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www.NationalMortgageProfessional.com O
PENNSYLVANIA MORTGAGE PROFESSIONAL MAGAZINE
O DECEMBER 2009
7
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NMP MEDIA CORP
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DECEMBER 2009 O
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
O www.NationalMortgageProfessional.com
Mortgage PROFESSIONAL
P E N N S Y LVA N I A
MAGAZINE
Rep. Fattah Wins House Approval
for Emergency Mortgage Relief Plan
Your source for the latest on originations, settlement, and servicing
Pennsylvania Association of Mortgage Brokers
3800 Market Street O Camp Hill, PA 17011
Phone #: (717) 737-2117 O (888) 311-PAMB
Web site: www.pamb.org
OFFICERS
Rose Stancato
Paul Logan
Jim Mahler Jr.
Paul Krause
Angelo DiCello
Lou Cesare
President
President-Elect
Vice President
Treasurer
Secretary
Immediate Past President
Past President
Council Representative
Larry Frank, CRMS
Asst. Past Presidents Council
Wayne Angelo
Board Member
John Anthony
Board Member
Jami Braafhart
Board Member
Tom Constan
Board Member
George Hanzimanolis, CRMS Board Member
Guss Scirrotto
Board Member
Roland Sorace
Board Member
Fess Stancato
Board Member
Tom Thimmons
Board Member
Tom Walsh
Board Member
Darla Wise
Board Member
Phone #
(610) 430-6901
(800) 295-1020
(717) 391-8086
(717) 269-4957
(724) 334-1999
(570) 824-7811
E-mail
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
(215) 657-9600
[email protected]
[email protected]
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[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Michael D’Alonzo, CMC
(717) 591-3278
(717) 731-9700
(570) 620-9561
(215) 654-0700
(610) 430-6901
(724) 335-7334
(570) 748-3630
REGIONAL LEADERSHIP
North Central Governor
North Eastern Governor
South Central Governor
South East Governor
Western Chapter Governor
(570) 748-3630
Jim Mahler Jr.
John Anthony
Barbara Irwin-Mayercheck
Wayne Angelo
Paul Logan
Guss Scirrotto
Larry Frank, CRMS
Fess Stancato
Paul Krause
George Hanzimanolis, CRMS
Jami Braafhart
Lou Cesare
By-Laws Committee
(717) 391-8086
Communications Committee
(717) 591-3278
Communications Committee
Community Relations Committee
Conference Committee
(800) 295-1020
Education Committee
Assistant Education Committee
Ethics Committee
(610) 430-6901
Finance Committee
(717) 269-4957
Legislative Committee
(570) 620-9561
Membership Committee
(717) 731-9700
Nominating Committee
(570) 824-7811
(724) 335-7334
[email protected]
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COMMITTEE CHAIRS
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Paul Krause of Core Settlement Services is treasurer of the Pennsylvania
Association Mortgage Brokers. He may be reached by phone at (717) 269-4957
or e-mail [email protected].
For more information, visit http://fattah.house.gov.
O DECEMBER 2009
Please be aware that the Pennsylvania Association of Mortgage Brokers has
turned over the billing and collection of your annual dues to the National
Association of Mortgage Brokers as of July 1, 2009, so please pay attention
when you receive an invoice from them.
When you paid your dues in past years to PAMB, we would hold aside the
NAMB portion of your dues and mail them a check at the end of each
month, but that process has been reversed with the NAMB now collecting
and sending us a check at the end of each month.
This transfer of service has saved us a lot of time and expense at a time
when we really needed the help, and this will have no adverse affect on your
membership.
Thank you for your continued support!
A Message From PAMB
Treasurer Paul Krause
Darla Wise
Tom Walsh
Wayne Angelo
Tom Constan
Tom Thimmons
Rep. Chaka Fattah’s (D-PA) $3 billion Homeowners Emergency
Mortgage Assistance (HEMA), already a success at blocking foreclosures for unemployed Pennsylvanians, has been approved by
the U.S. House of Representatives.
The HEMA plan is a major provision in the Wall Street Reform
and Consumer Protection Act (HR 4173), a broad overhaul of
financial markets, which passed, by a vote of 223-202. Fattah
voted for the bill.
Chaka Fattah
The national HEMA plan draws on unused funds in the
Troubled Asset Relief Program (TARP) to provide a $3 billion pool
for home-saving emergency mortgage loans for unemployed and financially distressed homeowners with prime mortgages. It is modeled after the successful
Pennsylvania program which Rep. Fattah, as a 26-year-old state representative,
took the lead in designing and guiding into law in 1983. That program has provided almost 43,000 home-saving loans for jobless, foreclosure-threatened
Pennsylvanians over the past quarter century.
Fattah noted the uneven record of other foreclosure mitigation efforts during
the recent mortgage crisis and cited the Pennsylvania success story as “tried and
true, a successful program, not an untried idea.”
“We have tried everything else,” Fattah declared to the House. “It’s time to get
people’s mortgages paid directly and slow the pace of home losses that are
destroying families and crippling our overall economy. It’s time to think outside
the box about foreclosures—and way past time to keep Americans inside their
homes.”
The Wall Street Reform and Consumer Protection Act, with wide ranging financial reforms, oversight and consumer protection in addition to HEMA, now moves
to the Senate. It enjoys support from the Obama Administration.
The road to enactment for a national HEMA program began with legislation
Fattah introduced in 2003. In the 111th Congress, Fattah’s proposal was incorporated into HR 3766, known as the Main Street TARP Act, introduced by Rep. Barney
Frank (D-MA) of the Financial Services Committee, with Subcommittee
Chairwoman Maxine Waters (D-CA) and Fattah as original co-sponsors. That proposal is now incorporated into the Wall Street Reform bill.
Fattah, in his remarks, thanked Reps. Frank and Waters for their leadership and
support in embracing HEMA. Rep. Waters, in turn, during debate on the bill,
returned the favor.
“We know that these kinds of loans can work. Since 1983, Pennsylvania has run
a very successful loan program, just ask Mr. Chaka Fattah, that has saved 42,700
unemployed homeowners from foreclosure,” said Rep. Waters.
The Fattah HEMA plan has drawn enthusiastic support from stakeholders.
The United States Conference of Mayors wrote all members of the House supporting the Wall Street Reform Act, specifically endorsed Fattah’s proposal as vital
to the interests of cities.
“We also support the authorization of $3 billion in unspent TARP funds towards
foreclosure mitigation,” declared Tom Cochran, president and CEO of the
Conference of Mayors. “The citizens of our cities continue to face losing their
homes. Additional resources for foreclosure mitigation will strengthen the nation’s
economy and our neighborhoods.”
Brian Hudson, executive director and CEO of the Pennsylvania Housing Finance
Agency (PHFA), which oversees the program in the state, said: “HEMAP is at heart
an unemployment program. With unemployment at 10 percent, but showing signs
of improvement, Pennsylvania provides an excellent model for the nation by
allowing homeowners to stay in their homes while jobs are being generated. I join
other Pennsylvanians in thanking Congressman Fattah for his leadership in pushing the Pennsylvania model and for his long history of advocacy for emergency
mortgage relief and affordable housing.”
Under Rep. Fattah’s HEMA proposal, a lender must inform a homeowner in
mortgage default about the HEMA program before the lender can begin foreclosure proceedings.
A homeowner found eligible to participate in the program then makes a partial
mortgage payment to the U.S. Department of Housing & Urban Development
(HUD) instead of the lender. HUD subsequently pays the homeowner’s entire
monthly mortgage to the lender provided that the homeowner has a reasonable
prospect of resuming mortgage payments within 24 months.
“There’s broad agreement that a major threat to homeowners today is loss of their
homes because of unemployment and job distress through no fault of their own. Our
program is a game changer, especially for struggling homeowners in our cities and
rural areas and for minorities. Now we are on the verge of success,” said Fattah.
PA 1
Pennsylvania AG Corbett
Files Lawsuits Against
Four Loan Mod Businesses
Consumer protection
lawsuits have been filed
against four loan modification or “mortgage rescue” businesses, along
with their officers, who
are accused of deceiving
Pennsylvania consumers
Tom Corbett seeking help modifying
their mortgage loans.
“Consumers struggling with high
interest rates or large loan payments
were drawn to these businesses by misleading ads, deceptive websites and false
promises of ‘permanent changes’ to their
mortgages,” said Pennsylvania Attorney
General Tom Corbett. “Instead, many
consumers paid large upfront fees that
resulted in little, if any, relief from their
mortgage problems—leaving them in
even worse financial situations.”
Corbett said the civil lawsuits were
filed by the Attorney General’s Bureau
of Consumer Protection against the following businesses and individuals:
O Foreclosure Awareness Inc. of
Bensalem, Pa. and Boca Raton, Fla.,
along with owner Michael Squillace
O Nationwide Foreclosure Prevention
Center LLC of Williamstown, N.J.,
and its owner Robert P. Valentin
O Best Interest Rate Mortgage Company
LLC of Huntingdon Valley, Pa. and
DECEMBER 2009 O
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PA 2
• Find loan programs
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Westmont, N.J., as well as company
president, Michael J. Diplacido
O U.S. Mortgage Mod LLC of Philadelphia
and its owner, Marc Dambrosio
Corbett said that, in addition to false
or misleading claims about the ability to
actually modify loans, some of the companies named in these lawsuits also
allegedly used deceptive mailings to consumers designed to appear as if the correspondence came from a government
agency or government-related program.
Additionally, the companies did not
provide consumers with state-required
financial disclosure information, failed
to inform consumers about their five-day
right to cancel and accepted upfront fees
without posting the necessary surety
bond or trust account. Other companies
were not licensed by the Pennsylvania
Department of Banking to handle mortgage loans or loan refinancing.
“For most consumers, their home is
their single most valuable asset,” said
Corbett. “Any business involved in credit-related activities, including loan
modification and ‘mortgage rescue’
services, must give consumers clear and
detailed information about the process
before accepting payment.”
Corbett said the consumer protection lawsuits announced are the result
of an ongoing statewide investigation
into loan modification services being
conducted by the Attorney General’s
Bureau of Consumer Protection, along
with the state Department of Banking,
the Pennsylvania Department of State
and the Pennsylvania Housing Finance
Agency (PHFA). Corbett thanked those
agencies for their continued cooperation and assistance.
Foreclosure Awareness Inc.
Corbett said that Foreclosure Awareness
Inc., operating from both Pennsylvania
and Florida, is accused of using deceptive
and misleading advertisements and failing to provide the services that were
promised. The company allegedly boasted on its Web site, “We have helped hundreds of homeowners to gain a financial
edge on what was once a loan gone bad.”
The company also claimed they “can
assist you with a smooth transition to help
save your home,” and added in directmail advertisements, “We help over 90
percent of the homeowners that call.”
According to the consumer protection
lawsuit, Foreclosure Awareness Inc.
failed to deliver the promised services to
consumers, resulting in complaints from
consumers across the country.
Corbett said the company also
allegedly operated as a “credit services
organization” without complying with
Pennsylvania law, including requirements involving contracts, the mandatory five-day right to cancel and the posting of a surety bond or trust account
with the Department of State, and also
failed to register as a telemarketer.
Nationwide Foreclosure
Prevention Center
Corbett said that Nationwide Foreclosure
Prevention Center, using the Internet
address “ceasemyforeclosure.com,” allegedly promised to “negotiate with your lender
to stop your foreclosure and get you the best
loan modification possible.”
According to the consumer protection
lawsuit, the company made numerous
misleading advertising claims, including
deceptive statements proclaiming, “We
are an attorney-based company!” In reality, Nationwide Foreclosure Prevention
Center had only one employee, owner
Robert P. Valentin, who is not an attorney.
Corbett said the company is accused
of not providing services that consumers
were promised, along with failing to
inform consumers of their five-day right
to cancel a credit services contract, not
posting the required surety bond or trust
account with the Department of State,
operating a mortgage loan business
without the required license from the
Department of Banking and conducting
telemarketing in Pennsylvania without
registering with the Attorney General’s
Office.
Best Interest Rate
Mortgage Company
Corbett said that Best Interest Rate
Mortgage Company, operating in both
Pennsylvania and New Jersey, allegedly
used deceptive direct-mail advertisements that were designed to appear as if
they were sent by a government agency.
The company is also accused of misrepresenting the benefits of its services via
their Web site and conducted telemarketing in Pennsylvania without registering with the Attorney General’s Office.
According to the lawsuit, Best
Interest Rate Mortgage Company violated the state’s Credit Services Act by
accepting upfront payments for their
services without having a bond or trust
account in place with the Department
of State. Additionally, the company’s
business practices allegedly violated
the Mortgage Act under which they are
licensed by the Department of Banking.
U.S. Mortgage Mod
Corbett said that U.S. Mortgage Mod
allegedly used misleading mailers and
also made misrepresentations to consumers about its ability to help consumers obtain loan modifications.
Additionally, the lawsuit alleges that
U.S. Mortgage Mod improperly accepted
loan modification fees upfront, without
the required bond or trust account posted with the Department of State, and
engaged in telemarketing activity in
Pennsylvania without registering with
the Attorney General’s Office.
Corbett said that all of the consumer
protection lawsuits seek restitution for
all consumers who were victimized, as
allowed by law, along with civil penalties, fines and other court-ordered relief.
All four lawsuits were filed in
Commonwealth Court, in Harrisburg,
Pa., by Senior Deputy Attorney General
John M. Abel of the Attorney General’s
Bureau of Consumer Protection.
For more information, visit www.attorneygeneral.com.
Five Indicted in Philly Foreclosure
Rescue and Mortgage Fraud Scheme
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Part III: Originating reverse mortgages
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Part V: A new frontier in mortgage lending
“This book combines Atare’s keen insights and know-how with extensive research to create a
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O DECEMBER 2009
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used fraudulent bankruptcy filings for
some of the distressed homeowners to
delay foreclosure until McCusker had
obtained an investor and a mortgage.
Bennett handled the closings for the real
estate transfers, manipulating the information provided to the lender in order
to hide the nature of the scheme until
after the loan was funded.
“Gov. Rendell and I are pleased
when state and federal agencies can
cooperate to protect consumers and
deter improper and criminal activity,”
said Pennsylvania Secretary of Banking
Steve Kaplan. “U.S. Attorney Levy’s
announcement today helps underscore
our respective commitments to consumer protection and the Department
of Banking’s ability to bring financial
expertise to criminal prosecutions.”
“The type of criminal activity alleged
in this indictment is particularly despicable in that it targeted those victims
who were the most vulnerable financially and the most desperate for some
type of assistance to avoid foreclosure
on their properties,” said Special Agentin-Charge Janice K. Fedarcyk of the
Philadelphia Division of the FBI. “It also
represents an affront to the millions of
hard-working Americans who struggle
every day to meet their mortgage obligations and keep their families in their
homes. The FBI is committed to aggressively pursuing those who engage in
schemes designed to illegally profit
from the current economic situation of
many of our fellow Americans.”
The defendants are charged with
conspiracy to commit mail and wire
fraud, mail and wire fraud, and conspiracy to commit money laundering.
Doherty is also charged with bankruptcy fraud.
Defendants Edward and Jacqueline
McCusker, Jeffrey Bennett, and John
Bariana face maximum sentences of
240 years in prison, $3.25 million in
fines, three years of supervised release,
and a $1,200 special assessment.
Defendant Stephen Doherty faces a
maximum sentence of 385 years’
imprisonment, $4 million in fines,
three years supervised release, and a
$1,500 special assessment. These are
the maximum sentences that may be
imposed if the defendants are convicted; the advisory United States
Sentencing Guidelines call for a sentence less than the statutory maximum.
The indictment seeks forfeiture of
the proceeds of the fraudulent scheme,
which is alleged to be approximately
$14.6 million.
This case was investigated by the
Federal Bureau of Investigation and the
Pennsylvania Department of Banking.
It is being prosecuted by Assistant
United States Attorney Nancy Rue.
A 15-count indictment was filed against
five defendants charged in a $14.6 million
mortgage fraud scheme that resulted in at
least 35 fraudulent mortgage loans,
announced United States Attorney Michael
L. Levy, Special Agent-in-Charge of the FBI
Janice K. Fedarcyk, and Pennsylvania
Secretary of Banking Steven Kaplan.
Charged are Edward G. McCusker and John
Alford Bariana, owners of Axxium
Mortgage Inc., McCusker’s wife, Jacqueline,
and Jeffrey A. Bennett and Stephen G.
Doherty, owners of the Doylestown law
firm Bennett & Doherty PC.
According to the indictment, the
defendants targeted financially distressed
homeowners facing foreclosure, falsely
promised them help in saving their
homes, engaged in real estate transactions with straw purchasers, and
obtained dozens of fraudulent mortgages. The defendants took whatever
equity the homeowner had left, funneled
it through various shell corporations they
controlled, used some of it to pay the
new mortgages, and put the rest of the
equity into their own bank accounts.
“Unfortunately, the downturn in the
economy has given rise to unscrupulous
predators looking to cash in on the misfortune of others,” said Levy. “This sort
of fraudulent activity not only preys on
desperate homeowners, it weakens our
financial institutions, destroys neighborhoods by leaving properties abandoned,
and devalues the homes of innocent
neighbors. This office will investigate
and prosecute those who victimize
financially distressed homeowners.”
The indictment alleges that the defendants promised financially distressed
homeowners that they would find an
“investor” who would help them save
their home. The defendants would then
arrange for a straw purchaser to obtain a
fraudulent mortgage and then transfer
of the title of the homeowner’s residence
to the straw purchaser. Using their company Axxium Mortgage, Edward
McCusker and Bariana, along with
Jacqueline McCusker obtained the fraudulent mortgages by submitting false documents to mortgage lenders and making
false claims about the straw purchasers’
finances. The defendants also concealed
from the lender the fact that the homeowner was going to continue to reside in
the home and that the mortgage payments were going to continue to be
made, in part, by the distressed homeowner and funneled through the straw
purchaser. Bariana and Jacqueline
McCusker each acted as straw purchasers
for 10 homes. The defendants also
recruited at least seven other persons to
act as straw owners in order to obtain
additional fraudulent mortgages.
Bennett and Doherty participated in
the scheme at the front and back end.
Doherty solicited and referred distressed
homeowners to Edward McCusker and
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PA 3
Sunday-Wednesday, February 21-24, 2010
Hyatt Regency Washington, D.C.
DECEMBER 2009 O
Why you should attend
The number one reason you should attend this event is the
satisfaction of knowing you are doing your part to ensure that
mortgage broker issues are heard on Capitol Hill. You are the
best spokesperson for our issues. Your participation benefits
you, the industry and your clients as a whole, by strengthening the broker’s presence in the halls of Congress.
PA 4
Key Issues in 2010 Include:
Regulatory reform (RESPA, TILA, HVCC and more!)
The National Mortgage Licensing Act (SAFE Act)
The Consumer Financial Protection Agency (CFPA)
And much more!
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Hyatt Regency Washington on Capitol Hill
400 New Jersey Avenue, NW
Washington, D.C. 20001
Phone #: (202) 737-1234
Toll Free #: (888) 421-1442
Here are a few reasons you should attend:
Lobby Your Representatives on Capitol Hill
“There is no better way to build relationships with your senators and representatives than by attending Lobby Day. Getting face-to-face with the decision-makers who create
important policy is invaluable during such historic and unprecedented times in our industry.”
—Bill Kidwell
Don’t Miss Out on What This Conference Has
to Offer
“If you can only attend one national meeting this year,
make it the NAMB 2010 Legislative & Regulatory Conference. It is a great opportunity to meet with fellow NAMB
members and work together to formulate NAMB’s policy
agenda.”
—Don Fader, CRMS
Be prepared to go to the Hill!
Includes Advocacy 101 training: General synopsis and "Question & Answer" on the best ways to
communicate NAMB's talking points with your congressman in an effective manner.
It’s all happening now!
Visit www.NAMB.org for details!
Branch Manager Business Analyst Business Development Manager
Commercial Loan Officer Corporate Sales Credit Analyst Inside Sales Legal Assistant
Advisor Asset Protection Management Bank President
Client Relationship Manager Client Relationship Specialist Collateral Asset Manager
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Mortgage Loan Processor Mortgage Originator National Account Manager National Sales Rep PC Support Admin
Post Closing QC Expert Processor Regional Vice President REO Closer Retail Branch Manager Retirement Planner Reverse Mortgage Specialist Sales Manager
Loan Administration Manager
Secondary Marketing Analyst
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Underwriter
O DECEMBER 2009
PA 5
PA 6
DECEMBER 2009 O
eSignatures: Be Sure You Know What You Are Getting
By Ed F. Wallace Jr., Ph.D.
4
FHA Insider—Getting the FHA Business: Presentation &
Paradigm By Jeff Mifsud
5
The NAMB Perspective
6
Trend Spotter: Motivating Move-Up Buyers
8
By Gibran Nicholas
Jr., MAI, SRA
11
Ask Brian By Brian Sacks
13
NMP Mortgage Professional of the Month: Julio de
Cardenas, Executive Vice President United Northern
Mortgage Bankers Ltd.
14
Scenes From NAMB/WEST 2009
16
Value Nation: Challenging the Appraisal By Charlie W. Elliott
Regulatory Compliance Outlook: December 2009—New
Good Faith Estimate and HUD-1 Settlement Statement
By Jonathan Foxx
COM
MER
CIAL
REVE
R
MOR SE
TGA
GES
RESI
DEN
TIAL
TECH
NOL
OGY
TREN
DS
MAR
KE
SALE TING/
S
SETT
LE
SERV MENT
ICES
17
18
The Secondary Market Overview: Government
Intervention By Dave Hershman
19
SAFE Smart … Testing, Education and Licensing: Era of
the Mortgage Professional By Paul Donohue, CRMS
19
HVCC Awoken in the City That Never Sleeps
By Eric C. Peck
24
Forward on Reverse: HECM at 20: Leaders and Pioneers
in U.S. Reverse Mortgage Series (IV) … The Reverse
Quarterback From Wall Street By Atare E. Agbamu, CRMS
26
A View From the “C” Suite By David Lykken
28
Your Game Plan to Social Media Success By John Seroka
36
Residential and Commercial: Working Together
36
38
How to Gain New Clients in a Volatile Market
By Dr. Kerry L. Johnson, MBA
39
The Art of Building Strategic Business Alliances in Today’s
Challenging Economy By Greg Perrine and Tim Markel
40
Knotworking: Beyond Networking By Laura Lynn Burke
41
MAIN STREET
62+
DECEMBER 2009
Cultivating Your Relationships By Nat Hardwick
MAIN STREET
By Christopher G. Brown
By William Pape, MSFS, CMC
MAIN STREET
www.NationalMortgageProfessional.com Mortgage Foreclosure Predictions for 2010
ORIG
INAT
IONS
SECO
NDA
RY
SERV
ICIN
G
COM
PLIA
NCE
PAG
E#
EXPLORER
NMP
1
December 2009
Volume 1 • Number 8
Mortgage PROFESSIONAL
N A T I O N A L
MAGAZINE
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Eric C. Peck
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(516) 409-5555, ext. 312
[email protected]
Andrew T. Berman
Executive Vice President
(516) 409-5555, ext. 333
[email protected]
Domenica Trafficanda
Art Director
[email protected]
Karen Krizman
Senior National Account Executive
(516) 409-5555, ext. 326
[email protected]
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MO
Building relationships
The fact is … if you reading this, you’re probably one of the remaining mortgage professionals who has
done a great job at building and maintaining relationships. This could be with your account executives,
warehouse line rep, referral partners, or just about anyone who can help you with your business. I have
always looked at building relationships like building equity. Assuming normal market conditions, that
equity will continue to rise as long as you maintain it with care and nurturing. In this issue, you will have
the chance to learn a number of ways to build these relationships through various channels, including
social networking and the Internet, traditional networking, working with commercial brokers, and putting
customer service at the forefront to gain new clients through quality referrals.
At NAMB/WEST, Fred Arnold told the group about carving out 10 min. a day to just e-mail something
personal to your contacts. It could be a joke, photo, story or anything that is not directly related to your
business, but no matter the message, it is your personal message … on that you took the time to construct
and send out in order to keep those existing relationships ongoing and foster new relationships.
This month’s Mortgage Professional of the Month …
This month, we had the chance to meet with Julio de Cardenes, executive vice president of United Northern
Mortgage Bankers Ltd. Julio started in real estate at the age of 18 and soon found a love for the financing side
of the business. His training was as hands-on as you can get. With little formal industry education, he started to learn the ins-and-outs of the mortgage business and his mentors had the confidence in him to generate a pipeline of loans by actually doing loans (as opposed to hours upon hours of classroom training). His
growth as a mortgage professional was a direct result of becoming an FHA expert and helping to train thousands of mortgage professional on how to structure loans and build relationships with referral partners.
Sincerely,
RTGAGE PRO
NMP
NATIONAL
DECEMBER 2009 ARTICLE SUBMISSIONS/
PRESS RELEASES
To submit any material, including articles and press
releases, 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 the
month prior to the target issue.
If you haven’t heard, this year’s NAMB/WEST was a huge success. It kicked off with a
cocktail party with a great rock and roll band featuring Colorado Association of
Mortgage Brokers Past President Douglas Braden.
While I would normally NEVER suggest putting an economist at the first session in
the morning in Vegas, however, when it’s Texan Dr. Ted C. Jones (director of investor
relations, Stewart Information Services Corporation), it’s a good idea. His energy and
interaction with the audience is just as powerful as any cup of coffee I have had. The
proof is that when Dr. Ted C. Jones asked the crowd, “How many of you feel we are in
a housing recovery?” almost the entire crowd gave a resounding, “No!” to which Ted concurred. Ted shared
with us that, as part of the overall economic recovery, the next “36 to 48 months, gas will be at $5 per gallon.” And, the “30-year fixed will hit seven percent in 2010.”
That was followed by NAMB’s Government Affairs Team of NAMB President Jim Pair, Government Affairs
Committee Chair and Past President Harry Dinham, Denise Leonard and Chief Executive Officer Roy DeLoach.
“Net worth requirements will turn a lot of mortgage bankers into brokers,” said DeLoach at this session.
“HUD didn’t want to be in the business of approving brokers. That job will be pushed to the lenders.”
Later on, when talks about the SAFE Act came up, Denise Leonard reported that North Carolina mortgage loan officers (MLOs) will be required to have a score of 720. Denise stressed the importance of the
states keeping NAMB aware of any developments like this.
Later in the day, we had the chance to hear Ginger Bell (who, by the way, did a great job of coordinating the conference speakers), along with Theresa Ballard, president of BFO Solutions and Ken Perry, president of Broker Knowledge, present a practical overview of the SAFE Act, MDIA, HVCC, Red Flags and other
regulatory updates.
The day continued with more powerful sessions, including an insider’s look at FHA, provided by Nancy
West from HUD, and a closer look at VA loans, provided by Debra Paiva from the U.S. Department of
Veterans Affairs.
The 2009 NAMB/WEST education sessions wrapped up with two very powerful sessions. One featured three
of the industry’s best sales coaches, Ron Vaimberg, Rene Rodriguez and Fred Arnold, sharing the secrets to
their success. The other session was one of the most innovative sessions I have seen at a mortgage conference in a long time. NAMB hosted a “speed dating-style” event, where participants had the opportunity to
visit with reps from the industry’s top companies in a fast-paced, “get to know you” networking session.
Day two of NAMB/WEST’s education started off with a social networking seminar presented by Mark
Madsen and Jason Berman. I get into a more detailed account of their session on page 7 of this issue in
my communications article in “The NAMB Perspective” column. Following the social networking session,
Frank Garay, co-founder of Think Big Work Small, shared his thoughts on how to capitalize on video marketing to build relationships. The last education session featured Jeff Mifsud presenting his real world intimate knowledge on the world of FHA.
The day wrapped up with a hugely successful trade show, where the industry’s top wholesalers, affiliated service providers, technology vendors and marketing companies were on hand to help attendees find
new ways to make 2010 a great year.
SSIONAL
2
ADVERTISING
To receive any information regarding advertising rates,
deadlines and requirements, please contact Senior
National Account Executive Karen Krizman at (516) 4095555, ext. 326 or e-mail [email protected].
NAMB/WEST was a HUGE success!
FE
www.NationalMortgageProfessional.com
Jennifer Moeller
Billing Coordinator
(516) 409-5555, ext. 324
[email protected]
A Message From NMP Media Corp.
Executive Vice President Andrew T. Berman
MAG
AZIN
E
National Mortgage Professional Magazine is
published monthly by NMP Media Corp.
Copyright © 2009 NMP Media Corp.
Andrew T. Berman, Executive Vice President
NMP Media Corp.
The National Association of
Mortgage Brokers
National Association of Professional
Mortgage Women
7900 Westpark Drive, Suite T-309 McLean, VA 22102
Phone: (703) 342-5900 Fax: (703) 342-5905
Web site: www.namb.org
P.O. Box 140218 Irving, TX 75014-0218
Phone: (800) 827-3034 Fax: (469) 524-5121
Web site: www.napmw.org
NAMB Board of Directors
Officers
President—Jim Pair, CMC
Mortgage Associates Corpus Christi
6262 Weber Road, Suite 208 Corpus Christi, TX 78413
(361) 853-9987 [email protected]
President-Elect—William Howe, CMC, CRMS
Howe Mortgage Corporation
9414 E. San Salvador Drive, #236 Scottsdale, AZ 85258
Vice President—Michael D’Alonzo, CMC
Creative Mortgage Group
1126 Horsham Road, Suite D Maple Glen, PA 19002
Secretary—Penny Fagan, CRMS
P. Fagan Mortgage Inc.
222 East Moulton Street Decatur, AL 35601
Treasurer—Don Frommeyer, CRMS
Amtrust Mortgage Funding Inc.
200 Medical Drive, Suite D Carmel, IN 46032
Immediate Past President—Marc S. Savitt, CRMS
The Mortgage Center
115 Aikens Center, Suite 20-B Martinsburg, WV 25401
Directors
John Councilman, CMC, CRMS
AMC Mortgage Corporation
2613 Fallston Road Fallston, MD 21047
Olga Kucerak
Crown Lending
8700 Crown Hill Boulevard, Suite 804 San Antonio, TX 78209
Walt Scott
Excalibur Financial Inc.
175 Strafford Avenue, Suite 1 Wayne, PA 19087
Senior Vice President
Sharon Patrick, MML, CMI
(386) 985-1620
[email protected]
Vice President/Northwestern Region
Jill M. Kinsman
(206) 344-7827
[email protected]
Vice President/Western Region
Tim Courtney
(760) 792-5620
[email protected]
Vice President/Southeastern Region
Jessica Edmonston
(919) 414-3028
[email protected]
Secretary
Laurie Abisher, GML, CMI
(661) 283-1262
[email protected]
Treasurer
Kay Talley, MML
(919) 846-4294
[email protected]
Parliamentarian
Hulene Bridgman-Works
(972) 494-2788
[email protected]
Vice President/Central Region
Candace Smith, CMI
(512) 329-9040
[email protected]
National Credit Reporting Association Inc.
125 East Lake Street, Suite 200 Bloomingdale, IL 60108
Phone: (630) 539-1525 Fax: (630) 539-1526
Web site: www.ncrainc.org
Board of Directors
President—Judy Ryan
(800) 929-3400, ext. 201
[email protected]
Vice President—Marty Flynn
(925) 831-3520, ext. 224
[email protected]
Treasurer—Daphne Large
(901) 259-5105
[email protected]
Ex-Officio—Nancy Fedich
(908) 813-8555, ext. 3010
[email protected]
Director—Dave Miller
(317) 573-0667
[email protected]
Director—Donald J. Unger
(303) 670-7993, ext. 222
[email protected]
Director—Tom Swider
(856) 787-9005, ext. 1201
[email protected]
Director—Donovan Williams
(714) 638-2855
[email protected]
NCRA Staff
Director—Thomas Conwell
(248) 313-1000
[email protected]
Executive Director—Terry Clemans
(630) 539-1525
[email protected]
Director—Don Goldammer
(661) 398-4700
[email protected]
Office Manager/Membership
Services—Jan Gerber
(630) 539-1525
[email protected]
Director—Sanford (Sandy) Lubin
(805) 481-3155
[email protected]
Legal Counsel—James Sutton
(972) 680-2665
[email protected]
DECEMBER 2009
Don Starks
D.C. Starks Mortgage Associates Inc.
141 South Main Street Bourbonnais, IL 60914
President-Elect
Gary Tumbiolo, CMI
(919) 452-1529
[email protected]
Vice President/Greater Northeast
Region
Colleen-Therese McKeever, CMI
(646) 584-8332
[email protected]
Ginny Ferguson, CMC
Heritage Valley Mortgage Inc.
5700 Stoneridge Mall Road, Suite 150 Pleasanton, CA 94588
President
Liz Roberts-Fajardo, GML
(702) 498-8020
[email protected]
www.NationalMortgageProfessional.com Joe Camarena
The Mortgage Source
10120 Southwest Nimbus Avenue, Suite C-7 Portland, OR 97223
National Board of Directors
3
eSignatures: Be Sure You Know
What You Are Getting
DECEMBER 2009 PENNSYLVANIA MORTGAGE PROFESSIONAL MAGAZINE
By Ed F. Wallace Jr., Ph.D.
4
As current regulations continue to account a number of different factors
change, one topic that has moved to and not just the input of randomly
the forefront among mortgage bankers selected letters and numbers that anyis eSignatures. A normal assumption in one opening an e-mail can enter. A
reference to eSignatures is that any sig- secured and certified eSignature goes as
nature obtained in a legal and binding far as to perform the transaction differface-to-face meeting is comparable to ently for the borrower and co-borrower,
eSignature. However, in the electronic making each signing ceremony indeworld, things are very different.
pendent of the other, while allowing
As can be seen throughout the indus- the lender to know a specific individual
try, the term eSignature is used most often has completed the process.
for three distinctly different items, which
After the eSignature process is completare an acknowledgement, an acknowl- ed, the documentation is sent to a tampedgement with a name being placed on a er-proof eVault for delivery. Under this
page, or a true certified watermarked and type of process, the eSignature is as legal
vaulted electronic signature. Although the and binding as any signature notarized
first two may currently conform to the ini- face-to-face. Because the documents are
tial disclosure regulatory requirements, immediately sent to the eVault, they are
they are not a true legal and
much more secure than
binding signature. An
those going through a
acknowledgement in most
manual process and handcases does not have the
delivered to a lender. From
security built around it,
the eVault, documents can
which, in turn, confirms
be electronically transmitthat the individual completted to the Mortgage
ing the process is actually
Electronic
Registration
the person of record. It simSystems (MERS) for registraply provides a verification
tion or delivered to a secthat an electronic docuondary market investor
ment is delivered to a speciwhich has the assurance
fied e-mail address, or even
the eSigned certified docuthat a person has opened
ments are genuine.
“As the eSignature
the email to review it.
As the eSignature debate
debate moves to a
Additionally, acknowlmoves
to a complete
complete eMortgage
edgements may have creeMortgage climate, it is vital
climate, it is vital
dentials built into the
that companies understand
that companies
delivery mechanism that
the difference between an
understand the difrequires the recipient to go
electronic acknowledgeference between an
through a simple process
ment and a true eSignature.
electronic acknowlto open the documents,
Choosing the wrong elecsimilar to buying tickets edgement and a true
tronic source may result in
online to an event. In
legal and monetary probeSignature.”
either case, the actions do
lems due to lack of adhernot certify that the individual obtaining ence to federal, state and local statues, as
the information is, in fact, the person of well as investor requirements surrounding
record, only that someone is using the the electronic signature process.
computer and opened a file.
A true eSignature has a very secured Ed F. Wallace Jr., Ph.D. is the chief integraprocess. This process is transaction-spe- tion officer for Docu Prep Inc., a nationwide
cific, borrower-specific, and certifies that provider of closing documents and initial
each borrower is in fact the person of disclosure services, including secure elecrecord. This certification ensures compa- tronic delivery tools, loan analysis testing,
nies that the information they have and dynamic selection of documents, bar
transmitted is being received, reviewed, coding, secured and certified eSignatures
and signed by the actual borrower or co- and eMortgages via LOS interfaces, Web
borrower and not another member of services and standalone systems. He may be
the family or unrelated individual.
reached by phone at (801) 574-2919 or eA true eSignature process takes into mail [email protected].
HUD to exercise restraint
in RESPA enforcement
The U.S. Department of
Housing
&
Urban
Development (HUD) has
announced that for the
first four months of
2010, the staff of the Mortgagee Review
Board (MRB) will exercise restraint in
enforcing new regulatory requirements
under the Real Estate Settlement
Procedures Act (RESPA), due to take full
effect on Jan. 1. The MRB has instructed
its staff to exercise such restraint in considering an action against Federal
Housing Administration (FHA)-approved
lenders who have demonstrated that
they are making a good faith effort to
comply with RESPA’s new requirements.
In addition, HUD is asking other federal and relevant state enforcement
agencies to exercise the same 120-day
restraint in enforcement for non-FHA
originators and other settlement service providers who demonstrate the
good faith effort to implement RESPA’s
new rules. In determining whether a
mortgagee has made a good faith
effort, MRB staff will consider whether
the mortgagee has relied on the new
RESPA rule and other written guidance
issued by the Department, and the
extent to which the mortgagee has
made sufficient investment and commitment in technology, training, and
quality control designed to comply with
the new rule.
“We will work with those who are
making an honest effort to work with us
as we implement these important new
consumer protections,” said HUD
Secretary Shaun Donovan. “While we
will not delay implementation of
RESPA’s new requirements, we are sensitive to the concerns of the industry as
it integrates these new rules into their
day-to-day business practices.”
On Jan. 1, 2010, HUD will require
that lenders and mortgage brokers provide consumers with a standard Good
Faith Estimate (GFE) that clearly discloses key loan terms and closing costs.
Closing agents will also be required to
provide borrowers a new HUD-1
Settlement Statement that clearly compares consumers’ final and estimated
costs. The new RESPA rule became
effective on Jan. 16, 2009, but provided
a one-year transition period for the
mortgage industry to incorporate these
changes. HUD will continue to work
with the mortgage industry during this
period, including providing a comprehensive set of frequently asked questions (FAQs) on its Web site.
For more information, visit www.hud.gov.
President Obama
establishes interagency
Financial Fraud
Enforcement Task Force
U.S. Attorney General Eric
Holder, Treasury Secretary
Tim Geithner, Department of
Housing & Urban Development
(HUD) Secretar y Shaun
Donovan, and Securities and Exchange
Commission (SEC) Chairwoman Mary
Schapiro have announced that
President Barack Obama has established by Executive Order an interagency Financial Fraud Enforcement Task
Force to strengthen efforts to combat
financial crime. The Department of
Justice (DOJ) will lead the task force and
the Department of Treasury, HUD and
the SEC will serve on the steering committee. The task force’s leadership,
along with representatives from a broad
range of federal agencies, regulatory
authorities and inspectors general, will
work with state and local partners to
investigate and prosecute significant
financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims.
The task force, which replaces the
Corporate Fraud Task Force established
in 2002, will build upon efforts already
underway to combat mortgage, securities and corporate fraud by increasing
coordination and fully utilizing the
resources and expertise of the government’s law enforcement and regulatory
apparatus.
“This task force’s mission is not just
to hold accountable those who helped
bring about the last financial meltdown, but to prevent another meltdown from happening,” said U.S.
Attorney General Eric Holder. “We will
be relentless in our investigation of corcontinued on page 10
$85
room
rat
lable e
Avai
Face the Future
with Knowledge
attend the
27 Annual Regional Conference of
Mortgage Bankers Associations
March 14 - 19, 2010
th
Getting the FHA Business:
Presentation & Paradigm
ence when I say that many LOs get into
an office, establish great rapport with
the agents, and give a great presentation. They feel great and on top of the
world, but then fail to follow up effectively because other things come up.
Whether it’s a bunch of refinances,
other referrals or any other legitimate
distractions, the bottom line is that if
you allow other things to distract you
from following up, then the seeds you
planted at the presentation—along
with those important relationships (and
future referral business) —will not bear
fruit.
“In the last five years alone, there
have been more than 1,000
changes to FHA loan programs!”
I would like to offer a Five-Step
Paradigm you can follow to help you
develop FHA business through presentations:
Our 2010 Commercial Property Program features: General
Session: A Market Perspective from Seasoned
Industry Leaders - Panel I of our General Session will
cover Office, Retail, Fannie Mae and Freddie Mac,
Panel II will speak to Recreating the Capital Markets:
The New Paradigm
Our Afternoon Session deals with Workouts on
Commercial Loans: How to Handle a Commercial
Loan Portfolio in a troubled market: How are the
Banks handling Current Market Issues?
Tuesdays Session features a panel entitled Unlocking
pension fund capital followed by a Lenders Panel
Come hear about the concepts on how business can be done
in the new credit underwriting cycle. The panel will share with
you their vision and underwriting guidelines as to how they are
closing deals in this unpredictable marketplace. The lenders
will be in the house on Tuesday morning, will you?
Enjoy lunch in our Commercial Property Exhibit Hall
New for 2010 - Our Opening Residential
Networking Cocktail Reception on Tuesday Evening
is in the Exhibit Hall. We’ll start this year’s conference off
with a BANG at our Grand Opening Reception on the Exhibit
Hall Floor!
Residential Program Highlights
Our General Session will look at The Future of
Mortgage Finance: Making a Profit in the Current
and Future Markets.
Enjoy lunch in the Exhibit Hall and meet with your
colleagues and gain valuable face time with your clients
Wednesday afternoon our Regulators Roundtable
feature Regulators from NJ, PA, NY and MD as well as NMLS
Representatives.
Enjoy our Second Cocktail Reception sponsored by:
continued on page 10
Thursday morning the Information Exchange experts will
be seated at roundtables, which will be identified by a sign
at each table, available for individual or group exchange on
their respective topics.
Also in the program: Federal Law update; Special
Speaker lunch on Thursday and much more!
SAFE Education will be provided at the 2010 Regional
Conference on Tuesday, Thursday and Friday.
For Registration and Exhibit Information
visit www.mbanj.com
DECEMBER 2009
2. Start with five real estate offices in
areas that will bring you your ideal
buyers.
I got my FHA start in inner city Detroit
in the mid-1990s when the auto companies were doing well and buyers
could easily qualify. I had to cultivate
10 leads to close one loan. After time,
that ratio changed to 30 leads per one
loan closed. I had to find business
elsewhere to bring that ratio down. If
you’re not sure who your ideal buyer
is, you need to make that determination before you start your campaign.
Call each office, ask to speak to the
manager, and then talk about your
1. Establish a series of three 15 min.
FHA presentations you can offer to
real estate offices.
Here are some ideas: “The 3 Things All
Realtors Must Know About FHA Buyers,”
“How to Avoid the Top Three Mistakes
Realtors Make When Writing Purchase
Agreements,” and “How to Sell Three
More Homes in the Next Three Months.”
In each presentation, include the guides
you feel will benefit your agents.
Commercial Property Highlights
www.NationalMortgageProfessional.com I’ve been asked many times by loan
officers just how to develop Federal
Housing Administration (FHA) business.
My patent response is: “You have to
brand yourself as an FHA specialist, get
out there and give FHA presentations to
your FHA referral sources, and then, follow up.”
If you are proficient in the basic FHA
guides and want FHA business, you
need to make yourself the resource for
FHA information. Remember, one of
the biggest burdens a real estate broker
has is providing useful and effective
training to their agents. The FHA guides
are so vast and change quite often,
even we loan officers have a hard time
keeping up. What do you think that
means for the overall real estate community? In the last five years alone,
there have been more than 1,000
changes to FHA loan programs! Keeping
up with FHA is hardly the priority of a
Realtor! And yet the more knowledge
they have, the more it helps their business. That’s where you, the FHA information source, come in.
Real estate agents need some catching up on FHA, and they need you to
help them. Unfortunately, many loan
officers feel they lack the requisite FHA
knowledge to go out there and do FHA
presentations. I have to tell you that if
you know the basics, then you start presenting the basics. Agents don’t need to
become FHA underwriters, they just
need the FHA information that can help
them add to the value they can give
their clients. As you learn more guides,
go out and present them to your
agents. Over time, you will become an
expert and a valuable resource to as
many agents as you can effectively
manage in your database.
The crucial factor in being successful
in growing your business through presentations is the paradigm you establish. The paradigm I’m referring to is
the pattern of steps you take after you
walk out of an office following your
FHA presentation. This is where many
LOs drop the ball … by failing to implement a post presentation system (PPS).
But this is where your referral base and
your income stream is at. Now, unfortunately I speak from personal experi-
Trump Taj Mahal Casino Resort, Atlantic City, NJ
5
For more information on the National Association of Mortgage Brokers, visit www.namb.org.
We Will Weather This Storm
A Message From NAMB President Jim Pair, CMC
6
Like many of you in this time of unprecedented financial turmoil
for our industry, I have wondered whether or not we as mortgage
brokers will survive. And, if we do, what does our future hold?
My answer to the first question is a resounding, “Yes!” There are
many reasons that the mortgage broker will survive. First and foremost, the mortgage broker fills an important role that the consumer does not receive from any other channel of distribution. The mortgage
broker develops a unique relationship with the consumer, while other channels
of distribution are more interested in producing a volume of loans each month
and will not (or cannot) take the time to listen and work with the consumer to
achieve their dream of homeownership. The mortgage broker is willing to
spend the time necessary to work closely with the consumer who may have
credit issues, or perhaps suggest what steps they can take to accumulate the
necessary funds to purchase a home. The mortgage broker is available to the
consumer, seven days a week, 24 hours a day … a service other channels of distribution do not provide.
Mortgage brokers are innovative and creative entrepreneurs. We are the
ones who began pre-qualifying and pre-approving the consumer in an effort
to speed up the process of shopping and purchasing a home. This saves the
consumer time and allows the consumer to receive preferential treatment
from the seller. A real estate agent or builder is now able to spend more
quality time with a consumer knowing what price range in which they are
qualified to buy. This is an extremely valuable service for the consumer, the
real estate agent and the builder that was not being provided by other channels of distribution.
The mortgage brokers who have survived the last few years and are members
of their state and national association are the true professionals in our industry.
These professional brokers subscribe to a code of ethics and best business practices. Many of them have obtained their certification and promote the National
Association of Mortgage Brokers Lending Integrity Seal of Approval. All of this sets
us apart from other originators and gives the consumer the confidence to work
with a mortgage broker.
Another question many of you are asking is, “How will we be compensated
in the future?” I believe our association will be able to protect the way in which
we are compensated. We will still be able to assist the consumer with their
upfront costs and be fairly compensated for the services we provide. If, for
some reason, we are unsuccessful in protecting the way brokers are currently
compensated, there are options open to us. One option would be to become a
creditor. As a creditor, brokers would be entitled to indirect compensation just
as other creditors. If you choose this option, it would mean added responsibility. You may have to establish a warehouse line or find a wholesale lender who
will provide with that line. This is just one option and I feel certain there will
be several others.
As I mentioned earlier, mortgage brokers are innovative and creative. There is
a sailor’s saying that goes like this, “We cannot direct the wind, but we can adjust
the sails.” That is who we are and what we do and the main reason the mortgage
broker will be here in the future.
I want to wish you and your family a very merry happy holiday season and a
prosperous New Year. Thank you for the support you give to your state and national association. The year 2010 will be a better year for us all.
We will weather this storm.
Jim Pair, CMC is with Mortgage Associates Corpus Christi and is president of the
National Association of Mortgage Brokers. He may be reached by e-mail at [email protected].
Certification? Certainly!
Thankful
A Message From NAMB Certifications Committee
Chair Pava J. Leyrer, CMC, CRMS
It is December, and our thoughts now turn to holidays as we are often
side-tracked by many things this time of year. We are busy changing
clocks, changing our wardrobe (well most of us anyway), and especially in our industry, changing our regulations and laws. The media does
not have negative stories about us every five minutes, but our regulators have not forgotten how to get media attention using consumer
protection as the focus.
The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is in full
swing for most states and many have, or are currently, adapting changes to comply with licensing and the national registry requirements.
You are probably wondering why I would title this article “Thankful” with
the lead in I just mentioned. I am thankful for the opportunity to still provide
the knowledge and expertise my community needs. I am thankful I obtained
my National Association of Mortgage Brokers certifications several years ago
which helped me be more prepared for the licensing we are now going
through. I am thankful that I belong to an association (NAMB) that cares about
my business and profession by trying to be proactive with legislation and
information.
As the month and 2009 ebb to a close, look at what you are thankful for and
let those around you know. Take a moment to look into areas, such as certification, that will benefit your professional status and knowledge. Have a great 2009
holiday season!
Pava J. Leyrer, CMC, CRMS, is president and owner of Heritage National Mortgage
Corporation in Grandville, Mich., and Certifications Committee chair for the
National Association of Mortgage Brokers. She may be reached by phone at (616)
534-4993 or e-mail [email protected].
The Credit Corner
Who Moved My Credit?
A Message From NAMB Credit Scoring Committee
Member Dave Wheeler
The last few years were full of “change” for our industry, but thankfully, credit scoring hasn’t been one of them. “What” you say? “But I
read somewhere that scores were completely different now. What is
going on?”
Since 2006, there have been many announcements about new
scoring models that are competing for acceptance in the mortgage
space. Quite a few entities need to put their seal of approval on a scoring model
before we can use it, including the rating agencies, Wall Street, Fannie Mae,
Freddie Mac, the credit bureaus and our lenders. There are also a few pending
lawsuits that may need to be settled.
Two scores are currently going through that process, VantageScore and FICO 08,
and neither have been fully accepted. However, both models have had a significant amount of attention in the media. VantageScore has been silent for the past
few months, but FICO 08 is being implemented by the bureaus now, and is receiving attention. These press releases prompt questions from NAMB members about
what has changed already, and what should we expect?
First, only Trans Union and Experian have released their versions of FICO 08. It
is still unknown if and when Equifax will do the same. Secondly, the governmentsponsored enterprises (GSEs), Wall Street and lenders will have to start using it.
That process could take many months or even a few years.
So, what stays the same and what changes? FICO 08 has the same “look and
feel” as the older models. It still uses the same 300-850 scoring range, and
inquiries are still treated the same as we know today. However, it uses newer versions of bureau data, which means that it has more information to draw from
when making its score. Using these new fields allows for some new changes that
make it a stronger model than ever before.
Collections, judgments and tax liens that were originally under $100 are no
longer evaluated by the model. We have been told that subsequent collection
attempts that add to the balance are still overlooked as long as they are reported
correctly.
Balances on revolving accounts are weighed more heavily. You will see a
greater score change as you hold different balances across your credit cards.
Also, a single delinquency will not hold the same negative impact as in previous models.
And lastly, authorized users get their own special treatment using proprietary
logic. Originally, authorized user accounts were reported to be completely
ignored, but the threat of an Equal Credit Opportunity Act (ECOA) lawsuit forced
them to be included. The final result is a revised model that considers spousal
authorized user accounts, but diminishes the impact from “piggybacking” an
authorized user. This is not a complete list of changes, but are the ones that the
Credit Scoring Committee of the National Association of Mortgage Brokers is most
frequently asked about.
Keep this in mind: Credit is an illusion that has purpose. It is only useful in relation to a goal and a time frame. The time frame for FICO 08 may be farther out
than many people need if they are going for a house right now, so stick with what
you learned before. The NAMB Credit Scoring Class is still one of the premier credit education sources for your lending needs. And rest assured that when FICO 08
becomes fully accepted, NAMB will be providing you with the most up-to-date
information.
about. They care about content, traffic and links. They want to be found on page
one of Google searches for terms like “Las Vegas first-time homebuyer.”
Mark suggests subscribing to real estate agents blogs’ RSS feeds via Google
Reader. Using these tools, you can stalk your market’s top real estate agents,
as well as get relevant location and industry news consolidated all in one
location. I can tell you personally that I use Google Reader based on Mark’s
recommendation. It’s very easy to use and a huge time-saver for finding and
reading the latest news. Once you find relevant content, share it with other
agents, post it onto Twitter, link to it on your blog and comment on it. Mark
strongly recommends commenting as a way to build rapport with the blogger
and as a way to generate traffic to your site by way of including your Web
site’s URL.
“Content is King,” was a phrase that was used by offline publishers as they
started to roll out Web sites in the mid-1990s. Mark makes a great point on how
right now, “Content is King” for mortgage professionals. Using your knowledge
base, you have a bank of content that be leveraged to create your own blogs or
blog entries for your real estate agent partners. Having relevant content targeting the areas you focus on will help you get top ranking on Google for the keywords you desire.
After Mark’s presentation, Jason Berman delivered his presentation on Twitter.
First off, Jason is a guy who understands the true value of tools like Twitter and
Facebook. Jason was the first person in the mortgage industry, or even in real
estate, that I heard use the term “Web 2.0,” long before it received mass adoption.
Moreover, he was the first person I knew of that was using social media to build
his mortgage pipeline.
Jason discussed the do’s and don’ts of Twitter. His main message was to be an
“Informer,” not a “MEformer.” He emphasized that optimizing Twitter is possible
through sharing valuable information with your followers, and not just telling
everyone what you are doing.
Both Mark and Jason are great resources when it comes to social media and
social networking. Feel free to contact them by e-mail at [email protected]
(Mark Madsen) or [email protected] (Jason Berman).
Andrew T. Berman is executive vice president of NMP Media Corp. and a member of
the NAMB Communications Committee. You may follow him on Twitter @andrewtberman. He may be reached by phone at (516) 409-5555, ext. 333 or e-mail
[email protected].
Dave Wheeler is a regional account with Credit Plus Inc. is a member of the NAMB
Credit Scoring Committee. He may be reached by phone at (610) 462-3763 or e-mail
[email protected].
We have what you need to get them!!
Viva La Communication!
NAMB/WEST highlights social networking at annual Vegas event
FHA / VA / NEW PURCHASE
A Message From NAMB Communications Committee
Member Andrew T. Berman
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DECEMBER 2009
D A T A
NAMB/WEST was a great success. Sure, we all learned about the
challenges that we are facing when it comes to the new GFE, HUD1 and TIL; potential obstacles created from the SAFE Act and more;
however, there was lots of positive talk about new and exciting
ways to network and find new business. Among the regulatory and
legislative seminars and sessions, NAMB/WEST featured the session, “Social Media: How to Use Facebook, Twitter & Blogging to Build Your
Business.”
The session started off with Mark Madsen, a Las Vegas-based mortgage originator, who shared his systems with a few hundred attendees on how to “Make the
Web work for them, and not work on the Web.” Mark was not talking about
becoming a social networking butterfly, but he described strategies in which you
could use social media to connect to referral partners, such as real estate agents.
Mark defines social media as an online platform that allows us to participate and
social networks as sites that use artificial intelligence to help us connect to other
like-minded users.
Mark started blogging back in 2006, when the local Las Vegas real estate market began to crash. Mark started to closely pay attention to the real estate agents
who were still closing lots of deals, despite of the downturn of the Vegas market.
By observing what these top agents were doing, he started to figured out ways to
help these agents by providing them content, help get traffic to their blogs, and
even offer positive commentary and words of encouragement in the form of blog
comments (which, by the way, also link to your site bringing you traffic and Search
Engine Optimization [SEO] value).
Mark shared with us what social media savvy real estate professionals care
www.NationalMortgageProfessional.com The Communications Corner
5HDFK3UH4XDOLÀHG%RUURZHUV
7
BY GIBRAN NICHOLAS
Motivating Move-Up Buyers
Congress has extended the $8,000 firsttime homebuyer tax credit and expanded it to include a $6,500 tax credit for
move-up homebuyers who have lived
in their primary homes for at least five
out of the last eight years. We have only
a few short months (until April 30,
2010) to generate business with this
incentive. How can we get the maximum benefit out of this?
Number 1: Understand
the homebuyer tax credit
A “first-time homebuyer” is defined
as someone who has not owned a
home in the last three years. If you
are a “first-time homebuyer,” your
tax credit will amount to 10 percent
of the purchase price of your new
home not to exceed $8,000.
8
A “long-time resident” is defined as
someone who has lived in the same
primary home for five out of the
past eight years. If you are a “longtime resident,” your tax credit will
amount to 10 percent of the purchase price of your new home not to
exceed $6,500.
The tax credit does not need to be
paid back if you continue living in
the home as your primary residence
for three years without selling it.
The home must be purchased for
less than $800,000 before May 1,
2010. If you sign a binding contract
to purchase a home before May 1,
you would need to close the transaction before July 1, 2010.
Single taxpayers with incomes up to
$125,000 and married couples with
incomes up to $225,000 qualify for
the full tax credit.
You cannot purchase the home from
a related party, such as a spouse,
direct ancestor or direct lineal
descendent (child or grandchild).
However, you can still qualify for the
credit if you purchase a property
from siblings, nephews, nieces and
others.
If you are married, both spouses
must qualify for the credit.
If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the
total credit taken cannot exceed
$8,000 (or $6,500 for “long-time residents”). Alternatively, if only one of
the unmarried buyers qualifies for
the credit based on their income or
past homeownership status, the
individual who qualifies for the
credit can claim the full credit.
The credit applies even
co-signers on your
mortgage loan.
The credit applies to
one- to four-unit homes,
as long as you live in
one of the units as your
primary residence. You
could live in one unit
and rent out the others.
the credit easy for people to understand. The best way to do this is to give
them a story, example or analogy to
which they can relate. Here’s the analogy that I’ve been using to simplify the
tax credit and make it easy for people
to understand:
A tax credit is kind of like a gift certificate that you can use to pay your
taxes—it reduces your income tax bill
on a dollar for dollar basis. Imagine
paying your bill at IRS Restaurant, and
then later getting an IRS Restaurant
gift certificate. Normally, you would
need to go back to IRS Restaurant and
buy more food in order to use your
if you have new gift certificate. But what if IRS
Restaurant allowed you
to just turn in your gift
certificate for cash?
That’s how the homebuyer tax credit works! All
you need to do is file a
form with the IRS after
you buy your new home
and they will send you a
refund check for $8,000
(or $6,500), just like the
example
of
IRS
Restaurant that allows
“People are not moti- you to exchange your gift
certificate for cash!
vated by dollars and
There are two special
rules that apply to
members of the uniformed services, the
Foreign Service of the
cents, but they are
United States, or
Number 3:
motivated by how
employees of the intelMake it about
dollars and cents
ligence community:
the client’s life
If you have served impact their life. The
People are not motivated
biggest mistake that
for at least 90 days
by dollars and cents, but
loan originators
of the year outside
they are motivated by
of the United States,
how dollars and cents
make is to focus on
you have until May
impact their life. The
the numbers instead
1, 2011 to purchase
biggest mistake that loan
of focusing on the
your home and
originators make is to
client.”
receive the tax credfocus on the numbers
it. In that case, if
instead of focusing on
you sign a binding contract to pur- the client. The way to motivate movechase a home before May 1, 2011, up homebuyers is to demonstrate the
you would need to close on the impact that buying now would have
transaction before July 1, 2011.
on their life, as opposed to the
If you end up selling the new impact of buying later. If they purhome you are buying in connec- chase now, would they be more
tion with government orders for financially equipped to send their
official service, the credit does kids to college without breaking their
not need to be repaid even if you budget? Would they be more finansell your home within the three cially empowered to comfortably
year timeframe.
meet their retirement goals? Would
they be in a better position to care for
Number 2: Simplify the
elderly parents?
homebuyer tax credit
For example, the $6,500 tax credNow that we understand the rules it invested at a seven percent annubehind the credit, it’s time to make al rate of return would grow to near-
ly $13,000 in 10 years. Perhaps this
$13,000, combined with the Fed’s
$1.25 trillion mortgage rate subsidy
(saving them at least one percent in
interest or $66,000 over the life
their $200,000 mortgage—see last
month’s TrendSpotter column), can
be used to help send the children to
college, get the retirement fund
back on track, or pay for an assisted
living facility for mom and dad who
are aging.
Once you paint a picture of the benefits of buying now, talk about the pain
of buying later—the kids will have a
tougher time with their college funding, the retirement account will remain
under-funded, mom and dad’s ailing
health will negatively impact the personal and financial goals of you and
your children.
In other words, get creative with how
you talk to clients about the $6,500 tax
credit or any other numbers you are
going over with them. Remember, numbers don’t motivate people. Life motivates people. Your mission, should you
choose to accept it, is to make the numbers come alive by talking to clients
about what the numbers mean for their
life. Certified Mortgage Planning
Specialist (CMPS) certification equips
you with scripts, strategies, dialogue
structures, resources and presentation
tools to make the numbers come alive
in every communication you have with
clients, prospects and referral partners.
Gibran Nicholas is the founder and
chairman of the CMPS Institute,
which administers the Certified
Mortgage Planning Specialist (CMPS)
designation. The CMPS Institute has
enrolled more than 5,500 members
since its founding in 2005. Gibran is
also the chairman of Published Daily,
a customizable online magazine,
newsletter and marketing service that
helps professionals transform their
clients and prospects into a referralgenerating sales force. He may be
reached at (888) 608-9800, ext. 101 or
e-mail [email protected].
Visit
author
Gibran
Nicholas’s
blog
at
http://gibrannicholas.com
where he shares his insights
on economics, real estate and financial issues, including the current
mortgage and credit crises.
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9
fha insider
news flash
continued from page 5
FHA presentations. Sound excited
when you speak about them! Focus on
the benefits the agents will receive.
You should be able to schedule at least
two presentations.
3. The big day!
Your focus should be on establishing
rapport with the agents and walking
away with a list of the names, phone
numbers and email addresses of agents.
You can do this by collecting their business cards for a small raffle item, or by
passing around an attendance form. Let
them know you will use their information to keep in touch and provide
important FHA updates. Before ending
your presentation, let them know about
the next presentation by telling them
the title and what they will learn.
4. Make a follow up phone call to
each agent that attended, and schedule an appointment to meet with
them one on one.
The purpose of this meeting is to establish a more personal relationship and
learn more about them and what their
business goals are. Building trust with
them is paramount to them feeling confident in referring their clients to you.
5. Follow through on your word.
Provide your new database with FHA
tips and updates to keep them
informed. Continue to make appointments with the ones you really feel you
can grow with, and make scheduled
calls to keep your name on the top of
their minds.
Follow this paradigm and you will
have a fresh new group of Realtors to
work with. Sometimes, we become stagnant in our relationships and we need
new ones to provide excitement, new
ideas and enthusiasm. If you need assistance with your FHA marketing and
access tools that can help you develop
more FHA business, you can subscribe
to my newsletter, The FHA Originator at
MortgageSeminars.com.
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 and
is a former FHA underwriter. Jeff may be
reached at (877) 342-9100 or e-mail
[email protected].
Visit author Jeff Mifsud’s
Web site at http://mseminars.com for tips and information on FHA loans and
details from some of the nation’s top
FHA specialists.
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porate and financial wrongdoing, and
will not hesitate to bring charges,
where appropriate, for criminal misconduct on the part of businesses and
business executives.”
The task force is composed of senior level
officials from the following departments,
agencies and offices: The Department of
Justice; Department of the Treasury;
Department of Commerce; Department of
Labor; Department of Housing and Urban
Development; Department of Education;
Department of Homeland Security;
Securities and Exchange Commission;
Commodity Futures Trading Commission;
Federal Trade Commission; Federal Deposit
Insurance Corporation; Board of Governors
of the Federal Reserve System; Federal
Housing Finance Agency; Office of Thrift
Supervision; Office of the Comptroller of the
Currency; Small Business Administration;
Federal Bureau of Investigation; Social
Security Administration; Internal Revenue
Service, Criminal Investigations; Financial
Crimes Enforcement Network; United States
Postal Inspection Service; United States
Secret Service; United States Immigration
and Customs Enforcement; relevant
Offices of Inspectors General and related
federal entities, including without limitation the Office of the Inspector General
for the Department of Housing and
Urban Development, the Recovery
Accountability and Transparency Board
and the Office of the Special Inspector
General for the Troubled Asset Relief
Program; and such other executive
branch departments, agencies, or offices
as the President may, from time to time,
designate or that the Attorney General
may invite.
“To give American families the protection and peace-of-mind they need,
it’s clear the federal response must be as
interconnected and multi-dimensional
as the challenges we face,” said HUD
Secretary Shaun Donovan. “No one
agency is going to be able to stop financial fraud. This Task force will build
upon many of the inter-agency collaborations already underway to protect consumers and restore confidence.”
In addition, the attorney general will
invite representatives of the National
Association of Attorneys General, the
National District Attorneys Association
and other state, local, tribal and territorial representatives to participate in the
task force through its Enforcement
Committee.
For
more
information,
visit
http://ustreas.gov.
MBA forecasts origination
volume to hit
$1.5 trillion in 2010
The Mortgage Bankers
Association (MBA) expects
economic growth to continue through the rest
of 2009 before slowing in the first half of
2010. Unemployment is expected to
climb to 10.2 percent by the middle of
2010 before beginning to moderate as
economic growth resumes sustained
growth in the second half of the year.
Mortgage originations should reach
$1.5 trillion in 2010. Modest increases
in home sales should drive purchase
originations, but refinance originations
are expected to decline as mortgage
rates rise.
“The recession is behind us but
the effects of the recession will linger
for some time in the form of higher
unemployment, and lower levels of
business investment and home construction,” said Jay Brinkmann,
MBA’s chief economist and senior
vice president for research and economics. “One of the big questions
regarding growth will be the behavior of consumers. The large losses of
consumer wealth in the form of
reduced home values and stock market losses, as well as the absolute
losses of income resulting from
unemployment, reduced employment and the fear of unemployment
have constrained consumer spending. Timing of the economic recovery
is very much tied to the growth in
consumer spending. In addition, the
effect of the bulk of the federal stimulus package, particularly the construction components, is not expected to be felt until 2010.
MBA found that real gross domestic
product (GDP) growth was negative in
2009, with the economy contracting
by around 0.5 percent resulting from
sharp drops in the first half of the
year followed by growth in the second
half. Growth is expected to be about
three percent in 2010. The study
found that the unemployment rate
will continue to increase from the current level of 9.8 percent, to about 10
percent by the end of 2009 and peak
at 10.2 percent in the second quarter
of 2010, before declining slowly
through 2011.
Fixed mortgage rates are expected
to average about five percent in the
fourth quarter of 2009 and increase
to 5.6 percent by the end of 2010, as
total existing home sales for 2009 will
end up about two percent higher than
those for 2008. Existing home sales
are projected to increase further in
2010, increasing by approximately
11.2 percent.
MBA found that new home sales for
2009 will be down by about 18 percent
relative to 2008. Sales seemed to have
bottomed in the first quarter of 2009 and
have been rebounding modestly since.
For all of 2010, new home sales should
post an increase of about 21 percent
from 2009’s very low levels. The national
average home price declines should
abate by early 2010, but will vary by state
and home value. The demand will be
highest for entry-level homes.
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You have all been there; that is if you about the accuracy of an appraisal, I
have been in the mortgage business have learned not to jump to conclufor longer than two or three transac- sions one way or another.
tions. You are shepherding a loan
When presented with an appraisal
along the pathway to a closing for a challenge from a client, it is almost
client. The client has a job, you have always accompanied with an excess of
qualified the client for income, you emotion and precious little in the form
have pulled the client’s credit report, of relevant facts. To the borrower, it is
they have the proper downpayment getting the proceeds from the loan. To
and everything seems hunky-dory. the loan officer, it is closing the deal
Then, it happens … you get a call from and paying this month’s rent. These,
the underwriting departhowever, are not reasons
ment, and you hear that
to challenge the appraisdreaded statement. “It
al. This must be done
didn’t appraise,” which
with relevant facts, facts
is colloquial for “The
not about either of the
appraiser is of the opinplayers among the cast of
ion that the property is
characters, but about the
worth less than the estiproperty and the market.
mated value that the
I once heard a wise
loan was based upon.”
appraiser talking to a
What is a self-respectproperty owner. The
ing loan officer to do?
owner had made the
First, there is always the
statement that there was
possibility that the home“When presented with something wrong with a
owner lied about what
certain appraisal. The
they paid for the property an appraisal challenge appraiser calmly respondfrom a client, it is
or that the tax card is in
ed, “Sir, there is somealmost
always accom- thing wrong, but it is not
error. Then, there is the
possibility that the mar- panied with an excess wrong with the appraisal.
ket has tanked so much
of emotion and preThere is something wrong
within the past year or cious little in the form with the property.”
two because of the rotten
If we are to properly
of relevant facts.”
economy that the subject
evaluate the circumproperty has lost most of
stances surrounding an appraisal withits value. But wait … there is one in a transaction, we must get past the
other possibility. The appraiser just fact that we want the transaction to
may be flat-out wrong. Are they com- close. We must honestly say to ourpetent, do they know the market, selves, “What is the property actually
were they in too much of a hurry, or worth?” This must come from the marwas there data supporting a higher ket and not from a preconceived notion
market value than that which the that a property is worth “X” amount of
appraiser came up with?
dollars.
I have been an appraiser, review
That being said, I am listing three
appraiser, appraisal manager and the things that we in our company commonowner of an appraisal management ly find wrong with appraisals, when the
company (AMC) for about three appraiser has made a mistake.
decades. There is little about real estate
appraisals that I have not been subject- 1. The subject is superior to the comed to. We have all seen challenging parable sales used.
markets, I have made my share of mis- In today’s market, finding good compatakes, I have seen others make mistakes, and when there is a question
11
news flash
Purchase originations for 2009 will
be $718 billion, about two percent
below the 2008 level of $731 billion.
Purchase originations should rise
about 12 percent in 2010, as existing
home sales recover and home prices
stabilize. Refinance originations will
end 2009 at $1.245 trillion, up about
60 percent from $777 billion in 2008.
Refinance activity will likely decrease
in 2010 to about $745 billion as mortgage rates increase.
“Perhaps the biggest unknown is the
level and volatility of interest rates,”
said Brinkmann. “While the lack of
inflation, high unemployment and
excess capacity in the economy should
hold interest rates down, there is a lot
of uncertainty regarding rates immediately following the termination of the
Federal Reserve’s purchase of mortgage-backed securities. No doubt the
Fed will do its best to minimize adverse
effects, but the elimination of these
purchases will put upward pressure on
all long-term rates as well as the spread
between
mortgage
rates
and
Treasuries. The size of any resulting
rate move will largely determine the
size of the refinance market.”
For more information, visit www.mortgagebankers.org.
J.D. Power study
concludes: Decline in
customer satisfaction
with primary mortgage
lenders
The average time required
to approve and close a loan
has increased in 2009
compared with 2008, fueling a decline in overall
customer satisfaction with primary
mortgage lenders, according to the
J.D. Power and Associates 2009
Primary
Mortgage
Origination
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This information is for use by mortgage professionals only and should not be
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as of date of printing and is subject to change without notice.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
© 2009 Wells Fargo Bank, N.A. All rights reserved. #68212 12/09-3/10
Satisfaction Study. The study measures
customer satisfaction in four key factors
of the mortgage origination experience: Application/approval process,
loan officer/mortgage broker, closing
and contact. The study is based on
responses from more than 3,400 consumers who originated new mortgages
within the previous 12 months. The
study was fielded between July and
August 2009.
Overall satisfaction among mortgage customers has declined to 739
on a 1,000-point scale, down 18 index
points from 757 in 2008, as a result of
tighter underwriting standards and
longer turnaround times. The average
time required to approve and close a
loan has increased to nearly 47 days,
compared with approximately 30 days
in 2008, primarily due to increased
scrutiny of loan applications and
higher origination volumes driven by
increases in refinancing. This increase
in turnaround time has a considerable impact on satisfaction, as satisfaction averages only 723 when the
time from application to approval
takes six or more days, compared
with 798 when the process takes less
than six days. Similarly, satisfaction
drops from 772 to 736 when the time
from approval to closing takes 14 or
more days.
In addition, lending criteria has
tightened, as the study finds that
credit scores are higher among mortgage customers and the percentage
of loan applicants who have been
faced with requests for additional
documentation has increased considerably to 45 percent in 2009 from 33
percent in 2008.
Branch Banking and Trust (BB&T)
ranked the highest among primary mortgage lenders with a score of 783, and
performs particularly well in the application/approval process and closing factors. Wachovia (781) and National City
Mortgage (769) follow in the rankings.
“Customers working with BB&T indicate they have a better idea of the steps
involved in all aspects of the mortgage
origination process and the time it will
take to complete each one,” said David
Lo, director of financial services at J.D.
Power and Associates. “Customers
report that BB&T effectively manages
customer expectations around standard
process-related elements of the experience, which results in increased satisfaction with the application/approval
and closing processes. In turn, this creates a lift in overall customer satisfaction and underscores the importance of
communication between lenders and
customers.”
The study finds that there are nine
key practices that lenders should
leverage to optimize customers’ satisfaction with the mortgage origination
experience. For example, satisfaction
averages 793 among customers whose
lender provided and met a time
frame for the application/approval
process, compared with 632 among
Dear Brian:
I have been a fan of your articles and the site,
www.loanofficerformula.com, for a number
of years. While I realize you have been in the
business a very long time (nearly 25 years
right?), I am amazed at how you can keep
your composure during times like these.
The last two years have devastated our
business, myself included. I have now
made my wife go back to work, and I have
taken a part-time job. I still originate, but
closed down my company and work parttime just to keep my head above water.
What do you do to stay positive in
these times?
Looking forward to your answer,
—B. Stanovich, Wisconsin
Dear Bob:
What a great and timely question. Yes,
these past few years have been terrible
for most, but not all. Even those who
remain are not earning what they had.
One of my clients just reported earning $92,000 in revenue from $8.3 million in closings for October … not bad!
However, I do realize that he is the
exception right now so keep reading.
self image. Most of these books, etc. are
teaching you to think positively but that
just doesn’t always work now does it? I
knew there had to be more than just thinking positively and daily affirmations.
I searched far and wide, and finally
found what I believe to be the answer to
these questions. It is contained in a classic book called Psycho-Cybernetics by Dr.
Maxwell Maltz. It’s a book I give to all of
my brand new coaching and consulting
clients. Go get this book! Everyone has
rough times … myself included. How
you get through these rough patches
mentally will determine your success!
Nothing else!
If you want even more tips I have put
together a 32-page free report at
www.loanofficerformula.com/nmp.
Dedicated to having buyers chasing you …
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 to
[email protected].
Brian Sacks is CEO of www.loanofficerformula.com. He has been an industry expert
for more than 25 years, closing 6,000-plus
loans totaling $1 billion. You can read
Brian’s 32-page special report entitled “The
Death of Mortgage Origination as We
Know It” and “The 10 Things You Must Do
Now to Survive and Thrive” at www.loanofficerformula.com/nmp. This report sells for
$97 and has been downloaded by more
than 9,200 originators and company owners, but is free for a limited time for readers
of National Mortgage Professional
Magazine. He may be reached by e-mail at
[email protected].
Call Now: 1-877-773-7178 Second … stay positive.
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www.presidentsfirst.com DECEMBER 2009
I know, staying positive is easier said
than done, but I read and listen to educational audio every single day, including weekends. One of the keys to success I discovered was your self image. It
controls everything you do … period!
I used to read Think and Grow Rich by
Napoleon Hill and all of the other motivational books on success, and yes, they are
good, but something always seemed to be
missing. Ever see someone do well and
reach a certain level and implode? Or, have
you ever seen someone who has all of the
skill and talent in the world, but just never
gets to that top level? Both are because of
Presidents f irst
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Let Us Help Grow
Your Business!
The good news—the tax incentive is
still in place for the beginning of 2010.
More good news … there are less of us
chasing the same deal than there has
been for the past seven to eight years.
Yes, it may be tougher to get these deals
done, but one big secret that I have always
shared is to work backwards. Find out
what programs you have to offer, and only
then, market to those folks. That is even
more important now since most have
fewer resources. But, more importantly,
when you go after just anyone, you may
become very frustrated with all the deals
that you cannot do and that is not good!
www.NationalMortgageProfessional.com First, let me give you some
good news, and then I will
share some ideas with you.
13
Julio de Cardenas, Executive Vice President
United Northern Mortgage Bankers Ltd.
14
Each month, National Mortgage
Professional Magazine will focus on one of
the industry’s top players in our “Mortgage
Professional of the Month” feature. Our
readers are encouraged to contact us by email at [email protected]
for consideration in being featured in a
future “Mortgage Professional of the
Month” column.
This month, we had a chance to chat with
Julio de Cardenas, executive vice president
of Levittown, N.Y.-based United Northern
Mortgage Bankers Ltd. A 20-plus year veteran of the mortgage and real estate industry, Julio attained his real estate license at
the age of 18, and sold his first home shortly after while attending St. John’s
University. Success in real estate led Julio to
leave the world of academia behind to pursue a career in home sales and home
financing. Julio’s career has taken him from
residential and commercial real estate, to
mortgage banking, a four-year stint as a
national sales trainer and consultant, now
back into mortgage banking.
Currently, Julio serves as the executive vice president of United Northern
Mortgage Bankers Ltd. Led by company
president and co-founder Don Giorgio,
United Northern currently averages $35$40 million per month in closings, and
as Julio stated in our conversation, the
company is projecting growth of
approximately $50-$75 million per
month in 2010. In order to accommodate the company’s financial growth,
United Northern is set to move into a
larger corporate headquarters, just
blocks away from its current Levittownbased operations. They are licensed in
eight states and currently have six other
locations, with more in the works.
How did you get started in the mortgage industry?
After graduating LaSalle Military Academy,
I was primed to begin a life of hard work
to achieve my goals. I attended St. John’s
University, as I acquired my real estate
license and sold real estate. After the sale
of my first home at 18-years-old, I quickly
shifted to more commercial and investment properties, mainly commercial leases, investment, specs and storefront properties. I loved real estate, but my drive
sought out more.
Around 1988-1989, I opened up my
own real estate brokerage, High Rise
Associates. Unfortunately, around that
time is when the commercial market
began to crumble.
In 1990, I went to work for Home
Mortgagee Corporation, as a loan officer. On my first day, training in the
mortgage industry was pretty basic. I
sat with the owner and another Home
Mortgagee employee for about 30 min.
each. I was showed how to fill out a
1003 and order a credit report. It was
after that I was taken to a room with a
box of pads and pens inscribed with the
Home Mortgagee logo and was told
those were the marketing materials I
was to pass out on the road. The bookkeeper smiled as she handed me a check
for $150 for expenses my first week,
while someone else had given me a
beeper. My training was complete. I was
assigned my territory in New York, and
pointed in the direction of the Bronx!
Thinking back, the smile on the
bookkeeper’s face was more of an
unspoken statement. “You’ll never
make it, Hot Shot!” There was never a
detailed explanation of what to do, but
that did not deter me. I took my background in real estate, along with my
ambition to succeed, headed to the
Bronx and eventually made a fortune!
After a year-and-a-half with Home
Mortgagee, I moved on to Mutual of
North America in the beginning of
1992. My family at the time applied
pressure for me to return to college. I
weighed my options and realized that
the amount of money I was making in
real estate was more favorable compared to what I was doing in macro
economics at St. John’s. Everyone in my
family has at least a degree, some multiple, including my grandparents. I took
the gamble, slung my calculator over
my shoulder and off I was again.
Within a few months, I was the company’s top salesman, and 18 months
later, I made enough to buy into the
business, so I became a partner with
the company’s owner. The bulk of my
business was FHA loans. When I started
with Home Mortgagee, their idea was
to become a master in FHA … to go out
there and speak about FHA, give FHA
seminars, and teach the real estate brokers and attorneys about FHA loans.
That is what I did, and at that time,
many people thought FHA was a thing
of the past, as they were doing mostly
conventional and stated loans, but I
stuck with FHA and it paid off in a big
way. Mutual became extremely successful and I prided myself in being the
“Government Loan Guru.”
In 1997, I sold my shares in Mutual of
North America back to its founder and
opened a mortgage bank called First
Estate Funding. After five years as president of First Estate Funding and achieving a certain level of success in our industry, in 2002, I sold off my portion to my
partner and walked away. At the end of
that year towards the beginning of 2003,
I went to work for Ron Vaimberg
International (RVI) as a trainer and coach.
My time with RVI was during the heart of
the sub-prime boom, and I was doing
consulting and training around the country. I had a riot travelling from one lender
to another, motivating their staff and getting paid for it. For those four years, the
only thing I considered work was the
tedious chore of making airline and hotel
reservations. Those years were quite
rewarding and educational for me. I
worked with Ron until May of 2007. As
our industry disappeared before our
eyes, I looked for new opportunities.
I first met Don Giorgio, president and
co-founder of United Northern Mortgage
Bankers, when my ex partner in Mutual of
North America sold the company to him
after I had left. I was immediately taken
by his intelligence, integrity, experience
and wisdom. I was living in Michigan at
the time, and even had a lucrative offer
from a company in California, but I spoke
to Don and genuinely liked him. I started
with United Northern in June of 2007.
How do you motivate your employees
and instill in them the tools required
to take the overall success of United
Northern to the next level?
In this profession, you have to like what
you do. It’s not work to me. I still live in
Michigan and come to New York during
the week for work. For me, the real
work is getting up at 3:30 a.m. on a
Monday, traveling to the airport to get to
has been an almost mass elimination of
mom and pop stores. Everything is big
and very rarely can you find something
on a smaller scale. We need to grow, and
our target is to hit $750 million in 2010
and to be over the $1 billion mark in
2011. If we don’t get there, we could get
swallowed up because the cost of maintaining our infrastructure is increasing.
With compliance and licensing issues
these days and the costs involved, the
little guy cannot survive. We employ
someone making a full-time salary just
to follow up on licensing issues for us as
a company, licensing on all of our loan
officers, educational requirements and
compliance in marketing. He works 4050 hours a week on making sure we
maintain compliance. Every state has
specific rules and requirements. When
you have loan officers licensed in several states, and we, as a company, are
licensed in eight going on 10 states, it’s a
lot to keep track of!
Do you think the new GFE and HUD-1
will address some of the borrower confusion that exists at the closing table?
I actually think it could cause more
confusion at the closing table. If I tried
to explain loan programs to anyone off
the street, they won’t understand
them. Just as if that person were to
explain their profession to me, I wouldn’t understand them. I think it will
become more cumbersome.
It’s a three-page Good Faith Estimate
(GFE), and you now have to compare
things that other people quoted in your
price. Does the consumer really understand these concepts? Look at the auto
industry … whether they charge you a 14
percent interest rate or two percent, you
still base your decision whether or not you
purchase the car on what you can afford.
At the same time, I like the other
changes in the industry concerning education and licensing requirements. I
believe these initiatives are weeding out
a lot of the people who have tarnished
the industry. You want people you can
trust doing mortgages. We have taken so
much abuse in our industry, but once
upon a time, if you sent in a check for
$500, you received a broker’s license. If
the industry is now policing itself and is
creating education requirements, that
brings it to a higher level and raises the
bar for the industry as a whole.
DECEMBER 2009
Are you in favor of increased lender
liabilities and net worth requirements currently proposed by the U.S.
Department of Housing & Urban
Development?
Yes, I am in favor of those initiatives
because this will also weed out the bad
in this industry. United Northern is still
a small mortgage banker, but a key
phrase I heard at the recent MBA
Annual Conference was “skin in the
game.” You want to make sure that the
lenders doing your loans have “skin in
the game” and are reputable. You want
them to stand by what they did.
Loan officers, before they were
What are some of the keys that have
led to the success of United Northern
Mortgage Bankers?
We have grown the company through
the support of our staff. We believe that
our number one priority is our staff,
and we are committed to creating an
environment where everyone succeeds.
You want to go to a place that will take
care of you. We are a 30-year-old company that is not going anywhere anytime soon … we’re not a fly-by-night
operation. United Northern is as for everyone. We have a terrific seastronger than it has ever been.
soned staff with a lot of experience. If
We are constantly recruiting and you take Don, myself, our underwriters
training. At United Northern, you get and all of our processing staff, we have
honesty and integrity. You may not about 300 years of combined industry
always like the answer I may give, but experience. I remember one of my
you get it. There is no ego here.
underwriters saying that being called
Our business approach is pretty sim- “seasoned” was the nicest way she had
ple … we sit back, take a look at the big ever been called “old.” United Northern
picture and don’t react on a dime. We knows where the market is at all times,
don’t hire and fire on a whim or even a we react and we don’t play games with
small boom in business.
people’s locks. We are a retail operation
At United Northern, we give people and our job is to give people good servthe customer service needed and provide ice. Let’s not make it too complicated
a strong core. Buying a home is the single … it’s not rocket science. Our personalmost important purchase a person will ized service, energy and experience,
make in your life. As you climb the ladder topped with pricing that competes with
of success those mortgages become larg- the big boys, often has me wonder how
er and the hand holding more intense.
they can compete with us! At the end of
All of these e-lenders have failed the day, everyone feels good about
because no matter what transpires in the what they have done.
loan process, how do you trust all of that
information to a computer? People want Are you active in industry trade
human feedback. A loan officer’s job is to associations?
hold their customers’ hand through the Yes, I make sure I attend all types of indusmortgage process. There are also times try conferences. I believe in educating
when we question if we can
myself with what’s going on
actually close on a deal.
in our industry. I am also
There is no substitute for
trying to become more
the one-on-one human eleactive with the Mortgage
ment. We have, at times,
Bankers Association (MBA).
had the applicant come and
The small- to mid-sized
sit with myself, Don and the
mortgage banker’s needs
underwriter on the file. I ask
are not always met.
them to explain why we
Through recent years, we
should make this loan? Why
have watched the disapdoes our loan officer feel
pearance of mom and pop
this is a good loan?
hardware stores, pharmaUnfortunately, nor the
cies, grocery stores, etc.
underwriter, Don or myself “Mortgage banking, at Now is the time to get
were present when a loan
the present moment, involved so that we avoid
officer sat at their kitchen
becoming the next casualis both challenging
table. Face-to-face, you can
ty of big business. We are
and exciting. I enjoy the voice that needs to be
read in someone’s eyes if
the building of a busi- heard.
they are being sincere.
ness, and this time,
The independent mortgage banker, like United it’s for keeps … I have What are United Northern’s
Northern, can cater to the
growth goals over the next
found my home.”
individual … a large bank
few years?
cannot possibly do that. We receive United Northern is celebrating 30 years
referrals from larger banks because due in this industry … 30 years of helping
to their guidelines, they need “the people purchase and remain in their
square” to fit into that “square.” They homes. We want to be here another 30
need everything to fit perfectly. If any years. As much as the doom and gloom
terms of the deal are even slightly ill- of the American economy surrounds
aligned, the loan won’t go through. us, there are a lot of companies out
These large institutions cannot do the there that do plenty of good for people.
one-on-one situations. Here at United
What we do is very well thought-out.
Northern, we can.
My goal isn’t to grow overnight; this success was 30 years in the making. Even in
Can an independent mortgage banker a year from now, I just want to increase
like United Northern compete with the by $10-$20 million per month in probig banks of the world on pricing?
duction, then we increase it a bit more
Yes, we can. First off, our overhead isn’t … it’s not about growing haphazardly.
the same. We pride ourselves on being Our projections are based on five-year
lean and mean. Don and I currently increments, and we know where we
share an office in order to accommo- want to be five years from now.
date our growth. Offices that once Truthfully, the worst thing that could
housed one or two salespeople are now happen would be if we did $2 billion
occupied by four. It wasn’t until we worth of business next year. It sounds
were absolutely bursting at the seams crazy, but that would not be a controlled
that we decided to acquire our new cor- growth … we may have compromised
porate space. These smart business the quality and integrity of the files, we
practices are to ensure another 30 years may have bypassed areas of quality conin business. In the new facility, we have trol, may have missed a few steps, etc.
taken on the first floor, third floor and That’s not what we are looking for and
the lower level for storage.
we won’t do that.
Money comes from the same source
In every industry we have seen, there
www.NationalMortgageProfessional.com the office in time. The real work is done
by my wife who deals with six children!
The phone goes off and I’m here in New
York and she’s in Michigan dealing with
various issues with my kids. I will repeat
the old saying, “Behind every great man,
is a great woman.” By not having any
home stress, I get to really enjoy my passion … banking.
Mortgage banking, at the present
moment, is both challenging and exciting. I enjoy the building of a business,
and this time, it’s for keeps … I have
found my home. I know that family
comes first, but to me this is an extended family. Many people count on me and
I work hard to not let them down. I constantly preach to my children that there
are consequences for your actions. One
false move by me can impact the families of all 120-plus of United Northern
employees and beyond. As we continue
to grow, that number grows. We’ll never
know how many people’s lives are
impacted by what we do. Think about
how many spheres were affected by the
Bernie Madoff scandal … charities, nonprofits, etc. … it’s all a trickle-down
effect. There are serious consequences
for your actions in this world. We, as a
society, haven’t really held people
accountable; we just give them a slap on
their wrist for their ill-advised actions.
Just recently, Lend America closed its
doors. Where is the accountability for
the 600 employees who lost their jobs
because of the misdeeds of a few …
from the maintenance guys who
worked for them, to the vendors,
lenders, etc.? The chain reaction is
colossal. There may be a few who were
involved in wrongdoing, but there are
600 people affected who have families,
who have car payments and bills to pay.
For the selfish acts of a few, the majority has to suffer. Everything I do affects
hundreds of people. There is a major
ripple effect that would take place if
something stupid happened within our
company. I try to instill in my loan officers and my own kids that there are
consequences to your actions.
I always tell loan officers when they
start out to think about their job
before entering the mortgage industry.
I tell them to take that same work ethic
they had in their previous job and now
apply it to being a loan officer. The
amount of money you can make in this
industry is amazing. The problem is
when they become complacent. In this
country, if you want something bad
enough, you can work hard and
achieve it. My words are not empty
hype, I live them and my staff sees it.
15
Fellow Texans NAMB
President Jim Pair and
NAMB Director Olga
Kucerak share a laugh in
Las Vegas
Dr. Ted C. Jones, director of
investor relations for Stewart
Information Services, delivers his
economic update at NAMB/WEST
in Vegas
16
NAMB Immediate Past President Marc Savitt,
Cheryl Savitt, and NAMB Treasurer and
Convention Committee Chair Don Frommeyer
during the NAMB/WEST Opening Reception
Ken Perry of Broker Knowledge and
Ginger Bell of Go2Training, co-moderators of the “SAFE Act, MDIA,
HVCC, Red Flags and Other
Regulatory Updates” panel discussion
Fred Arnold, president of
American Family
Funding, delivers his presentation, “Double Your
Profits Without Doubling
Your Workload”
Nancy West, marketing and
outreach specialist for the U.S.
Department of Housing &
Urban Development (HUD),
discusses the latest FHA changes
during her presentation
Rene Rodriguez, chief executive
officer of Volentum, shares the
secrets to his success in a down
market
NAMB Chief Executive Officer Roy
DeLoach discusses the importance of
education during NAMB/WEST
Joe Camarena, chairman of the
NAMB Education Committee,
welcomes attendees to
NAMB/WEST 2009 in Las Vegas
Jeff Mifsud of Mortgage Seminars
LLC leads the session, “National
Broker Challenge: Thrive in 2010
With the New FHA”
news flash
New Good Faith Estimate and
HUD-1 Settlement Statement
The U.S. Department of Housing & Urban
Development (HUD) published a final regulation on Nov. 17, 2008. This final regulation made substantial changes to
Regulation X, the implementing regulation
of the Real Estate Settlement Procedures
Act (RESPA). Among other things, HUD has
made substantial changes to the:
Good Faith Estimate (GFE)
HUD-1 Settlement Statement (HUD-1)
HUD-1A Settlement Statement (HUD1A), and
Settlement Cost Booklet1.
This month’s column will highlight
certain features of the new Good Faith
Estimate and the HUD-1 and HUD-1A
Settlement Statements.2
The new GFE
The new GFE is three pages in length
and contains more information than
the previous GFE. Main sections of the
new GFE include:
Important dates
This section contains dates that are
important to the borrower and lender.
This section also includes specific
“yes or no” questions with regard
to whether the interest rate, loan
balance, and payment amounts
can increase during the life of the
loan.
There are specific “yes or no” questions with regard to whether the
loan has a prepayment penalty or a
balloon payment.
Note: If the answer to any of these
questions is “yes,” then the new GFE
requires additional information about
that feature.
There are many calculations in this
area that have not been a part of previcontinued on page 20
The Mortgage Bankers
Association (MBA) has
adopted a model sale
and servicing agreement it anticipates
will become the standard form for industry participants to use voluntarily for
whole loan purchases and sales made
with an eye toward potential securitization. The agreement was adopted by
MBA’s Residential Board of Governors
(RESBOG) as an MBA supported best
practice.
The model agreement is part of an
MBA initiative to help increase liquidity and efficiency in the non-conforming residential mortgage market. The
agreement provides standard formatting and text for standard practices,
reducing the time, effort and cost of
legal and due diligence reviews. The
agreement also includes standard formats for transaction-specific terms.
“At the current time, there is virtually
no private label MBS market to speak
of,” said John A. Courson, MBA’s president and chief executive officer. “When
the market begins to return, we expect it
will start with whole loan transactions.
This model agreement will provide consistency and transparency to help
investors get a better understanding of
Ocwen completes nearly
45 percent of industry’s
permanent modifications
Almost half of the trial
mortgage modifications
converted to permanent
modifications for distressed
homeowners under the
U.S. Treasury Department’s
Home Affordable Modification Program
(HAMP) are attributable to Ocwen Loan
Servicing LLC, the principal subsidiary
of Ocwen Financial Corporation. There
are 27 large banks and loan servicers
participating in HAMP, but Ocwen alone
completed 44.6 percent of all of the
permanent modifications done by the
industry.
According to a report released by
the Congressional Oversight Panel
monitoring the government’s Troubled
Asset Relief Program (TARP), only 1.26
percent of trial modifications under
HAMP were able to convert to permanent status as of Sept. 1, 2009. Ocwen,
however, converted 13.9 percent of its
customers’ trial modifications during
that timeframe, and its conversion
rate is now at more than 20 percent
and climbing.
Servicers collect HAMP incentive fees
only for modifications that convert to
permanent status. To convert, the servicer must obtain and verify all documentation required of the homeowner
under HAMP guidelines and receive
three monthly payments on the modified loan during the trial period. The
converted modifications can also generate second- and third-year bonus fees
for servicers, assuming the loans continue to perform.
“Our technology and analytics-based
approach to prudent modifications is
paying off, as shown by the proportion
DECEMBER 2009
Purpose (See “Shopping for Your Loan”)
Shopping for your loan
The “Purpose” and “Shopping for Your
Loan” sections, containing standardized
language from HUD. These sections
explain to the borrower the purpose of
the GFE and how to use it to shop for
the loan that is best for that borrower.
Summary of your loan
This section includes information about
the initial loan amount, loan term, initial interest rate, and periodic (i.e.,
monthly) payment amount.
MBA releases model
whole loan sale and
servicing agreement
the whole loans they are purchasing.”
A working group of MBA’s Secondary
and Capital Markets Committee developed the model agreement by consolidating elements of existing whole loan
servicing agreements. MBA released a
draft in July for public comment in
order to solicit feedback from all interested stakeholders. The current model
agreement incorporates that input and
is designed to increase transparency
and efficiency in the private label
mortgage backed security market. MBA
anticipates further refinements to the
agreement this year and a process of
regular periodic review going forward.
“The model agreement was drafted by
members, for members and with significant input from a wide variety of stakeholders,” said Courson. “Plus, we’ve developed protocols so that the agreement
reflects standard practices and legal
requirements both now and in the future.”
For more information, visit www.mortgagebankers.org.
General headings (originator and
borrower information)—Page 1
On the top of page one you will see the
General Headings information. The lefthand side gathers information about
the originator, including name, address,
phone number and e-mail address. The
right-hand side gathers information
about the borrowers, including name
and address. This section also includes
the date that the GFE is prepared.
those whose lender did not. In addition,
satisfaction declines from 781 to 643
when customers were asked to provide
the same information more than once.
“The good news for lenders is that
optimizing the mortgage experience is as
easy as adopting these key practices,” said
Lo. “The bad news is that few customers
say they have an optimal experience—
only 22 percent of customers report experiencing all nine service practices. Among
these customers, satisfaction averages
862 points. In contrast, satisfaction averages only 566 points among customers
who report that their lenders missed four
or more of the key practices.”
The study also finds that satisfaction
is a critical component in optimizing
advocacy, loyalty and cross-sell opportunities. Among customers with high satisfaction levels (scores of 800 or higher),
58 percent say they “definitely will” recommend their lender, compared with
only 8 percent of customers with low
satisfaction levels (scores below 800).
More than 60 percent of customers with
high satisfaction levels say they “definitely will” consider their lender when
they refinance, while only 13 percent of
less-satisfied customers say the same.
Highly satisfied customers are also more
likely to use additional products and
services from their lender, such as a
checking or savings account, credit card
or home equity line of credit.
For
more
information,
visit
www.jdpower.com.
www.NationalMortgageProfessional.com Implementation Date: January 1, 20103
Line #1: The originator provides
the date (and time, if necessary)
through which the disclosed interest rate information is available.
Note: This is not intended to be
an interest rate lock.
the date through which all settlement service charges disclosed on
the GFE are available. HUD
requires this date to be at least 10
business days from the date of the
GFE, in order to give the borrower
time to shop around for the best
mortgage.
information about the rate lock.
After the rate has been locked,
the borrower will have a stated
number of days to go to settlement in order to receive the
locked interest rate.
Line #4: The originator lists the
number of days before settlement
that the interest rate must be
locked.
17
value nation
rable sales is tough. Do not be afraid to
ask your Realtor or borrower if they are
aware of any other higher-priced properties that may have recently sold near
the subject, and may have not been
considered as comparable sales.
2. Watch for unfavorable adjustments
in the square-footage section of the
appraisal.
This is especially troublesome when the
subject property is smaller than most or
all of the comparable sales. Frequently,
the dollar-per-square-foot adjustment
is much smaller than the depreciated
value of the improvements. Ask the
appraiser for paired sales to demonstrate the difference in value-persquare-foot.
3. Inquire about unique characteristics, processed by the subject, but not
properly credited to the subject property in the appraisal.
Items frequently overlooked or undervalued are additional land, detached
buildings, such as mother-in-law apartments, exceptional views and water
frontage.
While every property and appraisal is
unique unto itself, those variables listed
above are among those that I have
found most often to be responsible for
undervalued properties. Sometimes, we
will find that a property just is not worth
more than the appraisal and, under
such circumstances, it may be time to
swallow our pride and move on. Yet at
other times, there may be good cause to
question the appraiser. I think that you
will find that, in most cases, appraisers
will be receptive to suggested areas of
improvement in appraisals.
Appraisers lose when they are
unwilling to consider the relevant facts
presented about an appraisal. Their
credibility is also the line, and few are
willing to risk losing business because
they make mistakes that they are
unwilling to address.
Charlie W. Elliott Jr., MAI, SRA, is president of Elliott & Company Appraisers, a
national real estate appraisal company.
He can be reached at (800) 854-5889, email [email protected] or visit his
company’s Web site, www.appraisalsanywhere.com.
By Christopher G. Brown
Expect 2010 to be another tough year
for those having trouble keeping up
with their mortgage payments. As an
attorney who spends my days fighting against mortgage lenders that’s
what I’m expecting in the coming
year. That said, I do expect some
good news for cash-strapped homeowners next year, because I see
strong indicators that tell me that
the courts will take a good hard look
at the legality of some mortgage
foreclosure proceedings. On the
other hand, I don’t foresee much of a
decline in the number
of mortgage foreclosures in 2010.
Looking into my crystal ball, here’s what 2010
looks like to me:
The pace of
foreclosures will
not slow in
2010
More foreclosures will be
fought successfully
because of the industry’s
faulty system
I expect problems in the loan registration
system to slow or even halt some foreclosure proceedings. More courts will take a
dim view of Mortgage Electronic
Registration Systems Inc. (MERS) which is
the system that’s supposed to keep track of
mortgage filings. I first challenged this system in court in 2008 and was able to halt
a client’s foreclosure completely because
of its flaws. Then, last year, the Supreme
Court of Kansas and other
courts observed that the
MERS system could create
insurmountable problems
for a party seeking to foreclose. I predict that more
court decisions like these
will follow in 2010, as the
spotlight becomes more
and more focused on the
problems with MERS.
The system was originally created to keep track
“I do expect some good of any changes in the ownnews for cash-strapped ership of a mortgage.
homeowners next year, Today, it has some significant problems when it
because I see strong
comes to proving what
indicators that tell me
institution actually has the
that the courts will
ability to launch a foreclotake a good hard look
sure proceeding. Watch for
at the legality of some
more and more courts to
mortgage foreclosure
take notice of that in 2010.
There will be no significant decline in the number of mortgage foreclosures within the next 12
months. The first wave
of foreclosures was for
those who took out subprime loans. These
posed the highest risk of
default, so it was natural
that these loans would
start the foreclosure wave.
proceedings.”
Unfortunately, I expect
that wave to intensify as
More foreclosures
more and more loans from the next riski- will be defeated because
est loan category, Alt-A, fall into default. the wrong party tried to
When you add that to a struggling econo- take the house
my, high unemployment rate and a terri- Only the owner of a loan has the right
ble real estate market, you have a recipe to foreclose on a mortgage in most
for an increase in foreclosures for at least
the next 12 months.
DECEMBER 2009 18
Mortgage Foreclosure
Predictions for 2010
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mortgage professional
licensed, would just travel from lender
to lender. Now, with the Nationwide
Mortgage Licensing System & Registry,
that license follows you. You now have
to meet particular licensing and education requirements. This is a career …
treat it as a career. This isn’t a part-time
job at a fly-by-night operation, so take
it seriously. There has to be a way to
take it to a certain level, and I am in
favor of increased lender liabilities and
stricter educational requirements.
What would you say to the mortgage
professional to remain positive in
today’s marketplace?
When you break it down in its most simplistic form, we hold people’s hands
and help them attain the American
dream. We give them that place, a
home that is their shelter, where they
raise their children, and where one day,
when those children go to school, it
may become the source of equity for
college education. Upon retirement,
with a reverse mortgage, it could afford
them a second home or allow them to
live better in their retirement years.
You are doing something noble, so treat
it as such.
Government Intervention
There is no doubt that the housing
industry would have led us into a
depression had the government not
intervened with strong action during
the past 12 months. Many are complaining that the government spent too
much money and we will be paying for
generations to come. However, not
many in the mortgage industry are
complaining about the programs that
specifically help the housing and mortgage markets. Just as I am sure that not
many in the auto industry complained
about the Cash for Clunkers Program.
With the year coming to a close, we
are again focusing upon governmental
action. With a pipeline of millions of
foreclosures on the horizon, there is little doubt that the housing markets
could stand on their own without continued government support. To that
end, the previous month held much
good news in this regard:
Celebrated bank analyst Meredith
Whitney put out an industry note that
zeroes in on the Fed’s MBS purchase
program. She calls the “Great Exit” the
biggest market and bank risk over the
next four months. Let’s hope it emerges
into the public view over the next four
months, because it could be, if the Fed
exits as planned at the end of first quarter 2010, the biggest kick in the stomach
housing and financial markets have
gotten since surviving the near total
shut down of credit last fall.
We checked with our resident secondary expert, Eric Holloman, founder
On July 30, 2008, as a central part of the Housing and Economic Recovery Act
(HERA), President George W. Bush signed into law the Secure and Fair Enforcement
(SAFE) for Mortgage Licensing Act. Through its creation of the Nationwide Mortgage
Licensing System and Registry (NMLS), this landmark legislation sets forth education, testing and other professional integrity standards. The SAFE Act sharply
defined and established a new official designation for the originating profession:
The Mortgage Loan Originator (MLO).
Under the SAFE Act, every MLO in the country (yes, including those
employed by depository institutions) must register with the NMLS, obtain a
unique identifier (UI) or an individual ID, and submit to fingerprinting for a
criminal background check.
Additionally, all MLOs not employed by a depository institution must
obtain and renew a license from their state. State licensure will require the
MLO to satisfy significant education mandates, pass rigorous state test components, submit to credit examination and meet other standards necessary
to command the confidence of the community. Last, but not least, the rumor
is true: Every non-depository MLO must pass a rigorous 100-question national test. Everyone must pass the test. There are no grandfather provisions.
SAFE purpose
Congress established the NMLS for the registration and licensing of MLOs for
the following reasons:
Database: To provide a comprehensive licensing and supervisory database
with uniform application and reporting;
Licensing: To streamline the licensing process, improve information flow
and reduce the regulatory burden on multi-state entities;
Public exposure: To provide for tracking of MLOs across state lines and give
consumers access to the employment status and disciplinary actions
against MLOs; and
Accountability: To enhance consumer protections by requiring MLOs to act
in the best interest of the consumer and enforce responsible lending
behavior.
In an interview with Chris Kukla, consumer advocate attorney for the
Center for Responsible Lending (CRL), I asked what his organization was fighting for. He replied: “We want to stop lending abuses, protect consumers at the
origination table through greater transparency and force the industry to lend
DECEMBER 2009
The legislation also would extend the
$8,000 homebuyer tax credit to contracts
signed by April 30 and closed by June 30.
The credit was set to expire after Nov. 30.
The legislation also created a $6,500
credit for those who buy a home after
owning one for the last five years. That
measure would apply to contracts signed
by April 30 and closed by June 30. The
bill would raise the adjusted gross
income cap to $125,000 for single filers
and $225,000 for joint filers.
Does this mean that the challenge
is over? Unfortunately, no. Not only
are we dealing with a huge pipeline of
foreclosures, the Fed is still on schedule to exit the purchases of mortgagebacked securities (MBS) at the end of
the first quarter of next year. Those
who understand the markets know
that the Fed’s control of short-term
rates does not extend to long-term
home loan rates. Many are predicting
a poor reaction to the Fed’s strategy.
Here is what HousingWire had to say
on this issue:
The SAFE Act
Translation: Short-term rates are not
going up anytime soon. Low rates are
critical to the housing recovery and,
of course, the housing recovery is critical to the recovery of our overall
economy.
And that was not the end of the good
news as Congress passed not only an
extension, but an expansion of the tax
credit. The move to expand the credit to
move-up buyers is critical because this
market has languished as the first-time
homebuyer markets have flourished since
the beginning of this year. From
CNN/Money:
“Until the default rates move
down to acceptable and tolerable
levels, the markets cannot stand
on their own and government aid
is critical. If the government
leaves before the markets are
healthy, then we are talking
about a huge risk.”
The mortgage industry is at the epicenter of the national financial crisis. This
has caused damage to our reputation. It is our responsibility to restore lost
confidence and credibility. We should not waste energy thinking the irresponsible lending practices of the past will return. Those days are gone forever. A
bold and better way is pushing up through the rubble like a phoenix rising
from the ashes. Welcome to a New Era of the Mortgage Professional.
Regulatory activism and marketplace realities have spurred a top-to-bottom reformation of our industry. The old “safety and soundness” lending
principles, once the domain of the depository institutions, are being
pushed down into the non-bank mortgage channel. Skeptical consumers,
emboldened by the financial crises, are taking control of their financial
well-being, demanding more for less with no tolerance for incompetence
or infidelity. And now we have a specific federal law driving this reformation: The SAFE Act.
www.NationalMortgageProfessional.com The Fed released their statement after
meeting for two days which indicated
that conditions are “likely to warrant
exceptionally low levels of the federal
funds rate for an extended period.”
Congress also passed an extension of
the Economic Stimulus Act’s loan limits
for high-cost areas. This means the
“$729K” limits will stand for another
year. This action also is critical because
while the government has propped up
the conforming and government markets with heavy loan purchases, the
jumbo markets continue to suffer. In
order for the housing market to recover,
we need all segments of the market to
be firing on all cylinders.
Era of the Mortgage Professional
19
predictions for 2010
jurisdictions. There is, however, a distinction in the law between owning
the loan and having a right to enforce
the note and that distinction can
make the difference between whether
a foreclosure action is proper or not.
In the past, courts allowed parties to
file foreclosure actions based on the
assertion that those parties had the
right to enforce the note. I’ve fought
these actions by arguing to the court
that the foreclosing party needs to
prove ownership, which is more than
just a right to enforce the note. I
anticipate that more courts in 2010
will recognize the distinction between
the right to enforce the note and the
right to foreclose the mortgage and
more foreclosure actions will be dismissed as a result.
Mortgage modifications
and other foreclosure
alternatives will become
scarce
I believe that it will be harder to avoid
foreclosure in 2010. If a borrower is
seeking a mortgage modification, they
will probably be talking to one
department in the bank. If they are
seeking a short sale, they will likely be
speaking with a different department.
Foreclosures are handled by yet
another department in the bank. The
problem is that the different departments don’t talk to each other and
what one department is doing does
not affect the other. This means that,
for example, borrowers could be working on a modification with the loss
mitigation department, only to find
that the foreclosure department has
had them served with a foreclosure
summons. A pending modification
application does not prevent the borrowers from losing their house in foreclosure.
In general, I’m looking towards 2010
as a year in which foreclosures will continue at the current pace, but that borrowers will have more success in keeping the foreclosure wolves at bay.
Christopher G. Brown is foreclosure defense
practice chair for the Westport, Conn. law
firm, Begos Horgan & Brown LLP. He may
be reached by phone at (203) 226-9990 or
e-mail [email protected].
the secondary market overview
20
of RateLink. Eric indicated that he
shares these fears. “The Fed must eventually exit from this market and how
this plan plays out could very well significantly affect rates and thus our production next year.” If you would like a
recording of a Webinar in which Eric
gives a secondary update, e-mail us at
[email protected].
We are walking a tightrope right now.
The reason the mortgage markets cannot exist on their own is the fact that
mortgages are not seen as a safe investment. Until the default rates move
down to acceptable and tolerable levels, the markets cannot stand on their
own and government aid is critical. If
the government leaves before the markets are healthy, then we are talking
about a huge risk. The tax credit will not
help if rates move up significantly,
while lenders are still underwriting to
find gold in every file.
What does this mean for you? Rates
are low now. The tax credit is expanded.
Foreclosures will keep a lid on price
increases. We suggest you market these
conditions heavily to your sphere. This
may be the last chance for many in
America to obtain bargain real estate
prices with super low rates and a government kickback. There are not many
times in our history when the conditions will be so ideal for millions to purchase. You may want to consider marketing right through the holiday season
… and hope that the Fed makes the
right decision so that the momentum
continues through the New Year!
regulatory compliance outlook
ous RESPA requirements before (i.e.,
new monthly payment at first interest
rate change date or maximum monthly
payment for a variable rate loan).
Review carefully.
Escrow account information
The Escrow Section discloses if the originator requires an escrow account to be
set up to pay such items as hazard
insurance, real estate taxes, and so
forth. Note: The monthly payment
amount disclosed here includes only
principal, interest, and any mortgage
insurance, but does not include taxes
and insurance (escrows).
Summary of your settlement charges
This section contains a summary of (A)
the adjusted original charge, (B)
charges for all other settlement services, and (A + B) the total estimated settlement charges. Detailed information
about the charges appears on Page 2.
The amounts are summarized on Page
1 for the borrower’s convenience.
Understanding your estimated settlement charges—Page 2
Your Adjusted Origination Charge
This subsection consists of blocks.
Block #1: The loan originator discloses all the charges that the
loan originator will receive,
except for any charges for the specific interest rate chosen (i.e., the
discount points).4
Block #2: Discloses the credit or
charge (points) for the specific
interest rate chosen.5
Transactions not involving a broker.
There are two choices:
(1) Lender discloses the points or yield
spread premium as part of the origination charge in Block #1. If the lender
chooses this approach, then in Block #2,
the lender should check the box that says,
“The credit or charge for the interest rate
of_____% is included in ‘Our origination
Dave Hershman is a leading author for charge.’ (See item one above)”
the mortgage industry with eight books
and several hundred articles to his cred- (2) Lender discloses the points or yield
it. He is also head of OriginationPro spread premium as a separate line item
Mortgage School and a top industry in Block #2. If the lender chooses this
speaker. If you would like to stay ahead approach, then in Block #2, the lender
of what is happening in the markets, should follow the instructions for transvisit ratelink.originationpro.com for a actions involving brokers.
free trial or e-mail [email protected].
Transactions involving a broker.
For transactions involving brokers, brokers do not have the option of using the
first check box in Block #2 (to indicate
that the credit or charge for the interest
rate is included in the origination charge).
Brokers must check either the second or
the third check box under Block #2.
(1) If there is a yield spread premium being
paid, check the box that says, “You receive
a credit of $_____for this interest rate
of_____%. This credit reduces your settlement charges.” Note: The amount of the
credit is listed as a negative number.
(2) If points are paid to the lender,
check the box that says, “You pay a
charge of $_____for this interest rate
of_____%. This charge (points) increases your total settlement charges.” Note:
The amount of the charge is listed as a
positive number.
Note: At the bottom of this subsection is a line designated as Line A–“Your
Adjusted Origination Charge.” The
amount disclosed here is the sum of the
“Our origination charge” and the credit
or charge for the specific interest rate
chosen.
Your Charges for All Other Settlement
Charges
This subsection consists of various
blocks:
Block #3: The fees disclosed are
those fees for which the loan originator chooses the service
provider. The individual services
and the charges for those services
are disclosed and totaled in the
right hand column.
Block #4: Is for title services and
lender’s title insurance. The
lender’s title insurance premium
is included in this total.
Block #5: Includes the owner’s
title insurance fees, regardless of
who pays for it.
Block #6: Is for the required services
for which the borrower can choose
the service provider. The borrower
can choose a service provider from a
list that the loan originator may provide, or the borrower can shop for a
provider on his/her own.6
Block #7: Discloses the total of the
government recording charge.
Block #8: Discloses the total of
the transfer taxes.
Block #9: Discloses the initial
deposit for the escrow account (if
applicable).
Block #10: Discloses the amount of
daily interest charges from the date
of settlement until the first day of
the next month of the first day of the
normal mortgage payment cycle.
Note: Also discloses the per diem
charges, the number of days for
interest charges, and the estimated
date of settlement.
Block #11: Discloses the types and
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DECEMBER 2009
With minimal resources
available to them,
few mortgage servicers
have invested sufficiently in data management and predictive analytics to adequately identify borrowers most at
risk. But this appears to be changing,
according to new research conducted
by TowerGroup and distributed by
FICO. The study is published in the
FICO Mortgage Credit Risk Manager’s
Best Practices Handbook. It assesses
the current state of mortgage credit
risk management best practices
among leading institutions, analyzing
5LLKOLSW
JSVZPUN
TVYLSVHUZ&
FICO publishes study:
Best practices in credit
risk management to
increase profitability
the strategic application of technology
in financial services based on a survey
of senior mortgage credit risk managers who collectively account for 58
percent of first mortgage outstanding
debt.
Findings show that many more
loan servicers are moving toward a
stronger implementation of analytical tools, with half saying they are
currently implementing a solution,
and another 20 percent evaluating
solutions with the intent to implement them in the next six to 12
months. Executive management is taking note: 72 percent of survey respondents said their management has tightened its focus on credit risk management; the same number said they have
had organizational restructuring to
increase focus on distressed assets.
In a risk-averse environment,
lenders have responded with more
conservative loan underwriting practices, yet these practices are too often
applied to all loan applicants, putting
lenders in jeopardy of losing their
best clients. The report suggests that
use of customer segmentation analytics will be critical in order to keep
clients and maintain profitability. Yet
while most institutions have begun to
increase spending on analytic and
reporting tools, only 24 percent have
significantly increased their IT spending budgets.
Additionally, with the high demand
for loan modifications, servicers are
under increasing pressure to execute
unprofitable transactions in order to
keep people in their homes, all the
while trying to manage their own
portfolios to be lucrative enough to
stay in business. In these cases, adapting and adding technology for loan
modification programs can be critical.
Many are already implementing these
technologies, with two-thirds using
net present value software to automate required borrower eligibility
guidelines for government loan-modification programs. Yet only 36 percent
are using decisioning technology to
compare alternative loan forbearance
programs and decide on the optimal
program option.
“We’ve gained invaluable experience
working with mortgage lenders and servicers through our FICO Mortgage
Recovery Initiative (FICO MRI),” said
Joanne Gaskin, FICO director of mortgage scoring solutions. “We commissioned this study to more fully understand the loan remediation challenges
our clients face, and to gather best
practices for our clients to help them
improve portfolio profitability and
reduce the loan modification re-default
rate. By sharing what we’ve learned,
FICO can work even more effectively
with our clients, bringing the power of
www.NationalMortgageProfessional.com of permanent HAMP modifications
completed for Ocwen customers,” said
Ocwen President Ronald M. Faris. “We
believe it’s better for our business, and
better for struggling homeowners, for
us to do the difficult, detailed re-underwriting work up front. We’re committed
to modifications that stick; those are
the ones that help homeowners for the
long run, mitigate the mortgage crisis
and, importantly, generate incremental
revenue for our shareholders.”
Ocwen was one of the first servicers
to begin executing modifications under
HAMP and has pledged to work with
the Obama Administration to implement and improve its foreclosure prevention efforts.
“Sustainable modifications are the
key to a lasting solution to the daunting
foreclosure crisis which threatens so
many families,” said Ocwen Chairman
and Chief Executive Officer William C.
Erbey. “We applaud and support the
Administration’s efforts to assist homeowners with unaffordable mortgages.”
Ocwen recently convened more than
30 representatives of grassroots and
national housing advocacy organizations for a roundtable discussion to
share new ideas and insights related to
preventing foreclosures and helping
homeowners. The Ocwen and community groups’ representatives agreed
upon a number of imperatives, including: Working closely with Treasury to
arrive at more flexible guidelines so
more distressed homeowners qualify for
mortgage modifications under HAMP;
developing a national HAMP awareness
and information campaign to increase
homeowner outreach; focusing more
intensely on homeowners who are
unemployed or under-employed and
thus need state or federal assistance to
qualify for mortgage modifications; a
greater collaboration between servicers
and grassroots groups in providing realtime solutions for homeowners, including being more proactive about helping
borrowers early on, before they face the
prospect of foreclosure.
For more information, visit www.ocwen.com.
21
news flash
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22
Commercial real estate
industry investors and
professionals remain
decidedly negative,
colored by distress
over prospects for an extended period of
anemic demand and costly de-leveraging,
according to respondents of the Emerging
Trends in Real Estate 2010 report, released
by PricewaterhouseCoopers LLP and the
Urban Land Institute (ULI).
Survey respondents predict that commercial real estate vacancies will continue to increase and rents will decrease
across all property sectors before the
market hits bottom in 2010 and projects
value declines of 40 percent to 50 percent
off 2007 market peaks. Survey participants also believe that 2010 and 2011 will
present generational opportunities for
investors to buy at or near cyclical lows.
“Our report participants find that a
sense of nervous euphoria is growing
among liquid investors who can make
all-cash purchases,” said ULI Senior
Resident Fellow for Real Estate Finance
Stephen Blank. “Those that are patient,
daring and selective could score generational bargains on premium properties from both distressed sellers and
banks that are clearing out unwanted
bad loan and real estate owned portfolios. However, once the property market recovery begins and gains traction,
likely before 2012, any rebound could
be restrained by a lackluster economy
and rising interest rates.”
The survey data also indicates that
investors believe that capital will slowly
begin to flow back into commercial real
estate markets by the end of 2010, led
by all cash investors seeking quality
assets. The debt markets will start to
rebound too, but remain “far from normalized” in the wake of unprecedented
de-leveraging. Any lending will be conservative, expensive, and extended only
to the most-favored banking relationships. REITs, private equity funds, and
even refashioned mortgage REITs will
start to provide loans to battered borrowers but at a steep price.
“For 2010, our report finds that
investors will need to time the cycle and
only cash-buyers will benefit from the
emerging opportunities,” said Tim Conlon,
partner and U.S. real estate sector leader,
PricewaterhouseCoopers. “Investors will
need to be patient and transaction trigger
points will be improving job numbers, visibility into asset pricing and stepped up
tenant deals. Equity investors will need to
focus on quality assets and expect to hold
for at least a five to seven year period during the recovery, allowing fundamentals to
slowly improve.”
Survey participants believe that the
markets performing well before the
crash should perform better coming
out of it and the laggard markets will
continue to suffer. The report finds that
investors will continue to favor global
gateway markets on the East and West
Coasts. Cities and urbanizing infill suburbs with 24-hour attributes, brainpower centers that offer universities and
high-paying industries, as well as ‘barrier to entry’ markets where geographic
constraints limit development and help
control overbuilding will be top market
performers.
According to the survey, Washington,
D.C. ranks number one as the “recession-proof” city. Value declines have
been less than other markets as
employment is buffered by the federal
government. Long-term confidence
holds for New York and Boston, despite
financial industry downsizing. West
Coast gateways, such as San Francisco,
Seattle and Los Angeles, have all suffered ratings declines, but remain
among the survey’s top 10 major markets. Texas markets continue to show
strength after years languishing in the
survey basement.
For more information, visit www.uli.org
or www.pwc.com.
Your turn
National Mortgage Professional Magazine
invites you to submit any information on
regulatory changes, legislative updates,
human interest stories or any other
newsworthy items pertaining to the
mortgage industry to the attention of:
NMP News Flash column
Phone #: (516) 409-5555
E-mail:
[email protected]
Note: Submissions sent via e-mail are
preferred. The deadline for submissions
is the 1st of the month prior to the target issue.
• Daily updated mortgage industry news
• Industry blogs
• Find loan programs
• Discover local and national events
amounts of homeowners insurance
that will be required to be paid by
settlement and totaled in the right
hand column.
Note: At the end of this subsection is
a line designated as B – “Your Charges
for All Other Settlement Charges.” The
amount disclosed here is the total of all
the charges under “Your Charges for All
Other Settlement Charges.” Lines A and
B are totaled together to disclose the
“Total Estimated Settlement Charges.”
•
(2) Interest rate dependent fees, if the
loan has not yet been locked.
borrower or the transaction, that
was relied on in providing the
GFE and that changed or was
found to be inaccurate after the
GFE was provided.
New information particular to the
borrower or the transaction, which
was not relied on in providing GFE.
Exceptions:
(1) GFE expires (i.e., exceeds the 10 business days disclosed on page 1 and the borrower requests another initial GFE); and
Using the tradeoff table
The table in this section is meant to
help the borrower compare the transaction disclosed on the GFE with similar
transactions:
The same loan with lower settlement charges but a higher interest
rate.
The same loan with a lower interest rate but higher settlement
charges.
Using the shopping chart
The shopping chart section is meant to give
the borrower the ability to compare the
information from this GFE with the information from the GFEs of other loan originators.
The “This loan” column is completed
by the loan originator. Columns
labeled “Loan 2,” “Loan 3” and “Loan
4” would be completed by the borrower by hand as the borrower shops
around with other loan originators.
If your loan is sold in the future
This section informs the borrower that the
lender may sell the loan after settlement.
Note: Loan originators have the
option of completing this section.
Understanding which charges can
change at settlement—Page 3
This section gives information to the
borrower to help the borrower understand what to expect for final charges
on the HUD-1 Settlement Statement.
There are no completion fields in the
Understanding section; therefore, it is
important to place each fee in the
appropriate category. Charges fall into
one of three categories:
1. Charges that cannot increase at
settlement.
2. The total of these charges can
increase up to 10 percent at settlement.
3. These charges can change at settlement.
Note: These charges can be understood as three types of tolerances
(respectively):7
1. Zero Tolerance
2. 10 Percent Tolerance
3. No Tolerance
•
An act of god, war, disaster, or
other emergency.
Information particular to the
EXECUTIVE OFFICES:
108 Corporate Park Drive, Suite 301, White Plains, NY 10604
CALL: Kelley Berkheiser at (443) 418-7213 or
Louis Tesoriero at 888-329-GHMC.
www.joinguaranteed.com
DECEMBER 2009
•
Guaranteed, an established and well-funded Mortgage Banker since 1992, is
positioned to continue its prominence in the industry. As a leading FHA Direct
Endorsed Lender, we underwrite all files in-house. This allows for faster approvals,
common-sense underwriting and timely closings. We are actively seeking relationships
with productive mortgage teams and entrepreneurial mortgage professionals.
A “changed circumstance” includes
the following:
Residential Mortgage Banking
Branch Program for Professionals
www.NationalMortgageProfessional.com The loan originator is bound by the
initial GFE and the tolerances
described in the Understanding
about which charges can change at
settlement. There are a limited
number of circumstances under
which a revised GFE may be given.
The revised RESPA rules refer to this
situation as a “changed circumstance.” If a changed circumstance
allows for re-disclosure of the GFE,
then the charges from the re-disclosed GFE will be used when comparing the GFE charges with the
HUD-1 charges. This comparison is
found on page 3 of the new HUD-1.8
Note: the rule also provides a remedy for tolerance violation (and HUD
itself has acknowledged that fee tolerance may be difficult to meet at
times): Violations of fee tolerance
can cured by reimbursing borrowers
the amount by which the tolerance
was exceeded. (Reimbursement
must be made at settlement or
within 30 days of settlement.)
23
recently had an opportunity to follow up
with National Association of Mortgage
Brokers Immediate Past President Marc
Savitt of The Mortgage Center in
Martinsburg, W. Va. to discuss his trip to
New York City and the offices of New York
State Attorney General Andrew Cuomo.
The purpose of the trip was to present the
Office of Attorney General Cuomo with
120,000-plus signatures from consumers
and the mortgage industry agreeing that
24
120,000-plus signatures from both industry professionals and consumers.
Savitt’s day in Manhattan started at the
studios of Fox News for a live interview
with the anchors of Fox Business News to
discuss the harmful effects of the HVCC.
Savitt described the people at Fox News as
very helpful in wanting to get the message
out on the negative impact of HVCC.
“The Attorney General’s Office is looking at a lot of opposition to this right
now,” said Savitt. “They really don’t have
a lot of friends out there, so
it would be in their best
interest to create some type
of modification or revision
to this Code so that everybody can live with it. The
consumer will still be protected, but at the same time,
it will not harm the consumer or small business.”
After the Fox interview,
Savitt and the contingent of
mortgage professionals venNAMB Immediate Past President Marc Savitt and tured off to Broadway to delivthe group of mortgage professionals outside the
er 35 boxes of letters and petioffices of New York State Attorney General Andrew tions to Cuomo’s office. The
Cuomo in Manhattan
delivery was covered by another major media outlet, CNBC.
the Home Valuation Code of Conduct
Savitt, along with Garay and Stevens,
(HVCC) is harmful to the housing market went up to the offices of the New York
and detrimental to the home buying State Attorney General and had a meetprocess. Included among the signatures, ing with two of Cuomo’s senior attorwhich were hand-delivered in 35 boxes neys. The meeting was the fourth by
by a group of mortgage professionals Savitt with Cuomo’s office since May.
who made the trip from as far as Virginia,
“This, by far, was the most productive
were letters and HVCC “horror stories” meeting,” said Savitt. “The first two meetfrom consumers, appraisers, real estate ings, of course, we tried to get them not to
agents and mortgage brokers.
implement the HVCC. I met with them last
“We have one state Attorney General
who appears to be promulgating a rule
or regulation across the entire country,”
said Savitt.
Along for the ride with Savitt were
Frank Garay and Brian Stevens, co-creators of Think Big Work Small. Both
Frank and Brian have used their Web
site, ThinkBigWorkSmall.com to discuss
the HVCC and present the industry’s view
on how the HVCC should be halted Frank Garay (third from left) of Think
immediately through the duo’s daily Big Work Small is joined by some volvideo updates. Frank and Brian served as unteers who wanted their voice heard in
a driving force behind soliciting the New York City on the ills of the HVCC
May after the Code was in effect for
about three weeks. They weren’t
interested in hearing anything and
didn’t think there were going to be
any problems with it.”
In addition to the petitions, Savitt
also presented a study conducted by
Interthinx, which cited mortgage
fraud in property valuation having
increased 25 percent from the second quarter of 2009 to the third Members of the group gather and prep for the
quarter of ‘09, an overall increase of meeting with reps from Cuomo’s office
46 percent from the previous year.
The third quarter of 2009 represented the first full quarter that the HVCC has determine if harm would be caused to
been in effect.
small businesses, consumers and others.
“The Attorney General’s Office now The problem they are having right now is to
acknowledges that there are problems keep their Code in place, perhaps with
with HVCC,” said Savitt. “They want to some modifications and revisions so that
have dialogue with us to correct these everybody can live with this … the conproblems. We told them that the only sumer will be protected and small businessway to get rid of this list of problems is es won’t be harmed.”
to have the brokers back in charge of
NAMB continues to update the mortthe ordering process.”
gage broker community through its
The two sides agreed to meet again HVCC Resource Center section on their
between Thanksgiving and the end of the Web site, www.namb.org.
year, and both sides will come to the table
with options to get the HVCC issues resolved.
“To get a meeting like this, you usually
send three or four e-mail requests that go
ignored,” explained Savitt. “The Attorney
General’s Office is deathly afraid of negative
press, so the final e-mail I sent stated that
we were going to the press with this issue
and that they would be contacted for an
interview. Within three minutes of sending
that final e-mail, on a Saturday afternoon
no less, I received correspondence from a
Boxes containing petitions with
senior attorney with the Attorney General’s
120,000-plus signatures are unloaded
Office granting the meeting.”
for delivery to Attorney General
In February of 2009, NAMB, with the
Cuomo’s office
support of Baker & Hostetler LLP, filed a
lawsuit with the United States District
“One thing this issue has done is highCourt for the District of Columbia light the need for everybody to work
against then Federal Housing Finance together as a team,” noted Savitt. “That is
Agency (FHFA) Director James B. the only way we will accomplish not only
Lockhart over the HVCC included in the fixing HVCC, but maybe future issues that
appraisal agreements between the may come down the road. We are living in
FHFA, Fannie Mae and Freddie Mac a world today where people can’t go at it
(GSEs), and Attorney General Cuomo.
alone … everybody has to work together
“They never followed the Administrative for the common good of not only the
Procedure Act, which was the basis of our industry, but the consumer. Hopefully, this
lawsuit against them,” said Savitt. “They is the beginning of that process and we
never followed the proper procedures to won’t be dealing with this much longer.”
safe smart
responsibly.” This is not a revelation.
This is good business. We should take it
to heart.
SAFE outcome
Informative Research
and ValuFinders form
partnership
My SAFE-smart position
We must rethink our marketing impres-
Paul Donohue, CRMS is a 23-year industry
professional and founder of Abacus
Mortgage Training and Education. Paul
served on two NMLS working groups, establishing the new national education protocols. Go to AbacusMortgageTraining.com to
find out more about your obligations for
testing, education and licensure, or call
(888) 341-7767.
Credit Plus pushes green
initiative
Pro Teck moves to new
HQ and unveils new logo
The number one reason you should attend this event is the satisfaction of
knowing you are doing your part to ensure that mortgage broker issues are
heard on Capitol Hill. You are the best spokesperson for our issues. Your participation benefits you, the industry and your clients as a whole, by strengthening the broker’s presence in the halls of Congress.
And if that doesn’t convince you, here is just one reason given a by past
attendee ...
Debate the Hottest Issues Affecting Your Business
Today
“I have been attending this conference for the past 10 years and each year revitalizes my knowledge of how the political process contributes to the mortgage
industry. It is essential for NAMB members to discuss issues and make positive
change for mortgage brokers and their customers.”
—John Marcell
Key Issues in 2010 Include:
Regulatory reform (RESPA, TILA, HVCC and more!)
The National Mortgage Licensing Act (SAFE Act)
The Consumer Financial Protection Agency (CFPA)
And much more!
It’s all happening now!
Visit www.NAMB.org for details!
Hotel Accommodations
Hyatt Regency Washington on Capitol Hill
400 New Jersey Avenue, NW
Washington, D.C. 20001
Phone #: (202) 737-1234
Toll Free #: (888) 421-1442
DECEMBER 2009
Pro Teck Valuation
Services, a real
estate valuation
provider, has announced a new corporate
Why you should attend
Credit Plus Inc. has
announced that supporting documents to complete supplements can
now be directly uploaded
through its credit system. This new procedure is an important step towards the
company’s overall goal to adopt more
green initiatives that have a positive
impact on the environment.
“Credit Plus is determined to help protect the environment,” said Greg Holmes,
national director of sales and marketing
at Credit Plus. “We are focusing on making the mortgage transaction as paperless
as possible and plan on rolling out additional green efforts in the near future.”
Previously, when a loan officer was
working on a file and the potential borrower stated that there was an inaccuracy on his/her credit report, the supporting document would have been faxed or
e-mailed to Credit Plus. Now, there is a
hyperlink from the trade line that
allows the document to be immediately
attached to it in Credit Plus’ system.
Additionally, and since June of 2008, all
of Credit Plus’ customers receive a onepage invoice with a link to a secure Web
site to review account details. This has substantially reduced the amount of paper
being utilized. The company estimates
that it has reduced its paper usage by 30
reams a month, which is the equivalent of
saving nearly two trees every month.
For more information, visit www.creditplus.com.
www.NationalMortgageProfessional.com Informative Research,
a provider of mortgage credit information nationwide, and
ValuFinders, a provider of valuation services to national lenders and government
agencies, have announced a strategic
partnership which provides seamless
integration of their systems enabling
lenders to maximize the best of both
companies’ core strengths. As a result of
this partnership, lenders and brokers now
benefit from a comprehensive online
appraisal ordering and delivery service.
Specifically, clients of Informative
Research will benefit from seamless integration into ValuFinders Appraisal
Concierge, an online appraisal ordering
and delivery service that allows lenders
to use a blind-draw system to randomly
select certified and Federal Housing
Administration (FHA)-approved real
estate appraisers. Used in conjunction
with Informative Research’s comprehensive suite of mortgage credit information
services, Appraisal Concierge enables
lenders to easily stay in compliance with
federal guidelines including the Home
Valuation Code of Conduct (HVCC).
“In today’s constantly changing mortgage marketplace, accurate and timely
valuation is critical,” said Brad Kelso, vice
president of marketing at Informative
Research. “Our business model is built on
quality and superior customer satisfaction. Our customers are demanding alternatives to appraisal management companies due to their high fee structure and
inexperienced appraisers. We responded
to meet our clients’ needs and we discovered the perfect partner in ValuFinders.”
With ValuFinders Appraisal Concierge,
Informative Research customers can
meet HVCC requirements, source appraisers from a national network of certified
appraisers, attach documents to order
requests, coordinate and confirm the
delivery date and fee, and track orders
from inspection to delivery. The Appraisal
Concierge service includes appraiser
independence, monitored communications and automatic delivery of the
appraisal to the lender, streamlining the
process while ensuring compliance.
“We are extremely pleased to be partnering with Informative Research, a company who shares our passion and commitment to exceeding client expecta-
tions,” said Joe Williams, president of
ValuFinders. “Since 1999, we have strived
to deliver the industry’s most comprehensive and reliable suite of valuation
and collateral risk solutions, backed by
the most trusted network of certified
FHA-approved appraisers. We go to great
lengths to pay our appraisers full fees to
ensure our high standards for quality are
met each and every time.”
For more information, visit www.informativeresearch.com or www.valufinders.com.
The good news is that we will no longer
be competing against shortsighted
opportunists with no commitment to
professionalism; a higher-level playing
field of competition has been set.
However, you must brace yourself: These
new standards demand excellence and
will challenge even the most experienced
originators. In the New Year, we’ll all
have to earn our place in this profession.
All who fall short will be shown the exit.
sions to reposition ourselves as mortgage professionals and consumer advocates. We are operating in a skeptical
marketplace looking for someone to
trust. When we become the borrower’s
advocate, we will earn that trust, watch
our business flourish and restore professional excellence to this business we
love so much.
25
The new HUD-1 and
HUD-1A Settlement
Statements
The new HUD-1 (and HUD-1A) compares
the fees disclosed on the GFE and the HUD1 Settlement Statement. However, the
HUD–1 Settlement Statement now consists
of three pages (the HUD–1A consists of two
pages). It should be noted that HUD made
similar revisions to both the HUD-1 and
the HUD-1A. Therefore, references herein
to HUD-1 apply as well to the HUD-1A.
Main sections of the new HUD-1:
Page 1: No substantive changes.
Page 2: Certain substantive changes.
Lines now refer to Block numbers from
the GFE. This is meant to help the borrower understand how the charges from the
GFE are now populated on the HUD-1.
Page 3: New page, with numerous
substantive changes.
Top Section
The top of the page has a comparison of
the GFE and HUD-1 charges. Comparisons
are divided into three areas:
Charges That Cannot Change
Charges That in Total Cannot Increase
More Than 10 Percent
Charges That Can Change
26
This part of the new HUD-1 is correlated to the “Understanding” section discussed above (Page 3 of the GFE), indicating which charges can change at settlement. As noted above, the new
Understanding section gives detailed information regarding which of the three areas
is appropriate for a particular charge.
Note: In the subsection “Charges That
in Total Cannot Increase More Than
10%,” the GFE charges and the HUD-1
charges are totaled (for those charges
that fall into this category). If the HUD-1
totals higher, the dollar amount of the
difference must be disclosed, along with
the concomitant percentage change.
The change may not exceed 10 percent,
without violating the 10 percent change
limitation in this category.
Bottom Section
The bottom half of Page 3 provides a summary of the loan terms, similar to the
“Summary” on the GFE (see above). The
section includes information about the initial loan amount, loan term, initial interest
rate, and periodic payment amount. There
are also certain “Yes” or “No” questions
regarding whether or not the interest rate,
loan balance and payment amounts may
increase during the life of the loan, and if
the loan includes a prepayment penalty or
a balloon payment.
Any affirmatively answered item
requires additional information, and spaces
are provided for completing required information relating to that feature.
The final block contains the “Total
monthly amount owed including escrow
account payments.” Unlike the GFE, this
area of the HUD-1 gives the initial
monthly payment, which includes principal, interest, mortgage insurance (if
any), taxes and insurance (escrows).
Note: The area on the GFE correlating
to this are of the HUD-1 gives the dollar
amount for the initial monthly payment, including only principal, interest,
and mortgage insurance (if any).
Submit your questions …
Do you have a regulatory compliance
issue that you’d like to see addressed in
the Regulatory Compliance Outlook
Column? If so, e-mail your issue or concern to Jonathan Foxx at [email protected].
Jonathan Foxx, former chief compliance
officer for two of the country’s top publicly-traded residential mortgage loan
originators, is the president and managing director of Lenders Compliance
Group, a mortgage risk management
firm devoted to providing regulatory
compliance advice and counsel to the
mortgage industry. He may be contacted
at (516) 442-3456 or by e-mail at
[email protected].
Footnotes
1-HUD is publishing revisions to the
Settlement Cost Booklet. This new
booklet must be used along with the
new GFE and HUD-1.
2-For more detailed information,
please review the following Appendices
from the RESPA regulation: Appendix
A—Instructions for completing the
HUD-1 and HUD-1A; Appendix C—
Instructions for completing the Good
Faith Estimate (GFE).
3-Lenders can choose to implement the
GFE and HUD-1 earlier than Jan. 1,
2010.
4-All of these various charges (i.e., origination fee, application fee, underwriting
fee, etc.) and their impact on APR and
Section 32 are all lumped together into
the “origination charge” for purposes of
disclosure on the GFE and the HUD-1.
5-Completed in different ways, depending upon whether a broker is involved
in the transaction.
6-If the loan originator does provide a
list of service providers, the loan originator is held accountable for the accuracy of the disclosed charges.
7-The revised RESPA rule allows for the
use of an “average charge,” based on
the average charge for a class of transactions. For instance, averages from a
specific time period between, say, 30
days and six months, given a common
geographic area, and the same loan
type. The “average charge” must be
used for all transactions within that
class. The “average charge” rule went
into effect Jan. 16, 2009.
8-The only fees that may change are
fees that were affected by the changed
circumstance.
HECM at 20: Leaders and Pioneers in the
U.S. Reverse Mortgage Industry Series (IV)
The Reverse Quarterback
From Wall Street
Home Equity Conversion Mortgages Loans’ reverse mortgage division, is the
(HECMs) and private reverse mortgages gave investment-banker-turned-industry
birth to a new asset class, but the sharp executive who brought the U.S. reverse
financial minds on Wall Street missed this mortgage industry to Wall Street and
seminal event for almost a decade. Then in vice-versa, a reverse quarterback of sort.
Following his stint at Lehman, Corn
1998, Lehman Brothers tapped a young
investment banker to start its reverse mort- joined Financial Freedom as executive
vice president with responsibility for
gage business, the first on Wall Street.
To understand the new industry and wholesale/correspondent, capital markets
and secondary marketing.
to plant Lehman’s flag in it,
Twelve months later, he
the banker ventured into
left Financial Freedom to
reverse country. First, he
care for an ailing parent.
identified the industry’s
Corn resurfaced as part of
key players and assessed
the transition management
their needs: They needed
team at BNY Mortgage.
capital to grow. Second, he
When EverBank took over
initiated Lehman’s acquisiBNY Mortgage and created
tion of some jumbo propriEverBank Reverse Mortgage,
etary reverse loans from
Corn became a co-president
Transamerica HomeFirst
of the company. In 2008,
(THF), a reverse mortgage
Metlife
Bank
bought
pioneer which was exiting
the business. The THF “Some investors under- EverBank Reverse Mortgage,
and Corn was named vice
loans became the collaterstand it, but many
al for the first reverse mort- potential investors have president and head of its
gage securitization in the yet to purchase a reverse reverse mortgage business.
A 1987 accounting
U.S. engineered by Lehman mortgage-backed secugraduate of Muhlenberg
Brothers in 1999.
rity, so there is much
College, Craig and his wife,
Third, calling on other
education
ahead.
”
Laura, have four children.
talents at Lehman and
—Craig Corn, Vice
The following are his
using cash from the THF-LB
President, Head of
reflections on the industry
assets (jumbo reverse
he has helped to shape.
Reverse Mortgages,
loans) sale, the banker
helped Financial Freedom
Metlife Bank
At Lehman Brothers in
Senior Funding Corporation
(FFSFC … then a unit of Union Labor Life 1999, you were part of the team that pioInsurance Company [ULLICO]) to buy the neered the securitization of reverse
origination and servicing assets of THF, a mortgages in the U.S. secondary market.
transaction which propelled Financial What attracted you to reverse mortgages
Freedom into the front ranks of reverse as an asset class, and why did you commortgage lenders and servicers in the U.S. mit to them?
Then, the banker envisioned and ini- I had been involved in reverse mortgagetiated Lehman’s investment in FFSFC, type products before joining Lehman
Unity Mortgage, and other reverse mort- Brothers in 1998. In the United Kingdom,
gage lenders, giving Lehman a strategic I helped develop the market for shared
position in the emerging industry, as appreciation mortgages, a type of equitywell as access to loans for jumbo reverse release mortgage product, similar to
mortgage-backed securities.
Craig Corn, head of MetLife Home
heard on the street
logo and the move of its corporate headquarters. The new logo is part of a larger
rebranding project. With record growth
over the past few years, including being
recognized in the Inc. 5000 as the 12th
fastest-growing privately-held real estate
firm in the United States, Pro Teck saw the
need to ensure its culture and purpose
were clearly articulated to a growing family of employees, vendors and clients. The
rebranding effort will sharpen Pro Teck’s
mission and message.
“Pro Teck’s shift to a new look symbolizes
the accuracy, service and expertise we deliver to our customers. Our focus is to provide
the most accurate real estate valuations,
custom configured to meet the business
needs of originators, servicers, investors and
underwriters,” said Tom O’Grady, chief executive officer of Pro Teck. “We believe the
new logo captures the spirit of how Pro Teck
effectively delivers its services.”
Pro Teck will also be moving its corporate headquarters to a new building that
will more than double its current space.
“Success has made this move necessary,” said O’Grady. “Fortunately, we
were able to find a new home less than
a half mile from our current location,
making the transition seamless to our
customers and employees. The new site
provides an excellent working environment for our staff, and will allow us to
meet the future needs of our clients.”
For more information, visit www.protk.com.
NAR announces tech
acquisition of LPS Real
Estate Group
DECEMBER 2009
Equifax Inc. has
announced that
it has acquired Rapid Reporting
Verification Company, a privately-held
national provider of IRS tax transcript information and Social Security Number
authentication services. The addition of
Rapid Reporting will enhance Equifax’s
ability to provide lenders with improved
Equifax acquires Rapid
Reporting
www.NationalMortgageProfessional.com The National Association
of Realtors (NAR) has
acquired technology to
create a database of
all properties in the
U.S. The technology acquisition includes
licensed data and secured data aggregation
services from LPS Real Estate Group, a wholly-owned subsidiary of Lender Processing
Services Inc. NAR will use the assets to develop the Realtors Property Resource (RPR), a
parcel-centric information database covering all of the more than 147 million property parcels in the country as a resource for
NAR members. NAR is planning to launch
RPR in the second quarter 2010.
“Realtors are the first, best source for
real estate information, and the RPR is
another emphatic feature to that
resource,” said NAR President Charles
McMillan, a broker with Coldwell Banker
Residential Real Estate in Dallas-Fort
Worth. “RPR will give Realtors nationwide
data on all properties at their fingertips so
they can respond quickly to consumers
interested in residential and commercial
real estate. This is exciting news and a terrific NAR member benefit. NAR is committed to keep Realtors central to the transaction and to the buying and selling experience with their clients and customers.”
The management team of RPR includes
Chief Executive Officer Dale Ross, cofounder of the Metropolitan Regional
Information System; President Marty
Frame, former general manager of
Cyberhomes; Senior Vice President of
Industry Relations Mona Steen, former senior vice president with Cyberhomes; and
Jeff Young, NAR director of the Realtors
Property Resource and 2008 president of
the Michigan Association of Realtors.
RPR will provide nationwide access to
public record information, such as tax
and assessment data, liens, zoning, permits, environmental information and
information on neighborhoods, school
district and community demographics,
along with advanced search features for
property searchers, as well as market-tomarket comparisons and referral opportunities not currently available.
“These acquisitions will allow Realtor
interests to control the program and the
content,” said NAR Chief Executive Officer
Dale Stinton. “Realtors need to respond
quickly to today’s tech-savvy consumers,
and the RPR provides a means for multiple
listing services (MLS), commercial information exchanges (CIEs) and real estate brokerage business models to support the Realtor
community, rather than requiring Realtors
to purchase data aggregated by third parties. RPR is not a national MLS, and will carry
no offers of cooperation and compensation.
It is a private, NAR members-only benefit.
The assets acquired by NAR will be directed
through a wholly owned subsidiary corporation, Realtors Property Resource LLC.”
RPR will develop business strategies to
make it affordable and feasible for NAR
members, and will complement, not compete with, MLSs and CIEs. While many MLS
and CIE systems provide a range of services, no two are alike. Brokers are looking
for tools that support their agents across
multiple markets with similar service levels and access to robust and valuable
data. RPR is designed to support local MLS
and CIE models to create a common experience for agents and brokerages.
“We’re honored to have been selected
by the National Association of Realtors to
provide technology, data and other services for the RPR,” said Jay Gaskill, president of
LPS Real Estate Group. “Being involved with
such a transformational industry initiative
serves as an endorsement for our company
and the premier products and services we
provide to MLSs and associations, brokers,
franchisors and sales associates.”
For more information, visit www.realtor.org
or www.lpsvcs.com.
27
BY DAVID LYKKEN
A few months ago, I wrote metaphorically about the C-level executive who was
looking out over the landscape of the
industry from a high-rise corporate
boardroom window pondering the
storm clouds that were coming at the
industry, and therefore, at their company. It is true that as C-level executives, we
spend most of our time looking externally at the risks that could threaten our
business. However, often overlooked are
the hidden internal risks that can sink
our “boats” … and there is nothing like
the F-word that can do just that.
For the mortgage lender, there is no
greater internal risk to a company’s survivability than fraud. Using that very
word as an acronym, allows me to highlight five areas every C-level executive
should consider when examining internal risks. They are as follows:
It is analogous to flying an airplane
with a faulty compass. Not knowing
where “true north” is, could lead to disaster. You don’t necessarily need to know
how a compass works to navigate an airplane. But you absolutely have to know
how to read a compass. That may seem
like an over simplification, but it works.
Here’s where I am going with this …
and I am going to expand upon this in
the “Accounting” section below. Too
many C-level executives have no clue if
their financials are accurate. They are
flying blind. When in this condition,
they are unable to detect if there are
things going on “below the surface”
such as someone embezzling money
from the company. You would be surprised to know how much of that is
going on in companies across America.
Mortgage companies that originate
loans must have a demonstrated
There’s an old saying that has been cir“zero tolerance” policy against fraud,
culated around the mortgage industry
and the definition of fraud needs to
for years that goes something like this
be clearly spelled out.
… “A mortgage lender
Investors need to stop
never really ‘sells’ a loan
making ridiculous repurto an investor … he
chase demands and
merely ‘rents’ it to an
inventing “fraud” where
investor until something
no fraud existed. The
goes wrong with the loan
investors who intentionand then the investor
ally do “forensic undermakes them take the
writing” to “discover
loan back”
fraud” are about as
Starting in 2007, more
morally bankrupt as the
companies have been driven
originator that purposeout of business by investor
fully does something in
repurchase demands than
“Trusting in inaccuthe origination process
almost any other single
rate or even frauduthat is fraudulent.
thing. It used to be that only
lent financials has
mortgage bankers had to
been the undoing of
Accounting
deal with repurchase
many companies.”
In this article, we are pridemands. However, today,
marily focusing on fraud
mortgage brokers are facing repurchase demands also, it seemed … and now specifically, accounting
like this threat seemed to abate some fraud that involves embezzlement. This
until just recently. In recent weeks, we is the worst nightmare of every busihave seen another round of repurchase ness owner.
As a consulting firm, we are frequentdemands, but this time, with more
increased intensity than ever before. That ly asked by C-level executives, usually
old saying seems to be more true today the business owner, to come into their
company because he or she has begun
than ever before.
The easiest and best way for a C-level to suspect embezzlement has or is takexecutive to mitigate repurchase risk is ing place. And when we confirm that
to read all legal agreements before that there is or has been an embezzlesigning. If there is language in those ment going on, more than 90 percent of
agreements that represents undue risk, the time it is being done by someone
you have one of two choices: Not sign- that the C-level executive trusted implicing it or changing it. Unfortunately, itly. There are not too many things
many C-level executives wait until they worse than a trust violated. It can take
are presented with a repurchase years to recover financially and emodemand to read the agreement. Believe tionally and many never do.
Accounting systems such as
it or not, you can mitigate this risk by
inserting and/or deleting language in QuickBooks are too easily manipulated.
the agreement. I know, to many of you Frequently, accounting “irregularities”
Repurchases
Financials
Repurchases
Accounting
Underwriting
Due diligence
28
As a consulting firm with clients
coast-to-coast, it is in these five areas
where we see internal risk that has
proven life-threatening to many mortgage companies.
Financials
Trusting in inaccurate or even fraudulent financials has been the undoing of
many companies. In today’s world of
computerization, it isn’t surprising that
virtually every mortgage company uses
some type of accounting software system to generate financial statements.
Of all the software systems in the market, the one we see the most is Intuit’s
QuickBooks. It is not because it is the
best system … far from it. That said, it
can and does work for thousands of
mortgage companies today. No matter
which system the company chooses, it
comes down to the old acronym “GIGO”
(Garbage In, Garbage Out).
C-level executives need accurate
financials to make critical business decisions. “Manage by the numbers” is the
only way to effectively manage any business. Yet, most C-level executives are typically not known for their strong
accounting skills. They are more entrepreneurial by nature with strong intuitive skills. But when you have someone
with strong intuitive skills trying to apply
them to the financial management of
their company, the results can often be
disastrous. This is the classic “flying by
the seat of your pants” gone bad.
reading this, that seems like a fantasy.
Most of the investors that are
demanding loans to be repurchased are
claiming fraud as the basis for the
repurchase demand. One of the most
effective ways to manage repurchase
risk is to closely manage your production operation. I don’t care how good
someone might be at negotiating contracts, no investor in their right mind
would agree to buy loans if the mortgage company would not indemnify
that investor against fraud. We all know
that the problem with many repurchase
demands is that the investor is claiming
“fraud” when no fraud was committed.
The solution to this problem may seem
over simplistic and “Pollyannaish” but
it really isn’t. And the solution is twofold.
start off as innocent mistakes, but then
when someone discovers a way to “creatively” resolve the mistake, they also
discover how easy it is to manipulate
the system. Therefore, someone with a
“motive” (i.e., short on cash to pay their
bills) can start “manipulating” the
books to misrepresent the facts so they
can “borrow” some money from the
company “on a short-term basis” to
“make ends meet” until “some other
money (miraculously) can be found.”
This is regrettably becoming increasingly more common given our country’s
economy and the financial stresses
being experienced by many.
To understand how accounting fraud
can be avoided, we first need to come
to grips with the core of the problem …
at least most of the time. As I said earlier in the “Financials” section, most Clevel executives are not known for the
in strong accounting skills. To them,
diving deep into transactional details is
on the same level as having a root canal
… they hate details. They love the saying, “Don’t tell me about the labor
pains … just show me the baby!” Even
some of the biggest control freaks
quickly delegate accounting details to a
trusted “bean counter” type. However,
the further away they get from the
numbers, the more susceptible they are
to accounting fraud that then leads to
embezzlement.
If you rely upon a Certified Public
Accountant (CPA) firm to do your annual audit, think again. In every situation
we are brought in where there was
embezzlement, the CPA firm that did
the annual audit failed to discover the
financial fraud. All too often, the CPA
firm that does the audit can become
too comfortable with those people in
accounting doing the fraud. It is a good
idea to change CPA auditors every so
often. You, as the C-level executive,
should select the auditing firm. It is a
conflict to have accounting staff select
the CPA firm that does the audit.
In almost every situation where we
were called in to a company where
embezzlement has taken place, we discovered these common denominators.
The embezzlement was done by a
highly trusted employee.
It was someone they had known personally for a long time.
It had been going on for a fairly long
time.
They trusted this person as if they
were family.
forward on reverse
heard on the street
reverse mortgages. So I was already
familiar with the reverse mortgage product when I returned to the U.S.
What attracted me to the reverse mortgage was its newness. It was different
from anything I had seen before, and it
had potential for growth along with
America’s older population. Moreover,
once we understood the favorable traits of
reverse mortgages (for example, that prepayment was linked not to interest rates,
but to mortality), we felt they would be
attractive to investors once we overcome
their inherent lack of periodic cash flow.
How was the experience of creating
the first reverse mortgage securitization for your investors, for Lehman
Brothers, and for you?
The experience of creating the first
reverse mortgage securitization was very
exciting. The team at Lehman Brothers
knew that we were breaking new ground,
and although the process of working with
lawyers, accountants, rating agencies,
investors, etc. was long and involved
many late nights, there was a tremendous
amount of pride in being involved in such
a ground-breaking transaction. In addition, this securitization led to Lehman
Brothers’ investments in the business by
buying several reverse mortgage companies, including Financial Freedom.
Lenders One
Mortgage
Cooperative, a national alliance of
independent mortgage bankers, has
announced that MetLife Bank NA, a
subsidiary of MetLife Inc., as its newest
preferred investor. The relationship will
position MetLife Home Loans’ Reverse
Mortgage Division to purchase cooperative members’ closed reverse mortgages and fixed-rate home equity conversion mortgage (HECM) products.
“The reverse mortgage product is
very important to seniors looking for
ways to fund a comfortable retirement,
as well as to our members, for whom
the reverse mortgage business represents significant opportunities for
growth,” said Scott Stern, chief executive officer of Lenders One. “Reverse
mortgage lending is still a relatively
untapped business channel for many
lenders. We believe that MetLife’s experience in this sector of the industry will
support our members’ efforts to grow
their business in this market and allow an
additional way for them to provide needed products in the communities they
serve. We are so pleased to welcome
MetLife as a preferred investor, especially
because they are the top issuer of Ginnie
Mae HECM mortgages in the country.”
“With maybe 10 investors in the country buying reverse products, there are lim-
Servicing Source
announces its acquisition
of Level 1 Loans
The Servicing Source,
a division of the
Sextant Group Inc.
and provider of
mortgage asset pricing services and models, has announced
the purchase of Level 1 Loans from
IntraPrise Solutions. Concurrent with this
acquisition, the Servicing Source will be
renamed Level 1 Loans. IntraPrise
Solutions will continue to provide technical support for this new brand of asset
valuation models.
The mission of Level 1 Loans is to
bring mortgage asset pricing as close to a
true level 1 valuation under FAS 157 as
possible. This means striving for quoted
prices, of identical assets, in active markets, at the measurement date. Level 1
Loans will combine its proprietary cashflow model with its newly-acquired loan
level slotting and pricing engine.
“This system avoids the subjectivity
inherent in the cashflow modeling relied
on by most valuation systems,” said Dr.
Thomas J. Healy, CMB, president of Level
1 Loans Inc. “It identifies what the active
loan market will pay for an identical
asset as of the measurement date.
Pricing validity has been demonstrated
for both new and seasoned loans.”
Todd Fisher, president of IntraPrise
Solutions, said “This system is made
possible by the marriage of Level 1
Loans’ understanding of mortgage asset
pricing and IntraPrise solutions technology that allows for the capture of
investor prices, the slotting of loan product against those prices, and the execution and delivery of valuation runs.”
For more information, visit www.L1Loans.com
or www.intraprisesolutions.com.
UnitedTech acquires the
assets of LandAmerica
OneStop
UnitedTech Lender
Services (UTLS) has
purchased the assets
of LandAmerica
O n e S t o p, w h i c h
DECEMBER 2009
What are some lessons you have
learned about reverse mortgagebacked securities (RMBS) and investors’
attitude toward them?
The greatest lesson I have learned is that
when dealing with investors, it is useful
to discuss the importance of reverse
mortgages in the lives thousands of older
Americans. Put differently, the human
element should be a critical part of the
investment discussion, but not necessarily the investment decision.
Obviously, investors control billions of
dollars and they are looking for asset
classes and investment structures that
provide them with the appropriate
risk/reward characteristics. However,
these investors also have parents and
grandparents, and they appreciate the
role the reverse mortgages can play in
helping people live more comfortable
and dignified lives in retirement.
In addition, they want to understand
issues like fraud, cross-selling and counseling. Over the years, it has become clear
to me that when dealing with investors,
the discussion about the non-investment
side of the reverse mortgage business can
be just as important as the discussion of
the investment in the product itself.
MetLife Reverse named
a Lenders One preferred
investor
ited resources and knowledge available to
lenders,” explained Michael Mooney,
wholesale and correspondent sales director for MetLife Home Loans, a unit of
MetLife Bank NA. “Partnering with
Lenders One provides us a great opportunity not only to help those lenders already
offering reverse mortgages, but also to
help more small- to mid-sized lenders
venture into this special market and support them with an appropriate level of
understanding to be successful—and,
above all, to help more seniors to remain
comfortably in their homes.”
For more information, visit www.lendersone.com or www.metlife.com.
How informed were investors about
reverse mortgages as an asset class when
you began? How educated are they today?
Investors knew very little about reverse
mortgages when we started speaking with
them about this new asset class. As a
result, we not only had to educate
investors about the investment structure
and the nuances of the product, but we
also had to explain to them the origination process, how the loans were serviced,
what happens when a maturity event
[borrower moves, sells, or dies] occurs.
It was an education of the entire
business. Today, investors are more
educated about the product. We have
How has the secondary market for
reverse mortgages evolved since your
pioneering work? Where is it headed?
For the first six to seven years after the
first securitization, only a handful of
reverse mortgage securitizations were
issued, and only with non-HECM proprietary product. Two significant changes
have happened since then: The securitization of HECM in 2006 and the development of Ginnie Mae’s HMBS program for
HECM securitization, beginning in 2007.
These events have changed the reverse
mortgage securitization market by making HECMs the underlying collateral.
From investors and rating agencies
standpoint, the significance of the 2006
HECM securitization and the 2007 Ginnie
Mae HMBS stems from the elimination of
crossover risk (thanks to Federal Housing
Administration [FHA] insurance) and the
certainty of pre-payment when loan balance approaches 98 percent of FHA’s
maximum claim amount (MCA).
Because HECM products dominate
reverse mortgage origination, their
increased use as collateral for Ginnie
Mae’s securitizations gives investors the
confidence to consider reverse mortgage-backed securities as a viable asset
class, knowing that securitizations will
be regular.
products, quality and services to help
them better control fraud. Equifax will pay
$72.5 million in cash for the company.
“More than ever, today’s lenders need
better tools to determine creditworthiness
before qualifying a loan,” said Trey
Loughran, Equifax’s senior vice president,
corporate development. “Rapid Reporting’s
capabilities will allow us to offer lenders new
and improved products, as well as more
advanced fraud management services.”
Based in Fort Worth, Texas, Rapid
Reporting offers products, including
IncomeChek, which provides IRS verification of income tax information, and
DirectChek, which provides Social Security
Administration verification of social security numbers and also meets USA Patriot
Act compliance requirements. Operating
through a secure Web-based portal, these
products offer financial institutions an
efficient and cost-effective means to confirm borrower identity and income.
“This transaction is a logical next
step for our company,” said Jay
Meadows, president and chief executive officer of Rapid Reporting. “The
combination of Rapid Reporting’s
assets with Equifax’s mortgage-related
and employment verification services
will enable us to effectively mitigate
fraud and offer more advanced products for mortgage lenders.”
For more information, visit www.equifax.com
or www.rapidreporting.com.
www.NationalMortgageProfessional.com Without a model, what were some
structural challenges you faced? And
how did you overcome them?
The great challenge in any securitization of
a new asset class, especially one as fundamentally different as reverse mortgages, is
that there is no blueprint on how to do it.
As a result, the team had to develop its
own model, which was vetted by senior
management, rating agencies, lawyers,
accountants and investors. The most significant challenge was developing the rating agency criteria for this asset class.
Literally, we had to work with the rating
agencies for several months in developing
criteria for ratings, from Triple AAA right
through to Triple BBB. Since there was no
historical experience to draw upon, the criteria were developed while we were figuring out the structure, modeling the transaction, and convincing investors of the
product’s merits.
had many securitizations since 1999,
both of HECM and non-HECM reverse
mortgages, worth billions of dollars.
Some investors understand it, but many
potential investors have yet to purchase
a reverse mortgage-backed security, so
there is much education ahead.
29
a view from the “c” suite
During the duration of the embezzlement, all normal “checks and balance” type controls had been
removed or had never been in place.
While there may be an opportunity
for recovery by making a claim on
your Errors & Omissions (E&O) insurance, oftentimes, the loss is so significant that it is a almost impossible to
recover all the money stolen. The
solution for most companies is to
bring in an outside consulting firm
that has depth in accounting and
knows where and how to look at areas
of the company that can create exposure. If interested go to our Web site,
www.MortgageBankingSolutions.com,
and check out our CFO2Go services.
Underwriting
30
There are any number of directions I
could go with this one, but here is one
that you may not have considered. We
all have been told that private mortgage insurance (MI) companies are
there to pay claims in the event a loan
goes into default. The problem today is
that so many loans have defaulted that
mortgage insurance companies have
begun to renege on paying insurance
claims, most likely for survival. I know
this is hard to believe, but it is happening with increasing frequency. The scenario is that a when a home is foreclosed upon and resold, it is not uncommon for there to be a loss. When there
is an MI policy in place, a claim is filed.
With increasing regularity, MI companies are claiming that loans were inaccurately underwritten and/or loan
fraud was involved. The end result is
that the claim is denied. This results in
a repurchase demand back to the company that originated the loan. As a consulting firm, we are often called to get
involved. Here are the lessons we are
learning.
Contract underwriting via an MI
company may not provide you the
risk protection you thought. We are
at a place that you need to select
your vendors such as an MI company
based upon something more than
how good the MI rep is.
Document your loan underwriting
decisions thoroughly, especially
those marginal transactions. Having
a good paper trail could make all the
difference when filing an insurance
claim or defending a repurchase
demand.
Due diligence
The most effective way to prevent fraud
throughout your organization is
through due diligence. What I am talking about is something broader than
just the routine monthly quality control
process. Due diligence can mean different things to different people, but basically it is a process of investigation that
looks deeply into every aspect of an
organizations operations.
This can and should be done on an
ongoing basis with your own internal
staff, as well as bringing in a thirdparty consulting firm every six to 12
months. When our consulting firm
does due diligence reviews, and we
do a lot of them all over the country
on companies of all shapes and sizes,
it quickly becomes evident that this
may be the first time anyone had
done a thorough examination of all
aspects of their operations. It opens
the eyes of the C-level executives to
the importance of doing this on a regular basis. Without fail, things are
revealed that are surprising and
somewhat embarrassing to the Clevel executive.
There are two basic benefits that
come from doing regular ongoing due
diligence reviews. The first and most
obvious is catching things that are
being missed in the normal day-today operations. The second and less
obvious is this … just having an ongoing thorough due diligence review
process can stop an employee from
doing things that can cost the company precious capital … both time and
money. The thorough due diligence
review exposes weaknesses where
fraud and embezzlement take place.
As wise old Benjamin Franklin said,
“An ounce of prevention is worth a
pound of cure.”
If you don’t get anything else from
this article, I hope you give serious
consideration to implementing an
ongoing due diligence program within
your company.
When selecting an outside firm to
perform due diligence, make sure they
have hands-on operating experience of
actually running a company like yours.
Otherwise, how will they know where
things can go wrong?
We have a team of dedicated mortgage professionals that have owned
and operated their own mortgage
companies and are dedicated to helping C-level executives like you to do a
thorough examination/investigation of
your internal operations. Thank you
for reading this article, and I welcome
the opportunity to talk with you about
your company’s needs.
David Lykken is president, mortgage
strategies and managing partner with
Mortgage Banking Solutions. David has
more than 34 years of industry experience and has garnered a national reputation. David has become a frequent
guest on FOX Business News with Neil
Cavuto, Stuart Varney, Liz Claman and
Dave Asman with additional guest
appearances on the CBS Evening News,
Bloomberg TV and radio. He may be
reached by phone at (512) 977-9900,
ext. 101 or e-mail [email protected].
ADAPT releases
decisioning engine for
streamlined loan mods
Freddie Mac announces
pilot program to provide
standby purchase
A u t o m a t e d agreements to
Decisioning Asset warehouse lenders
Performing
Technologies (ADAPT) Enterprise LLC,
provider of an on-demand software solution for loss mitigation specialists, has
announced the release of ADAPT, a
Web-based NPV Decisioning Engine
designed to empower mortgage brokers, attorneys, community-based
organizations and others to support
servicers by preparing loan modification packages that conform to the
government ’s Home Affordable
Modification Program (HAMP) guidelines automatically.
The tool enables loss mitigation professionals to instantly determine the
eligibility of a loan modification, based
on HAMP guidelines. The system
applies the base NPV calculations and
defines the reduced rate, modified
term, step-rate along with principal forbearance (if suggested), in real-time. It
then produces the package for the servicer’s review.
“Servicers are overwhelmed with
the volume of loan modifications
they are receiving right now and can
not deal with them because they are
so busy dealing with borrowers who
are closer to being foreclosed upon,”
said Tom Sato, president of ADAPT.
“This tool will allow loss mitigation
specialists to do the heavy lifting for
mortgage loan servicers, providing
them with deals that will meet HAMP
guidelines, complete with the paperwork to move the deal through to
closing. This is the solution the industry has been looking for.”
ADAPT provides a secure pre-qualification application exchange, which is
triggered by the end-user, enabling the
homeowner to enter data in a secure
Web environment. The tool informs all
parties that the homeowner is required
to enroll into a U.S. Department of
Housing & Urban Development (HUD)approved housing counseling program
automatically if it detects that the backend debt-to-income exceeds 55 percent. The system will automatically
import the borrower’s data into the
Freddie Mac Loss Mitigation Transmittal
Summary Form as soon as it automatically confirms borrower eligibility.
For more information, visit www.adaptnow.com.
Freddie Mac has
announced a pilot
to help lenders
obtain warehouse lines of credit with
participating warehouse lenders. The initiative is designed to help single family
and multifamily lenders (Freddie Mac
seller/servicers) find adequate warehouse lines of credit to fund loans for
sale to Freddie Mac. Freddie Mac currently is working with warehouse lender
Natty Mac, a Guggenheim Partners company, in the pilot program.
“The warehouse lending industry has
nearly exited the market making it
increasingly difficult for lenders to fund
loans,” said Charles E. Haldeman Jr.,
chief executive officer for Freddie Mac.
“We’re proud to help bring much-needed additional liquidity to the residential
and apartment financing community.”
Freddie Mac will provide participating warehouse lenders with standby
commitments to purchase qualifying
loans in the event a seller/servicer cannot meet its contract obligations or fails.
Pre-funding reviews are required and
normal Freddie Mac purchase and origination processes and procedures apply.
Consistent with its charter and without
objection from its regulator, the Federal
Housing Finance Agency (FHFA), Freddie
Mac is providing this standby purchase
commitment arrangement with Natty
Mac as part of the pilot program. Freddie
Mac seller/servicers interested and who
qualify for this program will need to enter
into a separate agreement directly with
the participating warehouse lender. The
credit line from the warehouse lender
that is supported by the standby commitment will fund only the loans the participating seller/servicer intends to sell to
Freddie Mac.
For more information, visit www.freddiemac.com.
Interthinx adds MDIA test
to compliance tool
Interthinx
announced that
its PredProtect
Compliance Suite now performs Mortgage
Disclosure Improvement Act (MDIA) calculations that automatically determine when
heard on the street
includes the Default Services Division (formerly known as LandAmerica Default
Services Company) and BackInTheBlack,
the industry’s most comprehensive endto-end default servicing technology platform. These former LandAmerica business
units are now known as UTLS Default
Services and UTLS BackInTheBlack.
“With proven client focused methodologies in place, we will quickly build on
the foundation of providing innovative
and superior business solutions to our
clients,” said Tim Walsh, president of
UTLS. “Our default management clients
are increasingly challenged with delinquencies and foreclosures, as well as the
increased focus on regulatory compliance
and loss mitigation. Blending the service
capabilities with the BackInTheBlack
technology enables UTLS to offer the
mortgage industry the best and most
integrated default and technology servicing solutions in the marketplace.”
For more information, visit www.unitedtechls.com.
ing property auction services with LPS’ other
leading default solutions, we can offer our
clients an unparalleled toolset for managing
and disposing of REO assets that delivers the
best overall results. This acquisition solidifies
LPS’ position as the leading provider of asset
management solutions.”
LPS Auction Solutions takes a creative and comprehensive approach to
auction property marketing, including
the development of compelling property sales materials, as well as extensive
outreach involving radio, television and
print advertising, direct mail and email campaigns, public relations initiatives and social media engagement.
“With access to a powerful array of promotional channels and our unique understanding of local market conditions, we
can quickly adjust our marketing strategy
for each individual auction,” said Neel.
“This helps ensure that we’re attracting
the maximum number of potential buyers and investors to each auction event.”
For more information, visit www.lpsvcs.com.
LPS acquires auction solutions provider for residential REO properties
Lenders One partners
with Cenlar FSB
NetMore America has hired John Cassell
as senior vice president of retail production.
Mortgage Professionals
to Watch
Flagstar Bancorp has announced the
election of president and chief executive officer Joseph P. Campanelli to the
position of chairman, replacing Thomas
J. Hammond who retired in October.
The company has also announced the
appointments of Salvatore Rinaldi to
the position of vice president and chief
of staff, and Marshall Soura to the position of executive vice president and
director of corporate services.
Joseph Campanelli
Credit Plus Inc. has promoted Greg
Holmes to the position of national
director of sales and marketing.
John Cassell
At its 96th Annual Convention & Expo in
San Diego, the Mortgage Bankers
Association (MBA) has elected Robert E.
Story Jr., CMB of Seattle Financial
Group as association chairman; Michael
D. Berman, CMB of CWFinancial
Services as association chairman-elect;
and Michael W. Young of Cenlar FSB as
association vice chairman.
Robert Story
Michael Berman
Greg Holmes
forward on reverse
Author and columnist, Atare E. Agbamu,
CRMS is director of reverse mortgages at
Minneapolis-based AdvisorNet Mortgage
LLC. A member of the BusinessWeek Market
Advisory Board, Agbamu is author of Think
Reverse! and more than 100 articles on
reverse mortgages. Through his advisory
firm, ThinkReverse LLC, Agbamu advises
financial professionals, institutions and regulators across the country. In a 2007 national report on reverse mortgages, the AARP
cited Agbamu’s work. He can be reached by
phone at (612) 436-3711 or (612) 203-9434,
and e-mail at [email protected]
or [email protected].
DECEMBER 2009
What is your favorite reverse mortgage story?
I have heard and have been involved in
many feel-good stories about how
reverse mortgages have made a differ-
ence in people’s lives. But I have to say
that during 1998-1999, when my colleagues and I at Lehman Brothers were
working on the first securitization and
getting to understand the product, the
market and its growth potential, is was
one of my favorite times in the reverse
mortgage business. We knew we were
not simply working on a transaction, but
rather, building a business and that
securitization is vital to the growth of
the industry.
What prospects and challenges do
you see for RMBS after the Great
Recession of 2008-2009?
The prospects are very encouraging.
Ginnie Mae’s HMBS program has made a
significant difference in changing
investors’ attitude toward the reverse
mortgages. Given the massive flight to
quality we have seen over the past few
years, any product with government
guarantee is going to be seen as attractive to many investors. As a result,
investors are much more open to discussing the product with us.
When you factor in the zero risk
[really?] weighting of a Ginnie Mae
HMBS with the favorable pre-payment
characteristics of HECMs and HMBS
structure, it is not surprising that interest in reverse mortgages as a new asset
class has grown significantly in the past
twelve months.
www.NationalMortgageProfessional.com Lender Processing
Services Inc. (LPS), a
provider of integrated technology and
services to the mortgage and real estate industries, has
announced its acquisition of Rising Tide
Auctions, known for its property auction
expertise and innovative property auction
strategy. The acquisition will expand the
asset management offerings of LPS and
allow the company to provide comprehensive property auction solutions to help servicers minimize real estate-owned (REO)
timelines and reduce costs. Furthermore,
real estate buyers and investors will be provided with the ability to purchase individual or multiple bank-owned properties
directly from the nation’s leading REO disposition service provider.
Mortgage servicers have long relied on a
wide range of default-related solutions
from LPS, including national field services,
full-service asset management, title and
closing services, as well as bankruptcy and
foreclosure management. With the addition of property auction services through
LPS, servicers now have more REO management options from a single provider.
Additionally, servicers working with LPS
Auction Solutions will benefit from the company’s ability to manage all aspects of the auction process from beginning to end, including
data collection, property due diligence, open
house showings and the auction event. To
help ensure timely REO dispositions, the company also utilizes a comprehensive broker
outreach program to encourage broker participation in the auction events.
“Rising Tide Auctions brings significant
assets to LPS, including an impressive team of
executives with more than 30 years of successful property auction marketing experience,” said Chad Neel, president of LPS Asset
Management and Field Services. “By integrat-
Lenders One
Mortgage
Cooperative, a
national alliance of independent mortgage
bankers, has announced its newest partnership with subservicing giant Cenlar FSB,
which will provide cooperative members
with the ability to maintain the servicing
rights on their loans. Cenlar has serviced
residential loan portfolios for more than 40
years in all 50 states, allowing the company to reach all Lenders One members.
“Loan servicing is quickly emerging as
a trend—as well as necessary business
component—for independent mortgage
bankers, and we want our members to be
on its forefront,” said Scott Stern, Lenders
One chief executive officer. “Partnering
with Cenlar benefits our members with
timely, scalable term and interim mortgage servicing. These benefits are then
translated to borrowers in the form of a
more diverse, quality loan offering.”
Cenlar is working with Lenders One to
provide its membership with customized
subservicing for a wide variety of mortgage
products, all private-labeled under each
lender’s name and logo. Offering cooperative members the opportunity to maintain
the servicing rights to their loans helps
them reap the benefits of that servicing revenue without fixed operational costs. It also
enables them to avoid the added expenses
and time to build this capacity internally.
“Based on the volatility and ongoing
evolution of the industry, lenders need the
flexibility to adapt to changing market
conditions,” said Lori J. Pinto, CMB, senior
vice president of business development
for Cenlar FSB. “This relationship provides
Lenders One’s members a means to effectively grow their business models and
expand new offerings to their respective
communities. Lenders One is committed
to the industry’s mortgage bankers and
focused on providing the business partner-
ships that will bring the most value to its
members. For this reason, we are looking
forward to not only expanding our relationship with them, but also assisting
these lenders explore new markets.”
For more information, visit www.lendersone.com or www.cenlar.com.
31
new to market
32
new disclosures are required and whether
the timing of the disclosures meets statutory requirements. PredProtect compares
the annual percentage rate (APR) at application to the most recently disclosed APR,
applying a tolerance of one-eighth of one
percent. The system then provides an
“earliest closing date” calculation to
ensure that the timing for initial or re-disclosure follows the new requirements.
Users are automatically notified when a
loan is out of compliance. This new feature, although optional, is being provided
at no additional cost to Interthinx clients.
“MDIA compliance presents one of the
biggest challenges of 2009 for many
lenders, especially those with dated origination platforms that lack the elasticity
to adapt quickly,” said Roger Fendelman,
vice president of compliance for
Interthinx. “PredProtect offers lenders an
easy way to comply with MDIA. It provides instant protection from additional
scrutiny with written proof of compliance placed right in the loan file.”
MDIA is a federal law that is part of
the Housing and Economic Recovery
Act of 2008 (HERA). MDIA requires that
lenders wait seven days after the initial
disclosure is provided before closing a
home loan and an additional period
any time the APR changes by more than
one-eighth of one percent and re-disclosure is required. The law then
requires an additional cooling-off period before the loan can be closed. This
sequence is frequently referred to as
the 3-7-3 Rule.
“The time is right for lenders to
deploy new, practical technology and
ready themselves for more regulation
to come,” said Mike Zwerner, senior
vice president of business development
for Interthinx. “It seems like there’s
never a good time to implement
change, but now it’s a matter of keep-
When You
THINK
Of...
ing up with tough new regulation and
survival. Another way to look at the current environment is to recognize the
industry is in a state of rebuilding consumer trust and brand confidence.
Hidden costs or errors add up to lost
opportunity. The new MDIA test in
PredProtect provides lenders with a
simple approach to compliance, helps
avoid costly errors, and mitigates reputational risk with inexpensive, fast
automation.”
For
more
information,
visit
www.interthinx.com.
Experian launches
consumer income
assessment tool
Experian has
announced its
suite of leading “ability to
pay” products—Income Insight and
Income View—designed to determine a
consumer’s ability to pay. Income
Insight was designed to support recent
legislation by providing an estimate of
a borrower’s individual income utilizing
verified income data and proprietary
credit bureau attributes. Income View
is a Web-based tax verification service
that provides clients with reliable IRS
4506-T processing and prompt access to
applicants’ verified income via the
Internal Revenue Service (IRS).
“With a number of new or proposed
lending regulations, there is an increasing emphasis being placed on more
diligent and more informed lending,”
said Steven Wagner, president of
Experian
Consumer
Information
Services. “Our new ‘ability to pay’ products are an important part of this continuously changing picture. The capability to accurately estimate or verify a
borrower’s income provides a key
insight into that consumer’s ability to
repay a loan.”
Some of the features of Income
Insight include: Support of a lenders’
ability to comply with recent legislation; assistance to lenders with responsible provision of credit through considering a borrowers’ ability to pay; compliance with the Fair Credit Reporting
Act (FCRA) and the Equal Credit
Opportunity Act (ECOA); the targeting of
customers while considering the complete financial picture; an improvement on risk management efforts by
including modeled debt-to-income
ratios; accuracy in segments defaulted
borrowers to maximize collection
processes; and streamlined results
online or in batch.
Some of the key benefits of Income
View include: Income tax return summaries and detailed transcripts for individuals and businesses, including IRS
1040, W-2, 1099 and 1065, the secure
delivery of IRS transcripts within 24 to 48
hours; identification of potential fraud
through discrepancies in stated-income,
Social Security Number, filing status,
name or address; and no rush fees.
For more information, visit www.experianplc.com.
Byte integrates
LoanSifter into BytePro
Byte Software,
a provider of
loan origination software for banks, credit
unions, mortgage bankers and mortgage brokers, has partnered with
LoanSifter Inc. to offer a product and
pricing engine. LoanSifter’s best-ofbreed solutions include an intuitive
point-of-sale loan eligibility and pricing
engine, lock desk and rate sheet generator satisfying the most demanding
loan officer.
“LoanSifter’s streamlined, easy-toread format means originators don’t
have to waste time searching through
unnecessary numbers and suggestions
to get the information they need,” said
Agency (FNMA/FHLMC):
Fixed Rate Full Documentation Products
Refinance Program up to 125% LTV
Expanded Approvals Permitted
Mortgage Insurance Available
Portfolio:
...THINK
Agency
&
Portfolio
Products!
www.EmigrantMortgage.com
No-Income/No-Asset (NINA)*
Foreign National Financing Available
Jumbo Loans Allowed
Hold Title In LLC, Corp Trust or
Partnership Name
Cash-Out up to 100% of Loan Amount
LTV Restrictions May Apply
Contact an
Account Manager in
Your Area TODAY!
NY:
Manhattan/Bronx/
Westchester:
(212) 850-4363
Brooklyn/Queens/
Staten Island:
(718) 880-1681
Long Island:
(516) 822-5178
NJ / PA / DE:
(914) 785-1245
NH / MA / CT:
(617) 510-3442
FL:
(561) 373-9184
We have expertise in New York and New Jersey Co-op Financing!
*NINA subject to federal and state specific laws / regulations and Emigrant’s geographic restrictions.
EQUAL HOUSING
LENDER
Copyright © 2009 Emigrant Mortgage Company, Incorporated (Emigrant). All rights reserved. Emigrant is a subsidiary of Emigrant Bank, Member FDIC and is an Equal Opportunity Lender. All product names, company names and
logotypes are servicemarks or trademarks of Emigrant in the United States and other countries. The information, products and services contained in this advertisement are believed to be correct but may include inaccuracies,
typographical errors and/or omissions. Emigrant does not guarantee the accuracy of the data contained herein. This information is intended for mortgage and/or real estate professional use only and should not be distributed or
presented to consumers or any other third parties. This is not an offer or guarantee to extend consumer credit. Program guidelines, terms and/or conditions are subject to change by Emigrant without notice. All loans are subject to
submission of a complete application, underwriting review and credit and property approval by Emigrant. Not all products and/or programs are available in all states and/or localities and/or for all loan amounts. Certain products /
program are offered through third parties. Other restrictions and limitations may apply. New York Licensed Residential Mortgage Lender: Exempt. Emigrant is registered or licensed with the Banking Departments or Divisions in CT,
DE, FL, MA, NH, NJ, NY and PA.
Bruce Backer, president of LoanSifter.
“Secondary managers and originators
tell us that they are looking for ways to
manage risk and efficiently secure
more transactions. They understand
that integration translates to increased
control and immediate answers—two
factors that can make the difference in
growing your business in a challenging
market.”
LoanSifter provides pricing, automated underwriting systems and lock
desk features. Secondary departments
utilize the thorough, real-time streamlining and maintenance of the entire
mortgage pricing process (margins,
adjustments, incentives, service release
premiums [SRPs] and underwriting
guidelines), no matter if servicing is
retained or if correspondent and
wholesale investors are used.
The partnership between Byte
Software and LoanSifter reduces data
input and errors by giving customers
the ability to submit existing loan data
from within BytePro, instantly accessing
pricing and product information.
For more information, visit www.bytesoftware.com or www.loansifter.com.
Avista announces Web
portal launch and FHA
integration
Avista Solutions,
developer of Avista
Agile loan origination software (LOS),
has unveiled its completely redesigned
consumer Web site capability that puts
much greater functionality into the
hands of borrowers. The extensive
makeover improves the borrower experience and helps lenders meet the
growing desire of consumers to obtain
more information and functionality
independently when visiting lender
Web sites.
The new Web portals are private
labeled by Avista and branded to be
consistent with the lender’s own Web
site. Visitors can submit applications
online, obtain automated approvals,
receive online disclosures, and if “just
looking,” can receive notification when
the rates they want are available.
Payment calculators, loan type scenarios and other tools are available, with
customer-input information feeding
directly into the lender’s Avista Agile
loan originator software (LOS).
Borrowers stay abreast of their loan’s
progress with automated email updates
and online status, saving expensive and
time-consuming phone calls back and
forth with the lender’s staff.
Avista has also announced that its
automated underwriting system (AUS)
has been interfaced with the Federal
Housing
Administration’s
(FHA)
“Technology Open to Approved
Lenders” (TOTAL) Scorecard. This interface allows lenders who are underwriting FHA loans to submit borrower information to the TOTAL Scorecard, which
combines the capabilities of Avista’s
AUS to determine whether a loan is elicontinued on page 34
heard on the street
Your turn
Michael Young
O Pro Teck Valuation Services has
announced the hiring of Jeff
Marchetti as senior sales director
and Al Dalupan as sales director,
business development.
Jeff Marchetti
gage advisors: Janice Cole-Thornton,
Keith Fansher, Doris Hansen,
Thomas Harty, James Janik, Chue
Lee, Elisabeth Schaller and Joseph
Scheurell. The company has also
announced that Zachary den Daas
has joined as executive assistant, and
that John Guirau and Michelle Lewin
have been added as call center representatives.
O Assurity Financial Services LLC has
announced that Vanessa Giacoman,
CMB has been named the company’s new chief operating officer and
managing member.
invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that
seem appropriate and/or other pertinent
data to the attention of:
Heard on the
Street/Mortgage
Professionals to Watch
column
Phone #: (516) 409-5555
E-mail: [email protected]
is the 1st of the month prior to the target issue.
Why some Mortgage Professionals fail
in Credit Repair while others
Make Serious Money
Mortgage Professionals make money in credit repair while getting borrowers Mortgage Ready!
You don’t need to be a credit expert to they couldn’t close before due to bad credit! It
means more loans and more revenue for my loan
start your own Credit Repair business
Al Dalupan
O Antonio Catalano has joined
Resource Title’s Independence,
Ohio office to help in developing the
company’s retail division.
Fortunately, with HTDI Financial’s Credit Services Organization (CSO) program, you will be able to handle
ALL aspects of your business except having to do the
actual repairs; we do that for you! We will train you on
how to handle these customers and you will have the
support you need every step of the way. We will make
you look like a Fortune 500 company even if you work
from home! YOU control how much money you make.
In fact, through our CRM, we give you the tools and
resources to harvest leads, manage prospects and monitor their progress.
You don’t have to spend tens of thousands of
dollars for start-up costs for your own Credit
Repair Company
Antonio Catalano
Get those impossible to close deals
CLOSED!
As the number of loan programs are shrinking, the bar
on credit scores keep rising. This program will allow
your borrowers to become “Mortgage Ready” as soon
as 45 days. As one of our CSO stated:
“I have many loan officers that are now able to
send their clients through the credit repair, raise
their scores, and then close the client’s loan that
The credit industry, as a whole, is one of the most powerful and profitable industries in existence. With
loans, insurance and even employment taken into consideration individuals’ credit picture, the credit industry is getting bigger every day.
Inside the credit industry, Credit Services is helping by
assisting consumers with getting back on track by removing unverifiable and inaccurate negative items
from their credit reports. As a CSO, you can benefit in
being in a profitable industry and helping clients with
their futures.
“I’ve been in the mortgage business over 22 years.
A year ago, as the mortgage crisis worsened, I
began trying to find a way to help clients who
needed a better credit profile in order to get a
mortgage. Fortunately for both me and my
clients, I stumbled on HTDI. After a year of experience, I can honestly say the success rate is
100% and client satisfaction is through the roof.
All of my clients have seen significant improvements, and some have experienced breathtaking
jumps in their credit scores, even on the first
round!
From Day One you can be sure your “back office” (HTDI) has you covered. They will execute
their part of the job seamlessly, with precision,
on time, and with total consistency. All you have
to do is SELL the service! Just sign people up, collect the money, and send HTDI the paperwork
they need to get started. If you simply focus on
selling the service, you will make lots of money,
the work will get done, and you will never have
to worry about unhappy customers.
Although I got into it as a part timer, I now realize
this is an excellent full time business opportunity.
(Frankly, these days it’s probably a better business
than the mortgage business!) You could easily make
six figures in the first year with a minimal investment of money. How many opportunities like this
exist these days? What you must invest is your time
– SELL, SELL, SELL & SELL some more! Ultimately, what you are selling is the professionalism
of HTDI, which is why this really rocks as a business opportunity.”
20.44%
17.32%
14.21%
Round 1 Round 2 Round 3 Round 4
We average one of the highest fix/deletion rates in the industry 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 Credit
Repair, be VERY CAREFUL
First you have “Fair Credit Reporting Act” (FCRA). The
FCRA holds credit bureaus and creditors to their reporting methods and has guidelines they must comply with.
There are numerous techniques that are used along with
similar laws to maximize results for each client. You must
know these laws inside out.
You can’t forget “Credit Repair Organizations Act.”
(CROA). Just like the FCRA, the CROA hold credit repair
companies to specific guidelines as well. If you choose
HTDI Financial for your backend processing, we will ensure you maintain compliance.
Lastly, you have applicable State Laws. Depending on
the state you wish to conduct business in, you may
have a state Credit Services Organizations act to comply with.
As an active member in good standing of the National
Association of Credit Services Organizations, you can
be sure that we take our job very seriously, making sure
you stay compliant and your clients.
FREE
demo available
www.startacreditrepaircompany.com
O DECEMBER 2009
There is only one step you need to take;
visit www.startacreditrepaircompany.com or
call us at 877-877-4834 option 5.
O New Oak Capital has appointed Jay
Lown as managing director of the
company’s financial institutions group.
O PHH Corporation has named Jerome
J. Selitto as president and chief executive officer, and has also been appointed to company’s board of directors.
O Teresa Switzer has joined property
preservation and inspection services
provider Mortgage Contracting Services
(MCS) as vice president of business development and client relations.
O BankUnited has named Raymond
S. Barbone as executive vice president of mortgage services.
O William Mueller has been appointed
chief executive officer of iServe Real
Estate Operations, a wholly-owned
subsidiary of National Asset Direct Inc.
O DebtX has promoted Bill Looney,
former executive vice president of
the company, to the role of president of U.S. sales.
O USA Funding Corporation has welcomed the following as trusted mort-
“Until last year, I owned a large mortgage company in upstate NY with over 125 employees. We
got hit hard during the mortgage industry crash
and had to close our doors. I was stuck in a position with thousands of leads and customers that
couldn’t get qualified for anything. I decided to
start looking for a way to capitalize on my left
over resources and help people in the process. I
called many other credit repair companies and
was very unimpressed. One west coast based
company was charging $15,000 and had nothing
but negatives written about them on the Internet.
Then I found HTDI. They helped me to get
started at the beginning of this year and it has
been great. I have not only made great money
helping people to repair their credit, but I have refinanced 8 of them and helped 6 buy houses that
would have never qualified with the new guidelines. The software is very user friendly and all of
my clients, affiliates and Brokers have increased
business because of it.”
Get started in a business that is booming
and shows no signs of slowing
46.95%
Once you are set up in our system, you will get access
to software and tools that HTDI has spent over $1 million on research and development. You don’t need to
spend an arm and a leg to start building your own
credit repair business. Here is a quote from a mortgage
company located in upstate New York who spent
months of research before choosing HTDI:
officers. Even better than that, it is very rewarding to be able to help a client regain their credit
and be able to get the loan they need.”
Industry Leading Results
33
new to market
The Exam
The NMLS National Test
will examine your understanding of terms,
federal laws, ethics, math, loan products and
a broad range of mortgage knowledge with
100 challenging questions.
if you originate
you must pass it.
No grandfathering. No exemption. No escape.
[if originating for a depository institution the exam is not mandated. Yet.]
to pass it, you’ll
probably have to
study!
TM
34
Full-course text, illustration, video and over 700
challenging practice questions. Quiz Trainer
free trial -- gauge your readiness.
The Test is Tough.
Get The Cram.
SAFE-Smart information site:
AceTheSAFE.com
Abacus
TM
Mortgage Training and Education
Not licensed?
You will have to take the NMLS 20-Hour PE Course.
Abacus is an NMLS-Approved provider.
Class Broadcast Nationally
directly to your computer. Get the power of live class with
the convenience of online. NMLS-Approved format.
gible to be insured by the FHA. The
direct system to system interface
between the Avista’s AUS and FHA
allows approvals to happen in minutes,
speeding up and simplifying the entire
procedure for lenders and reducing
origination costs in the process.
“FHA is understandably busy at the
moment, as it undergoes a renaissance
in the use of its products and programs,” said Mark Phlieger, Avista chief
executive officer. “By interfacing our
automated underwriting capability
with the TOTAL Scorecard, originators
can get answers very quickly, without
data reentry and other inefficiencies
that can lead to mistakes and delays.”
For more information, visit www.avistasolutions.com.
DartAppraisal.com offers
new FHA appraisal
compliance solution
DartAppraisal.com,
an independent
provider of residential real estate valuations, has announced an updated version of its popular DartExpress system to
ensure compliance with all Federal
Housing Administration (FHA) Mortgagee
Letters related to valuations. The technology updates come in advance of the
FHA policy changes which will take
effect Jan. 1, 2010, allowing mortgage
brokers, lenders and appraisers an early
advantage in compliance.
DartAppraisal.com originally developed DartExpress technology in May
2009 to streamline the appraisal
process for mortgage brokers while
maintaining Home Valuation Code of
Conduct (HVCC) compliance. The
enhanced system now maintains compliance with all new FHA appraisal policies for FHA-insured loans as well.
DartExpress provides a quick and easy
online system to initiate an appraisal
order, pay for and track the progress of
the order, and finally deliver a copy to
the mortgage broker and lender in full
compliance with HVCC and all new and
existing FHA Mortgagee Letters.
“We have enhanced our DartExpress
technology to now offer the fastest
path to FHA policy compliance for
mortgage brokers, lenders and
appraisers,” said Marko Berishaj, vice
president of DartAppraisal.com and a
certified mortgage banker. “The Webbased system is a complete solution
that ensures our appraisals adhere to
all FHA Mortgagee Letters related to
valuations. DartExpress continues to
be extremely popular within the
industry for HVCC-compliant services,
and we are confident it will deliver
high quality results for users seeking
FHA compliance.”
DartExpress users register on the
DartAppraisal.com secure Web site
and receive their own account password. The mortgage broker then
picks from a list of FHA-approved
lenders who have “authorized”
DartAppraisal.com to process the
appraisal order. Next the user pays
online with a credit card, providing
immediate credit verification and
processing of the order without many
of the common delays associated
with consumer appraisal coordination. Brokers can track up to seven
steps in the appraisal pipeline via the
DartAppraisal.com Web site to determine the status of each order in the
account. The viewable tracking
process includes receipt, acceptance,
scheduling, appointment set, inspection, quality control and possible
addendums. Notations of any complications which may have arisen within
the process are also visible.
For more information, visit www.
DartAppraisal.com.
Loan-Score launches site
to underwrite FHA loans
Loan-Score
Decisioning
Systems has
announced
it
has
officially
launched
www.LoanSCORECARD.com for mortgage bankers, community banks, credit unions, lenders and originators to
connect to the Federal Housing
Administration’s (FHA) TOTAL Scorecard
loan approval platform. The new site
seamlessly interfaces with Scorecard to
offer users an easy, efficient and cost
effective automated FHA underwriting
experience.
Earlier this year Loan-Score interfaced its automated underwriting
system (AUS) with FHA TOTAL
Scorecard, which was initially added
as functionality to Loan-Score’s existing decisioning suite. The launch of
LoanSCORECARD.com, however, now
allows the entire mortgage industry
to utilize the portal as a standalone
application to decision and underwrite FHA loans, complete with conditions and an FHA certification that
the home ownership centers (HOCs)
will accept and review to insure.
The site allows lenders, loan officers
and brokers the ability to create an
account, upload a 1003, pull/re-pull
credit, instantly return underwriting
decisions on FHA loans and manage
their FHA pipeline. The primary value
in LoanSCORECARD.com is that users
pay only a fraction of the typical cost to
automatically return eligibility.
“LoanSCORECARD.com serves the
gamut of mortgage bankers, community banks, credit unions, lenders
and originators to conveniently and
cost effectively decision FHA deals
using our portal’s interface with
Scorecard,” said Joe Bowerbank, senior vice president of marketing at
Loan-Score. “What we’re providing is
an attractive industry-wide alterna-
tive to using other FHA decisioning
options.”
For
more
information,
visit
www.LoanSCORECARD.com.
Docu Prep designs new
app for new GFE changes
MERS and Interthinx
collaborate on fraud
prevention
MERSCORP Inc. (MERS)
and Interthinx have
announced the launch
of a national fraud
prevention database
that will allow lenders to seek, identify and
share suspected fraudulent activity in loan
We look for loans that improve a clients situation, in fact
we recently increased our funding capacity.
• No Credit Score Minimum -NO DOC and STATED Welcome In Certain Situations!
• Residential & Commercial
• Loan Amounts $100,000 to $2,000,000
• Debt Consolidation, Foreclosure and Bankruptcy
Buy-Out
• First and Second Trust Mortgages
Never A Pre-Payment Penalty
Our 3 Point Lending Philosophy:
1. Loan must show tangible net benefit to borrower
2. Borrower must demonstrate some capacity to repay
3. Is the appraisal accurate? We are going to verify, not
low ball your appraisal.
It's Just That Simple...
Visit our website or Call 877.353.2233
or For Faster Service
Please Fax Your Scenarios To 240.241.5160
www.WeApproveLoans.com
DECEMBER 2009
Kroll Factual Data,
a provider of business information
solutions to financial organizations has
announced the release of an
Independent Verification Solution which
helps lenders comply with the proposed
Federal Housing Administration (FHA)
credit policy changes announced on
Sept.r 18, 2009.
“It is vital for lenders to prepare for
the new FHA requirements to avoid
WE ARE NOT CREDIT SCORE DRIVEN,
Kroll introduces verification solution to assist
with FHA compliance
We are the lender, and
final decision maker, not a broker.
www.NationalMortgageProfessional.com In preparation for the
federallymandated Good Faith Estimate (GFE)
changes and requirements, Docu Prep
Inc. has created a feature which will
provide customers with an easy transition to comply with any GFE changes
that are on the horizon. With the U.S.
Department of Housing & Urban
Development’s (HUD’s) new GFE
requirements (which will go into effect
Jan. 1, 2010), lenders are scrambling to
update their systems to ensure compliance to the upcoming changes.
“Our customers can continue to use
their LOS [loan originator software] systems without any technical upgrade,”
said Docu Prep Senior Architect Josh
Arceo. “Users will be able to use the old
forms or new forms simultaneously.”
Docu Prep’s new feature will allow
users to easily disclose their fees and
comply with the GFE’s regulatory
requirements while maintaining a parallel structure to their current LOS systems. Adhering to compliance with
these new regulations will be a simple
task for Docu Prep’s customers, while
minimal changes will be made to their
current processes.
“Compliance with the new GFE/HUD
requirements is greatly enhanced with
the simple, client-driven approach,”
said Ann Savage, general counsel for
Docu Prep. “Early testing and parallel
systems will help our clients ensure
they understand the product and legal
changes and how they work in practice
before the Jan. 1st deadline.”
Not only will Docu Prep’s new application minimize changes to customers’
current processes, but it will also
enhance their understanding of the
new requirements to be put into place.
“The new feature will provide a
clearer understanding of how fees
interact with the new GFE and HUD-1
Settlement Statement, and will ensure
a more precise comparison of fees
between initial disclosure and closing
documents,” said Docu Prep Senior
Analyst Britt Christiansen.
For
more
information,
visit
www.docuprep.com.
repurchase claims and sanctions,” said
James Donnan, president of Kroll
Factual Data. “For the highest level of
safety and soundness, verifications
should be performed by an expert third
party that is financially independent
from the transaction.”
Under the proposed guidelines,
mortgage brokers will no longer
receive independent FHA approval for
origination eligibility, but will instead
be required to originate through an
FHA-approved lender. Since FHAapproved lenders will carry the liability for broker-originated loans, they
need to bolster their verification
process to support the additional volume that will come from the correspondent channel. Adding to this new
strain on scarce underwriting and
quality control resources is a new rule
for FHA streamlined refinances which
requires lender certification of the
borrower’s capacity to pay at the time
of application.
“This raises the bar at a time when
FHA market share is soaring,” said
Teresa Grove, senior vice president of
marketing for Kroll Factual Data. “The
Independent Verification Solution
helps lenders keep up with demand for
FHA loans by delivering timely, independent verifications so underwriters
and quality control personnel can focus
their efforts on making good loans
instead of on gathering information.”
Kroll Factual Data’s economies of
scale and proprietary processes allow
them to deliver capacity-to-pay verifications at a lower overall cost than
doing the verifications with in-house
resources or by assembling a complex
set of disparate verification products.
Since the verifications are performed
externally to the lender’s operation
and billed according to actual use,
lenders also ensure that expense stays
in sync with volume fluctuations for
higher profits and better capital efficiency. The detailed billing and reporting that is included with the service
increases traceability and transparency
for Real Estate Settlement Procedures
Act (RESPA) compliance. To give lenders
an extra measure of protection against
the risk of errors, Kroll Factual Data’s
verifications are backed by representations and warrantees of accuracy.
Lenders can customize the solution to
include additional types of verifications and risk assessment analytics as
required for their specific risk management program.
For more information, visit www.krollfactualdata.com.
35
Your Game Plan to
Social Media Success
By John Seroka
36
Think about the last time you attended tion they play. As a broker, your pura major sporting event, such as a profes- pose for participating in social media
sional basketball game. One connec- should be to build a solid following of
tion—an interest in how the team’s loan originators, other business referplayers will perform that day—brought rals and loan prospects.
you and thousands of people together.
The idea of a shared connection helps Avoid sales pitching
explain why social media is now a Just as fans entering a basketball arena
dynamic marketing force for businesses. have expectations about what will tranThe Internet is your arena to connect spire there, social media users have expecwith a crowd that’s intertations too. They turn to
ested in what you bring to
blogs, Facebook or other
the home financing
social Web sites for interestgame. But how do you get
ing and informative online
the crowd’s attention and
conversation. Sales pitches
make them your fans?
will drive people away from
First, you need to be a
you. Instead, let people
starter … you have to get
know what your key interoff the bench and get into
ests are, what your function
the action. Social Web sites
is within your company, and
are buzzing with activity.
share key industry informaBest of all, no tryouts are
tion to help their careers.
required, so you can easily
Remember that people do
“Too many people
join the game and become
business with people they
new to social neta major participant.
like, which ties into the relaworking
get
overzealA main point to undertionship-building purpose
stand is that online social
ous at first and then
of a social media strategy.
networking is about reladrop off completely
tionship-building. Take the
Know the tools
because they don’t
time to build your online see immediate results available
relationships and underEach social Web site has a
from all the postings
stand that rewards will
different playbook to folthey have done.”
come your way in due time
low. For example, Twitter
… and it snowballs. After
revolves around Tweets,
all, Kobe Bryant didn’t become a house- which are messages of 140 characters or
hold name after his first few games.
less. Facebook is designed to be personOnline networking is an inexpensive al and communicate the personality of
way to reach people, but you may need you and your business. LinkedIn is a site
to pace yourself in the beginning. Too that enables you to describe your profesmany people new to social networking sional background and display recomget overzealous at first and then drop mendations from customers and associoff completely because they don’t see ates. A blog is a Web-based journal that
immediate results from all the postings typically focuses on one subject.
they have done.
There are other websites for social
Like a coach developing a game networking, but we’ll take a closer look
plan, you too will need to plan a strate- at the most popular examples so you’ll
gy that successfully uses social media.
be ready to score points in any of them.
Identify your purpose,
know your audience
No pro makes it onto the court without
knowing his purpose based on the posi-
Blogs
Selecting a blog host such as
WordPress.com, Blogger, Typepad or
Vox is the easiest way to begin. A hosted
blog is very inexpensive and takes less
than 10 min. to establish. If you want
the look and feel to be completely customized, however, you may feel limited
by a hosted blog. The other option is a
server side or stand alone platform.
As a mortgage professional, your
blog will target business referrers (loan
officers, past customers and other professionals), so anything you write needs
to keep this audience in mind.
There are more than 40 documented
ways to drive traffic to a blog. One popular method is to submit your blog to several blog directories like Blogarama or
Bloggapedia. This is just one of the many
effective tools available to get your blog
noticed in the social media arena.
Include your contact information and
picture to personalize your blog. Below
each post, install a bookmarking widget. If
you have Facebook or LinkedIn pages,
include a link in your profile and send
Tweets driving people to your blog. Be sure
to put your blog URL on all your marketing
pieces, including your business card.
Another tip is to research keywords
and be sure to use them in the title and
first sentence of your posts. For example, don’t try to rank in Google for the
term “mortgage news,” but instead try
to rank for something specific like
“mortgage news in Venice, Calif.” Use
Wordtracker to find keywords with less
than 100 competitors if you can.
Also ensure that people can subscribe to an RSS feed, leave comments
and leave trackbacks.
Twitter
Strategic page development is an important key to the success of your Twitter page
and can help set you apart from the competition. When you design your Twitter
page, it’s best to customize the page background so it complements your brand. Be
sure to include a photo and select something professional that communicates
your personality. A Twitter page with your
picture will do a better job attracting followers. Just look at the top 100 Twitterers
and you’ll see that they include pictures of
people, not logos or objects.
After you have your Twitter page set
up, Tweet several messages of strategic
value and substance before you invite
your colleagues and business prospects
to follow you. This way your followers
will understand the value.
As a mortgage professional, you may
wish to communicate information about
rates, new guidelines, mortgage industry
trends or other topics that would be of
value to your audience. When communicating this information, use a hashtag (#)
in front of keywords in your Tweets. This
will make it easier for people to find you.
There are several ways you can
encourage people to follow you. One
way is to click on “Find People” at the
top of your Twitter page where you’ll
find several options for drawing them in.
You can also install a Twitter widget on
your Facebook page so that every time you
send a Tweet, your Facebook wall is updated. You won’t have to go to both sites to
send the same message, which saves time.
Remember to include your Twitter URL in
your e-mail signatures and add the Twitter
link icon on your Web site landing page.
In addition, there is a new feature at
LinkedIn that allows integration with
your Twitter account.
Facebook
Establishing a strategy for your Facebook
page before creating your profile is necessary in order to best optimize your presence on this Web site. One idea is to use
your company logo or your picture as the
primary photo … it depends on your overall social media strategy. You can also post
photo albums with pictures of yourself
and your employees to more personally
connect with your audience. Including pictures of you or employees engaged in
group activities or corporate events is perfectly acceptable.
Attracting people to follow you on
Facebook is fairly simple, but you must
remember why people become followers
to begin with—it’s because they like you,
your company and you are a source of
information to them. While establishing
your fan base, be personable and
informative. People on Facebook will be
interested in knowing a bit about what
you do during your personal time; however, overdoing this at the cost of informative communications will cost you.
To find people to follow you, you can
click on “Friends” and then click on
“Invite Friends” or “Find Friends.” After
clicking “Invite Friends,” you simply
input e-mail addresses of those you
wish to invite or import addresses from
your address book, write a message and
send it out. “Find Friends” helps you
find people in your e-mail contacts who
already have Facebook accounts.
Keep a consistent presence
and post relevant content
Players who have a reputation for slam
dunks and three-point shots quickly become
fan favorites. If you consistently post interesting and reliable updates that affect your
audience directly and immediately, then the
more loyal your fan base will become.
In the mortgage industry, things are
constantly changing and these changes
have a definite impact on consumers, loan
officers and other business referrers. There
is a constant flood of economic and industry news—keep track of what’s happening
and frequently update your messages.
Social networking is all about two-way
communication. So how do you respond to
negative feedback? Quickly and directly!
This always requires tact. You have to
remember that putting something out there
is like taking the final shot at the buzzer—
you cannot take it back. If you have a problem client who posts something derogatory
about you or your business, resolve it quickly, first privately and then online. Do not
continue an argument online.
Connect with your crowd
By understanding how to use social
media effectively, your online game plan
will help your company grow. There are
books available that can provide more
strategy details, and marketing firms can
give you a jump start to help achieve
quicker results. With the widespread use
of social networking sites, now’s the time
to get off the bench.
John Seroka is vice president of Seroka &
Associates, a full-service branding, advertising, marketing and public relations
firm that serves a nationwide client base.
He may be reached by phone at (866) 3790400, e-mail [email protected], or connect with him at linkedin.com/johnseroka
or at twitter.com/johnseroka.
Residential and Commercial:
Working Together
By William Pape, MSFS, CMC
1. Simply that one partner feels that he
does not need the other partner;
2. One feels he is doing the majority of
the work and only receiving a small
percentage of the income;
3. One want to be “the boss;” and
4. One does not like the way the business is going, etc.
DECEMBER 2009
1. What work will be completed by each
party?
The bottom line is that both the residential and the commercial broker
should assume that the relationship
will not be long-lived and decide in
their early negotiations how any future
concerns may be handled.
Certainly there are a number of
things that one must consider prior to
entering into a referral or co-brokerage
relationship with another broker. In real
estate, the slogan of greatest importance seems to be “location, location,
location.” In financing, the greatest concern should be “ethics, ethics, ethics.”
The ramifications of not taking the relationship between brokers seriously can
be devastating to both parties.
Have you thought about your licensing and your ability to continue to work
in our industry? If you are a residential
broker, whether you refer a client to a
commercial broker or you enter into a
co-brokerage relationship, you are probably receiving some compensation.
Don’t you think that that means you
have some fiduciary relationship to the
client? If the client feels as though he
has not been treated fairly, he undoubtedly will go back to the referring broker
to vent his anger and maybe even
request financial compensation. So,
what to do? You should check references, qualifications, confirm licensing
and general reputation before making a
referral to anyone you do not personally know well. You should review the
contract that your client is expected to
sign. Are you a party to the contract?
Does the client know exactly what role
you are playing in the transaction?
As a commercial broker working in
concert with a residential broker to provide financing for one of the residential
broker’s clients, you must consider your
reputation within the lending community. Do your due diligence. Speak directly
with the client and ascertain what, if any,
information has been provided to the
client by the residential broker. Does the
potential client understand what is
expected of him? Does he know what the
residential broker’s role is in the financing
endeavor? Does the client have any questions regarding the fee agreement? Are
his expected financing results realistic?
Networking is possible within a multitude of areas. We have stressed the relationship between the residential and
commercial mortgage broker, but other
networking relationships are also avail-
Partnerships just don’t last very long.
So, the answer may be to look at a co-brokerage or a referral relationship as being
different than a true partnership. You can
do that, if you have clearly defined the
obligations of both parties. In a “referral”
relationship, the referring entity is simply
expecting a small pre-agreed fee to introduce the potential commercial client to
the commercial broker. In a co-brokerage
relationship, both parties are working
together to obtain the financing for the
client. Complexities can occur … is the
referral fee to be paid for each separate
transaction in the future? Who has the
contract with the borrower? How much
will the fee be? What happens if, in the
future, the client contacts the commercial
broker directly? The same questions come
up in a co-brokerage arrangement with
the addition of:
2. Will all future business be split the
same way between the parties?
3. Who has the relationship with the
lender and what happens to that
contact, if the two brokers separate?
4. Are you sharing forms, documents, etc.?
www.NationalMortgageProfessional.com There are all types of direct relation- have been called upon to co-broker the
ships: Personal-business-client-lender- commercial transaction. Co-brokerage
etc., in the lending world. But, there of a specific transaction is the evolution
are also relationships built within a of the relationship between the resilarger framework of our
dential and the commerindustry and beyond the
cial loan broker.
scope of your daily conSo, how do you build
nections. Let’s consider
this relationship between
the relationship between
the residential and comthe residential and commercial broker, when
mercial mortgage broker.
there is limited interacThis relationship may
tion between the parties
take us out of our norms
and their interests are
and into a temporary, or
really not the same,
even an evolving, associexcept for the fact that
ation that may lead to a
both seek financing for
long-term alliance.
their respective client?
“In real estate, the
Relationships
that
Generally, it is often the
slogan of greatest
work must allow for both
commercial broker who
parties to contribute so
seeks out the residential
importance seems to
that the sum of the be ‘location, location, broker, who may, in the
results of the work of
future, have a commerlocation.’ In financboth parties is greater
ing, the greatest con- cial transaction come
than the sum of the work
across their desk that
cern should be ‘ethics,
of the two individuals
they cannot handle for
ethics, ethics.’”
considered separately.
the client. Typically, a
Generally, the beginning
social relationship begins
of this relationship occurs when the even prior to a possible working relaresidential mortgage broker needs help tionship. Of course, at times, the resiin obtaining financing for a commercial dential broker has an inquiry from a
property, with which he or she is not client regarding a commercial transacfamiliar. The commercial broker must tion and initiates the relationship with a
have already cultivated a measure of qualified commercial broker or at least
confidence within the residential bro- attempts to find someone to help them
kerage community or they would not complete the commercial transaction.
If I were the commercial broker, in
order to develop these contacts, I would
first consider joining the local, state
and/or national organization that best
represents both brokerages. This affiliation adds credibility to your endeavors to
work as a co-broker. Second, I would try to
educate your local residential brokers so
that they may determine if they are really
considering a “do-able” transaction.
Third, I would offer assistance to anyone
interested in learning more about evaluating commercial transactions.
Whereas, if I were the residential broker, first, I would determine what areas
of interest the various commercial mortgage brokers have, i.e. multi-family,
small or large commercial, SBA, specialty or other types of properties. Second, I
would determine the success rate of the
potential co-broker. Third, I would
determine what specific expectancies
the commercial broker had in regard to
my involvement in the transaction.
Fourth, an equitable fee split arrangement must be agreed upon and a document signed. In both cases, references
should be exchanged and considered
and everything should be in writing.
Very few “partnerships” are successful in the long-term. Consider those
business partnerships of which you are
aware and calculate how many have
lasted say 10 years. Why? There may be
a number of reasons:
37
able to both the residential and commercial broker. Not only do you have the
possibilities within professional lending
associations, but also within real estate
and other organizations such as the
national and local realtors’ associations,
Certified
Commercial
Investment
Members (CCIMs), Members of the
Appraisal Institute (MAIs), financial advisors, insurance professionals, etc., but
also with lenders, title companies and
others either directly or indirectly related to the financing industry. One of the
reasons that I have had some success in
developing relationships within other
professional groups is that I have continued to pursue professional designations
within not only the lending industry, but
also the financial services industry. It is
much easier to “sell” yourself to other
professionals, if you have the back-up of
academic degrees or professional designations. We can all continue to educate
ourselves—so take continuing educa-
tion whenever it is available.
Good relationships are time-consuming
and require effort on your part. It takes a
long time to develop a sense of confidence
within your fellow brokers, but only one
mistake to ruin that relationship. Most
things that are worthwhile are worth working hard to get. So get out there and develop great relationships with your residential
or commercial counterpart and be more
successful than you already are.
William Pape, MSFS, CMC is with
Commercial Mortgage Brokers, a company
with offices in Arizona and Missouri. He has
been a commercial mortgage broker for
more than 20 years and handles only commercial transactions in excess of $1 million
on a national basis. He served on the
National Association of Mortgage Brokers
(NAMB) board of directors for five years and
directed six national commercial conferences
for NAMB. He may be reached by phone at
(480) 836-8681 or e-mail [email protected].
Cultivating Your Relationships
By Nat Hardwick
38
Many of the most rewarding personal going out to a marketing event, aggressivefriendship relationships in my life have ly shaking hands and collecting clients’
grown out of business relationships that business cards and then believing that the
were nurtured over time. Early on in my hard work is over. They don’t periodically
career, I learned that the
check in with their new or
recipe for successful, meanpotential clients, assume
ingful, long-term business
that no news is good news,
relationships contains many
and wait until the client
of the same key ingredients
picks up the phone first.
that we subconsciously use
Instead, please understand
in developing and mainthat it is once a new client
taining our personal friendrelationship has been
ships—those key ingrediestablished that the real
ents include being open and
work should begin. Check
honest with strong lines
in with your clients regularof communication; being
ly, solicit honest feedback
accessible; properly followand then take action based
“One of the worst
ing through; dependability
on the recommendations
mistakes
that
I
see
and a willingness to do
they make. Listen to your
whatever it takes to help the professionals make in clients and show them that
this business is going what they tell you is imporother side out.
out to a marketing
Put simply, one should
tant. Think of your clients
nurture their business relaas outside consultants or
event, aggressively
tionships with the same
trusted friends who can regshaking hands and
level of care and concern
ularly advise you on ways
collecting clients’
that they nurture their peryou can improve.
business cards and
sonal friendships. The reality
One technique that I’ve
then believing that
is that when one adopts this
found to be highly successthe hard work is
mindset, one quickly learns
ful to facilitate regular and
over.”
that, just like meaningful
ongoing communication is
friendships, highly successoffering my clients aroundful business relationships also take a lot of the-clock accessibility. I give new clients
time, effort, hard work and commitment.
my personal cell phone number and
Regular contact and open, direct com- assure them it is fine to call any time, day
munication are critically important to or night, to reach me. It is a small gesture
developing meaningful business relation- in which I demonstrate to them that they
ships. One of the worst mistakes that I see are important and offer the reassurance
professionals make in this business is that a decision-maker is always accessible
to them in any situation. Whatever method
you choose, make sure clients know they
can get a hold of you when they have a
concern and ensure that they feel like it is
appropriate to contact you directly.
I have also discovered over the years
that regularly checking in and communicating with existing clients is an excellent
way to increase your existing client base.
One successful way to generate new business relationships is through the kind recommendations and the referral of existing
clients. If you have provided a client with a
positive experience, ask them if they would
recommend your services to a friend of
theirs. Better yet, ask them to facilitate an
introduction to other key producers within
their office. I cannot stress how important
this technique was to helping my firm,
Morris|Hardwick|Schneider, grow. In fact,
if I sit down with our current client list, I
feel that it is a “family tree” of sorts, where
each loyal client has led to a fruitful relationship that led to another and so on. Just
as your circle of personal friends grows naturally as you meet friends of friends socially, so should your network of business network expand over time.
Just as important as regularly touching your clients and showing them that
you care about their business concerns,
as well as them as people, is a requirement that you respond and react appropriately to the information you receive.
Solicit earnest feedback from your
clients and then use that feedback as a
springboard in implementing governing
policies and procedures within your
organization. Frame your service
around your clients’ needs.
In today’s marketplace, practically
every business pays lip service to the
same ideal that the client is priority number one and customer service is tops.
These often-repeated claims appear in
everything, from commercials and marketing materials, to printed receipts and
coupons. Due to this overexposure, what
should be highly meaningful business
statements have become merely empty
words in the eyes of many consumers.
Rather than preaching about your superior service, demonstrate your commitment to exceptional service by showing
your client that they are your number one
priority. Showing, in addition to telling,
will earn you credibility and loyalty from
clients who often hear empty promises of
the same from your competitors.
One way I have undertaken to
demonstrate my commitment to putting our clients first is by embracing
exceptional service as a company-wide
commitment. We have put this promise
into practice by using client feedback
and suggestions to devise a specific set
of service standards, our BASICS. These
BASICS govern our daily operating procedures; the very heart of their purpose
is to maintain and build positive and
fruitful client relationships. The BASICS
are not an amorphous “vision statement,” rather, they are specific requirements and timelines. We publish these
BASICS to our clients, and ask that they
hold us accountable for them. Putting
your neck on the line in this way is not
easy, and it certainly involves reputation risk, but by publicly setting the bar
high and continually striving to improve
to exceed our own standards, we have
built lasting client relationships that
have enabled our success.
As an owner or manager, you
absolutely must make sure that you
have a team working with you that also
shares the belief that meaningful business relationships are essential to continued success. Enlist their support in
managing and maintaining the business
relationships that you initiate. As a business grows, it becomes impossible for
one person to be the “do all and end all”
of managing every client relationship. I
am constantly reminded how important
my team is in maintaining every client
relationship within our firm. Certainly
those whom you surround yourself with
as employees within your organization
can make or break the client relationships that you have worked so hard to
put into place. Ensure that everyone
down the line who interacts with the
client shares the same respect for the
relationship that you espouse.
Our BASICS:
Treat everyone with courtesy and
respect.
Demonstrate professionalism and a
positive attitude.
Return all phone calls and e-mails
within two hours.
Meet all promised deadlines.
Always go the extra mile to close the
loan.
Communicate with clients and borrowers and address potential problems prior to closing.
Send the HUD-1 Settlement Statement
to all parties within four hours of
receipt of closing instructions.
Complete the title commitment and
send to the client within 48 hours of
receipt of title order.
Follow the Good Faith Estimate
(GFE).
Start all closings on time.
Nat Hardwick is a managing partner with
the firm of Morris|Hardwick|Schneider.
Nat serves as chairman of the board of
directors and chief executive officer of
LandCastle Title. He also serves on the
Board of Directors of the LandCastle Title
Foundation. He may be reached by phone
at
(678)
298-2100
or
e-mail
[email protected].
How to Gain New Clients
in a Volatile Market
By Dr. Kerry L. Johnson, MBA
www.NationalMortgageProfessional.com PENNSYLVANIA MORTGAGE PROFESSIONAL MAGAZINE
Web: www.appraisalsanywhere.com
DECEMBER 2009
The Dow decreases by 38 percent and II. Let your clients know
then increases by 42 percent, all in one that their own biases will
year. There is a high likelihood that the cause them to make bad
market will correct itself. Mortgage mortgage choices.
rates have increased and then In one University of Michigan study, if an
decreased. It has been easy to qualify investor missed the 40 best-performing
for a loan and now it’s hard. Even if the days in the market from 1963 to 1993, the
Fed is able to stabilize the credit mar- average return would have dropped from
kets, people are fright12 percent to seven perened of change. Your
cent. While you aren’t an
hope is to maintain your
investment broker, the
client base, but you can
same concept is true
do much more. You can
when looking for the right
grow your business even
mortgage. In the Journal
during these treacherous
of Economic Behavior and
times.
Organization, Richard
Are you diligent in
Thaler wrote that more
making calls to your top
people make mistakes by
tier clients? In past “turbunot making decisions
lence,” you have learned
than by making the wrong
the lesson that making
ones.
frequent client calls is a
“In a Forester
There is also a high
great way to hand-hold
tendenc
y for your
research study, broyour clients. In a Forester kers who talk to their clients to avoid making
research study, brokers
clients at least once a changes to their mortwho talk to their clients at
gage plans despite good
month during
least once a month during
reasons for doing it. In
volatiles times, lose
volatiles times, lose fewer
one Boston University
fewer clients to the
clients to the competition
study, subjects were
and gain many more competition and gain offered a choice of varireferrals. But what should many more referrals. ous investment products
you say on those calls? But what should you
and expected returns.
Here is a four-step process
After making choices,
say on those calls?”
to not only avoid losing
the participants were
clients and their assets but
informed some of the
also build your practice.
choices were already in their portfolio. Forty-seven percent changed their
I. Bring your client back
mind and decided to stay with the
to their original goals
products currently in their portfolio.
One of my coaching clients audio This is one of the reasons clients are
records with permission the opening often willing to ride an inappropriate
meeting laying out the needs and mortgage into ruin. This status quo
desires of the client in preparation to bias of only accepting 30-year-fixed
create a mortgage plan. When making loans or the lowest monthly payment
the monthly follow-up calls, he then may be the wrong decision but yet the
uses the exact words the client stated one the client is used to owning.
in that meeting. “When we first met
two years ago, you mentioned that III. Be armed with at least
your most important goals are having three solid stories of your
an income of $8,000 a month and clients who weathered
make it last until you pass away, pay volatile periods in the
your home off in 15 years and provide past and came out ahead
for your children’s college expenses. using your advice
You also want to travel during retire- The reason your clients panic during
ment at least four times a year at an recessionary periods is due to emotion,
expense of $5,000 per trip. Are these not logic. Don’t try to console them only
goals still important to you?”
with logic, they won’t stay convinced.
Bringing your clients back to their They cannot remember the logic and are
original goals will assure them you are again consumed by emotion. That is why
still in control and still on track to meet you should always use solid behavioral
their goals.
economics arguments followed with sto-
ries the clients can remember. If you can
After steps one through three, here are
do that, you won’t have to say the same the words you can use to gain referrals:
things over and over to the same clients.
“I really enjoy working with you. I am
IV. At the end of the
always trying to build my business with
my best clients. Who do you know who
conversation, ask for
could benefit from the kind of relationreferrals
I am sure the last thing you think of in ship we’ve had so far?”
a volatile period is ask for referrals. It’s
like asking a car crash victim to buy
Using this script will secure two
life insurance while still in the ambu- referrals and one new client within six
lance. Yet while most brokers don’t months from every referral request.
even call their clients during downContrary to common sense, your
turns. You will be able to pick up more clients depend more on your ability to
market share (clients) who are terrified communicate than your ability to pick the
about losing their home or making right mortgage for them. There is no rule
payments in the future. You may also that you have to lose clients during
be able to attract more clients already volatile periods. In fact, most of my coachdisgruntled with the lack of client con- ing clients who keep in contact with their
tact from most brokers. I played tennis own clients are having a record year. They
recently in my regular Sunday match are gaining clients and because prospects
in Newport Beach, Calif. The topic of are scared and need someone to advise
conversation was how much money them on the right real estate financing
we all lost the prior week. The conver- decisions. Seventy percent of these HNW
sation also migrated to our respective prospects don’t have a mortgage broker
home mortgages. I flippantly asked if they can trust and the remaining 20 perany mortgage broker had contacted cent have absentee brokers. This is the
them over the last 12 months. All best time since 2003 to protect your client
shook their heads no.
base and gain more referrals.
According to one study, 57 percent of
your clients would never use you again if Dr. Kerry L. Johnson, MBA is a best-sellanother mortgage broker approached ing author and speaks at mortgage
them. This means that many high net industry conventions around the world.
worth (HNW) clients would meet with you His personal coaching company, Peak
if you had the courage to ask. In another Performance Coaching, promises to
study at the University of Connecticut, increase your business by 80 percent in
researchers discovered that 89 percent of eight weeks. He may be reached by
clients cared more about the relationship phone at (714) 368-3650 or visit
with their broker than about interest rate. www.KerryJohnson.com/coaching.
39
The Art of Building Strategic
Business Alliances in Today’s
Challenging Economy
Perhaps the most challenging step,
includes your potential clients,
and the one that some people dread, is
rather than your peers.
the face-to-face meeting with a potential contact. At times, it can be challeng- Honesty is the best policy. Being
ing to initiate, let alone maintain a relahonest and truthful at all times will
tionship, but below we have outlined
show your credibility and prove that
some successful tactics that have been
you are the real deal and that you
beneficial for our business networking
are always looking out for their best
efforts:
interest.
By Greg Perrine and Tim Markel
40
Relationships can be defined as the way in relationships. It starts with doing your
which two or more concepts, objects or homework in advance, so that you have
people are connected. The art of building pertinent knowledge about the individlong-lasting relationships is essential to ual, their employer and their business
growing your business and flourishing in in general. Being able to identify comyour respective industry. Successful people mon interests, work-related and nonhave the ability to develop relationships work-related, also provides a solid founthat are effective, beneficial and endure dation for establishing an effective relationship based on personover time. Given the current
al camaraderie. And finaleconomic climate, estably, you must put yourself
lishing and maintaining
in the right situations to
relationships has never
meet your top tier conbeen more imperative.
tacts and capitalize on
Even with the best
the encounter through
products and business
diligent follow-up.
practices, you still need
Doing a little research
strong relationships to sucbefore you approach a
ceed in the real estate
potential client or busiindustry. Building strategic
ness contact sounds obvialliances and partnerships
ous, but a surprising numis an important aspect of
keeping your business rel- “The art of developing ber of people don’t take
evant and enabling you to and maintaining rela- the time to do it right. The
grow as an individual and tionships comes more company Web site, if there
an organization. The art of
easily to some people is one, is the place to start.
developing and maintain- than others. However, Here you’ll find information on what the company
ing relationships comes
with a strategic plan,
does, who its clients are
more easily to some peoa little practice and
and, if you’re lucky, a bio
ple than others. However,
determined follow-up, of the person you plan to
with a strategic plan, a little practice and deter- anyone can become an meet. Of course, there’s
effective networker.”
always a Google search
mined follow-up, anyone
—Greg Perrine,
and other online tools
can become an effective
Project Manager, The that can lead you to news
networker.
Moote Group
articles, organizations and
The first step is to idenother tidbits about your
tify your target: Who are
the individuals and businesses that can contact. Check Web-based networking
enhance your bottom line or play a and social sites such as LinkedIn, Plaxo or
vital role in the growth of your busi- Facebook for more details with an eye
ness? In addition to prospective clients, for other ways to engage with and estabthink about contacts who might be lish a concrete connection. And don’t forgood referral sources or can connect get to tap the knowledge of other peoyou with those hard-to-reach people ple, including your own team.
Our firm has a bi-monthly meeting
that may have work for you. Establish a
priority list and map out a plan as to to talk about new contacts, relevant
how you can connect with each of those events and changes in the industry. It’s
also a great way to get feedback on your
resources.
Your goal should be to establish a networking strategy or find out if any of
mutually beneficial relationship. The your co-workers can help you with a
concept of reciprocity in business has connection. We keep details notes on
been around for ages, but too often we our networking in spreadsheet format
forget that sometimes it’s better to give and note contact information for each
than to receive—especially in the person or business. Our combined conbeginning. The next time you meet tact list—accessible to the entire team
someone who can help your business, and constantly updated—forms the
database through which we send e-mail
ask first what you can do for them.
There are many different ways to announcements on our services and
effectively build mutually beneficial recent accomplishments.
Always be prepared! It is amazing how Provide a service that is unmatched
many times you will meet someone of
by others in your industry. At the end
related interest when you least expect
of the day, providing a great service
it. Being open to all options is crucial
is what will make your clients continbecause sometimes you meet people
ue to do work with you.
in the most ordinary of places. How
many times have you been at a restauThe above-mentioned tools have
rant, on a plane or at your kid’s soccer given us an advantage in building our
game and started talking with the per- network. There are times when we do
son next to you—only
not want to attend events
to find out that at one
or meetings, but at the
point you both worked
end of the day, if you are
for the same company
diligent with your efforts
or on the same project.
the rewards you reap will
Being able to leverage
be immense.
past experiences or
Relationships are great
encounters on the fly
and essential to your busiwill prove to be
ness, but it is the ones that
extremely beneficial for
can be sustained over time
establishing or rekinthat will prove to be profdling a relationship.
itable. You can go through
the trouble of preparing
Face time is very
yourself and putting your“Remember, respect
important to main- and trust are the glue
self in the best position,
taining a relationship.
but all will be for naught if
that holds together
With all the text mesyou can’t sustain those
functioning teams,
saging and e-mails partnerships and man- relationships over time.
these days, the imporBeing proactive and anticiaging relationships.”
tance of putting a face
pating your clients’ needs
—Tim Markel, CFD
to a name has taken a
will give you a leg up over
back seat. Stopping by Administration/Reim- your competition. You
bursement Division
a client’s office to say
need to show your potenManager,
The Moote tial client you have the
hello or asking them
Group
to lunch will imply
skills and knowledge to
that your client is
anticipate their every need
always on your mind. Remember, in and that you will put them in the best
order to maintain a relationship over position to benefit. Relationships are
time, they must be nurtured and something that constantly needs to be
taken care of with the required com- nurtured and taken care of.
ponents noted above.
It is not easy to establish a firm relationship let alone sustain one for the
One way to engage quickly with peo- forthcoming years. Relationships can
ple is to establish a common interest be compared to a redwood tree. A redor friendship prior to discussing wood has a solid foundation based on
business. Being able to relate on a enriched roots and can grow to be the
personal level first will make future tallest tree in the forest, but without
interactions about business much the necessary ingredients, it will not
more effortless. Don’t try too hard to achieve
its
greatest
potential.
force the issue. Allow the conversa- Consistency and timeliness in a relation to dictate the topics of interest. tionship provide an individual and/or
client a mechanism to depend on you.
Get involved with industry commit- It is going to take time to establish a
tees and community activities. worthwhile relationship and being conMaking time for groups play a vital sistent and unrelenting with your
role in how well-rounded an individ- efforts, will significantly increase the
ual you are. Look beyond the obvi- effectiveness of your hard work. It has
ous professional organizations that been said that you have only ten touchrelate to your own industry. You may es (phone calls, personal interactions or
want to be a member of a group that e-mails) with a prospective client
before the opportunity is lost. That
being the case, it is vital to treat each
interaction with the importance it
deserves because it could be your last.
In today’s challenging market, you
have to build successful relationships and
interact with people in a positive way to
attain your organizational goals. Building
relationships is such a vital aspect of your
business, so vital, there are divisions
within your company where their sole
task is to bring in business. Remember,
respect and trust are the glue that holds
together functioning teams, partnerships
and managing relationships. Through
hard work and persistence, you can really make a difference in establishing an
effective relationship that is mutually
beneficial to both sides.
Greg Perrine is a project manager and Tim
Markel is a CFD administration/reimbursement division manager at The Moote
Group, a full-service construction management firm serving California, Nevada and
Arizona. Greg may be reached by phone at
(714) 751-5557, ext. 246 or e-mail [email protected]. Tim may be reached by
phone at (714) 751-5557, ext. 217 or email [email protected].
Knotworking: Beyond Networking
By Laura Lynn Burke
Now is the time to take action, start
knotworking, forming alliances, building
relationships, bonding and partnering
today! Many individuals refer to networking as an activity that is done for the benefit of obtaining business, but knotworkers
understand that networking is an activity
that can be used for purposes other than
business gains. Knotworkers know that true
knotworking can lead to life-long relationships that often become great friendships.
I am stressing the importance of
knotworking, not for a specific need,
but for the gain of new and lasting
relationships. A comparison would be a
transactional salesperson or a relational salesperson? Which one are you?
Are you a transactional
person or a relational
person?
A transactional person is in the mindset
of what’s in it for the moment. “I need
to close this transaction, and if I never
hear or see from you again, so be it.”
The relational person is quite the opposite. The main focus is to make this
experience a positive one for you, as
well as build a bond, friendship, or unity
of some form, regardless how weak or
strong. It’s the initial tie that the relational person is looking for. Therefore,
in my eyes they are a knotworker.
While there are far too many achievers pushing to succeed at whatever the
cost may be, individuals and team
members become dispensable, when
necessary. This has become an acceptable business practice. It is an inexcusable to use an act in this manner to
propel yourself forward.
We must look at business differently.
Knotworking, combined with “networkology” is the key to the future, and
more importantly, basic principles that
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Heather Bayes
Email: [email protected]
Phone: 619-906-4205 Efax: 619-906-4215
DECEMBER 2009
We are a unique independently owned Escrow Company and we are dedicated to
accommodate you and your clients through these challenging times:
• Short Sale and REO transactions
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What’s your goal for 2010?
Make it happen! Only with United Wholesale Mortgage
www.NationalMortgageProfessional.com It’s a team or group effort of promoting one another and mutually benefiting,
void of the “What’s in it for me?” attitude.
That attitude doesn’t exist in knotworking. In knotworking, all (team members
or groups) are working towards long-term
goals, binding win-win relationships—
relationships that both nurture and feed
one another.
I remember hearing a
You’re losing
story about a town trying to
money!
build a very large monuEveryday that you are not
ment of stone many, many
talking to somebody, you
years ago. The men in the
miss an opportunity to
town would hoist large
knotwork. By using the art
stones up with a rope and
of “knotworking” which is a
pull. Eventually, the statue
word I coined, you will
became too tall for any one
become more effective at
person to pull the single
networking, know when
rope up and lift the stone.
the best time to ask for a
They stumbled upon
referral is, and once you
have the referral, you will “LinkedIn, Facebook, the idea of braiding the
know how to take it to the Plaxo and Twitter are single ropes they had
next level.
key marketing compo- together, and tying them,
this added strength to the
The difference between
nents, as well as a
rope, and they used a
networking and knotworkfabulous way to stay team of men to pull the
ing is the same difference
between a transactional in touch with possible ropes with the very large
referral sources. By
stones to the top. This
sale and a relational sale.
Networking, like the trans- build the relationship story exemplifies two key
points, the tying and
actional sale, is for today
first, referrals will
braiding of the ropes
coupled with the attitude
come later.”
made the rope stronger,
of “What’s in it for me?”
Networking is the exchange of superficial like a group of people with similar
pleasantries between parties and then thoughts bonding together to make a
comes, “What’s in it for me?” The other difference, the second is that by workparty counters, “What I need is referrals.” ing together as a team they were able to
Knotworking, on the other hand, is lift much heavier stones than trying to
creating teams, forming partnerships do so individually. This old story reflects
and building relationships through my theory on knotworking implicitly.
trust, loyalty and mutual respect. It’s a
bond, a unity, a tie or knot that strong- The difference between
ly holds those involved together like networking and
finely woven fabric. It’s the difference knotworking
between being a thread or a piece of By understanding the difference between
networking and knotworking, you will
finely woven fabric.
Networking is the sharing of referrals.
Knotworking is the sharing of abilities,
resources and knowledge. It is through
knotworking that you will understand
the power and benefits of investing in
relationships. Networking was a must
in the past, in today’s marketplace
“Knotworking” will be your survival.
become more productive and profitable,
by eliminating cold calls, phone-a-thons
and unproductive, busy work that wastes
your time, replacing it with knotworking.
I once heard Dr. Kerry Johnson,
author of Mastering the Game: The
Human Edge in Sales and Marketing
said, “The definition of a ‘top producer’
is someone who has the ability to make
cold calls, but never actually has to.
Nine out of 10 cold calls will end in
rejection, while seven out of 10 referralbased calls will gain new business.”
We’re facing serious challenges with
business as we know it. Our industry is
faced with extreme changes, including
slow downs and shut downs. In the mortgage business, we routinely see new rules
and regulations, less lenders and tightened guidelines, while technology continues to expand our marketing capabilities.
Our business is referral driven, so you
must learn to combine traditional methods of networking with current technology in order to take control of your business. In order to win in today’s marketplace, you cannot afford to make a wrong
move. Knotworking provides solutions
and the tools to prepare you for higher
levels of networking that will be expected. Knotworking will put you on the cutting-edge by learning where to mine for
referrals, how to build strong alliances
with bonds that tie and give you knowledge to create your own hubs or referral
trees that will keep you flourishing.
Knotworking isn’t something you can
turn on and or off. It’s an ongoing process
that you continuously improve and perfect. Some people are natural born networkers or have acquired the skill somewhere during their childhood; others
must learn the skill and techniques. Our
most important skills can be learned.
Once you’ve started to knotwork, you will
never want to stop. It will be a dynamic
tool you can use to build your business.
41
individuals are people and are to be
treated with kindness and respect. One
never knows who could be a diamond
in the rough. Through knotworking,
you can start building those ties and
bonds today.
Free Fall Networking
DECEMBER 2009 O
I went to a convention in Atlanta for
one of my business ventures. I walked
away with three potential deals for
another business in which I was
involved in. I also made two new
friends and one acquaintance who
shared a great story with me. I encountered these other business transactions
for two reasons.
42
O First, the woman I was traveling
with, a friend Betty had a great deal
of respect for me within the industry and felt comfortable referring
me to her friends, because she trusted me. She opened the door for conversations and it was up to me to
build the relationship and ask for
the business. A referral.
O Second is what I call “Free Fall
Networking.” No, you’re not networking without a net, but you really aren’t there for business nor did
you plan or position yourself to be
there. It’s an event that leads you to
unexpected knotworking opportunities. You bond almost instantaneously with someone, and before
you know it, you’re doing business
together. This is considered “Free
Fall Networking.”
Planned networking is when we
plan to meet a certain person or to do
something, such as attend a function,
mixer, seminar or party. Neither
planned nor Free Fall Networking is better than the other. They are just different. Know the difference; learn to
understand the dynamics of both to be
an expert in networking.
Futurists are telling us that relationships will be the most important factor
in doing business. The author of Endless
Referrals, Bob Burg tells us that “People
will do business with those people they
know and trust!”
Investing in relationships
Quite a few years back, I had an unusual situation occur. I was working as a
loan officer for a bank. I had to make a
judgment call very quickly. I believe I
did the right thing. The situation
involved a great referral source, a
builder, Larry, who had been my client
for years. We had a comfortable,
lengthy business relationship. He knew
he could count on me to get the job
done. We made a deal a few years back
never to ask the other person to jump
through burning hoops unless absolutely necessary. When asked, then you
knew it was serious and immediate
action would be taken on both sides.
We discussed situations rationally, without unreasonable expectations of one
another. We had built a relationship on
trust, loyalty and mutual respect.
He called me one morning and was
interested in refinancing his own home
loan. He asked me, “What could I do to
help?” He called during the worst possible week! This was during the 1993 refinance craze when banks, from time to
time, would raise their rates just high
enough to slow down the volume giving
them a chance to catch up and breathe.
The bank I represented had done just
that, raised its rates just slightly over
current market rates. I knew that we
were higher than others at this time
and there wasn’t anything I could do. So
it was my dilemma! I knew my rates
were not the best, competitive maybe,
but not the best! This was my great
business associate and referral source. If
I quoted Larry my rates and he made a
few phone calls, he could think I was
taking advantage of our relationship,
especially after all the business he had
referred to me. He would have probably
laughed and said, “What are your real
rates?”
I made a quick decision. I knew
which lender had the best rates in town.
It was also the lender who was kicking
my butt! I also knew on a normal daily
basis they weren’t the lowest and they
didn’t have the niche products that I
had. He didn’t need a niche product. All
he wanted was the best rate. He was
looking to me to give him the best rate.
So I did!
I took a risk. I said to him, “I can tell
you where to go today. They have the
best rate not only in town, but also in
three counties. I cannot come close to
their rate. Please, this is between you
and me. I’m telling you this for your
personal business. Next week, my rates
will be down again, but not today. I
want you to be happy as my business
partner, so I am sending you to my competition.” I was playing Miracle on 34th
Street, Macy’s referring Gimbels …
Gimbels referring Macys. I referred him
to another lender.
offering. I know it’s slightly higher
than most, but we have a relationship
so you have to work with me. You have
to do your deal at the higher rate
because it’s me. No other reason, I
cannot beat the rate. I have the same
service, but you have to take this rate
because of our relationship.” How long
do you think that our relationship
would have lasted? I would have lost
not only the relationship, but his
respect as well. I opted to lose the
transaction but keep the relationship.
The very next week, he referred me to
one of his construction clients, as always,
no reservation or hesitation on his part.
When you find yourself in a similar
situation, think twice before you make
a sales pitch to someone with whom
you have a relationship. Always put the
relationship before the transaction and
commission!
What lies ahead
There will be changes in the future that
will affect the way business is conducted. Technology will appear as a
stronger force in sales, marketing and
customer service. It is convenient, relatively easy to set-up and cost effective.
LinkedIn, Facebook, Plaxo and
Twitter are key marketing components,
as well as a fabulous way to stay in
touch with possible referral sources. By
build the relationship first, referrals
will come later.
The world is evolving and we are history in the making. We may not see it
happening, but we are creating history.
Keep the relationship,
We all need to take inventory regarding
how we expect to grow our business in
lose the transaction
I lost the transaction, but kept the rela- this “new marketplace.”
tionship! In fact, I even solidified our
relationship. I lost the transaction, but I Laura Lynn Burke has been selected from
didn’t lose my friend as a colleague in a nationwide search to be featured in
the process. I strengthened his trust in Stepping Stones to Success, a highly sucour relationship and in me. I looked like cessful book series. The book features
a “hero” instead of a “loser!” If I had best-selling authors Deepak Chopra (The
tried to sell him on a bogus interest Power of Purpose), Jack Canfield
rate, I would have risked our entire rela- (Chicken Soup for the Soul), Dr. Denis
tionship, one of mutual trust and Waitley (featured in The Secret) and
respect. I also kept control of where I Laura Lynn Burke (Networkolog) who are
sent him. I knew they couldn’t fill my joined by other well-known authors each
shoes for the future needs of his cus- offering time-tested strategies for success
tomers. What if he’d been dissatisfied in frank and intimate interviews. Laura
with my assistance and went in search is also the CEO and founder of
of another lender on his own. Who then Footprints International d/b/a The
might he have stumbled upon, a poten- Mortgage Institute, a training and contial new source for his customers. I did- sulting company designed with you in
n’t want that to happen.
mind. For more information, call (708)
He was happy and respected my can- 692-6199 or e-mail [email protected].
dor because in his time of need, I came
through. It didn’t matter that I didn’t
Visit author Laura Lynn
have the best interest rate. What matBurke’s Web site at
tered was that I was the person who
www.lauralynnburke.com
found the lender who did give him the
where she arms you with the
best interest rate.
information to “Prepare today for
What if I had said to him, “I expect tomorrow’s changes, and you will stay
you to take the rate and program I am one step ahead of the competition.”
new to market
LPS launches automated
property valuation model
eLynx launches e-closing
network
$
49
.95
Plus Postage
& Handling
Think Reverse!
Table of Contents
Part I:
The new pillar of retirement security
Part II:
Marketing reverse mortgages: It’s all about education
Part III:
Originating reverse mortgages
Part IV:
Enhancing freedom: The essence of reverse mortgages
Part V:
A new frontier in mortgage lending
“Atare Agbamu is one of only a handful of people in the reverse mortgage arena
who possesses a commanding understanding of the reverse mortgage industry.
As an originator, he has hands-on experience educating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press since
2002, Atare Agbamu communicates nationally with the housing finance community, bringing the unique insights and experience of an ardent reverse mortgage
expert into a wider business context.
“This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information on marketing and originating reverse mortgages.
“Present and future reverse mortgage professionals and senior advisors will profit from
decades of experience skillfully woven into this book. If you plan to succeed in this industry, this
book is the place to start.”
—Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair
of NRMLA’s Board of Directors
“When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu
has set down an impressive amount of information ... And he delivers it in an easy-to-read,
simple-to-understand style that will make this book essential reading for all reverse mortgage
professionals.”
—from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom
Senior Funding Corporation, and former four-term Co-Chair of NRMLA’s Board of Directors
“The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and
acceptance of reverse mortgages among us laypeople. They are very compelling ...”
—Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends
of the Elderly
“This book should be required reading for all new loan consultants originating reverse mortgages
and is recommended for experienced ones as well. This book provides excellent insight and information on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan
process and shorten the time to closing. Most of the problems caused in the processing and closing of reverse mortgages come from inadequate preparation.”
—Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company
DECEMBER 2009
eLynx, a portfolio company of American
Capital, has announced
an innovative electronic closing network
(eCN) service that lenders are integrating
into their existing closing process to
increase loan quality and provide
more control in order to meet the government’s demands for more accurate
closings. The move will help lenders
ensure borrowers and settlement
agents have a better experience at the
closing table. Lenders and their customers will benefit from eCN’s settlement agent management component,
which provides vital information
about the agents who handle the closings, their processes and disbursement. These details will help lenders
accelerate the delivery of the closing
package and funds, avoid fraud, service issues and other problems that can
be costly to all parties to a closing and
negatively affect the customer experience. eLynx reports that over 65,000
of the 300,000 plus settlement agents
the company works with have already
registered on the eCN system.
Built on eLynx’s expedite platform,
eCN connects disparate industry parties
and their supporting systems in ways
that never existed before. The result is a
single view into regulatory compliance,
a streamlined process, reduced risk of
errors and fraud, and improved customer service.
“More than 98 percent of the industry’s closing agents already use eLynx’s
expedite services, and now, through
Only
Lender Processing
Services Inc. (LPS), a
provider of integrated technology and
services to the mortgage and real estate industries, has
announced the availability of its new
automated property valuation model,
LPS AVM, to assist the mortgage industry in establishing and verifying property values for underwriting, quality control and due diligence.
LPS has combined its public records
data, analytics and modeling resources
with its valuation experience to deliver
a thorough automated valuation
report via LPS AVM. The report, which
delivers increased hit rates and
improved accuracy, will include a
value estimate; up to 10 comparable
sales listings with a location map; a
statistical confidence interval band; a
history of subject property transactions and finance activity; and regional price trends.
“LPS AVM is powered by our robust
public records database and multiple
valuation modeling methodologies,
and is complemented by ongoing quality control and reliable customer service. However, we offer mortgage
bankers far more than an AVM,” said
Nima Nattagh, Ph.D., senior vice president of LPS Applied Analytics. “In addition to our suite of AVMs and a cascade
interface, LPS is also a leading provider
of desktop and field valuations. The
extensive collateral valuation expertise
offered by our modelers and developers enables LPS to partner with lenders,
servicers and capital market professionals to determine the right products at
the right points in the collateral valuation process.”
LPS Applied Analytics collects and
compiles real estate public records
data directly from the county assessor
and recorder offices in jurisdictions
that cover 89 percent of U.S. residential market activity. The database
describes property characteristics,
ownership change, sales and financing data.
For
more
information,
visit
www.lpsvcs.com.
www.NationalMortgageProfessional.com applications from the point of origination. MERS FraudALERT, powered by
Interthinx, will help identify and prevent fraud through the sharing and
reporting of key data among the more
than 62 million loans currently registered on the MERS System. Lenders
using MERS FraudALERT will submit
loan application data and incident
reports with suspected or confirmed
fraudulent activity to a centralized
database. The system will then notify
other lenders who have loans that may
have connections to the data, alerting
them to possible fraudulent transactions in their pipelines.
“While the industry currently has
access to excellent loan-level fraud
detection technology, lenders still face
unacceptable risk,” said R.K. Arnold,
MERS president and chief executive
officer. “Fraudsters circumvent those
tools by perpetrating multiple instances
of fraud concurrently because no one is
speaking to each other. Only by creating
a collaborative industry wide fraud prevention database can this activity be
stopped. MERS FraudALERT will become
the national mortgage fraud detection
and prevention utility. By participating,
lenders can show that they take fraud
prevention seriously.”
MERS FraudALERT combines MERS’s
infrastructure and industry-wide integration with the proven fraud detection
capabilities of Interthinx. Lenders who
register their loans on the MERS System
will have immediate access to the first
industry wide database of fraud-related
information through the new product,
making any fraud screening technology
more effective.
For
more
information,
visit
www.mersinc.org or www.interthinx.com.
43
eCN, eLynx can offer detailed information on these vital partners,” said
Sharon Matthews, eLynx president and
chief executive officer. “This additional
data gives our lenders insight into who
is interacting with its customers, helps
them mitigate fraud more effectively,
and ultimately gives them more control
over the entire customer experience.”
For more information, visit www.elynx.com.
promoting new “niche” loan programs,
new products or any other announcement related to the introduction of a
new program, to the attention of:
New to Market column
Phone #: (516) 409-5555
E-mail:
[email protected]
Your turn
National Mortgage Professional Magazine is the 1st of the month prior to the tarinvites you to submit any information get issue.
• Daily updated mortgage • Find loan programs
• Discover local and
industry news
national events
• Industry blogs
To submit your entry for inclusion in the National Mortgage Professional
Calendar of Events, please e-mail the details of your event, along with
contact information, to [email protected].
FEBRUARY 2010
Monday-Thursday, February 1-4
Mortgage Bankers Association
CREF/Multifamily Housing
Convention & Expo
Mandalay Bay Resort & Casino
3950 Las Vegas Boulevard South
Las Vegas
For more information, call (800) 7936222 or visit www.mortgagebankers.org.
WEB SITE
PAGE
Abacus Mortgage Training and Education .......... www.acethesafe.com ............................................34
ACC Mortgage .................................................. www.weapproveloans.com ....................................35
AMB Links/DBA Alliance AMC ..........................................................................................................4
Byte Mortgage Software/CBC Companies ............ www.byte-cbc.com ..............................................18
Calyx Software ................................................ www.calyxsoftware.com ........................................22
Closing.com .................................................... www.closing.com ................................................18
Digital Mail Maker............................................ www.digitalmailmaker.com ................................PA2
Direct Group, LLC ............................................ www.dgmortgagemarketing.com ..........................18
Elliott and Company Appraisers, Inc................... www.elliottco.com ..............................................39
Emigrant Mortgage Company ............................ www.emigrantmortgage.com ................................32
Entitle Direct Group.......................................... www.entitledirect.com ..................Inside Front Cover
Etrafficers........................................................ www.etrafficers.com ............................................42
FindMortgageJobs.com .................................... www.findmortgagejobs.com ................................PA5
First Source Capital Mortgage, Inc. .................... www.fscmortgage.com ..........................................11
Franklin First Financial .................................... www.franklinfirstfinancial.com ............................22
Frost Mortgage Banking Group ........................................................................................................9
Guaranteed Home Mortgage.............................. www.ghm.com ....................................................23
HTDI Financial ................................................ www.htdifinancial.com ........................................33
MBA-NJ/NJAMB ................................................ www.mbanj.com ..........................................PA6 & 5
Mortgage Concepts .......................................... www.mortgageconceptsonline.com ........................10
Mortgage Now, Inc. .......................................... www.mortgagenow.com ..........................Back Cover
Mortgage Trainers of North America .................. www.mtgtna.com ................................................39
MortgageProShop.com...................................... www.mortgageproshop.com ........................PA3 & 43
NAMB Legislative Conference ............................ www.namb.org ..................................................PA4
NAPMW .......................................................... www.napmw.org ..................................................27
Packet8 .......................................................... www.businesssurvivalcenter.com/8x8 ..................PA3
Platinum Credit Services, Inc............................. www.platinumcreditservices.com ..........................21
Presidents First Mortgage Bankers .................... www.presidentsfirst.com ......................................13
Solid Solution Escrow ....................................................................................................................41
Stearns Lending, Inc. ........................................ www.stearns.com ................................................18
United Northern Mortgage Bankers Ltd. ............ www.unitednorthern.jobs ...... 11 & Inside Back Cover
United Wholesale Mortgage .............................. www.uwmco.com ................................................41
US Home Loan Advocates .................................. www.ushla.com ..................................................20
Wall Street List ................................................ www.wallstreetlist.com ..........................................7
Wells Fargo Home Mortgage.............................. www.brokerfirst.com ............................................12
Saturday-Thursday, February 20-25
National Association of Mortgage
Brokers 2010 Legislative &
Regulatory Conference
Hyatt Regency Washington
on Capitol Hill
400 New Jersey Avenue NW
Washington, D.C.
For more information, call (703) 3425900 or visit www.namb.org.
Tuesday-Friday, February 23-26
Mortgage Bankers Association National
Mortgage Servicing Conference & Expo
Manchester Grand Hyatt
1 Market Place • San Diego
For more information, call
(800) 793-6222 or visit
www.mortgagebankers.org.
MARCH 2010
Sunday-Wednesday, March 14-17
27th Annual Regional Conference of
Mortgage Bankers Associations
Trump Taj Mahal Casino Resort
1000 Boardwalk at Virginia
AvenueAtlantic City, N.J.
For more information, call (973) 3797447 or visit www.njamb.org.
Sunday-Wednesday, April 25-28
Fraud Issues Conference 2010
Hyatt Regency Chicago
151 East Wackler Drive • Chicago
(800) 793-6222 or visit
AUGUST 2010
Wednesday-Friday, August 18-20
California Association of Mortgage
Brokers 2010 Annual Convention &
Grand Exposition
Hyatt Regency Long Beach
200 South Pine Avenue
Long Beach Convention Center
300 East Ocean Boulevard
Long Beach, Calif.
For more information, call (916) 4488236 or visit www.cambweb.org.
OCTOBER 2010
Sunday-Wednesday, October 24-27
Mortgage Bankers Association 97th
Annual Convention & Expo
Atlanta Georgia Congress Center
285 Andrew Young International
Boulevard NW • Atlanta
(800) 793-6222 or visit
MO
RTGAGE PRO
NMP
SSIONAL
44
COMPANY
Wednesday, February 17
Florida Association of Mortgage Brokers
Broward Chapter 2010 Annual Chapter
Trade Show
The Broward Convention Center
1950 Eisenhower Boulevard
Ft. Lauderdale, Fla.
For more information, call (954) 7611422 or e-mail [email protected].
Sunday-Wednesday, April 25-28
Technology in Mortgage Banking
Conference & Expo
Hyatt Regency Chicago
151 East Wackler Drive • Chicago
(800) 793-6222 or visit
FE
Tuesday-Thursday, February 9-11
Nationwide Mortgage Licensing System
2010 User Conference & Training
Rancho Bernando Inn
17550 Bernando Oaks Drive • San Diego
For more information, call (202) 2962840 or visit www.nationwidelicensingsystem.org.
APRIL 2010
Tuesday-Wednesday, April 13-14
Mortgage Bankers Association’s
National Policy Conference
Hyatt Regency Washington
on Capitol Hill
400 New Jersey Avenue NW
Washington, D.C.
(800) 793-6222 or visit
NATIONAL
new to market
MAG
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UnitedNo
3017 Hempste
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Preside
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