TNR - June 2011

n 1 ma pg e l e. nd icl Ma r t A re A tu

a Fe

Issue 047 June 2011

6

TheNicheReport.com

Advertisement

12

Rate Pimping over Twitter Not a Long Term Successful Strategy

16

FEATURE ARTICLE! They Once Were Lenders Why the government still can't stop ex-subprime bankers or scammers from destroying homeowners

35

Mentoring and Being a ProtĂŠgĂŠ Give back to Scouting more than Scouting has given you - Boy Scout Motto

Up 58 Bringing The Rear Jamie Dimon, Chairman & CEO, JPMorgan Chase & Co.

Checked Your Trash Lately?

Not having FHA approval is NOT a reason to turn down business The reverse mortgage industry is growing at an incredible pace. If you’re not doing business in this niche market or you’re turning away reverse mortgage loans, you might as well be throwing away money.

EVEN IF YOU’RE NOT AN FHA-APPROVED BROKER, we can help. We’re Reverse it! – one of the largest and certainly the most respected wholesale lender for reverse mortgages in the country. Our business is simplifying reverse mortgages, and nobody does it better. Want proof? Send us the application. We do all the work including closing the loan. You get paid. Easy enough? We have all the tools to grow your business in this rapidly growing product line – including free software and polished, professional, turn-key marketing materials to help you close reverse mortgage loans faster and more efficiently than anyone else.

Visit us at new2reverse.com, and learn how hundreds of licensed mortgage brokers from coast to coast are growing their business with Reverse it!

Reverse it! is a subsidiary of Urban Financial Group, Inc. – A Knight Capital Group, Inc. Company

Are you sure you’re ready for the GSEs’ appraisal XML mandate?

This year, the GSEs will require full appraisals in MISMO XML 2.6 format. If you’re relying on PDF extraction to get the XML, your process will fail.

It’s not a question of “if” PDF data extraction and scanning will fail. It’s how often, and how much it costs you. And the answer isn’t good.

Do the math: The URAR form alone has over 1000 fields. Even at 98% fieldlevel accuracy, 20 or more fields will be corrupted. Some of those will be critical, and so your pipeline will stop due to bad data. You might not notice it today, because PDF extracted appraisals aren’t subjected to rigorous data analysis. But they will be, and many won’t pass.

The solution? Demand “Native XML” appraisals. No conversion, no extraction, no excuses. Just clean XML straight from the appraiser’s desktop software.

Then you get exactly what they typed, even on every kind of odd form or addendum. PDF extraction just can’t do that.

We’re certain, because we create, transmit, analyze, store, and manage more appraisal data than anyone on Earth, including the GSEs. So when we tell you there’s a problem with PDF extraction, believe it.

Protect yourself by downloading the free “MISMO XML 2.6 Appraisal Checklist” from our website. It’s a vendor questionnaire that helps you set policy now for the coming regulations. Whether you use an AMC or manage appraisals inhouse, it ensures a 100% native XML process free of pipeline problems — without changing vendors, or even paying us a dime.

Download the MISMO XML 2.6 Appraisal Checklist at www.MercuryVMP.com/XML

Native XML is just one of our solutions. Call us today for more.

Mercury Network 1-800-434-7260 www.MercuryVMP.com

AD CODE: MATMEMN0511 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice.

Copyright ©2011 a la mode, inc.

Opportunities Are Unlimited When You Partner With The Right Lender.

Icon ResIdentIal lendeRs, a wholly owned subsidiary of Grand Bank N.A., is one of the nation’s leading Conforming, Jumbo, FHA and VA wholesale lenders. Our strength, success, and longevity are derived from delivering customer service that exceeds our valued business partners’ expectations. With deep industry knowledge, financial stability and innovative technology, we provide the solutions for our business partners to fund loans while avoiding risk.

DTI Subject to DU Findings Free DU LPMI Available to 95% Direct Access to Underwriting Bank Funding 90 Day Seller Seasoning Not Required FHA and FHA High Balance Loans Down to 620 Fico Limited Trade Line Requirements Subject to DU Approval Maximum 10 Financed Properties Allowed

For additional information regarding Comforming, Jumbo, FHA and VA Lending, Call us at 1-888-716-8284 or visit us online at www.iconwholesale.com

CONTENTS

16

Issue 047

June 2011

They Once Were Lenders Why the government still can't stop ex-subprime bankers or scammers from destroying homeowners

NICHE REPORTS prime & FHA

pg 49

REVERSE MORTGAGE

pg 49

HARD MONEY

pg 50

Construction/Rehab

pg 50

JUMBO

pg 50

Service Providers

pg 51

Martin Andelman FOUNDER & PRESIDENT Robert Pegg robert@thenichereport.com CO-FOUNDER & PRESIDENT David Pegg david@thenichereport.com

12 26

Rate Pimping over Twitter Chris Jones branch manager, City 1st mortgage Not a long term successful strategy

Seizing Control of Your Retirement

38 40

Bernie Navarro President and founder, Benworth Capital Partners Plan by investing in mortgages: Part VI

29

Damages Arising from Defects in Real Estate Construction Projects Stan Stephenson managing principal, litigation economics, LLC Analyzing claims in business interruption cases

35

Mentoring and Being a Protégé Gary Opper president, approved financial corporation Give back to scouting more than scouting has given you - Boy Scout Motto

6

June 2011

MANAGING EDITOR Stewart Mednick stewart@thenichereport.com

Why Borrowers Choose Their Lender tom ninness Vice President, Cherry Creek Mortgage Their good experience will result in leads

ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com

Center Stage with 360 Mortgage

Advertising Director Jessica Grizzle Jessica@thenichereport.com

The Niche Report The Niche Report talks with Mark Greco, President of 360 Mortgage

Advertising sales Heather Bopp Heather@thenichereport.com

DEPARTMENTS

09 10 31 43 45 54 58

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@thenichereport.com

note from the founder Letters to the editor online lead generation What's your mortgage IQ? TIP OF THE MONth LENDER & RESOURCE DIRECTORY BRINGING UP THE REAR

Production Manager Henry Suchman henry@thenichereport.com Production Assistant Dawn Exner dawn@thenichereport.com Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Martin Andelman Karen Deis Chris Jones Stewart Mednick Bernie Navarro Tom Ninness Gary Opper Stan Stephenson Dennis Yu

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

SUBSCRIPTIONS This publication is intended for real estate finance professionals.

If you are a mortgage broker, lender, loan officer, or real estate professional and you do not currently receive The Niche Report, please go to www.thenichereport.com.

An annual subscription is $47.95 (twelve months/twelve issues.)

For additional copies being mailed to the same address please call 866.964.2695 or email us at subscriptions@thenichereport.com for multi-copy discount.

Send address change requests to info@thenichereport.com.

Remember to include the old address.

To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to opt-out@thenichereport.com.

ADVERTISEMENTS To inquire about advertising in The Niche Report, please call 866.964.2695, or send an email to ads@thenichereport.com. Visit our website, www.TheNicheReport.com to download a copy of our Media Kit.

EDITORIALS / ARTICLES To submit an article for consideration in The Niche Report, please send an email to stewart@thenichereport.com or call 866.964.2695. We are interested in original writings relevant to mortgage brokers and other real estate finance professionals.

If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to stewart@thenichereport.com.

THE NICHE REPORT POLICY The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.

Note from the founder

The Thirty Thousand Dollar Millionaire. Have you ever heard of this term? It is defined by the Urban Dictionary as “A kid who gets their first adult job making $30,000 a year and thinks they are a millionaire. They usually lease a Lexus because they can't afford the BMW or Mercedes and generally treats restaurant servers like crap.” The males are also characterized by Andrea Grimes of the Dallas Observer as “More intelligent than many experts give them credit for, they are highly social and can be easily identified by their plumage: wildly spiked, occasionally faux-hawked and usually frosted hair atop the head. About the torso, look for brand-name adornment in the form of shirts stamped with cheeky slogans or printed with a great deal of over-designed crap. There will be man-jewelry.” I’m sure there’s lots of fist pumping in there as well.

Our industry was inundated with these guys in 2005. They made the dedicated, honest, experienced LO’s job a nightmare and bequeathed our industry with the “used car salesman” title after the bubble burst, for which they then scattered to other areas of work such as being a used car salesman, a restaurant server perhaps (ahh, sweet, sweet poetic justice) or jumping into loan modifications.

This brings me to Martin Andleman’s Feature article this month titled They Once Were Lenders. It is a fantastic piece on how many of these trolls who helped bring down our economy (and our industry) were trained by sub prime mortgage shops and then moved on to loan modifications – it’s absolutely fascinating and truly mind boggling. Someone should buy the movie rights.

I have also asked Fred Glick of NAIHP to co-write this forward. His opinion on bringing back respect should resonate with our profession. Please read below for Fred’s wise perspective.

Keep up the Fight – Robert Pegg ••• Respect. How do you get it? Why do you need it? How does it help?

The word Mortgage Broker, as you may have heard is a dirty word. People in both Governmental and public circles define a Mortgage Broker as the pushy, car sales-like guy with money as his total motive. This was the guy that told me that I was getting a one percent mortgage. And the scary thing was fifty percent of the loan agents at the time truly believed this because they were not properly trained. I can rehash all that has happened in the last few years but I think you'd all rather watch reruns of Jersey Shore in Chinese than have me go through that angst.

Instead, let's look forward.

Currently, I am a Director of the NAIHP, the National Association of Independent Housing Professionals that is working in Washington on a volunteer basis to straighten out the industry. After meeting with Congress people, Senators, their staff and the staff of various committees, what I see is that we need to have the respect of the people we are trying to persuade in order to get our point across. When a National Association of CPAs walk in and tell them something is wrong, they listen and respect their opinions.

Why? Because their membership is licensed, background checked and properly schooled. And because of the SAFE Act, the NMLS licensed mortgage originator is too.

But, there is a big difference.

CPAs and their leaders are not out there partying with their clients seeing who can get the most drunk, smoke the most cigarettes, plan on the maximum amount of money they can swindle their clients of, don't come out with silly videos, don't commit fraud within their leadership and don't align themselves with just one far-reaching philosophy.

That's right, boring is good. Boring is respected. In the end, your clients and the legislature will enjoy boring. Boring will be listened to. Start looking at your own business in this way. Yes, it's fun to dress in a silly tie, just every once in awhile. Don't make silliness your moniker. Make it your brain. Be the guy that people go to when they need answers, not when they need to party.

I had this issue years ago. There was another loan officer in my area that was quiet, smart, plain and knowledgeable. I was the fun guy.

Her name is Eileen and my nickname was Slick (get it, Slick Glick). So the line on the street was, “If it's Slick, give it to Glick, if it's clean, give it to Eileen.” The easy clean deals went to her and I got the difficult ones. Even though I pulled a lot of them off, in the long range, she got the referrals of the clean deals.

See, boring works. Try it. Make your job and our job easier!

Respect! Fred Glick

Official

MEMBER

TheNicheReport.com

9

Letters to the editor

Letters to the editor I just got through watching my daily edition of TBWS and The Niche Report was being featured with a subscription offer. That reminded me of the first copy that I read. All too often people are too busy finding fault and criticizing, usually unencumbered by facts, and rarely issue praise when warranted. I wanted to point out that your publication is one of the best I have read.

I don’t remember when I read my first copy but it was some time ago. After reading it cover to cover I tuned to my wife, also a 25 year plus veteran of our industry, and said this is a very good publication. I still have that opinion and here is why. I find The Niche Report relevant and timely with great topics and solid current information. Additionally an industry reader is exposed to options and different perspectives that can help them with their business. There are no publications that I can think of that fit the above parameters and define themselves in this manner on a consistent basis.

Great job – You continue to move in the right direction and I am sure you will gain many more subscribers.

Neill

Tip of the Month: Going Through Hell and Stopped, April 2011

I just read your article in Niche (Tip of the Month),great tip when going

through Hell, just keep going. Great.

Keep up the Good work, Dennis

Bob

Bringing up the Rear: Ex Assistant Treasury Secretary Herb Allison and HAMP, April 2011 I love your column "Bringing up the Rear," how true and a painful reality check for us middle class citizens.

I am very upset over this entire HAMP fiasco and the numerous people that have and are losing their homes, this is horrible and to say "oh well, we offered to help" is unacceptable. Besides writing congress, what do you suggest I do to help? I am a Mortgage Professional for over (15) years, from Loan Originator, to Management, to Underwriting, I can help our government with suggestions and oversee things I think much better than others as I've been there. Oh and I am also a Licensed Realtor in one of the hardest hit areas (Nevada)...I see the pain and bank beat downs of our people, what a shame!

Thank you for your article and keeping it real. Let me know if there's something I can do to assist. We have got to band together.

P Jackson

Letters to the Editor may be e-mailed to info@TheNicheReport.com or faxed to 703-991-2362.

Include your full name, email address, and daytime phone number. We are unable to publish all letters and may edit letters for length and clarity. Visit us online at www.TheNicheReport.com to subscribe to our magazine and/ or eNewsletter. Or call toll-free at 866-964-2695 for more information.

And now more trouble coming for the Lending World. Makes me wonder if I should become a writer! LOL Keep up the great articles!

The Foreclosure Crisis: Causes and Consequences by Peter Hebert, April 2011 For nearly two years I've been working for a large servicing company doing loan modifications. The things I saw became so frustrating that I left two weeks ago. I could add a number of paragraphs to everything I've read so far.

Your article "The Foreclosure Crisis: Causes and Consequences" in "The Niche Report" of April 2011, is exactly on the money with what I saw. Another very accurate article was published by The Center for Responsible Lending entitled "Fix or Evict? Loan Modifications Return More Value than Foreclosures."

From what I've read the PSA's deliver no exclusive right to the servicers as far as loan modifications go. Would it be possible for an unbiased third party to do modifications and bypass the servicing company, without taking over any servicing responsibilities? This would be in the best interest of the investor, borrower and depending on how the PSA was written could even benefit the servicer.

Cathy B

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

Looking fo r: TO P P R O D U CERS Call for De tails!

The BEST Branch Solution, Period.

www.fmbranch.com 800.220.9498 info@fmbranch.com NationWide FHA Lender This information is provided to assist business professionals and is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. Lender NMLS: 2767. Licensed by the NJ Department of Banking and Insurance, License #9100861. Freedom Mortgage corporate office is located at: 907 Pleasant Valley Ave. Suite 3, Mount Laurel, NJ 08054. All Rights Reserved.

BODA Publishing, LLC, PO Box 494,Bentonville, AR 72712

PRSRT STD U.S. POSTAGE

PAID

PERMIT #379 BOLINGBROOK, IL

"TheNicheReport is a national trade publication dedicated to wholesale and correspondent lending."

“For the past six months, my customers have been receiving the Mortgage News every month. Now, my customers are benefiting from this valuable information every month, and the feedback I'm getting is outstanding.

I'm averaging at least 4 to 5 new loans every month as a direct result of this newsletter !

The Mortgage News has helped make my business a success—and my customers have proved it works!"

Richard Allen, Baton Rouge, LA

“Since I started using Stoneybrook Publishing, my business has increased 20% to 30%. It’s an EASY and effective marketing tool. We all say we want lifetime clients, but you have to keep in touch with your old clients to do that. Stoneybrook Publishing does it for you – EASILY and painlessly!”

A personal typewritten letter to each client by their first name !

1438

PUBLISHING, INC.

Jeff Jaye, San Ramon, CA

Rich Alex, Greenbelt, MD

Your Custom Back Page !

Your Photo Here !

"I have been mailing the newsletter every single month for five years now. It makes me between $50,000 to $60,000 in commissions off of repeat and referral business from my client database. I can’t imagine why other mortgage originators can’t see the value of staying in touch with old customers every single month."

•

NO Contracts !

•

Full-service, Turnkey Marketing Solutions !

•

Proven to Get You Results Every Single Month !

"I can't believe you can create such a great newsletter for what you charge!

This has really helped my business.

I get about 5 calls every month my newsletter goes out.

It's already paid for itself for the next 10 years!"

Sandro Mungioli, Dallas, TX

NRB

Only subscribers may view the full digital copy.

To subscribe, follow the link below: http://subscribe.thenichereport.com/mm5/merchant. mvc?Store_Code=TNR&Screen=PLST Send us an email to info@thenichereport.com with any questions.