Issue 035 Official
June 2010
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up 58 Bringing the Rear: Lloyd Blankfein CEO, Goldman Sachs.
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CONTENTS
18
Issue 035
June 2010
Change Results by Changing the Numbers Build, grow, prioritize and deliver value to your sphere.
NICHE REPORTS prime & FHA COMMERCIAL HARD MONEY & NON-PRIME ConStruction Service Providers
pg 48 pg 48 pg 49 pg 49 pg 50
Dave Hershman
FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com MANAGING EDITOR Stewart Mednick stewart@nichereportonline.com
12 14 33 45
How To Write Loans Using Facebook
Online Lead Generation Dennis Yu CEO, Blitzlocal.com Top ten internet marketing mistakes in Mortgage Lead Gen.
TechSpot Rick Roque principal, menlo company A new era of lending.
Center Stage with Mortgage Insurance Agency
June 2010
Bringing Up The Rear: Lloyd Blankfein Martin Andelman Mandelman Matters Ml-Implode.com CEO, Goldman Sachs.
Carl White Chief Strategist, The Mortgage Marketing Animals Why the "experts" are all wet about social media marketing.
The Niche Report The Niche Report talks with David J. Jackson, President and owner of Mortgage Insurance Agency, Ltd.
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EDITORIAL / CONTENT MANAGER Kristen Moser kristen@nichereportonline.com
DEPARTMENTS
09 10 25 28 37 40 43 53
FROM THE EDITOR'S DESK Letters to the editor The voice of housing mbs war room Appraiser sound off RULES & REGULATIONS HEADLINES 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 Martin Andelman Karen Deis Matt Graham Stewart Mednick Tim Rood Rick Roque Dennis Yu Contributing Authors Larry Benjamin Brossette Dave Hershman Carl White
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FROM THE EDITOR'S DESK
Summer is here and with the arrival of warm weather is a new season of marketing. This is a great time to develop new strategies for driving in business and meeting your goals of profitability. We have a magazine full of great articles that can assist you with your business development. So grab a cool drink, sit outside in the summer sun and start reading the great columns we have for you this issue. Make 2010 the best yet with The Niche Report in hand as your guide. Technology in the industry is a theme that has taken a strong foothold over the recent past years. We have a new column called “Tech Spot” primarily being hosted by tech guru and founder of the Menlo Company Rick Roque and this month it will focus on MBA’s Technology in Mortgage Banking Conference & Exposition that was held on April 25-28th in Chicago. Dave Hershman, an industry legend, brings us our feature article this month. He writes about a marketing plan to develop more quality leads for better return on your marketing efforts. Carl White, who I've recently had the pleasure to find on the very popular social media site Facebook, comes to us with our lead article about writing loans via Facebook. This guy is a monster marketer. In fact, he is utilizing Facebook to all its full potential. One cannot log on to Facebook and not run into him. Center Stage focuses on Mortgage Insurance Agency, Ltd. (MIA) which is the largest writer nationally of state licensed surety bonds, errors & omissions and fidelity bond coverage for the mortgage industry. We have the regular host of columns as well, that round out this month’s issue. If you like what you read, log on to our blog and look for my post of “What do you think of this month’s issue?” and post a comment. We like to know how we are doing in providing you with quality, informative and controversial information to help make you a better informed professional.
Thanks for reading!
Stewart Mednick
Official
MEMBER
TheNicheReport.com
9
Letters to the editor
Letters to the editor How Many Light Bulbs Does It Take to Change an Investor? By Mandelman, April 2010 Issue I am an advisor specializing in working with seniors (50 and up). I am a licensed mortgage originator as well as a licensed insurance agent. I utilize Fixed Indexed Annuities with many of my clients. In some cases I will also free up equity in their homes to keep as reserves through the use of a reverse mortgage. Your above referenced article was excellent. I’ve been doing this for over 30 years. You’re the first person I’ve ever heard hit the nail on the head (so hard!!) Americans today need to shift the investment risk from their shoulders to those of the insurance companies. Insurance companies are much better equipped to carry the burden of investment risk. Thanks again for your great article. Robert A. Gullace, Sr. Northstar Financial Network
FDIC - One West Sweetheart Deal Recently, the TBWS video by Brian and Frank that criticized the FDIC-One West sweetheart deal spread so rapidly and widely on the Internet that an FDIC spokesman was compelled to issue a rebuttal, a rebuttal that was at best disingenuous and on some points bordering on outright falsehood. While the video was correct in its major premise, the sample calculations were seriously in error. Here is how the agreement actually works:
One West’s “Shared Loss Agreement” (SLA) with FDIC is a misnomer. There is no possible loss, even if every loan went to zero. The reason is that “losses” under the agreement are measured not from what One West paid for them, but from the current loan balances. The Loan Sale Agreement sold for performing loans to One West for 70% of the balance. (At least 60,000 loans that were 60+ days delinquent went for 50%; seconds had a separate schedule.) If every performing loan went to zero, the reimbursement would be as follows: Portion FDIC Reimbursement 100%-80% 0.0% (One West takes 20% of aggregate “losses”) 80%-70% 8.0% FDIC pays 80% 70%-0% 66.5% FDIC pays 95% Total 74.5% So even if all loans went to zero, One West is guaranteed a minimum gross profit of 74.5/70 (6.43%), guaranteed by the full faith and credit of the U.S., when One Year T-bills, with the same guarantee are paying 0.38% per annum! Remember, the actual profit will be greater, as many loans sold for less than 70%. Yet One West is notorious for refusing loan modifications, even though the SLA requires it to do so and even though the FDIC head, Sheila Bair said 75% of Indy Mac loans could be successfully modified. That borders on criminal. While the video got the calculation details wrong, it performed a valuable public service by calling attention to this sweetheart deal. Bill Matz William P. Matz, B.S., J.D., LL.M. President/Broker MastersTouch Mortgage Corporation
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How To Write Loans Using Facebook! Why the “Experts” Are All Wet about Social Media Marketing! BY Carl White
L
et me get straight to the point: As a loan officer, you can write loans and monetize Facebook, despite what all the socalled experts say! And what are those “experts” saying? Well, first they tell you, “Don’t talk business on Facebook.” That’s utter nonsense! You can and should talk business on this social media site. You just have to do it the right way, and I will explain how to do that later in this article. Experts also say, “It can take months to build personal relationships on Facebook, so you have to be patient.” Again, more nonsense! In fact, you can gain action and traction within hours or days. I will also show you how to do that in this article. But, first, you have to realize that all the techniques I will demonstrate are based on a core philosophy of 4 steps. 1. Interest and Desire 2. Bonding and Trust 3. Give away free cool stuff 4. Then do a call to action The result – when you issue that call to action, agents respond positively and enthusiastically! At this point, you may be asking a fundamental question: “Why should I try to write loans on Facebook? Is it really worth my time?” You better believe it! Why? Because this site is where all the action is these days. Here is the proof:
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June 2010
• Facebook has 450 million active users! • Of that 400 million, 50 percent of them log on to Facebook every day! That’s 225 million people! • The average user spends almost one full hour on Facebook on a daily basis! • The average real estate agent spends more than 2 hours a day on Facebook. • 100 million cell phone users access Facebook! • Of all global internet users, 31 percent log on to Facebook! • The fastest growing segment is adults (who buy houses)! I’m sure you see the following point about why you should bother with this social networking site: Meet the people where they are, and that’s Facebook! This site has such a powerful reach because it taps into our basic human need for connection, particularly when so many people are isolated in home offices and other places. Because of this need, Facebook is here to stay and is bound to grow – and you want to be able to tap into that growth! Now, in order to capitalize on this phenomenon, you will have to ignore the mistaken strategy followed by many marketers, and that mistake is this: 99 percent of them perform social marketing for exposure, not money! Hey, I love media exposure as much as any loan officer, but – you know what? – I can not spend it at the grocery store or at the gas pump. Believe me, Facebook is all about income for us; otherwise, why waste our time? Sometimes, loan officers are reluctant to go the Facebook route because they have heard the “experts” say,
“You have to post updates five times a day.” I do not know about you, but I definitely want to spend my time doing activity that makes money, not pounding away on the computer keyboard. In fact, you – or your assistant - can do updates in an easy five minutes! Here is one last mistake to avoid: Many experts recommend that you post to friends and relatives on Facebook. No, no, no! You want a targeted audience of real estate agents, not people who have little interest or desire for your services! Remember: targeting = income! Plus, it’s all about measuring the results and honing your strategies and tactics to get the best possible – and most profitable! – results. Okay, enough background! Let me cover the steps for making the most of Facebook!
efforts – personal page, fan page, ads, etc.
Step 1: Create a Personal Page! By Facebook rules, you must create a Personal Page first before you can create a Fan Page (where you will perform all your business). All you have to do is go to http://www. facebook.com/, and youwill find it incredibly easy to sign up (free) and create your profile. But keep in mind, the personal page is nothing more than a life support system for the fan page. The Fan Page is where all the action happens. By creating and building a personal page, you will be able to invite friends to go to your Fan Page, where you will offer all kinds of quality products and services (more on this later).
Step 5: Give Before You Get! On the Internet, it’s a fact of life that you have to give before you receive. The key is to give your fans extremely valuable content! So, make sure everything you offer on your Fan Page has high quality for agents! The good news is that you can provide free content at no cost or at very little cost! Of course, there is a ton of real estate information on the Internet which you can re-purpose for your page. These include: Google, EzineArticles.com, Inmannews.com, etc. Just do your searches, and you will find plenty of quality content. A second source – and one of my favorites – is Private Label Rights (PLR) content.PLR allows you to buy quality content at very low prices and then claim authorship! So, you can offer videos, seminars, books, etc. Of course, any content you offer should be directly related to the services you offer, if at all possible. That will keep things targeted for you and your fans!
Step 2: Create Your Fan Page To create a Fan Page, follow the directions on Facebook. In essence, your initial Fan Page will look kind of like a fancy Personal Page, but you can and will customize it to your specific needs. By the way, there is no cost for this! Also, you will want to gather a minimum of 25 fans quickly. Once you have accomplished that, you can then choose a custom “vanity” name for the page that will more specifically identify who you are and what services you offer. Step 3: Choose Great Profile Photos! This is an extremely important step because it’s all about attracting fans, telling them your story, and branding yourself effectively! My recommendation is to have a photo taken in a casual but tasteful manner! No “glamour shots” here. You will want to post this photo on all your marketing
Step 4: Post Only Positive Content! Sad to say, sometimes marketers, agents and others post negative Facebook comments complaining about a lousy market, terrible government regulations and so forth. Guess what? Nobody cares, and negative people don’t buy! When fans come to your site, they only want positive and useful information of high value to them. After all, they are looking for solutions, not a gripe-fest! My rule-of-thumb is this: Always be a ray of sunshine in your fans’ lives and provide value in an entertaining way! It’s a simple fact: Happy people are the ones who buy, so make them happy when they come to your fan page. Never talk about your “bad day” or give “Bad News.”
- continued on page 47
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Online Lead Generation
Top 10 Internet Marketing Mistakes in Mortgage Lead Gen
S
ee how many of these you are guilty of-- then fix them quickly and watch your business grow like you never realized. 1. Not claiming your Google Local Business Center listing. Yes, it's totally free and easy to do. Even if you do not have an address, Google has a solution for you as a courtesy service. Claim your local listing to show up in map search results, if for no other reason than just to prevent a competitor from reserving your name.
2. Buy Google AdWords targeted beyond your local search area. Did you know that you can pick a zip code and radius for where you target your marketing?
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June 2010
Why waste money buying traffic that is too far out from your preferred marketing radius, especially if you are in New York City, for example, and targeting all the boroughs? 3. Running display and search ads in the same campaign. Google's banner ad network is called the "content network," and "display" is just a synonym for banner ads. “Search text” ads are what are shown alongside search results to people who have typed something into the search box. “Display” ads interrupt people who are reading articles (and have not performed a search).
4. Not creating a Facebook Fan Page. This is not a personal profile or Facebook Group-- it's a business
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Online Lead Generation
page. And do not use the default wall option of "posts by page only," as it discourages people from sharing. Do you have 5 minutes? Then you have enough time to make a quick Facebook Fan Page. 5. Not running Facebook and Google ads. You should be running both, as the two work together to establish your name in the neighborhood plus drive leads. You need both branding and conversion. I have written about this in a previous column. 6. Not having a video on your landing page. Video is what converts far easier than stock images and blocks of generic text. Not movie-star handsome or dazzlingly beautiful? So what. Even seeing a page where you are talking about your real estate business, who you are, and what the town is like is going to be far more powerful than nearly any other page. With video, expect 1 in 10 clicks to result in a lead, while you might be 1 in 30 otherwise. It's worth it! 7. Missing the phone number and address in text on your site. Do you want to show up in local search
results? Then let Google's local ranking algorithm know you deserve to be local by including local signals such as a local area code phone number (not a 1-800 number). Make sure that this local information is also in text, as opposed to being an image that looks like text. Search engine robots cannot read text that's inside images. 8. Missing reviews. Got some happy clients? Have your satisfied clients write an endorsement or recommendation on your site, your Google business listing, the Better Business Bureau, and elsewhere. These happy reviews should be on your homepage; visible without scrolling. Have you saved someone a lot of money with a great refinance? Then tell your prospective clients all about how your established clients saved a lot of money and how you were easy to work with, but let the clients tell the story; ideally in video. More reviews give you better conversions, plus will help you rank higher in map results. 9. Wasting marketing dollars by not measuring. Use a free tool like Google Analytics to determine how effective is your marketing. Use a coupon code or special website page so you can track the marketing hits. Maybe the yellow pages or direct mail is the culprit—you will just have to measure and see. 10. Having a cookie-cutter website. The "cookiecutter" look is not necessarily bad, nor is it necessary to have a fully-custom site that cost you a fortune. But a cookie-cutter site that does not have your pictures, content on your philosophy, a video of you talking, past deals you have closed, and local information that you wrote yourself (to make sure it's unique), is not going to instill trust from new clients.
Dennis Yu is CEO of BlitzLocal, a company focused on driving online exposure and phone calls for locally-based businesses, whether large chains or individual locations. Mr. Yu is a frequently sought after speaker and writer, having been featured at SMX West, SMX East, Affiliate Summit, PPC Summit, HostingCon, KTLA, TechCrunch, and other on and offline publications.
Change results by changing the numbers Build, grow, prioritize and deliver value to your sphere by dave hershman
I
have always resisted the old adage that sales is a numbers game —“Make more calls and get more deals.” Why have I resisted this old standard? I have always believed that it is not the number of calls that are important — but the quality of calls. For example, a call that results in a strong referral is many times more important than a cold call. However, let us not forget the fact that we also need a quantity of quality results. It is great to have a referral, but if there are too few referrals, then we will not make
a living. In a slow economy there is no doubt that the pace of referrals will slow down and we must increase our efforts to produce more results. Unfortunately, many of us tend to get “depressed” and thus “lazy” when faced with a challenging market. This results in a downward spiral because we are affected even more negatively than is warranted by the poor market conditions. Today, I am here to tell you that you can change your results in any market. You can do that by changing the numbers. Many people talk about marketing plans and everyone says that you must have a marketing plan. However, few define what actually is a marketing plan?
We confuse marketing plans with advertising and other activities. Let me simplify. A marketing plan is comprised of four major components: • Identify your sphere • Grow your sphere • Prioritize your sphere • Deliver value to your sphere. While this seems really simple, the difficulty is in implementation of each step. I always say that the devil is in the details. For example, the first step is one in which the average originator falls woefully short. The average originator has a database of a few hundred people which they have loosely identified as his or her sphere. I have a sphere exercise that goes through each segment of one’s sphere and when it is over, the average sphere should actually be a few thousand instead of a few hundred. This distinction is vitally important because if you only identify twenty percent of your sphere, you are actually marketing without your most precious resource. This makes marketing more expensive and even more importantly, less effective. I have written previously about this exercise and therefore will not give the details in this article. Instead of delving into sphere building during this article, I will actually look into the results you will be producing as part of the marketing plan. In other words, I look at the last segment, or the provision of value. Like the term “marketing plan,” the term “value” is another one that everyone hears but very few define. Again, we have a very specific definition for you… Value is something that meets the unique needs of your target. A key word here is “unique.” If you are delivering the same value as everyone else, for example a great price or great service, then it will be harder to respond to your marketing efforts. How many companies advertise that they have a lousy price or service? Think of value as a rare coin—the fewer coins in existence, the more valuable the coin. The definition of value will change in different markets, especially during down markets such as recessions. For example, this recession has been accompanied and exacerbated by a financial crisis. This has caused lenders of all types to tighten up on credit requirements. This means that there are more prospects who can not qualify for purchasing a home or refinancing. So a unique value in this market might be the ability to qualify more prospects. This market also makes investing in real estate more attractive to some sectors. Now the price of owning is roughly equivalent
to the price of renting in many markets. Therefore, many have turned to purchasing foreclosures, fixing them up and leasing them to those who can’t purchase. Finally, increased affordability has attracted many first time buyers into the market. Those who do not qualify are investors and first time buyers. Each of these segments requires the delivery of a particular value. Remember that the marketing plan not only requires building the sphere, but also prioritizing the sphere in accordance to the value you would deliver. Now let’s go back and look at the numbers. If you increase the size of your sphere by five times and you are able to provide unique value to 30 percent of your sphere instead of 5 percent. then you will produce more results. However, the numbers game does not stop there. If your efforts produce more leads, then you also need to convert more leads into your value system. So there is both a marketing and sales component to the equation. That is exactly why this article will focus upon more than one aspect of changing the numbers. *** In my analysis, I will use the example of qualification of prospects. Why? Again, because of our economic environment, so many do not qualify to purchase or refinance a home. In essence, it is a value that is matched well to the economic times. In addition, this is not a need that will disappear when the economy and real estate market recovers. The value must be a long-term proposition because we can’t afford to make wholesale changes in our marketing plan every time the market moves. I will show you how to increase your numbers using this value and the steps you must take to make it happen. Keep in mind that this analysis will work with any “long-term” value package, not just the qualification component.
First, you must have the tools In order to have the right tools, you must understand why many do not qualify. That may seem to be a very simple question, but if you do not break these down to specific components, you are not likely to find the best solution. Here are the major reasons people don’t qualify to purchase a home or refinance: • Their credit. We have moved into a “credit score” based society. This is not just about mortgages, it is also about car loans, insurance and even getting a job. So helping your prospects with this issue helps them in many areas of their life. Their poor scores increases their cost of living and,
TheNicheReport.com
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of course, that serves to lower their score even more. It is a vicious circle. What causes a poor score? Late payments, too much credit as compared to available credit, too little credit, inaccuracies and a few other factors. • Their debts. Obviously, you can see these issues as linked. If someone has too many debts, they can not make their payments on time. This lowers their score and then their payments go up. The vicious cycle gets worse. For many prospects, you can’t address credit without addressing debts. Add the fact that many are underwater with regard to the homes and the situation is exacerbated. I help these home owners increase their equity and for many, that is not possible until they lower their debt loads. Loan modifications, short sales, unsecured debt renegotiation and even bankruptcy are all solutions, but many of these solutions can make the client’s credit score worse and lengthen the road to being able to purchase. • Their spending. There is no doubt that many Americans have spent their way into their financial situation by purchasing houses, cars and other luxuries they could not afford. The good news is that the recession put a damper on much of this spending. The bad news is that
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most Americans do not have access to financial expertise to help them determine appropriate budgets and save for the long-run. • Their income. Two things have happened within this category. For one, lenders have tightened guidelines. This includes full documentation and tighter underwriting ratios. Secondly, many Americans have become unemployed or underemployed during the recession. Either one of these issues exacerbates all three of the previous categories. Helping someone with their income deficiencies is the hardest of all of the issues to rectify. There are many services that will help your prospects get back on their feet. From credit score improvement to financial counseling, we need to know what is available and how these services can help our clients. Note that I am not at all suggesting that originators decide implement these services themselves. The key is finding the right experts. Of course it would be helpful to find a service that provides more than one solution so that you are dealing with fewer points of contact.
Second, you must have the targets. As I indicated originally, I will not be going over the sphere marketing webinar in this article. I will make the assumption that you have built your sphere. The next question is, where do you go? The key word is prioritization. If you have put together a package of value, where do you take this value? I am a big believer in synergy. Synergy helps us get the most results in terms of numbers and effectiveness with the smallest amount of resources. We must conserve our time, money and energy—especially in times of fiscal crisis. For an originator, the best route is business-tobusiness because other businesses will be aggregating potential prospects for you. Of course, other originators are approaching Realtors, banks, builders, financial planners and other potential aggregators. The typical originator is fighting for the qualified prospects like vultures and they are all promising the same things— rates and service. What if you could walk into any office in America and focus on their prospects that others are throwing out? Yes, it may take a year or more to get some of these prospects into shape to purchase, but that gives you a long-term pipeline as well. The value you deliver in this regard will help you generate quality referrals as well through the relationships you can now
forge. For example, if a loan officer can help Realtors with a greater percentage of their prospects, why not use that loan officer more often? Part of this task is positioning and making sure you are not labeled as the person who specializes only in those who can not qualify. Even your advertising can focus upon these segments of the population. A couple of points are important here. First, consider using your sphere as the basis for advertising. That means your church bulletin instead of the newspaper. Second, many will respond who are more qualified than they think they are. I am all for filling your long term pipeline with prospects, but getting deals closed next month is important as well. Third, you must convert the leads. Attracting prospects using your new value-proposition is one thing. Making sure they become part of your pipeline and stay there is another important point. First, let me address the issue of conversion. Depending upon your mode of marketing, these leads may come from referral, direct phone call or electronically. Whatever mode of harvesting, some very important rules apply….
• Quick response is essential. This point is a sad indictment of the state of service in America, but the person who responds the quickest usually wins. The problem is that so few respond quickly. The good news is there will not be much competition in this regard. Get first in line and you increase your chances of converting dramatically. • Personal response is even more critical. The quick response must be personal. A phone call is best. If you do not have a number, then send a personal email instead of an automated response. Be sure to include some personal information such as “I see you live in_____,” I am originally from that area. • Do not sell by email or voice mail. When you respond, you are likely to get a voice mail. Do not put your sales message on tape or in an email. If you give them the information they want, there is no reason to call back. Keep the message short so that they are more likely to respond. With regard to emails, it is good to include a "short answer" question which will increase response even more. A question such as, “Is this your first home?” is easy
for them to answer. • Make sure your voice mail message or email signature is professional and does not sound like everyone else’s. Most say: “Hi, I am not at my desk right now….” The key to marketing is not sounding like everyone else. Have a short message that says to them—“You have found the right person.” • Follow-up. After the first conversation, the key is following up with the same intensity as you called back the first time. Again, this is another sad indictment of the state of service in America, but most prospects will not be used to follow-up. Well, this is again an opportunity to differentiate yourself.
Fourth, stay with them through value delivery. Quick response and follow-up is fine, but what really carries the day is staying with the clients during the process of value delivery. Let’s say you are referring them to a credit score improvement service. It may take six months to get their score where it needs to be. However, if you don’t stay in touch during this time…
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• The process will take longer because it is less likely that the prospect will follow as they should. Credit score improvement companies always answer the question “how long will it take?” with “how well with the client follow up?” • Keep in mind that others will be contacting them at the same time. During the initial period you are the winner with regard to value delivery. But if you don’t stay in touch and someone contacts them five months from now and the score is “ready to go,” you are still going to lose the deal. We talk in terms of six months for credit score improvement. However, many take a year or two in order to make the home purchase decision. That means even longer-term follow-up is the key. We understand it is hard to make a phone call every month to every prospect for a period of two years. A flyer will not work either. The prospects will stop reading flyers. That is why when I got into the industry thirty years ago, I started writing a newsletter immediately. It not only differentiated myself as an expert (no recipes or handy homeowner hints) but it also gave me the ability to send material that would not be thrown away because it is designed to add value (education) rather than plead for business and referrals. The ultimate value is being an expert who can lead them through a better decision making process. You must not only be an expert, but market yourself as an expert. I am not saying that you should start writing a newsletter immediately. That is not a good use of your time. It took me 10 years to convert my newsletter to a commercial venture and now it includes articles and more. The key is the constant delivery of value tailored to the need of the level of your sphere. For example, the ultimate value for those who are in business is helping them achieve more transactions. That is why we deliver a sales article every month. Now you can put yourself in the role of “marketing and sales” mentor instead of sales person. With a properly segmented sphere you can see how you are able to target value more effectively. While your Realtors may receive a sales article and newsletter, prospects may receive a newsletter and article relevant to their situation such as purchasing investment property. Those high up on the prioritization list will perhaps have lunch with you once every quarter or even more frequently. The thousands on the lowest rung of priority may only get an HMTL newsletter every week or monthly/quarterly if print. You can not have lunch with
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thousands. Of course, another tool you must have is a contact management system. This system must allow segmentation by priority. It must have reminder feature so that you know you must follow up in let’s say six months for those who are in a credit repair program. A simple email program will help you get newsletters out, but a powerful contact management system must do much more. Having a sphere of 3,000 or more will not help you if you have to exist on sticky notes. Build the sphere, grow the sphere, prioritize the sphere and deliver "value" targeted to the sphere. If you can do these things to change the numbers, you will change the results dramatically. That is an absolute guarantee because the numbers do not lie…
Dave Hershman is the leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also a top industry speaker. Hershman’s Certified Mortgage Advisor and Newsletter Program’s can be found at www.webinars.originationpro.com. His email address is success@originationpro.com.
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the Voice of housing
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GSEs Able to Bypass Bureaucracy on Road to Resolution by tim rood
M
ore than 600 days ago, the federal government placed into conservatorship Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that play a critical role in the U.S. home mortgage market. At the time, the Bush Administration said it wanted to shrink the two organizations by 10 percent a year. Much like the wayward child who squanders his parents’ inheritance on a life out of control … only to realize his mistakes and ask for forgiveness … Fannie and Freddie each have returned to their original purpose of providing stability to the market and supply lowand moderate-income families the keys to housing and homeownership. Granted, the GSEs re-focused mission was not a result of a religious epiphany. It came about more like the result of court-ordered community service. While lawmakers will no doubt be able to legislate away some of the risk of the same crisis happening again in the future, we need to be prepared to deal with the next one when it does come. The intervention and ongoing recovery of the GSEs over the past year and a half may have taught us something. Here’s how... In September 2008, Fannie and Freddie had roughly 5,000 employees each. You might be surprised to learn that since that time Fannie Mae has added nearly 1000 full time positions, and has 547 open, posted positions as
of April 2010. That’s a 30 percent increase from the time it first went into conservatorship. Freddie Mac is not far behind. By contrast, the Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae) have actually shrunk over the same period, and have just 39 and one job openings respectively. What’s up with these numbers? Maybe it’s the fact that a quasi-governmental organization is far less encumbered and therefore more effective, even in conservatorship, at crisis management and resolution than a federal agency? Fact is, Fannie Mae and Freddie Mac are not subject to and hamstrung by Federal Acquisition Regulations (FAR) and federal appropriations and budgeting. Ambiguous and urgent problems don’t wait for federal procurement practices that could take many months to approve a required service provider. The problem goes on even longer if an incumbent or disenfranchised responder protests. And yes, in the case of fully federal agencies, it actually does “take an act of Congress” to get the budget dollars to hire staff. Bureaucracy is the enemy of judgment-based decision making. The GSEs now are instruments of public policy for reasons largely related to the expediency and scale by which they can get things done. Part of that has to do with human capital, which they both have in spades, but TheNicheReport.com
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the Voice of housing
much has to do with that fact that are not subject to the federal procurement policies and restriction. Arguing whether or not federal intervention into the housing crisis through programs like Making Home Affordable is a separate topic all together. If you believe those programs were needed to stabilize the housing market and stave off the next Great Depression, then you need to consider that we would be in far worse shape if the GSEs had been nationalized and subjected to operate under FAR protocols.
The Collingwood Group is a senior team of seasoned financial services executives providing business advisory services to boards of directors and executives of companies in the financial services industry. The Collingwood Group has partnered with Mortgage News Daily to bring you the VOICE OF HOUSING Blog. Contributors include former Ginnie Mae CEO Joe Murin and former FHA Commissioner Brian Montgomery.
MBS WARROOM
Interpretation of the Financial Markets for the Best Results Part 1 of 2: laying out the ground rules by matt graham
I
deally, what would we really like market analysis to do for us? We can tout realistic and diplomatic benefits such as “gain a broader understanding of the forces at work behind interest rates,” or “get an accurate and timely picture of how MBS are moving,” but that’s the easy stuff. When it comes down to it, what would really benefit us the most would be to know, with a high degree of certainty, what the market is going to do BEFORE IT DOES IT! As you might guess, that’s not realistic, but by employing both fundamental and technical analysis in certain ways, we can take our minute to minute and day to day outlook from a total crapshoot to something that at least has a semblance of predictability, thus cashing in on the incremental gains that come with making the right decisions more often than the ones that cost us money. So how exactly do we do that? And what do you need to know to make sense of it? There are two separate and divergent schools of thought when it comes to the broad concept of analysing financial markets: TECHNICAL and FUNDAMENTAL. Between Google and various books on the topic, you can find all sorts of definitions for these seemingly opposite concepts, but in general, here are working definitions that will allow us to focus on how they can be used TOGETHER to obtain higher probability predictions: FUNDAMENTAL ANALYSIS: A study of all the 28
June 2010
factors that UNDERLY market movements TECHNICAL ANALYSIS: A study of the actual movements themselves with limited regard for what underlies them. It’s a bit unfortunate that these two approaches have—at least in perception—evolved into some sort of “competing roles” where the fundamentalists examine the economic calendar, legislation, valuations, and the like, while technicians concern themselves with trends, support/resistance levels, and even more complex charting overlays that rely on somewhat esoteric mathematical principles. It’s as if there are two opposing factions or “sides” to an argument, but the resolution of said argument is usually benefited by a measured application of BOTH schools of thought. In this first installment of a two part discussion, I’ll lay out some ground rules to keep in mind before using ANY type of analysis to change what you would otherwise be doing with your pipeline.
1. There are no magic bullets. It would be nice if there was a small collection of secret analytical techniques that worked the same way nearly every time they were employed. And it would be nice if we simply knew what those were and could share them with you. But even if there were “magic bullets” such as this, I’m sorry to say we wouldn’t share them with anyone. We’d be far too busy counting our money and far too sensitive to the risk of the secret techniques losing their predictive power by becoming common knowledge. In this sense, it’s better to
mbs warroom start with the common knowledge and see if we can eke out some methods of applying it that prove to be more reliable than others. Sadly, using non-proprietary methods as a starting point is not without it’s inherent downside, in that you must account for the simple fact that other participants in the marketplace are going to be looking at the same thing you are.
ANNOUNCEMENT that the Fed was planning on investing MORE than the entirety of new MBS production anticipated in 2009 was enough to give prices an unprecedented lift (and spreads an unprecedented tightening). The more the Fed put their money where their mouth was, the more every other player in the market got on board.
4. Tape bombs. These are those nasty little unexpected market movers that were not on the market’s radar, let alone an economic calendar. And even if everyone seems to have HAD a big market moving event on their radar, it seems that we normally hear much more about it AFTER the event transpires. After all, if it was so expected, why is the market saying it was surprised by rapidly adjusting its valuations? The market naturally adjusts for whatever it is collectively expecting, so sudden, violent movements are a surefire sign that the market is digesting something unexpected. The important thing to keep in mind about tape bombs is simply that they exist. It’s one more variable you have to plug into a risk v. reward scenario.
2. If you can see it, so can someone else. This is where financial analysis becomes a bit like a poker game and a lot like a case-study in human psychology. After all, if you crunch some numbers or hear that a certain portion of a certain economic report is likely to be off due to a certain factor that the broader markets are not building in to the estimate, you can safely assume that you are not the first person to have this revelation. Therefore, trying to anticipate what markets will actually do necessarily includes that component of anticipating how other participants in the market will act based on their anticipation of what the market is about to do. And by the time you ask yourself “are they trying to think about people of my mindset are going to do as well?” you have a Chicken And The Egg scenario that makes Iocane powder look like child’s play. The main value here is to prevent overconfidence. If you find yourself in a position where you’re feeling that you’ve come across something akin to insider information or that you’ve stumbled upon some secret analytical weapon that no one knows about, just remember that someone else DOES know about it. And if they suspect you might soon be basing financial decisions on something you think is a surefire proprietary strategy, they might sell their stake in the gold mine, set up a gold-pan shop a short ways down the hill, and purposely avoid debunking the methods you’ll soon be using so they can cash in on your optimism. But even if you’re wary to this risk, there’s a cold truth that can always rain on your parade 3. Golden rule. You’ve heard this one, right? “He with the gold makes the rules?” It’s especially true in capital markets. 97% of traders could be taking the same position, but if 3% takes a contrary position and that 3% represents a majority of the volume, the 3% crowd wins. Wall street’s recognition of this reality was beautifully demonstrated in the Fed’s MBS purchase program. Before that, the market was decidedly bearish on MBS. Even in lieu of the Fannie and Freddie conservatorship MBS prices continued to fall in relation to treasury prices. It was an “impending doom” sort of situation. But the mere
5. Patience, probability, profits. There’s a fine line between delay of gratification and stupidity when it comes
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5/6 ARM
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Fxd Pmt
0%
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First Loan
$400,000
$320,000
$388,000
$360,000
$320,000
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30 Years
30 Years
30 Years
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6.250%
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7.042%
5.819%
6.773%
6.597%
6.175%
P&I
$2,463
$1,842
$2,326
$1,988
$1,919
2nd Loan
N/A
$80,000
Term
N/A
30 Years
Rate
N/A
10.500%
Payment
N/A
$731
N/A
N/A
$373
$0
$0
$12,000
$40,000
$40,000
$14,238
$11,763
$13,041
$11,648
$10,838
Down Payment
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Closing Cost Est
N/A
N/A
$40,000
N/A
30 Years
N/A
10.750%
$0
$0
$0
$0
$0
$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
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Uncle Sam has $$$’s for you!
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
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Continue to receive The Niche Report monthly In an effort to maintain a healthy circulation we will be deleting many aged subscribers. If you haven’t already gone to our website and subscribed, do it now! ree! It’s f
mbs warroom to being patient for an expected result. You should know ahead of time what sorts of losses will be acceptable before locking and the minimum required gain before locking. Going too far in either direction is usually either unwise or greedy unless you have a fantastic understanding of the forces at play and an iron-clad justification for “changing your mind.” That said, even analysis that pans out in the long run may give plenty of “head fakes” toward “not panning out” in the short run. If you’ve dialed in the analysis available to you with your personal circumstances and understanding to a certain point, you will actually have a higher probability of making profitable decisions on each deal. But it’s very hard to assess “patience versus stupidity” in the heat of the moment. That’s why a SYSTEMATIC “if/then” approach is critical. And it’s the interpretation of those “if ’s” that we’ll dig into next time. Until then! Matt Graham is the creator of the MBS War Room, a first of its kind service bringing institutional quality market data and analysis to mortgage market professionals. Adam Quinones is Managing Editor of Mortgage News Daily and co-founder of the MBS War Room.
techspot
A New Era of Lending by Rick roque
T
o set the 2010 direction for mortgage technology, the MBA’s Technology in Mortgage Banking Conference & Exposition was held on April 2528th at the Hyatt Regency along the Chicago river in downtown Chicago. It is always good to see friends, colleagues and even competitors at these conferences. In several respects, many of us have grown up together in this industry and, despite the incredulous look we get after telling people “we work in the mortgage industry”, we proudly press on like a Band of Brothers amidst a largely un-forecastable future. Attendance this year was significantly higher than the dismal attendance in Las Vegas last year. With an industry workforce reduction of over 50%, deep economic losses that fueled a downward affect between bank underwriting requirements, property devaluations, poor consumer credit challenges and “round 1” of loan origination reforms (beginning with the GFE) behind us, there was a sense that the worst was behind us. I mean, we had soft shelled crab instead of turkey sandwiches and an open bar at the opening reception; how bad could things be? How pessimistic could we be about our future? Well, there is still plenty to still be worried about, and much of the success or failure of the challenges ahead will fall in the hands of the mortgage technology vendor and their innovations to move the
industry forward. Technology innovations tend to be driven by dramatic social needs and events. Most recently social networks and the precursor open source technology, Wikipedia and the internet itself, challenged closed door systems and platforms. It is no coincidence that the dawn and growth of the internet occurred during the same period as the collapse of communism, the fall of the Berlin Wall and the rapid expansion of political democracies around the world. With walls being torn down, people soon discovered a need to communicate and share information with their neighbors. Despite some technologies being truly revolutionary, all innovations even disruptive ones occur in a “technical and social context” and are mere evolutionary next steps to meet more sophisticated needs. The internet itself had been significantly held back given the limitations in storage cost, bandwidth and physical access to the internet. Now that you can buy a 1TB hard drive for $100, DSL is widely available (and cheap) and access the internet conveniently on our iphones, all three limiting factors eroded as those respective technologies evolved. More interestingly, who even buys a hard drive any more when you can store everything in the ‘cloud?? Who pays for the internet when free wifi is widely available and who needs a laptop when we have our smart phones? The point is, all technology is incremental while others are disruptive given the right circumstances. To illustrate further, for most technical innovations, the right factors need to align in order to gain
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techspot adoption and I believe these factors are falling into place in the mortgage industry: let me explain. As I reflect on mortgage how long have we been talking about e disclosures, electronic mortgages and e submissions? How long have we been talking about MISMO standards, data integrity and risk mitigation? What have been the limiting factors that have muted wide adoption of these principles? Market conditions and the push toward loan quality (e.g. driven by Federal and State regulatory efforts) have largely been the contributing factor to our changing landscape; I wish this was a result of our industry having been pro active enough to put these controls in place, however many of these compliance requirements are being placed on our processes as a reaction to the severe losses that have taken place. This reaction is largely why mortgage technology vendors have failed to deliver on cost effective technologies that can reduce quality and operational costs. During the 1980’s and 90’s, the internet and cloud computing were in their infancy, making data centralizing expensive and technically difficult; during the mortgage boon of 20022007, the last thing a loan officer wanted was to be managed and reported against. As a result, mortgage technology firms in that gained market dominance largely followed the needs of the buyer rather than the needs of the industry. As a result, such functional requirements from a software standpoint, were naturally not prioritized and as a result, vendors, with their focus on the loan officer’s production and not on compliance, management and control helped drive mortgage professionals and the industry off the economic cliff. With the exception of a few thought leaders, most of us did not understand the needs of the industry any more than the mortgage professional did. In this new era of lending, driving all trends is compliance and management. In the Legal & Regulatory Track, Robin Hannah, Vice President of Correspondent eBusiness with Wells Fargo said it well, We need to know what we are purchasing before we purchase it; our key priorities are to provide lender tools to ensure credit quality and data integrity levels are high. By using technology, field level requirements and automated triggers are to detect defects and to communicate effectively with partners is vital to run an automated, exception based process.
Now that the few investors who are left, are performing over 60 percent of retail origination themselves, they are in a better position to dictate what these processes, standards and technologies are going to be. The market circumstances will drive the need for data standards like MISMO in order to
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techspot drive data integrity and to mitigate investment risk, which now is a critical need in the market; Harry Gardner’s hard work just may pay off in the coming 1-2 years; It may even facilitate a much needed LOS consolidation which the sheer volume of LOS providers has without question been challenging to Wholesale Lenders and Investors in managing file quality. What does this mean for mortgage technology and third party originators – brokers and correspondent lenders today? A great deal: your need to change your technology platform in order to meet market compliance and regulatory needs is vital for your business and our industry. With an aggressive compliance culture, there is a driving trend of controls, time sensitive regulations and disclosures put in place in order to protect the interests of the borrower. Additionally, what is driving companies to shut their doors is their inability to then manage, report, and track whether or not their company is originating, processing, underwriting and closing loans in a compliant and efficient manner. In order to do this, your company – large or small – must be centralized in a database driven platform that has the right time sensitive compliance verifications, disclosures and workflow triggers to help you manage your business. “The GFE and upcoming
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TILA changes are forcing technology vendors to take the lead. No longer are you left to your own devices to feel your way through the process and to hope you are getting it right,â€? said Jonathon Corr, Chief Strategy Officer at Ellie Mae during the Business Technology Track – taking the Chaos out of RESPA. “The right technology partner is vital in order to have the confidence you can operate in a compliant manner. This is our Y2K, but worse. RESPA is increasingly complex – without the right technology partner, you won’t be successful.â€? I have to say that I must agree with him on this point. When your technology vendor has talked about “end to end platforms,â€? “rules,â€? “triggers,â€? and “automation,â€? but has yet to deliver it, you should seriously find an alternative. Filling a list of bullets in a PowerPoint is much easier than building and bringing a technology to market. I suggest insisting on seeing a “liveâ€? product and not simply listening to talking points showing a future direction. I believe this is the point. Most mortgage technology firms are behind and will continue to point to their ‘roadmap’ as to what “is coming‌.â€? Don’t be fooled. Mortgage technology firms are great at providing ‘niche’ solutions because they often lack the capital, leadership and market understanding to meet the broader needs. The era of the niche product is dead – for now. Loan origination software and/or marketing tools that simply cater to loan officers will continue to struggle. Not until the market stabilizes and platforms mature, will such products truly gain favor. After all, why invest in a niche product when the ‘core platform’ is evolving so rapidly? Why invest in simply mortgage CRM when your loan origination software isn’t setup to do a mortgage in a cost effective and compliant manner? Mortgage technology is significantly lacking in this area. There are issues of cost, the re-shaping of the origination channel(s), and ultimately the lack of technology industry leadership that is preventing the right set of solutions to solve the most critical problems for investors. Can we consistently originate a cost effective, quality, fraud free, loan in a consumer friendly manner that a borrower can repay? If you are using the same loan origination focused technology that you used 10 years ago, I can tell you will struggle and your answer to this will be “noâ€?. Rick Roque is Principal of Menlo Company (www. menlocompany.com) , one of the largest Mortgage Technology and Operations consulting firms in the country whose focus is Mortgage Technology Vendors, Mortgage Brokers and Small to mid size Mortgage Banks. Rick is a former Senior Management
Appraiser Sound off
REAL ESTATE APPRAISER INDEPENDENCE By Larry benjamin "benji" brossette
T
he biggest misperception in real estate is that there is no such thing as an Independent Real Estate Appraiser. Although there will always be a value, such as market value associated with real estate market reports, it is the opinion of property value being more significant than the estimate itself! Meaningful market value (MMV) is too important to overlook, cheat, and mock (manipulate logic and reasoning). In an economic system sought to be benefit free enterprise, one will eventually obtain for what they pay. Mortgage brokers, Realtors, and the entire lending industry, including Appraisal Management Companies (AMCs) all got what they paid for. Therefore, all of the above mentioned, and the general public will be paying for the broad and rampant misrepresentation for years to come. Ultimately, ignoring the appropriate professional’s assistance will only prolong artificial values and undermine the advancement of an Independent real estate market. The typical real estate appraisal process, as it existed before the Home Valuation Code of Conduct (HVCC) and post HVCC, may leave many market participants left out; speaking specifically about the ‘main street’ buyer and seller (even investor) of real estate in a competitive market during the loan process. The ‘main street’ buyer/seller appears to be the ones hurting the most!
An Independent Real Estate Appraisal Process can provide a path of progress to any client who wishes to build a less volatile, meaningful portfolio, and assist with a strong local and national economic base. It is when the market’s share of market participants becomes more knowledgeable, and justly given the proper communication for the value of their own asset and/or interest, productivity may occur. An uninformed general public undoubtedly is an un-knowledgeable market place, portraying economic behavior as less efficient and highly volatile. When the market’s share-of-market-participants are left out, thus unknowledgeable, this may create confusion among buyers and sellers. It may be in the social interest that the general public (average buyers/sellers/ investors) work with an Independent Real Estate Appraiser as the client, when purchasing and/or refinancing, acting in their own self interest. Many real estate appraisers are rallying against the Home Valuation Code of Conduct (HVCC) and many real estate appraisers are content with the changes. However, there is a quiet opinion among a small consensus that differs from the appraisers who are for and against the HVCC. The reason why this group looks to be quiet may stem from an idea that their view is not popular among the majority within the two other viewpoints. While these appraisers who actively petition against the TheNicheReport.com
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Appraiser Sound off HVCC and those who appear content with the HVCC, ‘theoretically’ fight it out, there is a logical belief there may be one group of appraisers lurking behind the scenes who attempt to reach out to “main street,” in order to build a private client base. A privilege once belonging to a mortgage broker, and in many instances has given Realtors an upper hand, was taken away from thebrokers via the selection and influence of the real estate appraiser, as written in the HVCC. These two professionals are commission driven, which means they have a high valued interest in selecting the real estate appraiser in order to get a specific value in any given transaction. The Home Valuation Code of Conduct also gave the appraisal management company an opportunity to advertise as the only reliable or credible source for the selection of real estate appraisers. As well as managing appraisal reports, they were not held accountable for their participation in the meltdown of the market, being owned by banking institutions. Like the mortgage broker and Realtor, the banking institutions have an interest, but are considered to have a different motive. When compared, the AMC is no better than the mortgage broker and Realtor – selecting, influencing, and managing real estate appraisers/ appraisals. Fannie Mae and Freddie Mac must rely on Independent Real Estate Appraisers/Appraisals when buying, selling, and trading the immovable market. Influence from all profit driven professionals must be contained from disrespecting and compromising the Independent Real Estate Appraisal Process. The HVCC fails to create or take that first step with regard to enforcement. With AMCs advertising relentlessly, but within the law, Independence through-out should be in adherence. AMCs have been showcased as an assistant to
Appraiser Sound off
the Automatic Valuation Model (AVM). The combination of the AMCs showing interest in a game of monopoly, advertising as the only solution for appraisals, and the adverse affects of AVMs, the Valuation ‘De Minimis’ looks to be even more detrimental to the real estate market. The Home Valuation Code of Conduct has good intentions. However, the presence of controversial talking points exist. The code does not ignore Appraiser Independence, which I hope more appraisers will embrace.. Initially, there was the optimism of an Independent Valuation Protection Institute (IVPI). There was mixed feelings about the 20 percent ownership in the AMC, for which the lending institutions lobbied. Today, neither one exists and there is 100 percent ownership in AMCs and of course there is no IVPI. It is difficult to write about any anger toward the decision Andrew Cuomo made. A privilege given to NAMB and NAR was taken away for good reasons. Evenso, it affected some good business models and/or practices that were already in place. This course of action brought Appraiser Independence to the table. The HVCC, if
nothing else, should be independently fought. Everyone should do their part in making America’s economy the most innovative, the most valuable, and absolutely the most Independent. Appraiser independence is important to acknowledge if economic advancement is to occur and grow accordingly. The ‘independent’ Real Estate Appraiser is, without a doubt, part of the solutions facing the economy today and tomorrow by simply being called upon by the general public (the average buyer/seller and investor)
Larry Benjamin “Benji” Brossette - Independent Louisiana State Licensed Real Estate Appraiser Trainee, currently attending Strayer University as a Bachelor of Science in Economics candidate. while I work towards a general appraiser certification. I have no interest in any appraisal organization; however, if the Guild showed interest, I wouldn't think twice about considering them.
Rules and Regulation headlines
The Biggie in this issue is LQI—or Loan Quality Initiative! There’s much more-- but don’t ignore this one—it’s a biggie and will further delay your closings. Check out Mortgage Talking Points® for your real estate agents called Don’t Close Late-Don’t Close Ugly: New Rules Make for a Bumpy Ride to Closing which reviews HVCC, LQI, MDIA, RESPA.
Fannie & Loan Quality Initiative – SEL 2010-03 – Effective July 1, 2010 I do not have good news for you…some of your loans will be audited BEFORE they close. High-risk loan types with higher risk characteristics require Q C Auditing! o >90 percent LTVs o Higher-risk Credit Scores o Investment properties o Cash-out Refinances • recommended audits for o Third-Party Originations o All property types – Condos, Co-ops, Manufactured o Originated by new personnel o All Underwriters
Brokers, Correspondents, and Everyone else – look for your QC on the post-closing side to tighten-up. The Third-Party origination section will really end up affecting everybody in some way as Lenders tweak their QC models – service retained originations will likely not escape unchanged. The big news here really is the Prefunding QC – I have to laugh and shake my head as I try to think about how this is going to be done and how it is going to affect to the process of closing a loan. It is exactly like what it sounds – a certain percentage of your loans will be re-underwritten by and AUDITOR – Not a production underwriter, but by someone that does QC…I can only imagine…How will this get done quickly – really can’t use the Post-Closing QC staff – they have their own work to do. Will Lenders add a new department? Calling – Prefunding QC Dept – “please hold”. Will this start a new outsource service? Hey maybe Fannie is the spark the economy needs for a new JOBS program. I see major problems here. 40
June 2010
TIME – loans are on a schedule – two different underwrites – Yeah! TIME – resolution of defects prior to closing – second set of conditions – Yeah! Staff – who is going to underwrite the loan the second time? Defect Reports – going to Management and involved parties every month Resolution Reports – going to Management and involved parties every month And I thought the threat of re-pulling credit before a closing was an issue… Oh, I almost forgot the GOOD NEWS – Fannie Mae is offering training in order to help lenders implement the changes to QC Policy.
FHA Net Worth Requirements & Streamlined Lender Approval Process. HUD has announced a final rule to be published in the next few days. Effective immediately: Net Worth Requirements • New lender applicants for FHA programs must possess a minimum net worth of $1 million. • Compliance timeline for current FHA lenders to comply with net worth requirement: o Effective one year following the rule enactment: • Current FHA approved lenders – with the exception of small businesses – must possess a minimum net worth of $1 million. • Current FHA approved small business lenders must possess a minimum net worth of $500,000.
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RULES & REGULATION HEADLINES
o Effective three years following the rule enactment: • Approved lenders and applicants to FHA singlefamily programs must have a net worth of $1 million plus 1 percent of total loan volume in excess of $25 million.
Mortgage Brokers already approved by FHA will be authorized to continue to originate FHA loans through the end of the calendar year without sponsorship of an FHA-approved lender. On January 1, 2011 the origination authority will end and mortgage brokers must originate under the sponsorship/oversight of an FHA-approved lender. There it is. The 3-year roadmap for FHA approved lenders and the official word that brokers can conduct business as usual until the end of the year. We will probably see a Mortgagee Letter on this shortly, but we are announcing it ahead of the Mortgagee Letter since HUD put it in writing. If you don’t already comply with the net worth requirements it’s time to put together the plan. At least now you have a timeline. Brokers, start talking to your lenders. The year will fly by and you need to know where you stand come January 1. Compliance - New Right of Privacy Model Form Required While the new Privacy Notice went into effect in December 2009, the actual model for it was not published until a month ago. • More bullet points • Standardized – limited ability to customize • Affiliate sharing—whether you work with an affiliated or non-affiliated company • Opt Out Credit Report Option • Do Not Call Notice Option • Annual notice is required
This form must be given to the consumer at the time you first ESTABLISH a customer relationship. If you work for a company that is affiliated with other companies—or if you are a broker who shares info with financial planners and insurance agents, then you’ll need to provide this disclosure, too. If your company is servicing the loan, they must send to the customer on an annual basis. If you are a broker, and the loan is sold, you only need to provide at application. If you have your clients sign a form authorizing you to share their financial information with insurance agents, financial planners or affiliated companies, then you need to provide a copy of this form.
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June 2010
USDA – Clarifies Cash Back at Closing Rules RD is providing additional clarification on “cash back” to borrower to hopefully minimize confusion on lenders part. A borrower is allowed to receive in “cash-back” at closing no more than that amount “documented” that they paid-in from their “personal funds”…typically being items such as earnest money deposit, appraisal, credit report fees, and inspections… NO MORE!! *Clarification of “Personal Funds”: this is the most important part of the clarification. Gift funds with no terms of repayment are considered “personal funds,” if there is an executed donor gift letter and verification the funds were transferred to the borrower prior to OR at closing. Some lender were not counting gift funds as “personal funds” and adding greater restrictions on “cash back” at closing other than that amount allowed by RD…. to the borrower detriment. RD is telling us here that properly documented and transferred gift funds are considered “personal funds” and ultimately can be considered when determining maximum cash back to the borrower. There’s more but this is the biggie! Freddie Bulletin 2010-7 – Multiple Rules Clarified. This is one dull Bulletin¬ Freddie is continuing to raise credit score requirements on several targeted products. The elimination of ALL Interest Only loans caught me a little by surprise, but then again, given the times we are lending in, the real question is what took so long? - Prediction - Fannie will follow soon. Borrower Eligibility - Construction Conversion and Renovation Mortgages will allow a Co-Borrower to be removed from the mortgage in the event of death or divorce, or a related person to be added to Permanent Financing - all borrowers must be Owner-Occupants Construction financing is next to impossible unless you redocument the loans or opt for a portfolio execution - guess that's why so many players have dropped this product all together...¬Hmmmm... I smell opportunity!
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 Phone Etiquette BY STEWART MEDNICK
I
n the last year, I have been involved in many different projects and endeavors. With every activity in which I participate, it seems the volume of calls I receive increase. This means the return time for the phone messages increases. So what are the expectations of the caller? Does the caller expect a call back within the hour? What if you can not call back for a number of days? How do you keep your clients happy with adequate communication? Your idea of response time and quality of response may be different than the caller. The first and most important aspect of communication is the establishment of goals and expectations. In regard to phone calls, the goal is to communicate effectively. The expectations are usually communication in a timely manner. Be sure to ask important qualifying questions when first making contact over the phone: employment, budget, timeline for closing, personal goals, etc. Take notes and start a file for each client with the first phone call. I always have a conversation where a few bits of personal information is exchanged, like birthdays, being a dog owner, favorite sports, hobbies, etc. With this information, you can then have a personal touch with each conversation about how the baseball season is going, working in the garden and how the new car is performing,
for example. You want to establish the rapport of trusted advisor, but you need to gain trust to do so. Having common interests and showing your interest in their life can achieve this result. There are times you will not answer every phone call. What does your phone message say about you and your business? Ensure that you give a specific timeframe for when you will return calls. I have a financial advisor whose phone message says: “…I will be returning calls between 10:30am and 11:30am, and between 3:00pm and 4:00pm everyday.” If you are overwhelmed with business and phone calls, provide the expectation for returning phone calls as such: “…due to the large volume of phone calls, I will return your call within three to five business days….” Sometimes, this can also be used as a marketing tool. If the client hears you are so busy, you must be good, right? So sounding busy (even though you may not be) can be a good tool to use. Set a realistic expectation as well, and under promise and over deliver. Finally, when talking to a client, do not use “street lingo.” Do not use contractions, or slang. Be professional and verbally do not be lazy. As an example, avoid “uhuh, ummmmm, yep, gotchya, ya, nope, won’t, don’t, you’ll, cool, right on,” and a number of other words. I think this makes the point. The most annoying aspect of communicating is the use of what I call ‘lazy words.’ There are a few, but they are over used. These are, “get, do, go,” and perhaps a few others. These words can
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You’ve Decided to Make a Move ... 5 Questions you Must Ask! 1. Have they been branching for nearly 2 decades or did they just start yesterday? 2. Are they more concerned with replacing fallen retail origination than in working with you to expand your business? 3. Will they support your marketing efforts or simply wish you luck? 4. Are they going to license your branch in multiple states or simply tell you to refer your out-of-state loans to home office? 5. Will they pay you next day or are you going to hear, “we’ll get back to you”?
TIP OF THE MONTH
always be replaced with a more substantial word. Get can mean to retrieve, receive, pick-up, catch, etc. Do can mean to perform, assert, accomplish, aspire, etc. A phone conversation is usually the first impression a client or other business professional will have of you. Make the impression a good one. Sound successful and you will be successful from the business you drive to your shop with a few minutes of well choreographed conversation and messages. Don’t leave anythin’ at the beep ‘cept crappy manors and unprofessional stuff that’ll get you nuthin but a big ole goose egg. I’m diggin’ it, totally!
Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for marketing consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-895-5122 or smednick1@netzero.net
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CENTER STAGE
Center Stage with Mortgage Insurance Agency BY STEWART MEDNICK
Mortgage insurance is growing in necessity and popularity in today’s mortgage economy. The Niche Report is very fortunate to be able to spot-light one of largest national insurance companies in this industry. Who is Mortgage Insurance Agency, Ltd.? Mortgage Insurance Agency, Ltd. (MIA) is the largest writer Founded by David J. Jackson in 1993 nationally of state licensed surety bonds, errors & omissions and fidelity bond coverage for the mortgage industry. At present we are proud to say that we have over 6,000 mortgage companies as clients. MIA has in-house underwriting authority with many “A Rated” (or better) insurance carriers. By having the ability to underwrite in-house allows MIA to provide quick turnaround for an underwriting decision. MIA also processes all bonds and riders on site. Once the completed application and payment arrives in our office our experienced staff can issue a bond within 1-2 days. Why choose Mortgage Insurance Agency, Ltd.? Mortgage Insurance Agency is a niche orientated corporation that has close relationships with large financial institutions, mortgage bankers and mortgage brokers. In addition, MIA works closely with and insures the industry’s most prestigious warehouse lenders
in the country. MIA only works with “A Rated” or better carriers around the world in an effort to provide the most competitive, flexible, warranted and dynamic insurance solutions to the mortgage industry. MIA is a Strategic Partner of the National Association of Mortgage Brokers (NAMB), a member of the Mortgage Bankers Association (MBA), the Illinois Association of Mortgage Professionals (IAMP), and many other state and industry associations. MIA has two sister companies, Complete Mortgage Licensing which handles mortgage licensure for industry leaders, and Quik Filings which can meet the needs of growing companies who need to obtain registered agent services. Mortgage Insurance Agency has become the mortgage industry’s “one-stop-shop” by providing bonding, licensure, insurance and registered agent services. What is the process to obtain a state licensed surety bond? Much like a mortgage a surety bond must be underwritten. It’s important to note that a surety bond is not an insurance policy it is a line of credit. If a claim is ever paid on a bond reimbursement to the surety is expected. Prior to a bond being issued an indemnity agreement will need to be signed. The surety will require company and personal indemnity in most cases. Indemnity allows the surety to seek reimbursement in the event a claim is paid. There are several items that the underwriter will need to review when a bond is requested. They will want to
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CENTER STAGE see the company financials in the form of the most recent year-end audit along with year-to-date financial statements. The underwriter will accept year-end in-house financials if an audit is not available. A personal financial statement and tri-merge credit report for any owner 10 percent or greater is also needed. Additional underwriting documents needed are Articles of Incorporation or an Operating Agreement, copy of the bond form that the state is requiring and resumes on all key employees. A list of any state licensed bonds currently in force along with the corresponding amount is also needed. Depending on a company’s particular situation there may be miscellaneous items requested by the underwriter. Different carriers have different underwriting rules. Some will allow up to $100,000 in bond aggregate based on credit scores alone, although the majority rely on the complete underwriting package to make a decision on an account’s allowable aggregate. Since Mortgage Insurance Agency contracts with a number of sureties, we are able to spread the risk between two or three sureties for accounts that carry a large bond aggregate. A copy of the Errors & Omissions and Fidelity Bond policy declaration pages are also requested. The underwriter likes to see this coverage because it shows the company is taking active steps to protect against loss. How much does a surety bond cost? Depending on the financial strength of the company, the underwriter will set the rate and the bond will qualify for either a standard rate or a non-standard rate. A company with strong financials that shows liquidity will usually fall within the standard rate of between $6 and $10 per thousand. If a company has a weak financial picture they still may qualify for bonds in one of the non standard programs. We have a non standard program called “Hard to Place” (HTP) that is available in the majority of states and has a flat rate of $50 per thousand. This program does not require collateral. Qualifying for the HTP program depends on how a company answers a series of questions regarding unpaid child support, open bankruptcy, surety claims and state or federal investigations of the company owners. For mortgage companies in particular states that don’t fall into the “Hard to Place” program we have another non-standard program that has rates between $15 and $150 per thousand. A company with weak financials and poor credit scores may be required to post collateral. When collateral is required the carrier usually wants 25 percent to 100 percent of the bond amount or bond aggregate. Once collateral is
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posted, the surety will not release funds until they see profitability for two to three years and a strong balance sheet. Even if a company goes out of business or has a change in ownership, the surety will hold onto the collateral for a number of years due to the tail period of the bond. A tail period is the length of time that a claim can be put on a bond after the bond has been cancelled. Tail periods vary from state to state, but most are in the 1 to 6 year period. If there is a change in ownership, it is important to inform the underwriter immediately because the entire account will need to be re-underwritten. We have seen companies purchased just for the state licenses and bonds, only to find out after the purchase that the new owners do not qualify for the bonds. Are any state bonds more difficult than others to obtain? Yes. There are different factors that cause an underwriter to be tougher in certain states. Some states have forfeiture language, cumulative liability, no cancellation clauses, and excessive amount of claim activity in that particular state. Also the size of the bond as a bond can vary between $5,000 to $500,000. The underwriter will also take into consideration the tail period on a bond. Another factor the underwriter will consider is the state statutes that make up the language of the bond. Some statutes are written to make it easier to file a claim on behalf of the consumer. The underwriter will be more strict when reviewing requests for states that have a high claim history. Are only mortgage companies required to be bonded? No. More states are requiring loan officers to carry a bond in their personal name. A $10,000 bond tends to cost $100 annually and requires simple underwriting. Also, loan processors and loan modification companies are being required. David J. Jackson is the President and owner of Mortgage Insurance Agency, Ltd., Complete Mortgage Licensing and Quik Filings. David has been selling and underwriting bonds for over 30 years. Mortgage Insurance Agency is located at 1125 Mitchell Court, Crystal Lake, IL 60014 and can be reached by phone, 847-458-9900 or via the web (www.mtgins.com), Complete Mortgage Licensing (www.cmlicensing.com) and Quik Filings (www. quikfilings.com).
- continued from page 13
Step 6: Convert Fans to Closings! To monetize your Fan Page, invite fans to webinars, free teleseminars and events (“How to Attract New Listings!, etc.), office meetings, demonstrations of how to do video marketings, etc. – whatever works for you. All of these products and services should be built around your “why.” That is, they should answer the agents’ central question, “Why should I do business with you?” Step 7: Build a Responsive List Fast and Slow! Once you have built your Fan Page and are offering some really cool stuff, it’s time to build your list! There are two methods – slow and fast – and I advise you to use them both. The first step in this process is to find out where agents hang out on Facebook. It’s easy to do! Just go to the site and type in, say, “Michigan Realtors.” When you do that, you will receive responses like “Michigan Association of Realtors, RE/ Max of Michigan,” etc. Then, log on to their fan pages to see how many fans they have and the list of those fans. Now, you can click on each and every one and invite them to be your friend, but that is a tedious and time-consuming process which takes you away from money-making activities. So, what you do is hire a ten-year-old (11, 12, etc.) and pay him or her, say, 10 cents per invite. They are happy to earn the money, and you are happy because you do not have to do this task! Just be specific and tell them how many you want done per day! That’s pretty cost-effective, isn’t it? But, as I said, it’s the slow method. The fast method is to “buy friends” through the use of Facebook ads! For example, you can advertise your Fan Page with titles like, “Free Help for Real Estate Agents,” etc. And these ads work! For example, in one of our ads, we attracted 181 fans in 1 week for a total of 464 fans…572
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visits in a week. What other sites do you have that attract 572 potential referral partners in a week? And we placed an ad for my friend’s Fan Page! We spent a total of $293, resulting in 523 fans. Each fan cost around 50 cents! Wow, talk about cost-effective! The great thing about Facebook ads is that you can target your audience with laser-like focus if you want to do consumer direct campaigns. Here’s an example: Assume you wanted to target Disney employees.
Walt Disney Company Estimated reach: 14,000 people • Who live in the Florida • Age 25 & older (adults buy houses) • Who graduated from college (higher income) • Who work at the Walt Disney Company or Walt Disney World Dolphin Hotel • Who speak English (U.S) (since I don’t speak any other language; if you’re bilingual, specify Spanish, French, etc. as well) Can you see how specific you can get with these ads? It’s fantastic! In a future article, I will show you how to make Facebook ads that suck (and get you branded, in the process) and how to use Internet services (Box.net, BudURL, etc.) to optimize the whole Facebook marketing process. Right now, I want you to sign up with Facebook immediately and start making money! Carl White is the Chief Strategist for The Mortgage Marketing Animals. Mr. White specializes in drastically increasing Loan Officers' and Realtors' business using new and tested strategies made for today's market. CarlWhite@ TheMarketingAnimals.com.
Buildmyscores.com Who is Build My Scores?
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www.buildmyscores.com Phone:206-377-9991 Email: joseph@buildmyscores.com
NICHE REPORTS
Prime & FHA Flagstar Wholesale Lending (866) 945-9872
NetMore America, Inc. 877-490-3140
Focus on Broker Communication, Purchases, FHA experts, CRM's as additional support
415-254-3279
Our wholesale lending division caters to MORTGAGE BROKERS that wish to send loans for the purpose of providing excellent service to their borrowers.
United Wholesale Mortgage
FHA & Conventional lending
Pacific Union Financial
NEW
Offer a full array of FHA and Agency products, coupled with industryleading underwriting turn times and technology
800-981-8898
COMMERCIAL GreenLake Real Estate Fund, LLC
NEW
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
Acquisition, Refi’s, and Development Commercial Loans. Your source for international and domestic funding.
MMG Capital LLC
Asset-based Hard Money Loans; Nationwide Lender
310-295-1121
Porter Bridge Loan Company
NEW
205-397-4068
Porter Bridge Loan Company is a nationwide direct hard money lender currently lending in every state except AK, HI and MI; we underwrite loans in 24-48 hours and issue a letter of intent within 72 hours. Loan amounts from $250,000 to $5 million.
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 lender’s information on products, program, procedures, representations, and warranties for details.
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June 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)
First Mount Vernon
Minimal documentation required, Combined Loan-to-Values to 105% - DE, MD, VA, DC, NC, SC, GA, FL
(866) 908-FMV1 (3681)
NEW
GreenLake Real Estate Fund, LLC 310-462-4637
Manaseh, Epharim & Associates 770-840-0112
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! Direct Lender with fast closings. Your source for international and domestic funding. Asset-based Hard Money Loans; Nationwide Lender
MMG Capital LLC 310-295-1121
NEW
Porter Bridge Loan Company 205-397-4068
Porter Bridge Loan Company is a nationwide direct hard money lender currently lending in every state except AK, HI and MI; we underwrite the loan in 24-48 hours and issue a letter of intent within 72 hours. Loan amounts from $250,000 to $5 million.
CONSTRUCTION NEW 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 lender’s information on products, program, procedures, representations, and warranties for details.
TheNicheReport.com
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Service provider classifieds
Service Provider Classifieds Compliance and Audit
NEW
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
HTDI Financial 877-877-4834 opt 5
Start your own credit repair company with our state of the art tracking software and dispute outsourcing options. Top notch support by a dedicated Account Expert.
NEW
CreditCRM 877-256-8162
The only full credit repair business in a box
NEW
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
50
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.
June 2010
Service provider classifieds
technology a la mode 1-800-252-6633 ext 309
Websites and marketing tools for real estate professionals
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 – from loan marketing through closing.
NEW
DocMagic 800-649-1362
The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges.
NEW
Lender Processing Services (LPS) 800-991-1274
LPS is the nation's leading single-source provider of integrated data, technology, mortgage processing services, settlement services, mortgage performance analytics and default solutions.
NEW
MBSauthority.com 800-264-7135
Live MBS data, analysis and recommendations. Join us for a FREE trial.
NEW
eMagic 800-440-1625
eMagic and Myers provide affordable online mortgage loan origination solutions for banks, credit unions, mortgage bankers and originators to help automate and simplify their workflow, while greatly reducing costs associated with loan origination.
NEW
Xetus 877-GO-XETUS
Provides a powerful, easy-to-use loan origination system that streamlines mortgage loan processing.
NEW
Appraisal & AMC 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.
TheNicheReport.com
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Service provider classifieds
marketing & lead Gen NEW
CMG 702-290-9210
OSI Express 866-674-1999
NEW
Mailer Leads (866) 783-4053 ext 14
NEW
Premier Advantage Marketing Tom_emmerson@budco.com Quick Qualifier Software (888) 684-9273
Get certified to sell the most powerful loan in the mortgage business today – The Home Ownership Accelerator – www.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.
Imagine having 50 prospects per loan officer that are already pre-approved calling you within 10 days from today! Our mailers are FICO and AVM based and are prequalified based on credit data. Prospects will be ready to finance when they call you! Powerful, targeted, personalized direct mail campaigns. Specializes in lead generation programs for the mortgage industry. www.ThinkPAM.com
Prequal & Marketing Software for Loan Officers. Use our software for Conventional, FHA & VA closing cost worksheets. Make Open House flyers with finance options and color pictures. Easy to learn and easy to use!
Branch Opportunities NEW
American Pacific Mortgage 866-625-9352
Join American Pacific Mortgage and become a direct lender with the option of brokering
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
Gateway Funding Diversified Mortgage Services LP 800-355-5626 x1224
One of the largest privately-held mortgage companies in the United States. We are licensed in most states and have office locations across the country
Guaranteed Home Mortgage Company, Inc. 888-572-3602
Specialized Retail Platform for Experienced Loan Officers
NEW
Sierra Pacific Mortgage 800-447-3386
Retail Branches and Wholesale Lending Nationwide. Privately owned specializing in residential conforming, FHA, VA and Jumbo. Wholesale: www.spm1.com Retail: www.spmloans.com
NEW
The Money Store 877-885-4953
Are you looking for a challenging and rewarding position with a world-class leader in the mortgage industry? Make the Money Store your destination.
NEW
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June 2010
LENDER & RESOURCE DIRECTORY
All Credit Considered Mortgage B&C LENDING IS BACK www.weapproveloans.com Contact: National Sales Manager Phone: 240-314-0399 X 19 Email: newloans@accmortgage.com
Best Rate Referrals Specializes in direct marketing services www.bestratereferrals.com Phone: 800-811-1402
a la mode, inc. Websites and marketing tools for real estate professionals www.alamode.com Phone: 1-800-ALAMODE Email: info@alamode.com
Bismark Mortgage Company Residential Construction Loans www.bismarkmortgage.com James Minarsich 800-350-7199 x106 loans@bismarkmortgage.com
American Pacific Mortgage Corporation One of the largest independent retail banking and branching companies in the country www.apmortgage.com Contact: Melissa Arntzen Phone: (866) 625-9352 Email: info@apmortgage.com
Applied Business Software Origination and Servicing software for hard money lenders. www.TheMortgageOffice.com Phone: 800-833-3343 Email: leadsmanagement@absnetwork.com
Appraiserloft A leading provider of comprehensive collateral valuation products targeted towards the mortgage lending, servicing, and insurance industries. www.appraiserloft.com Phone: 877-229-7799 Email: information@appraiserloft.com
ATTENTION LENDERS!! Buyers of Distressed Debt Email: NicheBuyers@gmail.com
Buildmyscores.com The leader in total credit restoration services. We’re committed to providing you with faster results and a greater opportunity for success, #1 trusted resource for credit restoration services. www.buildmyscores.com Phone: 206-377-9991 Email: joseph@buildmyscores.com
Calyx Software Affordable software that streamlines and optimizes all phases of the loan process—from loan marketing through closing. www.calyxsoftware.com Phone: 877-862-2599 email: 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 Contact: John Cathro / Mike Lee Phone: 702-290-9210 / 925-708-2236 jcathro@cmgmortgage.com / mlee@cmgmortgage.com
CreditCRM THE ONLY full credit repair business in a box www.creditcrm.com Phone: 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 Phone: 800-649-1362
eMagic Providing automated online origination solutions www.emagic.com Contact: Chad Northington Phone: 800-440-1625 Email: chad_northington@mgic.com
ENTITLE DIRECT Savings up to 35% or more on title insurance in 30 states www.EntitleDirect.com/mortgage Phone: 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 Phone: 703-823-6800 Fax: 703-997-2499 TheNicheReport.com
53
LENDER & RESOURCE DIRECTORY
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
Freedom Mortgage Branch Opportunities www.fmbranch.com Phone: 800.220.9498 Email: info@fmbranch.com
Gateway Funding Diversified Mortgage Services L.P. www.gateway-funding.com Contact: Randy Hutchison Phone: 800-355-5626 x1224 Email: rhutchison@gateway-funding.com
GreenLake Real Estate Fund Private Commercial Lender in CA & NV Contact: Kamau Coleman Phone: 310-462-4637 Email: kcoleman@greenlakefund.com
Guaranteed Home Mortgage Company, Inc. Established and well-funded Mortgage Banker since 1992 www.ghmc.com and www.joinguaranteed.com Contact: Kelley Berkheiser or Louis Tesoriero Phone: (888) 329-GHMC Email: ltesoriero@ghmc.com
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June 2010
HTDI Financial Provides credit repair business options to increase revenue www.outsourcedisputes.com Phone: 877-877-4834 opt 6 Email: sales@htdifinancial.com
MMG Capital LLC Asset-based Hard Money Lender; Nationwide www.mmgcap.com Contact: Chris Gleason Phone: 310.295.1121 (ext. 301) Email: chris.gleason@mmgcap.com
Lender Processing Services, Inc. (LPS) Leading real estate services and technology provider. www.lpsvcs.com Contact: Jean Bobin Phone: 800-991-1274 Email: mortgage.marketing@lpsvcs.com
The Mod Post www.TheModPost.com Phone: (877) 812-4327
Mailer Leads Lenders and Brokers who use our mailers are not only surviving -- they are thriving www.MailerLeads.com Phone: (866) 783-4053 ext 14
The Money Store Looking for a challenging and rewarding position with a world-class leader in the mortgage industry? Make the Money Store your destination. www.themoneystore.com/careers Email: hr@themoneystore.com
MBSauthority.com Live MBS data and analysis, lock recommendations, newsletters, and more! FREE trial! www.MBSauthority.com Contact: Barry Corse Phone: 800-264-7135 x 2 Email: bcorse@mbsauthority.com
Manaseh, Epharim & Associates Domestic and international financier, offer up to 100% financing to qualified investors/ borrowers www.meandassociates.com Contact: R.D. Walker Email: info@meandassociates.com Phone: 770-840-0112
The Mortgage Lender Implode-O-Meter Tracking the Housing Finance Breakdown... the WHOLE truth www.ml-implode.com
Mortgage Insurance Agency, Ltd. State Licensed Surety Bonds, Errors & Omissions, and Fidelity Bond coverages for Mortgage Bankers and Mortgage Brokers nationally www.mtgins.com Contact: David Jackson, President Phone: (866) 355-9944 Email: info@mtgins.com
LENDER & RESOURCE DIRECTORY
National Valuation Service, Inc Comprised of thousands of fully vetted Independent Business Owners who as Appraisers, provide valuation and consulting services in 50 states Phone: 786-581-9171 Email: info@nvs.coop
Porter Bridge Loan Company A Nationwide direct hard money lender www.porterbridgeloan.com Contact: Jeff Latham Phone: 205-397-4068 Email: jlatham@portercap.net
NetMore America, Inc. Next Gen Mortgage Banker www.netmoreamerica.com Contact: Karstan Lovorn Phone: 877-490-3140 Email: contactus@netmoreamerica.com Premier Advantage Marketing Specializes in lead generation for the mortgage industry www.ThinkPAM.com Email: Tom_emmerson@budco.com New Jersey Association of Mortgage Brokers/ MBA of New Jersey www.njamb.org 973.379.7447
OSI Express Not just mortgage flyers and open house flyers, We are a powerful financing analysis tool for refinance and purchase, greatly helping loan originators www.OSIExpress.com and www.EZMortgageFlyers.com Contact: OSI Customer Care Phone: 866.674.1999 Email: customercare@osiexpress.com
Pacific Union Financial Multi-State Mortgage Banker www.loanpacific.com Contact: Evan Stone Phone: 415-254-3279 Email: evans@loanpacific.com
Quality Mortgage Services, LLC Full Service Mortgage Compliance Solutions www.qcmortgage.com Contact: Chip Langley Phone: 615-591-2528 Email: info@qcmortgage.com
Quick Qualifier Software Prequal & Marketing Software for Loan Officers www.mortgagesoftware.com Contact: Thor Skonnord Phone: (888) 684-9273 Email: thor@mortgagesoftware.com
RateLink Providing mortgage professionals with timely and accurate data as a means to a competitive advantage www.ratelink.com Phone: 800-938-5193
Sierra Pacific Mortgage Retail Branches and Wholesale Lending Nationwide Phone: 800-447-3386 Email: info@spm1.com
Mortgage Social Media Marketing The Premiere Book on Social Media For Mortgage Finance Professionals! MortgageSocialMediaMarketing.com/ebook Email: naomi@naomitrower.com
United Wholesale Mortgage FHA & Conventional lending www.uwmco.com Contact: Allen Beydoun Phone: 800-981-8898 Email: abeydoun@uwmco.com
Waquis We provide HUD Auditing and QC on every loan type www.waquis.com/qc Contact: Joe O'Neill Phone: 310-696-9515 Email: joe@waquis.com
Xetus Provides a powerful, easy-to-use loan origination system www.xetus.com Contact: Scott Stein Phone: 650-237-1225 x123 Email: sstein@xetus.com TheNicheReport.com
55
Attention sellers And privAte lenders!
BRINGING UP THE REAR
- continued from page 58
We are buyers/ owner operators actively seeking NURSING HOMES We will consider all opportunities including: Hard Asset purchase
(Skilled Nursing Facilities/CCRC)
JV opportunities that require cash infusion Open leases that need operators Lending needs in this arena We prefer 100+ beds, 1-2 story and all states considered (exception CT and MA) We will also consider Nationwide Commercial Opportunities such as: Urban retail Apartment Bldgs Fractured Condos Office Hotels
nicheBuyers@gmail.com
civil unrest… bad. And they disbanded the country’s Supreme Court… also very bad. But, if you remember the footage on CNN, you had to kind of envy a country where they get to hit their politicians with sticks, right? Days after their day in the Senate, in an interview with Michelle Norris, Blankcheck said, referencing Goldman’s buying and selling of securities, "we are the market maker, helping people to acquire the kinds of risks they want to have," he said. "The clients we have are not deciding to buy or sell something because of what our position is." Oh really, Lloyd? Okay, let’s say he’s right, Goldman clients aren’t deciding to buy or sell having anything to do with what position Goldman is taking. Then why not disclose Goldman’s position, Lloyd? You know… in the spirit of disclosure, and all. My favorite line of the day, unquestionably, came from Democratic Senator, Claire McCaskill, when she said quite seriously to Blankcheck and the Boys from the Bank: “You are the bookie, you are the house. You have less oversight than a pit boss in Las Vegas.” And that would be funny, if it weren’t so monumentally sad. Here’s what’s so frustrating about Lloyd Blankfein and the bankers that broke the world: They made inconceivable fortunes on the downfall of our entire economy. Millions have lost jobs, millions more have lost their homes, taxpayers are on the hook for an amount that’s in the trillions… and these guys got bonuses… cashed out… Ka-ching! And they did so on the backs of U.S. taxpayers. How’s this for insult to injury: While Blankfein was testifying to the Senate Sub-Committee, he made $2.8 million! Yes, it’s true, according to the New York Daily News. He owns 2,035,364 shares, so every time Goldman stock goes up a penny, the man earns roughly $20,000, and the day he testified, the stock went up more than a buck, from $151.63 to $153.04. By Wednesday of that week, the stock was up by $5.38, so that’s about $10 million, which is not bad for a boy from a working class neighborhood of Brooklyn. Look, Goldman and Blankfein can claim until the cows come home that they didn’t bet against the housing market, and their clients, but… they did precisely that. I know it, Senator Levin and the rest of his committee knows it, and everyone else should know
BRINGING UP THE REAR it too. They weren’t alone, all of the Wall Street bankers did the same, and they all got rich… at the taxpayers’ expense. Because the fact is that without us taxpayers, Goldman would have very likely gone bye-bye in 2008. In October of 2008, after getting $12 billion from the taxpayers in bailout funds, they paid out more than $14 billion in bonuses at that year’s end. Last year, they set aside something like $90 billion for bonuses. And how much did they get from our bailout of AIG? I don’t even care to count it anymore. What the bankers have done here is inestimable in terms of the harm they’ve caused, and yet they continue to have political clout at the highest levels of our democracy. Goldman Sachs Chief Lobbyist is now Treasury Secretary Tim Geithner’s Chief of Staff. Goldman Partner, William Dudley, replaced Geithner as President of the New York Federal Reserve. During the first seven months in office Geithner’s calendar shows more than eighty contacts with Lloyd Blankcheck, Jamie Diamonds of JPMorgan Chase, or Citigroup’s CEO Vikram Pandit, who’s name sounds like a Bond villain. (I picture him petting his cat as he speaks.) Geithner had more contacts with Blankcheck than he did with Senate Banking Chair, Christopher Dodd. As Simon Johnson wrote in his recently published book, Thirteen Bankers, which I absolutely loved, by the way, “In a world where access is a prerequisite for influence, Wall Street had the access to the people that mattered, when it mattered.” Credit default swaps (“CDSs”) became a way to “go short” on the sub-prime mortgage market. You could package bonds you knew would default and then buy credit default swaps on those bonds. For $200,000 a year for ten years, you could buy a CDS on a $100 million AAA rated bond. The most you could lose was a few hundred grand, but when the bond defaulted, and you knew it would because you built it, you hit the $100 million jackpot.! Woohoo! You didn’t even need to own the bond to insure against its default. And if that wasn’t bad enough, the Wall Street crowd didn’t stop at that perverse level of financial innovation, as they like to call it. Oh, no. They securitized everything they could get their hands on, turning almost pure crap into triple A rated mortgage backed securities, turned those mortgage backed securities into CDOs, thus turning garbage into triple A rated gold once again, and then they created “synthetic CDOs” that had nothing inside them
but CDSs. They built a house of cards, placed huge bets on the cards falling down, and then went and switched on a giant fan. Senator Levin made that as clear as could be, and I salute him and his fellow committee members. At the time of this article going to print, the SEC has referred the Goldman case to the Justice Department for criminal prosecution. Perhaps someone can now be held accountable, instead of the borrowers accused of buying homes they couldn’t afford. “If they’re too big to fail, they’re too big,” says Alan Greenspan on October 15, 2009, who, after reading his book, I still like… so sue me.
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.
If You Know the Rules -You’ll Rule the Market! ... because it’s not about rates anymore -it’s about knowing how to get the deal closed!
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BRINGING UP THE REAR
Lloyd Blankfein CEO, Goldman Sachs BY MARTIN ANDELMAN
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his column made possible by the people who brought you financial Armageddon. At the risk of being accused of going after the obvious choice for this month’s posterior player, this “Rear” just had to be Mr. Llyod Blankfein, CEO of Goldman Sachs. I mean really… who would you have chosen? Did you watch his testimony in front of the Senate Subcommittee? Can you say “synthetic CDO”? Lord Blankcheck testified that Goldman’s clients' trusting the firm was essential to the firm’s success. He then went on to reject any suggestion that Goldman might have the teensy tiniest obligation to disclose the fact that it was betting big against the bonds, and I use that term very loosely, it was selling to investors. After that, Baron Blankcheck went with the all-too-familiar refrain that he just couldn’t answer any other questions about the “ins and outs” of the situation, under the rationale: “Because I just don’t know more than what I’ve heard from Mr Tourre’s testimony.” He doesn’t know more than that? Wow. See, now I would have thought that in order to be in the running for Goldman’s Chief Executive slot, you would need to know at least a scosh more about how the firm was making billions of dollars while the housing market was causing the entire U.S. economy to circle the drain, than what we heard during one day’s testimony by some 31-year old, junior banker known as Fabrice “Fabulous
Fab” Tourre. But, apparently not. Oh well, live and learn, as my mother likes to say. It was truly something to behold. The Senators grilled various Goldman execs about the firm’s role in the financial crisis, but Baron Blankcheck remained steadfast in denying that Goldman had taken a “short” position against the mortgage market in 2007. He also denied that there was any fraud involved on Goldman’s part. So, let me get this straight… he doesn’t know anything about the “ins and outs,” as he put it, but yet he’s absolutely positive that the firm didn’t take a short position against the mortgage market in ’07, and knows for sure that there was no fraud involved. Senator Levin, the Committee’s Chair said: “And you want people to trust you? I wouldn’t trust you.” Well, sure… Carl wouldn’t trust him, but that’s only because a 10-year old could tell you that the man is lying through his teeth. This is why I think that we’ve gotten too civilized over here… we’ve let decorum grow out of hand. I’m thinking of starting a movement called: “People in Favor of Hitting Bankers With Sticks.” We could call it: PIFOHBWS. Just think how it would have looked… Blankcheck would have said: “Gee, I couldn’t tell you about the ins and outs of those billions we made,” and someone would have walked over and whacked him with a good size stick. Now that’s what I call compelling television. Remember a few years back… when Pakistan was having all the political turmoil… bad. And there was - continued on page 56
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June 2010
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