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
Board of Directors Phone #
calendar of events CAMP
1225 8th Street #425 v Sacramento, CA 95814 Phone #: (916) 448-8236 v Fax #: (916) 442-3616 Web site: www.ca-amp.org
George Duarte
President
(510) 377-9059
gduarte@horizonfinance.com
Michelle Velez
President-Elect
(650) 653-3082
michelle.velez@prospectmtg.com
Karen Bates
Vice President
(619) 422-5900
karen@mil-loans.com
Jon Kaempfer
Vice President
(916) 486-6516
jkaempfer@comstockmortgage.com
Cathy Warshawsky
Secretary
(408) 371-2172
cathy@bayarealoan.com
Brian Weide
Treasurer
(909) 483-3212, ext. 243
brianweide@prodigy.net
Fred Kreger
Immediate Past President
(661) 505-4311
Ramona Castro
Central Valley Chapter
(559) 224-5795
Tom Cychner
San Gabriel Valley Chapter
(626) 653-1800, ext. 103 tacychner@cscaliforniacapital.com
Dale DiGennaro
North Bay Chapter
(707) 252-2700
dale@clgroup.net
Jon Kaempfer
Greater Sacramento Area Chapter
(916) 486-6516
jkaempfer@comstockmortgage.com
fred.kreger@affloans.com
State Representatives
Colin Kyffin
Greater Ventura Area Chapter
(805) 657-0000
colin.kyffin@gmail.com
Phil Lipp
North Los Angeles Chapter
(818) 752-0999
phil@allwestmortgage.org
Bill Moore
Inland Empire Chapter
(951) 283-8834
bmoore@prmg.net
Chris Perez
San Francisco Peninsula Chapter
(925) 785-2006
cperez@rpm-mtg.com
Ben Ramos
Central Coast Chapter
(805) 540-0990
ben@homerunmortgage.us
Cindy Schwartz
Southern Los Angeles Chapter
(714) 308-7155
cynthia.schwartz@nationstarmail.com
George Tribble
East Bay Chapter
(510) 390-0374
gdtribble@yahoo.com
Atsuko Yube
Silicon Valley Chapter
(408) 858-2169
ay@atsukoyube.com
DECEMBER 2013 Tuesday, December 10 2013 CAMP Holiday Party Admiral Baker Clubhouse 3603 Admiral Baker Road San Diego, Calif. 4:00 p.m.-7:00 p.m.
FEBRUARY 2014 Thursday-Friday, February 6-7 CAMP 2014 Sales & Marketing Conference Newport Beach Marriott Hotel & Spa 900 Newport Center Drive Newport Beach, Calif. For information on all CAMP events, call CAMP at (916) 448-8236, e-mail info@ca-amp.org or visit www.ca-amp.org.
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Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.) • Up to 55% on refinances • Up to 60%-65% on purchases • Term 1 to 5 years • Loan costs from 2.00% to 4.00% depending on LTV, term and prepayment penalty Land loan (max LTV 35%, refinance, 50% purchase) call for details
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Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums. This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614
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N A T I O N A L
Lykken on Leadership: Technology Makes Leaders More Productive By David Lykken
N O V E M B E R
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M O R T
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V O
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A SPECIAL FOCUS ON “MARKETING TECHNOLOGY OF TODAY”
The Increased Focus on Cybersecurity
Technology Can Enhance Mortgage Marketing Through Effective Use of Big Data By Jim Blatt ..............58
By Phil Hall
The Road to an Electronic Mortgage By Jeff Knott ..........60 The Future By Eric Weinstein ..............................................62 Leveraging Advanced Intelligence to Combat Short Sale Fraud By Randy Wussler....................................63 Ahead in the Clouds By Bryan Boyer ................................65 Taking the Red Pill By Michael Larkin..................................67
40 Legends of Lending: Maverick Funding Corporation By David J. Coster
NMP’s 2013 Mortgage Technology Providers Directory........................................................68
FEATURES (Almost) Free Ways to Get More Leads & Close More Business By Joan Piantadosi ............................8 The Elite Performer By Andy W. Harris, CRMS ......................8 The Credit Conundrum By Chad Evanson ..........................10 Enterprise Risk Management: What’s in Your MROM? By Andrew Liput ..................................................................16 Get Anti-Money Laundering Under Control at Your Organization By Melissa Hruza ..............................18
46 NMP Mortgage Professional of the Month: Mary K. Kinney, Executive Vice President & Coo, Ginnie Mae By Robert Ottone
52 NMP’s Inside Look: An Interview With Jonathan Foxx, President and Managing Director of Lenders Compliance Group and Brokers Compliance Group
NAMB Perspective: November 2013 ............................20 Seven Advantages of Automated Appraisal Technology By Vladimir Bien-Aimé ......................................28 Navigating the Origination Obstacle Course: Proper Support Staff By Robert Ottone ..............................30
V I S I T Company
Web Site
O U R
A Page
Adinta .............................................................. www.adinta.com ..........................................................58 AllRegs.............................................................. www.allregs.com ..........................................................60 American Financial Resources Inc........................ www.afrwholesale.com/wd ......................Inside Back Cover Brokers Compliance Group.................................. www.brokerscompliancegroup.com ....................................5 CallFurst.com ...................................................... www.callfurst.com ............................................................71 Calyx Software .................................................. www.calyxsoftware.com ................................................43 Document Systems, Inc./DocMagic ...................... www.docmagic.com ......................................................39 Fifth Third Mortgage .......................................... www.53.com/wholesale/contact ......................................31 First Guaranty Mortgage Corp. ............................ www.fgmcwholesale.com ..............................................33 Global DMS........................................................ www.amcmatch.com ......................................................15 Got Appraisal Management Services .................... www.gotappraisals.com ................................................CA1 GSF Mortgage Corp. ............................................ www.gsfsales.com ..........................................................7 Hometown Lenders ............................................ www.hometownbranch.com ..........................................13 Maverick Funding Corp....................................... www.maverickbranch.com ............................................25 Menlo Park Funding .......................................... www.mpfunding.com ....................................................11 Mortgage Banking Services Direct........................ www.lykkenonlending.com ............................................47 Mortgage Mapp, Inc. .......................................... www.mortgagemapp.com/MO ........................................27 NAPMW ............................................................ www.napmw.org ..........................................................51
f contents
T G A G E
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NMP’s Economic Commentary By Dave Hershman............32 How Will the Recent Government Shutdown Impact Your Client’s Mortgages? By Morgan Sims........................36 Marketing Compliance Corner: Lead Purchase Compliance By Michael J. Wallace Esq. ................38 NAPMW Report: November 2013 ..................................38 ValueNation: Putting Customer Service Atop Your Vendor Checklist By David Rasmussen ..............................42 TagQuest Customer Spotlight on Keith Brewer, President of Liberty United Mortgage ..........................44 How a Consumer Made the Government Fix FHA and CAIVRS By Adam P. Smith ............................................48 Grassroots Efforts Enact Governmental Short Sale Changes By Robert Ottone ..............................50 MBA’s Mortgage Action Alliance By Amy Swaney, CMB ....53 North Carolina Amends Anti-Predatory Lending Law By Melanie A. Feliciano Esq. ............................54 MBA Celebrates 100 Years by Focusing on the Future By David J. Coster ..............................................55
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The Changing State of Mortgage Fraud By Phil Hall ........70 NationalMortgageProfessional.com
Solution to the Short Sale Underwriting Issues Now Available By Terry W. Clemans ........................72
COLUMNS NMP News Flash: November 2013 ................................12 New to Market................................................................14 Heard on the Street ......................................................24 NMP Resource Registry ................................................74
D V E R T I S E R S Company
Web Site
Page
New Penn Financial, LLC .................................... www.gonewpenn.com ....................................................59 PB Financial Group Corp..................................... www.pbfinancialgrp.com ......................................CA9 & 61 Prime National Credit Repair .............................. www.primenational.com ................................................30 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com ..............................................17 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................45 Rushmore Loan Management Services LLC............ www.rushmorehl.com ......................................................9 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................63 Simple Nexus .................................................... www.simplenexus.com ..................................................49 Streetlinks LLC .................................................. www.streetlinks.com ..............................Inside Front Cover TagQuest .......................................................... www.tagquest.com ........................................................29 The Bond Exchange............................................ www.thebondexchange.com ..........................................37 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ........................................................19 United Northern Mortgage Bankers, Ltd............... www.unitednorthern.com/branch ..................................80 UNMB Wholesale................................................ www.unmbwholesale.com ................................................1 United Wholesale Mortgage ................................ www.uwm.com ................................................Back Cover Veros ................................................................ www.veros.com ............................................................64 Warehouse Lending Group .................................. www.warehouselendinggroup.com ..................................66
n California Mortgage Professional Magazine n NOVEMBER 2013
NMP Calendar of Events ................................................79
Happy Holidays! FROM ALL OF US AT NMP MAGAZINE
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NOVEMBER 2013 Volume 5 • Number 11
FROM THE
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com
As we approach Jan. 10, 2014, the implementation date of the Consumer Financial Protection Bureau’s Ability-to-Repay and Qualified Mortgage standards under the Truth in Lending Act (Regulation Z) changes, I wonder about exactly how we will all adapt. Are we actually ready for this to go down? Did we sit silently while others did the legwork on Capitol Hill to enact change? Are we going to be rudely awakened come Jan. 10? How will we be able to meet the demands of these new requirements placed upon underwriting without the benefit of technology? Each regulatory change enacted on the mortgage industry seems to up the ante regarding increased risk and liability. The complexity of the challenges to dissect the loan application and meet qualified mortgage (QM), qualified residential mortgage (QRM), ability-to-repay (ATR) and three percent cap requirements, to name a few, are literally outside of our ability to handle manually. In fact, the legal ramifications are so great that one would want technology as a suit of armor to protect oneself from possible severe financial risk and liability. As I look at the multitude of technology providers in the mortgage industry, as well as the many wholesalers and lenders, I am glad to see that preparations to meet the new regulatory environment come January with technology solutions is fully engaged. Who knows what changes will be made between now and then, but being prepared is a plan that every mortgage banker, mortgage broker and loan originator and their teams should be well ahead of. Technology in the mortgage industry has sped up the loan origination process and has aided in increased protection from fraud. I cannot recall a period in the mortgage industry like we are about to go through wherein technology was the lifeblood to survival. I guess what I’m really trying to say in this month’s column is simple … do not fear what the CFPB will bring come January, but be prepared and don’t wait until the last minute to develop your plan. As an industry, the mortgage profession has endured many a difficult period. Think of 2014 as just another challenge to both deal with and overcome and use the technology being developed and rolled out to meet these changes head on. If you fail to adapt, you may not survive! Until next month …
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 National Sales Manager (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com
Scott Koondel Operations Manager (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Robert Peter Ottone Senior Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com
David J. Coster Senior Editor davidc@nmpmediacorp.com
Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 jonb@nmpmediacorp.com
Phil Hall Senior Editor philh@nmpmediacorp.com
publisher’s desk
Brian Coleman Business Development Coordinator (516) 409-5555, ext. 311 brianc@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail beverlyk@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.
Joel M. Berman, Publisher-CEO NMP Media Corp. joel@nmpmediacorp.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2013 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors David J. Coster
David Lykken
Terry W. Clemans
Andrew Liput
Michael J. Wallace Esq.
Robert Ottone
Chad Evanson
Joan Piantadosi
Eric Weinstein
Amy Swaney, CMB
Melanie A. Feliciano Esq.
David Rasmussen
Randy Wussler
Melissa Hruza
Morgan Sims
Jeff Knott
Adam P. Smith
Michael Larkin
Candace M. Smith, CME, CMI
Kay A. Cleland, CMC, CRMS
Donald J. Frommeyer, CRMS
Phil Hall
Editorial Contributors Jim Blatt
Andy W. Harris, CRMS
Vladimir Bien-Aimé
Dave Hershman
Brian Boyer
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n California Mortgage Professional Magazine n NOVEMBER 2013
NAMB The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org
2013-2014 NAPMW National Board of Directors and Administration President Jill Kinsman (206) 344-7827 president@napmw.org
Vice President (Western Region) Anna Mackovska (323) 331-2222 anna.napmw@gmail.com
Donald J. Frommeyer, CRMS (t/e 2014)—President Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net
President-Elect Christine Pollard (607) 226-1046 cpollard1046@gmail.com
Secretary Cynthia Nutter (360) 449-6408 cynthia.nutter@fnf.com
John Councilman, CMC, CRMS (t/e 2014) President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com
Vice President (Central Region) Kelly Hendricks (314) 398-6840 khendricks@fsbfinancial.com
Treasurer Jeanne Evans, CME (918) 431-0155 drmjevans@att.net
Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net
Vice President (Eastern Region) Kimberly Rozell, CME (607) 229-5008 kimrozellnapmw@gmail.com
Parliamentarian Dawn Adams, GML, CMI (607) 737-2584 dawnadams@elmirasavingsbank.com
Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 200 South Wilcox Street, #224 l Castle Rock, CO 80104 Office: (720) 810-4917 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com
Vice President (Northwestern Region) Ken Perry, CMI, CME (360) 936-3010 kenapmw@gmail.com
Administrator Hulene Works (800) 827-3034 hulene01@verizon.net
NAMB 2013-2014 Board of Directors OFFICERS
Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com
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P.O. Box 451718 l Garland, TX 75042 Phone: (800) 827-3034 l Fax: (469) 524-5121 Web site: www.napmw.org
Jim Pair, CMC (t/e 2014)—Immediate Past President Mortgage America Corpus Christi Inc. 22800 Bulverde Road, Apt. 1402 l San Antonio, TX 78261 Phone: (361) 774-7314 l E-mail: jlpair@aol.com
National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org
2013 Board of Directors & Staff Daphne Large President (901) 259-5105 daphnel@datafacts.com
Judy Ryan Director–Chair Strategic Alliance Partnership Committee (800) 929-3400, ext. 201 jryan@kroll.com
Maureen Devine Vice President (413) 736-4511 mdevine@strategicinfo.com
Renee Erickson Director–Chair New Membership Committee (866) 932-2715 renee.erickson@acranet.com
Donald J. Unger Ex-Officio (303) 670-7993, ext. 222 don@advcredit.com
Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com
Mike Brown Treasurer (800) 925-6691, ext. 4350 mike.brown@ncogroup.com
Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com
Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com
Nancy Fedich Director–Chair Legal Committee (908) 813-8555, ext. 3010 nancy@cisinfo.net
Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org
Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com
William Bower Director–Chair Tenant Screening Committee (800) 288-4757 wbower@continfo.com
Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org
Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com
Tom Conwell Director–Liaison Legislative Committee (800) 445-4922, ext. 1010 tconwell@credittechnologies.com
DIRECTORS Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com Dick Morin (t/e 2014) Consumers First Mortgage P.O. Box 918 l Kennebunk, ME 04043 Phone: (207) 985-2895 l Fax: (207) 636-8027 E-mail: dick@consumers1stmortgage.com
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GSF Mortgage Corp.
(Almost) Free Ways to Get More Leads & Close More Business By Joan Piantadosi Mortgages are still happening in every city, but the challenge is improving your marketing efforts so you are experiencing plenty of business. It used to be that everywhere you turned, someone new needed your products or services. Today, it feels like a daily struggle to stay afloat in this ever-changing climate we call the mortgage industry. However, with change comes new opportunity. It’s those professionals that never give up, no matter how the pendulum swings, that come out on top. Marketing is about what you do, not always what you spend. We have compiled, mostly free, marketing techniques you can use without breaking the bank. These techniques can bring in more leads, which will lead to closing more loans no matter what the conditions are like in your area. Get local Every city has areas that grow and appreciate. Create flyers that are very specific to the neighborhoods in terms of relevant statistics and the values of the local people there. Share how you can help them-make yourself available as a local resource. Ask for referrals Although it seems obvious to ask for referrals, they are the best ways to bring in new leads and speak immediately to your credibility. Every once in a while, mail your recent clients to request referrals from them. Make sure you include “Thank You” notes for all referrals and a few of your business cards.
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8 Write a press release and submit it to the local media Announce local trends, a milestone in your business like “over 2,000 loans,” or perhaps announce a new technology you have that will make your way of doing mortgage business better for consumers (think faster, easier, more secure or more green). Be a guest speaker Many people are intimidated by public speaking, but doing so can help you bring in business and build credibility that keeps bringing more leads long after the speech is over. Offer to speak at local meetings such as real estate boards, homeowner association meetings, college economic classes, co-op meetings and more. Use your business cards creatively Think outside the box. Leave your card with your servers at a restaurant, your hair salon, the doctor’s office … etc. Write a simple note on the back such as “Call me when you decide to buy.” You never know whom you might reach at the right time or whom they might pass your card along to. Business doesn’t come as easily as it once did, so it’s up to you as to how much you help yourself to the resources around you. Explore the marketing techniques above and stick with what works best for your strategy. The savvy mortgage professionals will find more than enough business to weather the market. At the end of the day, your marketing is only limited by the extent of your efforts and willingness to try new things Joan Piantandosi is president of Titan List and Mailing Services. For more information, call 877-817-2918 or e-mail titanlms@bellsouth.net.
THE
elite performer
Marrying My Mortgage By Andy W. Harris, CRMS We are now entering a new era in the residential housing market for both the homebuyer and the mortgage professional. From tightening credit guidelines to regulatory restraints, the barrier to entry is greater than it has been in over a decade. What this tells us is that both sides of the homebuying equation must be better educated, prepared and committed to the process. As a mortgage professional entering 2014 with significant changes ahead, it is your duty to help new potential homebuyers and business partners plan for the mortgage application and approval process. This also includes helping them plan for a new large liability, primarily with a greater number of first-time homebuyers. Many consumers don’t realize that a mortgage loan is a liability on a balance sheet. We know there are benefits with amortization, appreciation and tax incentives, but this doesn’t change how a balance sheet works. Even after paying your home off, the property tax results in a liability. Understanding the risks and rewards will help determine the right time to buy and better plan for an investment in real estate. It’s actually quite similar to a committed relationship. Interestingly enough, a mortgage counselor could be compared to a marriage counselor in many ways. Here are a few stages homebuyers face similar to the marriage process:
Single No major commitments and no mortgage. Flexibility to do what they want and move when they want. Little maintenance or responsibilities on rental.
Dating They’ve learned a little about some of the advantages in homeownership and are beginning to show interest. They look online or ask friends to begin considering their options and doing more research. They are toying with a few homes they’ve seen, but carefully weighing the pros and cons, and at times, can be a little too picky. Some have too much square footage and others not enough. They’ve informally interviewed a few mortgage professionals and realtors of interest.
Going steady Not sure if this even happens anymore in human relationships, but hang in there with me … formal pre-approval has been met and they are confident in their lender. Their loan officer provides them with their first pre-approval letter in which they are excited about and show off to others. They’ve started the initial process and established commitment with their loan officer and real estate agent.
Engaged The property has been found and they are ready to go! They got excited when their proposal was accepted by the sellers. They have shared the news with family and friends and the plans have already started on drapes and flooring before the inspection is even complete. It’s an exciting time and the closing date is set!
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Services LLC. LLC. All Rights Reserved. Reser ved. Equal for the extension of credit credit or a commitment 2013 ﾂｩ Rushmor Services LLC, Not an offer offer for LLC, NMLS ID# 185729, 15480 Laguna Canyon Canyon Road, Suite 100, Irvine, Rushmoree Loan Management Services ual Housing Lender Lender. r. Rushmore Rushmore Loan Management Services Irvine, CA CA 92618. 1-866-699-5600. Not brokers.. Rushmore Rushmore does Bankerr-Br - okerr--Servicer (#101513); Licensed for mortgage mortgage brokers. Massachusetts, Missouri, Missouri, or Nevada. Nevada. Alabama Consumer Credit Exemption; Arkansas Arkansas Mortgage Mortgage Banker-Broker-Servicer Licensed Credit (#21602); Alaska Mortgage Mortgage Lender (AK185729); (AK185729); Arizona Wholesale Lender Exemption; to lend. Intended for does not lend in Alaska, Massachusetts, by the Department Department of Corporations under the California tgage Lending Act (#4131068); Colorado Wholesale Wholesale Lender Ex Mortgage Lender (ML-185729); Delaware Delaware Mortgage Mortgage Lender (#012394); District of of emption (Regulated by by the Division of Real Estate); Connecticut Mortgage by Mortgage Exemption California Residential Mor Columbia Mor tgage Lender (MLB185729); Florida Mor tgage Lender Licensee (#24224); waii Mortgage Mortgage Loan Originator Company Company (HI-185729); Idaho Idaho Wholesale Lender Exemption; Exemption; Illinois Residential Residential Mortgage Mortgage Licensee (MB.6760723); Indiana Indiana Mortgage Mortgage Lender-Servicer Mortgage Hawaii tgage Lender r-Ser - vicer (MLD622); Georgia Mor 24);; Ha DFI First Lien Mor tgage Lending (#18619);; Indiana DFI Subor dinate Lien Mor wa Mor Kansas Supervised Kentucky Mortgage Mortgage Company Company (MC71455); Louisiana Residential Mortgage Mortgage Lending (#185729), Maine Mortgage Subordinate Mortgage tgage Lending (#187644); Io Iowa Mortgage tgage Bank Banker er (MBK-2009-0083); Kansas Supervised Loan (SL.0026265); Kentucky Super vised Lender (SLM11886); Mar inator (185729); M ississippi M ortgage Lender Servicer (FL0017075); Michigan Seconda Supervised Maryland yland Mor Mortgage tgage Lender (#19168),, Mic Michigan Mor Mortgage tgage Br Broker, okerr, Lender & Servicer Secondary ry Mo Mortgage rtgage Br Broker, okerr, Lender & Ser Servicer vicer (SR0017076);; M Minnesota innesota Residentia Residentiall Mo Mortgage rtgage Orig Originator Mississippi Mortgage (185729); Montana Mor New tgage Lender (#185729); Nebraska Mor tgage Bank er (#2071); Licensed by by the New New Hampshire Hampshire Banking Department Mortgage Mortgage Banker Department Mortgage Mortgage Banker Banker (#15265-MB), Licensed by by the New New Jersey Jersey Department Department of Banking and Insurance Residential Mortgage Mortgage Lender (#186729),, New Mexico Mor tgage Loan Compan th Car olina Mor tgage Lender (L-154769); (L-154769); North North Dakota Dakota Money Money Broker Broker (MB102411); Licensed Mortgage of Registration Registration (SM501700.000); Mortgage Companyy (185729); Nor North Carolina Mortgage Mortgage Banker窶年YS Banker窶年YS Department Department of of Financial Financial Services Services ( #B501009); Ohio Mortgage Mortgage Loan Act Certificate Certificate of Oklahom tgage Br oker (MB001561); Or egon Wholesale Lender Ex emption; Licensed bbyy the P ennsylvania Depar tment of Banking Mor Dakota Mortgage Mortgage Oklahomaa Mor Mortgage Broker Oregon Exemption; Pennsylvania Department Mortgage tgage Lender (#39094); Rhode Island Licensed Lender (#20132838LL); (#20132838LL); South Carolina Carolina Mortgage Mortgage Lender/Servicer Lender/Ser vicer (MLS-185729); South Dakota Lender (ML.04880); T Mor tgage License (109273); T exas SML Mor ennessee e tgage Banker Banker Registration; Utah Wholesale Wholesale Lender Exemption; Washington Consumer Loan Loan Company Company Tennessee Mortgage Texas Mortgage Exemption; Vermont Vermont Lender (#6411); Licensed by by the Virginia State Corporation Corporation Commission Lender Licens Licensee (MC-5664); Washington (CL-185729); W est Virginia Mor tgage Lender (ML-24836); Wisconsin Mor tgage Bank West Mortgage Mortgage Banker er (#185729); W Wyoming yoming Mor Mortgage tgage Lender/Br Lender/Broker oker (#2250); Fannie Mae Seller/Servicer Seller/Servicer (#30519-000-4); HUD FHA Title II (#3094100002);Veterans (#3094100002);Veterans Affairs Lender nder (#902914-00-00);; USDA. USD DA. A
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By Chad Evanson merican consumers with poor credit face quite a conundrum and most of them don’t even know it. Consumers all share one basic need: Good credit. As well all know, good credit allows consumers to obtain credit and loans at the best
A
interest rates. That means a consumer with good credit can shop around for the best rates. They have choices. Bad credit equates to fewer choices for the consumer. Most lenders prefer consumers with good credit and offer such consumers the best interest rates and lending terms. But, not everyone balks at consumers with bad credit. In fact, one group in particular prefers consumers
that have poor credit: the credit bureaus. America’s top three credit bureaus–Equifax, Experian and TransUnion–all collect consumer data on more than 200 million consumers in the United States and compile that information into a credit report. Credit data is sold to various types of lending institutions with the credit bureaus putting a higher price tag on
those consumers with poor credit. In turn, the credit bureaus generate more revenue from consumers with bad credit.
Credit bureaus in a Catch 22? Credit bureaus are charged with providing lenders with an accurate picture of a consumer’s credit history. But, what many people may not real-
ize is that their credit reports may include inaccuracies that could have an impact on their credit scores. Numbers released from a Federal Trade Commission (FTC) study in early 2013, which studied 1,000 consumers and 3,000 credit reports, found that an estimated 25 percent of all credit reports contain at least one inaccuracy. That’s a 20 percent error rate. Five percent of the errors on consumers’ credit reports have been found significant enough to put them into a different credit category, according to a 2004 National Association of State Public Interest Research Groups study. The inaccuracies significantly impact approximately 10 million consumers, according to CNN1, each of whom are losing opportunities for better interest rates and better borrowing terms. In some cases, the lower credit scores, due to the errors, result in consumers being denied credit or loans altogether. Therein lies the Catch 22: The credit bureaus sell lending institutions credit data relating to the consumer’s financial history. Consumers with poor credit come with a greater price tag because lending institutions must charge a higher interest rate to consumers with sub-par credit. That creates a dilemma for the credit agencies, which are supposed to provide accurate information but which profit off of poor credit, some of which is the result of inaccuracies on consumers’ credit reports.
“Bad credit equates to fewer choices for the consumer.” ing with the credit agencies easier and can produce results. Mortgage professionals, in an effort to help their clients raise their credit scores to qualify for a home loan can refer consumers to a reputable credit repair agency that can help the consumer become a qualified borrower. A reputable credit repair agency assists consumers in rectifying errors on their credit report and can offer sound advice on how to raise their credit score. Essentially, a credit repair agency’s central purpose is to
help consumers navigate the often rough road of repairing credit and to save consumers both time and money in what could ultimately be a lengthy process, if working without the assistance of a credit repair professional. As in any industry, scammers will pose as credit repair professionals and will prey on consumers who desperately want to rebuild their credit. A referral from a mortgage professional can help a consumer feel more comfortable about working with a particular credit repair agency. A rep-
utable credit repair agency will always be licensed and bonded and will offer a money back guarantee. Consumers should also check with the Better Business Bureau to ensure the credit repair agency is a BBB Accredited Business and has an A+ rating. Chad Evanson is a principal of Prime National Inc. “The fastest credit repair in the business: 30 days.” He may be reached by phone at (800) 795-PNCR or email chadevanson@primenational.com.
Footnote 1—Ellis, Blake. “Millions of Credit Reports Have Errors.” CNNMoney. Cable News Network, Feb. 11, 2013. Web. <http://money.cnn.com/2013/02/11/pf/credit-reporterrors/>.
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Many consumers either do not have the time or the specialized knowledge necessary to clean up their credit report in an effort to boost their credit score. A reputable credit repair agency can make the process of deal-
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Credit agencies have little incentive to fix errors on a consumer’s credit report because they profit off of consumers with poor credit, which makes it extremely difficult for a consumer to convince a credit bureau to fix errors. An accurate credit report could result in a higher credit score, which means the credit bureaus won’t make as much money off of that consumer. Some consumers have even resorted to legal action to get the credit bureaus to fix inaccuracies. Approximately 2,249 Americans filed a lawsuit against one of the three credit agencies in 2012, according to CNN and WebRecon, the highest number of lawsuits in a year to date. What’s more, with more than 40 million Americans with at least one error on their credit report, the credit agencies will need the manpower to investigate, substantiate, and rectify those mistakes by either hiring more employees or by adding hours to their current employees’ schedules. Either move is going to cut into the organization’s profits.
EWSFLASH l NOVEMBER 2013 l NMP NEWSFLASH l NOVEMBER 2013 l NMP NE MBA Forecasts $1.2 Trillion in Originations in 2014
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The Mortgage Bankers Association (MBA) expects to see $1.2 trillion in mortgage originations during 2014, a 32 percent decline from 2013. While MBA expects purchase originations to increase nine percent, it expects refinance originations to fall 57 percent. MBA also upwardly revised its estimate of originations for 2013 to $1.7 trillion from $1.6 trillion to reflect shifts in lender market shares reported in the latest Home Mortgage Disclosure Act (HMDA) data release. MBA expects that purchase originations will increase to $723 billion in 2014, up from $661 billion in 2013. In contrast, refinances are expected to drop to $463 billion from $1.08 trillion in 2013. For 2015, MBA is forecasting purchase originations of $796 billion and refinance originations of $433 billion for a total of $1.2 trillion. Jay Brinkmann, MBA’s chief economist and senior vice president for Research and Education released the following statement highlighting key points of the forecast: “We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices. We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in home prices. “We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.3 percent by the end of 2015. As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances. We will potentially see a small increase in refinances toward the end of 2015 as the Home Affordable Refinance Program 2.0
(HARP) expires but HARP activity during 2014 will still be low. While on paper the number of HARP-eligible borrowers appears large, the reality is these borrowers have been unresponsive to numerous attempts to encourage them to participate in the program and are less likely to do so now that rates have gone up. “We revised our origination estimates for 2012 and 2013 based on the 2012 HMDA data released in September 2013. The data showed a higher share of originations going to independent mortgage lenders, particularly purchase mortgages. In 2012, 40 percent of the purchase volume was originated by independent mortgage companies, up from 36 percent in 2011. “Our forecast for the increase in the purchase market is based on our expectations for ongoing improvements in the broader economy and the jobs market. We are projecting overall economic growth to be 2.4 percent in 2014 and 2.7 in 2015, supported mainly by increases in consumer spending and residential fixed investment. GDP growth will remain relatively weak through the end of 2013 and early 2014, at around two percent, due to a variety of uncertainties, particularly over US spending and tax policies linked to the debt limit debate. Our expectation is that the economy will grow somewhat faster in the second half of 2014 as some of these issues are resolved. “Unemployment is expected to continue on a downward path due to falling labor force participation and job growth in the range of 150,000 to 170,000 jobs per month. We expect the unemployment rate will decrease to 6.9 percent in 2014 and 6.4 in 2015.”
Former MBA Leadership Forms Mortgage Collaborative Four industry leaders have announced the formation of The Mortgage Collaborative, a cooper-
ative designed to empower its member mortgage companies to compete more effectively in today’s shifting lending environment. Former Mortgage Bankers Association (MBA) chairmen John Robbins, CMB and David Kittle, CMB, as well as Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals (NAHREP) and Jim Park, former chair of the Asian Real Estate Association of America (AAREA) are the founders of The Mortgage Collaborative, based in San Diego, California. The purpose of the new cooperative is to assist all mortgage lenders in improving their businesses, using their collective buying power to lower costs for third-party services, obtain better financial execution on loan originations and maximize strategies to serve the growing diversity in homeownership, particularly in purchase transactions. For a selected group of service providers and mortgage investors, The Mortgage Collaborative will help to develop innovative partnerships with highgrowth mortgage originators to access new market opportunities. Robbins and Kittle, who led the MBA in 2007 and 2009 respectively, bring decades of experience in all aspects of mortgage operations to the Mortgage Collaborative, including origination, capital markets execution, servicing, compliance and quality control management. Park and Acosta are housing industry veterans with extensive backgrounds in origination, real estate asset management, working with the Government Sponsored Enterprises (GSEs), and running organizations that promote lending diversity and professional development. “The Mortgage Collaborative brings many benefits to lenders and their borrowers,” said Robbins. “It enables all mortgage originators to obtain buying power similar to the largest lenders, helping level the
playing field and reducing costs for consumers. We are bringing a fresh new approach to helping these lenders address the opportunities of a market that is evolving rapidly while mitigating the new business and compliance challenges that our industry is facing.”
CFPB Sheds Light on Servicing Rules The Consumer Financial Protection Bureau (CFPB) is releasing a bulletin and interim final rule to provide greater clarity to the market concerning mortgage servicing rules that take effect in January 2014. The clarifications address communications with family members after a borrower dies, contact with delinquent borrowers, and treatment of consumers who have filed for bankruptcy or invoked certain protections under the Fair Debt Collection Practices Act. “As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market,” said CFPB Director Richard Cordray. “When mortgage servicers better understand the rules they have to follow, that is better for consumers.” In January 2013, the CFPB issued rules to establish new, strong protections for struggling homeowners, including those facing foreclosure. The rules protect mortgage borrowers from costly surprises and runarounds by their servicers.
New FHFA Joint Business Entity Moving Forward The Federal Housing Finance Agency (FHFA) has announced that the joint venture between Fannie Mae and Freddie Mac that
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UWM Launches New Underwriter Tool for Brokers
makes getting deals done faster and easier.”
United Wholesale Mortgage (UWM) has announced that it has custom developed an Income Calculator for brokers to accurately determine a borrower’s wages on the 1003 application. UWM’s proprietary Income Calculator resides within its broker portal, EASE (Easiest Application System Ever), where it can be accessed and utilized by approved brokers. The Income Calculator is the same tool that is used by UWM’s underwriters to correctly calculate borrower income. As a result, accuracy and efficiency is ensured, discrepancies are reduced, the process is sped up, and brokers are able to better and more quickly service borrowers. “Our development of this new tool for brokers to quickly calculate income was done to help further position them as experts in lending to their customers,” said Mat Ishbia, president of United Wholesale Mortgage (UWM). “The Income Calculator is the same tool used by UWM underwriters. By sharing it with our clients, they in turn become income experts. We’re constantly innovating and arriving at new tools and services to help make our brokers as successful as possible. The Income Calculator is yet another component that has been added to our arsenal of solutions that we offer at no cost to our clients.” The Income Calculator works by UWM’s brokers simply logging on to EASE, uploading the 1003, and clicking a button to return the results. Brokers can then save the results for underwriting to review. In addition, brokers are able to access UWM’s Income Calculator via smartphones and tablets. “One of the biggest issues that brokers face is whether underwriting will arrive at the same income calculation that the broker does,” said Ishbia. “With our development of the Income Calculator, however, we have completely eliminated this issue since both the broker and the underwriter’s calculations will mirror one another. It just
New Penn Launches Mini-Correspondent Program
New Penn Financial LLC has launched its mini-correspondent program which enables clients such as mortgage bankers, community banks and credit unions to expand their mortgage businesses while limiting risk and maintaining their brand credibility. Under the program, mini correspondent clients originate loans, submit them to New Penn for underwriting and clear-to-close issuance, complete the closing/funding process and sell the loans back to New Penn. The client remains the lender of record and is responsible for disclosures, closing and funding, while New Penn provides the loan decision. Smaller institutions thus can price mortgages competitively, serve borrowers directly, brand loans/documents as their own and limit risk. “This new program adds the third leg to our successful correspondent and broker/wholesale business channels,” said New Penn COO Brian Simon. “We’re pleased to support the nationwide mortgage community with services that fulfill their requirements for mortgage revenue with reduced risk. We’re here to help these businesses grow.”
Global DMS Launches New AMC Search Engine Global DMS announced that it launched AMCmatch.com, a search engine that allows lenders, servicers and other users of valuation products to efficiently locate and qualify the best fit appraisal management company (AMC) for their needs. “All too often, organizations select AMCs that fail to produce quality appraisals, operate out of compliance,
are financially unstable, aren’t licensed in the states they do business in, and may have payment issues with appraisers, among other concerns,” stated Vladimir Bien-Aime, president and CEO of Global DMS. “AMCmatch.com remedies these problems by providing a Web portal that utilizes our enterprise-class appraisal management technology to list wellprofiled, qualified AMCs that aid lending organizations in their due diligence and selection process for new AMCs.” Approved AMCs that are listed on the site are able to facilitate online ordering, automated collateral reviews, high volume production, superior customer service and direct integration to the GSEs’ Uniform Collateral Data Portal (UCDP). Lending entities benefit by being able to visit the site and enter in specific search criteria to locate established, reputable AMCs that have a proven track record of compliantly delivering quality appraisals. Users of the site can sign up for free without contracts and any additional fees. The data that resides in AMCmatch.com’s search engine includes AMC type, years in business, location, area coverage, licensing, and payment acceptance types. All information and current state licensing is continually verified by Global DMS to ensure that all matches are current, correct and simple to access, thus enabling AMCmatch.com to return accurate information and create a first-rate user experience. AMCmatch.com makes it easy for users to quickly locate the right AMC for their specific needs without extensive research and verification. As a result, the time invested in the due diligence process in order to properly vet AMCs is slashed, making it painless, ensuring the accuracy of information, and allowing lenders to focus on production—and AMCs to focus on collateral. Global DMS has also announced that its eTrac Enterprise platform is now integrated with Ellie Mae’s loan
origination system (LOS), Encompass360. The integration is seamless and allows the entire appraisal process to be efficiently and compliantly completed directly from within Encompass360. “As the mortgage industry continues to face ongoing changes to valuation rules as well as the introduction of new rules, it’s imperative that lenders stay apace of regulatory changes to avoid running the risk of making errors or being out of compliance,” said Bien-Aimé. “Our new integration with Encompass360 prevents users from having to leave the LOS, which enables the seamless exchange of sensitive valuation data, speeds up the appraisal process, facilitates better communication and establishes much needed transparency.” Global DMS’ eTrac Enterprise valuation management is a single-source solution that is proven to automate the entire appraisal process from vendor management to placing orders, making assignments, tracking status and reviewing appraisals for quality assurance. The completed file is then automatically submitted to the Uniform Collateral Data Portal (UCDP)—100 percent compliantly and with no errors or missing information.
DocMagic Announces New QM Compliance Test DocMagic Inc. said it will roll out its new qualified mortgage (QM) test to its customers this month. The new functionality, based on the most recent rules handed down by the federal government, is in testing now with a select group of DocMagic clients. “While the new qualified mortgage standard doesn’t go into effect until 2014, lenders need access to the tools now in order to train their internal teams,” said Laurie Spira, DocMagic’s chief compliance officer. “DocMagic will have the tool available to lenders within the month, giving them a head start towards implementation before the regulations go into effect in January of next year.”
The calculations used to determine whether a given loan qualifies as a QM mortgage can be complicated. DocMagic’s new functionality makes it easy, returning a Qualified Mortgage determination to the lender automatically, without forcing users to learn a new process. The new test will be available from within DocMagic’s regulatory audit engine which is relied upon by thousands of lending institutions nationwide. “As our clients’ trusted regulatory compliance source, DocMagic is proud to provide the tools required to keep their operations fully compliant without compromising the effectiveness of their internal teams,” said Dominic Iannitti, CEO of DocMagic. “With so many regulatory changes being required in rapid-fire succession, our legal and compliance specialists work around the clock to insure that our regulatory auditing and document production systems are always in compliance and ahead of schedule.”
has announced that it has added an automated quality control tool to its platform. Lenders are committed to improved quality control and this tool ensures that clients receive appraiser reports in which errors are reduced 60 percent or more. That allows underwriting to perform their work faster and complete more files with improved accuracy and reduced costs. “There is always the question of which is better, manual quality control or automated quality control? We believe it’s a combination of both if you have the right automation, in our case a customized version of RealView from Platinum Data Solutions, to complement clients’ manual processes,” said Joni Pilgrim, NAN co-founder and direc-
tor of sales and marketing. Nationwide Appraisal Network recognizes the importance of developing and supporting flexible, scalable technology that makes the process simple— especially under the new regulations. NAN has also announced that it is now offering broker price opinions (BPOs) across the U.S. through its real estate broker network. “In response to requests from agents and servicers, we included in our strategic plan, creating a real estate broker network and enhancing our technology to support the initiative in 2013,” said Cari Burris, co-founder and director of operations and finance for NAN. “A great deal of time was spent to build and to test our platform. We have a
proven track record in customizing technology to support users and products. BPOs are just the latest example of the success of that strategy.”
ValuTrac Partners With CoreLogic to Streamline Flood Determination Ordering ValuTrac Software announced the integration of CoreLogic Flood Services into the ValuTrac platform. The integration will allow ValuTrac customers to streamline and enhance the efficiency of the flood continued on page 43
Credit Plus Now a Certified Seller of Equifax Online Employment Offerings
Nationwide Appraisal Network (NAN)
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Credit Plus Inc. has announced that the company is now a certified reseller of Equifax Verification Services offering online employment verifications from The Work Number database. The Work Number is the most comprehensive employment and income database in the nation. The database includes 226 million total records and nearly 54 million current employment records contributed by over 2,500 employers nationwide. The information is updated every payroll cycle; so the most upto-date information is constantly available. Credit Plus can manually verify employment within one to three business days for applicants not included in The Work Number database. “We make employment verifications easy and offer lenders an auditable process that ensures they are getting data they can trust,” said Greg Holmes, national director of sales and marketing at Credit Plus. “Lenders today operate in an environment of heightened regulation making the need to have reliable verification processes from a credentialed source more important than ever,” said Michael Kuentz, Equifax Verification Services Leader. “As a reseller of The Work Number, Credit Plus is well positioned to deliver an unparalleled level of efficiency, and documentation to lenders to help them better manage risk and meet regulatory demands.”
Enterprise Risk Management: What’s in Your MROM? By Andrew Liput
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Increasing regulatory pressures on banks and lenders to adopt greater risk management systems and processes are aimed at establishing a more uniform approach to quality control (QC) industry-wide. At the same time, these pressures seek to protect consumers from the type of non-managed business decisions that were at the root of the financial industry collapse several years ago. Consequently, federal regulators and the government-sponsored enterprises (GSEs) are requiring mortgage makers to demonstrate that they have adequate policies addressing full enterprise risk management, from stem to stern, and that these policies are more than just a window dressing. Audits are requiring that proof be provided that such policies are being used, adapted and modified as needed in response to threats and actual loss events. At Secure Settlements Inc. (SSI), we call this broad-based approach to total risk management the Mortgage Risk Operations Model, or MROM. An MROM implies that banks and lenders have conducted an internal audit and analysis of all of their procedures and operating systems throughout the mortgage manufacturing cycle. Lenders have then identified key touch points where regulatory, compliance, QC and risk management issues arise. Once these touch points are established, then appropriate controls are developed for each issue, backed by guidelines, overlays, training, technology, ongoing monitoring and management oversight. Testing, revisions and enhancements are conducted regularly in response to perceived and actual threats. An MROM committee or team meets weekly or monthly (depending upon the organizations size) to review issues and ensure the MROM is operating properly. Records and reports are maintained in the event of an audit to demonstrate commitment to managing enterprise risk. The key touch points in developing an MROM will likely involve the following stages of the mortgage cycle: Loan origination, processing, underwriting, pre-funding QC, closing, post-closing, third-party post-funding QC, and ongoing QC/QA training. At these stages, the evaluation may address such things as employment screening, best practices, employee performance valuations, QC plans, automated fraud tools, third-party service provider risk and company-wide training. It will also necessarily require ensuring a culture of accountability, self-evaluation, risk reporting and adequate response. At SSI we partner with banks, lenders and credit unions to provide an outsourced solution to evaluating risk, monitoring it on an ongoing basis, and issuing reports. Our services typically assist these entities in their MROM at the processing, underwriting and closing stages of the manufacturing cycle. Quality service provider risk management at these touch points ensures that, in the event of an audit, a bank may demonstrate that their approach is independent, comprehensive, includes ongoing monitoring, provides a method to respond to high risk individuals and events, and engages the proper technology to assure data security, data privacy and uniform regular reporting. Adopting an MROM fulfills the expectations of regulators that mortgage makers have an appropriate strategy to manage risk and changes in a volatile business environment, integrating a uniform but flexible approach to maximizing business success through quality production. Such an approach also fulfills expectations that internal company cultures will embrace accountability and consumer protection. What’s in your MROM? Within the next calendar year you and our staff will need to have an appropriate answer to this question. Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.
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will build and operate a new common securitization platform has reached some important milestones. A Certificate of Formation has been filed with the Secretary of State of the State of Delaware, establishing Common Securitization Solutions LLC (CSS) as a limited liability company. This establishes CSS as a legally recognized entity and marks an important step in creating the joint venture, which is an equally-owned subsidiary of Fannie Mae and Freddie Mac. “The filing of the Certificate of Formation represents a significant milestone toward accomplishing the goal of building a new secondary mortgage market infrastructure,” said FHFA Acting Director Edward J. DeMarco. “We are pleased with the progress being made and look forward to further developments.” FHFA also announced today that after a rigorous process to identify a site, a lease for commercial office space for CSS has been signed by authorized officials from both Fannie Mae and Freddie Mac. The office space is located in Bethesda, Maryland and the lease is for a three-year term. In addition, an executive recruitment firm has been retained to identify candidates for the positions of Chief Executive Officer and Chairman of the Board of Managers of CSS. Identification and interviewing of candidates is currently underway. In a March speech, Acting Director DeMarco announced that the formation of a new joint business entity, to be located separately from Fannie Mae and Freddie Mac and headed by a CEO and Chairman of the Board of Managers, were goals FHFA expected to achieve in 2013. Today’s announcement shows clear progress toward meeting those goals.
MBA Reports Multifamily Lending Up 33 Percent In 2012, 2,803 diff e r e n t multifamily lenders provided a total of $146.1 billion in new mortgages for apartment buildings with five or more units, according to a report from the Mortgage Bankers Association (MBA). The 2012 dollar volume represents a 33 percent increase from 2011 levels. Sixty-seven percent of the active lenders made five or fewer multifamily loans over the course of the year. The MBA report is based on its surveys of the larger multifamily lenders and the recently released Home Mortgage Disclosure Act (HMDA) data that covers multifamily loans made by many smaller lenders, particularly
commercial banks. The $146 billion of multifamily mortgages originated in 2012 went to a variety of investors. By dollar volume, the greatest share (40 percent of the total) went to the governmentsponsored enterprises (GSEs) Fannie Mae and Freddie Mac. In terms of number of loans, the greatest share (80 percent) went to commercial bank, thrift and credit union portfolios. The top five multifamily lenders in 2012 by dollar volume were JPMorgan Chase Bank N.A., Wells Fargo, CBRE Capital Markets Inc., Walker & Dunlop, and Berkadia. ”In many ways we were in a golden age of multifamily finance in 2012, that to a large extent continues today,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Finance. “Low interest rates, strong property fundamentals and increasing multifamily property prices are all supporting a very favorable lending environment. The 33 percent increase in lending volume in 2012 brought levels nearly back to where they had been in 2007.”
MBA’s Open Doors Foundation Nets $100,000-Plus at Convention
Debra Still, CMB, Chairman of the Mortgage Bankers Association’s (MBA) Opens Doors Foundation, released the following statement announcing Opens Doors raised more than $100,000 at MBA’s 100th Annual Convention: “It is a tribute to the generosity of the real estate finance community that we raised over $115,000 in just three days. That not only met, but surpassed our fundraising goal for MBA’s 100th Annual Convention. I am also proud to report that every cent contributed will go directly to providing mortgage assistance grants to families that are at risk of losing their home due to medical expenses incurred while caring for an ailing child. “For most people, the fear of losing a home is second only to the sense of panic that comes with the need to care for a seriously ill child. Our goal at MBA Opens Doors is to end the specter of foreclosure for families who unfortunately–and through no fault of their own–now face the deep financial uncertainty so often involved with attending to a loved one who is too young to help themselves. continued on page 18
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Get Anti-Money Laundering Under Control at Your Organization By Melissa Hruza When it comes to the media, anti-money laundering schemes make for a great story. Television dramas display gangsters and mob bosses with an intricate web of lackeys at their disposal for complex wire transfers. Many consumers are aware of these types of schemes through thrilling, award-winning shows like Breaking Bad or Weeds. It is the final step in order to use money stolen from a bank robbery or a high-stakes drug deal. Anti-money laundering schemes are also present in the mortgage industry. As a financial services provider, anti-money laundering schemes are detrimental to your business. Anti-money laundering revolves around deceit; tricking your staff into believing that the real source of the money was legitimate. Money laundering is a serious crime with federal convictions carrying sentences of 20 years in prison and a fine of up to $500,000, according to Pate Law Firm. Criminals that take that kind of risk do not make great customers. If you are a financial institution, you are accountable for any antimoney laundering activity that takes place at your business. When highprofile criminal cases take place, they can link your organization to criminal activity involving a drug cartel, global terrorist organizations, and it can lead to large, expensive settlements. Not to mention the cost of the resources required to address these types of cases, the loss of productivity of staff, reputational damages, etc. So, how can financial institutions avoid anti-money laundering?
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l Find out if your organization is required to follow the laws set in place by the Bank Secrecy Act (BSA). l To find out more information about the companies required to comply with the BSA, visit the Financial Crimes Enforcement Network at www.fincen.gov/financial_institutions/msb/amimsb.html. If you are required to follow the BSA, it’s time to get compliant. You can do that in a few ways. l You must satisfy annual requirements for anti-money laundering training. l Get a policy in place quickly to cover all aspects of the BSA. l Finally, work with the experts to make sure your bases are covered with ongoing training, tracking, and implementation of compliance procedures. l Training: According to the Federal Financial Institutions Examination Council (FFIEC), training needs to be ongoing, include your own policies/procedure/processes, but also be applicable to your staff’s specific responsibilities. l Tracking and implementation: If you are facing a BSA examination, you will need to ensure that you have a comprehensive compliance program. You will need to keep track of your policies and procedures. It is also recommended that you conduct independent testing or an audit every 12-18 months for banking institutions. Melissa Hruza is marketing and communications specialist for AllRegs. AllRegs has a variety of resources to help meet your company’s antimoney laundering needs, including turnkey policy manuals, training, tracking and implementation resources, and even a free online course to get you started. Visit http://answers.allregs.com/free-aml-course to register for the free course. Or, learn more about AllRegs and the full suite of products and services at www.allregs.com today or call (800) 848-4904.
SPONSORED EDITORIAL
nmp newsflash
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“I thank everyone who donated, and I encourage the entire real estate finance industry to go to www.mbaopensdoors.org and give to the Opens Doors Foundation so we can act to protect the one thing every family should have: a home. MBA is pleased to offer yet another way lenders can demonstrate their commitment to sustainable housing through charitable giving.”
GSEs Prevent Nearly Three Million Foreclosures Since 2008
Fannie Mae and Freddie Mac have completed more than 2.9 million foreclosure prevention actions since the start of conservatorship in 2008. These actions have helped approximately 2.4 million borrowers stay in their homes, including more than 1.4 million who received permanent loan modifications. During the first half of 2013, Fannie Mae and Freddie Mac completed more than 247,000 foreclosure prevention actions, 117,000 of these in the second quarter. The majority of these allowed troubled borrowers to save their homes. The results are detailed in the Federal Housing Finance Agency’s second quarter 2013 Foreclosure Prevention Report, also known as the Federal Property Manager’s Report. The quarterly report has information on delinquencies in each state and an updated, interactive Borrower Assistance Map for Fannie Mae and Freddie Mac mortgages, with information on delinquencies, foreclosure prevention activities and real estate-owned (REO) properties. Also noted in the report: l The number of Fannie Mae and Freddie Mac delinquent loans dropped nationally in the second quarter, primarily driven by a decline in seriously delinquent loans. l Fannie Mae’s and Freddie Mac’s 60-plus-days delinquent borrowers declined 7 percent during the quarter to the lowest level since the start of conservatorship. l More than half of troubled homeowners who received permanent loan modifications in the second quarter had their monthly payments reduced by more than 30 percent. l One-third of permanent loan mod-
ifications in the second quarter included principal forbearance. l Over 29,000 short sales and deedsin-lieu were completed in the second quarter, bringing the total to nearly 506,000 since the start of conservatorship. l Completed third-party sales and foreclosure sales continued a downward trend with a 10 percent reduction in the second quarter and foreclosure starts were down 11 percent.
JP Morgan Chase Reaches Historic $5 Billion-Plus Settlement With FHFA
The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, has announced it has reached a settlement with JP Morgan Chase & Company and related companies for $4 billion to address claims of alleged violations of federal and state securities laws in connection with private-label, residential mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac. Under the terms of the agreement, Chase will pay approximately $2.74 billion to Freddie Mac and $1.26 billion to Fannie Mae to resolve certain claims related to securities sold to the companies between 2005 and 2007 by JP Morgan Chase, Bear Stearns and Washington Mutual. In separate settlements, Chase resolved representation and warranty claims with Fannie Mae and Freddie Mac related to single-family mortgage purchases by the two companies. Under the terms of the agreements, J.P. Morgan Chase Bank N.A. will pay a total of approximately $1.1 billion—$670 million to Fannie Mae and $480 million to Freddie Mac. “The satisfactory resolution of the private-label securities litigation with JP Morgan Chase & Co. provides greater certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers. This is a significant step as the government and JP Morgan Chase move to address outstanding mortgage-related issues,” said FHFA Acting Director Edward J. DeMarco. “Further, I am pleased that a resolution of single family, whole loan representation and warranty claims could be achieved at the same time. This, too, will have a beneficial impact for taxpayers and the housing finance market.” continued on page 42
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NAMB PERSPECTIVE The President’s Corner: November 2013
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My thoughts this month are all over the place … This is hard to believe that we are in the last few weeks of 2013. This year has gone by quicker than I could have ever imagined. NAMB National is now behind us and what a response from our mortgage loan originator community. We had a fantastic turnout and the Exhibit Hall was out of sight. We have already begun on plans for next year, and it will be bigger and better. Thank you to the 1,500-plus attendees who came out and to all of the exhibitors who helped make this event a successful one. Next year, the Luxor is our new home from Sept. 1315, 2014 and they cannot wait to have us there. It is on the same end of the strip as the MGM, so it will be familiar territory. So set these dates aside and wait for more information to come very soon. I cannot believe the number of people who have gone to the NAMB Web site and have completed their Lending Integrity Seal of Approval. Remember, you have to renew this every year when you renew your NAMB membership. It is for all loan originators who are NAMB members. Use it. It is a powerful tool for you to let consumers know that you adhere to the Code of Ethics and Best Practices. I am still perplexed at the number of people that say that they are going to become a Mini-C lender to bypass the CFPB’s rules. It is still a great time to be a broker. We have always been a group of people who have had to deal with
some type of adversity in our life. I can remember back when it was made a rule that you had to disclose your fees to consumers. In the long run, that became a good thing because of the transparency of our costs. We still have to disclose all of our fees and I can truly say that I have never lost a loan because I am disclosing fees. I make sure that I explain everything to my customers and let them know that they are dealing with someone that does not hide their fees or make more money from them because they know what I am making. I don’t have to worry about trying to explain that I am making additional money after I sell the loan and they don’t have to worry about a lock problem. When the loan is locked, they are involved in the lock process. They are fully aware of everything in their loan. I also know that I won’t have to hire people to follow my warehouse line, manage it for me, and make sure that the forms are all correct and that I won’t have any additional exposure because I forgot something or my people forgot something or I missed a date to have it purchased off my line which lead to higher costs and I didn’t make what I thought I was making. One of the best things to come to the mortgage broker was the LO compensation rule in April of 2011. It made it easier to explain to customers what was going on with their loan. Yes, it might be presented to you that you can make more money, but what about the risk? Are you willing to go on the hook to bypass the CFPB? I think that if you are a small broker
Mortgage Community Gathers in Vegas for NAMB National 2013 By Kay A. Cleland, CMC, CRMS NAMB National was held at Harrah’s in Las Vegas in October and “WOW!” is all I can say about the event! If you are a mortgage professional and didn’t attend this convention, you really missed out. The event was bigger and better than the last few years. The convention hall was packed with vendors and attendees, and the speakers were magnificent. The event began Saturday, Oct. 19
with committee meetings, the NMLS eight hours of education taught by David Luna of Mortgage Educators & Compliance, the Delegate Council Meeting for all state members and the Opening Reception. The Delegate Council meeting is a time when all state members receive updates from NAMB and the state members give feedback and vote. One of the most intensive aspects of the event was the opportunity for mortgage professionals to complete eight hours of NMLS education, with morning and afternoon sessions that
shop like I am, or are not closing 50-100 loans per month, being a broker entity is the way to go. You get the ability to go to whatever lender you are approved with, lenders that let you give them the type of loans that they do best, and you perform a service to your customer that you feel that they will treat your customer professionally and that you feel good about for the future. This, in no way, changes your personal contact with them, but it solidifies your standing with your customer. If you are going to really think about going to the Mini-C, think about it long and hard before you do. You have a lot more on the line, you need more insurance, you will need to make sure that you are approved by the specific regulator for your state to do loans, you need to apply for your warehouse lines, and so much more. The one question that is being bantered about has to do with the full correspondents. These lenders are not happy with the qualifications that these Mini-Cs are asking for. The full correspondents have had to jump through a lot of hoops and have always set them self apart from brokers and banks. Just a word to the wise … be careful and be sure this is what you want. And one other thing, don’t forget the increased compliance requirements that you will be forced to complete along with a different Mortgage Call Report each quarter for the NMLS. Your responsibility with Home Mortgage Disclosure Act (HMDA) reporting is also your job. Just think about all of the added things you have to do going forward. Your obligation for all of these new requirements must make it worth your while to do this. I would like to extend an invite to any member that wants to get involved with NAMB and the committees. We are
always looking for good people to get involved. We have a lot of things going on, and we can use anyone that wants to make your association a better association. Remember, people are the important part of every organization, and we need you to help us. You won’t need to spend a lot of time on this, but it will be quality time. By the time you read this, the dates for our Legislative Conference will have been announced. This year, more than ever, you need to make plans to come to Washington, D.C. and be part of our “March on the Hill.” We are in the process of getting a grassroots effort together for the Government Affairs Committee, and this way, we can extend to you the opportunity to get with your local representative or senator. As a final note, the renewal period for the NMLS is upon us. Please make sure that you go on and complete your renewal as soon as possible. You will want to make sure that your continuing education is done before you do this or it will not let you renew your license. If I were you, I would get this done prior to Dec. 1 so that you will get your renewal prior to the new year. Please continue to send me your suggestions and watch for my “Monday Morning Messenger” each and every Monday. It is my way of staying in touch with you, the NAMB member, as well as you staying in touch with NAMB. Sincerely,
count toward qualifying credits. The morning session was an educational course on Identity Theft and Federal Laws, both of which were discussed in great detail. After breaking for an hour, the course continued in the afternoon with a segment on ethics, followed by ECOA and Fair Housing, and the FHA’s 203(k) offering. The afternoon (for those not engaged in the NMLS Course) was dedicated to the Delegate Council, where a discussion of the changes to the association’s Bylaws occurred. Another topic of discussion by the Delegate Council was talks of strengthening ties between both NAMB and its affiliates. This is always an important aspect of what NAMB stands for, reaching out and spreading the goals of the mortgage broker among its various supporters and affiliates from all across the country.
Saturday evening concluded with the Opening Reception, followed by the PAC Auction. Both events were well-attended and included a mentalist who worked the crowd with tricks and other illusions. Substantial donations were made to support the PAC fund’s efforts. Day two began with the Opening Keynote, Lawrence Yun, chief economist of the National Association of Realtors (NAR), who was on-hand to showcase a PowerPoint presentation entitled “What’s Next for the Housing Market?” Mr. Yun shared his stats for the 2014 housing market and the impact that the impending qualified mortgage (QM) rule may have on the marketplace. At the same time as Yun’s presentation, there were a few programming tracks taking place, including sections on reverse mortgage, maximizing a
Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals president@namb.org www.joinnamb.com
NAMB PERSPECTIVE borrower’s credit score and the DoddFrank Act. After a brief lunch, there was a programming track on how to get more business from realtors, as well as Jonathan Foxx’s panel related to policies and procedures for nonbank lenders and brokers. A regular contributor to National Mortgage Professional Magazine, Mr. Foxx of Lenders Compliance Group, discussed preparation for new regulations and the steps a company must take in order to conform to the mandates handed down by the Consumer Financial Protection Bureau (CFPB). The Expo Hall opened Sunday as well, allowing attendees the opportunity to network, win prizes and potentially invest in new revenue sources. The exhibitor booths ranged from wholesale lenders, appraisal management companies, compliance monitors, mobile telephone providers, mortgage insurance companies, social media companies, software companies, lead generation, credit, sales tools, commercial lending, insurance, bonding, media and marketing companies. All of these vendors were at the NAMB National to support the originators and their mortgage companies. Sunday evening was the time for NAMB to recognize a number of its volunteers for the hours spent over
the past year working toward the betterment of the mortgage industry at the Mortgage Professional of the Year Awards Gala. NAMB’s president recognizes those whom he or she felt went above and beyond their calling as volunteers and honors them with the NAMB President’s Award of Merit. This year, NAMB President Don Frommeyer, CRMS recognized the following four individuals for their work on behalf of NAMB in 2013: John Stevens, CRMS from ENG Lending in Draper, Utah for his service as PAC Chair and NAMB National Committee Chair; Joel Berman, publisher of Wantagh, N.Y.-based National Mortgage Professional Magazine for his work on the Magazine, the Official Publication of NAMB; James Nabors, CRMS from Citizens Bank in Ohio for his continued support of NAMB; and Ryan Riesterer, NAMB’s Corporate Attorney from Riesterer Law & Consulting Ltd. in Colorado for overseeing NAMB+ and their contracts. The Kathy Love Volunteer of the Year Award went to John H.P. Hudson, CRMS, vice president of regulatory affairs at Premier Nationwide Lending in Texas, and current Communications Committee Chair for NAMB, for his work on Capitol Hill on behalf of NAMB and mortgage professionals
nationwide. Nominees for NAMB’s Mortgage Professional of the Year for 2013 were John Stevens, CRMS of ENG Lending in Utah; Richard Bettencourt, CRMS of Mortgage Network in Massachusetts; and Olga Kucerak, CRMS of Crown Lending in Texas. The award went to Olga Kucerak for her dedication and work on behalf of the mortgage profession. Monday morning’s keynote presentation featured nationally-syndicated columnist Ken Harney and his perspective on where the market will be headed in 2014 and beyond. Later, a second keynote speaker, Greg Frost, provided tips on capitalizing on the market in 2014 in his presentation, “Build Your Sales to a Billion Dollars.” Marketing, planning and preparation were key themes in both presentations as both Mr. Harney and Mr. Frost provided those on hand with a number of tips to take their business to the next level. The day continued on with meetings that covered an array of topics, from credit misconceptions, retirement and home equity, mini-correspondent and underwriting. This convention was perfect timing to get the required NMLS classes by an elite instructor, and to get ready for the challenging New Year ahead of us with so many opportunities.
As a licensed mortgage originator and owner of my own company, it is imperative that I know what is going on legislatively and how it affects me, my customers and my company. NAMB is the greatest advocate for individual mortgage originators and their companies. It is important that we all know exactly what is coming legislatively and what we need to do as a mortgage professionals to be prepared. We are all in this together, which is why everyone that is in the industry should have been in attendance at this conference. Please join NAMB—The Association of Mortgage Professionals today and get involved. I am thankful for all of the volunteers at NAMB. I am also thankful for the NAMB sponsors, vendors and partners that made this Conference the absolute best! It is important that we all play a part in our mortgage industry. If you are not a member of your state and national association, please join today and help us to make a difference and support our industry. Kay A. Cleland, CMC, CRMS of KC Mortgage LLC in Castle Rock, Colo. is secretary of NAMB—The Association of Mortgage Professionals. She may be reached by phone at (720) 810-4917 or e-mail kay@kcmortgagecolorado.com.
Credit all photos to Laura Zukowski
James Nabors, CRMS from Citizens Bank in Ohio, receives the NAMB President’s Award of Merit from NAMB President Don Frommeyer
Alan Cicchetti, Joyce Wilkins Pollison, Michael Barone and Jonathan Foxx from Lenders Compliance Group and Brokers Compliance Group gather for a photo
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AppraisalNation’s Michael Tedesco, Allison Tedesco and John Tedesco on the exhibit hall floor of Harrah’s Las Vegas
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Scenes From NAMB National 2013 October 19-21 at Harrah’s Las Vegas
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NAMB PERSPECTIVE Scenes From NAMB National 2013 October 19-21 at Harrah’s Las Vegas Credit all photos to Laura Zukowski
Kimberly Castro, Mike Allen and Cary Harding from Credit Plus
NAM Natio
Kenneth Harney presents his Keynote Address, “Inside the Market: An Unvarnished Perspective” 22
NAR Chief Economist Lawrence Yun presents his “What’s Next for the Housing Market?” session
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Olga Kucerak, CRMS of Crown Lending was named 2013 NAMB Mortgage Professional of the Year
Maximum Acceleration’s Brad Korn, Kristie Woods, Stephanie York, Erik Janeczko, Ted Grose, Randall Brower and Adam Kernan gather for a photo
Fifth Third Mortgage’s Brandon Green, Tom Booth, Chris Shrader, Tho Mills and John Pater
Brad Mabey, Matt Hansen and Jeff Mabey from Simple Nexus were on hand to demonstrate their mortgage calculator app
Reps from United Wholesale Mortgage (UWM) gather for a group photo
NAMB PERSPECTIVE Scenes From NAMB National 2013 October 19-21 at Harrah’s Las Vegas Credit all photos to Laura Zukowski
B President Don Frommeyer welcomes attendees to NAMB onal in Vegas NAMB Communications Committee Chair John H.P. Hudson (center) receives the Kathy Love Volunteer of the Year Award from NAMB Vice President Rocke Andrews and NAMB President Don Frommeyer
Joel Berman, publisher of National Mortgage Professional Magazine, accepts his NAMB President’s Award of Merit
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Joe Amoroso, Carl Markman, Sandra Rodriguez and David Pederson from Real Estate Mortgage Network Inc. (REMN)
Ralph Rosynek, Rhiannon Behnke, Lori Erskine and Garrett Kolb from RMS-Reverse Mortgage Solutions
James Nabors (far right) swears in the NAMB Board
The gang from Rushmore Home Loans was on hand at NAMB National to discuss their product offerings
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mas
heard street ON THE
Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.
GSF Featured in Inc. Magazine’s Hire Power Awards and Opens New Florida Branch
customers on the phone to move forward with their transactions.
Second Annual Inc. Hire Power Awards, which recognizes the private businesses that have generated the most jobs in the past three years. GSF Mortgage created 21 jobs from Jan. 1, 2012 to June 30, 2013, which grew the company to 72 employees; nearly a 30 percent increase. This places GSF Mortgage among the top seven private business job creators within the state of Wisconsin. “For the second year in a row, we are pleased to recognize the employers who are putting Americans back to work for a second time,” says Eric Schurenberg, editor-in-chief of Inc. “The Hire Power Awards are the only awards that single out job creators. We think it’s fitting to pay tribute to company founders not just for their business prowess but also for their immense contribution to the welfare of U.S. workers and the vitality of the U.S. economy.” The Inc. Hire Power Award is for U.S.-based, private companies (both for profit and non-profit). Companies must have been founded in 2011 or earlier and have employed at least 10 full-time US-based employees as of Dec. 31, 2012. Companies must complete the Employee Verification Report. Top award finalists may also be asked to provide their 2012 EEO Employer Information Report. GSF Mortgage has also announced their newest expansion in Cape Coral, Fla. The addition will be overseen by Branch Manager Ray Stevens. Stevens began in the mortgage industry in 1990. Stevens comes to GSF with many years of experience in Internet lending. He calls Zillow his “claim to fame.” Stevens has been on Zillow for seven years and is a Top Rated Zillow loan specialist with over 132 personal reviews. He knows how to encourage
American Mortgage Network and Castle Mortgage Corporation have announced the full release of AmnetCastle Express. AmnetCastle Express uses cutting edge technology and focused service to help independent mortgage brokers close more loans, with more speed and convenience than any other system now available. “It’s really designed for what we call our “Mortgage Super Brokers,” said George C. Hawkins, III, chief executive officer. “Mortgage Super Brokers are our customers who want to provide the best service to the borrower with competitive pricing and products, while receiving the highest levels of compliance, accuracy, and convenience.” Hawkins continued, “It also appeals to independent mortgage brokers now working with other lenders, but are frustrated with older legacy systems, uncompetitive products and pricing or inferior service.” AmnetCastle Express redefines the best wholesale origination experience with clean, easy to use technology and effective, personal service. The new platform features: Mobile optimization, accessible and transparent pipeline statuses, convenient pricing screens, and simple online communication with a straightforward interface. “When we started designing AmnetCastle Express, we began with a clean slate, determined to enrich mortgage broker operations,” said Chief Information Officer Kamel Boulos. “We listened to the wholesale broker com-
American Mortgage GSF Mortgage Corp- Network and Castle oration has been Mortgage Partner on featured in the AmNetCastle Express
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munity and built this proprietary software in-house based on their requirements. Then, we leveraged the latest technology to deliver a high quality product,” Boulos added.
McLean Mortgage Recognized by Inc. Magazine Inc. Magazine has released its Second Annual Hire Power Awards recognizing private businesses that have generated the most jobs in the past 18 months. McLean Mortgage Corporation generated 75 new jobs from Jan. 1, 2012 to June 30, 2013, placing it among the top 20 private business job creators within the state of Virginia and within the financial services industry. McLean was ranked number six within the State of Virginia and 15th nationally within the financial services industry. “We are proud of the fact that McLean Mortgage Corporation has grown to be ranked among the top 40 mortgage companies in the nation upon being founded five years ago. This growth has led us to be recognized by Inc. Magazine as a Hire Power award winner,” said Pat Peavley, CEO of McLean Mortgage. “Five years ago many in the financial services sector were pulling back and we saw an opportunity to service the mortgage needs of our clients. This continues today as other mortgage companies are laying off hundreds and thousands of workers this year. Instead McLean continues our expansion efforts with a commitment to continue to hire and not to lay off any staff in today’s tough financial environment.” McLean Mortgage Corporation is among a select group of private growth companies that are Hire Power Awards
honorees, leading the way in creating more American jobs. While the honorees are found across the country in 25 categories, industries with the most Hire Power companies include health, financial services, software, human resources and IT services. States with the most honorees include California, Florida, Texas, Ohio, New York, Massachusetts, Illinois and Utah.
SSI Receives Highest Industry Standards For SSAE 16 Secure Settlements Inc. (SSI) received verification that its corporate operations and data center adhere to the highest industry and regulatory standards under the terms of a Statement on Standard for Attestation Engagements No. 16 (SSAE 16) audit. The SSAE 16 certification offers clear, third-party verification that SSI employs sound internal controls governing data accuracy and privacy, providing an important layer of assurance to financial institutions and their professional closing agents. SSI is one of the first in its field to achieve the SSAE 16 audit certification, which is rarely pursued in the mortgage business. As part of the process, firm J.R. Lupo performed an independent audit that included extensive testing of control activities and effectiveness at the SSI corporate headquarters and data center. “We’re proud to be one of the first in the closing agent risk assessment business to complete a SSAE 16 review, said Andrew Liput, president and CEO of SSI. “We can assure the banks we serve and the agents we evaluate for risk that we use best practices for security and uniform controls in all that we do. Our board members were very encouraged by the audit results.”
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LYKKEN ON
leadership
Technology Makes Leaders More Productive By David Lykken n his 2009 book The Gold Standard: Building a World-Class Team, legendary college basketball coach Mike Krzyzewski offers 13 chapters of advice on how to effectively build a team, drawing on his experience at Duke University and, more recently, with the team of NBA players he coached to win an Olympic Gold Medal. Each lesson offered, though, has a single theme in common that embodies Coach K’s core coaching philosophy: Time. “How do you build a team?” Krzyzewski asks in his introduction. “Embrace moments. Plan for moments. There are moments of anger, moments of joy, moments of togetherness, and sometimes just moments of awareness. Learn how to recognize them, reevaluate them, and, most important, share them. They are the lifeblood of our team.”
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So what does all of this have to do with technology, productivity, and YOU as a leader in mortgage banking? Everything! Just like the key to building a winning team is to “embrace moments,” one of the key objectives of every mortgage banking leader should be to learn how to effectively “embrace moments.” By this, I mean that time is the precious commodity we all have, and business can only ultimately be improved by the improved use of this commodity. In a single eight-hour work day (which I know is a modest estimate of an actual work day these days), there are 480 minutes and 28,800 seconds. What you do with those minutes, seconds and moments will define the extent to which you will fail or succeed in the industry. Leaders need to be an example of this in their organizations. Now, all of us have the same 28,800 seconds in a traditional eight-hour workday. But, even if all
of us do the exact same things in that workday, some of us will be substantially more effective as a result of the use of technology to leverage our time. Using technology allows you to cram more into a moment, allowing you to make better use of that most precious of commodities. It continues to baffle me how many in the industry refuse to embrace new technologies that can help them save vast amounts of time and dramatically improve their businesses. Some prefer to cling to tradition and convention rather than to suffer the pain of change required to learn, adopt and implement the new technologies. But, I would like to make a crucial point on this matter. I am not interested in technology because it’s “new.” I’m interested in it because it works. As with many things, it is not a question of new and old; it’s a question of right and wrong. Does it improve your use of time or doesn’t it? To the extent that a technology doesn’t make a positive impact on time management, I think we should pitch it. But, to the extent that it helps us use our time more efficiently, it is imperative that we embrace it. In this article, I would like to touch on four distinct areas in which technologies have risen to greatly aid us in the mortgage banking industry. Is it an all-inclusive list? Of course not. But I believe that if mortgage professionals can master the technologies currently available in these areas, they will be able to provide much better value for their customers, much greater opportunities for their staff, and a much more stable position for the industry in the marketplace.
First, and perhaps most obvious, are the benefits provided to mortgage professionals in way of getting more organized. Computing technology has made data management much more efficient. Note-taking applications such as Evernote allow you to store notes in various folders and access them anywhere from any device. Similarly, file storage applications such as Dropbox allow you to store files in the cloud and access them instantly wherever you are. Applications such as Todoist and Remember the Milk can help you manage tasks more efficiently. There are also countless customer relationship management systems and accounting software applications that help you can your data organized and accessible. Are you using these technologies to help you better organize your business? Are you using the best of these technologies that are currently available? It’s a fast-moving marketplace. Don’t hesitate to shop around to stay on the cutting edge of what’s available to keep your data in perfect order. Another important form of technology, one that has become particularly popular within the last decade or so, is communication technology. The ability to quickly and effectively reach customers, vendors, colleagues and others has been greatly magnified by communication technologies. You’re probably using e-mail, but there are additional features in e-mail that may help you use it more efficiently. Are you using a signature with appropriate links? Are you using auto-responders when you are out of town or when e-mails come from certain places (i.e. form submis-
David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail dlykken@mortgagebankingsolutions.com or dlykken@mbs-team.com.
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er than ever to consumer new and useful information. You no longer have to go the bookstore to buy a book or wait for the monthly or quarterly trade magazine to come in the mail. You can get the latest news and best practices every day, every hour, every moment. Are you using the technologies that enable you to do so? Are you subscribing to the right industry blogs and news sites? Most trade magazines even have online options to which you can subscribe via e-mail to receive new updates in your inbox. Subscribe to them and get the information as it becomes available. Are you listening to podcast like “Lykken on Lending” (www.LykkenOnLending.com)? Are you watching video presentations? Are you following the top informational resources on Twitter, Facebook and LinkedIn? Each have specific uses and benefits to mortgage professionals and leaders. Using “learning technologies” to get the latest information in the industry will also make you better at using the technologies for organization, communication and collaboration. When you’re in the know, you’re in control. Technologies will continue to evolve. The bright and shiny object of today will be the outdated relic of tomorrow. The important question to ask isn’t, “What new technology should I be using?” Rather, the important question you should be asking is, “Where can my business become more efficient and what current technologies are available to help me achieve optimal efficiency?” In other words, don’t get hooked one single tool, application, or platform. Always be willing to get rid of something that’s no longer working. Remember, it’s all about making a better use of time. “Embrace the moments,” says Mike Krzyzewski, “Plan for the moments.” How can you magnify the moments? That’s the question that matters. If you have the right priorities when it comes to managing your time, you’ll always make the right choice in embracing the best technologies to make you competitive and a more effective leader in the mortgage banking industry.
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sions)? Do you have templates for common e-mails (i.e. office memos)? What about social media? Your human resources, marketing, customer service, public relations and sales departments can also use social media platforms such as LinkedIn, Facebook and Twitter to create messages for your audience and respond to messages from your audience. There are even internal social networking platforms, such as Yammer and Salesforce’s Chatter, to help members of your staff more efficiently and effectively communicate with one another. How willing are you to adopt these new communication technologies? Doing so may just offer the seamless flow of communication that gives you the competitive edge in the industry. Taking the concept of communication technologies a bit further, there are also new technologies that have arisen to foster collaboration. Rather than simply allowing you to talk to others, these technologies allow you to work together with others on projects. Have you ever had the experience of trying to set up a meeting with a group of individuals that all have difference schedules and are just as busy as you are? Chances are, you go back and forth for days, or even weeks, before you’re able to hammer out a time that is good for all of you. Well, as they say in the digital technology world, “there’s an app for that!” A Web application called “Doodle” enables you to send out a list of potential meeting times to a group of people who can sign up for times that work for them. The time slot for which everyone signs up becomes the official meeting time. Speaking of meeting, technology makes it possible to “meet” without meeting at a geographical location. You can use conferencing software such as Citrix or Webex and, for more casual meetings, Skype or Google Plus Hangouts. What about after the meeting—when you actually need to start getting work done? Project management applications such as Basecamp and Do enable you to share conversations and files with one another as your working. With Google Docs, you can even have multiple contributors work on a project at the same exact time. Are you using these technologies to foster better collaboration for your team? Technology breaks down the barriers that keep your team from getting things done. Embrace it. One last important use of technology for making you productive in the mortgage industry is something you might not often consider as falling under the umbrella of productivity—professional development. I’m talking about learning more about your industry and the role, which you play in your company. Technology has made it easi-
Seven Advantages of Automated Appraisal Technology By Vladimir Bien-Aimé The fluidity of mortgage compliance continues to heat up, and now more than ever, all eyes are on lenders to operate in full compliance with the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB), and state and federalbased regulations. Ever-changing compliance rules that pertain specifically to the way appraisals are handled have become a critical piece of the increasingly complex compliance climate. Using automated appraisal technology to remain in compliance is a must. But, appraisal technology yields a number of additional advantages above and beyond compliance adherence that efficiently manages the entire appraisal process, prevents fraud, reduces costs, establishes control, creates visibility and speeds up the completion of quality appraisals. The seven advantages of using appraisal management technology: 1) Improved turn times: Appraisals typically take the longest of all loan fulfillment processes to complete, which opens up the potential for deal fallout. Using appraisal technology literally slashes the length of time it takes to complete appraisals. 2) Consistency and accuracy: All appraisals must be submitted to the Uniform Collateral Data Portal (UCDP). If there is missing or inaccurate information, the loan will be kicked back. Using appraisal technology ensures that all information is complete and verified to be accurate.
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3) Enhanced transparency: The appraisal process is complex, intricate and has lots of moving parts. Appraisal technology establishes a level of visibility along with reporting that delivers much needed transparency. 4) Integrated collaboration: Appraisal management technology allows lenders to easily assign orders, communicate with appraisers and provide status updates. This makes the appraisers’ jobs easier and entices them to do more business with you. 5) Adaptability and control: Every lender has their own internal processes that they utilize to handle appraisals. Good appraisal technology should empower lenders with the ability to easily configure business rules that can tailor their unique processes. 6) Focus on higher yield activities: The appraisal process, in general, is a high-task, low-yield activity. This can result in increased labor costs. However, appraisal technology does the heavy lifting for you, eliminating laborious tasks and the potential for human error. As a result, costs are reduced. 7) Improved verification: Since appraisal technology flags any potential issues with valuation quality, lenders don’t need to invest the time and manpower to “double back” on quality control details. And, detailed records are maintained should there be an audit. Compliance is king, but there are many additional benefits that leading appraisal management technology does to streamline processes and make lenders more efficient. Vladimir Bien-Aimé is president and chief executive officer of Global DMS. Since co-founding Global DMS in 1999, Bien-Aime’ has grown the company to capture a leading share of the appraisal management segment, with a client base of over 20,000 unique users and a 100 percent retention rate among lender clients. He may be reached by phone at (877) 866-2747 or visit www.globaldms.com.
SPONSORED EDITORIAL
heard on the street
continued from page 24
“The SSAE 16 certification recognizes SSI’s effort to provide the very best risk analytic vetting services that every party affected can comfortably rely on,” said Peter Stevens, former Utah deputy insurance commissioner. “SSI continues to break ground in forging a path of credibility and integrity in the real estate finance industry, said Regina Lowrie, former president of the Mortgage Bankers Association. “The most recent announcement of SSAE 16 certification status validates SSI’s systems, processes, controls and risk management procedures succeed in diligently reviewing closing agents.”
New Penn Acquires Resurgent Mortgage Servicing
Shellpoint Partners LLC has announced that its wholly-owned subsidiary, New Penn Financial LLC has acquired Resurgent Mortgage Servicing (RMS) from Resurgent Capital Services. Terms of the transaction were not disclosed. A provider of customized mortgage servicing solutions, RMS is already the servicer of New Penn’s residential mortgage loans. Upon completion of the acquisition, which is expected to occur before year end, RMS will be re-branded as Shellpoint Mortgage Servicing, operating as a division of and servicer for New Penn. RMS will also continue to service the mortgage portfolios owned by affiliates of RCS. As of Aug. 31, 2013, Resurgent’s servicing portfolio was $7.7 billion, and it is projected to reach $13 billion by year end. This portfolio includes agency, non-agency and servicing for investor owned loans. “The acquisition of Resurgent Mortgage Servicing creates a complete residential mortgage operating platform for Shellpoint as we continue to expand our enterprise in the U.S. residential mortgage markets,” said Bruce Williams, Co-CEO of Shellpoint. “Resurgent Mortgage Servicing adds significant franchise value to Shellpoint’s portfolio of companies and diversifies our revenue stream as a full service mortgage company and strategic partner for third-party servicing clients.” “After working with Jack and his team, we are excited to have them as part of the Shellpoint family of companies,” said Jerry Schiano, CEO/President of New Penn. “Adding Servicing to our suite of offerings makes us a truly selfsufficient mortgage banking franchise, allowing us to manage the customer experience from beginning to end.” Resurgent currently employs approximately 225 servicing professionals at its Greenville, S.C. and Houston, Texas office locations. With the addition of
RMS, New Penn’s operating businesses will employ more than 1,300 mortgage professionals in 45 offices, with locations in 21 states. Resurgent will continue to be based in Greenville and Houston and operate under its existing management team.
AllRegs Adds MERSCORP Information to Online Info Database AllRegs has announced that MERSCORP Holdings Inc. will make the current versions of its MERS System Rules of Membership and MERS System Procedures Manual available in the AllRegs Information System known as AllRegs Online. This content is now available to AllRegs subscribers in the company’s flagship product, the Single-Family Lending Package. AllRegs users who access the MERS System content will now benefit from a variety of productivity tools, including an electronic Table of Contents tree with links to guidelines, a robust search engine that features a thesaurus with industry jargon and relative matching results. “We at AllRegs are excited to work with MERSCORP Holdings and publish the MERS System Rules of Membership and Procedures Manual to provide our customers the reference information they need as MERS System members,” says Dan Thoms, executive vice president of AllRegs. “Delivered through our proprietary technology, the MERS System content is an important and valuable addition to our library of mortgage industry content.”
Impac Re-Enters Warehouse Business
Impac Mortgage Holdings Inc. has announced that as part of its mortgage lending expansion, it has re-entered the residential warehouse lending business through its new division, Impac Warehouse Lending. Impac Warehouse Lending will provide funding facilities to all lenders, but initially will focus on smaller mortgage bankers and credit unions, including some of Impac Mortgage’s current correspondent customers. Offering warehouse lending will provide added value for Impac Mortgage’s current correspondent customers, as well as increase the capture rate of our approved correspondent sellers’ business. Impac Warehouse Lending will be financing conforming loans along with jumbo loans up to $3 million and high continued on page 44
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NAVIGATING THE ORIGINATION OBSTACLE COURSE
Operations and Assembling the Proper Support Staff at (914) 486-0212 or jvannote@rhfunding.com.
By Robert Ottone
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J
eff Van Note is a leading financial expert in the New York area, with a decade-plus of experience in the mortgage industry. He prides himself on getting to the closing table within 30 days, as well as driving new business opportunities via innovative services. Van Note is also a recognized leader in the realm of customer service. Covering a variety of topics, Van Note was keen to shed some light on common issues that could affect businesses, as well ways to drive business in a difficult economy. Despite his youth, Van Note’s experience has been varied and has made him a top-earner for a good portion of his career in the mortgage industry. We chatted a bit about operations in this final entry in our “Navigating the Origination Obstacle Course” series. Jeff wants to hear what obstacles you have overcome or are facing. Contact Jeff
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Do you have an assistant? No. I don’t believe in having an assistant. I believe in having a strong processor. If you have a strong processor, it should make you 100 percent more efficient. Why Jeff Van Note add another piece of the puzzle? Keep it the originator, the processor and the underwriter. Remove the assistant from the equation. If you’re doing 100 deals a month, you might need an assistant. If my dad could process 400 deals a month back in the 1980s without e-mail or an assistant, you can do it today. People have become
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lazy, that’s why they hire an assistant. You shouldn’t need an assistant unless you’re doing 100 deals a month. People use an assistant for marketing and scheduling, too. In a perfect system, you have someone who handles your marketing, sure. They date and follow things up. But, it’s not a perfect system. If you’re good at what you do, you can handle that stuff on your own. Some originators are fake, they cannot originate or process, and they don’t know the guidelines, so that person might need an assistant to offset their lack of knowledge. Everyone has weaknesses. I have weaknesses. It’s all about handling weaknesses. Just because you are not an expert in something doesn’t mean you cannot or should not do it. Do you think that people should be working on turning weaknesses into strengths? I believe people should focus on their strengths. I’m not great with paperwork or calling clients. Those two aspects are just not my strengths. In fact, they slow me down. A processor can do that, though. That’s their job. They get their percentage for it. Properly package the file and pass it to the processor. Focus on your strengths. There’s only so much you can do on a daily basis. If you originate 100 deals, you are going to close 60. I’m more valuable as an originator than anything else. Some people don’t have that mentality. Talk about support staff and hiring. You need someone who is passionate about their work … someone willing to stay past quitting time because they want to. You need someone who is not con-
frontational and does not have an ego. You need someone who is active with the pipeline. How can you apply systems to the mortgage banking process to make deals flow better? I think technology allows for that. I can tell you everything about the pipeline I mentioned before. Every single file … I know where everything is. Systems are put into place for a reason. You cannot teach an old dog new tricks, but you can teach a new dog old tricks. You have to learn your systems and maximize what works best for you. Every deal is different. Ideally, have a deal done within 30 days. You can only move so fast with so many people involved. There are only so many moving parts. I can close a deal in 10 days if I needed to. Every deal is unique. I used to close deals in four days when I started out. Take a deal on a Thursday, close it on Tuesday. Talk a bit about operational aspects. I think communication is key. Don’t be afraid of delivering bad news. If you cannot do something, tell your superior you cannot do it so that you can inevitably learn to. Don’t put it off and then, at the last minute, leave a surprise. No one likes surprises. The longer you let bad news sit, the more emotions get involved. It shouldn’t be an issue. The key is to find a resolution and figure out how to fix it. This industry lacks a lot of “what’s the solution,” but it’s keen to highlight the problem. Robert Ottone is senior editor at National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or e-mail robertpo@nmpmediacorp.com.
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*According to Inside Mortgage Finance, May 17 7, 2 2013. Home Possible is a registered service mark of Freddie Mac. MyCommunityMortgage is a registered service mark of Fannie Mae. The information contained is intended for the sole and exclusive use of the business entities to which it was distributed and is subject to change without notice. Loans are subject to credit review and approval. Fifth Third Mortgage Company, 5001 Kingsley Dr., Cincinnati, OH 45227, an Illinois Residential Mortgage Licensee. Fifth Third Mortgage is the trade name used By Fifth Third Mortgage Company and Fifth Third Mortgage-MI, LLC. LL Member FDIC. Equal Housing Lender.
n California Mortgage Professional Magazine n NOVEMBER 2013
At Fifth Third Mortgage, we figure if your customers are happy, you’ll make more money. So we’ve cut down on approval times, answer questions promptly, and offer competitive rates on a wide variety of mortgage options. We’re also curious about how we can serve you better. So we want and appreciate your feedback. It’s this kind of “open ears” attitude that’s put us among the Top o 5 Wholesale * Mortgage Lenders in the country. So whether your customers are looking for a conventional loan, Home Possible® Mortgage or a HARP Mortgage, we’re the FHA, A, VA, A Jumbo, MyCommunityMortgage®,, H lending source you can count on time and again.
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We W e Want Want a You You o T To o Mak Make ke M Mor More. e.
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
M A G A Z I N E ’ S
economic commentary
WORDS OF OPTIMISM By Dave Hershman ust as the past few years, economic growth has not been strong in 2013. Yet, for some reason, the country seems to have more optimism regarding prospects for the future. The obvious question is, “Why such optimism?” To me, it all boils down to two words— household formation. The creation of households bottomed during the most recent recession—down to below 400,000 per year from an average of 1.2 million per year over the past 65 years. This lower average was a significant drag on the economy. In the past two
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years, annual household growth has soared back to 1.1 million in 2011 and 2.4 million in 2012. Kids are moving out of their parents’ homes in droves. Why is this increase in household formation so important? It is more than just a direct relationship between formation and the need to build homes. Even if the kids move out and rent an apartment, this increases the demand for multi-family housing, and we have seen this market recover significantly. Some will purchase or rent single-family homes. And starting a household requires the purchase of furniture, cars, insurance and more. If you look at the projections for growth in the next few years, it is no wonder that single-
family home starts are expected to double from the depths of the recession by 2015. The National Association of Home Builders (NAHB) is forecasting 924,000 total housing starts in 2013, up 18 percent from 783,000 units last year. Single-family production is expected to rise 17 percent this year to 629,000 units, jump an additional 31 percent next year to 826,000 and surpass the one million mark in 2015. The cards are in play for a decent and fairly strong recovery in 2014 and particularly in 2015,” said NAHB Chief Economist David Crowe. It is also no wonder that job growth is predicted to increase substantially in the next six months, according to a Federal
Reserve Bank of San Francisco report. We may be in a pause now due to the effects of the government shutdown and accompanying overall economic uncertainty; however, growth spurred by household formation is inevitable. There can always be intervening variables, but the numbers are there for a solid recovery moving forward from here. Researchers at the San Francisco Fed scoured available gauges of job market health, and found six that are particularly predictive of future labor market conditions. All six, in fact, give a better signal of where the unemployment rate will be half a year down the line than the current unemployment rate itself, they said. And all six, they found, had improved since the Fed began buying bonds last September. “Across the board, these indicators show the pace of the labor market recovery has increased compared with a year ago,” wrote Mary Daly, the San Francisco Fed’s deputy research director, and colleagues Bart Hobijn and Benjamin Bradshaw via Reuters. “We take this as evidence that the recovery in the labor market is robust, broad-based, and likely to continue, if not accelerate, over the coming months.” Now that we are in a “lull” between budget battles and we are approaching the all-important 2013 Holiday Season, perhaps the economy will gain some momentum leading into 2014. Of course, a major factor is the season of giving. Consumers must let go a little bit from now until the end of the year. That is tougher we are experiencing the after effects of a government shutdowns Dave Hershman is a top author in the mortgage industry with seven books published, including The Complete Mortgage Management Kit. Dave is also director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.
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The Increased Focus on Cybersecurity
“
This year has proven to be something of a turning point for cybersecurity.
”
By Phil Hall
n Sept. 18, Comptroller of the Currency Thomas Curry warned that the nation’s financial institutions faced a grave risk related to cybersecurity breaches. “We need to identify and address gaps in the landscape of federal and state bank examination policies related to cybersecurity and critical infrastructure resilience,” Curry said. “It is important that our examiners continue to have clear and meaningful policy guidance to address today’s threats, and tomorrow’s.” This year has proven to be something of a turning point for cybersecurity. After the denial-of-service attacks against the Web sites of major banks in January and the hacking of an internal Federal Reserve site that contained log-in and private information from over 4,000 U.S. bank executive accounts in early February, President Obama signed an executive order that branded cybersecurity attacks as a serious threat to national security. As part of the executive order, the National Institute of Standards and Technology (NIST) was tasked to work with the financial
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services industry to a standardized framework for enhancing cybersecurity practices. Congress also got into the act, or at least it tried to. In April, the U.S. House of Representatives passed the Cyber Intelligence Sharing and Protection Act with robust bipartisan support, but the legislation was not considered for a vote in the Senate. It is unclear how deeply cybercrime has specifically impacted the mortgage industry—no industry trade group or regulatory agency has compiled data that is unique to originators. One of the most prominent attacks occurred in February 2012, when DHI Mortgage, a subsidiary of home builder D.R. Horton Inc., reported a breach of the software security mechanism designed to protect its Internet loan prequalification system. Although DHI Mortgage did not offer in-depth details of the attack, it stated that it quickly isolated the server that was attacked, addressed the security measures surrounding the crime and notified customers that their personal data may have been affected. At this year’s Mortgage Bankers Association (MBA) National Technology in Mortgage Banking Conference, Richard Clarke, chairman of Washington, D.C.-based Good Harbor Consulting, warned that the cybercriminals represent a new wave of global terror. “These aren’t teenage kids who can’t get a date on Saturday night,” he said. “Cybercrime is taking place in countries that we didn’t even know existed … there have become ‘cyber-sanctuary’ nations, where crime pays and the criminals are protected and are a major source of revenue. And there is nothing that the FBI can do about that.” However, Clarke added that there were steps that the mortgage industry can take to prevent these breaches: Envision a worst-case scenario and emphasize the protection of the most valuable data; create a cybersecurity strategy that involves the input and approval of the corporate leadership; prepare an incident response plan and a crisis response plan that can be used in an emergency; identify potential supply chain disruptions that can be exploited by hackers; and obtain a digital governance strategy that clearly identifies corporate responsibility for cybersecurity. “You cannot do this anymore individually as a technology officer,” Clarke added. “This is an issue that is much bigger than all of you. You have to save yourselves.” Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
What could a cyber crime attack cost a company? According to the Privacy Breach Impact Calculator offered by Houston-based company Information Shield, the financial dent could be more than a little painful.
Privacy Breach Impact Calculator Effected Customers Total number of individuals within the compromised database(s)
10,000
Personnel Costs (all time should be indicated in hours) Personnel time to determine that a breach has occurred
40
Discussion time with legal counsel and executives about the situation
40
Personnel time to determine all the individuals impacted
60
Personnel time to collect contact information for impacted customers
60
Personnel time to write and mail letters
50
Additional Personnel Time (included in full Toolkit)
200
Total Personnel Hours
450
Avg. Cost per Man-Hour (include all HR benefit considerations)
$
200.00
Total Man-Hour Costs
$
90,000.00
Cost of positive advertising to protect company brand
$
700,000.00
Public and investor relations
$
500,000.00
Call centers to take additional calls
$
600,000.00
Forensics and criminal investigations
$ 1,200,000.00
Cost to Change/Repair System where Breach Occurred
$
Total Other Incident Cost
$ 2,500,000.00
Additional Post-Incident Costs
150,000.00
Customer Credit Monitoring Cost per individual for credit monitoring reports
$
Number of Years to Monitor Total Monitor Cost
100.00 3.0
$ 3,000,000.00
Potential legal damages Fines and Fees for applicable laws
$
250,000.00
Percentage of individuals bringing civil suit
.05
Number bringing civil suit
500
Award Per Individual
$
500.00
Total Legal Fines, Fees and Awards
$
500,000.00
Lost Customer Revenue Impact Number of lost customers
1,000
Value Per Customer
$
200.00
Total Lost Customer Value
$
200,000.00
TOTAL ESTIMATED IMPACT COST
$ 6,940,000.00
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How Will the Recent Government Shutdown Impact Your Client’s Mortgages? By Morgan Sims
ow that the government shutdown is finally behind us, many are saying it’s business as usual on Capitol Hill, as well as across the nation. But if you look closer, you’ll see that the 16-day congressional impasse has had a bit of a ripple effect in many industries. The mortgage industry is no exception to that effect. While there was no fire and brimstone, and the system didn’t exactly come crashing down around us, the whole ordeal has left a subtle, yet meaningful, imprint on the industry. That impact is going affect mortgage clients.
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Here’s a look at a few ways you’ll notice it.
Slower processing and approval times During the shutdown, federal offices were operating with a skeletal staff, but applications for FHA and VA loans were still processed. Many experienced delays due to hurdles with verifying income with the IRS. Additionally, access to tax information was largely unavailable to issuing agencies. The majority of mortgages that had previously been scheduled to close during the 16 days that the government was shut down likely had enough paperwork and verification processed and were handled without a hitch. Especially now that everything is back up and running, there is little cause for concern, though some say the approval process for applications over the next few weeks may be somewhat more sluggish as an influx of applications are submitted and the backlog processed. Any loan applications that were initiated during the two-week long shutdown will likely see a significant delay. This is due to the restricted access to 4506-T forms by IRS personnel while they were furloughed.
Varying rates
Reverse mortgages slowed Aside from some minor rumblings in the mortgage market, little has changed in the area of traditional mortgage lending. Reverse mortgages, on the other hand, are a different story. The U.S. Department of Housing & Urban Development (HUD) requested patience from lenders as it finds its footing and begins to process the backlog of reverse mortgage. HUD did process most requests as usual during the shutdown, but was limited by a cap on the amount of Home Equity Conversion Mortgages (HECMs) it is able to insure. The cap was extended, but there still remains a significant backlog of HECM
endorsements which will be handled within the next 30 to 60 days. This may affect client ventures significantly, as requests are processed on a prioritybased system by HUD. Generally speaking, the government shutdown is behind us. Despite the drop in home sales in September, followed by a 16-day partial government shutdown that further slowed the market recovery, the industry is slowly returning to business as usual. Morgan Sims is a writer and recent graduate who loves all things tech and social media. Follow her on Twitter at @MorganSims00 or e-mail morgansims00@gmail.com.
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Business as usual Thankfully for mortgage applicants,
most banks and private investors were still able to continue closing loans during the shutdown. Most developed short-term solutions to manage the issue of not having access to tax records from the IRS in order to do so. But now that everything is back up and running, there’s little cause for concern in this regard. Despite slightly longer approval times due to a backlog, few will experience a tangible difference in the mortgage application experience. As experienced, seasoned mortgage professionals that have seen every economic climate there is, this government shutdown is just another hiccup in the volatile environment that is the housing market.
NationalMortgageProfessional.com
During the shutdown, mortgage interest rates fell to lows nearing historic levels when they dropped to the lowest levels they’ve been since late 2007. Experts say that those lower rates won’t last long as the economy begins to recoup and financial confidence returns for homebuyers. Lower rates make this an ideal time for mortgage clients, as it makes the homebuying process that much more affordable. However, with a housing market that is making a slow yet steady come back from record lows, uncertainty regarding the shutdown could cause buyers to err on the side of caution. In addition to mortgage rates, home insurance is also being affected by the shutdown with fluctuating rates. It has been predicted that mortgage rates will slowly climb back to previous levels, if not higher, within a few weeks. As always, mortgage rates will continue to fluctuate along with the economy. When the U.S. government shut down for more than two weeks, it shook the foundation of our economy, and in turn, mortgage rates dropped significantly as lenders were trying to attract business. As it recovers from the 16-day standoff on Capitol Hill, the mortgage industry will likely see fluctuating rates that will affect clients. It’s best to advise consumers to always be acutely aware that the housing market changes all the time, and to always be prepared for the worst. Mortgage rates will continue to rise and fall similarly to the way they always have.
“As experienced, seasoned mortgage professionals that have seen every economic climate there is, this government shutdown is just another hiccup in the volatile environment that is the housing market.”
Marketing Compliance Corner: Lead Purchase Compliance By Michael J. Wallace Esq. Mortgage companies and loan officers augment their marketing efforts with purchases of “leads.” The expansion of the Internet and a reduction in the expense of communication has led to an expansion of lead sources-companies that focus only on generating leads for the mortgage industry. These companies tout specific leads for targeted groups or loan programs, such as a home equity conversion mortgage (HECM) or the Home Affordable Refinance Program (HARP). From a regulatory perspective, this activity may expose your company to risk. The following may help you to reduce your exposure: 1. Does the state for which you are purchasing leads require lead vendors to be licensed as a mortgage company? Some states view lead production as a licensable activity.
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2. If you are purchasing live transfers, or if there is any outbound phone calling, then you should determine: a. Does the vendor have a SAN number for the National Do-Not-Call Registry (https://telemarketing.donotcall.gov)? b. Determine that the company has purchased the DNC States/Area codes being called on your behalf. c. Determine that the company is obtaining the phone lists from reliable sources and that the list has been scrubbed by the DNC. d. Is the company licensed as a mortgage broker? e. Review the script to ensure that only compliant questions are asked (no discussion of rates, terms, social security number etc.). Very general information provided and then transferred to a licensed mortgage loan officer. f. Are other products being sold with the call? g. Establish the ability to listen to phone calls and then randomly monitor calls. 3. If you are using “trigger-list” data, understand the requirements and provide marketing materials commensurate with the data. 4. If you buy Internet leads, review the written policies and procedures and determine if the Web site is compliant within the state you are purchasing leads. Whatever type of lead program you purchase, you can also reduce your risk by establishing a quality control (QC) monitoring program. This should be done through compliance personnel. The QC program should be in writing and determine how each program is reviewed. This would include reviewing all aspects of the lead vendor, licensing, policies/procedures, and select a random number of leads for a detailed review. Lead purchases are a vital part of the mortgage marketing landscape, and with due diligence, you can take full advantage of this resource. You can download the checklist for mortgage lead compliance at www.clixmg.com along with other compliant related information. Michael J. Wallace Esq. is president of CLIX MG. Marketing Compliance Manager (MCM) is a Web-based compliance management system for marketing and lead programs, including social media. For a 15-minute live demonstration, please visit www.clixmg.com. He may be reached by phone at (727) 474-0961 or e-mail mwallace@clixmg.com.
NAPMW REPORT N O V E M B E R
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Where Mentoring Matters By Candace M. Smith, CME, CMI A career in today’s mortgage industry is complex. Professionals are tasked daily with learning a wide variety of regulations, procedures, policies and guidelines. While the necessity of keeping up with changes is important, business to expand personal leadership skills. Professionals are looking for options that can help them grow professionally and personally. Careers are demanding. Everyone needs advice and support and vision in today’s business world. NAPMW encourages and supports mentor relationships to enhance the personal and professional development of its members. In the simplest terms, a mentor is an individual who guides a less experienced person by building trust and modeling positive behaviors. An effective mentor understands that his or her role is to be dependable, engaged, authentic, and tuned into the needs of the mentee. NAPMW creates an optimal venue by bringing together experienced mortgage professionals with those who want to increase their opportunities. While professional coaching which focuses on performance based development is important and has its place; mentoring is without an agenda and focuses on an individual’s goals and provides a two-way relationship to offer support and guidance. Kelly Hendricks, national vice president for NAPMW, is a member of the St. Louis Association. Her mentor saw her potential early on and introduced her to NAPMW. “She believed in my potential. I was very new to the mortgage business and she saw something in me that I had not seen in myself,” said Hendricks. Due to her involvement in NAPMW, Kelly took on additional opportunities in her career. Today, as an underwriting manager for First State Bank of St. Charles, the experience has taught her to balance her personal and professional life. She feels she uses all that she has learned in her career and even in her family. From the national level to the Local level, this organization actively encourages and supports mentoring by encouraging each member to actively mentor one another. As an association, less experienced leaders reach out to peers to support them. All levels of this organization are self-managed, so the need to understand leadership skills is key to its success. Leaders in the organization value this experience. Current NAPMW National Vice President (Eastern Region) Kimberly Rozell, CME is a mortgage officer with CFCU Community Credit Union in Ithaca, N.Y. Earlier in her career, she took advantage of a mentor relationship with current NAPMW National President-Elect Christine Pollard. Both have been active members for several years of the Central New York Association. “Chris offered me positive support when I needed it,” said Rozell. “She provided me with support, guidance and information. She encouraged me to step outside the box and take on leadership opportunities.” This experience has helped Kimberly in her career as well. She took opportunities to become involved in NAPMW eventually leading the Central New York Association before taking on Regional and National Offices. Over the last year, NAPMW created the Choose to Lead Program, a unique program that offers support for all members by creating ongoing education in leadership development. For new leaders, basic leadership skills are discussed in their Boot Camp Series. For all leaders, regardless of experience levels, the Leadership Series drills down to more specific guidelines. Included in this is an active mentorship program linking individuals who desire mentoring with more experienced leaders. Kimberly Rozell feels that good mentor relationship programs grow from a desire to grow and learn. She advises others not to be afraid to ask someone to become a mentor. It can make such a difference in anything you choose to do professionally. Kelly sums up the mentor experience as follows, “The essence of NAPMW is that it is a way to build and grow who you are. With drive and motivation, it polishes the raw talents and helps develop you into something exceptional.” NAPMW will celebrate its 50th Anniversary in Seattle, Wash. from May 15-17, 2014. It will offer a wide range of industry education in addition to leadership development. Take the opportunity to experience all that NAPMW has to offer. Check out a local or nationwide event near you by visiting www.napmw.org. Candace M. Smith, CMI, CME is immediate past national president of NAPMW. She is a 35-year veteran in the mortgage industry and is an underwriter with WR Starkey Mortgage in Plano, Texas. She holds professional designations in Mortgage Instruction and Ethics through the Institute of Mortgage Lending. She has been awarded NAPMW’s National Education Innovator, Leader of the Year and Spirit Award.
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legendsoflending BY DAVID J. COSTER
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harles Dickens opens his novel about the difficult period just prior to the French Revolution with the following famous words: “It was the best of times; it was the worst of times.” In 2007 in the mortgage industry, the quote that seemed more appropriate would have been: “It was the worst of times … really, it was the worst of times!” But then there is the example of Maverick Funding Corporation, a Parsippany, N.J.-based multi-channel lender which was founded just as the mortgage and housing crisis was emerging. Against seemingly overwhelming odds, Maverick Funding has grown from a 10-person, locally-focused lending organization into a diversified lender with more than 300 employees, operating in 30-plus states. This success is due to the courage and vision exhibited by Maverick during arguably the most challenging period in the industry’s history. It is for this reason that they have been selected as National Mortgage Professional Magazine’s November 2013 Legend of Lending. I recently had a chance to speak with Maverick CEO Ralph Vitiello, President Mike Petruccelli, and National Wholesale Director Reno Heine about Maverick’s remarkable journey. What emerges from the dialogue recorded below is the story of a firm with a keen eye for spotting unmet opportunities in the mortgage industry, whose leaders possessed the intestinal fortitude, and a strategic vision to guide their rise to the top ranks in the industry.
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The year 2007 was an interesting year to start a mortgage company. What led to its formation? Ralph Vitiello: The year 2007 was not only an interesting year, but also a challenging time to start a new busi-
ness venture … particularly a mortgage company. Our executives’ 30 years of mortgage industry experience allowed us to see the possibility to advance a new venture by developing a strategic plan with a clear mission and objectives. Despite the environment, we saw this as an opportunity to grow a business. Your firm has witnessed very fast growth...to what do you attribute it? Mike Petruccelli: We attribute our fast growth to a focus on building and maintaining strong relationships with our direct retail consumers and the wholesale broker community. We have never lost sight of our core values to deliver superior customer service and responsible mortgage products to our customers. . Your management team is made up of industry veterans, how has that contributed to your success? Ralph Vitiello: There is no question that the team of dedicated mortgage professionals we have is a significant reason for the growth of the company. They had a good feel for what was going on in the marketplace, which allowed us to adapt and respond creatively to the circumstances in the market. Mike Petruccelli: There was a lot of turmoil in the industry when we started, so there was a lot of talent out there—we simply picked the best. You have made a big push into the reverse mortgage market, what is it about that market that attracts you? Mike Petruccelli: We saw this as another opportunity to fill a void that was created by the big banks getting out of the reverse mortgage business. We are believers in the reverse mortgage product. It is often the only product available to assist with cash-flow for lower income home owners over the age of 62. Previously, these borrowers would
have been placed in stated products, often creating financial hardship for seniors who often struggled to make payments. This is a lifesaving product for many borrowers. We believe in the long-term viability of the product, especially with over 10,000 families a day reaching the minimum borrower age of 62. This number is projected to increase to 18,000 families a day by 2020. Senior home equity reached a record-high $3.34 trillion during the second quarter of 2013, according to the latest Reverse Mortgage Market Index. That is too big of a market to ignore. Ralph Vitiello: Reverse mortgages have been a great product for Maverick. In less than 12 months, we went from start-up to a top 10 retail originator. We are also excited about the synergies our reverse mortgage product brings to our forward wholesale division. We recently created a reverse unit solely focused on educating our forward brokers. This has proved much more successful than anticipated, with a large pipeline already building. We are very aware of the recent changes to the program: Elimination of the fixed standard product, reduction in PLF’s and the impending financial assessment. While creating a difficult short-term business environment, these changes will put the HECM program on very stable ground in the long run. We have been able to acquire seasoned veterans when other firms such as Wells Fargo and Met Life, for example, exited the reverse business. The opportunity presented itself and we took advantage of it. You are also active in the wholesale market, how will you adapt to the coming regulatory changes? Mike Petruccelli: We are instituting two strategies in response to the three percent cap. First, we will be opening a mini-correspondent channel for those
The Maverick Funding Corporation booth a Conti, account executive; Bob Ketler, regio al sales manager; James Dring, account ex
“There is no question that the team of dedicated mortgage professionals we have is a significant reason for the growth of the company.” —Maverick Funding Corporation Chief Executive Officer Ralph Vitiello
brokers who have the net worth to get their banking license. It is our belief that this regulatory change is not going to have as great an impact as many had initially thought. Ralph Vitiello: We will also be facilitating warehouse lines for those participating in the mini-correspondent program. We are working with our existing warehouse lenders to facilitate lines of credit in the $2-$5 million range. Reno Heine: Some look at the wholesale broker channel and see a declining market … we look at wholesale in the exact opposite way. It is going to reemerge as the model that entrepreneurial mortgage professionals prefer. Brokers can control their own businesses and best meet the needs of consumers for personal service and maximum choice and value. You also are seeking to grow your retail branch network at this time. Why? Mike Petruccelli: It goes back to seeing and capitalizing on opportunities. We believe that there is a great deal of opportunity with small brokers who don’t have the net worth to become mini-correspondents. We believe that many of them would make excellent branches for Maverick Funding Corporation. Ralph Vitiello: We are actively seeking branch opportunities with brokers who no longer want the regulatory and compliance headaches and responsibilities. We are seeking teams that are purchase-oriented and have a book of purchase business. We have an existing platform that they can plug into and become successful immediately.
“Brokers can control their own businesses and best meet the needs of consumers for personal service and maximum choice and value.” —Maverick Funding Corporation EVP/National Wholesale Director Reno Heine
Where do you see Maverick Funding five years from now? Ralph Vitiello: Many times, we think only about what we need to do to overcome the challenges of starting up a business. We fail to think of what will be needed to successfully keep it going—profitably for the long term. In my view, building a business should be about striving to make the organization we setup sustainable. Sustainability is what will ensure a business started up today can endure weeks, months or years of struggles till it eventually becomes what many (who are often unaware of the prolonged periods of struggle endured) call an “overnightsensation.” We believe with the strategic vision, strong team and adaptability to the changing economic environment, Maverick Funding will continue to be a force in the mortgage industry. Mike Petruccelli: In five years’ time, we would like see the business expanding in all channels: Retail, wholesale and correspondent. We will build our reverse business. We also see potential in new areas, like non-agency products. Overall, our goal is to continue to serve customers and grow our brand name as the “Big Bank Alternative.” Maverick Funding Corporation saw opportunity in 2007. A few years later it saw an additional opportunity in reverse mortgages. Currently, they see the opportunity to build a correspondent business along with their retail branch network. They have put their money where their vision is by investing in a major new operations center. In the future, they expect to be a leader in non-QM, non-agency origination as well. With this type of track record of recognizing, seizing and capitalizing on mortgage industry opportunities, continued success for Maverick Funding Corporation seems like a safe bet. As opportunities continue to knock, Maverick will continue to answer the door. Congratulations to Maverick Funding Corporation, National Mortgage Professional Magazine’s Legend of Lending. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail davidc@nmpmediacorp.com.
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“We attribute our fast growth to a focus on building and maintaining strong relationships with our direct retail consumers and the wholesale broker community.” —Maverick Funding Corporation President Mike Petruccelli
You just opened a new operations center, what is the significance of that for the firm? Mike Petruccelli: With a newly-opened 18,000-square foot operating center in Fort Mill, S.C., Maverick employees will be able to service our geographically-expanding client base. The opening of the new center comes at pivotal time in conjunction with the Ginnie Mae approval. With the rapid growth of the company in the Southeastern region of the country, the expansion allows us to meet the requirements required by the strategic initiatives in our business plan. The center is fully staffed with enthusiastic and fully trained employees who are excited to
You are very involved in charitable work? Ralph Vitiello: Maverick Funding believes strongly in supporting our communities by getting involved in many charitable activities. We have been blessed with a growing business for six-plus years, and we feel it is our obligation and duty as a communityoriented business to give back. Giving back to the community is embedded in our philosophy. We also believe that donating our time, talent and resources is equally important as the money we give. Our team members give significant time volunteering in their communities every year.
NationalMortgageProfessional.com
at the “Let’s Make A Deal” Tri-State Wholesale Lending Fair in Atlantic City, N.J.: Joseph onal sales manager; Reno Heine, EVP/national wholesale director; Joseph Boiano, regionxecutive; and Robert Walker, account executive
You recently received approval as a Ginnie Mae lender. How will that impact your firm? Ralph Vitiello: Maverick Funding Corporation is proud to announce its latest achievement in the mortgage industry—approval as a Ginnie Mae lender. This news catapults us into the group of leading lenders that can meet the needs of low and moderate-income households across America. Mike Petruccelli: Ginnie Mae approval enables us to price much more competitively across our channels. It also allows us to underwrite to FHA guidelines without overlays to deal with.
assist those attracted to our diversified platform.
Putting Customer Service Atop Your Vendor Checklist By David Rasmussen
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We all expect stellar customer service, but have been trained over the years through circular phone trees, disconnections, language barriers, and scripted responses by uninformed personnel that customer support calls sometimes provide just the opposite experience. Thankfully, we’ve learned from the culmination of those experiences to check Web sites like Yelp! for reviews, or to search Google for insights before locking ourselves into contracts. So, shouldn’t logic follow that in your search for mortgage technology providers that investigating a vendor’s customer service team should rank highly on your checklist? When investigating a customer support team, there are three key areas to focus on: The on-boarding process, day-to-day maintenance and customization/upgrade needs. Implementing new technology typically comes with a certain learning curve. This is acceptable in the event you have a reliable team to help you quickly manage any necessary integration and train you and your team to confidently operate the tool, thus minimizing any frustration that might be associated with the learning phase. Key questions to have answered before committing to any tool or system include: Is there a customer training program to assist you in learning the technology? Once trained, will the customer support team be dedicated to my account, or do we fall into a pool for the first available operator? Do the support team’s hours match up with my business needs? On the topic of day-to-day maintenance, find out how directly the customer support team is connected to those who provide technical support. Additionally, ask your peers in the industry what the vendor’s reputation is for fully and clearly resolving service issues. Software can claim to offer a number of highly attractive features, but at the end of the day, if the system is down when you need it and you can’t seem to get clear information on why tools aren’t available and when they’ll be back up, then those sleek features won’t amount to much in your daily operations. Strong customer support teams will not only engage directly with you, the client, on a dedicated basis, but will also maintain strong connections to the vendor’s product and technology development teams. These connections make all the difference when you need responsive and timely support in the short-term, but also in the long-term when the often disparate client-customer service conversations can be connected across multiple clients and identify opportunities for product enhancements that can benefit a larger pool of product users. Lastly, on the issue of ongoing support, the truth of the matter is that the mortgage technology that exists today is very good but by its very nature must evolve. The technology that works for you and the industry today will need to be updated to meet new industry requirements and support new data types. We will expect systems to move faster, process more and connect in new ways not imaginable today. By engaging with a vendor with a reputation for reliable, on-time and on-budget customizations, you’ve put your firm in a far better long-term position to remain competitive and grow with a trusted technology partner. David Rasmussen is senior vice president of operations at Veros Real Estate Solutions. For more information, call (714) 415-6300 or visit Veros.com.
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nmp newsflash
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FHFA’s General Counsel noted, “Our lead representation by Philippe Selendy and the firm of Quinn Emanuel Urquhart & Sullivan was central to reaching this landmark settlement and their work continues in the remaining PLS cases. I want to cite the strong work of the FHFA Office of General Counsel’s litigation group under Stephen Hart and the legal and business teams at Freddie Mac and Fannie Mae.”
Q3 Commercial/Multifamily Origination Volume Rises Nearly 30 Percent Annually
Commercial and multifamily mortgage origination volumes during the third quarter of 2013 were 29 percent higher than during the third quarter of 2012 and originations were essentially flat compared to second quarter of 2013, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. “Commercial and multifamily real estate borrowing and lending continued at a moderate clip in the third quarter,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “Mortgage origination volumes were essentially flat from the second quarter, but were up 29 percent from last year’s third quarter and are up 14 percent year-todate. Lending by life insurance companies remained near last quarter’s record pace, while lending for the GSEs dropped by more than a third.” The 29 percent overall rise in commercial/multifamily lending volumes, when compared to the third quarter of 2012, was driven by the increase in originations for health care properties. The increase included a 124 percent boost in the dollar volume of loans for health care properties, a 69 percent increase for office properties, a 46 percent increase for hotel properties, a 30 percent increase for retail properties, an eight percent increase for industrial properties, and a three percent increase for multifamily properties when compared to the third quarter of 2012. Among investor types, the dollar volume of loans originated for conduits for CMBS increased by 105 percent from last year’s third quarter. There was a 72 percent increase for life insurance companies, a 41 percent increase for commercial bank portfolio loans, and a 40 percent
decrease in dollar volume of loans originated for Government Sponsored Enterprise GSE) loans. Third quarter 2013 commercial and multifamily mortgage originations were essentially flat from the second quarter. Compared to the second quarter, third quarter 2013 originations for health care properties saw a 161 percent increase. There was a 25 percent increase for hotel properties, a 21 percent increase for office properties, a 16 percent increase for industrial properties, a 14 percent decrease for retail properties, and a 16 percent decrease for multifamily properties from second to third quarter 2013. Among investor types, between the second and third quarters of 2013, loans for commercial bank portfolios saw an increase in dollar volume of 32 percent, loans for conduits for CMBS saw an increase in loan volume of eight percent, originations for life insurance companies decreased six percent and loans for GSEs decreased by 37 percent. Year-to-date (through the third quarter) 2013 commercial and multifamily mortgage originations were 14 percent higher than originations during the same time period of 2012. Compared to 2012, year-to-date originations for hotel properties saw a 25 percent increase. There was a 20 percent increase for multifamily properties, a 20 percent increase for office properties, a 19 percent increase for health care properties, a four percent increase for industrial properties, and a seven percent decrease for retail properties. Among investor types, year-to-date (through the third quarter) 2013 versus the same time period in 2012, loans for conduits for CMBS saw an increase in loan volume of 44 percent, loans for commercial bank portfolios saw an increase in loan volume of 22 percent, originations for life insurance companies increased 19 percent and loans for GSEs decreased three percent year-to-date 2013 versus year-to-date 2012.
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.
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determination ordering and retrieval process from within ValuTrac’s leading appraisal management platform. “The integration of CoreLogic Flood Services is another proof point on how ValuTrac’s fully customizable appraisal management technology continues to add tangible value to our expanding client base,” said Clint Cornett, CEO of ValuTrac Software. “The availability of CoreLogic Flood Services from within the ValuTrac platform will further streamline the flood determination ordering and retrieval process for our clients and provide a competitive advantage, best-in-class customer experience and mitigate risk in the lending value chain.” ValuTrac’s direct integration with CoreLogic Flood Services is available with the ValuTrac Pro and ValuTracPro Plus products, and will allow for automated submission and retrieval of CoreLogic flood determinations, loading the results directly to a customer’s ValuTrac platform. By integrating with CoreLogic Flood Services, the ValuTrac platform allows its customers to obtain flood determinations more efficiently while streamlining their business processes.
Adinta.com Introduces New Virtual Loan Officer Solution
LoanLogics Announces CFPB-Friendly Upgrade
LoanLogics has enhanced its LoanDecisions product with a new Fair Lending feature designed to satisfy the Consumer Finance Protection Bureau’s Fair Lending audits that are more indepth than in the past and seek to enforce provisions of the Fair Housing Act and Equal Credit Opportunity Act. “Lenders that use this feature can combat implications of disparate impact or treatment because they can provide the CFPB with an audit trail proving that the borrower was given the best program, price and lock period available,” said Matt Thoman, product manager for origination technologies at LoanLogics. “This demonstrates that the borrower received the best deal. This decision can be tied back to the lender’s pricing policy.” The CFPB has stated on numerous occasions that lenders must be able to explain the reasons for offers provided to borrowers during Fair Lending audits. LoanDecisions Fair Lending feature records as much data as possible and captures the reasons for each decision the lender made in the process of originating the loan. A loan level report will be produced by LoanDecisions on every loan for the compliance team. This report can be referenced during an audit. Pipeline reporting is also enhanced so lenders can identify how much of their pipeline is locked at the system-identified best execution and what loans require further explanation.
360 Mortgage Group LLC announced that it has been named the exclusive provider of the Southeast Texas Housing Finance Corporation’s (SETH) 5 Star Texas Advantage Program—Option 3 to lenders, who now have the capability to provide this product to their mortgage brokers. The SETH program, previously unavailable to mortgage brokers, offers access to a three percent grant on FHA, VA, or USDA government loans, which will lower a borrower’s down payment to 0.50 percent of their own funds. The program is only available on Texas properties, except in the cities of El Paso, Grand continued on page 53
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n California Mortgage Professional Magazine n NOVEMBER 2013
360 Mortgage Named Exclusive Provider of Texas Housing Finance Program
2014
NationalMortgageProfessional.com
Adinta.com is offering a new service, the Virtual Loan Office, which provides the consumer with interactive access to a comprehensive database of real time mortgage rates on a full range of loan programs offered by the lender. This cloud-based point-of-sale system has been designed to allow the smaller independent lenders and brokers to compete with big bank’s online technology without the cost of paying for expensive IT professionals. “You don’t have to re-engineer your whole organization to compete in today’s online origination race,” said Fotuhi, director of software development at Adinta. The interactive service provides easy multiple-choice questions to specify the loan scenario, property type, occupancy, loan amount, downpayment, etc. The scenario can be defined in less than a minute. “Today’s younger tech savvy borrowers demand instant answers to their home loan questions 24-7,” said Jorge Garcia, director of marketing at Adinta. Based on the scenario entered, the software displays all matched loan options to help lender’s meet AntiSteering Safe Harbor Regulations. Descriptive product names and extensive product details are shown for each loan program. The user can compare the different loan options simply by
tabbing through the side-by-side comparison screens.
Hot tip … what’s working best this holiday season? Direct mail … yes, I said it. Direct mail response rates have been on the rise since late summer and are now back to historically high response rates and close ratios! We’ve been tracking responses over two percent in some heavily marketed states like California, Maryland, and it’s working even better in others. If you haven’t tried direct mail marketing in a while, it’s time you gave it another look. You can pick your own criteria and get the phone ringing with qualified and interested prospects who want to talk with you.
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44 Customer spotlight 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, Keith Brewer, president of Baltimore, Md.-based Liberty United Mortgage on the results of their direct mail marketing. Here are a few findings: • 15,000 total mail pieces sent • 19 loans closed already • Six loans still in the pipeline to close Highlights of campaign that work well for you: “Clients call extremely interested with great loan amounts for a high ROI.” Highlights of growth that could appeal to other loan officers or offices: “In this market it is great to have such interested borrowers that qualify based on the data we mail to, calling exclusively to us for a loan. With loan amounts well above average for the area it makes for a nice return with the compensation rules we deal with.” Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit Tagquest.com.
VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser. http://www.youtube.com/watch?v=coBEsmEVOgo
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LTV Home Affordable Refinance Program (HARP) products up to 150 percent LTV, as well as providing competitive pricing while being customer service focused.
Embrace Launches Correspondent Lending Division Embrace Home Loans has announced the launch of its newly created Correspondent Lending Division. Embrace has hired Jackie Weed, a veteran mortgage professional with extensive correspondent lending experience, to build and manage the new division. “We are very excited to have Jackie and her team as part of Embrace,” said Kurt Noyce, president of Embrace Home Loans. “Having worked with Jackie often over the past 20 years, we have become huge fans of her—it was no surprise to us that her team was equally principled, and passionate.” Embrace Home Loans has been a national retail originator and servicer for the past 30 years. The new Correspondent Lending Division shares the same set of values on which Embrace was built and is committed to offering their business partners knowledgeable support and responsive, personal attention. Embrace has defined itself, as a responsive lender with attentive, best customer service based on a deep understanding of market cycles and loan products and will use this experience to assist Correspondent Lending partners in offering a wide range of mortgage solutions to their customers. Weed has been named VP, director of correspondent lending. Weed has more than 25 years of mortgage lending experience and has successfully created, grown and managed several start up Correspondent Lending Platforms. Prior to joining Embrace, Weed held executive level positions at First Choice Loan Services, a wholly-owned subsidiary of First Choice Bank; Aegis Mortgage and SIB Mortgage, a wholly-owned subsidiary of Staten Island Bank.
ValuTrac Expands its Texas HQ ValuTrac Software has announced the expansion of its Flower Mound, Texas corporate headquarters, adding an additional 3,000 square-feet of office space to accommodate the increased demand for its software solutions by new clients and expanding employee base. “ValuTrac continues to experience rapid adoption of its leading software solutions for the appraisal management
and mortgage lending industry by remaining at the forefront of innovation,” commented Clint Cornett, chief executive officer of ValuTrac. “During the third quarter of 2013, ValuTrac’s client base expanded by 31 percent compared to the second quarter 2013, by adding new clients including nationwide and regional appraisal management companies, large nationwide mortgage lenders and community banks. This additional office space positions us to handle future growth opportunities, enhance client service and support our growing employee base.”
Mortgage Professionals to Watch l E.J. Burke, executive vice president and group head for KeyBank Real Estate Capital and Corporate Banking Services, has been sworn in as chairman of the Mortgage Bankers Association (MBA). In addition, Bill Cosgrove, CMB, president and CEO of Union Home Mortgage Company has been sworn in as chairman-elect of the MBA, and Bill Emerson, CEO of Quicken Loans, has been named vice chairman of the MBA. l Interthinx has announced the appointment of former MBA chairman David G. Kittle, CMB as senior vice president of industry strategy.
KITTLE
Choose whether you are going to market through the holidays or not Some people do and some people don’t. That’s what makes marketing through the holidays so interesting. If you choose to market, understand that your expected response rates should be less than usual. That being said, you should also expect to close at a much higher rate as well. People who are purchasing and refinancing their homes during the holidays are MOTIVATED. That’s why close ratios go up. For each person who decides not to market during the holidays, there is another who decides to stick with it. For this reason, results can vary through the holidays. To overcome this, maintain consistency. Whatever sort of marketing campaign you do, keep it going! Failure to maintain consistency is the biggest holiday campaign killer of them all. You’ve got to get in front of those people who want to move and entice them to do so with you.
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l Elaine Sue Honegger has joined Mortgage Network Inc. as a loan officer in the company’s Hilton Head Island, S.C. branch. Shawn Hunt has joined Mortgage Network as a loan officer in the company’s Salisbury, Md. branch.
HONEGGER
TagQuest Customer Spotlight on Keith Brewer, President of Liberty United Mortgage
heard on the street
HUNT
Holiday Marketing Tips: Mortgage Direct Mail is Back!
l Michael Massella has joined Envoy Mortgage as executive vice president of retail lending. l ValuTrac Software announced the hiring of David Yavorsky as the company’s new chief information officer.
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l LenderLive Network Inc. has appointed Mary Rzucidlo as senior vice president of the Component Services Unit within the companyâ&#x20AC;&#x2122;s Outsource Services Division.
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l Mike Ronca has been named branch manager of the newest Real Estate Mortgage Network Inc. (REMN) office in Virginia Beach, Va. l GSF Mortgage has named Lisa Oâ&#x20AC;&#x2122;Connor and Gary Curtiss as branch managers in Scottsdale, Ariz., and Ed Nelson branch manager of GSF Mortgage, a d/b/a of
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Northwest Capital Mortgage in Maple Valley, Wash. Hammerhouse LLC has announced the hiring of Jessica Johnson and Ryan Grigsby as strategic growth partners. Steve Levine has been named retail regional manager of Paramount Residential Mortgage Group (PRMG)â&#x20AC;&#x2122;s southeastern division. Michael Fratantoni has been appointed chief economist and senior vice president, research and industry technology for the Mortgage Bankers Association (MBA). First Guaranty Mortgage Corporation (FGMC) has named Doug Harris its senior vice president, risk management and Ken Jones its senior vice president, mortgage banking and warehouse lending. LoanLogics has announced the hiring of Douglas R. Sheridan as senior vice president of channel partner relationships and strategic initiatives, Gerard Glavey as senior vice president and chief credit officer, and Chris Howley as vice president of sales. Generation Mortgage Company has announced that Lance Canada, Greg McDermott and Jim Becker have joined the companyâ&#x20AC;&#x2122;s sales team as retail branch managers. Mortech has announced that Tom Erickson has been promoted to the
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position of mortgage industry and compliance specialist at Mortech. ClosingCorp has named Brian Benson the companyâ&#x20AC;&#x2122;s new chief executive officer. Stearns Lending Inc. has announced the appointment of Kathleen L. Vaughan as executive vice president, national third-party production. Ernst Publishing Company has announced that title industry veteran Lisa Donahue has joined the company as assistant vice president of strategic alliances. Indecomm Global Services has announced that Indecomm Vice President Venkatasubramanian Krishnan has been named vice president of operations of the Lending Solutions Group. Venta Financial Group Inc. has announced that Lisette Rodriguez joined the company as chief operating officer. GFI Mortgage Bankers Inc. has announced the appointment Bobby Tsioutas as the companyâ&#x20AC;&#x2122;s new director of operations and has
announced the hiring of Jordy Castillo as the companyâ&#x20AC;&#x2122;s director of national sales. l Affiliated Mortgage Company has announced the addition of Mylena Evans-Alred as executive vice president of the companyâ&#x20AC;&#x2122;s Wholesale/Mini Correspondent Division.
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.
NMPâ&#x20AC;&#x2122;s 2013 Mortgage Technology Providers Directory SEE PAGES 68-69
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Markets may be volatile, but thereâ&#x20AC;&#x2122;s one thing you can always count on, the total commitment of our Mor tgage Team. Loyalty, continuity of ser vice and our dedication to protecting the integrity of our relationships are just a few of the things that set us apar t.
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www.ridgewoodbank.com www .rridgewoo id db k dbank.com
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Ridgewood understands the needs of its communities
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NMP MORTGAGE PROFESSIONAL
Mary K. Kinney, Executive Vice President & COO Ginnie Mae
NOVEMBER 2013 n California Mortgage Professional Magazine n
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ach month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us at newsroom@nmpmediacorp.com to be considered for a future “Mortgage Professional of the Month” article. This month, we had a chance to chat with Mary K. Kinney, executive vice president and chief operating officer of Ginnie Mae. As EVP, Kinney administers Ginnie Mae’s multi-billion dollar mortgage-backed securities (MBS) and Real Estate Mortgage Investment Conduit (REMIC) programs. She is responsible for managing Ginnie Mae’s daily operations, including contracting, budget and legislative initiatives, and overall risk management of the organization. Additionally, Kinney maintains liaisons with key officials and executives of housing and securities industries, the investment community, members of Congress, and other departments and agencies of the federal government. Kinney brings with her more than 20 years of experience in the MBS business, housing finance, affordable housing and commercial real estate investment. She has also managed end-to-end activities for private-label MBS at both
BY ROBERT OTTONE
Citicorp and the Mortgage Guaranty Insurance Corporation (MGIC). She has also managed loan origination and servicing functions in the primary servicing mortgage market. When you graduated from St. Lawrence University, what was your degree in? My specialty was geology, “rocks for jocks.” Who would have thought? In retrospect, I should’ve been a finance major. I landed in the mortgage industry by accident. I’ve been in both the primary and secondary segments of the market. How did you become involved with Ginnie Mae? I have been in the mortgage business for more than 25 years. I found my way to the secondary market while in Milwaukee while working for Mortgage Guaranty Insurance Corporation (MGIC) in the 1980s. I became involved with their privatelabel program, entitled “Maggie Mae” at the time. I cut my teeth on the concept of mortgage-backed securities (MBS) there and received a phone call from Fannie Mae in Washington, D.C. asking if I would come join them because they were struggling to get their single-family MBS program off the ground. It was a
total of less than $50 billion at the time, and it’s now around $2.7 trillion. I came aboard in 1984 to bring my private label experience to bring alternatives to some of the products Fannie Mae was offering. I spent some time on the origination side with Prudential, then rejoined Fannie Mae. Now, I’m with Ginnie Mae! I sometimes joke that I should’ve been born in the month of May because, including Citicorp’s CitiMae program, I’ve been with all the Maes. When issues surrounding MBS fraud like the one with Lend America in 2009 arise, what is Ginnie Mae’s approach to handling them? Ginnie Mae’s business model is based on counter-party risk. Unlike the government-sponsored enterprises (GSEs), we only take counter-party risk. We hold our lenders, who we call Issuers because they actually issue securities, with our guaranty, to a high standard. They use our name to make a splash in the secondary market. We guaranty their performance; one of the things we always look at is Issuer (or lender, as we use the terms interchangeably) performance. One of the standards is that you have to be in good standing with the FHA. We received notification
back in December 2009 that the FHA was going to “Pull the Eagle” on Lend America for various violations that Lend America had at the time. Again, because you cannot be an Issuer in good standing with Ginnie Mae unless you are in good standing with the FHA, we immediately defaulted the lender. When we do this, we take possession of our assets, which in this case, were our mortgage-backed securities that were issued with our guaranty. When a conflict like that arises, how do you ready yourself to discuss the issue? Let me break it into two categories, in the case of Lend America, we had little notice. We received notice from the FHA that Lend America had some egregious issues against them and that they were going to default. We had to move quickly, there was no opportunity for negotiation, so we had to act swiftly. We have a team in Ginnie Mae that’s called “Monitoring,” and they handle, along with our lawyers, the outlining of circumstances and inventory of the assets, documents that have to be physically removed. We have people on retention at all times to handle these kinds of portfolios of loans and MBS.
L OF THE MONTH What’s your family life like? What are some of your hobbies? I’ve played competitive sports my entire life. I don’t participate much anymore competitively, but I play a lot of golf. I love the outdoors. I’ve been married for 26 years now and I actually hired my husband at Fannie Mae. He’s a mortgage professional as well. We have a home in Maryland, and I commute into Washington, D.C. I enjoy my time in the garden, and I’ve become an obsessive walker, as well. For Valentine’s Day a few years ago, my husband gave me a shotgun, so I spend time with him shooting. I have a picture of me with my shotgun, so, when meetings go bad, I slide it across the table to our staffers and they know I mean business! Do you feel that women don’t want as much recognition in the banking field? Have women been properly represented in both the private sector and the government sector? This is an interesting discussion. I did a little blog piece on female executives. The mortgage industry is traditionally dominated by men. You have to learn how to play the role as a
woman. Sometimes, women come on too strong early and immediately alienate everyone. They hide the qualities that make them succeed. They feel they need to dominate and overcompensate. I think women need to rely on their intuitive skills and personality in order to succeed in any industry. If you commit yourself to an industry, learn about it. Be yourself. Don’t be someone else. Sit at the table. Don’t presume you should stand back. Engage your industry … you cannot be part of the game if you’re not in the huddle. My father instilled in me the notion of “work hard, play hard,” and I’ve always had male supervisors who have had the same outlook. The people I work with have that same drive and we just click. Over my career, I’ve always been passionate, and those around me have fostered that growth. If you’re not passionate, you’re going to burn out. Robert Ottone is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or e-mail robertpo@nmpmediacorp.com. 47
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When something like this happens, nings of the Ginnie Mae business the MBS and underlying loans that are model, which is a model that takes in the process of foreclosure become counter-party risk and not credit risk part of our portfolio. We’re not set up and a testament to our employees. like the GSEs to hold a portfolio. Our When I arrived four years ago, there intention is to guarantee the perform- were 62 employees, which is a shockance of the Issuer. Think of us like a ingly small number. Ted Tozer, our surety bond. We don’t want the port- president, appointed by the Senate folios, but we have to seize them and I spent a lot of time explaining to when the Issuer is in default. We’re government officials what Ginnie routinely reviewing lenders who Mae does and how we don’t assume appear to be in financial stress, that’s credit risk, how we are very low risk and generate substantial profits for what our Monitoring team does. If we see a lender that’s in distress, we the government. Congress appropriapproach them about their plan to get ated more funds to increase our back on track. One of the things we think staffing, so our numbers have since expanded to around about is that if they 110 employees. default on making a We’ve been able to monthly pass-through, we “Engage your receive funding to have the right to seize the entire portfolio. We would industry ... you modernize our infrastructure. There’s a immediately step in and advance our funds to cannot be part reason you don’t hear about any hicmake the investor whole and would seize the portof the game if cups with our infrastructure, our techfolio. Our lenders are motivated to do anything you’re not in the nology scales to an increased number of and everything to make huddle.” loans. We only had to the monthly pass-through scale for our lenders. in order to avoid a seizure We’ve added about of their portfolio. So for example, in an instance 30 or 40 lenders a year. Our business where seven percent of the portfolio model lends itself to scaling pretty is delinquent and we are concerned regularly. about the financial strain on the Issuer, we’ll have a conversation with There’s a possibility that loan limits the lender and advise them of will continue with HUD support. Is options, one of which may be to sell there another rebirth coming in terms their portfolio, that way, at least of volume for Ginnie Mae? they’ve still get the value of the 93 per- We have an ongoing dialogue with cent of their healthy portfolio, which members of Congress about our fundwe would otherwise seize, without ing and staffing levels. There’s been a compensation. That’s essentially the big great deal of recognition in terms of difference between Ginnie Mae and the the role we play. Our challenge always GSEs. When the GSEs issue securities, is, unlike most agencies seeking more they take on the credit risk of the bor- funding, is that we’re not funded from taxpayer revenues. We are funded, by rower. We take on the risk of the financial Congress, from a small portion of our strength of the lender and if they fail, we fee revenues – our guaranty fees, seize the portfolio. The GSEs operate at a transferring of servicing fees and other loan level, so the lenders don’t have administrative fees. Currently, our salary and staff expenses are running much skin in the game in that regard. at around $18 million per year, well Would you care to comment on the less than 20 percent of our fee income. Consumer Financial Protection Our systems are, however, prepared Bureau’s (CFPB) qualified residential for more loans. We’re constantly mortgage (QRM) and/or qualified watching the dynamic between lowering limits and whatever the GSEs do mortgage (QM)? We get a lot of questions about that in with their g-fees. our office and are looking at what the characteristics are. Given that we’re not Can you comment on the Federal in the credit-risk space, we don’t take a Home Loan Bank of Chicago partnerposition on it. We look to the FHA and ing with Ginnie Mae? the VA to take a stance on the issue as We’re very excited about this. This is they pertain to QM or QRM ruling under an opportunity to partner with their member banks, as well. This allows Dodd-Frank. their members to have access to the How were you able to meet the per- capital markets directly. They can sonnel requirements and increase the have access to the Ginnie Mae protechnological infrastructure at Ginnie grams, a better pricing structure and retain servicing to stay active in their Mae? It’s been a testament to the underpin- local communities.
How a Consumer Made the Government Fix FHA and CAIVRS
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By Adam P. Smith s mortgage brokers, we see and hear amazing stories and events in the lives of our clients and this one is no exception to amazing, I assure you. While I am not “the broker” in this story, but merely one of the “other brokers,” I asked this consumer to put his story in writing and allow me to submit it to National Mortgage Professional Magazine so that he could enlighten us all with what has been happening in recent years in the mortgage industry, with the involvement of the government, from the consumer’s perspective. So that we could all read what is going on today in the mortgage industry, with the involvement of the government, from the consumer’s perspective. So that we can be prepared and forewarned for what may be coming in the mortgage industry, with the ever-increasing involvement of the government, and better prepare our clients with the hope of changing the consumer’s perspective. His story is as follows.
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In 2008 my wife, Amy, I found ourselves, like many Americans, facing foreclosure on our first home. Our first
child was just turning six months old the week we moved all our property out of the house, watched as agents of the bank changed the locks, and asked for the keys to the mailbox. Humbled and humiliated, we took what lessons we could from the whole experience and set about regaining our financial footing. We found out the “waiting period” for a new home loan would be three years from the foreclosure. So, for three years, we cut every expense we could. We paid down debt, and started saving for a downpayment for when we’d be eligible for a loan again. We searched public records and found the date of the Public Trustee Sale was Aug. 19, 2009. This meant we would be able to apply for an FHA home loan as soon as August, 2012. So, in January 2013, we contacted a real estate agent and mortgage broker and started looking for a home that was large enough for our family which had grown from three to six with the addition of another daughter in 2010, and twin sons born in August 2012. In early February 2013, we discovered a hidden jewel of a house in a great part of town. We put in an offer which was accepted and went under contract. Then, our mortgage broker
came back with bad news. Even though our income and downpayment were sufficient for pre-approval of the loan on the house, there was a problem. According to the U.S. Department of Housing & Urban Development (HUD), our information was still reported on CAIVRS, the Credit Alert Verification Reporting System. Whenever someone defaults on a federally-guaranteed loan, such as an FHA, or VA mortgage or a federal student loan, their information is “flagged” in the CAIVRS system. Still, we knew we were past the three-year waiting period, so it didn’t make sense that we were flagged in CAIVRS. Days working on the problem stretched into weeks. The owners of the house simply could not wait for us any longer, and we were forced to cancel the contract. By March 5, the owners had accepted a backup offer and the house was no longer available. We were devastated. Our broker referred us to other brokers who had experience with CAIVRS issues, but the story was always the same: No one could figure out why the CAIVRS was still reporting three-and-ahalf years after the Trustee sale date. And more disheartening than that, no one we talked to had ever seen a CAIVRS issue fixed.
Over the next two weeks, we spent countless hours on the phone with HUD’s National Servicing Center. Eventually, we were able to find out two very important pieces of information. First, we learned that our CAIVRS report was not set to clear until December of 2013. This meant that as far as HUD was concerned, our foreclosure was in December of 2010—over 15 months after the Public Trustee sale according to county records. Next, we discovered that the CAIVRS report is not initiated until the bank executing the foreclosure files a claim on the mortgage insurance. For some reason, the claim was not filed by the bank until 15 months after they had foreclosed. This would turn out to be the key to resolving the issue. HUD guidelines, which are published online, list timeframes by which foreclosures should be executed according to state law. For the state of Colorado, the timeframe is seven months. Our lender failed to follow HUD guidelines and didn’t file the claim for over 15 months. Armed with this knowledge, we started a new round of calls with HUD’s National Servicing Center between March 10 and March 15. Increasingly, we spent more time on hold than we
“Then, she said something that confirmed my worst fears about government bureaucracies: ‘Well, it’s a guideline, but it’s not really a guideline.’”
Adam P. Smith is president of Greenwood, Colo.-based The Colorado Real Estate Finance Group Inc. He may be reached by phone at (866) 423-0564 or email adam@corefinancegroup.com.
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he had been instructed to tell us no one was available to meet with us. Far from being a resource we could turn to, HUD was now part of the problem. It was infuriating. “Oh that’s fine. Just give them the message that we’re going to file a complaint against them with our congressman,” my wife, Amy, said. The operator whispered back, “That’s exactly what you need to do. I couldn’t tell you when you were here, but that’s the best thing that you can do.” So we drove straight to Congressman Ed Perlmutter’s office in Golden, Colo. to meet with a member of his constituent services staff. We explained the situation to her and she initiated a congressional inquiry that day, March 15, 2013. Not knowing if this last, final effort could be effective, we all but stopped looking for a house. For two weeks, we were in limbo. Almost on a whim, went to look at another house that had been languishing on the MLS for over a month. It turned out to be an even better option than the first house we lost, and in an even better neighborhood. It made the pain of the CAIVRS issue seem even more acute. A week later, three weeks after the congressional inquiry was initiated, we received word from the Congressman’s office that they had heard back from HUD. The final decision, which was reviewed by four HUD officials, was that the bank had indeed failed to follow HUD guidelines. Officially, the bank had until December 2009 to convey the property to HUD. By that measure, our CAIVRS report should have been dropped by December 2012. Since the bank’s actions were beyond our control, HUD suppressed our CAIVRS report effective March 27, 2013. Finally, we were able to move forward. We closed on the second house on May 20 and have been enjoying our new home ever since. We are deeply grateful for the Congressman’s help in resolving this, and are happy to share our story since there may be many people out there who have similarly been harmed by lenders who ignored or skirted HUD guidelines during the foreclosure crisis. Also, we felt at points in our journey, HUD’s refusal to act on an obvious mistake made them just as much part of the problem, and, were it not for the leverage of a congressional inquiry, this issue may not have been fixed at all.
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did speaking to operators. We started to get the impression that we were purposefully being ignored in hopes that we would go away. When it got to the point that operators would say, “I’ve got your file pulled up here, please hold while I take a moment to review it,” and then never come back, we decided a face-toface meeting was necessary. We went to the HUD offices in downtown Denver on the morning of March 15. Initially, we met with a young man who was “acting” in his boss’ position. After explaining that over three years had passed since our foreclosure, but the bank’s conveyance of the property to HUD was a year late, a violation of HUD guidelines, he disappeared upstairs. Ostensibly, this was to consult with someone with more authority. When he returned, he was joined by another young man who also patiently listened to our explanation and reviewed our paperwork. Eventually, they admitted we had a point, but said that the regional office in Denver was unable to do anything about it. So, I suggested we call the National Servicing Center where the database was maintained. We were on speaker phone when the operator told us that we were correct: The bank had failed to meet HUD guidelines in conveying the property to HUD in a reasonable amount of time. Then, she said something that confirmed my worst fears about government bureaucracies: “Well, it’s a guideline, but it’s not really a guideline.” The HUD employees at the table with us actually dropped their eyes in shame. The phone call ended and a superior came down to the conference room to retrieve the two employees we had already spoken to. To their credit, the gentlemen already at the table pressed our case with the new woman and promised to initiate a formal inquiry within HUD’s grievance system. Though, both of them admitted they had never seen a formal grievance produce any results. When we walked out, we were frustrated, and to be honest, heartbroken that we would still have to wait several months to be eligible for a new loan. We had already lost one property and the market was starting to bounce back—the properties in our price range were disappearing within hours of being listed, sometimes with multiple offers over asking price. Soon, properties that were big enough for our family would be out of our price range again. When we left, we had no real plan, but, we called the HUD office from the car to get the names of the people we had just met with. The operator told us
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Grassroots Efforts Enact Governmental Short S By Robert Ottone grassroots effort is defined as driven by the politics of a community. While some might interpret this as a literal community, as in where one lives, it can certainly be applied to a community of mortgage professionals, as well. Letter-writing, phone calling, campaigning, all are typically associated with a grassroots effort and all are important aspects of whatever movement is seeking attention. Pam Marron and Terry Clemans have taken the grassroots approach in an effort to provide a solution for past short sale credit being erroneously coded as a foreclosure,
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resulting in a new mortgage denial for these past short sellers. Clemans, executive director of the National Consumer Reporting Association (NCRA), had met with Fannie Mae regarding the issue of short sales and the issue affecting one’s credit when he was introduced by a mutual colleague to Marron, who had been working on the same issue herself. They began talking about the issue and hammering out a plan of action almost immediately. Enacting change at a government level is incredibly difficult. To see two industry professionals partner up to tackle an issue head-on is inspiring in a way that we don’t often see in the business. “Initially, I was helping past short
sellers re-enter the housing market when this problem came up,” Marron, a mortgage broker, said. “I had two past short sale customers who had the foreclosure on their credit rather than a short sale. That’s when we first found this problem. After months of investigating this, it was realized that lenders couldn’t change the code, because there wasn’t a specific short sale code in the credit reporting coding system called Metro2 and used by the national credit bureaus for documenting a consumer’s credit history. Almost every short sale was being interpreted as a foreclosure when applying for a new loan, and this was resulting in a mortgage denial.” “This wasn’t the easiest thing to
grasp initially because various underwriting systems were handling things differently,” Clemans said. “Part of the problem was the dual-tracking, where lenders proceed with loss mitigation and ultimately foreclosure at the same time the homeowner is proceeding with a short sale. The national bureaus will tell you they have existing short sale code, but they don’t, as the code was a foreclosure code recently designated to be used for short sales.” Clemans continued, “There’s a specific code in Metro 2 for almost every possible circumstance relating to the consumer’s credit history. Each of the three national credit bureau’s codes have some slight variations of their specific Metro 2,
Robert Ottone is senior editor at National Mortgage Professional Magazine. He may be reached by phone at (516) 409-5555, ext. 314 or email robertpo@nmpmediacorp.com.
n California Mortgage Professional Magazine n NOVEMBER 2013
but it mostly overlaps in the pages of all the codes. It’s crazy that there isn’t a specific short sale code, especially after the historic housing meltdown we experienced.” Tackling Fannie Mae (or any government entity for that matter) headon seems like an insurmountable effort. However, both Marron and Clemans did it. “After loads of calls to Fannie Mae on this matter and an awareness of the problem being called in by many in our industry, Fannie Mae was very helpful with answering direct questions of where the problem originated from. We were trying to figure out if the problem was in the Fannie Mae automated system, or the problem stemmed from before it got there. I
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Sale Changes
am convinced it is a blend of both, as I have run a single borrower through their system with three different credit reports from three different agencies, resulting in three different approval statuses.” Even with this experience, Marron is confident in the implementation of the November 16th Fannie Mae “fix” which allows lenders to get the proof of the short sale, go into the system prior to running the automated underwriting, put in the correction as to whether it was a foreclosure or a short sale, then run the findings. “The fix that the Consumer Financial Protection Bureau (CFPB) and Fannie Mae came up with is excellent, simply inserting ‘NO’ to a foreclosure and designating a code for why,” Marron said. “There will be glitches, and we are already seeing new problems with dates now, but this is a superb start to the solution.” Marron and Clemans are quick to celebrate one another’s efforts in working with the CFPB and other government organizations in resolving this issue. Theirs is a remarkably true story of professionals finding a problem, pointing it out and affecting legitimate change. “We wouldn’t have gotten this far if this had not been advanced to Terry by Renee Erickson, another NCRA Board member and my credit expert at Acranet. Terry and I visited the CFPB, the U.S. Treasury, Sen. Bill Nelson’s office and some of the other hardest-hit state offices initially. Then, we came back to Washington, D.C. with a group from NCRA who went to Capitol Hill and told legislators about this problem,” Marron said. “Connecting to the right group who knows where to take a problem next made all the difference in the world. Sen. Bill Nelson saw the number of people this was impacting in Florida alone, and passionately demanded a solution within 90 days! I have incredible respect for the CFPB, who kept this problem on track to the end and did not give up until a solution was found. All of us had the same goal: to help consumers who were getting hurt because of this glitch.” Clemans further explained, “Initially, we believed the solution was for a new code to be added to the Metro 2 system specific for short sales. However, along the way, it was deemed that the easiest and quickest solution was for Fannie Mae to make the changes that others seemed to have figured out. Sometimes you have to compromise to get things accomplished and we were open to this as a good compromise to help consumer sooner rather than later.”
NMP’s Inside Look L E N D E R S
C O M P L I A N C E
G R O U P
The Source for Mortgage Risk Management An Interview with Jonathan Foxx, President and Managing Director of Lenders Compliance Group and Brokers Compliance Group
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onathan Foxx is president and managing director of Lenders Compliance Group based in Long Beach, N.Y., with offices in several states. Lenders Compliance specializes in legal and regulatory mortgage compliance guidance, and the firm offers a full suite of services in residential mortgage banking for banks and nonbanks. Brokers Compliance Group, an affiliate of Lenders Compliance, was established by Foxx in order to provide mortgage compliance to support the unique compliance needs of mortgage brokers. With more than 35 years in the mortgage industry, Foxx is an expert in all areas of mortgage compliance, federal and state regulatory compliance, operations, underwriting, and guidance in credit policy. Mr. Foxx has held executive and senior management positions, including chief compliance officer for two publicly traded mortgage companies, as well as executive vice president of compliance, director of government lending, and director of operations and underwriting at several of the largest mortgage loan originators in the country. Mr. Foxx holds a Ph.D. from Columbia University and an MBA from the Wharton School. He is also the founder and president of the Association of Residential Mortgage Compliance Professionals (ARMCP). Consisting of over 1,000 professionals, ARMCP is the first and only national organization in the United States devoted exclusively to residential mortgage compliance professionals. To learn more about Lenders Compliance, please visit www.LendersComplianceGroup.com, and to learn about Brokers Compliance Group, please visit www.BrokersCompliance-Group.com. National Mortgage Professional Magazine recently sat down with Jonathan to
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get an update on Lenders Compliance. NMP: Can you give our readers some background on how Lenders Compliance was founded? Foxx: I founded Lenders Compliance Group in early 2007 with the goal of providing comprehensive outsourcing solutions for companies that seek residential mortgage compliance services. Lenders Compliance is the country’s first full-service, mortgage risk management firm in the United States. Today, we are a national firm, specializing exclusively in legal and regulatory mortgage compliance guidance. We offer a full suite of services in residential mortgage banking for banks and non-banks. In 2012, I also founded Brokers Compliance Group, the first and only full-service, mortgage risk management firm in the United States that specializes in providing outsourced mortgage compliance exclusively to independent mortgage professionals, such as mortgage brokers. NAMB—The Association of Mortgage Professionals has appointed Brokers Compliance Group as its Exclusive Compliance Provider. NMP: What are the key value propositions of Lenders Compliance’s offerings? Foxx: Lenders Compliance offers costeffective, regulatory compliance advice to the residential mortgage loan origination and servicing industry by provid-
ing the professional knowledge and experience of subject matter experts in all areas of mortgage compliance. Clients are offered real world, practical solutions to business process issues, with an emphasis focused on operational assessment and improvement, legal and regulatory compliance, and all areas of mortgage risk management. Many financial institutions involved in originating residential mortgage products are often unable to pay the cost of hiring a chief compliance officer and fully staffing a Compliance Department. For a fraction of the cost, financial institutions retain Lenders Compliance as an outsourcing solution for guidance in any and all regulatory areas associated with residential mortgage loans. LCG’s interaction is handson and direct. Its compliance and support services are usually provided on a monthly basis, in order to ensure continual compliance support, or the firm may be retained as well on a project basis.
general counsel, compliance counsel, compliance manager, regulator (federal), deputy commissioner, director of consumer credit division (state), examiner (state), executive vice president of operations, and executive vice president of underwriting.
NMP: What is the experience of your professional team? Foxx: Lenders Compliance’s management team consists of professionals with proven knowledge, experience, and expertise in mortgage banking who have worked at some of the largest and most prominent loan originators in the country, as well as federal and state agencies, having held such titles as chief compliance officer,
NMP: What is driving the demand for your services? Foxx: Most residential mortgage lenders and originators want to be proactive, not reactive, though, often, that is not always achievable, especially when new policies, guidelines, rules, procedures, and the actionable implementation of regulations seem
NMP: Can you explain how Lenders Compliance operates as a seamless extension of a client’s compliance function? Foxx: Lenders Compliance provides an engagement team that meets the client’s size, complexity, and risk profile. The team provides compliance support virtually 24 hours a day, yearround, in all areas of residential mortgage compliance, including the drafting of policies and procedures, reviewing all mortgage banking operations and procedures, preparing a Compliance Management System, furnishing guidance with respect to disclosures, and federal and state banking law guidance, as well as a full range of loan analytics, such as quality control and forensic audits. Our risk management team meets regularly with clients to ensure the fulfillment of objectives and prepare the client for future changes in federal, state, and investor loan origination requirements.
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Prairie and McKinney. “360 Mortgage is excited to offer our mortgage broker partners access to the SETH program. This is a great program for mortgage brokers to help clients purchase a more affordable home and expand their business,” said Mark Greco. “360 Mortgage is committed to the wholesale channel, and will continue to offer products with competitive pricing, while supporting the mortgage broker community with best-in-class technology and service. 360 Mortgage is always working to expand its product portfolio to provide mortgage brokers with the best mortgage solutions for their customers. The SETH program does just that.”
ClosingCorp Launches New GFE Offering
Processing Services Inc. (LPS) has announced the launch of Quality Insight, a comprehensive loan quality tool that assesses loan data and document accuracy to help ensure compli-
Total Mortgage Unveils New Processing Platform
Total Mortgage Services LLC has announced the launch of Total Mortgage Processing, an end-to-end mortgage processing platform for mortgage lenders, community banks, credit continued on page 73
A Message From MAA Chairwoman Amy Swaney
s the 2013-2014 chair of the Mortgage Action Alliance (MMA), it was great to see so many companies and individuals represented at the Mortgage Bankers Association’s 100th Annual Convention in Washington, D.C. last October. More than 4,500 attendees joined together to celebrate the industry and a central theme rang through the halls of the Walter E. Washington Convention Center:
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“In correcting for the loose standards of yesterday, we have stifled access to the credit needed to drive this market. And in our effort to be diligent in the face of a collapse in the housing market, policymakers all over town have been making hundreds of policy decisions to clamp down on risk, decisions that may make sense in isolation, but in the aggregate, are choking off credit.” Over the course of our own industry’s history, we have always had to balance access to credit with minimizing risk. It’s a tough act, and over the years, the market has sometimes gotten out of balance, tilting too far in one direction or the other. There is no doubt that because of the conflicted rulemaking coming out of Washington, D.C., private capital remains on the sidelines. Policymakers can give lip service to their desire to bring more private capital into the mortgage markets, but so many of their own actions are working against that goal. Collectively, if we don’t get this right, we won’t be able to return to a time when Americans of modest means can have solid prospects for homeownership … where workingclass Americans and HispanicAmericans, and African-Americans and single moms and dads can buy a home to raise their kids. This is why the MAA is so important to members of the real estate
finance industry. MAA is a crucial portion of MBA’s advocacy efforts as it connects real estate finance professionals with their representatives in a collective voice on the federal and state level. MAA is the individual chance to speak up about what is happening in Washington, D.C. and in our state capitals, and the opportunity to become constituent experts with the ability to educate our elected officials on our business. Yet, despite our best efforts, MAA has less than three percent of actively engaged MBA members … this is not 53 enough. Our battles are far from over and active participation is needed from CEOs to receptionists, underwriters to originators. If you are an employee of a company that is engaged in, or supports the business of real estate finance, you are eligible to become a MAA member. You do not have to be a member of the MBA. Enrollment in MAA is easy … you simply fill out an online form at our Web site, www.mortgageactionalliance.org. Your membership is always free and lasts for one calendar year. Simply put, we need you. Your voice matters and it is critical that you use it. Together, we can make a difference on Capitol Hill and in state capitals across the country. The larger the group, the louder the voice. Add yours today. Amy Swaney, CMB is governmental relations officer and branch manager with Scottsdale, Ariz.-based Citywide Home Loans. Amy is also chair of the Mortgage Action Alliance (MAA), a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). Amy may be reached by phone at (480) 822-6262, ext. 2164, e-mail amy@amyswaney.com or visit http://mba.org/Advocacy/MortgageActi onAlliance.
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LPS Launches New Loan Quality Tool
“The L A R G E R the group, the L O U D E R the voice”
NationalMortgageProfessional.com
ClosingCorp has announced the launch of SmartStart, a program that gives small to mid-sized lenders immediate access to the company’s SmartGFE service for instant closing cost data for Good Faith Estimates (GFEs). SmartStart allows lenders to begin using SmartGFE at a highly discounted rate within one day of signing up for the service. During the 60-day SmartStart period, lenders receive the guaranteed RESPA compliant GFE data for Blocks three thru eight directly through ClosingCorp’s online SmartGFE service. The program includes the onboarding of up to four preferred providers and gives lenders access to current rates from ClosingCorp’s network of more than 12,000 service providers, as well as access to the company’s proprietary recording fee and transfer tax data. “Our SmartGFE is used by many of the nation’s largest lenders, and by launching SmartStart we are giving small to mid-sized lenders the opportunity to instantly experience the efficiencies and costs savings of obtaining accurate rates through our SmartGFE service,” said Mark Nogaki, senior vice president of sales at ClosingCorp. “SmartStart is ideal for lenders that want to quickly eliminate costly tolerance violations and save money without waiting on the customized onboarding process typically associated with software implementations.”
ance with investor and lender requirements for single-family loan salability. Quality Insight is delivered through the LPS Loan Quality Gateway, an open technology platform powered by RealEC that provides the integrations, data management, decisioning and workflow management required for current and emerging loan quality programs through a 24/7 data exchange connected to more than 15,000 of the mortgage industry’s service and solution providers. Quality Insight evaluates loan data against lender and investor criteria, and effectively tracks any exceptions. The tool provides a universal set of loan evaluation criteria that can be configured by clients to create an easy-to-read overall loan assessment featuring summary data, issues identified and support for remediation and exception processing. The solution’s reliable, consistent feedback helps improve loan quality accuracy and data transparency and eliminates the need for slow, expensive and less reliable manual audit checks. By improving accuracy and quality, simplifying remediation of suspense issues and reducing cycle times through decreased rework, Quality Insight can help lenders reduce repurchase risk, decrease costs, save time and improve data integrity. “As a key component in the LPS Loan Quality Gateway’s suite of analytical tools, Quality Insight identifies investor and lender compliance issues early in the process, helping lenders gain processing efficiencies by automating the internal quality control review process,” said Andy Higginbotham, executive vice president of LPS Loan Quality Origination Solutions. Offered by RealEC, an LPS subsidiary that powers the LPS Loan Quality Gateway Quality Insight further expands the loan origination services and analytic tools now available on the LPS Loan Quality Gateway, including appraisals; automated ordering of mortgage insurance (MI); automated valuation models (AVMs); title insurance; closing services; flood insurance; fee services; verifications of income, employment and identity; fraud prevention tools; and loan quality analytics, including Valuation Insight, an appraisal evaluation tool that quickly identifies the overall quality of an appraisal.
MBA’s Mortgage Action Alliance
North Carolina Amends Anti-Predatory Lending Law By Melanie A. Feliciano Esq. With the passage of Senate Bill 692, which became effective Oct. 1, 2013, the North Carolina High-Cost Home Loan and Rate Spread Home Loan Laws have been amended. The North Carolina High-Cost Home Loan Law has been amended as follows: l The definition of "points and fees" has been modified with respect to the amount of up-front mortgage insurance premiums collected and paid to the Federal Housing Administration (FHA), funding fees collected and paid to the Veterans Administration (VA), and guaranty fees collected and paid to the U.S. Department of Agriculture (USDA) that may be excluded from points and fees. Effective Oct. 1, 2013, the amount of such fees that may be excluded is no longer subject to a percentage of the total loan amount. In addition, upfront private mortgage insurance (PMI) premiums will no longer be excludable from points and fees. Only upfront fees collected and paid to the FHA, the VA, or the USDA to insure or guarantee a home loan may be excluded, in full, from points and fees. l The “points and fees” threshold has been increased from four percent to five percent. The North Carolina Rate Spread Home Loan Law has been amended as follows:
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l Amending the definition of such loans to track the definition of a federal higher-priced mortgage loan (HPML) http://goo.gl/8nIQmC l The existing limitations and restrictions of rate spread home loans have been eliminated and the following restrictions added: n A rate spread home loan shall not violate 15 U.S.C. § 1639c(a) [www.law.cornell.edu/uscode/text/15/1639c ](the ability-to-repay provisions for residential mortgage loans) and any regulations promulgated thereunder; otherwise, the loan shall be declared usurious. n Any prepayment penalty shall not violate 15 U.S.C. §1639c(c) [www.law.cornell.edu/uscode/text/15/1639c] and any regulations promulgated thereunder; otherwise, the prepayment penalty shall be unenforceable. In other words, the prepayment penalty must comply with the provisions of the Qualified Mortgage Rule http://goo.gl/kCBdB1 Lenders originating loans in North Carolina should update their systems accordingly or ensure that their compliance vendors have updates to their North Carolina high-cost test and rate spread home loan audits in place, as of Oct. 1. 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.
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Wedding ceremony The day is here and the butterflies are moving. Docs have been delivered to closing and witnesses are attending the signing. The disclosures and commitments are reexplained and the signing of papers begins. The notary stamp confirms identities and the formalities are complete.
Honeymoon They’ve got the keys and it’s time to party! The house has been furnished and decorated and they’ve invited family and friends for the house warming party. Each day is exciting and so much to look forward to. The pride of homeownership is established and it feels great.
you cannot place on others and terms must be met for a happy and longterm relationship. So what does this cheesy analogy mean? It means that your clients face a rollercoaster of emotions in today’s homebuying process and need someone there to lean on and help put things into perspective when necessary. You want to support a strong mortgage relationship with your clients and help them build wealth and avoid a divorce (foreclosure or financial strain) through proper budgeting. It also means that if you have a strong team supporting the process and making it as stress-free as possible, your clients will better understand and be more financially prepared for long-term success.
The marriage The most important part of the process that unfortunately lacks attention during the initial excitement phase. Commitment to a home and mortgage requires ongoing effort and selfless actions at times for the initial investment to grow. Maintenance and mortgage payments will be an ongoing responsibility that
nmp’s inside look
Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.VantageMortgage Group.com.
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to arise all the time. It seems that policies and procedures rise to the level of demands due to the increasing spate of regulations. In mortgage compliance, it is certainly possible to be too late to do anything about a violation of law or the implementation of a regulatory rule. Compliance leaves traces; it is nearly impossible to obliterate its trail. Lenders Compliance has always had a straightforward mission principle: Preparation is protection! Therefore, the demand is driven by the need to be fully engaged in implementing all applicable regulatory compliance requirements. Mortgage risk management is not an area for taking a pecuniary shortcut to being prepared, especially when an insufficient policy statement or violations of certain regulations may cause adverse CFPB, state banking department, and investor examination findings. If a residential mortgage lender or originator is not allocating sufficient funds toward reliable mortgage compliance, then the consequences for neglecting proactive and competent compliance eventually will lead to economically adverse results, such as administrative penalties, civil monetary penalties, and challenges to licensure or federal agency approvals, may far exceed a company’s ability to survive.
NMP: What key trends do clients have to be prepared for in 2014? Foxx: On a short-term basis, lenders must be prepared for the following: 1) Ability-to-Repay and Qualified Mortgage Standards; 2) High-Cost Mortgage and HOEPA Rules; 3) Loan Originator Compensation; 4) Mortgage Servicing Rule; 5) ECOA Appraisal Disclosures; and 6) Appraisals for Higher-Priced Mortgages. Longer term, the fate of the following regulatory compliance items will have a significant impact on future trends in the mortgage loan origination and servicing industry: 1) Changes and Revisions to the January 2014 Rules; 2) Disparate Impact Litigation; 3) Risk Retention, for QRM Rule Issued Aug. 28, 2013; 4) Home Mortgage Disclosure Act (HMDA) Rules; 5) RESPA/TILA Integration; 6) Future of Fannie Mae and Freddie Mac; 7) Federal Housing Administration Changes; and 8) CFPB Anti-Steering Rule.
MBA Celebrates 100 Years by Focusing on the Future BY DAVID J. COSTER
he Mortgage Bankers Association (MBA) reached a milestone, holding its 100th Annual Convention from Oct. 27-30 at the Walter E. Washington Convention Center in Washington, D.C. With such a significant accomplishment to celebrate, you might have expected the mood of the event to be reflective, focusing on past accomplishments and reveling in past glory. Yet, as was clear to the second largest crowd in MBA convention history, a crowd that totaled in excess of 4,000, the focus of this meeting, and the mortgage professionals who make up the industry, is squarely on the future. Yes, there was the obligatory birthday cake, served during a first-day meeting break, a display of historic photos just outside the trade show floor, and the acknowledgement of the occasion by each speaker at the outset of their remarks. But, once the cake was eaten and the presentations began, the MBA 100th Annual Convention was all about tomorrowâ&#x20AC;&#x2122;s mortgage industry. National Mortgage Professional Magazine and our new sister property, Mortgage News Network, were well-represented at the event. Our team of five had the opportunity cover the event and to conduct more than 30 in-depth interviews with an impressive cross-section of industry leaders from lenders, to vendors, to regulators. All interviews can be viewed at www.mortgagenewsnetwork.com. As you will see in the following excerpts from selected interviews, leaders in the mortgage industry are proud of the industry, concerned for its future and dedicated to improving outcomes for consumers. Congratulations to the MBA and to the industry as a whole for building and preserving an industry that makes a positive difference in peopleâ&#x20AC;&#x2122;s lives. For more reflections and insight from industry leaders visit www.mortgagenewsnetwork.com.
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David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail davidc@nmpmediacorp.com.
The Honorable Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), addresses the audience during the Opening General Session at the 100th MBA Annual Convention in Washington, D.C.
Hard at work in the StreetLinks booth at the 100th MBA Annual Convention in Washington, D.C. are Michael K. McDermott, Caitlin Hogan, Kelly Taylor and Jim Anderson
Representing Roosevelt Management and Rushmore Loan Management Services are Geoff Hader, Hope Margarit, Jim Schneider and Janice Pecache Cris Alexander at the Quality Mortgage Services (QMS) booth during the 100th MBA Annual Expo
Scenes From the MBA’s 100t
October 27-30 at the Walter E. Washingto
Credit all photo
Amy Swaney, CMB, chair of the Mortgage Action Alliance (MAA) visits the Mortgage News Network booth for a chat with anchor David Coster
David Lykken of Mortgage Banking Solutions visits the Mortgage News Network booth for a chat with anchor David Coster
David Lykken—Managing Partner, Mortgage Banking Solutions, Host, Lykken on Lending, Internet Radio Show MNN: What is it about this industry that inspires you? David Lykken: First of all, it’s at the core—the bedrock of our economy. If you are talking about anything that is going to get this economy going you are talking about housing. You won’t get housing going without a good housing finance system. But it’s beyond that—what really gets me excited about the mortgage industry is the difference it makes in people’s lives. When you put a family in a home, and you finance that home, you change the dynamics of that family. The job that I have enjoyed the most has been when I was directly financing homes— being part of the process of handing the keys to that family and seeing the emotion when they receive them.
Chairman and CEO Aaron Stein-Sapir and Account Executive Robert Villalon at the Mortgage Information Services Inc. booth
Julie Wink, Rory Tipton and Shelly Smith at the DATAFacts booth
Amy Swaney—Citiwide Home Loans, Steering Committee Chair, MBA’s Mortgage Action Alliance MNN: Tell me about the Mortgage Action Alliance. Amy Swaney: The Mortgage Action Alliance is the grassroots network for the Mortgage Bankers Association. As you know, we have been under a lot of pressure from the government and all the new regulations. The grassroots advocacy is to get out everyone that is in the real estate finance business and to make sure that everyone is participating and that our voice is being heard in Washington, D.C. and on Capitol Hill. It’s so easy to join. You simply go to the MBA Web site, search for the “Mortgage Action Alliance” and enter your name, home address and e-mail—there is absolutely no cost to join.
David H. Stevens, president and CEO of the MBA, welcomes attendees to the event
Larry Zastrow and Linda Bomar at the AllRegs booth during the MBA’s 100th Annual Expo
Sales Director Patrick McCarthy at the Veros booth was on hand to demonstrate his firm’s risk management offerings
Lewis S. Ranieri, chairman and president of Ranieri & Company Inc., during his presentation, “Reflections on a Century of Change”
E. M th Se
th Annual Convention & Expo
on Convention Center in Washington, D.C.
os to Rick Grant
David Kittle, SVP of Interthinx and past chair of the MBA, with David Coster on the set of Mortgage News Network
David Kittle—Senior Vice President, Interthinx, Past Chair, Mortgage Bankers Association MNN: What are you most proud of regarding the industry? David Kittle: I am proud of the members, I am proud of the association and how it has fought for and maintained high standards through the tough times. You look at everyone going down these aisles. These are good people who want to make good loans. They want to know the direction the industry is headed—they want some certainty with all the regulation that is going on. Once they get that certainty, we are back to doing business the way we know how to do it.
Debra W. Still, CMB, 2013 chairman of the MBA addresses the audience during the Opening General Session
.J. Burke, 2014 Chairman of the Mortgage Bankers Association, addresses he audience during the Opening General ession
Mary Kinney, executive vice president & COO of Ginnie Mae visits the Mortgage News Network booth for a chat with anchor David Coster
Mary Kinney—Executive Vice President & Chief Operating Officer, Ginnie Mae MNN: Tell us about your modernization effort at Ginnie Mae. Mary Kinney: It’s Ginnie Mae’s 45th anniversary, and we were the first entity in the world to issue mortgage-backed securities back in the 1970s. As recently as six years ago, our outstandings were $700-$800 billion. We are now up to $1.5 trillion. In order to sustain our growth, we are focused on modernizing our program. We believe our issuers—our lenders—will have a much better experience as they deliver their pool to us. We are also modernizing our staff. I joined Ginnie Mae four years ago and there were 62 employees at the time. Since then, well over 30 have retired our resigned. I am pleased to report that we are now up to 114 staff members.
Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), takes part in the “CFPB and FHFA Update” session
Carrie Bonner and CEO Jared Bonner at the LendLogix booth on the expo floor of the Walter E. Washington Convention Center
Brandy Miller of Calyx Software was on hand to demonstrate her company’s offerings
A big turnout at the DocMagic booth as Iordan Gavazov, co-founder of LenderMobile; Master Magician Joel Bauer; Ron Carrillo, Steve Ribultan and CEO Dominic Iannitti, all of DocMagic; and Iavor Boyanov, co-founder of LenderMobile gather for a photo
“Using outdated technology, a loan officer can never expect to outshine their more efficient and aggressive competitors and maintain long-term relationships that result in repeat business and referrals.”
Technology Can Enhance Mortgage Marketing Through Effective Use of Big Data By Jim Blatt Do you know anyone still using typewriters rather than computers? The question may seem silly. Just as technology has transformed the typewriter into today’s computer and tablet devices, so too has technology
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enabled vast change in marketing productivity when an originator takes advantage of Big Data by utilizing a complete CRM system. For those stuck with old technology, the only way to gauge marketing
success is based on how many marketing pieces are sent. Success of their marketing programs centers around mass marketing mailers that goes out to their customers within their LOS. Speed drives the process and they rely on little data, nothing more than names and addresses, to broadly communicate with their customers and prospects on a surface level. This strategy measures quantity of output, not quality of content or response rates from the recipient of the message. Unfortunately, the results match the effort—low. Using outdated technology, a loan officer can never expect to outshine their more efficient and aggressive competitors and maintain long-term relationships that result in repeat business and referrals. With new technology, the level of effort remains the same, as does the cost. However, results derived from using Big Data will be more effective marketing, and higher response rates and profitability. Using Big Data allows originators to execute one-to-one marketing, which has proven to be significantly more effective than traditional mass marketing. It gives loan officers the strength to finally “put away their typewriters” and adapt to current times. Fundamentally, most loan officers do not have the tools to manage Big Data, nor should they. Managing Big Data involves translating the 10,000 data fields that is part of each individual homeowner’s record into something that can be implemented, useful and effective for marketing purposes. Making sense of all the data housed in the LOS seems too daunting a task to handle, which is why it is easiest in the short run to send out a speedy mass marketing mailer. If you think that the true measure of success should be results, not output, you probably need to upgrade your technology. If your objective is on results, then you must be able to interpret your stored Big Data and standardize that mountain of infor-
mation within your LOS into actionable data that allows for targeted marketing—the right message to the right person at the right time.
Identify your key objectives and match them to your key audiences Loan officers should begin any marketing campaign identifying the actual objectives and the audience they are looking to reach. For instance, when marketing to past customers, loan officers should measure success by customer retention and focus on how many repeat deals were generated from past borrowers. A complete CRM intelligently stores this data and can readily supply these metrics. Referrals from past customers should also be tracked and reported. When marketing to prospects, loan officers should measure success by conversion rates, with clear reporting to illustrate the impact of marketing collateral on results. The biggest issue loan officers face is that while they generally know what they are trying to accomplish, they do not know how to measure it. Their dated technology may support execution, but it does not support measurement. They have no way of knowing whether their marketing campaigns are achieving the most desirable results, which is costly and counterproductive. Loan officers also need an updated system that compares results to their peers and the industry at large. By measuring results, loan originators can decipher exactly what worked well in their marketing efforts and identify areas where they can improve. From there, they can develop a highly focused and strategic marketing action plan.
Assessing the difference between Little Data vs. Big Data Loan officers with typewriters—or archaic, incomplete CRM systems using only mass marketing—use little data, which relies solely on the
borrower’s contact information, for their marketing purposes. Loan officers with computers—or complete CRM systems using one-to-one marketing—use Big Data. This leverages the relevant aspects of that particular borrower at a granular level to create messaging customized to reflect the recipient’s individual circumstances. This includes picking out the details of their mortgage and financial situation. Big Data also weighs in the current market conditions including interest rates, loan products or changing regulations that impact the borrower. A loan officer who demonstrates his or her commitment to monitoring the mortgage market for money-saving opportunities for the customer will win that customer’s loyalty for the long term. Mass marketing “Happy
Thanksgiving” cards do not have the same effect in creating a personal and meaningful connection. In order to make the transition from typewriters to computers, or incomplete CRMs to complete CRMs, loan officers must position themselves as counselors to their customers even after the sale and discuss how they will continue to manage the loan in the future. To make such a heavy promise, the loan officer must be able to deliver on his word by ensuring the right technology is in place to handle it. This means having a complete CRM and marketing system that shows various opportunities and how they impact each individual customer. When loan officers have the means to utilize Big Data and develop one-to-one marketing, they will gain customers for life.
Then they can finally throw away their typewriters and enter the 21st Century … it’s about time! Jim Blatt is CEO and co-founder of St. Louis-based Mortgage Returns, a
provider of database-driven, CRM and automated marketing solutions for the mortgage industry. He may be reached by phone at (877) 437-9100, e-mail info@mortgagereturns.com or visit www.mortgagereturns.com.
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“Ultimately, to effectively change the mortgage technology of today, the industry must refocus the way we view the mortgage process.”
The Road to an Electronic Mortgage By Jeff Knott
Advancements in technology continue to pave the way for an easier, more cost-effective and streamlined mortgage process. Consumer’s views toward the mortgage process are shifting, and it is time for the industry to understand new preferences. Carlisle & Gallagher Consulting Group conducted a survey of 618 U.S. consumers in September 2012 and
found that 46 percent felt that timeto-close was the most important factor in the mortgage application process. Forty-two percent said that simplicity was the most important aspect. It’s becoming more evident that consumers want a fast, simple process that is reliable. With this knowledge, our industry must consider ways to advance our technology
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in order to provide a more positive and efficient experience. The technology exists to change the mortgage process as we know it today. With capabilities such as electronic signatures and records, consumers are able to send pertinent documents without leaving their home or office–a convenience they now come to expect in everyday activities. With the capability of recent technology coupled with consumer desire to complete mortgage process electronically, the question that remains is why has there not been a widespread adoption of electronic practices, such as electronic signatures? The answer in part is due to a slow industry-wide acceptance. Many lenders currently originate both Federal Housing Administration (FHA) loans and conventional loans. While the lender may be able to use electronic signature capabilities with conventional investors, the FHA loans require a completely separate process since the FHA does not currently accept closing documents or records which have been signed electronically. This inconvenience of performing two procedures to manage several identical documents has limited the number of lenders who are willing to provide these capabilities throughout the mortgage process, therefore, hindering its mainstream adoption. There is industry discussion regarding the chance that the FHA may soon start accepting documents that are signed electronically along with electronic records. This industry evolution will change the entire mortgage process and lead the way to industry-wide acceptance of electronic signatures, and further down the road a solely electronic mortgage process. This lone development will have a significant impact on the industry due to the prevalence of FHA loans in our current market. According to the Mortgage Bankers Association (MBA), in the second half of 2012 FHA-backed loans accounted for as much as 30 percent of the total
loan applications submitted to lenders. These loans have made it possible for many first time homebuyers, or ones with thin credit scores, to own their own home by providing them with financial opportunities conventional lenders cannot. According to the National Council of State Housing Agencies (NCSHA), 78 percent of the homepurchase mortgages supported by FHA in 2012 were for first-time homebuyers, who are often members of a younger generation. According to the National Association of Home Builders (NAHB), the median age of a first-time homebuyer is 31. These younger consumers favor technology and the convenience it provides to many aspects of life. This change will help propel the industry forward where electronic mortgages will no longer be a thing for tomorrow, but instead the standard mortgage practice of today.
A new era As regulation holds the mortgage industry more accountable than ever before, lenders have had to find new ways to cope with compliance scrutiny. The anticipated FHA acceptance of electronic signatures and records could not be coming at a better time as a paper-driven process is no longer meeting the degree of accuracy and timeliness required by regulators. An electronic process will allow for guidelines to be met more efficiently, providing added protection for consumers. In addition, technology enables lenders to validate that documents from their end were delivered on time with a date and time stamp. This will prove invaluable in light of the Consumer Financial Protection Bureau’s (CFPB) new rule stating that all closing documents must be delivered at least 72 hours prior to closing. Moving to a fully electronic process will make meeting this deadline easier by decreasing the amount of time it takes to complete and deliver documents.
The ability to share loan files as electronic records in a secure, trusted, tamper evident way mitigates the risk of receiving negligent or fraudulent documentation and provides peace of mind to borrowers. Physical documents are required to pass through several touch points before completion, leaving room for error. With electronic document presentment, the process is streamlined and the risk of a document being lost or altered is significantly reduced. Also, with no surprises popping up at closing, such as delays and last minute cost adjustments, the process runs smoother and all parties can enjoy a more pleasant experience.
Moving forward
Many may wonder what the future will look like with all of the impending changes in mortgage technology. Having more advanced technology, rather than going through multiple channels or relying on borrower provided information, such as employment, income sources, and identity, financial institutions will have an increased ability to receive consumer authorized verifications obtained directly from the source saving both time and money. Because financial institutions will know that borrower information is more accurate than in the past, they
tronic mortgage process. However, just because obstacles exist does not mean that the end goal is out of reach. Ultimately, to effectively change the mortgage technology of today, the industry must refocus the way we view the mortgage process. We can only hope that, there will no longer be separate processes for an electronic mortgage and a traditional mortgage. Instead, the only mortgage process option will be one that is entirely electronic. Jeff Knott is the secretary of the Electronic Signature and Records Association (ESRA) and AVP product management for Equifax Verification Services. He may be reached by e-mail at jeff.knott@equifax.com. 61
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The road ahead
will be able to easily adjust thresholds, bringing up more funds that can be invested sooner. This will improve the process for everyone involved, from consumers to investors. Looking forward, there will inevitably be roadblocks along the way that must be overcome to reach a fully electronic mortgage process. For example, the Social Security Administration’s (SSA) recently issued a policy revision that it will no longer accept electronic signatures on Form SSA-89, which authorizes the SSA to release social security number verification for purposes such as mortgage applications, background checks and credit checks. This decree is one setback for our industry to overcome in the path toward a completely elec-
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As the industry continues to recover from the mortgage crisis, we certainly want to move forward rather than repeat history. However, even with certain regulations having yet to take effect, mortgage origination and compliance costs have nearly doubled in the last year. In fact, the MBA has said that the average cost of originating a mortgage jumped from $3,500 in 2008 to $5,000 in the third quarter of 2012. Our industry and economy simply cannot afford another crisis like we recently experienced. The mortgage crisis served as a wakeup call to an industry that it is in need of change. The good news is that the industry has never before been as equipped to implement an entirely electronic mortgage process as it is now. The advent of the IRS accepting electronically signed 4506-T forms has been instrumental to those promoting adoption of an electronic process. The Electronic Signature and Records Association (ESRA) led this effort with the IRS which has paved the way for other entities to realize the need for this change and the consumer desire for it. Kelly Purcell, executive vice president, global sales and marketing for eSignSystems, commented, “We absolutely cannot afford to have history repeat itself as we are constantly working to rebuild consumer trust. With the rising cost for consumers, if we don’t change how we view the
mortgage process we are burdening the American dream of homeownership. Because the legal and technological frameworks exist, the industry no longer has any excuse to not implement electronic processes to introduce a more efficient and productive mortgage process.” It is also important to consider the next generation of homebuyers. Who is today’s consumer? According to Purcell, “approximately 80 percent of applicants today expect to complete their application from start to finish online without the interruption of a document that requires them to physically sign and return it. As younger generations begin the mortgage process, it is important to consider how the infiltration of new technology has impacted the way consumers shop for everything, including homes.” Consumer demand goes far beyond simply receiving mortgage documents electronically. Instead, they expect to be able to sign and return forms as easily as they shop for everyday items via their phones, tablets and computers. Modern services will attract consumers who are now seeking the convenience of completing tasks from anywhere and at any time without ever having to step foot inside a financial institution for assistance or wait for a follow-up package to be delivered. While the mortgage process is rarely referred to as fun and easy, keeping up with consumer’s demand for an electronic process can provide a significantly better experience.
“When I first started in the mortgage industry, I had to bring my own Smith Corona to work.”
The Future
So what can we expect in 20 years from now? By Eric Weinstein
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I am 55-years-old. When I was growing up in the 1960s, there as a show I loved called “Beyond 2000.” It showcased all the neat stuff that would be around in the year 2000. In 1968, the year 2000 sounded like the far future. Everyone would have hover cars like The Jetsons and there would be colonies on the Moon. No one even predicted that Captain Kirk would be able to play Candy Crush on his subspace communicator or Mr. Spock’s earpiece would be Bluetooth. When I first started in the mortgage industry, I had to bring my own Smith Corona to work. That is a typewriter, not a Toyota for those of you who are age impaired. You had to hand-type the 1003, and if you made a mistake, you had to start all over again. Verifications of Employment (VOEs) were forms in triplicate with carbon paper and 4506Ts were not yet invented. Computers
were something NASA had. I went to the borrower’s house and hand wrote the loan application in front of them. That is why some stacking orders still call it a “Handwritten 1003” when no one I know hand writes it anymore. The average closing took 60 days from app to settlement. Now, I download a borrower completed 1003 from my secure web site. I Skype the borrower, dressed only from the waist up because that’s all my laptop cam can see. They cannot tell I am completely naked from the waist down. Unfortunately, it does bother the ladies in my office when I do that. Using my LOS, I get a DU finding, order title, order the appraisal, order Fraud Guard and order a pastrami sandwich from the deli across the street. Encompass has a button for everything! Closing takes about 30 days from the application date nowadays.
Holographic phones will mean I might have to finally get dressed all the way again. Maybe, the NSA will finally share their data so that all we will need is the borrower’s pin number to get his income, asset, credit, immigration and shoe size with the press of one button. You KNOW that have all that info now. Why not share it, if the client agrees? Appraisals will be so automated, no visit will be needed, only a satellite image to make sure the house is still standing. Title companies will finally accept digital signatures and be able to record in public records and fund electronically. The loan application will take 20 minutes tops in the morning, with 15 of those minutes dedicated to discussing the weather and their family. Processing will take, at most, an hour, and closing by later that day. Getting paid on the file will still take a damn month for some reason. Some things never change. Our kids will look back on these
times and think our iPhones and scanners are “quaint,” the way I look at my pager and fax machine now. Real estate agents will still complain the process takes too long and put a fourhour closing instead of the eight hours you plead for. Things will be the same, just different. I, for one, am ready for the future. I am resigned it. The future is closer than you think. I might as well start shopping for pants now. 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. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at :(703) 505-8692 or e-mail eweinstein4u@gmail.com.
â&#x20AC;&#x153;A variety of real estate trends vary based on the property value, and suspicious short sale activity is no exception.â&#x20AC;?
Leveraging Advanced Intelligence to Combat Short Sale Fraud By Randy Wussler
Though it may seem basic, the founda-
Know the fraudster profile Understanding where short sale activity is concentrated is a good start, but there is much more intelligence that can be utilized to pinpoint where the greatest risk lies. In the same recent study, DataQuick leveraged its National Property Database to identify suspicious short sales and create a fraudster profile. The suspicious sales were then compared to all short sales within these different segments to help clarify the profile by segmenting the market by geography, price band and property type. These are just a few useful ways to identify the fraudster profile: l As a general finding, the study found a much higher incidence of suspicious activity in Maricopa County, Ariz. and much lower rates in Los Angeles County, Calif. and San Diego County, Calif. It is also important to dig deeper within a county as short sale fraud can and does vary from one zip code to another. The
These three analyses are samples of the different types of evaluations that could be completed to profile the short sale fraudster. Specific approaches will vary based on individual requirements and fraud history. continued on page 64
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Recognize high activity levels to identify markets with the greatest fraud potential
tion of all fraud prevention strategies is ensuring a constant flow of market intelligence to understand where short sales are most common. This provides a clear picture on where the most risk exists and where to deploy the most intense prevention efforts. In a recent study of just more than 205,000 short sales from the past two years, DataQuick found significant variances in the percentage of all property sales accounted for by short sales. Wayne County, Mich. (38 percent) and San Diego County, Calif. (26 percent) had a much higher rate, whereas the rate in Miami-Dade County, Fla. (15 percent) and Clark County, Nev. (10 percent) were quite low.
l Fraud discrepancies occurred in varying property types as well, but the research pointed to a slightly higher than expected rate of suspicious activity with multi-family properties compared to single-family residences.
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The housing market collapse brought with it an unprecedented number of distressed properties, leaving mortgage professionals to find ways of minimizing potential loss through careful disposition planning. One of the most popular and effective strategies is short sales. Short sales not only provide a graceful exit for borrowers, they also allow lenders, servicers and investors to ease the burden of maintaining and reselling properties acquired through the foreclosure process. However, the increase in short sale activity has paved the way for unprecedented levels of short sale fraud. In fact, the Financial Crimes Enforcement Network (FinCEN) has stated that 10 percent of the 100,000 Suspicious Activity Reports (SARs) filed in 2012 relating to mortgage fraud were classified as short sale fraudâ&#x20AC;&#x201D;a significant increase from 2011. In addition, a recent DataQuick study found that 6.5 percent of all short sales had some type of suspicious activity associated with them, while no such activity was reported the year before. Although it may be impossible to completely eliminate all instances of short sale fraud, there are many strategies that can be used to counter the efforts of fraudsters. Five of the most effective approaches leverage advanced data and analytic solutions to identify potential fraud hotbeds in order to more effectively target and respond to fraudulent activity. These approaches help combat the growing issue of short sale fraud and also help prevent avoidable short sale losses caused by belowmarket property valuation.
study clearly identified that even though Maricopa County as a whole was a hotbed for short sale fraud activity, there were many micromarkets within the county that reported very little suspicious activity. The converse would definitely hold true for counties with less short sale fraud overall. l A variety of real estate trends vary based on the property value, and suspicious short sale activity is no exception. In general, a much higher incidence of suspicious activity occurred in lower-priced properties.
leveraging advanced intelligence continued from page 63
Implement early warning triggers Anticipating where short sale fraud is likely to occur and who is most likely to perpetrate this fraud are vital guides to overall strategy, but it is also critical to implement analytic tools that effectively and efficiently evaluate the risk of fraud on specific short sale offers. This is especially important to lenders and servicers in their ongoing portfolio management efforts. Here, the emphasis is on identifying potential short sale fraud on loans within the portfolio as quickly as possible—ideally immediately after a property is listed. Integrating deci-
sioning with comprehensive property intelligence can provide this type of early warning system characterized by the following components: l Review all loans in a portfolio against a national MLS data source on an ongoing basis. l Identify loans on new listings that have a high likelihood of short sale by comparing the listing price to current property value. l Gauge the borrower’s motivation to potentially bend the rules by identifying all liens on a property, performance on these loans and CLTV. l Use a fraudster profile, such as the
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one discussed in the previous section to further pinpoint potential problem borrowers. l Escalate those loans and borrowers identified as having the highest likelihood of short sale fraud for more intensive review and follow-up. Though advanced analytics and automated decisioning drives these types of solutions to quickly provide accurate analysis of all transactions, they do not take the human element out of the equation. In fact, these automated solutions optimize the deployment of critical human resources by flagging problem transactions that require the evaluation of an expert. Review teams are freed from the drudgery of a full evaluation on the transactions that already conform to pre-determined business rules and standards, and are able to spend their valuable time on the transactions that need the most care.
Know what is right before the offer is made Along with implementing these early warning systems to evaluate each short sale immediately after the property is listed, lenders and investors can also deploy solutions to protect them before the offer is made. One of the most effective tools to deploy is automated valuation models designed specifically to estimate the discount that should be expected for different stages of default—including short sales. The emphasis should be on a very local view of distressed properties, as it is essential to understand the zip-to-zip variations that are prevalent in most markets. By evaluating discounts at the most granular level of geography, mortgage professionals can quickly detect potential fraud and accept or reject a short sale with a much higher degree of confidence.
Leverage technology to quickly evaluate the offer The final best practice builds on the rest to provide an automated, more comprehensive evaluation of the short sale offer and a more in-depth review of the potential for fraud. By utilizing a variety of valuation sources, lenders and investors benefit from a more thorough interrogation of the offer and generate
more defensible documentation to justify their decision to accept or reject an offer. This type of valuation validation can be deployed as follows: l A consensus value is determined for the specific property based on a custom “expert panel” selected by the reviewer. The panel can consist of a variety of valuation sources, including: MLS Valuation Model, Tax Assessed Value, HPI Index Value and others. l Based on the distribution of values within the expert panel, a confidence score is developed to provide a clear understanding of the level of accuracy associated with the consensus value. l The offer price is then compared to the consensus value and either accepted or rejected based on the pre-determined tolerance level. Tolerance levels can vary based on property type, geography, price band and a host of other variables. Based on these outcomes, some may choose to adjust the consensus value by applying the short sale discount percentage for the subject property’s specific location. Following this type of approach will provide the confidence that all short sale offers have been evaluated in a consistent, accurate fashion. More importantly, it will help ensure that any fraudulent activity is identified before finalizing critical lending decisions. As long as there are short sales, there will be short sale fraud. The best practices outlined above provide a strong foundation to combat fraud by profiling where the risk is greatest and deploying advanced intelligence to quickly assess short sale fraud potential. This is a great start, but truly effective anti-fraud solutions come when these tools are integrated with a lender’s specific business requirements, systems and institutional knowledge of market-specific fraud trends. This combination will lead to the most relevant, effective solutions possible. Randy Wussler is vice president of product management and marketing for San Diego-based DataQuick. He may be reached by phone at (858) 597-3295 or email rwussler@dataquick.com.
“The decision to embrace deployment to a cloud service provider varies depending on the size, scope, infrastructure and focus of each business within the mortgage industry.”
Ahead in the Clouds
Examining the advantages and challenges in deploying critical mortgage processes to a cloud service provider By Bryan Boyer
than that. The decision to embrace deployment to a cloud service provider varies depending on the size, scope, infrastructure and focus of each business within the mortgage industry. Based on our own experience moving Choosing cloud services to the cloud for the design, develop- As NewOak learned when designing, ment and deployment of custom mort- developing, and deploying these solugage processes and risk management applications, NewOak has outlined some of the key factors and challenges to consider when weighing Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) offerings from cloud service providers for custom, mission-critical mortgage credit applications for which data privacy and high availability are paramount.
Selecting the right cloud partner
continued on page 66
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There are many options when it comes to cloud services. The provider you choose can hinge on certain questions: are you building a new application or solution? Are you willing to accept provider lock-in? Does the provider meet the technical requirements of your applications? Are you confident you can meet the service level agreements established with your end users, including protection of private data? No matter which provider you choose, there will be some level of provider lock-in. There will always be an intellectual investment and lock-in as well, as you build experience and an in-house knowledge base around the specific DevOps (agile collaboration and communication between developers and operations) solution supported by your provider. Provider lock-in can be minimized, however, by selecting services based on OpenStack and/or Cloud Foundry. While Amazon, Rackspace and Microsoft are the better known
tions, financial application architects have a powerful alternative in cloud service providers to achieve required scalability, integrity and maintenance. However, deciding when and which cloud technologies are appropriate can be challenging. Mortgage applications are no exception, particularly when they are meant to provide flexible, collaborative process management workflow and data security involving significant data and document volumes across multiple entities.
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The mortgage world has changed a great deal since the contraction prompted by the “Great Recession” and the credit crisis that sparked it. Now, many financial organizations are facing the need to upgrade their technology infrastructure, if not overhaul it completely just to meet current business demands. At the same time, organizations large and small are looking to embrace new technologies and processes to address changing operational needs and new regulatory requirements. While compliance remains at the center of mortgage decisions, everyone in the mortgage industry is looking to do things better, faster, cheaper and more securely. So how does cloud computing figure into this discussion? Certainly “the cloud” is a fashionable topic of discussion for many businesses and executives. Why wouldn’t any business want to migrate to a model where hosting application servers and databases is someone else’s problem, and if you want to increase capacity or capabilities, just say the word? One definition of the cloud is technologies “that make the physical infrastructure transparent and relieve the consumer of the burden of having custody of the infrastructure.” While the cloud makes services readily available at economic prices, most services accessible via the cloud are also available in non-cloud form. What’s changed for the application architect is that by adopting a public cloud solution, these services are more readily available and scalable across multiple entities and geographies. The internal IT is freed of maintaining and growing the infrastructure. The procurement and deployment process is often reduced to a click of the button after the decision. But the reality is far more complex
providers, IBM and CenturyLink/Savvis have a history of up-time and reliability that make them attractive for missioncritical mortgage applications. Look for industry certifications (SSAE 16/ISAE 3402) compliance, but be aware not all provider services comply. While your application may not require HIPPA compliance, if a provider supports HIPPA compliant applications for other clients, it indicates a maturity in the provider that you may desire.
ahead in the clouds continued from page 65
Most IaaS offerings include virtual machines, load balancers, virtual networks and storage. By leveraging a virtual network, you can transparently augment your on-premise network and infrastructure with a private infrastructure in the cloud. Utilizing virtual machines on a private virtual network can be one of the quickest and least intrusive ways to leverage cloud technology. Most providers also allow uploading of custom machine images for deployment. While the simple SQL databases, Web servers and compute engines offered under PaaS schemes are inexpensive options, they often have lim-
itations that do not exist in an IaaS virtual machine deployment. All major cloud vendors provide highly scalable storage options. Once you start down the path of building cloud-based solutions, blob (binary large object) storage quickly becomes a key component to your architecture, replacing the role of file server found in the traditional architecture. If you plan to transition a legacy application or business process that relies on shared file services for such things as loan documents, you will inevitably have to migrate this to a storage solution to leverage process distribution. This
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has the added advantage of providing the storage redundancy required for high availability. License requirements for both operating systems and any thirdparty software to be deployed must be carefully reviewed. It has been a highly competitive market place for cloud providers and pricing. Available features and feature limitations are frequently being changed, so always reference the latest documentation available.
Customization and deployment Once a provider has been selected, realities of deploying a custom mortgage application in the cloud become readily apparent for the first deployment. It is advisable to start by deploying some non-mission critical service or application, allowing you to build in-house experience and knowledge before tackling missioncritical applications. Take into account the investment in time required to become acquainted with building applications around the targeted services. Each cloud provider makes available various tools and APIs to automate the deployment and administration of their cloud services. Become familiar with your providerâ&#x20AC;&#x2122;s deployment options and failover architectures as soon as possible. This will save you considerable time and effort in the long run. Huge efficiencies in the development life cycle can be gained by leveraging agile development methodologies and a DevOps approach in conjunction with cloud services, so organizations need to be prepared to revise existing policies to accommodate the new DevOps era.
Availability and scalability For mortgage origination platforms or other service providers to the mortgage sector, itâ&#x20AC;&#x2122;s a fast-paced and dynamic marketplace. The right technology is critical to get the job done securely, on time and on budget, whether facilitating loan origination, underwriting, loan servicing or due diligence. Down time is not an option. This underscores high availability as a prime requirement.
A cloud deployment does not mean being free of the usual housekeeping responsibilities. Storage redundancy may alleviate your worst data loss fears due to hardware failure, but it does not provide you with a database recovery point for a failed business process or database corruption. Treat cloud service provider regions as a single point of failure in your deployment architecture, and use geographic replication options in your disaster recovery planning. Standard disaster recovery precautions and practices should still be followed, and that means off-site backups and dry runs of disaster recovery plans.
Security, data protection and compliance To mitigate security risks, NewOak recommends clients assume responsibility for encrypting all stored sensitive data. When storing sensitive information such as loan origination documents in blob storage, we recommend you apply your own application-level encryption as an added security precaution. For relational databases, we recommend column-level encryption or file-level encryption. Whether your mortgage application is an internal, intranet or internet application, look at using two-factor authentication. Microsoft Azure, Amazon Web Services and Google Compute Engine offer it and other providers are following suit. For the typical mortgage concern, the deciding factor may be if a cloud-based solution can be architected that meets existing internal policies and audit requirements. Considerations should be given to compliance with new regulations, data security and potential liabilities surrounding specific applications. Generally, cloud providers can work with potential clientsâ&#x20AC;&#x2122; technology and governance teams to address any concerns. Bryan Boyer is chief technology officer of NewOak Capitalâ&#x20AC;&#x2122;s Credit Services group, has more than 30 years of experience in the securities and banking industries, covering the design and implementation of many online and batch applications and services. He may be reached by phone at (212) 2080867 or e-mail bboyer@newoak.com.
“… the amount of data we have access to now in the areas of underwriting, fraud and quality is enlightening and can be incredibly valuable in the area of risk management.”
Mortgage Technology ... Taking the Red Pill By Michael Larkin “This is your last chance. After this, there is no turning back. You take the blue pill, the story ends; you wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland and I show you how deep the rabbit-hole goes.”—The Matrix
Underwriting and technology
Misunderstandings with technology I’ve been in the mortgage industry for 23 years now and still can honestly say that I love what I do. For the vast majority of that time I’ve been an underwriter and involved in either fraud or
Conclusion Lending has risk … it always has and always will. The technology helps to mitigate that risk, but can never eliminate it. For those of us who would choose to take the “blue pill,” we need to make sure we have really good underwriters that understand both risk and the end goal. For those of us who would choose to take the “red pill,” we’ve got a lot of data coming in and we’re paying for all of it. Use it wisely to create new efficiencies when you can, try not to become numb or complacent and welcome to The Matrix. Michael Larkin is director of risk management for Indecomm Global Services. A nationally-recognized risk management and quality control expert, Larkin previously served as vice president, risk management at Kroll Factual Data, where he was responsible for planning and development in risk solutions. He may be reached by phone at (614) 5717629 or e-mail michael.larkin@indecomm.net.
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It doesn’t seem like that long ago, but prior to Desktop Underwriter (DU) and Loan Prospector (LP), fraud tools, automated valuation models (AVM), and even before fax machines and email (yes…I’m that old), underwriting was very different. Underwriting was based on an assessment of documents and calculations. It was opening up a manila file folder, usually with notes on the outside and a checklist stapled on the inside. An underwriter opened the folder, did the review and within about 3045 minutes provided an underwriting decision or conditions that would lead to an underwriting decision. This was never a perfect process, but it did generally keep underwriters alert and vigilant since decisions on loans were made based on their recommendations. I remember when I first tested out DU, my first thought was…”this is amazing!” My second thought quickly followed though and it was…”Ok…now do I still have a job?” For the first users it was pretty scary.
barking at something. Sometimes it’s barking at kids playing in the street. Sometimes it’s barking at the mailman. Sometimes it’s barking at a squirrel, but it’s always barking at something. Sometimes, however, it’s barking because of a fire, a break in or a stranger. I relate to these tools in the sense that as the owner of the dog … you learn the barks. You learn what to react to and what is just a “false positive.” Underwriters, fraud examiners and quality auditors using these tools need to react the same way. The tool is pointing out what it can “see” or “hear,” but it’s up the owner/user to interpret the incoming data. As with a dog, you can tone down the reactions to reduce the false positives, but they’re always there. You just need to make sure your underwriters are experienced enough to not under-react or overreact, and then creating inefficiencies to the process. You also have to decide how much information you can really handle. It’s not that you don’t want it. It’s just how much your company can actually make actionable.
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A mortgage executive from a top five lender quoted this line from the movie The Matrix, a sci-fi thriller, while expressing the pros and cons of sophisticated mortgage technologies with me. I had to look this quote up after hearing it to fully understand the point, but it was that with mortgage technology and from the perspective of risk … once you start, it’s almost impossible to go back.
Lenders were reworking their entire workflow to rely on this new technology and underwriters were being laid off simply because lenders didn’t need as many of them. Underwriting became a battle with a loan officer who had gone to their sales manager complaining that the underwriter was asking for things that DU didn’t. Why weren’t they just following the DU checklist or doing what it told them? The underwriters had to quickly point out simple things like that DU couldn’t see that the signatures didn’t match or that there was whiteout on the pay stubs. DU and LP were never meant to take away the underwriter … they were meant to supplement and support the underwriter, but they did leave gaps. These gaps were then filled by an industry that didn’t exist yet and quickly became known as the fraud tools. Adding technology … to technology … to a process that just a few years earlier was based on expertise and experience. Are you getting The Matrix analogy yet? Obviously there are many sides to this story, and I’ve personally been on a few of them more than once. Most of us believe in the value of the technology, but also concede that it can often make us complacent. I agree that the amount of data we have access to now in the areas of underwriting, fraud and quality is enlightening and can be incredibly valuable in the area of risk management. If not used correctly though…it can be addictive and with results that aren’t always actionable or efficient.
quality. I’m proud of the fact that I worked as the chief underwriter for both CoreLogic and DataVerify, and served with Interthinx for a short period in more of a consultant role. During that period, I also worked with the U.S. Treasury Department as a lead underwriter looking at the industry as a whole and all the various technology solutions available to it. I’ve even worked with a few companies as they looked to develop new technology platforms to compete with CID (CoreLogic, Interthinx and DataVerify) or new solution areas entirely. Previously as a consultant … my favorite part of my career was always talking about the technology pieces and how to best fit those pieces together into solutions that make sense for lenders. CID (CoreLogic, Interthinx and DataVerify) deserve a large amount of respect. They have built incredibly detailed solutions and provide phenomenal services. Each has a loyal following of users that rely on these tools. Each tool has areas of pros and cons, areas of concentration or areas of expertise in various subjects. When these tools are used correctly they can add valuable insight, but when these tools are represented or sold correctly by CID … there should (and usually is) a common thread. The tools are a supplement. They are there to assist the underwriter. If I had a dollar for every time I’ve heard an underwriter or an executive say that CID approved it, I’d be a very rich man. The CID solutions do not approve loan applications. The tools are there to add valuable support to the underwriter in making their decision. They do not and cannot replace an experienced underwriter. I personally like and have used each of these tools and in reviewing various lending cultures can make the argument on which one makes the most sense for a lender. It’s important to accept the idea that these tools by their very nature can create over reliance and false positives, but so can a dog. Let me explain. Long ago, I came up with the analogy that CID (CoreLogic, Interthinx and DataVerify) is like a barking dog. If you own a dog, you know the dog is always
NMP’s 2013 Mort Providers Calyx Software
Global DMS
Why techies love the company: Robust, powerful and compliant, yet flexible and easy to use. Support included.
Why techies love the company: We are constantly innovating and adding to our single-source valuation management platform.
Why clients love the company: Affordable, reliable products for more than 20 years make us the number one provider.
Why clients love the company: The common theme we hear is that our solutions are very easy to use and highly effective.
Description of products offered: Developed by mortgage professionals, our products combine technology with functionality for banks, credit unions, mortgage bankers and brokers. Calyx products include Point and PointCentral, Verifyde, Path, Point Mobile, WebCaster and more to meet varied business needs and keep you compliant. Professional Services helps optimize utilization of your software based upon your individual requirements, and online training and Webinars help clients stay up-to-date. Calyx makes it easier to get your job done.
Description of products offered: eTrac is the flagship product and single-source solution for compliantly assigning, tracking, and reviewing appraisals transactions. AMCmatch.com is an advanced search tool that locates the AMC that best suits users’ needs. ATOM is a mobile application that allows appraisers to easily accept and complete orders. MARS identifies collateral risk and scores appraisal reports. Global Kinex offers direct integration to the UCDP that compliantly delivers appraisals.
Phone #: (800) 362-2599 Web site: www.calyxsoftware.com
Phone #: (877) 866-2747 Web site: www.globaldms.com
DocMagic
Mortgage Coach
Why techies love the company: No one can touch DocMagic’s level of service, security or processing power.
Why techies love the company: Mortgage Coach for Apple and Android devices is a personal lending experience anywhere.
Why clients love the company: DocMagic easily has you creating your first set of documents in minutes. Description of products offered: DocMagic’s many document solutions represent the milestones in the mortgage process and the array of markets our customers serve. Our innovations have evolved from desktop to online and now mobile … from same-day turnaround to instant and now eDelivery with ClickSign … from the first data validation system to a comprehensive auditing system that validates document content and mitigates client risk. DocMagic has built its reputation on quality, trust and service as it provides the best loan document solutions available … anywhere.
Why clients love the company: With Mortgage Coach, families nationwide can make a confident mortgage decision. Description of products offered: Mortgage Coach provides the only mobile app that helps homebuyers work with a mortgage professional to achieve absolute financial transparency about mortgage options and both purchase or refinance scenarios. Top rate and service focused loan officers across America have been adopting the Mortgage Coach philosophy for over 15 years to help borrowers make confident home financing choices. Families can review all their options anytime and anywhere.
Phone #: (800) 649-1362 Web site: www.docmagic.com
Phone #: (800) 485-7251 Web site: www.mortgagecoach.com
GeoData Plus
Mortgage Mapp
Why techies love the company: It’s Web-based and can be accessed from PCs, Macs, tablets and mobile devices.
Why techies love the company: Mortgage Mapp eliminates the heavy lifting and cost of creating your own app.
Why clients love the company: GeoData has comprehensive property data. It’s fast, accurate and affordable.
Why clients love the company: Your app is the ultimate tool to cut through clutter of traditional marketing.
Description of products offered: GeoData Plus is a data source used by thousands of real estate professionals throughout the state of New York. GeoData’s clients are appraisers, real estate agents, investors, mortgage companies and tax reduction professionals. Services include detailed property reports, sales comparables, foreclosures, mortgages, for sale/for rent listings and maps. Phone #: (516) 663-0790 Web site: www.geodataplus.com
Description of products offered: Use Mortgage Mapp to create your own app. Share it with agents and clients to grow your business. Phone #: (855) TAPPIFY Web site: www.mortgagemapp.com
tgage Technology s Directory Motivity Solutions
StreetLinks Lender Solutions
Why techies love the company: Movation business intelligence is simple to manage, but also robust and flexible.
Why techies love the company: One word … innovation. StreetLinks thrives on building innovative solutions that move the mortgage industry forward. When we discover that a piece of the puzzle may be working but isn’t driving significant value to our partners, we feel a responsibility to address that challenge with a better process.
Why clients love the company: Business intelligence built by mortgage professionals for mortgage professionals. Description of products offered: What gets measured, gets results. Motivity Solutions is the award-winning creator of the mortgage industry’s leading business intelligence platform that helps lenders gain efficiencies and increase productivity through real time analytics. Motivity’s business intelligence software combines all data into one web based platform and helps generate a better understanding of company performance with scorecards, dashboards and dynamic reporting capabilities.
Why clients love the company: At StreetLinks, we don’t believe in doing anything unless it is innovative, serves our lender and appraiser partners, and promotes positive change in the industry. These technologies–such as our industry-leading automated appraisal review solution, StreetLinks QX–address specific partner pain points to drive consistent and measurable results. Description of products offered: StreetLinks offers an innovative and differentiated suite of valuation solutions to mortgage industry professionals nationwide.
Phone #: (800) 411-5541 Web site: http://motivitysolutions.com
Phone #: (800) 778-4920 Web site: www.streetlinks.com
Simple Nexus LLC
ValuLink
Why techies love the company: Document scanning and “Push Notifications” help you connect with clients.
Why techies love the company: ValuLink is an easy-to-use, fast and compliant appraisal management platform.
Why clients love the company: Compliance features are unmatched, and support is one-on-one.
Why clients love the company: ValuLink is customizable managing the appraisal process from start to finish!
Description of products offered: Your smartphone app connects You and Your Company to Realtors and Borrowers.
Description of products offered: ValuLink’s easy-to-use, cloudbased appraisal management platform is redefining the way AMCs and Lenders drive efficiency, stay compliant, and make time to win new clients. ValuLink’s platform offers an intuitive environment for vendor enrollment, order placement and storage, and payable/receivable management. It’s simple yet robust. ValuLink conducts a CustomFit analysis of your business and fits the ValuLink platform around the way you and your team work, no extra fees or added costs. ValuLink is your secure and robust appraisal management platform!
Phone #: (855) MTG-APPS Web site: https://simplenexus.com
Phone #: (866) 213-0672 Web site: www.myvalulink.com
SKM Media Group
Veros
Why techies love the company: Free customized cloud-based marketing platform; plug & play for mortgage CTOs.
Why techies love the company: Veros built its foundation on stretching the boundaries of predictive analytics. Veros was the recipient of the Synergy Award in 2010 for its efforts around UCDP and industry-standardization.
Why clients love the company: Huge ROI, monster databases, killer creative and ad copy, direct mail platform. Description of products offered: Targeted databases and lists, responsive ad-copy, mortgage marketing experts! Phone #: (561) 404-1036 Web site: www.skmmediagroup.com
Why clients love the company: Veros is committed to helping its clients meet the demands of complex industry regulations, as well as quickly and successfully adapt to the evolving mortgage landscape for profitable business results. Description of products offered: Veros has excelled as a premium provider of AVMs, residential market forecasts, home price indices, market risk scoring tools and more. Veros also offers reliable and secure platform solutions enable companies to better manage their collateral valuation strategies. In addition to being the official technology provider for UCDP, Veros also offers its own proprietary solutions for electronic appraisal ordering, quality control, review and delivery to the GSEs. Phone #: (866) 458-3767 Web site: www.veros.com
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The Changing State of Mortgage Fraud By Phil Hall n the realm of mortgage fraud, there is an abundance of good news. The degree of tumult and trauma created by fraudsters in the run-up to the 2008 crash appears to have safely departed into the history books, with no evidence of a roaring comeback. However, while mortgage fraud has abated to a great degree, it has not evaporated completely. Indeed, the slow transition from a refi-heavy market to a purchase-driven market is giving many fraud observers experts a slight case of agita, as the potential for new chicanery quietly awaits. But first, let’s focus on the positive news. According to the Mortgage Fraud Report issued in September by Irvine, Calif.-based CoreLogic, approximately 19,700 mortgage applications in the second quarter of 2013, or 0.8 percent of the total number of applications, were identified as having a high risk of fraud. This is down from 20,900, or 0.7 percent, in the second quarter of 2012. Furthermore, CoreLogic found that fraudulent loan applications reached a combined value of roughly $10.5 bil-
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lion for the first half of this year. Fraud risk among U.S. mortgage applications declined 5.6 percent in the second quarter of this year, slightly up from $5.2 billion in the first quarter, but down from $5.5 billion in the second quarter of 2012. Ed Gerding, senior fraud and risk strategist at CoreLogic, credits the current numbers on the industry’s abilities to target suspicious activity. “Overall, quality control and quality best practices are starting to surface in the downward trend in mortgage fraud risk,” Gerding says. And while a combined value of $10.5 billion in fraudulent applications in the first six months of 2013 may not seem like a tiny figure to some, it is a far cry from the pre-recession years. “The Financial Crisis Inquiry Commission reported that between 2005 and 2007, $112 billion in fraud losses occurred in mortgage industry,” recalls Brent Chandler, CEO of Suwanee, Ga.-based FormFree Holding Corporation. “The Commission pinpointed this was a direct result of lenders’ willful disregard to assess the borrower’s ability to repay. But, of course, lenders were not all to blame— investors buying loans and saying, ‘Hey,
we need more loans.’” Rick Sharga, executive vice president at Irvine, Calif.-based Auction.com, credits much of the decline in fraud risk to a more vigorous attention to detail at the origination level. “There are much tighter underwriting standards and much more diligent quality control work done by originators,” Sharga says. “It is very difficult for borrower to perpetrate fraud in today’s lending environment.” “Banks have become aware of how dangerous unchecked fraud can be,” says Ann Fulmer, vice president of industry relations at Agoura Hills, Calif.based Interthinx. “From the 30,000-foot view, fraud risk down significantly since the boom.” Yes, but … However, mortgage fraud—both in possible risk and actual practice—was not permanently buried in the rubble of the 2008 crash. Fulmer notes that Interthinx’s data on the subject has discovered an acute problem that could seep back into the industry. “According to our mortgage fraud risk report, the risk of fraud is up very slightly from quarter to quarter,” Fulmer explains. “This concerns us. As the market shifts from refi to purchase,
risk goes up. You have more actors involved and more moving parts in a purchase market than you have in refi. All additional moving parts bring higher risks.” CoreLogic’s Gerding agrees, adding that some sections within the mortgage world are already showing evidence of problems. “We are seeing an increase in three out of six risk areas: Income fraud risk, undisclosed debt income fraud risk and occupancy fraud. As the market changes, the refi boom leads to a purchase market. Refi is less risky than purchase–with refi, lenders already know the borrowers and do less verification.” Ruth Lee, executive vice president of sales, marketing and business development at Denver-based Titan Lenders Corporation, notes that other types of fraud are percolating across the housing market. “Right now, fraud is in a different place than it was a few years ago,” Lee says. “A major area in application fraud involves owner-occupancy fraud, where the fraudster claims they are buying for owner-occupant, but are not. There are also ‘asset mules,’ which involves renting other people’s assets and bundling them in with their own. There are also
flash listings on the Multiple Listing Services, where real estate agents put up homes for a few hours and then pull then down, thus contributing to appraisal fraud.” One area that has been raising a number of red flags involves short sale activity. Randy Wussler, vice president of product management and marketing at San Diego-based DataQuick, says that his company has been following national trends that point to suspicious happenings that may have significant consequences. “Between 2011 and 2013, the incidents where people were buying low and selling have been amazingly high,” Wussler explains. “There are incidents where the short sale price is less than 50 percent of the market price and the subsequent sale is 200 percent higher—and within six months of the initial short sale. According to our data, 6.5 percent of all short sales had that activity. We found that incredibly high.” Wussler adds that Arizona’s Maricopa County appears to the epicenter of this trend—the county registered 41 percent of the national volume of short sales and 59 percent of suspicious activity relating to buying extremely low and selling extremely high. Southern California came in second with 27 percent of all short sales
and 15 percent of all suspicious activity. Properties valued at less than $100,000 made up 16 percent of short sales and 25 percent of suspicious activity, while properties valued between $100,000 and $200,000 were 28 percent of short sales and 39 percent of suspicious activity. Wussler notes that these figures do not necessarily mean that every short sale was a fraudulent transaction. “It is not illegal to buy low and sell high,” Wussler states. However, he expresses concern over the possibility of a new wave of malfeasance relating from any potential collusion between sellers and agents. But considering the excess inventory that has burdened the housing market, it would not be cynical to imagine that more than a few cases of dubious behavior have occurred. “Whether at the applicant or underwriter level, there are going to be folks who are compensated or incented to get business done at a rapid pace and high volume,” says FormFree’s Chandler. “When you have that, then you will have fraud.”
Fighting back So what can today’s industry do to hammer back at the fraudsters? Brian C. Coester, CEO at Rockville, Md.-based Coester Valuation Management Services, advises mortgage bankers to recognize that the nature of loan origination will never allow for a fraud-
free environment. “You can make the process so complicated that it would be 100 percent fraud-proof,” Coester says. “But, at the same time, it would make it so complication that no one would get a loan.” For Coester, the strongest defense comes in the intelligent use of technology–specifically, in using today’s software systems to determine the points along the origination route where possible fraud may have taken place. “We had an issue where the FBI came into our office because the lender was changing the appraisal values and the FBI wanted to see the original appraisal,” Coester adds. “It is important to make the loan process more traceable so we can see what a file originally looked like and what looks like now. The technology is there to accomplish this. It is just a matter of putting it all together.” “From my perspective, fighting mortgage fraud is about data integrity or lack thereof,” says Fulmer. “As much as Dodd-Frank and the Consumer Financial Protection Bureau cause pain at a variety of levels, they nonetheless elevate data integrity to a level of compliance. The governmentsponsored enterprises have also been pushing for this.” But despite the most targeted data solutions, there is also the question of the extremes that some fraudsters will
go to in order to achieve their goals. “Although we continue to make tremendous strides, the fraudsters are very good, too,” says Michael Kuentz, senior vice president of mortgage services at Atlanta-based Equifax. “We know of cases where they are stealing identifications or taking advantage of hospice facilities in order to get control of Social Security numbers and circulate them into mortgage arena.” Titan Lenders Corp.’s Lee calls for a more diligent human element to fight back against mortgage fraud. “For all of the many advantages in technology, a human component is required to ferret out when people are lying,” Lee says. “Data can be perfect, but identity theft is a big issue in fraud. With home equity conversion mortgages, for example, there is a disproportionate amount of fraud because many counselors do their counseling over the phone. When you do that, you don’t know who the heck you’re talking to.” Lee adds that the fight against fraud needs to be part of a daily operation, involving all employees in the origination chain. “It is not a reflection on you if fraud occurs,” Lee says. “But it is a reflection on you if you don’t implement training on suspicious activities reports.” Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com. 71
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n California Mortgage Professional Magazine n NOVEMBER 2013
Solution to Short Sale Underwriting Issues Now Available By Terry W. Clemans
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n the February 2013 issue of National Mortgage Professional Magazine, my column focused on the troubles encountered by consumers who had a short sale transaction more than two years ago when trying to reenter the housing market. These are consumers not with totally shattered credit histories, but consumers who had FICO scores above the required threshold and meet the rules for homeownership after the short sale. Some had little to no bad credit other than the troubled mortgage account represented by the short sale transaction; however, they were still being denied. That article was written in the middle of a campaign to understand and resolve these problems, with the help of a tireless Florida mortgage broker
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Pam Marron (who is quoted in the February article) and several National Credit Reporting Association (NCRA) members who took to the streets of Washington, D.C. in June of 2013 to continue to highlight this problem that was brought to the Senate Commerce Committee’s attention by Sen. Bill Nelson of Florida. I got the pleasure of working with Pam and the staff of Sen. Nelson’s office on several occasions. Also paramount to this story is the help of some members of the federal government, most notably, Brian Webster at the Consumer Financial Protection Bureau (CFPB). Thanks to all of these individuals, this problem was resolved the week of Nov. 16 when Fannie Mae made changes to the DO/DU system. These changes were announced by Fannie Mae on Aug. 22, 2013 in the DO/DU Release Notes Version 9.1. This update will include a feature to allow lenders to overriding the credit code
used by the national credit repositories and mortgage servicers that is causing the loan to be denied as reported in the February 2013 article. To get these short sales, shown as Deed in Lieu (DIL) and Pre-Foreclosure Sale (PFS), approved loan originators will need to work with the mortgage credit reporting agency to assist the borrowers in obtaining a new loan in an appropriate timeframe. The change will allow DU to disregard the foreclosure information on the credit report when instructed to do so by the lender on the online loan application. To make this change, you need two things. First, the consumer with the past short sell needs to have proof of the past short sale available (commonly received from the listing real estate agent) and a HUD 1 Closing Statement to show the date of the short sale (both of which can be often received from the real estate agent or title company that handled the short sale) and provide those to the lender. Next the lender should run the DU and get the finding. If a reject comes up, Shown as a “Refer With Caution,” go back into the loan application (URLA form 1003). When DU identifies a foreclosure on a credit report, find the trade line that appears to be one that shows the DIL or PFS. Then, you must instruct DU to disregard the foreclosure information on the credit report by entering “Confirmed CR DIL” or “Confirmed CR PFS” in the explanation field for Question C. This is the declarations section of the online loan application. You can then resubmit the loan case file to DU, which will read this indication and override the foreclosure information on the credit report represented by the DIL
or PFS trade line and the remarks code associated with it. After thee corrections are made and the lender has rerun Desktop Underwriter the “Refer With Caution” should be replaced with an approval and the consumer will be back on track for homeownership. For questions regarding the support of this field by a lender’s loan origination system, lenders should contact their technical support team, and may also contact their Fannie Mae Account Team for additional assistance or follow the links below for access to supporting documents for this story. l February 2013 article from National Mortgage Professional Magazine: http://nationalmortgageprofessional.com/news35306/la ck-short-sale-code-credit-reportingsystem-creating-hardship-manyconsumers l Fannie Mae’s DO/DU release notes: https://www.fanniemae.com/content/release_notes/du-do-releasenotes-11162013.pdf l A media release from Sen. Bill Nelson: http://www.billnelson.senate.gov/news/details.cfm?id=345575& l A video presenting the short seller’s account his problems trying to get back into a home: http://www.youtube.com/watch?v= ZPvzVpnwKRI&feature=youtu.be Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached at (630) 5391525 or e-mail tclemans@ncrainc.org.
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unions and third party originators, to originate more mortgage loans, scale capacity to market demands, increase profitability, enhance service levels, remain fully compliant and maintain the customer relationship. Total Mortgage Processing can efficiently support retail or wholesale channel originators through either an existing network of preferred service providers or a network recommended by Total Mortgage. The on-demand processing platform is 100 percent customizable and includes multiple features and benefits. “Mortgage processing as a service will become a more important processing model as the cost of originating a mortgage increases due to numerous factors including regulatory compliance,” commented John Walsh, president of Total Mortgage. “Total Mortgage Processing is an on- demand solution to help mortgage originators remain competitive, fully compliant, mitigate risk and own the client relationship under their own terms. Our centralized solution, run by experienced mortgage executives, specializes in managing the mortgage lending value chain through various market cycles without any disruption to an organization’s core business or service and personnel levels.”
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coming in january 2014
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ServiceLink Announces Launch of New Customer Advocate Site ServiceLink announced the availability of its LoanCare Servicing division’s new consumer-facing customer advocate Web site. In the spirit of the current regulatory environment, the online portal minimizes frustration and delays in the complaint filing process and enhances consumers’ overall experience. Consumers can easily navigate the site to input complaints and, once a form is submitted, the consumer receives a confirmation email with a ticket number that can be used to follow up. Once received, the inquiry is assigned to a LoanCare advocate expert charged with the responsibility of responding timely. The customer advocate then handles the complaint and offers a recommended resolution. “The common complaint from consumers who have problems with their loans has been that nobody is paying attention,” said Gene Ross, president of LoanCare. “Our advocacy website provides consumers with a seamless, usercontinued on page 78
We’re compiling a list of companies who are actively hiring for National Mortgage Professional Magazine's “Who’s Hiring Report” feature, slated to appear in our January 2014 edition. If your company is hiring, we want to include your company name and website in our 2014 Who’s Hiring Report. It’s really simple. Just go to https://nmpmag.wufoo.com/forms/whos-hiring-in-2014 and complete the form. There is no charge for this simple listing. If you are aggressively hiring on a regional or national level, we also have some additional opportunities to help you. Call (516) 409-5555 ext. 4 for details.
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n California Mortgage Professional Magazine n NOVEMBER 2013
Norcom Mortgage has announced the launch of its Norcom Origination Exchange (NOX) Portal, a secure loan exchange system, with its wholesale and correspondent partners in mind. The new portal creates a seamless workflow between employee and partner, starting from the second a loan is submitted, all the way through closing and funding. Scott Blanchard, Norcom’s manager of Web operations and creator of NOX, insists “good technology allows you to achieve your business goals better and faster by being simple, helpful and unobtrusive. We believe that NOX will be all of that and even more.” The new system has allowed for more efficient business transactions and the elimination of trouble shooting issues. Bill Granata, owner of New Milford Mortgage and broker partner feels, “Norcom Mortgage and NOX has made my task as the owner of a small mortgage brokerage so much more efficient and profitable. The instantaneous email communication of receipt of documents, and updates to each file, has made communicating with borrowers and business partners so much more accurate.”
Calyx Software has announced it now offers governmentrequired regulatory mortgage compliance reports through its new Calyx Verifyde. Calyx Verifyde reports will help aid banks, credit unions, mortgage bankers and mortgage brokers with a one-stop solution to adhere to reporting regulations at both the state and federal levels. “Calyx Software has always provided high product value at an affordable cost and Verifyde continues that tradition,” said Dennis Boggs, executive vice president of business development at Calyx Software. “We wanted to keep Verifyde simple, so we created bundles to match each business type, with the specific state and federal reporting needs to match. No need to shop a-la-carte.” Initial regulations supported include the Home Mortgage Disclosure Act (HMDA), HMDA Plus requirements of the Office of the Comptroller of the Currency, NMLS Mortgage Call Report, North Carolina Mortgage Lending Act data uploads, South Carolina Mortgage Log System, RegulatorConnect Licensee Examination File, California Form RE 881 for brokers, Nevada Monthly Activity Report and New Hampshire Form 397-A-AR.
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Norcom Unveils New Portal Geared Towards Wholesale and Correspondent Partners
Calyx’s Latest Offering to Aid in Regulation Reporting
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APPRAISALS
Our Guarantee We will not leave you stranded and alone on an island. Our seasoned operational rollout team will ensure you a smooth transition to our branch platform. Our RHF University will train everyone on your staff. We stand by our reputation of providing ongoing support and communication to every branch , every day. You’re our #1 Priority! We are a Full-Service Banker, a Direct Endorsed FHA and Fannie Lender. We are a TRUE 48 hours in Underwriting and Closing. We will close your loans on time. We will give the best service to you and your clients We will give you full access to all marketing and development services from loan origination to hiring to specialty products. We are the Leader in marketing, technology and strategic business partnerships. We assist our Branch Managers in hiring, training and motivating their staff. We will help you build your team. CALL NOW 866-319-4442 or EMAIL fkuri@rhfunding.com or VISIT www.rhfbranch.com
COMPLIANCE CONSULTANTS BRANCH OPPORTUNITIES
Hometown Lenders (888) 606-8066 moreinfo@htlenders.com www.hometownbranch.com "WE HELP YOU GROW YOUR BRANCH AND SKYROCKET YOUR INCOME!" • • • • • • • • • •
We fund your start-up costs Corporate Recruiting Team that puts producers in your branch Direct Connection with the branch managers who are crushing it Proven "Marketing Maps" that will double your business "Next Level Support" to help keep you growing Get a BPS payback from our volume incentive, or build a margin for yourself into your rate! Full capability to control your loan officers' pricing. Create, Customize and Optimize your branch's compensation plan. Full Eagle Lender and In-House Underwriting, Closing and Fundings Currently looking for high-quality producers in: TX, CO, NC, SC, NJ, OH, GA, AL, TN, FL, MS, LA, KY
BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com Division of Lenders Compliance Group, BCG is the first and only mortgage risk management firm in the U.S. devoted to supporting the unique compliance needs of residential mortgage brokers. Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews
COMPLIANCE CONSULTANTS
CONTINUING EDUCATION
Clix Mg 1756 Hanshaw Road • Ithaca, NY 14850 Office: 727.474.1442 www.clixmg.com
Mortgage Seminars MortgageSeminars.com 248-403-8181
Clix Mg, provides the mortgage industry with compliant marketing solutions. We assist mortgage companies to balance the competing needs of effective marketing campaigns and compliance. Our management team includes attorneys, software developers and marketers, combining more than 50 years experience in the industry. During the past year Clix Mg has been developing the LCP (“Lender Compliance Portal”). LCP is a web based platform that provides mortgage companies the ability to track, control, oversee and approve every marketing piece, material, campaign or program according to their own guidelines in an easy user friendly and cost effective manner. LCP provides reporting capability for internal as well as State and Federal audits.
Cost: Only $19.95 per month per physical office location Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained by HUD and an FHA Originator for over 15 years, is publisher of The FHA Originator, a monthly marketing newsletter which gives you… • • • •
FHA guideline news to keep you updated FHA Marketing tips and downloads that are easily customized Personal development tips to help you develop your character Full access to all previous FHA marketing downloads!
No contracts so sign up today and give yourself the tools to brand yourself as The FHA Expert in your marketplace. Cost: Only $19.95 per month per physical office location.
DIRECT MAIL
Titan List & Mailing Services, Inc. 1020 NW 6th St Suite D, Deerfield Beach, FL. 33442 (800) 544-8060 www.TitanLists.com Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services. The firm specializes in data lists (mail/phone), printing, direct mail, graphic and website design as well as internet and SEO marketing. Starting in 1998, the company has, since then employed highly skilled individuals who have considerable experience regarding marketing trends. The company manages the complete in-house campaign themselves including Design, Data Lists, Printing, Postage, and Mailing.
LEADS
CREDIT REPORTING
LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance.
Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.
You want to close more loans. We can help you do it. Accurate information is the basis of smart lending decisions. Credit Plus, Inc. provides that – and more. We’re the company mortgage professionals trust for intelligent insight, smart information that enables them to mitigate risk and build their business. Our information services line is more than 160 products strong. Our expertise in the mortgage industry enables us to quickly assess current and future needs, and provide new solutions for a rapidly changing environment. We move mortgage professionals forward.
MortgageLeads.org 888-695-3239
Mortgage Internet Leads $9.99. Find out why the nation's top lenders partner with MortgageLeads.ORG. Target by: • Refinance • Purchase • HARP • FHA • VA • Reverse. Close more loans today 888-695-3239 or click www.MortgageLeads.org
AllRegs—Your Source for Fast, Reliable Answers 2600 Eagan Woods Drive, Suite 220 Eagan, MN 55121 (800) 848-4904 www.allregs.com AllRegs offers mortgage professionals fast, reliable answers needed to conduct their day-to-day business. From research and reference to business intelligence, from education and training to professional services, we are your definitive source for mortgage industry information. With tools for originators like NMLSapproved CE training, regulatory content libraries for compliance staff, guidelines for underwriters, policy manuals for operations, and business intelligence for business development – we have you covered as the leading information provider for the mortgage industry. If you have a specific need, our professional services team can help with thing like policy, procedure or guideline development, as well as custom training or publishing resources. Contact us to learn how we can help you – visit www.allregs.com today.
LOAN ORIGINATION SYSTEMS
Calyx Software 800-362-2599 www.calyxsoftware.com TagQuest www.myharpleads.com TagQuest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.
Calyx Software is the #1 provider of affordable mortgage solutions for banks, credit unions, mortgage bankers and brokers. Beginning with customizable websites that offer online mortgage applications with eDisclosures and document request/retrieval, Calyx offers products that enable smooth bi-directional flow of data from start to finish. Our solid yet flexible LOS delivers smart technology with electronic document management, back-end functionality such as underwriting and secondary marketing, strong security, remote access, on-the-go productivity available with optional mobile apps, and a configurable business rules engine needed for workflow and compliance. Convenient interfaces with over 200 vendors providing PPE, closing documents, compliance services and more make endto-end processing and reporting simple & accurate. Lenders can take advantage of our fully integrated automated underwriting and pricing products that determine loan eligibility and pricing against investor or FHA guidelines.
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NationalMortgageProfessional.com
Our Compliance Team Will:
Credit Plus, Inc. 31550 Winterplace Parkway, Salisbury, MD 21804 800-258-3488 www.creditplus.com
MARKETING/NEWSLETTERS
RECRUITMENT
WAREHOUSE LENDERS
â&#x20AC;&#x153;The year I started their Lender Letter and Week e klly Economic Update, my business the eW DOUBLED. Thank you, Right Side Marketing, for your excellent products and service.â&#x20AC;? Steve Peterson Sierra Pacific Mortgage
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8520 Macon Rd. Ste 2 Cordova, TN 38018 info@mcmf.net | 615-477-7118
973-646-3067 www.AFRWholesale.com
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MCMF developed My Guide, a Premier Credit & Financial Education Magazine that you can customize with your LOGO and Ad Pages to feature your organization as well as provide your borrowers a go-to-guide for credit and financial resources, empowering them to make the most informed financial decisions. This 16 page, full color, quarterly publication, provides financial literacy tools in a concise, unbiased, easy to understand format. My Guide is offered in traditional magazine print, as well as our newest electronic flipbook version, bringing â&#x20AC;&#x153;flipping through a magazineâ&#x20AC;? experience right to your desktop
Jim Melchior, Vice President of Sales
Maaverick Funding Corp. is a direct mortgage lender licensed in 30 states across the country. Haavving obttained FHA, VA A, USDA and Fannie Mae appro ovals, Maaverick is growing and seeking top talent for their expanding nationwide footprint.
Phone: 855.422.5917 ny NJ NJ,, 07054 9 Entin Rd., Parsippany Visit us at www w.Ma . averickFundingg.com Maverick Fundingg Corp. NMLS# 7706
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Warren J. Rosaluk 800.795.2150
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American Financial Resources' Wholesale Division is one of the country's leading wholesale lenders. Recently ranked #1 in total sponsored FHA loans closed, AFR offers a wide variety of products including: â&#x20AC;˘ Conventional â&#x20AC;˘ USDA â&#x20AC;˘ Manufactured Housing â&#x20AC;˘ VA â&#x20AC;˘ Freddie Mac Open Access and Fannie Mae DU Refi Plus â&#x20AC;˘ One-Time Close Construction â&#x20AC;˘ FHA â&#x20AC;˘ FHA 203(k) and 203(h) rehab loans Since 1997 we have been expanding to better serve you and our hard work and investment have resulted in faster turn times, quality customer service, and one of the most robust product lines in the industry. American Financial Resources, Inc., 9 Sylvan Way, Parsippany, New Jersey 07054 1-888-664-2101 â&#x20AC;˘ NMLS# 2826 â&#x20AC;˘ Intended for Mortgage Professionals only. Celebrating 15 years of exceptional service to our clients. Please visit www.afrwholesale.com for a full range of products, programs, forms and additional information.
VALUATION SERVICES
Close Jumbo Loans Others Cannot Veros Real Estate Solutions "Innovating Mortgage Technology" veros.com | (866) 458.3767 Follow us on Twitter at @verosRES Veros has been an industry leader in real estate collateral valuation management & decision analytics for more than a decade. We offer a wide variety of software solutions and tools to help you manage collateral valuation from the beginning of the mortgage chain and throughout the life of the loan. Contact Veros today to learn about: â&#x20AC;˘ Sapphire â&#x20AC;&#x201C; the most comprehensive valuation management platform â&#x20AC;˘ VeroVALUE â&#x20AC;&#x201C; the industryâ&#x20AC;&#x2122;s leading national AVM â&#x20AC;˘ VeroSCORE â&#x20AC;&#x201C; automated appraisal scoring quality control tool â&#x20AC;˘ ComplianceTRACK â&#x20AC;&#x201C; independently designed AVM cascade â&#x20AC;˘ VeroFORECAST - most advanced residential market forecast Email Veros at info@veros.com to learn more or to schedule your complimentary product demonstration.
Service more jumbo borrowers with New Pennâ&#x20AC;&#x2122;s Jumbo Advantage portfolio product 877-930-PENN www.GoNewPenn.com Jumbo Advantage Highlights: â&#x20AC;˘ Market leading jumbo rates â&#x20AC;˘ Loan amounts up to $2 million â&#x20AC;˘ Cash out up to $400,000 â&#x20AC;˘ FICO down to 680 â&#x20AC;˘ Expanded loan-to-value (LTV) up to 85% (no MI) â&#x20AC;˘ Expanded debt-to-income ratio (DTI) up to 50%
WHOLESALE/CORRESPONDENT LENDERS
WHOLESALE LENDERS
The Direct Path into the Reverse Mortgage Market. Ralph E. Rosynek, Jr. / Senior Vice-President National Production Manager /HECM Direct Endorsement Underwriter E-Mail: rrosynek@rmsnav.com / rrosynek@rmpath.com Office: 281.404.7970 / Cell: 708.774.1092 / EFax: 866.543.5420 URL: www.rmsnav.com • www.RMPath.com
Real Estate Mortgage Network, Inc. www.remnwholesale.com 866-933-6342
Whether you are an experienced reverse mortgage professional looking to grow faster or a firm wanting to create a new product line, allow RMS’s production division RMPath to work with and alongside you to build a strategic path to success. We have: • Correspondent, Wholesale Lending And Aggregation Partnering • We Offer Exceptional Customer Service And Market - Leading Pricing • Powerful, Secure, Scalable Loan Origination Systems • Proprietary State-Of-The-Art Technology Utilizing The RM COMPASS Technology Platform • Customizable Production Strategies To Fit Your Needs • Rapid Execution And Exceptional Customer Service • Excellent Compliance And Regulatory Controls
REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time. Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com
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Rushmore Home Loans is a wholesale lender dedicated to understanding and answering the needs of our brokers. We provide competitive mortgage loan products with a focus on quality, efficiency and flexibility. Our goal is to deliver an experienced, customer-focused team with access to the most comprehensive technology platform to deliver the highest possible service to our brokers.
HomeBridge 5 Park Plaza, 10th Floor Irvine, CA 92614 www.homebridgewholesale.com HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology. Currently expanding and hiring experienced Wholesale Account Executives nationwide. Please send your resume to marketing@homebridge.com. Building bridges to success, one loan at a time.
UWM has a full set of mortgage products to meet all of your lending needs with Conventional, FHA, USDA (Rural Development), VA, Jumbo, HARP 2.0 and DU Refi Plus. With UWM’s ELITE program, you will receive the most aggressive conventional rates and pricing in the industry for your elite borrowers! Discover Lending Made Easy with United Wholesale Mortgage!
NMP MAGAZINE—DECEMBER 2013
40 UNDER 40
The 40 Most Influential Mortgage Professionals Under 40 coming in december 2013
NMP Media Corp. 1220 Wantagh Avenue • Wantagh, New York 11793-2202 p 516.409.5555 • f 516.409.4600 e advertise@NMPMediaCorp.com w www.NationalMortgageProfessional.com
n National Mortgage Professional Magazine n NOVEMBER 2013
WHOLESALE LENDERS
United Wholesale Mortgage 800-981-8898 www.uwm.com NationalMortgageProfessional.com
Rushmore Home Loans www.rushmorehl.com 888.202.0878
new to market
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friendly experience when reporting complaints and ensures that their issues are being effectively addressed in a timely manner.” One of the key elements of LoanCare’s Customer Advocate Web site is the live chat feature hosted by LivePerson, a customer engagement platform that uses ticket tracking technology to help improve the customer service experience. The live chat feature offers customers the opportunity to quickly reach a customer advocate without having to leave the website. LoanCare’s customer research, escalation and seller finance teams currently use the platform in their day to day operations and expect it to provide similar benefits for customer advocate site users.
Risk Reveal From Equifax Sheds Light on Potential Risk
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Equifax has announced the availability of Risk Reveal, an automated technology that scans closed loans investors receive from their delegated correspondent lenders to reveal the ones that may pose potential risk. To better mitigate risk, ensure loan quality and drive profitability, investors need more transparency into the credit activity of borrowers during the underwriting process. In fact, based on Equifax research, 20 percent of mortgage loans reviewed in 2013 had one or more new trade lines during the “quiet period” — the time between the original credit file pull and the closing of the loan. Risk Reveal helps provide laser focus on the loans that need attention and further research, so issues can be addressed in a timely manner. The solution removes the random nature of the selection process by identifying loans that have undisclosed debt or exceed DTI requirements associated with the loan type submitted. In addition, Risk Reveal provides: An efficient review of all delivered closed loans to investors to ensure no new debt was established during the origination process, without interrupting the funding process; an analysis of any new debt incurred that also notes the impact to DTI based on income used to qualify; a portfolio evaluation with exceptionbased alerts to highlight loans that require further analysis in terms of undisclosed debt and consumer DTI; and efficient tracking and comprehensive ordering via Equifax Spectrum—a powerful delivery platform that offers efficient tracking and intuitive ordering. “Fannie Mae and Freddie Mac, along with mortgage insurance (MI)
companies, have a vested interest in “clean” loans, yet the continued growth and competitive nature of correspondent lending requires the investor to make critical decisions on large volumes of loans in a very short time frame,” said Craig Crabtree, senior vice president and general manager of Equifax Mortgage Services. “These challenges can cause investors to purchase mortgages without the thorough review necessary to ensure due diligence was performed—exposing the organization to costly repurchase requests. With Risk Reveal, this is no longer an issue.”
DocuTech and Veri-Tax Join Forces to Automate 4506-T Forms DocuTech Corporation has partnered with Veri-Tax to automate the 4506-T IRS verification process in DocuTech’s flagship software, ConformX. This integration will enable ConformX users to submit tax transcript requests through Veri-Tax within the ConformX document software for simple 4506-T fulfillment. “Compliance burdens in the industry place a great emphasis on a lender’s need for seamless partner integrations that can satisfy all requirements of the disclosure process,” said Scott K. Stucky, chief operating officer of DocuTech. “DocuTech’s partnership with VeriTax will automatically deliver tax transcripts to the customer in a designated secure folder, simplifying the disclosure process and guaranteeing compliance.” The integrated service allows shared customers to easily satisfy IRS requirements by automating the verification process and enabling lenders to place and retrieve tax transcript orders within ConformX, where borrower information is already stored. It also enables lenders to leverage existing partnerships without implementing transformational changes and to comply with the Abilityto-Pay regulation recently finalized by the Consumer Financial Protection Bureau (CFPB). “New compliance rules involving the IRS and CFPB present a significant challenge to lenders, which is why this integration with DocuTech makes so much sense,” said Maria Kirgan, Veri-Tax senior director of product management. “The combination of automated verifications and electronic documentation will greatly streamline the compliance process while improving loan quality and saving time for everyone—especially the consumer.” DocuTech’s flagship software, ConformX, provides customizable solutions that assist lenders with the
importation of information from a loan origination system into compliant documents. DocuTech anticipates integrating additional Veri-Tax verification services such as form SSA-89 processing, verifications of employment and verification of accounts in 2014, as well as offering additional integrations to auxiliary verification providers.
The course clocks in at under 30 minutes to complete, and provides an overview of the industry, including trends, regulatory requirements, and other basic information about the HECM program which will help the course participant make reasoned, strategic business decisions.
Mortech Marksman Integrates With Kroll ReverseVision University Factual Data Now Available as Online Educational Tool
ReverseVision Inc. has announced the launch of ReverseVision University (RVU), which offers an online education platform to teach mortgage professionals about the reverse mortgage industry. ReverseVision plans to offer a wide range of additional benefits with its courses, including continuing education credits from the Nationwide Mortgage Licensing System (NMLS) and credits from the National Reverse Mortgage Lenders Association (NRMLA) for its coveted Certified Reverse Mortgage Professional (CRMP) distinction. “RVU will be a fantastic tool for reverse mortgage professionals because it will serve several functions,” said Rachel Smith, product manager at ReverseVision. “We were repeatedly told how expensive and time-consuming it is to train new LOs or anyone new to the industry. RVU will supplement the need for in-house, HECM-specific training for new staff and keep experienced staff up-to-date on recent changes. Compared to live training, RVU is more convenient and consistent, and far less expensive,” Smith said. RVU courses are also essential for companies looking to ensure their staff members are speaking the same language with respect to reverse mortgages. By utilizing RVU, companies will build a team of knowledgeable reverse mortgage experts who can better service their borrowers, and better position themselves to avoid any issues that may arise around training from a CFPB audit. RVU’s initial launch includes two course offerings: ReverseVision Fundamentals and ReverseVision Advanced Reverse Mortgage Executive Development (ARMED), with additional courses slated for release. ReverseVision Fundamentals is a two-hour course that educates participants on the key laws and principles which comprise the HECM program. Reverse mortgage professionals looking to brush up on the newest changes and sharpen their understanding of complex topics will appreciate the course’s simplicity, while forward mortgage professionals looking to break into the reverse space will find the material comprehendible and thorough without delving too deeply into any one topic. ARMED is built upon the fundamentals course, but is intended primarily for mortgage executives, senior management, and others in leadership roles.
Mortech has announced a new integration between Mortech’s Marksman pricing engine feature and software from Kroll Factual Data, Inc. The integration will enable loan originators to get more accurate pricing by pulling a consumer’s credit earlier in the loan-pricing process. “The integration will benefit loan officers by allowing them to seamlessly pull credit through Marksman. In the past, loan officers had to leave the system in order to retrieve this information for pricing.” said Don Kracl, vice president of mortgage tools at Zillow Inc. “In addition, the integration with Kroll Factual Data allows loan officers to access credit reports earlier in the process so they can provide more accurate loan pricing and customer service.” Now loan officers can review an HTML-formatted credit report directly from Kroll Factual Data or import it directly into the Marksman loan application. If the borrower is deemed to be qualified, the data can then be exported directly into the loan origination software, therefore increasing loan officer efficiency. In addition, loan administrators also can determine which loan officers have access to the Kroll Factual Data credit report. “We agree with our colleagues at Mortech that credit should be pulled earlier in the process, as credit is a threshold component of any lending decision,” said Damon Littlejohn, director of channels and alliances at Kroll Factual Data. “We were impressed with the speed with which Mortech’s integration team approached the problem, and delighted with the collaborative effort to produce the solution. This will absolutely benefit our common customers and the consumers they serve.”
Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market 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.
calendar of events N A T I O N A L
DECEMBER 2013
Wednesday-Friday, December 4-6 Mortgage Bankers Association (MBA) Independent Mortgage Bankers Conference InterContinental Miami 100 Chopin Plaza Miami, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. JANUARY 2014
M O R T G A G E
Tuesday-Friday, February 18-21 Mortgage Bankers Association (MBA) 2014 National Mortgage Servicing Conference & Expo The Peabody Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. MARCH 2014
Sunday-Thursday, March 9-13
P R O F E S S I O N A L
APRIL 2014
Thursday, April 17
Saturday-Monday, September 13-15
23rd Annual Rocky Mountain Mortgage Lenders Expo Denver Marriott Tech Center 490 South Syracuse Street Denver, Colo. For more information, call (303) 773-9565 or visit www.cmla.com.
NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail vvalvo@agilityresourcesgroup.com or visit www.nambnational.com.
MAY 2014
OCTOBER 2014
Monday-Thursday, May 5-8
Wednesday-Saturday, October 15-18
Friday, January 17
Wednesday-Friday, March 12-14
Thursday-Saturday, May 15-17
New England Mortgage Expo 2014 MGM Grand Foxwoods 39 Norwich Westerly Road Ledyard, Conn. For more information, call (860) 922-3441 or visit www.nemortgageexpo.com.
American Land Title Association (ALTA) 2014 Business Strategies Conference The Omni Nashville Hotel 250 5th Avenue South Nashville, Tenn. For more information, call (202) 296-3671 or visit www.alta.org.
50th Annual NAPMW National Education Conference Location to be determined Seattle, Wash. For more information, call (800) 827-3034 or visit www.napmw.org.
Sunday-Wednesday, February 2-5
Tuesday-Friday, March 18-21
CREF/Multifamily Conference & Expo The Peabody Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
MBA’s National Technology in Mortgage Banking Conference & Expo 2014 JW Marriott Los Angeles LA Live 900 West Olympic Boulevard Los Angeles For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
Thursday-Saturday, September 4-6
FEBRUARY 2014
SEPTEMBER 2014
Florida Association of Mortgage Professionals 2014 Convention & Trade Show Rosen’s Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.famb.org.
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.
American Land Title Association (ALTA) 2014 Annual Convention The Westin Seattle 1900 5th Avenue Seattle, Wash. For more information, call (202) 296-3671 or visit www.alta.org.
Sunday-Wednesday, October 19-22 MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
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American Land Title Association (ALTA) 2014 Federal Conference & Lobby Day The Grand Hyatt 1000 H Street NW Washington, D.C. For more information, call (202) 296-3671 or visit www.alta.org.
NationalMortgageProfessional.com
2014 MISMO Winter Summit Hyatt French Quarter New Orleans 800 Iberville Street New Orleans For more information, call (800) 793-6222 or visit www.mortgagebankers.org.
2014 Regional Conference of Mortgage Bankers Associations Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.
Monday-Friday, January 13-17
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WHOLESALE DIRECT FREE PROCESSING - NO LENDER FEES
LOSE, Y YOU OU ORIGINATE, ORIGIN NATE, T W WE EC CLOSE, ITâ&#x20AC;&#x2122;S THA AT S IMPLE. THAT SIMPLE. 888.913.3912 www www.afrwholesale.com/wd .afrwholesale.com/w d Lender NMLS 2826. AFR Wholesale, a division of American Financial Resources, Inc. is a nationwide wholesale residential mortgage lender and an approved lending institution. The company is a GNMA issuer, FNMA seller/servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. This information is provided to assist business professionals. This is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. - Equal Housing Lender - Equal Opportunity Employer. Corporate office located at 9 Sylvan Way, Parsippany, NJ 07054. AB110813