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NEW JERSEY EDITION
MBA-NJ/NJAMB State Office 385 Morris Avenue v Springfield, NJ 07081 Phone: (973) 379-7447 v Fax: (973) 379-5152 MBA-NJ Web site: www.mbanj.com v NJAMB Web site: www.njamb.org
MBA-NJ OFFICERS Phone # Michael DiSalvio President (609) 519-0484 W. Thomas Kelly First Vice President (973) 376-1800 Laura J. Borrelli Second Vice President (973) 785-4800 Samuel Lamparello, CMB Treasurer (732) 738-7100 Maria Guillermina Chaux, CMB Immediate Past President (201) 861-0531, ext. 122 E. Robert Levy Executive Director (732) 404-1128
Robert Baerenbach Eugene J. Brown Robert E. Knuth Lawrence R. Lesiger Nelson Ramos
MBA-NJ BOARD OF GOVERNORS 2012 Governor (732) 851-7033 2012 Governor (856) 596-6200 2012 Governor (800) 582-7066 2012 Governor (856) 663-7800 2012 Governor (215) 591-0222
Fax # (856) 468-3856 (973) 376-0180 (973) 890-9206 (732) 738-5806 (201) 861-0754 (732) 404-1129
(888) 549-9723 (856) 574-9041 (800) 358-5597 (856) 663-6565 (215) 793-6520
Joseph Alvini Robert Ciullo Maureen A. Erwin, CMB Andy Pada Jr. Diane Scriveri
2013 Governor 2013 Governor 2013 Governor 2013 Governor 2013 Governor
(251) 591-0222 (908) 309-6370
(251) 793-8520
(201) 569-3469 (201) 862-0660
(201) 227-2958 (201) 862-0598
Robert J. Angelucci Thomas A. Juliano Paul T. Logan Richard W. Miller Alex Saphos
2014 Governor 2014 Governor 2014 Governor 2014 Governor 2014 Governor
(215) 293-6800 (609) 693-9045 (856) 685-0096 (609) 987-3559 (215) 575-1452
(215) 293-6807 (609) 693-8698 (856) 428-7213 (800) 785-5173 (215) 575-1778
NJAMB EXECUTIVE COMMITTEE President (732) 505-9050 Immediate Past President (908) 918-1500
Dennis Astrella Nagji Vira Anthony Gatto
NJAMB BOARD OF DIRECTORS Director (973) 882-2919, ext. 103 Director (732) 283-2120 Director (856) 401-0088
E. Robert Levy Monica Cede単o
(732) 404-1129 (732) 596-1625 (732) 596-1625 (732) 596-1625 (732) 596-1625 (732) 596-1625
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Rosa A. Fernandez Charlene Gilbert Melinda Gravell Dana Maki
MBA-NJ/NJAMB STAFF Executive Director and Counsel (732) 404-1128 Membership/Registrations (732) 596-1619 Coordinator Communications Coordinator (732) 596-1619 Executive Assistant (732) 596-1619 Financial Coordinator (732) 596-1619 Meetings Coordinator (732) 596-1619
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MBA-NJ/NJAMB
calendar of events SEPTEMBER 2015
Monday-Thursday, September 28-October 1
Northeast Mortgage Brokers & Professionals Conference Harrah’s Resort Waterfront Conference Center 777 Harrah’s Boulevard • Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.
Tuesday, September 29
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facebook.com/mortgageprofessional LinkedIn.com (search National Mortgage Professional Magazine)
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2015 Northeast Conference of Mortgage Brokers and Professionals Golf Outing McCullough's Emerald Golf Links 3016 Ocean Heights Avenue • Egg Harbor Township, N.J. 11:00 a.m. For more information, call (732) 596-1619 or e-mail dpassaretti@mbanj.com. Eight-Hour PA SAFE Comprehensive: Relevant for the MLO #5382 Instructors: Diane Lombardi, CEO of MindBulge and E. Robert Levy, Executive Director & Counsel for the Mortgage Bankers Association of New Jersey Harrah’s Resort • 777 Harrah’s Boulevard • Atlantic City, N.J. 9:00 a.m.–6:00 p.m. OCTOBER 2015
Thursday, October 1 Four-Hour NJ SAFE: New Jersey State Elective #5409 Instructors: Diane Lombardi, CEO of MindBulge and E. Robert Levy, Executive Director & Counsel for the Mortgage Bankers Association of New Jersey Harrah’s Resort • 777 Harrah’s Boulevard • Atlantic City, N.J. 1:00 p.m.–5:00 p.m.
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Sunday-Thursday, March 13-17 Regional Conference of Mortgage Bankers Associations Harrah’s Resort Waterfront Conference Center 777 Harrah’s Boulevard • Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com. For information on all MBA-NJ/NJAMB events, call (732) 596-1619 or visit www.mbanj.com.
7th Annual Northeast Conference of Mortgage Brokers and Professionals September 28-October 1, 2015 Harrah’s Convention Center Atlantic City, NJ
www.mbanj.com
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7th Annual Northeast Conference of Mortgage Brokers and Professionals How to Grow and Prosper in Today's Economic and Regulatory Environment
September 29 - October 1, 2015 Harrah’s Convention Center Atlantic City, NJ www.mbanj.com
Want a great deal? Northeastt Conference of Mortgage Attend the 7th Annual Northeas Brokers and Professionals and join your colleagues and functions, exhibitors at our educational sessions, food functi ons, cocktail receptions and in our exhibit hall, all for a modest all-inclusive fee!
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Take A Look: • Two Continental Breakfasts • Lunch in the Exhibit Hall Receptions • Two Networking Cocktail Re ceptions A Terrific Program: Professionals • Featuring Top Industry Profe ssionals Great Panels: • Including State Regulatory Forum • Other Panels To Be Announ Announced ced
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MBA-NJ Platinum Sponsors
MELISSA COHN, PRESIDENT Featured Speaker | NYC Real Estate Expo 11/11 - 2:00 PM Venue: NY Hilton (Midtown Ave of Americas / 53rd St.) Room: Murray Hill West (NYC Finance Expo)
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N A T I O N A L
M O R T
Managing Third-Party Origination Risk By Greg Stephens, SRA, MAA, CDEI
S E P T E M B E R
30 Who’s Afraid of a Plummeting Homeownership Rate? By Phil Hall
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l
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A SPECIAL FOCUS ON “SCHOOL IS BACK IN SESSION: EDUCATION & CERTIFICATION” Live Versus Online Training By Casey Cunningham ....................................58 Creating a Training Strategy for the Next Generation By Ginger Bell ..................................................................................................60 Ensure Compliance With Education and Certification: Navigating the Seven “Cs” By Matt Seu ......................................................62 We Don’t Need No Ed-u-ca-tion By Eric Weinstein ....................................64 NMLS-Licensed Loan Originator: Now What? By Michael McNulty ..........65 Why Do You Want to Learn? By Dave Hershman ........................................66
36 NMP’s Mortgage Professional of the Month: Phil Shoemaker, Executive Vice President of Wholesale Lending: Caliber Home Loans By Phil Hall
FEATURES NAMB National By Nathan Pierce....................................................................8 The Elite Performer: Roach or Coach? By Andy W. Harris, CRMS ..............8 Net Promoter Score By Dr. Kerry Johnson ..................................................10 China Devalued the Yuan: What Does It Mean to the Mortgage Market? ..............................................................................16 Five Mistakes That Will Doom Your Direct Mail Campaign By K. Justin Restaino ......................................................................................18 NAMB Perspective ........................................................................................20 OrigiNation: By Originators, For Originators By Andy W. Harris, CRMS ..28 From Wholesaler to Consumer, it’s All About Education By Tom Hutchens ............................................................................................32 Industry Updates: September 2015 By Melanie A. Feliciano Esq. ..............38
50 Lykken on Leadership: Innovation Throughout the Organization—Five Key Areas for Leaders to Focus on Improving By David Lykken
56 Closing Disclosure: Deep Dive—Page Four and Five By Jonathan Foxx
V I S I T Company
Web Site
O U R
A Page
Academy Mortgage ............................................ www.academymortgage.com ..........................................11 Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................65 American Financial Resources Inc. ...................... www.afrwholesale.com/wd-benefits ....................Back Cover Angel Oak Mortgage Solutions ............................ www.angeloakms.com ..................................................43 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................88 Caliber Home Loans.............................................. www.caliberwholesale.com/portfoliolending ................44-45 CallFurst.com ...................................................... www.callfurst.com ............................................................59 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................31 & 64 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7 Equity Prime LLC................................................ www.equityprime.com ..........................................50 & 71 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 61 Flagstar Bank .................................................... www.wholesale.flagstar.com ..........................................17 Franklin First Financial, Ltd. .............................. www.franklinfirst financial.com/wholesale ......................41 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ............................29, 53 & 60 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................13 LendingHome .................................................... www.lendinghome.com/nmp ............................................1 Lykken On Lending ............................................ www.lykkenonlending.com ............................................74 MBA-LML/NJ ...................................................... www.mbanj.com ..........................................................NJ6 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................69 Monroe Capital, Inc. .......................................... www.monroecap.net ......................................................47 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ..............................34-35
T G A G E
O L U M E
P R O F E S S I O N A L
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The Mental Game of Mortgage Banking By Brian Sacks............................42 E-mail and Web Design: Knowledge Is Power! By Brent Emler ................46 Rookie Recruiting: Getting Young Los Off to a Strong Start By Mike Anderson............................................................................................48 The Long & Short: The Business of Short Sales By Pam Marron ..............52 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ..............................54 The Unique Conduct of Mortgage Closings in California Amid Concerns Over Fraud By Andrew Liput ..............................................68 Account Executives: Not Just Your Best Source for Donuts Anymore By Keith Bilodeau ............................................................................................70 TRID: What You Need to Know By Joni Pilgrim ..........................................72 Operation VA SITREP: Your VA Situation Report By Richard M. Bettencourt Jr., CRMS, CMHS................................................78 Step Inside Ginnie Mae By Ted W. Tozer ....................................................80 Misunderstanding MSAs Could Cost You $1 Million By Bubba Mills ........81 Culture and Marketing By L. Maria Zywiciel ................................................82
COLUMNS New to Market..............................................................................12 News Flash: September 2015 ....................................................14 Heard on the Street ....................................................................40 Outstanding Places to Work ......................................................84 NMP Calendar of Events ............................................................85 NMP Resource Registry..............................................................86
D V E R T I S E R S Company
Web Site
Page
Mortgage Star Conference .................................. www.mortgage-star.net ..................................................75 NAMB Plus ........................................................ www.nambplus.com ......................................................27 NAMB National .................................................. www.nambnational.com ..........................................3 & 79 NAPMW ............................................................ www.napmw.org ....................................................76 & 81 NAWRB ............................................................ www.nawrb.com ............................................................77 Nationwide Appraisal Network............................ www.nationwide-appraisal.com ......................................55 NYC Finance Expo .............................................. www.nycnetworkgroup.com ..........................................NJ7 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 51 & Inside Back Cover PB Financial Group Corp..................................... www.calhardmoney.com ................................................63 PreApprovalLetter.com ...................................... www.preapprovalletter.com/lender ................................66 Radian Guaranty ................................................ www.radian.biz ............................................................67 RCN Capital ...................................................... www.rcncapital.com ......................................................19 REMN Wholesale ................................................ www.remnwholesale.com ......................................NJ1 & 5 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................73 Secure Insight....................................................www.secureinsight.com ..................................................33 TagQuest .......................................................... www.tagquest.com ........................................................49 The Bond Exchange............................................ www.thebondexchange.com ..........................................58 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Wholesale Mortgage ................................ www.uwm.com ......................................................24 & 25 WAMP .............................................................. www.mywamp.org ........................................................76
SEPTEMBER 2015 Volume 7 • Number 9 FROM THE
Education as the rock to success
1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com
Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com
Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com
Beverly Bolnick VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com
Scott Koondel VP of Operations (516) 409-5555, ext. 324 scottk@nmpmediacorp.com
Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com
Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com
Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@nmpmediacorp.com.
ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.
SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.
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publisher’s desk
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.
This month, we will take a closer look at education and certification, as two remain key components in making in not only today’s mortgage professional, but any profession. As layers upon layers of compliance are stacked upon the mortgage industry, continuing education is the building block to work through the complexity of remaining compliant. Rules mandated by the Consumer Financial Protection Bureau (CFPB) may seem cumbersome at times, but they have served the dual purpose of cleaning up the industry in the process. Scrubbing the market of the bad actors who contributed to the housing market implosion became a very positive byproduct of industry regulation. In today’s digital age, absorbing knowledge has become a way of life. With digital media at the fingertips of the consumer, prospective homebuyers, including the emerging Millennial market, are entering the market more educated than ever before. With the Millennial homebuyers soaking up knowledge like a sponge, they will seek out only those who have the answers to their questions as they begin the path to homeownership. Today’s mortgage professional needs to become that trusted advisor and source of all the answers to lead today’s homebuyers down a righteous path of homeownership. In order to grow your own knowledge base, enriching your mind through continuing education and keeping up-to-date on the latest market trends becomes paramount to remaining a successful loan officer. Whether via online courses, a live classroom setting or brush-up Webinars, all play a vital role in keeping current with today’s market trends. Taking into consideration the many uses of digital media, most education is there at your fingertips, 24 hours a day, seven days a week. You could listen to an on-demand Webinar while traveling or even at the gym. In essence, despite our hectic lives and schedules, there is no excuse not to take advantage to learn and enrich our knowledge base. A simple investment in education, whether mandatory or voluntary, can go a long way to becoming that trusted advisor, turned to for the purchase of that first home or refi down the line. Let education serve as your cornerstone, and the foundation in building success today and in the future. Sincerely,
Joel M. Berman, Publisher-CEO NMP Media Corp. • joel@nmpmediacorp.com
National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2015 NMP Media Corp.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S
EDITORIAL CONTRIBUTORS Featured Editorial Contributors Rocke Andrews, CMC, CRMS
Dave Hershman
Editorial Contributors Mike Anderson
Fred Kreger, CMC Richard M. Bettencourt Jr., CRMS, CMHS
K. Justin Restaino
Tom Hutchens
Brian Sacks
Andrew Liput
Matt Seu
Michael McNulty
Greg Stephens, SRA,
Ginger Bell
David Lykken Keith Bilodeau
John Councilman, CMC, CRMS
Pam Marron Laura Burke
Jonathan Foxx
Nathan Pierce
MAA, CDEI
Bubba Mills
Eric Weinstein
Joni Pilgrim
L. Maria Zywiciel
Casey Cunningham
Donald J. Frommeyer, CRMS
Ted W. Tozer Andy W. Harris, CRMS
Melanie A. Feliciano Esq.
Brent Emler
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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
2015-2016 NAPMW National Board of Directors
NAMB 2014-2015 Board of Directors OFFICERS John Councilman, CMC, CRMS—President AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS—President-Elect Lending Arizona LLC 3531 North Pantano Road l Tucson, AZ 85750 Phone: (520) 886-7283 l E-mail: randrews@lendingarizona.net Fred Kreger, CMC—Vice President American Family Funding 28368 Constellation Road, Suite 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Rick Bettencourt, CRMS—Secretary Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l E-mail: rbettencourt@mortgagenetwork.com Andy W. Harris, CRMS—Treasurer Vantage Mortgage Group Inc. 15962 SW Boones Ferry Rd., Ste 100 l Lake Oswego, Oregon 97035 Phone: (503) 496-0431, ext. 302 E-mail: aharris@vantagemortgagegroup.com
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Donald J. Frommeyer, CRMS—Immediate Past President/NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A l Carmel, IN 46032 Phone: (317) 575-4355 l E-mail: donald.frommeyer@gmail.com
1851 South Lakeline Boulevard, Suite 104, Box 303 Phone: (800) 827-3034 • E-mail: napmw@napmw.org Web site: www.napmw.org
National President Kelly Hendricks (314) 398-6840 president@napmw.org
Treasurer Judy Alderson (918) 250-9080, ext. 300 nattreasurer@napmw.org
President-Elect Nikki Bell (678) 442-3966 preselect@napmw.org
Parliamentarian Frances Reinhardt (678) 331-1384 freinhardt@firstservicetitle.net
Vice President Cathy Kantrowitz (845) 463-3011 nvp1@napmw.org
Vice President Laurel Knight (425) 412-6787 nvp2@napmw.org
Secretary Windee Falla (281) 556-9182 natsecretary@napmw.org
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
2014-2015 Board of Directors
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DIRECTORS Kay A. Cleland, CMC, CRMS KC Mortgage LLC 2041 North Highway 83, Unit CPO Box 783 l Franktown, CO 80116 Phone: (720) 670-0124 l E-mail: kay@kcmortgagecolorado.com
Mike Brown President (908) 813-8555, ext. 3020 mbrown@cisinfo.net
Judy Ryan Director Credit Plus (800) 258-3488 judy.ryan@creditplus.com
John H.P. Hudson, CRMS Premier Nationwide Lending 1202 W. Bitters Road, Bldg. 1, Ste. 1205 San Antonio, TX 78216 Phone: (817) 247-4766 l E-mail: jhudson@pnlending.com
William Bower Vice President (800) 288-4757 wbower@continfo.com
Mike Thomas Director (615) 386-2285, ext. 285 mthomas@ciccredit.com
Maureen Devine Ex-Officio (413) 736-4511 mdevine@strategicinfo.com
Dean Wangsgard Director (801) 487-8781 dean@nacmint.com
Julie Wink Treasurer (901) 259-5105 julie@datafacts.com
Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org
Renee Erickson Conference Chair (866) 932-2715 renee@zipreports.com
Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org
Olga Kucerak, CRMS Crown Lending 110 Broadway, Suite 360 l San Antonio, TX 78205 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com John Stevens, CRMS Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com
Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com
Scott Ledbetter Director (801) 375-5522 sledbetter@propertysolutions.com
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www.DocMagic.com
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1.800.649.1362
Photo credit: castillodominici
NAMB National The Nation’s Largest Conference and Trade Show for Mortgage Professionals October 17-19, 2015 Luxor Hotel and Casino • Las Vegas, Nevada
By Nathan Pierce
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The final countdown has begun, free registration has come to an end, and reservations are being made. Will you be part of the largest conference and tradeshow for mortgage professionals? NAMB National will be loaded with a terrific mix of compelling sessions for all mortgage professionals, such as Maximize Your Profitability and Prepare for 2016, The Evolving Non-QM Market and how new rules from Washington, D.C. will affect you! You’ll also hear from riveting keynote speaker, Navy SEAL and author Don Mann on “How to Make Mortgages Like You’re Seal Team Six.” Add complimentary breakfast and lunch and you have a can’t-miss event for mortgage professionals from across the nation. Events include business-building, leadership and networking sessions; education and professional certification courses; and a trade show with more than 75 exhibitors. Continuing education classes are available and will include such topics as Truth-in-Lending Integrated Disclosures (TRID), FHA and VA lending, changing rules and much more. The CRMS/CMC preparation workshop has been reintroduced so that mortgage professionals can prepare to receive one of NAMB’s prestigious designations that serve to remind the public of the dedication and hard work of a NAMB certified member. Wrapping up each evening’s events, attendees can attend one or more of the many social gatherings that will be held by many of the exhibitors and sponsors and will take place in various locations around Las Vegas. Join colleagues from around the country in gaining a greater prospective of the day’s events. There is still time to register. Visit NAMBNational.com to complete your registration. Don’t miss out on this exciting opportunity to better yourself and your business … register today! Nathan Pierce is the chairman of NAMB National. He is a Certified Residential Mortgage Specialist (CRMS) and president of Advanced Funding Home Mortgage Loans in Salt Lake City, Utah. For more information, call (801) 272-0600 or e-mail npierce@advfund.com.
THE
elite performer Coach or Roach? By Andy W. Harris
’ve noticed a growing trend in the number of coaches and coaching companies both in our industry and in the business community as a whole. After doing a little research, I realized that the business coaching industry generates in upwards of $4 billion annually. That seems like a very large number, and I would assume it relates to the cost associated with most coaching programs. From my experience, coaching mainly targets executives and business owners or those with the means to allocate for personal and/or business growth. I would assume most find value in another person challenging them and holding them accountable during meetings to the goals they mutually set and agree to meet. Many do this through an entrepreneur type group and sharpening each other versus hiring a professional coach, but there are also many that pay for “Probably my best professional coaching. Both can be rewarding and beneficial, but it’s all quality as a coach about the people. You want to surround is that I ask a lot of yourself with sincere people and not those that have a separate agenda or challenging questions blowing smoke. You need to be clear on your vision and utilize others to help and let the person come you stay focused on it and hold you up with the answer.” accountable to your overall business goals. —Phil Dixon So is hiring a coach worth it? If you have it in your budget to consider a coach (which is the first question), than I believe it can be worth the investment if you are seeking wise council and advice. It provides outside perspective on your business, fresh ideas, accountability and more. Even if you start with unpaid or mutual coaching to determine if it is right for you, the actual person coaching you will be the most important consideration in determining value. I believe coaching or a form of it (paid or not) can certainly create value to your business and career. Iron sharpens iron, and I would just carefully consider who you individually hire or collaborate with as a professional coach if you are considering paying for it. You certainly don’t want any personality conflicts. Make sure this person not only holds your respect for integrity and passion, but it would also be a good idea to consider someone more tenured and experienced than you with a track record of verified success. This could relate to both private sector real world experiences, as well as academic credentials. Don’t fall for any sales pitch, but find a coach that doesn’t need to sell themselves.
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Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.
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Net Promoter Score
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How to discover how referable you are
By Dr. Kerry Johnson ould you like to make yourself more referrals? Do you currently know your referral quotient? Many producers wonder why they don’t have more referrals. Many also question why more folks don’t just call in. They spend thousands on building a better brand. They advertise on TV and radio, hoping prospects will respond by picking up the phone. The answer lies in first discovering how referable you are before you spend any more money on public relations. Many companies pay hundreds of thousands of dollars creating and distributing surveys to find out how their clients think. Less than five percent of the surveys are returned, and even less if a reward is not given. But now you have a tool to find out how your clients think about your relationship and how referable you are. It’s called the “Net Promoter Score.” Fred Reichheld, a partner at Bain and Company, spent a decade searching for a simple way of measuring why some clients become raving advocates
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“The answer lies in first discovering how referable you are before you spend any more money on public relations.” and others are just simply satisfied. Here is how the Net Promoter Score is implemented. First, ask your clients to rate you on a scale of 0 to 10 on the question: How likely is it that you would recommend us to a friend or colleague? Then, sort the responses into three groups: l Promoters: 9s and 10s l Passives: 7s and 8s l Detractors: 0 through 6 The percentage of Promoters minus the percentage of Detractors equals your score. If you have 75 percent Promoters and 15 percent Detractors, you have an NPS of 60. This means your “refer-ability” is only 60 percent. As a rule, anything above 50 percent is good. But referrals don’t come consistently unless your score is over 75 percent.
One important consideration is to offer this survey only to your A and B clients. These are the clients you most want to get referrals from. Your goal is to constantly drive that score up by asking two follow-up questions: l Why did you give us that score? l How can we raise that score? For every 10 percent increase, you can gain in your NPS score, your net income will also increase by 10 percent. Below is an example of an NPS Form.
Net Promoter Score How likely are you to recommend our firm to a friend or colleague? Please circle the number that best represents your view. Lowest 1 2 3 4 5 6 7 8 9 10 Highest l Why did you give us this rating?
l How specifically can we improve your score? One of my clients sent an NPS rating sheet to his A and B clients, as the NPS score was 50. When he asked the question, “Why did you give us this rating?,” many clients responded with the fact that they only heard from him once a year. When they answered the question, “How specifically can we improve your score,” many clients asked to be called once every three months. When he implemented these threemonth phone calls, his NPS score increased and referrals started flowing in. His NPS score increased to 90 and advocacy (incoming referrals) started to flow in as well. His income increased by 75 percent, all within six months. Dr. Kerry Johnson is a frequent speaker at mortgage industry conferences. He is the author of six books, including Mastering the Game: The Human Edge in Sales and Marketing, WILLPOWER: The Secrets of Self-Discipline and his newest book, Why Smart People Make Dumb Mistakes With Their Money. He may be reached by phone at (714) 3683650 or e-mail kerry@kerryjohnson.com.
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DocMagic Finalizes SmartCLOSE for Launch
SmartCLOSE is also being integrated with all leading settlement platforms and other third-party applications used in the loan closing process.
DocMagic Inc. has announced that after extensive testing by lenders, settlement providers and other relevant parties, SmartCLOSE has been honed to perfection and been moved to a secure cloudbased production environment. In June, more than 250 lenders participated in the testing of DocMagic’s new SmartCLOSE collaborative closing portal in order to provide key feedback to DocMagic for continued fine-tuning of the system. As a result of months of preparation and testing, lender and settlement provider feedback and fine tuning the technology, SmartCLOSE is now ready for production. “The innovative enhancements that DocMagic has added to the portal makes SmartCLOSE the most feature rich and easy-to-use TRID solution in the industry,” said Kevin Marconi, COO of United Fidelity Funding. “Even though the TRID deadline was pushed to Oct. 3, DocMagic’s early readiness today gives me the peace of mind I absolutely must have to know that I am TRID ready.” DocMagic’s Audit Engine maintains electronic evidence to track and log all transactions and its Compliance Engine continuously compares the initial Loan Estimate against the final to ensure RESPA compliance throughout the process. DocMagic also reps and warrants all documents created and calculations provided by the system with a complete TRID compliance guarantee. This compliance “stamp of approval” allows SmartCLOSE users to rest assured that all TRID requirements have been met. “The DocMagic client base and strategic partners say that DocMagic has built the best TRID solution in the industry,” said Tim Anderson, director of eServices at DocMagic. “Our team has diligently worked to fine-tune SmartCLOSE largely based on user feedback which has helped us get to where we are today.” SmartCLOSE integrates with DocMagic’s LOS partners to provide seamless, bi-directional exchange of information with the click of a mouse.
Mortgage Consultant David Lykken Launches Transformational Mortgage Solutions
Mortgage industry consulting veteran David Lykken has announced he is embarking on a new entrepreneurial venture, Transformational Mortgage Solutions. Through Transformational Mortgage Solutions, Lykken will assist clients with setting strategic direction, defining their purpose, and implementing operational plans tailor-made for their unique needs. The consulting venture works with all banks, credit unions, independent mortgage companies, and the service providers that support them. This includes firms in originations, operations, secondary marketing, mortgage loan servicing and mortgage technology. Lykken will serve as president and managing partner of the firm, and collaborate with other leaders in the industry who are committed to delivering transformational solutions to the mortgage industry. “I felt now was the perfect time to go back out on my own to accomplish my vision of transforming the industry, one person, one process, one company at a time,” said Lykken. “The industry is fundamentally broken. I want to be a catalyst that transforms our industry into what it needs to become in order to provide a sustainable, safe and secure housing finance system that is good for both consumers and lenders.” Lykken has more than 43 years of mortgage lending, real estate and financial experience. He has been actively consulting and coaching with business owners and executives for the past 15 years. Most recently, Lykken was a partner at Mortgage Banking Solutions, a management consulting firm and
provider of advisory services. He will continue to work with his former partners at Mortgage Banking Solutions in an affiliated business relationship. In addition to the consulting firm, the serial entrepreneur has been effecting change and sharing his vision for the last seven years as the host of a weekly, 60-minute podcast, “Lykken on Lending.” More recently, in 2013, he created Today’s Mortgage Minute, a consumer-facing one-minute video series that appears on more than 125 radio, television, and newspaper websites that is seen by approximately 16 million consumers each month. Lykken also continues to be a regular contributor on the FOX Business Network as well as a guest of other national radio and television programs. “Right now there are so many reasons to be optimistic, but the industry needs to address core issues,” said Lykken. “That’s what I’m setting out to do. If there is another housing crisis, it is going to be very difficult for many companies to survive. I’m here to help them develop a plan to not only survive but to thrive in the new market ahead.”
Parkside Lending Launches New Jumbo Offerings
Parkside Lending has announced that it will now go to 95 percent LTV without mortgage insurance (MI) on its expanded jumbo program. Parkside Lending designed its new jumbo offering to help creditworthy borrowers with a downpayment or equity as low as five percent fit into a traditional jumbo loan. Parkside will go to 95 percent LTV/CLTV on loan amounts up to $1 million without mortgage insurance on a one-unit, owner-occupied purchase or rate and term refinance: An alternative to high balance loans (minimum loan amount: $417,001); 740 minimum credit score; 24 months
reserves (borrower’s own funds); 35 percent maximum DTI; and a minimum downpayment of five percent (borrower’s own funds). “We believe our new jumbo loan offering is an important financing alternative for a specific segment of creditworthy borrowers,” said James Lamparter, executive vice president of sales for Parkside Lending. “We continue to grow our jumbo product line as we identify different needs in the marketplace. Delivering the right loans to the right people with a caring approach is what Parkside Lending is all about.” Parkside Lending also offers jumbo loans on non-owner-occupied transactions, and will go to 65 percent LTV/CLTV, one to four units. In addition, there is no price hit for occupancy on LTVs up to 60 percent.
Calyx Launches TRIDReady PointCentral Version 9.2 Calyx Software has announced the release of PointCentral Version 9.2. With this new version, mortgage lenders using PointCentral can originate loans and deliver TRID-compliant Loan Estimates and Closing Disclosures immediately. With integrated access to essential loan origination tools, and both new and enhanced calculation features, PointCentral 9.2 delivers additional functionality and TRID-compliant results to lenders in plenty of time for the extended Oct. 3 deadline. PointCentral Version 9.2 automates the new Loan Estimate and Closing Disclosure forms and includes several new functions like simple interest calculation, Down Payment Assistance (DPA) functionality, zero percent interest calculation, principal reduction and much more. By collecting input from customer advisory groups, and conducting extensive testing, Calyx has improved not only the calculation areas but the overall user experience. “Because we’ve been in the industry more than 25 years, Calyx has weath-
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To learn more about the HomeBridge advantage, please contact us at 855-729-2885.
www.HomeBridgeWholesale.com This is a business-to-business communication provided for use by mortgage professionals only and is not intended for distribution to consumers or other third parties. It is not an advertisement; as such term is defined in Section 2 26.24 of Regulation Z. Product information is subject to change without notice. HomeBridge Wholesale is a division of HomeBridge Financial Services, Inc. NMLS #6521 Š HomeBridge Financial Services, Inc. All rights reserved.
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HomeBridge Wholesale is a national wholesale lender offering Conventional, Government,
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EWSFLASH l SEPTEMBER 2015 l NMP NEWSFLASH l SEPTEMBER 2015 NMP NE Mortgage Professionals Get Month-Long Observance
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September is celebrated in some quarters for National Bourbon Heritage Month, National Honey Month and National Prostate Health Month. Now, thanks to the effort of Greensboro, N.C.-based United Guaranty, September is also officially recognized as “National Mortgage Professionals Month.” The National Day Calendar, an organization that determines special day, week and month celebrations of industries, professions and events, issued a proclamation for September to become National Mortgage Professionals Month. This is the latest month-long celebration related to housing, following April as Fair Housing Month and June as National Homeownership Month. “The hard-working professionals in our industry are enormously deserving of having September set aside to celebrate the important work they do in helping families and individuals purchase or refinance a home that is right for their needs and budget,” said United Guaranty Chief Operating Officer Brian Gould. “We’re pleased to recognize outstanding individuals. These are demanding jobs and many of these professionals don’t get enough recognition for helping so many people with what is one of the most important decisions of their lives,” Gould said. United Guaranty is kicking off this new observance with a month-long contest for mortgage professionals, with 240 electronic memo tablets for prizes. Contest details are online at UGCorp.com/NMPM.
FHA Announces New Lender Comparison Metric The Federal Housing Administration (FHA) has announced a new method for evaluating the lending practices of FHA-
approved lenders and understanding the sorts of borrowers they are serving. FHA’s new Supplemental Performance Metric will complement the agency’s existing ‘compare ratio’ and offer more nuanced insight into a lender’s specific performance while encouraging lenders to serve eligible underserved borrowers. The new supplemental performance metric will help FHA lenders see the impact of their business at all ends of the credit spectrum in line with FHA’s willingness to insure loans to eligible borrowers with lower credit scores. “This is one more tool to help FHA, lenders, and the public, know exactly who we’re serving,” said Ed Golding, Principal Deputy Assistant Secretary for Housing. “By better understanding FHA’s acceptable risk tolerance levels for a variety of credit scores, lenders will have the confidence to lend more broadly and FHA will have more data on how successful those lenders are.” The Supplemental Performance Metric responds to lender concerns about the Compare Ratio being a comparison to one’s peers rather than to FHA’s risk tolerance. By measuring default rates and claims in three distinct credit bands, the metric compliments the Compare Ratio, providing a more granular, nuanced look at lender performance, with the added benefit of better understanding of who lenders are serving. In the spring of 2014, FHA proposed the development of a Supplemental Performance Metric—one component of FHA’s Blueprint for Access to Credit initiative, an effort to expand access to mortgage credit to underserved borrowers. Effective by the end of the July 2015, this new complementary metric will be available in FHA’s Neighborhood Watch Early Warning System. The new metric is designed to help mitigate adverse selection of borrowers with certain credit profiles and encourage the extension of homeownership opportunities to underserved segments of the market.
FHA currently calculates a ‘Compare Ratio’ for all FHA-approved lenders. This ratio compares a lender’s rate of early defaults and claims for insured single-family mortgage loans to other approved lenders in a geographic area. Compare ratios are used to identify lenders with excessive default and claim rates compared to their peers and which lenders FHA may terminate.
Zillow: Average FirstTime Homebuyer 33 Years of Age Today’s first-time homebuyer is older and more likely to be single than first-time homebuyers in the 1970s and 1980s, according to a new Zillow analysis. Zillow’s study found that Americans are renting for an average of six years before buying their first homes. In the 1970s, they rented for an average of 2.6 years. They’re also spending a bigger chunk of their incomes to buy: In the 1970s, first-time homebuyers bought homes that cost about 1.7 times their annual income. Now they’re buying homes that cost 2.6 times their annual income. Part of that can be attributed to the housing markets where Millennials are moving: More expensive cities on the coasts, where there are growing job markets. The average first-time homebuyer is about 33, at the front end of the Millennial generation. Their median income is $54,340, which is about the same as what first-time homebuyers made in the 1970s, when adjusted for inflation. In the late 1980s, 52 percent of firsttime homebuyers were married. Today, only 40 percent were married. “Millennials are delaying all kinds of major life decisions, like getting married and having kids, so it makes sense that they would also delay buying a
home,” said Zillow Chief Economist Dr. Svenja Gudell. “We know Millennials value homeownership and want to buy. The next challenge will be figuring out how they can save for a downpayment and qualify for a mortgage, especially while the rental market is so unaffordable all over the country. The last hurdle will be finding a home they like amidst very tight inventory, especially among starter homes.”
Ginnie Mae Hits Record $47 Billion in MBS Issuance for July
Ginnie Mae has announced that the corporation guaranteed $47.06 billion in mortgage-backed securities (MBS) for July, surpassing the old record set in July 2009 of $46.1 billion. So far, for Fiscal Year (FY) 2015, Ginnie Mae has guaranteed more than $346 billion in MBS, compared to $242 billion at this point in FY 2014. “This growth is clear indication of the value of our single securitization platform. The scalability of our platform allows Ginnie Mae to support the shift from traditional depository institutions to new entrants– which have primarily been non-depositories,” said Ginnie Mae President Ted Tozer. “The rapid rise of these new entrants has been critical to our growth and to keeping mortgage credit available to middle class America.” Government lending overall has reached an all-time high—and in terms of consumer demand there’s no reason for it to slow, given the Federal Housing Administration’s (FHA) recent mortgage insurance premium drop and competitive interest rates for FHA, VA, and RHS loans. Purchase activity has been increasing over the last several months. July’s purchase activity comprises more than 60 percent of total issuances, compared to approximately 34 percent increase for loan refinances. “The increase in purchase activity is further proof that the housing recovery is moving into high gear,” said Tozer. Currently, Ginnie Mae’s mortgage-
backed securities (MBS) portfolio stands at $1.57 trillion in unpaid principal balance (UPB). “Despite this rapid growth, the Ginnie Mae platform, while fueling competition, also spreads risk among our issuers.” In July, Ginnie Mae II single-family pools led the way with more than $43.8 billion in MBS issuance, while Ginnie Mae I single-family pools totaled nearly $1.6 billion. Total single-family issuance for July was more than $45.5 billion. Ginnie Mae’s multifamily MBS issuance was nearly $1.5 billion. The Ginnie Mae Home Equity Conversion Mortgage-Backed Securities (HMBS), included in Ginnie Mae II single-family pools, totaled $809 million in July.
Q2 HARP Refinances Remain Consistent The Federal Housing Finance Agency (FHFA) has reported that the total number of loans refinanced through the Home Affordable Refinance Program (HARP) in the second quarter was nearly the same as the number of HARP refinances through the first quarter. FHFA’s second quarter Refinance Report indicates that 31,561 HARP refinances were completed between April and June, down slightly from the 31,648 HARP refinances completed from January through March.
More than 3.3 million borrowers have refinanced their homes through HARP since the program began in 2009, and FHFA estimates that, as of March, more than 578,000 borrowers nationwide still have a financial incentive to refinance through the program. The top five states with the highest numbers of “in-themoney” borrowers that remain eligible for a HARP refinance are Florida, Ohio, Illinois, Michigan and Georgia. Borrowers are considered “in-themoney” if they meet the basic HARP eligibility requirements, have a remaining mortgage balance of $50,000 or more, have a remaining term of greater than 10 years, and an interest rate at least 1.5 percent higher than current market rates. Nationwide, these borrowers could save,
on average, as much as $200 per month on their mortgage payments, or $2,400 per year. See the U.S. map showing the number of HARP-eligible borrowers by Metropolitan Statistical Area, county and zip code.
Report Tracks Income Inequality in Mortgage Deductions Mortgage-related tax deductions are of lesser benefit to lower income homeowners and greater benefit to their wealthier counterparts, continued on page 16
Chicago Sued Over Affordable Housing Ordinance
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A municipal guideline that requires Chicago real estate entities to factor in affordable housing units as part of their developments is being challenged in court two months ahead of its official enactment. According to a Chicago Tribune report, Hoyne Development and the Home Builders Association of Greater Chicago have a filed a lawsuit against the city, claiming that the Affordable Requirements Ordinance violated the Fifth Amendment because it took away private property without providing “just compensation.” The Affordable Requirements Ordinance, which was first enacted in 2003 and updated four years later, in 2007, covers residential developments of 10 or more units that require a zoning change that either expands the property’s density or introduces a residential development in a new setting. The ordinance, which also covers projects on city-owned land or that receive financial assistance from the city, requires developers to set aside 10 percent of their units as below-market rate affordable housing (either for rental or sale) or pay the city an in-lieu fee of $100,000 per unit. In the new lawsuit, Hoyne Development claimed the city wrongfully applied the ordinance to one of its projects, a former auto dealership that was purchased and rezoned for a pair of six-unit condo developments and a separate mixed-use project containing two apartments. The lawsuit argues that the city improperly forced Hoyne to provide two below-market-rate units or else pay $200,000 as an in-lieu fee to the city. Shannon Breymaier, a spokeswoman for Mayor Rahm Emanuel, commented via e-mail that the city planned to “defend the ordinance vigorously” in court.
China Devalued the Yuan: What Does It Mean to the Mortgage Market?
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The hottest topic in the financial industry is the Chinese government's surprise decision to devalue their currency by almost two percent. China's central bank recently allowed the yuan to drop sharply against the U.S. dollar. This ignited the currency's largest two-day decline in decades. China is the second-largest economy in the world, and it was predicted that it would surpass the United States as the largest economy in the world at some point this century. What does this mean for the mortgage industry? As employment returns to a better level, it gives the Federal Reserve another reason to delay raising interest rates. But as the U.S. dollar strengthens and makes it tougher for U.S. corporations to strive in the world market because Chinese goods are cheaper. Which creates a domino effect because this leads to the fed to holding off on raising rates. Yahoo Finance reports that the Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday, Aug. 12, observing a week-over-week increase of 0.1 percent in the group's seasonally adjusted composite index for the week ending Aug. 7. That trailed an increase of 4.7 percent for the week ending July 31st. Mortgage loan rates moved erratically on all types of loans last week. This is a blessing in disguise, Right when everyone was thinking our rates would increase, it turns out that rates may decrease again. This is the perfect time to kick your mortgage marketing campaigns to high gear. Some of you might say, how do I market to these people? Well listen closely … you do a little thing called “multi-channel” marketing which means getting in touch with these people in multiple ways. One of the most successful multi-channel campaigns our clients are using is called direct mail voice. It’s a direct mail campaign combined with personalized voicemail. How does this work? Instead of doing your regular direct mail campaign, add a little something special. That something special is called direct mail voice. Leave your client a personalized message asking them to call you back. This happens at the beginning, and again at the end of your direct mail voice campaign. The beauty of that is their phone doesn't ring. The response rates for this multi-channel campaign have added a new dimension to the already solid mail campaign. TagQuest customer spotlight: Michael D., Colorado Each month, TagQuest speaks with its clients to see how their campaigns are going. Here’s what they heard from Michael D. in Colorado.
nmp news flash continued from page 15
according to a new report issued by the National Center for Policy Analysis (NCPA). The report, titled “Who Benefits from Mortgage Deductions?,” analyzed 2012 data to determine that more than half the total value of home mortgage interest deductions, or nearly $100 billion, was claimed by the top 40 percent of households with incomes of $100,000 or higher, while the bottom fifth of households—those with incomes of less than $45,000—only claimed 14 percent of the interest deduction’s value. The average deduction for the top 20 percent of households was $13,824 while the average for the bottom 20 percent was $6,964—and the report added the disparity would have been greater if the deduction were not limited to home loans of $1,000,000 or less. In regard to points deduction, the top fifth of all returns deducting for points—and 27 percent of the value of those deductions—were claimed by homeowners earning more than $200,000 annually, and 60 percent of all claims for a points deduction were made by homeowners with incomes of $100,000 or higher. But the bottom fifth of households received an average of 18 percent of the value of the deduction. “Mortgage deductions are the largest tax expenditure, and although they are hugely popular, they do not necessarily benefit every homeowner,” said NCPA Senior Fellow Pamela Villarreal, a coauthor of the report. “Mortgage-related deductions benefit homebuyers who itemize, and income tax itemizers tend to be middle and higher income earners. However, these tax benefits could be tailored to reduce the cost of home ownership for families in the lowest income quintiles by making a limited tax credit available to non-itemizers.”
Marketing method: Direct mail voice l Volume: 10,000 pieces l Results: 1.5 percent response rate from the mail—another one percent response from follow up voicemails equaling a 2.5 percent total response.
CFPB: Consumers Benefit From e-Closings and Bureau Issues Guidance to Servicers on PMI Cancellation
Highlights of the campaign that worked well … “The personalized voicemails added the extra magic to increase my response rates.”
The Consumer Financial Protection Bureau (CFPB) has published a report on its “Know Before You Owe” eClosing project which found that borrowers can benefit from electronic closings when navigating the mortgage closing process. Specifically, the results of the pilot indicate that those who closed their mortgage using an electronic platform are generally better off on measures of understanding, efficiency, and feeling empowered than borrowers who used just paper forms. “While technology alone will not address all consumer concerns in the closing process, our study showed that eClosings do offer the potential to make
Highlights of the campaign that may appeal to others in the industry … “Every time my phone rang, at the other end, was an interested and qualified person. Cha-ching!” Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 717-8980 or visit www.tagquest.com.
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the process less complex,” said CFPB Director Richard Cordray. “We expect this pilot project and its findings to help inform further innovation that will be a win-win for consumers and industry alike.” In April 2014, the CFPB released a report that outlined the major pain points associated with the closing process—the last step before consumers are contractually obligated to their loan. The report found that consumers felt like they did not have enough time to review the documents. Consumers also felt overwhelmed by the stack of complex paperwork. Finally, consumers complained about finding errors in the documents. The CFPB identified electronic closings as one solution to address some of these pain points. And while eClosing transactions are already happening in the market today, adoption is low. The CFPB believes that the eClosing process has the potential to give consumers more time to review closing documents while also providing them with educational tools that can help them navigate the closing process more successfully. The CFPB project took place over a four-month period and involved seven lenders, more than 3,000 consumers, four technology companies, and many settlement agents and real estate professionals. Some consumers used traditional paper documents, others used a complete eClosing process, and others used a hybrid of electronic resources and paper documents. Borrowers who completed mortgage transactions during the pilot were invited to complete a follow-up survey. About 1,200 surveys were completed. The CFPB asked consumers questions about their actual knowledge and understanding of the process, and how they felt about the process. On the perception questions, scores were calculated based on borrowers’ rating their responses from “strongly agree” to “strongly disagree” to various statements. Data from these questions were presented as “net positive scores,” which were calculated as the difference between the percentage of those who responded positively and the percentage of those who responded negatively. The CFPB then followed-up with oneon-one interviews. The study also found that the consumers who showed the best results on all three measurements of empowerment, efficiency, and understanding received and reviewed their closing documents in advance of the closing meeting. This was regardless of whether the paperwork was received electronically or through paper copies, though CFPB believes using an eClosing process can facilitate faster document delivery. The CFPB has also issued a bulletin continued on page 38
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1Source: FHA Neighborhood Watch, May 2015.
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Policy changes and near-historic low interest rates have made it an ideal time to purchase or refinance with FHA loans. With more than two decades of industry know-how, Flagstar Bank is a national leader—and a partner you can rely on.
Five Mistakes That Will Doom Your Direct Mail Campaign By K. Justin Restaino When you use direct mail as a marketing strategy, you typically invest a lot of money upfront. There’s the cost of the mailing list, perhaps the expense of the graphic designer, the price of the mailer itself, and of course, the money spent on postage and handling. Because you are making such a significant investment, you want the best results you can get. To accomplish this, we advise you to avoid these common pitfalls: 1. Lack of personalization A one-size-fits-all letter is going to quickly find its way to the trash can. Instead, you want to use personalization—“Dear Jane” rather than “Dear Homeowner.” This leaves a far more favorable impression on the recipient than a generic-looking form letter. 2. Wrong mailing list Most marketers would say that a mailing list is the most important factor in a direct mail campaign. Buy your list from a reputable source—or use your own contacts database—to make sure that your mailer ends up in the hands of people who matter. For instance, a marketing letter designed to attract first-time homebuyers is wasted on people who already own their own homes. Keep in mind that by over-thinking your mailing list by narrowing your criteria too much you could end up with oversaturated/less responsive clients, and thus, the wrong mailing list.
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3. No call-to-action (CTA) If you fail to use a call-to-action, you’ve wasted a significant opportunity. Your mail piece should have a clear CTA, requesting that the recipient take a specific action after reading the letter. This could be something as simple as asking them to call you to set up a free consultation or to return a postage-paid mailer. 4. Unprofessional Have you ever received something in the mail that looked like your grade school child designed it? Remember that appearance matters. While you don’t necessarily have to hire a graphic designer, you do want to send out letters or postcards that are professional and attractive. 5. Create benefit-driven copy Rather than inundating your readership with a list of every service that you provide (feature-driven copy), you want to make it clear to your recipients how they can benefit from a loan. For instance, you might mention that they can save thousands of dollars, go on that European vacation they’ve been dreaming about, or have a backyard for the kids to play in once they own their own home. Think about the reasons that your typical client retains your services and make sure to highlight these benefits in your copy. When designing your piece, it is best to rely on the experience of a professional. After all, their job is to create the most effective approach for your campaign. All too often, pieces are built without the advice of an expert to ensure the wrong steps aren’t taken, so don’t hesitate to rely on their expertise to review your approach. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 15 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.
SPONSORED EDITORIAL
new to market continued from page 12
ered many regulatory changes,” said Doug Chang, president of Calyx. “Based on our experience, we understood it was imperative to have the new TRIDcompliant Loan Estimate and Closing Disclosure in our customers’ hands as quickly as possible. That’s why we released a Point version with the new Loan Estimate and Closing Disclosure in May. Although moving the TRID effective date from Aug. 1 to Oct. 3 was beneficial to the industry overall, our customers did not need to rely on the extension because we offered them the opportunity to prepare for TRID well in advance.” Dennis Boggs, executive vice president of business development for Calyx, said “Getting an early start was certainly key to getting PointCentral 9.2 TRIDready well in advance of the deadline. We think lenders are really going to enjoy using the enhanced solution PointCentral 9.2 delivers.”
Fast Forward Stories Launches New TRID Video Library
Video content service Fast Forward Stories has announced the availability of its new TRID (TILA-RESPA Integrated Disclosure) video library, a collection of 26 brandable videos clarifying TRID terms for consumers. Confusion and questions surrounding the new TRID rules, effective on Oct. 3, create a marketing opportunity for businesses providing content that explains the new rules and related changes. The Fast Forward Stories TRID Library illustrates and clarifies key TRID concepts visually, using short animated videos branded for subscribing businesses. One of the videos, for example, clarifies the differing definitions of “Business Day” used for TRID Loan Estimates versus Closing Disclosures. “Today’s consumers, especially Millennials, prefer video and other visual explanations to dense text, particularly for complex subjects like the new TRID rules,” said Matthew Dunn, PhD, CEO of Fast Forward Stories. “Explaining concepts in concise video is proven highly effective, and answering consumer questions using video, on any device, is content marketing at its best.” Besides the 26 new TRID videos, Fast Forward Stories offers 125 more covering a broad range of mortgage, title and real estate topics. Subscribing businesses can brand their own library, ranging from 26-151 videos. Embedding and delivery are included for use across Web, mobile, e-mail and social media channels. Advanced marketing features include lead capture, view metrics and co-branding options for business partners, built on a state-of-the-art online video distribution system. All of the
videos are captioned in English and Spanish, providing ADA-compliant content for marketing and consumer education. “Over-investing in systems but under-investing in content makes an unbalanced marketing portfolio,” Dunn said. “With hundreds of branded videos, marketing leaders in mortgage, title and real estate can be ready with the content consumers will be looking for in October and beyond.”
Chase Enhances Its Jumbo Loan Offerings
Chase has announced it is simplifying its jumbo loan product and lowering FICO and downpayment requirements for those loans. A buyer with a FICO of 680 or higher looking to purchase a single-family property can now put as little as 15 percent down. Previously, singlefamily homebuyers were required to have a minimum FICO of 740 with 20 percent downpayment. “We want to make sure homebuyers can easily understand the benefits of financing with Chase,” said Steve Hemperly, head of mortgage loan originations. Chase rolled out easy-to-understand guidelines for primary and secondhome loans, investment properties and cash-out finance loans. Part of a firmwide simplification process, the new loan guidelines reflect Chase’s thorough analysis of market and borrower risk. “Everyone in the homebuying process—from consumers to real estate agents and mortgage bankers—can more easily understand how we can help them close on a loan fast,” said Sean Grzebin, Chase’s head of retail lending.
loanDepot Announces New Line of Home Equity Product Offerings
loanDepot LLC has announced that it plans to offer new home equity products. This announcement comes just two months after loanDepot’s launch of personal loans. loanDepot personal loans have gained market acceptance, with funding volume in the first two months of launch reaching more than$40 million. Overall funding volume across the entire loanDepot platform in the first half of 2015 reached $14.3 billion, an increase of 165 percent compared to the first half of 2014, rising from $5.4 billion. “This is a substantial step forward for consumers and marketplace lending after the financial crisis. The delivery of continued on page 32
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NAMB PERSPECTIVE The President’s Message: September 2015 I just returned from the Florida Association of Mortgage Professionals 2015 Convention & Trade Show in Orlando and it was incredible! When I first arrived and saw the huge, gorgeous hotel in the middle of an impeccably kept golf course, I was impressed. Then, when the education class I attended took in excess of five minutes
to read the roll call, I could tell this was going to be a big event. And big it was! The breakout sessions were all full and the speakers were great. John Stevens’ session on social media was so hot that they wouldn’t let him out of the room. What had been scheduled for one hour turned into a two-hour course on advanced social media. Then, there was the exhibit hall. More than 100 exhibitors were on hand, just
The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer, CRMS
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How many hours do you think you have to donate to an organization? Or, why should you join your trade association? These questions can be answered very easily. You only need to DONATE one hour a week and by joining, you get good up-to-date information. As you all know, I am an information junkie, and I read a lot from the articles in magazines, in trade papers, online blogs just to name a few. And because I belong to NAMB, I am constantly learning about things that are going on in our mortgage community. I have written a lot of articles about why you should join or why you should donate your time. You all know that I believe you need all kinds of information to make yourself a success in this day and age. For the moment, let’s look at what it would be like if there was no NAMB. It would be a lot different today. Everyone would be working for a large company that doesn’t let you think or be your own boss. At one time, the so-called experts wanted every company to have the same requirements and you would need a minimum of $100,000 net worth. You would have to be in a business office building, have an 800 number for customers to call and have posted hours that you had to be in the office. Potentially, you would all have to be licensed (like now, but with more restrictions) and you could not make business decisions of your own. You would not have a Government Affairs Committee fighting for you every day. You would not have NAMB Plus that can make your business thrive at a discounted rate. You wouldn’t have a Legislative Conference in Washington,
D.C. that gathers independent mortgage originators to walk together on the Hill to fight for your rights and the rights of your consumers. There would be no designations that would distinguish you from the common ordinary originator and you would not be a Lending Integrity Professional with the Seal of Approval. You would not have state associations that share information with you and work with the national association to fight for your rights. You would not have that voice of agreement or disagreement with legislators. In essence, YOU WOULD BE OUT THERE ALL ALONE! And just think, you are making more money now than you have in a number of years. So again here is the breakdown: $120 per year ($10 per month) makes you a voting member of NAMB. You must have your NMLS number and be involved with originations. My real question to you is: Are you in the mortgage business as a career or just a part-time job? Is this what you want to do for 40 years of your life? Then what is holding you back, because I am sure that you spend more than that a month on coffee, candy, pieces of apple pie or whatever. To be truthful, I am tired of trying to explain why there are more than 100,000 originators in America and we can only get five percent of that number to join NAMB. What has happened to you? NAMB used to have 27,000 members. It cannot be about the money. I just outlined that in the above paragraph. We should have more than 50,000 members. Let me share something with you. When I first got into the business in 1975, I worked for Associates Financial Services. They taught me
like the old days. There was a constant flow of traffic all day long. This is an event you cannot afford to miss next year! September will be a very busy month for NAMB. We are approving a cleanup of our bylaws, the rules that govern the association. They are extremely important. Most of the changes reflect the changes in our industry, but there are a few changes that will make things work more smoothly and efficiently. NAMB’s Delegate Council must approve the changes in October at NAMB National. Also in September, we will hold the second session of the Wholesale Summit in Dallas. This is where the nation’s top
wholesalers send their executive management to discuss how we can restore wholesale lending to its leadership role. I would be remiss in not reminding you to get your flight reservations now for NAMB National in Las Vegas. Nearly 2,000 mortgage professionals have registered so far. It is going to be incredible. I hope to see you there! Sincerely,
how to make loans, how to analyze loans and collect them. It was a lot of work. I was just starting to understand why people would come to us. They needed money, be it a small loan for $2,500 or for a mortgage of $50,000. I was understanding the concept and why I was there. I was good at what I did and I was successful. But then came December 1988 and I needed something else. I went to work for a mortgage broker and it was great. I could help people with one exception, I didn’t have to collect. Wow … what a great job. Now I got to do what I really liked to do and that was to help people. I can remember my first customer, Mrs. Brown. She had some equity in her home, but had some bills that were making her life difficult for a single mom. She needed to refinance her home and pay off some bills. I did that for her. She was so happy that she sent me 10 people whom I was able to do almost the same thing for. And to my surprise, they had people send me more people, and I was helping a lot of people. Then along came a new law in the state of Indiana that would have put the broker business out of business. I got involved at that time and the INAMB was formed (Indiana Association of Mortgage Brokers). We contacted NAMB and I worked with a man named Joe Falk from Florida. He helped us get the association off the ground and I began to work on the Model State Statute Committee. We ended up getting involved with the legislators and came up with a new Broker Law that helped everyone. But the concept here was working together. Fast forward to today. It is still the same. State associations ask NAMB for help and we are there. But without NAMB, I don’t know what would have happened. It all comes down to the same basic question: Do you like your job or would you rather be digging ditches?
You all know that I have dedicated my life to NAMB and I am truly a better person for that. But I also understand what NAMB does and I want to belong. I am very proud and very honored to have been a member of this organization for a number of reasons. It keeps me in the loop on everything related to my profession. It makes my job as an originator a very important part of America and I love it. And it also lets me understand what other originators are seeing everywhere else. I get to meet great people, and to share my successes and failures. I am proud that they are my friends because they make me better. Moving up the ladder in the association led me to be your president for three years, and let me tell you … it was a rough start. But I had you members to protect. Now I was working with NAMB for the successes that you needed. And the board of directors that I had over those three years believed in the idea and led me to lead your association to what it is today. We are growing and we are succeeding. This group of leaders that we have accumulated are hungry for success. I couldn’t ask to be part of anything better. But I have spent the last year as your immediate past president and your CEO. The three new board members coming into the fold in October are very good people. And I will continue to be involved as your CEO. But I have only one request: I need you to join the party … you need to become a member of NAMB! Go to JoinNAMB.com now and become a member. And let me be frank, we need YOU! So come help us and be part of a great organization that believes in you and what you do. No questions asked!
John L. Councilman, CMC, CRMS NAMB President president@namb.org www.joinnamb.com
Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at namb.ceo@namb.org.
NAMB PERSPECTIVE Education and Responsibility By Rocke Andrews, CMC, CRMS As the leaves change colors and football returns, so does the season of NMLS Continuing Education. While you sit in class or at your computer, pay attention to the material presented. As the content rolls out and you affirm your attendance and
understanding, you are also now responsible for what you have learned. Loan officer compensation, “Know Before You Owe,” RESPA and TIL regulation are now in your knowledge bank and you are now expected to know and adhere to these rules and regulations. Licensing puts up a barrier to entry to our profession, but also imparts the expectation that we as loan originators know the law. The
Shape-Shifting Organizations By Fred Kreger, CMC
ness’s procedures. All employees become the watchdogs to insure the public is treated fairly and according to the rules that we all are required to follow. So pay attention in your continuing education classes, as it may help you or your company from getting fined or losing your right to remain in our industry.
chapters, I learned that the old rules no longer apply to modern warfare. The same is true in scanning our own landscape. I always say that I have a Ph.D. in lending because of constant changes in the industry and the amount of reading and education that I must keep up on in order to be a professional in my industry. To paraphrase a paragraph describing a battle between the defeated Napoleon’s FrancoSpanish fleet to the British admiral Horatio Nelson: “At the heart of his success was patient, yet relentless, nurturing of competence and adaptability within his crews. Here, for organizations, lies the critical nexus between theorized strategy and realized victory-the ground where doctrine theorists and armchair admirals fall short is the decisive terrain from which true leaders emerge. Nelson’s real genius lay not in the clever maneuver for which he is remembered, but in the years of innovative management and leadership that preceded it.” Our outdated management systems are based on linear thinking. We are now in the social media information age where everything happens in milliseconds. We must adapt to these changes and cannot manage (fight) the same war like we did a decade ago. We do not operate in a mechanized pre-determined environment where we can predict outcomes based on previous experiences. Our customers or association members will not work with us based on old outdated theories. The environment is a maze that shifts every night when we go to bed and when we wake up, there are new paths that were created. How can we as managers, directors and loan officers adjust our thinking and become more nimble, more adaptable to change and have the instincts to thrive in an environment that seems to have no boundaries.
My messaging for this article is to look at how we are operating within our own organizations and associations. In General McChrystal’s book, he pointed out that to combat this new Al-Qaeda in Iraq enemy (AQI), he must create teams that conduct themselves independently of the larger organization in order to be more nimble and effective. They understood the greater goal, but were given the trust to make decisions within that arena that they were fighting (working). The trust was KEY amongst team members. I am pointing out what may be obvious to some, but for some who do not like change, it is very difficult to change and adapt. I get this. I am of that general mindset, but need to accept these changes in order to be a more effective manager and leader. I myself must adapt and be nimble in order to combat and win the battle that we all face daily. My challenge for all of you is straightforward. Do an environmental scan of your landscape (SWOT ANALYSIS). Pay close attention to how you can adjust your weaknesses and threats. Can you give trust to those that make up your organization? Can they trust you? Take about an hour out of the day this month and meet with your peers, managers or leaders. Look at your landscape and see if breaking up into effective teams, might help you accomplish your greater goals. Thank you and Namaste’.
Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is presidentelect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or email randrews@lendingarizona.net.
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Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is also a past statewide president of the California Association of Mortgage Professionals (CAMP) and currently is the vice president and Government Affairs vice chairman for NAMB—The Association of Mortgage Professionals. He may be reached by phone at (661) 505-4311 or e-mail fred.kreger@affloans.com.
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We are in a new age of associations and business management. We live in a world with multiple challenges affecting us on a daily basis. Some of our challenges are ambiguity of regulations, changing of investor underwriting guidelines, mentoring the new generation of originators and providing new home opportunities for this new generation. Much like fronts in a war, we as managers and directors, must understand the landscape in which we all must live and work in order to not just survive, but thrive. How do we do this in an everchanging environment? We must adapt to our surroundings, sometimes with limited and outdated resources. To see this in action, let us take a chapter in ancient Greek history of the Immortal Proteus, son of Poseidon–The Old Man of the Sea. In The Odyssey, Menelaus was on his journey home from the Trojan War. He learned from Proteus’ daughter (Eidothea), that if he could capture her father, he could force him to reveal which of the gods he had offended and how he could appease them and return home. Proteus possessed the great power of shape shifting and defeating him was almost too impossible. Menelaus and his men, disguised in sealskins, lay in ambush on the beach. As Proteus emerged salty and frothy from the rolling sea, Menelaus and his men sprang into action. First Proteus shifted into a great bearded lion, and then a serpent, a panther, a wild boar, a torrent of water and a tree. But the
Greeks changed their traditional fighting tactics in order to defeat this difficult adversary. Their normal weapons were of little use. With each shift from Proteus, Menelaus and his men shifted. With each new challenge, they changed. They clenched their legs tight around the necks of animals that appeared, or digging their fingers into the wooden limbs of trees, or wrapping their arms around swirling balls of fire. The Old Man of the Sea was defeated. By adapting, the Greeks found their way home. How do you look at your own operational environment? Is it adversarial? When was the last time you did your own analysis of your current environment? I see everchanging regulatory changes, referral partner loyalty, investor guidelines, and micro economies to name a few in our origination business. If you are active in your own association, you have regulatory changes, membership atrophy and financial resource issues. Therefore, I ask the question. How do you adapt? Do you still cling to the top down approach to effectively lead an organization or your own business operations? Or can you adjust like the Greeks did in order to beat Proteus and overcome your current obstacles. What are these obstacles or threats that we see in the landscape? We are often taught to manage from a top down approach. We reward simple execution of plans as opposed to creating a culture that rewards individuals for initiative and critical thinking. I have been reading a book by General Stanley McChrystal called Team of Teams. He took command of the Iraqi Joint Special Operations Task Force in 2004. In reading his
excuse that the LO didn’t know what their company was doing was illegal is no longer an acceptable excuse. If your company is using a questionable compensation plan or is improperly paying a partner in a marketing agreement, you have the knowledge and responsibility to correct it or step away. The CFPB is requiring continuing education as a requirement because they want all of us to be on the watch for illegal practices that might harm the consumer. The more people who know the right way to do things reduces the chance that an improper practice will be intentionally or unintentionally introduced into a busi-
NAMB PERSPECTIVE Proud to Be a Mortgage Originator By John L. Councilman, CMC, CRMS There are people who have thrown stones at the mortgage industry over the past few years. What were we accused of doing? Creating the highest percentage of homeownership in history? Sure, there were some people who didn’t do the right thing but you cannot name a profession that doesn’t have that. We have taken the rap for far too long. It is time to be proud of what we do. Think of it … mortgage originators make it possible for people to own homes. What more rewarding profession is there than that? As any originator knows, there is nothing like the smiles, the joy, the tears, that come from the people we help achieve the
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American dream every day. Yes, I love what I do. I saw a cocktail napkin at the recent Florida Association of Mortgage Professionals Convention that I thought was great. It said, “I was told to do what I loved. Aren’t you glad I chose mortgages?” People trust me with their most private information. They know that I will work tirelessly to help them achieve their dreams. Think of what our industry provides for our country. We make it possible for people to build new homes and renovate them. More people are employed in the construction industry than any other industry in America. No wonder the economy collapsed when we weren’t writing as many mortgages. Real estate agents often push us, but they depend on us as well. We help them to sell houses. Title companies, home inspectors, appraisers and innumerable other
Why Do I Need NAMB? www.namb.org … JOIN TODAY! l NAMB Testifies Before Congress
industries depend on us to help them make a living. That is powerful! We create a bridge to a better life for young people. The mortgage industry has created a good profession that young people can choose to enter without a Ph.D. and make a good living. Millennials are coming into our business along with a diverse work force. We use our income to become good consumers that help our economy to thrive. Our hard work supports healthy families that can afford a home, medical care and a lifestyle that makes a strong community. We are the gatekeepers of the financial system. It is our expertise that makes certain that people who qualify for a mortgage can get one. We put all of the pieces of a complex financial transaction together, allowing a lending decision can be made. We work the long hours, taking people through the maze of the most complex financial transaction most will encounter in their life. I would be remiss if I didn’t mention that NAMB membership brings a lot of
(No additional costs to NAMB members)
How to Apply for your National Lending Integrity Seal www.lendingintegrity.org Click on EARN the Seal NAMB members ONLY–Log in to the Lending Integrity site with your NAMB User ID and Password (If you do not know your User ID and Password, type in your e-mail and click log-in and the system will send you a password. If you have any issues, please call (972) 758-1151 or email membership@namb.org).
Lending Integrity Requirements
l NAMB Participates in Multiple Regulatory/CFPB Panels l Full-Time NAMB Lobbyist on Capitol Hill l NAMB Protects Your Business l NAMB Forms Industry Coalitions l NAMB Education
For detailed information, visit www.namb.org.
John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or email jlc@amcmortgage.com.
Are You an NAMB Lending Integrity Seal of Approval Holder?
l NAMB Works With the CFPB l NAMB Webinars
this together. NAMB brings wholesale lenders and originators together. We help to educate the industry. We help to shape the laws and regulations that will determine how we operate. We become friends with our peers. I love going to conferences where I meet people who face the same challenges that I do. I learn to be the best at my craft. Yes, it is a good feeling to be a mortgage originator. I sleep well at night knowing I have done something good for my family, my community and my country. I will not let the detractors steal that from me. I have earned my own self-respect and the respect of my fellow originators. We can lift our heads high knowing that we have a great and important profession. We are what makes America great!
l l l l l l l l l
The Lending Integrity Seal of Approval is awarded only to mortgage originators who meet specific requirements. To earn the privilege to display the Seal, mortgage brokers and loan officers must: Be an NAMB member Meet the requirements of the SAFE Act Pass a national criminal background check Attend eight hours (or equivalent) of professional development education each year Attend two hours (or equivalent) of ethics training every other year or each license renewal cycle Provide professional references Subscribe to NAMB’s Best Business Practices Agree to NAMB’s Code of Ethics Must be renewed annually
NAMB PERSPECTIVE
getting toknow Andy W. Harris NAMB Treasurer B Y
Is it correct that NAMB’s numbers didn’t always add up to a profit? When I got involved as treasurer, the books were completely messed up. We uncovered a lot of mistakes in financials, and we worked with a CPA to get profit/loss balance stabilized. We were showing a loss on our national show in Las Vegas. Since then, we’ve showed a significant profit and maintained good liquidity. Obviously, this helped the association. But this is a huge responsibility. What attracted you to this aspect of NAMB? When I first spoke with the Nomination Committee, everyone thought I’d have good patience in this position. I would tell everyone looking at the books, “Would you do this in your own business?” Also, I like numbers. People have a sense of how we’ve changed things and are using common sense. Before, there was a
lack of participation. Now, finances are getting discussed. We always have the Finance Committee agree and vote on certain things, making sure it benefits the members. In your work on the NAMB Executive Board, you have also been active in representing the organization in Washington, D.C. It is great for anyone in the organization to see Washington, D.C., and to understand how it relates to our business. My first visit there was an eye opener, as I was able to go through halls of Congress and speak with lawmakers. It’s priceless to be able to be directly involved with it. One of the big challenges facing NAMB’s leadership is expanding the organization’s membership. Why should mortgage professionals become part of NAMB? If you have a passion for this business and see your work as more of a career than a job, you need to ask how you can participate in this business to make it better. We have an industry that lacks participation. I hope more people join in the future—it is one of the most frustrating things. Why do you think more people have not become involved?
23 There could be a misunderstanding of what NAMB does. In our name, “B” stands for “Broker,” but our name is also the Association of Mortgage Professionals. That is a little bit confusing. And if you look at board of NAMB, we have more bankers than brokers. You’ve also held leadership roles in your state association. How do you compare the state experience versus the national experience? There are good things in both. At the state level, there are more local colleagues to work with. At the national, it is macro-level versus micro-level. Macro is more fulfilling, at least to me, and I get a different perspective. Do you see yourself taking on higher level executive roles at NAMB in the near future? For right now, I plan to remain another year as treasurer. For the future, it is hard to say. My schedule is very tight. I originate and I am busy, so I am not able to serve at this point in high executive positions. I’m inundated with business, which is not necessarily a bad thing. Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by email at philh@nmpmediacorp.com.
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NMP: At the risk of starting off with a very obvious question, what are the duties of the NAMB treasurer? Andy W. Harris: The treasurer is the chairman of Finance Committee, which has the responsibility for setting the budget for the fiscal
year. It is the committee’s job to make sure we’re robust and showing a profit. The Finance Committee consists of seven members, including myself, and we usually meet as needed. Our fiscal year just ended, so now we are going to talk about next year’s budget. We should be showing a profit.
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Andy W. Harris, CRMS, is one of the most influential and respected leaders in the mortgage profession. As founder of Vantage Mortgage Group in Lake Oswego, Ore., has won several awards and received significant press coverage for his successful business operations. As president of the Oregon Association for Mortgage Professionals from 2010 to 2012, he has been in the forefront of working to improve the depth and scope of his state’s mortgage scene. And for the past two years, he has been an indefatigable presence as treasurer of NAMB—The Association of Mortgage Professionals. Harris has been a ubiquitous presence in National Mortgage Professional Magazine, both as a writer and the subject of coverage including several tributes in the magazine’s annual “40 Most Influential Mortgage Professionals Under 40” feature. In this go-round, we talk to Harris about his work with NAMB and his views on the state of the profession.
P H I L
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Managing Third-Party Origination Risk By Greg Stephens, SRA, MAA, CDEI rior to the publication of the Interagency Appraisal and Evaluation Guidelines in December of 2010, many lenders passed off the responsibilities to what were referred to as “Vendor Management Companies (VMCs)” believing the VMC would be on the hook for any regulatory compliance issues. Originations require collateral valuations and an increasing number of
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lenders were engaging appraisal management companies (AMCs) as a result of the Home Valuation Code of Conduct (HVCC) also in the belief that engaging an AMC would relieve the lender of management responsibilities relating to the oversight of the valuations within the collateral underwriting process. That all changed with the inclusion of Title XVI-Third Party Arrangements within the Guidelines. Within the Interagency Appraisal and Evaluation Guidelines (hereafter referred to as Guidelines), the Agencies
included very specific language to facilitate compliance, such as “An institution that engages a third-party to perform certain collateral valuation functions on its behalf is responsible for understanding and managing the risks associated with the arrangement.” The Guidelines further state, “An institution should use caution if it engages a third party to administer any part of its appraisal and evaluation function, including the ordering or reviewing of appraisals and evaluations, selecting an appraiser or person to perform evaluations, or providing
access to analytical methods or technological tools.” The lender/institution’s responsibility relating to third-party oversight is stated very clearly: “An institution is accountable for ensuring that any services performed by a third party, both affiliated and unaffiliated entities, comply with applicable laws and regulations and are consistent with supervisory guidance. Therefore, an institution should have the resources and expertise necessary for performing ongoing oversight of third party arrangements.”
The scope of the Guidelines goes beyond just compliance risks when the Guidelines state: “An institution should have internal controls for identifying, monitoring, and managing the risks associated with using a thirdparty arrangement for valuation services, including compliance, legal, reputational and operational risks.” Realizing third-party vendors provide more than just valuation services, the Guidelines specifically refer to oversight requirements relating to appraisers and those who provide valuation services to complete an evaluation by stating the following: “An institution also is responsible for ensuring that a third party selects an appraiser or a person to perform an evaluation who is competent and independent, has the requisite experience and training for the assignment, and thorough knowledge of the subject property’s market. Appraisers must be appropriately certified or licensed, but this minimum credentialing requirement, although necessary, is not sufficient to determine that an appraiser is competent to perform an assignment for a particular property or geographic market”. So how can you manage the risk and remain compliant when you engage a third-party? The answers are found within the Interagency Guidelines and state regulations that provide specific language that can be incorporated into a compliance program. Specifically, Chapter XVII-Program Compliance provides the following “should” examples of a compliant process:
“So how can you manage the risk and remain compliant when you engage a third-party?”
Among the 38 states that have thus far passed AMC registration legislation and regulations, there is a common continued on page 28
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n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
Insulate the persons responsible for ascertaining the compliance of the institution’s appraisal and evaluation function from any influence by loan production staff. Appraiser independence violations can seriously impact the credibility of the collateral valuation program, the loan portfolio, and the reputational risk of the institution. It is therefore essential to have a written policies and procedures protocol that insulates the collateral valuation functions from influence by loan production staff. At several conference presentations, including a recent national conference in Dallas, Texas, Robert L. Parson, Appraisal Policy Specialist, Credit and Market Risk, for the Office of the Comptroller of the Currency (OCC), repeatedly stated that the selection of the appraiser is the single most important function within an institu-
Ensure the institution’s practices result in the selection of appraisers and persons who perform evaluations with the appropriate qualifications and demonstrated competency for the assignment. Although this backdrop of third party oversight regulations is directed toward the institutions’ valuation functions, it can be applied to any third-party arrangement especially given the overall broad nature / absence of specificity in the language. There is also much to be gained by analyzing the parallel between the val-
uation function and other third party activities where the oversight responsibilities overlap. Excellent examples of this can be found in the language contained within the various state legislation and regulations directed toward Appraisal Management Companies. Business Practices, Business Records, Prohibitions of Conflicts of Interest, Selection criterion, review and audit processes and procedures are just a few examples. Rather than regulations directed at the individual level, the state AMC regulations are directed toward the activities of the business entity and provide an excellent outline for operational compliance.
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Maintain a system of adequate controls, verification and testing to ensure that appraisals and evaluations provide credible market values. A compliant program will include clearly written policies and procedures within the institution that include quality control / audit functions of internal staff to ensure the valuation products meet the minimum standards for collateral risk
tion’s collateral valuation program and is reflected in the Agency’s directive noted in the next bullet point.
managing third-party origination risk continued from page 27
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thread applicable to the registration l A certification that the third-party vendor has a document retention requirements of virtually any Thirdsystem in place to maintain the Party Vendor, beginning with the detailed records of each transaccharacter makeup of the officers, tion for a period of time dictated by managers and any investor owning applicable laws and regulations; 10 percent or more of the AMC. Most states require a background investi- l A certification that the third-party vendor compensates appraisers at a gation to ensure the officers, manrate that is customary and reasonagement team and owners are of able for the geographic area and good moral character and do not property type; have a pattern of behavior that would call into question public trust l A written irrevocable consent to service of process; and which should be a paramount criteria in the selection of any third-party l Designation of a primary contact between the vendor and the board vendor. or lender. Additional AMC registration requirements include certain written Such certifications must be incorpocertifications that provide a level of credibility to the compliant nature of rated into written policies and procedures program that are incorporated the program. Examples include: into the contractual documentation l A certification that the third-party between the institution and the third vendor has a system and process in party vendor. This article provided guidance into place to ensure the appraiser being added to their panel meets the third party oversight through direct competency requirements for the references to the Third Party regulageographic market, the property tions contained within the Interagency Appraisal and Evaluation Guidelines as type and analytic methods; l A certification that the third-party well as providing language contained vendor requires that appraisals are in some of the state appraisal board conducted independently and free regulations specifically addressing from inappropriate influence and requirements related to the oversight coercion pursuant to the appraisal of third parties engaged by a financial independence standards estab- institutions. The examples provided can form lished under section 129E of the the basis of a compliance program Truth-in-Lending Act (TILA); l A certification that the third-party that should be reduced to writing, and vendor has a system in place to should be a living document that is verify that the appraiser receiving periodically reviewed and updated as the assignment holds a credential new regulations and guidance become in good standing in the state where available. the property to be appraised is Greg Stephens, SRA, MAA, CDEI, is chief located; l A certification that the third-party appraiser, senior vice president of comvendor has a system in place to pliance at Metro-West Appraisal perform an appraisal review on a Company LLC. His professional credennumber or percentage of apprais- tials include Certified General Appraiser, al reports submitted by each SRA Designation from the Appraisal appraiser who is performing Institute, AQB Certified USPAP Instructor appraisals for the third-party ven- through The Appraisal Foundation, and dor on a periodic basis to ensure CDEI certified distance education instruccompliance with required federal tor through the International Distance Education Certification Center. and state standards;
By Originators, For Originators
Independence By Andy W. Harris, CRMS The word “independence” seems to have lost meaning over the last few years in our industry. It’s as if most mortgage loan originators (Los) forgot they work for their client, not the company where they choose to place their license. They also seem to forget that their employer (company) doesn’t really actually employ them, but their client does. As a result, the LO indirectly employs those who work for the employer (company) since they bring all revenue through the consumers closed loan. Sound confusing? It seems to be for many. I understand company branding and culture. I also understand those that are newer in the industry or working at most depositories call on company-generated leads or walk-ins, but that is not what I am talking about. I’m talking about those of us that are experienced, tenured, have a solid book of referral business and production. Those of us that are self-made and don’t rely on others or company-generated business. Why have many of us lost our independence and so quick to chase shiny objects or be influenced by others? My question is about responsibility and accountability. I believe a licensed LO should know more than any employer they choose to work for, any manager or other non-originator in the industry. I believe that we should be self-educated and influenced by what we independently learn rather than influenced by anyone else to develop our beliefs. I feel this is vital with how we communicate with the public during such an important financial transaction. We owe it to our clients to be experts without egos. So what are your thoughts? Do you rely on your employer or others when trying to understand changes, regulation, or operations in the primary residential mortgage market? Or, do you self-study, attend conferences, read and get involved to develop your own views? Do you think that the individual LO should be the most industry-educated since they communicate to the consumer and public directly? I personally do and feel we need better, more independently informed LOs than ever before. Share your opinions for next month’s OrigiNation! To have your stories or topics considered in future editions of “OrigiNation,” please e-mail me with “OrigiNation” in the Subject Line at aharris@vantagemortgagegroup.com. These can be confidential or your name and company can be referenced if you wish. 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.vantagemortgagegroup.com.
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Who’s Afraid of a Plummeting Homeownership Rate? By Phil Hall he U.S. Census Bureau recently reported that the homeownership rate for the second quarter of this year was 63.4 percent—a rate that has not been seen since 1966, and a sizeable drop from the 69.2 percent peak recorded at the end of 2004. Should the mortgage world be worried that the homeownership rate is
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reaching depths not seen in nearly a half-century? According to industry leaders, the answer is no—if only because the situation is outside of the industry’s control. Logan Mohtashami, an Irvine, Calif.based senior loan manager at AMC Lending Group and a financial blogger at LoganMohtashami.com, observed that it is a mistake to accept the homeownership rate as a static entity. “We are working off an artificial high,” said Mohtashami. “There were
an excess number of people who shouldn’t have been homeowners who were buying homes.” Mohtashami added that the homeownership rate peak of the previous decade was also the result of many mortgage products that are now extinct. “Without exotic loans, first-time homebuyers are not owning, but renting. We have legitimate buyers now,” said Mohtashami. Rocke Andrews, president-elect of
NAMB—The Association of Mortgage Professionals and broker/owner at Tucson, Ariz.-based Lending Arizona LLC, agreed that the quality of homeowners today needs to be valued. “Not everyone is made out to be a homeowner,” Andrews said. “We got a little ahead of ourselves trying to fit everyone into homeownership.” Edward Pinto, co-director and chief risk officer of the International Center on Housing Risk at the American Enterprise Institute (AEI) and a former
necessarily setting the stage for a Millennial buying rush. “In certain markets, builders are starting to rally and have properties for first-time homebuyers,” Stucky said. “Traditionally, these would be targeted to Millennials. But Millennials tend to want urban settings, and most first-time homebuyer homes are located on the edge of urban sprawl—so there is a misalignment of market requirements.” Yet even if Millennials were seized with the sudden desire to become homeowners, there are more than a few obstacles in their path. “Many Millennials are carrying extremely high student loan debt,” said Matt Clarke, chief operating officer at Brentwood, Tenn.-based Churchill
Mortgage Corporation “Housing prices are increasing quickly, and there is a lack of credit. With the extremely high rents that many are paying, it is difficult for anyone to try to save up for a house. Plus, there is not enough inventory for people to move into a buy.” Rick Roque, principal with Washington, D.C.-based Menlo Company, pointed out that Millennials are not the only ones being shut out of homeownership. “Since the [2008] collapse, there has been a concentration of wealth in upper classes because the middle income-earning American hasn’t recovered,” said Roque. “This has created a reverse mushroom effect: A growth of income and wealth in professional
classes and an economic reversal in blue collar labor class.” And while all of these circumstances are outside of the control of mortgage professionals, there is one area where the industry can encourage more people to qualify for homeownership. “The industry has to develop more products and become better lending on non-conventional properties like condos,” said Bill Lowman, president of Roseville, Calif.-based American Pacific Mortgage. “We need to lead on these types of properties.” Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
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GOVERNMENT PROGRAMS DOWN TO
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Fannie Mae chief credit officer, also noted that the decreasing homeownership rate is being influenced by the increased removal of people from foreclosed properties. “We are still working off the foreclosure backlog that has still been around for the past seven to eight years,” Pinto said. Pinto added that, despite the low rate of homeownership, there is a fastgrowing level of home sales. “We have a rip-roaring purchase market going on right now and it is not abating,” Pinto said. “If you look at the trends over the years and not month-to-month, you will see there are huge increases going on. Purchase data is increasing by 20 percent year-over-year.” But this does not mean that the homeownership rate cannot be higher than it was in 1966—especially when one considers the greater volume of potential homeowners today. Andrews admitted that many are avoiding the idea of buying a house for the wrong reason. “There is a large percentage eligible for home loans who don’t think they are,” Pinto said. “We need to educate them on the possibility of homeownership—especially in places where it is cheaper to own than to rent. They need to understand that this is not just a long-term investment, but it is also better for their budget in the short term.” There is also a bigger problem keeping the homeownership rate: The absence of the full thrust of the Millennial demographic from the market. “Millennials are kind of delaying everything,” said Amy Crews Cutts, chief economist at Atlanta-based Equifax. “They are not buying cars or houses, and they are not getting married and having babies at the same rate as previous generations.” Cutts added that Millennials may not be purchasing houses at a great rate now, but that doesn’t mean it is completely off their “To-Do List.” “If they are delaying [purchasing a house] until they are in the 30 to 35 age range, then the homeownership rate will go up,” said Cutts. Still, this demographic has its’ own trepidations that need to be acknowledged. “The Millennials coming in are a very, very different group of people,” said Sue Woodard, CEO of Vantage Production, based in Red Bank, N.J. “The challenge is going to be strengthening relations and determining how to reach this generation that distrusts banks.” Becky Walzak, president of Indianapolis-based Looking Glass Group LLC, noted that Millennials considering homeownership would probably not be interested in suburban starter homes. “They are looking more to condos or homes in cities,” Walzak said. “They don’t want to spend two-and-a-half to three hours a day in their cars commuting to and from work.” But Scott Stucky, chief strategy officer for DocuTech in Idaho Falls, Idaho, observed that home builders are not
From Wholesaler to Consumer, it’s All About Education By Tom Hutchens
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When first-time homebuyers begin exploring their options, they often realize they actually know very little about getting a mortgage. They have to rely on the expertise of others, such as family and friends who have already gone through the process, to make the most educated choices possible. However, finding a home and going through the mortgage process is not a one-size-fits-all solution. One person’s advice may not be suitable for another’s situation. For example, some homebuyers might not qualify for conventional mortgages. But if their realtor isn’t knowledgeable about alternative nonprime lending products, the consumer might be misinformed and believe that they’re not qualified for a mortgage. That’s why it is of the utmost importance for homebuyers to work with a well-educated realtor with access to the resources needed to stay informed on the entire market of products available to borrowers in every financial situation. Realtors should aim to work with loan originators who are well-versed on the variety of products and solutions available in the market today. The more knowledgeable the originator is on various mortgage products, the more tools he or she has at their disposal for providing appropriate lending solutions to the consumer. Ultimately, it’s up to the originator to work with a wholesaler that offers updated information on the products currently available on the market. At Angel Oak Mortgage Solutions, we make it a top priority to educate our loan originators on available products and programs they can offer to their realtors and borrowers. Our sales team holds regular training sessions and seminars with clients to keep them up to date on our sub-prime and alt-doc programs. In addition to the individual training, we also offer approved originators customizable marketing flyers that they can pass on to relators as a detailed refresher on each type of product we offer. Angel Oak also provides educational tips on a weekly basis in our “Quick to Close” Newsletter. This e-mail newsletter includes information specific to the non-prime industry, highlighting the differences between the requirements of closing a loan with non-QM lenders vs. agency lenders. It’s important to remember that the burden of education does not fall squarely upon any one party in the mortgage supply chain. Instead, it is up to every party involved to make sure that both they and their constituents remain up to date on the most recent developments within the industry. Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail info@angeloakms.com.
new to market continued from page 18
a home equity product immediately following the launch of our personal loan product confirms the agility and scalability of our tech-enabled lending platform,” said Anthony Hsieh, chief executive officer and chairman of loanDepot. “It reaffirms our commitment of ushering in the next generation of lending that will empower borrowers and investors to connect through multiple products on our platform. Our vision is to deliver a diversified lending model sustainable in all market conditions. We look forward to leading the development of marketplace lending through the introduction of new products and services that provide credit solutions for borrowers with attractive returns for investors.” Investor interest in loanDepot’s home equity and personal loans is strong, with multiple investors showing interest in both asset classes. Investors are attracted to the company’s innovative model that efficiently connects borrowers with loan products on a platform engineered with substantially higher compliance and license requirements, enabling the company to offer a larger product suite. loanDepot expects to continue adding investors that will help refine and deepen the home equity marketplace, as well as other home loan and personal loan products. “As the economy continues to improve and home prices have stabilized, there is a growing reservoir of equity to help borrowers capitalize on their options to manage their credit profiles,” said Brian Biglin, chief risk officer for loanDepot. “For example, consumers across the country who have legacy home equity products may experience payment shock this year as these loans reset. There are also tens of thousands of homeowners who took out higher-costing personal loans over the past few years who can use our home equity products to lower their effective borrowing costs and substantially decrease their monthly payment.”
New Fannie Mae HomeReady Offering Caters to Affordability
SPONSORED EDITORIAL
Fannie Mae has announced the release of its HomeReady mortgage, a lending option aimed at helping creditworthy borrowers with lower and moderate incomes to have access to an affordable, sustainable mortgage. HomeReady features new functionality for lenders through Desktop Underwriter to automatically flag potentially eligible loans and fully leverage Fannie Mae’s integrated suite of risk management tools for greater certainty and efficiency. HomeReady reflects extensive research and lender input, and will replace Fannie Mae’s MyCommunityMortgage.
“HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, vice president for underwriting and pricing analytics at Fannie Mae. “We are also confident this mortgage option will create business opportunities for lenders serving the changing demographics and borrower needs seen in today’s market. The combination of our risk management safeguards and an innovative online education tool will put HomeReady borrowers in a strong position to succeed in homeownership.” Under the new guidelines, Fannie Mae pricing is favorable and simplified for lender use, and eliminates or caps standard loan level price adjustments. Borrowers will be required to complete an online education course preparing them for the homebuying process and providing post-purchase support for sustainable homeownership. The education course, called Framework, will be provided by the Housing Partnership Network and the Minnesota Homeownership Center, and meets the requirements of the HUD Housing Counseling Program and the National Industry Standards for Homeownership Education and Counseling. For the first time, income from a nonborrower household member can be considered to determine an applicable debtto-income (DTI) ratio for the loan, helping multi-generational and extended households qualify for an affordable mortgage. Fannie Mae’s research indicates that these extended households tend to have incomes that are as stable or more stable than other households at similar income levels, positioning them well for homeownership. Other HomeReady flexibilities include allowing income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to augment the borrower’s qualifying income. First-time and repeat homebuyers can purchase a home using HomeReady with a downpayment of as little as three percent. HomeReady will be available to borrowers at any income level for properties in designated low-income census tracts, and to borrowers at or below 100 percent of area median income (AMI) for properties in high-minority census tracts or designated natural disaster areas. For properties in remaining census tracts, HomeReady borrowers must have an income at or below 80 percent of AMI. Approximately half of census tracts will be subject to the 100 percent AMI limit or have no income limit.
Velocify Now Available Via Ellie Mae’s Encompass
Velocify has announced that its solu-
tions are now available through Ellie Mae’s Encompass all-in-one mortgage management solution. The integration allows lenders to order Velocify’s solutions directly through Encompass to drive quality and efficiency in the loan origination process. Velocify’s sales automation technologies, Velocify LeadManager and Velocify Dial-IQ, enable mortgage companies to close more loans by helping loan officers respond quickly to prospective borrowers and stay focused on the highest priority sales opportunities. Ellie Mae is a provider of ondemand software solutions and services for the residential mortgage industry. Ellie Mae’s Encompass provides one system of record that enables banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency. “I am delighted that Ellie Mae and Velocify strengthened ties with a more robust system integration,” said Neal Johnson, director of lead systems and analytics at Guaranteed Rate Inc. “The Velocify enhancements underpinning the partnership will drive industry best practices between the two critical systems, which will enhance our ability to better serve and put the customer experience first with life’s biggest purchase.” “Like Velocify, Ellie Mae has a long history of leadership in the mortgage industry,” said Velocify President and CEO Nick Hedges. “By working more closely together, we can help our mutual clients sell loans more efficiently and profitably.”
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.
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n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
Accurate Group has announced it has enhanced its managed services offering designed to help mortgage lenders more effectively comply with regulatory requirements and eliminate costly appraisal management overhead. The enhanced offering is designed for lenders who are currently managing their own appraisal function and related compliance efforts. By taking on the role of outsourced managed service provider, Accurate Group allows mortgage lenders to offload resource and capital-intense overhead functions related to appraisal management and appraisal compliance. The full-service solution can help lenders significantly lower costs, deliver continuous regulatory compliance and focus more resources on core business functions such as loan originations and client service. A recent Fannie Mae survey found that mortgage lending compliance costs increased nearly 30 percent in 2014. In addition, three-quarters of senior mortgage executives surveyed stated that new rules and regulations issued by the Office of the Comptroller
credit unions and other mortgage lenders to offload the administrative burden and fixed overhead costs of managing real estate appraisals and related compliance requirements, so they can focus on their core business. Many financial organizations have already outsourced IT overhead and systems management, and it is now time for them to consider doing the same with real estate appraisal and compliance management. Not only will it eliminate the risk of non-compliance, but the immediate cost and resource savings they realize by partnering with Accurate Group can then be invested in more strategic areas for business growth.”
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Accurate Group Enhances Managed Services Offering
of the Currency (OCC), Consumer Finance Protection Bureau (CFPB), Federal Reserve and Federal Deposit Insurance Corporation (FDIC) have had “significant” impact on their business. “Many real estate lenders are still managing their own appraisal management function, and adhering to regulatory compliance requirements has become a significant and expensive burden for mortgage lenders. In addition, the complexity of maintaining compliance is putting many firms in the risky position of being noncompliant,” said Paul Doman, president and CEO of Accurate Group. “Our goal in providing this full-service, turnkey offering is to enable banks,
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Phil Shoemaker
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SEPTEMBER 2015 n New Jersey Mortgage Professional Magazine n
PROFES
Executive Vice President of Wholesale Lending Caliber Home Loans BY PHIL HALL
hen Phil Shoemaker was in college, he never intended to become a mortgage professional. And today, in his role as executive vice president of wholesale lending at Irving, Texas-based Caliber Home Loans, he is still pleasantly surprised at his career trajectory. National Mortgage Professional Magazine recently spoke with Phil about his journey in mortgage banking and his view of the industry where he has become one of the most prominent figures in wholesale lending.
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NMP: How did you first get involved with mortgage banking? Was this your
“Despite the fact that we are one of the largest lenders in the country, Caliber Home Loans has been able to maintain an entrepreneurial culture, where creative people who like to innovate can flourish.”
original career path? Phil Shoemaker: This question always makes me laugh a bit because I have yet to meet a person who dreamed of growing up and becoming a mortgage banker. My original career path was engineering and my degree is in electrical engineering, yet here I am in mortgage banking. I was a freshman in college and needed a job. Through a friend, I ended up getting an
opportunity with a start-up mortgage bank as a shipper in post-closing. The company was First Magnus Financial, and I was lucky that I had the opportunity to participate in a start-up that eventually became one of the largest privately-held lenders in the country. By the time I finished my degree in electrical engineering, I had been exposed to how dynamic and rewarding it was to work in
mortgage banking and decided to make mortgage banking my career path. The day First Magnus closed was one of the saddest days of my life, yet in hindsight, it was one of the best things that ever happened to me and my family. That event brought me to Caliber Home Loans and taught me many valuable lessons about mortgage banking. Specifically, it taught me how important it is to never lose sight of what’s best for the consumer and the valuable role that servicing plays in the long-term financial viability of a mortgage bank. How did you first become associated with Caliber Home Loans? After First Magnus, I participated in another start-up mortgage bank. We ended up selling the
SSIONAL assets of the company to Lone Star Funds and it was this acquisition that seeded the technology and origination platform of Caliber Home Loans. I relocated to Dallas to run operations and we’ve been building on the platform ever since.
How has Caliber been able to keep on top of the many regulatory changes that have taken placed in recent years? We’ve had to dedicate a large percentage of our corporate resources to interpret, educate, implement and validate that we are properly complying with all of the regulatory reform that has occurred. There is no doubt that the cost to the consumer has increased, and I would argue that some of the regulatory reform has been a bit overboard, but I also believe the regulators got it right in key areas, specifically, the ability-to-repay requirement that is critical in making sure the industry does not repeat the mistakes of the past. These regulatory changes will keep the industry grounded in responsible lending as the non-agency market emerges. Caliber offers a brochure with the title “Our Products Make Us Different/Our People Make Us Great.” What kind of people does the company look for to strengthen its employee base? Above all, we look for people who have integrity and are capable of placing the interests of the consumer above their own. Caliber is very much a performance management culture, and we look for and attract those who want to be part of a team that is constantly striving for perfection and never happy with status quo. Despite the fact that we are one of the largest lenders in the country, Caliber Home Loans has been able to maintain an entrepreneurial culture, where creative people who like to innovate can flourish. As a follow-up to the previous question … what can the industry as a whole do to encourage young people to
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pursue careers in mortgage banking? The lack of young people entering this industry is a real problem, but I think it’s more of a function of the current market, regulatory environment and overall perception of the mortgage banking industry by the general public. Given all of the regulatory reform, the environment has demanded experienced individuals, and with all of the consolidation in the industry, there hasn’t been a shortage of experienced people. A big part of the issue is the industry’s motivation to attract and teach new mortgage bankers. As the industry recovers, I think we’ll see a natural push by many companies to bring young people into the industry because there will be a need. A more stable regulatory environment will also afford companies the time and resources to invest in attracting and educating new mortgage bankers. I also cannot help but think there is a correlation in the low rate of first-time homebuyers. Young people are not buying homes, but this is slowly changing. As they start to experience the joy of owning their own home and the perception of working in the mortgage banking industry improves, it will drive more interest to careers in the mortgage banking profession. I believe this industry is one of the most diverse and exciting industries to work in, and we perform a valuable service to the consumer. I don’t think young people see that right now, but they will as the perception of the industry changes. Looking back on your work in the industry, what do you see as your greatest challenges and your greatest accomplishments? The early years at Caliber were my greatest challenge. The industry was in shambles, our culture was a mess, we lacked experienced people in critical roles, and as a result, we
churned through some very good people and had to reinvent ourselves several times. In terms of my greatest accomplishments, I think that whatever role I have played in getting Caliber to where we are today, as tiny as that may have been, is my greatest accomplishment. I am very proud of what we have been able to build, yet I also feel like we are just getting started. What do you see as the nearterm future for the mortgage banking industry? There will continue to be consolidation over the next couple of years. Companies that have not focused on driving purchase business, creating a sustainable business model that involves the stability of a servicing portfolio, and investing the appropriate resources to ensure regulatory compliance will likely have to exit and sell to companies like Caliber. I also think we will continue to see non-agency products evolve and become a more substantial part of the market. As of August, Caliber is the first lender in the country to issue a private label security of this type of product since 2007. We intend to lead the way in making the market for nonagency, but we also intend to do it responsibly by ensuring that borrowers are placed in the best loan possible and can demonstrate the ability to repay such that we don’t repeat the mistakes off the past. Outside of work, how do you spend your leisure time? I spend time with my family and focus on being a dad. I don’t see them much during the week, but I’ve gotten pretty good at shutting down and enjoying time with my wife and kids on the weekends. Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.
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How do you see the current state of the wholesale lending market? I am very bullish on wholesale lending. The credit quality in wholesale has never been better and the brokers we support are providing a valuable service to the consumer. I believe there has been an overreaction to the regulatory reform that has occurred over the last five years and the belief that the broker model is no longer viable is unfounded. As the U.S. residential real estate market continues to recover, I see wholesale lending gaining market share because consumers appreciate the options and competition always results in a better product and price. This will be especially
important as non-agency products become a more substantive part of the market. Mortgage brokers will play a critical role in helping educate referral partners and consumers about the additional lending options that are now available.
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In your opinion, what makes Caliber stand out from the competition? The people and the culture. It took six years and it wasn’t always easy at Caliber, but I am very proud of the culture we have built and humbled by the people I work with and work for. They are the most intelligent and experienced mortgage bankers in the industry, yet there is zero arrogance. Every day, I am part of a team that comes to work with the goal of how to better serve the consumer, our customers and our employees. There aren’t silos … the layers of management are thin and we are building a company that has integrity and longevity. It also doesn’t hurt that we are one of the most financially stable independent mortgage banks in the country, which allows us to retain all of our servicing and create our own suite of nonagency portfolio products.
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Industry Updates: September 2015 By Melanie A. Feliciano Esq. CFPB reports findings from “Know Before You Owe” eClosing pilot project On Aug. 5, 2015, the Consumer Financial Protection Bureau (CFPB) issued a report on its eClosing pilot program. The eClosing pilot was a study evaluating the use of electronic records and signatures in the residential mortgage loan process. The four-month long project examined results involving seven lenders, four technology companies (DocMagic Inc., was one of the participants) and about 3,000 consumers. CFPB issues guidance on cancellation and termination of PMI On Aug. 4, 2015, the CFPB issued Compliance Bulletin 2015-03 to provide guidance to residential mortgage servicers and sub-servicers in their compliance with the private mortgage insurance (PMI) cancellation and termination provisions of the Homeowners Protection Act of 1998 (HPA). The Bulletin explains the HPA requirements and provides examples from the CFPB's supervisory experience of PMI cancellation and termination procedures that violate the HPA or create a substantial risk of non-compliance. CFPB publishes Real Estate Professional's Guide In August, the CFPB published a Real Estate Professional's Guide to assist real estate professionals with understanding the TILA-RESPA Integrated Disclosure (TRID) rule.
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Arizona adopts national SAFE MLO test The Conference of State Bank Supervisors (CSBS) announced on July 29, 2015, that the Arizona Department of Financial Institutions began using the National SAFE Mortgage Loan Originator (MLO) Test with Uniform State content on July 15. This brings the total number of agencies using the nationwide test to 47. Licensed applicants who pass the National SAFE MLO Test need not take any additional state-specific tests to hold a license within the participating 47 states. Arizona deeds of trust On March 27, 2015, Arizona enacted Senate Bill 1218, which requires a person recording a deed of trust or mortgage for residential property constructed for at least one family, but not more than four families, to include "residential 1-4" in the caption heading on the first page of each deed of trust or mortgage. According to SB 1218, failure to comply with this requirement does not affect the validity of the deed of trust or mortgage or the validity of the recording thereof. Correspondent lenders should check with their investors to determine whether they will require this caption heading on Arizona deeds of trust. 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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nmp news flash continued from page 16
providing guidance to mortgage servicers regarding the cancellation and termination of private mortgage insurance (PMI). The bulletin explains certain requirements of the Homeowners Protection Act and is intended to help servicers comply with the law. “Consumers should not be billed for unnecessary private mortgage insurance,” said CFPB Director Richard Cordray. “We will continue to supervise mortgage servicers to ensure they are treating borrowers fairly, and today’s guidance should help servicers come into compliance with the Homeowners Protection Act.” PMI protects the lender if the borrower stops making payments on a loan. Lenders generally require consumers to purchase PMI if their down payment is less than 20 percent of the sales price or the appraised value of the home. PMI premiums are added to the borrower’s monthly mortgage payment. The Homeowners Protection Act of 1998 was passed by Congress to address borrowers’ difficulties in cancelling private mortgage insurance when they had reached a certain level of equity in the property. The CFPB has identified substantial industry confusion over implementation of the PMI cancellation and termination requirements in the Homeowners Protection Act. Examinations by the CFPB have identified violations of several different provisions of the Act. The CFPB discussed a number of Homeowners Protection Act violations in the Summer 2013, Winter 2013, and Summer 2015 issues of Supervisory Highlights.
Negative Equity Woes Retreat, as TILA/RESPA Woes Rise There is good news for homeowners burdened beneath the weight of negative equity and not-sogood news for lenders trying to stay compliant with federal compliance requirements. On the homeowner front, Zillow reports that the U.S. negative equity rate dropped below 15 percent in the second quarter. Zillow credited this decline on the least valuable one-third percentage of homes, which benefited from the rising level of home values. “If the overall negative equity rate is going to continue to fall, it will need to keep being driven down by improving health at the bottom end of the market,” said Zillow Chief Economist Svenja Gudell. “The least valuable homes really bore the brunt of negative equity during the recession, and that’s where most negative equity remains concentrated today.” But this is not to say that the negative equity crisis is ready for the history books: more than 15 million homeowners still carried this problem. Condo owners had it even worse: Nearly 20 percent of these property owners were still stuck with
underwater mortgages. In fact, singlefamily homeowners were more likely to be underwater than condo owners in only three major markets—Detroit, Memphis and Pittsburgh. Gudell added that an influx of new homebuyers could further push down the negative equity levels. “As more first-time buyers enter the market seeking these less expensive homes, home value growth at the bottom end could continue to outpace growth overall, which will be good news for millions of underwater homeowners in these homes,” she said. On the lender side, Burlingame, Calif.based ComplianceEase analyzed a crosssection of 700,000 audits on closed loans with compliance defects in the first quarter and found that 17 percent of the loans failed for Truth in Lending Act (TILA) reasons while another six percent of failed for being outside of the Real Estate Settlement Procedures Act (RESPA). The analysis was based on a cross-section of 700,000 audits that were performed in ComplianceAnalyzer and RESPA Auditor during the first quarter of 2015. It found that 17 percent of the loans failed for Truth in Lending Act (TILA) reasons. Another six percent of the loans—or one in 15—failed for being outside of the Real Estate Settlement Procedures Act (RESPA) tolerances. If that’s not bad enough, 4.5 percent of Qualified Mortgage (QM) loans failed Safe Harbor tests and 11 percent of loans were incorrectly categorized as to their QM status. ComplianceEase estimated that the average reimbursement was $328 for the RESPA-failed loans and $740 for all loans that had an uncured RESPA violation. These reimbursements will rise in the third quarter when the new TILA-RESPA Integrated Disclosure (TRID) rule takes effect. “Based on our analysis, closing defects are already an expensive problem for lenders under the current rules, and are about to get riskier and more expensive under TRID,” said John Vong, president of ComplianceEase. “Lenders and settlement service providers will need to work together so they can produce higher quality loans and not add to the already high costs of origination.”
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.
Tuesday, December 8, 2015 Atrium Hotel, Irvine, CA Thursday, December 10, 2015 Doubletree Hotel Dallas, Dallas/Fort Worth, TX Tuesday, December 15, 2015 Holiday Inn & Suites, Orlando, FL
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The only thing better than a closed loan is a free party.
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Look for more information in NMP’s October 2015 Issue!
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.
United Wholesale Mortgage Adopts Bestborn’s Accounting Software
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Bestborn Business Solutions has bolstered the efforts of Troy, Mich.-based wholesale lender United Wholesale Mortgage (UWM) by equipping it with its Loan Vision mortgage-focused enterprise accounting software. The technology has improved the lender’s status as the nation’s top wholesale lender. “UWM is the leading wholesale lender nationally, in terms of volume, and it has everything to do with a focused effort to align our technology goals to streamline the loan production process,” said Paul Orlando, UWM’s CIO. “It’s great to partner with companies like Bestborn; their Loan Vision product has helped us identify and improve areas in the channel where costs were substantially higher, as well as target and pursue business that’s most profitable for us.” Already using paperless technology, a growth opportunity was recognized in implementing paperless efficiencies across the financial side of the business. They realized that if they invested more in technology, they could gain a substantial lead on their competitors. By turning to Loan Vision, UWM was able to eliminate manual workloads and reduce reliance on multiple software platforms, providing an entirely paperless system and faster business insights. For mortgage companies like UWM, Loan Vision brings enterprise level accounting and business management functionality with unmatched flexibility. Built on Microsoft Dynamics NAV, Loan Vision can seamlessly interface with key systems such as a loan origination system or data warehouse, efficiently passing detailed loan level information into the accounting system. The platform also contains modules for interim servicing and loan officer commission, as well as a branch portal.
“The operational improvements Loan Vision provided UWM are just an example of the huge financial benefits lenders can achieve with the right financial software,” said Martin Kerr, president of Bestborn. “Driving down operational costs should be the focus of every mortgage lender. Leveraging the right technology to reduce manual workloads for all departments and increase productivity will make all the difference.”
NorStates Bank Selects HomeBridge’s Affinity Mortgage Platform
HomeBridge Financial Services Inc. has been chosen by NorStates Bank to provide a complete line of residential mortgage services for its depositors in Illinois and Wisconsin. Through the HomeBridge Affinity Mortgage Platform, NorStates will now offer its depositors a comprehensive line of residential mortgage products typically found at national banks, combined with the personal attention NorStates has provided the communities it has served for nearly 100 years. Led by HomeBridge Vice President Joseph Cilento, the HomeBridge Affinity Mortgage Platform provides regional financial institutions the ability to offer depositors a wide range of tailored and locally supported mortgage services, without fear that borrowers will later defect to other financial institutions after obtaining a mortgage. “After an independent review of the top mortgage solution providers, NorStates concluded HomeBridge is the best option to provide our depositors with the broadest range of mortgage
options supported by the same personal level of service the local community expects from us,” said Matt Tilton, executive vice president at NorStates Bank. “The HomeBridge platform includes locally based mortgage loan originators who are well known within our housing community, along with the ability to offer competitive rates and resources you typically only find from the major national banks.” Cilento said, “HomeBridge’s Affinity Mortgage Platform will provide a complete end-to-end mortgage solution for NorStates’ depositors, with the same level of personal attention the bank has become synonymous with for nearly 100 years. Competition in both banking and the mortgage industry is incredibly fierce right now and the HomeBridge Affinity Mortgage Platform allows regional banks the ability to focus on their customers and their core banking services.”
Angel Oak Expands With Several Locations Across North Carolina
Angel Oak Home Loans has announced that its rapid national expansion has continued with the opening of multiple branches across the state of North Carolina. Angel Oak Home Loans is opening the door to homebuyers looking to take part in the booming North Carolina housing market, bringing access to flexible mortgage loan programs to homebuyers of all types in North Carolina. The North Carolina housing market, now experiencing rapid growth, sales, and construction across the state, is growing without signs of a slowdown. The new Angel Oak Home Loans North Carolina locations are found in Charlotte, Cary, Raleigh
and Wilmington, N.C. In addition to traditional mortgage loan products including conventional, FHA, USDA and VA, the firm offers unique portfolio loan programs and financing for first-time homebuyers, clients with less-than-perfect credit, and buyers who have experienced a housing event such as a short sale or foreclosure. By providing unique loan programs to clients other loan originators tend to overlook, Angel Oak helps stimulate growth in the North Carolina mortgage community, a state where the housing market has been growing quickly as of late. “We are truly thrilled about opening the door to North Carolina home buyers and building the Angel Oak brand in North Carolina. Our lending philosophy is founded upon the idea of providing homebuyers access to innovative portfolio loan programs while consistently delivering an exceptional client experience, both for our clients and referral partners,” said Whitney L. Fite, president of Angel Oak Home Loans. “By historical standards, mortgage lending credit requirements remain tight, leaving a lot of deserving, safe borrowers unable to get the home mortgage loans they need.”
North American Title Group Announces Risk Management Partnership With Secure Insight
North American Title Group (NATG) has announced that it has entered into an agreement with Secure Insight to conduct independent risk evaluation, rating, and monitoring of its 120 title and settlement offices throughout the United States. The process will be utilized to enhance NATG’s ongoing efforts to implement best practices and provide NATG’s customers with another layer of risk management for quality assurance and consumer protection. “We have always employed a com-
prehensive and effective risk management program to ensure our customers are protected and our business is reliable,” said Kimberly Sledd, legal and regulatory compliance specialist for NATG. “We decided to engage Secure Insight as a further enhancement to our process, allowing for third-party verification and management of our controls to elevate our settlement and title service best practices to an even higher level.” Secure Insight President Andrew Liput said, “We are pleased to work together with NATG in assisting them with the management of title agent and office quality control and consumer protection issues, thereby helping them earn the highest level of consumer and lender confidence in the industry.”
become homeowners through the USDA Rural Development Guaranteed Rural Housing (GRH) Program. In fiscal year 2014, Carrington helped moderate income families in Wisconsin use more than $1 million of GRH program funds by financing home purchases for borrowers participating in the program. Nearly 3,300 families across Wisconsin were able to purchase a home last year through the GRH loan program, totaling nearly $414.6 million. “Working with our lending partners across the state, we’ve made a difference to those rural families prepared to realize the responsibility and benefits of owning a home,” said Gruszynski. “The last several years have been challenging for homebuyers in rural communities.
By partnering with local lenders like Carrington we are able to leverage our resources and overcome financial barriers in order to help rural communities move forward. We value our partnership with Carrington and commend their achievement and contributions to meeting rural housing goals for Wisconsin.” The Million Dollar Lender Award is awarded at four levels Million, Silver, Gold and Platinum, based on the total amount of funding utilized by the lender; Million and Silver Levels disbursed more than $1 million, Gold Level disbursed more than $2 million, and Platinum Level disbursed more than $5 million during the past year. Carrington was also named a 2014 Million Dollar Lender in Illinois.
Comergence Begins Education Agreement With Sales Coach Ron Vaimberg and Partners With Blustream Lending
Comergence has established a strategic relationship with noted mortgage and real estate industry consultant, motivational speaker and sales coach Ron Vaimberg to provide free training Webinars and educational materials as a value-added service for the company’s customers. continued on page 48
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The Wholesale Lending Division of Carrington Mortgage Services LLC has announced that it has been presented with the USDA Rural Development Award, and it was named a million dollar lender by USDA Rural Development Wisconsin State Director Stan Gruszynski. Carrington earned this distinguished recognition for supporting Wisconsin rural residents looking to
800.528.3007 franklinfirstfinancial.com/wholesale
FRANKLIN FIRST FINANCIAL, LTD. 538 BROADHOLLOW RD, STE. 401 MELVILLE, NY 11747 IS A LICENSED MORTGAGE BANKER-NYS DEPT OF FINANCIAL SERVICES. LICENSE #B500728 NMLS #1630, HUD APPROVED TITLE II NON-SUPERVISED LENDER #17895-0000-0. FRANKLIN FIRST FINANCIAL IS NOT ACTING ON BEHALF OF OR AT THE DIRECTION OF HUD/FHA OR THE FEDERAL GOVERNMENT. ALL LOANS ARE SUBJECT TO CREDIT & APPRAISAL APPROVAL. PROGRAMS, RATES, TERMS, AND CONDITIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE.OTHER RESTRICTIONS MAY APPLY. THIS IS NOT A COMMITMENT TO LEND. COPYRIGHT FRANKLIN FIRST FINANCIAL, LTD. ALL RIGHTS RESERVED.
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Primary Residential Mortgage Inc. (PRMI) has released their new logo as part of their ongoing evolution of the company’s brand. In its original design, the triangle was created to symbolize the roof of a home, but was later changed to represent the pyramid. The pyramid was chosen because its several sides come together to make a zenith or focus. The strong base is indicative of the strong foundation built by PRMI and its dedicated team. “Evaluating our brand and ensuring we are in sync with our goals and customer needs is something that is vital to our corporation,” said Dave Zitting, president and CEO of PRMI. “This logo embodies our brand and the direction that PRMI is heading with its strong lettering, edgy lines, modern colors and simplified design.” The logo mark is now a stronger branding element where one half represents trust and the other, stability. These combined with the PRMI acronym represents the company’s goals with brand recognition and awareness. The year 2015 marks the 17th year in business for PRMI, and in the past year, it has had record-breaking months, having grown its personnel by more than 150 with the opening of 80-plus new branches nationwide.
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The Mental Game of Mortgage Banking By Brian Sacks his morning, I logged into my Facebook account and saw this post in my feed:
T
Brian, I officially left the mortgage industry in November of 2009. Looking back, it was probably one of the worst decisions I’ve made in my life. I’ve read many of your posts about trusting in God, putting God and family first, never backing down from what you know is right, and doing what’s right no matter what. I dropped the ball … I let my God, my family, myself, my business partners and clients down. You taught me how to be a professional, how to brand myself and how to have people chasing me instead of vice-versa. I learned a lot … I was hungry and made a name for myself and a lot of money in the process. But I walked away from it all, including God and my family. And in the past year or so, have begun restoring those relationships. I do want to thank you for your gift. I know times must have been diffi-
cult for you as well, but you found the necessary strength to carry on. Here’s wishing you well my friend.
It bothered me on a very deep level I believe that most of the success or failures in our business and in life are based on mental attitude. Heaven knows we have major highs and major lows in our business. As I travel the country, I have heard this story numerous times. In fact, I have lived it myself when I left the business and came back. One of the lessons I learned is that the manner in which you handle your failures is what determines your success. You can drink, take drugs, go into major depression, or you can continue walking and eventually reach your destination. Now as long as you are walking, why not take a long walk and think big. After major setbacks, it’s hard to think big, but you must. If you want to do $1 million in volume a month, why not start targeting $3 million a month? You will attain what you focus on, so why not focus on
the big things rather than just the attainable goals? You can, but only if you think you can. I recently released two new systems, and of these systems deals with boomerang buyers and the other deals with turning renters into homeowners. In both of these systems and courses, the content is much less important than the attitude of the student. I have sent my students a special book called Psycho-Cybernetics by Maxwell Maltz.
This book is not about thinking good things Psycho-Cybernetics is about your selfimage and how it controls your destiny. As an example, one of my coaching members had the talent to be a $50 million producer. She was smart, hardworking and knew her guidelines and was a great communicator. But she couldn’t ever break the $2 million a month mark. It had nothing to do with her skills, it was truly all in her head. I showed her what a $50 million producer looks like, acts like and speaks like and had her visualize it.
The problem with most “gurus” I had taught her how to better market herself, spread her influence and better target prospects and position herself so that people were chasing her. But she did not succeed and could not succeed until we fixed her way of “thinking.” Think of this as a rubber band … when you pull it apart far enough, it snaps back. That’s exactly what she was doing. Every time she cracked her production ceiling, she would self-sabotage it. She simply did not see herself as a $50 million producer and that’s what we needed to fix. Please take a minute and really look inside yourself. This is more important than any marketing advice, since nothing will work until you fix your way of thinking and improve upon your self-image. Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,924 transactions for in excess of $1 billion. He may be reached by phone at (443) 324-8424 or e-mail loanofficertips@gmail.com.
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Caliber P Portfolio ortffolio oli Lending Our new por portfolio tffolio o of financ fi finance e pr products oducts tto o help mor more e homebuy homebuyers ers achie achieve ve their dr dreams. eams.
This suite of five specialty Caliber Home Loans, Inc. is pleased to introduce Caliber P Portfolio ortffo olio Lending. L products is designed for borrowers facing specific challenges or barriers. They may not qualify for Agency or Government loan products, but can demonstrate ability to repay. All Portfolio loan products are available as fixed-rate loans or ARMs. FRESH S START: TA ART: Created for borrowers recovering from a recent bankruptcy, foreclosure or short sale. Borrowers may qualify without seasoning requirements and a minimum 580 FICO score.
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More M ore about Caliber We are a national mortgage lender with headquarters in Irving, Texas. Our core streng ths include our innovative mortgage solutions, customer and sales-centric culture, proprietary loan origination system, and entrepreneurial management team. Caliber Home Loans is committed to providing our business partners with flexible lending solutions that fit borrowers’ individual needs and enhance their lives. Through responsible lending and servicing practices, we continue to deliver outstanding service to our business partners and customers. 45
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Caliber Home Loans, Inc., 33701 701 R Regent egent Boul Boulevard, evard, Ir Irving, ving, TX 7506 750633 (NMLS # #15622). 15622). 1-800-40 1-800-401-6587. 1-6587. C Copyright©2015. opyright©2015. All Rights R Reserved. eserved. Equal Housing Lend Lender. er. FFor or rreal eal estat estate e and llending ending pr professionals ofessionals only and not ffor or distribution tto o cconsumers. onsumers. All inf information ormation in this adv advertisement ertisement ac accurate curate at time of printing. This ccommunication ommunication ma mayy ccontain ontain inf information ormation that is privil privileged, eged, cconfidential, onfidential, llegally egally privil privileged, eged, and/ and/or or e exempt xempt fr from om discl disclosure osure und under er applicabl applicable e la law. w. Distribution tto o the general g eneral public is prohibited. prohibited. Caliber Home Loans, Inc. is required required to to disclose disclose the following following license license information: information: Alaska Alaska Mortgage Mortgage Lend Lender er Lic License ense No No.. AK AK15622; 15622; Arizona Mortgage Mortgage Banker Banker Lic License ense No No.. 09236 0923637; 37; Lic Licensed ensed b by y The Depar Department tment of C Corporations orporations und under er the California California Residential Residential Mortgage Mortgage Lending A Act, ct, FFinance inance Lend Lender er Lic Licensee; ensee; C CO: O: R Regulated egulated b byy the Division of R Real eal Estat Estate; e; DE: Lic Licensed ensed b byy the Dela Delaware ware Stat State e Bank C Commissioner, ommissioner, Lic License ense 5202 e expires xpires 12/ 12/31; 31; Georgia R Residential esidential M Mortgage ortgage Lend Lender er Lic License ense No No.. 7330; Illinois R Residential esidential M Mortgage ortgage Lic Licensee ensee No No.. MB.000404 MB.0004043, 3, by by the Illinois Division of Banking, 320 W West est W Washington ashing ton St., Spring Springfield, field, IL 62 62786, 786, (217) 7782-3000; 82-3000; Kansas-licensed Kansas-licensed mor mortgage tgage ccompany, ompany, Lic License ense Number SL SL.0000796; .0000796; Minnesota: MN-M MN-MOO- 40 40149066, 149066, This is not an off offer er tto o ent enter er int into o an agr agreement. eement. An Anyy such off offer er ma mayy only be mad made e in ac accordance cordance with the rrequirements equirements of Minn. Stat. Section 4 47.206 7.206 (3) and (4); Lic Licensed ensed b byy the Mississippi Depar Department tment of Banking and Consumer Consumer Finance; F inance; Montana Montana M Mortgage ortgage Lend Lender er Lic License ense No No.. 15622; Lic Licensed ensed b byy the New Hampshir Hampshire e Banking Depar Department; tment; NV NV:: 33753 753 Ho Howard ward Hughes P Parkway, arkway, Suit Suite e 25 257, 7, Las V Vegas, egas, NV 89169 89169,, (702) 7784-5975; 84-5975; Lic Licensed ensed mor mortgage tg e bank tgag banker er n.s.--N.J. Department p tment of Banking; Licensed Licensed Mortgage Mortgage Bank Banker-NYS er-NYS Department Department of Financial Financial Services; Services; Ohio MBMB.850184.000; MBMB.850184.000; Or Oregon egon M Mortgage ortgage Lend Lender er Lic License ense ML ML-324; -324; Rhod Rhode e Island Lic Licensed ensed Lend Lender; er; V VA: A: NMLS ID # 15622 (www (www.nmlsconsumeraccess.org); w.nmlsconsumeraccess.org); ) W Washington ashing ton C Consumer onsumer Loan C Company ompany Lic License ense No No.. CL CL-15622. -15622.
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E-mail and Web Design: Knowledge Is Power! By Brent Emler Once upon a time … marketing made its way to consumers via TV and radio ads. Then one day, we blinked and e-mail was standing there, the new superhero ready to take traditional marketing to its knees. Ever since online marketing began, promising new formats have taken over marketing attention and dollars. Many of those formats delivered and became essential to the media mix. At the same time, some of them overshadowed email and claimed it was a dying player on the digital marketing stage. The reality is that e-mail marketing is, and will continue to be, a lucrative strategy. Having emerged as the centerpiece of marketing automation platforms, email has evolved into a sophisticated marketing channel. The trick is to keep up with the ever changing devices that consumers use to view things online. When you have a Web page, you want it to provide optimal viewing that works with a wide range of devices from desktop computers to tablets to mobile phones. This type of design is called Responsive Web Design (RWD),
and it is one of the trends in business technology. More and more, people are using mobile devices for tasks that were once only possible on a desktop computer. It’s not just about updating social media or surfing, it’s everything— browsing, e-mail and even online shopping. Because mobile Internet usage is increasing, it is imperative that your Web site is mobile-friendly. Perhaps you haven’t considered this before. In fact, not so long ago, it wasn’t even a concern. Maybe you have one site that’s designed for desktop users and a different site specifically designed for mobile users. Now it’s not only possible, but far more efficient, to have a site that works equally for both desktop and mobile users. Enter Responsive Web Design—users don’t have to fool around zooming or shrinking text or images on whatever screen they’re using. Content automatically adjusts to the screen of individual devices, making it easier and more convenient for people to read and navigate your site. A Web site’s design should respond to each user’s behavior and environment based on screen size, platform and orientation. In techno-speak, that means that the practice consists of a
mix of flexible grids and layouts. As a user moves from using their laptop to their tablet to their cellphone, your Web site must have the technology to automatically respond to the user’s preferences. It should automatically switch to accommodate for resolution, image size and scripting abilities. Having this in place eliminates the need for a different design for each new device on the market. If your Web site doesn’t function on mobile devices, your visitors will become frustrated and leave. High bounce rates mean low conversation rates and that’s just bad for business. Responsive Web site Design will help you to stay ahead of your competition—with RWD, potential customers will be able to find you no matter where they are. So, catering to mobile device users by having a mobile-friendly site makes good business sense. If your competitors aren’t making use of responsive design, they’ll lose out on potential customers. That puts you ahead the game and gives you a “oneup” on winning over those customers. Once you have the attention of customers and potential customers, you’ll want to connect with them on a per-
sonal level in order to keep their attention. Imagine you’re out for dinner with a group of people. Somebody orders shrimp; someone else orders steak with a baked potato; yet another orders Caesar salad with grilled chicken. Everybody wants something different; everyone has different tastes and expectations. The point is, your customers aren’t all the same and they don’t all want exactly the same thing. So, why market to all of them in the same way? Utilizing database segmentation in e-mail marketing provides you with a way to diversify your marketing to match your customers. Your e-mail reputation will improve and you’ll achieve the results you’re looking for—the first and foremost of those is that your customers will be more likely to open your emails. E-mails that get opened are those that grab our attention because they offer something that appeals to us. The ultimate objective of database marketing is to increase marketing efficiency. Through advanced analytical methods and the use of customer data, the aim is to take intelligent marketing actions that concentrate on those customers most likely to respond to the
used to, those same phrases may be lost on some people.
“Database segmentation is a must-have in the world of e-mail marketing. Marketers who fully utilize it reap higher click-through rates and generate more revenue from their e-mail offerings than their non-segmenting competitors.” of us are familiar with it by now. Useful content should be at the core of your marketing—the idea being to engage your prospects. Even if you’re already doing that, how can you be sure that you’re getting it right? As search engine algorithms become better at identifying and ranking appropriate content, companies have greater opportunities when it comes to engaging in content marketing. Your content is the fuel that makes the search engine go. So, if you consistently provide fresh fuel your site will build authority with search engines, in turn giving your site better ranking which drives relevant traffic back to you. Content Marketing is a great way to demonstrate your expertise. With a constant barrage of information and marketing ploys, it’s wonderful when we get content that’s actually relevant to our lives. All the best marketing ideas steer away from the hard sell. By giving your customers useful information that will assist them in making decisions, you are increasing your customer base and building relationships. Imagine your emails as door-to-door salespeople, and the subject line is the knock on the door. Unless you’re instantly recognizable as an adorable urchin bearing those irresistible boxes of cookies, you won’t easily get a foot in the door. You need an initial line that says, “I’m worth listening to.” It’s guaranteed the door will be slammed shut in your face if you start with, “I’m selling …” But you might get an attentive
l Steer clear of subject lines that can be perceived as threatening, for example: “Last chance! Don’t miss out!” Instead, go for the positive. Turn “don’t miss out” into “great opportunity” and your subject line goes from seeming threatening to confident and positive.
ear two if you start with, “Give me two minutes to show you how your carpet can look brand new.” So it is with the email subject line. If you don’t capture their attention in the seconds it takes to read it, it’s going in the trash folder. Your subject line determines whether or not the reader will decide to open your e-mail. There’s no magical formula to writing a subject line. You’ve got this wellcrafted, interesting e-mail, but everything hangs in the balance because of your e-mail subject line—writing subject lines is hard! How do you get people to open your e-mail, what will get more clicks, win more clients … oh, the pressure! It’s exasperating. What in the world is an email marketer do? l Know your target audience. What will interest them? l Keep the subject line as straightforward as possible. Be specific. People are busy and busy people don’t like guess-work and surprises. Plus, how are they going to know if they’re interested enough to keep reading if they don’t know upfront what that interest is? l Don’t ask yes/no questions. If the immediate reaction is “no!” they’re not going to open the e-mail and read it. l Don’t use jargon. Although it’s easier to use the catch phrases that you’re
Most brands have some kind of email marketing platform as part of their overall marketing strategy. But consumers can spot one-size-fits-all, spammy promotional messages from a mile away. Most consumers check their various online media and feeds throughout the day—a real-time marketing e-mail based on a pertinent local event or news story is more likely to be read. In the constantly-evolving world of marketing much has changed in the way brands and consumers communicate, but email marketing is still a trusted and versatile marketing tool. E-mail consistently demonstrates its exceptional ability to drive measurable results. With the availability of things like RWD, Database Segmentation and Content Marketing, e-mail is a solid performer that is only getting better. Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.
Gary Robinson Vice President, Commercial Loans
585.424.2750 l www.monroecap.net
Taylor Wold Commercial Loan Officer
3445 Winton Place, Suite 228 l Rochester, New York 14623
Sarah Montz Commercial Loan Operations
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n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
Commercial Real Estate Financing up to $10,000,000 • Acquisition, Renovation, Bridge and Mezzanine Financing • Typical Loan Term 12-24 Months • Interest Only Payments • Closings Generally Within 30 Days of Commitment Issuance • Brokers Protected
l Avoid using promotional phrases or obvious gimmicks. Spam filters nab things for a variety of reasons, so if your subject line has even a hint of the odor of spam, your e-mail will likely go ignored. Although specific words are often the culprit, spam alarms are also set off by things such as using all caps, exclamation points, promising free product, etc.
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marketing campaign. There are all kinds of different ways you can segment your e-mail list that will enable you to run compelling e-mail campaigns. While each segmentation might work fine on its own, they work best when used in a composite with other segments, triggers and lead intelligence data. Since the whole point of segmentation is to provide the most relevant content to your email recipients, you will need to collect the right information. In a world of marketing overload, marketers understand that even the simplest grouping of their customers allows them to generate more effective advertising. The need for database marketing is clear: When customers receive a personalized and relevant offer, there is a much higher chance that the message will have an impact. That’s why it is critically important to tailor your messages and incentives and make them relevant and interesting for each individual customer. Database segmentation is a must-have in the world of email marketing. Marketers who fully utilize it reap higher click-through rates and generate more revenue from their e-mail offerings than their non-segmenting competitors. To build a successful system involves consideration of everything that goes into creating an environment of referral generation; being sure you’ve designed tactics for each element; having in place processes that support those elements. Not all leads are equal in value, so a system of rating clients and leads is essential to assure that appropriate levels of recognition and service are given to all levels of clientele. A system that produces constant referrals work unless it is supported by good ongoing client service strategies. When all of this is managed within a database, you’ll have everything you need to build techniques, reminders and functionality for conducting referral conversations and referred lead generation. They key word there is “conversation.” Classical sales training taught that you should always deliver a strong sales pitch. However, when you use traditional sales language, potential clients cannot help but see you as a stereotypical salesperson. Clearly that’s a turn-off in this new millennium where people have access to a vast wealth of information, marketing and statistics. Begin a conversation instead—let clients know that you’re interested in them, in what they need, and suggest ways you can help them. Sure, your goal is to close the deal, but if you make that the focus, your client will likely feel pushed and rushed. If a client gives you objections or challenges, find out the reasons why rather than countering with a defense of your product. Your clients will appreciate you giving them the information they need to make the decision that’s right for them. With that being said, Content Marketing is one of the most important terms for marketers to know, and most
Rookie Recruiting: Getting Young LOs Off to a Strong Start By Mike Anderson With the average age of a loan originator sliding toward 50years-old, a hot topic in the mortgage profession is the lack of young professionals entering the industry. Lenders across the U.S. are asking the question: “How do we get young people into mortgage banking—a career that provides them the chance to ‘be in business for themselves’ and to enjoy unlimited economic potential?” For many recent college graduates, they simply may not be aware of these and the other tremendous advantages that the mortgage industry has to offer or they don’t know where to start. The challenge to attract young recruits inevitably leads to unique corporate initiatives; for example, employee referral bonus programs, the creation of personal and professional development teams, and the launch of career development programs. All of these solutions are designed to get young recruits in our doors and once they are here, make sure they get off to a strong start. Lenders like Academy Mortgage are seeing success turning bright and eager graduates from top universities into self-motivated, driven loan originators through career development programs. A solid career development program has these components:
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l Paid training, relocation incentive, and benefits package (medical, dental, vision, etc.). l Personal instruction and guidance from a mortgage career development coach. l Preparation to pass the licensing exam and opportunity to take the exam at no charge. l Hands-on training on how to market products, gain business partners and grow a client base. l One-on-one mentoring from the top producers in the field. l Support from a company that believes in its employees and wants them to succeed. Rookie training can be structured in phases, yet it is important to provide a clearly defined career path. Initial training may occur in a lender’s home office, where rookies can meet and learn from key executives as they are introduced to the company and the industry and prepare for the licensing exam with the help of a mortgage career development coach. After completing this phase at the home office, rookies may then join a field branch for a short-term apprenticeship to gain hands-on experience, while being mentored by a top producer. They can then transition to full-time loan originators, groomed to be top performers focused on growing business relationships and increasing production volume. Job fairs, college career fairs and university job listings are great places to start to get the word out about a lender’s career development program. In this day and age, young recruits are also always looking for job opportunities through sources like LinkedIn. Lenders may consider dedicating recruiters just to finding and screening interested recent college graduates. Beyond adding talented members to our teams, career development programs benefit all those involved with the program, no matter their position or length of time in the industry. By participating in these programs, managers and mentors often enjoy increased personal production, enhanced leadership skills, and the satisfaction that comes with helping shape a rookie’s future. Of course, the most obvious benefit, as our junior loan originators succeed, our branches and companies as a whole will succeed. Mike Anderson is senior manager of the Digital Marketing and Personal & Professional Development Departments at Academy Mortgage Corporation. He has more than 20 years of experience in marketing, technology and education. He can be reached by e-mail at mike.anderson@academymortgage.com or on LinkedIn at LinkedIn.com/in/mikeander.
heard on the street continued from page 41
Vaimberg will work with both wholesale account executives and retail loan originators on sales, marketing and motivational success strategies. He will conduct free monthly training Webinars as well as periodic “Ask the Expert” conference calls to help Comergence’s clients solve real-life business challenges. Vaimberg will also host on-site training and live events to teach clients how to leverage Comergence’s marketing resources to make the sales process easier and to help them focus more closely on turning applications into closed loans. Vaimberg spends more than 150 days a year on the road, presenting his success programs. He works with top sales professionals from some of the nation’s largest real estate franchises, mortgage bankers and national banks. “Ron’s unique ability to identify his clients’ strengths, weaknesses and untapped opportunities has enabled him to guide them to fast, unprecedented sales growth—and make that process easy,” said Greg Schroeder, president of Comergence. “We’re excited to have him share those skills with Comergence’s customers.” Comergence has announced that it is now providing its originator screening and due diligence services to new wholesaler Blustream Lending, a d/b/a of Nexera Holding LLC. Blustream recently began using Comergence’s REALM for Third-Party Originators, a proprietary platform with a comprehensive database of more than 400,000 records on every licensed mortgage originator in the country. REALM aggregates critical data such as: Licensing, criminal and civil records, financial sanctions, as well as bankruptcies and foreclosures. Because the REALM platform is updated continuously, clients are able to keep current on the status of their thirdparty originators, helping to ensure compliance with state and federal regulations. “By using REALM for Third-Party Originators, Blustream is streamlining the originator approval process in its wholesale channel,” said Greg Schroeder, president of Comergence. “With REALM, Blustream is also helping to ensure it meets regulatory compliance requirements. We’re very happy to add them to our client base.” Amit Pall, vice president of Blustream, said, “REALM for Third-Party Originators allows us to monitor the activities of our brokers, helping to ensure we’re not missing anything. The service offered by Comergence makes our third-party originator approval process much more efficient, saving us time and money.”
Franklin First Launches New Division for Co-Ops and Condos
Franklin First Financial Ltd. has announced the launch of a new Project SPONSORED EDITORIAL
Development Division to work exclusively with condominiums and co-op developments. The new Division will assist these developments in securing or recertifying their approvals with Fannie Mae, the FHA, and/or the VA, as well as financing for the individual units. Each development will be assigned a dedicated mortgage team to work closely with all of the parties involved (the sponsor, the developer, the management company, the boards, the real estate agents, the owners and the buyers) to ensure the most streamlined and user-friendly mortgage experience industrywide. “The trend of increasing new construction starts for large multi-family dwellings, coupled with the number of existing condos and co-ops that have lost their warrantability over the last several years, makes this a perfect time for Franklin First Financial to enter this market with a division specializing in project developments,” said Janet Orozco Feller, Project Development Division director. “With the strong, diversified portfolio of mortgage products that we have built over the years and our traditional commitment to excellence, we expect to be on the forefront of this market before long, and we are very excited by the prospect.”
KeyBank Mortgage to Utilize LOS From BKFS
Black Knight Financial Services Inc. (BKFS) has announced that KeyBank has selected Black Knight’s Empower loan origination system (LOS) to support KeyBank Mortgage’s expanding operations. “We are building our residential mortgage business around everything we know about customer satisfaction so we can help our customers to make confident decisions when they select a mortgage,” said Mark Danahy, president of KeyBank Mortgage. “Our customers want banking to be easy and straightforward, and obtaining a mortgage is no exception. Black Knight’s suite of products has the flexibility and ability to integrate with additional solutions to support the mortgage origination process. This means we can efficiently expand our retail mortgage business with a streamlined process that provides great customer service.” Empower offers a task-based engine to automate the various processes involved in originating a loan, which will help KeyBank Mortgage increase the productivity of its retail operations and decrease risk by minimizing the number of manual processes, helping to reduce the overall cost per loan. Empower is available as both an ASPcontinued on page 52
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n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
LYKKEN ON
leadership
Innovation Throughout the Organization: Five Key Areas for Leaders to Focus on Improving By David Lykken n the mortgage industry, as in many others, one of most talked about concepts is that of innovation. As many readers may
I
know, I host a weekly Internet radio show called Lykken on Lending in which my colleagues and I discuss various topics related to the mortgage industry. Over the last four to six weeks on the program, we have talked exclusively about the subject of innovation—inter-
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viewing leaders from various aspects of the industry on how innovation plays a role in their areas of expertise. What I find so astonishing is the breadth of areas to which innovation is applicable. Innovation isn’t just about software or technology, it is, or at least it should be, a vital aspect every part of the mortgage industry So, what exactly is innovation? As I mentioned, most of us think of innovation within the context of computer technology. Apple, of course, is the company that always readily comes to mind. In the mortgage industry, we’ll often think of cutting software vendors and mortgage companies who use them as being particularly innovative. But, at its base, innovation is more than simply its application. The root word of innovation is “new,” and it was originally used to mean restoration or renewal. In short, what innovation really means is change something for the better—to improve it. And, as we all know, there are many aspects of our organizations in the mortgage industry that could use improvement. As leaders in our space, we’ve got to rise to the challenge of addressing all of them. First, let’s address the technological aspect of innovation. While I don’t think that technology is the only area in which innovation to matter to us, I would agree that it is extremely important. I am continually amazed by the forward-thinking development of vendors in our industry to make the mortgage business more efficient. There are some innovative software and information system technologies that are really bringing the industry into the 21st century. Those who refuse to adopt these technologies are being left in the dust, while the leaders who are willing to take the risk of bringing these innovations into their organizations are thriv-
ing. Change is difficult and risky and, with that change being technological in nature, it can also be costly. There is such a thing as too risky—some are chasing after the next thing without any clue as to whether or not it will work. But, as a whole, I think our industry suffers more from the problem of adopting new technologies too slowly. Great leaders will know the right time to make the change but, as a rule, the time is typically sooner rather than later. If there’s one subject in recent years that has gotten more mentions than innovation in the mortgage industry grapevine, it’s compliance. While the chatter surrounding TRID has begun to die down, its presence is still felt and organizations are still adapting to its demands. The CFPB is alive and well. As we head into the next presidential election, the issue of economic hardship is bound to have some effect on regulation—in one direction or the other. Like or not, ever-changing regulation is likely going to be simply part of the business going forward. But, even within the context of regulation and compliance, there are ways to be innovative. The best organizations have begun building their legal and compliance team—whether they be in the form of staff or partners—to find ways to work successfully within the system. Innovation can work in the legal department in two ways: Members of your legal team can find unique ways to adapt to new legislation when it occurs, and members of your legal team can assist in lobbying for legislation reform that makes the industry work more effectively. In either case, if you aren’t forward-thinking with your legal team, you’ll be left behind by those who are.
“Those who refuse to adopt these technologies are being left in the dust, while the leaders who are willing to take the risk of bringing these innovations into their organizations are thriving.” innovation starts with listening. What are the people you are paying attention to? Go where the customer is, and he might just follow you back to where you are. Innovation isn’t a department—it’s a philosophy that gets infused into all departments. If you want to be a great leader in preserve your organization through times of adversity, you’ve got
to start seeing innovation in a broader context. From time to time, every aspect of the organization could use reinvention—not just the IT department. Great leaders are always looking for ways to improve—and that’s precisely what makes them great. David Lykken is 40-year mortgage industry veteran who has been an
owner operator in three mortgage banking companies and a software company. David hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He may be reached by phone at (512) 759-0999 or by e-mail at David@TMSAdvisors.com.
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Aside from technology (and maybe even in conjunction with technology), one of the most obvious areas of innovation occurs in operations. Oftentimes, the organization can be improved substantially just by reinventing the process through which the work is done. Organizations stand or fall based on the robustness of their systems. The way in which a mortgage flows through your business can be done sloppily—or it can be done with remarkable efficiency. Great leaders explore ways that can simplify the communications and the hand-offs between vendors, employees, and customers. Sometimes, all it really takes is clarity. People handling each component of the business need to know what they’re supposed to, why they’re supposed to do it, and how it’s related to the what everyone else is doing. Getting everyone on the same page may sound simple, but it sure isn’t easy. Great leaders look for innovative solutions to introduce clarity and cohesion into operations to make the process of handling mortgage more efficient. Another area in which innovation is vitally important is in your human resources department. No matter what systems you have in place or the technology you have to implement it, nothing will get done without having solid people in place to see it through. A good coach focuses on developing the playbook, but a great coach focuses on developing the team. If you can build a solid team, you can trust them to carry out the work that leads to success. And building a solid team takes an innovative approach. Have you thought about introducing innovation into your hiring process? Do you hire people the same way you’ve always done or the same way that others in the industry do? Maybe you should try something new. What about your training and development? Do you stick to industry or company norms, or do you have feelers out there for programs that may take a more effective approach? I believe that people want to do their jobs better—they just need help. Great leaders look for innovative ways to develop their team. One final area I would like to discuss in terms of innovation is marketing. With the advent of the Internet and social media, there has been much written on taking innovative approaches to marketing; however, most of it has been outside of the mortgage industry. In our industry, we seem to be uncomfortable with some of the new approaches to reaching prospects that are gladly being taken up by other businesses. Especially as Millennials grow about become the new generation of home buyers, we’ve got to be open to new methods of communication. Here’s a key principle to remember in order to be innovative in your marketing: Stop trying to reach people the way you like to reach them, and start trying to reach them the way they want to be reached. In marketing,
The Long & Short: The Business of Short Sales
Good Business is Available for Loan Originators By Pam Marron Mortgage financing can be targeted at three unique client bases for the next four-plus years, and loan originators have an opportunity to develop niche financing markets especially in the hardest hit states such as Nevada, Florida and Illinois.
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1. Approximately 7.1 million distressed homeowners, or those who are still in underwater homes, are contributing to a recent increase in refinancing as lenders finally decide to relax internal caps on loan to value for HARP 2, which has an unlimited loan to value (Imagine where we might be if banks had done this years ago!). 2. An estimated 7.3 million Boomerang Buyers or those who have had a past short sale or foreclosure, are returning to the market in droves. In 2016 alone, more than one million Boomerang Buyers will be eligible to return to the housing market and a peak is expected in 2018, with more than 1.2 million eligible to return. RealtyTrac has found a way to pinpoint where Boomerang Buyers have moved to, and I am working with a group of real estate agents in the Tampa Bay area to promote agent and mortgage services to this client base. 3. Banks are finally letting go of shadow inventory, but many of these homes need seri52 ous renovation. Loan originators who team up with realtors have a great opportunity to assist in marketing these homes with FHA 203K and conventional Homestyle renovation mortgages (where were these loans for the last eight years?). Finding lenders who handle both of these renovation loans under one roof is a plus. The FHA 203K is only available to owner-occupied homebuyers while the Homestyle loan is available to owner-occupied, second home and investment buyers.
So what can you do differently? Work with listing agents of these dilapidated home and have a “feasibility report” done upfront that shows repairs needed and their costs. Couple this report, typically done by FHA consultants, with applicable financing programs and have all available to prospective homebuyers upon listing the home. Prospects can better visualize the home potential with renovations to their taste, and this gives real estate agents more opportunity to emphasize the value of the location of the home. There is already a strategy in place to assist these three client types in Tampa Bay, Fla. The Gulf Coast Chapter of the Florida Association of Mortgage Professionals has taken on the promotion of a program called “Back From the Housing Brink” that provides guidance to loan originators and real estate agents who wish to assist these clients. The program drills down on solutions for unique problems encountered by consumers and by states that are still bouncing back from the housing crisis. Real estate agents, loan originators, lenders, credit reporting agencies and government agencies that can assist are promoted for free at HousingCrisisStories.com, a Web site that offers detailed help to affected consumers, loan originators and agents. Daren Blomquist, Vice President of RealtyTrac, will be the guest speaker at the first “Back from the Housing Brink” Seminar in November 2015 at the Pinellas Board of Realtors. Both loan originators and real estate agents will be attending. This is the beginning of a trek to assist neighbors, community and states work forward. And here’s the secret. Working with those who need your help, who know you want to help and know you have the expertise to get them into a home … builds an unbeatable referral base. Contact me at pmarron@tampabay.rr.com if you want to be involved. Take a look at a Webinar presented this past February titled, “How to Make a Niche Market Out of 7.3 Million Boomerang Buyers” for statistics and help (http://goo.gl/30YXzY). There is enough of this business for all of us. Stay tuned. Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail pmarron@tampabay.rr.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.
heard on the street continued from page 48
and lender-hosted, Web-based loan origination solution that supports retail, wholesale and consumer direct channels and helps lenders electronically capture, process and close loans. KeyBank will also implement Exchange, an open technology platform that provides integration, data management, decisioning support and workflow management through a 24/7 data exchange that connects more than 17,000 of the mortgage industry’s service and solution providers. Exchange is available through RealEC Technologies, a division of BKFS. “We are pleased that KeyBank Mortgage has selected Empower to help expand its operations and provide great service to its customers,” said Jerry Halbrook, president of the Black Knight Origination Technologies division. “Black Knight is proud to offer a full range of origination technologies and analytic tools to help lenders grow and protect their businesses.”
Wentworth Home Lending Inc., a newly-rebranded division in the J.G. Wentworth family of brands. The new division is expected to benefit from J.G. Wentworth’s 72 percent aided national brand awareness and hundreds of thousands of customer inquiries seeking financial solutions as a result of direct marketing initiatives. WestStar’s Executive Vice President, Roger W. Jones, will serve as president of the J.G. Wentworth Home Lending division. “The team at WestStar is excited to join an established direct-to-consumer leader like J.G. Wentworth, and we look forward to bringing a new suite of product solutions to J.G. Wentworth’s established and growing customer base,” said Jones.
Lenders One Expands Product Set Available From Flagstar Bank
J.G Wentworth Completes Acquisition of WestStar Mortgage The J.G. Wentworth Company has announced that it has finalized its acquisition of WestStar Mortgage Inc., a privately held residential mortgage company. The transaction consisted of $53.2 million in cash and $13.5 million in company shares, for a total purchase price of $66.7 million. “Diversification to deliver Cash Now is a fundamental part of our strategy for growth,” said Stewart A. Stockdale, chief executive officer of The J.G. Wentworth Company. “The acquisition of WestStar is strong evidence of this strategy in action. Together with our structured settlement payment purchasing business and other key initiatives, we are delivering financial products and solutions that allow our customers access to funds that will help them achieve their goals. We are excited to welcome the WestStar team to our company.” Headquartered in the Washington, D.C. suburb of Woodbridge, Va., and licensed to operate in 40 states, WestStar built its success over the past 15 years in originating conventional, VA, and FHA loans. Known for its reputation and commitment to excellence, WestStar has earned several prestigious awards, including Costco Mortgage Services’ 2013 Operational Excellence Award and 2014 Lender of the Year Award. Based on an independent analysis conducted by consumer finance site LendingTree.com, WestStar has a 95 percent consumer satisfaction rating, among the highest in the industry. The addition of WestStar’s 300 employees will nearly double The J.G. Wentworth Company workforce. WestStar will now operate as J.G.
Lenders One Mortgage Cooperative has announced that its cooperative members now have access to a diverse array of secondary mortgage market products from Flagstar Bank’s Warehouse Division, Verus Mortgage Capital and ACH Trust. “The mortgage market thrives on access to differentiated products, and these new preferred investors offer our cooperative members a host of high quality lending options,” said Daniel Goldman, interim chief executive officer of Lenders One. “These companies have added to our growing lineup of diverse products and services backed by providers with deep expertise and resources.” The new Lenders One preferred investors are available to support members in areas including conventional and government products, warehouse lending and non-QM loans. Flagstar Bank now offers its Warehouse Lending service’s technology through a suite of digital tools for real-time reporting and paperless processing. Flagstar provides warehouse lines for a wide variety of investors. As the correspondent lending division of the Towne Mortgage Company, ACH Trust specializes in competitively priced government and conventional loans that can be managed through a suite of online tools that enable locking-in up-to-date mandatory and bulk pricing rates. ACH Trust purchases retail FNMA, FHLMC, FHA, VA and USDA loans with minimal overlays and manages all the draws on the 203K loans they purchase. Verus Mortgage Capital provides continued on page 68
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Just Ask
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By
Eric Weinstein & Laura Burke nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you. This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, taxrelated issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend
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seeking legal counsel or the advice of a tax professional. Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!
Bertha Biggs from Owen Mills, Md. asks … I’m dealing with a “builder/seller” who just told me the that my buyer agreed to pay for his transfer tax fees, but I do not see it anywhere in the purchase agreement, and even their agreement titled “Oral Statements” did not list this agreement. So I assume my client is NOT obligated to pay. I also checked with the real
estate agent who is unaware of this fee being charged to my clients. I just don’t want to be hit with violating the 10 percent tolerance cure on my Good Faith Estimate (GFE) as my disclosed “transfer taxes” was only $4,000 per title company, and this $1,600 for seller’s taxes is coming out of nowhere. Eric’s reply to Bertha … Ouch! That can be major problems. First, verify with the title company that is actually the case and it is the buyer’s responsibility. There may be an addendum to the contract you do not have. I have had that happen to
me in a Maryland-based deal where the transfer taxes are usually split, but I did not pick it up until later. If it is true, then you need to contact the lender and figure out what to do since your GFE is really screwed up now. A Change of Circumstance Letter” might not do it. You might even have to cancel the deal and then re-app the deal with a new application date. Most lenders will let you transfer the lock. Laura’s reply to Bertha … Wow, this is a difficult situation. I believe Eric has good strategic information in his response.
k Eric & Laura First off, verify it is true. Then, handle it exponentially as you may need to rewrite the loan application, but don’t panic. Staying calm will help others involved to stay calm. Since this is a purchase, I would assume there is an attorney representing the buyers, the sellers need to contact the attorney immediately to help clarify the situation. Best of luck to you!
Val E. Gurl from San Bernardino, Calif. asks … One of my future clients, who is also my friend, is self-employed because she’s a totally independent contractor and gets a 1099. She has obtained a business loan under her business name/tax ID. Will her business monthly loan debt count against her? I assume that it will, because she’s the only owner and guarantor of her business loan, which is set up as an S Corporation that we will have to factor in her business loan debt in to her DTI ratios correct?
Rochelle Favor from Chicago asks … I am wondering if all FHA lenders require Social Security Cards at closing,
Eric’s reply to Rochelle … Look up OMB Form No. 0960-0760, “Authorization for the Social Security Administration (SSA) to Release Security Number (SSN) Verification.” I have had wholesalers tell me that don’t like to use this form because it costs them money so that is why they require copies of the actual Social Security Card, but in a pinch, when the card looks suspicious or the borrower lost their card, it can be used. Personally, I think I lost my Social Security Card when I was 16, and that was about 40 years ago. Back then, all you needed to know was the number, no one ever asked you for the card. Who knew it would grow to be so important? Here is a “tidbit” of information what the U.S. Social Security Administration (SSA.gov/history/ssn/geocard.html) has to say on Social Security Numbers: The nine-digit SSN is composed of three parts: l The first set of three digits is called the Area Number l The second set of two digits is
The Area Number is assigned by the geographical region. Prior to 1972, cards were issued in local Social Security Offices around the country and the Area Number represented the State in which the card was issued. Within each area, the group number (middle two digits) range from 01 to 99, but are not assigned in consecutive order. For administrative reasons, group numbers issued first consist of the ODD numbers from 01 through 09 and then even numbers from 10 through 98, within each area number allocated to a State. The serial numbers (last four digits) run consecutively from 0001 through 9999. Apparently due to the fact that the middle digits of the SSN are referred to as the “Group Number,” some people have
misconstrued this to mean that the “Group Number” refers to racial groupings. So a myth goes around from time-to-time that encoded in a person’s SSN is a key to their race. This simply is not true. Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage marketplace. She may be reached by e-mail at lauralynnburke@gmail.com.
Eric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com. 55
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Laura’s reply to Val … When an independent contractor is filing as an S Corporation, the loans of the business are typically shown on the S Corp 1120S tax return. If the loan shows on the tax return as an expense, and there is a 12-24 month history of the business paying for the loan (each lender has their own rules, some may be okay with 12 months, while others may require 24 months) it shouldn’t be counted as personal debt. If it is clearly on the tax return, the lender may not require cancelled checks, but they could require proof that the loan is paid for by the business. Be prepared to show two years of S Corp tax returns, in addition to two years of personal tax returns. The income or loss from the corporation is transferred to the personal return via a K1.
Laura’s reply to Rochelle … The U.S. Department of Housing & Urban Development (HUD) requires evidence of your Social Security Number. It doesn’t specify having a Social Security Card, but I think each lender will make their own call on this. What other documentation maybe used to verify a Social Security Number? Perhaps a letter stamped from local Social Security Office stating the borrower has applied for a replacement card. They are getting cards out in seven to 10 business days, so if the borrower is aware prior to closing as they should be, they could request reissuance of a card right away. I’m trying to think of what may contain a borrower’s Social Security Number that maybe used, perhaps if they are a veteran they will have documents from the VA with their Social Security Number. I would say it would have to be a card or document issued by a government agency, a school, possibly an employer. I don’t think a tax return, even though the number would clearly be on return, would be allowed as authentication of a Social Security Number.
called the Group Number l The final set of four digits is the Serial Number
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Eric’s reply to Val … Actually, if the business has a different name and pays with business checks, you don’t have to count the debt if you can show 12 months of cancelled checks showing the business pays the debt. It’s the same thing as if she had co-signed for her brother’s car loan. It’s best to double check with the account rep, as some banks have different rules.
and what if my borrower lost theirs. Is there another document that can be exchanged for the Social Security Card?
Closing Disclosure: Deep Dive–Pages Four a By Jonathan Foxx
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his is the sixth and final article of a six-part series devoted to TILA-RESPA Integration Disclosure. In this sixth part, I will discuss Page Four and Page Five. Through a review of important highlights, I invite you to join me in a deep dive into the intricate features of the Closing Disclosure. In the first article, I discussed the mission of TILA-RESPA Integration and the Loan Estimate (LE).1 The second article introduced and treated the numerous features of the Closing Disclosure (CD).2 These two articles (viz., on the Loan Estimate and Closing Disclosure, respectively) were accompanied by separate, detailed tables to be used for certain itemized categories and action requirements. In the third article, I provided the salient features of the Loan Estimate, in considerable detail.3 In the fourth article, I took you through Page One and Page Two of the Closing Disclosure.4 The fifth article was devoted to Page Three, which outlined the sections for Calculating the Cash to Close and Summaries of Transactions.5 I would suggest that you read all the articles in this series in order to better understand the TILARESPA Integration Disclosure (TRID) rule promulgated by the Consumer Financial Protection Bureau (CFPB or Bureau). This series on TILA-RESPA is meant to be informative, though it is not intended to be comprehensive. It is always prudent to research areas of particular interest with respect to the regulatory mandates. If assistance is needed, Lenders Compliance Group is a resource. Indeed, we recently established two proactive paths toward a TRID knowledgebase:
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1. We established the TEAM TRID task force,6 a relatively inexpensive, cost-effective way to get TRID integration implementation done efficiently (viz., TEAMTRID.com); and importantly 2. We established TRIDHotline.com,7 an entirely free online service, manned by our task force, to assist people with their questions about TRID. We want to listen to their compliance needs (viz., TRIDHotline.com). Please consider my analysis carefully. Follow along with a copy of the Closing Disclosure. I will provide, where helpful, some information as Suggested Guidance. Allow a few hours to consider this explication. And as I have admonished all along, make notes, raise questions, and seek answers from competent compliance professionals! Hopefully, you will have read the previous five articles. Now we will continue a detailed review of Page Four and Page Five of the Closing Disclosure, a two-page set of tables set forth under the rubric Additional Information About This Loan. The fourth page of the Closing Disclosure, with the general heading, Additional Information About This Loan, includes the sections entitled Loan Disclosures, Adjustable Payments (AP) Table, and Adjustable Interest Rate (AIR) Table. continued on page 70
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“Live training can foster camaraderie. Participants can work together in skills practice just like they would at work.”
Live Versus Online Training By Casey Cunningham
stay ahead of the learning and performance curve, or struggling to catch up to those who always seem to be a step ahead. Most of us don’t have time and money to waste. When we invest either or both of these critical assets—time and money—we expect a return. Consider with me the true cost of learning, and once you do, I think you’ll agree that the
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More often than not, I hear countless people state that live training is better than online training. As a company with extensive experience in both types of training, we are extremely versed on this topic. So what do we think? Well, they both can be equally good and equally bad for different reasons. Truly understanding this difference could mean equipping yourself, your team, and your company to
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medium alone does not dictate how effective your learning experience is. So, let me clearly define live training versus online training to keep us on the same page. Live training is an instructor-led, face-toface event in a classroom of students who have traveled to a location to attend. The online training I will be discussing is the live version (not recorded classes) that is instructor-led, and the trainer and students are in different locations. Now let’s consider some big differences, beginning with live training. Live training has a distinct advantage as it allows for effective skills practice. Because live training classes are usually longer, the trainer can take time to give participants practice in between segments of content. It is also easier to keep participants engaged. The trainer can create engagement through movement and energy. He can also keep participants on task when they inevitably get distracted. Live training can foster camaraderie. Participants can work together in skills practice just like they would at work. Camaraderie can also keep energy high by having participants feed off each other during the class. On the other hand, online training also has huge benefits as it allows for one training session across different time zones, to an unlimited number of people, and participants don’t have to leave their offices. And, it is cost-effective because you don’t have to pay for travel and hotel accommodations along with the fee for training. Students can get the same training, at the same time while still having time afterward to get other work done. So, you might be saying at this point, I understand online training advantages, but online learning just isn’t as good. Unfortunately, that can be true because most online instructors haven’t been trained to effectively teach online. They are so ineffective they have given online training a bad reputation. If I am going to be completely honest though, it does not mat-
ter which medium you choose, if you do not have trainers, predetermined measures of success put into place, and reinforcement and accountability, you might as well not have training—live or online—at all. So let’s go through each aspect of good training so you can see why the medium does not matter if these aspects are not incorporated—starting with great trainers.
Great trainers Having a great trainer is the most important aspect in having a great training session because it facilitates engagement and ultimately, results. A great trainer is someone who has been well-equipped to teach inside a classroom to a group of live students and able to teach from behind a computer screen to students in different locations. In both settings, trainers must plan for and address the distractions—in online learning, there is a chance a student will minimize the screen, be distracted by e-mail, phones, other people, etc. With live training, there are cellphones, work they bring with them, sidebar conversations, and many times, a hostile attitude to just being there. In both cases, these distractions are addressed by excellent trainers. Great trainers know how to engage participants in multiple ways by asking questions at the right time, acknowledging students effectively and responding properly to challenges and inquiries. The difference between an engaging trainer and a boring one is the ability to keep the audience’s attention under various and quite often, unplanned circumstances. To continue to keep participants engaged a well-designed handout is necessary to guide a student along during the class. It also serves as important reference material in reinforcing what has been learned. Without a handout, the student is at risk of not being able to properly execute what has been taught in the class. Ultimately every class, whether online or live should provide key
assignments/action items to be completed post class, which brings me to my next point—measures of success.
Measures of success To ensure effective learning, it is important to be clear with participants what they are going to learn and what they are going to be able to do by the end of the course. A great trainer clearly sets the expectations so when the students have completed the course, they can experience results and their time and money was not wasted. A measure of success can include a comprehensive test to assess the information retained or an assignment students must complete in order to use the material in a real-life situation. Without any measures of success established before the course begins, the participant is not accountable for his growth outside of the “classroom” and
therefore may not utilize what was learned in the training session, whether it is live or online. This is also why reinforcement and accountability are extremely important.
Reinforcement and accountability While a great trainer is the most important aspect during a valuable training session, reinforcement and accountability are the most important aspects after a training session. What does this mean? It means that after a training session, a lot of trainers feel like they are done. They did their jobs, taught their content and now it is the participants’ job to use what they have learned. Unfortunately, when trainers do this, after only a few days, it is as if they did not teach the class at all. Constant reinforcement and accountability are extremely important because
without it, information learned is quickly lost over time. For example, “A typical graph of the forgetting curve shows that humans tend to halve their memory of newly learned knowledge in a matter of days or weeks unless they consciously review the learned material (TrainingIndustry.com). After a training session, live or online, trainers should assign postclass assignments and institute accountability measures—preferably weekly. In this instance, the saying, “practice makes perfect” truly applies. Participants need reinforcement assignments to continue the energy and excitement felt during the session. In conclusion, training has gotten a bad reputation in the mortgage industry because it has not been executed correctly. When it comes to choosing which medium is better, I would say there is
not a right answer. When you are looking for training that requires more skills practice and you are able to spend more money on travel and other expenses, live training might be for you. If you are looking for training for a large amount of people with geographic limitations, online training could be right for your company. I say all of this with a caveat: neither of these mediums will work without a great trainer leading the class, clear measures of success for students after the class ends, and reinforcement and accountability long after the class has ended. Casey Cunningham is the chief executive officer and founder of Alpharetta, Ga.-based XINNIX, The Mortgage Academy, a provider of leadership development and mortgage sales training. She can be reached by e-mail at Casey.Cunningham@XINNIX.com.
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n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
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â€œâ€Śmany businesses are not adapting and catering to the communication styles, effective learning methods and overall purpose-driven ventures that the Millennial workforce desires to be a part of.â€?
Creating a Training Strategy for the Next Generation By Ginger Bell
SEPTEMBER 2015 n New Jersey Mortgage Professional Magazine n
ee in the U.S.A. in 2013 was over the age of 42.1 The risk of “Lost Knowledge� is very real for many companies today. We must recognize two major forces in play. The first is an aging population and the second is the increasing complexity of knowledge, skills, rules and regulations that companies must capture and share
Grow Your Business
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“Always pass on what you have learned.�—Yoda One of the greatest emerging challenges businesses face today is a workforce who is not only retiring, but as they retire or change positions, they are retiring their knowledge for an incoming workforce. According to the Bureau of Labor and Statistics, the average age for an employ-
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with the incoming workforce. The Millennial or Generation Y population is bigger and much more diverse than the Boomers.2 There are currently 80 million Millennials in the United States, and every day another 10,000 of them turn 21. By the year 2025, three out of every four workers globally will be Generation Y.3 We must create a path to train and mentor the next generation. The challenge however lies in create training programs that are engaging and relevant to the methods that Millennials learn and excel in. Baby Boomers have decades worth of wisdom and Millennials possess the techsavvy skills that today’s workforce requires. Yet many businesses are not adapting and catering to the communication styles, effective learning methods and overall purpose-driven ventures that the Millennial workforce desires to be a part of. As a result, many companies are seeing an extreme amount of turnover. The use of gamification (which means applying game principles to non-game situations), is very appealing to the Millennial workforce. The concept is to make learning fun, and to challenge the learner to continue to learn through quests and competition. More and more organizations are utilizing gamification programs for corporate elearning and training. Subject matter experts or “SMEs� are often plagued by the question of how to take several years of experience and put it into a context so that they can start at the right place and share their knowledge and expertise in an orderly, make-sense fashion. For most experts, just the idea of explaining how they have been doing something for years to someone who is just getting started is overwhelming. For many, work has become a habit or an instinct and the thought of “how to do it� is second nature. Many SMEs just dive in somewhere and start explaining their work, hoping for the best. This scattered approach leaves the training unpredictable and the results the same. There is a better way. In order to have a successful outcome for your training program, you must have a successful plan. The better the plan, the better the results. This does not mean you need to invest in an outside training organization or hire an internal trainer to develop your training program.
What it does mean is that by creating and following a plan, you will be able to easily develop your training programs and engage both your SMEs and your apprentices (new employees) in the learning experience. We live in a rapidly changing environment. Systems, regulations and processes can change quickly. This means companies must have a training plan that is easily changed or adapted as changes come into play. You must begin by creating a training plan that can be added to, deleted or completing rewritten and delivered quickly. You will want to look for a delivery method that is scalable, engaging, and easily managed. There are many recent advancements in technology that will allow companies to adopt an online elearning platform that can house the training that their SMEs develop. Remember to make certain that the platform allows SMEs to develop and create their training programs online in real time so that they can access it as they need to for changes. It should also have various teaching methods that allow for engagement and interactivity as well as a strong testing and measurement method. Reporting is another feature that is important to consider if you have certification or government regulatory or licensing requirements within your industry. A complicated or expensive e-learning platform or training program is not necessary to accomplish transferring a tenured employee’s expertise. However; creating a training plan template is the most important aspect of any effective training program. The training plan is the most important tool you can use to help your SMEs take their expertise and transfer it into a logical training program to quickly help your new employees learn a new task or skill. By using a systematic approach, an SME can quickly develop training for almost any task for skill. Begin by using the following template to develop a training plan. l Step one: Start with a Training Template Spreadsheet l Step two: Identify the skills or tasks that are to be learned. l Step three: Prioritize the order or sequence in which the apprentice is to
How to Make a Peanut Butter and Jelly Sandwich Skills/Task to be Learned
Sequence
Test/Success Measurement
Resources/Material
Delivery Method
Timeline
Review/Update
Ingredients
1
Identify Ingredients
List of Ingredients to include variations
Online List
Total 15 minutes
Annually
Location of Ingredients
2
Locate Ingredients
List of where to locate ingredients
Online List
Tools
3
Identify Tools
List of what tools will be needed
Online List
Location of Tools
4
Locate Tools
List of where to locate ingredients
Online List
How to apply Peanut Butter
5
Successfully apply Peanut Butter
Step-by-step instructions on how to open jar and spread on peanut butter
Online Video
How to apply Jelly
6
Successfully apply Jelly
Step-by-step instructions on how to open jar and spread on jelly
Online Video
How to cut sandwich
7
Successfully show various methods to cut sandwich
Step-by-step instructions on how to cut sandwich
Online Video
Variations/Best Practices
8
Successfully recommend additional variations of a PBJ. May include using additional ingredients like honey, bananas, bacon, etc.
Recommendation on variations, how to place on plate and additional recommendations
Online List
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Ginger Bell is the best-selling author of Cracking the Success Code and Success Today, books she co-authored with Brian Tracy and other business specialists. She is currently involved in leading development of a gamification e-learning system with Morf Media Inc., an international gamification software development company. She may be reached by e-mail at ginger@go2training.com.
Footnotes 1—BLS.gov/cps/industry_age.htm 2—Money.CNN.com/interactive/economy/diversitymillennials-boomers/ 3—Business.Time.com/2012/03/29/millennials-vsbaby-boomers-who-would-you-rather-hire/
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Above is an illustration of how to use the Training Plan Template to teach how to make a peanut butter and jelly sandwich. Once the training plan template is complete, an SME can begin creating or locating the resources to teach the skill or task. When designing an effective training program, course developers often will use what is termed as “chunking” to break up the online learning experience and make it more engaging and interactive. Videos that show how to spread the peanut butter and jelly onto the bread and then view bread-slicing options may be another way to deliver the content in a visual context to help the learner see what they
need to do to complete the task. Remember, Millennials learn best by seeing and doing and they like to have the lessons short and move quickly. Tests can be incorporated into an online e-learning platform to then check for understanding. It is necessary for companies today to adapt or introduce training that will resonate with the incoming generation while sharing the expertise and knowledge of the existing generation. Companies must form bonds between the generations. In order to train and retain the next generation, companies must embrace a formal approach to the problem. The goal is to harness these differences in generations and turn them into company strengths. In the end, all generations play a crucial role in business. Now is the time to pass on what we have learned.
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learn the skills or tasks. l Step four: Write the success metrics and/or test questions that must be answered to prove that the apprentice has “learned” the skills or tasks. l Step five: Locate resources and develop material or instructions on how the apprentice will learn the skills or tasks. l Step six: Determine what delivery method will be used for the training. It may be a combination of face-toface interaction supported by online follow up and testing. l Step seven: Establish a timeline. How long will it take them to learn and master the skills or tasks? l Step eight: Review/Update material and measure effectiveness of training plan.
“Implementing an education program internal to your company provides the framework necessary to gain the knowledge required to keep up with the regulatory challenges.”
Ensure Compliance With Education and Certification: Navigating the Seven “Cs” By Matt Seu
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The environment for lenders and servicers is very different than it was a decade ago. The default crisis and the resulting conservatorship of the government-sponsored enterprises (GSEs) created a significant change in thinking for regulators, policymakers and investors. Regardless of whether you believe that additional regulation was warranted or not it is here to stay; and it doesn’t appear that the election in 2016 will change much of what is driving the primary markets, at least not in the short run. Therefore, the market will face challenges in the foreseeable future. Without a smart way to face these challenges, lenders and servicers may find themselves lost. In fact, they may be lost at “C”.” This article illustrates four “Cs” that create enormous pressure on the market participants. Next, we discuss two “Cs” that can alleviate pressure and position companies for success. The result should be the final “C” which differentiates them from the rest of the marketplace and results in smooth sailing. The challenges all roll up to one obvious conclusion. The lenders and servicers must perform all of the basic functions that they did before the crisis, but now they must do even more. It isn’t a little bit more … it is a lot more. Compliance is the most significant challenge in the marketplace today. The Consumer Financial Protection Bureau (CFPB) was launched as an advocate for the consumer and wields a heavy hand. Servicers must follow timelines and communication protocol to the letter when dealing with borrowers. Starting with the establishment of communications and at the onset of delinquency, all the way through a positive or negative resolution there
are dozens of steps, forms and business rules to navigate through assuming a cooperative borrower. For lenders, there hasn’t been a change like TILA-RESPA Integrated Disclosure (TRID) in recent memory. Again, the big change that TRID requires is in the process and standardization of the steps and sequences. The forms themselves are complex, as is the regulation, but it is the process changes that impact the technologies that are the real challenge. The GSEs are also mandating changes much of which results in more data transmissions being required. In 2016 or 2017, the GSEs will mandate delivery of yet another data set that maps to the TRID requirements and the Closing Disclosure Form. If you want to do business with the GSEs, you will have to comply, and right now there aren’t a lot of options in the primary markets. Let’s not forget MERS, who has required proof of data quality against data in their registry for the last several years. The final area of compliance that I want to discuss is in the area of Cybersecurity and Information Security specifically. Although these aren’t unique to the mortgage industry, they are significant, and required new and different skill sets in many instances. Varieties of regulators are concerned with this type of security risk and are looking for proof of a well-managed operation. The second “C” is Counterparty Management. The importance of managing your vendors and service providers should be obvious. In engaging in counterparties to manage portions of your operations, you have essentially shifted risk to them. The risk doesn’t go away, and in fact, it may be more difficult to observe. Think about a simple example of out-
sourcing portions of your servicing business to a special servicer or service provider. Most likely the decision to outsource was based on internal competency or capacity and the ability to move operations to a company that is more efficient, less expensive, and hopefully more reliable and proficient in the specific operations or business function. This all makes sense, but let’s go back to the first “C.” Compliance cannot be avoided by outsourcing. The burden of proof for compliance remains with the lender or servicer. When the CFPB comes for an audit or review, it is critical that you are able to explain how you are managing the counterparty and how you prove compliance. A solid counterparty management program that starts with establishing Service Level Agreements (SLAs) in the contracting process, and continues with a rigorous oversight and audit function that ensures compliance with the lender or servicer requirements, in addition to all regulatory requirements. The third “C” is Contraction. At least for the lenders we are in a down period in terms of production volume. It doesn’t appear that a refi wave is anywhere in the immediate future. Companies who rapidly expanded during the mini boom period that ended a year ago geared up operationally for larger volumes and many have yet to downsize significantly or find additional revenue outlets. This also constrains the ability to invest in the changes needed to comply with the regulatory challenges. The fourth “C” is Cost Pressure. Let’s review what we have discussed so far. Increased compliance results in the need for new staff positions and probably new technology tools. This isn’t a one size fits all model. The same skill sets and knowledge base for monitoring compliance against TRID can be very different than the skills needed to establish a Cybersecurity framework. The same is true for establishing a counterparty management function. Many companies either try to fit all of these functions under a compliance function, or choose to outsource these functions to service providers or con-
sultants until they are established and stabilized. This can become expensive. Not all is lost, however. Lenders and servicers can leverage two more “Cs” in order to stay afloat and move into calmer waters. The first is Continuing Education. Implementing an education program internal to your company provides the framework necessary to gain the knowledge required to keep up with the regulatory challenges. A strong education program should consist of a learning track for each domain area relevant to the core business performed, but should clearly cover current hot topics including TRID and other CFPB compliance requirements, compliance with GSEs, and Cybersecurity. If an education program already exists, then simply tailor the existing education tracks to include these newer areas of focus. If no education program exists, it may make sense to follow and evolutionary approach similar to what is described below. l Identify key educational outlets offering courses in areas of focus. Ideas could include the Mortgage Bankers Association (MBA), Mortgage Industry Standards Maintenance Organization (MISMO), Mortgage Electronic Registration Systems (MERS), American Land Title Association (ALTA), American Bankers Association (ABA), and other groups and associations. Most lenders and servicers are already members of one or more. l Identify key people in the company to focus on the specific domains and have them attend the courses. These individuals will be the trainers for the internal courses. l Implement a “train the trainer” model whereby the trainer implements an internal curriculum tailored to the individual needs. This may be a combination of internal training and leveraging training through associations or other outlets.
l Align training with individual staff members who need the training and make it part of a performance management process.
for the moon and maybe you will end up in the “C” of Tranquility. Matt Seu is a partner and owner of
Actualize Consulting and is a member of the MISMO Strategic Planning Committee. He may be reached by e-mail at mseu@actualizeconsulting.com.
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Once you have your education program in place, you can move the sixth “C” which is Certification. Certification in specific domain areas is a natural progression from continuing education and provides immediate credibility internally and prepares any company for compliance audits. Another angle regarding certification relates to Counterparty Management. As a lender or servicer, it is important to require or suggest key certifications depending on the function of the vendor. It is imperative that they follow all Cybersecurity requirements regardless of vendor type. Additionally, consider compliance certifications for MERS, MISMO and perhaps TRID, via ALTA or another association. Certifications do not guarantee success, but having them is a key indicator of whether counterparty is focusing on the right things. As a vendor, having company or individual certifications will only make your company more attractive and will make audits friendlier. So we have discussed six “Cs” and now we can discuss where it ends. If you are serious about facing the first four “Cs” and leverage the next two you will reach the seventh “C” which is Competitive Advantage. As a lender or servicer, you will have a staff that is well versed in important current topics. Your business functions can implement controls into processes and technologies that will prepare you for regulatory audits, but most importantly will give upper management confidence in the operations. Being proactive allows for better prediction of costs and prevents surprises resulting from regulatory audits which could result in putting all hands on deck or even bad press depending on the severity. Focusing on how you manage counterparties and requiring certifications gives you the upper hand in your oversight activities, and provides confidence that they are running your operations in a compliant manner. In review, there are multiple challenges facing the mortgage market ranging from new compliance requirements and cost pressures to contraction in production volume. Implementing an education and certification program and requiring the same from counterparties
will provide a stable base for operations and risk management, while gaining a competitive advantage. This is all attainable with focus and foresight. So shoot
“… Knowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind.”
We Don’t Need No Ed-u-ca-tion By Eric Weinstein I saw two books at the store the other day: Things They Teach You at Harvard University and Things They Don’t Teach You at Harvard University. By definition, between these two books, they should contain the total sum of all human knowledge. Sadly, I found out, that was not the case. It cost me $63.21 to learn that. Similarly, continuing education
mortgage classes don’t teach you EVERYTHING on how to be a better loan officer. They teach you facts and laws, but they don’t exactly teach you human kindness, attentiveness to detail or a better work ethic. If you are like me, you have probably lost money on deals where you just didn’t know. I call that “paying tuition.”
SEPTEMBER 2015 n New Jersey Mortgage Professional Magazine n
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Join our career webinars, posted on Facebook at: www.facebook.com/CarringtonHomeLoans www.Carringtonhomeloans/CareerWebinar © Copyright 2007-2015 Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suite s110 & 200A, Anaheim, CA 92806. 800-561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File 413 0904. CO: Mortgage Company Registration 2600 and Supervised Lender’s Licenses 989668 and 989668-001. To check license status of your mortgage loan originator, visit www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Kansas Supervised Loan License SL.0000313. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MS: Licensed by the Mississippi Department of Banking and Consumer Finance. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. NC: Carrington Mortgage Services, LLC is licensed under the North Carolina Agency Permits 102107 & 103455 and North Carolina Secure and Fair Enforcement Mortgage Licensing Act. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA, DE & VA Automatic loans only). OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender and Broker. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600 & Mortgage Broker License MB-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, KY, MD, MT, NE, OK, SC, SD, TN, TX, UT, WV, WI, WY. All rights reserved.
I write another monthly column for this magazine called “Just Ask Eric & Laura” (see page 54). In it, we say “Knowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind.” It is just a painful fact that the more you know, the more money you make. By combining our experiences, we can talk about all the mistakes not to make with the idea to save us all a bunch of money. Here are a few examples from when I was just starting out. Let my experience save you some cash: Once, I was doing a loan for a police officer. When I asked him how much money he had in the bank, he told me $500,000. I was so surprised, I said, “Wow! Where did you get all that money from?” He looked at me and said, “This interview is over.” I learned from that not to ask questions that do not pertain to the loan. It cost me a $4,000 commission fee. I got a call from a woman who wanted a VA jumbo loan. She said she already had a VA loan and liked it so much, she wanted another one. I asked her if she had sold and paid off the other VA loan already or if it was pending sale. “No,” she said, “I am keeping that loan.” I told her very politely that VA guidelines were that you could not have two VA loans at the same time. She told me I was an idiot, to check my facts and that she would use a smarter loan officer. I researched it, she was right and she did. That cost me a $6,000 commission. A nice woman called me and about buying a home with her husband. I took all the information over the telephone and later went to their home for signatures. “Why did you put my husband as borrower?” she asked. I told her it
didn’t make a difference since they were both obligated equally. She said, “Yes, but I spoke to you first, I should have been the borrower.” It went downhill from there. You only get ONE first impression. She never liked me after that and thought I was a sexist. I eventually lost the deal. From then on, the borrower is the person I talk to first. Lost commission: $5,000. When I was just an inexperienced newbie, I had someone call for a VA jumbo loan which was above the county high balance limit where they were buying. I told them the max VA loan was the county limit. It turns out, that is not correct. A VA borrower can exceed that limit by putting up a downpayment. You can look up the formula like I eventually did. No telling how much I lost there, but it was a loan for $1 million. You do the math. About 50,000 years ago, humans learned verbal communication skills. With that, civilization grew because we could teach our children, friends and neighbors what NOT to do. I am a strong believer in the power of knowledge. Isn’t it nice to have a parent to tell you not to touch a hot stove rather than having to do it yourself to find out? Please send me YOUR most embarrassing moments of stupidity via email to eweinstein4u@gmail.com. I am sure I am not the only one to talk from ignorance and lose a deal. Together, we can educate the world. Otherwise, can you get me that hot pan on the stove? Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. Eric is semi-retired, doing mortgages by referral only. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com.
“Licensure and GRC training without reliable regulatory updates or inefficient tracking and reporting can often do more harm than good to a compliance program.”
NMLS-Licensed Loan Originator: Now What? By Michael McNulty in this structure, but so too are governance, risk management and compliance (GRC) training, effective delivery of timely and pertinent content and regulatory updates, and efficient tracking and reporting systems that allow compliance department personnel to effectively manage the compliance lifecycle of all employees, regardless of role.
Mike McNulty is executive vice president of financial services for OnCourse Learning Corporation. McNulty has more than 20 years of sales and operational experience in the financial services and education industries. He may be reached by phone at (410) 628-1060, ext. 7202 or e-mail mmcnulty@oncourselearning.com.
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The NMLS lists more than 100 approved providers that can deliver some or all of the pre-licensing and continuing education needs related to SAFE ACT licensure. It is becoming increasingly important for firms to look for partners that can provide as much or all of the foundation for their programs. Licensure and GRC training without reliable regulatory updates or inefficient tracking and reporting can often do more harm than good to a compliance program. As senior leadership drives acceptance of and a change to company culture to both understand and appreciate these programs, relying on a partner that offers an engaging and satisfying user experience can deliver significantly higher traction within the organization. To put this in terms of some largely overused catch phrases, if you expect your organization to undergo a “paradigm shift” in how compliance is viewed and valued, it is essential to find a “trusted adviser” with whom you can partner to help build your foundation. There are many examples of NMLSapproved education and training partners that are moving in this direction—
firm’s compliance program are typically a recognition of the need to establish a legally defensible program that is fully backed by management and choosing the appropriate compliance partner. A license is an invitation to the party. The real work starts soon thereafter.
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Signed into law in 2008, the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act is exceedingly clear and prescriptive in terms of the requirements to which non-depository loan originators must adhere to become licensed to practice in their field. Prospective loan originators are required to register with the Nationwide Mortgage Licensing System and Registry (NMLS), receive a unique identifier, undergo a criminal and financial background check, complete at least 20 hours of pre-licensing education, and pass a national licensure examination. Common practice in occupational licensure is to develop an examination that measures minimum competency, which was defined by the U.S. Department of Health, Education and Welfare in 1977 as “the process by which an agency of government grants permission to an individual to engage in a given occupation upon finding that the applicant has attained the minimal degree of competency necessary to ensure that the public health, safety and welfare will be reasonably well protected.” In licensure, public protection trumps the advancement of the profession as the main goal. In short, the possibility exists that an individual could be licensed or minimally competent to practice, but not necessarily qualified to effectively deliver the customer experience that many employers or consumers are looking for, and the burden of additional industry and ancillary education then falls to the employer. Due to increasing regulatory pressure and the permanence of negative perceptions from the court of public opinion, many firms are greatly expanding not only their compliance training, but also the way their organizations think about compliance. Establishing a culture of compliance has become the goal for many financial services organizations. If thought of as a foundation of compliance, clearly licensure is an integral pillar
some more quickly than others. Aggregators of content and capabilities across many industry verticals have been providing best-in-class education and compliance solutions for years to mortgage originators, banks and credit unions, real estate professionals and insurance professionals. Content relevance, system performance and ease of use, as well as user experience should determine the best fit for your organization. Price should be seen as a tertiary factor in this decision-making process, and, in most cases, is not overly burdensome regardless of the solution. The biggest contributing factors in determining the future health of a
“Becoming an expert is the goal so you can give expert mortgage advice and deliver expert customer service.”
Why Do You Want to Learn? By Dave Hershman I have been teaching in this industry for more than 30 years now … among other things that makes me old. During that time I have observed, coached and taught tens of thousands in the areas of mortgage expertise, marketing, sales, customer service, leadership and more. It never ceases to amaze me to see how many come just to learn—as if the learning will somehow make them better.
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This is also a message I have been delivering for over three decades— while all learning is good, learning without purpose is not fruitful by any means. Even achieving a certification is not going to help you if you don’t take action. As the creator of the Certified Mortgage Advisor Certification Program, that sounds contradictory. But it is true, a certification by itself is worthless. It is how
you market yourself with that certification and use it every day to help your customers which is important. This seems an obvious point, but it needs to be made. Why? Because training attracts those who suffer from a special form of call reluctance. In teaching about call reluctance, I have found that there are many forms of call reluctance. Those “attracted” to trainings are likely to be someone who is not comfortable calling someone unless they know everything. Meanwhile, those who have low levels of call reluctance and high marketing IQs, call and find out the answers later. Sort of a version of the “aim, fire, ready” scenario. In reality we need a balance. We need to take the learning and use it to “ready, aim, fire” more effectively. It is certainly a conundrum. Those teaching schools are trying to attract students, but naturally they attract the wrong ones, or the ones least likely to benefit from these trainings. Those suffering from the most severe forms of call reluctance spend as much time learning as possible to avoid calling. Even social media and e-mail can be used as tools to mask this reluctance to call. The next question is—if learning must have a purpose what is the real purpose of learning? For that I go back to the term mortgage advisor. When thinking about this term, we assume that loan officers want to deliver the most value to their clients. Value should be defined in terms of the needs and wants of the consumer. What do clients want? They want expert mortgage advice. They are not looking for a loan officer or an originator. They don’t even know what those terms mean for the most part. But they know what a mortgage advisor is. Why use a title that does not describe what you do with regarding to the value you deliver? I think we all would agree that expert mortgage advice is what the goal is here. And it is not about earning the title, or a certification. It is
about becoming an expert in the industry. What do you need to learn to become an expert? The answer is very comprehensive. It is not one topic, but understanding the industry, programs, pipeline management and more. Here is a non-comprehensive list of the areas a great mortgage advisor should have expertise in … l The real estate process—from home ownership to closing expertise. l The economic and non-economic reasons to own a home. l The understanding of the secondary markets influences which affect your rate sheet. l Basic concepts of real estate finance-from mortgage prepayment alternatives to the effect of closing costs. l How to compare the performance of loan products, downpayments, closing costs and mortgage insurance under future scenarios. l Qualifying prospects, including credit, budgeting and debt reduction expertise. l How to process and underwrite a loan. l How to value a property. l How to control your pipeline and the process to deliver great customer service. l How to market as an expert from within the process l Learn what is right and what is not right from an ethical standpoint. l Become an expert in sales and marketing—not only for you, but your business-to-business targets as well. Within our Certified Mortgage Advisor curriculum, we touch on all these targets, but there is much more work to be done with regard to achieving the status of expert. Becoming an expert is the goal so you can give expert mortgage advice and deliver expert customer service. But there is the other side of the equation. Becoming an expert is not enough by any means.
You not only have to be an expert, but you need customers to give advice to. If you are working for a company that provides leads, the process is easier, but the sales part of the process might be more difficult. If you are a “street” loan officer, then you also must become an expert in marketing and sales. Of the two, most companies emphasize sales training, but it actually marketing expertise which is more important. Why? Because marketing skills determine the quality of the lead. The stronger the lead, such as a strong referral, the less sales skills you will need, though some level of sales skills will always be needed. Certainly you can see how strong your sales skills must be to field cold calls versus strong referrals. And this brings us back to call
reluctance. If you can give expert mortgage advice, but you don’t make the necessary calls to set up meetings with referral sources such as real estate agents, the training and education and certification is not going to help you. So you need to become an expert in overcoming call reluctance as well. Again, I have been training for three decades. I have seen those who struggle in one or more of these areas. But if you really want to be a top producer, you will conquer each aspect of the equation. And that is why I have always espoused comprehensive knowledge and have tried to teach all aspects of what is required. But all the knowledge in the world will not bring home the bacon. You still have to hold up your side of the equation.
Dave Hershman is a top author in this industry with seven books published as well as the founder of the OriginationPro Marketing System and
Certified Mortgage Advisor Curriculum. He is currently director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com.
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Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@securesettlements.com.
ALES
REINFORD
Mortgage Professionals to Watch
MOORE
WILSON
l DocMagic Inc. has announced that it has named Gavin T. Ales as chief compliance officer.
l Veteran mortgage professional Stan Reinford has joined Mortgage Network Inc. as a loan officer in the company’s Doylestown, Pa. branch office, where he will be responsible for serving borrowers and homeowners throughout the eastern Pennsylvania area. Edward Cuyler Applegate Wilson has also joined Mortgage Network as an LO in the company’s Mount Pleasant, S.C. branch office, where he will be responsible for the Southeast region.
l Primary Residential Mortgage Inc. (PRMI) has added Ann Liberato as its King County Area Manager in the state of Washington.
l First Guaranty Mortgage Corporation (FGMC) has announced that industry veteran Elliot Salzman has joined the company as senior director of credit operations.
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l Bill Moore of Paramount Residential Mortgage Group (PRMG) has been recognized as Affiliate of the Year by the trade association, the California Association of Mortgage Professionals (CAMP).
l Comergence has announced the addition of Jamie Giorello as busiSPONSORED EDITORIAL
ness development manager to assist lenders and appraisal management companies leverage the company’s third-party oversight services. Comergence has also announced the addition of Dave Crugnale as business development manager to expand the sales of its REALM for Third-Party Originators and Appraisers tool to mortgage lenders, correspondents and AMCs.
l MCT Trading Inc. (MCT) has announced that Ben Coll has joined the company’s capital markets team.
HARTMAN
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According to figures published by the Federal Bureau of Investigation (FBI), the Financial Crimes Enforcement Network (FinCEN), CoreLogic, Interthinx and LexisNexis, based upon filed SARS reports and other available data, California has been cited in the top 10 fraud states nearly every year. In 2009 and 2010, California was third in the nation for the most mortgage fraud incidents. In 2011 and 2012, California came in seventh out of 50 states. In 2013, the state improved to 10th place, then in 2014, crept back up to second place. California is a large state, with many investment properties, diverse communities and a large and diverse housing stock, which ensures that it will always be a target for significant fraud. California allows several different parties to handle and participate in a property's escrow and closing process. Escrow companies licensed by the state's corporation commission are the primary agents allowed to handle California real estate escrow and closings, however, property title companies frequently handle real estate escrow and closings and attorneys and real estate brokers may also be involved. In some instances California-licensed real estate brokers can handle escrow and real estate closings for their clients. Who may conduct a closing may also differ geographically. In Northern California, property title companies traditionally handle escrow and closing activities. Southern California real estate processes are different, however, in that escrow companies as well as lenders deal with escrow and closing services. However, California is so large that the selection of escrow and closing services providers can vary even from county to county. When fraud occurs, the State of California encourages government reporting however the ability to recover for losses when fraud has already taken place is limited. Escrow officers are required have a stated $25,000 net worth and to maintain a $125,000 fidelity bond as well as a $25,000 surety bond. Upon initial application, escrow officers must complete a fingerprint process and a criminal background check. It is performed only once upon licensing; there is no ongoing monitoring or annual checks conducted. In a state where the current average home price is $393,000 (according to Zillow) and the average mortgage is $310,676 (Lending Tree) these protections are helpful, but will not prevent fraud nor cover a significant lender loss. Attorneys are licensed when admitted to the bar and should be insured, however malpractice insurance is not required in California, it is only recommended. Title agents who are not direct employees of an underwriter must maintain a $25,000 surety bond and are issued closing protection letters however the CPL does not cover all fraud incidents such as conspiracies and theft of NPI. Of further concern to lenders in California is the perceived lack of a legal duty for closing agents to actually report fraud even if they have actual knowledge that it is taking place. In 1999, in Vournas v. Fidelity National Title Co., the California Court of Appeals held that settlement agents have “no duty to police the affairs of a lender,” and have no obligation to “report fraud.” Similar results were reached in Axley v. Transnational Title Ins. Co. and Lee v. Title Insurance & Trust Co. CFPB vendor management rules require lenders to adopt policies to evaluate and monitor anyone who handles their documents, funds and borrower NPI for risk, not simple rely upon licenses and insurance. California lenders are quickly adopting new vendor management solutions to evaluate and monitor risk for closing professionals to deter and prevent fraud and the threat of harm before it occurs. Greater risk management rules and vendor management programs may never knock California out of the list of top fraud states, but they very well may help deter the types of mortgage and settlement fraud risks those lenders and consumers in the state fear most.
Lenders One members access to nonQM lending products designed to fill a credit void in today’s mortgage market. These programs are designed to address the issues limiting a borrowers’ access to credit through common sense underwriting. All of the loans underwritten and acquired by Verus are ATR compliant and focus on the borrowers’ abilityto-repay.
SALZMAN
By Andrew Liput
continued from page 52
GIORELLO
The Unique Conduct of Mortgage Closings in California Amid Concerns Over Fraud
heard on the street
l Mid America Mortgage Inc. Owner and Chief Executive Officer Jeff Bode announced that Chris Hartman has been promoted to sales manager of wholesale and correspondent operations. l New Penn Financial has announced the hiring of Don Degli as sales manager in Ft. Lauderdale, Fla. Degli has experience managing loan officers for more than 20 years in the state of Florida, and also has a background as an investment counselor.
CAVANAGH
ager of correspondent lending to serve the Colorado, Utah and Wyoming markets. l Ellie Mae has announced that Dr. Selim Aissi has joined the company as chief security officer (CSO), responsible for Ellie Mae’s overall security program, including security operations, security engineering, and governance, risk and compliance. l RealtyTrac has announced it has hired real estate data licensing veteran Richard Lombardi as executive vice president and general manager, leading the company’s expanding data and file licensing business.
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.
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l Home Point Financial Corporation has hired Joan Cavanagh as director of product standards, working out of the Parsippany, N.J. office. l United Wholesale Mortgage (UWM) has promoted Melinda Wilner to the newly created role of chief operating officer (COO) from her job as executive vice president of underwriting. l Caliber Home Loans Inc. has announced that Mike Homberg and Scott Berngartt have joined the company as branch manager and sales manager, respectively. l Stonegate Mortgage Corporation has announced that Richard A. Kraemer has been named interim CEO of the company, replacing Jim Cutillo, who has resigned from the company. Stonegate has also announced the appointment of James V. Smith as president and COO. l Carrington Mortgage Services LLC has appointed Dennis Hueman to the position of senior vice president of centralized lending where he will lead Carrington’s mortgage lending centralized operation in all aspects of tactical management and deployment of corporate objectives to deliver superior products and services. l ClosingCorp has announced that Pat Carney has joined the company as executive program manager of the Title Channel. l T.J. Hildebrand has been tapped to lead the new Mortgage Network Inc., d/b/a MNET Mortgage Corp., branch in Wildwood, N.J. Veteran mortgage sales and training professional Jeffrey Gable has also joined Mortgage Network Inc. as a national sales support leader in the company’s Danvers, Mass. office. l Williston Financial Group (WFG) has named Steve Ozonian as its president and chief operating officer. l GSF Mortgage has added Tim Powell as branch manager in the company’s Decatur, Ind. location. GSF has also named Sandy Cline as branch manager in the company’s Christiana, Del. Branch, joining GSF with 25 years of mortgage industry experience. l Primary Capital Mortgage LLC (PCM) has announced that Felix Ortiz has been appointed regional sales manager, focused on building PCM’s wholesale business in California. PCM has also announced that Stephen Bledsoe has been appointed as the company’s new chief financial officer, responsible for overseeing all aspects of the company’s finance and accounting group, including
planning and analysis. l PrimeLending has announced that Dan Yribar has joined PrimeLending as Tucson, Ariz. branch manager. l Altisource Portfolio Solutions SA has announced the hiring of Riccardo S. Brizzi as chief client officer and Kirk G. Willison as senior vice president of government and industry relations. l Bay Equity has announced that Senior Loan Officer Elizabeth O’Daly has joined its Cal Pacific team in San Diego. l Gateway Mortgage Group has announced the addition of Barbara Niedt as a new regional sales man-
Account Executives: Not Just Your Best Source for Donuts Anymore By Keith Bilodeau We all know the old image of the account executive (AE) making their rounds with donuts and logo items in hand. While gifts and marketing tools still help build relationships, your AE has become a much-needed source for more. Simply put, your AE is no longer just your best source for donuts. As the importance of a reliable donut delivery system has faded, the need for reliable information has exploded. Today, AEs are considered subject matter experts in many areas and have become one of the best sources for industry information. Their extensive experience allows them to provide compliance and regulatory expertise, personalized service in your office, loan level support, and hands on training. Today’s AEs understand the importance of delivering information to help you grow your business and they are taking an all new approach to helping you do so. Here are some things to consider when assessing the evolution of your AE:
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l Accessibility: To be efficient in your business you need accessibility to real-time information. Whether it’s underwriting, operations, servicing or closing, an effective AE will be your direct access to the inner workings of your lender’s operations. l Trusted partner: If you have a strong relationship with your AE, then you are pretty confident that any concerns you may have will be addressed and cared for by the appropriate person quickly and efficiently. An AE who is a trusted partner understands, lives, and breathes front line service commitment. l Loan level support: The above leads directly to your AEs’ ability to help you with loan level support. We know that the mortgage industry is based on closed loan files, not loans in progress. And having the right AE looking at your pipeline each and every day can make all the difference in your closed loan volume and ultimately your bottom line. l Live training: Training happens best where you work with a live instructor … your AE. Having structured training is critical to keeping you and your staff abreast of changes in the mortgage business. Today’s AE looks for the best way to deliver training to you and your staff so that you can, in turn, deliver exceptional service to your borrowers. If you are not seeing these characteristics and behaviors in your AE, then maybe it’s time for you to consider finding a lender who will provide the kind of AE partner and support that has your business in mind. Furthermore, a local level AE supported by their national company can be invaluable to growing your business … and not your waistline. Keith Bilodeau is senior vice president of Wholesale Production at Freedom Mortgage. With more than 30 years of experience in capital markets, operations and production, Keith offers unique expertise in helping mortgage professionals grow their business by leveraging Freedom Mortgage’s technology and programs. He may be reached by e-mail at keith.bilodeau@freedommortgage.com or visit www.freedomwholesale.com.
closing disclosure continued from page 56
Page Four Regulation Z8 requires Page Four of the Closing Disclosure to contain from one to three tables, depending on the type of product: l A “Loan Disclosure” table, which addresses various requirements in or arising from the legal obligation, including assumption, demand feature, late payment, negative amortization, partial payments, security interest, and escrow account information. l The Adjustable Payments (AP) table that also appears on Page Four of the Loan Estimate, as applicable. l The Adjustable Interest Rate (AIR) table that also appears on Page Four of the Loan Estimate, as applicable.
Loan Disclosures Loan Disclosures Table The Loan Disclosures table provides disclosures mandated by statute, including three disclosures added to TILA by the Dodd-Frank Act.9 Assumption This is the first item in the Loan Disclosures table. It is labeled Assumption,10 and mirrors the assumption disclosure on the Loan Estimate.11 The only difference is the replacement of “we” with “your lender.” Form H-25 offers this text for the disclosure: Assumption If you sell or transfer this property to another person, your lender Will allow, under certain conditions, this person to assume this loan on the original terms. Will not allow assumption of this loan on the original terms. Demand Feature The second item in the Loan Disclosure table is labeled Demand Feature and is intended to satisfy TILA requirements.12 Regulation Z requires the creditor to disclose whether the legal obligation permits the creditor to demand early repayment of the loan and, if so, a statement that the consumer should review the loan document for more details.13 Form H-25 offers this text for the disclosure: Demand Feature Your loan Has a demand feature, which permits your lender to require early repayment of the loan. You should review your note for details. Does not have a demand feature.
Lender NMLS ID: 2767. Freedom Mortgage Corporation, 907 Pleasant Valley Avenue, Suite 3, Mount Laurel, NJ 08054.
SPONSORED EDITORIAL
Suggested Guidance The type of demand feature triggering these disclosures includes only those demand features contemplated by the parties as part of the legal obligation.14 For example, this provision does not apply to transactions that convert to a
demand status as a result of the consumer’s default. A due-on-sale clause is not considered a demand feature. Late Payment The third item in the Loan Disclosure table, labeled Late Payment, discloses any dollar charge or percentage amount that may be imposed due to a late payment, other than a deferral or extension charge.15 The creditor must disclose the statement which details the late payment charge stated as dollar amount or percentage of the late payment amount, and the number of days a payment may be late to trigger the late payment fee.16 This is similar to the feature regarding the Loan Estimate requirement. Form H-25 offers this text for the disclosure: Late Payment If your payment is more than ___days late, your lender will charge a late fee of ___ . Negative Amortization The fourth item in the Loan Disclosures table, labeled Negative Amortization (Increase in Loan Amount) provides that no creditor may extend credit to a borrower in connection with a transaction secured by a dwelling or residential real property that includes a dwelling, other than a reverse mortgage, that provides for or permits a payment plan that may result in negative amortization unless the creditor provides the consumer with a notice that the transaction may or will result in negative amortization.17 A statement must be provided about whether the regular periodic payment may cause the principal balance to increase. 18 The disclosure applies to all transactions subject to disclosure integration. If the regular periodic payment does not cover all of the interest due, the creditor must state that: l The principal balance will increase, l The principal balance will likely exceed the original loan amount, and l The increases in the principal balance will lower the consumer’s equity in the property. If the consumer has the option of making regular periodic payments that do not cover all of the interest accrued each month, the creditor must include a statement that, if the consumer chooses that option, the principal balance may exceed the original loan amount and that increases in the principal balance decrease the consumer’s equity in the property. Form H-25 offers this text for this disclosure: Negative Amortization (Increase in Loan Amount) Under your loan terms, you o are scheduled to make monthly pay-
ments that do not pay all of the interest due that month. As a result, your loan amount will increase (negatively amortize), and your loan amount will likely become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property. o may have monthly payments that do not pay all of the interest due that month. If you do, your loan amount will increase (negatively amortize), and, as a result, your loan amount may become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property. o do not have a negative amortization feature. Partial Payments The fifth item in the Loan Disclosures table, labeled Partial Payments provides that, in the case of any residential mortgage loan, the creditor must disclose, prior to settlement or at the time a person becomes the creditor for an existing loan,19 the creditor’s policy regarding the acceptance of partial payments, and if partial payments are accepted, how the payments will be applied to the loan and whether the payments will be placed in escrow.20 The creditor must disclose a statement of whether the creditor accepts periodic payments less than the full amount due.21 If the creditor may accept partial payments, and apply the payments to
the consumer’s loan, or if the creditor may hold the payments in a separate account until the consumer pays the rest of the payment, or if the creditor does not accept any partial payments, then the disclosure must state that fact. The creditor also must include a statement that, if the loan is sold, the new lender may have a different policy. It is clear that the Bureau decided to alter the statutory requirement because it would have required a detailed disclosure of the many variations of partial-payment processing, resulting in information overload. There are disclosure requirements22 that apply after consummation,23 implemented as part of the CFPB’s January 2013 Servicing Rule. Form H-25 offers this text for the disclosure: Partial Payments Your lender o may accept payments that are less than the full amount due (partial payments) and apply them to your loan. o may hold them in a separate account until you pay the rest of the payment, and then apply the full payment to your loan. o does not accept any partial payments. o If this loan is sold, your new lender may have a different policy. Security Interest The sixth item in the Loan Disclosures table, labeled Security Interest requires
the creditor to provide a statement that a security interest has been taken in the property securing the transaction or in property not purchased as part of the transaction by item or type.24 The creditor must disclose that the creditor will take a security interest in the property, that the consumer is granting a security interest in that property, the address of the property (or other location information, such as a lot, square, or similar number, if no street address exists), the zip code in which the property is located, and a statement that the consumer may lose the property if he or she does not make payments or satisfy other requirements of the legal obligation.25 Form H-25(B) illustrates the completion of this disclosure, as follows: Security Interest You are granting a security interest in [456 Somewhere Avenue, Anytown, ST 12345] You may lose this property if you do not make your payments or satisfy other obligations for this loan. Suggested Guidance l For transactions secured by a consumer’s interest in a timeshare plan, Regulation Z permits the creditor to disclose as “other location information” a lot, square, or other such number or other legal description assigned by the local governing authority, or if no number or description is available, the name of
the time share property or properties with a designation indicating that the property is an interest in a timeshare plan.26 l If personal property also secures the transaction, a description of that property may be disclosed. When the personal property description does not fit in the space on form H25, the creditor may use an addendum to disclose the property.27 l Even though this is not addressed by the Comments, Regulation Z presumably would also allow an addendum if the descriptions for multiple real properties do not fit in the space allocated on the Closing Disclosure. The Comments allow such an addendum for the Loan Estimate, but for real property only.28 I do not believe a different rule would apply to the Closing Disclosure, that is, it seems reasonable to take the position that the Comments (1) address only the use of addenda for personal property because of the specific, different treatment the Comments provide personal property in the Loan Estimate versus the Closing Disclosure, and (2) they inadvertently overlook the use of addenda for real property descriptions.29 In other words, it seems that the Bureau’s comments (and preamble to the Rule) assume addenda may be used continued on page 72
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closing disclosure continued from page 71
TRID: What You Need to Know l
By Joni Pilgrim
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Beginning Oct. 3, 2015, requirements for paperwork filings will officially change for the newly combined Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). The new “Know Before You Owe” Rule will also be known as the “TILA-RESPA Integrated Disclosure Rule (TRID).” Mortgage lenders and settlement services providers, including appraisal management companies (AMCs), will be required to implement changes in order to comply with the rules of the new disclosures. According to the Consumer Finance Protection Bureau (CFPB), for the consumer, the new disclosures are easier to understand than those currently in use. The Loan Estimate they will receive after applying for a mortgage and the Closing Disclosure are designed to work with each other, eliminating overlapping and inconsistent language. TRID will apply to most closed-end consumer real estate credit transactions. The new rule does not apply to home equity lines of credit (HELOCs), reverse mortgages or mortgages secured by a mobile home. The creditor will be required to provide the consumer with Good Faith Estimates (GFEs) of credit costs and transaction terms and provide the Loan Estimate within three business days of the receipt of the consumer’s loan application. The new Loan Estimate must contain, in writing, an estimate of credit costs and transaction terms. If unavailable or unknown, the creditor must make the disclosure based on reasonably available information. The Loan Estimate must be delivered to the consumer no later than three business days after receipt of the application. If the creditor determines that the consumer’s application will not or cannot be approved on the terms requested, or if the consumer withdraws the application within that period, the creditor does not have to provide the Loan Estimate. The Loan Estimate includes tables addressing the Loan Terms, Projected Payments and Costs at Closing. A detailed breakdown of closing costs, a Comparisons Table, along with an Other Considerations Table that includes information regarding appraisal, homeowner's insurance, and late payment fees; and sections pertaining to assumptions, refinancing and servicing of the loan are also included. For loans that proceed to closing, creditors must provide a new final disclosure reflecting the actual terms of the transaction called the Closing Disclosure. The form integrates and replaces the existing HUD-1 and the final TIL disclosure for these transactions. The creditor is required to ensure that the consumer receives the Closing Disclosure no later than three business days before consummation of the loan. The Closing Disclosure generally must contain the actual terms and costs of the transaction. It is important to understand that the lending process could be jeopardized without strict adherence to and understanding of these new procedures. Joni Pilgrim is the founder and director of sales and business development at National Appraisal Network. For more information, visit Nationwide-Appraisal.com or call (888) 760-8899.
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for multiple real properties if the property listing or description does not fit in the space allocated on form H-25. The creditor should insert the property description using italics to emphasize that the italicized information has been completed by the creditor.30 The creditor complies with the requirements regarding “Escrowed Property Costs over Year 1” and “Monthly Escrow Payment” if the creditor bases the numerical disclosures on amounts derived from the escrow account analysis required under RESPA.31 If the consumer’s escrowed costs do not include homeowner’s association fees, but the creditor knows the consumer is likely to pay, say, $1,000 in homeowner’s association fees, then the creditor must disclose the fee as part of “Non-Escrowed Property Costs over Year 1.” When the creditor does not impose a fee for not establishing an escrow account, the “Escrow Waiver Fee” disclosure must be left blank.
Adjustable Payment (AP) Table Page Four of the Closing Disclosure must include two other tables, as applicable.32 The first is the Adjustable Payment (AP) Table, the same table that appears on the Loan Estimate, which the creditor must include if, under the terms of the legal obligation, the principal and interest payment may adjust without a corresponding adjustment to the interest rate or if the loan is a seasonal payment product. The table must contain: l The periodic payment at the first adjustment of the payment, l The number of the earliest payment that could reflect an adjustment to the amount of the periodic payment, l The maximum possible principal and interest payment, l The number of the earliest payment that could reflect the maximum possible periodic payment, and l An affirmative or negative statement of whether the loan has an interestonly payment option, step-payment period, or seasonal payment period and the length of that period and payments affected.33 Adjustable Interest Rate (AIR) Table The second table is the Adjustable Interest Rate (AIR) Table, the same table that appears on the Loan Estimate, which the creditor must include if, under the terms of the legal obligation, the interest rate may adjust after consummation. The table must include: l The index and margin if the interest rate will adjust according to an index beyond the control of the creditor, l The amount of scheduled adjust-
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ments and their frequency if the interest rate will change based on something other than an index beyond the control of the creditor (such as a “step-rate” product), The interest rate at consummation, The minimum and maximum possible interest rates after consummation of the loan after any introductory or teaser rate expires, The maximum possible change in the interest rate at the first adjustment, The maximum possible change for subsequent interest rate adjustments, The month after consummation when the interest rate may first change (counted from the date interest begins to accrue for the first periodic principal and interest payment), and The frequency of subsequent interest rate adjustments.34
Page Five The fifth and last page of the Closing Disclosure contains a Questions? box and an optional Confirm Receipt signature section. The three tables are labeled Loan Calculations, Other Disclosures, and Contact Information.35 Loan Calculations The creditor must disclose in a separate table, labeled Loan Calculations, information required regarding the “Total of Payments,” “Finance Charge,” “Amount Financed,” “Annual Percentage Rate,” and “Total Interest Percentage.”36 Total of Payments The first item in the Loan Calculations table is the Total of Payments with a statement that it is the “Total you will have paid after you make all payments of principal, interest, mortgage insurance, and loan costs, as scheduled.”37 The revised Total of Payments is calculated in the same manner as the “In 5 Years” disclosure on the Loan Estimate,38 except that the Total of Payments reflects the total payments through the end of the loan term instead of five years. The amount includes principal, interest, mortgage insurance (including any prepaid or escrowed mortgage insurance), and the Loan Costs disclosed in the Closing Costs Details on Page Two of the Closing Disclosure. Suggested Guidance This differs from the method of calculating Total of Payments under Regulation Z, which adds the Amount Financed and the Finance Charge.39 Creditors may not modify the descriptive statement (not even for variablerate transactions), and may not omit the Total of Payments disclosure in single-payment transactions or demand obligations that have no alternative maturity date.40
Finance Charge The second item in the Loan Calculations table is the Finance Charge with this statement: “The dollar amount the loan will cost you.” This disclosure is identical to the Finance Charge disclosure required under Regulation Z, 41 except that Regulation Z does not allow creditors to modify the descriptive statement for variable-rate transactions (with a phrase indicating that the disclosed amount is subject to change) and does not require (or allow) creditors to disclose the finance charge (and the APR) more conspicuously than any other required disclosure other than the creditor’s identity.42 Under Regulation Z, the disclosed Finance Charge and other disclosures affected by the disclosed Finance Charge (including the Amount Financed and the APR) are treated as accurate if the amount disclosed as the Finance Charge is understated by no more than $100 or is greater than the amount required to be disclosed.43
in accordance with the Regulation Z requirements.44
Amount Financed The third item in the Loan Calculations table is the Amount Financed with a statement that “The loan amount available after paying your upfront finance charge.” Regulation Z requires the creditor or closing agent to calculate the amount
Suggested Guidance When the creditor determines an initial interest rate without using the index or formula for later rate adjustments, the disclosure should reflect a composite annual percentage rate based on the initial rate for as long as it is charged and, for the remainder of
Annual Percentage Rate The fourth item in the Loan Calculations table is the Annual Percentage Rate (APR) with a statement that “Your costs over the loan expressed as a rate. This is not your interest rate.” Suggested Guidance Regulation Z does not require the APR to be disclosed45 more conspicuously than other required disclosures. 46 TRID does not change the APR calculation, set forth in Appendix J. Total Interest Percentage The fifth item in the Loan Calculations table is the Total Interest Percentage (TIP), with a statement that “The total amount of interest that you will pay over the loan term as a percentage of your loan amount.” Dodd-Frank Act47 added this requirement to TILA.48 Creditors must disclose the TIP on Page Three of the Loan Estimate.49
the term, the rate that would have been applied using the index or formula at the time of consummation.50 Other Disclosures The creditor is required to disclose, in a separate table labeled “Other Disclosures,” information regarding appraisals, contract details, liability after foreclosure, refinancing, and tax deductions.51 Let’s give some consideration to each of these categories. Appraisal The Dodd-Frank Act amended Equal Credit Opportunity Act (ECOA)52 to require the creditor to provide the consumer with a copy of any written appraisal obtained for a loan that is or will be secured by a first lien on a dwelling, and also added a requirement that the creditor disclose that right to the consumer at the time of application, which the Bureau implemented in its January 2013 ECOA Appraisals Rule.53 The Dodd-Frank Act also was amended to require creditors to provide consumers with an appraisal copy at least three days prior to consummation of certain higher-risk mortgages,54 which the Bureau implemented for higherpriced mortgage loans (HPMLs).55 The Bureau has harmonized these appraisal notice requirements,56 for the Loan Estimate,57 and for the Closing Disclosure, with a disclosure labeled Appraisal. The Appraisal disclosure is
required only for loans subject to transactions 58 that are or will be secured by first liens on dwellings and HPMLs.59 It may (but need not be) omitted for other loans. The Appraisal disclosure in the Other Disclosures reminds consumers of their right to receive a copy of an appraisal conducted for their loan, with the following text: Appraisal If the property was appraised for your loan, your lender is required to give you a copy at no additional cost at least three days before closing. If you have not yet received it, please contact your lender at the information listed below. The reference to “information listed below” in the Appraisal disclosure relates to the Questions? box (viz., contacting the lender). Contract Details The second item in the Other Disclosures table, labeled Contract Details requires the creditor to provide a statement that “[t]he consumer should refer to the appropriate document for any information such document provides about nonpayment, default, the right to accelerate the maturity of the debt,60 and prepayment rebates61 and penalties.”62 continued on page 74
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Form H-25 provides this disclosure: Contract Details See your note and security instrument for information about: l What happens if you fail to make your payments, l What is a default on the loan, l Situations in which your lender can require only repayment of the loan, and l The rules for making payments before they are due.
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Liability After Foreclosure The third item in the Other Disclosures table, labeled Liability after Foreclosure, follows up on the “Liability after Foreclosure” disclosure on Page Three of the Loan Estimate. The Liability after Foreclosure disclosure implements TILA,63 as was added by Dodd-Frank Act.64 The statute generally requires the creditor to provide a written notice to the consumer describing the protection provided by the applicable state’s anti-deficiency law and the significance for the consumer of the loss of that protection, for refinance transactions only. Regulation Z requires the disclosure for all disclosure integration transactions, not just refinances.65 The disclosure mentions that state law may protect the consumer from liability for the unpaid balance, that any protection afforded under state law may be lost if the consumer refinances or incurs additional debt, and that the consumer should consult an attorney for additional information. If state law does not protect the consumer from liability for the unpaid balance, the creditor must disclose that fact by checking the appropriate box. Suggested Guidance l Whether the consumer is afforded protection from liability in a foreclosure varies by state; Regulation Z requires the creditor to provide a general description of the applicable state’s requirements, by checking one of the check boxes in the disclosure.66 l Any type of protection afforded by state law, other than a statute of limitations, requires a statement that state law may protect the consumer from liability for the unpaid balance.67 l The Bureau does not believe that the high-level disclosure constitutes the practice of law.68 Form H-25 provides the following disclosure: Liability After Foreclosure If your lender forecloses on this property and the foreclosure does not cover the amount of unpaid balance on the loan, o state law may protect you from liability for the unpaid balance. If you
refinance or take on any additional debt on the property, you may lose the protection and have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information. o state law does not protect you from liability for the unpaid balance. Refinance The fourth item in the Other Disclosures table, labeled Refinance requires the creditor to disclose the same “Refinance” language that appears on Page Three69 of the Loan Estimate.70 The following disclosure in H-25 states: Refinance Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan. Tax Deductions The fifth and final item in the Other Disclosures table, labeled Tax Deductions requires the creditor to disclose certain tax implications for a consumer credit transaction secured by the principal dwelling of the consumer in which the loan amount may exceed the fair market value of the collateral.71 This requirement must be implemented for all transactions subject to disclosure integration.72 It requires the creditor to state that, if the consumer borrows more than the value of the property, the interest on the loan amount above the market value is not deductible from federal income taxes. The disclosure must include a statement advising the consumer to consult a tax professional for additional information. Form H-25 provides the following disclosure: Tax Deductions If you borrow more than this property is worth, the interest on the loan amount above this property’s fair market value is not deductible from your federal income taxes. You should consult a tax advisor for more information. Questions Notice Under the Loan Calculations table, the creditor must include a statement directing the consumer to use the Contact Information table if he or she has any questions about the loan terms or costs, and a reference to the Bureau’s web site to get more information or make a complaint.73 The regulation requires a prominent question mark to appear in this disclosure. If the creditor or closing agent deviates from the depiction of the question mark shown on form H-25, it must comply with the applicable statute’s description of the size and location of the question mark, and the creditor or closing agent otherwise must accompany with any other permissible changes74 to the form of the Closing Disclosure.75
Contact Information Table The Closing Disclosure must contain a Contact Information table76 which requires the following contact information for each creditor (under the subheading “Lender”), mortgage broker (under the subheading “Mortgage Broker”), consumer’s real estate broker (under the subheading “Real Estate Broker (B),” seller’s real estate broker (under the subheading “Real Estate Broker (S),” and settlement agent (under the subheading “Settlement Agent”) participating in the transaction: l Name of the person, labeled “Name” l Address, labeled “Address” l Nationwide Mortgage Licensing System & Registry (NMLSR ID) identification number, labeled “NMLS ID” l Name of the natural person who is the primary contact for the consumer with the person, labeled “Contact” l NMLSR ID, labeled “Contact NMLS ID,” or, if none, the license number or other unique identifier issued by the applicable jurisdiction or regulating body with which the person is licensed and/or registered labeled “Contact License ID” with the twoletter abbreviation for the state of the applicable jurisdiction or regulatory body shown before the word “License” in the label, for the natural person l E-mail address for the natural person, labeled “E-mail” l Telephone number for the natural person, labeled “Phone”
or an abbreviation of the person’s legal name or trade name must be disclosed, so long as the disclosure is clear and conspicuous, that is, sufficiently distinct.83 Confirm Receipt The statement required by Regulation Z84 above the signature lines reads: “By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.” Suggested Guidance l If the creditor believes the signature line and accompanying statement are confusing, it may omit them at the creditor’s option.
l Regarding consumers in rescindable transactions, the definition of consumer includes a non-applicant coowner of a principal dwelling, and the Closing Disclosure must be given to each consumer who has a right to rescind, including each non-applicant co-owner.85 l To the extent that consumers’ names do not fit on the space allocated for a signature on form H-24, an additional page may be added to the Closing Disclosure.86
Conclusion of the Six-Part Series This six-part series has provided a continued on page 76
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Suggested Guidance l Addresses. The address is the identified party’s place of business where the primary contact for the transaction is located (usually the local office), rather than a general corporate headquarters address.77 l Primary Contact. The primary contact working at the identified party is the individual who interacts most frequently with the consumer and who has an NMLSR identification number or, if none, a license number or other unique identifier.78 l Contacts. In general, the contact information at the top of page 3 of the Loan Estimate apply to this Closing Disclosure table.79 l Blanks. Inapplicable items must be left blank, not marked “N/A.”80 l General Addresses. Disclosure of a general number or e-mail address for the lender, mortgage broker, real estate broker, or settlement agent, as applicable, satisfies this requirement if no such information is generally available for the natural person.81 l Multiple Persons. If the transaction involves more than one of the five categories of persons in the transaction (such as two sellers’ real estate brokers splitting a commission), the space in the Contract Information table may be altered to accommodate the information for the addi-
tional person, provided that the information required on Page Five is disclosed on the same page as illustrated by form H-25. If the space on form H-25 does not accommodate the addition, an additional table may be provided on a separate page, with an appropriate reference on Page Five to the additional table. A creditor or closing agent may, instead, omit a column on the table that does not apply or, if necessary, replace an inapplicable column with the contact information for the additional person.82 l Names. The person’s legal name (i.e., the name used for registration, incorporation, or chartering purposes), the person’s trade name, if any,
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broad, introductory overview of TILARESPA Integration Disclosure. TRID is so extensive and involves such a significant generational change in disclosure that there will be a continual need to understand both its current and future implications. Even now, on the cusp of TRID implementation, the Bureau is providing written announcements, rule updates, and Webinar responses to TRID’s implementation challenges. Examinations and enforcement are right around the corner! The importance of complying with the specialized requirements cannot be overstated. Failure to comply with TRID’s precise and detailed rules may lead to significant liability and litigation risk, under both TILA and RESPA, as well as other statutes, such as the Equal Credit Opportunity Act, state and federal UDAAP statutes, and state mini-TILA and mini-RESPA statutes. Keep in mind that TRID introduced a new feature to TILA and RESPA enforcement. RESPA does not provide private rights of action for violations of Sections 4 and 5, regarding Good Faith Estimates, Settlement Statements, and Special Information Booklets. But TRID ‘moved’ some of the RESPA Section 4 and 5 requirements that previously appeared in RESPA’s Regulation X to TILA’s Regulation Z. The effect of this change was an expansion of RESPA liability, by bringing those provisions into the purview of the Truth in Lending Act, which provides for a private right of action. Clearly, a probable factor motivating the movement in this direction, instead of from TILA to RESPA, was the more robust civil penalty regime offered by TILA. Closing agents concerned about additional liability seem to be finding some comfort in the Bureau’s statement that it does not believe a settlement agent’s provision of the Closing Disclosure exposes the agent to civil liability under TILA87 so long as the agent is not also functioning as a creditor under TILA.88 Mortgage brokers appear to find the same comfort regarding their involvement in providing Loan Estimates. When TRID was proposed and comments were elicited from the public, commenters expressed concern that TRID’s combination of RESPA and TILA disclosure requirements would invite consumers to bring lawsuits seeking TILA remedies for RESPA violations. Hoping to block this path to litigation, they asked the CFPB to specify which provisions of Regulation Z, as affected by TRID, relate to TILA requirements and which relate to RESPA requirements. One commenter suggested that the CFPB should implement the TILA disclosure requirements in Regulation Z and the RESPA disclosure requirements in Regulation X to discourage litigation invoking TILA’s liability scheme for
RESPA violations. However, in the Final Rule the CFPB responded in this way: “While the final regulations and official interpretations do not specify which provisions relate to TILA requirements and which relate to RESPA requirements, the section-by-section analysis of the final rule contains a detailed discussion of the statutory authority for each of the integrated disclosure provisions…?[T]he authority for the integrated disclosure provisions is based on specific disclosure mandates in TILA and RESPA, as well as certain rulemaking and exception authorities granted to the [CFPB] by TILA, RESPA, and the Dodd-Frank Act. The details of the [CFPB’s] use of such authority are described in the section-bysection analysis. The [CFPB] believes these detailed discussions of the statutory authority for each of the integrated disclosure provisions provide sufficient guidance for industry, consumers, and the courts regarding the liability issues raised by the commenters.”89 I have yet to make my peace with this statement. The notion of “sufficient guidance” seems to be the exact coordinate where litigation will aim its ‘test case’ missile. In my view, “sufficient guidance” means an item-by-item analysis of the integrated disclosures explaining each statutory source for the disclosure item, any prior implementation of that requirement, the Bureau’s research into the effectiveness of that disclosure from both a consumer and industry perspective, the CFPB’s alteration (if applicable) of the statutory requirement or previous regulatory implementation of the requirement to respond to its research, its reasons for implementing that disclosure as part of TILA-RESPA disclosure integration, and the statutory support for including the final version of the disclosure. Frankly, in most cases, the ultimate statutory support rests on a specific requirement stated in TILA, RESPA and/or the Dodd-Frank Act, further supported by the regulatory flexibility offered in TILA Section 105(a) (sometimes also TILA Section 105(f)), RESPA Section 19(a), and the DoddFrank Act Sections 1032(a) and 1405(b). In other words, the CFPB relied for the most part on the ‘regulatory flexibility’ given by these provisions because it found it necessary to reconcile differences between the RESPA and TILA statutes, and between sometimes differing provisions within the TILA statute itself. The Bureau also found it appropriate to alter many of the statutory requirements (even discarding some). Thus, many resulting disclosure items are not derived solely from one statute or the other but from one or more statutory starting points and the broad rulemaking authority given the CFPB by
TILA, RESPA and the Dodd-Frank Act. Unraveling the final result to separate a RESPA claim from a TILA claim will prove difficult. These authorities give the Bureau an extraordinary amount of freedom to adopt disclosure requirements and constraints on consumer credit terms and conditions, including requirements different from those specified in any statute affecting mortgage loans. It is inevitable that market participants and the courts will assume that a private action under TILA is available to challenge noncompliance with certain disclosure items. Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com or visit www.LendersComplianceGroup.com.
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1—Foxx, Jonathan, RESPA/TILA Integration-Part I: Overview and Loan Estimate, pp. 28-54, National Mortgage Professional, October 2014. 2—Foxx, Jonathan, RESPA/TILA Integration–Part II: Closing Disclosure and Action Plan, pp 26-50, National Mortgage Professional, December 2014. 3—Foxx, Jonathan, Loan Estimate: Deep Dive (Part III), pp. 40-75, National Mortgage Professional, June 2015. 4—Foxx, Jonathan, Closing Disclosure: Deep Dive–Pages One and Two (Part IV), pp. 40-82, National Mortgage Professional, July 2015. 5—Foxx, Jonathan, Closing Disclosure: Deep Dive–Page Three (Part V), pp. 5678, National Mortgage Professional, August 2015. 6—www.teamtrid.com 7—www.tridhotline.com 8—Regulation Z §§?1026.38(l)-(n) 9—Regulation Z §?1026.38(l) 10—Required by TILA §?128(a)(13) 11—Required by Regulation Z §?1026.37(m)(2) 12—TILA §?128(a)(12) 13—Regulation Z §?1026.38(l)(2) incorporates certain of the requirements of Regulation Z §?1026.18(i) and (p). Comment 38(l)(2)-1 refers to Comment 18(i)-2 for a description of demand features that trigger this disclosure requirement. 14—Regulation Z §?1026.18(i) Commentary; §?1026.38(l)(2) 15—TILA §?128(a)(10) 16—Regulation Z 1026.38(l)(3). Also, Regulation Z §?1026.37(m)(4) [similar to §?1026.18(l)] 17—TILA §?129C(f), added by DoddFrank Act §?1414(a) 18—Regulation Z §?1026.38(l)(4) 19—TILA §?129C(h) uses the phrase “in the case of a person becoming a creditor with respect to an existing residential mortgage loan, at the time such person becomes a creditor ….” This
phrase is meaningless in light of TILA’s definition of “creditor,” which refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness. (See TILA §?103(g) and Regulation Z §?1026.2(a)(17).) Congress presumably meant “servicer” instead of “creditor.” 20—TILA §?129C(h), added by DoddFrank Act §?1414(d) 21—Regulation Z §?1026.38(l)(5) 22—TILA §?129C(h) 23—Regulation Z §?1026.39 24—TILA §?128(a)(9) 25—Regulation Z §?1026.18(m), also Regulation Z §?1026.38(l)(6) 26—Comment 38(l)(6)-1 27—Comment 38(l)(6)-2. The Comment addresses only the use of an addendum for personal property, as does Comment 38(a)(3)(vi)-1, which allows an addendum to describe the property address required by Regulation Z §?1026.38(a)(3)(vi) on Page One of the Closing Disclosure if the description does not fit in the space allocated on form H25. The creditor may use one addendum to combine these Page One and Page Four personal property disclosures. 28—Comment 37(a)(6)-2 29—Comments 37(a)(6)-2, 38(a)(3)(vi)-1, and 38(l)(6)-2. See 78 FR 79729, 8000180002 (December 31, 2013) 30—78 FR 79729, 80030 (December 31, 2013) 31—Regulation X §?1024.17 32—Regulation Z §?1026.38(m) and (n) 33—Comment 38(m)-1 directs creditors to the commentary to §?1026.37(i) for guidance on this disclosure table. 34—Comment 38(n)-1 directs creditors to the commentary to §?1026.37(j) for guidance on this disclosure table. 35—Regulation Z §?1026.38(o)-(s) 36—Regulation Z §?1026.38(o); see also TILA §?128(a)(2)-(5), (8), (17), (19) 37—This is a modification made by the Bureau, to wit, modifying the existing “Total of Payments” disclosure, set forth in TILA §?128(a)(5) and Regulation Z §?1026.18(h). 38—Regulation Z §?1026.37(l)(1)(i), see also §?10.02[2][b] and Comment 38(o)(1)-1). 39—Regulation Z §?1026.18(h) 40—Contrast with Comments 18(h)-1, 3, and -4 41—Regulation Z §?1026.18(d) 42—Regulation Z §?1026.38(o)(2); See also §?1026.17(a)(2). 43—Regulation Z §?1026.38(o)(2). The finance charge continues to be calculated in accordance with the requirements of §?1026.4 and its commentary. See Comments 38(o)(2)-1 and -2. 44—Regulation Z §?1026.38(o)(3). See also §?1026.18(b) and its commentary. 45—Regulation Z §?1026.38(o)(4)
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Force for not letting me join up, I guess they have a slight problem with a severe asthmatic flying a $30 million F-15E Strike Eagle in an oxygen-deprived environment! I could have handled it! So, I decided many years ago that if I couldn’t serve my country as a soldier, I’d focus as much free time as I could on serving those who served for me! I realized early on in my career as a mortgage professional that our veterans were not receiving the advice owed to them. Too many were being told “... the VA home loan isn’t for you,” “... it’s too difficult to get VA financing,” “... the VA loan takes too long to process,” and “… your offer will never be accepted.” I can’t tell you how many veterans I work with who have conventional or FHA financing because
they were advised the benefit they earned was too tough to obtain. My humble opinion … in many cases, the main reason for this mistreatment was simply the result of an industry professional who was more concerned with a paycheck and not concerned with providing the veteran with the benefit they deserve. I cannot tell you enough how fired up I get when I run into these situations! My dream to become a soldier never materialized, however, I have an undying passion to assist those who gave so much for me and my family. As I close out my first column, please remember this … the VA home loan is not a program and cannot be treated as a program. The VA home loan is a benefit as defined in the Codified Federal Regulations of the United States.
We as mortgage professionals need to look upon each other as Benefit Providers! We as mortgage professionals need to do all we can to ensure this benefit is administered in as many cases as possible. We as mortgage professionals need to ensure that our veterans have the opportunity to make the American dream of homeownership a reality! If you haven’t already, take a minute today to thank a veteran. We owe them more than they owe us! Richard M. Bettencourt Jr., CRMS, CMHS of Danvers, Mass.-based Mortgage Network is secretary of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (978) 304-0818 or e-mail rbettencourt@mortgagenetwork.com.
By Richard M. Bettencourt Jr., CRMS, CMHS
Once a Dream, Now a Passion!
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What’s the goal of my new column in the pages of National Mortgage Professional Magazine and what on earth does SITREP really mean! It means “Situation Report,” and it’s military terminology often used to keep various aspects of the military up to speed on ongoing situations. That’s the goal of this column … to provide our readers with a monthly “Situation Report” on VA home loans and VA resources. I’ll be tackling VA guidelines, changes, origination experiences, dispelling rumors and myths, and who knows, perhaps some of my friends involved with VA Loan Policy will chime in from time to time and help us out. For some of you regular readers, many of you know who I am. And for those diving into this magazine up for the first time, I’d like to tell you a little about myself. I have been a mortgage professional originating VA loans for more than 13 years, nearly 55 percent of my business in the New England area is VA origination (impressive for the New England territory). I’m a board member with NAMB— The Association of Mortgage Professionals and hold a position on the Executive Board of the association, serving as secretary. I’m the Immediate Past Government Affairs Chairman, and last but not least, a vocal advocate and supporter of our military servicemen and servicewomen. Growing up in Massachusetts, I had the same dream as any other baseball player from New England. I wanted to walk into Fenway Park and call it my home field! I came somewhat close, but realized early on it wasn’t meant to be! Damn sliders on the outside corner of the plate were the death of me! So, the only other dream I ever had was to serve my country as a soldier. It really didn’t matter which branch it was that took me, I just wanted to do my part and serve my country as did my grandfathers, father, uncle cousins had done. I wanted to make a difference and wanted to proudly wear the uniform. I always joke about it, but I cannot really blame the U.S. Air
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Step Inside Ginnie Mae Ginnie Mae Summit 2015— A Game Changer By Ted W. Tozer During my career in financial services, I have seen market cycles come and go. Generally, our industry has seen big changes occur—like the rise of mortgage banking practices and securitization beginning in the 1980s—followed by several years of relative stability. But this pattern has not proven to be the case during the years since the Great Recession of 2008-11, and the housing bust that helped cause it. Instead, particularly in the Ginnie Mae market, we have seen one gamer changer after another occur: l The prolonged exodus of traditional market participants l The rise of non-depositories, from issuing securities to servicing mortgages l New types of structures and financing for mortgage servicing rights l The continued surge in FHA lending l A much more active regulatory environment l A dramatic expansion, propelled by non-depositories, in the issuer base for Ginnie Mae securities
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These are a lot of changes to absorb, and how each one of us responds can determine the fate of our business. And that’s what makes the 2015 Ginnie Mae Summit such an important event. Our annual Summit has become a central gathering place for business partners, government officials, affordable housing leaders and academic minds. And this year’s Summit, which takes place in late September just outside Washington, D.C., is no exception. Together, we will be exploring all the game-changers. We will be discussing how we can work together more effectively, be it creating a business plan to address changes in mortgage servicing rights or simply adjusting operations to comply with the latest Ginnie Mae policy. We will be taking a long, hard look at housing markets—Will single-family continue a slow recovery? Is the surge in multifamily sustainable? How can consumers afford to pay a mortgage or rent? We will be asking the experts one big question on everyone’s mind: How will the economic turmoil in China affect interest rates, as well as the mortgage-backed securities (MBS) market, here in the United States? With this event being a Summit hosted by Ginnie Mae, much of the program involves how we work with business partners, focusing on our expectations of them and their expectations of us. So we will be doing deep dives into business policies, operational practices, quality control, servicing arrangements, securities pooling, institutional compliance and more. All these subjects are critically important to Ginnie Mae’s ability to support mortgage markets in a safe and sound manner. And we are approaching all this as a market leader. Our market footprint is now par with the GSEs, with an MBS portfolio of $1.57 trillion through July and business volume so far this year of $350 billion, also through July. Investments in our infrastructure will produce even more effective risk management practices and systems technology. And our people will continue to aid the market in thought leadership. Put all this together—transformation in mortgage markets and transformation at Ginnie Mae—you can see why our Summit continues to attract industry leaders. The Summit has potential to become its own game-changer, in good way, for all of our businesses. That is my hope, and I look forward to reporting on key findings from our Summit in a future column. Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.
46—As differentiated from Regulation Z §?1026.17(a)(2). 47—Dodd-Frank Act §?1419 48—TILA §?128(a)(19) 49—Comment 38(o)(5)-1. See §?1026.37(l)(3) and its commentary. 50—Regulation Z §?1026.38(o)(5) 51—Regulation Z §?1026.38(p) 52—Equal Credit Opportunity Act (ECOA) §§?701(e) 53—Regulation B, 12 CFR §?1002.14 54—TILA §§?129H(c)–(d) 55—Regulation Z §?1026.35(c)(6) 56—Regulation Z §?1026.37(m)(1) 57—Regulation Z §?1026.38(p)(1) 58—ECOA §?701(e) 59—TILA §?129H 60—TILA §?128(a)(12) 61—Regulation Z §?1026.18(p) 62—Regulation Z §?1026.38(p)(2) 63—TILA §129C(g) 64—Dodd-Frank Act §?1414(c) 65—Regulation Z §?1026.38(p)(3) 66—Comment 38(p)(3)-1 67—Idem 68—78 FR 79729, 80047 (December 31, 2013) 69—TILA §?128(b)(2)(C)(ii) 70—Regulation Z §?1026.37(m)(5); also §?1026.38(p)(4) 71—TILA §?128(a)(15), which was added
by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 72—Regulation Z §?1026.38(p)(5) 73—Regulation Z §?1026.38(q) 74—Regulation Z §?1026.38(q) 75—Regulation Z §?1026.38(t)(5). See Comment 38(q)(3)-1. 76—Regulation Z §?1026.38(r) 77—Comment 38(r)-3 78—Comment 38(r)-6 79—Regulation Z §?1026.37(k). See Comments. 80—Comment 38(r)-1 81—Comment 38(r)-7 82—Comment 18(r)-1 83—Comment 38(r)-2 84—Regulation Z §?1026.38(s) 85—For the definition of “consumer,” see Regulation Z §?1026.2(a)(11) 86—Comment 38(s)-1 (referring to Comment 37(n)-2); Comment 38(t)(5)-4 87—TILA Section 130 88—TILA Sections 130 and 131 89—Bureau of Consumer Financial Protection, 12 CFR Parts 1024 and 1026, Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z), Action: Final rule; official interpretation, pp100-101 [Docket No. CFPB-2012-0028]
Correction … Due to a production error, in the August 2015 issue, Pacific Union Financial LLC was left out of our “Who’s Who in the 2015 Wholesale Marketplace” section. Here is the correct listing: Company Name
Web site PacificUnionFinancial.com Specialty or Niche Conventional, FHA, VA, USDA, Jumbo, direct lender for FHLMC, FNMA and GNMA State(s) Licensed In Nationwide except for AK, HI, MT, NY & WV
Misunderstanding MSAs Could Cost You $1 Million By Bubba Mills
l Keep payments proportionate. If your MSA is between two parties, then each party need to pay its proportionate amount of marketing expenses—each needs to pay 50 percent. If you bring in a third party, then break the payments into thirds. l Value your marketing services objectively. Sharing ad space and passing along prorated advertising costs to a partnering company are aspects of MSAs that are easy to value. But email campaigns or other generic marketing services are tougher to value. Experts say hire an auditing firm to offer objective values of marketing services. l Track services. If a mortgage broker is being paid for services it’s not performing, that’s a RESPA violation. Create a way to measure services rendered objectively so that both the mortgage broker and the company paying for the services can track what’s being done. Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit www.corcorancoaching.com.
n New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
l Offer only advertising and/or marketing. In an MSA, the mortgage broker is essentially being hired to advertise the services of the other entity, so limit your services to advertising—nothing else.
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Let’s get right to it shall we? Do you want to avoid $1 million in fines? That’s exactly what I thought … keep reading. The topic today is MSAs–Marketing Service Agreements, and if you do them wrong, you could end up facing that kind of fine. When it comes to MSAs today, things are getting serious. First, an MSA is a relationship between a mortgage broker and a real estate broker, a title company or a home warranty company where the mortgage broker agrees to market the services of one of those entities for a fee. It might go like this: One of those companies pays you, say, $3,000 a month if you include their information in your marketing materials or ads. So far, no problem. These agreements are fine and they’re permitted under the Real Estate Settlement Procedures Act (RESPA). The problem occurs when a mortgage broker gets greedy and makes several of these agreement with those different entities—basically reducing its marketing spend to zero—or worse, actually entering these MSAs as a way to make money. Attorneys say it’s imperative to make sure that the relationship between the mortgage broker and the title or real estate company is not tied to sales or productivity. They say valuing the marketing services that the mortgage broker is performing is essential to analyzing whether the agreement complies with RESPA. Overvaluation can lead to serious penalties from the Consumer Finance Protection Bureau (CFPB). In fact, those prosecutions by CFPB for RESPA violations are on the rise. Yes, it appears MSAs are squarely in the CFPB’s crosshairs. And the CFPB may fine companies up to $5,000 a day for violating RESPA. If the violation was reckless, those fines can jump to $25,000 a day. And if a company knowingly violates or ignores the provisions, the CFPB can levy fines up to $1 million a day. If you’re a broker and your mortgage office has an MSA with a title company, let an attorney look it over to ensure it complies with RESPA. It’s better to spot a problem and fix it before the CFPB gets involved. In the meantime, here are some key points attorneys say to remember about MSAs:
Culture and Marketing
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certed effort to reach out to the multicultural segments. Much has been hat does culture written regarding the booming have to do with Hispanic population in the United m a r k e t i n g ? States and homeownership trends. Everything! Cul- For example, from 2000-2014, ture is what gives us our identity, Hispanics accounted for 50 percent of what is learned, shared and passed the net growth of overall owner on to others. Whether a company is households in the country. A 2014 trying to sell candy bars, energy study by the Urban Institute projects drinks, cars, financial services or that Hispanics will account for 55.5 even mortgages, marketers need to percent of new homeowners from know and understand the culture of 2010-2020. their target audience. Companies So what do these statics and culwho learn about the differences and ture have to do with each other? similarities among consumers will Organizations that take time to develop the best products, promo- understand the culture of this contions and strategies. Yet, when it sumer base will be the ones that will comes to multicultural marketing, be best poised to attract, retain and companies often get confused, serve this growing demographic. Just intimidated or think it may not be as companies research for the general worth the hassle. market, they also need to do research When it comes to the housing and to develop a well thought out lending industry, the numbers are Hispanic marketing plan. compelling and make the case for Understanding key elements of the why a company should make a con- Hispanic culture can help you underBy L. Maria Zywiciel
W
stand how to better position your product/service. When marketing, a company can explicitly communicate their product and service by listing all the benefits to a consumer. This, however, wouldn’t necessarily make a connection with a buyer. With so many companies to choose from, why would a consumer choose to partner with a company that doesn’t bother to understand them or make a connection to them? Some companies simply don’t know how to incorporate the elements of culture into their marketing plan. Here are some considerations to help you start to think a little differently.
Language It used to be that Hispanic marketing was synonymous to in-language marketing. In a recent study by Pew Hispanic Research indicates that 68 percent of U.S. Hispanics (ages five and older) speak English proficiently.
It’s really not an issue of ability, but rather of consumer preference. Having bilingual salespeople, client service representatives, collateral and Web presence are all ways in which a company demonstrates its commitment to this segment and ensures they are able to assist a customer whose preference is Spanish.
Concept of time Mainstream American culture emphasizes that time is money. We put a high value on productivity and getting down to business. In many cultures, including the Hispanic culture, work gets done but the approach is much different. Take for example, a person communicating how they spent summer vacation. In Spanish it would go something like, “Pasé mis vacaciones en Nueva York,” which literally means they “passed the time in New York.” In English, we would say, “I spent my summer vacation in New York.” The difference between the
concept of “passing the time” vs. “spending time” says a lot.
Formality The Spanish language has distinct grammatical rules for elders, people of seniority or people that you have just met. Even if you don’t use Spanish in your marketing efforts, the rules around formality still apply. Using informal tenses can appear disrespectful and amateur so, if you do use Spanish, it’s extremely important that salespeople and telemarketers are properly trained.
The individual vs. the group Millennials are influencing, and in many regards, changing culture as we know it. Twenty percent of Millennials identify themselves as Hispanic. There is no doubt that this younger generation values their individualism just as mainstream Americans strongly identify with the “I” or “me” mindset. However, unlike other Millennials, Hispanic Millennials still strongly connect and feel connected to their cultural heritage. Also, Hispanics are much more likely to live in a multigenerational household than other segments. This includes living with parents as the head of household, or adult children as heads of households with parents and siblings with their families living with other family members. Making sure to show and understand the importance of the extended family is very important.
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are you
nominated coming in december 2015
“The Hispanic population is now widely recognized as the key driver for growth in the overall housing sector.”
Assimilation and acculturation Of all the elements I’ve outlined, I
L. Maria Zywiciel is President of NAHREP Consulting Services, a marketing consulting firm specializing in the Hispanic segment and Housing industry. She may be reached by phone at (858) 622-9046 or e-mail mariaz@nahrepconsulting.com.
NationalMortgageProfessional.com
Food and music Aside from language, food and music are ways in which an individual can hold on to, cherish and experience their heritage no matter their economic status. Nothing transports a person to a moment or place so instantaneously than when they hear that special song or taste that comfort food. And we aren’t just talking about the great dishes our abuelitas made for us! The connection between food and culture is strong among the Millennials as well. A report by the market research firm The NPD Group said Hispanics and the rest of the under-37 age group seem to want to be more involved with their meals and meal preparation. Like food, music is a great equalizer and connector. The contagious rhythms of a Latin beat, the influence of iconic musicians like Pitbull, Jennifer Lopez, Enrique Iglesias and others have taken the Hispanic culture to the masses.
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We are seeking nominations from our readers for National Mortgage Professional Magazine's "40 Under 40" feature, slated to appear in our December 2015 edition. Anyone who is under the age of 40 and has had a major impact on the industry can qualify for this feature. This could be through innovation, association participation, sales force automation, community activism, management techniques, technology or any other significant method that has influenced our industry. We would need a short, three-line bio on the nominee, along with a color photo and company contact info to complete the profile. To nominate yourself or someone else, visit https://nmpmag.wufoo.com/forms/nmps-40-under-40-2015/.
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 New Jersey Mortgage Professional Magazine n SEPTEMBER 2015
believe the most important one is to research where your customers live and how long they have lived there. This will give you a good indication of whether or not the customers you are seeking are assimilated or acculturated. This information can drive and define so many of the aforementioned characteristics. Assimilation is when an immigrant population adopts the culture of the mainstream. Generally speaking, immigrants assimilate by the third generation. Acculturation, on the other hand, means adding some elements of the mainstream culture, but still maintaining key elements of the original culture. In recent years, states like Georgia and the Carolinas have experienced exponential growth in their Hispanic population. Though the total number of Hispanics is still relatively low compared to the population as a whole, the percentage of growth is off the charts. In these areas, you will find a high percentage of non-assimilated Hispanics and perhaps a small percentage of non-Acculturated Hispanics. In other words, you will likely find many recent immigrants that still have a strong dependency on Spanish and still hold on to the cultural characteristics of their native country. Keeping this in mind is very important in developing your strategy and outreach. In these circumstances, high touch and grass root efforts are very effective. In other regions and cities, like Chicago (where 25 percent of the population is Hispanic) you will find Hispanics that speak English and Spanish equally well, who shop at high end department stores and tune into Spanish radio stations. The marketing approach in a highly acculturated market can differ greatly from the high touch approach of the new/recent immigrant population. Bottom line, the numbers don’t lie. The Hispanic population is now widely recognized as the key driver for growth in the overall housing sector. Companies that demonstrate they understand and value the culture through meaningful messages and marketing will be the companies that win loyal customers. A picture is worth a million words, and so is a great marketing campaign with cultural elements that bring it all home for the intended audience. And, it can be done with or without using a single word in Spanish.
outstanding
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p r o f e s s i o n a l ’ s
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places to work
Equity Prime Mortgage
REMN Wholesale
877-255-3554, xt. 600 www.equityprime.com
732-738-7100 www.remnwholesale.com
Equity Prime Mortgage is focused on creating an outstanding work environment. We consider each and every employee as a true partner to our success. This approach, combined with Equity’s industryleading technology and turn times ensures we deliver exceptional service levels to our branches, referral partners and customers alike.
Although REMN Wholesale is part of a large corporation, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential. As a national company, REMN provides many opportunities for employment from coast to coast.
PRMG
United Wholesale Mortgage
1-866-PRMG-YES (806-776-4937) www.PRMG.net
800-981-8898 www.uwm.com/careers
Built by originators for originators, PRMG was born from a vision of creating a company with a unique culture focused on the successes of the producer. We understand what it takes to be a successful originator and cultivate new business every day.
Voted the #1 place to work in Metro Detroit, UWM is looking for A players to join our talented team. Our business is driven by our culture, and our people are our greatest asset. If you’re looking for the opportunity of a lifetime, apply to UWM today!
Attention Recruiters, Business Development Managers and HR Professionals national mortgage professional’s
Freedom Mortgage (844)-380-8450 www.freedomwholesale.com Freedom Mortgage is dedicated to fostering homeownership in America. A number one ranked lender1, we offer exceptional opportunities for career growth and development. Our employees are dedicated to providing the kind of service excellence, expertise and cutting-edge technology support that have helped us successfully meet the needs of our customers and business partners for 25 years. 1. Number one, overall volume. Scotsman Guide’s Top Mortgage Lenders, 2014.
outstanding places to work
We are pleased to announce a new package that will give your firm the recruiting tools to instantly shift your recruiting efforts into high gear using a multimedia, market-saturating approach. We will utilize the most successful methods that our clients have been using to find, identify and place top talents for your company. We have designed these packages with the concept of making it less expensive to give you the ability to reach more people. NATIONAL MORTGAGE PROFESSIONAL MAGAZINE 1220 Wantagh Avenue • Wantagh, New York 11793-2202 516-409-5555 • Fax: 516-409-4600 • E-mail: advertise@NMPMediaCorp.com
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calendar of events N A T I O N A L
SEPTEMBER 2015
Tuesday-Wednesday, September 15-16
Mortgage Professional of Iowa Fall Conference Hilton Garden Inn-Johnston 8600 Northpark Drive Johnston, Iowa For more information, call (800) 467-0077 or visit http://impoi.wildapricot.org.
Wednesday-Thursday, September 16-17 Arizona Association of Mortgage Professionals 2015 Education and Fall Expo Phoenix Convention Center, West Building 100 North 3rd Street Phoenix, Ariz. For more information, call (623) 972-6180 or visit AZAMP.org.
M O R T G A G E
Wednesday-Friday, October 7-10
American Land Title Association 2015 Annual Convention Westin Copley Place Boston 10 Huntington Avenue • Boston, Mass. For more information, call (202) 296-3671, visit ALTA.org.
2015 Mortgage Star Conference Canyons Resort 4000 Canyon Resort Drive Park City, Utah For more information, call (860) 719-1991 or visit Mortgage-Star.net.
Sunday-Wednesday, October 18-21 Mortgage Bankers Association Annual Convention and Expo 2015 San Diego Convention Center 111 West Harbor Drive • San Diego, Calif. For more information, call (800) 793-6222 or visit MBA.org.
Virginia Association of Mortgage Brokers 27th Annual Convention Hilton Garden Inn Richmond Innsbrook 4050 Cox Road • Glen Allen, Va. For more information, call (804) 285-7557 or visit VAMB.org.
OCTOBER 2015
NOVEMBER 2015
Friday-Sunday, October 2-4
Monday-Wednesday, November 16-18 National Reverse Mortgage Lenders Association 2015 Annual Meeting & Expo The Palace Hotel 2 New Montgomery Street San Francisco, Calif. For more information, call (202) 939-1784 or visit NRMLAOnline.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. * Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.
Wednesday-Friday, November 18-20 Tuesday, December 15
2015 Mortgage Bankers Association Accounting and Financial Management Conference The Roosevelt New Orleans 130 Roosevelt Way New Orleans, La. For more information, call (800) 793-6222 or visit MBA.org.
2015 Florida Holiday Networking Party The Holiday Inn Hotel & Suites 5905 South Kirkman Road Orlando, Fla. For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or email beverlyk@nmpmediacorp.com.
Friday, November 20
JANUARY 2015
Utah Association of Mortgage Professionals Expo 2015 Canyons Resort 4000 Canyons Resort Drive Park City, Utah For more information, call (860) 719-1991 or visit UAMPExpo.com.
Sunday-Wednesday, January 31February 3
DECEMBER 2015
Wednesday-Friday, December 2-4 MBA 2015 Independent Mortgage Bankers Conference Omni Nashville 250 5th Avenue S Nashville, Tenn. For more information, call (800) 793-6222 or visit MBA.org.
Tuesday, December 8 2015 California Holiday Networking Party Atrium Hotel 18700 MacArthur Boulevard Irvine, Calif. For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or email beverlyk@nmpmediacorp.com.
MBA’s 2016 CREF/Multifamily Housing Convention & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org. FEBRUARY 2016
Tuesday-Friday, February 16-19 MBA’s 2016 National Mortgage Servicing Conference & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org. SEPTEMBER 2016
Friday-Monday, September 23-26 NAMB National 2016 The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com. OCTOBER 2016 Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street Boston, Mass. For more information, call (800) 793-6222 or visit MBA.org.
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Thursday-Friday, October 29-30
Originator Connect 2015 Mohegan Sun Casino & Resort 1 Mohegan Sun Boulevard Uncasville, Conn. For more information, call (860) 922-3441 or visit OriginatorConnect.com.
Thursday, December 10
2015 Texas Holiday Networking Party DoubleTree by Hilton Hotel Dallas– Campbell Centre 8250 North Central Expressway Dallas, Texas. For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or email beverlyk@nmpmediacorp.com.
NationalMortgageProfessional.com
Saturday-Monday, October 17-19 2015 NAMB National Conference The Luxor Resort & Hotel 3900 South Las Vegas Boulevard • Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com.
Thursday, September 24
60th Mortgage Bankers Association of the Carolinas (MBAC) Annual Convention & Trade Show Hilton Head Marriott Resort and Spa 1 Hotel Circle Hilton Head Island, S.C. For more information, call (704) 557-0204 or visit MBAC.org.
Wednesday-Thursday, November 18-19
Thursday, October 8 Florida Association of Mortgage Professionals Miami Chapter 2015 Trade Show Miami Airport Convention Center 711 NW 72nd Avenue • Miami, Fla. For more information, call (305) 333-0130.
Sunday-Tuesday, September 20-22 MBA’s 2015 Regulatory Compliance Conference Grand Hyatt Washington 1000 H Street Washington, D.C. For more information, call (800) 793-6222 or visit MBA.org.
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All inquiries will be kept strictly confidential. This is not an offer for legal services, but rather for his expert review and opinion about your particular compliance situation. All fact patterns are different so the results will vary. No guarantees are expressed or implied. Licensed by California and Federal Bar. NMLS 149450.
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Holiday Networking Parties
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HomeBridge Wholesale is a national wholesale lender offering Conventional, Government, Jumbo, and Renovation Loans. 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.
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Tuesday, December 8, 2015 Atrium Hotel Irivine, CA Thursday, December 10, 2015 Doubletree Hotel Dallas Dallas/Fort Worth, TX Tuesday, December 15, 2015 Holiday Inn & Suites Orlando, FL
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SEPTEMBER 2015 n New Jersey Mortgage Professional Magazine n NationalMortgageProfessional.com
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