TNR - August 2010 by The Niche Report

Issue 037 August 2010 TheNicheReport.com

... 12 ToandClosing Beyond Ever thought about servicing?

Marketing: Turning the 14 E-Mail 18 Corner Seven Secrets And boost your results.

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CONTENTS

Issue 037

August 2010

NICHE REPORTS prime & FHA COMMERCIAL HARD MONEY & NON-PRIME ConStruction Service Providers

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com

Turning the Corner

CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com

Mortgage Technology in an Emerging Market

MANAGING EDITOR Stewart Mednick stewart@nichereportonline.com

Rick Roque

To Closing ... and Beyond

BJ Bounds Sr. Marketing Communications Specialist, Calyx Software Ever thought about servicing?

E-Mail Marketing: Seven Secrets Molly Dowdy EVP of marketing a la mode And boost your results.

Online Lead Generation Dennis Yu ceo blitzlocal.com Why you don't need a web designer any more.

Stage with 47 Center TheModPost The Niche Report

pg 52 pg 52 pg 53 pg 53 pg 54

August 2010

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@nichereportonline.com

Bringing up the Rear Martin Andelman mandelman matters ml-implode.com Starring this month: Me, Martin Andelman.

DEPARTMENTS

09 10 26 30 40 42 45 57

founder's letter Letters to the editor Appraiser sound off Frank & BRian speak voice of housing RULES & REGULATIONS TIP OF THE MONTH LENDER & RESOURCE DIRECTORY

ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com Advertising Director Jessica Grizzle Jessica@nichereportonline.com Advertising sales Heather Bopp Heather@nichereportonline.com Production Manager Henry Suchman henry@nichereportonline.com Production Assistant Dawn Exner dawn@nichereportonline.com COLUMNISTS & Contributing Authors Martin Andelman BJ Bounds Karen Deis Molly Dowdy Frank Garay Regina Hoover Stewart Mednick Rick Roque Jim Russell Brian Stevens Dennis Yu

  Are you prepared?

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Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@nichereportonline.com www.TheNicheReport.com

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer, or real estate professional and you do not currently receive The Niche Report, please go to www.thenichereport.com. An annual subscription is $47.95 (twelve months/twelve issues.) For additional copies being mailed to the same address please call 866.964.2695 or email us at subscriptions@nichereportonline. com for multi-copy discount. Send address change requests to info@nichereportonline.com. Remember to include the old address. To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to opt-out@nichereportonline.com.

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EDITORIALS / ARTICLES To submit an article for consideration in The Niche Report, please send an email to stewart@nichereportonline.com or call 866.964.2695. We are interested in original writings relevant to mortgage brokers and other real estate finance professionals. If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to stewart@nichereportonline.com.

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FROM THE FOUNDER

This is our 37th issue. That’s right, over three years ago we launched our very first issue of The Niche Report. We were born exactly at the time our industry, and the economy, were settling into the largest recession our country has ever seen. Moreover, it felt like our industry was being thrown into a wood chipper. I think readers and advertisers alike, found our magazine to be unique and interesting. Our subscriptions climbed while we worked hard to separate ourselves from the norm. We also have strived to maintain relationships. In fact, part of our decision to go to a paid circulation was to not raise ad rates that would have affected our advertisers in a time where our industry has been slammed by recession. This same approach of fostering relationships have also allowed us to offer you, our current subscriber, an unbelievable subscription deal that will most certainly have people who are watching us, scratching their heads – asking themselves “how the heck did they put that together?” Take advantage of what we have to offer, this is no smoke and mirrors, the offer is one that is designed to elicit an obvious choice – the choice for you to subscribe to TNR. And again, thank you to Blitzlocal.com, Facebook and Carl White of the Mortgage Marketing Animals for helping us put this offer together. See special offer on Page 4. Although our last three years have been a wild ride, and in the publishing world is still considered very young, the work and passion we pour into this magazine has made it feel like three months. Time has flown by. And if you can believe it, this is Martin Andelman’s one year anniversary writing his column Bringing Up The Rear. Mandelman is proof that controversy and stepping out of the norm drives readership. Over a year ago he came busting down doors with the best analysis on HVCC ever written titled Cuomo’s Crossing: An Outsiders Appraisal of The New HVCC Rules. He followed it up with his phenomenally popular monthly column Bringing Up the Rear with a “love me or leave me” attitude. We truly love and appreciate having him with us and we look forward to each and every new Bringing Up the Rear. Martin has no ulterior motive in his writing for The Niche Report - not money, not fame, not ego – he simply wants to express and convey what he feels is right. Thank you Martin. This month is our technology themed issue. Rick Roque, our technology columnist, has written this month’s feature article based on his perspective of emerging and mainstay technology companies leading the charge on our ever evolving industry. The companies he discusses in his article are from his own research and expertise. The Niche Report had nothing to do with the companies he chose to mention nor is this article a paid advertisement. Thank you and keep up the fight!

Official

Robert Pegg

MEMBER

TheNicheReport.com

Letters to the editor

Letters to the editor Is It “Hard Money” or “Hard to Get Money”? by Joe Andahazy, Issue 036, July 2010 The mailman dropped off the July issue of The Niche Report today, and I grabbed it as I was heading out to lunch. When I saw the reference on the cover to an article about Hard Money, I went straight for it. Now I have read many, many articles on hard money lending, and I felt compelled to write and tell you that this was hands down, the best article I have ever read on the subject. Every point you hit was spot on, and is almost to the detail exactly how I run my practice. I’m a guy who appreciates when someone can effectively convey information, and you cover the full range of issues in a simple, easy to swallow format. It should be required reading for every mortgage broker before they send a hard money lender like me their loan scenario.

Mark Hanf Pacific Hard Money Loans & Financial Services

Bringing Up the Rear: Special Banksters’ Edition by Martin Andelman, Issue 036, July 2010 As usual you are right on the money. The banksters are gutting the middle class and laughing at how gullible we Americans are. I would love to see an article where you explain how "big media” feed this daily propaganda to the masses. How much do the big banks spend with Fox, NBC, CBS, and the rest every year? How much do they donate top politicians? How much incestuousness is their between their respective board

of directors? The USA better wake up...our forefathers died for our freedoms and a few Oligarchs are slowly, but surely working on taking us back to the middle ages of serfs and landlords. Keep up the good work Martin. Bob Squiers Concerned American

HVCC Question directed to Martin Andelman Love your articles - and HVCC has been a target for a while. I just got off the phone with a large wholesale lender. They are screwing up one of my loans, and I have it approved at another lender. Of course, I had to use this lender's own appraisal system for the appraisal. When I inquired about whether they could complete a form to transfer over the appraisal to my new lender (which my new lender will accept AND will do for other lenders as well), I was told HVCC says it's illegal for lenders to transfer the appraisal to another lender. I have read many articles about the wonderful efficiencies of HVCC.....and it could be the permanent grimace, frustrated blood filled eyes and constipation I have been experiencing while reading the articles....but did I miss this? Does HVCC actually prohibit the transfer of appraisals? I thought it was the opposite. HVCC makes appraisals non-portable, if that's a word. I think it fits in with the HVCC goal of stopping things from moving in any way it can.

Letters to the Editor may be e-mailed to info@nichereportonline.com or faxed to 703-991-2362. Include your full name, email address, and daytime phone number. We are unable to publish all letters and may edit letters for length and clarity. Visit us online at www.TheNicheReport.com to subscribe to our magazine and/ or eNewsletter. Or call toll-free at 866-964-2695 for more information.

August 2010

Martin Andelman

CONNECT WITH www.TheNicheReport.com www.facebook.com/TheNicheReport http://twitter.com/TNR01

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To Closing ... and beyond Ever thought about servicing? by BJ Bounds

uying a home can be a harrowing experience for the buyer as well as the broker/lender. You spend so much of your time and expertise to get your borrower to closing... and then that’s it--it’s over. But it does not have to be; parting ways with your customer after closing can be a thing of the past. With today’s technology and a multitude of industry professionals, there is no reason you can’t take advantage of all the benefits of keeping your customers for the life of their loans. Servicing your own loans gives you a competitive edge and provides you with additional revenue streams for many years. If you are not servicing, once you close your loans, your revenue with your clients stops. Income is a one-stop deal—and it is over. Servicing opens up a whole other world of income potential with valuable customer retention. In fact, according to the Mortgage Bankers Association, net servicing income rose in the 2nd quarter of 2009 for independent mortgage companies even as origination profit margins narrowed. Your largest profits will come from servicing and the opportunities for revenue that result from keeping your customers. These opportunities include: •

Interest Income. At the risk of stating the obvious,

August 2010

keeping your loans for servicing will generate regular income in the form of interest payments. As an example, with an interest rate of 5.25 percent on a $200,000 loan, you can earn almost the loan amount in interest over the life of a 30-year loan. That is monthly income that adds up the more loans you close and service. •

Pool Sale. Instead of selling your loans on a flow or monthly basis, grow your portfolio of loans and sell them as a block on the secondary market to Fannie Mae or Freddie Mac in a whole loan sale for a great source of cash funds and liquidity.

•

Re-Finance. If you keep your customers, you are the first in line if they decide to refinance, which provides you another opportunity for income. You retain all pertinent client history and you are in a better position to make strategic business decisions based on available data analysis.

•

Scratch and Dent. If you are servicing your own loans, have you considered purchasing non-performing loans at deep discounts and turning them into performing loans? They don’t have to be yours to start with but they can still serve you well until you can sell them in your next block. While servicing loans undoubtedly provides various money-making avenues, there are some risks and barriers to entry that you should consider as a lender. There are also

things you can do to mitigate those risks to open the doors for strategic profitability. Some of the most common concerns for servicing are indeed the most significant in terms of federal regulations. These include the requirement for annual 1098 IRS forms, borrower letters, and escrow administration. Other barriers include things like payment collection, history tracking, accuracy in payoff statements, and the fact that servicing loans can be extremely labor intensive. Simplicity and efficiency are paramount features for any loan servicing system. And while the concerns listed above are most certainly valid, there are solutions that resolve each of them. You don’t have to do it yourself; there is technology out there that can help you as little or as much as you need. If you are servicing loans and need a more efficient method, or you’ve just made the decision to start servicing, it’s time to start shopping. •

Affordability. Technology being as advanced as it is today, you should not be required to purchase additional hardware to get started in the servicing arena. You’ll want to look for a small desktop application that works with your current systems and processes. As your business grows, you do not want to pay additional fees per user. Look for a servicing solution that does not penalize you for adding staff, but instead charges you per loan. Only pay for what you use.

•

Simplicity. When shopping for your system, look for one that uses minimal resources on your own system and is easy to use. You’ll want your staff to learn quickly how to generate additional income.

•

Compliance. If you’ve struggled in the past with keeping up with industry compliance, make sure your new system includes the required forms and documents for your customers. These include 1098 year-end statements, hello and good-bye letters, and accurate escrow administration.

•

Safety/Security. The safety and security of your customers’ data is significant. As a business owner, you must protect the integrity of your client’s sensitive data. Keeping loan data available on computer hard drives is definitely not the way to accomplish a secured system. Your servicing platform must also be secure. Look for a sever system with redundancy and reliable backup processes in place.

•

Flexibility. The market changes and you must

constantly react to the ebb and flow of market conditions. Your servicing solution should be just as flexible to react with you and adjust to your needs. You may need a full-service solution, or merely a web-based system that your staff can manage. If your staffing level changes, your system should be adaptable. Reacting to the market can sometimes mean trying something new. The opportunities for income go to the servicers. Is it not time for you to stop turning over your customers to others to profit from them? You’ve already taken your customer through a grueling process for both you and them. It is all downhill from here, and it can be a smooth coast if you do your research first. It is time to find the technology that is right for you. Choosing the level of service for your business is a crucial step. Not every platform offers full service servicing, and you might want to begin with that if you have limited staff. Make sure your servicing platform can adapt to your needs and ensure that you remain in compliance, both with regulatory agencies, and with the trust of your customers that their data is safe. Servicing with the right software can be deceptively simple. The name of the game is sustainability. In the tumultuous mortgage industry, you’ll want to do what is necessary to maintain the viability of your business. That means seeking out alternative means of generating revenue. For lenders, the obvious choice is servicing. You get to keep your customers and build loan portfolios that are attractive to larger buyers, providing you with optional revenue streams beyond the monthly interest income. Servicing will make you money and getting started should not require excessive financial or time investments. Affordable software technology is available that will do everything you need it to do so that you can take your mortgage customers with you beyond closing.

B.J. Bounds is the Sr. 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 over 10 years experience in sales and corporate marketing with a focus on technology that spans several industries. For more information on Calyx Software, contact 800-362-2599 or visit www.calyxsoftware. com or www.calyxcorner.com. TheNicheReport.com

E-mail Marketing: Seven Secrets And boost your results By Molly Dowdy

one right, e-mail marketing can be hugely successful. It’s very affordable, easy to do, and it does something direct mail can not do – it starts conversations because replying to e-mail is so easy. E-mail marketing is a great way to get new leads, ask for referrals, and also keep your name on the minds of past clients so they’ll come back and refer their friends and family. Whether you are just starting your e-mail marketing campaigns, or taking a look at your current program and wondering what else you could be doing, here are seven secrets to boost your results: 1. Find a way to e-mail frequently. You know it takes many “touches” before a lead will convert into a customer. There is no consensus on a magic number, but most marketers believe people need to see you five to seven times before they will take any action at all. Some will require much more. You have to be persistent and memorable. Many mortgage pros make the mistake of sending e-mails too infrequently because they’re worried people don’t want to be bothered. But think about how many ads they see each day (e-mail, magazines, television, billboards, web banners, etc.). If you’re only sending once or twice a month, it will be difficult to establish any kind of impression in their mind at that frequency. Don’t get me wrong. You can not send your contacts e-mail ads every day. But you can and should send them valuable information they want regularly. Great brands do this all the time (think about news sites that e-mail headlines

August 2010

wrapped in banner ads every day, daily electronics or clothing specials, and travel specials). What kind of information would your contacts want to receive from you every week? You could e-mail rate lock advice, local market trends, investment tips, and much more. Wrap it in your brand with your contact information all over it. Done well, the recipients won’t consider it “advertising”, but it will effectively market you as a credible authority and the one they will remember. 2. Do not quit when you are busy. Do not spend one or two months on e-mail marketing and give up because you become too busy. When you get busy, hire help or refer the business to your friends. You’ll be establishing relationships that will help you in the future and you’re building a bigger baseline to keep you profitable when times get leaner. Also, you should choose an e-mail marketing vendor that automates your campaigns. By having a “fire and forget” system that automates ongoing campaigns that span months or years, your e-mail marketing will much more effortless. And automation helps your marketing maintain consistency, especially when you get busy, and keeps your leads from coming to a screeching halt. You don’t want that to happen. 3. Choose the right e-mail marketing vendor. A Google search for mortgage e-mail marketing will turn up thousands of results and lots of promises that a magical program is going to grow your business. To choose the right vendor, make sure of the following: a) Your vendor caters to the mortgage market. Some e-mail marketing vendors try to make their product fit every market. They may have the systems in place, but they don’t have built-in marketing templates that are right for mortgage brokers. Do you want to spend

your time changing dry cleaning ads or real estate ads into mortgage ads? No. Find a vendor who specializes in mortgage lending. b) Your vendor is there for you around the clock. Look for the support phone number before you buy. (For some vendors, you won’t find one at all.) Make sure your vendor has a 24-hour support line. You’re likely to set up campaigns after business hours or on weekends, so make sure your vendor is working when you are. For a real adventure, call their support line before you buy. Is their support staff in India? How long is the hold time? c) Importing contacts is easy. Importing lists should be easy and take only a few minutes. Read their instructions. This process shouldn’t be long or frustrating. d) Their marketing templates are excellent and relevant to your business. Do they have postcard and e-mail campaigns that match each other and reinforce your message? Is their pre-written content up-to-date and relevant? Do not settle for a few pre-written templates. Make sure there are holiday campaigns, seasonal campaigns, interest rate campaigns, newsletter templates and more. Remember, if it takes you too long to prepare, you just won’t do it. Make sure they have the templates and pre-written content you need before you sign up. e) They’ve got content your clients want to receive. You can not just send ads all the time, so make sure the library is stocked with marketing pieces that offer advice, tips, and more. Clients appreciate the advice and you are positioned as the mortgage lending authority. 4. Categorize your contacts. Sure, there are some ads and marketing e-mails you’ll send to everyone on your list (“Happy Holidays”, for example) but for the most effective e-mail marketing, divide your contacts into categories so they receive the marketing most relevant to them. Each category will respond to different marketing. For people in your neighborhood, you will want to include a message like, “Your neighborhood mortgage expert at 123 James Lane.” For borrowers interested in particular products, you might want to include valuable information like rate trends, qualifying information, or down payment requirements. Investors should receive marketing targeted to them; renters should receive “declare independence from your landlord” messages, and so on. Categorizing your contacts is a great way to get creative and targeted. Each niche will see you as an expert in their area of interest. Mission accomplished. 5. Grow and update your list. People move, their life circumstances change, and contacts get stale. To keep the value of your list, you’ve got to keep growing it. Are you careful to add new contacts to your e-mail campaigns, or do business cards sit in your desk drawer? Do you update your database when you

August 2010

get address change notifications? These simple steps ensure your marketing stays viable. But to really grow, you’ve got to find new contacts. Purchasing customer lists from reputable vendors like InfoUSA is surprisingly cheap and easy. Buy a tightly focused list – high end renters, homeowners, people in your zip code, or town. Don’t bother buying e-mail addresses – you’ll want to gather e-mail addresses from the prospect, and sending unsolicited e-mail has its own dangers. Instead, focus purchased lists on postal mail or phone calls and ask for their e-mail address. Offer them something of value (like a rate lock newsletter) in exchange. 6. Offer value and include a call to action. “Identity” pieces are fine, but you must to include offers in your campaigns as well. Can you offer rate lock advice? Credit advice? These are reasons to contact you even if a customer is not ready to sign loan papers right away. Some of your e-mail marketing pieces must offer this value, and every piece should have a call to action like “Want to know how much you’ll qualify for? Contact me for a free, no-obligation consultation” or “Rates change. Give me a call for the most current information.” 7. Measure your results so you can duplicate success. Finally, none of your marketing efforts matter if you don’t measure their effectiveness. Get in the habit of asking every caller: How did you hear about us? Keep a tally of the most effective media. How many signed up for a rate lock newsletter? How many called? How many e-mailed inquiries or replies? You don’t need anything fancy – just a paper log or an Excel sheet. Using this method, you can repeat your most effective campaigns to get more out of your marketing. E-mail marketing can be incredibly easy and a veritable goldmine of new business. It can bring you new leads, keep clients coming back, and turn colleagues into referral machines. Focus on finding the right vendor and remember these seven tips. For more tips on e-mail marketing, visit www.alamode.com/MortgageMarketing. Molly is the EVP of Marketing for a la mode’s Mortgage Solutions Division. She manages the advertising content in XSellerate, a la mode’s automatic marketing product for mortgage professionals. Since 2005, mortgage pros have sent over 73 million e-mails from XSellerate, and the product has generated an average of 40% more leads for Mortgage XSite clients using it. Molly can be reached at Molly.Dowdy@alamode.com or 1-800-ALAMODE.com

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*Rates subject to change without notice. Not a commitment to lend. Not a consumer advertisement; information for licensed mortgage professionals only. “Home Ownership Accelerator” and the yellow flying house logo are registered trademarks of CMG Financial Services, Inc. Licensed by the California Department of Corporations RML #4150025 and CFL #6053674; Licensed in Alabama as CMG Wholesale, Inc. #MC20578; AZ License #BK-0903132; AR License #11316; CO License #989309; DE License #010033; FL License #CL0502475; Georgia Residential Mortgage Licensee #15438, NMLS #1820; ID License #MBL-4310; Illinois Residential Mortgage Licensee; IN License #11075 & #10279; IA License #2001-0016; Kansas Licensed Mortgage Company #MC.0001160; KY License #MC18844; ME License #SLM4893; MD License #10825; MI License #FR0989 & SR1689; MN License #20210930; Mississippi Licensed Mortgage Company; NM License #00617; NC License #L-100335; ND License #MB100072; OH License #SM.501225.000; OK License #SL006163; OR License #ML-3000; SC License #S-7,029; TN Registration #2275; Texas License #44253; UT License #5498072-MLCO; WA License #520-CL-37058; WI License #27412. Copyright 2009 CMG Mortgage; all rights reserved. U.S. Pat. No. 7,627,509.

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Turning the corner Mortgage technology in an emerging market By Rick Roque

ould you consider the mortgage industry in the United States, under rapid change, experiencing a significant amount of volatility under the context of newly introduced regulatory requirements, laws along with industrialized pressures toward standardization and automation? If your answer is yes, then the industry is under the classic definition of an “emerging market.” There are over 20

Emerging markets in the world; China, India, Brazil and Nigeria, to name a few lead this list of emerging markets. They are on this list because of the rapid growth, in what was (and still is) a highly un regulated environment, with extreme foreign pressures to regulate, provide systems and institutions to drive transparency and to create a governing structure to oversee the market’s activities. What makes these markets so volatile are the lack of a historic baseline for their economies to be measured. Additionally, currency fluctuations, inflationary pressures and their dependence upon foreign goods & services that drive their national debt are on-going destabilizing pressures that discourage foreign investment and sustainable economic development. The changes we are making to regulate, oversee and reengineer the mortgage industry, with little to no precedence to gauge future success, in an environment that is not inviting for investors (MBS), amidst a highly volatile economic circumstance is what makes our industry, by analogy, an “emerging market” as well. It is a sobering comparison but one that is worth exploring in light of how difficult it is to run a mortgage operation with any substantial basis for a confident view in the future. Likewise, to deliver technology solutions in this environment, is even more

difficult given the rapid pace of change. Only the well capitalized “innovators” with a solid base of customers will likely succeed, while others will fail taking their customers down with them. Like any market undergoing a fundamental regulatory & industrial change, technology is the key enabler to accomplishing all three of these components. Mortgage technology is changing like it has never changed before. The cost to analyze, design, develop and bring to market a technology solution has literally never been more expensive and complicated. On which part of the market do you focus? Which part of the market will still be originating loans? What features do we design for that segment? When do they need them by and how long will these requirements be in place? When can we deliver these solutions? These are the questions plaguing technology vendors. With changing regulatory requirements and the constant evolution of what is expected (and unknown), the importance of providing the right solution, to best equip mortgage companies has never been more important like it is today. In the words of Larry Huff, President and Founder of Optimal Blue, “there is a cost to innovation and it is significant; most companies aren’t capitalized or have the foot print to do it at all.” I can’t agree with him more and we’ll explain how Optimal Blue has been able to maintain and grow market share, year of year as a result. Faced with such questions, companies generally respond one of two ways: they innovate their way through the challenges, build a broader development infrastructure and as the industry continues to change, they expand their sales/marketing efforts to help shape, lead and direct the industry; or alternatively, the company plays it ‘safe’ by cutting critical support, sales and development resources while waiting for a clearer indication regarding the direction of the market. Companies with this second corporate ‘behavior’ will see the market slip away from them. “From an origination component, because of the market conditions, there are a lot of technology providers who will not be in the business longer term,” says Don Covey, Managing director of the Origination Technology Division of LPS. I believe the difference between those who grow and thrive in today’s environment is rooted in the difference between these two behaviors and both are clearly evident in many companies today. The goal of this article is not to review a comprehensive list of mortgage technology

companies. There are many legacy companies who have a strong history in mortgage technology but are failing to innovate. They either lack the resources, vision and/or management team to serve their customers today. So, how do you distinguish those that are innovating from those that are not? Likewise, the mortgage industry is famous for “fly by night” technology firms. Let’s face it, anyone can file articles of incorporation, raise a small amount of money and eventually attract 5, 10 or even 20 customers and/or a base of several hundred users; even in today’s environment it isn’t very difficult. So, how do you as a mortgage owner distinguish the promising start up from those that will only waste your company’s money and more importantly, time? I will always be amazed why mortgage companies buy these products with no understanding of the capital, vision and product roadmap behind the technology provider. In these cases, when your technology provider needs YOU more than you need them, this should be seen as a serious red flag? Yes, you can often save money by going to cheaper solutions that are new to the market or less expensive legacy technologies, however how many customers can your technology provider lose before they begin struggle to pay salaries, maintain high levels of support and continue to develop quality driven solutions? Therefore, the goal of this article is to quite simply bring attention to companies who are demonstrating qualities necessary to innovate the industry and to move mortgage lenders forward. There may be other companies who could have been mentioned but were not available or simply given the limitations of this article could not be included. I look forward to hearing from you as to who those companies are. But from my perspective, in today’s market there are mortgage technology companies who are clear “winners” and “losers;” many will face the reality that unless they contribute to the innovation life cycle of our industry, they will continue to lose market share & revenue, and worse of all, they will continue to lose the respect from their peers. I am focusing on two different types of mortgage technology companies: Select “legacy” mortgage technology companies who have captured market share, earned the respect of their peers and are most importantly, contributing to the “thought leadership” of the industry as it moves forward; and secondly, companies who themselves are new to the scene or they have a new product and orientation to their products that are very much in line with 2010 – 2011 industry trends. I have also categorized each

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company in their respective ‘domain’ to help draw some distinctions between organizations and products. The categories are: Categorizing solutions was indeed a challenge. In today’s environment, everyone claims to be a ‘compliance company’; after all, every product today is being developed around regulatory requirements. Having said this, the categories are loose associations and does not in any way restrict the company or its solutions to that category. In either case, these organizations are doing well in their technology innovation and are contributing to the dialogue; clearly these are great options for any mortgage lender looking to make changes to their technology.

Legacy Solutions / Companies If there was ever a time when the mortgage industry needed the expertise, resources and leadership from its legacy technology vendors it is now. With regulatory requirements and the needs of the market changing at such a rapid pace, I wanted to take this opportunity to highlight

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some companies who are leading the vendor community by growing in both value to their customers , revenue and market share.

Product & Pricing:

Optimal Blue, Plano, TX www.optimalblue.com Under the leadership of Larry Huff, founder of Optimal, Optimal Blue is clear pioneer and industry leader in the field of product & pricing. I have always long been impressed with their brand, corporate reputation and their ability to know their core competency and execute against it. Larry has deep roots in mortgage technology having pioneered internet based product & pricing functionality in the 1990’s; he applies this same skill set for innovation in their flagship product & pricing product today. They are arguably the most accurate and effective secondary marketing automation company in the market today. Optimal Blue is experiencing a tremendous amount of growth in the mortgage banking and depository origination channels of business – particularly from credit unions and community banks. “Our solution starts from the secondary perspective,” says Larry Huff, “this Is vital for our clients as they look to identify ways to increase their profitability while margins are getting thinner and costs are going up.” Optimal Blue has a solid reputation and in my experience has a core following amidst midsized to larger mortgage banking operations who account for much of the total origination volume in the United States. Larry continues, “Our adoption rates are good, new sales and customer retention is very strong; we have experienced 30-40 percent top line revenue growth year over year since 2006.” In my view, product & pricing automation is critical for today’s mortgage operation. Whether or not you are working with a lot of investors, it is important to maximize both time and efficiency in order to elevate your profitability. Since making an investment in Secondary Interactive, Optimal Blue is continuing to enhance on mandatory delivery –“ OB is the only system that

we can manage the entire workflow around mandatory or best efforts”, Larry asserts. “Above all else- our focus is on accuracy; strong customer service and to continue our integrations in order to provide services deeper and deeper into the mortgage operation. Moving forward, lead aggregation and secondary marketing services will be our primary focus over the next 2 years. It is for these reasons they are a leading solution provider for the banking mortgage operation.

Loan Origination

Ellie Mae, Pleasanton, CA www.elliemae.com

With the acquisition of Contour and Genesis, and most recently Online Documents Inc and Mavent and nearly 10 years of evolution and adoption of the Encompass platform, Ellie Mae has developed a broad service offering in residential loan origination technology. With over 20 percent of all residential mortgage applications in the United States going through the Ellie Mae network in some form or another, and over 55,000 active users, Ellie Mae is well positioned to continue to serve existing clients and be a strong consideration of users of other platforms. As mortgage companies close down and loan origination volume continues to moderate at 10 year record (low) levels, this directly impacts the mortgage technology vendor community – in particular, other loan origination platforms that aren’t as well adopted or capitalize to ‘ride the market’ are most vulnerable in today’s market. Due to its ability to integrate critical components to the origination process – compliance, initial disclosures and closing docs, a rules based architecture and customizable workflow etc have all been ways, Ellie Mae has positioned itself differently than its competitors. So what makes them so different? “There are many ways we are different. first, we look at origination workflow as a holistic and unified process, not something where critical functions or requirements are “pieced” together through one vendor or another,” says Jonathan Corr, Chief Strategy Officer and Executive Vice President of Business Development & Product Strategy. “Secondly,

we price our software in a value based way - we price it based upon the value and ROI we can deliver to our customers. Some competitors price this more or less - but the reality is we deliver in innovative ways electronic data validation, delivery and funding - this serves the broader software as a service model. Our solution may not be 'cheap' but the reality is, in the bigger picture it is more cost effective in the long run to leverage such an integrated service.” It is important for the mortgage operation, to ensure the critical components are seamlessly integrated and that as much of the information collected for the purposes of a mortgage are verified and validated. Most LOS platforms “spackle” things together in a piece meal manner still relying upon 3rd party providers to delivery on key (regulatory) components of the process. Clearly this is not the direction of loan origination. Ellie Mae delivers an efficient solution that can help organizations stay compliant, cut costs and maximize profits. Mortgage companies do not want (or need) a bunch of disconnected desktops where reporting, compliance and controls are difficult to achieve. Ellie Mae’s platform moves the industry forward with its leadership of technology integration and innovative platform.

Servicing

Lender Processing Services, Jacksonville, FL www.lpsvcs.com

LPS is one of the few publicly traded, mortgage technology companies in the mortgage industry. Other than FISERV, through its acquisition strategy, breadth of services and capital, no company is as dominant and aggressive, in so many different types of services than LPS. With their vast number of services ranging from origination, servicing, default and risk management, desktop workflow solutions, capital markets, real estate, government and risk management solutions. This varied gives them an edge over other less mature solutions in the market place. “We look at the total business relationship with the lenders,” says Don Covey Managing Director, Origination Technology Division. “Our account management team, enables us to provide value to our TheNicheReport.com

customers, as the relationship evolves one department and technology at a time.” There is no question that providing front end visibility to loan level servicing, provides global flexibility throughout the life cycle of the loan. Over 63 percent of the market is serviced by LPS’ technology. This gives LPS a tremendous advantage as they expand. Other than Ellie Mae, LPS sees the origination space as a largely untapped market. “I see Ellie Mae doing some good things in the market – a similar strategy as to our own. What we have done is expand our product offering beyond a set solution. This enables LPS, with its expanded set of solutions and our capital position, to be in a good position to pick up more market share throughout the mortgage supply & service chain,” says Mr. Covey. “Most origination companies aren’t capitalized to meet the regulatory needs of the market, and most of the systems are not built to maximize sales, our set of solutions are.” It is for these reasons, a strong history, capitalization and existing market opportunity, that LPS is in a strong position to continue being both an innovator and technology leader in the industry.

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Appraisal Management

A la mode, Oklahoma City, Oklahoma www.alamode.com With over 60 percent market share/adoption in the U.S., it is not an under statement to say that Ala Mode has the largest set of solutions for real estate appraisers in the country. It is an incredible challenge for any company to grab market share but to maintain it – and this is something that they have done. With their online application, rate lock advisory services, mortgage, real estate agent & appraiser based web sites, lead generation and referral conduit solutions, and their electronic signature & document delivery solution, they truly have a wide variety (and successful) set of services. How have they done it? By consistently innovating and adding value to their respective customers. This sounds easier said than done, and in over 24 years in business many have tried to compete against them amidst the various market fluctuations over the years. Based in Oklahoma City, Oklahoma, they are continuing to add additional services and are, once again, expanding their set of service further. The Mercury Network is their flagship, self managed Appraisal Management solution; On to mercury network, an appraisal is ordered - If the report doesn't pass specific checks the solution will disable the ability to pass it on further in the process. “There is business intelligence built into our solution”, says Brad Eaton Chief Product Officer, “it is there to ensure quality and to keep the turn around time minimal. As a result the re work rate is minimal.”. In today’s environment, the accuracy of the appraisal is the most challenging component to getting loans qualified and approved. So, working with a competent and reputable partner is important to the success of your loan origination process. “It isn’t uncommon that 45-60 percent of appraisals that are ordered need to be reworked,” says Adam Calvery, President of the mortgage services, “the rework rate for appraisal managed in our solution is at least 20 percent lower.”

Document Services

DocMagic, Manhattan Beach, CA

You can’t talk about Document Services without talking about DocMagic. They are the largest dedicated loan document production company in the United States, delivering a wide variety of document deliver, data verification and validation services to meet the quickly evolving mortgage regulatory environment. DocMagic has strong brand integrity and is well equipped to meet the complexity in today’s mortgage documentation challenges. Founded over 22 years ago in 1998, Document Systems Inc, more commonly known as DocMagic, has built a base of customers that is the envy of its competition. What separates DocMagic from other providers? First, its broad base of solutions offered to the mortgage community. There are form, delivery and fraud protection services to ensure that not only the forms are accurate but the data that resides in them are both validated and the most up to date throughout the loan origination life cycle. In addition to these services there are Flood Determination and other Legal related services that simply places the focus of compliance on the mortgage operation. Another solution that is worth mentioning, is their LoanMagic solution, which helps the mortgage operation manage their leads and track the appropriate documentation throughout the sales cycle. They have a solid and broad base of solutions that envelope the front end origination and closing stages of the loan. Secondly, DocMagic has made sizable strategic investments in their compliance and software development in order to make sure to keep up and involved in the regulatory changes at every level of the business. Their legal / compliance department has over 15 legal and mortgage professionals in place specifically to analyze the requirements and interface with the appropriate legal and regulatory authorities on the state and federal level(s). They’ve also expanded their sales, marketing and support organizations in a time when most legacy companies in the industry are cutting back. There is a real personal commitment on the management team of the company

to both deliver value and service to its customers, and to keep the technology standards high from within their company. “We’ve always separated ourselves by our commitment to technology and innovation. We are proactive in the marketplace always thinking ahead and looking to constantly delivery value to our customers,” says Don Iannitti, President and Founder of DocMagic. “We Develop our way out of industry problems and not to make our customers do more work, that is our main goal.” This is at the heart and center of the work of an innovator. It is important to consistently push the envelope and, consistently look for ways to expand systemic value while supporting the core offering. This is the key to innovation and the key to DocMagic.

Emerging Solutions / Companies There are several technologies and companies emerging to meet the growing needs of the market. These needs revolve around the two most critical aspects of the mortgage process. First, the value of the property and second, the need to educate the consumer regarding preparing for a mortgage along with understanding what their options are pertaining to available mortgage products in a changing market. The companies selected were done so based upon their financial standing, base of customers, growth opportunity and their product alignment with market trends. We are focusing on a few companies located in the Wisconsin and California, however in subsequent issues we will focus on other emerging solutions or companies that are gaining traction.

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Beyond Appraisal Management

Corvisa, LLC, Milwaukee, Wisconsin. www.corvisa.com/

To call Corvisa an Appraisal Management software company, would be to misunderstand what they do; to categorize them as an system wide analytics solution is not quite right either, and to consider them merely a closing management application also doesnâ&#x20AC;&#x2122;t fit â&#x20AC;&#x201C; so who are they and what do they do? Well, the answer rests in a seamless web based solution which provides a suite of critical operational modules that ensure greater efficiency, operational insight and compliance. Corvisa utilized the experience and expertise of its principles and advisory board members to create a suite of solutions which enable lenders to control the appraisal ordering process with an easy to use HVCC compliant interface, to monitor system-wide operations with a simplified reporting structure and tie and coordinate key operational event such as collection of payments from the borrower and scheduling into a logical and efficient flow.

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When I reviewed their solution, what struck me most was that they had created suite of modules that are easy to use and adopt. The natural core functionality is indeed to manage the appraisal ordering process from start to finish but their dynamic and flexible reporting capabilities enables a global performance view of your company which is quickly becoming a clear standout, as well. Corvisa understands the importance of simplifying and streamlining the lending process in a manner that is logical while compliant and their suite of solutions delivers on that vision. Under the leadership of Matt Lautz, a nationally recognized internet technologist & entrepreneur, its Board which includes John Alexander and a strong software management team, theyâ&#x20AC;&#x2122;ve gone from a start-up to a company with an expanding base of thousands of users and nearly cash flow positive in less than 6 months. With continued strong investment support and market adoption, they look to achieve huge success into 2011.

GFE Compliance/Vendor Management

Closing.com, La Jolla, CA www.smartgfe.com www.closing.com

One of the greatest challenges to mortgage lenders across the United States, is the developed disclosure of the fees of the Good Faith Estimate. Furthermore, regulations, restrictions, reduced tolerances, RESPA, and other challenges facing lenders are increasing their cost of quality on every loan they close, fund and service. The demand for accuracy has never been greater, especially when it comes to estimating closing costs has reached epic proportions. Mortgage technology vendors, for the most part were un prepared to address the operational and compliance related needs related to the GFE. What used to be a â&#x20AC;&#x2DC;fee scratch padâ&#x20AC;&#x2122; to illustrate to the borrower a list of â&#x20AC;&#x153;estimatedâ&#x20AC;? fees related to the purchase, now is a binding quote of services performed on the transaction. A 10 percent (or more) deviation from the original GFE can result in a RESPA violation unless properly cured by the lender. If not cured, the lender is subject to civil actions with possibly secondary consequences to the

funded loan and possible reputation challenges to their firm. It’s 2010 - welcome to the new world of lending. If you think all of these regulatory requirements have taken the fun out of being in the mortgage business, I can only assume you are using a technology or loan origination platform that is not performing it’s job. So, relax, enjoy the business, focus on your client relationships, and allow the SmartGFE®, by closing.com to construct, prepare, organize and guarantee the fees on your GFE. The SmartGFE® is one of the most innovative (and accurate) technologies in the marketplace. Every lender in the United States should take a hard look at the manual processes and employees put into place to solve the GFE requirements, and simply have your loan officers use the SmartGFE® instead. The SmartGFE® is seamlessly integrated with your loan originated platform, and it provides a controlled environment where lenders can control the closing cost fees and vendor rates to ensure (and guarantee) the accuracy of what is presented to the borrower. I will always be amazed why the pride and success of a mortgage lender would convince them to spend the time, resources and ongoing maintenance on attempting to build compliance solutions themselves. This will only produce operational frustrations and increase your cost of quality over the middle to long terms. I can assure, in the larger picture such decisions are bad for your company and bad for your clients; so why do it? With the SmartGFE, you don’t have to. Aside from the low cost, the SmartGFE® comes backed with the assurance that if the estimate provided exceeds HUD’s tolerance levels, the make-up difference in cost will be paid by Closing.Com.- Guaranteed. With an guarantee like this, you can actually enjoy the industry again; have fun again – take advantage of the SmartGFE® .

Qualified Leads

Ratespring, LLC, Milwaukee, WI www.ratespring.com

In a contracting market, what is on everyone’s mind is their pipelines. With the economy faltering and underwriting requirements getting more stringent by the day, the goal is not to just find any borrower but to find the right borrower who can qualify for a loan. How do you identify borrowers, especially those whom you’ve never been in contact with that would be perfect for a loan in today’s market? Just as difficult, with the fluctuation of the market, changing underwriting criteria and constant modifications to lender program guidelines, how can you stay on top of the eligibility of your leads once you have them in your pipeline? This is the sales opportunity life cycle that has been elusive to many loan officers throughout their career leaving them to depend upon the market demand for loan products in order to drive their business. Ratespring has two solutions that go hand in hand. First, their Premier Leads Program enables lenders to acquire and rate their existing leads based upon a proprietary algorithm that analyzes and monitors over 300 data points in a borrower’s credit report. The result of this is to predict, with a greater than 65% accuracy, which borrowers are most likely to qualify and close on a new purchase or refinance loan in any 6month timeframe. If it sounds too good to be true, I encourage companies to try it to see for themselves. It is a smart way of acquiring leads that are most likely to close and provide you with the ROI you are looking for.

- continued on page 50

Apraiser Sound off

Highjacked Vocation Completely Collapses (HVCC)

by Regina Hoover

VCC, Home Valuation Code of Conduct, is an acronym we have all come to know too well. Those of us in the real estate related industries, such as appraisers, realtors and lenders know what HVCC is. As a Certified Residential Real Estate Appraiser with more than 14 years of experience, I definitely know what the HVCC is; and I know what it is not. If you had asked me before May 1, 2009 what HVCC meant to me, I might have answered with a bit of humor, “Honest valuation comparable communicator”, or any number of well placed words describing myself as a career real estate appraiser. I would definitely have described myself as a competent, ethical, well-educated professional charged with the enormous task of determining the fair market value of real estate. I certainly did not find myself in the language routinely thrown around to describe appraisers as unethical, duplicitous, colluding scoundrels, who sent our country to the brink of financial extinction. Now when I hear the acronym HVCC, I hear “Hijacked vocation completely collapses.” Before you go off about how I speak from my emotions, let me clarify. I concur 100 percent! I absolutely speak from the heart 26

August 2010

when I talk about the widespread carnage caused to my profession by the passage of HVCC. First, let me say that the majority of lenders I have worked with were honest, ethical, hard-working professionals whose businesses have also been severely impacted by HVCC. So do not burn me in effigy and wonder, “Does she hate lenders?” The answer is a resounding no. These lenders were my clients. I knew their spouses’ names, celebrated their children’s births, thanked them for their business each year and watched them celebrate their clients’ dreams of homeownership. The difference is this: my clients and I did NOT collude with one another; they did not coerce me to provide values or to ignore condition issues. They were my clients but they also cared about their own clients; the consumer. In fact, we were a great fit. I was the real estate appraiser providing an honest valuation of a property for the loan collateral, and the lender, guiding their client, the consumer, in the loan process. It really is and always was that simple On the converse, I know how it feels to tell a lender or realtor to take their business down the street, to those less ethical people who would happily do their shady deals. I remember these situations with pride as they were a regular part of an ethical appraiser’s week. I did not need HVCC to regulate my behavior or to place a firewall between me and my clients. I effectively severed ties with unethical clients, all by myself, just like any good business owner will do. And for those appraisers who acted unethically,

Apraiser Sound off there was always the state licensing board, the Appraiser Qualifications Board, the Appraisal Standards Board, FHA review, and ever-present USPAP to protect the consumers. After all, were not these safeguards put into place after the last “fall” when the savings and loan crashes decimated the economy? Fast forward to May 1, 2009, the implementation of the Home Valuation Code of Conduct, and the subsequent passage of the new FHA Appraiser guidelines that became effective February 15, 2010. At a cursory glance, the passage of HVCC and the FHA Guidelines SOUNDS like a very good way to stop lender coercion, appraiser/lender collusion, to ensure necessary appraiser independence and to protect the consumer. In fact, with all this accomplished in one fatal swoop; one has to wonder, “What TOOK them so long?” You would almost expect Andrew Cuomo to have the big Superman “S” on his chest for saving us all from the big, bad appraisal industry, right?? Not surprisingly, the passage of HVCC has dramatically changed the appraisal industry landscape. According to a March 22, 2010 edition of HousingWire.com, TAVMA (Title/Appraisal Vendor Management Association) indicated that “two-thirds of appraisals conducted in the U.S are done with AMC’s. There are 45 AMC’s that are TAVMA members and the group said those companies generate 85% of the country’s AMC business.” Since FHA’s new guidelines became effective February 15, 2010, mandates included that fees paid to the appraiser are required to be “customary and reasonable”. As appraisers, we knew that the passage of HVCC in May of 2009 and its forced reductions of the appraiser’s fee had already driven the typical fees made by appraisers down by a minimum of 20 percent. I can personally attest that my fees are down as much as 25-50 percent with some AMC’s. I was recently asked by an AMC to lower my fees as promotional prices for new lenders. This reduction would result in lowering my overall fee to around 50 percent of my typical fee prior to HVCC. In fact, this same AMC indicated that appraisers who were unwilling to allow these “promotional price cuts” would not be considered “preferred appraisers” and would not be able to count on continued business. Whoa! Wait a minute! Isn’t this similar to the same pressure appraisers were reportedly receiving from lenders, vowing to pull work away or “blacklist” good appraisers who did not “get on board?” Exactly WHAT did HVCC accomplish on this particular front? Very little I am sad to say. Where are experienced, qualified, career appraisers whose

business has always been lender based supposed to go when we are basically extorted to reduce our fees? When we refuse to accept lower fees, or work within unacceptable time frames the work literally goes away. In the past, our own marketing savvy, coupled with old fashioned hard work, could build a sustainable appraisal business. You would solicit new business and your hard work and ethical behavior kept ‘em coming back for more. I am sorry to say that is simply not the case for appraisers anymore. We appraisers do applaud a la mode’s Mercury Network and its Appraiser Fee Reference published in February 2010 for their efforts to give appraisers an independent source by which we may prove that the fees paid to appraisers are considerably lower than they were prior to the advent of HVCC. The appraisal industry currently faces significant reduction in its ranks. Since the appraisal industry has increased education, has at best 40 percent of the expectation of fees it once did, and is entirely dependent upon trainee appraisers continuing to perpetuate the industry, where do we go when all the good ones are gone? Where is the industry when the younger qualified appraisers, frustrated

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Apraiser Sound off with their disappearing appraisal business have moved to more sustainable careers? I know several appraisers who are leaving the field for “more respected professions.” A highly qualified 29 year old appraiser told me recently he had rather give up the next six to eight years for law school and have a career in a sustainable field than spend another year in the appraisal profession and lose his home to foreclosure. He mentioned that he could get a student loan for education purposes, but he cannot get an SBA loan for his appraisal business due to it being considered “unsustainable.” I find myself faced with that frightening reality, despite the many years of education, experience, and hard work of building a successful appraisal business. Because I personally refuse to workload for fees that existed in the early 1990’s that do not fairly compensate me for the difficult task of appraising in our new world, my work has decreased more than 80% in the last year and a half. However, my biggest questions remain. Are consumers more protected by these changes and is the appraisal industry now providing a more credible report to the consumer as a result? The answer is a resounding “No.” NAIHP (National Association of Housing Professionals), and its leader, Marc Savitt, have produced report after report detailing the abuses rampant within the new system and proof that appraisal fraud is higher than ever. An article that appeared on May1, 2010 edition of the Washington Post highlights the recently completed MARI Report (Mortgage Asset Research Institute) found that “fraudulent appraisals rose in 2009, and now represent the fastest-growing form of home loan fraud.” They also reported that “distorted valuations came in as the second biggest source for home loan fraud” and “rose to 33 percent in 2009.” I believe this has happened because of the reduction of fees, the inability of appraisers to work for clients of their choosing, but most importantly, the general lack of respect for our profession that has resulted in a decline in quality. This decline can often be traced to the use of unqualified appraisers who often work outside their competency level, both experience-wise and geographically. I cannot fault appraisers who have accepted this fate and now slave away for fees much lower than they deserve. I know that pull between professional integrity with regard to fair compensation and feeding your family. I know it all too well. Before you write me off as another whiny appraiser, let me tell you about my new definition for the acronym,

August 2010

HVCC. For me it now stands for “High Velocity Career Changer.” While I was at first, very frustrated and somewhat demeaned by the unavoidable changes of my profession, I was forced to look inside to find out my true desires. I am now happy to report that HVCC has been a good thing for me professionally. Working with a phenomenal business coach named Tim Davis, the Marketing Evangelist, I am finding out that I really DO love what I do every day as a real estate appraiser, and that has been a game changer for me. Armed with a plan for success and brand new direction, I now have a burgeoning real estate appraisal practice once again. And I did it my way. This is not new by any means, appraising real estate for the purpose of divorce and estate settlement, but is now the mainstay of my business. I have developed new relationships with divorce and real estate attorneys, RCS-D (Real Estate Collaborative Specialist-Divorce) realtors, home inspectors, and other real estate professionals; and people like Kelly Lise Murray, the new director of community and continuing education at Vanderbilt University Law School in Nashville. Having worked closely with Kelly Murray and Wendy Waselle, co-founders of DivorceThisHouse.com, I have found an entire segment of the population, divorcing homeowners, who absolutely need the very service I provide: an unbiased opinion of fair market value for real estate involved in their divorce process. And despite their troubles, this segment of the population, reported at 50 percent, understands the need for experienced real estate appraisers. They and their attorneys happily allow the time required to produce a credible real estate appraisal in today’s complicated real estate market. In fact, they absolutely depend upon it. So don’t give up my fellow appraisers. Go out there and find YOUR new definition of HVCC. I bet it’s bigger than you think. Regina Hoover, owner of Sumner Appraisal Service, has been appraising real estate in the Middle Tennessee area since 1996. Ms. Hoover is a Certified Residential Appraiser but is nearing completion of her commercial license certification. Ms. Hoover specializes in the appraisal of real estate for divorce and estate settlement purposes. Ms. Hoover also provides consulting services to lenders, realtors, and other real estate related professionals in growing their business through the divorce real estate niche. Regina may be reached at gina@sumnerappraisal. com or www.sumnerappraisal.com.

Frank & Brian Speak

Find Inspiration, find opportunity by frank garay & brian stevens

s time goes on and as transactions have become more difficult from the moment of origination to the very end at funding many lenders are simply getting out of the business. We've listened to folks complain about reform, oversight, NMLS, Respa, HVCC along with a host of other reasons. Hell, we very well may have helped foster an environment that led to disenfranchised, disillusioned loan officers running to other professions. We partially believe this is exactly what congress and the GSE’s wanted. If you look at their actions and their "torch and pitchfork" witch hunt they've been on for the past couple of years, we can envision no other outcome. We however like to look at this from another angle though. See, if we accept the idea that all markets are cyclical. If we accept the notion that valleys are eventually offset by peaks of similar size. If we accept that bad markets set the table for good markets, then we must accept the simple fact that our current situation will eventually end and greener pastures are somewhere, out of sight, but nevertheless, in front of us. So, we just finished looking at a press release where Chase and Citigroup are "ramping up" their retail mortgage branches. Though this may sound promising on the surface, their "ramping up" is primarily loan officers that have not or cannot cope with the testing and cost associated with NMLS. What’s being missed in

August 2010

these headlines are those that are leaving the broker and small banking channels and are not landing with the big four. Those folks are now in unemployment lines, selling Buick's, great customers and a variety of other vocations. They're not, however, doing loans. Further, our industry, like appraisers (exchange the word “lender” for “appraiser” and you'll have the same outcome) is not recruiting new talent for the next good market. Really, who in their right mind would want to be a mortgage lender right now? We mean, we would, but we have a different perspective than a new graduate looking to enter a career. Our numbers are down and we’re not getting new blood. Loans are remarkably more difficult than they were a couple of years ago. AND our bear housing market will eventually get replaced by a big mean ass bull. Guys, when that happens, and it will, three things will occur: 1) You'll have more business than you'll know what to do with. Remember, someone will have to help navigate borrowers through these programs. Difficult loans are a sure bet for job security. 2) If you're not an alcoholic, you'll probably become one. Some of my most difficult months have been my busiest months. We know a number of you reading this know exactly what I'm talking about. Let me digress for a moment on this point - "hard working and hard partying..." doesn’t that conjure up memories! 3) Third Party Origination Channels and Underwriting Guidelines will open back

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up. If you think this prediction sounds far fetched, look at the atmosphere before and after the first depression. You had the Roaring Twenties and The Greatest Generation; not bad bookends to one of the lowest point in our country’s history. Yet if you were to ask someone in 1934 what they thought of the future, it'd probably be pretty bleak. Yet, things changed. Ask a lender what he or she thinks the future holds and most of the time they'll spit

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venom; but that will change too. Our point is, stick with it. If you've made it this far, you might as well. Through the nonstop streams of negative press and through the constant grumblings in your office you can find inspiration. You can find opportunity. Through our travels over the past couple of years and through our countless conversations with loan officers we’ve been remarkably inspired. We’ve spoke with Jeremy in California, Scott in Michigan, Chris in Florida and so many others that are finding success that any originator would envy in the best of markets. So if we can find adopt and emulate the right examples, remember, there's green grass and a stiff drink in your future. Thinkbigworksmall.com (TBWS) was founded in 2007 by a group of highly successful real estate and mortgage industry entrepreneurs. Born in the most battered market in the real estate and mortgage industrys history, Thinkbigworksmall.com was conceived after decades of observing how the most successful professionals always seem to work smarter not harder. Frank & Brian can be reached at tbwsdaily@gmail.com

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online lead generation

Why you don't need a Web designer anymore

years ago getting your business online was a technical challenge—you had to know FTP, html, PHP, and a wide array of languages, protocols, and tools. Then came a range of user-friendly tools that let unsophisticated users create their own websites—you can name your favorite, as well as perhaps argue why handcoding or your tool of choice was better than some point and click package. And now anyone can create a website in minutes with zero technical know-how necessary. In fact, with a Facebook page, Google Places listing, or LinkedIn profile, you can be successful without even having a website. Many

THROW THE HIGH PRIEST OUT OF THE TEMPLE 10 years ago, unless you were a coder, you had to go to the high priest if you wanted any changes made to your website. And if you asked in just the right way, with the appropriate sacrificial offering, the high priest would perform an incantation—then magically, your website would have that image added, text updated, or whatever you requested. It was clear you were at their mercy. Like the only car dealership in town, they could charge whatever they wanted 34

August 2010

for new cars or repairs. You wouldn’t want to anger the gods, for fear of retribution or their arcane mumblings about why other ways of growing your business online are unsafe and unpious. Certainly, mere mortals cannot understand their ways. Nowadays, as a mortgage broker, you have control, since your website is a business decision. You can easily measure what you spend and how many leads you get. • You can ask your vendor-- how many leads will you get from their $500 package versus their $3,000 package? If they snow you with technical babble and can’t formulate a response in plain business-speak, run—don’t walk! Any expense you have for on-line marketing must be quantifiable into traffic and conversion. Traffic is mostly advertising, while conversion is about getting that traffic to turn into phone calls. It’s this simple—for every dollar you spend—whether on labor or ads—how many leads does that turn into? The discussion about the bits and the bytes is meant to confuse you to pay for things you don’t need. • You see a website you like? There are thousands of freelancers that will mimic it for you for a few hundred bucks. Those folks make about $20/hour and create pricing

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pressure on US design firms that can only hem and haw about how somehow they are better. But in the same way you can buy that can of Coke for $8 from the hotel mini-bar or 25 cents at the supermarket, you can shop. Further, you can buy pre-made sites or semi-custom designs for cheap or even free. And as a company that charges up to $100,000 for new websites, we can tell you that it’s not necessarily true that you get what you pay for. • Your website should have only ONE goal—to convert. Are you tracking how many visitors turn into phone calls or leads? You should be getting one lead for every 10 people that visit your website. If not, then there’s something wrong with your website—and most likely it’s because you are not providing enough information to convince a prospect that you’re worth a phone call. Do you have a video greeting of yourself, client testimonials, a rich description of what you offer, your address and phone clearly visible on every page of your website? Does your website look like one of those generic spammy sites that have stock art images (the happy family embracing in front of their new house—you know the ones I’m talking about), such that it’s devoid of your own content? See how that has nothing to do with the bits and the bytes? The firm that’s making your website should be paid only to helping you convert better via more engaging content—not some weird blue animation that zips across the screen, but has nothing to do with convincing your prospects to call you. • The other half of your online program is to advertise. The most beautiful site with the most compelling content is useless if nobody ever sees it. So you have to get found on Google, Facebook, and any other places that your prospects are looking. Just like the web designer that hides behind gobbedly-gook, the search engine optimization wizard likes to hide behind the curtain of Google’s complex algorithms. Nonsense. Take out your business stick and ask how much traffic you’re getting and at what price. Then ask

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online lead generation what the quality of the traffic is, since buying users who watch funny videos on YouTube might be worth a nickel, while a search on “mortgage refinance rates in {your city}” might be worth $10. Whoever does your advertising should make it clear what that traffic is costing them and how much they’re marking it up. If they hem and haw about this point, perhaps because they have a “dynamic balancing algorithm” or some garbage, it probably means they are spending 10 to 20 cents of your dollar and pocketing the other 80 to 90 cents. Now that the commoners are running the temple, they (you) can get your web presence built for free on Google (they have a Places product) and Facebook (they have a Pages product). Look for more detail on how in upcoming articles here.

Example 2 (Mortgage Landing Page Template)

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Dennis Yu is Chief Executive Officer of BlitzLocal, which specializes in online lead gen for businesses that have a local presence. He is an internationally recognized author, having appeared on CBS Evening News, National Public Radio, KTLA, Entrepreneur Magazine, and other outlets. His blog is at dennis-yu.com and you can reach him at dennis@blitzlocal.com.

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The Voice of Housing

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Gimme Shelter: Homelessness Rate Climbing Low Income Rental Units Needed By Jim Russell

uring the housing boom of the late 1990s until the bubble burst in 2008, the Clinton and Bush Administrations boasted that record numbers of Americans were homeowners, particularly citing increases among minority homeowners. The “American Dream” was finally being realized under their watch, and lenders were definitely along for the ride. It was as if the mortgage market turned into “The Price is Right,” and anyone could come on down be approved for a loan. As the housing bubble began to burst, starting with buyers in the subprime market, the rest of the economy became affected and spiraled in a downward trend. Some of those who experienced the “American Dream” under Presidents Clinton and Bush turned a blind eye, just as lenders did during this time, and thought they could afford to own a home. People with shoddy credit were suddenly being approved at alarming rates. Not surprisingly they began to fall behind on their payments, leading to a record number of foreclosures. As the economy has worsened, people have lost their homes for a variety of reasons: unemployment, lack of housing counseling, sickness, and other economic pressures. Since passage of the Housing Economic Recovery Act of 2008 (HERA) in July of 2008, Congress has struggled with how best to address the housing market. Most of their focus has been on stabilizing the market

August 2010

for homeownership as opposed to rental programs and homelessness issues, the two latter issues should be more greatly dealt with. While I would argue that homeownership is more of a right that someone eventually achieves, everyone should have access to shelter. Renters are a population that seemed to have been lost in the shuffle of foreclosures, although many were just as affected by foreclosed rental properties that their landlords fell behind on the payments. There are more foreclosed properties sitting empty than at any other time in America’s history. Most of these remain for a potential homebuyer. Thousands of homes that have been foreclosed upon could be turned into rental projects with guidance from HUD, Fannie Mae, Freddie Mac, Veterans’ Affairs, USDA, and the FDIC. The FDIC in particular is selling foreclosed property in bulk, without restrictions. There should be more of an effort to develop some of these foreclosed multifamily units into rentals. Due to the greater economic woes and increasing unemployment numbers, more Americans are being forced to live within or below their means to save money. This is creating competition for rental units and in turn pushing those with even less resources from the units they can afford. The very- and extremely-low income families and individuals are now facing living in shelters

The Voice of Housing or homelessness. Especially in the development of multi-family units, personal Section 8 vouchers should be accepted. Funding for the Section 8 voucher program has been stagnant and many cities face waiting lists of over five years. Homelessness, especially amongst veterans, continues to spiral. Government agencies should work together to ensure all is being done to help curb the increasing numbers on the street and in the shelters. The VA, HUD, USDA, GSEs, and FDIC should help not only potential homeowners, but also potential renters. They should invest more in housing counseling, to educate people on the process of buying a home, more stock should be placed in renting-to-own programs. The American Dream may not include owning a home for some, but it should include access to shelter for everyone. Jim Russell is a Managing Director of the Collingwood Group. In his 37 years of experience in the financial services industry, Jim has led project teams for the USDA, HUD, ICE, CUNA and SBA.

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Rules and Regulation headlines

And the rules just keep on comin’! 11new rules this month that affect Loan Originators (yeah, still about three a week). A cool new app has been added to Mortgage Talking Points™ flyers/emails—you can now automatically post a condensed version of MTP to Face Book, with a call to action for your agents. Share these rules and regs with your agents—it takes a village to make sure your loans are not rejected because you did not know the rules!

Fannie Clarifies Rules: “Say It Again--But With Meaning this Time!” Just to be clear, SEL 2010-07 covers a bunch of old rules with additional information on how they should be interpreted. Well, maybe they did not explain it very well the first time around—ya’ think? Here is the condensed version: Foreclosure Redemption Periods – It’s an old rule, but the bottom line is that a foreclosure is NOT complete until the “redemption period” is over. In most states, if the owner can scrape up the cash to buy it back from the bank, they have the right to do so within a certain period of time. If you closed a loan and the redemption time has not yet expired, you will have to wait to sell it to Fannie until time is up. Marketing Tip: Hold seminar/ webinar for your real estate agents with a foreclosure attorney and review your state’s rules. Oh, and don’t forget to share the rules with your staff too. Mortgage Talking Points & FaceBook post for real estate agents available. Mortgage Insurance Fast & Simple Version - Okay, Fannie 42

August 2010

covered all the different MI options again, but here’s the simple, easy way to look at it…Calculate the MI based upon where you want the LTV to end up. For example, if the borrower has the cash, they could get MI rate at 90%--if not, then the MI goes to 95%. Refi to Buyer Out Owner’s Interest – Requires joint ownership for 12 months, a written transfer agreement, and no proceeds back to borrower who will become the owner. If property is inherited and person is buying out, joint owners, the 12- month ownership rule is waived but the rules mentioned still apply. Marketing Tip: Email real estate agents and attorneys (both estate and divorce types) and let them know

Federal Housing Finance Authority-Their 2-Cents Worth! Okay, so it’s more than 2-cents, but it’s looking like FHFA is getting more involved in the interworkings of Fannie and Freddie—and we hope in the long run, it will benefit the industry. But there’s going to be a lot of pain before the gain! Here’s what to except: Data Collection Consistency System Coming Your Way – A common platform for reporting appraisals, loan data, servicing is being developed and is supposed to be available this fall. MISMO® (Mortgage Industry Standards Maintenance Organization) will be the basis for the data dump. Since data will all be located in one place, expect major changes to the way to enter and report data. HVCC Complaint Process Being Developed – So the skinny is that as part of the Fannie/Freddie settlement with NY Attorney General Cuomo, an “Independent Valuation Protection Institute” was supposed to be established. Since, Fannie and Freddie are now being managed by FHFA, and no “complaint department”

Mercury Network Appraisal management done right

Mercury Network is the dominant online appraisal Vendor Management Platform (VMP), allowing you to manage your entire appraisal workflow from any web browser, while remaining in full compliance with HVCC, FHA, GLB, and Federal Interagency Appraisal Guidelines. If you’re a lender, Mercury Network gives you all the efficiencies of an outsourced appraisal management company, yet you stay in full control. You don’t lose your existing local appraisers, and you keep appraisal fees lower for your cash-strapped borrowers. If you’re an AMC or a lender seeking an appraisal management revenue stream, Mercury Network can provide 100% of your back office and appraisal management technology. In either case, you’ll keep closings on schedule and save time in quality assurance, compliance, and underwriting, since Mercury runs thousands of customizable rules against every report, before it even leaves the appraiser’s desktop. You also get XML data feeds (Fannie Mae CDD compliant, in fact) and secure encrypted transmissions to keep your data safe and GLB compliant. You can even extend the public Mercury platform with private customizable web pages, mortgage broker “on behalf of” ordering, borrower credit card acceptance, and much more, by adding a VMP XSite. The latest member of our industry-leading XSite family, a VMP XSite is literally “a management company in a box”. Since you can be much more efficient in just minutes, why wait? Call us today for a personal walkthrough and we’ll get you set up.

“Dropping our AMC and going to Mercury Network was the best business decision I made in 2009. The AMC filled my days with arguments between the bank, borrowers and Realtors. With Mercury Network, we get appraisers located near the subject property who know the area and their pricing is lower than the AMC. Instead of arguments over values, I can work on things that make the bank money.” Terry K. Fraser , Mackinac Savings Bank, FSB “We get to use and support appraisers we know and trust, while keeping us in compliance with the regulations — all without burdening appraisers with high AMC fees.“ Bob Wampler, First Republic Mortgage “Mercury’s double blind feature assures management that production staff cannot hand choose or discuss value with the appraiser, keeping us compliant with HVCC and FHA appraisal guidelines. It’s also streamlined my ability to review.“ Sheila Hutchison, George Mason Mortgage, LLC “We chose Mercury Network because we can customize our fee panel and we’ve got hassle-free, total control over it. You can’t get that with AMCs. We also love how easy the order process is and we’re kept up to date on each step of the process. Those status updates save us a lot of time.” Jaki Brown, First Community Bank

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RULES & REGULATION HEADLINES

has been created, FHFA is saying no, no to the IVPI-- they are creating their own! HVCC is set to expire on Oct 31, 2010—but not so fast—it may go away in it’s current version—but expect another version of it to be developed.

Fannie Updates Loan Quality Initiative FAQ’s Lots of conversations about inquiries, additional debt before closing, updated credit reports, scores—where will it all end? Updated LIQ-FAQ released--read Questions/Answers 4, 5 & 6. Basically, vendors have developed “soft credit reports” with no scores, checking inquiries, to comply with LQI. NOTE: There is a 2% tolerance if a new report shows additional liabilities. If exceeds 2 percent, will have to run thru DU prior to closing. Marketing Tip: Borrowers believe that they can “shop” for things even if they don’t buy anything. We must get them and the real estate agents to understand not to move one credit muscle before and during the loan process.

FHA – Making It Short & Sweet Instead for issuing the normal Mortgagee Letters, David Stevens wrote a letter re-hashing condos, e-signatures & net worth requirements. But there were actually a couple of big clarifications in the letter too. Temporary Waiver of HO-6 Insurance – You could hear the moaning across the US when FHA required HO-6 Insurance (walls’ in) on condos. In addition to FHA’s new condo approval rules, this requirement was the death knoll, not only because of its expense, but servicing issues. Good news—for now! It’s been waived—until April 29, 2011—which will help condo sales—we hope! e-Signatures – So what if the e-Signature law has been around for over 15 years now. HUD’s finally getting their &%#@ together-saying they will accept them on 3rd party docs, (i.e. purchase agreements) and by fall, accept them on loan apps and disclosures. Ya’ think is has anything to do with all MDIA, GFE, RESPA, HVCC, LQI? FHA Net Worth & Definition of “Small Business” - Yeah, HUD has new net worth requirements that go into effect next year. But did you know that there is a little-known provision for 44

August 2010

“small businesses”? With lower net worth requirements? Using SBA standards for mortgage companies, a small mortgage business is “less than $7M in annual receipts for non-depository institutions and less than $175M in assets for depository institutions. (HUD Net Worth Timeline Chart available) Condo Letter/Checklist Found Hiding On HUD’s website – there was no announcement, no drum roll, no ML letter—nada, but FHA quietly posted a suggested cover letter/Checklist for initial condo approval submissions. And, we have a copy of it available for subscribers. Marketing Tip: Use the comprehensive document to give to Realtors/Builders to help them understand what’s required to get a condo approved (or re-approved) by FHA. It’s Been Fixed-Streamline Refis & TOTAL Scorecard – So to be clear, previously, FHA required that any streamline refi that was run thru TOTAL had to be processed as a rate-and-term refi. Better yet, “refer” findings do not require manual underwriting either. Do ya’ think FHA could find a couple of programmers to fix things like this quicker?

VA Accepting FHA Condo Approvals—for now! So, we’ve been telling you for the last 6 months that the only way you could do a VA loan on a condo was that it had to be on the VA approved list. This change is a big deal. They will now lend on FHA condos that had been approved prior to Dec 7, 2009. Marketing Tip: Let Realtors® know and ask them to give you a list of the condos they have listed. Then go to FHA’s condo approval site https://entp.hud.gov/idapp/html/condlook. cfm and let them know. Give them a copy of a “Condo Comparison Chart”, comparing the requirements for Fannie, Freddie, FHA, VA and USDA project approvals (available to subscribers).

USDA – 2010 Income Limits Increases While not a huge increase by any means, income limits increased $400 to $600. But remember, the total income can be much higher because USDA allows certain deductions from the gross income. Marketing Tip: Check out USDA income limits in your area http://eligibility.sc.egov.usda.gov and them give your Real Estate Agents the Mortgage Talking Points called “Six Common Deductions Allowed By USDA”. Oh, we’ve also created an “Eligibility Worksheet” for Loan Originators. Written and contributed by Karen Deis of Mortgagecurrentcy. com. Provided monthly by www.MortgageCurrentcy.com - Interpreting the Rules and Regulation Changes for loan officers, processors, underwriters and owners/managers. Mortgage Talking Points ™, charts and checklists included.

TIP OF THE MONTH

TIP OF THE MONTH Anniversary Edition BY STEWART MEDNICK

he Niche Report has just eclipsed three years of existence. I am proud to say I have been with this fine publication for all but one month of that life span. I wrote the feature article in the August 2007 issue and have been writing Tip of the Month every subsequent month for these many years. I am sure that many of you current readers have not been privy to my educational column for that long. So as part of the recognition of the “still standing,” I would like to reprint one of the very first articles I wrote. I have developed a technique to assist with a focused and rapid development of conversation for the purpose of obtaining information and directing conversation for a marketing pitch of your services. This technique I called the Two Minute Minglesm. Here is the article as it appeared in December 2007: I believe that you are reading this column because you want to learn something new and helpful. Perhaps, you seek a Holy Grail of knowledge and a sip of this column will bear eternal closings. I should be blessed with such influence, however, I am not. Although, I can paraphrase a biblical syllogism; give a broker a closing and he or she will eat for a month… teach a broker to close and he or she will eat for a lifetime. To close a deal, one must have a deal to close. To obtain a deal, one must gain the trust of the prospects and provide information that will gain their favor. More often than not, we have

very limited time to do all this. So how does a person capture the attention of a prospect in the first minute of conversation? One word can answer this question; practice. Let’s explore the art of client interaction and a technique I created to perfect the skills needed. This technique is The Two Minute Minglesm. The Two Minute Minglesm is an exercise that is utilized to develop the innate skills needed to be a successful “ambassador” of your business. I can explain the philosophy behind this technique by drawing an analogy to sports teams in preseason practice. The allstars and rookies alike start training with the basics; ball handling, throwing, conditioning, catching, etc. The mental conditioning through the basic training becomes second nature, so during a game the body responds and acts without conscience thought; innate actions. If I were to focus on an athlete to provide an example, I would choose Michael Jordan. Mr. Jordan won six NBA championship rings. He practiced for countless hours to be a great basketball player. Even in college at North Carolina University, he practiced every season. Practice makes perfect. If practicing often is a successful formula to achieve great results, then why do we not do so in sales? We compete to win the prospect, but how have we learned to do so in the past? My experience has been through OJT, or on the job training. When I started with my first brokerage, I was handed three leads and was told to call them. I was scared. I was unsuccessful as well. TheNicheReport.com

TIP OF THE MONTH What if Michael Jordan never practiced and just showed up at the game to play? I bet he would not be the star he came to be today. So, again I ask, why do we not practice in sales? The “sell” is the same. The Two Minute Minglesm is the practice that develops the basics so when in conversation with customers, the ability to speak actively, respond and state necessary information without faltering is second nature. How many times can you remember hanging up a phone or leaving a client meeting and thinking to yourself, “I should have said….” Or, “Why didn’t I counter their comment with….” This is because no practice has been performed and the recitation was none existent or unpolished. Let’s take a look at how a Two Minute Minglesm works. The purpose is to develop three key aspects of a conversation. First, you want to have an innate repertoire of comments, phrases, statistics, and be authentic in the delivery. Second, you want to control the conversation in the direction you want it to go. Third, you want to complete the conversation or encounter with the exchange of contact information; preferably you obtain their

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information. All this is performed inside a two minute timeframe. I have decided on two minutes from my experience in hundreds of situations. Two minutes is a realistic window of opportunity to gain a person’s attention, direct the conversation to a desired outcome, and to ask for contact information by piquing the interest of the other person to whom you are talking. The exercise would start with two people to stand and face each other. A scenario of two people in an everyday setting (for example) would be waiting in a line for food at a restaurant, while in a bathroom, on a bus, shopping for food or clothes in a grocery store or department store, respectively. The two people establish the situation and one is the initiator. A third person is the timer and judge to give impartial opinion on how well the Two Minute Minglesm proceeded. This can also be performed in a company’s weekly meeting, as part of training, or do it by yourself in the car when driving. This last suggestion is for a more advanced Two Minute Mingler. In a meeting or training setting, more than one person or everyone can judge. I have developed a score card with specific points to be judged. You can mingle as often as you want. Remember, practice makes perfect. Perhaps perfection will never be obtained, but the outcome should be more favorable than, “I should have said….” Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, customer satisfaction, marketing and sales techniques. Mednick is also a business coach and consults on these topics. Mednick can be contacted for a Two Minute Minglesm training engagement or for other training engagements at 651-895-5122 or smednick1@netzero.net

CENTER STAGE

Center Stage with themodpost Rising Loss Mitigation Software Vendors

THE NICHE REPORT

Around mid 2008 Loss Mitigation was looked at by many as the “New” Gold Rush of 1869. It quickly became apparent to those folks who rushed into this arena for “easy money” that it took more than just taking an application. Now in 2010, a few dominate and skilled players with the right technology Chris Fuelling and proficiency have persevered. We sat down with someone who leads a company doing exceptionally well in this environment - his name is Chris Fuelling of TheModPost. As the mortgage industry continues to find a way to brush itself off, mortgage professionals, lenders, servicers, and basically all mortgage related vendors are struggling to deal with the onslaught of continued foreclosures and imminent defaults. With the loss mitigation industry screaming for automated, technology solutions, we interviewed one of the key players in this field. To cope with this epic situation, companies and professionals alike, have taken the Darwinian survival of the fittest approach to adapt automated technology solutions from TheModPost. How important is software technology to the loss mitigation industry? Well, in one word- Critical! All the big lenders and servicers are using it to manage their portfolios to automate processes, track potential defaults, and manage pending foreclosures and REOs. The newer, more robust systems are becoming web-based and open to allow for 3rd party intervention. But even the few that

have acquired these web-based systems vs. on-premise software are prohibiting 3rd party interactions. You would think by their actions, that most lenders and servicers are executing loan resolutions on their own time and guidelines. Fortunately, Fannie and Freddie loans have very specific HAMP guidelines to follow that make it easy to automate with software. However, even when the lender/servicer has the best intentions for non-GSE loans, problems arise from the necessary approval required by the investors. Our software technology provides solutions to all loss mitigation cases for any entity that processes and negotiates loan resolutions. What are the most important automation tools in a loss mitigation system? Since the government rolled out HAMP and HAFA guidelines for all Fannie and Freddie loans, its been possible to automate HAMP proposals that auto-calculate a new mortgage term down to a front-end DTI of 31% The waterfall technique, which incorporates principal reduction/forbearance has gained traction and has seen recent adjustments in an “Alternative Waterfall” calling for up front principal reduction/forbearance to 115% LTV. Our system can automate these auto-calculations saving time and reducing errors in approvals. Regarding HAFA, which relates to short sales, guidelines are pushing servicers and lenders to approve short sale offers without going through the traditional steps like listing the property for a set period of time or lining up a buyer with verified funds. Regardless, our system can auto-calculate the Net Investor Benefit for accepting a short sale, which expedites the process even faster. We incorporate similar formulas used by the TheNicheReport.com

CENTER STAGE lenders and servicers that include, the original loan amount, liquidation value, home depreciation forecast, REO stigma, expected REO disposition value, etc… Another powerful feature is document automation. It is the largest time saving feature for any business in loss mitigation. TheModPost has built in templates and packages for client ready packages and bank ready “do-It-Yourself ” packages. Everything you need like 3rd party authorizations, legal contracts, custom disclosures, hardship affidavits, 4506-Ts, and more are included. Additionally, our proposal module auto-generates a detailed, itemized report analyzing the cost of foreclosure. What did you mean by Bank Ready “Do-It-Yourself ” packages? We have a version of our software that runs like TurboTax, where a client can access a private labeled version of the software to create their own bank ready loan modification or short sale documents, ready to submit to their bank. It’s a very innovative concept, with many different uses for non-profits, for-profit companies, real estate and mortgage offices, lenders, and servicers. We even setup turn- key websites that support the client’s business model. Which entities do you feel need to adapt the latest loss mitigation technology? The obvious is any lender or servicer that is experiencing defaults in their portfolio. While most of the players have picked up software solutions, others are still behind on systems that have all the robust capabilities to effectively manage loss mitigations in a Web 2.0 or Loss Mitigation 2.0 world. Since all the enterprise level software systems on the market are out of reach to the small loss mitigation entities and individual loss mitigation professionals advocating for the homeowner, we have focused our solutions to fit their specific needs. Since our launch in 2008, we have acquired clients such as Law Offices, Non-Profit Counseling

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Agencies, Wholesale Processing Companies, Mortgage professionals, Realty Offices, and some Investors. This underserved market has shown immense gratitude by providing incredible feedback, helping us develop a feature rich loss mitigation software application. So, it sounds like setting up a software system is complicated, expensive, and meant for the big companies and lenders. Not necessarily, we created our web based system to launch instantly after a subscription plan is purchased. The only delay falls back on the learning curve for the users. Typical time frames from launch to actively using the system company wide range from three days to two weeks, depending on the number of user company wide. In respects to pricing, we have pricing plans starting around $50/month for a single user to $20/month for entities with more than 20 users. Obviously, we work custom deals to organizations with unique employee or affiliate structures. How do you deal with all the regulatory changes that affect licensing, approvals, guidelines, etc… We all know how turbulent and fast changing the loss mitigation world is today. When looking at the situation from the top down, you see the government rolling our constant initiatives to keep pace with the growing foreclosures and housing depreciation. These initiatives from HAMP, HAFA, HOPE, etc… provide guidance to the servicers and lenders to follow, but aren’t guaranteed to take effect on every loan. The reasons vary from lender to lender, case by case. What we try to do from a software standpoint, is to provide tools and access to information to streamline actionable resolutions, case by case. So within our system you will have access to lender profiles that provides access to their guidelines, thresholds, past approvals from current system users, key contact info, and more. Additionally, we have useful links category that provides links to HAMP, HAFA, and all loss mitigation news updates. We have 35+ lender/ servicer loss mitigation packages built into the system as well. Anything that we miss, we provide open dialogue via an open feedback forum for the user to interact and make suggestions for improvements. That’s how we all grow together! What is the loss mitigation software technology vendor landscape like today? So in short you have the enterprise level systems for

CENTER STAGE the lenders and servicers, which may or may not be web based- These systems are very expensive and not practical for your average loss mitigation firms advocating for the homeowners. Then you have stand alone, installable/ downloadable software systems that cost a few hundred to a couple thousand dollars. You own the software, but youâ&#x20AC;&#x2122;re stuck on one computer or you might be able to network it across your office computers. But what about outside users? Client Access? Data backup? Security? Software Upgrades/Updates? Etcâ&#x20AC;Ś We take care of all that seamlessly, in our web based platform at no additional charges! Chris Fuelling is the President of The Mod Post, a Division of The Loan Post, Inc. He has a background in wholesale mortgage lending, originating, and has been developing mortgage software since 2006. The Loan Post, Inc. is located in the Brickell financial district of Miami, Fl. And can be reached at 877-812-4327 ext 88 or E-MailChris@theloanpost.com To learn more about their loss mitigation software systems visit www.TheModPost.com

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But driving sales is more than simply identifying good leads. Let’s face it, with many loan officers, you can hand them a bag full of cash and they’d lose it between their home and the bank. So, how do you monitor and capitalize on these leads once you’ve acquired them? With Ratespring’s Loanbook solution and their custom rate and product alerts, give loan officers a proactive and reliable tool to help monitor the eligibility of each borrower. “Ratespring has helped improve our overall conversion and service levels by enabling us to monitor market movements on behalf of our clients”, says Eric Egenhoefer, President of Waterstone Mortgage, a 250 loan officer, mortgage operation based in Pewaukee, WI. “Ratespring also provides our branch managers and loan officers with the information they need to allocate their time and resources on those prospects which they can provide an immediate benefit”.

Consumer Services Loansifter, Appleton, WI www.loansifter.com Founded in 2004, Loansifter is hardly an ‘emerging’ company. With an impressive base of Over 600 customers/institutions to whom they provide a variety of services and a surprisingly easy to use suite of services, it is not surprising to see them continue to make their mark on the mortgage industry. So, what is the focus of the evolution of their products? “We don't really focus on best execution, although that is part of it, we look beyond that,” says Craig Doriot, a highly successful internet pioneer and the company’s CTO. It is for this reason, they are drawing many clients from competitor NYLX and have an edge over the struggling company who has lost key staff members and important executive leadership over the last 12 months. To capitalize on this, Loansifter continues to focus on its sales/ marketing efforts and to add consumer facing services to enhance and bring greater value to their legacy Product & Pricing platform. What they are doing is keenly of interest to me, because I have always said that you best serve your customer, by serving your customer’s customer best. In my opinion, company’s who do this will always stand

August 2010

out and have an advantage. Loansifter’s strategy embraces the consumer in as much as it does the loan officer, and this clearly supports the industry’s direction to educate and inform the consumer on the products and options they have to choose from. “Mortgage Companies want more consumer oriented features and we have released some features to accommodate this. We are clearly heading more in that direction”, says Bruce Backer, President of Loansifter. “We have a partnership with Leads360 that will be released in August. Customers can provide pricing to consumers via a variety of channels and mechanisms.” Loansifter’s consumer oriented portals enable any organization; either a mortgage operation, real estate agent, financial planner or referral partner to provide real time pricing and quotes to borrowers who may want the information before they fill out a full loan application. Their custom rate and product alerts automatically monitor a borrower’s loan eligibility so your loan officer’s don’t have to. It is very consumer friendly and well integrated in their pricing solution and the data seamless flows to your loan origination platform.

Lead & Contact Management

focusIT, Phoenix, AZ www.focusitinc.com

Founded in 2002, focusIT began as an outsourced IT and manage service provider based in Phoenix, Arizona. They transitioned into one of the nation’s first fully dedicated software as a service (SaaS) consulting firms. focusIT recognizes the importance of cloud computing initiatives and have completely embraced this method of technology services. Its solutions allow clients to significantly reduce technology spending, keep current with hardware and software upgrades, and focus on growing their own businesses vs. running a computer network. With over 12,000 users, nearly 10 percent of the mortgage industry has their client information stored in focusIT’s data center. It is for this reason, they are the primary hosting provider for Calyx Software’s PointCentral banking platform, a relationship I facilitated when I was on

their senior management team. With the goal of adding more and more value to its customers that will best enable them to compete in today’s contracting market, they are launching their lead management suite of products in the 3rd Quarter.

With the ability to track both prospects and existing loans in your pipeline, its web based and automated client solution, keeps loan officers, referral partners and consumer up to date on the status of their lead and loan (in processing). They have the fullest ‘sales life cycle’ process in the market; the solution operates as a highly integrated, mortgage contact management solution with the capacity of keeping clients, referral partners and loan officers up to date on the status of every opportunity. Given focusIT’s market penetration, financial stability and partnerships in the industry is what makes them and their solution(s) something to watch for as the industry continues to evolve.

Rate Monitoring Services

MBS Authority, Lexington, KY www.mbsauthority.com/ Not exactly a start up, beginning in 2005, MBS Authority is a software and advisory firm with active monitoring functionality that works with loan officers to get the best and most accurate information regarding what is going on with the mortgage back securities (MBS) market. They receive their information directly from trading desks

on Wall Street rather than through data aggregators such as Bloomberg or Reuters. This enables them to be real time and more accurate than their competition. What has impressed me from a technology standpoint is that MBSauthority is one of the only “active” monitoring systems; others are more “passive.” A “passive” system is one that tells an originator that their rate sheet pricing is getting better or worse because MBS pricing has already changed. An example of this would be “Floating – FNMA MBS 4.5 has improved +.25BPS.” “We have actual bond analysts that have actually owned and possessed mortgage backed securities and strips,” says Bryan McNee, Vice President / Sr Bondage Analyst of MBS Authority. “They have a unique ’hands-on‘ expertise on what would cause someone that is ready to spend five to ten million dollars to purchase or sell mortgage backed securities en mass. This is important because these mortgage backed security holders think very differently than other traders.” As an “active” monitoring system, they are the only company that provides a live chat link to an actual human being that is a bond analyst that will answer any questions in real time about market conditions and trends. Their dynamic loan ‘dashboard’ that gives the viewer easy to read and understand charts and graphs regarding whether or not specific aspects of the market is “up and down,” but they don’t stop there. They provide in depth, expert analysis on the data regarding the movement of the market. Their guidance helps you resist reacting to market changes. As a result, you have expert guidance regarding how to manage your pipeline and how to monitor your locks. What makes their solution valuable are the other tools that loan officers can leverage; they have a solution that is called, ShowMyScreen which enables loan officers to do live webinars with their clients, in addition to IdeaPresenter, which makes sending personal videos to your clients via email; both are intelligent ways to build relationships with your clients. Rick Roque, former senior management team member of Calyx Software, presently runs a leading mortgage research & consulting firm called MenloCompany.Com; based in Washington DC, Menlo works with technology vendors and some of the largest correspondent lenders in the United States to best adjust and be competitive amidst the changes in our industry. For comments, feel free to email him at rick@menlocompany.com

TheNicheReport.com

NICHE REPORTS

Prime & FHA Flagstar Wholesale Lending (866) 945-9872

NetMore America, Inc. 877-490-3140

NEW

Presidents First Mortgage Bankers

NEW

United Wholesale Mortgage

800-507-0423

(800) 981-8898 ext. 5515

Offer a full array of FHA and Agency products, coupled with industryleading underwriting turn times and technology. 24-48 Turntimes, Inside Support, RESPA Help, Friction Free Technology, FHA for Brokers, We value Brokers! Wholesale Lender; 24 hour turnaround time, online submissions, extensive product line 24/7 realtime access.

Home of the 7 Day Paycheck. FHA & Conventional Underwriting in 24-48 Hours. Doublewide Manufactured now Available!

COMMERCIAL GreenLake Real Estate Fund, LLC 310-462-4637

Manaseh, Epharim & Associates 770-840-0112

MMG Capital LLC

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today! Acquisition, Refiâ&#x20AC;&#x2122;s, and Development Commercial Loans. Your source for international and domestic funding. Asset-based Hard Money Loans; Nationwide Lender.

310-295-1121

NEW

Remington Financial Group, Inc. 480-905-3239

Senior Financing, Mezzanine, Bridge Loans, Hard Money, Equity, and Joint Venture. All Property Types.

ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lenderâ&#x20AC;&#x2122;s information on products, program, procedures, representations, and warranties for details.

August 2010

NICHE REPORTS

HARD MONEY & NON-PRIME B & C LENDING IS BACK. If your client has equity, we have a loan. Loan amounts 100K to 2MM. We are the final decision makers, all decisions made at our location.

ACC Mortgage, Inc. 240-314-0399 X 19

No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 - DE, MD, VA, DC, NC, SC, GA, FL.

First Mount Vernon (866) 908-FMV1 (3681)

Minimal documentation required, Combined Loan-to-Values to 105% - DE, MD, VA, DC, NC, SC, GA, FL.

First Mount Vernon (866) 908-FMV1 (3681)

GreenLake Real Estate Fund, LLC 310-462-4637

Manaseh, Epharim & Associates

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today!

770-840-0112

Direct Lender with fast closings. Your source for international and domestic funding.

MMG Capital LLC

Asset-based Hard Money Loans; Nationwide Lender.

310-295-1121

NEW

Remington Financial Group, Inc

Up to 65% of valued collateral, fast closing.

877-597-4458

CONSTRUCTION Bismark Mortgage Company 800-350-7199 x106

Manaseh, Epharim & Associates 770-840-0112

Owner Builder and Spec Construction for residential AL, AK, AZ, CA, CO, GA, HI, ID, IL, IN, KY, ME, MD, MA, MI, MN, MO, NY, NV, NJ, NC, OH, OR, PA, TN, TX, UT, VA and WA. New construction and rehab loans for all types of commercial properties. Your source for international and domestic funding.

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lenderâ&#x20AC;&#x2122;s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

Service provider classifieds

Service Provider Classifieds Compliance and Audit Quality Mortgage Services 615-591-2528

Mortgage Compliance Solutions, Post Closing & Default Audits, HVCC Reporting, QC Software, Federal Regulatory Audits.

Waquis 310-696-9515

We provide HUD Auditing and QC on every loan type.

Credit Repair & Restoration NEW

Credit-Aid Software 800-257-1192

Credit Repair Software. Credit repair business opportunity.

CreditCRM 877-256-8162

The only full credit repair business in a box.

Buildmyscores.com 206-377-9991

We offer a personal and customized approach to help bring complete restoration to your client’s credit. We’re committed to providing you with faster results and a greater opportunity for success.

Insurance

Entitle Direct 877-936-8485 or 877-9ENTITLE

Hundreds of mortgage professionals have saved their borrowers up to 35% or more on their title insurance by recommending Entitle Direct.

Mortgage Insurance Agency 866-355-9944

State Licensed Surety Bonds, Errors & Omissions and Fidelity Bond coverage’s for Mortgage Bankers and Mortgage Brokers nationally.

August 2010

Service provider classifieds

technology a la mode 1-800-252-6633 ext 309

NEW

AllRegs (800) 848-4904

NEW NEW

Products include single and multifamily underwriting & insuring guidelines, federal & state compliance laws and regulations, contract publishing services, policy and procedure manual templates, AllRegs Academy training programs and more.

Applied Business Software 800-833-3343

Origination and Servicing software for hard money lenders.

Calyx 877-862-2599

Affordable software that streamlines and optimizes all phases of the loan process â&#x20AC;&#x201C; from loan marketing through closing.

DocMagic 800-649-1362

NEW

Websites and marketing tools for real estate professionals.

Global DMS, LLC 877.866.2747 Lender Processing Services, Inc. 904-854-5043 SmartGFE from ClosingCorp 858-525-1500 x206 Xetus 877-GO-XETUS

The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges. The most comprehensive web-based valuation management programs on the market. Utilizing the software as a service (SaaS) model global DMS is able to provide extraordinary value with the shortest Implementation time in the industry. Lender Processing Services (LPS) is the nation's leading provider of mortgage processing services, settlement services, mortgage performance analytics and default solutions. The SmartGFE service provides instant access to live data to complete competitive Good Faith Estimates from a single source. The service delivers fees for local, regional and national vendors (Block 6) backed by a Compliance Guarantee. It also includes property characteristics, transfer taxes and recording fees. Currently available through CalyxÂŽPointÂŽ 7.2 and at www.smartgfe.com. Provides a powerful, easy-to-use loan origination system that streamlines mortgage loan processing.

Appraisal & AMC

NEW

Appraiserloft (877) 229-7799

A leading provider of comprehensive collateral valuation products targeted towards the mortgage lending, servicing, and insurance industries.

National Valuation Service 786-581-9171

Comprised of thousands of fully vetted Independent Business Owners who as Appraisers, provide valuation and consulting services in 50 States.

ValRev, LCC 323-302-9630

Online solutions to valuation challenges.

TheNicheReport.com

Service provider classifieds

Training & education NEW

AllRegs (800) 848-4904

AllRegs Academy offers online, audio and classroom training, continuing education, certifications, study guides, practical guides and customized training at your site on compliance, underwriting, servicing, FHA, VA, SAFE and more.

marketing & lead Gen CMG 702-290-9210

OSI Express 866-674-1999

Premier Advantage Marketing Tom_emmerson@budco.com

Get certified to sell the most powerful loan in the mortgage business today â&#x20AC;&#x201C; The Home Ownership Accelerator â&#x20AC;&#x201C; HomeOwnershipAccelerator.com

Not just mortgage flyers and open house flyers, we are a powerful financing analysis tool for refinance and purchase, greatly helping loan originators.

Powerful, targeted, personalized direct mail campaigns. Specializes in lead generation programs for the mortgage industry. www.ThinkPAM.com

Branch Opportunities

NEW

American Pacific Mortgage 866-625-9352

Join American Pacific Mortgage and become a direct lender with the option of brokering

Franklin First Financial 800-408-6421

Nationwide wholesale Lender, Total backoffice support, Quailified leads and top comissions.

Freedom Mortgage Corp 800-220-9498

Looking for individuals with mortgage experience who possess a high level of ethics and a desire to originate loans the right way

Guaranteed Home Mortgage Company, Inc. 888-572-3602

Specialized Retail Platform for Experienced Loan Officers

Sierra Pacific Mortgage 800-447-3386

August 2010

Retail Branches and Wholesale Lending Nationwide. Privately owned specializing in residential conforming, FHA, VA and Jumbo. Wholesale: www.spm1.com Retail: www.spmloans.com

LENDER & RESOURCE DIRECTORY

All Credit Considered Mortgage B&C LENDING IS BACK www.weapproveloans.com National Sales Manager 240-314-0399 X 19 newloans@accmortgage.com

a la mode, inc. Websites and marketing tools for real estate professionals www.alamode.com 1-800-ALAMODE info@alamode.com

Appraiserloft A leading provider of comprehensive collateral valuation products targeted towards the mortgage lending, servicing, and insurance industries. www.appraiserloft.com 877-229-7799 information@appraiserloft.com

ATTENTION LENDERS!! Buyers of Distressed Debt NicheBuyers@gmail.com

Best Rate Referrals Specializes in direct marketing services www.bestratereferrals.com 800-811-1402 AllRegs Leading information provider for the mortgage industry www.allregs.com (800) 848-4904 help@allregs.com

American Pacific Mortgage Corporation One of the largest independent retail banking and branching companies in the country www.apmortgage.com Melissa Arntzen (866) 625-9352 info@apmortgage.com

Applied Business Software Origination and Servicing software for hard money lenders. www.TheMortgageOffice.com 800-833-3343 leadsmanagement@absnetwork.com

Bismark Mortgage Company Residential Construction Loans www.bismarkmortgage.com James Minarsich 800-350-7199 x106 loans@bismarkmortgage.com

BlitzLocal Provides our clients with every tool necessary to run a profitable internet marketing campaign www.blitzlocal.com 888-811-2448

Buildmyscores.com The leader in total credit restoration services. Weâ&#x20AC;&#x2122;re committed to providing you with faster results and a greater opportunity for success, #1 trusted resource for credit restoration services. www.buildmyscores.com 206-377-9991 joseph@buildmyscores.com

Calyx Software Affordable software that streamlines and optimizes all phases of the loan processâ&#x20AC;&#x201D;from loan marketing through closing. www.calyxsoftware.com 877-862-2599 point72@calyxsoftware.com

CMG MORTGAGE INC One of the nation's leading wholesale mortgage banks with offices in San Ramon CA and Phoenix AZ www.cmgbanking.com John Cathro / Mike Lee 702-290-9210 / 925-708-2236 jcathro@cmgmortgage.com / mlee@cmgmortgage.com

Credit-Aid Software Credit Repair Software. Credit repair business opportunity www.credit-aid.com Barbara Starr 800-257-1192 sales@credit-aid.com

CreditCRM THE ONLY full credit repair business in a box www.creditcrm.com 877-256-8162

DocMagic The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges www.docmagic.com 800-649-1362 TheNicheReport.com

LENDER & RESOURCE DIRECTORY

ENTITLE DIRECT Savings up to 35% or more on title insurance in 30 states www.EntitleDirect.com/mortgage 877-936-8485 or 877-9ENTITLE SpecialistCenter@EntitleDirect.com

First Mount Vernon I.L.A. Privately-owned, equity-based lender which specializes in lending to borrowers who require fast closings www.FMV1.com 703-823-6800

Flagstar Wholesale Lending One of the largest wholesale and correspondent mortgage lenders in the U.S. www.wholesale.flagstar.com 866-945-9872 wlsc@flagstar.com

Franklin First Financial www.franklinfirstfinancial.com 1-888-933-8639

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August 2010

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The Mod Post www.TheModPost.com (877) 812-4327

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BRINGING UP THE REAR

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- continued from page 62

up his check from Treasury when the music stopped. This bubble’s got securitized trusts, that were supposed to taste great with mortgages inside, but instead are e-Flyers less filling without. And let’s not forget the certificate Beautiful New Mediterranean Style Home holders that basically are the investors that get blamed AND when Chase doesn’t feel like modifying a loan. Printable PDF’s Yep, this deepening recession is a teaching machine, let me tell you. And, want to know what I learned more than anything else though? That I’m an idiot, that’s what, and I have been for Mortgage something like the last 30 years. Flyers e I was thinking about the 1970s the other day. A Hom n Style ranea editer M kinder and gentler time. Union strikes, dirty politicians, w www.EZMortgageFlyers.com e ful N Beauti inflation, stagflation, 18% interest rates, the gas crisis, disco music, the hostage crisis… you know… the good Uncle Sam has $$$’s for you! old days. I was remembering my family, growing up, when we used to go on vacation. Before leaving town, OSIIs now the rig my Dad would go to the bank and buy traveler’s checks. ht ti me Then every day or so, when he needed cash, he’d cash a t 866.674.1999 o refinan ce? traveler’s check. I remember our family car back then too. Dad would buy one and drive it until it needed to be • • towed away from the front of our house… then he’d • • buy another. I remember one year he was debating whether to get our new car with an AM and FM radio, or whether AM alone was really enough. Hey, it was important, every option cost money. And then there was filling up with gas at Esso. He’d pay for it with his Esso card, a charge card whose bill you paid at the end of every month. Over 800 Stunning VariationsWe had some wonderful family vacations in the Free Co-Branding ~ Free Updates 70s, back before our family took all the fun out of dysfunction, as families so often do. The thing is, there’s one thing I don’t recall being in the mix… credit cards, car loans, or stupid frivolous spending on absolutely nothing. Since then, however, look what the guys on Wall Street have got going on. It’s not bad enough that they’ve run non-stop ads my entire adult life to convince me that I should be investing with Paine, Merrill, Smith or Barney. It wasn’t enough to sweep up my portfolio’s losses every seven years like locusts. No, they also had to come at me with a more hypnotic message: Debt is good, my boy. No, it’s better than good… it’s the coolest thing going. You want as much debt as we’ll give you. Debt is how you let the world know you’ve arrived.

Amazing Software ~ Current Guidelines Automatic Calculations ~ Accurate APR Family Oriented Floor Plan & Park Like Setting

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Finance Notes

Cnv Fxd

Fxd 100%

5/6 ARM

Fxd Pmt

1%ByDn

Fxd Pmt

10%

First Loan

$400,000

$320,000

$388,000

$360,000

$320,000

Term

30 Years

% Down

ting ike Set ark L vate P rge Pri

Rate APR

P&I

2nd Loan Term

La n with or Pla ted Flo y Orien Rate

Payment

6.250%

5.625%

6.000%

5.250%

6.000%

7.042%

5.819%

6.773%

6.597%

6.175%

$2,463

$1,842

$2,326

$1,988

$1,919

N/A

$80,000

N/A

30 Years

N/A

10.500%

N/A

$731

N/A

$373

$12,000

$40,000

$14,238

$11,763

$13,041

$11,648

$10,838

Down Payment

Closing Cost Est

N/A

$40,000

N/A

30 Years

N/A

10.750%

$14,238

$11,763

$25,041

$51,648

$50,838

$3,004

$2,814

$2,855

$2,323

$2,522

Seller/Lender Pays Total $ Required

N/A N/A

Total Payment

QUIET AND COMFORTABLE Located in a Family

Neighborhood. With nice Low Maintenance

Landscaping, it is Close

& Convenient to Schools, Shopping and Freeways.

$400,000

This financing is designed to assist you in selecting the loan program that most closely suits your budget.

Financing is shown for comparison only. This is not an offer of credit or commitment to lend. Loans are subject to buyer/property qualification. Rates/fees are subject to change without notice. Total Cash Required may include prepaids/impounds, not cash reserves which may be required for some conventional loans. Total Payment may include taxes, insurance & mortgage insurance for loans when required, but does not include HOA.

APR shown is for 1st loans only. 2nd loans do not include prepaid finance charges. A full disclosure of your closing costs, including the APR, will be provided when you select a financing program and negotiate the purchase of a home.

Bob Smith, Senior Mortgage Consultant Office: 888.555.1212 Cell: 800.123.4567 Email: bob@prospectmtg.com t 1234 Main Street, Hometown, 92869 ~ Licensed Mortgage Broker enUSA tate Ag Real Es 2322322 Whether you are a �irst time or step up ll Jones, Mary 23.4567 Cerealty.com homebuyer, Uncle Sam has a tax credit that 800.1 friendly @ can give you a bag of money. mary

n the loa ecting in sel ist you . to ass r budget you igned is des y suits ncing st closel of t mo This fina offer erty m tha not an rop progra This is t to buyer/p . y. ice n onl subjec out not pariso are t Cnv Fxd nge with for com Loans Fxd Pm t to cha shown nt to lend. n Cnv Fxd ing is subjec 00 1%ByD Financor commitme /fees are t Cnv Fxd $400,0 Pm tes cash dit Ra 00 Fxd cre ds, not ns. ation. M Cnv Fxd $400,0 10% impoun qualific loa 00 5/6 AR paids/ ventional % $400,0 10% e pre 00 con 00 Fxd 100 y includfor some $320,0 3% $400,0 d red ma 00 00 Requi y be require ars $360,0 0% $400,0 Cash 30 Ye 00 Total es which ma $388,0 0% rtgage A. Years mo erv 30 00 & 00% res 6.0 nce lude HO ars $320,0 insura 30 Ye 00 not inc 5.250% ars e taxes, but does $400,0 6.175% d, 30 Ye y includ 6.000% ars nt ma when require 6.597% 30 Ye Payme paid ns $1,919 5.625% e pre Total nce for loa 6.773% includ luding $1,988 0 6.250% insura inc do not $40,00 5.819% loans sing costs, gram 326 $2, 2nd pro y. N/A clo ncing 7.042% your ars ns onl $1,842 30 Ye 1st loa closure of select a fina N/A is for dis N/A $2,463 % 0 shown rges. A full ed when you e. APR 10.750 $80,00 hom N/A vid nce cha be pro chase of a N/A N/A fina 3 will ars pur R, $37 30 Ye N/A the AP otiate the N/A N/A and neg

Cnv Fxd

Financ

Notes

Sales

Price

wn % Do Loan First Term

Rate

APR

P&I n 2nd Loa Term

ent Paym ent Paym Down Est g Cost Closin r Pays /Lende Seller ired $ Requ tal To ent Paym Total

% 10.500 $731

N/A

Rate

8 $14,23

8 $14,23 $3,004

N/A

0 $40,00 8 $11,64

0 $12,00 1 $13,04

3 $11,76 $0

3 $11,76 $2,814

$25,04

8 $51,64

855 It c$2, ould b Yo

$2,323

0 $40,00 8 $10,83

First time homebuyers* did you know that you may be eligible to receive a tax credit up to $8,000? Now is the time for you to achieve the dream of homeownership.

8 $50,83 $2,522

Step up buyers** are you looking to buy a bigger home? You may be eligible to receive a tax

com credit up to $6,500! Move up to the home you have always dreamed of. ctmtg. prospe ant oker e, if ur ad : bob@ ge Br Consult .. just Email ortga Call me for details. able r M.ortgage You .4567 nsed M rate 0.123 ~ Lice ant ith, Senio card wSm morCell: 80 92869 to co A s, 12 tg b Bo car lo ns55 age n, US ol.12 paym an8.5 at m metow s, et idet, Your Office: 88 ent c.re eHo onth is in ain St and curr34 crea ly de you12 enM t inte si bt su ng wan ch as t a lo rest rate You cred wer As a it paymis higher tuit want to ion, ent. than help mortga Equal Housing Lender. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend. Consult a professional Tax Advisor for complete details. vaca “cash ou toda * A first time homebuyer is a buyer who has not owned a principal residence in the past three years. ** A step up buyer is one who has owned the same home for 5 consecutive of the last 8 years. tion y’s ra with ed man ge profe , or t” equi te hom ty to e im use we ca many y differe ssional, prov for co dif nt ty I n emen lle if ge pes have no discu feren ts.

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These credits apply directly against income taxes owed, and may actually create a refund for some homebuyers.

BRINGING UP THE REAR Debt comes in precious gems and shiny metals. Hi, I’m a gold debtor… no look at me, I’m a platinum debtor. How’d you like to be a sapphire debtor? Just think how good you’ll look and feel when you show the world you’re a sapphire debtor. Yes, Wall Street’s finest hired the guys from the television show, Mad Men, and worked us over pretty good. They actually convinced me that these plastic cards of gold and platinum were status symbols. Pulled out my American Express Platinum card, because membership had its privileges. I paid $300 a year to carry that stupid grey colored piece of plastic around, and I think the only privilege I ever got was a late check-out from a hotel on Sunday that I’m sure could have been had by anyone who asked. Wall Street has been selling us on how cool and good looking being a debtor really was, because they were making a fortune on that debt, securitizing it, and packing it up to be shipped to investors all over the world. And they sure got me; I think for a while there in my early thirties, I can remember having to buy a new wallet just so I could sit atop an entire deck of VISA and MasterCard playing cards, and I’ve got the back problems to prove it. What’s the difference between those ads that make debtors look so successful, and cigarette ads that showing beautiful people smoking their way to the beauty of lung cancer and heart disease? We got rid of those ads pretty darn quick, didn’t we? I wonder which actually kills more Americans each year: smoking cigarettes or the mountains of debt under which they told us we should bury ourselves. And I remember now, that look on my father’s face. He must have been wondering why in the world his son would choose to walk around showing the world what a debtor he really was, when in his day, that was something of which people were ashamed. Yeah, that must have looked pretty darn weird all right. Yes, this recession is going to be around for quite a while. You know why, right? Because we’re not going to borrow our way to feeling prosperous again. We’ve fallen for three bubbles in my lifetime and I for one am not going down for a fourth. Next time I’m asking about the price of the car I’m buying and before I go on vacation, I’ll be stopping to pick up some traveler’s checks… or using my debit card, I suppose. Unless those fees get too high too, in which case I’ll just carry cash.

I know what you’re thinking… carrying cash is dangerous… you might get robbed. Really? I’ve never been robbed of my cash by a street thug, but I’ve sure been robbed every day of my life carrying around those credit cards that were supposed to make me so much safer. That’s what happens when our government encourages Wall Street to run ads 24/7 everywhere we turn telling us how wonderful life as a debtor can be. As long as you don’t smoke, of course. Yes, this time around there’s been a whole lot of learning going on over here. I’ve learned what a jackass I’ve been all these years… and that you were right Dad. I guess what they say is true… it costs money to go to school.

Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on Ml-Implode.com called Mandelman Matters. He also publishes a Monthly Museletter and you can follow "Mandelman" on Twitter. Send your reponses to martin@nichereportonline.com.

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BRINGING UP THE REAR

Starring This Month’s Rear: Me, Martin Andelman BY MARTIN ANDELMAN

ou know, I’ve spent a lot of time this past year darn near speechless at what’s been happening in this country. I don’t know whether you’ve realized it or not, but we’ve blown right through whatever tipping point there was, and we are going down where we’ll stay for some time. In fact, the next time this country feels anything like what I’ve seen over the last 30 years could very well be after I’m gone… and I just turned 49 years old. All the stupid talk about “double dips” was starting to get to me anyway. Does anyone actually buy any of that garbage? Like the recession ended sometime this past year, but I’m just not able to tell, is that what I’m supposed to believe Professor Bernanke? Yeah, it’s weird because I had no trouble discerning when it started. You guys inside the Beltway may be so insulated that you need to check with your mega-computer to figure out such things, but me… no problem. So in case of a power failure, feel free. I’m here for you. The thing is, I’ve had some time to really think about this meltdown and I’ve got to say… this one has made me a lot smarter. All I learned from the last bubble popping was not to buy a stock with a 400 P/E whose business model involves shipping 50 pounds of kibble across the country overnight for free. Not all that handy for anything I’ve seen since, so it’s not exactly knowledge

I expect to put to work anytime soon. And the bubble before that? I believe the key learning there involved not banking at an S&L owned by Charlie Keating. Oh, and something about Michael Milken, but he’s like eating eggs every morning for breakfast… I can never remember for sure whether he’s good or bad for me. Ah, but this bubble, my friends… this bubble’s an educational marvel. And, just like emotional baggage, it’s the gift that keeps on giving. I’ve always thought that there were only two things in life that led to real learning: age and pain. Everything else is forgotten a week after you take the test. But, this meltdown… it’s one of the true wonders of the world… this one has it all. It’s a credit crisis, a global financial crisis, a foreclosure crisis, an economic catastrophe, the total destruction of the secondary mortgage market, the end of pension plan investing and Wall Street’s investment banks, and an ongoing example of why derivatives should be regulated until they’re no fun to play with anymore. This bubble’s got its own lexicon… like tranches… something that should be served at brunch; did you try the tranches, get the sauce. And the bottom tranche, called the “mez,” which sounds so much more valuable once you re-securitize it into yet another triple A rated bond. Then there’s CDOs and CDOs squared, CDSs, and counter-parties where there is no counter, and the only person thinking ‘party’ is the banker after picking - continued on page 60

August 2010

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