National Mortgage Professional Magazine - February 2011 by United Sports Publications

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National Mortgage Professional Magazine

TABLE OF CONTENTS RTGAGE PRO

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February 2011

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Volume 3, Number 2

COMPANY

WEB SITE

PAGE

Accurate Quality Control .................................. www.accurateqc.com ..........................................36

Special Focus on “It’s All About Marketing!”

BankFinancial.................................................. www.bankfinancial.com ........................................4 Bay Equity LLC ................................................ www.bayeq.com ..................................................34

Get Personal … With Technology By BJ Bounds

Marketing: Remember the Fundamentals By Scott Seroka

How to Thrive in the New Mortgage Landscape

Benchmark Mortgage ...................................... www.iambenchmark.info ......................................19 Calyx Software ................................................ www.calyxsoftware.com ......................................20 Comergence Compliance Monitoring, LLC .......... www.comergencecompliance.com ..................4 & 38 Elliott and Company Appraisers, Inc................... www.appraisalanywhere.com ................................21

By Kurt Reisig

Flagstar Wholesale Lending .............................. www.wholesale.flagstar.com ....................Back Cover

Influence the Influential By Andy W. Harris, CRMS

Freedom Mortgage .......................................... www.fmbranch.com ......................Inside Back Cover Frost Mortgage Lending Group .......................... www.frostmortgage.com/nmp ..............................35

Social Media … Can’t Live With ‘Em … By Mark Anthony McCray and Tonya D. Bradley

GSF Mortgage Corporation ................................ www.gsfprobranch.com ..........................................9 Guaranteed Home Mortgage.............................. www.joinguaranteed.com ....................................37

The Five Essentials of Every Mortgage Web Site

HVCC Appraisal Ordering .................................. www.hvccappraisalordering.com ..........................26

How to Win Customer Confidence, Generate Referrals and Differentiate Your Business Through Exceptional Customer Service By Scott Peters 30

MortgageProShop.com .................................... www.mortgageproshop.com ..................................44

By Joy Gendusa

MBA-NJ/NJAMB ................................................ www.mbanj.com ..................................................8

Mortgage Concepts .......................................... www.mortgageconcepts.com ..................................5 Mortgage Dashboard ........................................ www.mortgagedashboard.com ................................7

E-mail Marketing Plans: A Small Investment in Time Reaps Big Payoff By Melanie Attia

NAMB.............................................................. www.namb.org/legconference ..............................33 Nationwide Equities Corp. ................................ www.nwecorp.com ..............................................11

Features

NMLF, Inc. ...................................................... www.nmlf.us ......................................................32

The Secondary Market Overview: From Bonds to Production 12 … The Great Real Estate Debate By Dave Hershman

REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ....................................39

NMP Mortgage Professional of the Month: Chris Frost, Vice President and Business Development Manager, Frost Mortgage Banking Group 14

Terrace Mortgage Company .............................. www.terracemortgage.com ....................................6

FHA Insider: Compliant Filed With HUD … Will Lenders be Forced to Accept FHA Minimum Scores? By Jeff Mifsud 17

Windvest Corporation ...................................... www.windvestcorp.com ........................................23

Leaders on the Frontline: Leadership’s Top Priorities

StreetLinks National Appraisal Services .............. www.streetlinks.com/SCORe ..........Inside Front Cover

United Northern Mortgage Bankers Ltd. ............ www.unitednorthern.jobs..............................10 & 28 USA Cares ........................................................ www.usacares.org ................................................15

By Stewart Hunter and Jim McMahan

The NAMB Perspective

By Charlie W. Elliott Jr., MAI, SRA, ASA

Trends in Mortgage Lending for 2011 By Christopher Brown Esq.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

Forward on Reverse: FIT for Reverse Mortgage Lenders (Part VI) … Marital Transitions By Atare E. Agbamu 22 Value Nation: Property Value Rebound Challenges

32 33

Columns NMP News Flash: February 2011

4 15

Heard on the Street

New to Market

NMP Mortgage Professional Resource Registry

NMP Calendar of Events

Visit NationalMortgageProfessional.com.

FEBRUARY 2011

Mortgage Heroes

NationalMortgageProfessional.com

Lykken on Leadership: Leadership and LO Compensation By David Lykken

PB Financial Group Corp. .................................. pbfinancialgrp.com ..............................................32

February 2011 Volume 3 • Number 2

Mortgage PROFESSIONAL N A T I O N A L

MAGAZINE

Your source for the latest on originations, settlement, and servicing

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site: www.nationalmortgageprofessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 andrew@nmpmediacorp.com Domenica Trafficanda Art Director domenicat@nmpmediacorp.com Karen Krizman Senior National Account Executive (516) 409-5555, ext. 326 karenk@nmpmediacorp.com

Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 jonb@nmpmediacorp.com Tara Cook Billing Coordinator (516) 409-5555, ext. 324 tarac@nmpmediacorp.com

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Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Credit 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.

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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FEBRUARY 2011

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.

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ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Senior National Account Executive Karen Krizman at (516) 409-5555, ext. 326 or e-mail karenk@nmpmediacorp.com.

MAG

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A Message From NMP Media Corp. Executive Vice President Andrew T. Berman How can a reduction of 33 percent in volume actually be a good thing? The latest Mortgage Finance Forecast from the Mortgage Bankers Association (MBA) is calling for a drop from $1.5 trillion in originations for 2010 to $966 billion in 2011 and $976 billion in 2012. However, there is some positivity in that harsh reality. It is forecasted that the purchase market will moving from $473 billion in 2010 to $614 billion in 2011, and then $740 billion in 2012. If you take into consideration the massive attrition we have seen in the originator sector, as states like Florida are reporting that only 36 percent of mortgage brokers are currently still in business from last year. Is this a blessing or a curse from the SAFE Act? This number means now is a pretty good time to be in the mortgage industry if you are a referral-based purchase-targeted originator. In this month’s edition, Dave Hershman discusses how the purchase market will be strong in 2011 on page 12 in month’s installment of The Secondary Market Overview, “The Great Real Estate Debate.”

How do we capture this purchase boom? ... It’s all about marketing! This month, we take a look at marketing strategies that are working in today’s marketplace. We all know that marketing is much more than just sending out postcards or taking out Yellow Page ads. In this special section, we see that marketing today runs the gamut from making a strong first impression to cultivating relationships, to quality in customer service to maintaining and following up on referrals. It’s managing and analyzing every step of the process to ensure that you have an everlasting pipeline of loans. I hope you find some nuggets of info to capture your share of the purchase boom.

NMP’s Mortgage Professional of the Month This month, we had the pleasure to sit down and chat with Chris Frost, vice president and business development manager of Frost Mortgage Banking Group. With a banking background and philosophy that puts him in the trenches with his staff, Chris is looking to help guide Frost Mortgage Banking, Primary Residential Mortgage Inc. (PRMI)‘s second biggest division, to the $1 billion mark in production volume in 2011.

Two new additions to the publication You will notice two new sections in the pages of National Mortgage Professional Magazine this month. First, on page 15, you will find “Mortgage Heroes,” a section provided in partnership with USA Cares. Each month, “Mortgage Heroes” will highlight mortgage professionals who go out of their way to support the men and women who have fought to protect this great country we live in. For our column launch, USA Cares selected the folks at Kentucky Neighborhood Bank (KNB) in Radcliff, Ky. for all of their work on behalf of our nation’s defenders. Also new to this issue is the column on page 19, “Leaders on the Frontline” by Stewart Hunter and Jim McMahan of Benchmark Mortgage. In this first installment, we hear from these two execs who lead from the trenches about “Leadership’s Top Priorities.”

Rounding out the issue… Other articles of note in the February 2011 issue include the return of Jeff Mifsud’s “FHA Insider” series on page 17, “Complaint Filed With HUD: Will Lenders be Forced to Accept FHA Minimum Scores?;” in our second installment of “Lykken on Leadership” on page 18, David Lykken breaks down the “7 Cs” or characteristics of what makes a strong leader; “The NAMB Perspective” on page 21 from NAMB Board member Deb Killian where Deb shares a real-life example of closing loans in today’s tough regulatory environment; Part VI of Atare E. Agbamu’s “FIT for Reverse Mortgage Lenders” series on page 22 discussing reverse mortgages and life decisions; “Value Nation” from Charlie W. Elliott on page 32 discussing a rebound in the housing market; and a look at “Trends in Mortgage Lending for 2011” on page 33 from Christopher Brown Esq. of the law firm of Begos Horgan & Brown LLP. Until next month …

Andrew T. Berman, Executive Vice President NMP Media Corp.

The National Association of Mortgage Brokers

National Association of Professional Mortgage Women

11325 Random Hills Road, Suite 360 Fairfax, VA 22030 Phone #: (703) 342-5900 Fax #: (703) 342-5905

P.O. Box 451718 Garland, TX 75042 Phone #: (800) 827-3034 Fax #: (469) 524-5121 Web site: www.napmw.org

NAMB Board of Directors Officers President—Michael D’Alonzo, CMC Creative Mortgage Group 1126 Horsham Road, Suite D Maple Glen, PA 19002 (215) 657-9600 mjdalonzo@hotmail.com Vice President—Donald J. Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355 dfrommeyer@amtrust.net Secretary—Virginia Ferguson, CMC Heritage Valley Mortgage Inc. 5700 Stoneridge Mall Road, Suite 225 Pleasanton, CA 94588 (925) 469-0100 hvm1@msn.com Treasurer—John Councilman, CMC,CRMS AMC Mortgage Corporation 2613 Fallston Road Fallston, MD 21047 (410) 557-6400 jlc@amcmortgage.com Immediate Past President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 jlpair@aol.com

Directors Michael Anderson, CRMS Essential Mortgage 3029 S. Sherwood Forest Boulevard, Suite 200 Baton Rouge, LA 70816 (225) 297-7704 mikea@essentialmtg.com

Olga Kucerak, CRMS Crown Lending 222 East Houston, Suite 1600 San Antonio, TX 78205 (210) 828-3384 olga@crownlending.com Walter Scott Excalibur Financial Inc. 175 Strafford Avenue, Suite 1 Wayne, PA 19087 (215) 669-3273 wscott.afcs@gmail.com

Vice President—Central Region Lisa Puckett (405) 741-5485 lpuckett@ameagletitle.com

President-Elect Laurie Abshier, GML, CMI (661) 283-1262 E-Mail: lauriea@gemcorp.com

Vice President—Eastern Region Christine Pollard (646) 584-8332 cpollard1046@gmail.com

Senior Vice President Candace Smith, CMI, CME (512) 329-9040 csmith@wrstarkey.com

Secretary Murielle Barnes, CME (806) 373-6641 napmw123@yahoo.com

Vice President—Northwestern Region Jill M. Kinsman (206) 344-7827 jill.kinsman@usbank.com

Treasurer Hulene Bridgman-Works (972) 494-2788 hulene137@yahoo.com

Vice President—Western Region Tim Courtney (760) 792-5620 desertranchrealty@hotmail.com

Parliamentarian Dawn Adams, GML, CMI (607) 737-2584 dawnvadams@live.com

National Credit Reporting Association Inc. 125 East Lake Street, Suite 200 Bloomingdale, IL 60108 Phone #: (630) 539-1525 Fax #: (630) 539-1526 Web site: www.ncrainc.org

2011 Board of Directors & Staff Tom Conwell President (248) 473-7400 tconwell@credittechnologies.com Donald J. Unger Vice President (303) 670-7993, ext. 222 don@advcredit.com Daphne Large Treasurer (901) 259-5105 daphnel@datafacts.com Marty Flynn Ex-Officio (925) 831-3520, ext. 224 marty@ccireports.com William Bower Director—Tenant Screening Chair (800) 288-4757 wbower@confinfo.com Mike Brown Director—Technology Chair (800) 285-6691 mike.brown@ncogroup.com

Janet Curtis Director—New Membership & Elections Co-Chair (212) 224-6121 jcurtis@sarma.com Renee Erickson Director—Tenant Screening Co-Chair (800) 311-1585, ext. 2101 renee@zipreports.com Nancy Fedich Director—Conference Chair (908) 813-8555, ext. 3010 nancy@cisinfo.net Judy Ryan Director—New Membership & Elections Chair (800) 929-3400, ext. 201 jryan@kroll.com Tom Swider Director—Legislative Co-Chair (856) 787-9005, ext. 1201 tswider@creditlenders.com Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org

FEBRUARY 2011

Susan Cataldo DirectorEducation & Compliance Chair Jan Gerber (404) 303-8656, ext. 204 Office Manager/Membership Services susancds@cdsusa.net (630) 539-1525 jgerber@ncrainc.org

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Deb Killian, CRMS Charter Oak Lending Group LLC 3 Corporate Drive, P.O. Box 3196 Danbury, CT 06813-3196 (203) 778-9999, ext. 103 debkillian@snet.net

President Gary Tumbiolo, CMI (919) 452-1529 garytumbiolo@aol.com

NationalMortgageProfessional.com

Donald Fader, CRMS SMC Home Finance P.O. Box 1376 Kinston, NC 28503-1376 (252) 523-5800 dfader@smchf.com

National Board of Directors

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The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have jointly released the January edition of the Obama Administration’s Housing Scorecard. The latest housing figures show increased new and existing home sales as home affordability remains high, but officials caution that the market remains fragile, as prices are unsettled. Foreclosure starts and completions remained low at the year’s end, as lenders continue to review internal servicing procedures. “Over the last 20 months, the Obama Administration has confronted the nation’s housing crisis with an unprecedented effort to promote stability in the market—keeping millions of families in their homes and helping millions more to save money by refinancing. But the data clearly show that the market remains extremely fragile,” said HUD Assistant Secretary Raphael Bostic. “We know that many responsible homeowners are still fighting to make ends meet. That’s why we’re committed to continuing to provide help to homeowners by implementing the broad range of programs the Obama Administration has put in place.” “Before the launch of the Administration’s programs, little was done to offer meaningful assistance to homeowners struggling to deal with the worst housing crisis in generations. The data released today demonstrates that the Administration’s programs are reaching middle income homeowners and providing them with real payment relief,” said acting Treasury Assistant Secretary for Financial Stability Tim Massad. “While we cannot prevent every foreclosure, it is important to remember that these programs have helped to create more options for affordable and sustainable assistance than have ever been available before.” Each month, the Housing Scorecard incorporates key housing market indicators and highlights the impact of the Administration’s housing recovery efforts, including assistance to homeowners through the Federal Housing Administration (FHA) and Home

Affordable Modification Program (HAMP). The January Housing Scorecard features key data on the health of the housing market including: New and existing home sales increased in December, but remained below levels seen in the first half of 2010. Record low mortgage rates continue to keep home affordability at record high levels. However, home prices remain unsettled at this fragile stage of the recovery. As lenders review internal procedures related to foreclosure processing, many foreclosure actions have been delayed leading to a lower level of foreclosure activity in December than in prior months. The decline is likely to be temporary as lenders eventually revise and resubmit foreclosure paperwork in the coming months. More than 4.1 million modification arrangements were started between April 2009 and the end of December 2010—more than double the number of foreclosure completions during that time. These actions included more than 1.4 million HAMP trial modification starts, more than 650,000 FHA loss mitigation and early delinquency interventions, and nearly two million proprietary modifications under HOPE Now. While some homeowners may have received help from more than one program, the number of agreements offered was more than double the number of foreclosure completions for the same period (1.7 million). View the December HAMP Servicer Performance Report. Homeowners in HAMP permanent modifications continue to perform well over time, with re-default rates lower than industry norms. December data for the Making Home Affordable Program (MHA) shows that after 12 months, nearly 85 percent of homeowners remain in a permanent modification. Homeowners in HAMP permanent modifications have already reduced their mortgage obligation by more than $4.5 billion to date. For more information, visit www.hud.gov/scorecard. continued on page 6

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news flash

continued from page 4

Rep. Bachmannâ&#x20AC;&#x2122;s Proposes Bill to Eliminate Dodd-Frank Act

FEBRUARY 2011

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Rep. Michele Bachmann (RMN) has introduced HR 87, legislation drafted to repeal the Doddâ&#x20AC;&#x201C;Frank Wall Street Reform and Consumer Protection Act, one of the most far-reaching legislative items of the previous Congress. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m pleased to offer a full repeal of the job-killing Dodd-Frank financial regulatory bill. Dodd-Frank grossly expanded the federal government beyond its jurisdictional boundaries. It gave Washington bureaucrats the power to interpret and enforce the legislation with little oversight,â&#x20AC;? said Rep. Bachmann. The Doddâ&#x20AC;&#x201C;Frank Act (HR 4173) was signed into law by President Barack Obama on July 21, 2010. HR 4173 was originally drafted on Dec. 2, 2009, in the U.S. House of Representatives by Rep. Barney Frank, and in the Senate Banking Committee by Sen. Chris Dodd. Due to Rep. Frank and Sen. Doddâ&#x20AC;&#x2122;s involvement with HR 4173, the conference committee voted to name the bill after the two members of Congress. â&#x20AC;&#x153;Dodd-Frank also failed to address the taxpayer-funded liabilities of Fannie Mae and Freddie Mac,â&#x20AC;? said Rep. Bachmann. â&#x20AC;&#x153;Real financial regulatory reform must deal with these lenders who were a leading cause of our economic recession. True reform must also end the bailout mindset that was perpetuated by the last Congress. I am proud to work towards repeal of Dodd-Frank because Congress must protect the taxpayers, instead of handing out favors to Wall Street.â&#x20AC;? Rep. Bachmannâ&#x20AC;&#x2122;s legislation has been endorsed by the Club for Growth and Americans for Prosperity. Original co-sponsors include Rep. Darrell Issa (CA) of the Committee on Oversight and Government Reform, Rep. Todd Akin (MO), Rep. Tom McClintock (CA) and Rep. Bill Posey (FL). For more information, visit http://bachmann.house.gov.

Agencies Announce Initial Registration Period Under SAFE Actâ&#x20AC;&#x2122;s MLO Provisions The federal bank, thrift and credit union regulatory agencies, along with the Farm Credit Administration, have announced that the Nationwide Mortgage Licensing System and Registry (NMLS) have begun accepting federal registrations. Under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) and the agenciesâ&#x20AC;&#x2122; final rules, residential mortgage loan originators (MLOs) employed by banks, savings associations, credit unions, or Farm Credit System institu-

tions must register with the registry, obtain a unique identifier from the registry, and maintain their registrations. Following the expiration of the 180day initial registration period on July 29, 2011, any employee of an agency-regulated institution who is subject to the registration requirements will be prohibited from originating residential mortgage loans without first meeting these requirements. The rules include an exception for mortgage loan originators that originated five or fewer mortgage loans during the previous 12 months and who have never been registered; they would not be required to complete the federal registration process. The registry announcement is being made by the Board of Governors of the Federal Reserve System, Farm Credit Administration, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Office of Thrift Supervision (OTS). For more information, visit http://mortgage.nationwidelicensingsystem.org or www.federalreserve.gov.

MBA Files Suit to Overturn Department of Laborâ&#x20AC;&#x2122;s Interpretation on LO Overtime The Mortgage Bankers Association (MBA) has filed suit against the U.S. Department of Labor (DOL) in the United States District Court for the District of Columbia under the Administrative Procedure Act (APA). The suit seeks to set aside DOLâ&#x20AC;&#x2122;s Wage and Hour Division Administratorâ&#x20AC;&#x2122;s Interpretation No. 2010-1 (March 24, 2010) that reversed and withdrew a 2006 opinion letter from DOL to MBA. The 2006 opinion letter interpreted DOLâ&#x20AC;&#x2122;s own regulations and concluded that typical loan officers were exempt from Fair Labor Standards Act (FLSA) requirements for overtime payments under the â&#x20AC;&#x153;administrative exemption.â&#x20AC;? â&#x20AC;&#x153;In 2006, the department issued a clear opinion to MBA interpreting DOL regulations that exempted typical mortgage loan officers from overtime pay,â&#x20AC;? said MBAâ&#x20AC;&#x2122;s President and Chief Executive Officer John A. Courson. â&#x20AC;&#x153;If the Department wanted to reverse that opinion, it should have provided notice and an opportunity for public comment. In issuing this administrative interpretation, the department ignored that statutory requirement.â&#x20AC;? The mortgage lending industry has relied on the 2006 DOL opinion letter to MBA and the underlying regulations indicating that a loan officer can qualify for the administrative exemption under the FLSA. MBA claims that the abrupt reversal of this ruling subjects mortgage lenders to unnecessary litigation. â&#x20AC;&#x153;This abrupt reversal by the continued on page 8

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LOS | CRM | MORTGAGE BANKING | CLOSING

news flash managing in the brave new world of mortgage finance attend the 28th Annual Regional Conference of Mortgage Bankers Associations March 15 - 17, 2011 Trump Taj Mahal Casino Resort, Atlantic City, NJ For The First Time: The Residential Program Will Include A Commercial Track So That Attendees Will Have A Choice As To Which Sessions To Attend. Both Cocktail Receptions And The Exhibit Hall Will Be For Both Residential And Commercial Programs.

Tuesday Opening Residential Networking Cocktail Reception in the Exhibit Hall

Wednesday General Session Topics The Future of the Securitization Market, Risk Retention, TBA Market, Reforming the GSE’s, Government Guarantees & More MBA’s Report on Current Legislative/Regulatory Issues Banks in the Mortgage Market How to Use Social Networking: Facebook, Twitter, LO Websites, Blogs

Exhibit Hall with Lunch Afternoon Session Topics LO & Broker Compensation Labor Law Issues (LO Overtime, Department Of Labor Opinion, Minimum Wage)

FEBRUARY 2011

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Mortgage Bankers & Financial Institutions Panel: Independent Mortgage Bankers Mortgage Brokers (FHA Business, Use Of Compare Ratio’s, Etc.) Regulators Roundtable Regulators from NJ, PA & NY Mortgage Fraud Panel: How To Detect And Avoid Mortgage Fraud Networking Cocktail Reception

Thursday Critical Issues Day An in Depth Look at Financial Regulatory Reform LO Compensation Risk Retention Ability To Repay CFPB Regulations Fed Reserve Rules SAFE Act And Related Issues MI’s: Future Of The Private MI Industry Residential Mortgage Lending For Financial Institutions Subsidiary vs. Division Registration Of LO’s Obtaining HUD Approval Investor Approvals Underwriting A View From The Regulators: OCC, FDIC, State Reg

For Registration Information visit www.mbanj.com

continued from page 6

Department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer,“ said Courson. “Requiring loan officers to be paid overtime will not increase their compensation and asking them to now track and report their hours will deprive them of the flexible schedules they and their customers have enjoyed. What we are asking the court to do is to set aside this ruling, effectively requiring that, if the Department wants to reverse the 2006 ruling, it follow the APA and issue a proposed rule for public comment. If the department were to do that, we are confident it would find that the existing ruling providing an administrative exemption for loan officers from overtime should remain.” In its suit, MBA asks the court to declare that the department violated the APA, vacate and set aside the Administrator’s Interpretation (AI) and prevent enforcement, application and implementation of the AI. The suit also urges that, because the DOL’s interpretation in the AI is contrary to the plain language of the regulations and the preamble interpreting them, the AI is arbitrary, capricious, an abuse of discretion, and otherwise, contrary to law. For more information, visit www.mortgagebankers.org.

FHFA and GSEs to Work on Alternatives for New Mortgage Servicing Compensation Structure The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to work on a joint initiative, in coordination with FHFA and the U.S. Department of Housing & Urban Development (HUD), to consider alternatives for future mortgage servicing structures and servicing compensation for their single-family mortgage loans. Currently, a servicer’s compensation is generally based on a minimum servicing fee that is part of the mortgage rate, which decreases the flexibility necessary for optimal servicing of nonperforming loans from both the borrowers’ and guarantors’ perspectives. The current servicing compensation structure also results in the creation of a mortgage servicing right asset, which is difficult to manage and separate from a servicer’s core competency of servicing mortgage loans. The joint initiative announced will consider alternatives to the traditional servicing compensation structure. The goals are to improve service for borrowers, reduce financial risk to servicers, and provide flexibility for guarantors to

better manage non-performing loans, while promoting continued liquidity in the mortgage securities market. Alternatives for consideration may include a fee for service compensation structure for nonperforming loans as well as the possibility of reducing or eliminating the minimum mortgage servicing fee for performing loans, or other structures. Many of these issues have been the subject of discussion within the mortgage industry for years. “As the recent problems in managing mortgage delinquencies suggest, the current servicing compensation model was not designed for current market conditions,” said FHFA Acting Director Edward J. DeMarco. “The goal of this joint initiative is to explore alternative models for single-family mortgage servicing compensation that better address the needs of borrowers, servicers, originators, investors and guarantors.” FHFA will coordinate efforts of the initiative over the next several months to gather feedback from the industry, consumer groups and investors, and from other regulators and government agencies. FHFA expects that this effort will lead to a proposal for a new singlefamily mortgage servicing compensation model that will benefit from broad public input. Any implementation of a new servicing compensation structure would require a significant lead time to ensure that all participants in the mortgage finance process have sufficient time to adjust to any changes. Any such implementation would be prospective in nature and would not be expected to occur before the summer of 2012. For more information, visit www.fhfa.gov.

FHA Seeks to Stabilize the Housing Market Through Anti-Flipping Deadline Extension In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Federal Housing Administration (FHA) Commissioner David H. Stevens has extended the FHA’s temporary waiver of the agency’s “anti-flipping rule.” The extension is intended to accelerate the resale of foreclosed upon homes in neighborhoods struggling to overcome possible property abandonment and blight. With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. Early in 2010, the FHA temporarily waived this regulation through Jan. 31, 2011. FHA today posted a notice extending this waiver through the remainder of 2011. This action will permit buyers to continue to use FHAinsured financing to purchase U.S. Department of Housing & Urban

A coalition of seven major public pension systems has called on the boards of directors of Bank of America, Citigroup, JP Morgan Chase and Wells Fargo to immediately undertake independent examinations of the banks’ mortgage and foreclosure practices. Led by New York City Comptroller John C. Liu on behalf of the five New York City Pension Funds, the coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement

System, the New York State Common Retirement Fund, the North Carolina Retirement Systems and the Oregon Public Employees Retirement Fund. The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter. The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages. In November, the New York City Pension Funds and Comptroller Liu

made a similar request for bank boards to conduct independent policy reviews as part of a shareholder proposal to the banks’ annual meetings in the spring. “The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors,” Comptroller Liu said. “There is a fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies. Given the risks involved, only a swift and unbiased audit can reassure shareholders that the pension funds of 700,000 working and retired New Yorkers are in safe hands. The boards of directors have no time to waste.” continued on page 11

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All transactions must be armslength, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. For more information, visit www.hud.gov.

Seven Public Pension Systems Call Out Major Lenders on Their Foreclosure Practices

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Development (HUD)-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. “As I noted when we first announced this policy change early last year, because of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Stevens. “Today, I can report that this policy change has been effective. Since the original waiver went into effect on last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition.” FHA research finds that in today’s market, acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time. “Because of past restrictions, FHA borrowers have often been shut out from buying affordable properties,” said Stevens. “This action enables our borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated. It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.” The extension is effective through Dec. 31, 2011, unless otherwise extended or withdrawn by FHA. All other terms of the waiver will remain the same, and HUD continues to invite public comment on it. The waiver contains strict conditions and guidelines to assure that predatory practices are not allowed. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver continues to be limited to those sales meeting the following general conditions:

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The Federal Housing Administration (FHA) has released guidance for homeowners and lenders

continued on page 12

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FHA Issues Guidance for Reverse Mortgage Borrowers Facing Foreclosure

that use the reverse mortgage or Home Equity Conversion Mortgage (HECM) program and are dealing with outstanding property taxes and unpaid hazard insurance premiums. FHA’s guidance is intended to assist elderly borrowers who have neglected to pay these expenses and may face foreclosure. “We understand that some senior citizens have not paid their taxes or insurance for some time and may be at risk of losing their home,” said FHA Commissioner David H. Stevens. “Today’s guidance is designed to establish a clear framework that protects both the homeowner and the

FHA’s Mortgagee Letter 2011-01 applies to all HECM loans where the lender/servicer advanced corporate funds to satisfy an unpaid property charge on behalf of the borrower. It reminds lenders that foreclosure is to be a last resort when dealing with their elderly clients. It also includes sample letters that lenders may use to make certain borrowers understand that property tax and hazard insurance are required expenses that must be paid even though the homeowner owes nothing on their mortgage loan. Mortgagee Letter 2011-01 precisely defines the process and reporting requirements lender/servicers must fol-

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The coalition represents more than $430 billion in pension fund investments, including $5.7 billion invested in the four banks. “We don’t know exactly what the banks were doing, and we don’t know if they did it right,” New York State Comptroller Thomas P. DiNapoli said. “Millions of families have lost their homes, and the investments of the million members of the Common Retirement System have been put at risk. As investors, we need to understand what happened. A full and open examination of the procedures used to foreclose on millions of families is the only way to make sure our investments are protected and no one is ever wrongfully evicted from their home.” Federal Reserve Governor Daniel K. Tarullo testified before the Senate Banking Committee on Dec. 1 that the Federal Reserve’s preliminary findings on bank foreclosure procedures suggested “significant weaknesses in risk-management, quality control, audit and compliance practices as underlying factors contributing to the problems associated with mortgage servicing and foreclosure documentation.” The Congressional Oversight Panel has estimated that banks’ potential mortgage liability could total $52 billion, borne largely by the four banks contacted by the pension funds. The Panel’s Nov. 16 report titled, “Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation,” concluded that banks’ could suffer “disabling damage” if they were found to have misrepresented the quality of loans sold for securitization and forced to reabsorb billions in troubled loans. “The responsibility for making sure that internal controls and compliance process are in place for mortgage and foreclosure practices rests squarely with these Audit Committees,” said North Carolina State Treasurer Janet Cowell. “The recent testimonies and studies strongly suggest the need for these Audit Committees to act swiftly and objectively in conducting an independent and comprehensive review of these practices.” The coalition of pension funds called for the banks to report the findings of their independent examinations in their 2011 proxy statements this spring. As of Dec. 31, 2010, the coalition’s combined holdings in each bank included: 97.1 million Bank of America shares valued at $1.3 billion; 226.6 million Citigroup shares valued at $1.1 billion; 40.7 million JPMorgan Chase shares valued at $1.7 billion; and 50.6 million Wells Fargo shares valued at $1.6 billion. For more information, visit www.comptroller.nyc.gov.

lender who participate in our reverse mortgage program.” HUD regulations allow lenders to make tax and insurance payments on behalf of their elderly clients from the borrower’s available mortgage funds. However, once those resources are exhausted, the lender must advance funds to protect FHA’s interest and obtain reimbursement from the borrower. Over time, however, these unpaid debts and lender advances have resulted in an untenable situation that could put the FHA Insurance Fund at risk and result in foreclosure proceedings against delinquent seniors. While the guidance issued is intended to help elderly homeowners avoid foreclosure, lenders may have no choice if these defaults are not cured.

side is winning out. Higher rates are not necessarily a bad thing in this regard… From a recent Money article: “Some industry experts say the rise in rates may stimulate a sluggish housing market. The rising rates create an urgency for potential buyers. They’ll have more incentive to buy soon before rates go any higher. Lawrence Yun, chief economist of the National Association of Realtors, doesn’t foresee a moderate hike in rates as a negative for the industry. Instead, he says the real challenge is getting lenders to approve creditworthy buyers for a loan. ‘It’s less about rates than it is about underwriting standards ... If lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to need to live somewhere—and not the housing market and spillover benenecessarily in an apartment because fits for the broader economy,’ Yun said.” they prefer a house or need a house because of family size. Hint: These Expect this debate to continue for extra renters make for a great invest- some time. This real estate market is ment market for decades to come. not likely to change on a dime. Job creInterested in my recent article: “The Demographics of Real Estate?” Then e-mail me at success@hershmangroup.com to receive a copy.

The Great Real Estate Debate

FEBRUARY 2011

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Every day, we hear news about millions of foreclosures in the pipeline. We also hear that the delinquency rate on home loans is improving. In the debate regarding the recovery of the economy, certainly real estate is front and center. We cannot have a strong recovery unless real estate contributes positively to economic growth. CNN/Money posted an interesting article during the holidays. On one side, Bill Ackman, chief executive officer and founder of hedge fund Pershing Square Capital Management, and Warren Buffett both stand on the side of the bulls who say it is time to start investing in real estate. Meanwhile, Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, highlighted the millions of impending foreclosures to predict lower home prices in 2011. Who is right? In reality, the news will probably be somewhere in between. There are some strong forces working in both directions as you will see by the reasons “for” and “against” a real estate rebound in 2011 we have listed below. The reasons “for” the real estate market to get stronger in 2011: Homes are more affordable than they have been in a generation due to low rates and lower housing prices. Yes, rates have risen, but they are still unbelievably low. The economy is improving and jobs are being created consistently, unlike the previous three years. As the economy improves, household formulation will rise as well. Kids will move out of the basement and more couples will actually get divorced because they can afford to be divorced. While credit standards are tight, we have probably reached the height of the credit cycle, and as real estate recovers, banks will be more anxious to lend because real estate will once again be considered a “safe” investment. Along the same lines, as rates creep upward and refinances dwindle, banks will be competing for a smaller market share of home loans. The population is growing. We are now at more than 300 million Americans in the nation. These people need to live somewhere. Even those who are foreclosed upon will

The reasons the real estate market “will not” gain strength in 2011: Two words: “Shadow inventory.” There are millions of homes in the foreclosure pipeline and millions of homes that are underwater, and therefore, are likely to become foreclosures in the future. Some have estimated as much as four years to clear out this inventory and thus up to decades for the real estate market to recover in some harder hit areas. Even with the economy creating jobs consistently, unemployment is high and therefore, consumers will react cautiously. The latest jobs report showed more than 100,000 in jobs created, but we need more than 200,000 new jobs each month to change the equation. The economy is improving, but we have not reached this level as of yet. The debt crisis in Europe and other economic factors we don’t even know about yet could cause the economic recovery to slow down or even come to a halt. The recovery has been pumped up by government stimulus in the past two years and this effect is ending. As a matter of fact, with the deficits faced by the federal and state governments, government shrinkage is likely to become a drag upon the economy. What does this all mean for you? Even though refinances may be down due to higher rates, don’t expect the purchase market to fully fill the void. More competition for fewer loans will call for survival of the fittest. However, the good news is that these conflicting forces will allow for the purchase market to move forward and rates should not move up so quickly that refis completely vanish. If rates do rise more rapidly, it very well means that purchases are just getting stronger as the “bullish on real estate”

news flash

“While credit standards are tight, we have probably reached the height of the credit cycle, and as real estate recovers, banks will be more anxious to lend because real estate will once again be considered a ‘safe’ investment.” ation, looser underwriting standards and a stronger consumer will all come, but not at breakneck speed. Nor will higher rates ...? Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s NewsletterPro Marketing System can be found at www.webinars.originationpro.com. If you would like to stay ahead of what is happening in the markets, visit ratelink.originationpro.com for a free trial or e-mail success@hershmangroup.com.

continued from page 11

low to collect unpaid property charges from HECM borrowers. FHA is strongly encouraging HECM borrowers who have outstanding property charges to work closely with loan servicers and approved housing counselors who can provide free assistance to help them resolve the situation and avoid any foreclosure action. The U.S. Department of Housing & Urban Development (HUD) is also providing nearly $3 million to housing counseling agencies to specifically help reverse mortgage borrowers facing this issue. Counselors will help elderly homeowners work with their servicer to create repayment plans that cure the outstanding balance. If keeping the home is no longer an option, the counselors will help the borrower transition to alternative housing. Under this new guidance, lenders must send letters to borrowers who recently missed a property charge payment, borrowers who had an unpaid property charge balance for an extended period, and to borrowers with a significant unpaid property charge balance. Lenders have until Feb. 28, 2011, to send all letters to borrowers with loans that are delinquent as of the date of the Mortgagee Letter. Thereafter, letters must be sent as soon as the mortgagee receives notice of a missed payment. The lender must also offer loss mitigation options to allow the borrower the opportunity to cure the deficiency. These options must include, but are not limited to, establishing a realistic repayment plan; contacting a HUD-approved housing counseling agency to provide free assistance to the borrower; and refinancing the delinquent HECM to a

new reverse mortgage if there is sufficient equity to pay off the existing mortgage and bring the property charges current. For more information, visit www.hud.gov.

MBA Study Examines Foreclosures and Decline in American Cities The Great Recession of 2007-2009 has created new declining cities, and posed further difficulties for cities already in decline. Some cities may not re-attain home price peaks for many years, and could see some neighborhoods cease to be viable economically, according to a study released by the Mortgage Bankers Association (MBA). “A Study of Real Estate Markets in Declining Cities,” conducted by James R. Follain, Ph.D., senior fellow of the Rockefeller Institute of Government and sponsored by the MBA’s Research Institute for Housing American (RIHA), analyzes the recession’s impact on real estate markets in cities in the midst of a severe and persistent economic decline. The study includes detailed statistical analysis of trends in U.S. metro areas over the past 40 years, paying particular attention to seven large metro areas since 2000, and a comprehensive review of existing academic research on this topic. “The primary goal of this paper is to offer insights on the potential future evolution of real estate markets in cities that are in the midst of a severe and persistent economic decline. Typically, a declining city is one that suffers a major loss in population owing to a dramatic reduction in its employment

base,” said Follain. “These are cities that lost comparative advantage in the production of a manufacturing product like automobile or steel but the newly identified declining cities are places that grew substantially during the housing boom and are now experiencing unprecedented declines in home prices and increases in foreclosures.” “The future viability of these areas may be threatened by recent economic events,” said Follain. “This is a critical point that should be well understood by potential home buyers and lenders who want to avoid places plagued by high foreclosures, vacancies and a deteriorating housing stock due to deferred maintenance. Overall, neighborhood choice is likely to become a more important component of housing decisions in those markets particularly hard hit by the current housing crisis and the Great Recession.” Michael Fratantoni, MBA’s vice president of research and economics said, “Though the pace and extent of the overall economic recovery of these markets is still far from certain, many places will likely resume growth and fully recover within the next decade or so. This will likely not to be the case for all metropolitan areas, however. Even among those metro areas with relatively brighter long-run prospects for growth, certain segments or submarkets within them may remain well below the peaks reached at the height of the boom for many years to come.” For more information, visit www.mortgagebankers.org.

LendingTree Survey Finds Consumers Shy Away From Comparison Shopping for Mortgages

Trepp Reports CMBS Delinquency Rate Hits Record High of 9.2 Percent in December

For more information, please visit www.hopeloanportal.org.

HOPE LoanPort has announced that Chase Bank has awarded the nonprofit a $100,000 grant to help facilitate mortgage loan modifications. Formed in 2009, HOPE LoanPort is a Web-based utility created to improve the execution of loan modifications. The portal is currently being used by homeowners, non-profit counselors, servicers and other organizations involved in the loan modification process. The Chase grant will provide additional support to HOPE LoanPort, which allows U.S. Department of Housing & Urban Development (HUD)-approved housing counselors to collect all of the necessary documents from homeowners, upload the completed package directly to mortgage servicers and track the status of a homeowner’s application. Chase’s mortgage servicing division has been instrumental in the development of HOPE LoanPort since the early stages. As a charter member, Chase provided a dedicated project manager during the pilot phase and continued guidance for the HOPE LoanPort steering and outreach committees. Currently, 12 major mortgage servicers use HOPE LoanPort and three more are likely to finalize their participation in the next few weeks. Active users of HOPE LoanPort include more than 1,700 housing counselors from 448 organizations in 47 states, the District of Columbia and Puerto Rico. “We are pleased to continue supporting HOPE LoanPort in streamlining the loan modification process,” said Kimberly Davis, managing director, global philanthropy. “This Web portal enhances communication between homeowners, housing counselors and mortgage servicers. Our grant will enable HOPE LoanPort to continue to be innovative in helping homeowners in these challenging times.” “We are thrilled by Chase’s continuing support as we move into the next phase of our evolution,” said Larry Gilmore, president and chief executive officer of HOPE LoanPort. “As a non-profit, we know how important these grants are to our future success. We are working diligently, with our partners, each day to provide a top-notch, Web-based, public utility for all parties with a stake in the future of the American housing market.” HOPE LoanPort, powered by RxOffice and developed by the HOPE NOW Alliance, is a new Web-based tool that streamlines loan modification applications on behalf of homeowners at-risk of foreclosure, allowing housing counselors to efficiently transmit completed applications to mortgage servicers. HOPE LoanPort is designed to improve the quality of both the application itself and the ability of servicers to make decisions on that application.

Cooperative, an alliance of community mortgage bankers, correspondent lenders and suppliers of mortgage products and services, has announced a new national marketing campaign to establish a seal of excellence for the mortgage industry. The LendRIGHT commitment is intended to create a distinct point of differentiation among lenders offering home mortgages. The LendRIGHT program is designed to allow consumers to easily recognize lenders who are committed to providing a premium level of service, expertise and ethics in communities around the country. The LendRIGHT mark will indicate to consumers that participating Members of the Lenders One mortgage cooperative have pledged to pursue operational integrity and customer service excellence. “We want to restore confidence in the mortgage industry and assure consumers that these lenders have vowed to provide the highest levels of quality and performance,” said Scott Stern, Lenders One chief executive officer. “Borrowers should be confident that the company they select for home financing is committed to maintaining the utmost standards in terms of education, training, compliance, fiscal responsibility and service. LendRIGHT lenders offer that assurance.” The program will be supported by a campaign that includes a robust national media program, as well as local-market implementation tools, for LendRIGHT lenders to leverage the mark and effectively differentiate themselves. A national Web site (www.lendright.com) will help direct consumers to their local LendRIGHT lender and provide resources to assist them with learning more about the mortgage process. LendRIGHT lenders also will have tools in place to further educate consumers about the processes and services that should be expected from a mortgage provider. For more information, visit www.lendersone.com or www.lendright.com.

Lenders One Announces LendRIGHT: The Chase Awards HOPE Mortgage Industry Seal of LoanPort $100,000 Grant to Excellence Lenders One Mortgage Facilitate Loan Mod Efforts

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

FEBRUARY 2011

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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Trepp LLC, a provider of commercial mortgage-backed securities (CMBS) and commercial mortgage information, analytics and technology to the global securities and investment management industry, has released its December 2010 Delinquency Report. According to the report, the U.S. CMBS delinquency rate rose again in December with the percentage of loans 30 or more days delinquent, in foreclosure or real estate-owned (REO) climbing 27 basis points to 9.20 percent, the highest in history for U.S. commercial real estate loans in CMBS. The value of delinquent loans now exceeds $61.5 billion. The decline in the delinquency rate in October 2010 now appears to have been a blip, as the rate has since increased by 62 basis points. December’s 27 basis point jump comes despite the fact that new issues continued to make their way into the calculation and servicers continued to resolve troubled loans. The new deals—which theoretically should have low delinquencies for a while—will continue to put downward pressure on the delinquency rate as issuance continues to grow in 2011. Similarly, the resolution of troubled loans will also help to lower the rate. “Many have speculated that between the emergence of new CMBS lending, the resolution of many troubled CMBS loans and an uptick in trophy property sales, that the commercial real estate crisis was nearing its final stages,” said Manus Clancy, managing director of Trepp. “The December delinquency

rate underscored that there still may be some nasty surprises in store even as the market shows some signs of healing.” For more information, visit www.trepp.com.

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According to a new LendingTree survey of 1,317 homeowners conducted online by Harris Interactive in September, 96 percent of American consumers compare prices when shopping for anything, but nearly 40 percent obtain just one home loan quote. By comparison, when shopping for a home computer, consumers research an average of 3.1 models before making a purchase. This explains why fewer than three in 10 (28 percent) borrowers are very confident they received the best possible deal on their current mortgage. Based on a nationally-representative sample of current homeowners who were involved in shopping for their home loan, the study revealed 85 percent of consumers use the Web to comparison shop, yet just more than one in five (21 percent) shopped online first for mortgage rates. Additionally, although nearly 40 percent obtain just one home loan quote, more than nine in 10 borrowers (91 percent) understand interest rates vary between lenders. “Choosing a mortgage is probably the most important financial decision most of us will ever make, yet many consumers simply take the first offer that comes their way,” said Doug Lebda, chairman and chief executive officer of LendingTree. “It’s a gamble

that leaves many borrowers uncertain they’ve received the best deal on their mortgage. Our research clearly shows that home buyers and homeowners need help navigating the often complex world of home loan financing. LendingTree strives to simplify the process and instill confidence by offering services like our Best Deal Guarantee, lender ratings and reviews, and the opportunity to compare multiple offers. At the end of the day, 30 years is too long to be in the wrong loan.” Frustration also appears to be at the root of this shopping dilemma. According to the survey, 70 percent of borrowers find shopping for a mortgage frustrating, citing the complexity of the terms (21 percent) and time-intensiveness nature of the process (20 percent). This survey was conducted online within the United States by Harris Interactive on behalf of LendingTree from Sept. 28-30, 2010 among 1,317 homeowners ages 18 and older, of which 659 adults were at least somewhat involved with obtaining their current mortgage. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For more information, visit www.lendingtree.com.

Chris Frost, Vice President and Business Development Manager Frost Mortgage Banking Group

FEBRUARY 2011

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Each month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at newsroom@nmpmediacorp.com for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Chris Frost, vice president and business development manager of Frost Mortgage Banking Group. Chris was born in Monterey Park, Calif. and moved to New Mexico with his parents when he was eight-years-old at the urging of his uncle, noted industry speaker Greg Frost, noted as the industry’s first $1 billion loan originator. Greg was a graduate of the University of New Mexico and saw the tremendous growth opportunity in Albuquerque. Chris’s father, Mike Frost, started his homebuilding company shortly after relocating and has served New Mexico families ever since. Mike also currently acts as Frost Mortgage Banking Group’s facilities manager. Chris attended New Mexico State

University in Las Cruces, N.M., majoring in finance. While in college, Chris was a member of the Lambda Chi Alpha fraternity, and worked part-time in commercial banking for three years. He spent a total of seven years in banking, culminating with his role as assistant vice president and branch manager at the Bank of Albuquerque. He made his move to mortgage banking and Frost Mortgage Banking Group in December of 2002, learning the business under the tutelage of his uncle Greg. Chris has been a top loan originator, sales trainer, sales manager, and now serves in his current role as Frost Mortgage Banking Group’s vice president and business development manager. Chris is a member of the New Mexico Mortgage Lenders Association, the New Mexico Association of Mortgage Professionals, the Hispano Chamber of Commerce and the National Association of Hispanic Real Estate Professionals. Under Chris’s watch, he has helped grow the company from five local branches with $100 million in annual volume to 20 national branches encompassing 13 states and $300 million in annual volume. Chris and his team currently have another seven branches committed and in the process of being vetted and approved by Frost’s parent company, Primary Residential Mortgage Inc. (PRMI). His team has a 2011 divisional goal of 30 branches and $1 billion in annual volume. Frost Mortgage Banking Group finished as the second most productive division in the PRMI organization. The goal for 2011 is to finish in the top spot. Chris has been married to Holly for 10 years and has two children, 15-year-old Destiney and eight-year-old Ryan. When not in the office, Chris enjoys traveling with his family, golfing with friends and colleagues, participating in parent associations at both of his children’s schools

and philanthropic organizations, includ- have to start at the ground level to get to ing the Full Plate Society of Roadrunner one of those spots. They don’t just hand Food Bank. out positions like that. Once I got to school and started to realize the amount How did you first get involved in the of time and effort you had to put into sitindustry? ting in a cubicle and doing nothing but I was born in Monterey Park, Calif. and crunching numbers on a sheet, I realized my uncle Greg [Frost] came to corporate accounting just wasn’t for me. Albuquerque, N.M. to attend the I always thought I was going to be interUniversity of New Mexico on a football acting with the public and exchanging scholarship. After he graduated, he had ideas and growing, but that’s not an a friend of his who got him into the accountant’s job. Their job is to sit financial sector, and at that time, behind closed doors and maybe give a Albuquerque was relatively small with a population of around 400,000. Greg saw tremendous growth opportunity in the “Communication is the New Mexico market and urged my lubrication in any well-run father to move here from California. organization.” When I was eight-years-old, my parents relocated to New Mexico. My father was in the construction presentation, but ultimately, its time industry, so he came out here and start- alone behind doors buried in spreaded work with a company, ultimately sheets and I just didn’t want to do that. opening up his own company, Arcadia I chose finance because it was closeHomes. He’s been running that opera- ly related to accounting, but gives me tion ever since. more of a business perspective. I I interned for my uncle Greg a couple interned with Greg [Frost] over one of summers while I was going to high summer performing entry level tasks: school and I found my path in the Driving to the Department of Veterans financial services arena. I also worked Affairs (VA) office and taking verificafor my dad during the summers in the tions, picking up mail, going to title homebuilding industry, out in the ele- companies and picking up packages, ments, so I really got to see both sides and sitting in on interviews for preof the fence. With my grandmother qualifications and applications. Greg’s being a Realtor, my uncle being a mort- objective was that everybody in the gage banker and my father a builder, it organization is integral to the success of was obvious I would be in the residen- the organization and that I needed to tial home sector in some fashion. learn the most fundamental task and its importance. My take is that it doesn’t When you started school, were you matter if someone is simply sitting looking at a career in retail banking? behind a desk and answering phones, Were you planning all along to join you are still the “Director of First up with your uncle Greg Frost in the Impressions.” Everybody in the organimortgage industry? zation is a piece of the puzzle. When I No … actually when I went to college, I was finished with my internship, I realwanted to be a corporate accountant for ized this is really where I wanted to be, a Fortune 500 company. What I didn’t helping people achieve the American realize, at the time, is that you actually dream of homeownership.

I started working for Sun West Bank, who was ultimately bought out by Boatmen’s Bancshares, who was eventually bought out by Nations Bank, who was sold to Bank of America. I started to work for an offspring of the merger with Bank of America and Nations Bank with a bank called Bank of Albuquerque. I started as a con-

“Today’s lending environment is very cumbersome. It’s more challenging than it has ever been. People must know the ins and outs of the government product offerings …” sumer banker and worked my way up relatively quickly to the position of vice president and branch manager. Around early November of 2002 my uncle Greg was heavily focused in public speaking, coaching and training sessions across the country. He was in strong demand and knew he was going to get out of the origination business physically. It was at that time that I moved onto Frost Mortgage Banking Group.

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Are you a “Mortgage Hero” or know of anyone who might be? We want to hear from you if you’ve completed the FREE Military Family Housing Education Course as Mortgage Heroes deserve to be recognized for their outstanding service to America’s servicemen and servicewomen. Please send a short bio to MFHE Program Manager Beverly Frase at Beverly.Frase@USACares.org.

FEBRUARY 2011

As a branch partner under the Frost division, do your branches partners also receive guidance on how to run their operations? Our parent company is PRMI, Primary Residential Mortgage Inc., headquartered in Salt Lake City, Utah. Whenever I am doing a presentation or sales demonstration to prospective branch partners, I say to them that they are basically the wall outlet and Frost Mortgage Banking Group is the power strip. We plug into PRMI, but everybody else plugs into us, so their direct source is us.

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What sort of management philosophy have you implemented at Frost Mortgage Banking Group? Greg [Frost] always says, “Communication

“It doesn’t matter if someone was simply sitting behind a desk and answering phones, you are still the “Director of First Impressions.” Everybody in the organization is a piece of the puzzle.”

When we think of “Mortgage Heroes,” the folks at Kentucky Neighborhood Bank (KNB) in Radcliff, Ky., come to mind. The minute they heard about the free new USA Cares Military Family Housing Education course, designed to provide a clear understanding of how to work with military borrowers, they were eager to take it and get certified. Not only did all their loan officers take the course, their entire lending staff signed up! Even though they’ve been skillfully serving their military clients for many years, Loan Officer Ken Dozer remarked after completing his exam, “Everyone who touches a loan should take this course!” Stepping up to help our military service men and women is nothing new at KNB Bank. They teamed up with USA Cares nearly five years ago to continue their approach that we can all do just a little bit more to help our service members, who are friends and family to all of us. They were already offering a higher than average rate of return on their military deposit accounts to further their mission to help. Participating in the “red shirt Friday” campaign since its inception, they decided to take it a step further. Purchasing several hundred long- and short-sleeved t-shirts, they sold and contributed 100 percent of the proceeds to USA Cares. Where most donors simply donate the difference between the shirt and the sale price, KNB has footed the expense for the shirts personally and then donated the proceeds from the sales without recouping the cost of the shirts. That’s generosity! As one more added twist of giving, KNB Bank offers its employees the opportunity to designate USA Cares as the beneficiary of their payroll-deducted United Way contributions. It all adds up to make a difference to service members everywhere. Over the last few years, KNB Bank’s fundraisers, and just plain giving, have funneled thousands of dollars to help alleviate the many needs that arise in even ordinary military life, much less the current multiple deployments of guard and reserve units everywhere. KNB Bank actively participates in the annual USA Cares golf scramble held at Fort Knox, Ky. Loan Officer Ken Dozer stepped up this year as committee member and treasurer for the USA Cares Wounded Warrior Golf Scramble held at Fuzzy Zoeller’s Covered Bridge Country Club in Louisville, Ky. In other words, when USA Cares mentions another way to help our military service men and women, the folks at KNB Bank immediately say, “Yes!” We extend to everyone at KNB Bank, their lending department, support staff, indeed all of their employees, our deepest appreciation on behalf of service members worldwide and congratulate them for being true “Mortgage Heroes!”

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Is there anything that you feel you would’ve done differently along your career path? Looking back at your history, do you feel like you came in at the right time or do you feel that you would’ve liked to have spent more time on the banking side, learning operations before you joined Frost Mortgage? Back when I started working at the bank, the hours were 9:00 a.m.-3:00 p.m., you wore a suit and tie, and people came in to visit you dressed as though it was an important appointment. That was a good experience for me to be able to work up the ranks and learn from the banking side commercially. I was able to grow professionally and individually with each challenge. In the long run, it gave me a strong foundation. Our goal with Frost Mortgage Banking Group is to do $1 billion annually in funding. That may seem like a lofty goal and Greg [Frost] wrote an e-mail to our team that said, “Dream … dream a big dream. Make the dream your goal.” The idea here is that if you have a dream and set a goal, and if you attain 30, 40 or even 50 percent of what that goal was, you will have attained more than you would have had you never set one at all. It’s just a challenge to yourself.

is the lubrication in any well-run organization.” The idea behind it is that 99 percent of all errors or failures are based on communication. It’s either a total lack of clarity with communication, a miscommunication, an e-mail to somebody when you should’ve spoken to them ... it’s the execution that’s flawed and the reason why is because the communication didn’t come through. For example, I took my office from upstairs at Frost Mortgage and moved it downstairs into the heart of the operations center. I wanted my door open for all to come in and stay on top of day-today operations. To me, effective communication begins with listening to find out what it is that people want, then taking a step back, putting a plan together as a group and then moving the plan forward. That is what we were are trying to accomplish. At Frost Mortgage, we hold monthly meetings and issue monthly reports. We address all items of concern, put out a scorecard and everyone sees what everyone else is doing production-wise. The goal is to never be at the bottom of that scorecard! We use things like this as a motivational tool and urge them not to take poor production numbers personally, but to use it as a means of motivation to work harder and build upon that the following month. It’s constant evolution that makes you better. Effective communication is just simply asking questions and listening to what your employees say and then finding a way to implement some resolutions on what it is they want.

mortgage professional PRMI handles the compliance end, they have the warehouse commitments, they’ve got the correspondent investors and their products. We plug into those things. Every branch partner that is beneath us, including our local loan officers that work for us, plug directly into us first.

“… if you have a dream and set a goal, and if you attain 30, 40 or even 50 percent of what that goal was, you will have attained more than you would have had you never set one at all. It’s just a challenge to yourself.”

FEBRUARY 2011

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We have a monthly sales meeting with our local loan officer staff where we invite the processing manager and senior underwriter so that we can share all the things that are going on specifically within their marketplace. We highlight things they need to address themselves because they are really not partners managing a branch. They are loan officers, so their needs are a little bit different, as they are more of a microcosm of what the business is. I also hold an individual monthly call with each manager of our branch network across the country, where we spend time discussing the econometrics in their specific market, analyzing programs, trends in their local market, networking opportunities, etc. PRMI holds two underwriting training conference calls each month as well, in addition to marketing calls presented by Greg Frost, PRMI’s marketing director. Our branch partners have the opportunity to plug into Greg, which is a tremendous asset to any organization. Who is the right fit for Frost Mortgage Banking Company and who isn’t the right fit as a partner? From an operations standpoint, a staff member from an underwriter to a processor, we’re looking for folks who have been in the industry for eight to 10 years.

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Today’s lending environment is very cumbersome. It’s more challenging than it has ever been. People must know the ins and outs of the government product offerings, whether it be Fannie Mae, Freddie Mac, U.S. Department of Veterans Affairs, Federal Housing Administration (FHA) … but they also have to know investor-specific guidelines in conjunction with any overlays that you may have in your own firm. It’s a challenge if you take somebody who came from an assembly line process where one individual performs five tasks and then the loan is passed off to another individual. There wasn’t a cradle to the grave concept where they came from; therefore, they are sort of shell-shocked. From a sales standpoint and a branch partner perspective, we are looking for much the same kind of concept as far as longevity goes. We are not looking for people who came into the industry in 2006, when at the height of the refinance boom, they did a ton of volume under an old product mix. Those people are starting to suffer as the referral partner relationships aren’t there because they were buying leads and were doing mostly refinances. We tell people when they come on board that we want them doing $3 million in volume monthly over a 12-month average. Approximately a year ago, you turned your organization inside out. How do you find the balance of being both consistent and flexible as an organization in today’s lending environment? We had to buckle up, pull up our sleeves and work a little harder than we had ever before. I’m not going to lie to you … it’s not as though we were working just 8:00 a.m.-5:00 p.m. and then decided to do this overhaul. We had to put some work in over the weekends and had some long nights as well. We had to literally sit, evaluate our current position and then make concerted decisions for change, just like when we were with First Magnus, for example. We’ve always been a net branch division of somebody since 1991 when we first opened our doors. We were with First Magnus from 2002

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until the day they imploded. When First Magnus fell apart, we had to scramble and figure out a way to keep the group together, keep morale high and also find the ability to continue to do business. Greg [Frost] and I decided that we were going to tear apart several different models from different companies. We had people calling asking, “Hey, come and work for us,” but we had to just break it down and look at several components: Technology, corporate platform, pricing, revenue standpoint, financial stability, etc. With our analysis, we realized that just one individual could not do it all, and that is where we broke down certain tasks within the organization where Greg [Frost] is the president, I am the vice president and business development manager, and we realized you need additional components beneath you because you cannot physically do it all. We decided that we needed to go with a processing manager, a closing manager and rely on a senior underwriter to assist with day-today activities in those respective departments. There was no way I could do all of that in conjunction with everything else. We had to bring on some folks and incurred increased costs, but it streamlined the business model significantly and enhanced the overall morale of the company. What challenges has Frost Mortgage Banking been faced with in light of all the regulatory changes that have occurred over the past year? It’s quite cumbersome actually. Currently, we have six different investors that we bank with. When I say “bank with,” I mean we are selling our loans to them. Each of these investors has their own interpretation of what’s going on in the marketplace, plus their own microscopic look to protect their company and they too change their guidelines constantly. We are facing one of the more daunting changes right now with the impending loan officer compensation rule set for April 1, 2011. It’s going to change the whole scope of the mortgage industry by virtue of how a loan officer can be paid and there’s so much interpretation out there. On one hand, you have the Mortgage Bankers Association (MBA) with their perspective, lobbying against the LO compensation rule, while other groups such as the National Association of Mortgage Brokers (NAMB) are presenting their point of view. On the flip side, you have investors like Wells Fargo, who does both banking and brokering, out there giving two messages and they don’t just want broker volume to stop, so they are assuring the brokers they will be okay and are committed to the wholesale market. We make sure that we do the best we can to follow the letter of the law to make sure our folks can still earn a competitive living in this industry. We meet once a week with some legal experts at the corporate level and scour new rules and regulations, paragraph by paragraph, making sure we have all of our compliance bases covered.

Do you think it’s possible that a mortgage loan originator working within the Frost Mortgage Banking organization could actually make more money under the new loan officer compensation rules based on their bonuses/performance overrides? Yes, I do believe it’s possible. As a mortgage broker, the law says you can only be paid by one source—either by the lender or by your company—one of the two and that’s it. As a mortgage broker, you are getting paid on a yield spread premium (YSP) which is fully disclosed, so you’ve really got one option. In a mortgage banking environment, we get paid a service release premium (SRP), which, as you know, is not disclosed. So by virtue of that one difference, we have the ability to set our pricing model at a certain threshold higher than what a mortgage broker can because we are correspondent bankers.

“It’s constant evolution that makes you better.”

What do you do when you are not in the office? I spend a lot of time with my family. My daughter is a high school freshman on the cheerleading squad and in the chorus. My wife and I are members of the Parent Teacher Association (PTA) at LaCueva High School in New Mexico, as well as the PTA at Georgia O’Keefe Elementary where our son attends third grade. We do a lot of philanthropic work with the Full Plate Society of Roadrunner Food Bank, an organization here in New Mexico that gathers food and feeds the less fortunate. I am involved with the National Association of Hispanic Real Estate Professionals (NAHREP) and the Hispanic Chamber of Commerce. Greg [Frost], my father and I all look very Caucasian, but we come from a Hispanic background. My mom is of Mexican descent and my father is of Spanish descent. My family likes to travel a lot. We visit San Diego, Calif. at least once a year and rent a beach house in the area, in addition to random road trips we take as a family. I also like to golf. It’s a great sport that’s harder than hell, and it’s a great time to be out. The golf course is a great place to conduct business and cultivate friendships. You can play golf with complete strangers and you can see a lot of places you wouldn’t normally see just by virtue of playing golf. I’ve closed a few deals through the game of golf where I played with someone, passed them my business card and ultimately did a loan through that connection made on the course. We had one large builder account that we picked up by virtue of playing in a golf tournament with these folks. You can really a lot of connections on the golf course, not to mention that if you don’t build a relationship that’s a direct referral source, you can pick up a lot of information that’s going on in your community.

Complaint Filed With HUD: Will Lenders be Forced to Accept FHA Minimum Scores?

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Pro Teck Valuation Services has announced that it has entered a strategic partnership with Collateral Analytics (CA), a developer of real estate analytic products and tools to support financial institutions, institutional and retail investors, as well as property capital market activities. By combining the most comprehensive and timely data with the brightest minds in the industry, Collateral Analytics has developed a suite of automated valuation models (AVMs) and analytic products that are more accurate, more useful and more insightful than any competing products in the market. Led by Dr. Michael Sklarz, a pioneer in the real estate analytic community, continued on page 19

FEBRUARY 2011

According to the NCRC, their fair lending testers “evaluated the practices of national lenders, financial services corporations, and other regional and local FHA-approved lenders.” In the complaints filed, NCRC

Pro Teck Valuation Services Forms Partnership With Collateral Analytics

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1. Borrowers with an MCS at or above 580 ARE eligible for maximum financing. 2. Borrowers with an MCS between 500 and 579 ARE limited to a 90 percent loan-to-value (LTV). 3. Borrowers with an MCS less than 500 are NOT eligible for FHA-insured mortgage financing. 4. Borrowers with a non-traditional credit history or insufficient credit are eligible for maximum financing, BUT must meet the underwriting guidance in HUD 4155.1 4.C.3. *Requirements DO NOT apply to: Title I, Home Equity Conversion Mortgages; HOPE for Homeowners; Section 247; Section 248; Section 223(e), Section 238.

states that lenders were chosen according to their market share and volume of FHA loans. I’m a former FHA underwriter trained by HUD, and it has always been my position (and it was also the position of HUD until recently) that a borrower’s loan should be underwritten according to creditworthiness, regardless of the credit score. According to Fair Isaac Corporation (FICO), approximately 6.3 million people fall within the range of 620 to 640. It’s my guess that those who fall between 580 and 620 number about another five million. In this estimated 11 million that fall between 580 and 640, a significant percentage of those wishing to buy a home are also creditworthy individuals who would pay their mortgage on time every month. It has been my experience that a substantial percentage of individuals with lower scores are in that range due to extenuating circumstances and events that have little bearing on their ability to make their payment. The classic example would be a borrower with medical collections. These collections can occur due to billing errors, or from expensive procedures not covered by insurance but that can be, or are being, taken care of with payment arrangements (i.e. the debtor is making regular payments on time until the bill is paid off). This type of borrower is very creditworthy and, from a traditional underwriting standpoint, a very good risk, but their scores will typically be low. This type of borrower may use very little credit and is likely to be living within their means, and as such will buy a home with an affordable payment and rations below the 31/43 limits. Sadly, as of now, this creditworthy person is denied homeownership because they lack the MCS necessary to get approved. On the other hand, look at the classic American over-spender who doesn’t “act their wage,” and in spite of being a dualincome household, manage to over-extend on their credit cards. They may have ratios

StreetLinks LLC has announced that it will soon be launching several new product channels, along with a new corporate identity. With a new name and new look, StreetLinks Lender Solutions will soon offer best-of-breed lender-executed appraisal management software, Broker Price Opinions (BPO) and a full suite of revolutionary automated valuation and review tools. The company predicts large capture rates of market share as they experienced for their full service appraisal management (AMC) channel. “Our vision has always been to provide the best products and services in the industry, which until this point, has been our full service AMC platform. We’ve established ourselves as a leader in the AMC space by committing to do business the right way and by bringing clear differentiation, best execution and thus, best value to our customers,” said StreetLinks Chief Executive Officer Steve Haslam. “Similarly, we believe there are current market segments ready for the same type of revolution. Specifically, the BPO realm has become a highly commoditized product where servicers are forced to settle for what has always been. We plan to transform that.” In a recent interview with National Mortgage Professional Magazine, Haslam revealed the proprietary technology, unique data sources, and appraiser-based regression methodology behind the company’s new automated valuation solution, Intelligent Valuation Model (IVM). “Our IVM products are in the final phases of advanced testing. While no automated solution can or should compete or take precedence over the work of an appraiser, our results are significantly outperforming name-brand AVM’s in valuation accuracy and consistency. Our goal is to provide originators and underwriters credible and reliable tools to more accurately estimate or validate realistic property value ranges as a compliment to, not a replacement for, traditional appraisal products,” said Haslam in the interview with National Mortgage Professional Magazine which will appear in the March 2011 edition. StreetLinks recently announced the launch of LenderX, a lender-executed

appraisal management platform. StreetLinks is so confident in their new offering that they have put forth a challenge and a guarantee that any lender who previews the LenderX platform will agree that it is the best lender-executed appraisal management software on the market or StreetLinks will pay $1,000 to the lender’s favorite recognized charity. “Lenders and servicers deserve and should demand more—the best products and services that afford them accuracy and great service, while allowing them to run leaner and more efficiently. StreetLinks is that kind of partner,” said Tom Hurst, StreetLinks executive vice president. “Our range of appraisal management products now allows us to provide appraisal services to any lender, exactly the way they want it. In addition, we’ll bring an innovative approach to procuring and delivering BPOs to elevate a market segment that has been stagnant over the past two decades.” StreetLinks’ full-service AMC offering, LenderPlus, and their lender-executed appraisal management software platform, LenderX, are currently available. StreetLinks will be launching its new brand, along with an updated Web site showcasing the new products on Feb. 1, 2011. The BPO product line is slated for launch on April 1, 2011. For more information, visit www.streetlinks.com.

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In a complaint filed with the U.S. Department of Housing & Urban Development (HUD) on Dec. 7, 2010, the National Community Reinvestment Coalition (NCRC) alleged that the lending practices of 22 banks deny Federal Housing Administration (FHA)-insured loans to African-Americans and Latinos by requiring minimum credit scores as high as 640. The NCRC is an association of more than 600 community-based organizations that promote access to basic banking services. It is interesting to note that on Oct. 4, 2010, only two months before this complaint was filed, the FHA instituted minimum credit scores (MCS) into its policy with Mortgagee Letter 10-29 (see below). Many mortgage loan originators (MLOs) think that the scores required by banks are representative of what the FHA requires, and are unaware that FHA has established minimum credit scores. Below is a list of the current FHA minimum scores established by Mortgagee Letter 10-29 for all standard FHA programs*:

StreetLinks Unveils New Corporate Identity and Expanded Product Offerings

By David Lykken

Leadership and LO Compensation

FEBRUARY 2011

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

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There is an interesting correlation between the coming changes in loan originator compensation (April 1, 2011) and leadership. While I will get into a more in-depth explanation later, I am predicting that the success or failure of any future loan officer compensation plan will be more about “leadership” than “the comp plan.” Leadership is going to be huge! Sound interesting? Last month, I wrote about how we, as a nation and, for that matter, as an industry, are facing a serious leadership crisis. Some of you questioned me when I suggested that extended periods of prosperity do not foster leadership development, but actually seem to cause leadership development to go into remission. If you are still wondering about that statement, then ask yourself the following questions: “During my (your) life, when was it that I (you) grew the most personally? Was it during the good times or during the more difficult times?” While we all enjoy the good times, we undoubtedly experience the most meaningful times of growth and maturity during the difficult times. Is there any question about this … the good old days in the mortgage industry are gone, and we may in fact find ourselves facing some very difficult days ahead. This is especially true when you consider the tsunami of new regulation headed our way, combined with loan volumes plummeting by as much as 50 percent. However, if we subscribe to the theory that good times cause a remission of leadership and bad times provide a window of opportunity for good leaders to rise, then it is fair to draw the conclusion that because of the difficulties we foresee, are we going to see some strong new leaders emerge? It is in times of economic and social upheaval that we see significant shifts in power and wealth. Old leaders fall and new leaders rise along with the companies that they represent. Nowhere could this be more evident than in the mortgage indus-

try. We can quickly identify those industry leaders of yesterday … the chief executive officers of companies such as Countrywide, Washington Mutual, IndyMac and a slew of others, all of which have vanished from the landscape. The only reason we know that some of them are still alive is that we read about the many lawsuits in which they are still embroiled. What we cannot yet identify are those companies that are going to emerge to take their place. However, we can identify what the characteristics of future leaders are. These are the seven characteristics, or the “7 Cs”, of what I believe we will see in the strong leaders of tomorrow.

III. Confidence Because of the difficulties that lie ahead, a strong future leader is one who portrays a heartfelt confidence that is “birthed” from a deep conviction in sound principles versus power. We can spot arrogance from a mile away and people of the right character will not follow the arrogantly overconfident counterfeits of yesterday.

IV. Charismatic Future leaders will have a genuine warmth about them and are not the “full-ofthemselves” charismatic types of the past. They will be “real” as the expression goes. Another word that I would use to describe them is “relatable” and magnetic.

I. Character Character has always mattered, but more so in the future than ever before. Character should have always been synonymous with leadership, but regrettably, that has not always been the case … especially in the recent past. In the last business cycle, greed seemed to trump good character. However, the top leaders of tomorrow will emerge and become evident because of their strong character. While they will not be perfect, they will have a strong sense of what is right and what is wrong, and will insist on doing what is right. Character will be their hallmark. A return to “virtue” will be the objective and not viewed as some outdated concept.

II. Conviction A strong leader has to believe deeply in their mission and this belief has to come from their heart. That is why when following a leader, you have to know their character. If you follow someone with deep convictions anchored in a compromised character, the mission has a much higher probability of failure. Real leaders genuinely believe what they believe and do so from the core of their being. That is why conviction has to be anchored in good character, especially when facing the challenges we have ahead.

V. Clear and concise A good leader eliminates confusion, and communicates in such a way as to bring clarity to otherwise confusing matters. Loan officer compensation is an example of this as there is so much confusion surrounding the coming changes. A strong leader intensely studies whatever issue they are facing and forms a clear plan understandable by all, and then will be able to relay that plan very concisely.

VI. Conversant in the facts Again LO compensation changes are the confusing issue of the day as there are so many factors involved in making good decisions about which plan to pursue. A good leader will have a strong grasp of all the facts by delving into the details and then effectively communicating their knowledge in a way that most can understand.

difficulties of those who follow them. This is a fine line that true leaders seem to innately know within themselves. It is my intention to write every month in this column about each of the above listed characteristics of good leaders. I am excited to be doing so and look forward to your feedback. Now that I have laid the foundation for what I believe the characteristics of tomorrow’s leaders should be, where are we going to find them? Leaders not only deal with difficulties head-on, they, in fact, attack them vigorously. So if you want to start looking for future leaders, go the most intense issue(s) of the day and there you will find them intently/intensely focusing on solutions. So, what are the two most intense issues immediately before us? Are they not the following? Issue #1: The Federal Reserve’s “New Rule” issued on Aug. 16, 2010 This new rule amends Regulation Z’s implementation of the Truth-in-Lending Act (TILA) and the Homeownership and Equity Protection Act (HOPEA). This new rule effectively prohibits: (1) Compensation to loan originators based on terms or conditions of loan, including rate or pre-payment penalty, but excluding the amount of credit extended; and (2) Steering by mortgage brokers and other “loan originators.” It defines the permissible and impermissible methods of compensating loan originators. The wording in the new rule is filled with ambiguity, and therefore, fraught with legal exposure risk. But there is an opportunity in it for strong leaders … more on that in a minute!

VII. Compassionate The leaders of tomorrow are going to have to be more compassionate in nature than the hard “it’s my way or the highway” stance leaders of yesterday. With so many going through hard times, it is essential that the leaders of tomorrow be genuinely compassionate towards those who are struggling without getting caught up in the

Issue #2: The new Dodd-Frank Bill, also known as the “Wall Street Reform and Consumer Protection Act” or the “Financial Stability Act of 2010” If we thought the new (Federal Reserve) rule above is confusing and filled continued on page 20

heard on the street

continued from page 17

CA provides innovative, data-rich solutions. “Together, Collateral Analytics and Pro Teck can provide a full suite of real estate valuation services,” said Dr. Sklarz. “The combination brings a strategic blend of data, analytics, and valuation expertise to seamlessly meet the wide variety of needs in today’s mortgage and residential real estate markets. Pro Teck’s history as an established and innovative leader in residential valuation makes them the ideal partner.” Tom O’Grady, chief executive officer of Pro Teck said, “Pro Teck is proud to offer CA’s suite of AVM and real estate analytic products to our customers. Collateral Analytics’ reputation for providing the most accurate and innovative real estate data and analytical tools aligns well with Pro Teck’s customer-centric mission. The partnership will add to the extensive range of quality services Pro Teck currently delivers, and we look forward to introducing CA’s products to our customers.” For more information, visit www.protk.com or www.collateralanalytics.com.

network will clearly benefit from the outreach, training and educational opportunities that a partnership with NFHA can offer. This, in turn, will benefit the homeowners nationwide that are seeking assistance with their mortgages.” HOPE LoanPort addresses one of the biggest hurdles to loan modification: Lost documents. Because all modification documents are uploaded into the portal, both the servicer and the housing counselor can readily ascertain whether an application has been submitted and whether all required documents have been entered into the system for the servicer to access and review. Housing counselors also receive status reports every 10 business days of the status of the application for a loan modification. For more information, visit www.hopeloanportal.org or www.nationalfairhousing.org.

Rennell Announces Launch of Resource Title National Agency Credit: Creatas Images

NFHA Partners With HOPE LoanPort to Offer Fair Housing Training

Lisa Schreiber has joined TMS Funding as vice president of wholesale lending.

continued on page 20

Jim McMahan is president and Stewart Hunter is founding partner and core values officer for Dallas-based Benchmark Mortgage. You can find them both online at www.iambenchmark.info.

FEBRUARY 2011

Lisa Schreiber

Every leader working in the mortgage industry today knows that January is a tough month. Getting your company moving in the right direction in the New Year is always a challenge and the numbers are never going to be good. But this year is one for the record books. Looking back over the past few years, there was always something that a good leader could build from, a wave of refinances on the horizon or a new loan program to attract additional borrowers. If you paid close attention to the market, you could always find something positive even in the darkest years of the downturn. But this year has been different. The industry is finally feeling the impact of years of historically low interest rates and tightening investor guidelines. Few who have a mortgage have the financial incentive to refinance and those who could benefit from a new mortgage are finding it very difficult to qualify. To get traction in 2011, leaders are going all the way back to the basics. Good leaders are focusing now on a few key priorities: growth, relationships and resources. There’s an old adage that says companies are either growing or they’re dying. That’s exactly right. But growth is not necessarily measured by size. Our own company has been right-sizing for the past couple of years as a response to changing market conditions. We’ve trimmed from nearly 200 branches to less than 100, but our profits have surged during the same period. We have grown as a company by getting closer to our key values and building out a growing team of leading mortgage lending branch executives. Our key metrics have changed in the process. Instead of growing in terms of branches, we’ve grown in terms of attracting top talent and the results are showing in our financials. Today’s mortgage leaders must know what growth means for their own operations and be vigilant in moving their companies toward it. One area where we are always working on growing is in the number and quality of our relationships, both inside and outside of the firm. On the external side, building good relationships with your business sources has been a near constant mantra of the sales training gurus in our industry for years. Those firms that took those messages to heart and built those relationships are in a fairly good position right now. Those that didn’t are suffering. Building external relationships today, when it’s difficult to offer the value real estate sales people are seeking due to extremely high underwriting standards, is much more challenging then it was a year or two ago. Today, lenders either already have those relationships in place or they do not. Just as important are the internal relationships that a growing mortgage company builds upon. Leaders do not underestimate the importance of the relationships between the company’s loan officers, underwriters and managers, but rather see them as the essential building blocks that the firm is built upon. These relationships are so important in our company that we have set up a special website to make sure that our people know each other (iambenchmark.info) and we build and nurture loan officer-underwriter teams to streamline our operation and create excellent experiences for our customers. At a higher level, the relationship between the company and its branch executives is critical to everyone’s success. It requires a careful balance between the needs of the company and the needs of the branch. And this leads to the third focus for today’s leaders, keeping the required resources flowing into the company and on to the people who need them. Much more than an accounting function, this is where true leaders shine. With a careful focus on growth, relationships and resources, the best leaders in our industry have taken their teams through a very difficult January and on to a successful 2011.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

Mortgage Professionals to Watch

By Stewart Hunter and Jim McMahan

NationalMortgageProfessional.com

HOPE LoanPort and the National Fair Housing Alliance (NFHA) have announced they will collaborate to promote fair housing for borrowers facing foreclosure. The organizations will collaborate to preserve homeownership through training and outreach focused on ending housing discrimination. NFHA will offer fair housing training to HOPE LoanPort’s network of nearly 500 U.S. Department of Housing & Urban Development (HUD)-certified counseling agencies and 15 mortgage servicers that are already committed to using the portal. “This partnership is a natural fit as both of our organizations are dedicated to helping homeowners keep their homes and helping our neighborhoods stay strong and viable,” said Shanna L. Smith, NFHA president and CEO. “Fair housing organizations and housing counselors are often the first responders assisting troubled borrowers and can help provide much needed information regarding fair housing issues to borrowers as they navigate the loan modification process. The partnership will affirmatively further fair housing and particularly benefit borrowers and communities of color that have been disproportionately impacted by the foreclosure crisis.” “HOPE LoanPort is committed to the National Fair Housing Alliance in its effort to promote fair housing,” said Larry Gilmore, president and chief executive officer of HOPE LoanPort. “We acknowledge the desperate need for fair housing education and outreach as it relates to housing and lending markets. The housing counseling professionals and loan servicers in our

Leslie Rennell, former president and chief executive officer of Cleveland, Ohio-based Resource Title Agency Inc., has announced the formation and launch of Resource Title National Agency Inc. which has purchased some of the business assets of Resource Title. Rennell will serve now in the role of owner and chief executive officer of Resource National. Resource National will be an independent, family-owned agency providing full title insurance and escrow services. The company will provide national lines of service in commercial, real estateowned (REO)/default and relocation markets, as well as traditional title and settlement services in Ohio and nationwide. “We will adopt Resource Title’s traditional focus on meeting customer needs efficiently and quickly” said Rennell. “We will be committed to using technology, experience and the work ethic of our team to be flexible and receptive to the expectations of our clients.” For more information, visit www.rtnai.com.

Leadership’s Top Priorities

lykken on leadership with ambiguity, wait until you start reading through the massive Dodd-Frank Bill. The worst part calls for the formation of yet another new regulator … the Consumer Financial Protection Bureau (CFPB). When the CFPB comes into existence on July 21, 2011 it will have extraordinary power to further regulate the mortgage industry including it’s jurisdiction over loan originator compensation.

“A strong leader has to believe deeply in their mission and this belief has to come from their heart.”

FEBRUARY 2011

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

NationalMortgageProfessional.com

In the LinkedIn discussion group “Loan Originator Compensation Changes and New Rules” that I started less than 30 days ago, there are hundreds of posts on these critical issues. Note that if you have yet become a member of this group, follow the instructions in the sidebar entitled “Instructions on how to join the LinkedIn discussion group on “LO Compensation.” You see, the leaders of tomorrow are already using the new tools of tomorrow that are available to them today. Future leaders have a tendency to be early adopters of newer technologies and seem to find some way to use it more effectively than those “wannabe” leaders that just don’t seem to “get it.” What are the “New tools of tomorrow?” What comes to mind? If you answered “social media,” you got the answer right. In the last five years, there has not been a more significant development than this which impacts the way we do business in the future than social media sites and applications. The leaders of tomorrow are already using social media very effectively to communicate their message and draw like-minded people to them. With more than 1,500 members as part of this discussion group, it is a great place to go and read the various LO compensation ideas presented and hashed out. As you read the many posts, keep the “7-Cs” I discussion from above in the back of your mind and see if you are able to recognize those who are showing signs of leadership.

continued from page 18

Leaders see the above two issues as a great opportunity to grow their business. They recognize that the potential disruption caused by these two issues are creating opportunities to grow their business. While these are not the only issues that will be causing significant disruption within the mortgage industry, they are the two issues that are on everyone’s mind today. The leaders of tomorrow are seizing what they recognize as an opportunity to draw top performers into their company. They will be successful if they can communicate with conviction, in confidence and in a clear and concise manner a finely crafted “better solution.” Their companies will prosper if they possess each of the “7-Cs” previously listed. Personally, I have never seen an opportunity as large as this one. There is going to be a huge potential seismic shift of top production personnel. We have already begun to see a mass exodus out of large behemoth regulated financial institutions that have the false perception that they are the leaders of tomorrow by virtue of their size current market share. Once again, where the exiting masses go is yet less clear, but one thing is certain … they will end up working for the companies that have the strongest leadership and right character. As always, I welcome your feedback on this article. David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 101 or e-mail dlykken@mortgagebankingsolutions.com.

heard on the street

continued from page 19

Mark W. Boyer has been promoted to chief executive officer of Foundation Financial Group. The company has also announced that former chief executive officer and founding partner Paul V. Scott will take over as chairman of the board.

Mark Boyer

REO Allegiance has named Moe Levine chief operating officer.

Moe Levine

Alan Henricks has been named to Ellie Mae’s board of directors.

Alan Henricks

Xetus has announced the appointment of new president and chief executive officer Scott Stein.

To listen to author David Lykken’s online radio show, log on to www.blogtalkradio.com and type in “Lykken on Lending” in the “Search” box on the right-hand side of the page.

ed by Credit Plus Inc. to the position of Southeast regional sales manager. Real Estate Mortgage Network (REMN) has added Michael Stallings as a mortgage loan originator and Jeff Conn as branch manager in the company’s Kennesaw, Ga. office. Calyx Software has announced the addition of three regional sales reps: Henry Rosenthal in the Northeast United States, Jackie Nickell in the Southeast and Peggy Rubadue in the Midwestern region of the U.S. LenderLive Network Inc. has named Stephen Hewins executive vice president of operations. Radian Guaranty has announced the addition of several new account managers nationwide: Michelle Allerton-Teague in the New York State territory; Karen Bascom in the Alabama territory; Sharon Gerritsen in the Pittsburgh and West Virginia territories; Randi Gocinski in the Southern Florida territory; Jeff Petrocci in the New York territory and Bridget Trevino in the Houston, Texas territory. Sal Mazzocca has joined Pro Teck Valuation Services as national sales director. Informa Research Services Inc. has announced the hiring of Chris Goode as manager of the company’s mortgage lending division. Jim Janczy has been named Eastern regional manager for QuestSoft. The Stone Hill Group has hired Paige Petta as business development manager. Bob Wexler has been named vice president of the newly formed financial services division for New Penn Financial LLC. Todd Salmans has been named president and chief executive officer of PrimeLending. Steven Winkler has joined WFG National Title Insurance Company as chief underwriting counsel.

Your turn Scott Stein

Paul Levine has been appointed fulfillment manager for Guaranteed Home Mortgage Company Inc.

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 e-mail: sales@calyxsoftware.com visit: www.calyxsoftware.com

Paul Levine

Don Clement Jr. has been promot-

Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

For more information on the National Association of Mortgage Brokers, visit www.namb.org.

Not Feeling the Love From Your Wholesaler … Have Some Faith! By Deb Killian, CRMS, NAMB Board Member

Second, when a major change takes place, maybe people should pay a bit more attention to the details most affected by the change. I don’t think we will leave it up to the lender and assume “they MUST know everything.” Third, does a lender really care so little about their relationship with their wholesaler as to simply say “let the broker eat it” especially when the documentation proves they were the ones making the decisions? Sometimes, in all the chaos, an initial reaction is not the end resolution. Patience goes a long way in allowing people to react without reacting to their reaction! Got it? Fourth, keep all communication and correspondence, no matter now insignificant it may seem. Thank God for our loan manager program. It keeps track of every document, and time and date-stamps every single thing that happens on our files. Making notes in your point of sale system where no documentation exists is also critical. Fifth, let calm prevail. Screaming will never help a conflict. Our policy is that no matter how bad things are, everyone must maintain a professional attitude. Our account executive was quick to return calls and e-mails, went to bat for us and stood up for what was right. So how did it all turn out? I am watching the clock! It’s 9:50 a.m. on Jan. 6 as I write this. I was told at 9:15 a.m. this morning that it would be resolved within the hour, and as soon as I get the phone call, I will finish this article. I am still waiting at 10:00 a.m. … still waiting at 10:10 a.m. still waiting at 10:19 a.m. and 10:29 a.m. strikes! Our account executive just called and guess what? Not only is the lender assuming the additional 1.25 percent cost for the increased UFMIP, but the customer gets the lower monthly MIP (0.55 vs. 0.90) and the loan is closing on time! Always give your lender time to work through issues. They will usually come to the right conclusion. Okay, so we got lucky this time. But if this article can prevent just one customer, broker, mortgage loan originator or wholesaler from the angst and stress of this type of situation, it was worth the time to write it. Deb Killian, CRMS of Brookfield, Conn.-based Charter Oak Lending Group LLC d/b/a Danbury Mortgage is a member of the National Association of Mortgage Brokers board of directors. She may be reached by phone at (203) 778-9999, ext. 103 or e-mail debkillian@snet.net.

NationalMortgageProfessional.com

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

Web: www.appraisalsanywhere.com

FEBRUARY 2011

Oh what a web we weave! The entire mortgage industry seems to be a bit out of control these days. Congress, the Fed Rule, the Dodd-Frank Act, Elizabeth Warren and the Consumer Financial Protection Bureau (CFPB), overlays, disclosures … I don’t know about you, but all of these new regulations are starting to grate on my nerves and the nerves of the very customers they are designed to protect. Recently, just 48 hours prior to a closing on a purchase, we were told by our wholesaler that they did“… in this tidal wave n’t realize that the Federal Housing Administration (FHA) case number was pulled on Sept. 30, 2010, four of regulation, lenders, days prior to the Oct. 4, 2010 changes in the Upfront underwriters and Mortgage Insurance Premium (UFMIP) and they closers are forgetting insisted that we pulled the number. about the people they On Oct. 26, a Realtor referred a client whom I had never met or spoken to before that day. Unlike most are supposed to be clients, “Susie” gave us EVERY SINGLE DOCUMENT WE protecting and NEEDED within 24 hours of applying. Susie is the serving.” model customer, and I wish I had a 100 clients just like her. She was easily qualified for her purchase. Unfortunately, due to “too many property issues,” they backed out of the first deal they had. When we issued her Good Faith Estimate (GFE) and did the calculations on the 1003, we used the new one percent UFMIP and 0.90 percent annual premiums. For the sake of the lessons learned, put aside whether the old or new guidelines were better for my customer. On Nov. 5, she found another property and by Nov. 16, she was under contract for a January closing. The appraisal was ordered on Nov. 30 and we got it back on Dec. 7. The file was underwritten and approved on Dec. 22, subject to proof of a few minor repairs being made. On Jan. 5, we were waiting for those fabulous words “CLEARED TO CLOSE,” when we were informed that the loan amount on the title was wrong because the loan amount needed to be increased to take into consideration the OLD FHA UFMIP of 2.25 percent instead of one percent. As you can imagine, some interesting conversations took place between my processor, the underwriter, myself and the account executive. Meanwhile, I have a first-time buyer e-mailing and calling hourly to make sure everything is okay and that the closing would still take place on Jan. 7. On the evening of Jan. 5, I was informed by our account executive that they are still trying to determine how to deal with this case number. When I asked if this change in circumstances was going to require an additional three days and delay the closing, I was informed that it is NOT a change in circumstances, and if it reverted back to prior to Oct. 4 guidelines changes that, “the broker (us) would have to eat the 1.25 percent additional UFMIP.” Now I don’t know about you, but those words don’t sit kindly in my mind! Are we not the customers of our wholesalers? Fortunately for everyone, me and my processor both keep every single e-mail related to a particular loan file. And there it was … on Nov. 30, a string of e-mails between my processor and the lender employee assigned to overseeing issuance of case numbers detailing a conversation regarding the fact that a case number had been assigned to the property several months back for another borrower. Remember, we did not meet our borrower until Oct. 26 and she did not find this property until Nov. 5. So what’s the lesson for all of us? There are a few that we learned from and hope they will help you too!

First, in this tidal wave of regulation, lenders, underwriters and closers are forgetting about the people they are supposed to be protecting and serving. We should all step back for just a moment after we originate the loan and remind ourselves who we are really serving.

*Names of people and places are fictional. **Please give me your feedback (e-mail me at atare@thinkreverse.com) on the strengths and weaknesses of this question, as well as your suggestions for improvement. Atare E. Agbamu is author of Think Reverse! and more than 140 articles on reverse mortgages. Since 2002, he writes the nationally-distributed column, “Forward on Reverse.” A former director of reverse mortgages at Minneapolis-based AdvisorNet Mortgage LLC, Agbamu has years of handson experience marketing and originating

FIT for Reverse Mortgage Lenders: Part VI Marital Transitions

FEBRUARY 2011

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

NationalMortgageProfessional.com

Among the Urhobos of Nigeria’s turbulent Niger Delta, “How are you?” is often followed by a peculiar questioncum-greeting: “Is it well at home?” The home, in Urhobo understanding, is the center of the family and the person. Harmony at home is wellbeing, disharmony is the reverse. If you care about a person, the thinking goes, you inquire about the state of their home. In assessing whether a senior can stay at home long enough to reap the benefits of a reverse mortgage, “Is it well at home?” is a good question for originators to keep in mind. Marital transitions—widowhood or widowerhood, divorce, separation—are pregnant with risks for seniors and lenders. Let’s go back to Lake Matata, Minn. and to Paul Pumata.* Pumata, 76-years-old, lost his wife of 54 years six months ago. Ever warm, always kind and gracious, Sandy Pumata was Paul’s center, the rock of their home for 54 years. Two months after Sandy Pumata’s death, their financial advisor, Peter Puta, delivered another blow: Monthly income from his bond portfolio will have to be cut by 50 percent to preserve capital. Puta suggested looking into a reverse mortgage for cash to cover the shortfall until the portfolio rebounds. Meanwhile, Pumata’s only daughter in Tempe, Ariz., Jennifer Zama, has been asking her dad to relocate to the warmer climate of Tempe so that she could look after him now that her mom was gone. The relocation idea was persuasive because Pumata is very fond of his three grandchildren. His immediate need though is cash, and a reverse mortgage was the best option, but he was uncertain about his residency in Lake Matata, Minn. During counseling, the counselor spotted his residential uncertainty, they discussed it briefly, and the Financial Interview Tool (FIT) summary reflected it as “yellow flag” number three. How should Pumata’s loan officer bring up

the issue for discussion at the loan interview? Here is a suggestion: “Mr. Pumata, at FreeFloat Bank, we pride ourselves on helping our reverse mortgage customers think through their decisions. We know reverse mortgages are cheaper the longer you stay in your home. To guide my product recommendation for you, may we discuss how long you plan on staying in your home?”** This question could help Pumata and his loan officer, Randy Zeros, discuss his residency and its implications for the loan. It could help Zeros recommend the new HECM Saver, a perfect product for seniors in transitions, uncertain of their residency. But without the FIT signal and the discussion, Zeros and Pumata could have decided on HECM Standard, a decision that Pumata could come to regret, a decision that may even bring the thought of litigation to Pumata and his daughter when they learn later that there was a cheaper reverse mortgage for shortterm use. Other marital transitional situations involve divorce and separation. Besides living-aloneness, the absence of a spouse or partner through divorce or separation could bring isolation and trigger depression in some seniors. Without support for daily living activities, isolation and depression could impair their health, calling into question their ability to benefit from the loan over time.

“In assessing whether a senior can stay at home long enough to reap the benefits of a reverse mortgage, ‘Is it well at home?’ is a good question for originators to keep in mind.” As you go about putting seniors into the right reverse mortgage, keep the Urhobo greeting/question in mind: “Is it well at home?”

fha insider

reverse mortgages. Through his advisory, ThinkReverse LLC, Agbamu advises financial professionals, institutions and regulators across the country. In a 2007 national report on reverse mortgages, AARP cited Agbamu’s work. He can be reached by phone at (612) 203-9434 and e-mail at atare@thinkreverse.com. Visit author Atare E. Agbamu’s blog at thinkreverse.com for his thoughts and insights on the reverse mortgage marketplace.

continued from page 17

of 34/46, but they get approved because of an automated underwriting system (AUS) decision. According to traditional underwriting practices, this loan would be denied because their credit profile is a foreclosure waiting to happen! All it takes is for one of them to lose their job, and they’re no longer making their mortgage payments. Something is very wrong with this picture. I am a very big proponent of HUD forcing banks to accept the FHA scores for three main reasons: 1. All Americans deserve a chance to have their loan application reviewed from the overall perspective of creditworthiness, and not have to fear being automatically rejected because they don’t have the minimum credit score. 2. It will benefit the housing market. David H. Stevens, FHA Commissioner, was quoted as saying that 15 percent of people between the scores of 620 and 640 are potential FHA borrowers. 3. It will help the mortgage loan originator by increasing their pool of potential buyers. I suspect that there is a very good chance we will see banks be required to accept the FHA scores because this practice does raise fair housing issues. I also suspect that if HUD wants this implemented, it will happen, since the banks received bailout money—i.e., politically they will be pressed to make the change. From the quote below, made by HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña in a Dec. 8, 2010 HUD press release, the HUD sentiment is clear: “FHA is an important vehicle for

“I’m a former FHA underwriter trained by HUD, and it has always been my position (and it was also the position of HUD until recently) that a borrower’s loan should be underwritten according to creditworthiness, regardless of the credit score.”

Americans who want to purchase or refinance a home. We thank NCRC for bringing these complaints to HUD. For lenders to deny responsible home seekers this source of credit, without regard for their capacity to repay the loans, would raise serious fair housing concerns and, if proven, undermine our nation’s recovery efforts; HUD will take appropriate action against any lender found to be engaging in discriminatory practices.” If lenders were required to meet the FHA MCS requirements, it would force lenders to improve the quality of their underwriting and assure that their underwriters have an expert knowledge of FHA guidelines, in both the technical aspects of the guidelines as well as the spirit of the guidelines. Let’s hope that this change is made, and that we can give more Americans a chance at owing their own homes. Go FHA! Jeff Mifsud is founder of Michigan-based Mortgage Seminars LLC, a former FHA underwriter with 15-plus years of experience originating FHA loans, an FHA expert for LoanToolbox.com and creator of The FHA Originator, a monthly FHA newsletter. Jeff may be reached by phone at (248) 403-8181 or visit www.MortgageSeminars.com.

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"I am part of a real family that cares about my team, my clients and myself. I truly know we are all in this together. Being part of the Benchmark community has taken my branch to the next level. It’s the best business decision I have ever made!" - Marty Preston, Kentucky Branch Partner, former Mortgage Company Owner of 12 Years “Benchmark is being a part of a dream team whose core values are based around relationships. The customer service that we receive from each department is the best I have seen in 15 years in this industry. Having this amazing team of people has allowed us to create relationships that have taken our business to the next level.” - Roger Medlock, South Carolina Branch Partner, former Mortgage Company Owner of 16 years

"Benchmark is a company with a heart for its people. The leadership team is one of the most dynamic and innovative teams I have ever been around." - Sally Bucciero, Tennessee Branch Partner, formerly with PRMI/Frost Mortgage

"Stewart, Jim and the entire Benchmark leadership team really took the time to get to know me. Togetherm we crafted a plan for my branch that became something much greater than a branch partnership. I am truly grateful to be a part of Benchmark." - Thomas Ray, South Carolina Branch Partner, former Mortgage Company Owner of 8 years "During one of the most challenging periods our industry has ever faced, Benchmark confirmed to me that the borrower is still the ultimate focus. This has always been my philosophy and it is refreshing to be aligned with a company that gets it." - Tom Sherman, Texas Branch Partner, formerly with Prospect Mortgage

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“I am dedicated to ensuring the success of my branches by being a team player. I am very passionate about underwriting and my product knowledge empowers me to be able to provide the highest level of service. I am accessible!” - Sissy Freudenberg, Benchmark Senior Underwriter

“Transitioning your branch is a critical time. You can count on me to navigate you successfully through the process. I am committed to taking your team to the next level. I am all in!” - Marla Mills, Branch Transitions

“I am dedicated to providing you with the highest service levels by being accessible. I can ensure you the best loan programs with the best execution everytime because I care about you and your clients.” - Jasper Tadlock, Secondary Marketing Expert “We know what a difference it makes to have docs to title early versus having docs to title at the last minute. We strive to conduct ourselves as if we were your partner, and we believe it is our job to make you look like a superstar. Our doc teams make an extra effort to be flawless, compliant, and responsive with a very quick turn time. We are not satisfied unless the Title Company, client and branch are all ecstatic with our closing process.b - Selena Oliver, Doc Prep Team Leader “I am like your private banker. I am at your beck and call to provide you with my undivided attention. I pride myself on being patient, detailed and responsive.” - Christopher Osban, Commission Specialist / Accounting

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Calyx Software to Offer Free Online Training

PCLender.com has announced that it has extended the compliance functionality of InHouse Mortgage, its comprehensive loan origination software (LOS), to further assist lenders in complying with the disclosure of fee requirements included in the Real Estate Settlement Procedures Act (RESPA). With its latest announcement, PCLender.com continues in its tradition of staying at the forefront of offering innovative mortgage lending solutions that are compliancefocused. PCLender.com is a leading provider of enterprise Web-based mortgage software and mortgage lending technology solutions for mortgage companies, credit unions, and community banks. New federal governmental regulations that became effective January 2010 require lenders to monitor annual percentage rate (APR) changes and redisclose any adjustments greater than .125 percent. This action is necessary even if there was no change to the initial loan program or fees, such as adjustments to mortgage insurance or a slight change to the adjustable-rate mortgage (ARM) index. The recent enhancements to PCLender.com’s InHouse Mortgage software provide new features and functionality within its Fees and Disclosure History screens. This eliminates much of the guesswork around what required actions, if any, are needed for the user and provides customers with a more intuitive user experience. Also, within the InHouse Mortgage software a new RESPA feature was added to the Fee Edit screen that discontinued on page 36

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Veros Meets New GSE Requirements With VeroSELECT Platform

www.windvestcorp.com

FEBRUARY 2011

Veros, a provider of collateral valuation technology, enterprise risk management and predictive analytics, has announced that its VeroSELECT valuation management platform is ready to provide lenders with complete capabilities for ordering, managing and delivering their appraisal in compliance with the government-sponsored enterprise (GSE) requirements announced for the Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP). These ini-

PCLender.com Adds Compliance Functionality to Its InHouse Mortgage Product

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Calyx Software has announced that all online training through the company will now be offered at no charge to customers. The company hopes that more users will take advantage of Calyx’s frequent classes to help them become more familiar with the many features and benefits of their software. Users will have unlimited access to classes on a first-come, first-served basis. Calyx Software’s online schedule includes many classes that will help users become more efficient by teaching them how to navigate the software with basic functionality and use many of the convenience compliance and processing features. The classes are taught by experienced industry consultants with deep and thorough understanding of the software and how it can be used in daily operations. “We have found that so many of our customers are not using the software to their advantage,” said Jody Collup, director of marketing for Calyx Software. “Free training classes enable us to increase their awareness of the remarkable functionality of the software, which makes them more efficient as they find it easier to use.” Regular titles include “Getting Started in Point,” “Fees Worksheet,” “Building Templates,” and “Marketing and Custom Forms.” For popular or specialized topics, classes will be added as necessary to meet the demand. For more information, visit www.calyxsoftware.com.

tiatives are part of the GSEs’ Uniform Mortgage Data Program (UMDP) to standardize and drive data quality to benefit the entire mortgage industry. In an announcement made Dec. 16th, the GSEs have indicated that delivery through the UCDP will be available in June 2011 with requirements in March 2012 for applications dated December 2011. The announcement provided new and updated resources to assist lenders and appraisers in preparing for implementation and the use of UAD and UCDP for prepurchase delivery of appraisals in electronic format. “In addition to industry-leading valuation management functionality from ordering to valuation review, Veros has incorporated new functionality to help participants comply with new investor requirements found in programs such as UAD and UCDP,” said Darius Bozorgi, Veros’ president and chief executive officer. “The GSEs have taken a large step to standardize and drive data quality that benefits lenders, investors and homeowners and we at Veros view this as an important step toward bringing liquidity back to the mortgage market. Given the myriad of changes the industry must adapt to, we are ensuring that

lenders using our VeroSELECT platform are ready for the new paradigm with the best possible valuation management tools well in advance of the newly announced dates.” The new requirements from Fannie Mae and Freddie Mac define new specifications for appraisals, among them the UAD, which includes the data points required for a complete appraisal report and standardizes key data points. The agencies are responding to the magnitude of change required to achieve these important goals and their impact on a number of industry players. The agencies are also supporting early adoption of appraisal data standardization and are encouraging lenders to begin using the portal in their business processes prior to the Dec. 1, 2011 application date and March 2012 required delivery date. The VeroSELECT platform routes and returns appraisals and other valuation products for lenders, including appraisals, broker price opinions (BPOs), automated valuation models (AVMs), and automated risk, fraud, and data products. With its connectivity into investor portals, it can assist lenders in meeting investor compliance requirements and identify potential valuation concerns. VeroSELECT enables lenders to achieve regulatory and investor compliance through its flexibility to route valuation orders across multiple service sources, while tracking all transactions and data elements in a real-time, fully auditable reporting module. Whether it involves orders to numerous integrated AMCs or individual appraisers through its panel management module, VeroSELECT maintains complete appraisal management capabilities and maintains all data points from the valuation source, including a first-generation PDF of the entire report. For more information, visit www.veros.com.

Get Personal … With Technology By BJ Bounds

FEBRUARY 2011

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We’re all busy. Our society is a rushed with. Again, clients are more likely to society that often leaves little time for do business with you if they can relate the personalized touches that cultivated to you on a personal level. relationships in the age before computThink about your own experiences. ers and e-mail. Those small touches Does a well-designed site influence your included thank you notes and birthday decision to stay there and browse or move wishes, handwritten and enclosed in on? Your Web site should incorporate customized stationary, as well as peri- information and visuals that work best for odic phone calls for a variety of reasons. you and your intended target market. It Selling was personal—not anony- should be a source of industry updates, mous—and clients bought from those rates, notice of events, neighborhood or they liked and trusted. Unfortunately, mortgage trends—anything that could life has gotten in the way of some of the keep a prospective client coming back. more individual tasks of marketing a Personalize the site with a video blog or mortgage business. But it offer live chat sessions. doesn’t have to be over. Now that you have techMake the right nology, cultivating relaconnections tionships has shifted in Additionally, your Web site delivery, but it is still as should provide an avenue important as ever to “perfor prospects to apply for a sonalize” your business. loan directly and securely. Personalizing your comAnd your LOS should be munications with current linked directly to your site and potential clients is easso that all application data ier than you think, and you is transferred into your LOS probably already have the quickly and accurately to “Ensuring that you tools you need to maintain allow you adequate time and build the relationships have the appropriate to process and provide the that will help you grow your marketing materials required disclosures. The business. All you need is more efficient and accuis easy—ensuring your loan origination sysrate your data flow during that your intended tem (LOS) and a Web site. the application process— recipients actually For some activities or matethe more time you have to receive them is not.” rials, you might also want further build your client to have Microsoft Word, but relationships. This is where it’s all in what you choose to do and what further customization of your Web site works best in your neighborhood. will help. Your online applications can enable Market with clicks complete mortgage applications, or The first element of personalized mar- you can choose to customize your availketing with technology is a customized able fields. Customizing your fields Web site. According to www.internet- gives you the opportunity to contact worldstats.com, 77 percent of the U.S. your prospects for additional informapopulation has Internet access, which tion and start a relationship, while makes it a great place to start market- offering you additional time to meet ing your business—and with easy-to- disclosure deadlines. By allowing your use Web site templates, the personal- clients the convenience of online appliization is completely up to you. How cations and at the same time providing much or how little you personalize can an avenue by which you must have perbe a factor in your repeat traffic. It’s a sonal contact in order to continue, you good idea to let your personality shine show that you value their time, care through so that potential clients feel about their specific needs and getting they know who they’re doing business things done correctly.

Innovate and create Capturing Internet users is just one way of using your technology to market and build your business. There are other ways your LOS can be used as your favorite marketing and branding engine. It’s a veritable goldmine of tools that works beautifully with Microsoft Word to help you design, create and distribute your personalized materials. Using your LOS in conjunction with Microsoft Word, you can produce creative and affordable marketing pieces that you can use repeatedly and repurpose for different outreach activities. Use the pre-built marketing templates in your LOS to help you get started. Every piece you create can be branded with your logo and any other images or photos you want to use. Using the templates in Word, you can customize and personalize your materials and save them in your LOS as a customized form, letter or label to send to any number of contacts saved to your LOS database.

business with whom you have contact— from Realtors and appraisers to remodelers, painters, lawn maintenance companies and foundation repair companies— you already have a huge referral base to tap into. If you are preparing your flyers in Word, personalize them further by including information your associates will find helpful. Similar to what you can post on your Web site, providing statistics, loan rates, industry status or predictions can potentially boost your referral rate. Use your LOS to ask for referrals from former clients as well. You have their contact information—why not ask? Send a follow-up message to make sure they are satisfied with your service and offer an incentive (if you can) for them to send friends your way. When you are marketing and building your business, you must take every opportunity to make contact with your database and ask for referrals. Keep your name in front of them (without being a pest).

Consolidate your contacts Celebrate The database you use for your business contacts is very important, and it’s essential to maintain your complete lists of associates, adding and removing them as necessary. If you aren’t using your LOS for contact maintenance, you are missing out on a very useful feature. Rather than storing your contacts in various locations, such as Outlook or a stack of business cards, it would behoove you to make sure you have them all in one place—only in your LOS. If you have multiple users of your mortgage platform, those contacts will be available for them to access for emergency situations when access to other databases may not be possible. Once your various contacts are stored in your LOS with significant information, such as phone number; email address; personal info such as birthday, family member birthdays, and current mailing address, you are fully armed with the tools you need for marketing your business with the personal touches technology can provide.

Grow your list If you have a large list of Realtors and contractors that you do business with, by all means create several marketing materials geared toward them. Always ask for referrals. Referrals help build and maintain your pipeline. Think about all of the

Everybody has birthdays. They’re very personal, and they’re the perfect reason to keep in contact with your clients and business associates. Take some time every month to run a birthday list. Your LOS can filter by birth month so this process should be very quick and easy. Then, tailor your messaging and design for your intended audience. If you have a prospect who never completed an application, your message can be a combined birthday wish with an offer to get them the best rate available if they are still interested. Current clients, former clients and business associates, such as Realtors, appraisers, etc., can all have customized messages. Personalizing your message by audience is much easier than you think. Once you have the templates created in Word—an e-mail, flyer, postcard, letter, etc.—saving them to your LOS with mail-merge fields is a piece of cake.

Make technology work for you There are many more reasons for communicating to your contacts that you may have thought of while reading this article. The key is to actually implement your ideas. You have the ability to optimize the use of your existing technology, while maintaining a level of personalization and sincerity that can make a difference.

Using your LOS, you have the option to mix it up—to choose various avenues of marketing to your database. The templates you customize or create can be distributed via e-mail or regular mail. This is why maintaining your database is so important. Ensuring that you have the appropriate marketing materials is easy—ensuring that your intended recipients actually receive them is not. If you choose to mail your materials or messages via letter or flyer or postcard— any print medium actually—you can embed mail-merge fields from your LOS database directly into Word. Alternatively, you can print generic materials or letters and mail them using a label printing feature in your LOS. You can also skip the mail-merge feature altogether and create flyers that you can print and distribute personally to businesses or potential clients in your area, which can provide you with ample networking opportunities.

Marketing is all about creating and cultivating the relationships that can help your business grow. If you aren’t using the tools you have at your disposal, specifically in the technology you use in your business, you could be left behind. You don’t want to be a nameless, faceless window-front in a world of colorful possibilities. Get personal. Use your technology—your LOS—and market yourself in front of the competition. BJ Bounds is the senior marketing communications specialist for Calyx Software. In addition to media relations and copywriting, BJ is a contributing author to the Calyx Software blog, CalyxCorner. She has more than 10 years experience in sales and corporate marketing with a focus on technology that spans several industries. She may be reached by phone at (214) 252-5617 or email bj_bounds@calyxsoftware.com.

Marketing: Remember the Fundamentals By Scott Seroka

1. We need to understand our customers. 2. We need to understand our competitors. 3. Staying on top of consumer and industry trends is non-negotiable. 4. All of us are in the relationship business. 5. The purpose of marketing is to shorten the sales cycle.

Understanding customers There is still too much chest-beating taking place as companies continue to focus on how fantastic their products and services are instead of focusing on the wants, needs and desires of their different audiences. We cannot forget that it really is all about the customer, not the company. If you find that your focus isn’t where it needs to be, consider this idea: Create separate points of entry or unique pages on your Web site for your different types of buyers, such as for consumers, brokers and residential sales associates. They each have unique needs, and once they sense that you understand their needs and can provide solutions to their challenges, it will be much easier for them to make an informed and educated purchase decision.

Understanding competitors You and your competitors are courting the same people—no big surprise. Your competitors are also stalking your customers. This is no big surprise either, but it is something that needs to be kept in mind. You’ll need a plan to stay on top of what your competitors are doing, what they are saying, how they are trying to win new business and what they may be saying about you. You may also want to ask yourself two powerful questions: “If I were on the other side of the business, with whom would I do business? Why?” Answering these questions requires a little research on your part, but it may be the best way to know who you are really competing with. It can also provide you with the extra surge of motivation needed to make some necessary changes from within. The good news is that there are easy ways of keeping a sharp eye on your rivals. The most obvious way is to review their Web site/Web presence and make notes about what they are doing that you admire, as well as where you feel they are vulnerable. Next, enter their name into Google Alerts so that you get e-mail updates every time they make a move or come up in the news. Finally, make note of their presence in the industry trade publications. These activities can eat up a lot of your time, but that’s what eager and willing interns are for. Find the right one for you and insist that he or she supply you with weekly updates, even when there is little, if any, change.

Trend watching Trends can be broken down into four primary categories: Political, Economic, Technological and Social (PETS). Whenever there is movement in any of these areas, it can have a direct impact throughout the entire mortgage industry. Our current administration has made some very bold, decisive maneuvers that will have a lasting impact on the mortgage industry. The economy continues to remain “under construction,” with some pessimistic (yet realistic) analysts suggesting that the worst is far from over. These political and economic trends are what keep many people at bay. continued on page 26

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Also, consider evaluating your advertising, marketing and online presence to your top three competitors. Do you find that you all pretty much say the same things, just with different graphics and copy? Are you able to identify one or two unique characteristics about your company? If not, you know what to do next. If yes, those are the characteristics that people need to know about you so that they can make that educated, informed decision. Some marketers choose to look at what their competitors say about themselves and then use that as a benchmark for their own messaging. That can be perilous. It’s one thing to stalk competitors, learning what they

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“Trends can be broken down into four primary categories: Political, Economic, Technological and Social (PETS). Whenever there is movement in any of these areas, it can have a direct impact throughout the entire mortgage industry.”

are up to and watching them closely. It’s quite another to “blend in” to the mix because it’s what everyone else is doing. Be unique: If you look like everyone else, you are as good as invisible.

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In the 1990s, one of my favorite profes- about 10 years ago—marketing was still sional sports teams was the Chicago relatively simple. You had your choice of broadcast, print, direct Bulls because it was durmail, outdoor, trade ing that time when shows, Yellow Pages and Michael Jordan, Scottie public relations. Marketing Pippen and Coach Phil was a one-way conversaJackson led the team to tion, whereby marketers win six championships told people what they within eight years. wanted them to know, Near the end of this think and believe. Many dynasty, I read one of Web sites were merely Michael Jordan’s books, online brochures. Social The Jordan Rules. Since he media was barely in its is recognized as one of teething stage. the greatest athletes in Times have certainly NBA history, I figured he “…consider evaluating changed. must have plenty of your advertising, It was several years insightful things to write. ago when social media In his book, there was marketing and online presence to your top began to really consume a philosophy that really our personal lives. At the resonated with me and it three competitors. Do time, we didn’t really has become one that I you find that you all understand their full now share: “Always stick pretty much say the potential, particularly as to the fundamentals.” same things, just with it relates to how busiSure, I’ve heard the different graphics nesses could benefit. phrase many times and copy?” Today, we do. throughout my life, but When you combine when it comes from someone who was the very best at what traditional marketing vehicles with he did, it takes on a much stronger social media, which has opened the meaning. So what does this have to do door to two-way conversations between people and brands, you can easily with marketing? Read on … understand how anything and everything related to the Internet has comTop five marketing pletely changed the rules of marketing. fundamentals Or has it? Sure, social media has Back in the olden days—you know,

added many options to the marketing game, but that’s exactly what they are … options. They add to the choices marketers have to communicate their messages, win new business, preserve existing relationships and compete for market share. Some are more effective and influential than others. However, the fundamentals of marketing have not changed:

Technological trends include everything that has to do with how people interact with each other and with brands online. If you are wondering how powerful the Internet is, here are some figures to put it in perspective: In the U.S. alone, there are 20,000 Google searches taking place every second. Here is a question … When people are searching for your services, are you there to be found? If your site is not properly optimized, you are missing quite a few sales opportunities. People are watching two billion YouTube videos, on average, each day, and 24 hours worth of video is uploaded to YouTube every minute of every day. Facebook has more than 500 million users and the percentage of business-to-business companies on Facebook is increasing rapidly.

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LinkedIn has an estimated 70 million users. This may pale in comparison to Facebook, but keep in mind that LinkedIn is strictly for business. If you don’t already have a LinkedIn account, make sure you sign up for one today. Why? If you have contact with customers and other business professionals, your absence from LinkedIn will be viewed as, well, strange. Social trends (family, community, personal finance, health, work and leisure) overlap with technological trends. I say this because the Internet and mobile devices have changed the way we interact with each other. People communicate through e-mail, social media sites and texting much more than picking up the phone and dialing someone’s number. There are also stark contrasts on how people

from different generations, cultures and social backgrounds view the world.

We are in the relationship business People do business with people they like. You’ve undoubtedly heard this philosophy hundreds of times before, because it’s true. You’ve also heard that people don’t buy from a company, they buy from people they trust and like. Your company is a reflection of your character, integrity and charming personality. The challenge we are all facing today is that social media and e-mail interactions are rapidly replacing in-person communication. It is increasingly more difficult to establish and maintain personal relationships in the spirit of building chemistry and nurturing personal bonds. It’s no longer a question of who you know, it’s now a question of who knows you. Take advantage of those face-to-face networking opportunities that you may have been blowing off. Meeting the right person at the right time will pay off.

Shorten the sales cycle I’ve believed for quite a long time that the sole purpose of marketing is to shorten the sales cycle. Building awareness, promoting products and services, and growth are functions of marketing, but its real purpose is directly connected to expediting sales. As many experts and gurus have said so many times, nothing happens until a sale is made. Marketing provides the tools to make the sale faster, as long as you don’t forget the fundamentals. Scott Seroka is vice president and principal with Seroka, a full-service marketing, public relations and interactive firm that serves a nationwide client base. He may be reached by phone at (262) 523-3740, by e-mail at scott@seroka.com or visit www.seroka.com.

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How to Thrive in the New Mortgage Landscape Successful marketing in the modern world focuses on relationships with help from technology By Kurt Reisig

providing services to the depositors who walk into branches and the work required to maintain massive portfolios ($1-2 trillion in servicing rights), their hands are quite full. As a result, there is an opportunity for regional, mid-sized retail mortgage companies to carve out their market share. This can be accomplished through developing relationships with real estate professionals, brokers, CPAs and other real estate and financial professionals. The challenge Historically, these relationEach potential client and ships have been the most stakeholder has individual productive referral partners needs, but one extremely for mortgage professionals. common concern is that they If a business or a mortwant the job done right the gage professional can first time, and done in a prove that they have the timely matter. An originator “Prospecting, experience and the knowlcan demonstrate credibility if edge to usher a loan they can show that they have identifying the right through the origination the service model and the person to meet and experience to streamline the conducting a real sales process without issue, the company will have a process. For many profesinterview (for the tremendous competitive sionals in the real estate field exchange of thoughtful advantage. Clients will be today, there is legitimate more likely to want to work skepticism that loans will not questions and diligent listening) are all with them. Many mortgage be created in a predictable extremely important companies now realize this time frame, which impacts and have shifted their marto the traditional art all aspects of their business. keting resources into outFive years ago, many of lost by many.” reach in the business comthe processes mandated munity versus marketing today would be considered insane. Lenders now do in-depth research directly to consumers. to ensure that they limit their liability in creating and approving loans. Throughout Modern marketing each step of the process, there are multiple Many new marketing tactics involving reports filed and databases cross-refer- technology have emerged in the last few enced. Unfortunately, these systems are not years. While the tools available do help perfect and there are times when there is streamline and measure communicaincongruity in the findings. When this tion, the key is to remember that they occurs, more time is spent researching the should be fully integrated into a marketapplicant and vetting their information ing plan that is focused on relationships. The best way to develop these relationthan building the relationship. These “misships is through a real sales interview. matches” consume energy and precious Sales professionals need to do research time, and hinder the ability for all parties involved to meet necessary deadlines. This before they prospect and set up meetings. can leave the agent, client and loan officer Once the initial research is done, mortfeeling like they have been beat up, and gage professionals can set up face-to-face many are exhausted by the time they finish. meetings with the stakeholder (a CPA, real estate professional or broker, for example). These meetings can take place at the The opportunity In the past, banking giants like Bank of stakeholder’s office—or with the recent America, Citi, Chase, Wells Fargo and others ubiquity of items like the iPad, at a local have had great origination strength on the coffee shop or over a casual lunch. Giving regional level. These mega banks have a dynamic presentation to a client and become massive loan aggregators. Between showing how the mortgage professional The mortgage landscape has changed. The needs of clients have been shifted. Rules and regulations are constantly being revised. Professionals in the industry now look for ways to establish stability and distinguish their business from others in the crowd. The successful players have realized that the best approach is the one rooted in traditional foundations that utilizes modern tools.

can fulfill each need helps build credibility and shows that both parties will work together to get loans approved in a timely, predictable manner. The presentation is important to a meeting, but so is listening. A stakeholder will often share ways in which their current mortgage professional is failing them. Listening to these concerns allows a mortgage professional to show how they are better able to meet the stakeholder’s needs. One way to build credibility is to take notes during these meetings and follow up afterward with a personal note or email to address the stakeholder’s key concerns. This note allows a mortgage professional to provide specifics on how they will meet the stakeholder’s needs.

Refocusing

Kurt Reisig is the founder and chief executive officer of American Pacific Mortgage Corporation. He may be reached by phone at (916) 960-1325 or e-mail kareisig@apmortgage.com.

Influence the Influential By Andy W. Harris, CRMS

Prospecting and marketing is a continu- marketing plan and narrowing my tarous effort for those of us in the real estate get client. What type of person should I and finance industries. Successful mar- market my services to that will result in keting, followed by a positive transaction the highest quality referrals? What type and client experience, results in customer of clients do I primarily work with that referrals and database creation. We all provide the most favorable outcome? understand that marketThe answer to these quesing will always be an tions will mold the future ongoing priority in our of your database and transactional-based busibusiness. ness even with these pasI have personally found sive referral sources, but that spending time with how do we maximize the the most quality prospects quality and number of and those in a position of client and business partinfluence provides the ner referrals? most successful outcome Target marketing is a and the highest quality word we hear often as referral. Others trust their entrepreneurs and busiopinion and counsel ness owners. The term is “We all understand when referring peers, typically used when friends and family. Don’t that marketing will researching or developing always be an ongoing get me wrong, I am open a business plan for a speto helping all people priority in our cific geographical area. regardless of income, transactional-based Since many of us in the credit, net worth and business even with industry carry state-specifsocial status, and will ic licensing and specialize these passive referral always provide the same sources, but how do in somewhat broad areas quality of service to each we maximize the around our homes and client. However, if you are place of business, I’ve spending time and effort quality and number always carried a slightly of client and business developing your marketdifferent view with regards ing plan than it’s imporpartner referrals?” to target marketing. I call it tant to think about who “Influence the Influential.” you are marketing to. Like most people, I prefer to maxiIndications you might need to revise mize the little time I have each day your target market: and be as productive as possible. I do this by having a plan in place and You feel like the majority of clients focusing on the tasks that carry the responding to your efforts are highest demands and provide the unable to qualify. most positive results. I follow these continued on page 28 same guidelines when developing a

A short list of companies offering leads for mortgage professional Bankrate.com • 561-630-1257 www.bankrate.com/cpcprogram/ CEO: Thomas R. Evans

Premier Advantage Marketing • 888-799-3959 www.thinkPAM.com Vice President: Tom Emmerson

Type of leads: Cost Per Click, Internet leads, performance based

Type of leads: Targeted mailings, creative design, direct response campaigns

EnVision Direct • 800-922-9860 CEO: Christian DeWorken

Split Test Media, LLC www.Refinance-Mortgage-Leads.com CEO: Michael Andrew

Type of leads: Our clients stay ahead in this changing market with our great service and all-inclusive pricing.

Type of Leads: Internet Leads, Inbound Calls, Branded Leads

FEBRUARY 2011

MortgageLoan.com • (877)-390-4750 CEO: Paul Knag

Type of Leads: Refinance Leads Only. Conventional, FHA, VA, & Jumbo. Rate-And-Term, Cash-Out, & Debt-Consolidation.

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Lead Provider Roundup

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It might seem odd to focus so much attention on the marketing and sales tactics of 20 years ago, but they have proven success and can separate a true mortgage professional from their competition. Prospecting, identifying the right person to meet and conducting a real sales interview (for the exchange of thoughtful questions and diligent listening) are all extremely important to the traditional art lost by many. Leveraging technology is not just a gimmick. It is a way to meet your customers where they are. For example, bringing an iPad to a coffee shop or restaurant is much more effective than lugging a laptop and projector to a conference room for another “boring” presentation that does not differentiate one mortgage professional from another. New technologies also provide a great opportunity to act as a business coach. Teaching clients how to utilize platforms like Facebook or Craigslist to drive traffic to their listings will help clients and continue to build a mutually beneficial business relationship.

Marketing in today’s digital age is different, but the same principles still apply and service is king. The personal relationships built in today’s world can start anywhere. Some will still start at a Chamber of Commerce mixer, while others will start on Twitter, LinkedIn or Facebook. No matter where the relationship starts or where a particular professional focuses their marketing dollars, they must know their customers. Where are they spending their time online? What are they reading? How can you, as a mortgage professional, meet their needs to help your business grow, and how can you ask current clients for more referrals? As compensation reform becomes a reality, clearly mortgage professionals will have to sell and close more loans than they did just a few years ago to maintain the same compensation level. Closing more loans often involves two variables: Up-selling current clients and finding new clients. It is much more cost-effective to up-sell to current clients, which requires listening to their needs, offering superior service and ensuring that each of their needs is met in a timely manner. Marketing is what a business or individual makes it, but many who have succeeded will say that successful marketing is based on research, relationships and retention. Direct mail, social media tools and search engine marketing are all great methods of marketing, depending on the target stakeholder. But without the proper followthrough and quality service, even the best marketing efforts will fail over time. Focus on knowing the potential client and what will help them achieve their goals, not just how they can contribute to a sales quota.

Your business primarily requires Federal Housing Administration (FHA) financing in order to qualify, thus putting a heavy influence on your database which could use more diversity. Post-closing client referral quality or quantity could use improvement. Business partner referrals are hard to qualify or never pan out. You find that the type of client your marketing produces is difficult to work with or tries to take advantage of your time. The average credit score or application-to-closing ratio is below where you feel should be acceptable You can also use the same marketing guidelines toward business partners and colleagues. If you find that you receive referrals from others who are either difficult to qualify or few in quantity, you might consider their

position of influence and number of transactions closed annually. Also strive to be an influential professional yourself. Partnering with like-minded and ethical colleagues can be rewarding for your business, but more importantly, rewarding for your clients. The prerequisite before influencing the influential is to have confidence, supreme skills and a heightened level of service that automatically generates referrals post-closing. If these things are in place, then narrow down your target market by influencing those who can influence as many other qualified candidates as possible. Doing this in your marketing plans will bring more success to your business and quality to your referral database. 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 or e-mail aharris@vantagemortgagegroup.com or visit AndyHarrisMortgage.com.

United Northern is Seeking Highly Qualiﬁed, Experienced Mortgage Professionals To Grow as We Grow

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• Operations Manager • Production Manager • Senior Underwriter • Virtual Mortgage Loan Ofﬁcers (VMLOs) • In-House Mortgage Loan Ofﬁcers (MLOs) • Team Leaders/Sales Managers

Visit UnitedNorthern.Jobs, email info@UnitedNorthern.Jobs or call (888) 600-8808 ext 1. United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender

Social Media … Can’t Live With ‘Em … By Mark Anthony McCray & Tonya D. Bradley

Social media … can’t live with ‘em … be present and you have to be strong! If can’t … you invite your prospects to Twitter and How would you finish they discover that you the punch line? Can’t live haven’t tweeted in three without ‘em? Can’t kill months, your credibility is ‘em? However you would gone. Poof! If you aren’t finish the sentiment, the going to tweet, don’t even fact of the matter is that refer people to your you are going to have to Twitter account. make peace with them Another note about some way or another! social media: Whatever Social networking is you do, and however you the newest, simplest form do it, THOU SHALT NOT BE of low-cost marketing. BORING! Inject your perThe entire world is on sonality into everything Mark Anthony McCray social networking sites you do. Be yourself. Share “When you start and the bottom line is about your life. If your that, as a real estate pro- networking socially, you only online interactions will build better fessional, just like any are about interest rates, other business group, you new listings and begging personal relationships should be marketing with people you already for more friends, #fail. yourself and your services Even if you work more on know only as where your customers the transactional side of acquaintances and meet are. And, don’t look now, real estate, being active on people whose paths you these social networking but they are all on would never have Facebook, LinkedIn and sites not only creates more crossed otherwise.” Twitter. There are some opportunities to sell propeven on ActiveRain, but, erty, but also provides the they mostly use it to direct people to opportunity to help more clients succeed their Twitter and Facebook pages! in reaching their real estate goals. Here is the reality of If you’re really want to doing business these days demonstrate that you’re a … everyone looks for you leading resource, you’ll on the Web and on social want to create a personalnetworks before they pick ized “Fan” page too. It’s up the phone to call you. customary for these to be They use it to assess more business-driven. whether you’re personUse your business or fan able, trustworthy and page to be more “hardresponsive. There is nothcore” with your real ing wrong with it. It’s just a estate practice. fact. Your chance to make When you start netyour first impression hapworking socially, you will Tonya Bradley pens without you even build better personal rela“Social networking has being there these days. tionships with people you Here’s how the process revolutionized the way already know only as businesses function goes: An interested acquaintances and meet prospect starts by Googling today and has become people whose paths you you … colloquial parlance an indispensable part would never have crossed for putting your name into otherwise. In regards to of every successful a search engine. Then, they your current client base, marketing plan. look for you on Facebook. you can get to know their Frankly, we’re If you say you’re on Twitter, needs better. The relationapproaching a day they look for you on ships and influence that wherein you will not Twitter. If they think you you build on social net“exist” if you can’t be two can possibly do busiworks improve (even crefound easily online.” ness together, you’ll get an ate) your reputation and invite via LinkedIn. Then, enhance your value as an and only after passing those tests, you will expert. The wider your circle, the more get an e-mail or a phone call. You must chances you have to add to your business.

Social networking has revolutionized the way businesses function today and has become an indispensable part of every successful marketing plan. Frankly, we’re approaching a day wherein you will not “exist” if you cannot be found easily online. Still resisting? As some futuristic figures have reminded us, resistance is futile. Remember, however, business is still about personal connections. We are just doing some of it differently. Think of social media as the new town square. Be present. Be yourself. And you’ll benefit. If you do it right, it will be fun, too! Mark Anthony McCray is chief executive officer of Houston, Texas-based First Capital Commercial Finance and an associate with Managed Mortgage Investment

Fund (MMIF). First Capital is a commercial mortgage banking firm that helps clients leverage millions of dollars in financing for their real estate acquisitions, developments and investments. MMIF is a direct lender specializing in short-term private mortgage financing and equity investments. He may be reached by phone at (832) 566-2001, e-mail mark@dealsdone.net, follow Mark on Twitter @markmccray or visit www.markanthonymccray.com. Tonya D. Bradley is an entrepreneur and paralegal in Houston, Texas. She is the managing member of TD Bradley Business Group LLC and owns a few businesses, including Essential Effects Marketing & Promotions, a Web and graphic design company. She may be reached by phone at (713) 965-7306 or email: info@e2mp.com.

The Five Essentials of Every Mortgage Web Site Does your site have them all? By Joy Gendusa

If the design is the face of the operation, then marketing is the brains. You need a designer who understands how consumers think who and creates a Web site layout that guides them through the sales process and maximizes the amount of conversions you see. Without this essential, your site will be just another pretty face in the mortgage world—with nothing to show for it. In action: You’ve learned your lesson about aesthetic-only designs and hire a designer with marketing training. He creates a page that has one clear action for the visitor and guides their eye through the page. You see an immediate increase in leads, but it plateaus just as quickly. You are getting more responses, which is good, but you need think about traffic, too. If you don’t have enough people coming to your site, you cannot possibly get enough leads.

3. SEO (search engine optimization) SEO is how you improve your rankings in search engines like Google and Bing. High search rankings bring you organic leads (leads that find you without paying Google). If SEO is ignored, Google won’t send people to your site—even if it has an incredible design and marketing strategy. In action: Now you have an SEO expert look at the site. He informs you that your homepage is too crammed with keywords (words related to your industry that help search engines rank your pages). He suggests two or three keywords that will help you get the best response from Google. For example, he suggests having separate pages to highlight your services, so you can optimize each of them with their own keywords. After a few weeks, you see the traffic to your site increase, as well as the number of new leads—but not in proportion. What’s still missing?

Programming is vital to the success of your site. Even the simplest error in functionality makes a Web site look unprofessional. On the flip side, excellent programming can make your site easier and more fun to use than your competitors’ and gives your prospect value they cannot get elsewhere. In action: To address a high bounce rate, you decide to look into it yourself. You go online, Google your company name, and click on the link provided. It takes about seven sec. for your home page to load completely. You think it might just be the connection, so you go back to Google. Lightning-fast. Now you have a problem. Even beautiful, well-thought out and well-written Web sites cannot operate at full capacity if people do not stay long enough to see them. People expect things with immediacy, and that’s why high-quality programming and hosting is essential to your site. Nobody wants to wait more than five sec. to see a page, especially if there are other options. They’ll just use the back button and go find one of your competitors. As you can see, having even four of the five essential elements isn’t enough to have a fully functioning Web site. However, most design companies do not offer all of these services. That’s why you need to be very selective when you are shopping for a new website. There are companies who are full-service and have competitive pricing, so it’s worth the time to search them out. Make sure your website design firm has all five elements covered—or kick them to the curb. After all, these aren’t “optional add-ons,” they are essential to your mortgage business’ success. You need them. Joy Gendusa is chief executive officer and founder of PostcardMania. She began PostcardMania in 1998 with nothing but a phone and a computer and zero investment capital. By 2008, revenues reached nearly $19 million and the company now employs more than 150 people, prints four million and mails two million postcards each week representing more than 40,000 customers in over 350 industries. For more information, call (800) 628-1804, ext. 342 or visit www.postcardmania.com.

FEBRUARY 2011

Probably the most underrated of all the five essentials, many businesses provide their own copy (words) for their Web site. Be extremely cautious about this! There is a reason people make a living copywriting— there is an art and science to creating advertising and product copy. To get the best possible results from your site, hire a design firm with a professional copywriter on board. In action: You decide to have a professional copywriter look over your site to see what hang-ups they find in the copy. They immediately spot some areas where the prospect is probably encountering friction or resistance when reading through your site. They do a quick overhaul, deleting some unnecessary blocks of text and ensuring the

5. Programming

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4. Copywriting

copy flows straight from beginning to end. As a result, you begin to see the leads from your Web site go up immediately as prospects no longer get stuck on confusing copy. You are pretty satisfied with your site’s performance until you notice that the bounce rate for your home page is exceptionally high, which means most people that visit your site are leaving without finding what they are looking for.

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As we go through the list, I’m going It’s 2011, as I’m sure you’ve noticed, and to show you how these elements almost every business has a Web site. We are living in the digital age and people impact your site through a hypothetical expect you to have one too. If your mort- example in the IN ACTION section. gage company does not have a Web site, do you think your business is suffering? In 1. Design order to compete in this crowded market- A high-quality, aesthetically appealing place, you need a site specifically designed Web site makes your mortgage business appear top-notch—even to attract, guide and capif you still operate out of ture your prospects’ attenthe spare bedroom of tion. If your site doesn’t do your home! Be careful, that, it is costing you valuthough as many design able leads. firms focus exclusively on Most mortgage busithis. Incredible design is ness owners are not Web great, and you absolutely design experts, and even if need it, but it’s only one you are, you hardly have aspect. It cannot hold up the time to build an entire the Web site on its own. site. That means most of In action: You get a you outsource this work. mock-up back from your “Too good to be true” design firm and it looks pricing is out of control in “If your mortgage fantastic. The colors realthe world of Web design. company does not ly pop, the graphics add It’s tempting business ownhave a Web site, do to the message without ers every day. If a company you think your distracting and its overall you are considering has a business is suffering?” appearance is clean and much lower quote than easy to look at. You’re everyone else, you need to proceed cautiously as they may not offer pleased that your site will finally look professional, instead of the outdated all of the services you will need. There are five essential elements to one you’ve had since 1996. When the new site is live, you have a Web site design. I call them essentials because if you are missing just one of spike in new visitors, but no noticeable them, your site could collapse. Make sure difference in new leads. Why? The your design team is fully capable of han- design doesn’t guide your prospects’ dling each of these essentials below—or eye-trail through the page to show them what action to take. it’s time to look for a new one!

2. Marketing

How to Win Customer Confidence, Generate Referrals and Differentiate Your Business Through Exceptional Customer Service Marketing reverse mortgages to the senior community By Scott Peters

FEBRUARY 2011

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Why wouldn’t you consider a lender in the Guidance at a sensitive reverse mortgage industry as a “helping” time professional, such as a doctor or social Great customer service can help allay cusworker? If you haven’t, you tomer concerns, highlight should! A reverse mortgage the benefits and make the company is in the business overall reverse mortgage of helping provide senior loan process less overAmericans with an option whelming. It can also that allows them to stay in address customers’ emotheir homes and receive tional needs. While a the extra cash needed to reverse mortgage is primapay bills, cover medical rily a financial decision, it expenses, or simply secure also involves sensitive a cash reserve. In fact, the issues, such as the prospect National Council on Aging of declining health or loss (NCOA) estimates that of independence. reverse mortgages can Caring and competent “As lenders search for help 13.2 million people service at a time when peoways to distinguish pay for the services they ple may be feeling vulnerathemselves in the need to stay in their ble is a sure path to success marketplace, that same homes. for lenders and the reverse helping mindset can As lenders search for mortgage industry. But give them a valuable ways to distinguish themlenders have to be sincere. edge. When lenders selves in the marketplace, Every company promises that same helping mindtruly care about their great customer service, but set can give them a valufar fewer deliver. In order customers, it shines able edge. When lenders through in exceptional for lenders to succeed, they truly care about their cusneed a caring approach, customer service.” tomers, it shines through but they also need a solid in exceptional customer foundation, such as the service. Customers become advocates right internal systems and technology and a rich source of referrals. Word-of- and a well-trained staff. mouth marketing is very powerful. It’s They also need to make sure they also free. have a solid public image. In large part, Now is a particularly good time for that image is based on the aggregate reverse mortgage lenders to focus on experience of many customers, undergrowth. The reverse mortgage industry is scoring the need to offer each customer poised to grow by as much as 20 to 40 the same high level of service. percent over the next 12 months, aided Potential customers looking for by the new HECM Saver and the information often turn to organizaimproved HECM Standard, favorable tions, publications and other sources demographics, and increased advocacy they trust, such as the AARP or the to raise awareness of reverse mortgages. Better Business Bureau (BBB). A posiMany Americans are confused or tive reputation or a great rating from even wary of reverse mortgages. They the state and national BBB, for examdon’t understand what they are, how ple, is a significant advantage in attractthey work and what the benefits are. ing new customers. While 67 percent of older homeowners On the flip side, clients who are dishave heard of reverse mortgages, just satisfied will make that known by comnine percent are likely to use this plaining to the BBB or other organizafinancing option to pay for assistance tions or posting negative comments at home, according to the NCOA. online. Online comments, positive or

negative, can have a big impact. Nearly 80 percent of people ages 50-64—and 42 percent of those who are 65 and older—are online, according to the Pew Research Center.

Customer service so good, they’ll tell their friends While there is a significant opportunity for growth among reverse mortgage lenders, particularly those with a good reputation, the initial contact is when the one-on-one personal service begins. From that point, lenders must be focused on anticipating the customer’s needs. Some will need moderate guidance; others will need hand-holding throughout the process. What follows are five strategies to help lenders deliver the best customer service, inspiring confidence in their clients, differentiating themselves in the marketplace and developing valuable referral sources. 1. Get personal Make it easy for potential customers to connect. Often, the most welcoming thing a lender can do is to have a person—not an interactive voice response (IVR) system—answer the phone. Older adults, in particular, do not want to navigate an IVR. The personal approach also drives the sales process. Every person’s situation is different and it’s important to take a holistic view of a customer’s circumstances and understand how the proceeds will be used. Only then is it possible to know if a reverse mortgage is the right solution. This in-depth analysis should be the focus as the customer moves to application and processing of the loan. Reverse mortgage lenders should also work to make the process transparent, understandable and comfortable. They should explain what the loan process entails, how long it takes and what documentation is required. 2. Offer a second counseling session While the reverse mortgage process is second nature for origination professionals, there is a lot for potential borrowers to absorb. They may not fully understand all the nuances in the first counseling session. Financial terms that may have seemed clear can be puzzling on review. New questions may arise with the reverse mortgage process, and family or friends may voice additional concerns. Offering a second counseling session can help in a number of ways. It underscores the lender’s commitment to act in the customer’s best interests, making the client more comfortable. When the customer signs off on the mortgage,

everyone can be confident it was done with full understanding. 3. Encourage communication between brokers and underwriters While some lenders do not typically encourage communication between brokers and underwriters, it can have a significant impact. A clear exchange of information helps the underwriter make a decision based upon facts, not assumptions. By helping the underwriter fully understand the borrower’s situation, the lender can offer a mortgage with terms that are most favorable to the customer. 4. Work with the customer’s timeline Do the customers have an immediate need for the money, or do they want to close at a later date? By establishing challenging cycle-time metrics and meeting them, lenders can be sure they can close on the loan when the customer is ready. One good goal is to surpass, not just meet, U.S. Department of Housing & Urban Development (HUD) requirements. Setting and meeting firm deadlines also makes the process much more predictable, thus lessening customers’ stress. 5. Create lifelong customers and referral sources The lender’s commitment shouldn’t end once the loan is closed. For example, one consistent stumbling block for customers is that they must pay their insurance and taxes separately. Since many people are accustomed to having insurance and taxes rolled into their conventional mortgage payment, they fail to plan for these expenses and come up short. By using strategies such as sending a notice reminding customers before the payments are due, lenders who also service their loans have an opportunity to once again demonstrate their personal concern. This avoids complications and makes the customer feel cared for, which helps generate additional referrals.

A growing market The need for reverse mortgages is growing. Despite the housing bubble, home equity remains an important resource for many people. Using a combination of facts, experience, personal attention and exceptional customer service, lenders can offer people the help they need, often at a critical time in their lives, and gain a customer and advocate for life. Scott Peters is president and chief executive officer of Generation Mortgage Company. He may be reached by phone at (404) 995-7870 or e-mail scott.peters@generationmortgage.com.

E-mail Marketing Plans: A Small Investment in Time Reaps Big Payoff By Melanie Attia

question because they’re not wellinformed. For mortgage professionals already sending out newsletters regularly, consider incorporating some of the fun new social media and hightech options that are making a buzz on smartphones.

Take some of the e-newsletter real estate to highlight a new listing that matches with your audience, whether it be first-time buyers, specific to a school district, emptynesters or those looking to downsize. If you have an ongoing relationship with real estate agents, suggest promoting their listings in return for assistance in building your opt-in email list. People enjoy reading about where they live and the history behind buildings, parks, street names and people of interest. Share just enough to pique their interest and link to a page on your Web site with more information, photos and additional links. In the same vein, reach out to local service providers, vendors, retailers and small businesses within your community. People will sign up for your e-newsletter if you provide deals, discounts and specials and you will build a larger network for new leads and prospects. In another section, you may want to offer tips on growing the nest egg. Offer recipes like a skinny decaf caramel mochachino (you will find it several places online). Making it at home saves money, not to mention, calories.

Now that you have your plan for 2011 on paper, put it up on your bulletin board or enter it into your calendar on your smartphone. Make sure you set up reminders so you’re not scurrying around at the last minute trying to keep up with the work you did. It’s also a good idea to keep a folder on your computer with links to online articles that you can share or review when putting together your own entries for your e-newsletter. Take a few minutes each month to subscribe to newsletters from other businesses with similar customers. Great ideas for topics and graphics come from listening to others and it helps keep the pulse of your prospects. And don’t forget to keep building and growing your opt-in e-mail lists. Set up a Facebook fan page and a Twitter account for your business and use bits of your e-newsletter to regularly update and link to your Web site. When you add your Facebook fan page, be sure to include a sign-up form that allows people to become part of your e-mail marketing subscriber list. Use any data you collect here (location, birthday, etc.) to segment your e-mail list. Keep the engagement going by sending personalized messages that may be more social in nature or have ties to relevant conversation on your fan page. You can also use the segmented list by the date of sign up to resurrect successful e-mail marketing campaigns that have already been sent to other lists earlier this season. For a local option, set up your business on Yelp and ask friends and fans to review your service. Keep an eye on other locationbased social networks. Some may come and go but most have their 15 min. of fame. So long as you’re sharing information, not just selling, these are all great places to build your brand, share your expertise and find new people who want to opt-in to your e-mail list. As your list grows, consider adding a few of these suggestions to keep your enewsletter fresh and inviting: Ask your subscribers if they want to read your e-newsletter on their computer or a mobile device. Then segment your list accordingly. Use a sincontinued on page 32

FEBRUARY 2011

Last, but certainly not least, don’t forget about the holidays. When you lay out your email timeline, pencil in the public and local holidays, anniversaries and festivals. Instead of searching for the perfect graphic in the last minute, pull them all at once or at least make sure your email marketing service offers good options that you can drop in when needed. You can also tie several of the ideas above into the holiday theme: Jewelry tips in February from

Accrue interest on your plan

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People love reviews and mobile is hot. Invest a little time in one new app each month and report the good, the bad or your indifference. For that matter, you can make any hobby a recurring column. If you have love for the subject, the words should come naturally.

a local merchant, parade routes in July and a turkey raffle in November. Think outside the box in December with a re-gift exchange. Someone out there must want to swap a holiday fruitcake in return for the world’s ugliest Christmas sweater!

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Here we are again … another new year and another fresh start. For professionals in the mortgage industry there is even a bit of optimism in the air. The National Association of Realtors (NAR) reports that existing home sales rose in December for the fifth time in the past six months, and the Mortgage Lock-in your Brokers Association’s (MBA) terms with a plan Market Composite Index, a It doesn’t matter if you measure of mortgage loan are new to e-mail marketapplication volume, and its ing or a seasoned veteran, Refinance Index, both saw set or re-evaluate your an uptick. objectives to make sure While I wouldn’t rec“It doesn’t matter if ommend betting your you are new to e-mail they are still clear and realistic. Know the purhouse on a fast recovery, marketing or a pose of your e-mail marthere is good reason to seasoned veteran, set keting program. You are start smart with a 2011 eor re-evaluate your setting yourself up for mail marketing plan. objectives to make frustration if you don’t There really is no downsure they are still have goals because, there side: It’s inexpensive, are no milestones to work strategic and with a bit of clear and realistic. against and the analytics prep work, and doesn’t Know the purpose of that come with each eneed to take much time at your e-mail all. But don’t just take my marketing program.” mail send will mean little unless you know what word for it. Campaigner you’re looking for. It’s recently surveyed its users about e-mail marketing. Thirty-three per- also a good idea to create a timeline. cent responded that they were going to Working to a plan is much easier than continue with their e-mail programs in realizing that it’s been a while or 2011, and 61 percent responded that worse—someone on your prospect list plans were underway to increase the use is working with another mortgage broker because they are more connected. of e-mail in their marketing programs. I recommend using the months as There are two things that came to mind immediately when I read the your guide. Twelve e-newsletters evenly results of the survey. First, whether it’s spaced out across the calendar delivers used for branding, lead generation or consistency without being overwhelmnetworking, businesses that use e-mail ing for you or your prospects. NAR in their marketing programs give it a releases national and regional existing thumbs up. Second, the majority sur- home sales price and volume statistics veyed sees the value of e-mail marketing on or about the 25th of each month, and intends to increase its use as part of and the MBA comes out weekly with a their marketing programs because of its comparison and four-week comparison. Use these as a hook to reach out to return-on-investment (ROI). The message here is that if you’re your audience with an easy-tonot using e-mail marketing, try it out. understand analysis of what is going on Almost 100 percent say they are going in the market, nationally and locally. to continue or expand their e-mail mar- It’s a great way to show your knowledge keting programs. That’s a pretty good and experience in the industry and recommendation. For those of you your community. You want to keep your e-newsletters already using e-mail marketing periodically, ramp it up with regular e- topical so your prospects continue newsletters with information that will opening your messages and find a reabe of interest to prospects looking for a son to forward it on to their friends. mortgage now, considering a home Let’s say the top third of your e-newsletpurchase in the future, and even those ter template holds your logo, contact who may think buying is out of the information and your photo (consider

an action photo within your region, for instance, lugging a sled in the winter or showing off your fishing trophy in the summer, but I digress). The first column underneath is your update on the industry. What can you do with the rest of the space? Here are several ideas to get you started:

gle column layout if sending to a mobile device. It’s easier to read.

dimensional barcodes are a hot trend for 2011 and they don’t cost a penny, so why not try it and then analyze the results? Mobile users with a cameraenabled smart phone can scan the QR Code, which can be coded to do things such as display text, provide contact data or even open your Web page in the browser on a smartphone. Link it to your Facebook page, a video embedded on your site or a special free offer for using the QR Code and signing up for the e-newsletter.

Give your subscribers the ability to click through on a link from their mobile device and make sure the page they are directed to is also mobile-friendly. Many content management systems offer mobile displays that turn on automatically when they detect a smartphone browser. Have a link at the very top of your enewsletter that allows subscribers to “view online” if their phone doesn’t display your e-mail correctly. Analyze how subscribers interact with your campaigns. Check what enewsletters each contact received, whether they opened it, and any further actions (i.e. what links they clicked on etc.). This unparalleled level of detail for each contact can help you refine topics of interest and how to segment your lists to better target based on preferences. 32

It’s not for everyone but the small two-

Ideas for your e-newsletter are endless. But to keep the program from becoming a behemoth, periodically refer back to your objectives. If the QR Codes aren’t being used, move on with something that your e-mail reports tell you do work. With a bit of planning and review, e-mail marketing is sure to share rewards. Melanie Attia is product marketing manager for Campaigner E-mail Marketing and is focused on managing the Campaigner marketing programs and product messaging. She may be reached by e-mail at mattia@protus.com.

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By Charlie W. Elliott Jr., MAI, SRA, ASA

Property Value Rebound Challenges The worldwide recession, which began in ed property values has eroded and/or no 2008, caused a collapse in the values of longer exists. This thing called “supply most real property. The obvious problem and demand” has raised its ugly head. We of property-owner equity depletion, find that for property values to rebound, which typically comes to mind in such much has to happen to reduce the glut of cases, was only one of many problems property on the market. Those new home created by this monumental event. To be developers with a glut of speculative more succinct, the recession created a homes must find a way to reduce inven“perfect storm” of events, mostly caused tories, all of those bank foreclosures must and fueled by declining financial and real be liquidated, and those private homeestate markets. This has owners who have offered created a domino effect, their homes for sale for 24 promoting challenges that to 36 months must find rippled throughout the buyers. These things must economy. Those of us ownbe done before the homeing property found that we builder can begin building not only lost substantial homes again, hiring out-ofportions of our net worth, work people, who, thembut we also had a host of selves, would like to purother financial problems chase homes, and purchasto deal with. ing materials from the local Some of the collateral building supply, along with damage resulting from all of the other events that this storm included fore- “Property values can- contribute to replenishing closures, high unemploy- not rebound with mil- the economic forces that ment, business failures lions of units of unsold stabilize our economy and and the stock market inventory and unem- support property values. crash. We found ourselves ployment hovering at The magnitude of the struggling to dig out from current recession cannot around 10 percent.” under a mess of rubbish, be discounted. Past ecomuch in the same way as nomic downturns occurwe would have if a real storm had ring within most of our lifetimes have passed through and physically destroyed been less severe. We have experienced the structures in which we lived and mini-slowdowns that lasted 12 to 24 worked. Those of us who survived had to months, only to rebound and return to dig ourselves out from under the mess business as usual in a short time. Property with whatever makeshift tools we could values have diminished in small increfind. Once we dug out and assisted our ments, say five to 10 percent, and have friends to get to the surface, we found rebounded quickly. This recession is difthat the real work had just begun. It was ferent, much different. It is the granddadmuch like finding that we not only had dy of them all of our lifetime. Property to deal with replacing our shelter, but values in many markets have plummeted we also had to address the challenges of to 40 to 50 percent of previous levels. In finding food, clean water, healthcare, addition to homeowners unable to pay transportation and all of the other their mortgages, speculators have gone things we had been accustomed to. out on a limb and invested in second Now that we have come to the surface, homes and investment homes, and neidusted ourselves off, and made emer- ther can find buyers. Many of these gency and temporary repairs, the longer- homes are in foreclosure. The evidence is term heavy lifting begins. We find that continued on page 34 much of the underpinning that support-

Trends in Mortgage Lending for 2011 By Christopher Brown Esq.

What trends will shape the picture of mortgage lending, mortgage foreclosure and mortgage investments in 2011? How will lenders and borrowers react in the next 12 months after a record number of U.S. homes went into foreclosure in 2010? I expect the most significant trend to be a dramatic shift in the nature of the relationship between borrowers and lenders. Here are some of the other trends that I foresee shaping the mortgage sector in 2011:

mortgage current. But everyone knows they really don’t want the houses. I expect those borrowers’ frustrations with the banks’ so-called “loss mitigation programs” will boil over next year to the point where they’ll just give up and tell the banks to take the homes. Borrowers will say, “You won’t do a modification and you won’t do anything to help me stay in the house, so here’s the house.” It’s essentially calling the banks’ bluff. When that happens, I predict that the banks will put

the brakes on the foreclosure action and put borrowers into an ongoing foreclosure stalemate. The borrowers will continue to live in their houses, not paying their mortgages and not pursuing any foreclosure alternative. The banks won’t push the foreclosure through to take title because they won’t want the homes.

hang around in hopes of working things out. All the while, this foreclosure cloud would be hanging over them. But more and more people have been in this cloud for a long time and they just want to be done with it. Unlike a foreclosure stalemate, these people will leave their houses and find new places to live.

Borrowers will simply walk-away

Fewer bank takeovers of homes

The number of people walking away from their mortgages will continue to escalate in 2011. In the past, people believed they could find a way to work with the banks, but there’s been enough publicity about this as a false hope that I forecast more people than ever will simply walk away from their homes. In the past, people might just

The housing marking has been slow to recover and banks no longer look to a time when it will improve. When the housing market first took a dive, banks had a better appetite for homes because they were expecting the market to recover and the assets to become valuable again, thus

Borrowers will look for ways to invalidate their mortgages

The number one reason you should attend this event is the satisfaction of knowing you are doing your part to ensure that mortgage broker issues are heard on Capitol Hill. You are the best spokesperson for our issues. Your participation benefits you, the industry and your clients as a whole, by strengthening the broker’s presence in the halls of Congress.

Key Issues in 2011 Include:

Monday-Tuesday,, h 14-15,, 2011 March Capitoll Skyline e Hotel Be prepared to go to the Hill! Includes Advocacy 101 training: General synopsis and "Question & Answer" on the best ways to communicate NAMB's talking points with your congressional leaders in an effective manner. Featured Speakers Federal Reserve Board Sandra Braunstein, Director, Division of Consumer & Community Affairs (invited) Paul Mondor, Senior Attorney, Division of Consumer & Community Affairs (invited) Small Business Administration Dr. Winslow Sargeant Chief Counsel, Ofﬁce of Advocacy - (conﬁrmed)

Loan Originator Compensation • Will we see a delay in the rule • Message from SBA on LO Compensation • Status update on Call to Action Dodd-Frank Act DOL Wage and Overtime Safe Act/NMLS • Recovery fund v. Net Worth and/or Bond • Credit reports & Reciprocity • NMLS Modiﬁcations • Call Reports

Hotel Accommodations Capitol Skyline Hotel 10 "I" Street, Southwest • Washington, D.C. 20024 Phone #: (202) 488-7500 www.capitolskyline.com Special "NAMB" rates will be available for a limited time only. Book early! Here are a few reasons you should attend: Lobby Your Representatives on Capitol Hill “There is no better way to build relationships with your senators and representatives than by attending Lobby Day. Getting face-to-face with the decision-makers who create important policy is invaluable during such historic and unprecedented times in our industry.” —Bill Kidwell

Don’t Miss Out on What This Conference Has to Offer “If you can only attend one national meeting this year, make it the NAMB 2011 Legislative & Regulatory Conference. It is a great opportunity to meet with fellow NAMB members and work together to formulate NAMB’s policy agenda.” —Don Fader, CRMS

US Department of Housing and Urban Development Vicki Bott, Deputy Assistant Secretary for Single Family Programs (conﬁrmed) Congressional Guest Speaker Michelle Bachmann (R-Minn.) (invited)

It’s all happening now!

Visit www.NAMB.org/legconference for details!

FEBRUARY 2011

Expect to see an increase in the number of homes in “foreclosure stalemate,” where borrowers continue to live in homes without paying mortgages and banks continue muddying the workout process. Banks either have been dragging their heels in offering borrowers meaningful alternatives or are not offering programs that provide meaningful alternatives. They do not approve enough loan modifications or short sales and it takes them forever to make a decision—good or bad. The truth is that during the foreclosure process, banks want borrowers to think they want to take the houses, pushing them to find the money to bring the

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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

Borrowers will stay in “foreclosure stalemate” longer than ever