TNR - September 2009 by The Niche Report

Issue 027 September 2009 TheNicheReport.com 12282 FWL_7104PC_L01_OL.pdf

8/25/09

6:08:10 PM

MDIA 10 The Quality 16 Control Dilemma Can you absorb repurchase losses?

How long can we delay the closing act?

Your Company 46 NAR's Chief 26 IsS.A.F.E.? Economist (Ret.) You need to be identified.

David Lereah A liar in economist's clothing.

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CONTENTS

Issue 027

September 2009

NICHE REPORTS agency & FHA

pg 36

MDIA

REVERSE

pg 37

Karen Deis Bending over backwards to conform to the new rules.

HARD MONEY & NON-PRIME

pg 38

JUMBO

pg 39

CONSTRUCTION/REHAB

pg 40

COMMERCIAL

pg 41

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com MANAGING EDITOR Stewart Mednick stewart@nichereportonline.com

The Quality Control Dilemma

Joshua Weinberg Business Analyst Calyx Software You need to be identified.

George H. Marentis President/CEO COMPLIANCE made Simple, LLC Can you absorb repurchase losses?

Pending RESPA Requirements on the Good Faith Estimate Joel Horn President mortgage spirit This Education is in Good Faith.

Consumer Education, Creating Sales Ready Leads Bill Rice founder and CEO Kaleidico.com This type of 'home' schooling can cost a mortgage.

September 2009

Is Your Company S.A.F.E.?

Center Stage with Quick Qualifier Software The Niche Report The Niche Report talks with Thor Skonnord, co-owner and designer.

DEPARTMENTS

09 28 34 43 46

NOTE FROM THE FOUNDER/ letters to the editor RULES & REGULATIONS HEADLINES TIP OF THE MONTH LENDER & RESOURCE DIRECTORY Bringing up the rear

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@nichereportonline.com ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com Advertising Reps Jessica Grizzle Jessica@nichereportonline.com Mark Moulton mark@nichereportonline.com Production Manager Henry Suchman henry@nichereportonline.com Production Assistant Dawn Exner dawn@nichereportonline.com ADVISORY BOARD Randall Marquis Senior Editor, The Mortgage Lender Implode-O-Meter COLUMNISTS Martin Andelman Martin@nichereportonline.com Stewart Mednick Stewart@nichereportonline.com Karen Deis www.mortgagecurrentcy.com CONTRIBUTING AUTHORS Joel Horn George H.Marentis Bill Rice Joshua Weinberg

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

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NOTE FROM THE FOUNDER

Welcome to our Legislative & Regulatory issue of TNR. As we all knew, change was coming down the pike. And as loan originators, we will all be affected by these changes. This issue is packed full of information, contributed by some of the most respected and trusted insiders of our industry, to help you navigate these changes. Please pay attention. Keep up the fight,

Robert Pegg

Letters to the Editor The Kids Don’t Stand a Chance by Martin Andelman I just wanted to reach out and say that I enjoyed your article about Web 2.0 technologies and the power that they possess for businesses. I am a startup mortgage price management software company for mortgage bankers and it is imperative to keep my overhead as low as I can and with all the cheap and easy to use web 2.0 services that are available, I’m able to do so at a VERY low cost. I've outlined some of them below for your convenience: - Google Apps http://www.google.com/a I can use this service for email, docs, spreadsheets, PowerPoint presentations, websites, chat, and much more and its 100% free! It syncs to my blackberry, my email application (Mozilla Thunderbird), and I can store all my marketing media in there online docs service for free and look like a multi-million dollar corporation - ZenDesk http://www.zendesk.com I’m a software company, so I need a help desk. This service is $9/mo for 1 agent. Yes, that’s a 9. Amazing! Enterprise level support for $9/mo. Another great service is www.getsatisfaction.com - Freshbooks http://www.freshbooks.com Lets be honest, I invoice my clients on a monthly basis. With this service at around $20/mo, I can have professional invoices sent automatically and have online payments accepted. Quick, easy, cheap. - Twitter http://www.twitter.com You already mentioned twitter but I thought I would reiterate that its a way to make a company "human" There are a million others out there but I’m a software company and if you add up all the features I mentioned above, I’m spending $29/mo and I’m providing enterprise level service and support for the money that gets stored in my "keep

the change" savings account from my bank! This allows me to keep my cost down and my customers happy. Thanks again for a GREAT article. Mark Ramirez CEO, Priceweaver

Bringing up the REAR: Edward Yingling by Martin Andelman Thank you for writing the article about the hubris being demonstrated on the part of the federally chartered depository institutions and banking associations. I am SICK of these guys! Attached you will find an editorial by Jamie Dimon that appeared in the WSJ a few months ago. You will also find PROOF that all these guys participated in subprime originations. "Ding-a-ling" said virtually the same thing that Dimon said. Did they take a How to Point the Finger class together? EY - "banks watched as mortgage brokers and others MADE LOANS..." WHAT'S WRONG WITH THESE GUYS? Brokers can't MAKE loans. JD - "What many people forget is that hardly any commercial banks regulated by the OCC, offered these products. Rather, these loans sprang from lightly regulated mortgage brokers and thrifts." SPRANG FROM BROKERS? WHERE DID BROKERS GET THE PRODUCT? PLEASE keep getting the word out. These guys are ALL in denial, pointing fingers and dumb and arrogant enough to make stupid proclamations that can be proven false. Would love your thoughts! As you can tell, you hit a nerve. Deb Killian, CRMS Charter Oak Lending Group, LLC

TheNicheReport.com

THE QUALITY CONTROL Dilemma Can you absorb repurchase losses?

by George H. Marentis

n today’s lending environment, the quality control process is more important then ever before. Whether you’re a large or small mortgage lender or broker, the quality control process needs to be a key part of your daily business. As foreclosures continue to mount, loans are being kicked back for a variety of reasons even when you think your company has done its due diligence with sound underwriting. In this market, you need to ask yourself, can we absorb repurchase losses, because a single repurchase can mean the loss of thousands of dollars, the loss of a warehouse line, or worse yet, the closure of the business. Quality Control is often viewed as insignificant to the lenders and broker’s production process. The results of the QC process, although reported to management, get lost or pushed back in the day-to-day effort to originate more loans. While some lenders and brokers consider the establishment of a quality control department to be an unneeded expense, others view the cost as an expense that has a positive impact on a company’s bottom line. Some lenders and brokers have considered the use of an Automated Underwriting System (AUS) as their quality control department. This is not acceptable and may lead to major issues for the lender and broker. The AUS system is only as good as the data being provided to generate the approval. An AUS approval is not a guarantee that the loan will not ultimately end up as a repurchase request months or years down the line. A good in-house or outside independent third party quality control program would ensure that all the AUS requirements are satisfied in order to provide for a loan that meets the investor’s ultimate requirements for purchase. A good quality control review is not only looking for

September 2009

fraud, but also at whether the loan meets a wide variety of regulatory requirements. As the regulatory environment continues to change, not only do you need to be concerned with the typical underwriting issues relating to credit, income, assets, property, rescission, APR etc. you will now need to be concerned with new disclosure requirements regarding RESPA, Regulation Z, Home Valuation Code of Conduct and the licensing requirements soon to be effective under the SAFE Act. Violations of any one of these regulations or problems with the quality of the underwriting package may cause the loan to fall into a potential repurchase scenario. Even more concerning is the fact that where there is one file with regulatory or underwriting errors, there generally is more. In reviewing loan files, the QC review process will review the typical areas that are known to be of concern and the source of numerous repurchase demands. The following are just a few areas of concern: • Verifications of Income falsified or distorted • Verifications of Deposit falsified • Fraudulent bank statements • Fraudulent income documents (paystubs, W-2’s and tax returns) • Appraisals with false comparables or improper adjustments used to justify a highly inflated value. • Inaccurate disclosures or the failure to provide disclosures timely. • Flips - property is acquired and resold in a very short time frame, often to a related party. • Sending verifications to P.O. Boxes or unsubstantiated addresses. • Fraudulent gift letters • “Straw buyers” - Using someone as a buyer to obtain a loan only to facilitate a transfer of the property either away from a builder or to someone who otherwise would

not qualify for the loan. • Improper use of social security numbers. • Incorrect data input to automated underwriting systems. In order to satisfy the quality control requirements of investors, warehouse lenders and state regulators, lenders and brokers can either use an internal department or outsource the process to an independent third party. Outsourcing can often relieve a large amount of the effort expended in doing the quality control work and allow the lender’s staff time for reviewing issues, training and implementation of changes that can improve loan quality. Outsourcing makes what would be an otherwise fixed cost vary based on the volume of loan production, thus allowing the monthly cost of quality control process to increase or decrease based on the lender's loan volume. Another advantage to outsourcing the quality control function is the objectivity brought to the process by an unrelated third party. In-house audits can create questions about the independence which needs be present in the review and disclosure of errors along with the potential severity of the finding. Outsourcing also avoids personality conflicts within the company that can be an issue between co-workers. A quality control plan whether done by an in-house department or independent third party should at a minimum: • Consist of a sampling of at least 10% of the monthly loan production or a valid statistical sample for those large lenders. • Verify for accuracy the information obtained in the loan file. • Review the accuracy of the data used to obtain the Automated Underwriting approval. • Verify that the requested items for Automated Underwriting approval have been satisfied as requested. • Identify whether any there are any problems with processing, underwriting and closing. • Develop an action plan with management to correct any identified problems. • Review and respond to repurchase demands. Part II of this article will deal more directly with anticipating and responding to repurchase demands. George H. Marentis is President/CEO of Compliance Made Simple, LLC, a company that provides licensing services and other compliance related services to the mortgage lending industry nationwide.

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Training to Succeed under Pending RESPA Requirements on the Good Faith Estimate This education is all in Good Faith. by Joel Horn

he complex changes involving HUD’s reformed Good Faith Estimate (GFE) slated for Jan. 1, 2010, has left many mortgage originators uneasy. The significant change brings a lot of discord as many originators struggle to prepare for the challenging requirement to define their revenues in terms of a specific dollar amount instead of the current industry practice of defining their revenue in percentages. The transition takes time and must be handled with care. While many originators resist changes dictated by the new “final rule” of the Real Estate Settlement Procedures Act (RESPA), such change is inevitable and it is imperative that they prepare by implementing a formal educational process. The training involved for the pending RESPA requirements should begin at least 90 days prior to the ruling going into effect. One of the best ways for the owner of a brokerage or mortgage banking organization to educate their entire staff is to follow a three-tiered, 90-day approach.

Phase 1: Introduction Phase one takes place during the first 30 days and focuses on getting the staff accustomed to the technical aspects behind the new GFE. It is vital that this familiarization process has the full support from the top of the organization to holistically change the organization’s language and mindset. Making such a major change, where revenue discussions are about “dollar amounts” rather than the traditional “percentage points” will not happen any other way. The staff should form a formal, ongoing training program that comprehensively explains the new standard three-page GFE and its overall impact on the

September 2009

organization and the organization’s customers. Encourage brainstorming, goal setting, team motivation and morale boosting among staff. For branches located outside the main office, bring meetings to them through WebEx presentations to ensure the training reaches everyone at once and the message and teachings are consistent. Print and distribute a copy of the revised GFE for all staff and ask them to review the layout. Also, print and distribute a copy of the old GFE form to compare and contrast easily. Highlight major differences, explain each difference’s overall impact on the lending process and address any questions among your employees during this phase. The curriculum behind these lessons should focus on fully explaining the GFE’s complicated categories: information that must match exactly or a “zero tolerance” for difference (i.e. revenue from origination, YSP, fees, discount points and transfer taxes) and information regarding HUD’s “10 percent tolerance” for difference (i.e. title fees, recording fees and other third-party fees). The mortgage company should also understand that certain information is exempt from the tolerance sliding scale, including prepaid property tax and insurance. Do not assume the staff can educate themselves on these topics or you will find them unable to cope with the changes when they are implemented in 2010.

Phase 2: Learning how to communicate with borrowers The second 30-day phase provides training for staff on how to communicate with borrowers about the new GFE form. Rather than making the mandatory training session something your employees loathe attending, trying to come up with entertaining and interactive methods to share the information. The company’s ongoing training sessions should incorporate role-playing and interactive gatherings

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into the curriculum during this phase. Divide the staff up into groups of two (an originator and a “borrower”), providing borrower loan scenarios and forcing each originator to fully disclose his or her earnings. While this portion of the new GFE is highly uncomfortable, the full transparency behind the act will help build trust between the mortgage originator and the borrower, who may be more comfortable with the origination process as a result of the more candid and straightforward nature of the GFE form. If borrowers are more comfortable and less anxious, they tend to be more willing to stay with their original originator and keep the file in house. This added pressure on the originator can produce a healthy trickle-down effect for the industry. With such increased oversight, HUD is taking active measures to streamline the disclosure process to ensure the borrower is shopping for the most appropriate loan. The state of the borrower parallels the state of the mortgage industry…it must begin with a healthy borrower to become a healthy industry.

Phase 3: Double disclosure process The last 30-day phase calls for an extra hands-on activity for the originator. The originator should take the knowledge gained from the first two phases and apply it to his or her next business engagement, implementing both the old and new GFE requirements. This “double disclosure” process is the best way for a loan originator to grasp and comply with RESPA’s new guidelines before mandatory compliance on Jan. 1. Practicing with the new GFE uncovers any questionable issues or problem areas before the new law is in effect and the onus is on the originator. When the law is finalized, if the “zero tolerance” information listed on the GFE does not match exactly with the information listed on the HUD1 at closing, the originator will have to cure or return the difference. This means that the burden is on the originator or lending institution to hold the risk of any tolerance loss. This third phase to the formal education process is by far the most important. It enables the loan originator to figure out all the kinks before the new risks are imposed. Although it is more time intensive (HUD estimates the new GFE is an added 10 minutes or more per loan), it is better to become fully conversant with the new form to avoid any unnecessary repercussions. Post-implementation After January 2010, origination executives might consider performing spot audits or other systematic reviews 14

September 2009

to make sure that there are no problems with the documents after the legislation takes effect. It is beneficial to have constant checks and balances to ensure the company remains in full compliance. It is crucial for mortgage companies to arm themselves with all the tools necessary to thrive under the new regulatory environment. By giving your organization a 90-day head start, you increase the odds of maintaining productivity and clearing away any confusion. Through a dedicated training program, your company begins thinking like a unified body and can better understand how to effectively and successfully operate in a completely new way. Joel Horn is the president of Mortgage Spirit, a Denverbased boutique technology provider for the mortgage industry that offers profitability and revenue management technology. The company includes all RESPA reform considerations, maximizes the profitability of each loan and enables users to better manage the origination process in order to make loans more saleable in the secondary market under the new, more restrictive HUD environment. For more information, visit mortgagespirit.com.

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MDIA

Bending over backwards to conform to the new rules by Karen Deis

our world is being turned upside down with this one—especially if you are a broker! But wait, this affects EVERYONE—bankers, lenders, creditors—anyone who provides closed-end mortgage loans. The Mortgage Disclosure Improvement Act was created for 3 reasons – uniformity, disclosure, and comparison-shopping! You will also find changes in GFE and HUD 1 and HUD 1A. Oh, by the way, more waiting periods kick in. MDIA should be renamed to “How Long Can We Delay the Closing Act”! In fact, to be a little more

technical, MDIA defines and consolidates the information from TILA, HOEPA, HERA, EESA and Reg X and Reg Z (It’s published in Federal Register Vol. 74, No 95, May 19, 2009 if you want to research on the internet, download and read.) It’s designed to clearly answer the questions borrowers have when applying for a mortgage and gives them the ability to compare estimates—both with your competitor’s rates and fees and a second disclosure if the terms, fees or APR have changed by more than the tolerance levels. MDIA requires a “waiting period” between the times when the disclosures are given, fees are paid (other than the credit report) and the closing date of the mortgage transaction. The Federal Register

specifically says that creditors are the entities that are supposed to provide the GFE’s and re-disclosures. Creditor is defined as the one funding the loan. If you are a mortgage broker, you are at the mercy of the creditor/ lender to send them to your borrowers. Standardized forms now required – GFE (used for disclosure and re-disclosure) but the big addition here is a section where the consumer can use “The Shopping Chart” to comparison-shop with other lenders. The HUD 1 contains basically the same line items—but now includes the loan terms on page three. Now the biggie, the HUD 1A – the GFE is compared to the closing costs so the consumer can easily decipher what was quoted on the disclosure versus the actual closing costs.

4. Transactions that require MDIA Disclosures a. Purchase – both primary and 2nd home i. Condos, Townhomes & Co-Ops ii. No-cost loans b. Construction loans and end loans c. Refinance of primary and 2nd home d. Closed-End Loans i. Including Home Improvement Loans e. Time Shares f. Manufactured Homes or Mobile Homes on Real property g. Mortgage Assumptions (if loan terms change from the original mortgage) h. Reverse Mortgages

Covers “closed-end mortgages”. 1. Effective date – All loan applications taken ON or AFTER July 30, 2009 a. Definition of a loan application (6 pieces of info required) i. Borrowers’ Names ii. Social Security Numbers iii. Gross Monthly Income iv. Property Address v. Estimate of Value of Property vi. Dollar Amount of Mortgage Requested

5. Transactions that DO NOT require MDIA disclosures a. Rental property that will be/are used for business purposes b. Land c. Land & Home with 25 acres or more d. Seller-financed mortgage or contract for deed e. Loan Modifications – Original Mortgagors only f. HELOCS –(But will still require TILA but not 3-day and 7-day notices) g. Loan Application Denied – AT APPLICATION i. Or if Borrower withdraws with 3 days of loan application.

2. New Forms Required – a. Good Faith Estimate i. Must contain the following paragraph: “You are not required to complete this agreement merely because you have receive this disclosures or signed a loan application.” b. Closing Statement - HUD 1 c. Comparison of GFE HUD 1a d. Optional Form Transactions without Sellers HUD 1A e. New Information Booklet (Not Available Yet) 3. Defines “Business Days” a. Monday thru Saturday are now ALL considered “business days” – EXCEPT: i. Sunday ii. Federal Holidays – New Year’s Day, Martin Luther King Birthday, Presidents Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day

6. Disclosure & Re-Disclosure Timing & Dates – Days are counted from the date that the disclosures was mailed, emailed, couriered or given to borrower at application. It is deemed that the borrower will have ”received” it in the 3 or 7-day time period. a. Timing of Delivery of Early Disclosure i. Must “deliver” 3 days after loan application (see #1) b. Waiting Period to close loan after Early Disclosure i. 7 days after loan application before you can close the loans – can close on day 7. c. Waiting Period after Re-Disclosure i. 3 days if APR increased more than 1/8% on regular transaction and ¼% on an irregular transaction OR change in loan terms (See #7) ii. Applies only to the “last” disclosure sent – if you have sent out 4 of them, and the APR changed— as compared to the 3rd one sent (not disclosures 1 or 2) TheNicheReport.com

7. “Delivery” Defined a. Mailed b. E-mail or Electronic c. Face-to-face d. Courier e. Any other method of delivery 8. Collection of Fees a. If 3-day disclosure is MAILED, borrower only allowed to pay for a credit report fee i. Midnight of the 3rd day – Collect additional fees on the 4th day if the disclosure has been mailed. b. If 3-day Disclosure is given in PERSON, appraisal, lock-in, commitment and other fees may be collected “any time after disclosure delivery.” 9. Re-disclosure Tolerances a. Regular transactions i. “APR…is considered accurate if it varies in either direction by not more than 1/8 of 1 percentage point from the actual APR. b. Irregular transactions (i.e. Construction Loans)

“APR…is considered accurate if it varies in either directly by not more than ¼ of 1 percentage point from the actual APR. c. APR Range i. Acceptable to quote an “APR Range” – Example: 10% to 10-1/4%. Since it falls within the 1/8% tolerance, quoting a “range” is acceptable d. Quoting “Estimated Fees” i. If exact cost is unknown, must include the word “estimate” or can add a statement that “the fees are estimates”. e. No Re-disclosure if APR is LOWER than original disclosure. f. Change in loan terms 10. Bona fide Waiver of Waiting Period After Disclosure a. Everyone signing the loan application must sign the waiver b. Hand written (No Preprinted Form) c. Extenuating Circumstances d. Does not insulate lender from legal liability

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11. Record Keeping – Very little direction given on how to keep track of a “mailing date”. a. Federal Rule – 24 months b. Check with your State’s Requirements 12. 30-Days After Closing to Cure Inaccuracies It’s been 35 years since the GFE’s and HUD 1 were introduced (1974) and even then, the GFE was considered the “liars” form—honest loan officers know what we’re talking about here. Consumers found out they had been lied to – only at the closing table – owing thousands of dollars that were not disclosed (or re-disclosed if the loan terms changed) and with no recourse whatsoever, other than to back out and lose their locked interest rate! July 30, 2009 is a red-letter day for consumers applying for a mortgage. Not only will they be able to comparison shop (because the GFE is now the universal form being used), but mortgage companies will need to re-disclose and re-disclose and re-disclose until they meet the TILA tolerances compared to the final loan terms and closing costs. Want more uniformity? Business days have now been defined. Waiting periods have been added (think Right-ToRescind as a comparison) When counting days, here’s the difference between the three day and seven day waiting periods. The three day disclosure expires at midnight, which means the collection of fees or the closing date occurs on day four (just like the three day right of rescission) The seven day waiting period required before you can close, means that you can close on day seven (don’t have to wait until day eight) Sundays and Federal Holidays are the only days you DON’T count towards the waiting period (used to be business days that your office was opened and now it does not make any difference if your office is closed on Saturdays) Let’s talk about No-Cost Mortgages (rate is higher and part of SRP covers closing costs). Yes, it still requires a GFE and P.O.C (paid outside of closing notation) A little known fact is that TILA allows you to quote an APR “Range”. For example, the GFE can say “6-1/4% to 6-1/2%”. Remember, if the final APR is lower, you don’t have to re-disclose. However, let’ say the new APR is 6-5/8%, you don’t have to re-disclose because it’s still within the 1/8% tolerance (based upon your APR interest rate range) for “regular transactions”.

Is this just one more nail in the coffin for the mortgage brokers? Some of the major lenders have already told their brokers that THEY will be sending the disclosures out. In addition to the three day appraisal notification, brokers are now at the mercy of the lender/ creditor to send the disclosures on a timely basis too. On the other side of the coin, it looks like the “one- week closing” is a thing of the past!

L O Interpretation If you take a loan application on July 30, 2009, you cannot close the loan until August 7! (If only approvals would be completed that quickly). Watch your pre-quals that turn into loan applications (6 pieces of information constitutes a loan app) with a formal property address. Pre-quals DON’T require a GFE but the minute a property has been found, the GFE disclosure and seven day waiting period kick in. If you “mail” or “courier” the disclosure, the only fee that you can collect is for the credit report. However, there is a loophole that if you deliver the GFE at the

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face-to-face application, you can collect the rest of the fees (appraisal, commitment fee, lock-in fee, etc). If most of your loan apps are taken over the phone…you can’t collect the appraisal fee until day four, as if the HVCC delays were not enough (and so much for the seven day waiting period to close the loan.) Take the time to read every line of the new disclosures. Personally, I think you should create a script—especially for page three and the section called “Using the Shopping Chart”—that says Use this chart to compare GFE’s from different loan originators. Fill in the information by using a different column for each GFE you receive. By comparing loan offers, you can shop for the best loan.

As part of your script, you might want to talk about the “dates” and the possibility of re-disclosure. Nothing is worse than the consumer receiving another GFE in the mail and wondering why they received another one –let alone explaining the HUD 1A? Can you spell D-I-S-T-RU-S-T? If you are a broker, here’s where it gets weird—what

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if you changed lenders? And the tolerances are still the same as with the old lender? Your borrower will now be receiving disclosures from another lender/creditor and asking you what’s going on. Again, this is where scripting and letting your clients know the possibilities will come into play. As for waivers – same as 3-day right-ofrescission – there better be a big financial loss or set of circumstances—AND the creditor/lender has the final okay on the waiver! Oh, and don’t forget that the borrower has three days to review the appraisal before you can close-just one more kink in delaying the closing date. This affects your real estate agents and builders too. Let them know about the new rules. When writing a contract with a drop dead closing date…well, I can assure you it’s going to be a problem. Loan originating is a “team sport” and everyone from processors to underwriters to real estate agents need to communicate BETTER than ever before. If there are ANY changes to the loan terms or closing costs, everyone

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needs to know. Ultimately, you will need to constantly review your files and re-disclose based on changes in loan terms for the TILA tolerances (See #8) As for owners and managers, there is very little direction given about “recording keeping” and how you keep track of the delivery days, re-disclosure days, etc. Recommend that you create an internal system (auditors can understand your system) so you can defend yourself in case of a lawsuit. If you are a servicer and are allowing mortgage assumptions and changing the terms of the loan, this applies to you too! If, after the loan has closed, and you or the consumer find a disclosure problem, you have a 30-day grace period to “cure the inaccuracy”. MDIA does not give much direction here either—other than you won’t be shut down if you self-monitor your deals. If you are a broker shop, now is the time to sit down with you lenders and determine HOW you will notify them that you have a loan app, how the GFE’s will be sent, how will they know when to re-disclose, etc.

Example By Date With No Re-disclosure Formal Loan Application Taken GFE Sent If mailed, cannot additional fees until If delivered same day as application, Can collect additional fees Closing on 7th Business Day

July 7, 2009 July 8 July 11 July 7

Example By Date - Several Re-disclosures Formal Loan Application Taken July 7 GFE Sent July 8 If mailed, cannot additional fees until July 11 If delivered same day as application, Can collect additional fees July 7 GFE Re-disclosure Sent July 10 GFE Re-disclosure Sent July 15 Closing date after midnight or 3rdBusiness Day July 20 Disclaimer: As with all new rules, there may be more/ other notifications, directives and interpretations in the future. Rely on your legal counsel for direction on how these changes will be implemented and how they will affect your individual company. Copyright MortgageCurrentcy.com 2009 Karen Deis, Publisher, MortgageCurrentcy.com, author and speaker in the mortgage industry since 1998. Interpreting the lending rules and regulations in plain language for loan officers, underwriters, processors and owners/managers.

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consumer education, creating sales ready leads This type of 'home' schooling can cost a mortgage by Bill Rice

he mortgage industry has long been at the forefront of using the Internet to generate sales leads. The Internet leads market was riding high in the glory days of the mortgage refinance boom, but then the market came crashing down. Literally overnight hundreds of banks failed, mega-banks were on the brink, and for months consumers had little or no choice for mortgage financing. Well, you’re a mortgage broker or lender most probably—is it possible to believe the marketing opportunities are even bigger in this new market?

Lots of Demand for Mortgages Let’s review the facts: There are millions of homeowners still in problematic loans (i.e., ARMs, option-ARMs, interest-only, and negative amortization); others are watching their home values dip below their current financing; and even more are losing jobs and income--challenging their ability to repay their mortgage. These conditions are certainly filling the funnel with demand for mortgages and loan modifications. Despite the complex qualifying issues associated with these borrowers there are hundreds of government and private programs available to help them. However, the path there is increasingly complex. This is good for the savvy mortgage broker or lender that solves these challenges in their marketing strategy.

September 2009

Volatility and Complexity Newspapers learned long ago volatility sold papers. The same rule holds true for mortgages. When mortgage rates fluctuate, governments regulate, and loan programs undulate; homeowners turn their attention to their mortgages. The difference in this market versus the previous mortgage refinance boom is that borrowers are unsure of what they need—it is not as clear as, “the lowest rate.” This is your mortgage marketing opportunity. Consumers, homeowners and new homebuyers, are looking for information. They need to be educated and guided through this confusing tangle of government stimulus, legislation, and mortgage servicer workouts. Consumers are looking for education. And if you want an endless supply of mortgage leads you will quickly learn how to offer that service. How to Offer Consumer Education There are a variety of ways mortgage brokers and lenders are executing on their consumer education marketing plans. From large to small mortgage businesses, these smart companies are finding that investing in educating their prospective clients is quickly turning profitable. Large National Lender - David Wind, President of Guaranteed Home Mortgage Company, tells an interesting story of how consumer education evolved from a plan for business survival into a highly profitable marketing strategy. Managing more than 500 lenders in over 27 states

is no easy task and when stated income loans were the rave David spotted a significant risk. He realized that many borrowers didn’t understand the representations they were making. Specifically, he was worried about their understanding that their stated income had to be accurate and would support the repayment of their loan. He realized that at some point the investors in these mortgages would hold Guaranteed Home Mortgage accountable for these borrowers’ understanding. “Our consumer education program started as a simple measure of self-preservation,” tells David Wind. “We included a letter in every application package, explaining very clearly the income representations they were making and had the consumer sign it.” That simple letter made all the difference. As other mortgage lenders began to meltdown under the weight of loan buy backs and imploding stated income mortgage portfolios—Guarantee Home Mortgage survived. “This simple survival plan demonstrated how important it is to develop a partnership between consumers and lenders,” says Wind. “It is the responsibility of the lender to arm the consumer with enough information to understand when something isn’t right about their mortgage process—we protect them and they protect us.” Guaranteed Home Mortgage has expanded their consumer education strategy into a core business differentiator. They invest much of their marketing dollars in explaining a good mortgage process to consumers and automating data verification to speed the customer experience. Wind is so confident in his approach that he puts his cell phone number on the cover of every mortgage application package. Marketing Partnerships - Not everyone needs to go through this long learning process and upfront investment. Some marketing companies are already experts and can assist you on the consumer education path immediately. LendingTree was one of the first Internet mortgage marketing brands and uniquely maintained a consumerfirst message. Remember stampeding suited bankers in “When Banks Compete You Win!” commercials? This always seemed an odd message for a marketing company that made its money from bankers paying them to market on their behalf. Perhaps, they had the formula right all along?

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However, if you have visited LendingTree.com recently you have seen them crank up the volume on consumer education. No longer is it a sidebar message. It is literally impossible to click without learning something about the lending process—credit scores, payment calculators, financial guides, and breaking news. “We are focused on being a general financial management resource for consumers,” Nicole Hall, Editor-in-Chief of LendingTree.com, passionately explains. “Our goal is to build trust and loyalty through consumer empowerment.” Hall continued with how this obviously creates a more compelling value proposition to the consumer and the lender network they support—“consumers understand better, they have better conversations, and they come prepared to get a loan.” Obviously, putting a brand like LendingTree behind your consumer education marketing strategy can be a short cut, but is it a sustainable strategy? SurePoint Lending would certainly agree. LendingTree’s leader in closed loan volume and also the top converting lender, started working with Internet leads in 2000 and in 2003 became a pure online originator. Unlike many lenders they survived the bust and continue to thrive. LendingTree.com attributes their success to an emphasis in consumer education that carries beyond the consumer hand-off from LendingTree. Their tagline is a sure indication of that importance—“Straight talk. Straight answers.” Independent Mortgage Broker - Even the smaller mortgage operations are reaping big rewards from marketing education to consumers. Dan Green, a loan officer and publisher of TheMortgageReport.com, told me: “My blog educates today’s homeowners and tomorrow’s home buyers. It builds trust and makes my phone ring and my inbox ding.” Green has used a simple do-it-yourself approach with technologies like a Wordpress blog, Photoshop, and Twitter to create an award-winning mortgage information resource for consumers. Although the mortgage market isn’t terribly complicated with regard to mortgage rates (one of the most popular mortgage searches), Green says analyzing the data is important to building trust with a prospective borrower. “I use my blog to educate savvy consumers,” informs

Attention sellers And privAte lenders! Green. “It builds trust with new customers and builds a relationship fence around my existing clients.” Positioning your mortgage business to capture these curious borrowers is limited only by your creativity. The key is obvious—exchange education for trust.

Customer Loyalty Too An even more compelling part of this strategy is that it can extend beyond the originations process and the closing table. An investment in educating the consumer can easily return referrals and references before, during, and after a customer actually engages you for their loan. A good understanding of the broader opportunity can really rocket your long-term return on investment. Uses for great consumer education content and processes go beyond individual mortgage shoppers. Media, blogs, and consumers will also reference this quality content, creating an even bigger marketing funnel. To implement this long-term effect you need to consider a few key questions: - continued on page 30

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Is your company s.a.f.e.? You need to be identified

by Joshua Weinberg

ith the passage of the Housing and Economic Recovery Act (HERA) of 2008; Title V, the Secure and Fair Enforcement Mortgage Licensing Act (SAFE Act) brings extensive changes to the lending industry. Among the most significant is a requirement for all Loan Originators to be licensed and registered with a national database. Additionally, the SAFE Act provides a new federal definition of Loan Originator and requires all States to create and maintain a system for licensing and monitoring Loan Originators so that loan performance may be tracked at the individual loan level. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) were given the task of creating the Nationwide Mortgage Licensing System and Registry (NMLSR), the national database responsible for tracking Loan Originators. They were also responsible for creating Model State Legislation that contains the minimum standards to meet the SAFE Act requirements. The Model State Legislation was approved by the Department of Housing and Urban Development (HUD), because HUD has the obligation to implement a national licensing standard for any states that do not implement the SAFE Act on time, or in compliance with the Act. The Federal Financial Institutions Exam Council (FFIEC) was given the responsibility for coordinating between the NMLSR and federal banking agencies for the registration of Loan Originators employed at banking institutions exempt from 26

September 2009

state licensing laws. Given the combined state and federal effort, it’s easy to be overwhelmed or confused by the requirements. Currently, out of the 60 states and territories required to implement licensing legislation, 47 have proposed legislation, and 21 of those have passed or enacted the legislation. Many states’ legislation very closely resembles the Model State Legislation, which means it contains a significant clause: “MSL XX.XXX.210 UNIQUE IDENTIFIER SHOWN—The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations or advertisements, including business cards or websites, and any other documents as established by rule, regulation or order of the Commissioner.” Also, under direction from the Director of the Federal Housing Finance Agency (FHFA), beginning January 1, 2010 all loan applications submitted to Fannie Mae or Freddie Mac will be required “to obtain loan-level identifiers for the loan originator, loan origination company, field appraiser, and supervisory appraiser.” Essentially, the name and NMLSR number for the Loan Originator and their company will need to be printed on the 1003 and likely all other loan documents. The FHFA also requires the Appraiser and Supervisory Appraiser’s names (as applicable) and their license number to be included in the electronic data elements included with the loan file, however according the Fannie Mae and Freddie Mac, those elements do not need to be printed at this time. Considering the differentiation among state requirements, and the fact that many brokers and

lenders operate in multiple states, Calyx has provided a single solution that meets the national standard and those of all states. In Version 7.1 you will have the ability to manage state license and NMLSR information for all required parties, including at the Branch level and for the Control Person. You will also be able to print the license information and control which information prints. License information printing is available for almost every document in the program, even custom documents. Joshua Weinberg is a Business Analyst for Calyx Software, in charge of Compliance, Government Loan programs and Reverse Mortgages. Weinberg is a member of the Product Management team and is the lead designer for all features and requirements related to those topics. Weinberg is a Certified Residential Mortgage Specialist, licensed as a Broker by the California Department of Real Estate and has been originating loans since 2004. Weinberg is active in the industry and works closely with the Department of Housing Development, the Federal Reserve Board, and many State regulatory agencies and also sits on committees for the Mortgage Bankers Association as well as the National Association of Mortgage Brokers.

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Rules & Regulation Headlines Wow, for the first time in years, there have been no FHA Mortgagee Letters or VA Circular Letters that affect Originators and Processors! Of course, Fannie and Freddie have created a new dance routine called the “Mortgage Shuffle”, where they are changing the changes that they changed before! If you only read one update in this article, read Freddie’s Clarifies and Revising Underwriting Guideline Updates!

Fannie Updates 125 LTV Again! But these are Good Changes! Nice that Fannie opened up the 125 LTV option to all lenders, not just those that are the current servicer of the loan as the program was originally rolled out. With this announcement the 125 option for Refi Plus loans was moved up and is available immediately. • Available for DU Refi Plus (previously only available as Refi Plus) • Follow Rules as announced in Announcement 09-23 until DU is updated to reflect the higher LTVs • Refi Plus 125 loans are eligible immediately

For those of you who are refinancing Fannie loans you service, there is absolutely no reason to ever process a loan DU Refi Plus when it is eligible as a Refi Plus. In other words, the ability to switch from DU Refi Plus to Refi Plus shouldn't matter if you are doing your job right. Now is a great time to go back to those who you were not able to help earlier in the year. The ability to go to 125 LTV will help many who we were not able to help the first time around. New Area Median Income Limits for 2009 As they do once a year, Fannie Mae has updated the Area Median Income Limits for 2009. These limits are the key to a number of affordable housing products. Loans that are manually underwritten require the use of the new Area Median Income limits by September 1, 2009. Loans underwritten by DU require the use of the new Area Median Income limits with DU update 7.1 which will take place the weekend of September 19, 2009. Website Resource: https://www.efanniemae.com/sf/refmaterials/ hudmedinc/index.jsp?from=hp Freddie’s Clarifies and Revising Underwriting Guideline Updates! The bottom line to Bulletin 2009-18 is--Document, 28

September 2009

Document, Document! If you can't document it, then you can't count it! Where do you even start to interpret the insanity that continues to come our way day after day? The changes and “clarifications” are numerous and have been the norm for any lender with half a brain. The problem with rules and clarifications such as these is that lenders tend to go overboard and impose their own insane overlays on top of them. Just a sample of some of the clarifications: • Income without a 3yr continuance should not be counted • 2yr history of receipt of income is required if income is to be counted • 2yr requirement not required for recent grads or those who attended career training schools • 2yr requirement not required for those re-entering the work force provided they have a minimum of 6 months of history with their employer and had a previous employment history that is documented • File should contain analysis of how income was calculated • Retirement account balances are only counted as 70% of the balance. Outstanding loans must be subtracted from the balance before calculating the 70% figure. Verbal VOE now required on all loans within 10 days prior to closing • No verbal only documentation. All loans will require documentation of income in some way. No more Accept/ Plus verbal documentation only. • Phone numbers for verbal VOE must be verified via a thirdparty source • ...Yes, and there’s much more when you read the Bulletin along with a Best Practices section!

At the end of the day, if you can't verify income is stable and consistent for at least two years with a likeliness that it will continue for at least three years, the income in most cases likely will not be able to be counted. I like how they were so precise in their rules. I can see underwriters tearing a file apart and using the “I-don't-think-it-islikely-to-continue-for-three-years-card”.

RULES & REGULATION HEADLINES

USDA Manufactured Housing Lending Update USDA will NOT lend on a manufactured home if the manufacture date is more than 12 months old. The real news here is that if you are looking for NEW home manufactured money, this is only one of the few sources left. Now is the time to cozy up to the dealers in your area. Here’s the problem for them…if the Manufactured Home is brand new, but not sold within 12 months of the date it has been manufactured, it is NOT eligible for USDA financing. And, USDA will only finance homes sold thru their approved-dealer list. They are easy to find—they are listed on www.USDA.gov website. In order to become an approved dealer, they must submit form RD 1944-5 and be approved by USDA but you can help them get approved. It’s just another niche for your lending tool belt! More detailed updates can be found at MortgageCurrentcy. com – Interpreting the rules and regulation changes for loan officers, processors, underwriters, and owners/managers. Mortgage Talking Points®, charts and checklists included.

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• Is your content simple to understand and accurate? • Is your content easy to reference, refer, and forward? • Are you covering the basics of the mortgage process? • Do you continue to educate the consumer even after closing? This mortgage market is unlikely to become simple anytime soon. The more time and investment you put into bringing yourself educated borrowers, the quicker and more frequently you will be closing loans. Bill Rice is the founder and CEO of Kaleidico.com; experts in Internet lead generation and lead management. Rice has more than a decade of experience as an executive in Internet mortgage originations and lead-generation businesses, including DeepGreen Bank, Quicken Loans and MortgageLoan.com. Rice is a passionate mortgage industry expert regularly speaking and writing on topics of mortgage marketing, lead generation and lead management. Rice can be reached at bill.rice@kaleidico.com or (734) 775-4487.

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$225 per person

$365 per person

$415 per person

$465 per person

$225 per person

$275 per person

$325 per person

NON - MEMBERS (Full Conference Registrations)

Conference Only Option SAFE Pre-Licensing Education/ Conference Option

Golf/Conference Option

Registration After September 15, 2009

On-site Registration

$145 per person

$195 per person

$245 per person

$465 per person

$515 per person

$565 per person

$245 per person

$295 per person

$345 per person

EXHIBIT HALL PASS (For Entrance to the Exhibit Hall ONLY on Thursday, October 22, 2009) Register Before September 15, 2009

Registration After September 15, 2009

On-site Registration

Member

$25 per person

$35 per person

$50 per person

Non- Member

$45 per person

$55 per person

$70 per person

10% Discount on Attendee price for 5 or more registrations from the same company. Name ____________________________________________________Badge Name ___________________________________ Company ________________________________________________________________________________________________ Street _____________________________________________________________________________________________________ City _______________________________________________________________________State ________ Zip ______________ Phone ____________________________ Fax _________________________ E-Mail ____________________________________ Payment Method:

Check (made payable to NJAMB)

Credit Card (Visa or MasterCard ONLY)

Total Enclosed: $_______________

Credit Card: Visa or MasterCard Name on Card ____________________________________________ Signature _____________________________________________ Card Number ______________________________________________ Exp ____________/___________ V-code __________________

Hotel Reservations: Hotel rooms are NOT included in the Conference Registration Fee. Upon receipt by the NJAMB of your completed registration form and fee, you will receive hotel reservation information. Rooms are available on a limited basis at a special rate for single/double occupancy. You are not guaranteed a room, because rooms are provided on a first-come first served basis. Do NOT send your hotel room deposit to the NJAMB. Refunds: for cancellation of Conference registration will be made only upon written request, minus a $25 administrative fee until September 15, 2009. A $30 fee will be charged for returned checks. Cancellation of Conference: The Conference may be changed or cancelled at the sponsor’s option if circumstances require. If you require a receipt please request it at time of registration.

CENTER STAGE

CENTER STAGE WITH quick qualifier software Thor Skonnord, co-owner and designer of Quick Qualifier. brought to you BY THE NICHE REPORT

Pay attention folks, this is a highly useful software suite that will help you close loans and build referrals. Over the last fifteen years, Quick Qualifier Software has become an industry leader as a versatile tool for loan officers. Thor Skonnord, author of the software, talks about its conception and features. Tell me about Quick Qualifier. Quick Qualifier is a Windows-based software program that does many things for a loan officer. It calculates loan scenarios with payments, closing costs, and total cash requirements. It is a pre-qualification tool and a marketing tool that has templates for fourteen open house flyers that include finance options and color pictures of Real Estate agents and homes for sale. It creates more than sixty presentations in English or Spanish. The best part is that everything it does is instantaneous. It also has a client database that can be used to store contact information and history of loan transactions. It can be used for marketing functions. What gave you the idea of writing the software program? The software that I was using had about a dozen fields to be completed before I got any answers. Also, the print-outs that it generated took a CPA to understand. I wanted something simpler and faster. I couldn't find it, so I decided to create it instead. With an FHA scenario in Quick Qualifier, you need only to enter the sales price and everything instantly calculates. The simplified loan summary sheet and closing cost sheets are easy to understand. I think that because the software was written by a loan officer instead of a professional programmer has a 32

September 2009

lot to do with its simplistic nature. At the same time, donâ&#x20AC;&#x2122;t take this to mean that it does not do sophisticated things. What has helped the software evolve to the tool that it is today? Over the years, if we ever got feedback that our software was lacking in some way, we treated it as a good idea. Instead of justifying why it did not have a certain feature, we added it. The only criteria was that the user interface had to remain consistent and intuitive. One addition that really stands out in my mind is the bilingual feature. We were asked to make everything print in Spanish as well as English. So, we did. Quick Qualifier habla espaĂąol. What does Quick Qualifier offer that other software programs lack? It offers speed and simplicity. Many of the things that it does can be accomplished in the popular processing software programs, but nowhere nearly as easily. When you are working with a client, information can be displayed in seconds. Learning to use the program is quick and easy because almost everything is displayed on single screens. And in keeping with the simplicity theme, output for borrowers is straightforward and easy to understand. Quick Qualifier contains virtually everything a loan officer could want when working with potential loan applicants. It has a Shopping Guide where you can just enter a desired payment that let you back into a sales price for ten of the popular loan programs. You can also use income and debts to show a similar matrix of home to buy. It does side-by-side comparisons. It has a Rent vs.

CENTER STAGE Own module that also calculates the federal tax benefits of buying a home. For FHA streamline refi's it calculates MIP refunds and blends them into the refi scenario. It also has a refinance analysis tool that calculates a blended rate on debts to be paid, and then it compares the closing costs versus the annual interest savings and displays a breakeven point. These are just a few of the useful features. There is also an amortization engine that can show the accelerated payoff by adding to payments. This is a great way to show the benefits of refinancing. How does Quick Qualifier help loan officers increase their production? Quick Qualifier does several things that help a loan officer to get more business. It is a huge benefit to create an attractive open house finance flyer in just a few seconds. Offering the flyer to a real estate agent at an open house is an excellent way to start a co-marketing relationship. The flyers can also be emailed directly from the software to the agent. Again, what makes it work is the ease in creating the flyer. Creating a template for a flyer could be developed with other applications but calculating and inputting the payments and cash requirements would be tedious and time consuming. An even more daunting task would be adding an accurate APR. Quick Qualifier automatically calculates APR's, using the RESPA approved method to one 100th of a percent. Now, here is the most spectacular way that Quick Qualifier helps get more business. It is also what makes it so unique. With the Loan Officer version of Quick Qualifier, the LO is allowed to give unlimited, royaltyfree installations of the program to RE agents and builder clients. We get lots of different reactions to this idea, all the way from "Why would I want to do that?" to "I wouldn’t want to do that because then they wouldn’t need me." The concept is contrary to typical software licensing, but it is legal, because we say it is, and it works! Let me start by explaining the quoted objections. The reason for doing it is simply because it creates lasting relationships with agent. After you give them the software program, they become very attached to using it. Before long, other agents in their office will see the software and they will call you and ask for it. Soon, you will have dozens of agents using your software. And, every time they print something for a borrower, it will have your name and contact information. They should appreciate the gesture on your part, but

even if they do not, it works. You can absolutely force the issue by setting a timer when you install the software in their computer. After a few months (you set this as part of the installation) they will start receiving a warning that they are in a countdown after which they will no longer be able to use the software. Because of the timer, you retain control of the relationship. How about the part where they will not need you? If you think about it, they still need someone to originate the loan. Agents will typically use the software to give information to potential clients, but they will soon refer them to you for the formal pre-approval. And what if they absolutely do not do this even when using your software? Then they probably wouldn’t have anyway so you do not lose a thing by trying this marketing technique. But if it does increase your chance of working with the agent, then why not pursue it? What other unique features does the program have? Quick Qualifier has what we call the Internet Rate Link. It is a way of letting agents import interest rates directly into the program. Naturally, this comes into play after the LO has shared the software with them. The rates are posted by the LO, using their home-based copy of the program. Instead of the more traditional methods of sending emails, giving out rate sheets or directing them to a website, the rate link lets them simply click on the main screen of Quick Qualifier and rates are imported directly into the software. When they do this, it also turns on our "auto rate" feature, so when they run a loan program, it finds the correct rate and uses it automatically. Updating also displays an announcement from you about new programs or reminding them to contact you for their lending needs. Is there a corporate license that allows multiple users for a single price? In addition to the individual loan officer license (the one that can be shared with agents), we sell the "Office version" that can be used by all personnel in a single branch location. We also have quantity discounts for multiple purchases of either version. How can I learn more about the software? Our website, www.quickqualifier.com has Flash videos in the Demo screen. There, you can also download a working demo. Or, the best and easiest way is to request a live online demo. Just call and we can schedule one. TheNicheReport.com

TIP OF THE MONTH

TIP OF THE MONTH Creeping Commitment BY STEWART MEDNICK

very relationship has a beginning. The best of friends and the closest partners all were strangers to one another at sometime. When you engage people/prospects as potential clients, they have little or no reason to commit to you; “they don’t know you from a hill of beans.” How do they become a committed client of yours? A person will slowly become more committed and loyal to you as you guide them through the process of originating a mortgage or finding a house. As the time you spend with a person increases, and as the options become fewer, and as your knowledge of their goals is honed, the commitment to you is stronger. This is called “creeping commitment.” You can chart creeping commitment just like any other process. ‘Time’ is the horizontal axis and ‘Commitment’ is the vertical axis. As time increases, commitment increases…or that is how it should be. Perhaps the reason we lose clients before sitting at the closing table is because they lack commitment and we do not promote commitment. You mean I can market ‘commitment’ to a client? Yes! The process should be simple: the more time you spend with a client, the more committed he or she will be to you to the point of total dedication. Well, in my mind the customer will worship the ground I walk on and will sell candles at the airport to cover the closing fees…that is

September 2009

dedication. Not so much in reality, huh? A customer’s commitment to you is proportional to the amount of obstacles that bar the way to a committed relationship. The more obstacles, the less commitment; the less obstacles, the more commitment. On our chart, obstacles would be the random points the annoying trigonometry teacher would plot on the chart to connect with mind-blowing equations. Without obstacles on the chart, the line is straight and true; simple yet elegant. What are these obstacles? Examples would be: • Other lenders/real estate brokers • Choices – interest rates, loan programs • Distractions – family, work, the football game • Misunderstandings – friend’s advice, poor communication • False expectations – time line, cost, loan amount • Bad experiences in past – lies, lies, untruths, hollow promises, and lies Establish a goal early on in the trusted advisor/ client relationship development process. Your mission, should you choose to accept it, is to guide the client to this goal, avoid the obstacles, and perform this feat in the least amount of time and with the most direct process. Figuratively, you will hold their hand and lead them through the obstacles. As the client is guided closer to the final goal, the more focused the goal becomes and the stronger the commitment will be to you, the trusted advisor. This sounds easy, but as we know, it can be a grand challenge with many potential clients. Everything

TIP OF THE MONTH

changes. Beginning expectations are altered as you communicate knowledge of the industry, provide expert assistance, and systematically eliminate possibilities that equate to obstacles. But, once the goal is obtained, benefit is high and perceived value is then high as well (reference back to “The Formula”). So, marketing commitment means you will communicate how you will lead the client to their dream home in a prompt and painless manner. This will capture the attention of the prospective client, and with skill, active listening abilities, and the persona of the trusted advisor, creeping commitment will soon turn into dedication. 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

Manaseh, Epharim & Associates

There is a solution.

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Your source for commercial real estate financing. Funding nationwide and internationally!! Rates from 3.9%

Direct Private Lender www.MEANDASSOCIATES.COM 770-840-0112 or 770-840-0113 Fax: 678-302-6444

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Metro Funding Corporation one Kalisa Way, Suite 310, Paramus, nJ 07652 For more information, call toll free:

(866) 302-6360 or visit our website: www.metrofundingcorp.com

NICHE REPORTS

Agency & FHA Premium Listings

American Pacific Mortgage

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

866-625-9352

Flagstar Wholesale Lending 866-945-9872

Freedom Mortgage Corp

Offer a full array of FHA and Agency products, coupled with industryleading underwriting turn times and technology

800-220-9498

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

Guaranteed Home Mortgage Company, Inc.

Specialized Retail Platform for Experienced Loan Officers

888-572-3602

Mid Island Mortgage Corp

Direct FHA Lender, True manual underwriting company, Streamline's down to 580, Scores down to 500, Refers OK, Mtg lates Ok

703-754-9643 - Tim Dooley

AGENCY & FHA Lender Listings Powered by TheLoanPost.com Alternative Mortgage Express

800-552-5263

www.amxloans.com

Florida Capital Bank Mtg

866-295-0014

www.flcb.com

AME Financial Corp

770-449-8444

www.amefc.com

Franklin American

606-519-4165

www.franklinamerican.com

American BancShares

305-826-4500

www.americanbancshares.com

Freedom Mortgage

800-388-1537

www.freedomwholesale.com

American Financial Resources (FHA only) 973-588-8530

www.afrwholesale.com

Gateway Funding

800-355-5626

wholesale.gateway-funding.com

American Home Equity

714-661-5836

www.ahedirect.com

Global Lending Group

727-530-0110

www.glgiwholesale.net

American Partners Bank

800-393-5250

www.apbwholesale.com

Greystone Financial

877-673-5626

www.greystonefinancialonline.com

Amtrust Bank (Fannie/Freddie only)

888-321-6446

www.amtrustgemstone.com

GSF Funding

262-373-0790

www.gsfsales.com

Assurity Financial (FHA only)

866-844-7390

www.assuritywholesale.com

Guaranteed Rate

866-755-0989

www.griwholesale.com

BAC Florida Bank (Fannie/Freddie only) 305-789-8064

www.bacflorida.com

Home Savings of America

972-235-7366

www.myhsoa.com

Bank of America Wholesale

wholesale.bankofamerica.com

ICON Residential Capital

888-639-5641

www.iconwholesale.com

www.boaawholesale.com

ING Mortgage

877-464-0555

www.ingloans.com/wholesale/index.html

800-669-2825

Bank of Ann Arbor (Fannie/Freddie only) 800-807-6337

banktnwholesale.com

JMAC Lending

877-841-0776

www.jmaclending.com

Century Lending (Fannie/Freddie only) 866-831-5618

www.centurylending.net

Liberty Lending Inc

800-808-5591

www.libertylendingwholesale.com

CMG Mortgage

800-501-2001

www.cmgbanking.com

Liberty Mortgage

800-940-4032

www.bbt.com/libertymortgage

CNB National Lending, LLC

877-421-4654

www.cnbnationallending.com

M&T Bank Mortgage

804-380-7465

wholesalemortgage.mtb.com

Continental Home Loans

800-540-8838

www.chlmortgagebankers.com

Mega Capital Funding (Fannie/Freddie only) 818-657-2600

www.megacapitalfunding.net

www.solutioncenter.biz

Merit Mortgage

310-650-0773

meritwholesale.com

Emigrant Mortgage (Fannie/Freddie only) 800-Emigrant x mid atlantic www.emigrantmortgage.com

MetLife Home Loans

888-341-6100

www.wholesale.metlifehomeloans.com

Mortgage Close (Fannie/Freddie only)

866-267-7691

Federal Trust Mortgage

407-323-1833 x 153 www.federaltrust.com/brokers

National Direct Funding (Fannie/Freddie only) 877-772-7790

Fifth Third

866-492-0072

www.53.com/wholesalemortgage

National Home Lenders

888-344-0520 x 4 www.nationalhomelenders.com

First Cal

877-224-3262

www.firstcalwholesale.net

Nations Direct Mortgage

866-762-3940

www.brokerFHA.com

Washington Federal

971-645-9140

www.washingtonfederal.com/wholesale

NetMore America

509-526-4007

www.netmoreamerica.com

Flagstar Bank

800-945-7700

www.wholesale.flagstar.com

Nexbank

866-389-6046

www.nexbank.com

BankTennessee

Direct Mortgage Wholesale

901-383-0237

801-924-2300

b2b.mortgageclose.com www.ndfcorporation.com

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

September 2009

NICHE REPORTS

AGENCY & FHA premium niches continuedâ&#x20AC;Ś NorthStar Lending (Fannie/Freddie only) 866-829-8726

www.mynorthstarlending.com/

Security Mortgage Funding

Pacific Banc Mortgage

949-419-0505

www.pacificbanc.com/

(Fannie/Freddie only)

800-407-8436

www.smfcloans.com/brokers

Pacific National Bank

305-539-7675

www.pnb.com

Security National Mortgage

801-264-1060

www.securitynational.com

Senderra Funding

866-831-2430

www.prmglending.net

www.senderra.com

Paramount Residential (FHA only)

951-278-0000

Phoenix Funding

877-562-6414 x 230 www.phoenix-funding.com

Sierra Pacific

800-447-3386

www.spm1.com

PMC Bancorp

626-964-4040

www.pmcmtg.com

SouthPoint Financial (Fannie/Freddie only) 800-433-1467

www.spfs.com

Polaris Funding (FL, IN, MI, OH)

866-467-9230

www.polarishfc.com

Stearns

800-350-5363

www.stearnswholesale.com

Preferred Capital (Fannie/Freddie only) 800-454-0109

www.prefercapital.com

SunTrust Wholesale

913-982-2150

www.stmpartners.com

Premier Mortgage Capital, Inc.

407-367-6500

www.premierwholesale.com

The Jumbo Lender

800-826-0360

www.TheJumboLender.com

Presidents First

877-773-7178

www.presidentsfirst.com

Titan Wholesale

775-852-6888 x 225 www.titan-wholesale.com

Primary Capital

800-699-1286

www.primarycapital.com

Provident Funding

800-733-3657 x 1712

Reliant Funding

800-850-8056

www.reliantfunding.us

Residential Lending Network

954-334-2059

www.reslend.com

800-941-8321

pfloans.provident.com/

949-450-1888 x 1284 www.trustone.com 800-803-4212

www.usbank.com

United Residential Lending

888-875-8326

www.urlending.com

United Wholesale Mortgage (FHA only) 800-981-8898

www.uwmco.com

www.reunionwholesale.com

Village Capital and Investment (FHA only) 800-496-7136

www.villagewholesalelending.com

(Fannie/Freddie only)

Reunion Mortgage

Trust One Mortgage U.S. Bank Consumer Finance

Royal Crown Bancorp

877-507-6925

www.crownloan.com

Virgin Money USA

877-937-4887

www.virginmoneyus.com/mortgage

Security Atlantic (FHA only)

732-738-7100

www.fhaland.com

Wells Fargo

310-283-8411

www.brokersfirst.com

REVERSE Premium Listings

Guaranteed Home Mortgage Co., Inc.

Specialized Retail Platform for Experienced Loan Officers

888-572-3602

Reverse It! A division of Urban Financial Group, Inc

Reverse Mortgages, fastest turn times in the industry. Training and lead support available.

888-777-3311 REVERSE MORTGAGES Lender Listings Powered by TheLoanPost.com American BancShares

305-817-2165

www.americanbancshares.com

MetLife Home Loans

www.wholesale.metlifehomeloans.com

Arlington Capital Mortgage Corp

800-814-9432

www.acmcwholesale.com

NetMore America

509-526-4007

www.netmoreamerica.com

Circle Mortgage Corporation (Fl only)

800-576-1338

www.circlemortgage.com

Pacific Banc Mortgage

571-340-5593

www.pacificbanc.com

Continental Home Loans

631-393-3800 x 114 www.chlmortgagebankers.com

Essex Mortgage

702-893-9200

www.essexwholesale.com

Quality Life Reverse Mortgage

800-955-7919

qualityliferm.com

Financial Freedom

800-500-5150

www.financialfreedom.com

Quik Fund Inc.

813-671-0712

www.quikfund.com

Financial Heritage

800-895-2209

www.financialheritage.com

Silvergate Bank (cml)

858-362-6300

www.silvergatebank.com

Generation Mortgage

866-733-6089

www.generationmortgage.com

SouthPoint Financial Services

800-433-1467

www.spfs.com

GotMortgage.com

760-802-9630

www.gotmortgage.com

Sunwest

800-453-7884

www.swmc.com

Liberty Reverse Mortgage

866-871-1353

libertyreversebroker.com

Wells Fargo Reverse Mortgage

800-336-7359

www.wellsfargo.com

TheNicheReport.com

NICHE REPORTS

HARD MONEY & NON-PRIME Premium Listings

All Credit Considered Mortgage

Private Money

240-314-0399 X 19

AFG LLC (Asset Funding Group) 720-889-1175

AgriCap Financial Corporation 213-542-5232

Fairview Commercial Lending 866-634-1270

Financial Resources Mortgage 800-950-6913 or ddexter@frmortgageinc.com

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

Direct lender - up to 70% LTV: Bridge loans, purchase & rehab, construction financing, raw land, no minimum credit score requirments. Nationwide lending from $300k to $3 million, 24 hour commitment as fast as 5 days to close. HARD MONEY- MADE EASY Agriculture including facilities and part-time farms, commercial, special purpose properties No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours Real Estate based private money lender. Commercial & Residential Investment. Refi cash out allowed. Retail,office,multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today. No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 - DE, MD, VA, DC, NC, SC, GA, FL Minimal documentation required, Combined Loan-to-Values to 105% - DE, MD, VA, DC, NC, SC, GA, FL

NEW

Gregory Funding 888-324-3578

Private portfolio lender funding small balance commerical loans up to $1MM. No credit score requirement. No pre-payment penalty. Up to 70% LTV. Foreclosure ok. Bankruptcy ok. Lending territory: AZ, CA, CO, ID, NV, OR

NEW

Groupe 369 Corp.

Portfolio lender for commercial real estate loans

630-396-6400

Manaseh, Epharim & Associates 770-840-0112

Metro Funding Corp 866-302-6360

Direct Lender with fast closings. Your source for international and domestic funding. Direct lender specializing in short term bridge financing. Interest only. No prepayment penalty. No points upfront. Commitments within 24 hours. Brokers welcomed and protected.

September 2009

NICHE REPORTS

HARD MONEY & NON-PRIME premium niches continued…

Local direct lender (DC, MD and VA) specializing in bridge, construction, rehab and business loans. Loans are based on “subject to value”, 50% LTV, minimal documentation, EQUITY DRIVEN not FICO sensitive. Brokers are protected.

TrustCapital Investments LLC 301-503-2231

HARD MONEY & NON-PRIME Lender Listings Powered by TheLoanPost.com Advantage Capital Equity Solutions

800-223-3019

HARDDMONEYLOANS.COM

813-516-5210

www.HARDDMONEYLOANS.COM

AFC Hardmoney

813-387-3800 x 311 www.afchardmoney.com

Hawkins Capital

801-936-5100

www.hawkinscap.com

AgriCap Financial Corporation

213-542-5232

Investor Funding

864-213-3951

www.4investorfunding.com

J & J Financial

866-296-8246

www.10dayloan.com

Lakeside Financial Inc.

949-297-4180

www.nofico.net

Lib Properties, LTD.

404-256-8600

www.libloans.com

LNB Commercial Capital

321-214-0585

www.lnbcapital.com

Magnolia Financial Consultants

601-428-1005

www.hardmoneymortgages.com

Meridian Group

800-901-9301

www.meridiangroupinc.com

Overland Financial

818-342-2477

www.overlandfinancial.com

Pacific Mortgage Funding Corp. (cml)

562-864-4006

www.pacificmortgage.com

PB Financial Group Corp.

310-289-0900

www.pbfinancialgrp.com

Piedmont Capital Lending, LLC.

678-292-6984

www.piedmontcapitallending.com

Porter Bridge Loan Company (cml)

866-725-1777

www.porterbridgeloan.com

Portfolio Mortgage Company

480-227-2857

www.portmort.com

PFA Capital, LLC

800-531-4589

www.pfacapital.com

Rehab Funding

610-645-9939 x 310 rehabfunding.com

Remington Financial Group

480-905-3239

www.remingtonfg.com

Right Start Mortgage

800-520-5626

www.rightstartmortgage.com

SBB Financial

866-358-7238

www.sbbfinancial.com

SDI Funding

864-233-3337 x 3220 www.sdifunding.com

SmartServ Solutions

888-633-4778

Swift Funding

727-521-6633

swiftfundingcorp.com

TCRM Commercial Corp. (cml)

212-371-3933

www.tcrmcommercial.com

www.adcapequity.com www.agricap.com

All California Home Loans 877-462-3422 www.aboutcaliforniahomeloans.com/hard-money.html Alliance Financial, Inc.

866-603-5999

www.afiloans.com

Ameribank Mortgage

516-833-8834

www.ameribanksolutions.com

American Acceptance (cml)

800-452-9287

www.aamonline.com

Assurity Financial

866-841-7863

www.assuritywholesale.com

Avant Capital Partners, LLC. (cml)

212-219-9419

www.avcapital.net

Bay Equity

800-229-3703

www.bayeq.com

BlueWater Funding, LLC

866-551-2583

www.bluewaterfundingllc.com

Brookview Financial

877-734-2211 x 316 www.brookviewfinancial.com/

California Equity Lenders

818-584-2320

www.calequitylenders.com

Capital Alliance

415-288-9575

www.calliance.com/index.php

CFA Capital Partners (cml)

914-967-5780

www.cfacap.com

Crawford Park Financial

626-796-7979

www.crawfordparkfinancial.com

Cushman Rexrode Capital Corporation (cml) 925-988-7200

www.cushrex.com

Diamond Bay Investments, Inc.

www.diamondbayinvestments.

702-254-9303

com Eastern Savings Bank (cml)

800-787-8187

www.easternsavingsbank.com

Emerald Financial

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- continued from page 46

Dr. Lereah and his research staff were responsible for creating two of the nation’s most powerful real estate indicators-the Mortgage Bankers Association’s Weekly Mortgage Application Indexes and the National Association of Realtor’s Pending Home Sales Index. Dr. Lereah was Senior Vice President and Chief Economist of the National Association of Realtors where he served as the association’s spokesman on the U.S. economy, the housing and real estate markets as well as other economic and policy issues affecting the real estate industry in the U.S. and abroad. He directed the Association’s Research Division, the Regulatory and Industry Relations Division, the Real Estate Services Group and Strategic Planning activities for the Association. Prior to NAR, he was Chief Economist for the Mortgage Bankers Association of America and …

And when that Chief Economist lies all the time, it does the reverse. (I felt I needed to clarify that for David, specifically.) And that’s bad, David. Not good. Bad. Maybe I should be trying to communicate with you in your own language: Bullish, in which the word for “bad” is pronounced: “Buy”. The point is, we need to trust again and the National Association of Realtors lying about the state of the housing market is a big problem because it puts Realtors on the long list of other groups we can’t trust anymore. “It was easy to do during boom times, harder when times weren't good.” Oh was it, Davey-boy? Harder for who… and in what way? Does it depend on the definition of “harder,” Dave-O? Rosato went on to ask for Lereah’s response to the NAR's latest forecast that calls for a slight increase in home prices next year, and he said the following:

Arrrgghhhh! Oh dear Lord … Who’s driving the bus in this country? If you want to be misled as to where things are headed, visit Lereah or the mortgage bankers frequently… I’m confident you’ll be homeless in no time.

My views are quite different now. I'm pretty bearish and have been for the past year and a half. Home prices will continue to drop. I think we'll see a very modest recovery in sales activity in 2009. But we've still got excess inventories, a bad economy and a credit crunch that will push prices down further, another 5% to 10% more. It'll take a long time to get back to the peak prices we saw in many markets.

No, Dave… I’d say you’re still full of BS… you’re just slightly less willing to say ridiculous things. And as to your replacement at the NAR… well, nice hire over there guys. Are you trying to become irrelevant? Rosato’s last question for Lereah was predictable, but nonetheless telling. She asked if he had any regrets and he replied: “I would not have done anything different. But I was a public spokesman writing about housing having a good future. I was wrong. I have to take responsibility for that.” You wouldn’t have done anything differently? Amazing. Given the chance, you’d just be wrong again. You’re a real jackass, Lereah, you know that? But, at least you said that you have to take responsibility for what you did as Chief Economist for the NAR, so I guess that’s all we can ask for… So… everyone that lost money as a result of David Lereah’s admitted negligence, please send invoices to him directly. I’m sure he’ll reimburse you promptly. After all, he’s a man of his word. I couldn’t find a physical address, but his Website is www.realestateeconomywatch.com. Yes, it’s true… this guy is still employed. Here’s what his new Website says… David A. Lereah, president of Reecon Advisors, is a recognized economic expert in the real estate and financial services industries.

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.

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NAR'S CHIEF ECONOMIST (RET.) DAVID LEREAH

A retired bull? No ... Just a liar in economist's clothing BY MARTIN ANDELMAN

’m still not entirely sure why they call someone who thinks a given market’s prospect’s are bleak a “bear”. It’s not because “bears get slaughtered,” that’s “pigs” that get slaughtered… or maybe “hogs,” I don’t really know, or care to know, frankly. I find Wall Street’s apparent preoccupation with bestiality distasteful, and not surprising in the least. But I do think that I just figured out why they call people who are optimistic about a market’s future a “bull”. It’s because what they have to say is BS, and they’re too polite to add and spell-out the conjunctive ‘s’ word that would make the term a synonym for “fertilizer”. At least that’s what I learned this month when I came across what the retired National Association of Realtors (“NAR”) Chief Economist, David Lereah had to say in an interview with Donna Rosato, a senior writer for Money Magazine, earlier this year. Lereah was a famous “bull” while working for the NAR, or another way to phrase that might be that he was famous for promulgating the ‘B’ in BS while employed by the organization, whose membership is made up of Realtors® throughout all 50 states. Now, when you hear the Chief Economist at the NAR say that what’s coming up in the housing market is nothing but roses, you listen with some healthy amount of skepticism. But Lereah did a lot more than just issue rosy forecasts. He referred to housing as an infallible investment in interviews on television and in print, and then wrote a book, “Are You Missing the Real Estate Boom?" in 2005. As late as in January 2007, he made the statement: "It appears we have established a bottom." Yes, he’s a real bottom all right. Boy-o-boy that sure is going the long way around the barn just to describe what’s really going on here: David

September 2009

Lereah is a liar. I’m sure that, since he’s left the NAR and is now a “private consultant,” he wants us to believe that he’s a retired liar, but can one “retire” from lying? At best, I tend to think of someone who claims to have stopped lying as being a “recovering liar”. Lying just isn’t something you can “retire” from, is it? How would anyone know the actual date of your supposed retirement, for example? “So-in-so claims to have retired from his career spent lying on March 3rd.” See what I mean? Here’s how Mr. Lereah responded to Rosato’s question: “Were you wrong to be so “bullish”? I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it. It was easy to do during boom times, harder when times weren't good.

What in the world does that mean? If I find out this guy is a parent, I’m making a note never to work with his offspring should I, or anyone I know, run across him, her, or them in the future. I’m not saying that they’ll grow up with the propensity to lie just like Dad, but let’s just say that the widespread proximity of fallen apples to their trees makes me apprehensive. (In the event that Mrs. Lereah is reading this, and the children are still young, smack Dave across the face and get the heck out of there, would be my best advice.) In his response to Rosato’s question, Lereah provides us with a window through which we can see the workings of a distorted mind. He clearly believes that his job, as the NAR’s Chief Economist, was to say whatever would promote housing. But David, the reason organizations hire a Chief Economist is not to sell product, it’s to give the organization insight and credibility in its forecasts of the future. With a Chief Economist, it’s not just a guess, it’s a guess made by an economist. - continued on page 45

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