something about it. TRID does not prevent us from closing loans changes, and acknowledging the on time. TRID was not designed role we played as part of the to be your talking point and your reason the changes were mandated. And, more importantly, “go to” excuse for not delivering timely results. With proper to see the changes as a way to procedures and training, I know make our industry stronger as a that the guidelines can be whole and to protect our clients followed while still delivering a who trust us with one of the fantastic borrowing experience to largest financial decisions they will make in their lifetime. TRID is your clients and referral partners. The concept of differentiate or an opportunity to look within your die certainly applies to where we organization and work to create stand as an industry today. Doing ways to implement the changes things the way you have always into our methods of operations done them will certainly catch up without causing delay or poor to you. Understanding the current service levels to the borrowers rules and then building your and real estate agents who so desperately rely on us to keep the entire mortgage process around those changes will allow you to housing industry moving forward move forward and have success and vibrant. The rules and regulations were … and yes, it will prepare you to better handle the next wave of put into place to protect the changes. The only thing constant consumer, to educate them on is change, so you have to learn to what they are actually about to embrace it. As Charles Darwin sign, and to provide a level said, “It is not the strongest of playing field in the industry since the species that survives, nor the all parties have to play by the same rules. It is all well-intended. most intelligent that survives. It is Whether or not all of these things the one that is most adaptable to change.” were accomplished is a
Brian Rogerson is senior vice president of Production with Wallick & Volk, managing all of the company’s Arizona-based branches. He has received numerous industry acknowledgments, including being recognized as one of the Top One Percent of Mortgage Originators in America for both 2014 and 2015.
Where Are the MLOs?
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n the year 2050, my granddaughter or grandson is going to buy a house.
Sitting in front of their “computer” screen they set the search to “Hologram” then type in Glen Ridge, N.J. When prompted, they pick “Neighborhood” and sit back to take a ride through the town that they have heard so much about. They see the old colonial homes, updated from the early “Oughts,” but still have the old charm they found in their parent’s eyes. Prior to logging on they had spoken to an animated visualization of a real estate agent who had told them about the great schools and easy access to New York City. Heliports are far enough
Deciding to wait till they got home, they enjoyed their meal and imagined the changes they would face. When they went home, they had on three they asked the computer away from the central part of the to let them know what the monthly agreed that house number three village that the noise is not was the one they liked the most, so payment would be based on the disturbing. they told the computer to make an parameters they had set before. After the virtual drive through They had determined the amount of offer $250,000 under the asking town, noting the shopping district price of $1.7 million. It was less savings they could use together is still uncovered. With many new than five minutes later that they with the equity realized from the communities throughout America, received the documents they sale of their home in Utah. creating a mall like experience by needed to execute to sign via Then they went to dinner at a placing a roof over the shopping preregistered virtual signatures. new restaurant in Salt Lake and district, helped smaller The agreed upon a date for transfer communities thrive and eliminated talked about the different options of the property, signing all the they had seen. They even took the need to build any more necessary closing docs was two some time to call up the info on sprawling shopping malls. weeks from now. They signed the After the virtual drive through the their handhelds that allowed a computer-generated documents review right there on the table of different neighborhoods, they and went pleasantly to bed. the restaurant. asked the computer memory to show them the houses that were for sale in a certain neighborhood Ralph LoVuolo Sr. has more than 50 years in the mortgage that they had found attractive. The Industry, with the last 30 as a coach. He is past president and hologram representation of the founder of the New York Association of Mortgage Brokers, and homes for sale allowed them to long-time member of NAMB—The Association of Mortgage Professionals. He can be reached by phone at (917) 576-1230 or walk through the homes they e-mail Ralph@MortgageMotivator.com. especially liked. When they settled By Ralph LoVuolo Sr.
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Why 2016 Is the Year for the Mortgage Industry to Go Digital
it possible for you to seamlessly the complexity of borrowers’ order a car service from your financial backgrounds and mobile phone and have that car other particularities. picking you up in minutes From a digital automation (sometimes even seconds). standpoint, this complexity The same can be said about “double punch” from both the travel industry, with sides of the transaction is companies like Airbnb and hardly an ideal scenario. Orbitz, and the entertainment industry as demonstrated by l Sensitivity of mortgage Netflix (although Netflix has transaction for consumers: begun to produce their own Unlike streaming a movie, media in the past few years). buying a plane ticket or Digital technologies have ordering car service, getting a completely transformed how mortgage is the single most these industries are structured. important financial transaction So why, then, have we not seen l World’s largest taxi company in an average person’s life, and this level of digital innovation in the owns no taxis (Uber) consumers desperately want mortgage industry? l Largest accommodation and need the guidance of provider owns no real estate mortgage experts. Getting a Obstacles to innovation in (Airbnb) mortgage is a series of the mortgage industry l World’s largest movie house important decisions—e.g., how There are significant barriers to owns no cinemas (Netflix) much should I put down?, entry that any innovator must Should I add a co-borrower to overcome in order to successfully The formula for disruption my application?, Should I buy scale a company in the mortgage seems to be clear. These down points?, etc.—and there industry. disruptors don’t own or control is simply no replacement for the physical or human assets the reassuring voice of a l Complexity of mortgage that manufacture or perform the mortgage professional who products and borrower loan service. Instead, these knows the ins and outs of scenarios: Mortgage products companies, through their digital these products and how each are complex financial platforms, own and control the of these decisions will impact instruments that most people consumer experience. your loan. do not naturally understand, Uber, for example, does not or, for that matter, care to own the vehicles that transport l Regulation: Navigating the understand. Lay consumers thousands of people a day, nor mortgage industry’s complex can easily get lost in an do they directly employ the regulatory landscape is not an alphabet soup of loan thousands of drivers that easy feat, and it has only programs and loan features. participate in their offering. They gotten harder in recent years The complexity of mortgage do, however, own and control a with the introduction of Doddproducts is only matched by digital infrastructure that makes Frank and all the new rules and laws that stem from it. Regulation impacts digital innovation in many different ways: n Increases the upfront costs of entering the industry (e.g., hiring lawyers or compliance professionals). n Makes the product development cycles longer (in less regulated industries, it is easier to launch an initial product and iterate based on feedback collected from real users, whereas in more regulated To participate, e-mail Scott Koondel at industries the initial product 516.409.5555, ext. 324 must comply with industry or e-mail ScottK@NMPMediaCorp.com. regulations from the outset). few months ago, there was a picture of an IBM Global Entrepreneur Program presentation making its rounds through social media. The slide in the picture was titled “The Digital Disruption Has Already Happened,” and contained eight bullet points, each mentioning an industry disruption and the company driving that disruption. It went something like this:
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By Valentin Saportas
You can’t be ready for what you don’t see coming.
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n Makes sales cycles longer because new products must be fully vetted by a potential client’s compliance department before getting the green light. The silver lining for mortgage innovators Ironically, it is these same obstacles that make the opportunity of innovating in the mortgage industry so attractive, because once you overcome them, they are there to protect you from future entrants as well. There are already many mature companies and tech startups bravely and passionately pursuing ambitious goals in the mortgage industry, and now a perfect storm is brewing to give these innovators much needed wind behind their sails to break through. l Millennial homebuyers: Recent reports by the National Association of Realtors (NAR) already show the millennial generation as the largest percentage of homebuyers in the United States. With improved economic and employment conditions, these tech-savvy consumers are finally moving out of their parents’ basements and into homes of their own. Like generations before them, Millennials also see homeownership as an aspirational goal. And as rents throughout the country continue to skyrocket, their sentiments about homeownership are only reinforced by mathematical logic that points to homeownership as the better financial decision. The Millennial homebuyer represents a major shift in consumer behavior in the housing industry. This is the first generation born and raised in a digital economy where information is free and abundant, and services—even financial services—are seamlessly delivered via their electronic devices. l Regulation … again: Regulation is significantly
increasing the cost of doing business in the mortgage industry. As costs increase, lenders and other loan originators will look for ways to minimize human error and increase efficiencies in their operations through automation and standardization - two problems technology can help solve. In fact, studies show that technology can help reduce origination costs by up to 25 percent. The case for embracing innovation Innovation can be frightening. By definition, innovation changes the way things are done, and, because of its uncertainty, change is always a little scary. However, in today’s fast-paced, technology-driven world, successful professionals—in any industry—are those who learn how to quickly adapt to the times.
The forces of innovation do not ask for your permission or wait for your approval; they are coming, whether you are on board or not. This being said, innovation is something to embrace, not something to protect yourself against. Technology can make you more efficient and help you deliver a better experience to your borrowers. And, as you already know, happy borrowers lead to more borrowers, which you will now be better equipped to handle because your technology is there to help. Mortgage professionals who embrace technological innovation have an opportunity to be more successful than they have ever been—not in spite of technology, but because of it. Therefore, not only should mortgage professionals embrace innovation, they should strive to be a part of it. The mortgage industry is too
complex for even the most brilliant technical minds in Silicon Valley or other tech hubs around the world to develop great technology products alone. Innovation in the industry will only succeed if it results from the collaboration of different groups, some within the mortgage industry and some outside of it too. Up until now, technological innovation has been lagging in the mortgage industry, but 2016 is shaping up to be the year that it finally goes digital. Technology will have a transformative impact in the industry—not only in the way consumers search, shop and ultimately obtain a mortgage, but
it will also change the way lenders and other loan originators deliver their services and loan products. Mortgage professionals should embrace—and become a part of—this wave of innovation. Those who do will greatly position themselves to capture the millennial generation of borrowers and other digital natives who are accustomed to doing everything else online. To quote the great hockey player, Wayne Gretzky, “Skate to where the puck is going to be, not to where it has been.” In the mortgage industry, the puck is going to be in digital technology.
Valentin Saportas is co-founder and chief executive officer of MortgageHippo, a mortgage technology company that partners with mortgage lenders, brokers and loan originators to provide better online experiences to borrowers. Before starting MortgageHippo, Valentin was a finance attorney at the bank lending group of a large Chicago-based law firm. He may be reached by e-mail at Valentin@MortgageHippo.com. 81
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Join the new Facebook group by searching for “OrigiNation.” This public and open group features information that will be featured in the “OrigiNation” column in National Mortgage Professional Magazine, with your consent of course, by Andy W. Harris. People want to hear from you, the mortgage originator, from the good stories to the bad, from the funny to the serious … take this opportunity to connect and share. Search today on Facebook and join the group! Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish.
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What Is Mortgage Trended Data, and Why Should Mortgage Professionals Care? By Julie Wink eing able to predict whether or not a consumer will pay his or her mortgage loan on time and in full is the key concept behind credit scoring. The Fannie Mae announcement about trended data being added to mortgage credit reports for the underwriting process is causing a shift in the entire industry, and will change the way consumers are viewed by the underwriting system. This is a big deal, and is going to cause a shakeup in the mortgage lending world for sure. Before you climb under your
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desk and yell “I can’t take anymore after the TRID changes!” don’t despair, we have you covered! Read on for 10 crucial points to understand about the addition of mortgage trended data, why you should care, and how you can be prepared for the change. 1. You need to know the definition of trended data Fannie Mae recently shared their definition of trended data: “An enhanced credit report with new, valuable data fields, including Actual Payment Amount, and up to 30 months of detailed account history for each trade line.” The way credit
reports show information now is in a snap shot format. Basically, when a report is pulled, the current balance, last payment, and minimum payment show up on the report. This scenario does nothing to account for the people who charge on their credit cards all month, and then pay the balance in full. 2. Fannie Mae’s announcement about trended data This data allows a smarter, more thorough analysis of the borrower’s credit history. Currently, as we mentioned above, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower has been on time or delinquent on existing credit accounts. With trended credit data, lenders will have access to the monthly payment amounts that a consumer has made on these accounts over time. Among other benefits, this will allow lenders to determine if the borrower tends to pay off revolving credit lines, such as credit cards each month, or if the borrower tends to carry a balance from month-to-month, while making minimum or other payments. By understanding the borrower’s payment trends, the underwriting process can be more predictive of who is prepared for a mortgage loan. For example, with all other aspects of the loan being equal, research has shown that borrowers who pay off their credit cards every month are 60 percent less likely to become delinquent than borrowers who only make minimum payments each month. Desktop Underwriter will be updated to utilize this trended credit data, and Fannie Mae will provide additional guidance to lenders in the coming months. 3. Only two of the three credit bureaus are currently on board TransUnion and Equifax are the
only repositories set up at this time to supply mortgage trended data in the beginning of the rollout. Experian could possibly offer it at a future date, however, there has been no announcement at this point as to a timeline of if or when that will happen. Both bureaus offering trended data have given their product specific names. TransUnion has named their mortgage trended data product “Credit Vision,” and Equifax is calling theirs “Acrofile.” 4. Trended data cannot be used in lending decisions during the test phase Although a hyperlink connecting to trended data will be accessible from the mortgage credit reports the first part of March 2016, this is a test timeframe. According to Equifax, in the March-June period, lenders are prohibited from using trended data in mortgage lending decisions. While it is visible, it doesn’t need to impact the loan decision in any way until Fannie Mae “blesses it.” 5. The way you order credit reports won’t change Good news! While the information may look different, the process of pulling a credit report is not. Mortgage professionals will be able to access and order credit reports in the normal manner. Ordering mortgage credit reports will be conducted as always, either through the online ordering platform, through your DU system or your LOS system. 6. The guideline for how exactly trended data affects underwriting has not been announced yet As of now, Fannie Mae hasn’t shared specifically how mortgage trended data will be scored or impact the underwriting process. Trended credit data will be included as part of the Fannie Mae loan review with the DU 10.0 release in June 2016. The FICO credit scoring model
“The Fannie Mae announcement about trended data being added to mortgage credit reports for the underwriting process is causing a shift in the entire industry, and will change the way consumers are viewed by the underwriting system.� currently does not incorporate trended data into their scoring system, and there have been no announcements about adding it into credit scoring formulations.
Conclusion The Fannie Mae announcement about trended data has shaken
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10. These changes will most likely impact mortgage credit report costs Both bureaus supplying mortgage trended data have
Julie Wink joined Data Facts in 1995, and in 2005, became the firm’s executive vice president and partner. Julie she has served on numerous boards of directors, including the National Credit Reporting Association (NCRA) in the roles of treasurer, chairperson of the Education and Compliance Committee, and presently as the association’s vice president.
Thousands of mortgage professionals pay just ½ % premium* for their state mortgage license bonds.
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* premium rate based on bond amount and subject to underwriting
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8. Mortgage credit reports will change only slightly in their layout Within the credit report, there was an original plan of offering a link to the trended data. This has recently changed, so that now, we are expecting that all trended data will show up on the main credit report. This view may vary slightly, depending on the vendor mortgage professionals use to pull credit.
announced price increases in regards to this more fleshed out, robust report.
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7. Not all trade lines will show trended data The new trended credit data information will not show on certain account types. Authorized user accounts, public records, and accounts with less than six months of credit history are examples of accounts that will not show trended data. On the trade lines that show mortgage trended data, the key enhancements are that each trade line will detail actual payments broken out monthly for up to 30 months. The new, mortgage trended data credit report is expected to improve chances of “transactor� applicants securing a mortgage. The premise behind this is, if a person is paying off their credit cards each month, they bring less risk than applicants who carry a balance, or only make the minimum monthly payment. However, applicants who only make the monthly payments on their revolving accounts will experience no further negative impact on their chances to buy a home than they ever have.
9. This change is coming in June 2016 In October of 2015, Fannie Mae announced the change will go into effect the weekend of June 25. However, with testing processes and implementation still underway, this time frame could change. It is important for all mortgage professionals to follow all the updates from Fannie and the bureaus. At this time, FHA and VA loans will not be utilizing mortgage trended data. Lenders won’t see the updated guidelines on their FHA or VA loan case files.
up the industry, and will change the way consumers are analyzed in future lending decisions. There will definitely be a learning curve in reviewing and translating the new information on mortgage trended data credit reports. By staying on top of breaking information, you will be wellprepared and ready to handle this shift without hindering your productivity or progress in making certain your clients are well-served. Keep in mind that this change is a positive shift and helps empower mortgage professionals to serve their clients better, and offer more people the ability to be approved for a mortgage loan.
Three Lucrative Mortgage-Lending Trends ortgage lending volume will increase in 2016, but companies that differentiate themselves by reducing risks to investors will come out on top. When TRID came on the scene in October, it was accompanied by red tape and confusion. Mortgage professionals focused on origination and getting loans to close. Lenders didn’t have much time to consider what investors would want to see in the loans once closing was finalized. Now, loans from that initial hectic transition are being sold on the secondary market. Many in the industry believe minor violations won’t deter private investors. Yet a mere five percent of private investors have inched their way back to the residential mortgage-backed securities (RMBS) market since the 2008 housing crisis—with many of them purchasing only jumbo loans. It’s not that TRID violations are scaring them off, necessarily, it’s that errors are simply another indication to the other 95 percent that the RMBS market is too risky. They don’t want to take on the additional risk that all TRID
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T H E F U T U R E O F C O R P O R AT E S T O R Y T E L L I N G A Special Section in National Mortgage Professional Magazine nmpNEXT is the future of corporate storytelling. It melds the sponsored content that publications depend upon with the editorial focus that lends credibility to the sponsor's most important stories. In Next, NMP editors will look at what's just around the curve by telling stories about the firms that are leading the way. A variety of sponsorship levels allow advertisers to balance budget with reach and puts marketing managers in control of one of the most powerful channels available for advancing their brands. nmpNEXT is a monthly feature in National Mortgage Professional Magazine. Don't miss this opportunity to brand your company, products and leaders as progressive & forward thinkers.
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By Wes Miller
loans carry—the umbrella contractual obligation that the purchaser must prove a loan was originated in compliance with the law. This was the case for WJ Bradley, a lender that recently lost its warehouse funding because it had jumbo mortgages with TRID issues on its line of credit. Lenders, especially those that originate jumbo loans, need to find a way to assure private investors that their loans are low risk. To ease the fears of private investors, three lending trends are emerging: New reps and warrants in the marketplace, corrected/clean TRID loans to ensure good ratings, and proof of compliance. Lenders who understand and implement these trends will pull ahead of their competition. 1. New reps and warrants It will be difficult to understand the true impact of TRID loans in the market until the first ones go into default, most likely two to three years from now. Private investors need to have enough confidence in the RMBS market to take up more and more of the GSEs’ load— more than just jumbo loans. That means lenders need to be aware of what investors want to see in the secondary market
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when it comes to reps and warrants, and plan accordingly. The private securitization market needs to solve this problem and not lean on the government. Structured Finance Industry Group (SFIG) has some recommended solutions in its November green paper—an update of its recommended best practices for alleviating disparities in the current reps and warrants. These include standardized industry best practices for such reps and warrants as No Modification, No Mechanics Liens, Early Payment Default and No Rescission, to name a few. Reps and warrant changes might not seem like a threat to your business model, but the painful lesson of TRID’s long transition period and lastminute interpretations are perfect examples of why you should start now—even if it takes some time for SFIG’s suggestions to become industry standards. Looking ahead and developing processes in advance will lighten the considerable load that new reps and warrants could present in an already rule-heavy environment. Non-agency loans with TRID violations are sitting on warehouse lines. The cost to offload these loans is as much as a 10 percent discount. When one considers the bulk of this business is in the Jumbo space it does not take long to rack up major losses. Loans without infractions from the start will generate the most profit, since they won’t need to be offloaded into the scratch and dent market. This is the first trend in mortgage lending that originators can profit from, especially if they adapt to it quickly. 2. Corrected/clean TRID loans Loan rating agencies are now saying TRID violations won’t
make a huge difference to the secondary market. But there are other statements from the same agencies that many industry professionals might not catch the importance of at first. Consider Kroll Bond Rating Agency’s recently published report: “In instances where these (TRID) violations go uncorrected by an originator, KBRA believes the risks associated with TRID-Eligible Loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining to rate the transaction.” The second lucrative trend in mortgage lending will be ensuring that TRID violations have been corrected/cured. If this is not done in time, loan ratings will be impacted, resulting in lower value pools. A credit risk can be AAA rated, but with TRID violations that weren’t cured in time the rating will slide down to D, reducing its value on the secondary market. A “good enough” business model will never reach its full potential. Author Jackson Brown Jr., known for his bestselling Life’s Little Instruction Book, said, “A racehorse that consistently runs just a second faster than another horse is worth millions of dollars more. Be willing to give that extra effort that separates the winner from the one in second place.” If mortgage lenders want to remain successful, they will need to reach beyond “good enough” and originate clean TRID loans from the start. But even perfectly originated loans, by themselves, need another value proposition to draw out risk-averse private investors: 3. Proof of compliance Even if a loan is 100 percent TRID-compliant, you must be able to prove it for it to be worth anything. Proof of compliance is possibly the most lucrative mortgagelending trend of all. In the current regulatory
“It will be difficult to understand the true impact of TRID loans in the market until the first ones go into default, most likely two to three years from now.” they need to understand their customer’s pain points. Jon Burgstone and Bill Murphy Jr. wrote in their book, Breakthrough Entrepreneurship, “The more acute the pain or problem, the more likely it is that you’ll be able to offer a compelling solution. The more compelling the solution, the more quickly the customer will pay.” A lender’s ultimate customer is the secondary market, and lack of proof of compliance is a massive pain point for private investors. It’s expensive for the secondary market to discover problems. Once these loans are out for bid, it’s a stare-and-compare, manual process. The sidelined private investors would be far more likely to re-engage if they saw proof of compliance and loans fit for sale at close. There could even be price incentives for those lenders that can
prove consistent accuracy of compliance. Problem, meet profitable opportunity. Success is in the details Success tends to favor the detail-oriented, those “racehorse” businesspeople who care and strive for that extra second. Take note,
mortgage lenders: These granular particulars will make all the difference in the value of your loans. New reps and warrants, TRID compliance and proof of that compliance will make loan purchasers sit up and take notice. Don’t let these three lucrative trends pass you by.
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Wes Miller is CEO and co-founder of ATS Secured, a new technology category for the real estate closing industry. Miller has extensive experience in developing and marketing both core and ancillary financial products. Wes has been recognized for his success in sales, customer service and training support staff. He may be reached by e-mail at Wes.Miller@ATSSecured.com.
NMP Daily is the mortgage industry's source for news, insights, trends and tips.
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It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.
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environment, proof of compliance is difficult and costly. It’s not only true of TRID’s 2,000-page rule, but also with UDAAP, FCA, and every other offshoot of the Dodd-Frank Act statute. With so many rules, total proof of compliance has become something of a unicorn in the industry: an elegant, mythical thing that few people believe exists. But a unicorn in the business world is another thing altogether—it’s a company that creates unprecedented success. Businesses that look beyond the complications created by compliance are profit centers ready to be realized. In the words of Henry Kaiser, father of American shipbuilding, “Problems are only opportunities dressed in work clothes.” Every good salesperson knows that to make a sale,
Trends in the Mortgage Industry: No Body Mortgage By Eric Weinstein n April 9th, my daughter got married. Being the freaky, nature loving, hippie that she is, the wedding was held on top of some mountain in the Shenandoah Valley. Don’t get me wrong, the background scenery to the ceremony was serene, but do you know how cold it has been in Virginia this April? Add to that the winds and it was like negative 30 degrees as I walked her down the aisle in my paper thin, rented tuxedo. I could feel myself catching a virus as I stood there. Over the next week, I developed a fever, a nasty phlegmy cough and pink eye in BOTH eyes. Have you ever had pink eye in both eyes at the same time? Squinting through an intersection while you are driving is not the height of safety. I looked like something living at the top of a bell tower in Notre Dame. Yet, life goes on, work goes on and I still had loans to do. Thank goodness I work from home. Can you imagine coming to the office all feverish and half blind? If I was the office manager, I would call security and have me shot on sight. Think zombie invasion. This got me wondering. Just
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“Come to think about it, assuming the correct compute interface, I could be a body-challenged brain in a jar and still be a darn good loan officer.” how bad would I have to be so that I was too disabled to still be a loan officer? This is something I have contemplated ever since I once hired a loan officer with one arm. He was a slow typist, but pretty much, all in all, just as good as any other loan officer I ever hired. I was really impressed at the time. I thought to myself, “Hey, if I lost an arm, I could still be a loan officer, pretty cool.” In fact, even if I lost both arms, I could hire someone to type for me, no problem. How about if I lost both arms and both legs? Sure, same solution, I could hire an assistant, since my main job is to solicit business and answer calls. Who needs to walk and see people? I could do everything over the Internet. Come to think about it, assuming the correct compute interface, I could be a bodychallenged brain in a jar and still be a darn good loan officer. I am sure there is a
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“Futurama” episode like that somewhere. Imagine Stephen Hawkins selling reverse mortgages? It could be done. Okay, here is where I start to date myself (visualize your grandfather’s voice). Back when I started in the mortgage industry as a loan officer, I visited real estate agents, bringing donuts to their office and handing out “rate sheets.” Is that a thing anymore? Real estate agents all work at home and I have not done a rate sheet in, literally, decades. This was all back when the Web was something spiders made in a haunted house and before Al Gore invented the Internet. A thumb drive was something you used to hitchhike. Cellphones were pagers and a computer was the size of your garage that only NASA could afford. There is no way you could have been a loan officer back then with no arms and no legs. Now, of course, we have social media advertising, interactive downloading personal Web sites, home offices and everything one
needs to be a licensed mortgage loan officer … no anatomy needed, except your brain. In fact, it makes you wonder if Quicken Loans actually has any human beings working there right now. I mean, given the strides in artificial intelligence, really, that disembodied voice you get could be Siri with a testosterone subroutine. How would you know? But more importantly, how would your customer know? Would your customer care? Just as long as the rate was 0.125 percent lower, I don’t think they would. So that is the trend I see in the mortgage industry. Soon, smart software programs will replace even us loan officers. But I have a plan. I will open a string of mortgage companies where all the loan officers are just brains in a jar. I would imagine I could pay them a lot less, since how much would a brain need to live on? I even have my corporate name picked out, “No Body Mortgage.” Our motto: “We only have fixed-rate mortgages because … we have no ARMs.”
Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. Eric is semi-retired, doing mortgages by referral only. He may be reached by phone at (703) 505-8692 or e-mail EWeinstein4U@gmail.com.
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Advertising Compliance: Ready for the Banking Examination (Part One) BY JONATHAN FOXX
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advertisements. Of course, banking examiners don’t much care about how engaging and captivating an advertisement is; these professionals are tasked with protecting the consumer in accordance with required regulatory guidelines. One of the very first requests a regulator asks at the outset of an examination is to receive for audit all advertisements involving contact with the public during the scope period. Woe be unto the company that does not have each and every advertisement ready and available for audit! And woe be unto the company that lets a regulator somehow uncover an advertisement that was not disclosed at the time of an examination—even if the advertisement had no violations in it, the trust factor with the auditor will not be easily re-established! As many of you know, Lenders Compliance Group’s orientation is what I call “applied compliance”—not the theoretical approach to
compliance that seems to work in theory, but often becomes controversial in the on-going implementation of regulatory compliance. In this article, I am going to provide a practical approach to guiding you through the maze of certain advertising compliance rules as well as regulatory expectations. Obviously, the article is not meant to be comprehensive. But it is aimed at providing suggested ways and means toward the kind of hands-on, applied compliance that my firm handles every single day on behalf of our clients. This is a two-part article. In this first part, I will discuss some basics, give you the principal ways to prepare for advertising compliance examinations, and highlight the banking examiner’s expectations. In the second part, we’ll explore marketing campaign development, the use of advertising checklists, triggering terms (the advertised continued on page 92
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in-Lending Act (TILA); Federal Trade Commission’s Mortgage Advertising Rules; FHA mandates; Real Estate Settlement Procedures Act (RESPA); Unfair, Deceptive, or Abusive Acts or Practices (UDAAP); fair lending; the SAFE Act, the Fair Credit Reporting Act (FCRA); and state regulations. Clearly, advertising compliance is complex! My firm looks at thousands of potential advertisements a year that are sent to us by our clients for clearance. Although we provide them with our Advertising Manual, which is deep and broad in application and contains many forms and formats, each advertisement still often needs a review, especially at the commencement of a marketing campaign. Our clients want to comply with federal and/or state advertising regulations; however, they feel continually constrained as to how best to both stay within bounds of regulatory compliance and also create appealing
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dvertising is often central to a loan originator’s marketing plans. After all, if prospective borrowers cannot even find you when they need mortgage loans, there’s nothing left but word of mouth, dropping off bagels at real estate brokers, giving away pens and pads with your name on it, offering occasional, educational and promotional presentations on loan products, and hanging out a website shingle with the hopes that you will be listed on Page 10 of a Google Search. Informing the public of loan products is a highly regulated activity in mortgage banking and finance. Buzzwords, restricted words and phrases, and trigger terms can be a nasty nest of vipers that will catch you up in a regulator’s net. The regulatory areas involving mortgage banking advertising include the Fair Housing Act; Equal Credit Opportunity Act (ECOA); Truth-
Should You Really BY BRIAN SACKS
T
ake a trip up Main Street in any big city and you will notice a few interesting things …
Look at the gas stations that have been there for years. There is probably one on each of the four corners on the major intersection right? Now look at their signs. They are all different and one of the them is usually significantly cheaper than the other three. Once you have filled up your tank, keep driving. You will see a Wal-Mart and a Costco if you live in a city with any sort of density. Not far away, usually a mile or so up the road, you will see a store that sells upscale jewelry, upscale clothing, upscale appliances, etc. You might wonder how they
are all able to stay in business, but if you keep reading, you quickly see that price is only an issue for a very small minority of the general public. Not everyone will make their decision just based on price. Furthermore, if you are always the lowest or best priced company out there, you should watch out because no one can sustain that for long. There are actually some who automatically pay the highest price because they feel price is associated with expertise and quality. This has everything to do with your own mortgage business. In my own town of Baltimore, you can drive up York Road and see a mall full of cars shopping at Tiffany’s, Burberry and Nordstrom. Drive three miles down the road, and you will see Dollar General and Wal-Mart,
“Not everyone will make their decision just based on price. Furthermore, if you are always the lowest or best priced company out there, you should watch out because no one can sustain that for long.” along with a Men’s Warehouse and other discount stores. All of them are busy and all of them are doing business. I mention all of this because of all of the noise over the Consumer Financial Protection Bureau’s Rate Checker and some of the new companies that are trying to eliminate loan officers and have “robotic” online
originations. That’s fine … why waste energy and time debating it? None of us will ever have the best rate and we don’t need to! If you know me at all, then you realize that being successful has nothing to do with rates and points. It’s all about expertise and marketing. It’s all about “Picking a niche, which equals
y Care About This?
becoming the expert … letting everyone know about it!” When you are the expert in a niche and can solve a problem, the question of rates disappears. Here are some niches you can explore: 1. First-time buyers and grant programs available locally. 2. Construction perm loans. 3. Reverse mortgages. 4. Couples who are divorcing. 5. Unapproved condos. 6. Self-employed borrowers (new bank statement programs). 7. And my favorite … the 7.3 million Boomerang Buyers who are now eligible for a mortgage. My clients rarely even ask me about my rates and points. They want to know what their payment
will be and how much cash they will need at closing … that’s it! Yes, I realize that sounds easy, but let me give you a real-life example. I regularly mail to apartment complexes with a systematic way of generating new deals. I also mail directly to renters who I know are eligible and have had a bankruptcy or foreclosure, and are now in the position to buy a home. One of the clients who came from this mailing was ready to buy, and I pre-approved her. I then called an agent in an office I had no relationship with and turned my buyer over to one of the top agents in that office whom I had never met or spoken to before. That agent has already sent me two new deals—both conventional 20 percent down with 800 credit scores!
Did you follow that recipe? I gave the agent what she wanted, a pre-approved buyer who was ready to buy, and used that to build our relationship. That works much better than a dozen donuts … right? My niche, and the one that will be exploding this year is buyers who have had a bankruptcy or other credit issue. Some have had a foreclosure three to four years ago or more. They are now eligible for a
mortgage, but don’t realize it! As an industry, we have even given them a name, “Boomerang Buyers,” and the last estimate was that there are close to 7.3 million of them who are now eligible to buy. Are you talking to these potential buyers? Didn’t think so! But they are ready and willing to get back in the market! Stop worrying about pricing so much and start worrying about marketing and the niche you will become the expert in.
Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,900 transactions. He has trained tens of thousands of loan officers and company owners over the past 31 years on how to close more loans, make more money and still have a life. You can view the “Top Originator Secrets Show” on Mortgage News Network. He may be reached by phone at (443) 324-8424 or e-mail LoanOfficerTips@gmail.com.
MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams
he Mortgage Action Alliance (MAA) is a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). MAA is dedicated to strengthening the industry’s voice and lobbying power in Washington, D.C. and state capitals across America. Membership in MAA achieves real results. In late April, the Consumer Financial Protection Bureau (CFPB) issued a letter in response to an MBA-led effort seeking additional clarity on several aspects of the Know Before You Owe rule. The Bureau’s response outlined an expedited rulemaking process that should provide lenders, the secondary market and consumers the clarity and consistency of disclosures that are sorely needed. Also, the House recently unanimously passed an MBA-supported bill that would make it easier for private insurers to offer flood insurance coverage. None of this could happen without the grassroots support of MAA leaders! 92 But much work remains to be done. Over the past few months, 1,862 MAA members have written letters to 351 Congressional offices in support of HR 2121, a bill that would provide transitional licensing authority to originate mortgages for individuals who move from a federally-insured institution to a non-bank lender or from one state to another while they work to meet the SAFE Act’s licensing and testing requirements. Thank you to those MAA members who have already taken action. For those who haven’t- visit Action.MBA.org and help make sure the bill is considered by the full House! Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice! If you would like to run an MAA campaign, please contact Peter Shapiro at (202) 557-2933 or e-mail PShapiro@MBA.org to receive an enrollment campaign kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs. Real estate finance industry professionals who wish to join or learn more about MAA can do so at Action.MBA.org. If you have any questions regarding MBA’s advocacy programs, please contact MBA’s Director of Political Affairs Annie Gawkowski at (202) 557-2816 or e-mail AGawkowski@MBA.org. MAY 2016 n Texas Mortgage Professional Magazine n
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Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage. He may be reached by phone at (800) 851-0263 or e-mail FWilliams@CrescentMortgage.net.
advertising compliance words or phrases that “trigger” the need for additional disclosures), and the way advertisements impact fair lending. The basics First and foremost, let’s be clear about what is a viable advertisement. There are essentially two features that are foundational: It must be truthful; and the intended audience must be “reasonably capable” of understanding the information contained in it. The advertiser’s intent is not the sole determining compliance factor; rather, the manner in which the advertisement actually is received by the audience is dispositive. What is reasonable? One of my colleagues often refers to the “reasonable person rule” as the “village idiot rule;” that is, if the village idiot can be expected to understand the message, the “reasonable person rule” test may be passed. Sounds about right! In effect, a representation, omission, or practice is material if it is likely to affect a consumer’s choice of or conduct regarding a product or service. Put it this way: the general test is whether the “average” person in the intended audience—persons expected to read or hear the advertisement and to be influenced by it—will understand the message clearly. Perhaps it is not possible to quantify the number of persons in the intended audience who need to understand the advertisement clearly, but it should be understandable by a substantial number in the audience. It is not necessary for an advertisement to state every feature of the loan product: an advertisement is not a legal treatise. That said, any features and any terms (including prices) or any potential benefits should be presented in a manner that does not mislead. That means no false impressions caused by omissions. Advertising is a sinkhole of omissions, whether intentionally caused or the result of an error. For the most part, the American Bankers Association’s (ABA) definition of an advertisement offers a
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concise understanding, 1 as follows: “Advertisement” means any message paid for by the sponsoring institution in a newspaper or magazine, on radio or television, on billboards, or in the form of brochures, statement stuffers, direct mail, and other printed material, including applications. Signage, either interior or exterior, and displays also are included. Although not strictly advertising, the terms also embrace oral communications between [bank] employees and actual or potential customers, including telephonic and faceto-face solicitations and inquiries. Added to the foregoing definition would be social media advertising and website advertising—in fact any contact with the public where the goal of the message (written or spoken) causes or can be expected to cause an “intelligent purchase decision” by a consumer who sees or hears the advertisement and, being influenced by the information contained therein, can decide that using the advertised product or service is in his or her best interest— irrespective of whether the product or service is obtained from the advertiser. However, advertising does not include direct personal contacts relating to the negotiation of a specific transaction, or informational material distributed to only business entities. Getting ready for the banking examination There are five aspects involving preparation for advertising compliance. If any one of these is not ready for and responsive to the regulator’s document requests, the company will be scored down, and even may lead to administrative actions on the part of the supervising agency. Let us take a tour of these five components to advertising compliance, as well as the actions you should be taking in advance of an examination. 1. Media Determine the types of advertising media used and
types of services or products that have been promoted. Be sure to review, update where needed, and test the relevant processes for: a. Advertising Policies and Procedures b. Advertising Files and Folders c. Advertising Expense Records (viz., particularly payments to various media, such as radio, television, and newspapers) d. Telephone solicitation and radio and television commercial scripts e. Social Media Interactions f. Website URLs
regulator will be testing for advertising compliance. So you should not wait until the time of a banking exam for you to test your advertising compliance. We recommend a review, at least quarterly, of your advertising files. Consider taking these actions: 1. Review your advertising since the previous examination. If the file is voluminous, select a sampling of advertisements. A typical sample selection should include these reviews: a. Product and service type b. Media used (television,
newspaper, radio, electronic, and so forth) 2. Determine if the reviews include a way—such as via checklists—for gauging compliance with applicable regulatory requirements. Assess the effectiveness of the compliance review procedures based upon a sampling of the advertising file. 3. Rate the advertisement for compliance with regulatory mandates, using (“1”) for fully compliant and (“5”) for least compliant. Specify, test for, and
document all correction actions. 4. Maintain the documents involving the periodic review. Include in the review any complaints associated with the advertisement and the resolution of such complaints. Examiner’s audit criteria When developing advertisements and market campaigns, differing regulatory frameworks may be involved and interlocked. For instance, continued on page 94
2. Compliance training Determine the extent, adequacy, fulfillment, and scope of the compliance training received by staff responsible for responding to consumer inquiries and providing loan product and service information. In my opinion, all employees should take such training. 3. Training-telephonic and electronic communications Determine the extent, adequacy, fulfillment, and scope of compliance training given to staff engaged in phone, e-mail, and any electronic solicitations for loan products and services.
During the examination, the
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5. Audit procedures Determine the existing and needed audit procedures involving all advertising and solicitations (written or spoken) in order to comply with applicable regulatory requirements. Include in the audit procedures a means by which monitoring can be functionally implemented, such as the monitoring of outbound calls to consumers to ensure compliance with applicable law and internal policies; ensuring compliance with legal obligations; and regularly evaluating employee and service provider (viz., Marketing Services Agreements) or affiliate entities performance (if applicable).
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4. Reviews Determine the extent, adequacy, fulfillment, and scope of the reviews conducted on advertising and public notices for compliance with all applicable rules and regulations.
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Mortgage Technology
Bidding Wars By Andy W. Harris, CRMS
s most of us know, bidding wars in most markets have become the new normal. There are simply more active homebuyers looking than there are homes for sale. Inventory issues have certainly provided challenges for new buyers, as well as frustration to say the least when getting outbid. In our market, we’re seeing homes sell for tens of thousands over asking with multiple offers in mere minutes after the home is listed. Nearly half the offers in some areas are even cash and people are going to great lengths to get in that first position for the sellers. My concern has been with how offers are being presented to these sellers through the listing agent. I strategically call the listing agent on most offers my clients make to ensure they are clear on their qualifications and details around their transaction so they can accurately communicate with the seller. The problem is that many of the listing agents I speak with I get the impression they don’t know how to actively filter buyers who are pre-approved or utilizing financing providing the questions they ask. Some often ask if the buyers are contract employees. My response is asking if they mean are they self-employed? Neither is relevant, as you could have a wage-earner non-self-employed borrower with lower reserves and higher debt ratios, than a self-employed buyer and viceversa. How is this relevant without knowing the profile? You could also have someone putting 10 percent down, but they might have the capability of putting 90 percent down if they wanted to. Again, a simple pre-approval letter will not expose this, so what are listing agents telling their selling clients when looking at similar non-cash offers where financing is involved? There are just too many variables internally. This is where a call by the originator certainly can help, as well as a letter from the buyers to the sellers. We just hope that the listing agents are presenting all offers and are in compliance. We have unfortunately seen listing agents giving inaccurate and discriminatory advice to sellers by boycotting veteran buyers, even when a stronger offer assuming their financing is more challenging when it is not. The same might be said for FHA loans over conventional loans, and higher downpayments versus lower downpayments, but there is more to it than that. The details matter, and I believe they should seek them from the lender before presenting advice to a client selling their home. What are you seeing out there? I know there are many stories around this topic as I have many myself. Please share your stories on these bidding wars for next edition by sending me an e-mail or posting on our Facebook Group. Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with “OrigiNation” in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish. You can also join the Facebook Group by searching for “OrigiNation.”
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Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 4960431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.
in Regulation Z (TILA) an advertisement is a commercial message in any medium. For purposes of the FTC’s Mortgage Acts and Practices Rule (MAP Ad Rule), 2 a commercial communication is a statement designed to effect a sale or create an interest in purchasing goods or services appearing in various formats, including the Internet or any other medium. Examiners will evaluate the advertising materials and disclosures across all media, including print, television, radio, telephone solicitation scripts, and electronic media including the Internet, e-mail and text messages. If the company engages in telemarketing, examiners are going to listen to a selection of the sales calls. Furthermore, if the company uses a thirdparty lead generator, there will be a deep dive into the extent and scope of any such relationships, in addition to a review of affiliated or other service providers (i.e., as a broker or agent) to advertise, offer, or provide loans or other products and services. Anticipating the examiner’s audit criteria is critical to a successful review. Typically, a regulator will determine whether advertisements and promotional materials for mortgage loan products contain material misrepresentations, 3 expressly or by implication, of the following: 4 l The existence, nature, or amount of fees or other costs; l Number, amount, or timing of payments, including whether the payment
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includes amounts for monthly escrow payments for taxes and insurance; Credit qualifications for a particular product or program; Potential for default; Product type; Product effectiveness with respect to debt elimination; Nature of counseling services; or The existence, nature, or amount of prepayment penalties.
There are red flags that examiner’s look for when evaluating advertisements, such as the use of fine print, separate statements or inconspicuous disclosures. They will want to know if additional products or services are sold or offered in connection with the loan, such as credit insurance products, home warranties, or annuities. Additionally, the regulator will determine whether advertisements and promotional materials provide timely, clear, and understandable information about the existence of costs, payment terms, penalties, or other terms and charges, the reasons for their imposition, and the salesperson’s compensation from cross-sales. The audience for the advertisement is factored into the overall compliance evaluation. An examiner will determine the target audience for each type of advertisement for a product and service as well as whether the company designs and publishes advertisements, promotional materials, disclosures and scripts that are “comprehensible by the target audience.”
Footnotes 1—Statement of Principles on Financial Advertising, American Bankers Association (ABA). 2—Mortgage Acts and Practices-Advertising, Final rule, 16 CFR Part 321, Federal Trade Commission, FR/76-41, July 22, 2011, Rules and Regulations. 3—See also the MAP Rule, 12 CFR 1014.3, which applies to non-banks and certain statechartered credit unions, which lists nineteen examples of specific prohibited claims. 4—See Module 2 of the CFPB’s Examination Procedures (Mortgage Originations), January 2014.
Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at JFoxx@LendersComplianceGroup.com or visit LendersComplianceGroup.com.
to survive, diversify
class, he said, and reverse mortgages are well suited to tap that wealth. “Americans have wrongly steered clear of reverse mortgages,” Merton said. “This is going to become one of the key means of funding retirement in the future.” The media appears to be catching on, citing the latest research and heralding program changes as extra safeguards for consumers. Major newspapers like The Wall Street Journal, USA Today and The Boston Globe published several articles last continued on page 101
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A saving grace Demographics, economic realities and recent product revisions have led many to reassess the value of reverse mortgages. Several research studies have been published by noted academics and financial professionals in The Journal of Financial Planning and elsewhere exploring the various ways a HECM can be used strategically in retirement planning. The Center for Retirement Research at Boston College has published a number of briefs extolling the advantages of the product. Its research predicts that more people will choose to access their home equity in the coming years. “While most retired households do not currently tap equity, this approach may be a luxury that
future retirees will not be able to afford,” a brief from the Center states. “As the baby boomers retire and the retirement income system contracts, housing equity is likely to become an increasingly important source of support.” Alicia Munnell, the Center’s director, reiterated this point to The Boston Globe last year. “Many people think of their house as a last resort fund or as a bequest for their kids. But the days of ignoring housing wealth
are over. Most people will need to tap their home equity—either by selling and downsizing or taking a reverse mortgage to help pay monthly bills in retirement.” In October, Nobel Prizewinning economist Robert Merton drew the finance world’s attention to reverse mortgages. Speaking before thousands at a wealth management conference, Merton said he believes that reverse mortgages will become essential. The house is the largest and sometimes only major asset for many in the working middle
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It’s all in the numbers While consumers can choose from a variety of loan products on the market today, the fact is none of them are quite like the HECM. The loan gives older Americans access to their home equity without the burden of a monthly mortgage payment, and statistics indicate that many will need to utilize their equity—often their greatest asset—to support their retirement. The numbers make the case. Nearly one-third of retirees have less than $1,000 in savings, according to the Employee Benefit Research Institute’s April 2015 survey on retirement confidence. An alarming majority of seniors claim that running out of money is their greatest fear, even surpassing death. At the same time, approximately 80 percent of seniors are homeowners, and homeowners over age 65 have, on average, more than $200,000 of equity, as stated in a 2016 Merrill Lynch retirement study conducted in partnership with Age Wave. Furthermore, the number of seniors in the U.S. has increased 20 percent in the past five years, reaching 48 million—and this number will continue to grow, as reported in the December 2015 Population Reference Bureau Bulletin entitled Aging in the United States. With more baby boomers expected to reach retirement age in the coming years—and living longer—the market of potential reverse mortgage consumers will increase dramatically.
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SCOTT
Mortgage Professionals to Watch
GOLDSMITH
l First Guaranty Mortgage Corporation (FGMC) has announced the addition of warehouse lending sales veteran Norman Scott as relationship manager of FGMC’s Warehouse Lending Division, bringing more than 20 years of mortgage lending industry experience to the company.
WYBLE
l New Penn Financial has announced the appointment of Jim Wyble as senior vice president of Third-Party Originations (TPO), where he will be charged with overseeing both the East and West TPO Divisions, uniting the leadership, direction, and growth of the channel.
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l Paramount Residential Mortgage Group (PRMG) has promoted Ryan Goldsmith to the position of wholesale regional manager for the firm’s Northeast Region, where he will be reporting directly to James Matarazzo, regional vice president of the Eastern U.S. Territory.
l Stearns Lending LLC has appointed Steven Smith to the position of chief financial officer, with senior executive level responsibilities for the company’s accounting,
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treasury and financial activities and associated strategies.
BROCKWAY
heard on the street
l Alexander Brockway has joined the sales team of the Portland, Maine branch office of Mortgage Network Inc., where he will be responsible for serving buyers and homeowners throughout the Kennebunk and Kennebunkport areas of Maine. l CoesterVMS has hired former Iowa appraisal board regulator Toni Bright as their new chief compliance officer. Bright has more than 10 years of experience in real estate and compliance, having been in charge of multiple boards for the state of Iowa as a regulator for the last 10 years. l Guild Mortgage has named partner and senior vice president Theresa Cherry as manager of its California Coastal Region. l Comergence has hired Chaeli K. Walker as its new marketing director, where she will be responsible for marketing new product rollouts and for supporting sales efforts through multi-channel communications. l ComplianceEase has named David Kittle, CMB as senior vice president of Government and Industry Relations. Kittle will oversee the company’s interactions with federal and state regulators, GSEs, capital markets participants, and mortgage industry groups. Additionally, he will develop new business and sales efforts. l Home Point Financial Corporation has announced the hiring of five new account executives to support growth in its Third-Party Channel, including Jeff Lynch in Chicago; Scott Burchett in Atlanta; Holly Struthers in Dallas; Jenny Gibbons in San Clemente, Calif.; and Doug Bland in San Ramon, Calif. l Dart Appraisal, an independent provider of residential real estate valuation services, has announced the promotion of Mark Luckas to director of client services from
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senior account manager. GSF Mortgage has added Kim Bussan as a mortgage loan originator in Cuba City, joining GSF with 19 years of mortgage industry experience and is able to lend in the tristate area of Iowa, Illinois and Wisconsin. GSF has also announced the addition of Todd Pennington as a regional manager in Ohio. GSF Mortgage has also named Jackie Jones as mortgage loan originator in the company’s Brown Deer, Wisc. Branch, joining GSF with 13 years of experience in both the mortgage and real estate industries. Also new to GSF Mortgage is Firdoun (Rick) Samemy as a mortgage loan originator in Houston, Texas. Churchill Mortgage has named Leticia Mijes as its new multicultural Market Manager, focusing on better meeting the unique needs of an increasingly diverse homebuyer population in communities across the country. RoundPoint Mortgage Servicing Corporation has announced that mortgage origination industry veteran Kelli Yarbrough has joined the company as vice president of Loan Retention, responsible for all aspects of customer contact in the loan retention process for RoundPoint’s MSR portfolio. Parkside Lending LLC has added Linda Jacopetti to support its growing government lending programs as senior vice president of Government Operations. Altisource Portfolio Solutions SA has announced that Jon W. Gerretsen has joined the company as president of Altisource Origination Services (AOS). Altisource has also announced two executive appointments in its Origination Solutions Business Unit, as Michael Kuentz joins as vice president of National Sales for the Lenders One Mortgage Cooperative, a national alliance of independent mortgage bankers, correspondent lenders and suppliers of mortgage products and services, and Justin Vedder was promoted to vice president, National Sales for Origination Solutions. ResMac Inc. has announced the addition of three business development and sales executives to its Correspondent and Wholesale
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Channels, as Bill Parnell (Ohio), David Exner (Chicago) and James Collins (New England) join the company as regional senior account executives. WFG Lender Services (WFGLS), a Williston Financial Group company, has added Derrick Jones as a national sales director. Collateral Analytics has appointed Robert Walker, CMB, CMT as senior vice president of Customer Retention and Acquisition Technologies. Stonegate Mortgage Corporation has announced that Betty Lonis has been named senior vice president of Human Resources, where she will lead the company’s human resources efforts. Stonegate has also announced that Michael Bender has returned to the company and been named east regional manager, where he will lead the East Region’s Third-Party Origination sales teams, selling products in the company’s four TPO channels—broker, non-delegated correspondent, delegated correspondent and bulk mandatory. LenderLive Network Inc. has announced that Lynn Collins and Tisha Hamari have joined the firm as regional account executives for the company’s Correspondent Lending Division. Docutech has announced that David Aach has joined the company’s management team as executive vice president, where he will initially focus on helping to grow revenues by working closely with Docutech’s industry partners and financial services clients and prospects.
Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
e-mail marketing is dead
inboxes of Gmail and Outlook? Do they provide feedback and help to create or even natively deliver behavioral e-mail marketing campaigns? E-mail marketing is not only the oldest digital medium, it’s the most prolific, has the most upside (there are 4.3 billion email addresses), is perfectly situated to integrate data mining, can provide immediate feedback and automated responses, and remains the
most cost-effective marketing medium available. E-mail marketing is generally not dead, it’s not tired, it’s not boring, it’s not a carnival barker asking you to step right up. If you treat your e-mail marketing
Brent Emler Velma.com, exclusive to by e-mail at
as checking a box and hoping the “spray and pray” method works for you, then yes, your email marketing will die. Get serious about breathing life into your e-mail marketing effort; it promises to deliver.
is director of sales and marketing at a customizable marketing software provider the mortgage industry. He may be reached Brent@Velma.com.
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immediately offer him a mortgage refinance product. Instead, you would start a conversation. During that conversation, given the nature of your relationship, you might discuss real estate and mortgage topics. The more you know about someone, the easier it is to have a conversation with them, right? Think about marketing opportunities you will have in the future with the new clients you’re creating today. When you close a loan with a customer, you’re not only serving their immediate needs but also creating an incredibly detailed customer profile. The information you have at your fingertips offers a lifetime of relevant, timely, personal conversation starters. Couple the data with the ability to model e-mail communications around consumer behavior, and you’ll find e-mail marketing will continue to be one of the most powerful tools available to marketers. E-mail reputation, deliverability, and avoiding the dreaded Google “Promotions” tab or Outlook “Clutter” folder, is a mixture of art and science. To keep your e-mail marketing alive, you have to use services which understand how e-mail clients (Gmail, Apple Mail, Outlook, etc.) automate the marginalization of e-mail marketing. There are no less than 200 million e-mail marketing services available to marketers. Okay, that may be a hyperbolic amount, but the point is there are a lot of choices for e-mail marketing. In fact, any respectable CRM or marketing platform has some form of e-mail marketing; it’s a requirement to remain relevant. To ensure your e-mail marketing doesn’t “die,” you have to start thinking about email as an evolving, complex ecosphere requiring specialized skills. If you’re buying a CRM that offers e-mails, ask them about their e-mail reputation. Ask them what efforts they take to avoid spam traps. Have them share with you their subject line testing. Do they throttle their delivery and automate data segmentation to mimic conversational e-mail correspondence in an attempt to avoid the dreaded “Promotion” or “Clutter”
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outstanding
n a t i o n a l
m o r t g a g e
p r o f e s s i o n a l ’ s
o u t s t a n d i n g
p l a c e s
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places to work
Assurance Financial
REMN Wholesale
255-239-7948 www.lendtheway.com
732-738-7100 www.remnwholesale.com
Assurance Financial has built a great reputation for closing loans on time, every time. Our operations team is committed to helping our branch managers and loan officers succeed. We have immediate openings throughout the South. Join us, and experience what a huge difference our support can make to your success!
Although REMN Wholesale is part of a large corporation, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential. As a national company, REMN provides many opportunities for employment from coast to coast.
PRMG
United Wholesale Mortgage
1-866-PRMG-YES (806-776-4937) www.PRMG.net
800-981-8898 www.uwm.com/careers
Built by originators for originators, PRMG was born from a vision of creating a company with a unique culture focused on the successes of the producer. We understand what it takes to be a successful originator and cultivate new business every day.
Voted the #1 place to work in Metro Detroit, UWM is looking for A players to join our talented team. Our business is driven by our culture, and our people are our greatest asset. If you’re looking for the opportunity of a lifetime, apply to UWM today!
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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
calendar of events JUNE 2016 Sunday-Wednesday, June 5-8 National Notary Association 38th Annual Conference The Hyatt Regency Orange County 11999 Harbor Boulevard Garden Grove, Calif. For more information, call (844) 466-2266 or visit NationalNotary.org/Conference. Thursday, June 9 MBAofNY Strategic Real Estate & Lending Summit The Manhattan NYC, an Affinia Hotel 371 Seventh Avenue at 31st Street New York, N.Y. For more information, call (516) 997-3707 or visit MBANY.org.
Wednesday-Saturday, August 17-20 Florida Association of Mortgage Professionals 2016 Annual Convention Omni Orlando Resort at ChampionsGate 1500 Masters Boulevard ChampionsGate, Fla. For more information, call (850) 942-6411 or visit MyFAMP.org. Thursday-Friday, August 18-19 Louisiana Mortgage Lenders Association 2016 Annual Education Conference New Orleans Riverside Hilton 2 Poydras Street New Orleans, La. For information, call (225) 590-5722 or visit LMLA.com. SEPTEMBER 2016 Wednesday September 14 Texas Mortgage Roundup 2016 DoubleTree by Hilton Dallas Near the Galleria 4099 Valley View Lane Dallas, Texas For more information, call (860) 922-3441 visit TXMortgageRoundup.com.
Saturday-Monday, September 24-26 NAMB National 2016 The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com. Thursday, September 29 8th Annual NYC Real Estate Expo The Hilton Hotel 1335 Avenue of the Americas New York, N.Y. For more information, call (646) 210-2545 or visit NYCNetworkGroup.com. OCTOBER 2016 Tuesday-Friday, October 4-7 American Land Title Association 110th Annual Convention Fairmont Scottsdale Princess 7575 East Princess Drive Scottsdale, Ariz. For more information, call (202) 296-3671 or visit ALTA.org. Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street Boston, Mass. For more information, call (800) 793-6222 or visit MBA.org.
Monday-Thursday, October 24-27 8th Annual Conference of Mortgage Brokers and Professionals Harrah’s Convention Center 777 Harrah’s Boulevard Atlantic City, N.J. For more information, call (732) 596-1619 or visit MBANJ.com. NOVEMBER 2016 Monday-Wednesday, November 14-16 National Reverse Mortgage Lenders Association 2016 Annual Meeting & Expo The Swissotel Chicago 323 East Upper Wacker Drive Chicago For more information, call (202) 939-1784 or visit NRMLAOnline.org. Wednesday-Thursday, November 16-17 Mortgage Star Conference 2016 Canyons Resort 4000 Canyons Resort Drive Park City, Utah For more information, call (860) 922-3441 or visit Mortgage-Star.net. Friday, November 18 Utah Association of Mortgage Professionals Expo 2016 Canyons Resort 4000 Canyons Resort Drive Park City, Utah For more information, call (860) 922-3441 or visit UAMPExpo.com.
To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. *Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.
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JULY 2016 Monday-Tuesday, July 11-12 Ultimate Mortgage Expo 2016 Hotel Monteleone 214 Royal Street New Orleans For more information, call (860) 922-3441 or visit UltimateMortgageExpo.com.
AUGUST 2016 Sunday-Wednesday, August 7-10 Summer CAMP 2016: Destination Napa The Westin Verasa: Napa 1314 McKinstry Street Napa, Calif. For more information, call (916) 448-8236, or visit TheCAMPsite.org.
Friday, September 16 OriginatorConnect 2016 Mohegan Sun 1 Mohegan Sun Boulevard Uncasville, Conn. For more information, call (860) 922-3441 or visit OriginatorConnect.com.
NationalMortgageProfessional.com
Tuesday, June 21 Great Northwest Mortgage Expo 2016 Embassy Suites Washington Square 9000 SW Washington Square Road Tigard, Ore. For more information, call (860) 922-3441 or visit GreatNorthwestExpo.com.
Monday-Wednesday, July 25-27 Appraisal Institute 2016 Annual Conference The Sheraton Charlotte 555 South McDowell Street Charlotte, N.C. For more information, call (888) 756-4624 or visit AppraisalInstitute.org/AnnualConference.
overcoming challenges
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all parties involved in real estate transactions. One example is the document “Appraised Value & Energy Efficiency: Getting It Right” which was released in November 2015 by the Appraisal Institute and the Building Codes Assistance Project. This twopage document provides important information to borrowers and lenders of homes that have green or energyefficient features. The guide includes ways builders can help the buyer assure a competent appraiser is selected. It also assists buyers in learning about the loan and appraisal process, and working with the lender. Another tool is the Appraisal Institute’s “Residential Green and Energy-Efficient Addendum.” Lenders can provide this document to appraisers to assist in the valuation of high-performance homes. This addendum was the first form of its kind intended for appraisers’ use. It’s an optional addendum to Fannie Mae Form 1004, the appraisal profession’s most widely used form for mortgage lending purposes that allows appraisers to identify and describe a home’s green features, from solar panels to energy-saving appliances. Evaluating competency With the increasing popularity of green features, it’s likely that an appraiser eventually will be called upon to value a highperformance house. This makes it more important than ever for lenders to provide borrowers with appropriately trained appraisers who will be able to produce credible opinions of value. It is the responsibility of the lender to hire a competent appraiser for the property type. Contrary to some misconceptions, lenders—as well as builders, borrowers and real estate agents—have a right to request a competent appraiser who has taken green
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valuation education, and has experience in this property type. The future The Appraisal Institute believes that the real estate community should collaborate to ensure that green homes are reliably valued. To meet this goal, the association is participating in several initiatives and partnerships. In January 2016, AI and the Residential Energy Services Network signed a cooperation agreement agreeing to work together to present education programs on real estate valuation topics and building energy efficient rating and certification systems to appraisers, builders, developers and other interested individuals. AI and RESNET also agreed to cooperate in research and studies on topics of interest to both organizations. Also, in June 2015, AI joined with the U.S. Department of Energy’s Better Building Accelerator, which will convene leaders to focus on key solutions to expanding energy efficiency in the residential sector. The Better Buildings Home Energy Information Accelerator supports the President Obama’s Climate Action Plan with a goal to accelerate investment in home energy efficiency improvement projects across the country, according to the Energy Department. Green technology is an exciting segment of the residential marketplace, representing a rapidly growing area of the real estate market. All real estate transactions require credible opinions of value which required as much data as possible. Lenders and appraisers should learn more about this rapidly evolving field to best serve the growing numbers of energy-conscious consumers.
Scott Robinson, MAI, SRA, AI-GRS, is 2016 president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers, with nearly 20,000 professionals in almost 60 countries throughout the world.
to survive, diversify
year explaining how a reverse mortgage can be used in conjunction with other strategies to enhance a retirement portfolio. Web coverage was equally positive with sites like forbes.com, marketwatch.com and time.com detailing why home equity should be an important part of the overall retirement picture. Noted retirement expert and frequent Forbes contributor Jamie Hopkins is one of many financial professionals who has spoken out about the importance of the product. In his Oct. 7, 2015 column, Hopkins wrote, “The lack of focus on home equity in retirement income planning is nothing short of a complete failure to properly plan and utilize all available retirement assets.” He continued, “This needs to change immediately because strategic uses of home equity, especially reverse mortgages, could save many people from financial failure in retirement and help stem the overall retirement income crisis facing Americans … Reverse mortgages are a viable tool for retirement income planning, and while not for everyone, could serve as a saving grace for many baby boomers facing a retirement income shortfall.”
Conrad, who has worked in traditional mortgage lending for 38 years. “We process three times the paper than we used to, but policy changes have capped what we can make. So, we make half of the revenue and incur double the amount of manual labor. It no longer makes sense. That’s why I’ve chosen to focus my business on reverse mortgage loans.” Danny Shaheen, who has worked as a mortgage broker
and independent loan officer for 22 years, agrees. “From a timing standpoint, reverse mortgage loans seem to be a perfect fit for loan originators like me. It’s a solution that works with what the market is doing, and it isn’t impacted by TRID guidelines. Certainly, I won’t turn away any business on traditional loans, but
I plan to place more of my efforts on reverse mortgage loans.” Reverse mortgage loans are positioned to become an important part of the retirement planning puzzle in the coming years, and mortgage professionals who can offer this product to their clients will have the advantage.
Kimberly Smith is senior vice president of Wholesale Lending at American Advisors Group (AAG). She may be reached by e-mail at KSmith@AAG.com or visit AAG.com/Wholesale.
Ultimate Mortgage Expo Jazz up your Mortgage Business
June 11-12, 2016 Hotel Monteleone | New Orleans 101
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The ULTIMATE MORTGAGE EXPO provides an exceptional opportunity to showcase your solutions, while networking with hundreds of mortgage industry leaders, brokers and lenders.
To contact us: Vincent M. Valvo, CEO Agility Resources Group LLC Direct: (860) 922-3441 Email: info@agilityresourcesgroup.com
www.ultimatemortgageexpo.com
n Texas Mortgage Professional Magazine n MAY 2016
Shifting opinions With momentum gathering, some are noticing a change in tide. Media coverage of reverse mortgages is trending positively like never before, and many are predicting that public opinion will follow suit. For originators struggling to stay afloat in the wake of TRID, reverse mortgages can offer a welcome reprieve from the forward mortgage paperwork shuffle. But even more importantly, with the anticipated rise of reverse mortgage loans to correspond with the retirement of the boomer generation, this product will likely become increasingly popular. Burdened by TRID, some originators have already added reverse mortgages to their list of product offerings. We asked some of our approved partners to weigh-in on this topic and here’s what they had to say: “In the forward business, my cost to produce an application has gone up steadily since 2010, due to all the regulatory changes, including TRID,” says Bob
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