NAMB West 2007 - Oser Communications Group

Saturday, June 23, 2007
Oser Communications Group
PRBC FILLS A HUGE GAP IN THE
CREDIT-QUALIFICATION SYSTEM
BY INCLUDING RENT, UTILITIES
Michael Nathans is founder and
Chairman of Pay Rent, Build Credit
(doing business as PRBC). PRBC bills
itself as America’s Alternative Credit
Bureau and helps consumers demonstrate
their creditworthiness with recurring payments they make for rent, utility, phone
and other bills that don’t get reported to the traditional
bureaus. In this interview, Nathans explains how his company
performs an important service.
Continued on Page 29
TOP PRODUCER MODEL
QUICKLY GROWS
MEGASTAR INTO
MULTI-BILLION DOLLAR
FUNDING FIRM
How did MegaStar
build a multi-billion
dollar funding company and attract top
national producers in
less than eight years?
Anita Padilla, President, CEO and
Founder of MegaStar Financial, shares
her story.
MDN: Every mortgage company wants top
producers. How did MegaStar Financial
build a model that attracts top producers?
Can you share this model with us?
AP: We surveyed top loan officers
throughout the U.S., and we found that the
No. 1 complaint top producers had was the
Continued on Page 29
DIRECT CHURCH LENDER
THERIZO CAPITAL TEAMS
WITH MORTGAGE
BROKERS TO SERVE
NICHE MARKET
Winford,
Barry
President of America’s
leading church lender,
Therizo Capital (booth
1110), talks about the
underserved, but growing $28 billion church lending market.
Seattle
MRS. FIELDS HAS COOKIES
AND PACKAGING DESIGNED JUST
FOR THE MORTGAGE INDUSTRY
Mrs. Fields is celebrating 30 years
of baking perfection this year.
America’s favorite cookie baker,
Debbi Fields, opened her first store
in Palo Alto, Calif., in 1977 and the
number of stores has grown to nearly
400 retail locations in the United States and another 100 locations
internationally. But many consumers may not be aware that Mrs.
Fields products are also available for delivery. Today we talk to
Continued on Page 29
SOUND BUSINESS
STRATEGIES KEEP
QUALITY HOME LOANS
ON AN EVEN KEEL IN
STORMY SEA
By Patrick Weaver,
President of Quality
Home
Loans,
Agoura Hills, Calif.
WHERE’S YOUR GOAL?
SOUTHWEST SECURITIES
HELPS MORTGAGE
BROKERS BECOME
BANKERS
BW: There are 450,000 churches in
America, and the market is growing. Yet,
most traditional lenders lack experience
with churches or simply overlook them.
This creates an opportunity for brokers to
serve this market, and with an average
loan size north of $1 million and the ability to earn a full one percent origination
Swallowed by the
storm, our first thoughts instinctively turn
to any port for refuge. We’re not likely to
look much beyond the immediate horizon
or wonder where to tack tomorrow.
But that’s precisely what most subprime mortgage companies should be
doing these days as bad weather batters
many and challenges all.
It’s a statistical probability that most
of the industry will endure the current
downturn. And, indeed, many participants
will thrive as existing and prospective
homeowners, unable to secure traditional
“Yeah, we’re the
guys with the little
soccer
girls,”
answers a grinning
David Frase at trade
shows across the
country when mortgage brokers line up at
his booth. Southwest Securities, FSB features a girls’ soccer team in their advertising and booth display.
The four-year-olds in red and blue
uniforms point to their goal to remind
mortgage brokers how they also should
consider the direction of their company.
Frase believes that a warehouse line is
the answer to what’s next for many
mortgage originators. With 21 years of
experience in mortgage lending, he
should know.
Continued on Page 23
Continued on Page 23
Continued on Page 23
MDN: Are churches really an attractive
niche market for brokers?
4
Saturday, June 23, 2007
ELLIE MAE’S ENCOMPASS 3.0
MORTGAGE MANAGEMENT
SOLUTION IS FASTER AND EASIER
The newly-released Encompass 3.0 is
making “quick and easy” even quicker and
easier. Twelve new enhancements enable
Ellie Mae’s Encompass mortgage management solution users to achieve benefits like deeper two-way communication
with borrowers and vendors, the ability
to handle more varied loan programs and
integration with even more third-party
technologies. So originating and closing
loans is even more streamlined and less
time-consuming than ever before.
With the launch of the Encompass
WebCenter, users can now maximize the
power of a professional Web presence
with a next-generation Web solution that
serves as a direct extension of their software. The Encompass WebCenter serves
as both a professional, scalable and
searchengine-friendly Web site and a
secure online business center that originators can use not only to generate leads,
but also to communicate and collaborate
with borrowers and partners. Potential
clients can easily apply online, borrowers
can constantly monitor the status of their
loans and Realtors and partners can view
the progress of applications generated
from their referrals. Unlike any other Web
site product on the market, the WebCenter
connects seamlessly with Encompass so
online applications flow directly from the
site into the Encompass pipeline. Status
updates can be instantly posted from within the loan file, and all data remains consolidated in one central system.
Encompass 3.0 supports even more
third-party technology platforms, like
the newest versions of several solutions
by Microsoft, SQL and Adobe, so companies can utilize their updated software solutions—hassle-free. And as far
as loan programs go, Encompass 3.0
can handle both piggyback loans and
WITH LOANXENGINE, FIRST LIBERTY
LEAPFROGS COMPETITION, EXPANDS
35 PERCENT IN ONLY SIX MONTHS
First Liberty Financial of Louisville, Ky.
was looking for a platform to pull all the
pieces together to build their bank around.
After an in-depth search for a pricing
engine, CRM, lead distribution solution and
LOS, First Liberty Financial chose to
implement LoanXEngine with Encompass.
First liberty planned to use
LoanXEngine for managing lead sources
and lead distribution, performing best
execution pricing and to be their primary
CRM, and planned for Encompass to
handle LOS duties. Initially worried
about simultaneously implementing two
major technology projects and undertaking such a major shift, First Liberty has
found the rewards to be astounding.
Jim Melchior, Vice President at First
Liberty explains, “In six months, we’ve
gained so much additional business that
we’ve experienced a 35 percent growth
in head count and an even larger growth
in volume.” He adds, “There’s no way we
would have been able to accomplish this
without LoanXEngine.”
Leveraging LoanXEngine’s capabilities, First Liberty’s close rates and business
have
increased.
They’ve
leapfrogged over a number of major
banks in the LendingTree network rankings, rising from a 25th ranking to the no.
6 spot in purchase transactions. Melchior
notes, “Our loan officers can quickly find
the best execution price. Even when a
deal is seems lost, carefully crafted email
campaigns from LoanXEngine often
draw the customer back,” Their loan officers, “frequently hear back from customers that they have not spoken to in
months, largely due to the continued
communication through LoanXEngine.”
First Liberty likes LoanXEngine’s
THE LANDSCAPE OF RAW-LAND
LOANS: SITUATIONAL LENDERS
WILL WORK TO GET SALE DONE
By Jeffrey Wolfer, President & co-CEO,
Kennedy Funding, Inc.
There seems to be a lot of discussion
recently about raw land loans.
Specifically, the discussion is about what
they are, when to look for one, why to
look for one and where to look for one.
This curiosity makes perfect sense
because, despite the claim of some
naysayers that the market is in a downturn, land will always be among the most
popular investments.
That’s because it’s still a wise investment. And the only thing that has
changed is the way people think about
land purchases today, and who they turn
to in order to fund them.
Over the past several years, the who
has been a situational lender such as
Kennedy Funding. We and other direct
private lenders represent the alternative
to traditional lenders, represented by
banks, credit unions and the like. In their
world, raw land loans are simply not
done, in 99 cases out of 100, being
considered too big a risk and too high a
cost. Actually, it’s the miles of red tape,
cookie-cutter mentality, and refusal to
compromise that make things problematic.
Kennedy Funding and others have
positioned ourselves as the alternative to
Mortgage Daily News
more Option ARM products, so closing
today’s popular loan products is easy
and expedient. Ordering compliance
reports is now automated with
Encompass 3.0, and users can now
order title reports from any agent of
their choosing, securely and electronically, directly through Encompass.
Other changes include campaign
management enhancements. The enhancements allow managers to share their best
practice marketing campaigns with their
loan officers, calendar sharing features that
enable assistants and managers to view and
edit each other’s calendars right from
inside Encompass, eDisclosure support
that seamlessly and securely delivers initial disclosures to borrowers, state-specific
disclosures for all 50 states, email status
update enhancements and more fields to
store additional credit information.
If you haven’t test-driven the solution yet, there’s no time like the present.
With this latest version of Encompass,
Ellie Mae continues to raise the bar on
mortgage management technology.
For more information about Ellie
Mae, visit www.elliemae.com or call
888-955-9100.
integration capabilities with Encompass.
When a lead has been distributed, priced, repriced and is now ready to move into processing, First Liberties’ loan officers can
click a button and export all the data for
Encompass, which means no double entry.
“Importing information into Encompass is a
huge time saver,” Melchior says.
Additionally, First Liberty likes having their own LoanXEngine installation
and the independence it provides. “The
system we were on previously was shared
and was always crashing.” says Melchior.
“Hosting the application independently
has provided improved stability and faster
response times.” The support they receive
from the LoanXEngine team has been
great with Melchior noting that they are
“always responsive to our needs.”
Alan Johnson, President of the
Denver, Colo.-based LXE Software, the
maker of LoanXEngine says, “It’s been a
joy to watch First Liberty take business
from their competitors and grow at such
a rapid rate, especially in such a challenging business climate. Their continued success points to how companies can
properly invest in technology to achieve
traditional lender thinking, as sources that
will not only fund virtually any loan, but
will fund it faster and easier than conservative sources ever could or would. Rather
than waiting on a loan for weeks or even
months, Kennedy routinely closes on raw
land loans in an average of 10 working
days. In some cases, we can close in five
days or less. And, while our rates may be
higher than a bank’s, we more than make
up for it with the swiftness of the close, our
obsessive attention to detail and our creativity in being able to make practically
any proposal a reality.
A situational lender is one who considers loans on a case-by-case basis and,
after performing due diligence, decides
how best to consummate the deal. Rather
than refuse the deal outright, as in the conventional lender scenario, the situational
lender applies knowledge, experience and
expertise to make sure the deal happens.
It’s that creativity that has more and more
AN INDEPENDENT PUBLICATION
NOT AFFILIATED WITH NAMB
Lee M. Oser
Publisher and Editor-in-Chief
Michael Harris
Senior Associate Publisher
Kim Forrester
Associate Publisher
Nate Searing
Senior Associate Editor
Scott Smith
Dan Stebbins
Associate Editors
Valerie Wilson
Art Director
Steve Colindres
Graphic Designer
Lorrie Baumann
Business Affairs Manager
Richard Mandziak
Guy Taylor
Account Managers
Enrico Cecchi
European Sales
Mortgage Daily News is published by
Oser Communications Group ©2007. All rights
reserved. Executive and editorial offices at:
1877 N. Kolb Road, Tucson, AZ 85715
520-721-1300/Fax: 520-721-6300/www.oser.com
European offices located at Lungarno Benvenuto
Cellini, 11, 50125 Florence, Italy.
(055) 657-5629, Fax (055) 657-5631
remarkable results.”
Released less than three years ago,
LoanXEngine continues to attract leading
mortgage companies. LoanXEngine automatically selects the best fit, fully-adjusted
pricing from prime and subprime programs
in seconds. The Web-based software also
generates ratesheets, sends emails, creates
tasks and spawns alerts to help manage
pipelines. LoanXEngine works as a fullyfeatured application or as a XML Web service, allowing information to seamlessly
move between lead sources, CRMs, processing systems and workflows.
For
more
information
on
LoanXEngine, visit www.loanxengine
.com or stop by booth 812.
raw land borrowers shying away from traditional sources and approaching the private sector first. They don’t squander their
time going down the same old traditional
paths, only to end up with disappointment
instead of a hoped-for loan. Situational
lenders can negotiate better terms, and we
can insure that your money will arrive on
time as promised, that you won’t lose your
deposit by default, that your transaction
will close in a timely manner and that you
will be the owner of the land in question.
We’re quicker in helping you expedite the process. We’re faster in dealing
with the local municipalities. You can
often negotiate better terms (e.g., no prepayment penalties, no brokerage costs,
etc.) and our timely loans can keep you in
line with your projections.
Borrowers and brokers come to situational lenders because of our reputation
Continued on Page 29
10
Saturday, June 23, 2007
GET REAL-TIME PRICING, ELIGIBILITY
DATA AT YOUR FINGERTIPS WITH
NYLX’S INNOVATIVE SOFTWARE
In an industry mired by regulation and compliance requirements, change is typically
slow. However, there are times when a single technological advancement can give any
company a stronger ability to compete.
In point-of-sale pricing and eligibility,
real-time comparative pricing data may
soon be making rate sheets a thing of the
past. Bankers and brokers of all sizes can
access accurate real-time pricing info via
the Internet, and the rewards are staggering.
On-demand pricing and eligibility
technology that actually gives accurate
real-time data and instant comparison
info is no longer fiction. NYLX provides
the ability to compare a variety of
lenders, as well as different scenarios,
using up-to-the-minute pricing data.
Individual customer data can be matched
with lender guidelines, price adjusters
and matrices to display fully adjusted
rates and prices, and the system ranks the
results to maximize transaction profits. In
successfully filling that need within the
market, NYLX is actually changing the
perception of pricing engines.
“There are a lot of pricing engines
out there, but very few do a good job,”
says Kevin Roczey, President of
ProLender Solutions. “NYLX enhanced
the credibility of pricing systems because
they are one of the few success stories.”
In a market where pricing info is
so critical, a tiny mistake could cost
METROCITIES MORTGAGE COMPLETES
STRATEGIC INVESTMENT, ANTICIPATES
ENHANCED PRODUCTS & TECHNOLOGY
Metrocities Mortgage, LLC, a national
leader in the residential mortgage lending market, earlier this month
announced the completion of a strategic investment from Sterling Partners,
a private equity fund group based in
Chicago and Baltimore.
Metrocities, based in Sherman Oaks,
Calif., will become part of Prospect
Mortgage Company, LLC, a Sterling
Capital Partners portfolio company, and
will continue to operate under the
Metrocities name. Terms of the transaction were not disclosed.
The Metrocities investment is an
early action of newly formed Prospect
Mortgage, marking Sterling Partners’
entrance into the mortgage industry.
“We chose Metrocities as a platform
company because of its highly regarded joint venture program, talented
management team and positive company culture,” says Mark Filler, Prospect
Mortgage’s CEO.
Filler cited the Metrocities relationship as representative of Sterling’s
long term strategic investments in a
variety of service industries, most
notably educational firms such as
Sylvan Learning Systems.“Sterling
Mortgage Daily News
thousands. Until a company actually
implemented a robust accurate pricing
engine in the mortgage market and other
companies saw that it worked, many brokers and bankers didn’t believe the idea
of real-time pricing and comparison
could actually become a reality.
“You have to go above and beyond to
do this (pricing) well, and that is one of the
key things that really sets NYLX apart,”
Roczey says. “They understand the importance of accurate information.”
ProLender Solutions partners with
NYLX to provide its clients with a tool
that increases their volume of business and
boosts profitability. So they can spend
more time originating loans and less on
pricing and administrative functions.
Many advocates of the pricing engine
didn’t even know that this type of software
existed a few years ago. Now it is changing the way they do business every day.
Real-time pricing data can now be viewed
instantly, but NYLX had a much longer
journey to get to this point. The product
actually started in 1999, but the market
was not yet ready for a new approach to
pricing and eligibility.
By 2004, a variety of new loan products were changing the market, making
brokers’ and bankers’ jobs more complex,
and driving the need for better pricing and
eligibility technology. That is when sales
took off. Within two years, NYLX had
dominated the on-demand pricing and eligibility market and changed the way many
bankers and brokers were doing business.
Customers realized that this single
change in how their employees gathered
and received information translated into
hours of additional productivity. But that
isn’t the only benefit. Real-time data gives
brokers and bankers the ability to react as
rates change throughout the day. They
become more proactive and gain the ability
to increase the profit on individual loans.
NYLX’s technology has put that ability into
the hands of every banker and broker.
invests in innovative, entrepreneurial
companies whose founders are committed to running the business with
additional capital,” said Filler.
“Metrocities fits our profile perfectly.”
Paul Wylie, founder and CEO of
Metrocities, will be an equity participant in Prospect Mortgage. Wylie said,
“I am excited about the potential synergies
between
Sterling
and
Metrocities. This recapitalization
allows us to enhance all areas such as
technology, marketing and loan products. It gives us new resources to continue our growth in 2007 and beyond.”
lender based on unique loan programs
and
successful
joint
ventures
with key real estate companies, credit
unions, financial advisor/business
management companies, builders
and other affinity groups. Loan
officers have access to more than
7,000 loan programs and proprietary
search engine technology enabling
them to find the best loan products
for their clients. Metrocities is
renowned for its in-house lending
expertise, wide selection of loan
programs and Heroic Customer
Service TM . To learn more, visit
www.metrocitiesmtg.com.
Metrocities Mortgage
Established in 1989, Metrocities is
ranked in the top one percent of residential mortgage lenders nationwide
for closed loan volume. Metrocities
has become a leading nationwide
Sterling Capital Partners
Sterling Capital Partners is an affiliate
of Sterling Partners, a private equity
Continued on Page 29
INTERFIRST NOW GIVES BROKERS
CHOICE BETWEEN LP AND DU
AT THE TIME OF SUBMITTING LOAN
FITCH RATINGS AFFIRMS GENWORTH
MORTGAGE’S ‘AA’ INSURER FINANCIAL
STRENGTH RATING FOR N.C. COMPANY
In February, InterFirst launched a service enhancement that allows its brokers
to now choose between LP and DU
when submitting loans, as opposed to
having to resubmit them if they change
from LP to DU or vice-versa.
This capability for brokers to choose
LP or DU right as they submit loans is
unique to InterFirst, and it saves users the
time and inconvenience of having to resubmit loans if they are rejected later by
Freddie Mac or
Fannie Mae.
In the few
months since this
service
feature
launched,
hundreds of brokers
have enjoyed the
convenience it has
brought them.
Jim Gallup, a
broker from San
Ramon,
Calif.,
certainly got satisfaction from the
new service enhancement. Not only did he
Fitch Ratings affirms the ‘AA’ insurer
financial strength ratings of the mortgage
insurance subsidiaries of Genworth
Financial, Inc.. Fitch has also affirmed
GNW’s ratings via a separate Rating
Action Commentary. The Rating Outlook
remains Stable.
The ‘AA’ IFS rating for Genworth
reflects the North Carolina company’s
strong excess capital at its current rating
level, good credit performance of the
insured portfolio relative to peers, and
solid financial returns over an extended
period of time.
Moreover, Genworth’s parent,
GNW, is broadly diversified with businesses in life insurance, European
payment protection and international
mortgage insurance. Concerns center on
the impact of the overall housing environment and the rising delinquency
trends within the mortgage insurance industry’s insured portfolios, intense competitive
threats affecting the entire mortgage insurance industry and lower returns in the mortgage insurance industry.
With combined statutory capital of
learn about the LP/DU choice, he
responded to a direct-mail marketing
piece that he’d received about this feature
and won a Fender guitar signed by none
other than the Rolling Stones.
All InterFirst brokers will continue to
be treated like rock stars! The LP/DU
choice service will continue on as InterFirst
Wholesale Mortgage Lending merges activities with its new parent organization,
CitiMortgage, Inc. So soon, this valueadded benefit will be extended
to an even broader public.
For more information,
visit www.interfirst.com/choice
or call 800-540-0157.
Jim Gallup (center) certainly got
some ‘satisfaction’ when his participation in an InterFirst marketing promotion earned him a
new Fender guitar, signed by
The Rolling Stones. InterFirst
Regional
Manager
Dean
Doering (left) and Account
Executive Karen Saporito find
that, with InterFirst’s new
LP/DU choice service enhancement, the brokers can always get what they want.
$2.7 billion at Dec. 31, 2006, including
$305.4 million of policyholders’ surplus
and $2.4 billion of contingency reserves,
Genworth maintains healthy excess capital on a stand-alone basis. Under Fitch’s
proprietary mortgage insurance capital
model, these capital resources comfortably supported both the $23.7 billion of
risk in force within the U.S. mortgage
insurance operation and capital required
by the risk in force of its international
operations at an ‘AA’ IFS rating. GNW’s
U.S. mortgage insurance operations contributed 19.7 percent of GNW’s consolidated operating net earnings while the
international mortgage insurance business contributed 27 percent. Combined,
GNW’s global mortgage insurance operations contributed 46.7 percent of
GNW’s $1.32 billion consolidated operating net income as of Dec. 31, 2006.
The current slowdown in the U.S.
housing market has led to higher
incurred losses for Genworth and the
mortgage insurance industry in general.
Continued on Page 29
22
Saturday, June 23, 2007
MORTGAGE BROKERS WILL FIND
OPPORTUNITIES TO BUILD BUSINESS
DESPITE SLOWING HOUSING MARKET
By Steve Curley, 1st National Bank of
Arizona Mortgage Division EVP, Chief
Administrative Officer
With refinance volume down, home sales
slow and underwriting standards tighter
for nonconforming products, brokers
must expand their repertoire to continue
building their business.
Construction loans and commercial
lending are two ways to reach that goal.
That’s because those sectors do not always
follow standard residential mortgage
trends. For instance, commercial loans,
often restricted by prepayment penalties
and lock-outs, are less sensitive to interest
rates and refinance waves. As a result,
there is plenty of commercial business out
there for the broker willing to understand
commercial lending and how to structure
deals to meet the needs of their borrower.
Many brokers don’t realize they
already have potential commercial mortgage clients. To enter this potentially lucrative sector, just turn to your existing clients
and review the REO section of 1003 forms
to find their other properties. Then determine if you can offer a better interest rate,
cash-out for property upgrades and business
improvements, funds for the purchases of
new properties or more flexible loan terms.
Your existing referral network is another goldmine of prospects. Tap your relationships with real estate agents and contractors
specializing in commercial properties, and
approach banks and credit unions not offering commercial loans. Further, some large
commercial lenders don’t bother with loans
under $2 million. Many would be happy to
refer their customers to you rather than
reject applicants outright. That is exactly the
type of loan that residential brokers are most
likely to encounter.
The complexity of commercial lending might be the biggest challenge. That’s
why it’s important to learn about commercial lending basics and what documentation lenders require. For commercial
lenders, cash flow, or the income a property produces, is a priority. Probe potential
lenders to determine what kind of training,
Web-based tools and incentives lenders
offer to ensure they are going to provide
you with the knowledge needed to successfully close this business.
It is also important to align yourself
with a lender offering a range of programs, including purchase, refinance,
TITLE AGENCIES, JOINT VENTURES
OFFER DISTINCT TRADEOFFS AND
BENEFITS FOR THOSE INVOLVED
By Jim Campbell and Nancy D. Warner,
Title Alliance, Ltd.
We announced this month that Bill
Cotter and the senior officers of Title
Alliance, Ltd. have purchased the company and its subsidiaries.
Title Alliance is the premier creator
of successful, RESPA-compliant affiliated title agencies. This will allow our
management team to focus all our energy
and talent on meeting and exceeding
partner’s expectations.”
Title Alliance Ltd., has seen very
large companies make the decision to go
with a joint venture rather than a title
agency managed on their own, in spite of
having many resources at their disposal,
while much smaller operations have
opted to go the title agency route.
IT’S IMPORTANT TO DEVELOP
A GOOD RELATIONSHIP WITH
YOUR WAREHOUSE LENDER
By David Fleig, founder of Access Lending
So, you’ve just obtained your first warehouse line, and you are enjoying the benefits of selling closed loans to investors via
correspondent relationships. Congratulations, you are well on your way to separating yourself from your competition.
You are making more money, you
have eliminated certain RESPA disclosures on yield spread premiums and you
have more control over document preparation and the loan closing process. You
are improving your service levels and
enhancing your image. All of this is wonderful, but the trick is to keep it that way.
How do you enhance your relationship with your warehouse lender? Here
are tips on managing this relationship,
some pitfalls to avoid, and some pointers
on for navigating challenging times.
Your relationship with your warehouse lender is an important one. They are
providing you with a seven-figure credit
facility! Read your warehousing agreement carefully, understand your compliance obligations. Insure that someone in
your shop is providing monthly financials,
annual audited financials and updated
insurance and state licenses.
Know when loans become stale under
your agreement, the point where your warehouse lender increases the interest rate on
stale collateral, when they expect you to pay
down or pay off loans not yet purchased. Do
you have sufficient cash reserved for such
an event? Be proactive. Don’t make your
lender call you for compliance items or the
Mortgage Daily News
and construction of different property
types. For instance, many commercial
lenders finance standard property types,
such as multifamily and office. Some also
finance less conventional ones like medical buildings, gas stations and hotels. Also
seek lenders that can offer flexible terms
for amortization, loan-to-values, prepayments terms and other key criteria.
Construction-to-permanent
(CTP)
lending can also be a lucrative niche. In a
CTP loan, the homebuyer provides funds
for both the construction and permanent
loan. The builder is advanced funds according to a draw schedule while construction
proceeds, and the loan converts to a permanent loan when the building is completed.
Builders prefer CTP loans because homebuyers take title to the land when construction begins, freeing up the builder’s credit
line for other uses. A CTP loan is also much
less likely to leave the builder with a few
dollars in forfeited deposits and unsold
home. The borrower is financially committed through their loan to owning the home.
Homebuyers also like CTP loans
because it allows them to build their dream
home and make specific trade-offs on what
they want rather than be forced to fit into
one of a builder’s standard model offerings. To ensure the borrower is satisfied
with the loan it is important that your
lender offers long-term locks and interest
rate caps and float down features.
Brokers should also build relationships
with lenders offering Full and Stated
documentation types. Many people that
build high-end custom homes are business
owners or people with significant assets
who manage income based on the needs of
their business or personal tax situation. It is
critical to have a Stated Income documentation type to address the needs of these people. Longer construction terms are another
important consideration so borrowers are
not hit with extension fee after extension
fee. Some lenders can also base the contingency and interest reserve on the lesser of
the acquisition cost or appraisal value.
CTP loans may create special challenges. Homebuyers may be stressed
over paying mortgages for both the current and new home before the current
home is sold. In response, if the homeowner has enough equity, lenders can
create a swing loan that capitalizes interest payments for a period of time.
Lenders can also work with the builder to
structure a loan that postpones interest
payment during the construction phase.
By looking beyond typical loan programs and entering niche areas, such as
commercial lending and CTP loans, brokers can continue to keep their loans
flowing despite an industry-wide slowdown in standard mortgage products.
For more information about the construction to permanent lending and commercial loans offered by 1st National
Bank of Arizona, please visit us online at
www.fnbavenue.com to locate an
account executive in your city.
Since Title Alliance is a joint venture
management company, it has built its
reputation by looking out for its clients’
best interests rather than steering them in
one direction or the other.
The decision seems to revolve around
the focus of the operation that is making the
decision. If a mortgage brokerage is looking
to grow its mortgage business rather than
maintain it, the decision seems to almost
always be to go with the joint venture. That
way, the day-to-day headaches belong to the
title partner who is better equipped from the
experience standpoint to guide the operation
through the inevitable rough spots.
If the operation is aiming at retaining
its place in the market and staying within
its home turf, the decision almost seems
to be to go with the agency and begin
focusing on the title business while maintaining the mortgage brokerage business.
The title business, like the mortgage
business, requires experience, focus and
discipline. There is an old saying, “When
a man with money deals with a man with
experience, the man with the experience
ends up with the money and the man with
the money ends up with the experience.”
That’s true in all businesses! The investment of your time is your most critical
decision throughout life, so invest wisely.
For more information about Title
Alliance and affiliated business arrangements, visit www.titlealliance.com.
story on stale loans.
Here are some ways to avoid pitfalls
in your warehouse lending relationship:
• Keep your lender informed about problems with your loans.
• Meet all the deadlines for providing
compliance items.
• Take responsibility for every aspect of
your loans, regardless of the outsourcing
arrangements.
• Provide investor purchase advices timely
to insure identification of incoming wires.
• Don’t make excessive distributions to
owners, materially altering your working
capital and leverage.
• Avoid getting involved in unrelated
businesses.
integrity. Most lenders will work with
you if you give them full and timely disclosure of a problem. Your lender has the
right to demand payoffs on loans that
become stale beyond the defined limit.
However, many lenders will consider a
partial payoff, provided you have a good
plan for completing the sale of the loan.
• Be realistic about time frames for liquidating stale loans. Missing deadlines
reduces your credibility.
• As personal guarantor, when serious
problems arise, you must provide solutions that may include adding more capital to your company, if necessary.
• Much of your success in maintaining a
healthy and prosperous relationship with
your warehouse lender after the honeymoon is over boils down to knowing and
complying in a timely fashion with all the
terms of your agreement, and being
proactive and straightforward in communicating with your lender.
For more information stop by
booth
615,
visit
www.access
lending.com or call 281-207-7000.
The good news is that you will rarely
have problems selling well documented
and properly underwritten loans. Still,
given enough time and loan volume,
problem loans and other challenges are
inevitable. Here are some pointers for
managing these problems:
Most importantly demonstrate
Mortgage Daily News
Saturday, June 23, 2007
1ST METROPOLITAN MORTGAGE
TURNS TO EDUCATION AS KEY TO
SUCCESS DURING SLOW CYCLES
The last thing on the minds of originators
during slow origination cycles is education. However, a little extra knowledge
can help originators more successfully
survive during those slow cycles while
building a foundation for growth.
“When the market slows down, it is
crucial that originators take that time to gain
market share,” says Daniel H. Jacobs, CEO
of 1st Metropolitan Mortgage. “The best
way to accomplish that is through gaining
the knowledge that will help them learn
what they need to know to be successful
during a shrinking of industry volume.”
Therizo Capital (Con’t. from p. 1)
fee, it certainly has great potential.
Likewise, while some long-standing
churches can go to traditional lenders,
most small to mid-sized churches are
limited in their financing options.
MDN: What would you say is unique
about Therizo Capital?
BW: First, we specialize in financing for
churches and meeting the unique needs of
the faith-based market. Second, we are a
direct funding source to the church market,
not an intermediary, so we can deliver the
capital churches need to grow. In fact, our
team has been involved in more than $800
million in lending to America’s churches—
across denominations, church sizes and
throughout the country.
MDN: How big is the church-loan market?
Quality Home Loans (Con’t. from p. 1)
financing, continue to want access to their
home equity in order to enter the market
for the first time or move up in it.
So, what can we take away from
today’s turbulence that will safely deliver
us to a more prosperous tomorrow? That,
as the game show host used to say, is the
“$64,000 question.”
The answer lies in our existing
strengths. As stress mounted and fear took
over, how many lenders lost their focus on
the very same, key business strategies that
brought them success in the good times?
Numerous business areas have been
impacted adversely by this year’s subprime
fallout. However, there have been numerous
Southwest Securities (Con’t. from p. 1)
“When mortgage brokers become
mortgage bankers, they gain control by
handling their own settlements,” says
Frase. “You can make promises to your
homebuyer without wondering whether
the investor’s closing department will
drop the ball—again.” Frase points out
that brokers who keep chasing the highest price usually find an overwhelmed
closing department on the other end.
If you are a broker considering
becoming a mortgage banker, consider
who’s on your team and whether they have
your interests at heart. For example, the
team at Southwest Securities, FSB teaches
1st Metropolitan, a national broker
with nearly 250 branches nationwide,
recently did just that. During the company’s
annual conference, more than 300 branch
managers and originators had the opportunity to learn tips and techniques from some
of the industry’s brightest professionals.
Todd Duncan, author and trusted sales
trainer, has helped thousands of professionals worldwide. He was at 1st Metropolitan’s
conference to encourage the group to
change the way they approach their everyday business lives. During his discussion,
he gave the group keys to making and
BW: The church-finance market is a $28
billion industry, according to a research
study conducted by Lambert Edwards
Analytics, and expected to grow by 40
percent to $40 billion in 2010. There are
two key factors driving growth. The first
is the increase in church attendance—the
average American church saw its attendance grow 12 percent from 2000 to
2005. The second driver is the proliferation of mega-churches. Mega-churches,
or those with more than 2,000 people,
increased their total attendance by 57
percent from 2000 to 2005, creating the
need for larger sanctuaries and campuses.
MDN: How does Therizo work with
mortgage brokers?
BW: As a national lender as well as a
direct lender, Therizo understands the
important role that brokers play in connecting us to local communities and to the
23
managing goals, which is the key to success
and will jump-start anyone who is experiencing a flatline in their business.
Barry Habib, CEO of Mortgage
Market Guide service, offered his wisdom
based on his more than 20 years in the
mortgage industry. Drawing from his experience, Habib has helped originators
efficiently monitor market conditions,
improve production, manage their pipeline
more efficiently and strengthen their position as a mortgage planner.
“When times get tough, most companies do not invest in their own people,
but the reality is this is the most important time to invest in order to gain market
share,” Jacobs says. “By sharing with our
originators the knowledge and wisdom
that Todd and Barry both possess, we are
demonstrating our commitment to investing in people, branches and the company,
so we can continue to futureproof not
only our company, but also the industry.”
In addition to the guest speakers, 1st
Metropolitan has enlisted the services of
Xinnix, a national mortgage academy. 1st
Metropolitan has scheduled a two-day
leadership and development session for
fifty branch managers to gain additional
experience in originating and leadership.
“There is not enough training in the
mortgage industry,” Jacobs continues.
“We want to ensure that our originators
have every opportunity to gain knowledge that they can share with their colleagues, which will in turn make them
stronger assets to the communities they
serve and ultimately to consumers.”
For more information about 1st
Metropolitan Mortgage, stop by booth
1619, visit www.1stmet.com or call
800-523-7611.
borrowers. I personally used to be a mortgage broker and adamantly commit to protect and reward brokers when they bring us
deals. With all the competition for residential and small commercial deals, churches
are a great way to offer a unique product.
And having Therizo as a partner and
source can give brokers a leg up on this
underserved, but large niche market. Plus,
once a broker brings a church loan to
Therizo, we commit to working on the deal
with that broker exclusively. We’ve sat in
the mortgage broker’s seat and are sensitive to the vital role they play.
faith-based facilities. Again, our team has
participated in the lending of more than
$800 million to churches nationwide across
a wide range of denominations and sizes, so
we know how to get things done and we
understand the nuances of this market.
MDN: What kind of experience does
Therizo have?
BW: The leadership team of Therizo has
decades of collective experience in the
church-lending and faith-based lending
market. In addition to churches, we
also finance schools, colleges and other
corresponding opportunities for not only
overcoming them but capitalizing on them
as well. We learn more from failure than
success, the philosophers tell us. And the
current market swoon is no exception.
Now is the time for us to maintain
critical service levels and pull-through
technologies. It has never been more
important to maximize efficiency and
control waste, making sure to have the
right people in the right jobs—from IT
management to loan-risk control.
Growing more important these days
are our investor/lender relationships. It is
critically important to be on the same page
with investors, as well as keeping our focus
on a handful of key relationship objectives,
including the right product mix, partnership,
reliability, automation (AUS), etc.
brokers best business practices and introduces them to the investors that will do
business with them. “We‘re not an
investor,” Frase points out. “Therefore, our
warehouse program is not designed to
build business for some other part of the
bank. Our independence allows us to give
non-biased suggestions about where and
how you can sell your loans.”
Many brokers fear that they don’t
have enough volume, personnel or experience to handle a new role as a mortgage
banker. Frase says, “That’s rubbish!”
Continuing the theme of children’s soccer, he says everyone should be allowed
to play. A fulfillment company gives you
the ability to rent the expertise you need
file-by-file. A fulfillment company prepares the docs, requests the funds and
completes delivery on your behalf. You
get to learn by watching them and gradually bring the functions in-house when
you feel you are ready. An added bonus is
that when you outsource the work, you
also outsource much of the risk.
When asked about the economics of
warehousing, Frase replies that becoming
a mortgage banker is not a get-rich-quick
scheme. “You will usually make a little
extra revenue, but the real benefit is controlling your service for your customer.”
Frase says, “The most important product
offered by a mortgage originator is consistency. That’s where referrals come from.”
Ensure Proper Safeguards
Needless to say, there must be a diligent
focus on people, products and guidelines,
and processes to minimize risks, as well
as to ensure that the proper safeguards
are in place. We are validated in our decision not to chase the market down over
the past 12 to 18 months, sticking with
the strict quality guidelines established at
and maintained since our founding.
These guidelines and tenets are:
• Quality Home Loans has products that
meet the needs of the difficult borrower
and remains compliant with new,
stricter guidelines and more difficult
underwriting demands.
MDN: What kind of lending does
Therizo do?
BW: Therizo is a direct lender with multiple loan options, including lending for
new construction, building purchases,
renovation/expansion, land acquisitions
and bridge loans/interim financing. We
lend to churches directly, and also partner
with brokers—and we allow broker fees
up to one percent to be included in the
loan amount.
For more information about Therizo
Capital, stop by booth 1110 or visit
www.therizo.com.
• A central tenet for all of us going forward in this market will be to maintain
a comprehensive borrower and asset
review. That means, at minimum,
conducting an exhaustive review of borrowers and assets. This involves using
external tools to rate not only current property value, but trending values as well.
• As lenders and brokers we must insist
on extensive reviews of individual,
actual borrowers and assets to determine loan eligibility.
As lenders leave the business and some
nontraditional products are scaled back,
strong credit quality should serve to give
us a level playing field and a lot of opportunity in the next 18 to 24 months.
Southwest Securities, FSB offers
lines to companies with as little as
$100,000 in working capital. With 15
years of operation through many business cycles, the bank has proven its commitment to its customers. Lines can go as
high as $25 million with paperless fundings and real-time Web reporting.
David Frase’s team and the little
soccer girls will be at booth 1718. You
can go on over, take a shot and find out
which goal is right for you.
For more information about
Southwest Securities, FSB’s National
Mortgage Warehousing Program, call
888-477-3098 or visit www.south
westsecuritiesfsb.com.
Mortgage Daily News
PRBC (Con’t. from p. 1)
MDN: Why did you start PRBC?
MN: Basically, there’s a tremendous
need to help consumers get the credit
they deserve. Today there are from 35
million to 54 million Americans who
either aren’t tracked by the traditional
bureaus or who don’t have a sufficient
number of traditional trade lines in their
bureau reports.
MDN: You recently changed PRBC’s
tag-line from Pay Rent, Build Credit to
Payment Reporting Builds Credit. Why?
MN: We started out as a way for consumers to have their rental payments
show up in a bureau. We’ve since
branched out to incorporate a broader
range of payment types that people make
Mrs. Fields (Con’t. from p. 1)
Greg Berglund, president of Mrs. Fields
Gifts, which ships freshly baked cookies,
brownies and other indulgent delights to
virtually any location nationwide.
MDN: When did you start delivering
your products?
GB: We began a shipping service in 1988 as
a way for Mrs. Fields cookie fans to share
our products with friends and family who
maybe didn’t have a store location nearby.
Since then, we’ve grown from two product
offerings to more than 200. The gifting service has definitely caught on, and we now
ship nearly a million packages a year to
recipients across the country.
MDN: What can you offer customers in
MegaStar Financial (Con’t. from p. 1)
ability to control the loan from application
to funding. Top producers are committed to
the WOW customer service factor, anything
less is unacceptable. The model that
MegaStar created, called SAMI [Service,
Appreciation, Mentoring, Income], gave
top producers exactly what they wanted and
needed—a system that gave them control
from time of application to time of funding,
ease of doing business, mentoring by other
top producers and increased quality of life.
MDN: What do think the future holds for
mortgage bankers?
AP: The past year has resulted in losses for
many mortgage bankers, wholesalers and
Wall Street. The result of this will be a
major push for higher quality and education
Kennedy Funding (Con’t. from p. 4)
in the industry as someone who can help
and who delivers. Usually, creativity is
Metrocities (Con’t. from p. 10)
fund group with more than $2.2 billion
of capital under management. Founded
in 1983, Sterling partners with superior management teams, invests in
companies with strong business fundamentals and leverages the firm’s
Saturday, June 23, 2007
on a recurring basis.
MDN: How can rental and bill payments
help qualify me for a mortgage?
MN: The GSE’s and FHA guidelines
have allowed PRBC data to be used to
qualify consumers without a traditional credit history or applicants who
have thin files but no derogatory history. There are a growing number of
lenders and investors who want to use
bill payment history to supplement traditional measures of subprime borrowers’ default risk.
MDN: What’s the difference between
using a PRBC Report and a NonTraditional Mortgage Credit Report?
MN: There are several. One is the ways
we can obtain and verify the data;
the mortgage industry?
GB: Lots of mortgage companies have
found our services very beneficial to their
business. We have the ability to customize our tins, gift boxes, towers and
baskets with a company logo or message,
and many customers have found that’s a
great conversation starter that often leads
to future business. The delivery person
creates a buzz when they show up delivering something that says Mrs. Fields.
We can also include your business cards
or inserts with our product to make it easier for your clients to pass along referrals.
We work with many companies in the
industry to assist them with their holiday
gifting, as well. In an industry that’s often
driven by word-of-mouth, our products
definitely sweeten the conversation.
standards. Since MegaStar Financial only
hires top producers, who commit to customer service and quality lending practices,
we have investors that are willing to compete for our business. The result is aggressive pricing and unparalleled service.
another is the fact that we’re a repository, not just a credit reporting agency
and a third is the verification procedures we use.
PRBC can obtain and verify data that
comes from the consumer, we call it selfreported data, but we can also obtain
reports of payments made directly from
lenders and service providers, or electronically from the financial institutions
consumers use to pay their bills [e.g.
through their banks’ online bill payment
services]. It’s this last channel for automated bill payment reporting that is
allowing us to grow our database of
prospective borrowers’ bill payment histories so rapidly.
We verify self-reported data using procedures developed in conjunction with the
National Credit Reporting Association
MDN: What sets your business apart
from your competitors?
GB: Unlike many other food gift ideas that
maybe have niche appeal, cookies are universally enjoyed. We also provide a highly
recognized brand and our products are
delivered in creative and fun packaging
that can be used long after the goodies are
gone. And as always, the baked goods
inside are of the highest quality.
MDN: Are you introducing any new
products here at the show?
GB: Yes, we have just developed a
new line of boxes, specifically
designed for customers in the mortgage industry. All of these boxes can
be customized with your logo or the
name of the recipient. There are no
29
and in consultation with the GSEs and
FHA, whose standards for verifications
we meet or exceed.
MDN: Today the GSE’s only recognize
PRBC data when the loans are manually
underwritten. Will this change?
MN: We think so. The GSEs are businesses that want to increase their sales, so it
will be in their interest to clarify the rules
and lower market impediments expanding
originations using this data. All indications are that as lenders and buyers create
more loan performance history around the
data, scoring algorithms and pricing
guidelines based on this information will
be come more sophisticated. This will lead
the GSEs to follow the private mortgage
insurers and investors who are using
PRBC data in automated underwriting
environments today.
set-up fees or minimums on these items,
so it’s perfect for businesses large or
small. In addition, our gifts come with a
free gift card, so you can say just the right
thing to your recipient.
MDN: How do you order with Mrs. Fields?
GB: The process is easy and we have
dedicated business account representatives to help you from start to finish. We
can assist you with artwork set-up, gift
selection, volume discounts and gift-list
management. Our goal is to make gift
giving sweet and simple.
For more information, visit booth 914
to sample cookies and see all the creative items Mrs. Fields has to offer.
You can also visit www.mrsfields.com
or call 888-COOKIES.
AP: Absolutely, here are just a few
things we do differently:
• Closing documents are sent to the title
company a minimum of three days
before close.
• Mandated, 24-hour, in-house underwriting for top producers.
• Control—a system that allows the loan
specialist to process, underwrite, draw
documents and fund loans without
having to go to several departments and
systems to get done.
• Ability for Realtors and clients to log
into the MegaStar systems and check the
status of their loan at any point.
• Accountability through systemcontrolled measurements.
• A system-driven process that automatically notifies Realtors and clients when
key elements of the loan process have
been completed—appraisal, title, underwriting conditions, etc.
•System software that automatically notifies
loan originators to contact current and past
clients on certain triggers, and what to say.
• Once a deal has closed—a system that
automatically sends emails and letters to
clients based on certain triggers.
Examples of the triggers include when
rates hit a certain point, notification that
an insurance renewal date is coming due
and notifications of birthdays.
• Reporting that monitors loan progress and
ensures that all key elements of the loan are
completed in specified time frames.
•
A full-time product specialist that compares MegaStar Financial to other lenders to
ensure our programs are always more competitive than theirs—done daily.
•
Technologically savvy lender on the
leading edge of lending technology;
MegaStar Holdings owns its own information technology company, Take Three
Technology and e-commerce based
MegaStar Real Estate Agents.
what makes the company’s deals work,
and word of mouth is still the best advertising. Kennedy and other private lenders
can close virtually any deal because we
offer flexibility in loan configuration,
specialized attention, and quick turnaround for most any type of property. We
base loans primarily on an asset itself. It
depends on the deal, and where it is. In
the final analysis, we’ll undertake to do
nearly any raw-land property type and
most importantly, we’ll do it quickly.
proprietary methodology for acceleration of growth. Sterling collaborates
closely with entrepreneurs and business owners to achieve the growth
standard in their industry. Sterling
Capital Partners assumes controlling
interests in middle-market companies
through equity investments ranging
from $15 million to over $100 million
per company. Industries of focus
include financial services, education,
healthcare, business services, direct
marketing, specialty manufacturing
and distribution, and technology.
For more information, visit www
.sterlingpartners.us.
MDN: Is there an example of
things MegaStar does differently than
other lenders?
For more information about MegaStar
Financial, stop by booth 429, visit
www.megastarholdings.com, call 88885-FIXED (888-853-4933), or 303321-8800. Or email info@mega
starholdings.com.
Genworth (Con’t. from p. 10)
Higher losses have been driven by a
delinquent loan inventory facing fewer
refinance opportunities, less built-up
home equity and higher average loan
balances, especially for loans of the
2005 and 2006 vintages.