texas mortgage professional magazine - may 2009
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Texas Mortgage Professional Magazine - May 2009TRANSCRIPT
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� Presidents First is a multi-state, full-service home mortgageBanker dedicated to offering quality mortgage solutions with anunwavering commitment to service. Having years of experience inthe mortgage industry, we understand what’s important.Presidents First is dedicated to providing our customers withintelligent, innovative mortgage products at aggressive rates andunparalleled service levels. Utilizing hands-on common senseunderwriting, expeditious closing strategies and personalizedaccount servicing, Presidents First is focused on helping ourcustomers to grow their business. Offering affordable lendingsolutions for borrowers that deserve quality loan programs andstability - it’s clear to see why Presidents First is America’s LeadingWholesale Lender.™
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For additional information Please contact us at:1-877-773-7178445 Broadhollow RoadMelville, NY 11747 � www.presidentsfirst.com �
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America’s LeadingWholesale Lender ™
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Mortgage PROFESSIONALT E X A S
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
STATE OFFICEPhone # E-mail
Elvis Stulting President (713) 450-9300 [email protected] Ward President-Elect (281) 440-4660 [email protected] Smith Treasurer (817) 299-0024 [email protected] Baker Secretary (713) 661-6683 [email protected] Kucerak Immediate Past President (210) 828-3384 [email protected]
DIRECTORSJan Brown Director (214) 641-1778 [email protected] Pheiffer Director (972) 365-7531 [email protected] Everett Anschutz Statewide Legal Counsel (713) 980-9503 [email protected] G. Dinham Executive Director (800) 850-8262 [email protected] Boyd Executive Assistant (800) 850-8262 [email protected]
LOCAL CHAPTER PRESIDENTSRobert English Central Texas Chapter (512) 687-4040 [email protected] Kingsley Dallas Chapter (972) 596-1555 [email protected] Puente San Antonio Chapter (210) 490-8833 [email protected] Gilbert Greater Houston Chapter (281) 462-2088 [email protected]
Texas Association of Mortgage Brokers State OfficeThe State Affiliate of the National Association of Mortgage Brokers
14901 Quorum Drive, Suite 435 � Dallas, TX 75254Phone: (800) 850-8262 � Fax: (530) 484-2906
TAMB Web site: www.tamb.org � E-mail: [email protected]
reached an agreement with one of thelargest privately-held lenders in theUnited States to resolve charges thatthe company violated federal law byfailing to provide reasonable securityfor consumers’ sensitive information.
In testimony before the HouseEnergy and Commerce CommitteeSubcommittee on Commerce, Tradeand Consumer Protection, ActingDirector of the Bureau of ConsumerProtection Eileen Harrington said theagency strongly supports the goals ofHR 2221, the Data Accountability andTrust Act, which would require compa-nies to put reasonable data securitypolicies and procedures in place, and tonotify consumers when there has beena data security breach that affectsthem. The legislation also would givethe Commission the authority to obtaincivil penalties for violations.
“A critical element of privacy is datasecurity. If companies do not protectthe sensitive consumer informationthat they collect and store, that infor-mation could fall into the wrong hands,resulting in fraud and other harm, andconsumers could lose confidence in themarketplace,” the testimony stated.
The Commission made two furtherrecommendations regarding the datasecurity legislation: It suggested thatthe legislation be extended to cover
The Federal Trade Commission (FTC)under the Obama Administration is tak-ing an aggressive stance on identitytheft in the workplace by targeting oneof the largest mortgage bankers in thecountry. Legislation to control the useof peer-to-peer (P2P) software and therise in activity by information brokershas raised serious concerns and isprompting the creation of new laws tocontrol and deter identity theft in theworkplace. The following is the latest ina string of announcements issued bythe FTC urging Congress to take addi-tional action to curb identity theft orig-inating in the offices of creditors andfinancial institutions.
As outlined below, the FTC has filed acompliant against James B. Nutter &Company, which is open for publiccomment until Monday, June 8, 2009.To file a public comment, go towww.ftc.gov/os/2009/05/0723108pub-liccomment.pdf.
FTC release • May 5, 2009The FTC testified on the Commission’sefforts to promote better security forsensitive consumer information and toprevent the inadvertent sharing of con-sumers’ personal or sensitive data overpeer-to-peer (P2P) Internet file-sharingnetworks. As part of these efforts, theagency also announced that it had
FTC testifies on data security,peer-to-peer file sharing
By Craig Atchley, CITRMS
data stored on paper, as well as elec-tronic data. It also recommended thatcertain provisions imposing obligationson information brokers—companieswhose business is to collect and sellinformation about individuals who arenot their customers—be targetedspecifically to address harms con-sumers may face when brokers sellinformation about them, to the extentthat such harms are not alreadyaddressed by federal law. These provi-sions should not displace existing legalprotections.
The FTC currently enforces severallaws that restrict the dis-closure of consumer infor-mation and require com-panies to ensure the secu-rity and integrity of thedata in certain contexts:the Fair Credit ReportingAct restricts disclosure ofconsumer credit reportsexcept for specified per-missible purposes; theGramm-Leach-Bliley Actimposes privacy and secu-rity obligations on finan-cial institutions; and theFTC Act prohibits unfair ordeceptive acts or practicesin or affecting commerce.
Using its authorityunder these laws, the tes-timony noted, theCommission has brought26 law enforcementactions since 2001against companies thatallegedly failed to maintain reason-able procedures to protect consumers’personal information, including a casethe agency has just settled againstJames B. Nutter & Company ( JBN). Thecompany is based in Missouri andmakes and services residential mort-gage loans around the country. It col-lects information from loan appli-cants, including their Social Securitynumbers, financial information, andemployment and credit histories. TheCommission’s complaint alleges that,beginning in 2004, JBN engaged in anumber of practices that taken togeth-er failed to provide reasonable andappropriate security for sensitive con-sumer information, in violation of theFTC’s Safeguards Rule. In addition, thecomplaint alleges that the companyviolated the FTC’s Privacy Rule by fail-ing to provide privacy notices and,later, providing notices that were inac-curate. To settle these charges, JBN hasagreed to a proposed order that wouldrequire it to establish and maintain acomprehensive data security programcovering consumers’ personal infor-mation, and to hire an independentauditor to assess its security proce-dures every two years for 10 years, andto certify that these procedures com-ply with the proposed order. The pro-posed order also bars JBN from violat-ing the agency’s Safeguards andPrivacy Rules.
The Commission previously has fileddata security cases against retailers TJX;
CVS Caremark and DSW ShoeWarehouse; and the data brokersChoicePoint and Reed Elsevier Inc.,which operates Lexis Nexis and SeisintInc. The FTC also promotes better datasecurity practices through extensiveconsumer and business education, thetestimony stated. On the policymakingfront, the FTC recently proposed a rulethat would require that consumers benotified when the security of theirhealth information is breached. Inaddition, the FTC is examining privacyissues associated with behavioraladvertising and the use of personal
health records and cloudcomputing networks.
The testimony alsodetails the Commission’sactivities with regard toinadvertent file sharingon P2P networks.Although P2P technolo-gies hold potential bene-fits for computer usersand businesses, they alsocan raise the risk thatsensitive information willbe made available overP2P networks, eitherthrough inadvertentsharing or through mal-ware. The testimonynoted that the agencyhas brought cases relatedto P2P file sharing, hashelped P2P softwaredevelopers devise volun-tary best practices tohelp consumers prevent
inadvertent file sharing, and continuesto monitor efforts by companies tocomply with these practices. TheCommission also has held a workshopon P2P, issued a report, and alertedconsumers to the risk of inadvertentfile sharing. The testimony stated thatthe Commission also is supportive ofHR 1319, the Informed P2P User Act,legislation that would set a minimumstandard for P2P software companies tofollow in notifying consumers aboutwhat files a P2P program will share,and in obtaining consent from con-sumers before the files are made avail-able.
The Commission vote to approve thetestimony was 4-0.
The Commission vote to approve theadministrative complaint and proposedconsent agreement with JBN was 4-0. TheFTC will publish an announcementregarding the agreement in the FederalRegister shortly. The agreement will besubject to public comment for 30 days,beginning today and continuing throughJune 8, 2009, after which, the Commissionwill decide whether to make it final. Tofile a public comment, please visitwww.ftc.gov/os/2009/05/0723108public-comment.pdf and follow the instructionsat that site.
Craig Atchley is a Certified Identity TheftRisk Management Specialist (CITRMS)with The Safeguards Institute. He may bereached at (214) 228-6598 or [email protected].
Announces settlement of case against mortgage lenderthat allegedly failed to safeguard consumer information
“Legislation to controlthe use of ‘peer-to-peer’(P2P) software and therise in activity by infor-
mation brokers hasraised serious concernsand is prompting the
creation of new laws tocontrol and deter
identity theft in theworkplace.”
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Silver Hill Financial LLCTexas Capital Bank
STATEWIDESTATEWIDE
Sponsorship funds are used to develop new Chapters across the state, monitor legislative and regulatory issues at the state and regulatory issues at the state and national levels, produce quality educational programs, send future association leaders to the National Association of Mortgage Brokers Leadership Conference, and maintain the association’s headquarters in Austin.
Black, Mann & Graham LLP
Amtrust MortgagePrimary Capital Mortgage
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For more information on the TAMB Statewide Sponsorship program, call the TAMB office at (800) 850-8262 or visit www.tamb.org.
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NMP EXPLORER
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NMP Mortgage Professional of the Month: Hugh Miller,President and CEO of Reliance First Capital LLC
Ask Tommy: Your QC Expert By Tommy A. Duncan
Trend Spotter: The other 50 percent By Gibran Nicholas
A view from the “C” suite: SurvivorBy David Lykken and Scott Woll
Mortgage warehousing: What now? By James Hinton
Lock, stock and barrel By Michael Larssen, CMB
A closer look at Cost Segregation Studies By Scott Marchand
Forward on reverse: Write-offs could cut HECM costs By Atare E. Agbamu, CRMS
The NAMB perspective
Good-enough technology … is this the best we can do?By Ron Litt
The FHA insider: The FHA responds to declining marketsBy Jeff Mifsud
Value nation: The mortgage crisis and the case of no col-lateral By Charlie W. Elliott Jr. MAI, SRA
Ask Brian By Brian Sacks
Make sure red flag rules are on your radar screen By Steve Grant
Job hunting in today’s market
Look for ‘the one’ when it comes to branch partnershipsBy Joe Ramis
Loan mod forensic loan audit: Part I of III By Bonnie Wilt-Hild
National Mortgage Professional Magazine Book Review:Think Reverse! By Liz Schulz
These are the end of days By Eric Weinstein
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May 2009Volume 1 • Number 1
1220 Wantagh Avenue • Wantagh, NY 11793-2202Phone: (516) 409-5555 / (888) 409-9770
Fax: (516) 409-4600Web site: www.nationalmortgageprofessional.com
Mortgage PROFESSIONALN A T I O N A L
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
STAFFEric C. PeckEditor-in-Chief
(516) 409-5555, ext. [email protected]
Andrew T. BermanExecutive Vice President(516) 409-5555, ext. 333
Domenica TrafficandaArt Director
Karen KrizmanSenior National Account Executive
(516) 409-5555, ext. [email protected]
Beatrice MarcusOffice Manager
(516) 409-5555, ext. [email protected]
ADVERTISINGTo receive any information regarding advertising rates,deadlines and requirements, please contact SeniorNational Account Executive Karen Krizman at (516) 409-5555, ext. 326 or e-mail [email protected].
ARTICLE SUBMISSIONS/PRESS RELEASESTo submit any material, including articles and pressreleases, please contact Editor-in-Chief Eric C. Peck at(516) 409-5555, ext. 312 or e-mail [email protected]. The deadline for submissions is the first of themonth prior to the target issue.
SUBSCRIPTIONSTo receive subscription information, please contactOffice Manager Beatrice Marcus at (516) 409-5555, ext.301, e-mail [email protected] or visitwww.nationalmortgageprofessionalmagazine.com. Anysubscription changes may be made to the attention ofBeatrice Marcus via fax to (516) 409-4600 or [email protected].
Statements of fact and opinion in National MortgageProfessional Magazine are the responsibility of theauthors alone and do not imply an opinion on the part ofNMP Media Corp. National Mortgage ProfessionalMagazine reserves the right to edit, reject and/or post-pone the publication of any articles, information or data.
National Mortgage Professional Magazine is published monthly by NMP Media Corp.
Copyright © 2009 NMP Media Corp.
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A message from NMP Media Corp. Executive Vice President Andrew T. Berman
National Mortgage Professional Magazine … a new time, anew empowering resource serving the entire mortgageprofessionIn this new era of the mortgage profession, we must find the most efficient ways to deliver,process and utilize the significant volume of news and information being constantly dissem-inated. We believe the broadcast of this news is even more important today in this turbu-lent and confusing environment. Our industry is under increased regulatory and legislativeoversight and constant scrutiny, as mortgage professionals extend their capabilities into anumber of interconnected and related businesses.
To say “the times are changing” is an understatement …For the past 16 years, the National Mortgage Press publishing team has delivered relevant, high-quality, local andnational content to mortgage professionals nationwide. As a former loan officer, my heart will always be on theorigination side of the business. However, times have changed and so has our readership. Today, the lines defin-ing the various disciplines of the mortgage profession are no longer clear, and we are seeing a significant crossoverbetween residential and commercial originations and their associated settlement and servicing. These are pro-found changes, and mortgage professionals must adapt to these changes to remain competitive and successful.
What you can expect to find in every issue of National MortgageProfessional Magazine?Each month, we will be featuring a Mortgage Professional of the Month. We are selecting this individual basedon criteria, including innovation, the ability to overcome insurmountable obstacles, controversial ideas andopinions, and other areas that make the chosen Mortgage Professional of the Month stand out from the pack.This month, we’ve selected former Delta Funding CEO Hugh Miller as our May 2009 Mortgage Professional of theMonth. He tells the story of his entrance into the business, how he overcame certain obstacles and his historyas primarily a wholesale operation who is also enjoying great success on the retail side.
This month’s cover story by James Hinton, “Mortgage Warehousing: What now?,” takes a comprehensive lookat the current state of warehousing, and provides suggestions on how to address the issue of disappearing ware-house lines.
In the May 2009 issue, we take a closer look at “Who’s Hiring?” in the mortgage industry. This special section willbring you ideas on how and where to look for employment in the industry, and offer tips to assist you on your jobhunt. On page 33, in conjunction with FindMortgageJobs.com, we bring you “National Mortgage ProfessionalMagazine’s Top 50 Companies That Are Hiring.” This special one-page listing features the companies, positions andlocations of the biggest movers and shakers currently seeking the top professionals in the field to join their ranks.
Each month, you can also expect to find other features like Tommy Duncan’s “Ask Tommy: Your QC Expert”column. Tommy breaks down the complexities of quality control and compliance, and brings these ideas downto a level that everyone can grasp. CMPS Institute Founder and Chairman Gibran Nicholas’s “Trend Spotter” col-umn will focus on the latest trends and revenue-generating concepts in the industry, and I think you are alsogoing to enjoy a monthly behind-the-scenes view from David Lykken and Scott Woll in their “A View From the ‘C’Suite” column. Jeff Mifsud will guide you through the waters of FHA loans from an insider’s perspective in hismonthly installments of the “FHA Insider.” If you are involved in reverse mortgages or financial planning, or areconsidering entering this field, Atare E. Agbamu‘s “Forward on Reverse” is required reading. As we face increasedscrutiny over values and the appraisal process, Charlie W. Elliott Jr.’s “Value Nation” will provide a closer look atthe world of appraisals and a view of the industry from the appraiser’s perspective. Last, but not least, BrianSacks will share his marketing techniques and proven sales tips in his “Ask Brian” monthly feature.
But wait … there’s more!In addition to the aforementioned features, each month, we will have the industry’s best minds share theirsecrets, knowledge and solutions on the industry. We have created a unique visual table of contents called the“NMP Explorer,” designed to help to understand the content of the articles and features through the use of key-words and concepts. The “NMP News Flash” column will bring the latest news briefs and regulatory updates toour pages each month, and our “Heard on the Street” takes a look at the mergers, acquisitions and changes inthe lives of those individuals and companies that shape the mortgage profession. Finally, the “New to Market”column will feature the latest programs and products designed to take your business to the next level, and intro-duce you to some new ideas that’ll enhance and supplement your current business model.
This is NOT a monologue …National Mortgage Professional Magazine is defined by elements of editorial interactivity, as we aim to focus ongenerating an ongoing dialogue of collaboration with our readers through user-generated content and variousforms of social networking. With this in mind, we have developed National Mortgage Professional Magazinetogether with our continuously updated Web site, NationalMortgageProfessional.com, to offer our readers thefreshest news and analysis 24/7, and the opportunity to have an active voice by providing feedback on the issuesimpacting you, the mortgage professional. The result will keep you better-informed and engaged in the manychanges impacting the mortgage profession, no matter what your discipline or area of expertise, as we provideyou the tools to be better-prepared in building a more responsive, profitable and compliant business model.
Please feel free to share your thoughts, comments, words of praise or complaints directly with me [email protected].
Cheers,
Andrew T. Berman, Executive Vice PresidentNMP Media Corp.
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Fannie Mae/Freddie MacHVCC takes effect May 1, 2009
The Fannie Mae/FreddieMac Home Valuation Codeof Conduct (HVCC) becameeffective on May 1, 2009.All lenders, correspondent
lenders and servicers selling loans toFannie Mae/Freddie Mac will berequired to adhere to the Code.
The Code of Conduct establishes anumber of parameters, including:Required use of the Market ConditionsAddendum (Fannie Mae Form1004MC/Freddie Mac Form 71); apprais-er independence safeguards; require-ment that the borrower receive a copyof the appraisal; appraiser engagementrestrictions; prohibitions againstimproper influences on appraisers;appraisal audit requirements; and theIndependent Valuation ProtectionInstitute.For more information, visit www.fhfa.gov.
MBA boosts originationsforecast by $800 billion-plus
The Mortgage BankersAssociation (MBA) hasincreased its forecast ofmortgage originations in2009 by over $800 billion.
MBA now expects originations to total$2.78 trillion, which would make 2009the fourth highest originations year onrecord, behind only 2002, 2003 and 2005.
MBA cites that the boost is dueentirely to the expected increase inmortgage refinancing activity motivatedby the drop in interest rates followingthe Federal Reserve’s March announce-ment on the Treasury bond and mort-gage-backed securities purchases pro-grams and the Fannie Mae and FreddieMac refinance programs. MBA slightlylowered its forecast of mortgage origi-nations tied to home purchases.
“While the Fed has not announcedthat it is targeting specific rates for either10-year Treasury rates or rates on 30-year fixed-rate mortgages, the effect ofhaving the Fed bid in the market for asustained period is enough to create arefinance incentive for a tremendousnumber of homeowners,” said JayBrinkmann, MBA’s chief economist and
senior vice president of research andeconomics. “The vast majority of mort-gages originated before the latter part of2008 are probably going to have at leasta 50-basis point refinance incentive forat least the next several months, withmortgage rates hitting lows not seensince the early 1950s and late 1940s.”
The previous record originationyears of 2002, 2003 and 2005 had largeamounts of sub-prime loans and jumboloans. In contrast, the 2009 originationswill be almost entirely Fannie Mae andFreddie Mac-eligible loans, or eligiblefor Federal Housing Administration(FHA) insurance.
MBA estimates that refinancings in2008 totaled $765 billion and were fore-cast to increase to $1.13 trillion in 2009.With the recent moves by the FederalReserve and the Fannie/Freddie pro-gram, refinancings are expected to reach$1.96 trillion. In contrast, MBA estimatesthat purchase mortgage originations in2008 totaled $854 billion, and were fore-cast to fall slightly to $851 billion in2009. The new MBA estimate for 2009 is$821 billion, driven by a combination ofcontinued declines in home sales andlower prices on the homes that are sold,leading to smaller mortgages on averagethan in recent years.
MBA projects that total existinghome sales for 2009 will drop 2.5 per-cent from 2008 to 4.8 million units.New home sales will decline about 39percent in 2009 from 2008 to 293,000units. Median home prices for new andexisting homes will continue to fall,dropping by about five to six percentfrom 2008 levels.For more information, visit www.mort-gagebankers.org.
New FICO credit score formortgage lenders debuts
FICO and Equifax have introducedBEACON Mortgage Score, a new FICOindustry score designed to help mort-gage lenders make the best possiblerisk decisions when addressing bothcurrent homeowners and those aspir-ing to own. The new score builds uponthe predictive power of the BEACONcredit risk score which is used in the
mortgage industry. By focusing specifi-cally on mortgage risk performance,FICO scientists have developed a ver-sion of the BEACON score with signifi-cantly greater power for assessingmortgage repayment risk.
In early validation testing, the per-formance of BEACON Mortgage Scorewas compared to that of the general riskBEACON score when predicting mort-gage repayment risk specifically. Thenew score identified up to 25 percentmore of the high-risk mortgages andhome equity lines-of-credit that laterbecame seriously delinquent. In light oftoday’s housing crisis, this new scorecan aid servicers in earlier identificationof borrowers at risk, mitigating the highcost of consumers moving to foreclo-sure. Early results suggest that the use ofBEACON Mortgage Score by the industrycan potentially save it $1 billion in fore-closure costs and help keep an estimat-ed 115,000 more struggling homeown-ers in their homes.
To assist clients, BEACON MortgageScore retains the same 300-850 scoringrange, minimum scoring criteria, andinquiry treatment as previous versionsof the BEACON score. However, toachieve its increase in predictivestrength, FICO’s new scoring modelassesses several additional data vari-ables derived from Equifax consumercredit files, selected specifically to pre-dict mortgage repayment risk. As aresult, the model includes 15 addition-al score reason codes that help lendersunderstand and explain the scores.
For more information, visit www.fico.comor www.equifax.com.
Reverse mortgage association adopts loan originator credential
The National ReverseMortgage LendersAssociation (NRMLA)
has announced that it soon will be offeringa Certified Reverse Mortgage Professional-Loan Originator designation. To receivethe designation, applicants must meet cer-tain eligibility requirements, such as aminimum of two years of service originat-ing reverse mortgages and 50 loans closed,12 hours of continuing education and sub-mission to a background check, beforethey can sit for the exam.
Over the past year, a committee ofindustry professionals and lawyers hasbeen meeting to design the accredita-tion process and prepare the exam.NRMLA has made a significant financialinvestment in gathering representativesfrom across the nation to think throughthis vital plan.
“This is some of the most importantmoney we have ever spent,” says PeterBell, NRMLA president. “Our organiza-tion’s viewpoint is that our first respon-sibility is to protect the consumer—andthis new designation will provide sen-iors and their children with every assur-ance that they are dealing with educat-ed, well-prepared professionals.”For more information, visit www.nrmla.org.
continued on page 7
Each month, National MortgageProfessional Magazine will focus on one ofthe industry’s top players in our “MortgageProfessional of the Month” feature. Ourreaders are encouraged to contact us by e-mail at [email protected] consideration in being featured in afuture “Mortgage Professional of theMonth” column.
This month, we had the chance tochat with Hugh Miller, president andchief executive officer of Melville,N.Y.-based Reliance First Capital LLC. A20-plus-year veteran of the industry,Hugh Miller is the former chief execu-tive officer of Delta Funding.
How did you first get involved in themortgage industry?My father, Sidney Miller, saw the unful-filled need for borrowers who could notqualify for conventional loans, and thusstarted Delta Funding in 1982. I workedpart-time for Delta since its inception (Iwas going to college at the time), andjoined the firm full-time in 1985.
What has kept you involved in themortgage business all these years?The mortgage business is a very cyclicaland challenging one. New products areconstantly being made available forcustomers and changes are always
occurring with existing product guide-lines. The review and study of risk man-agement and understanding of prod-ucts and programs that make senseboth for customers and investors isalways taking place. We are also experi-encing new technologies to be utilizedto help streamline the process.Ultimately, and at the risk of soundinga little corny here, the great Americandream is homeownership. The ability toassist borrowers in owning a home issomething I think many people in themortgage business pride themselves onbeing able to help with, and it’s some-thing that drives them to continue inthis business even in adverse times,myself included.
Delta Funding had been in businessfor approximately 26 years, whichwas a very impressive feat for a non-prime lender. During that timeframe, there were many cycles wherewe saw most of your peers go out ofbusiness. What was the primary rea-son for Delta’s success?I think there were a lot of reasons forDelta’s success. But if I had to identify aprimary reason, I would have to say itwas our lending philosophy. At Delta,we tried to always originate loans thatwe felt were in the borrower’s best inter-4
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Hugh Miller, President and CEO of Reliance First Capital LLCests, as well as loans that made sense inthe secondary market. Just as a lenderwouldn’t do a loan just because borrow-ers asked for it if it wasn’t somethingthat made sense, likewise mortgagelenders should not be originating loanssolely because investors or Wall Streethave an outlet and a market for thatloan. It is important to make sure thatthe product makes sense for both theborrower and the lender/investor.
Throughout Delta’s history, we had astrategy of originating only loans thatwe thought made sense for the borrow-er. For instance, Delta always originat-ed the majority of its loans as fixed-rateloans, whereas the industry was clearlymuch more adjustable-rate (ARM)-focused. This was true of our companythroughout its entire 26-year history,and in fact, we were originating inexcess of 90 percent of our loans fixed-rate in 2007. While this kind of strategyhurt us from a volume perspective, wefelt it was the right thing to do.
We did not originate risky producttypes such as 125 percent loan-to-value or option ARMs and significantlyreduced originations of higher riskloan types by creating underwritingoverlays that we thought made sense.We just were not willing to sacrificequality just to boost originations inthe short run when we knew it did notmake sense in the long run.
We think this long-term approach tothe business ultimately led us to having avery low employee turnover rate. We hadmany people with the company for 10-plus years. I began running the companywhen we had eight people, and we grewit to more than 1,600 by 2007, which issomething we are all very proud of.
I was really sad to see the hugely suc-cessful mortgage powerhouse thatyour father and you created [DeltaFunding] become another casualty ofthe credit crunch, but we can assumethat successful mortgage profession-als like yourself look at such misfor-tunes as learning opportunities.
What lessons have you learned fromthe current credit crisis?Everyone at Delta Funding was obvi-ously very sad to see what happened toour company. While we take a tremen-dous amount of pride in our 26-yearhistory and our ability to operatethrough multiple cycles, the completecollapse of the entire non-prime mar-ket and the disappearance of the secu-ritization market, ultimately spelledour demise. This current environmentis the worst global economic crisis seenin seven decades, according to U.S.Treasury Secretary Timothy Geithner.
Being purely a non-prime lender,our business model was reliant on thesecuritization markets. When thosemarkets for non-prime loans disap-peared in late 2007 and we had manyhundreds of millions of loans on ourwarehouse lines with nowhere to sellthem, that proved to be our undoing.Since we had securitized for 17 yearsprior to then, and were able to success-fully complete a securitization even inadverse environments such as thefourth quarter of 1998, and the firstquarter of 2007 (a time frame where wesaw the majority of our peers go out ofbusiness), we had hoped that Delta’ssuperior loan performance based onthe products it originated would enableus to continue to access the markets aswe had in other adverse times. But,unfortunately, with virtually no marketfor non-prime, that was not to be thecase. We take solace in the fact that welasted much longer than our peers, andmade it through the first half of 2007with all of our warehouse lines intactand our business thriving.
We are now in a market where the vastmajority of loans originated have eitheran implicit or an outright governmentguarantee. These agencies were createdfor a reason, including to normalize themarkets in adverse times, which is obvi-ously what we are witnessing now. Goingforward, we believe a more diversifiedapproach to the business with differentproduct types makes sense for our com-
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Question: Tommy, it appears there are a fewer number of mortgage brokers out thereconducting business, It also seems to take longer for my loans to get through underwrit-ing to closing which is hurting my business. What is your recommendation?
Fannie Mae recently announced that mortgage brokers are conducting 15 percent ofthe overall number of mortgage transactions, a number that was 60 percent just a yearago. I will agree that many broker shops no long exist as a result of result of fewer bor-rowers qualifying for conventional loans. Those brokers who were able to obtain theirFederal Housing Administration (FHA) approval in 2008 appear they are going tosurvive. The trend I am seeing across the country for mortgage broker survival in2009 is obtaining approval from the FHA for Direct Endorsement (DE) Full Eagle sta-tus. This enables the mortgage professional to fund their own loans and sell FHA loansto Ginnie Mae.
Warehousing lines or lines of credit have reduced significantly in 2008. However,new and up-and-coming mortgage banking entities are raising capital and private eq-uities to support warehouse lines. Funding your own loans gives you an advantagebecause you will have your DE from the FHA to underwrite your own loans and closein your own name with a line of credit. What many brokers are discovering is that it’snot as difficult as one may believe.
The reason it is wise for mortgage brokers to move into this direction is due to thesurvival factor. Mortgage brokers who become small lenders and/or mortgage bankerswill have more control on loan production, rather than depending on an outsidelender’s timeline. You may want to continue to use the large lender for conventionalloan products; however, the broker’s lifeline at this point is the FHA. You can have theinvestor serve as the DE if you cannot maintain a DE underwriter.
If you have a Full Eagle, you can chose which Appraisal Management Company(AMC) you want, rather than being forced to use a lender’s approved AMC enablingyou to support a community-based or regional AMC.
When being considered for FHA Full Eagle status, the mortgage professional willneed to demonstrate solid pre-funding quality control (QC) and post-closing QCpractices. An FHA QC Plan should incorporate Red Flag Rules/Identity Theft Pre-vention and fraud detection products that retrieve information from the Internal Rev-enue Service and the Social Security Administration and exercise post-closing qualityassurance (risked-based analysis or the ability for the loan to be repaid). The QC Man-ager will need to show an active post-closing QC Program by providing QC ManagerReports that capture the company’s response to the QC Reports. These items are re-quired for a line of credit as well.
What mortgage professional would not have a robust QC Program when they havemore at stake when funding their own loans? Likewise, investors would be more in-clined to open a line of credit giving the mortgage professional more flexibility in run-ning their mortgage operations.
In order to survive in today’s mortgage industry, a mortgage broker needs to receiveFHA approval, work toward obtaining DE for underwriting, fund the shop’s loans, andsell FHA loans to Ginnie Mae. Of course, implementation of a robust QC Program anda display of thoroughness of the program by the use of QC tools like Qchecks, AVMs,outsource post-closing QC and the QC Manager’s Reports, closes the gaps in a QCProgram bringing credibility to mortgage operations and stabilization to the industry.
By Tommy A. Duncan
Sponsored by
Tommy A. Duncan is executive vice president of Quality Mortgage Services LLC.For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528, ext. 124 or e-mail [email protected]. You may also visit QualityMortgage Services LLC on the Web at www.qualitymortgageservices.com.
pany. While the government has made itclear that it does not want to be the soleprovider of mortgage financing andwould like to see the private sectorreturn. We are certainly interested in par-ticipating in those markets again as wedid successfully for more than 25 years,but we do think it makes sense to have adiversified approach in terms of availableproducts. This way, we can offer a broad-based set of products to customers andhave the company best set up for all dif-ferent market environments.
While I am not sure of the percentageof wholesale business you were doingat Delta, I would venture to guess itwas well over 50 percent. What ledyou to make the decision not toinclude a wholesale platform withReliance First Capital? Do you thinkthat could change in the future?While Delta started back in 1982 aspurely a wholesale operation, it isimportant to note that in the last 10years, we made a conscientious effortto originate retail loans. In fact, retailbusiness was approximately 50 per-cent of our total business for the lastfew years at Delta. Hence, we are verywell-versed in retail and very comfort-able with originating loans from theretail channel. We actually had one ofthe highest percentages of retail origi-nations that we are aware of in ourindustry. We were even a top 10 retaillender, so it was natural for us to con-tinue retail originations.
The decision not to enter thewholesale arena at this time is both astrategic decision to focus on retailand a market driven decision. As withany business, we will continue to ana-lyze our business strategies and themarkets, and will consider wholesalelending, among many other opportu-nities, as time goes by.
How did Reliance First Capital cometo be?In the weeks and months after we pub-licly announced that Delta Fundingwas closing, we were contacted bynumerous third parties wanting toinvest in a new entity with Delta’s man-agement team. We first focused on anorderly wind-down of Delta, which webelieve we accomplished. We werethen fortunate to be able to review thecapital partners available to us.Ultimately, we decided on WexfordCapital, a [Securities and ExchangeCommission] SEC-registered investmentadvisor with billions of dollars of assets
under management. This has proven tobe a great partnership and we are verypleased with our choice.
Why are you pleased with your choiceof Wexford Capital? What have theydone that makes you say that?There are many reasons, as our similarbusiness and corporate philosophiesbeing top of the list. Our warehousefinancing arrangement is a great example.Last summer, before we started originat-ing, we were working on obtaining ware-house financing and had received someterm sheets. We then received a call fromWexford telling us they did not want us totake a warehouse line from a bank,because they were concerned with thecurrent market conditions and any bank’scommitments to continuing to providesuch lines. Needless to say, with what hashappened in the markets, it has been verycomforting having a warehouse line withyour capital partner and not having todeal with the market vagaries. This is justone of the many ways they have providedvalue added to our company, and demon-strated their commitment to our business.
What is your growth strategy forReliance First Capital?We are definitely looking to grow ourcompany significantly. We are well-capi-talized, have numerous outlets for ourloans and have more than sufficientwarehouse and support in place to allowus to grow. While we are looking to groworganically from our three current offices(New York, Pittsburgh and Charlotte) anda fourth that is opening shortly, we arealso looking at other opportunities in themarketplace. We are very open-mindedas to the different forms those can take.It could be consideration of some formof a strategic alliance or other businesspartnership to an outright acquisition.We are looking for people who are the“right fit” for us most importantly.
If someone is interested, how shouldthey go about contacting you?If they are interested in joining Relianceas an employee, they should contact ourHuman Resources Manager CindyNeuendorf at (516) 422-8888 or [email protected] anything strategic-related, they cancontact our Executive Vice PresidentRandy Michaels at (516) 422-8850 or e-mail [email protected].
Visit Hugh Miller’s RelianceFirst Capital LLC on the Web at
www.reliancefirstcapital.com.
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It is estimated that more than 50 per-cent of American homeowners areeither in or near a negative equity sit-uation. My question is: “What systemsdo you have in place to consistentlyfind and motivate the other 50 per-cent of homeowners and home buyersthat actually qualify for financing?”
According to the latest statistics bythe Federal Reserve, American home-owners still have more than $8 trillionof home equity remaining—even afterthe record plunge in home sale prices.Furthermore, American householdsstill have an aggregate net worth(assets minus liabilities) of $56 trillion.In other words, there are still a largenumber of Americans who can qualifyfor financing right now. Among thisgroup of individuals who need youand can qualify for your services, youwill find business owners, executives,real estate investors, retirees, seniorcitizens, first-time home buyers andothers. Believe me, these people doexist! The only question is where arethey? How can you find them and whatvalue do you deliver that attracts themto do business with you?
Where do you find these people?I was recently giving a speech to about50 CPAs at an event hosted by the CPAassociation in my state. At least a half-a-dozen people in the audience cameup to me afterwards and wanted torefer me business. You see, more than50 percent of all mortgage originatorshave completely left the industry. Allof these CPAs and financial advisorshave been abandoned by our industryand they don’t know whom to workwith and where to send their clients.
In fact, 61 percent of all financialplanners surveyed by the FinancialPlanning Association indicated thatthey want to meet and work withqualified mortgage professionals. Notonly that, but 81 percent of investorssurveyed said that they want theirfinancial advisors to provide themwith advice on more than just invest-ments. I’ve got to tell you, if you wantto meet the other 50 percent ofhomeowners who are not underwa-ter, you really need to start network-ing with CPAs and financial advisors.
In fact, I recently spoke to a groupof 75 mortgage originators in southernCalifornia at an event hosted by theCalifornia Association of MortgageBrokers. As I was interacting with theaudience, one of the things I askedthem was whether anyone in the audi-ence was involved with their local CPAassociation. Not a single person raisedtheir hand. I then asked if anyone wasinvolved with their local FinancialPlanning Association. Again, not a sin-gle person raised their hand. Whatexactly is the problemhere? Why are so manypeople in our industrycomplaining about lackof qualified borrowerswhen they are all fishingin the wrong ponds?
Now, let me ask you.Are you involved with yourlocal CPA or financial plan-ning associations? Whynot? Yes, I know fundingsources are pulling theirfunding, Fannie, Freddieand the Federal HousingAdministration (FHA) arehaving an identity crisis,lenders keep changingtheir guidelines, the unem-ployment rate is doublewhat is was two years ago, and everybodythinks that mortgage brokers should justall go out and shoot themselves.
But in the meantime, these CPAsand financial planners are just waitingfor someone like you to stand up andbe a hero for their clients who canqualify for financing. Where are youand why are you hiding? This is yourtime and place. You have been chosenby your destiny for this very moment.
What do you say and howcan you attract theseclients and their financialadvisors?I was flipping channels on my televi-sion one evening in late 2008 andcame across that classic show,Jeopardy! Two of the categories in thisparticular show caught my attention.The first was “The Financial Crisis,”and the other was “Shakespeare.” Onequestion being posed to the contest-ants from “The Financial Crisis” cate-
gory was, “Who is the current U.S.Treasury Secretary.” I was taken bysurprise when not a single contestanteven attempted to answer this ques-tion. I thought to myself, how couldthese people not know Hank Paulsonwhen his name and picture have beenappearing on almost every channel,newspaper and Web site every dayand night for the past several weeks?
The next several questions camefrom the “Shakespeare” category.Ironically enough, all of the contest-
ants were clamoring overeach other to answerevery one of these ques-tions. These smart peopleseemed to have memo-rized all the works of adead poet who lived hun-dreds of years ago, andyet not a single personcould name the man whowas responsible for thelargest government inter-vention in our markets’in recent memory. Rightthen and there, some-thing dawned on me:
These people are living ina different world than myworld. The things that
seem to be important in my world arenot even on their radar. Not only that,but life goes on and these people areliving their lives, enjoying Shakespeareand all the other things that life has tooffer, even in the middle of a financialcrisis and deep recession.
The moral of the story here is that inorder to attract people to do businesswith us, we need to live in their worldand speak their language. There aremore than 300 million Americans whoare continuing to live their lives even inlight of the current downturn. Peoplewill always need a place to live. Peoplewill always get married, have children,care for elderly parents, deal with healthissues, get divorced (unfortunately), etc.In order to do business with these peo-ple, we need to first understand our rolein their life story, and then communi-cate our value to them and their finan-cial advisors. It’s really a two-stepprocess:
Step #1: Acquire unique knowledgeand skills that are valuable to this tar-get audience.
You need rock solid answers to ques-tions like these:
� What mortgage strategies will bestempower me to fund my child’s col-lege education now that studentloans are so hard to come by?
� What should I do if I own my homefree and clear, don’t want to sell itright now in a down market, but stillwant to move into a new home withlittle or no mortgage payment?
� Is this a good time to buy a home orshould I wait for four percent inter-est rates?
� What strategies can I implementimmediately to profitably invest inthe turbulent real estate markets?
� And the list goes on …
Step #2: Communicate your uniquevalue in a way that differentiates youand your communications from allthe noise bombarding these people.
Only by implementing this simpletwo-step process can you transcend theunfortunate circumstances of today’smarket realities, and find and do busi-ness with the other 50 percent ofhomeowners and buyers that need youand can qualify for your services.
Gibran Nicholas is the founder andchairman of the CMPS Institute, whichadministers the Certified MortgagePlanning Specialist (CMPS) designa-tion. The CMPS Institute has enrolledmore than 5,500 members since itsfounding in 2005. Gibran is also thechairman of Published Daily, a cus-tomizable online magazine, newslet-ter and marketing service that helpsprofessionals transform their clientsand prospects into a referral-generat-ing sales force. He may be reached at(888) 608-9800, ext. 101 or [email protected].
Visit author GibranNicholas’s blog athttp://gibrannicholas.com
where he shares his insightson economics, real estate and finan-cial issues, including the currentmortgage and credit crises.
The other 50 percent
“Are you involvedwith your local CPAor financial planning
associations? Why not?”
BY GIBRAN NICHOLAS
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J.D. Power report:Incidences of identitytheft higher in younger consumers
Younger consumers—those included inGeneration Y—tend tobe at higher risk for
identity theft, but are less concernedwith the threat than are consumers inthe Generation X and Baby Boomerdemographics, according to the recent-ly released J.D. Power and AssociatesIdentity Theft Report.
The inaugural report, conducted bythe J.D. Power and Associates WebIntelligence Division, analyzes Internetpostings from 70 million blogs and dis-cussion boards that occurred betweenFebruary 2008 and January 2009. Thereport is designed to provide executivesin the financial services, credit protec-tion, banking and insurance industrieswith ongoing measures of consumerattitudes regarding perceived risks andother issues pertaining to identity theft,and how these attitudes are influencingconsumers’ shopping and buying habits.
Online conversations about identitytheft indicate that 83 percent of postersin the Baby Boomer generation (thosebetween the ages of 45 and 63) say theyhave a high level of concern about iden-tity theft, compared with 79 percent ofthose in Generation X (ages 31 to 44)and only 47 percent of those inGeneration Y (ages 19 to 30). Highly con-cerned online posters—those whoproactively protect their identity—com-prise 72 percent of posters discussingidentity theft, while 24 percent say theyare moderately concerned and four per-cent report a low level of concern.
Online commentary indicates that,while people say they are aware of identitytheft issues on social networking sites suchas Myspace and Facebook, a majority donot take security into consideration whencreating their profiles. More often, peoplereport changing their profiles to avoidembarrassment—for example, to keep aboss from seeing a particular picture.
“While social networking sites can bea hot spot for identity theft, people seethese sites as a way to express them-selves, and limiting or changing theirprofiles makes them feel like they’re cen-soring their identity,” said Carter Truong,senior manager in the J.D. Power andAssociates Web Intelligence Division.“While communicating online, peopleare unwilling to sacrifice this self-expres-sion as a way to prevent identity theft.”For more information, visitwww.jdpower.com.
Mortgage Fraud skyrock-ets according to MARI
Reported inci-dents of mort-gage fraud in the
U.S. are at an all-time high and increasedby 26 percent from 2007 to 2008 according
to a report released by the Mortgage AssetResearch Institute (MARI), a LexisNexis serv-ice. The 11th Periodic Mortgage Fraud CaseReport to the MBA examines the currentstate of residential mortgage fraud andmisrepresentation in the U.S. based ondata submitted by MARI subscribers.
The report found that, for the first time,Rhode Island ranked first in the countryfor mortgage fraud with more than threetimes the expected amount of reportedmortgage fraud for its origination volume.This is also Rhode Island’s first appearanceon the MARI report Top 10 list, indicatinga problematic and overlooked mortgagefraud problem in the state. Florida, rankedfirst in 2007 and 2006, dropped to secondplace and is followed by Illinois, Georgia,Maryland, New York, Michigan, California,Missouri and Colorado.
The top fraud incident type in 2008—representing 61 percent of all reportedfrauds—was application fraud, the fifthyear in a row it topped the list. Secondwere frauds related to tax returns andfinancial statements which jumped 60percent from 17 percent of reportedfrauds in 2007, to 28 percent of report-ed frauds in 2008. Additional document-ed fraud types included, in order of vol-ume, frauds related to appraisals or val-uations, verifications of deposit, verifica-tions of employment, escrow or closingcosts, and credit reports.
“MARI data shows that mortgage fraudis more prevalent today than it was at theheight of the boom in mortgage loanoriginations,” said John Courson, presi-dent and chief executive officer of theMBA. “This report is essential reading formortgage bankers who need to under-stand where mortgage fraud is comingfrom, what to watch for and how to pro-tect our companies and communities.”For more information, visitwww.marisolutions.com.
Survey finds short sale resolutions at FHFA rapidly rising
According to statistics recently releasedby the FHFA, short sale resolutions atFannie Mae and Freddie Mac for trou-bled borrowers grew by a factor of fourover the course of 2008, while loanmodifications doubled and completedforeclosures grew by 60 percent throughOctober. The government-sponsoredenterprises (GSEs) processed 516 shortsales in January 2008; by December2008 short sales numbered 2,261.
Separately, a recent nationwide surveyof real estate agents and brokers conduct-ed by Campbell Communications foundthat 19 percent of home sales duringJanuary and February 2009 were shortsales, with foreclosed properties account-ing for another 37 percent of sales. On
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“Survivor” … no, not the widely populartelevision show, though many similaritiesof people surviving a jungle and learninghow to adapt to the current industry envi-ronment. But all of us that are still surviv-ing in this industry and plan on seeing itthrough these tough times and look for-ward to getting to the more lucrative andpositive territory again. We believe thatthis industry must pull itself up by theirboot straps, continue to work hard andplan to change the mystery of this indus-try in order to gain back the respectabili-ty it deserves. The mortgage lending busi-ness has been a mainstay of the financialeconomic landscape for many decades,and consumers, as well as industry veter-ans, need mortgage lending to regain itsposition atop the financial services arenaso people can purchase homes and beoffered refinancing options to obtain thewealth rewards we want to achieve.
We have both been employed in themortgage lending business for over acombined 60 years, and have comment-ed that these past two years have beenthe most difficult and challenging timeswe have seen in the business. From thebeginning of this decade, we have seen arecord volume of originations, as well asrecord profits and commissions for theindustry. Many people made a lot ofmoney during this span, but a lot of mis-takes had been made as well. Many peo-ple have come and gone from this indus-try over this past decade. The industry asa whole has taken a large hit to the foun-dation and the principles that have madeit the stronghold of this country.
We believe that the wholesale andthereby the broker channel has taken the
largest hit in this downfall of the mort-gage industry over the past two years.Arguably, records show that somewherebetween 60-65 percent of all originationsfrom 2000-2008 were made by mortgagebrokers. Since the majority of loans wereoriginated via the wholesale channel andby mortgage brokers, is this why they aregetting the largest portion of the blame?We all believe that there is plenty ofblame to go around for the fiasco thatcurrently exists in this industry. Yes,mortgage brokers mayhave taken the applica-tions from the majority ofthe borrowers, but theloan products were dictat-ed by larger lenders,investors, as well as WallStreet, and let us not forgetthe guidelines and under-writing of the actual loanswere done by the lender.Supposedly, there werelimitations and guidelinesin place to limit the risk ofbroker loans, but now thetotal blame of the debacleseems to be laid at the feetof mortgage brokers.
While it can be said thatmistakes were made, andyes, there were some people who abusedthe system, even some who committedactual “fraud,” but certainly that was asmall minority. We have both known manygreat brokers, who have a strong following,great foundation in the community, out-standing principles and are now beinggrouped in with many brokers who justrecently started in the business to make asmuch money as they could and then moveon, others who deliberately found theloopholes to originate difficult and riskyloans, as well as others that became very
greedy. Many looked too short-term, butthe financial rewards were large for origi-nating more and more loans, especially inthe Alt-A and sub-prime product world,that lenders, and ultimately Wall Street andinvestors, were re-packaging and re-sellinginto a very demand side industry.
Now, in order to correct the problem,as perceived by Congress and otherfinancial service pundits, some believethe answer is more regulation and lend-ing conservatism. We could not disagree
more with that approach. We all agreethat the “risk meter” may have been sofar to the left or risky, but the answer isnot to go so far to the right or ultra con-servative. We hear that there are morethan 2,700 pieces of legislation in frontof state legislators and U.S. Congressregarding mortgage lending focusing onthe limitations and/or abolishment ofmortgage brokers. Now the optimisticview is that states have been, some to afault, heavily involved in the licensingand regulation of mortgage brokers andbankers. But as we all know, the largelenders, the government-sponsoredenterprises (GSEs) of Fannie Mae andFreddie Mac and Wall Street make therules as to whom they will do businesswith. As we have seen, many of the larg-er lenders and the GSEs have eliminatedor greatly restricted those who mayqualify in their wholesale channels,making it increasingly difficult for bro-kers to do business.
We will all agree that there is still someroom to filter this industry, removing thoseindividuals and companies that are affect-ing the rest of us. But we believe with theassistance of the National Association ofMortgage Brokers (NAMB) and MortgageBankers Association (MBA), that we can re-build this industry back to respectability.But it will take us all working together,
sharing our thoughts and ideas, not look-ing as we all are vicious competitors, but asa team to bring back this valuable andwell-needed financial service industry backto the public to restore confidence in thesystem, confidence between us, and confi-dence by the public in the products andservices we all offer.
In the meantime, we see that manymortgage brokers are looking at theiroptions in order to survive. The manyoptions that are available include, themergers of brokers that compliment eachother across different communities orproduct offerings; becoming a net branchof a larger lender to take advantage ofmore competitive pricing, products andtechnology; or looking to convert to mort-gage banking by obtaining a warehouseline of credit and control their business asto lender selection as well as possibleagency approvals. As any good businessperson constantly does, they review theiroptions in order to either survive and/orimprove their business into the future.
We will review these options in moredetail and other current issues in future arti-cles. We appreciate you taking the time toread this article and look forward to com-municating and sharing our thoughts andideas in future writings. Please feel free tocontact us with any questions or ideas by e-mail at either [email protected] or [email protected].
David Lykken is president, mortgagestrategies and managing partner withMortgage Banking Solutions. David hasmore than 34 years of industry experienceand has garnered a national reputation.David has become a frequent guest onFOX Business News with Neil Cavuto,Stuart Varney, Liz Claman and DaveAsman with additional guest appear-ances on the CBS Evening News,Bloomberg TV and radio. He may bereached by phone at (512) 977-9900, ext.101 or e-mail [email protected]. Scott Woll is director ofbusiness development for MortgageBanking Solutions. With over 25 years inmortgage banking, Scott has experienceand knowledge across all facets of theindustry. He has been involved heavily insecondary marketing, financial analysis,servicing evaluations and operationalmanagement, as well as correspondentand broker lending. Scott has worked dili-gently with the local MBA, FNMA andFHLMC to assist in the continuing educa-tion and growth of the industry. He maybe reached by phone at (512) 977-9900,ext. 112 or e-mail [email protected].
BY DAVID LYKKEN AND SCOTT WOLL
Survivor
“As any good business person constantlydoes, they review their options in order to either survive and/or improve their
business into the future.”
David Lykken Scott Woll
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This information is for use by mortgage professionals only and should not be distributed to or used byconsumers or other third-parties. Information is accurate as of date of printing and is subject to changewithout notice.Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009Wells Fargo Bank, N.A. AllRights Reserved. #64153 4/09
Shared Vision, Shared Success.SM
WELLS FARGO WHOLESALE LENDING
Make YourWayWith A Lender Committed ToLeading Responsible ChangeWells FargoWholesale Lending is dedicated to working with mortgage brokers who are committedto five key principles for long-term industry success:
Responsibility: Ensure fair and responsible lending and borrower education are top priorities.
Quality: Produce high quality loans.
Controls: Better manage our collective risk and eliminate fraud.
Excellence: Create, promote and adhere to industry-leading standards of excellence.
Efficiency: Develop capabilities that drive greater efficiency and ease of use between ourcompanies.
Together, we will lead the way, helping to establish a foundation for a stronger, healthier andmore responsible industry.
Share in this vision. For more information, tools, ideas and market insights visit our Shared Vision,Shared Success.SM web site located on www.brokersfirst.com.
RESPONSIBILITY • QUALITY • CONTROLS • EXCELLENCE • EFFICIENCY
average in the U.S. residential real estatemarket, there is one short sale for everytwo foreclosed property sales. For the GSEs,there is approximately one short sale forevery 7.5 foreclosed property sales, but atcurrent growth rates, the number of shortsales for the GSEs might exceed the num-ber of foreclosure sales sometime this year.
“In many cases, a short sale is a morecost-effective resolution than a foreclo-sure, with the loss severity for a short saletypically being one-half the severity for aforeclosure,” said Tom Popik, principalauthor of the Campbell Communicationsstudy. “Short sales avoid the legal expenseof the foreclosure process, maintenanceexpenses on foreclosed properties, andinterest costs. Additionally, because a shortsale can be completed several months ear-lier than remarketing of a foreclosed prop-erty, there is less exposure to rapidlydeclining prices in real estate markets.”
The survey conducted in March 2008by Campbell Communications found thatthe average time for a mortgage servicerto provide a “yes” or “no” response to anoffer to buy a short sale property was 4.5weeks. The survey conducted in February2009 found that the average responsetime for short sale offers is now nineweeks, double the time of a year ago.
In recent months, Fannie Mae andFreddie Mac have attempted to forestallforeclosures as they search for alterna-tives that do not increase the inventory ofvacant properties Loan modificationsnumbered 4,228 in January 2008 and hadgrown to 8,688 by December. Completedforeclosure sales at the GSEs were 10,571in January 2008; by October 2008, com-pleted foreclosures numbered 17,008. InNovember and December, foreclosuresales dropped precipitously as FannieMae and Freddie Mac implemented tem-porary foreclosure moratoriums. InNovember 2008, the GSEs completed14,408 foreclosure sales; in Decemberthis number dropped to only 3,430.
The surveys also have found thatfrustrated homeowners often trashtheir houses when a short sale fails andthey are forced into foreclosure. ANovember 2008 survey conducted byCampbell Communications found one-third of foreclosed properties are sodamaged that they cannot qualify forstandard mortgage financing; theseproperties sell for an average discountof 37 percent. In the current survey, amajority of respondents indicated that“cannot get financing for damaged REO(foreclosure) properties” is a majorimpediment to first-time homebuyers.For more information, visit www.camp-bellsurveys.com.
PricewaterhouseCooperssurvey finds investors prioritizing survival overacquisitions
Battered bythe U.S. eco-
nomic recession, the commercial real estate
market is struggling to maintain valuesacross all property types and geographicareas, kicking a growing number ofinvestors into survival mode as they painful-ly watch the value of their existing portfoliosdecline, according to investors and realestate professionals surveyed as part of thefirst quarter 2009 PricewaterhouseCoopersKorpacz Real Estate Investor Survey.
Real estate investors do not expect arebound in any of the commercial realestate sectors until well into 2010, accord-ing to the survey. In the meantime, proper-ty owners are faced with limited financingoptions, declining tenant demand, risingoverall capitalization rates and deflated
confidence. They are looking to protect thevalue of their existing properties in order tocompete and survive in an increasinglychallenging environment. To mitigatevalue loss, landlords are being more proac-tive about signing tenants to new leases,expansions and renewal, in some casesoffering leasing incentives and lower rentalrates. In addition, some are attempting tocut property costs and better positionassets in a rapidly growing tenants’ market.
“Tenants are in the driver’s seat, andlandlords are in survival mode, trying topreserve revenue streams in one of theharshest ownership environments everencountered,” said Tim Conlon, partnerand U.S. real estate sector leader forPricewaterhouseCoopers. “It will be survivalof the fittest going forward, with ownerswho are able to remain financially strongbeing better positioned to capitalize on the
buying opportunities that are to come.”Although sales have been weak, investors
surveyed by PricewaterhouseCoopers expectbuying opportunities to emerge in the com-ing months as commercial loan defaultsincrease and the number of distressed assetson the market increases. Some investors arepreparing for potential acquisitions byboosting their liquidity through de-leverag-ing, joint venture partnerships and selectdispositions of current holdings. However,the bid-ask pricing gap remains widebetween buyers and sellers, pricing isopaque because of limited sales activity andfinancing remains scarce.
Also making acquisitions difficult is thefact that recession conditions in commer-cial real estate are not expected to easeuntil 2010 at the earliest for most major
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news flash continued from page 7
In 1972, I graduated from college and joined my father’s mortgage banking firm. He startedin the mortgage business in 1948, and formed his own company in 1950. My dad enjoyedthe fatherly trait of passing pearls of wisdom to his sons. This is one of my favorites. “Treatyour warehouse lender with the same respect that you treat your wife.” I’ve carried that allthese years. I still have the same wife I had 37 years ago. But our warehouse lenders seem tohave run off with the tennis pro. Is it something I said, or should I work on my backhand?
The availability of warehouse financing is critical to the survival of independent mort-gage bankers. Because banks can fund their own mortgage banking operations withdeposits, it is not necessarily critical to the viability of bank-owned mortgage companies.Independent mortgage bankers created this industry and provide a valuable source ofmortgage loans for the communities they serve. Their presence greatly contributes to thefree market dynamics of competition. Their preservation is important to the availabilityof affordable mortgage loans.
The solution to this challenge will require creativecompromise and thought. Banks and lenders, thefederal regulators and the mortgage banks them-selves must work for the solution. Each has its ownset of issues and agendas. Let’s take a high level andsimplistic look at how we got in this position, and themost significant issues that each party faces. Bydoing so, we can then look for solutions.
The capital challenge For warehouse lenders—usually banks or Wall Streetfirms—the fundamental issue is CAPITAL. I often hearthat lack of liquidity is the source of the problem.Banks with adequate levels of capital do not have liq-uidity problems. They simply raise liquidity by accept-ing more insured deposits, or by borrowing moneyfrom the Federal Reserve or one of the federal homeloan banks. The banks can then loan that money at arate higher than the rate they pay for it. But if thebank does not have adequate capital, it cannot raisemore deposits, or borrow money, to invest in newloans. That activity grows the assets of the bank.Capital adequacy is measured as a percentage of theassets that the bank holds. If the bank has inadequatecapital, it cannot grow its assets.
A couple of years ago, many banks started losingmoney due to losses on bad loans and exotic deriva-tives. The capital markets lost confidence in the traditional banking business model.Investors do not want to put money into a losing business that had an uncertain future.The availability of new capital dried up.
Federal regulations require that banks hold minimum levels of capital as a percent-age of their assets. Many banks have been losing money, and they are not growing cap-ital through earnings. In some banks, the losses have actually caused their capital tofall dramatically. Banks cannot easily raise capital through new stock offerings. Theyreally have only two choices—sell the bank or stop growing the bank.
Healthier or larger banks have bought banks that had to sell, or that were closedby the government. Some of the acquiring banks did not have enough excess capitalto absorb the banks (and all of their loan losses) they bought, so they made dealswith the government to protect them from asset losses. Then things grew worse. Theloan and asset losses got even bigger. Private capital wanted no part of it. Banksneeded more capital. The government had to start investing capital in these banks.
The capital effect The lack of new capital—through earnings or new stock offerings—makes it very dif-ficult for a bank to embrace a lending strategy that offers significant growth poten-tial. The mantra of most banks is presently capital preservation and not balance
“Mortgage banking was created to transport
mortgage lending capitalfrom capital surplus
areas of the country togrowing, capital starvedregions of the country.Independent mortgagebankers are vital to the sustenance of our coun-
try’s mortgage financing.”
sheet growth. Banks are just trying to survive this period. If a bank enters a lend-ing program that grows its balance sheet size, it will need capital to support thatgrowth. Capital is scarce.
Many of the banks in the warehouse business have been bought, closed ormerged (IndyMac, Countrywide, Wachovia, Washington Mutual, PNC, GuarantyBank, Chase etc.). In most cases, the acquiring entity has not preserved the busi-ness line in its present form. They closed or significantly shrunk the warehousingunit of the bank they acquired. The loss of these banks has negatively impactedthe availability of warehouse financing. On a positive note, Wells Fargo has recent-ly pledged their support to warehouse financing.
Bank capital is scarce. In order to safely maintain adequate regulatory capital lev-els, banks must slow down the growth of their balance sheet, or shrink it. The onlyway to do that is sell or liquidate assets. During this period, it is incredibly difficult,and costly, to sell assets. Although warehouse lending is profitable, “mortgage” ispresently a dirty word and an easy target for discontinued operations. Most impor-tantly, warehouse assets provide an easy way to shrink a bank’s balance sheet—without having to sell anything. The warehouse loans run off quickly—as the mort-gages sell—the bank’s assets decrease and capital ratios increase. Some warehousebanks have either exited or shrunk their warehouse lending business. This hasdecreased the availability of warehouse financing.
The nature of mortgage warehousing is best suited to large banks. Mortgagewarehousing requires sophisticated systems and personnel. Small banks usuallydo not have that. Banks also have regulatory limits that they can loan to any oneborrower, called “LTOB” or “loans to one borrower” limits. For national banks, it’s15 percent of capital. For some state banks, it’s 25 percent of capital. For exam-ple, a national bank with $50 million in capital would have an LTOB limit of only$7.5 million. Most banks set an even more conservative internal limit that is belowthe regulatory maximum. Warehouse lines of credit can often exceed $50 million.This makes it very difficult for a small community bank to be a warehouse lender.
Through the financial crisis, our small community banks remain healthy. Largerbanks, for the most part, were involved in the riskier endeavors and have taken thelargest hits. Ironically, they had the expertise and capital to take more risk. If there isexcess capital in the banking system, it is primarily found at community banks. But mostsmall community banks do not have, or do not want to concentrate their risk at the max-imum LTOB limits that are necessary to support large warehouse lines of credit. Many ofthem do not have the resources or inclination to create or buy the requisite systems, andhire the expensive personnel, necessary to safely run a warehouse division. Communitybanks can help with warehouse lending capacity. But they are not the total solution.
Collateral management is one of the most important aspects of safe warehouselending. As banks exit or shrink the warehouse lending business, the prevalence ofqualified mortgage warehouse operations platforms is scarce. It takes time and moneyto recreate these platforms. In these days of profitability and capital concerns, theincentive to embrace overhead and operations risk is less. Those who have these plat-forms have similar concerns and are not necessarily anxious to “rent them” to otherbanks by expanding their business and selling participations to other banks. This toohas restricted the availability of credit.
Bank capital: The mathBank regulatory capital standards are a very complicated subject. I will try to high-light the basics in very broad and simple terms. If you are a regulator or account-ant, please excuse my brevity. Banks should maintain capital of at least six percentof total assets to be classified as well capitalized. There is also a capital standardcalled risk-based assets. Banks should hold capital of at least eight percent of theirrisk based assets, and 10 percent to be classified as well-capitalized.
Banking regulations have established risk-based asset percentages for the varioustypes of assets/loans in which banks can invest. The riskier assets/loans have a high-er percentage, and the less risky a lower percentage. Traditional warehouse lines ofcredit have a 100 percent risk-based asset allocation. In contrast, Federal HousingAdministration (FHA)- and Veterans Affairs (VA)-insured loans have a 20 percent risk-based asset allocation. Conventional loans with a loan-to-value (LTV) exposure at orbelow 90 percent have a 50 percent risk-based asset allocation and conventionalmortgages above 90 percent LTV exposure have a 100 percent allocation.
The underlying loans that secure traditional warehouse lines of credit mostly fall intolower risk-based asset allocations—if held directly by the bank. However, a traditionalwarehouse line of credit is treated like most commercial loans, and treated as a 100 per-cent risk-based asset. Therefore, banks with limited capital are less inclined to invest in tra-ditional warehouse lines of credit. Banks with scarce capital may reallocate, or target, theirassets to more favorably treated risk-based assets. For the last two years, I believe this hasbeen happening and it has impacted the availability of warehouse lines of credit.
Let’s take a look at a hypothetical example. A community bank has $500 mil-lion in total assets and generally accepted accounting principles (GAAP) capital of$35 million. They have invested their assets as follows:
� Cash deposits at the Federal Reserve ................................................$20 million� Traditional warehouse lines of credit ............................................$300 million� FHA and VA loans ............................................................................$100 million� Conventional loans with an LTV less than 90 percent ......................$30 million� Conventional loans with LTV greater than 90 percent ......................$50 million 11
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This bank has an LTOB limit of $5.25 million (15 percent of $35 million). Thismeans that the maximum loan commitment to each of its warehouse customerscannot exceed that amount. Their total capital is seven percent of assets ($35 mil-lion divided by $500 million), which is safely above the six percent requirement.Their risk-based capital is calculated as follows:
Risk-based % Amount Risk based $Cash deposits at the Fed ........................0% ..............$20 million........................$0Warehouse lines ..................................100% ..........$300 million ......$300 millionFHA and VA loans ..................................20% ............$100 million ........$20 millionConventional loan less than 90% ..........50% ............$30 million ........$15 millionConventional loans greater than 90% ..100% ............$50 million ........$50 millionTotal risk-based assets ..................................................................$385 million
This bank has risk based capital of 9.09 percent ($35 million divided by $385 mil-lion). That is above the minimum, but below the required regulatory minimum for awell-capitalized bank, and exposes the bank to increased regulatory scrutiny or criti-cism. This is a simplistic and extreme example. There are many variables and factorsthat go into these calculations, and other capital measures that banks must meet. Butthis example exhibits the importance for banks to manage the risk-based allocationsfor the loans in which they invest. They can use much less capital, and enjoy greaterleverage, by investing in loans that have lower risk-based asset allocation percent-ages. This example also exhibits that a bank has more incentive to invest in individ-ual mortgage loans, rather than traditional warehouse lines that are secured by indi-vidual mortgage loans. When capital is scarce, one cannot blame the bank for maxi-mizing its capital utilization. A bank that owns a mortgage company and funds itsmortgage production with deposits can usually count those loans at the lower, loanlevel risk-based asset percentages. But if they are also a traditional warehouse lender,they have to count those lines of credit, secured by similar mortgage loans, at 100percent. If they have limited capital, you can guess what they will likely do. They willsupport their internal mortgage banking operations. That’s just smart business.
Warehouse lending: Evolution Use of purchase/repurchase agreements (repos) has been with us since the creation ofGinnie Mae mortgage-backed securities in the late 1960s. Mortgage companies wereempowered to issue Ginnie Mae securities backed by the FHA and VA loans that we orig-inate. Mortgage bankers gather bundles of mortgage loans, prepare a schedule of theloans, send it to Ginnie Mae, send the mortgage collateral to an approvedcustodian/trustee and Ginnie Mae sends back a security guaranteed by them andbacked by the loans. The mortgage banker enters into a trade to sell that security to aWall Street firm on a specific settlement date.
The agency security often arrives a week or two before the settlement date. Mostwarehouse banks allow those securities as eligible collateral under the warehouse lineof credit—until the trade settles. Because these securities are backed by the full faithand credit of the United States government, Wall Street developed a process by whichmortgage bankers can sell these securities to them before the actual security settle-ment date (the loan sale date). The mortgage banker has the obligation to repurchasethe securities simultaneous with the settlement of the security. The difference betweenthe price at which the Wall Street firm initially buys the security and the price at whichthe mortgage banker buys back the security is the effective cost of the repo and simi-lar in nature to the interest rate charged on a warehouse line of credit. The repo agree-ment is almost always with the Wall Street firm to which the security is sold. Thisprocess allows the mortgage banker to pay off its warehouse lines of credit with theproceeds of the repo transaction. The effective interest rate on the repo transaction isusually much lower than the rate on a traditional warehouse line. More importantly,the mortgage banker does not have to wait for the securities settlement date to movethe loan off its balance sheet and pay down the warehouse line of credit. Most banksdo not treat the repos as other debt in the debt to equity calculation. This improvesthe mortgage banker’s debt-to-equity ratio. Repos still exist and are widely used.
As the market matured, Wall Street and the banks expanded the repo mechanismto Fannie Mae and Freddie Mac mortgage-backed securities. They also introduced asnazzy hybrid called the “Gestation Repo.” The Gestation Repo allows mortgagebankers to repo the individual whole loans that have been designated to go into theGinnie, Fannie or Freddie security before getting the security back from the agency.The loans that are going into the security are specifically identified, and sold into therepo agreement. This lowers the mortgage banker’s cost of credit, gets the loans offthe balance sheet sooner and allows them to do even more business.
In the early 1990s, some banks began to use this same Whole Loan Repo process intheir warehouse lending programs. Several banks still use this today. Rather than estab-lishing a traditional, secured warehouse line of credit to the mortgage banker, the bankactually purchases the individual mortgages, or a 100 percent participation in the mort-gages, with an agreement to sell the loan back to the mortgage banker simultaneous withthe purchase of the loan by the takeout investor. This allows the warehouse bank to:
� Enjoy the lower risk-based asset allocations for the individual mortgages, rather thanthe 100 percent risk-based asset allocation for a traditional warehouse line of credit.
continued on page 12
� Visit your community bank(s) and explain the business to them. Ask them ifthey will consider providing warehouse financing to you and/or other mortgagebankers. If they will, contact your current warehouse lender and see if they willsell them a participation in your line of credit.
If you are a successful warehouse lender:
� Thank you for supporting our industry! � Please consider using your operations platform and expertise to expand your
lending program by selling participations to other banks that need loans andare willing to consider warehouse financing. Charge a fee for this extra service.
If you are a bank that is willing to consider warehouse financing:
� Please consider the purchase of warehouse line participations from experienced banks � If you have the resources, consider forming a unit to provide warehouse financ-
ing. It can be a very lucrative and safe business channel.
If you are a Wall Street firm:
� Do you or can you still offer repos? � Do you or can you still offer Gestation Repos?
If you are a federal home loan bank or “banker’s bank:”
� Please consider creating an operational platform to serve your member banksthat would like to invest in mortgage warehousing. This can increase your feeincome, and help your member banks invest in a profitable asset.
� Consider using your resources to be a clearing house for sale of warehouse lineof credit participations to your member banks.
� To the extent your charter permits, consider investing in warehouse lines of creditthat are secured by loans eligible for sale to Ginnie Mae, Fannie Mae or Freddie Mac.
If you are a federal regulator:
� Please consider allowing risk-based capital treatment, for qualifying warehouse linesof credit, to be based on the risk-based allocations for the underlying mortgages thatsecure the line of credit. That will eliminate the disparity between bank-owned andindependent mortgage companies. The Mortgage Bankers Association has recentlymade a similar request.
� Bank-owned mortgage companies that are funding their loans “on balancesheet” can already use this capital treatment.
� Banks using a Whole Loan Repo process are also already using this capital treat-ment. By definition, Whole Loan Repo agreements are not supposed to have spe-cific recourse to the mortgage banker. Traditional warehouse lines of credit,backed by agency loans, afford the same collateral protection to the bank, andhave the added credit enhancement of specific recourse to the mortgage banker.
If you are Fannie Mae, Freddie Mac or Ginnie Mae:
� Please consider the purchase of warehouse line participations from experi-enced banks. As this article goes to press, Ginnie Mae has announced that theyare considering some type of warehouse support for Ginnie Mae issuers.
� Thank you for your years of support of and collaboration with our industry!
Mortgage banking was created to transport mortgage lending capital from capi-tal surplus areas of the country to growing, capital starved regions of the country.Independent mortgage bankers are vital to the sustenance of our country’s mort-gage financing. Without adequate and affordable warehouse inventory financing,independent mortgage banks will become scarce. For many years, banks and inde-pendent mortgage bankers have enjoyed a symbiotic relationship. We are all awareof the challenges that banks face. The provisions of warehouse financing are goodfor the banks, mortgage bankers, the availability of mortgage loans and the cost ofmortgage loans to the consumer.
For many years, this industry has contributed to the American dream of homeown-ership. Our industry needs some help and some compromise. The cost of that compro-mise is affordable and, when properly managed, safe. We must all work together forprompt resolution. The tools are available, and the requisite compromises are tolerable.It’s time for a solution!
James Hinton is chairman of Hinton Mortgage & Investment Company in Dallas, andis a 37-year veteran of the mortgage and banking industries. His company providesconsulting and advisory services to the financial services industry. He may be reachedby e-mail at [email protected] or via his company’s Web site, www.cfhinton.com.
Visit author James Hinton’s blog at blog.cfhinton.com for tips andtricks on how to de-mystify and conquer the home loan process, and
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� Avoid the LTOB limitations. Because the bank is not extending credit to themortgage banker and is relying solely on the individual loans and the loan saletakeout proceeds for retirement of the loans, the LTOB limits apply to the indi-vidual mortgage borrowers and not the mortgage banker. This allows the bankto fund a large mortgage banker that they might not otherwise be able to fundunder their LTOB limits.
In the last 10 years, Fannie, Freddie and several conduits have developed early purchaseprograms. These programs look very much like the Whole Loan Repo process. The takeoutinvestor (Fannie, Freddie or the conduit) funds the purchase of the loan, or part of the pur-chase price, within two or three days of the funding by the mortgage banker. The mortgagebanker then has a defined deadline by which it must deliver all of the required documen-tation, and receive the balance of the money due to them. If they fail to do so, they haveto buy the loan back. This allows the mortgage banker to quickly get the loan off the bal-ance sheet, reduce its warehouse line of credit and improve its debt-to-equity ratio.
Warehouse lending: Profitable and safe Without question, the risks of warehouse lending have increased. Nonetheless, forthose who run it well, warehouse lending is a safe and profitable business. Thelender’s yield on the warehouse line of credit, and the rapid repayment of amountsadvanced, makes this lending a very attractive asset for a commercial bank. Thoselenders who profit from this lending watch the things that always mattered:
� The character and track record of their customer and its management� The debt-to-equity and profitability of their customer � The liquidity of their customer � The speed at which their customer turns their loans, including aggressive pay-
down requirements for aged loans � The timeliness, substance and quality of the takeout and the takeout investor
to which their customer is selling their loans � The advance rate under the line, versus the takeout price � Careful oversight and control of the mortgage collateral, including use of the
Mortgage Electronic Registration Systems (MERS)� Careful control over the funding of the loan and the proceeds of the loan sale
Mortgage bankers: Challenge and adaptation Mortgage bankers also have challenges. When I started in this business, the prevailingdebt-to-equity requirement for warehouse lines of credit was 10 to one. In other words,the mortgage banker needed GAAP capital of $1 million for every $10 million of ware-house line outstanding and, in most cases, for the amount of line committed.Additionally, warehouse lenders looked at working capital (GAAP current assets minusGAAP current liabilities) as an important ratio. We tried to maintain positive working cap-ital equal to at least 75 percent of GAAP capital. We did not capitalize, nor did we oftensell, servicing. Most warehouse lines of credit advanced the lesser of 98 percent of par orthe loan sale takeout price. In summary, the industry operated with much less leveragethan today. As we began to capitalize and sell servicing, things got more complicated. Amore competitive and permissive credit environment led to higher advance rates anddebt-to-equity ratios. In the last 10 years, I have seen warehouse deals with debt-to-equi-ty ratios as high as 25 to one and advance rates as high as 102 percent of par. As to work-ing capital, “What’s that?” has often graced the tongues of lenders and borrowers.
Mortgage bankers are also at the mercy of the institutions to which they sell theirloans. For many mortgage bankers, that is a conduit, and the conduits have their ownfunding challenges—whether it is the funding capacity of the bank that owns themor the capacity of their own warehouse lines. The mortgage business is very volatile.When business volume spikes, the speed at which institutional investors buy loansslows dramatically. This slows down the turnover of the mortgage banker’s ware-house inventory and increases the size requirements of their warehouse credit needs.
Warehouse lending: Solutions Now let’s look at some possible solutions. Some are more dramatic than others. Ibelieve that they can all have a positive impact on the challenge.
If you are a mortgage banker:
� If you have a warehouse lender, treat them with the same respect you treatyour wife (or spouse).
� Manage your aged inventory. If you have a problem, call it to the attention ofyour warehouse lender before they call it to your attention. When you call them,offer a reasonable and achievable plan for resolution of the specific problem.
� Prepare and model your business for higher capital requirements—a lowerdebt –to-equity ratio.
� Carefully monitor the liquidity (working capital) of your business, and maintainadequate levels to safely run your business.
� Don’t defer problems. Hoping is not a plan.
what now? continued from page 11
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marketing that have remained front pagenegative news include securitizations, col-lateralized debt obligations (CDOs), deriv-atives, exotic adjustable-rate mortgages(ARMs), etc. Regrettably, one of the morebasic areas that receive little to no atten-tion is the lock process.
When a borrower applies to a mort-gage company, they have the option tofloat their rate until a later period of timeor secure the rate that is offered at appli-cation for a set number of days (rate lock).Applicants are able to secure hundreds ofthousands of dollars of mortgage moneyby simply filling out an application, pay-ing limited upfront expenses, such as anappraisal, credit report and/or applicationfee. This immediately creates some cal-lousness about the mortgage applicationprocess, because the borrower has very lit-tle and/or no commitment to their loan,
and/or their mortgagecompany. You might beasking yourself why a bor-rower should have to obli-gate themselves to a mort-gage lender and/or theirloans terms? With commit-ment comes responsibility,and with responsibilitycomes accountability. Thelast decade of mortgagecompany implosions ispaved with examples ofborrowers who did notunderstand the terms oftheir loans, as well as manyunscrupulous mortgagecompanies that deceivedborrowers into loans thatwere not in their best inter-ests. We need to enhancetransparency, accountabili-ty and responsibility, but
how? Are there simple ideas that canachieve incredible results?
With all of the recent loan level priceadjustments, borrowers have not beenable to benefit enough from rate reduc-tions. We also need to lower the cost ofavailable credit. I have a simple solution.Create a national proscribed lockprocess, complimented by a suitablelock fee. The fatal flaw of not having thisprotocol in our industry has exacerbatedour problems, increased rates and com-pounded mortgage company expenses.
By adopting a national lock fee policy, aborrower would take more stock reviewingthe terms of their mortgage, and thiswould improve personal accountability.There are some purists who believe that ifa borrower remembered the simple philos-ophy of “buyer beware,” that many of thebad mortgages would never have beendone, and I partially agree. There are manyof you who feel borrowers did not have abarrel of a gun pointed at their heads whenthey signed the mortgage, and should havebeen more responsible. Unfortunately,
It seems that our government and busi-ness leaders are constantly making neces-sary changes to address the systemic blun-ders that were adopted during the lastdecade. We are witnessing an unprece-dented bombardment of governmentintervention, regulation and supervisionto re-engineer the overall finance indus-try. All of these complex changes arebeing enacted to ensure we never repeatthe prescription for economic ruin again.Industry veterans, politicians and borrow-ers continue to struggle and place blameon numerous entities and individuals.
The “Blame Game” has become sopopular, that it is now both a universalbanking term, as well as the title of arecently published book chronicling ouramazingly deficient oversight, accounta-bility and responsibility in mortgagebanking. We can only pray that all of theexperts being called uponto contribute to the planwill enable our newly-elected government to cre-ate polices that stabilizehome prices and stimulateeconomic growth in thenear future. Logically,there is immense politicaldisagreement about theplans being enacted, anduncertainty about theireffectiveness and timing.The magnitude, complexi-ties and scope of our prob-lems are epic, and there-fore, consumer confidenceis at a historic low. Onething is certain: Our indus-try will never be the same,and we must restructureall aspects of the mortgageapplication process, creditstandards, and secondary marketingpractices to regain confidence, and even-tually, more liquidity to the market.
So, what does all of the above historyhave to do with the title of this article, andwhy did I preface this article with areminder of the problems we are sick andtired of hearing about? For those of younot familiar with the phrase, “Lock, Stockand Barrel,” simply put, it means to putcomplete focus into something. If youhave your head down and are really visu-alizing your target, you can be said to bedoing something “Lock, Stock and Barrel.”This phrase could not be more apropos ofour market today. There are millions ofpeople keeping their head down (formore reasons than I can list), and every-one is focusing on survival. Unfortunately,with so much attentiveness and tunnelvision about the big issues and restructur-ing the universe, we often overlook thesimple obvious problems. With all of theexpert analysis, intervention and regula-tions, we are missing one basic area of thesecondary and mortgage applicationprocess that must be perfected. To date,the more intricate areas of secondary
Lock, stock and barrel
continued on page 16
property types. One exception to thisrecovery is the U.S. apartment sector,where demand increased with the rise inforeclosures as many homeowners turnedto rental properties as a housing option. Asdemand for multi-family housing catchesup with supply, the apartment sector isexpected to emerge from the recessionphase of the value cycle ahead of the othersectors, according to the survey.
As investment risk has increased, theaverage overall capitalization rateincreased on a quarterly basis for allsurveyed markets with the exception ofthe Washington, D.C. and Houstonoffice markets. The Pacific Northwest,San Diego and Denver office marketsposted the largest quarterly overall caprate increases in the office sector. Mostof the real estate professionals sur-veyed as part of the Korpacz Real EstateInvestor Survey project overall cap ratesto increase over the next six months.For more information, visitwww.pwcreval.com.
LPS releases study onimpact of foreclosures onhome prices
Lender ProcessingServices Inc. (LPS) hasreleased a study thatreveals the impact offoreclosure sales, also
known as real estate-owned (REO) sales, onhome prices. Using a proprietary homeprice index that can include or exclude REOsales, LPS conducted a study of changes inregional home prices between 2007 and2008 in the nation’s top housing markets.
“While the gap between REO sales pricesand the rest of the market was very slimprior to 2007, our study shows that gap isgrowing at an accelerating pace,” said NimaNattagh, Ph.D., senior vice president, LPSApplied Analytics. “In general, markets thatexperienced sharp drops in home prices in2008 also saw deeper REO discounts.”
The largest drop in prices of REO saleswere observed in Riverside County, Calif.Home prices fell by 28 percent inRiverside County in 2008 versus 2007;however, including REO sales, prices fellby 34 percent when compared to 2007.The study also found that, including REOsales, home prices declined by 29 per-cent during 2008 in the Phoenix marketwhere analysts cite significant overbuild-ing. When REO sales were excluded fromthe analysis, though, the price declinewas less severe at 19 percent year overyear. The gap between home prices withand without REO sales was smallest inSeattle, New York and Cambridge, Mass.While the Western states and Michiganand Florida saw double-digit declines inhome prices, other regions have faredmuch better. However, based on studyresults, further deterioration in the hous-ing market will most likely deepen theREO discount levels in these markets.For more information, visitwww.lpsvcs.com.
MBA calls for uniformnational regulation of mortgage lending
The Mortgage BankersAssociation has sent a let-ter to the Chairmen and
Ranking Members of the House FinancialServices and Senate Banking Committeescalling for legislation that would establisha tough, new federal regulatory frame-work for mortgage lending to protect bor-rowers nationwide. In the letter, MBAoffered an outline of proposed legisla-tion, titled the Mortgage Improvementand Regulation Act (MIRA), that wouldestablish new uniform national lendingstandards to replace the current patch-work of state and federal lending lawsand that would also establish a new fed-eral regulator to implement and enforcethese standards.
“In order to restore confidence in thehousing and mortgage markets, we needto ensure that many of the excesses thatled to the current crisis aren’t repeated,”said John A. Courson, president and chiefexecutive officer of MBA. “For this reason,we are calling on Congress to create a newnational regulatory framework to regu-larize the mortgage market and betterprotect consumers.”
MBA’s plan is centered on the creationof new lending standards and a new reg-ulator, the Federal Mortgage RegulatoryAgency (FMRA). MIRA would establish,and FMRA would be responsible forimplementing and updating, the newmortgage lending and servicing stan-dards, as well as regulating independentmortgage bankers and mortgage brokersin partnership with state regulators.
“MBA has long advocated for uniformnational lending standards to protect bor-rowers coast to coast,” said Courson. “Onestandard for all borrowers to learn andunderstand, and one standard for alllenders to follow will offer much betterprotection to consumers in every stateand will help to lower costs. It will alsosignificantly cut down on the confusingand often contradictory patchwork ofstate laws and regulations.”
As part of MIRA, HUD and theFederal Reserve would be required towork together in consultation withthe new regulator to develop greatlysimplified consumer disclosure forms,including combining Real EstateSettlement Procedures Act (RESPA)and Truth-in-Lending Act (TILA) dis-closures to help consumers betternavigate the mortgage process.Additionally, MIRA would increaseresources for investigating and prose-cuting mortgage fraud and establish anational financial literacy and coun-seling program. As part of that pro-gram, MBA suggests there should bepre-purchase counseling required oncertain mortgage products, primarilyfor first-time homebuyers.For more information, visit www.mort-gagebankers.org.
news flash continued from page 9
“We are witnessingan unprecedentedbombardment of
government interven-tion, regulation and
supervision to re-engineer the over-all finance industry.”
By Michael L. Larssen, CMB
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institution by improving the position andsecurity of a loan for the lender and tothe welfare of the borrower by enhanc-ing their cash flow immediately uponacquisition of the property. This is a win-win situation for all parties involved.
How does CostSegregation benefit theborrower beyond posi-tioning to secure a loan?Commercial real estate investors arealways looking for ways to improvetheir project’s cash flow. Cash flow isoften the most critical factor investorsanalyze in the decision mix to purchasea facility. Cost Segregation Studiesaccelerate depreciation deductions anddefer federal and state income taxes.This helps the prospective propertyowner increase their cash flow.
Once a property is purchased, astudy may also materially reduce localproperty taxes by separating real andpersonal property. Most importantly, aCost Segregation Study puts cash intothe hands of commercial and residen-tial real estate properties now! Whatreal estate investor wouldn’t want youto show them how to obtain thefinancing they need and a way to sig-nificantly increase cash flow once theyacquire a property? These studies areone-time property specific events thatare completed in 30 days, saving multi-unit owners tens of thousands of dol-lars. They pay for themselves tenfold.Consider these examples:
� For a $1.28 million multifamilyinvestment property: A CostSegregation Study was performed,netting a tax savings of approxi-mately $85,000 that the ownercould not have otherwise obtainedwithout a study.
� For a $4.8 million multifamily invest-ment property: A Cost SegregationStudy reduced federal and state incometax burden by $231,000 that this ownercould not have otherwise obtained.
� For a $7.2 million multifamilyinvestment property: A study pro-duced additional depreciation ofover $900,000, generating almost$400,000 in tax savings.
Scott Marchand is with Albany, N.Y.-basedCost Segregation Partners Inc. He may bereached at (518) 608-4283 or e-mail [email protected].
For information on obtaining afree Cost Segregation AnalysisReport, e-mail Scott Marchand
A virtually unknown strategy called CostSegregation can help you to not onlysecure loans, but build your businesswith commercial and multi-unit resi-dential investors.
A Cost Segregation Study is a time-proven and powerful technique forincreasing cash flow immediately uponacquisition of a commercial or multi-unit residential investment property.Traditionally, these studies are com-pleted after the acquisition of a proper-ty. However, when commercial mort-gage professionals use the analysis dur-ing the loan application process, it posi-tions the borrower as more loan-worthyand makes the loan application (bank-ing guidelines) stronger. Best of all, theanalysis is free.
What is a Cost SegregationStudy and a Cost SegregationAnalysis Report?A Cost Segregation Study identifies andreclassifies personal property (HVAC,plumbing, fixtures, landscape, etc.) fromwhat is real property (bricks and sticks).Typically all of these assets are depreciat-ed over 39 years (commercial) and 27.5years (residential investment). A studychanges the method of depreciation fol-lowing IRS guidelines to greatly acceleratethe depreciation of personal propertyassets to as little as five years. Oftentimes,up to 60 percent of building costs can bedepreciated for these shorter periods—typically saving property owners hun-dreds of thousands of dollars.
Cost Segregation Studies are per-formed by a team of engineers, certifiedpublic accountants (CPAs) and construc-tion specialists. The cost of a study tendsto be 10 percent of the increased cashflow that the study produces. The bene-fits of a Cost Segregation Study are sub-stantial, immediate and enduring. TheCost Segregation Study is only requiredonce. Its cost is not recurring, but thebenefits are recurring during the term ofproperty ownership. A Cost SegregationAnalysis Report conservatively identifiesand estimates the savings that can beachieved for specific properties.
What type of borrowersand properties can benefit? Any commercial or residential multiu-nit building owner (or those in processof purchasing a building) whose prop-erty is valued more than $750,000 orwho is constructing a building. Anyowners of commercial or residentialmultiunit buildings who acquired thatproperty post-1986 and have not had aCost Segregation Study completed yet.
Commercial mortgage professionalsthat use a Cost Segregation Analysis aspart of their loan application processshow a commitment to their financial
A closer look at Cost Segregation Studies
By Scott Marchand
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both assumptions have credibility. Over thepast few decades, in an effort to ensurethat borrowers had easy access to credit,they were given more and more freedomto shop their loan. While one wouldassume the ease of shopping could onlybenefit a borrower, our industry has madethe process of shopping a loan so simple,that we diminished accountability and cre-ated a world where borrowers can shopmortgage companies indefinitely. This lackof commitment is especially true, if weexamine a refinance commitment wherethe ability to rescind on a mortgage is vol-untarily offered at time of application, tominimize the initial review of the paper-work involved. Simply stated, the flexibilityoffered to a borrower has had an adverseaffect of minimizing the significance of amortgage process, thus diminishing thepredictability of loan closings post applica-tion. To be absolutely clear, I am not advo-cating the elimination of the borrower’sability of comparing competitor’s termsand service. I am advocating that they havea substantial interest in the transactionwhen they select a company.
This policy would also enhance second-ary market confidence and performance.It would reduce volatility of a mortgagecompany’s pull through percentage, forloans sold to the secondary market.Instability of pull-through creates addi-tional hidden costs, directly related tohedging interest rate risk. By implement-ing a simple national lock fee, hedgingvolatility of pull-through would be dra-matically reduced. Mortgage lenders aregraded by their investors utilizing a score-card. Large banks and/or correspondentinvestors rank correspondent clients bytheir ability to deliver high consistent pull-through. The mortgage lender is chargedadditional points or penalized for poorpull-through performance, and these costsare passed on to the borrower if their pullthrough does not meet expectations.
At a recent Lenders One (an allianceof more than 125 mortgage lenders)conference, I polled more than 30executives about my concept, and theyunanimously agreed that such a policywould be warmly welcomed. Many inthe room had recently put differinglock fee policies into effect, anddespite their employees’ passionateobjections, they all witnessed very pos-itive results. They also unanimouslyvalidated my assessment, that the sec-ondary savings from a reducedpipeline volatility and operationalwaste that would be realized couldrange between 0.500 to 0.750 basispoints. Simply put, the superior hedg-ing performance achieved from the feewould directly benefit the borrowerand the mortgage company.
A simple national rate lock policywould reduce the redundant expense thatcompanies encounter working on loansthat fall out of their pipeline. With theease of losing a loan, it is difficult for a
mortgage company to manage the effi-ciency and effectiveness of their origina-tors. These unnecessary operationalexpenses eventually wind up being passedon to a borrower via increased rates.
In the mortgage world today, there is awidening gap between the small- to mid-sized companies. It is usually the largercompanies that hedge, and the smallerones that do not. Recent spreads betweenbest efforts and mandatory delivery haveexpanded to historic highs. After speakingwith several secondary risk managementexecutives, they stated that there is anapproximate 0.750 to 150 basis point dif-ferential. Operating without a nationalrate lock policy, the best efforts lenderstruggles to manage the substantial loss oftheir applications in a declining rate envi-ronment. As rates drop, some smallermortgage lenders feel helpless to main-tain the customer, thus they often re-negotiate a rate lock with a borrower, re-lock the loan with a new investor, and donot deliver the loan to their original tar-geted investor. The larger lenders are notimmune to the negative impact of exist-ing loan lock policy and procedures. Theyincur the same losses and operationalinefficiencies in their retail channels.Large lenders also are affected moreseverely via their third-party channels,that they have less direct control overwhen managing risk. These secondaryand operational challenges have recentlybeen cited as reasons for larger institu-tions eliminating their third-party chan-nels. These third-party channels create liq-uidity and are another important aspectof our business slowly becoming extinct.
There is no other financial transactionthat I could think of that has such a lim-ited level of commitment. When you buya stock, you don’t get to change the priceof the stock later in the day because themarket improved. In order to better man-age risk, you have to be able to obtain asecure hold on your deliverables.
As I previously stated, there arelenders doing business that charge alock in fee today, and unfortunately areat a competitive disadvantage by thosethat do not.. It is a proven fact that arealistic lock fee will differentiate realclients from rate shoppers. If we institut-ed a national rate lock fee policy, it
lock, stock and barrel continued from page 14
“While one would assume theease of shopping could only
benefit a borrower, our industry has made the processof shopping a loan so simple,
that we diminished accountability and created aworld where borrowers canshop mortgage companies
indefinitely.”
continued on page 20
Mortgagebot acquiresNetupdate from MostHome Corporation
MortgagebotLLC, a providerof online, point-
of-sale lending technology to the mort-gage industry, has announced that it hasacquired, through a wholly-owned sub-sidiary, the loan origination software plat-form operated by Netupdate Inc. ofBellevue, Wash. and its client base.
Netupdate has been a developer ofconsumer-direct, point-of-sale mort-gage-origination technology since 1999,and was a wholly-owned subsidiary ofVancouver, B.C.-based Most HomeCorporation, a provider of online cus-tomer-service solutions for the mort-gage and real estate industries.
“We’re confident that Netupdate clientswill benefit from our business model—which is built not only on providing inno-vative solutions with exceptional function-ality, but also delivering outstanding cus-tomer care,” said Scott Happ, presidentand CEO of Mortgagebot. “Because we col-laborate so closely with our clients, we callthem our ‘Partners;’ and we’re delightedto welcome Netupdate’s clients as newMortgagebot Partners. Our goal is to maketheir transition into the world ofMortgagebot as smooth, as trouble-free,and as worry-free as possible.”
With the Netupdate acquisition,Mortgagebot strengthens its client base ofbanks, thrifts and credit unions to morethan 900 organizations nationwide.
“Most Home is pleased to haveNetupdate acquired by Mortgagebot,”said Ken Galpin, CEO of Most HomeCorporation. “Mortgagebot truly is themarket leader, with a world-class reputa-tion for both product innovation andclient satisfaction. Netupdate clients arein very good hands with Mortgagebot.”For more information, visit www.mort-gagebot.com.
StreetLinks partners with Calyx Point
StreetLinks NationalAppraisal Services hasannounces its integra-tion with Calyx Software,
makers of the Calyx Point loan originationand processing system. This partnershipwill allow Point users to order appraisalsand receive completed reports withintheir loan origination system, thus elimi-nating the use of separate systems and
entry of duplicate information. The inte-gration has been fully tested and is cur-rently operational.
“Through this integration, lenders canlaunch an appraisal order with the pushof a button,” explained Tony Ebeyer,StreetLinks COO. “This will reduce pro-cessing time and eliminate errors inher-ent in duplicate entry. With Calyx’s reachand reputation, it is exciting to be in frontof everyone using their Point system. Thispartnership demonstrates our compa-nies’ shared commitment to leveragingtime, cost and compliance.”
Dennis Boggs, senior vice president ofbusiness development for Calyx Software,said, “We are excited about StreetLinks’integration into Point. Our goal at Calyx isto continue to provide the best serviceproviders available to Point users.”For more information, visitwww.streetlinks.com or www.calyx-software.com.
Lend America implements 100 percentautomated paperlessplatform
Lend America hasannounced that ithas built and imple-
mented an automated paperless plat-form for all loan originations and pro-cessing that enhances overall efficiency,regulatory compliance and risk manage-ment, while extending the company’scommitment to environmental steward-ship. This strategic initiative was directedby Lend America’s new chief informa-tion officer, Adeel Saeed, who is respon-sible for managing the technology deci-sions and architecture of the companywith a mandate to focus on automation,simplicity and eco-responsibility.
“Our paperless platform, which bringsthe entire mortgage process into a singleapplication, truly positions Lend Americaas a leading next generation mortgagecompany,” commented Michael Ashley,chief business strategist of Lend America.“This fully automated platform signifi-cantly enhances the mortgage process byintelligently creating, managing, process-ing, monitoring archiving, and retrievingall content throughout the lifecycle of amortgage from initial contact through theclosing of the loan. The tangible benefitsof this platform are numerous andinclude increased efficiency, regulatory
continued on page 20
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Write-offs could cut HECM costsDisclaimer: Nothing in this article shouldbe considered tax advice. It is strictlyinformational. Consult a reverse mort-gage-competent tax advisor.
Monica Bubasky is a happy woman. The70-year-old native of Lake Hekmo, Minn.is beside herself with joy. It comes acrossin her warm chatty voice and tenderbrown eyes. Her slight 5’4” frame comesalive when she talks about her modern-ized kitchen and bathrooms.
The $40,000 project, paid for with cashfrom a reverse mortgage she took inSeptember 2007, made her kitchen andbathrooms age-suitable and new. Thekitchen cabinets are now on the samelevel as her dishwasher. No more climbing
up and risking falling down to get utensilsfrom her cabinets. Her new bathtub is fall-proof and ringed with baby-soft air-bub-ble rubber edges on which she can resther head while taking a hot bath. If shefalls for some strange reason, her headwould land on a pillow (thanks to the air-bubble edges) that alerts her children andher doctor in neighboring towns.
The tub’s auto-cleanser carries a life-time warranty. Besides auto-flushingand cleaning, her new toilet bowl per-forms quarterly fecal and urinal analy-sis and remotely stores the results inher digital medical record. The walltiles of the bathroom are maintenance-free for life. It is what the contractor’smarketing literature calls “tomorrow’s
bathrooms for older adults who aspireto age-in-place.”
As satisfying as the new kitchen andbathrooms are to Bubasky, our tax codemay hold some cash surprise: Deduction forthe mortgage insurance premium (MIP) shepaid to get the Home Equity ConversionMortgage (HECM) loan as well as the extra50 basis points MIP charged to her loan bal-ance and remitted monthly to the U.S.Department of Housing and UrbanDevelopment (HUD). Considering thatFederal Housing Administration (FHA) insur-ance premiums generally make up morethan 50 percent of HECM costs, the poten-tial MIP write-offs could significantly reduceHECM costs for seniors such as Bubasky.
These potential tax write-offs camecourtesy of some little-known provisionsin the Tax Relief and Health Care Act of2006 (Public Law 109-432, as amended bythe Mortgage Forgiveness Debt Relief Actof 2007 [Public Law 110-142]) accordingto James E. Veale, vice president of gov-ernment affairs at Security One LendingInc., one of the nation’s leading authori-ties on taxes and reverse mortgages.
Veale says these guidelines apply tothe MIP deduction*:
� Insurance contract must be issuedafter Dec. 31, 2006;
� Reverse mortgage has to be related to“acquisition indebtedness” (construct-ing, acquiring, major improvement orthe refinance of those items);
� Borrower cannot have income over$100,000 (or in some cases less)without reduction;
� Home has to be a “qualified resi-dence” (a.k.a. principal residence);
� No deduction after Dec. 31, 2010;� Pre-paids (i.e. upfront MIP) gets writ-
ten off over 84 months.
Not every borrower can take advantageof the deductions. In addition to meetingthe above guidelines, they must have suf-ficient taxable income for the deduction tomake sense, but Veale believes sharinginformation about the write-off’s availabil-ity is important whether or not your HECMborrowers qualify.
“Even if they don’t have the income,it is still available, and they should stillbe made aware that it is available,” saysVeale, a CPA with more than 38 yearsexperience in tax matters.
Because every HECM borrower’s situ-ation is different and an originator can-not be sure how a customer used theirHECM cash, Veale suggests that reversemortgage originators should not con-clude that their customer is eligiblewithout finding out how the cash fromthe HECM was used.
“The key question is ‘how was theloan proceeds used?’” says Veale.
That is a question that your clientsshould be able to answer. If they usetheir reverse mortgage cash for home
continued on page 20
*Here is the relevant IRS code:The sections are Internal Revenue CodeSections 163(h)(3)(E), 163(h)(4)(E), and163(h)(4)(F).
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A message from NAMB PresidentMarc Savitt, CRMS
I’d like to welcome you to the inaugural issue of National Mortgage ProfessionalMagazine. In this issue and future issues, the magazine will focus on all aspects ofthe mortgage industry. While I personally represent the National Association ofMortgage Brokers, the entire mortgage industry can still speak with a unifiedvoice, and it is the goal of this publication is to have that voice heard.
I’d like to thank the publishers of National Mortgage Professional Magazine forproviding NAMB with this forum to detail the work we do on behalf of our mem-bership. Our board is rich with industry experience, and in this issue and in futureinstallments, NAMB board members and committee chairs will reveal the secretsto their success and provide tips in their particular areas of expertise.
This first installment of “The NAMB Perspective” column will feature articles byour Federal Housing Administration (FHA) Committee Chair John Councilman,CMC, CRMS; Membership Committee Chair Olga Kucerak; and Secretary DonFrommeyer, CRMS. I’m sure you will find John’s expertise in the field of FHA to bequite valuable as he tackles the topic of FHA loans, one of the hottest productscurrently in the marketplace. Olga’s article stresses the power of NAMB member-ship and how strength in numbers speaks volumes. Finally, Don’s article discussesthe current state of the underwriting field and how the current low rates have cre-ated a virtual backlog of work for underwriters everywhere.
As the market begins to heat up in certain areas, we as an industry still seem tohave a target on our collective backs. We are currently facing several legislative issuesin Washington, D.C., and the daily battles on Capitol Hill will continue as we stand upand protect our industry. We have been subjected to unprecedented legislative chal-lenges this past year. A majority of these issues evolved from the unfair image of thebroker as portrayed by the mainstream media. We will continue to combat theseissues and shall prevail.
I thank you for your time and strongly encourage you to take in the knowledgethat will be provided by our membership in “The NAMB Perspective” in this issueand in the future.
Marc Savitt, CRMS is President of the National Association of Mortgage Brokers andpresident of The Mortgage Center in Martinsburg, W. Va. He may be reached at [email protected].
A message from NAMB FHA Committee Chair
John Councilman, CMC, CRMSFHA, the low-cost alternative … maybeIt seems hard to believe that the FHA has gone from an unused relic to one of thehottest mortgage programs in the market in a mere matter of months. In 2006,many brokers had turned in their FHA approval. Many wholesalers didn’t evenoffer FHA. All of that was before the financial meltdown. Now, many borrowerswho could choose any conventional program are choosing FHA.
Everyone who had given up their FHA approval scrambled to be re-approved.Now, brokers are reporting over 50 percent of their production is FHA. If one sim-ply looks at rates and fees, it is easy to send most of your loan production throughFHA. A good mortgage originator will dig a little deeper. The current legislative andregulatory climate is already introducing a new concept to many originators, a
Duty of Care. Already included in some state legislation and in HR 1728, Duty ofCare means “presenting consumers with appropriate mortgage loans.” That dutyrequires any originator to take the time to see if they are actually giving the bor-rower the loan a person who had done due diligence would have given them.
Consider a borrower who only expects to live in the house for three years. If theprivate mortgage insurance (PMI) is available, it is often much less costly than FHAinsurance. If the borrower has a 700-plus score and 10 percent down, PMI often isthe better choice. Make certain you have checked to see if the loan meets USDARural Housing guidelines or if the borrower is a veteran. As home prices stabilize,as they will, presenting the appropriate loan will become even more challenging.
One of the most common reasons originators have avoided Fannie Mae andFreddie Mac has been due to a tightening of guidelines and ever-increasingadd-ons. Add-on fees have reached unbelievable levels. PMI rates have soared,if you can get PMI for the loan at all. Meanwhile, the FHA has maintained nor-mal MI premiums that seem downright cheap in today’s market. FHA credit,income and reserve requirements are not significantly different than theywere in the heyday of the sub-prime market. There are none of the add-onsfrom FHA that have become commonplace for the government-sponsoredenterprises (GSEs). While FHA is not charging add-ons, it has not made FHAloans immune from radical add-on fees from lenders.
Supposedly, there is some logic to these fees, but they all seem to standindependently rather than as a component of a grading scale. It is not clearwhat justifies such massive fees since FHA loans are 100 percent guaranteed.Lenders tell me that it is because their compare ratio in Neighborhood Watchis at risk. Others claim loans that are less than perfect are difficult to market.Still others claim servicing costs are greater. If that is the case, one must won-der one why the fees vary so greatly between lenders.
Lenders generally take two different approaches to what is perceived to be greaterrisk. Some lenders take the approach that fees are inappropriate and they simplydon’t take loans with certain features. Some go so far as making across-the-boardrestrictions for all loans whether conventional or FHA. At least one lender accepts noloans below a 680 score, irrespective of what GSE or FHA guidelines allow. Most of thelargest wholesale lenders have set 620 as the minimum acceptable score. A secondapproach to risk has created a huge cottage industry of smaller wholesale lenderswho are willing to accept lower scores, but have considerably higher rates and fees.Although FHA allows maximum financing down to a 500 credit score, it is very diffi-cult to find any lender willing to take an FHA loan with a score below 580.
There are so many additions to FHA guidelines and additional fees that the fol-lowing list is far from inclusive of them all. Scores below 620 can be very costly tothe borrower. Not only do some investors charge a point or two more in generalthan the premium investors, they may charge as much as two points more for the580 score. This begins to rival or exceed fees charged by Fannie Mae or FreddieMac. By the time the originator takes even a basic origination fee, the borrowermay be paying three to four percent of the loan amount upfront.
The credit score fees are only the tip of the iceberg. Consider some of theother add-ons:
� A borrower with a very high score may still be unacceptable to many investorsbecause their qualifying ratio is in excess of 45 percent or 50 percent. A fee ofone percent is very common for loans with a ratio over 55 percent. If the bor-rower has no score, tack on another half- point, and if non-traditional credit isused, another half-point. Manual underwriting varies greatly from a quarter ofa point to 1.5 points.
� Many lenders will not accept a borrower with any mortgage lates. More liberallenders will simply add on another point. If the property being purchased is anFHA real estate-owned property, expect to add a half-point to a full point. Manyinvestors charge additional fees for certain states and loan amounts.
This list is hardly exhaustive. It is entirely possible to have an FHA loan thatcould exceed Homeownership and Equity Protection Act (HOEPA) fee triggers. That
For more information on the National Association of Mortgage Brokers, visit www.namb.org.
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University Mortgage151 West Passaic Street • Rochelle Park, NJ 07662
Contact Trust representative at:202-489-9292 (Washington, DC) or by email at [email protected]
NEEDED residential refinance forGreenwich, CT. estate property
Current appraised valuation: (all appraisals performed by nationally recognized appraisal companies).current $5.9 million (April 2009), $6.3 million (November 2008) $6.1 million (2007, 2008- three
appraisals performed)
Property info: 6400 SQ FT home on 4 1/2 acres in estate back-country area.Separate guest house, small barn, pool, pond. World-class neighborhood.
CLTV: as low as 38%. Based upon negotiated settlement with FDIC- which is highly anticipated.
Client Credit score: 800 Borrower has perfect employment, career and un-affiliated mortgage history spanning 30+ years.
Client has cash reserves of 8-10 months I&P.Taxes and insurance pre-paid for one year.
Client seeks stated loan with verified assets. Assets verified through notarized bank verification of deposits forms or letters.
Client will accept adj 3/1 ARM, short-term commercial note, private lender note.
Title has been held for ten years in a family trust. Client (borrower) will guarantee mortgage, and, in addition, the Trust will guarantee the mortgage.
Trust has verifiable income (2005, 2006, 2007).
To facilitate an expeditious closing, client (borrower/trust) will permit an escrow agent to hold a quit-claim deed for term of loan)
Client WILL NOT pay application fees under any circumstances.
Appraisals, plot plan, tri-merge credit, 1003, photos available to bona fide lenders.
Home can be used for primary residence, OR, used for rental income (which has been its use in 2005-2008).
Specifics:
would be the extreme. While it would be nice to avoid these fees, the stark reali-ty is that millions of borrowers would receive no loan at all if these were notoffered. Perhaps as property values stabilize, lower-score or high-ratio borrowerswill be able to obtain more attractive financing.
The tightening is far from over. Appraisal reviews are becoming commonplace.Even when not required by FHA, some investors will call for a second appraisal.Mandatory appraisals on streamlined refinances are becoming increasingly com-mon. Some investors require full income verification on streamlines, while otherssimply want to verify employment. The most conservative want a fully document-ed loan, even for streamlines.
It is not uncommon to see lenders stop offering a program before it is neces-sary to do so. An example is the 95 percent cash-out refinance program. While 95percent of refinances only needed the FHA case number pulled by April 1, mostlenders pulled the plug much earlier. The same cutoff happened with FHA Secure.
Despite the profit incentive, some programs offered for insurance by FHA aregoing wanting. Very few lenders offer FHA’s manufactured housing program. Tryto find a lender that will allow your borrower to keep open a Chapter 13 bankrupt-cy or do an Inter-Vivos Trust. FHA allows them, but there seems to be no market.
One must question what will happen when FHA’s legislated moratorium on risk-based pricing expires on Oct. 1. Can we imagine Upfront Mortgage InsurancePremium (UFMIP) possibly doubling combined with the fees lenders will charge?Upfront fees to borrowers could easily exceed five percent and potentiallyapproach 10 percent. That makes sub-prime look cheap.
FHA faces its own worries. Downpayment assistance (DPA) defaults continue togrow according to the U.S. Department of Housing and Urban Development (HUD).Perhaps that FHA’s biggest new problem is the “immediate default.” Borrowerswere taking cash out of a property and simply walking away. The lender is usual-ly the one stuck, but FHA could also be on the line. Vacant properties are blight-ing neighborhoods and require significant costs to maintain.
If you think lenders vary greatly now, wait until they start reviewing appraisalsthat include Fannie Mae’s 1004-MC Form regarding declining markets. In theMortgagee Letter implementing the 1004-MC, HUD states, “Direct endorsementlenders are reminded that if the appraiser they selected provides a poor or fraud-ulent appraisal that leads FHA to insure a mortgage at an inflated amount, thelender is held responsible, equally with the appraiser, for the integrity, accuracyand thoroughness of an appraisal submitted to FHA for mortgage insurance pur-poses.” You can be certain that means a lot of direct endorsement underwritersare going to nitpick appraisals to death. If you ordered the appraisal, you may beliable as well.
A final word to brokers and correspondents … remember, you are liable for theaccuracy of all information that was used to underwrite the loan. You are certify-ing that the bank statements, pay stubs and other forms of verification are accu-rate. If the lender pulls a 4506-T and your borrower’s pay stub doesn’t reflect theirincome, you may be called upon to indemnify the lender.
I realize that loans are difficult to do now. But be careful. The federal govern-ment can appear as though it has fallen asleep for a long time. If they suddenlyawake, very few can afford the legal fees to fight them. Certainly that figures intothe increased costs that lenders making more difficult loans anticipate.
John Councilman, CMC, CRMS is FHA Committee Chair for the National Associationof Mortgage Brokers and president of AMC Mortgage Corporation in Fallston, Md. Hemay be reached (410) 557-6400 or e-mail [email protected].
A message from NAMBMembership Committee Chair
Olga KucerakThe number one reason to join NAMB …We as mortgage professionals must work together to fight and educate peopleabout the benefit of working with a broker.
� All regulators and legislators want to know are “numbers.” How many peopledo you represent?
� Small numbers equals weakness, whereas large numbers equal power.
� There isn’t one mortgage broker who will have the funds to step up and financethe legal costs associated with the fight. We can do this together, but not indi-vidually.
� Nothing gets done without lobbyists and grease (Political Action Committee).Again, the power is in the many, not the few.
Our success will be a result of our determination, or the lack thereof. It is not aforegone conclusion that we will lose this fight, provided we show up for the battle.
Olga Kucerak is Membership Committee Chair for the National Association ofMortgage Brokers and president of San Antonio, Texas-based Crown Lending Inc. Shemay be reached by phone at (210) 828-3384 or e-mail [email protected].
A message from NAMB Secretary Don Frommeyer, CRMS
The underwriting process: 2009Hello, it is now 2009 and it is time to come clean with your customer that today’sunderwriting is not like it was two years ago. Many of you are aware that everyunderwriter is making sure that they dot their “I’s” and cross their “T’s,” and makesure that “K” comes before “L” and “Q” is after “P.”
Now you have been very honest and upfront with your customer, told them that theirrate is this and have told them the amount of cash they will be bringing to close, butwhat about the real time that it will take to have the underwriting done and the time toget them closed. This item is something that brokers have not been able to forecast, butit is time that you are honest with your borrower. Explain to them that the reason thatlenders are running behind. It is truly due to volume and the current amount of work-ers that they feel comfortable hiring. Most account executives now send you an updateas to the amount of days that their underwriting department is behind.
I have found that if you are upfront and lay everything on the table and give thecustomer a timeline based on the information provided by your rep, the customerwill not be calling you to close in three days and will realize that it will be 10 businessdays before you hear from them. I don’t mean that you should totally neglect callingyour customer, but you can call them after a few days and give them an update onyour lender. Keeping in contact is the one item that will not only put trust betweenyou and your customer, but it will not leave them with any false expectations.
Don Frommeyer, CRMS is Secretary of the National Association of Mortgage Brokersand senior vice president of Amtrust Mortgage Funding in Carmel, Ind. He may bereached by phone at (317) 575-4355 or e-mail [email protected].
would create more parity among com-peting lenders, stability in the hedgingprocess, self-assurance that the borrow-er has an incentive to fully understandthe terms, and operational efficienciesthat can add to lender profitability.Paramount to all of the benefits out-lined, an effective national rate lock pol-icy would lower rates for borrowers.
The lock-in fee that should be imple-mented is an amount that does restrictborrowers from applying for a mortgage,and at the same time has a noticeableimpact on the decision to commit to aparticular lender. As exemplified above,I believe that a fee of 0.500 point wouldachieve the necessary impact. The policyshould allow for the fee to be refundedat closing.
This type of change will not comeeasy. Companies that already institut-ed this policy fear that they will loseloan officers to competitors and bor-rowers will walk down the street to a
110-142), says you may be eligible todeduct a portion of your MIP. Takethis card to your accountant and askthem to get you the deduction youmay be entitled to.
The law runs out in 2010. So, act nowto put some money in your pocket.
Sincerely yours,
Atare E. Agbamu
Needless to say, you will impress notonly your Mrs. Bubaskys, but also theiraccountants and their children.
Think reverse. Move forward!
Author and columnist, Atare E.Agbamu, CRMS is director of reversemortgages at Minneapolis-basedAdvisorNet Mortgage LLC. A member ofthe BusinessWeek Market AdvisoryBoard, Agbamu is author of ThinkReverse! and more than 100 articles onreverse mortgages. Through his adviso-ry firm, ThinkReverse LLC, Agbamuadvises financial professionals, institu-tions and regulators across the country.In a 2007 national report on reversemortgages, the AARP cited Agbamu’swork. He can be reached by phone at(612) 436-3711 or (612) 203-9434, ande-mail at [email protected] [email protected].
Visit author Atare E.Agbamu’s blog at
http://thinkreverse.com forhis thoughts and insights on thereverse mortgage marketplace.20
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company that does not charge them afee. In this era of change, we mustinstitute this one simple process, anddo the right thing for borrowers,mortgage companies and the entireindustry.
Michael L. Larssen, CMB has 20-plusyears in the mortgage banking industrywith senior management positions. Hehas started and/or managed numerousmortgage banking companies. He cur-rently serves on several industry adviso-ry councils, committees and boards.Larssen has held leadership positionswith the Tennessee Mortgage BankersAssociation and Lenders One MortgageCooperative. He previously served aschairman of the National Alliance ofIndependent Mortgage Bankers andholds the Certified Mortgage Bankersdesignation. He may be reached byphone at (727) 493-2218 or [email protected].
lock, stock and barrel continued from page 16
improvement like Monica Bubasky,then they may be able to make thededuction with the guidance of theirtax advisor.
Why should you bring this potentialMIP tax deductibility information toyour clients’ attention? There are atleast two reasons. One, as I advised inmy recent book, Think Reverse!,reverse mortgage originators shouldconduct themselves as consultants,not product salespeople because areverse mortgage is a solution to yourclients’ life-planning needs, not aproduct to be sold. By bringing theprovisions of this little-known tax lawto the attention of your clients, theirchildren, or their accountants, you willbe showing your clients and their cir-cle of influence that you care abouttheir financial well-being. Acts likethese will differentiate you from theproduct-peddlers in our midst.Secondly, it is another way to addvalue to your post-closing relationshipwith your clients. A little postcard fromyou to your Mrs. Bubaskys may read:
Dear Mrs. Bubasky:I hope you are doing well. It is tax sea-son again, and I thought you shouldknow that you may be eligible todeduct a portion of the mortgageinsurance premium (MIP) you paid thefederal government to insure yourreverse mortgage loan.
The Tax Relief and Healthcare Actof 2006, Public Law 109-432 (asamended by The Mortgage ForgivenessDebt Relief Act of 2007, Public Law
forward on reverse continued from page 17
compliance, risk management, security,centralized document retention andreduced paper files. All will help us betterserve our clients, increase the company’soverall profitability and have a significantimpact on the environment.”
Lend America launched its automatedpaperless platform in early February2009, and to date, all of the company’sloan originations, from entry into theorganization to closing, are conducted asa paperless transaction. Utilizing key tech-nologies, this fully integrated collabora-tive solution allows borrowers to e-signdisclosure documents via a secure portaland/or submits the documents requiredfor their loan. In addition, the platformallows borrowers to communicate real-time with Lend America’s 300-plus trainedmortgage specialists and is combinedwith an automated fulfillment processtracked at every step for those withoutonline access. Using a multi-layered SSLencryption technology, consumer data isalways secure and monitored 24/7.
In conjunction with the launch of itsautomated paperless platform, LendAmerica developed a two-week manda-tory training program for its entire 590-plus employee base so they could clearlyunderstand both the full functionality ofthe platform and the business benefits tothe organization and environment. For more information, visitwww.lendamerica.com.
Fiserv launches new brand identity
Fiserv Inc. has unveiledan enhanced marketapproach and new
brand identity, affirming the company’scommitment to its clients and to lead-ing the transformation of financial serv-ices technology. These moves representa further acceleration in Fiserv’s singu-lar approach to the market and to antic-ipating client demands within a rapidlychanging environment.
“Our enhanced market approach andvibrant new identity are reflective of thesignificant change occurring within thefinancial services industry,” said JefferyYabuki, Fiserv president and chief execu-tive officer. “We have the expertise,resources and scale to lead this transfor-mation. Fiserv provides processing tech-nology solutions for more financial insti-tutions than anyone in the world. Thatscale, combined with our market-leadingproducts and services, uniquely positionsus to lead the development of next-gen-eration solutions that will transform theway financial services are delivered.”
The company’s organizational struc-ture has been aligned to streamlineFiserv’s market approach, accelerateproduct innovation and make it easierfor clients to access the full breadth ofFiserv solutions. All of the company’sbusinesses have been unified under thenew brand and report through two pri-mary operating divisions led by Steve
Olsen, former CheckFree chief operatingofficer and now Fiserv group president,and Tom Warsop, Fiserv group president.This structure will enable further integra-tion of client relationship managementand product development efforts.For more information, visitwww.newfiserv.com.
DartAppraisal.comextends partnership withEllie Mae for HVCC compliance
DartAppraisal.com,a provider ofnationwide residen-
tial real estate valuations, is expandingits ongoing partnership with Ellie Mae,a provider of loan processing softwarefor mortgage bankers, brokers andother third party originators.
Ellie Mae has announced its HVCC-Compliant Appraisal Services, a new pro-gram designed to help banker, lenderand broker clients fully comply with theHome Valuation Code of Conduct (HVCC)that went into effect on May 1.
“The new program initiated by EllieMae, combined with the pending HVCCregulations, will serve to elevate the levelof independence and transparencybetween appraisers and mortgage bro-kers or lenders,” said Darton Case, presi-dent of DartAppraisal.com. “This inde-pendence will help to reduce opportuni-ties for bias throughout the industry.Furthermore, it will serve to enforce thestrict standards which DartAppraisal.comalready has in place and extend thosesame standards on this platform.”For more information, visit www.dar-tappraisal.com.
Lenders One and RapidReporting team up forincome verification
Lenders One MortgageCooperative hasentered into an agree-
ment with Rapid Reporting, a provider ofpre-funding income and identity verifica-tion products for the mortgage indus-try. The partnership will provide coop-erative members with more aggressivepricing and quicker turn times on Form4506-T requests with Rapid Reporting’sIncomeChek product. IRS Form 4506-T,Request for Transcript of Tax Return, isa quality control check used to evalu-ate the borrower’s creditworthiness byverifying the income stated on the loanapplication.
“Today’s lending environment is aboutimproving efficiencies while reducingcosts, all to ultimately increase a compa-ny’s return on investment,” said LukePille, Lenders One director of nationalprograms. “Our members are makingmore Form 4506-T orders as investors arerequiring such documentation. RapidReporting, which focuses on the mort-
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gage industry, understands the evolvingneed of lenders and offers the tools theyneed to operate in a more cost effective,efficient manner.”
IncomeChek is Rapid Reporting’sWeb-accessible income verification toolthat is directly interfaced with the IRS toconfirm and verify borrower incomeagainst tax return, W-2 and 1099 data. Itproduces personal (1040) or business(1120 or 1065) tax transcripts in as littleas 24 hours, and it will save Lenders Onemembers time and money as pre-screening mechanisms eliminate invalidIRS forms and fraud detection tools workto reduce the risk of repurchasedemands. IncomeChek provides resultsin a data format, enabling members toautomate their underwriting processesin addition to decreasing loan process-ing times with the removal of humanerrors, which will increase operationalspeed and efficiency.
“We feel as though we are an exten-sion of the Lenders One network, notjust a third-party vendor,” said JayMeadows, Rapid Reporting presidentand CEO. “Lenders One has membersin all 50 states, and each of theselenders demonstrates the utmostintegrity in wanting to eliminate fraudand improve their reporting process-es. With Rapid Reporting, they canfeel confident in their efforts to pre-vent fraudulent information frombeing used.”For more information, visit www.lender-sone.com or www.rapidreporting.com.
Kroll Factual Data andMIAC Analytics unite tooffer analytical data
Kroll Factual Data,a provider of busi-
ness information solutions to financialorganizations, and MIAC Analytic, aprovider of post-origination and second-ary mortgage pricing, hedging, account-ing and risk management solutions,have announced an alliance to providewhole loan collateral risk assessment tomortgage investors and risk managers.
“Our alliance with Kroll Factual Dataprovides real-time risk metrics to helpour clients measure the fundamentalrisks caused by the current financial cri-sis,” said Paul Van Valkenburg, principalat MIAC. “Together, we are providingour customers with current loan valueand borrower credit information tomanage portfolio risk accurately and ina timely manner. Through this partner-ship, we can deliver information withinhours that once took days or weeks.”
Kroll assesses consumer data to helpclients more accurately evaluate loancharacteristics, transfer risk andincrease safety and soundness. MIACAnalytics’ integrated software productsassist with deriving loan loss reservecalculations, pricing and valuation ofmortgage-based assets and OTTI (otherthan temporary impairment) for secu-
rities. The integration of Kroll FactualData’s updated risk metrics, lenderdata and collateral behavior assump-tions derived with MIAC’s analytic toolsprovides for faster, more comprehen-sive loan evaluation and pricing.For more information, visit www.krollfac-tualdata.com or www.miacanalytics.com.
PennyMac selects LPS’MSP to service its firstmortgages and HELOCs
Lender ProcessingServices Inc. (LPS),a provider of inte-
grated technology and services to themortgage industry, has announced thatPrivate National Mortgage AcceptanceCompany, LLC (PennyMac), a managerof residential mortgage assets, hassigned a multiyear contract to serviceits first mortgages and home equitylines of credit utilizing LPS’ MortgageServicing Package (MSP).
Approximately 50 percent of allU.S. mortgages are serviced on MSP.MSP supports all areas of PennyMac’sservicing, including loan setup andmaintenance, cashiering, escrowadministration, investor accounting,default management and regulatoryreporting. In addition to MSP,PennyMac is leveraging LPS’ completesuite of mortgage solutions, includingvaluation products, title decisioningsolutions, flood services, workflowmanagement platform (LPS Desktop),risk management solutions, docu-ment services and default services.
“Our strategy is to keep borrowers intheir homes through programs thataddress both their ability and willingnessto pay their mortgages. Simultaneously,we are creating value for investors,” saidStanford L. Kurland, PennyMac’s chair-man and chief executive officer. “MSP isthe leading and most com right systemfor PennyMac as we look to jump-startand significantly grow our business.”For more information, visitwww.PennyMacUSA.com or www.lpsvcs.com.
Beacon Reverse tobecome American HomeBank Reverse
Beacon Reverse, aprovider of reversemortgage lending servic-es to community banks,credit unions, non-profit
lenders and consumers, has announcedthat it will become known as AmericanHome Bank Reverse. Beacon Reversebecame a division of American Home Bankin 2006, and originates and/or provides ful-fillment for all of the Bank’s reverse mort-gage production. It also originates reversemortgages through a network of third-party lenders that value having the supportof an experienced partner when it comesto these specialized programs.
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the mortgage industry: Homebuyers soonwill be securing mortgages and closing onsales almost as easily and conveniently asthey purchase an airline ticket online.
Borrowers will go through the entireprocess, from application to registering withthe county courthouse, without the moundsof messy paperwork currently required.”
It had been more than five years sincethe first e-mortgage and we were still shuf-fling tons of paper around with each loan.
Fast forward to March of 2009. If youoriginated a loan lately, you know that isstill takes an average of two to four weeks tocollect all paperwork and get a clear toclose. Oh yes, we are making use of elec-tronic documents. The appraisal comes as aPDF, but the appraised value, the apprais-er’s name and license information are man-ually transferred to another form or system.
The credit reports, title com-mitment, are all still largelyjust paper documents thatare in electronic form. Thereis no ability to actually movethe information from sys-tem to system electronically.
We’ve had automatedunderwriting in place fordecades, but no one truststhe findings since themortgage meltdown. “Aminimum credit score of620 for this loan programis required regardless ofAUS findings”, is a phraseroutinely posted on Websites and lender guide-lines. Lenders routinely
impose additional conditions on loanswhich require manual handling.
We live in a strange mortgage universetoday—a stagflation of sorts. In stagflation,there is high inflation driven by highdemand, and economic stagnation causedby slow or no growth at the same time. Wehave something like that today, don’t we?The demand for mortgage loans is beingfueled by low interest rates and high homeinventories. At the same time, it isrestrained by the stagnation, nay the tight-ening of credit requirements, falling ware-house capacity and general reluctance onthe part of lenders to lend. It’s Alice inWonderland’s mad tea party all over again!
It’s not much better downstream. Titlecompany technology still does not interfacewith other systems on a broad basis nor dowarehouse lenders or end investors. Howmany of the approximately 3,100 countiesin the U.S. can actually electronically recorda note and deed of trust? We are still payingfor overnight delivery fees.
The use of paper documents with originalsignatures is still commonplace. While e-mailhas improved the velocity of business com-munications, it is not a secure medium for the
In the heydays that were only just a fewyears back it seems, the systems in everylender’s office were straining at their break-ing points to cope with the volume. Duringthis time, there was much fanfare andhype about the so-called “e-mortgage.” Itwas to be the unifying process that wouldstreamline our process, eliminate papershuffling, lower costs and cure the com-mon cold. Committees were meeting, com-missions were debating about standards,and technology was being developed tofacilitate e-signatures and imaging. Thingslooked so hopeful, yet the e-mortgage didnot evolve beyond a prototype.
There was no time then to implementany major improvements; no time toadopt the new technologies that promisedthe untold rewards of efficiency and costreduction. Instead, we settled for familiartechnology … some band-aids,workarounds and minorchanges in our manualprocess. We used lots of old,familiar tools, like spread-sheets, to calculate best exe-cution, to manage hedgesand locks. What I call, “goodenough” technology.
We put off things andpatched up existing systems.We prayed for a time whenvolume would back off a lit-tle so we would have time toconsider major improve-ments to our processes.Well, that time has come …or has it? Volume is downand the pressure is off, butwhere is the capital to makethe very improvements we lusted after justa short time ago? Today, the theme is capi-tal conservation. Budgets are slashed, prof-its down and layoffs are de rigueur as weare in survival mode.
So what are we doing about technolo-gy, these days? It seems that it’s goodenough. Systems are no longer stressedpast their limits. There’s no pressure toimprove technology and no money to doit. Interest in new innovations and the e-mortgage is down as is attendee andexhibitor participation at mortgage tech-nology events and trade shows in general.
Are we stuck in neutral … not movingforward or backward? At a time when wecould be preparing for the future, we arefaced with the prospect that there mightnot be one, at least as we know it, hencefew want to invest in new technology.
Every year since 2000 when the first e-mortgage was consummated, we asymptot-ically approach the e-mortgage finish line,half the distance at a time, but are we everreally going to get there? Six years after thatmomentous event, the following quotesappeared in a July 24, 2006 CNNmoney.comarticle, entitled “E-mortgages on the way.”
“There’s a quiet revolution going on in
Good-enough technology … is this the best we can do?
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“We’ve had automatedunderwriting in place
for decades, but no onetrusts the findingssince the mortgage
meltdown.”
By Ron Litt
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The FHA responds to declining markets
In November of 2008, Fannie Mae andFreddie Mac published their requirementfor appraisers to use the new “MarketConditions Addendum” for all appraisalsdone after April 1, 2009. ThroughMortgagee Letter 2009-09, the FederalHousing Authority (FHA) has responded inkind by establishing their appraisalrequirements for properties located indeclining markets, including the use of theMarket Conditions Addendum. The pur-pose of this addendum is “to provide thelender and borrower a clear and accurateunderstanding of the market trends andconditions prevalent in the subject neigh-borhood.” (Fannie Mae form 1004MC)
What I’d like to provide you is a better
understanding of what is required ofappraisers in today’s market, and theimportance of delivering an accurateassessment of the subject property andthe neighborhood trends.
Historically, loan officers have not seri-ously taken the great importance of theappraisal and the value it has to theirclients. Unfortunately, in my experience, Ifind that most loan officers really don’tunderstand appraisals and what’sinvolved in determining the value of aproperty. In turn, they generally have nottreated the appraisal as a truly importantpiece of information for the borrower.I’ve observed that loan officers regularlyput tremendous pressure on appraisers to
“bring in the value.” This is not only high-ly unethical, but it displays a total disre-gard for the client’s needs.
When a client requests a cash-outrefinance, a good practice is to ask themthe following question: “How long doyou expect to stay in the home?” Theanswer will help determine just howmuch cash they should really take out.You should assume the role of a finan-cial advisor, and you should give them abroader understanding of the potentialramifications of any resulting transac-tion. The truth is, most clients aren’tthinking long-term, so you have to helpthem. In all cash-out situations, youhave to compare the short-term gain toany long-term losses and establish a pri-ority. It may well be that the short-termbenefit (debt consolidation) is moreimportant than the long-term loss (lessprofit when property is sold).
For example: Let’s say you have a clientthat wants to do an 85 percent cash-outrefinance to consolidate some debt. Whenyou ask them, “How long do you expect tostay in the house?,” they answer, “Threeyears.” Given this information, you haveto project what the house may sell for atthat point and what they will net fromthat sale. If the house is currentlyappraised at $250,000 (based on a solidappraisal with no stretch on value), theloan amount at an 85 percent loan-to-value (LTV) will be $212,500. Using conser-vative figures, here’s what you project:
Future sales price ..................$235,000 Mortgage payoff ......................$210,250
Commission at six percent ........$14,100Seller concession at five percent $11,750Transfer tax at one percent..........$2,350Escrow costs ................................$1,500Cash needed to close ..................$4,950
In this scenario, you estimate that yourclient may need to bring approximately$5,000 to close on the sale of their home.Your client doesn’t like that idea, so youdecide to do an 80 percent LTV for a loanamount of $200,000. At this loanamount, your client will receive approxi-mately $6,200 at closing. Your client likesthis much better and opts for the 80 per-cent LTV.
The scenario I’ve just described toyou is that of a mortgage professionalgiving sound advice to their client.Imagine how good that client will feelabout giving referrals to this loan officer.
Now let’s look at the financial out-come for the same $250,000 (real value)where the same client goes to a “loanpusher” who is only concerned with theircommission, who doesn’t think long-term either for the client or themselves,and makes it his or her business to exertpressure on appraisers to “bring in thevalue.” We will assume the “loan pusher”had the appraiser “bring in the value” at$275,000, and they did an 85 percentcash-out refinance for a loan amount of$233,750. Of course, the client is happyto consolidate their debt, but they areblissfully unaware of what the futureoutcome will likely be when they try to
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Value Financial launchesVirtual RMS Web portal
Value Financial MortgageServices has announcedthe launch of Virtual
RMS, a special Web portal for reversemortgage specialists. The new portal willallow a reverse mortgage specialist toaccess calculators, marketing and train-ing materials, online news feeds, radiospot production, access to ValueFinancial’s online weekly Webinars, andtimely information from the U.S.Department of Housing and UrbanDevelopment (HUD).
Virtual RMS was designed and builtby Andrew Milks, AVP of marketingand training for Value Financial. Thecompany has long been proud of theextensive materials it made availableto train its staff.
Through Virtual RMS, a loan origina-tor can do everything from ordering
business cards, to designing and print-ing personalized direct mail, to produc-ing a custom 60-sec. radio commercialat one location. The public may viewthe site at http://vfrms.com/#content.However, access is limited to ValueFinancial reverse mortgage specialists.For more information, visit www.val-uefinancial.net.
AllRegs enhances StateCompliance Package withthree new features
AllRegs has announced thatnew features have beenadded to its State CompliancePackage accessed through
AllRegs Online. State CompliancePackage subscribers currently benefitfrom online, searchable access to plainlanguage interpretations, links to sup-porting laws and regulations, Englishand Spanish language disclosures and
more for all 50 states. Now enhancedwith three new features, subscribershave access to loan file checklists, disclo-sure matrices and permissible fee matri-ces for each of the 50 states.
“We are excited to offer new check-lists and matrices on state compliance,required documents and permissiblefees through our State Complianceproduct,” said Dan Thoms, AllRegs sen-ior vice president. “These documentscan be printed and inserted into thefront of every loan file, or used as a ref-erence for state compliance. Mortgageprofessionals will be able to ensure thattheir loan files are complete and com-pliant by using these new checklistsand matrices, streamlining processesand promoting accuracy.” Each productis an instant-print worksheet that iscontinually updated by AllRegs. For more information, visitwww.allregs.com.
Calyx releases Point andPoint Central Version 7.0
Calyx Software hasannounced the releaseof Point and Point
Central Versions 7.0. Point Version 7.0provides a number of new capabilitiesto improve workflow and increase loanproductivity, including central docu-ment image storage capabilities for e-loan purposes, as well as enhance-ments to banking screens, title andescrow interfaces and the addition of anew Federal Housing Administration(FHA) statutory worksheet.
Due to the increased use of e-loansand e-docs, Calyx has integrated a docu-ment image storage feature for organiz-ing and storing all of the documents ineach Point file. Point automaticallyencrypts, compresses and associates eachdocument with the loan file, regardless ofwhether the document is single or one ofa group, from within Point or one of itsinterfaces, or from outside of Point.Externally-generated documents can bescanned and imported, or dragged anddropped, into the Point file, while main-taining an audit trail for each documentthat shows who created it, what it con-tains, and the date and time it was creat-ed. With its enhanced security, DocStorage formats e-mail documents intoPDF files using 128-bit encryption andindividually set passwords for each docu-ment in the storage file.
Another significant change Point7.0 offers is enhancements to thebanker screens. Users can use Point asa single system of record, from origi-nation through product pricing, regis-tration and rate lock, underwriting,and eventually to closing and sale onthe secondary market. The bankerscreens in 7.0 support user’s dailyworkflow more effectively and there isincreased clarity in documentationtracking and reporting.
Additionally, title and escrow inter-faces have been directly embeddedinto Point 7.0. Working within Point,users can now order all needed formsfrom a document provider. Calyx Point7.0 also includes a worksheet enabling
brokers and lenders to perform statu-tory required calculations and docu-ment them in the loan originationfile, in order to comply with FHArequirements. The new worksheetsaves repetitive data entry, as infor-mation flows from screen to screen,while ensuring that the loan is in com-pliance throughout the Point file.
PointCentral provides all the bene-fits and functionality of the Point pro-gram, but also allows remote users toaccess all loan documentation via asecured Internet connection and givescustomers the ability to apply field-level rules and conditions for qualityand compliance purposes.
“Our goal is to ensure that Point andPointCentral consistently remain theproducts of choice in the mortgageindustry,” said Dennis Boggs, seniorvice president of Calyx Software. “Thenewest versions also ensure users are incompliance, allowing them to focus oneffectively and efficiently close loans.”For more information, visit www.calyx-software.com.
Ellie Mae announcesHVCC compliance program
Ellie Mae hasannounced its HVCC-Compliant Appraisal
Services, a new program designed tohelp banker, lender and broker clientsto fully comply with the HomeValuation Code of Conduct (HVCC) thatwent into effect on May 1, 2009.
Ellie Mae’s HVCC-Compliant AppraisalServices will leverage technologyenhancements, partnerships withappraisal management companies(AMCs), and direct connection via theePASS Network to facilitate the HVCC-compliant ordering and delivery ofappraisals for Ellie Mae’s banker, bro-ker and lender clients. With the HVCC-related enhancements to theEncompass Mortgage ManagementSolution, companies gain the abilityto control which staff members canelectronically order appraisals, createrules based on property location andloan type, and create and managetheir own appraisal panels. Users willalso be able to connect directly withtop appraisal management companiesthat are integrated to the ePASSNetwork. Ellie Mae is working withcorrespondent and wholesale lendersto incorporate solutions that enhanceappraisal portability and simplifylender re-certifications.
“The Home Valuation Code ofConduct’s guidelines will requiremortgage professionals to change theway they do business with appraisers,”says Ellie Mae Senior Vice PresidentRichard Roof. “After May 1, originatorswho fail to comply with the HVCC maybe faced with penalties, the inabilityto sell loans, or in the case of brokers,will be unable to submit their loanapplications to the wholesale lenderof their choice.”
continued on page 26
Become an FHA resource in yourmarket place and gain an advantageover your competition.
Go FHA!
Jeff Mifsud founded Southfield, Mich.-based Mortgage Seminars LLC in 2004,has been an FHA originator for 12 years,is a contributor to LoanToolbox.com andis a former FHA underwriter. Jeff may bereached at (877) 342-9100 or [email protected].
Visit author Jeff Mifsud’s Website at http://mseminars.comfor tips and information
on FHA loans and detailsfrom some of the nation’s top FHAspecialists.
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Open letter to Mortgage Bankers and Mortgage Brokers:
Reliance First Capital LLC. Is a one year old FULL SERVICE MORTGAGE
BANKER with offices in Melville, NY, Charlotte, NC, Pittsburgh and Philadel-
phia, PA, and was founded by the former management team of Delta Financial
Corporation. Our senior management team has over 100 years combined mort-
gage banking experience. We have the backing of a very strong private equity firm
with over 5 billion dollars in assets. Reliance is looking to grow its originations
franchise and is interested in discussing strategic opportunities from an outright
acquisition, to a modified net branch relationship with mortgage bankers/brokers
that have a strong knowledge of all FHA and agency loan products.
If you are a licensed mortgage banker or mortgage broker with a team of highly
motivated individuals who are looking to get ahead, and want to align yourself
with a company that can provide:❖ A wide range of loan products; ❖ Ability to act as a true mortgage banker without having to worry about
warehouse facilities; ❖ Financial backing of a 5 billion dollar private equity fund;
❖ A management team with over 100 years combined mortgage banking
experience;❖ Technology that is on the cutting edge;
❖ Then you should seriously consider joining the “Reliance First
Capital family”.
To explore opportunities in confidence, please call me directly at (516) 422-8850.
Yours truly,
RandyRandy [email protected]
sell their home in three years. Here’show the numbers may look for thisclient:
Future sales price ..................$235,000 Mortgage payoff ....................$230,250Commission at six percent ......$14,100Seller concession at five percent $11,750Transfer tax at one percent ........$2,350Escrow costs ..............................$1,500Cash needed to close ................$24,950
In this outcome, the client has tobring in nearly $25,000 to closing! Howhappy do you think they’d be, and howready to send all their family, friendsand co-workers to their “loan pusher?”
Sadly, it’s thanks in large part tothese “loan pusher” scenarios that hascontributed to the current crisis in ourindustry and all the appraisal reform.And, based on the great feedback I get,I’m encouraged to know that the read-ers of my column are true mortgageprofessionals, trusted advisors for theirclients who are more concerned withintegrity and their client’s best intereststhan with a quick profit at the client’sexpense.
And now, here are the 10 things yourappraiser must do or provide for allFHA appraisals of properties located indeclining markets done after April 1,2009, from Mortgagee Letter 2009-09:
1. At least two comparable sales within90 days of the appraisal date.
2. A minimum of two active listings orpending sales in addition to thethree closed comparables.
3. Bracketed listings using bothdwelling size and sales price whenpossible.
4. Adjust active listings to reflect theList to Sales Price Ratio.
5. Adjust pending sales to reflect con-tract sales price when possible.
6. Include original list price and anyrevised list prices.
7. Reconciliation of adjusted values ofactive or pending sales with adjust-ed values of closed comparablesales.
8. Absorption Rate Analysis. 9. Verify sales data through the parties
to the transaction.10.Known or reported sales conces-
sions on active and pending sales.
This update includes an often statedwarning that … “Direct EndorsementLenders are reminded that if the apprais-er they selected provides a poor or fraud-ulent appraisal that leads FHA to insurea mortgage at an inflated amount, thelender is held responsible equally withthe appraiser for the integrity, accuracyand thoroughness of an appraisal sub-mitted to FHA.”
If the above appraisal guidelines lookforeign to you, that’s okay, because thisupdate is intended for appraisers and
underwriters. What you can (and should)do is to provide you with this informa-tion so you can take the followingactions and help make yourself an FHAresource in your market.
1. Forward this update to your appraisers.2. Forward this update to all of your
real estate agent partners.
As you already may be aware, I pro-vide legislative updates for LoanToolbox.After sending this update and suggestion
fha responds to declining markets continued from page 23
to the membership, one of theirPlatinum Plus members followed mysuggestion, and sent the FHA Appraisalupdate to their real estate agent andclient databases. Shortly thereafter, Ireceived this correspondence:
“I sent that out to my database yester-day and when I checked my e-mails, Ihad two real estate agents asking meto call their customers for a loan, anda refinance request from another oldcustomer of mine. One agent in par-ticular thanked me for the informa-tion, but everyone else just seemed tobe responding to the contact. I amreally pleased with how Platinum Pluslets me manage my database withautomation.”
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Several of the industry’s most widelyaccepted and leading appraisal manage-ment companies have partnered withEllie Mae to participate in the HVCC-Compliant Appraisal Services program,including First American eAppraiseIT,ServiceLink, Finiti, StreetLinks, andAppraiserLoft. Three appraisal manage-ment companies that are also participat-ing are also already integrated into theEncompass network: CBCInnovis,DartAppraisal.com and NationsValuation Services. Ellie Mae plans tocontinue adding appraisal managementcompanies on a case-by-case basis. For more information, visitwww.elliemae.com.
Interthinx launches Web-based video news program
Interthinx has launcheda new, Web-based videonews series calledFraudBytes to provide
the financial services industry with cur-rent information on important industrychanges. Similar to a cable news programsegment, the series will focus on fraudrisk mitigation and regulatory compli-ance for mortgage lenders.
“We have become a society that isaccustomed to getting news from tele-vision,” said Kevin Coop, president ofInterthinx. “The Internet has made itpossible to extend news delivery to thedesktop, and our research indicatesthat lenders are very comfortable get-ting critical information through thismedium. We have always been a pri-mary source for fraud and complianceinformation. This multimedia newsprogram will make it easier for us todeliver it to our customers.”
The first FraudBytes newscastappeared on the Interthinx Web siteduring the first week of March andincluded information on FHA compli-ance, emerging fraud schemes, the newHome Valuation Code of Conduct(HVCC), and Interthinx product updates.
“We have learned, through programslike our FHA Webisodes, ‘Fraud Angels,’and ‘FSI: Fraud Scheme Investigation’training films, that multimedia is a veryeffective medium for communicatingwith our customers—and the industryat large,” said Kristi Kennelly, director ofmarketing for Interthinx and host of thenew program. “The valuable informa-tion we provide through FraudBytes willbe easy for lenders to digest, retain, andact on. By delivering it in the form of ashort, on-demand video news program,lenders will benefit quickly from theupdates. In today’s world, executivesmust find ways to stay informed withminimal time investment so they canconcentrate on the critical tasks thatrequire their attention.”For more information, visitwww.interthinx.com.
Kroll seeks to curb borrower fraud withFactualID
Kroll Factual Datahas announced that
it will offer its consumer identity verifi-cation product in conjunction with tri-merge credit reports. FactualID, a com-prehensive borrower assessment, helpslenders prevent fraud and reduce riskby uncovering possible identity misrep-resentation.
“A recent report issued by FinCEN[the Financial Crimes EnforcementNetwork] indicated that more than halfof mortgage fraud filings were filed byonly 10 institutions, around eight per-cent of the SARs [suspicious activityreports] filed referenced a repurchasedemand, suggesting the filing institu-tion did not learn of the possible frauduntil a buyback was requested.” saidJeff Gentry, vice president of emergingservices at Kroll Factual Data.“Uncovering fraudulent activity at thepoint of origination is essential. By com-bining FactualID with our credit reports,we aim to help financial institutionsfund accurate, high quality loans, andultimately reduce losses due to fraud.”
To perform a FactualID assessment,clients provide Kroll Factual Data with theborrower’s name, Social Security numberand property address. From this data,clients receive a report that assesses therisk of identity and occupancy misrepre-sentation and also searches the Office ofForeign Asset Control (OFAC) List ofSpecially Designated Nationals (SDN), theOFAC Non-SDN Palestinian LegislativeCouncil List (NS-PLC) and other exclusion-ary lists. Results are translated into anumerical risk score to provide easy riskassessment parameters that can be cus-tomized for each client.For more information on, visitwww.krollfactualdata.com.
Byte announcesElectronic DocumentManagement for BytePro
Byte Software has announcedthe addition of ElectronicDocument Management to itsBytePro software. Electronic
Document Management will be available inboth BytePro Enterprise and ByteProStandard as part of a major software releasecoming this spring and will be included inthe core software without additional feesfor current Byte Software customers.
BytePro will store the electronic docu-ments on the customer’s network, not ona remote server accessible only via theInternet. This configuration results ingreater control over the documents,faster document access, higher systemavailability, low overhead and increasedproductivity. Loan documents can be
new to market continued from page 24
The mortgage crisis and the case of no collateral
Our current economic crisis, in the mindsof many, was caused primarily, if notexclusively, by the issuance of hundredsof billions of dollars of bad real estateloans. In addressing the issue of defaultson loans, most would have assumed thatthe losses on the loans by the bankswould have been largely mitigated byselling the property for which the loanwas collateralized. Afterall, people borrowingmoney, whether on aresidential or commer-cial property, must makedownpayments, whichserve to account for partof the purchase price ofproperty, while loan-to-value (LTV) ratios offerprotection on refinances.
Even if the borrowerloses his job or business,falls on hard economictimes or just proves to bea bad credit risk, most ofus probably thought thatthe bank would have alarge measure of protec-tion. Here, we had a per-fect storm of things thatwent wrong. While there isa plethora of blame to go around, the pur-pose of this article is to address the issue ofcollateral. As the owner of an appraisalcompany and as one having many years ofreal estate experience, I offer you a hypo-thetical case demonstrating that banks hadno collateral on some mortgage loans. Thatis right, zero collateral.
1. Many people getting loans did notmake material downpayments. We have seen those television commer-cials offering 125 percent loan-to-value(LTV) loans in the months leading up tothe wheels falling off of all of thebanks. Yes, 125 percent LTV. Who intheir right mind would expect to have asound loan under such circumstances?Let’s say that this causes damages of 20percent on an average.
2. Property values whipsawed wildlyin the months leading up to the eco-nomic crisis.There were reports of values increasingas much as 40 percent per year in areas,such as Las Vegas, California andFlorida. The economy could not supportthis kind of appreciation, and the prop-erty values headed south. Borrowers
paying $500,000 for homessuddenly found themselvespaying for $400,000 mort-gages, when their propertywas only worth $300,000.To put it simply, theybailed, leaving the bankholding the bag. Let’s sayhere that the typical dam-age is 20 percent of thevalue of the property.
3. Some unscrupulouslenders and appraisersadded insult to injury byfraudulently participat-ing in schemes to inflateappraisal values in orderto make loans “work.”This usually occurredwhere borrowers were leastcapable of paying back the
loan. Otherwise, it would not have beennecessary to tip the scales in the begin-ning. In this subtle fraud the lenderpressured the appraiser for values highenough to make the deal. The appraiserdid not realize a big cash kick back; heonly received the normal appraisal feeand stood first in line to do the nextappraisal for the lender. The loan officermade his normal commission on thetransaction, paid his bills for the monthand protected his position to make moresimilar loans the following month. Itseffect inures primarily to the short-termbenefit of the borrower, and to a lesserextent, to the lender and the appraiser.Here we could be dealing with damagesat, or near, 25 percent.
continued on page 29 continued on page 28
“While there is aplethora of blameto go around, the
purpose of thisarticle is to
address the issueof collateral.”
By Charlie W. Elliott Jr., MAI, SRA
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According to Russell Rothstein, man-aging director of American Home BankReverse, the name change reflectsAmerican Home Bank’s increasing promi-nence, and commitment to reverse mort-gage lending. “Changing our name toreflect our affiliation is a logical move,and emphasizes our community bankorientation,” commented Rothstein.
James Deitch, American HomeBank’s CEO, said the division’s focus onsupporting community banks, creditunions and non-profit lenders placesthem at the forefront of what is anemerging trend in reverse mortgagelending.For more information, visitwww.ahbreverse.com.
Mortgage Professionals to Watch� Gregory Lutin has been named
executive vice president and nation-al sales manager for Flagstar Bank.
� David Oshan has been named chieffinancial officer of Ameritrust.
� Lender Live Network Inc. hashired Joe Camerieri as vice presi-dent of sales.
� Ron Litt and Linda Litt havejoined the corporate staff ofSouthwest Funding LP.
� Encomia has added Al Tappe to
lead the company’s banking indus-try business development division.
� Lance Drummond has been namedexecutive vice president of FiservInc.
� The Federal Deposit InsuranceCorporation (FDIC) hasannounced the appointment of PaulM. Nash as deputy to the chairmanof external affairs, a new seniorposition with the FDIC.
� American Realty Capital hasannounced the appointment ofSteve Rokoszewski as vice presi-dent, national sales desk for RealtyCapital Securities LLC, the bro-ker/dealer affiliate of AmericanRealty Capital Trust.
� Chad Coluccio has joined MissionCapital Advisors LLC as managingdirector in the firm’s New Yorkoffice.
� Mortgage Spirit has namedKeith Kemph vice president ofsales and marketing, and hasalso announced the appointmentof Michael Byrd as vice presi-dent of information technology.
� Dallas-based Mortgage Search &Acquisition has named ChrisMeyer managing director of thecompany’s new Phoenix office.
� Keith Kitterman has joinedNexBank as director of the compa-ny’s new wholesale lending division,overseeing the division’s lendingoperations in the north Texas area.
Your turnNational Mortgage ProfessionalMagazine invites you to submit anyinformation promoting new “niche”loan programs, new products or anyother announcement related to theintroduction of a new program, to theattention of:
Heard on theStreet/Mortgage
Professionals to Watch column
Phone #: (516) 409-5555E-mail:
Note: Submissions sent via e-mail arepreferred. The deadline for submis-sions is the 1st of the month prior tothe target issue.
heard on the street continued from page 22
transmission of documents with consumerinformation. The ubiquitous fax machine, atechnology that was invented in 1843, is stillan essential element of the mortgage process,cranking out thousands of reams of paper asit moves information around the country.
Last year, the Property Records IndustryAssociation (PRIA) and MISMO (MortgageIndustry Standards MaintenanceOrganization) announced the first draft e-recording document standards; a draft,mind you. In the joint press release whichappeared in the May 2008 issue of MortgageBanking Magazine it stated, “This is the firstjoint publication of the two organizationssince forming an alliance in November2005,” according to Harry Gardner, thenMBA’s vice president of industry technologyand head of MISMO. One wonders what theywere doing for the last three years.
Recently, Mr. Gardner moved on to otherpursuits and the Mortgage BankersAssociation announced that MERS (theMortgage Electronic Registration Systems),the highly successful electronic registry serv-ice will take over MISMO. Some, includingKevin Smith, president and CEO ofMortgage Builder Software, view this devel-opment with optimism. In his February 12“Industry Outlook” column on MortgageTechnology, he said, “Hopefully, havingMISMO be part of MERS will hasten theprocess of adoption for e-mortgages.”
Further, he stated, “The potential of e-mort-gages has yet to be realized except as a tech-nical curiosity. Now, it holds the promisethat it might be the thing that can rescueour industry.” I certainly hope he is right.
According to Smith, e-mortgages are notpaper, they are simply organized collectionsof data. So when one item is changed, thatchange is instantly reflected in all associateddocuments in the collection. This structurecan make compliance simpler and third-party fraud, hopefully, immune to humantampering. Borrowers and investors alikecan “see” the loan throughout the process asit progresses and into a secure electronicvault. Closings are inherently more transpar-ent and secure. It is this inherent assuranceto stakeholders that may bring securitiesinvestors back to the fold, resulting in liquid-ity throughout the industry once more.
It has been almost nine years since the firste-mortgage closed. In 1961, without the aid ofcell phones, personal computers and theInternet, we started the space program andlanded a man on the moon. That took lessthan eight years. I’m still waiting for the e-mort-gage to show up. I hope I don’t miss the e-mail!
Ron Litt is operations director at Dallas-based mortgage banker, SouthwestFunding LP. He may be reached by phoneat (214) 221-5215, ext. 168 or [email protected].
good-enough technology continued from page 22
Gregory Lutin
David Oshan
Al Tappe
Joe Camerieri
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attached to the BytePro loan file from avariety of sources, including e-mail, fax,scanners or by simply dragging anddropping from a folder on the hard disk.Source documents can be in any com-mon format, including PDF, TIFF, JPEG,HTML and DOC; the documents are ulti-mately stored in a PDF format. Once doc-uments are stored within BytePro theycan be viewed, printed or securely e-mailed to the borrower or investor.
“The addition of Electronic DocumentManagement to our core software repre-sents another step in the continuing evo-lution of our products,” states Joe Herb,general manager of Byte Software. “Weare particularly pleased to be able toinclude the feature in our core software atno additional cost, which will result inhigher adoption rates and yield signifi-cant savings for Byte Software customers.”For more information, visit www.byte-software.com.
Optimal Blue launchesnew engine with newlydesigned production sites
Optimal Blue hasannounced the launch ofa new engine and produc-tion sites to providegreater speed and flexibil-
ity to its customers. The engine is hosted ina state-of-the-art, green, SAS-70 co-loca-tion facility. The implementation includesstate-of-the-art storage area networks(SANs) for greater reliability and flexibility.
Optimal Blue’s executives wanted therelease of its new engine to offerincreased system flexibility, speed andscalability. The co-location facility enablesOptimal Blue to grow its capacity as vol-ume dictates, as well as increase through-put, by incrementally adding more bladeservers. Search times have been reducedto two- to three-seconds. Capabilities ofthe interface have been increased to han-dle pricing traces for historical pricing andenable users to customize the way thesearch results are presented. What used tobe a unified single screen search resulthas been augmented with views acrossmultiple tabs depending on how a specif-ic user wants to see the information,which is something no other provider inthis space has the capability to do. Usingthe new look, production sites havebecome more visually intuitive, havemuch greater navigation capabilities andimprove efficiencies of informationretrieval. With this functionality, usersrequire fewer clicks to search for and lockloans, and they get their results faster.
“As our customers face the currentand future market challenges, it’s our jobto help stretch our innovation capabili-ties further to streamline the workflowprocess, improve production and ulti-mately increase profitability,” said LarryHuff, co-CEO of Optimal Blue. “ForOptimal Blue, this was an importantfinancial and technical investment, butit’s a true differentiator that allows our
platform to operate at a more advancedlevel than our competitor’s. We see thatas a significant competitive advantage forour customers.”
As part of the engine overhaul,Optimal Blue upgraded from stand-aloneservers to a Dell PowerEdge modularblade enclosure with blade servers con-nected to a very fast Dell EqualLogic PSSeries iSCSI SAN. This results in a 50 per-cent improvement in applicationresponse time, as well as significant sav-ings from the reduction in space used forhardware. Additionally, Optimal Blue willsave a significant amount each month inpower, furthering its efforts to becomemore environmentally friendly. For more information, visit www.opti-malblue.com.
Property FraudPrevention releases anti-fraud software
Property FraudPrevention LLC, hasunveiled its new PFPReports, an online soft-ware system that allows
lenders and title companies to track real-time activity by running reports that canreveal property fraud schemes at anytime in the loan process.
“Mortgage fraud cases have been onthe rise in recent years and our currenteconomic situation is causing an evengreater increase in fraud cases,” saidGloria Lorentson, president and CEO ofProperty Fraud Prevention. “Our PFPReports software system is a powerfultool that provides up-to-the-minuteinformation and can reveal potentialfraud schemes before a loan is funded.”
Subscribers to PFP Reports can easilyand securely run real-time reports usingsoftware that allows title companiesand mortgage lenders to communicatewithout invading each other’s databas-es. The PFP data is stored indefinitely ina secure database and becomes morepowerful with each transaction.
“The software helps identify incon-sistencies in data and alerts sub-scribers that they may want to inves-tigate further,” explained WarrenBurgess, project manager and archi-tect who designed the system. “Ourreports are intended to provide datasecurity, data integrity, and real-timeresponses to subscriber submissions.”For more information, visit www.proper-tyfraudprevention.com.
Commerce Velocityreleases update to HomeAffordable ModificationProgram
C o m m e r c eV e l o c i t y
announced that its AssetManagement Solutions have beenupdated to include all of the newly
new to market continued from page 26
We all do foolish things. Many knowing well in advance that our actions are foolish,but we are not willing to change our behavior. Okay, I’ll start … I smoke—both fool-ish and dangerous! So far, I am getting better, but have yet to fully quit … foolish!
I am writing this article today, just two days after surgery when I was specif-ically told not to drive. But I drove myself to the office and committed to writ-ing this article. If parts of it are incoherent, then blame the Percocet andCodeine. Didn’t take them this morning knowing I wanted to get this article out.
Now let’s talk about you!Let’s get out a pad and paper and talk about what you might be doing that’sfoolish: Meaning you know better, but continue the bad habits anyway. It’salmost like some evil force deep within you is preventing you from doing theright thing. Before I continue and we make that list, I must tell you about a bookcalled Psycho-Cybernetics, A New Way to Get More Living Out of Life by MaxwellMaltz. This book has really helped me and hundreds of my members overcomesome of these foolish habits.
Now let’s get to that list okay?
1. Do you work “in” your business instead of “on” it?2. Do you market your services?3. Do you have a system for maintaining your pipeline—getting it
processed and closed?4. Do you follow up on your past clients with a newsletter?5. Do you block times in your planner to market?6. Do you know your numbers? 7. Do you track your marketing pieces?8. Do you use the “head of lettuce” tools that everyone else is using?9. Do you use emotional direct response marketing?10. Do you use automated tools like Arch Telecom and Mortgage Web
Success to generate new business?11. Are you getting your share of real estate agent business?12. Are you doing $10 an hour work?13. Is your support staff helping you or hurting you?14. Do you even have a support staff?15. Are you a generalist or a specialist?16. Is your income predictable regardless of the economy or rates?17. Do you have a niche?18. Are you the obvious “go to” person in your area?
Now this is going to sound harsh so wait a second before you read this!I’ll bet after reading this, you have found a number of areas in which you need
help. Knowing that, the question becomes “Why are you being foolish?” and notdoing anything about it. You see, I know you can make an excuse for each one ofthe issues above. But guess what … whether they are legitimate or not, they arestill excuses and if you want positive things to happen, you must make changesnot excuses (please re-read those last few words) even if they are uncomfortable!
Okay, that’s enough now! I know you get the idea.We launched the www.loanofficerformula.com community on our site. I
am really thrilled to tell you that all of the answers to the questions aboveare answered in great detail. This is a community of like-minded originatorsand company owners and dedicated to helping everyone succeed … period!
If you have a question you would like Brian to answer in this column,please send an e-mail with “Ask Brian Question” in the subject line [email protected].
Brian Sacks is CEO of www.loanofficerformula.com. He has been an industry expertfor more than 25 years, closing 6,000-plus loans totaling $1 billion. You can readBrian’s 32-page special report entitled “The Death of Mortgage Origination as WeKnow It” and “The 10 Things You Must Do Now to Survive and Thrive” atwww.loanofficerformula.com/mp. This report sells for $97 and has been down-loaded by more than 9,200 originators and company owners, but is free for a limit-ed time for readers of National Mortgage Professional Magazine. He may bereached by e-mail at [email protected].
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4. Another evaluation issue I will listis that of the borrower trashing theproperty upon departure. First, he performs zero maintenance onthe property for the last few monthsthere, anticipating that the property willbe lost. No yard maintenance, no paint-ing, no cleaning, no nothing. Finally, dur-ing the last few weeks and days, he goeson a redneck rampage, breaking every-thing in the home that can be broken,knocking holes in the walls, staining thecarpet beyond reclamation and finallystealing everything he can possibly takefrom the property, nailed down or not.Let’s estimate that these damages reducethe property value by 35 percent.
5. Finally and to add insult to injury,it is expensive for a lender to fore-close on a property. Selling cost alone typically are six percent ofthe sales price. If the property lies idle for18 months the loss of interest incomecould cost the lender nine percent. The costof property taxes could take another onepercent. Then add maintenance, insur-ance, utilities, court costs, legal fees, and,well, you get the picture. Final estimateddamage estimated here is 20 percent.
In summary, do the math. In this hypo-thetical case there is nothing left for collat-
eral; zilch, zero. I submit to you that whilemost collateral related losses may not totalor exceed 100 percent of a property’svalue, most foreclosed homes in today’smarket suffer to some degree, from someif not all of the above diminution of collat-eral issues, giving real meaning to theterm, sub-prime mortgage.
When we look at the situation as awhole, one must wonder who in their rightmind would make a loan under the cir-cumstances described above. Some ofthem may seem far-fetched, but all of ithas gone on everyday in the mortgagebusiness. I have personally witnessed all ofthese examples. This is not an indictmentagainst lenders and appraisers. Most arehonest and ethical, but some are not.Perhaps lenders and regulators will paymore attention to collateral and collateralvaluation issues going forward.
In my next column, I will offer sug-gestions as to how the powers that beshould handle real estate loans to bet-ter ensure that our ship does not runaground yet again.
Charlie W. Elliott Jr., MAI, SRA, is presidentof Elliott & Company Appraisers, a nation-al real estate appraisal company. He canbe reached at (800) 854-5889, e-mail [email protected] or visit his company’sWeb site, www.appraisalsanywhere.com.
value nation continued from page 26
What to look forSo how can you prevent identitytheft as instances occur? There areseveral key pieces of information tolook for, including:
� Alerts, notifications or warningsfrom consumer reporting agenciesthat suspicious activity may havetaken place. This can include any-thing from excessive inquiries forinformation to an unusually highnumber of financial transactions,both of which might indicate fraud.
� Suspicious documentsor personal identifyinginformation. This wouldinclude documents thatappear to be forged orcontain informationinconsistent with otherpieces of identification.
� Unusual or suspiciousactivity on an account—noticeably different fromtypical activity.
� Information that comesdirectly from customers, vic-tims of identity theft or lawenforcement authorities.
Ongoing awareness is key. Somefraud can be caught in person, buttechnology is a great partner. There areplenty of services that provide pieces ofinformation that can serve as noticeabout potential identity theft. The chal-lenge is gathering all the information ina meaningful and easy-to-use way.
For example, each of the three majorcredit bureaus—Equifax, Experian andTransUnion—offer fraud preventionservices as part of their credit reportservices. They flag phone numbers andaddresses considered high risk, andwhen application information is sub-mitted that doesn’t match what isalready on file from the customer.
The systems also reports if there havebeen excessive credit inquiries on agiven Social Security number, and tracksthe use of Social Security numbers fordeceased individuals or numbers not yetissued. Luckily, there are providers thatconsolidate information from the threeagencies into one report.
Here’s another resource: Alerts by theOffice of Foreign Assets Control (OFAC)allow a professional to automaticallycheck borrower records against the U.S.Treasury’s master list of SpeciallyDesignated Nationals and BlockedPersons, which contains thousands ofindividual names. These individuals maybe more likely to commit fraud.
There’s so much to keep tabs on …increasing regulation, rapidly fluctuat-ing market conditions, changing lenderrelationships and more. Properly man-aging it all can make you feel like an airtraffic controller.
Here is one more thing that you shouldbe aware of: The “Red Flags” rules, whichgo into effect May 1. By this date, it’s impor-tant to have detailed policies and proce-dures in place to effectively detect, preventand mitigate identity theft. These rules,which have been in the pipeline for morethan a year, call for an alert, proactive atti-tude toward protecting cus-tomers, including mort-gage customers. Althoughthere aren’t any criminalpenalties for not followingthese rules, violators couldbe subject to civil monetarypenalties. So consider iden-tity theft a big “blip” onyour personal radar.
Understanding therules, and committing tofollowing them, is justthe first step. There’s thepractical matter of beingable to catch everythingand prevent incidents.The latest technology canhelp you stay on top of itall without breaking asweat.
How the “Red Flags” rules came to beEach year, despite the best efforts offinancial institutions and law enforce-ment, identity thieves devise new waysto steal personal information. In 2007alone, more than 250,000 identity theftcomplaints were received by the FederalTrade Commission (FTC), according tomedia reports.
Because of this ongoing concern, andthe need for intensive action, a numberof agencies including the FTC, bank reg-ulatory agencies and the National CreditUnion Administration created the RedFlags rules, as part of the Fair andAccurate Credit Transactions Act (FACTA)of 2003, technically Sections 114 and315. Identification and detection of pat-terns, practices or specific activities thatcould be related to identity theft arerequired, along with guidelines on spe-cific, continual responses.
Who needs to be aware of this?Professionals at any financial institutionthat hold a “transaction account”belonging to a customer. This caninclude local banks, savings and loansand credit unions. Importantly for mort-gage brokers, it also includes creditors,and the so-called “covered accounts”include mortgages. Also in the mix arefinance companies, utilities andtelecommunications companies.
Make sure red flag rules are on your radar screen
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“The latest technology can helpyou stay on top of itall without breaking
a sweat.”
By Steve Grant
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Job hunting in today’s market You only have one chance to make agood first impression. In today’s highly-competitive job market, you cannotafford to make mistakes. In this feature,top executives from Residential FinanceCorporation share tips on how you canmake the most of that first impressionto stand out and get noticed.
Today, many thousands of mortgageprofessionals are unemployed andseeking work. If you are among them,you face challenging odds, whether youchoose to remain in the mortgage busi-ness or seek a position in anotherindustry. But there are concrete stepsyou can take in order to increase yourodds of getting noticed and making anoteworthy first impression.
Like any company hiring in today’smarket, Residential Finance Corporationreceives hundreds of resumes for its avail-able positions. In this article, ResidentialFinance Corporation President and ChiefExecutive Officer Michael Isaacs, VicePresident of Sales Obiora Egbuna, andExecutive Recruiter Russell Jipson dis-cuss what they believe makes candi-dates stand out as they offer concretesuggestions on how to make your appli-cation convey the very best first impres-sion to help move your resume to thetop of the pile.
Look sharpLike the Academy Awards, there is alwaysan air of expectation when the envelope—or the electronic file—is opened. The firstglance can leave a lasting overall impres-sion, so make sure that your presentationspeaks well of you.
Michael Isaacs: The first impression weget of a candidate begins with the over-all look of your cover letter, resume andany accompanying documents. Giveyour application good visual appealthat will help make a professionalimpression by being well organized,laid out in a visually appealing mannerwith a balance of copy and bullets thathighlight your achievements and quali-fications.
Russell Jipson: Include your contactinformation—not only on your cover let-ter, but on all pages of your resume andany accompanying documents as well, in
case anything gets separated. Make surethat you have a professionally appropri-ate e-mail address, i.e., [email protected] rather than [email protected].
Cover letters should always be cus-tomized to the company and the posi-tion for which you are responding. Inthe letter, address your interest in theposition for which you are applyingand include specific reasons why youbelieve you are the best candidate forthe job. Be sure to carefully researchthe company and explain why you areinterested in the position and how youbelieve that your skills and capabilities
will add value to the position and tothe company.
As for the resume, there are manyformats from which to choose. But theone that would serve an applicant bestis one that features achievements andaccomplishments specific to the posi-tion being applied for whenever possi-ble. Be sure and customize your accom-plishments and capabilities to be veryspecific to the job for which you areapplying.
Obiora Egbuna: Always be honest—never exaggerate your skills, achieve-ments or education—but do relatehow your skills, achievements andeducation make you a great fit forthe position.
Use facts to tell an enticing storyStick to the facts and let them tell your
story. Create a “laundry list” of all youraccomplishments and their overallimpact in terms of benefits to others andyour company. Then customize a best-fitresume by cherry-picking the types ofaccomplishments that are most perti-nent to the specific position for whichyou apply. Describe your accomplish-ments in terms of dollars, percentagesand return-on-investment for the great-est impact.
Isaacs: What gets attention fast is yourrecord of achievement—words likeincreased volume, grew business, topproducer, expanded lines of business,get us to stand up and take notice. Besure and include details, such as dollarvolume or percentage of growth. Citeany awards or recognition you receivedthat would be appropriate to the posi-
tion you seek, such as “consistentlyplaced in Top 10 Producers for the past14 months” or, “received citation forprocessing efficiency.”
Jipson: Provide concrete, “action-to-ben-efit” examples of your achievements rela-tive to the position for which you areapplying. Never brag or exaggerate whendiscussing your accomplishments, but docommunicate with sincere enthusiasm,and use facts and figures to make yourstory compelling.
Instead of saying, “Negotiated totrim 30-percent off with vendors,” usestatements such as “Negotiated withvendors to gain a 30 percent cost reduc-tion, resulting in overall monthly sav-ings of $55,000, which was reinvestedinto revenue-generating activities thatyielded an additional $4.4 million rev-enue, for an overall 325-percent return-on-investment.”
Egbuna: Your actions will always speaklouder than words, and one picturespeaks a thousand words. When youprovide a clear picture of yourachievements—and the net impact onthe business, you demonstrate thevalue you can bring to a potentialemployer.
Don’t discount your related expe-rience outside the industry, butexplain why this experience wouldbring value to the position for whichyou are applying. For instance, thefact that you sold life insurance maynot initially interest a mortgage com-pany reviewing your resume.However, if you mention that youwere consistently the top sales per-former in your division, and that youbelieve your experience and successin selling life insurance couldenhance your success as a loan offi-cer, the employer might be veryinterested in your qualifications.What’s more, if you could providestatistics showing how you increasedthe volume of your sales or those ofyour department by a set percentageeach quarter, you would demon-strate that you are a motivated indi-vidual with valuable closing skills.
Go the extra distanceIsaacs: We recently received a packagefrom a candidate who included quotesfrom co-workers, employers, businesspartners and others, and included con-tact information for each. These testi-monials helped illustrate the individ-ual’s character and capabilities, mak-ing them a real stand out.
Jipson: If you have sufficient experienceand accomplishments, consider creat-ing a resume package with your cus-tomized cover letter and an achieve-ment-laden resume.
Egbuna: Consider including a shortlist of your favorite books, and/or theorganizations you belong to (asappropriate) in the package. Explainwhy these books and/or organizationsare important to you, demonstratingyour motivation, career focus andinterest in personal development.
Communicate your enthusiasm: Show your interestIsaacs: People who communicate withsincere enthusiasm and show their
“But there are concrete steps you can take in order to increase your odds of getting noticed and making
a noteworthy first impression.”
Michael Isaacs Russell Jipson Obiora Egbuna
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interest in a position tend to stand outduring the interview process.
Jipson: Enthusiasm makes an impressionafter your interview, as well. Follow uppromptly with a personalized card viamail and e-mail.
Egbuna: Make your follow up noteextra effective by taking this opportu-nity to reiterate why you are interestedin the position—why you believe youwould be a great fit and the value thatyou could bring to the organization.This can be especially helpful if you areapplying as a loan officer or for anoth-er sales or customer service-relatedposition.
The follow upIsaacs: Following up shows how inter-ested you are in the position—and italso demonstrates how you may fol-low up on the job with customers orcoworkers.
Jipson: Enthusiasm makes an impres-sion after your interview, as well. Use apersonalized card—and send an e-mail. Be careful about calling, howev-er. Follow up promptly with a person-alized card via mail and e-mail.
Egbuna: Make your follow up noteextra effective by taking the opportu-nity to reiterate why you are interest-ed in the position—why you believeyou would be a great fit and the valuethat you could bring to the organiza-tion. This can be especially helpful ifyou are applying as a loan officer orfor another sales or customer servicerelated position.
Selling yourself: Tips to ace your interviewMaking a strong positive impression withyour resume can get you an interview.But you really have to shine during theinterview process and “sell” yourself to“close the sale.”
Isaacs: Emphasize your strengths andcapabilities and demonstrate anupbeat, can-do attitude. Ask thoughtfulquestions that demonstrate your inter-est in the position and the organiza-tion. And ask for the job—communi-cate your interest clearly that youwould like to be a member of the teamand why you believe you would be agreat fit for the position.
Jipson: You should be prepared for aphone screening prior to being invitedto interview. Make sure that you cancommunicate a succinct message aboutyour strengths and capabilities. Make itshort enough to pique our interest in30-sec. If you believe you’re a perfect fitfor the position, tell us how and why
you think so from the start.
Egbuna: Borrow a technique used bymany sales, customer service and callcenters—practice in advance. Recordyourself and use a mirror to hear, seeand fine-tune yourself to measure whatyou will say and how you say it. Createscenarios and practice fielding ques-tions. Be sure to ask about next stepsbefore you leave.
Stay motivatedA positive attitude communicates awealth of information about you andattracts positive attention toward you.Work to maintain a positive attitudethroughout your job hunt.
Isaacs: Today’s job hunt can be anarduous and frustrating task with somany talented professionals nowseeking work. But nobody wants anEeyore on their team. Present your-self as upbeat and motivatedthroughout the application and inter-view process.
Jipson: Never lose sight of yourcapabilities and your goals. Reviewyour “laundry list” of accomplish-ments and allow yourself to recog-nize the value of your achievements,and use that as a buoy betweeninterviews.
Egbuna: Network and help others intheir job hunts, as well.
Branching outIn today’s market, the competition foropen positions is intense. Many areconsidering employment in otherfields. The advice in this article canapply to job hunters universally.
Isaacs: Attitude and skill sets aretransferable across industries. If youconsider looking to another field,take inventory and create a “laundrylist” that defines the skill sets andaccomplishments you have to offer,then cherry-pick key elements to cus-tom fit each position for which youare applying.
Jipson: If you apply for a position out-side of the mortgage industry, cut theindustry slang and abbreviations tomore clearly explain your skill sets andaccomplishments.
Egbuna: Remember, customize yourresume to the position you areapplying for and make it a stand outby including concrete examples ofyour skills, accomplishments andsuccesses. The tips in this article canhelp you stand out in a crowdedfield of job hunters and put you incontention for the position youseek.
By Joe Ramis
In today’s challenging economy, it’smore important than ever for mortgageprofessionals to make the right decisionwhen deciding on a potential branchpartner. The choice will have a long-lasting impact on your business andreputation. There are wide variationsamong branches and the people whorun them, of course.
I have found that thebest approach is to look atthis like a dating relation-ship. There are some attrac-tive things about the com-pany that caught your eyein the first place, and that’senough to begin a dialogue.But the real test comes inthose first few encounters.A real comfort level must beestablished early on, andbacked up with proof thatthis company will meetmost or all of your needs.Only then can things betaken to the next level.
This idea of datingimplies that it’s a two-waystreet—and nothing elsewill do. Here are some things to look forwhen sizing up a potential branch partner.
Size of companyEvery company is a different size, forbetter or for worse. I’ve worked for bothbig and small firms. In a small company(say, less than 25 employees total), theatmosphere is typically more tight-knit,and there’s more hands-on involvementfrom those in charge. That can be good,from a mentoring perspective, or bad, ifthey’re meddlesome and don’t allowyou to simply do your job.
On the flip side, a larger or nationwidecompany will have access to moreresources and business opportunities formortgage professionals. But companyleadership will be more remote, and theymay not know about (or care about) yourlocal market. There may also be issueswith trying to serve too many branches.
One good thing about a larger com-pany is that there are more people forsharing ideas on how to succeed. You’lllikely learn things you hadn’t thoughtof before. Find the company that strivesto give you the independence you want,while helping you conform to a safeand stable work environment with justthe right amount of support.
More options You should ask if the company is
licensed to do business in just one stateor in several states. Being open to otherstates allows you to expand your busi-ness, or at the very least, not turn awaypotential customers. If the company isaffiliated with a federally-charteredbank, that removes some licensingobstacles and can provide the ability toserve customers across the U.S. The pastpositives of working for companiesaffiliated with a federally-chartered
bank have been dimin-ished with upcomingimplementation of theSAFE Loan Licensing Act,as well as heightenedscrutiny from regulators.
The more lenders youhave access to, the better.Those who are on theirown know that lenders areharder to find, and thepricing isn’t always ideal.Being part of a networkhelps. If the company hasa banking division, youalso have more choices.You can close loans withyour company directly, orcan broker them to whole-
sale lenders, although the latter option isdecreasing over time.
You may also secure access to loansthrough the Federal HousingAdministration (FHA), Veterans Affairs(VA), and USDA Rural Development, aswell as reverse mortgages and evencommercial and construction loans. Besure to ask about all the possibilitiesduring the interview process.
If you’re not familiar with working withall these loan types, that’s okay. Goodcompanies can provide training, and inthe end, you’ll be able to show your cus-tomers you can be a one-stop solution.
Look for support Part of the benefit of joining a companyis the professional support you shouldreceive. Solo practitioners have to domuch more than originate loans. Theyneed to manage their finances, informa-tion technology needs, accounting, pro-cessing, marketing and legal compliance.These headaches can take a lot of timeaway from focusing on mortgages.
The best companies provide excel-lent support in these and other areas. Ofparticular importance these days iscompliance. With new laws and changesto laws coming down more frequently,being out of the loop can cost you interms of money and reputation. Don’t
Look for ‘the one’ when it comes to branch partnerships
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“Part of the benefitof joining a compa-ny is the profession-
al support youshould receive.”
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chance it. This is one benefit of largercompanies, since they have staff mem-bers whose sole job is to think aboutbackground checks, staff licensing, filereviews, loan audits and the wording ofmarketing materials.
Another key area to look at is tech-nology. How committed is the companyto the latest and greatest? You’ll want toprice loans efficiently and accurately,lock in loans online, and have access toa loan pipeline on your timetable. Themost competitive companies maketechnology a priority. You’ll want toknow what, if anything, all these servic-es will cost you personally, as well.
A stable place to workEveryone knows the mortgage busi-ness isn’t exactly stable right now.Companies are coming and going
more quickly, while those with thebest business reputations are stand-ing their ground. You’ll want a realis-tic assessment of the company, andthis requires pointed questions foryour interviewer, as well as due dili-gence in and around the company.
Your interviewer will probably say thecompany is doing great! That’s to beexpected. The more candid he or she is,the more you can trust the information.While you shouldn’t expect access to sen-sitive financial information, you shouldbe able to visit a few of their offices andtalk with the people who work there.This way you can see what the workingatmosphere is like. If they don’t encour-age it, that’s a huge red flag.
Even more revealing details cancome from business partners, such astitle companies or other lenders. Askyour interviewer who these are, but beprepared to make some calls to find out
on your own. You can do research to seeif they’ve ever been suspended or finedby agencies such as the U.S. Departmentof Housing and Urban Development(HUD), or if they are listed as problemat-ic by the Better Business Bureau.
Expectations on both sidesA tell-tale sign is what they expect fromyou, personally, during the process. Dothey call you immediately after youinquire, and make lots of promises withlittle substance? Do they only want totalk about your production numbers,and not how you got there? Is there ajob offer without an in-person meeting?These could be signs of serious trouble.
The best companies take a moremethodical approach, looking at yourbackground, experience (including man-agement roles) as well as your productionnumbers. The interview process should be
a genuine give and take, with each sideputting its best foot forward, while beingrealistic about the potential opportunity.
In the end, look at it this way: You’renot just joining a company, but rathermaking a career decision. It’s like goingfrom dating to marriage. Initial attrac-tion and interest only go so far. Youand your prospective employer need tobe completely comfortable with thearrangement, or it won’t work.Remember, you become married to acompany’s reputation when you joinup.
As in life, there are no guarantees,but if you strive to see the whole pic-ture, you’ll “tie the knot” with more cer-tainty and much less stress.
Joe Ramis is branch recruitment director forInlanta Mortgage, a mortgage banker since1993. He can be reached by phone at (262)513-9853 or e-mail [email protected].
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Date Indicator Summary
A reading of “1” has the lowestimpact on rates, while “10” has thehighest. Although carefully verified,data are not guaranteed as to accura-cy or completeness. BestInfo Inc.cannot be held responsible for anydirect or incidental loss or liabilityincurred by applying any of the infor-mation or opinions in this feature.
Provided exclusively to The NationalMortgage Professional Magazine byDavid Beadle, president of BestInfoInc., the BestRates cell, pager and email rate alert service for mortgageindustry subscribers. Send your inquiryto [email protected] forfull details on a free two-week trialsubscription.
May 21Weekly Jobless ClaimsRate Impact
May 26May ConsumerConfidenceRate Impact
May 27April Existing Home SalesRate Impact
May 28April New Home SalesRate Impact
As the month of April came to an end, the number of first-time claims for weekly state unemployment benefits wasfalling but the number of continuing claims was rising. This was an indication the pace of job cuts was decelerat-ing but hiring had not resumed in any significant way. The sudden advent of a potential influenza pandemic threwanother obstacle in the way of a global economic recovery since planes heading to certain destinations were fly-ing almost empty and even the vice president of the United States was saying that people should avoid confinedspaces such as airliners and subway trains. If you count up all the industries which are connected to the use ofconfined spaces (such as elevators in office buildings), you may come up with a number which encompasses themajority of business activities.
There was a significant improvement in April attitudes as measured by the Conference Board. The overall indexjumped more than 12 points to a level of 39.2 when compared to March and future expectations shot up to a levelof 49.5 from what had been 30.2. This survey was administered before the influenza news became the lead storyon all three broadcast network newscasts on April 24. Within days, many folks were heading for their nearest phar-macy to pick up face masks and to the supermarket to stock up on supplies as if a blizzard or hurricane were onthe way. While this may provide a temporary boost to retail sales, it could be a harbinger of the “nesting” tenden-cy which took place in the immediate aftermath of the 9/11 attacks. The scenario of people sitting at home is notconducive to economic prosperity except for online retailers and pay-per-view movie purveyors.
It’s been difficult to get a handle on existing home sales for two reasons. First, the annualized rate has been bounc-ing up and down like a yo-yo since November of last year. For instance, the sequence has been 4.5 million(November), 4.7 million (December), 4.5 million (January), 4.7 million (February) and 4.6 million (March). Of themost recently released total, roughly half were foreclosure sales. And foreclosures themselves were curtailed inmany states by nervous politicians during the winter months. The result is that foreclosures are on the rise againas the embargo has now been lifted in most locales. Since hiring has not returned, the prospects are for continuedstagnation in the real estate market. If any improvement does emerge, it could bring out another wave of sellers,thereby keeping inventory levels near historic highs.
While mortgage rates have been near half-century lows for months, the effort by the government to provide stim-ulus to the real estate market via artificially reduced yields has been a failure. The reason is that we’ve seen itbefore, back in June 2003. Rates are not substantially lower now than they were six years ago. Despite the NewYork Federal Reserve’s $1.5 trillion annualized pace of mortgage-backed securities acquisitions, prospective homebuyers are more worried about their next paycheck than owning a residence. Therefore, the only way to get every-one’s attention may be to take three dramatic steps when it comes to borrowers with a solid record of on-time rentor mortgage payments by reducing the 30-year fixed-rate to an annual percentage rate of three percent, raisingthe refinance loan-to-value ceiling to 150 (from the current 105) and allowing simple drive-by appraisals for refis.
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National Mortgage Professional Magazine’s 50 companies that are hiring
For more information on employment opportunities throughout the country, log on to FindMortgageJobs.com.
COMPANY NAME POSITION(S) LOCATION(S)
A&N Mortgage Services Loan Officer, Processing Manager IllinoisAllied Home Mortgage Capital Corporation Loan Officers, Branch Managers Various locations throughout the countryAmerican Bank Loan Officers Colorado, Florida, Illinois, Indiana, Minnesota and North CarolinaBank of America Mortgage Loan Officer, Mortgage Underwriter NationwideBranchCare Consultants LLC Bank Affiliate Branch Manager NationwideCiti Loan Processor, Telesales Mortgage Consultant,
Credit Specialist 2—Loan Closer, Government Underwriter, Credit Underwriter and Loss Mitigation Specialist Ann Arbor, Mich. and Frederick, Md.
Citizens Bank FHA Underwriters, Mortgage Document Review Specialists Providence, R.I.CMH Servicing Director Santa Ana, Calif.Concorde Staffing Group FHA Direct Endorsement (DE) Underwriters Long Island, N.Y.Dover Mortgage Company Branch Managers With Existing Branches North Carolina and South CarolinaFannie Mae Auditor Model Validation & Valuation, Auditor Team Lead Washington, District of ColumbiaFifth Third Bank Credit Analysts, Closers, Funders, Processors, Underwriters Illinois, Michigan, North Carolina and OhioFirst Bank Loan Originators Illinois, Missouri and TexasFirst Mortgage Corporation Branch Managers, Loan Officers, Escrow Officer,
FHA Processers, DE Underwriters and More Arizona, California and NevadaFirst Priority Financial Branch Managers, Loan Originators 16 States Throughout the CountryFreddie Mac Risk Modeling Director Associate, Learning Consultant McLean, Va.Freedom Banc Mortgage Services Loan Officer Dublin, OhioHSBC Mortgage Sales NationwideJust Mortgage Inc. Mortgage Broker, Loan Officer New JerseyLevel One Bank Mortgage Loan Originator Farmington Hills, Mich.Luxury Loans Loan Officer San Diego, Calif.M&T Bank Originators, Reverse Originators, Underwriters, Processors and Closers Various Locations Throughout the CountryModification Zoom Loan Modification Reps NationwideMortgage Solutions of Colorado Senior Sales Director, Senior Loan Officer ColoradomortgageNOW Inc. Loan Officers, Branch Managers Various Locations Throughout the CountryNational Housing Non-Profit Housing and Foreclosure Counselor/Advocate Providence, R.I.Nations Funding Source Mortgage Broker, Loan Originator, Branch Manager NationwideNationstar Mortgage Marketing Manager Lewisville, TexasPan American Mortgage Bank Branch Managers NationwidePeople’s United Bank Mortgage Processor Bridgeport, Conn.PrimeLending Retail Loan Officers Fort Lee, N.J.ProLending Loan Officers Atlanta, Ga.Quorum Federal Credit Union Loss Mitigation Underwriter Purchase, N.Y.Reliance First Capital Mortgage Analysts, Loan Officers Various Locations Throughout the CountryRemX Office Staff Direct Endorsement (DE) Government Underwriters, Loan Processors,
Underwriters, Closers, Administrative Support Las Colinas/Irving, Texas and PhiladelphiaResidential Lending Services Inc. Mortgage Consultant Little River, S.C.Rose International Mortgage Closers St. Louis, Mo.SaveMTG.com Account Executives, Loan Originators San DiegoSpecialized Loan Servicing Compliance Analyst Highlands Ranch, Colo.Superior Mortgage Loan Officers, Branch Managers Various Locations Throughout the CountryThe Poston Group Credit Policy Manager North CarolinaUnion Bank and Trust Mortgage Loan Officer/Originator Waldorf, Md.United Homestead LLC and Home Protection Law Group Loan Mod Sales Reps Orange County, Calif.United Northern Mortgage Bankers Senior Loan Officers Various Locations Throughout the CountryU.S. Bank Home Mortgage Underwriters, Closers, Mortgage Loan Processors, Mortgage Loan Officers Various Locations Throughout the CountryUSAA Mortgage Loan Closing Manager San Antonio, TexasValue Financial Mortgage Services Inc. Reverse Mortgage Originators Various Locations Throughout the CountryW.J. Bradley Company Loan Processors, Loan Originators Austin, TexasWestStar Mortgage Branch Managers NationwideXINNIX Inc. Loan Officers Nationwide
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Who’s Hiring Report for Mortgage ProfessionalsBranch Opportunities
Business Opportunities
Business Opportunities
Employment Opportunities
Loan Officer Programs
Loan Officers and Branch Managers
Allied Home Mortgage Capital Corporation
6110 Pinemont
Houston, TX 77092
Phone: 888-736-1520 www.branchasap.com
Opportunity: Allied Home Mortgage Capital Corporation is the #1 Branch Companyin U.S, #1 Branch, Company in FHA originations. We offer our branches the ability tooriginate, Conventional, FHA, VA, Reverse Mortgages, Rural Development as a Mort-gage Banker (No YSP Disclosure required) plus the ability to Bank or Broker FHA Loans.You pay no warehouse fees on Banked Loans. Loan revenues are posted to your ac-count on Banked Loans w/in 24 hrs. We help you generate business with programslike Corporate Sponsored Marketing Programs, FSBO Marketing Program, InternetLead & Marketing Programs, Branch Websites in English and Spanish. All brancheshave access to free training. There is strength in numbers, however with dedicatedinside Branch Coordinators, you will never feel like a number when you join Allied.
Locations: Allied Home Mortgage Capital Corp. is Licensed in all 50 States and USVI.
CEO:Jim Hodge
Key Contact:Jonathan FowlerShawn FewellPaul BuskePhone: 888-736-1520
Reliance First Capital, LLC
100 Baylis Rd. Ste 150
Melville, NY 11747 www.reliancefirstcapital.com
Opportunity: Reliance First Capital, a dynamic and leading mortgage banker, is seek-ing motivated Mortgage Analysts with a proven track record, to join our organization.If you have a background in sales, have a desire to earn a significant income in themortgage business, and are looking for a long term career, this may be the oppor-tunity for you. We provide you with material amount of leads on a daily basis, ex-tensive product line available for sale, tremendous back office support and quickturnaround times, excellent technology that will help you close more loans, aggres-sive compensation plan, extensive training program, excellent benefit package in-cluding Medical, Dental, Vision & LTD, 401(k)
Locations: Nationwide
President/CEO:Hugh Miller
Contact:Human Resources Department Email:[email protected]:516-422-8888Fax: 866-724-6169
Superior Mortgage Corp.
854 S. White Horse Pike
Hammonton, NJ, Zip 08037 www.supmort.com
Opportunity: Privately held Mortgage Banker who was founded over 20 years agoon the principals of always doing the right thing for our Loan Officers, Branch Man-agers, employees, and our customers. We are experiencing record growth and pro-duction while other companies are downsizing and struggling to survive. Ourwarehouse lines are strong and secure allowing Superior to close loans on timeevery time. We have the products tools and experience to help you excel in this verycompetitive market place. Our comp plans and incentives are second to none witha full benefits package. We are very entrepreneurial in our business model and willentertain your proposal to open a branch or join us as a Loan Officer. We are FHA andVA approved as well as Fannie Mae and Freddie Mac Seller Servicers.
Locations: Various locations.
CEO:Stephen Cors
Key Contact:George AllenExecutive Vice [email protected]: 609-294-4455
HTDI Financial
4365 E Pecos Rd #135
Gilbert, AZ 85295 www.StartACreditRepairCompany.com
Opportunity: The credit industry is one of the most powerful and profitable indus-tries. With our Credit Services Organization (CSO) Program, you can quickly becomea credit repair expert and run your own credit repair business.
As a CSO, you can earn an average of $500 - $700 per client in a 6 month timeframewhile helping clients with their futures. You handle ALL aspects of your business; wehandle the burden of the actual processing and repairs in getting their credit in thebest shape possible.
Locations: Nationwide
Key Contact:HTDI FinancialCSO Program, [email protected]: 877-877-4834 opt 5
Platinum Credit Services, Inc.
100 Broadhollow Road, Suite 100, Farmingdale NY 11735
www.platinumcreditservices.com
Opportunity: Affected by the mortgage melt down? Make big money from the con-tacts you made. If you’re a victim of the mortgage melt down but still have a lot ofcontacts in the industry why not use those relationships to tremendously increaseor supplement your income today. Platinum Credit Services is looking for people thatare serious about making money by introducing us to your contacts in the mortgageindustry. We will give you residually commission based on there gross sales everymonth. This is a wonderful opportunity for you to profit from the years of hard workbuilding these relationships .Please email or call me for more information. PlatinumCredit Services, Inc. is one of the largest full level credit reporting agencies in the na-tion. We prosper during these hard times because of our proprietary Fico score im-proving systems. It’s our mission to help loan officers close more loans.
Locations: Nationwide
CEO / Key Contact:Lorenzo PuglianoPresident /CEO
[email protected]: 631-299-2084
Business Opportunities Reverse Loan Officer Programs
mortgageNOW Inc.
141 W. Front Street
Red Bank, N.J. 07701 www.mtgnow.com
Opportunity: Excellent opportunity with one of the fastest growing companies inthe country. Maximum income potential for all positions includes health and 401Kprograms. Sales leads provided with cutting edge technological support. Top FHADirect Lender in all listed states. We are currently hiring Sales Managers, Loan Offi-cers, Telemarketers, Underwriters and Processors.
Locations: CA,FL,GA,HI,IL,IN,MD,MI,MN,MO,NJ,OH,PA,SC,TN,TX,WA
CEO:James L. Marchese
Key Contact:Thomas SiricoNational Business [email protected]: 866-421-8400
Value Financial Mortgage Services, Inc.
660 NW 116th Street
Miami, FL 33168 www.valuefinancial.net
Opportunity: Value Financial is an aggressive reverse mortgage lender in Miami,FL. We are expanding into new states and we are in need of talented Reverse Mort-gage Originators. We offer a lead generation system, high commission rates, in-dustry leading reverse mortgage technology, and the ability to originate both FHAForward and Reverse Mortgages. We are an HUD Direct Endorsement Lender and aFannie Mae Seller/Servicer. Call us today to join the Value Financial Team! We PaySigning Bonuses for Experienced Reverse Mortgage Originators!
Locations: Various locations through the country. Call 800-760-5363 X 122 or [email protected]
CEO:Nelson A. Locke
Key Contact:Charles [email protected]: 800-760-5363 X 122
UNITED FIRST FINANCIAL
(Nationwide) Home Office:
Salt Lake City, Utah www.UnitedFirstFinancial.com
Opportunity: Join UFirst™, an award winning company offering a revolutionarysystem that helps consumers and homeowners rapidly pay off debt and build eq-uity. “Entrepreneur Of The Year”™ award winners, in 2008, from the Utah Re-gion of ERNST & YOUNG. UFirst™ has opportunities for Mortgage & Financialprofessionals to represent this program as a “value added” service OR as a fulltime career, potentially providing an income which matches, or exceeds, that ofyour mortgage business. Full training & support provided. Ask about our “AgentFee 4 Leads” program.
Locations: Nationwide
Founders:Skyler Wittman, John Washenko
Key Contact:Sue CopeningBranch Manager, Independent [email protected]: 407-443-0348
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Platinum Credit Services, Inc. will train and educate your staff of mortgage professionals on how to use and maximize our score enhancing software.
PCS will guide them through our re-score process and get the scores increased at the bureau level in as little as 2 – 5 business days with or without documents. Call us today!
2009 Editorial Calendar
Issue Focus Special Features
June 2009 Direct Response Marketing Best Direct Mail Pieces
July 2009 Wholesale & Correspondent Who’s Left in Wholesale?Update
August 2009 Compliance Technology Compliance Tools Directory
September 2009 The Future of MortgageBanking
October 2009 It’s All About the Marketing! Lead Provider Roundup
November 2009 Growth Strategies for 2010 The 40 Under 40: The 40Most Influential MortgageProfessionals Under 40
December 2009 Building Relationships
*Please note that we also distribute as several other Mortgage Banker and Mortgage Broker events throughout the year
For advertising opportunities in these Focus Issues or Special Features, please call(888) 409-9770 and press "4" for the Advertising Department of
e-mail [email protected].
For more information on editorial contributions, please call (888) 409-9770 and press "6" for the Editorial Department or e-mail [email protected].
Various Positions
Franklin First Financial
329 Hempstead Turnpike
West Hempstead, New York 11552
www.franklinfirstfinancial.com/careers
Opportunity: Come work for a Leading Mortgage Bank that knows what it takes tobe a winner. The latest Technology and Smartest Marketing helps you earn morethan ever before. National TV and Call Center Campaigns give you a world of leads.Competitive Compensation: Salary and hourly positions available. Bonus Plan: Plansavailable for sales, salaried, and hourly positions. Great Culture: Have fun working forFranklin First Financial. Experience over 15 years of mortgage management to growyour career.
Locations: New York, New Jersey, Florida, Long Island, New York (other locationsavailable)
Fred AssiniPresident
Key Contact:Denine SadlowskiRecruiting ManagerOffice: 516-479-5777 x5776Fax: 516-479-5753 [email protected]
Citi
Various Locations Nationwide www.careers.citigroup.com
Opportunity: CitiMortgage prides itself in making the dream of homeownershipcome true for a wide range of customers and partners across the country every day.As a member of Citi, we are focused on providing the highest quality mortgage prod-ucts as part of an expansive portfolio of financial services that includes banking, in-surance, asset management, credit cards, and much more. CitiMortgage offersproducts to help first-time homebuyers, as well as those interested in building a newhome, refinancing, or tapping into the equity of an existing home. Hiring for: Telesales Mortgage Consultants, Loan Processors, Loan Closers, CreditUnderwriters, Government Underwriters, Operations Managers, Sales Managers
Locations: Ann Arbor, MI; Las Vegas, NV; Dallas, TX; St. Louis, MO
CEO:Vikram Pandit
Key Contact:www.careers.citigroup.comwww.citi.com
Various Positions
Not only must you say how you will workto prevent identity theft and mitigate it ifit happens, you must be able to explainhow you will update and execute on thisplan for the future. You’ll need to thinkthrough how employees will be trained,and how this will be verified and continu-ally improved upon.
Importantly, there needs to be buy-in from senior leaders within your com-pany, since they are ultimately chargedwith overseeing the program.
Like a successful air traffic controller, amortgage professional needs to rely onthe right technology and expertise tokeep everything moving smoothly. Takinga few important steps where identitytheft protection and compliance with theRed Flags rules are concerned will keepyour business under firm control.
Steve Grant is president of Credit PlusInc., a credit information servicesprovider since 1928. He can be reachedby phone at (800) 258-3488 or [email protected].
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on your radar screen continued from page 29
consumer should the court find in the bor-rower’s favor.
Several pieces of the mortgage processare audited during a forensic loan auditto determine if there have been viola-tions where the overall mortgage processis concerned. Cases are examined todetermine compliance where the RealEstate Settlement Procedures Act (RESPA)and Regulation Z are concerned,
reviewed to determine ifpredatory lending practiceswere used and examinedto determine if misrepre-sentation or constructivefraud occurred at any timethroughout the mortgageprocess. Evidence of viola-tion where any of theseitems are concerned couldresult in serious legal con-sequences for the loan ser-vicer and as stated above,legal leverage for the bor-rower where loan modifi-cation is concerned.
Approximately 80 per-cent of the forensic loanreview can be completedby simply reviewing the
borrower’s mortgage documents, review-ing the results of any technology tools,underwriting practices and the borrowersclosing documents. Quite frankly, some-thing as simple as under-disclosure of theborrower’s annual percentage rate by aslittle as 0.125 percent could result in seri-ous consequences, including reopeningthe borrowers’ rescission period whichcould place a stay on foreclosure proceed-ing until the case is heard in a court oflaw.
Forensic loan review is a useful tool forall lenders, servicers as well as the loanmodification companies. As mortgage pro-fessionals, I think we all need to be awareof the standards and practices under whichthey will be conducted in the future. Thetrend is gaining momentum from both anoffensive and defensive standpoint.
As the author of The 2009 FHA/VA SurvivalKit, a 1,000-page how-to guide, Bonnie Wilt-Hild is a Loan Modification Universityinstructor (www.loanmoduniversity.org),and maintains a full-time position as seniorDE underwriter for a major banking institu-tion. She may be reached at [email protected].
What is a forensic loan review? Although anafterthought where mortgage lending isconcerned, this piece of the mortgage func-tion should be strongly considered not onlyfrom a compliance standpoint, but alsofrom the standpoint of future lender liabil-ity. It’s not a term that we have heard oftenin the past, but with the rise of loan modi-fication cases, the term will become quiterelevant in the years to come.
As we wade our way outof the mortgage mess thatwas created over the pastseven or so years, govern-ment officials as well aslenders, have become wellaware of the unscrupulouslending practices thatplagued us over the pastseveral years. These prac-tices have resulted not onlyin the collapse of the mort-gage market, but the sub-sequent increase in thenumber of foreclosures.
As lenders try to mini-mize overall losses thatmight be sustained as aresult of the excessive fore-closure rate, loan modifica-tions have become, in some instances, amethod to cut future losses as well as help aborrower retain ownership of their property.
Loan modification companies, as wellas attorneys, have taken on the arduousduties of helping those individuals whoreceived mortgages that were not in theirbest interest either do to excessive interestrates or other features, modify their currentmortgages into more sustainable mortgageproducts, and due to declining marketsnationwide, many lenders are beginning toalso see this as a viable solution to foreclo-sure. However, there are still lenders outthere that purchased and securitized thesemortgages that refuse modificationattempts at any level.
As a result, many of the attorneys andloan modifications companies have imple-mented the use of the forensic loan auditin order to gain legal leverage against theseloan servicers. The bottom line is this, if aforensic loan audit determines that theborrower’s rights were violated under stateor federal law, the attorney may pursuelegal action against the loan servicer whichcould not only stay a pending foreclosurebut result in actual, as well as statutory,monetary damages being awarded the
Loan mod forensic loan audit: Part I of III
Think Reverse! by Atare E. Agbamu, CRMS
By Liz Scholz
Think Reverse! The Complete Guide to Marketing and Originating ReverseMortgages for Mortgage Professionals and Financial Advisors reflects animpressive level of breadth and depth in reverse mortgage knowledge. Clearlya lot of thought with integrity was clearly put into this work. I found the workimpressively researched, well documented and a nicely interwoven range oftopics throughout the way. Author Atare E. Agbamu’s expertise as a reversemortgage loan originator, with real live cases, and his experience as a keyindustry participant and leader, comes through on each page loud and clear.
I appreciate the range of insight offered from the softer side of commu-nicating with clients to the more technical perspectives and information onthe products. This book takes complex products and rules and boils themdown to very accurate, yet understandable, terms.
And now, more than ever, is the importance of ethics in dealing with sen-iors. Atare provides sound, practical and professional insights into dealingwith this very special customer in marketing, meetings and outreach withthe right level of integrity and care for the client. Tips on communications,analysis on new market segmentation, and trends to expect were just a fewof the many facets of the book that I found interesting.
I would highly recommend that anyone interested in getting into thebusiness, or new to the business, and yes, even seasoned veterans, can learnfrom this book! Kudos to Atare for a fine piece of work that will serve themortgage industry in very positive ways.
Liz Scholz is chief operating officer and executive vice president of theNational Reverse Mortgage Lenders Association. She may be reached by phoneat (202) 939-1776 or e-mail [email protected].
There’s assistance from the InternalRevenue Service (IRS) that can be helpful aswell. For example, TRV (tax return verifica-tion) reports provide a streamlined methodof verifying a borrower’s tax information byelectronically comparing the income-relat-ed lines of the borrower’s tax return withthe same lines on file at the IRS. This datacan be obtained on any individual or busi-ness that has authorized the release of thisinformation in connection with an applica-tion for credit. Any variations uncoveredcan be highlighted in an easily read report.
TRVs offer further protection againstfraud by verifying that the applicant’sinformation matches Social SecurityAdministration files.
What you’ll need to doJust like an air traffic controller needs tomake the right decisions without panick-ing, so will you as a mortgage professional.It’s all about having a plan in place focusedon prevention and reaction to incidents.
A big step is putting your program inwriting, and in as much detail as possible.
“Forensic loan reviewis a useful tool for
all lenders, servicersas well as the loan
modification companies.”
By Bonnie Wilt-Hild
Mortgage PROFESSIONALN A T I O N A L
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
ONE YEAR $59 $27*Includes:
• FREE conference calls • FREE webinars• FREE electronic version of National Mortgage Professional Magazine
Visit Subscribe.NMPMag.com for more details.
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As a self-acknowledged expert in themortgage industry, it is my firm beliefthat the world will come to an end onDec. 21, 2012. I came to this realizationafter studying such market indicators asthe Dow Jones Industrial Average, theMayan Calendar, the Prophecies ofNostradamus, the Bible code and thenumber of vowels in the word“Obama.” Notice how when you takeout the vowels, all youare left with is “BM.”Every sixth grader knowsthose are the initials forhow the economy isdoing right now.
So, as a loan officer,what does this mean foryou and your family inthis most uncertain Endof Days?
In times of panic, itis well known that peo-ple tend to invest insafe mediums such asgold and U.S.Treasuries. While, Ihave my investments inrice, guns and a wellconstructed hole in theground, I can certainlyrespect the investing strategy of mypeers. Real estate, however, shouldnot be overlooked. Prices havedeclined to the point where borrow-ers normally frozen out of the mar-ket due to low wages can now affordto buy. We are on the cusp of anoth-er buying boom. It will not be longbefore my secluded wildernessfortress is overrun by first-timehomebuyers, nail salons and VerizonFIOS installers. Hence, the guns …part of my equation.
Mortgage rates will also continue todrop, due to the slow economic growth,the lack of inflation and a surplus ofwaterfront properties on the worldmarket due to global warming and the
ice caps melting. Having your home“underwater” will have new meaningonce the seas consume the land.
This will be helped further as theInternational Monetary Fund (IMF),under the United Nation’s benevolentmilitary leadership, moves us to a“one world currency” and the anti-Christ reveals himself. Imagine howthe phones will ring when rates hit
one percent on a 30-yearfixed-rate the day after100,000 headless horse-men scourge the earth.Of course, good lucklocking in, your accountexecutive will be onvacation that week andthe fax lines will bejammed.
It has been scientifi-cally proved, on theanointed day, the earth,sun and center of thegalaxy will align as itdoes once every 15,000years. The last time thishappened, the Dow Joneswas at zero, caves were asurplus on the market,the prime rate was at
negative three and Merrill Lynch exec-utives refused their bonuses. It is wellknown that on that cycle, the earth’spoles shift, north becomes south, andChinese kids digging a deep hole reachAmerica, rather than the other wayaround. Count on shifting poles caus-ing changes in magnetic fields andthrowing off annual percentage ratecalculations, since no one knows howto do them by hand anymore. Evenworse than predicted, the earth’s rota-tion may even reverse itself. Then daywould be night, night, day andAmerican Idol would be on at 4:00a.m. Borrowers, however, will contin-ue to call you while you are sleepingand ask, “What’s the rate, now?”
Yet, the market is a strong organ-ism and is able to rebound.Civilization will survive, in one formor another and a mini-boom is boundto begin any quarter now. One justneeds the staying power to weatherthe ensuing gamma ray radiationfrom the black hole in the center ofthe universe and the spontaneouscombustion of all living matter on theplanet. Remember, the market worksin cycles, much like a tornado in theWizard of Oz. You may lose yourhome, but look at the nice shoes youpick up.
Naysayers discount the increasednumber of buyers that will be causedwhen zombies and vampires gain equalrights, the ability to purchase propertyand are allowed to adopt. Of course,plan on yet another disclosure in theloan package, this one requiring adroplet of blood next to the bar code.But still, it is a small price to pay formore first-time homebuyers in a sloweconomy.
What is going on now is called “TheRapture,” when good jobs disappearand go to Heaven, and us remainingsinners are left to suffer the seven yearsof Obama Tribulations. If you read theblogs, you already can see famine, war,earthquakes and locust infestationsdevastating the world.
Alas, until our Father’s armydefeats Satan’s demon hordes, therewill be nothing left for us to do butagonize through this, hunker down
and watch out for Andrew Cuomo’sflaming new appraisal guidelinesfrom the sky. There will be nothingleft but prayer and repentance forthe faithful, as the demonic regula-tors reap carnage throughout theland proudly displaying the “666”tattooed on their forehead. Therewill be nothing left for us but fore-closures and short sales, but hey, it ’sa living.
Don’t bother complaining, as ourtiny planet hurdles through spacewhere no one can hear you screaming.We are but a tiny grain of sand, on adesert planet among billions of solarsystems in billions of galaxies. Our fateis held in the hands of powers we can-not even imagine. Comic forces con-trol our destiny. The best we can say is,“We had a good run while it lasted,”turn out the lights and wait for thenext evolutionary species to take over.Personally, I am rooting for a Planet ofApes. It will be a tough call, whetherthe politicians or the apes can throwthe most feces.
As for me, I will just sit in my hole,surrounded by rice, continuing to scrib-ble out 1003s for buyers “just looking”and refinancing neighbors who have nohope of qualifying. You may ask, “Whatis the square root of Y squared?” Why?Because I don’t know how to do any-thing else … do you?
Eric Weinstein may be reached at (703)505-8692 or e-mail [email protected].
“Prices havedeclined to the point
where borrowersnormally frozen outof the market due tolow wages can now
afford to buy.”
BY ERIC WEINSTEIN
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released guidelines and logic out-lined in the Treasury Department ’snew Home Affordable ModificationProgram. The Asset Managementproduct line includes AssetX,which decisions loans at a pool orportfolio level, and Optimizerwhich provides detailed analysisand processing solutions at theindividual case file level. The com-pany reports that its clients areable to access the updated rulesfrom both modules.
“Our customers are able to accu-rately decision their loan modifica-tion case files today against the newprogram guidelines released just yes-terday,” said Commerce VelocityProduct Director Fred Popke. “Ourability to make changes like this isone of the many factors attractingmany firms challenged in the indus-try today. With thousands of loansthat need to be modified, they needa system that can get their guidelinesupdated in a very consistent andtimely fashion.”
Commerce Velocity’s decisioningplatform has been designed to enablelarge lending institutions and ser-vicers to efficiently process thousandsof loans at a time. The software auto-matically cycles through all of the pos-sible qualifying permutations of inter-est rate reductions, term extensionsand mortgage payment to incomeratios and will even recommendappropriate principal balance reduc-tions to qualify the borrowers whileadhering to the investors’ or servicers’decisioning guidelines. The softwarewill also instantly calculate how eachloan workout compares to otheroptions such as a real estate-
owned/foreclosure property or a shortsale.For more information, visit www.cveloci-ty.com.
OpenClose launches theAssistSeries
OpenClose hasannounced the
introduction of its new, integrated end-to-end suite of mortgage software prod-ucts called the AssistSeries. Developedto help mortgage companies and indi-viduals create new business opportuni-ties, the AssistSeries streamlines work-flows and helps lenders automate moretasks with less software and capital. Itsdesign enables mortgage brokers, mort-gage lenders, credit unions or commu-nity banks to configure the system tomeet the needs of large enterprises orindividual loan originators.
With its acquisition of LION MTS,OpenClose has integrated the LIONmortgage software into its own Web-based solutions to create a new suiteof mortgage products. The integrat-ed products are built upon a singletechnology platform to enable mort-gage professionals to work with asingle set of loan data from initialconsumer contact through post-clos-ing and secondary marketing. Thisreduces the time spent preparingloans while also increasing securityand profitability.
“In order to be successful in thenew marketplace, companies aregoing to have to change the way theydo business,” said J.P. Kelly,OpenClose’s president of operations.“The AssistSeries enables lenders toincrease efficiencies in the lendingprocess by including consumers and
brokers in the same system used bylenders and consolidating all loandata. Preparation time is reduced,while security and profitability aremaximized.”For more information, visit www.open-close.com.
HOPE NOW announcessite enhancements toassist at-risk borrowers
HOPE NOW hasannounced a redesignedand enhanced Web site
(www.hopenow.com) that provides animportant new way for homeownerswith mortgage concerns to connectdirectly with their mortgage servicerand receive help faster. The site fea-tures a new online Assistance IntakeForm, which a homeowner may use tosubmit an application for assistance tohis or her servicer. The homeownerthen will receive an acknowledgementof the application in no more than fiveto seven business days and will haveconfirmation that the process hasbegun.
The Assistance Intake Form andenhanced Web site was developed byHOPE NOW in preparation for theObama administration’s HomeownerAffordability and Stability Plan. Thenew enhancements will allow HOPENOW to handle the expected largeincrease in the number of homeown-ers requesting assistance.
“HOPE NOW’s enhanced Web sitewill make it even easier for home-owners at risk of foreclosure to startthe workout process and will allowservicers to assess each homeowner’sneeds much more quickly,” said FaithSchwartz, HOPE NOW’s executivedirector. “We want to do everythingpossible to make sure that everyavoidable foreclosure is actually pre-vented.”For more information, visitwww.hopenow.com.
iEmergent announcesnew enhancement to itsmortgage forecasts
iEmergent has announcedthe addition ofenhanced local market
performance planning tools to its 2009-2013 mortgage opportunity forecasttables. iEmergent’s enhanced per-formance planning tools help banks,mortgage lenders and sales man-agers maximize loan acquisition effi-ciencies, increase sales productivity,spend marketing dollars wisely andoptimize the allocation of theirconsumer contact resourcesthrough educated decisions basedon the types, size and expectedgrowth rates of mortgage volumesin local markets.
The planning tools are embeddedin iEmergent’s detailed loan volumeforecasts and unique market behav-ior metrics. The user-adjustable toolsenable lenders to differentiate thepurchase and refinance opportuni-ties in each market and automatical-ly calibrate resource coverage levelsbased on their lending model, cur-rent and future growth objectives,and competitive market position. Byproviding the user the flexibility toalter inputs and assumptions, theinteractive tools help business lead-ers at all levels see how changes inthe economic environment mightimpact their overall volume, marketshare and sales efficiency goals indifferent markets.
“Our enhanced mortgage marketforecasts simplify many of the criticaldecisions used when developing strate-gies to seize market share by groundingcrucial decisions in fact-based, loan vol-ume projections and calculations,rather than relying on the old conven-tional wisdoms that may no longer fittoday’s environment. Since the toolspermit users to define multiple scenar-ios, they are able to optimize their totalresource levels, efficiency and prof-itability in a wide range of market con-ditions. By planning in advance formarket uncertainty, an organizationreduces internal anxieties and outper-forms competitors who are passivelywaiting for market conditions tochange.”For more information, visitwww.iemergent.com.
Your turnNational Mortgage Professional Magazineinvites you to submit any informationpromoting new “niche” loan programs,new products or any other announce-ment related to the introduction of a newprogram, to the attention of:
New to Market columnPhone #: (516) 409-5555
E-mail:[email protected]
Note: Submissions sent via e-mail arepreferred. The deadline for submissionsis the 1st of the month prior to the tar-get issue.
new to market continued from page 28
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MAY 2009Thursday, May 21
Florida Association of Mortgage BrokersSuncoast Chapter Tabletop Trade Show
The Osprey Inn1660 South Tamiami Trail • Osprey, Fla.
For more information, call (941) 993-5084or visit www.famb.org.
Sunday-Wednesday, May 31-June 3Mortgage Bankers Association President’s
ConferenceNote: This is an MBA member-only event
La Costa Resort & Spa2100 Costa del Mar Road
Carlsbad, Calif.For more information, call (800) 793-6222 or
visit www.mortgagebankers.org.
JUNE 2009Wednesday, June 10
Arizona Association of Mortgage Brokers2009 Mortgage MarketPlace Education &Expo “Expand Your Mind & Expand Your
Business”Phoenix Convention Center
100 North Third Street • PhoenixFor more information,
call (480) 423-7334 or visit www.mortgage-marketplacehome.com.
Wednesday-Friday, June 17-19National Reverse Mortgage Lenders Association
Washington D.C. Policy ConferenceThe Liaison Capitol Hill Hotel
415 New Jersey Avenue • NWWashington, D.C.For more information, call (202) 939-1760
or visit www.nrmla.org.
Saturday, June 272009 National Association of Mortgage
Brokers Mid-Year MeetingCrowne Plaza Riverwalk
111 Pecan Street East • San Antonio, TexasFor more information, call (703) 342-5900
or visit www.namb.org.
JULY 2009Wednesday, July 8
11th Annual “Let’s Make a Deal” Tri-State Wholesale Lending Fair
Sponsored by the Mortgage BankersAssociation of New Jersey/New Jersey
Association of Mortgage Brokers, New YorkAssociation of Mortgage Brokers and
Pennsylvania Association of Mortgage BrokersTrump Taj Mahal
1000 Boardwalk at Virginia AvenueAtlantic City
For more information, call (973) 379-7447or visit www.njamb.org.
Wednesday-Saturday, July 15-18Florida Association of Mortgage Brokers2009 Annual Convention & Trade Show
“World of Wonders”Orlando World Center Marriott Resort
& Spa8701 World Center Drive
Orlando, Fla.For more information, call (800) 289-9983
or visit www.famb.org.
Wednesday-Saturday, July 29-August 1
California Association of Mortgage Brokers2009 Annual Convention & Grand Exposition
San Diego Marriott Hotel & Marina333 West Harbor Drive
San Diego Convention Center111 West Harbor Drive
San DiegoFor more information, call (916) 448-8236
or visit www.cambweb.org.
AUGUST 2009Tuesday-Friday, August 11-14
American Association of ResidentialMortgage Regulators 20th Annual
Regulatory ConferenceThe Hyatt Regency Savannah
2 West Bay StreetSavannah, Ga.
For more information, call (202) 521-3999or visit www.aarmr.org.
SEPTEMBER 2009Wednesday-Friday, September 9-11
Mortgage Bankers Association ofPennsylvania Annual Conference
The Eisenhower Hotel2634 Emmitsburg Road • Gettysburg, Pa.
For more information, call (888) 739-9991or visit www.mba-pa.org.
Wednesday-Friday, September 9-11Mortgage Bankers Association Document
Management & Custody ConferenceThe Westin GasLamp Quarter San Diego
910 Broadway Circle • San DiegoFor more information, call (800) 793-6222 or
visit www.mortgagebankers.org.
Thursday, September 10Minnesota Mortgage Association 2009
Convention & Exhibitor ShowcaseThe Hyatt Regency Minneapolis
1300 Nicollet Mall • MinneapolisFor more information, call (952) 345-3240
or visit www.themma.org.
Monday-Wednesday, September 14-16
Mortgage Bankers Association RegulatoryCompliance ConferenceThe JW Marriott Hotel
1331 Pennsylvania AvenueWashington, D.C.
For more information, call (800) 793-6222 orvisit www.mortgagebankers.org.
Wednesday-Thursday, September 16-17
2009 Missouri Association of MortgageBrokers Trade Show & Convention
St. Charles Convention Center and EmbassySuites Hotel
2 Convention Center Plaza • St. Charles, Mo.For more information, call (314) 909-9747
or visit www.mamb.net.
Thursday-Friday, September 17-18Mortgage Bankers Association Human
Capital Management SymposiumMBA Headquarters
1331 L Street NW • Washington, D.C.For more information, call (800) 793-6222 or
visit www.mortgagebankers.org.
OCTOBER 2009Friday-Saturday, October 2-3
Kentucky Association of MortgageProfessionals 2009 Annual Convention
Belterra Casino & Golf Resort777 Belterra Drive
Belterra, Ind.For more information, call (270) 929-2836 or visit www.kyamp.net.
Monday-Tuesday, October 5-6Washington Association of Mortgage
Professionals 2009 Real Estate Lenders Conference
Meydenbauer Center11100 NE 6th Street
Bellevue, Wash.For more information, call (866) 425-7250 or visit www.wamb.org.
Sunday-Wednesday, October 11-14MBA 96th Annual Convention & Expo
San Diego Convention Center111 West Harbor Drive
San DiegoFor more information, call (800) 793-6222 or
visit www.mortgagebankers.org.
Wednesday-Friday, October 21-23Pennsylvania Association of MortgageBrokers and New Jersey Association ofMortgage Brokers Regional Conference
Trump Taj Mahal1000 Boardwalk at Virginia Avenue
Atlantic CityFor more information, call (973) 379-7447 or visit www.njamb.org.
Friday, October 30Oregon Association of Mortgage
Professionals 2009 Annual Convention“The Best of the Best”
Location to be determinedFor more information, call (503) 670-8586 or
visit www.oamponline.com.
NOVEMBER 2009Monday-Thursday, November 2-5
VAMB 21st Annual ConventionWilliamsburg Lodge
310 South England StreetColonial Williamsburg, Va.
For more information, call (804) 285-7557or visit www.vamb.org.
Friday-Wednesday, November 13-18NAMB/WEST
MGM Grand Hotel & Casino3799 Las Vegas Boulevard South
Las VegasFor more information, call (703) 342-5900
or visit www.namb.org.
FEBRUARY 2010Monday-Thursday, February 1-4
Mortgage Bankers AssociationCREF/Multifamily Housing Convention
& ExpoMandalay Bay Resort & Casino
3950 Las Vegas Boulevard SouthLas Vegas
For more information, call (800) 793-6222or visit www.mortgagebankers.org.
Tuesday-Friday, February 23-26Mortgage Bankers Association NationalMortgage Servicing Conference & Expo
Manchester Grand Hyatt1 Market Place
San DiegoFor more information, call (800) 793-6222
or visit www.mortgagebankers.org.
To submit your entry for inclusion in the National Mortgage ProfessionalCalendar of Events, please e-mail the details of your event, along with
contact information, to [email protected].
COMPANY WEB SITE PAGEAllied Home Mortgage Capital Corp. ............www.branchasap.com..................................................34All Regs......................................................www.allregs.com ........................................................17Citi ............................................................www.careers.citigroup.com ....................................8 & 35Elliott and Company Appraisers Inc. ............www.appraisalsanywhere.com ......................................37First Fidelity Capital Markets Inc. ................www.ffidelity.com ......................................................24Flagstar Bank ............................................www.wholesale.flagstar.com ............................Back CoverFranklin First Financial ..............................www.franklinfirstfinancial.com..............................29 & 35Global Financial Services ............................www.globalbrokersystems.com ......................................7HTDI Financial ..............................................www.startacreditrepaircompany.com ..Inside Back Cover & 34Hudson Valley Processing ............................www.hudsonvalleyprocessing.com ................................23Mercury Capital ..........................................www.mercurycapital.com ............................................38Mortgage Now Inc. ....................................www.mtgnow.com ..............................................21 & 34Multiple Listing Service of Long Island Inc. ..www.mlsli.com ............................................................3NAPMW......................................................www.napmw.org ........................................................39National Association of Mortgage Processors..www.loanmoduniversity.com ........................................43Platinum Credit Services Inc. ......................www.platinumcreditservices.com ..........................34 & 35Presidents First Mortgage Bankers................www.presidentsfirst.com ..............Inside Front Cover & 34Quality Mortgage Services............................www.qcmortgage.com ..........................................5 & 37Reliance First Capital LLC. ..........................www.reliancefirstcapital.com ................................25 & 34Superior Mortgage Corp...............................www.supmort.com ......................................................34United First Financial..................................www.unitedfirstfinancial.com ..............................15 & 34University Mortgage ....................................................................................................................19Value Financial Mortgage Services Inc. ........www.valuefinancial.net........................................27 & 34Wells Fargo Home Mortgage ........................www.wellsfargo.com ....................................................9
You don’t need to be a credit expert tostart your own Credit Repair businessFortunately, with HTDI Financial’s Credit ServicesOrganization (CSO) program, you will be able tohandle ALL aspects of your business except having todo the actual repairs; we do that for you! We will trainyou on how to handle these customers and you willhave the support you need every step of the way. Wewill make you look like a Fortune 500 company evenif you work from home! YOU control how muchmoney you make. In fact, through our CRM, we giveyou the tools and resources to harvest leads, manageprospects and monitor their progress.
You don’t have to spend tens of thousands ofdollars for start-up costs for your ownCredit Repair CompanyOnce you are set up in our system, you will get accessto software and tools that HTDI has spent over $1million on research and development. You don’t needto spend an arm and a leg to start building your owncredit repair business. Here is a quote from a mort-gage company located in upstate New York who spentmonths of research before choosing HTDI:“Until last year, I owned a large mortgage com-pany in upstate NY with over 125 employees.We got hit hard during the mortgage industrycrash and had to close our doors. I was stuck ina position with thousands of leads and cus-tomers that couldn’t get qualified for anything. Idecided to start looking for a way to capitalizeon my left over resources and help people in theprocess. I called many other credit repair compa-nies and was very unimpressed. One west coastbased company was charging $15,000 and hadnothing but negatives written about them on theInternet. Then I found HTDI. They helped me toget started at the beginning of this year and ithas been great. I have not only made greatmoney helping people to repair their credit, but Ihave refinanced 8 of them and helped 6 buyhouses that would have never qualified with thenew guidelines. The software is very user friend-ly and all of my clients, affiliates and Brokershave increased business because of it.”
Get those impossible to close dealsCLOSED!As the number of loan programs are shrinking, thebar on credit scores keep rising. This program willallow your borrowers to become “Mortgage Ready” assoon as 45 days. As one of our CSO stated:“I have many loan officers that are now able tosend their clients through the credit repair, raisetheir scores, and then close the client’s loan that
they couldn’t close before due to bad credit! Itmeans more loans and more revenue for myloan officers. Even better than that, it is veryrewarding to be able to help a client regain theircredit and be able to get the loan they need.”
Get started in a business that is boomingand shows no signs of slowingThe credit industry, as a whole, is one of the mostpowerful and profitable industries in existence. Withloans, insurance and even employment taken intoconsideration individuals’ credit picture, the creditindustry is getting bigger every day.
Inside the credit industry, Credit Services is helpingby assisting consumers with getting back on track byremoving unverifiable and inaccurate negative itemsfrom their credit reports. As a CSO, you can benefitin being in a profitable industry and helping clientswith their futures.“I’ve been in the mortgage business over 22years. A year ago, as the mortgage crisis wors-ened, I began trying to find a way to help clientswho needed a better credit profile in order to geta mortgage. Fortunately for both me and myclients, I stumbled on HTDI. After a year ofexperience, I can honestly say the success rate is100% and client satisfaction is through the roof.All of my clients have seen significant improve-ments, and some have experienced breathtakingjumps in their credit scores, even on the firstround!
From Day One you can be sure your “backoffice” (HTDI) has you covered. They will exe-cute their part of the job seamlessly, with preci-sion, on time, and with total consistency. Allyou have to do is SELL the service! Just signpeople up, collect the money, and send HTDIthe paperwork they need to get started. If yousimply focus on selling the service, you willmake lots of money, the work will get done, andyou will never have to worry about unhappycustomers.Although I got into it as a part timer, I now real-ize this is an excellent full time business opportu-nity. (Frankly, these days it’s probably a betterbusiness than the mortgage business!) You couldeasily make six figures in the first year with a min-imal investment of money. How many opportuni-ties like this exist these days? What you mustinvest is your time – SELL, SELL, SELL & SELLsome more! Ultimately, what you are selling is theprofessionalism of HTDI, which is why this really
rocks as a business opportunity.”We average one of the highest fix/deletion rates in the indus-try for the first 45 days of service. Shown below, in real-time,is the average percentage of fix/deletes per round.
If you are going to get involved in CreditRepair, be VERY CAREFULFirst you have “Fair Credit Reporting Act” (FCRA). TheFCRA holds credit bureaus and creditors to their report-ing methods and has guidelines they must comply with.There are numerous techniques that are used along withsimilar laws to maximize results for each client. You mustknow these laws inside out.You can’t forget “Credit Repair Organizations Act.”(CROA). Just like the FCRA, the CROA hold creditrepair companies to specific guidelines as well. If youchoose HTDI Financial for your backend processing, wewill ensure you maintain compliance. Lastly, you have applicable State Laws. Depending onthe state you wish to conduct business in, you mayhave a state Credit Services Organizations act tocomply with. As an active member in good standing of the NationalAssociation of Credit Services Organizations, you canbe sure that we take our job very seriously, makingsure you stay compliant and your clients.
Why some Mortgage Professionals fail in Credit Repair while others
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There is only one step you need to take; visit www.startacreditrepaircompany.com or
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