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62+
The Secondary Market Overview: From Bonds to
Production How Long Will They Stay Low? By Dave
Hershman
Smooth Sailing With New Compliance Tools
By Greg Holmes
Value Nation: The Appraisal Review Its Time Has Come
By Charlie W. Elliott Jr., MAI, SRA
NMP Mortgage Professional of the Month: Peter Norden,
Chief Executive Officer, REMN-Real Estate Mortgage
Network Inc.
Mortgage Revolution to Present MRev New York Oct. 15-17
Ask Tommy: Your QC Expert By Tommy A. Duncan, CMT
Yield Spread Premium is Gone! A Proclamation
Declares a New Term By Jonathan Foxx
Are You Really SAFE From Predatory Mortgage
Originators? By Lawrence Fried
FHA Insider Big FHA Updates: NegEQ Refi, CLTVs,
MIPs and Credit Scores By Jeff Mifsud
SAFE Smart Registration, Level or Not, Here It Comes
By Paul Donohue, CRMS
A New Era of Mortgage Reform Part II: Legislation
Reactive or Proactive By Jonathan Foxx
The Trusted Mortgage Professional: Its Time to Step Up
By Greg Schroeder
Looing Into the Future of Mortgage Banking
By Rene F. Rodriguez
Why and How You Control the Future: Braving the Great
Waves of Change By Gibran Nicholas
A Look Into the Crystal Ball of Mortgage Banking: The
Wild Ride Continues, But Major Opportunities Lie Ahead
By Dave Zitting
A View From the C-Suite: Mortgage Banking Change?
You Havent Seen Anything Yet! By David Lykken
Forward on Reverse: FIT for Reverse Mortgage Lenders:
Part I By Atare E. Agbamu, CRMS
A Message From NMP Media Corp.
Executive Vice President Andrew T. Berman
YSP, well miss you
As the yield spread premium (YSP) rides into the sunset, we now have to find a bet-
ter nomenclature to describe the credit that third-party originators (TPOs) will
receiving for originating loans. On page 18 of this issue, you will find the new term
that we feel will takeoff as an official term in the mortgage industry, replacing the
old YSP as proclaimed by Jonathan Foxx. Later in the magazine, Jonathan con-
tinues his dissection of the Dodd-Frank Act in Part II of his series A New Era of
Mortgage Reform.
The future of the mortgage banking marketplace
This month, we will focus on the future of mortgage banking. As we face massive changes in the
industry, in this focus, we had our experts write about ways to deal with these constant changes. The
section starts off with the change-master himself, Rene F. Rodriguez, chief executive officer of
Mortgage Dashboard providing an overview of the future of mortgage banking and his perspective
from a technology standpoint. Gibran Nicholas then shares his thoughts on why you can control
change and how to adapt to the ever-changing marketplace. Then, we get to peek into Dave Zittings
crystal ball to see the opportunities that await us as the market undergoes its metamorphosis. The
section wraps up with David Lykken discussing the current state of the mortgage banking market
from the perspective of the C-level executive and speculating on the unknown variables that lie
ahead in the marketplace.
Our NMP Mortgage Professional of the Month
Last month, we featured wholesaler Joe Amoroso from REMN. As we focus this month on the world of
mortgage banking, we didnt have to go travel very far away from Mr. Amoroso, in fact, we went just
down the hall to a man who is considered legendary in the world of mortgage banking, REMN Chief
Executive Officer Peter Norden. Peter (who is pretty young by industry standards) came out of retirement
when he was faced with unprecedented opportunities presented in the secondary marketplace. Peter is
a guy who trades mortgage-backed securities (MBS) on his personal account just for fun. Im pretty sure
youll find his insight and stories on the market helpful as you continue to survive in this ever-changing
mortgage marketplace.
We hope you enjoy this issue and take away from it, knowledge from our informative articles that
will assist you in todays turbulent marketplace. As the leaves begin to fall, action in the industry
begins to heat up as Id like to highlight two marquee events on the horizon. First off, Mortage
Revolution will present MRev New York 2010, Friday-Sunday, Oct. 15-17 at the Westchester Marriott
in Tarrytown, N.Y. For more information on this innovative industry event where the top minds are
brought together in a forum to exchange ideas with the common goal of advancing the industry, visit
www.mortgagerevolution.info. In December, the National Association of Mortgage Brokers will visit
Las Vegas and the MGM Grand, Saturday-Monday, Dec. 4-6, for the 2010 installment of NAMB/WEST.
This annual event will feature a number of informative breakout sessions, a jam-packed trade show
in the exhibit hall, and much more. NAMB continues to fight the fight for the entire mortgage indus-
try, not just the dues-paying members, so come on out to Vegas and see what NAMB has to offer. For
more information, visit www.nambwest.org.
Until next month ...
Sincerely,
Andrew T. Berman, Executive Vice President
NMP Media Corp.
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September 2010
Volume 2 Number 9
1220 Wantagh Avenue Wantagh, NY 11793-2202
Phone: (516) 409-5555 / (888) 409-9770
Fax: (516) 409-4600
Web site: www.nationalmortgageprofessional.com
Mortgage
PROFESSIONAL
N A T I O N A L
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
STAFF
Eric C. Peck
Editor-in-Chief
(516) 409-5555, ext. 312
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Executive Vice President
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Art Director
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Senior National Account Executive
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contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail
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Statements, articles and opinions in National Mortgage Professional Magazine
are the responsibility of the authors alone and do not imply the opinion or
endorsement of NMP Media Corp., or the officers or members of National
Association of Mortgage Brokers and its State Affiliates (NAMB), National
Association of Professional Mortgage Women (NAPMW), National Credit
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Participation in NAMB, NAPMW, NCRA, and/or other state mortgage
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National Mortgage Professional Magazine, NAMB, NAPMW, NCRA,
and/or other state mortgage trade associations do not make any misrepre-
sentations or warranties concerning the regulatory and/or compliance
aspects of advertisers, products or services and/or the editorial content con-
tained in NMP Media Corp. publications. National Mortgage Professional
Magazine and NMP Media Corp. reserve the right to edit, reject and/or post-
pone the publication of any articles, information or data.
National Mortgage Professional Magazine
is published monthly by NMP Media Corp.
Copyright 2010 NMP Media Corp.
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National Credit Reporting Association Inc.
125 East Lake Street, Suite 200 O Bloomingdale, IL 60108
Phone #: (630) 539-1525 O Fax #: (630) 539-1526
Web site: www.ncrainc.org
The National Association of
Mortgage Brokers
11325 Random Hills Road, Suite 360
Fairfax, VA 22030
Phone #: (703) 342-5900 O Fax #: (703) 342-5905
PresidentWilliam R. Howe, CMC, CRMS
Howe Mortgage Corporation
13322 East Paradise Drive O Scottsdale, AZ 85259
(602) 200-8100 O bill@howemortgage.com
President-ElectMichael DAlonzo, CMC
Creative Mortgage Group
1126 Horsham Road, Suite D O Maple Glen, PA 19002
(215) 657-9600 O mjdalonzo@hotmail.com
Vice PresidentDonald J. Frommeyer, CRMS
Amtrust Mortgage Funding Inc.
200 Medical Drive, Suite D O Carmel, IN 46032
(317) 575-4355 O dfrommeyer@amtrust.net
SecretaryVirginia Ferguson, CMC
Heritage Valley Mortgage Inc.
5700 Stoneridge Mall Road, Suite 225 O Pleasanton, CA 94588
(925) 469-0100 O hvm1@msn.com
TreasurerJohn Councilman, CMC,CRMS
AMC Mortgage Corporation
2613 Fallston Road O Fallston, MD 21047
(410) 557-6400 O jlc@amcmortgage.com
Immediate Past PresidentJim Pair, CMC
Mortgage Associates Corpus Christi
6262 Weber Road, Suite 208 O Corpus Christi, TX 78413
(361) 853-9987 O jlpair@aol.com
Michael Anderson, CRMS
Essential Mortgage
3029 S. Sherwood Forest Boulevard, Suite 200
Baton Rouge, LA 70816
(225) 297-7704 O mikea@essentialmtg.com
Donald Fader, CRMS
SMC Home Finance
P.O. Box 1376 O Kinston, NC 28503-1376
(252) 523-5800 O dfader@smchf.com
Deb Killian, CRMS
Charter Oak Lending Group LLC
3 Corporate Drive, P.O. Box 3196 O Danbury, CT 06813-3196
(203) 778-9999, ext. 103 O debkillian@snet.net
Olga Kucerak, CRMS
Crown Lending
222 East Houston, Suite 1600 O San Antonio, TX 78205
(210) 828-3384 O olga@crownlending.com
Walter Scott
Excalibur Financial Inc.
175 Strafford Avenue, Suite 1 O Wayne, PA 19087
(215) 669-3273 O wscott.afcs@gmail.com
Donald Starks
D.C. Starks Mortgage Associates Inc.
141 South Main Street O Bourbonnais, IL 60914
(815) 935-0710 O donstarks@starband.net
Marty Flynn
President
(925) 831-3520, ext. 224
marty@ccireports.com
Tom Conwell
Vice President
(248) 473-7400
tconwell@credittechnologies.com
Daphne Large
Treasurer
(901) 259-5105
daphnel@datafacts.com
William Bower
Director
(800) 288-4757
wbower@confinfo.com
Mike Brown
Director
(800) 285-6691
mike.brown@ncogroup.com
Susan Cataldo
Director
(404) 303-8656, ext. 204
susancds@cdsusa.net
Nancy Fedich
Director
(908) 813-8555, ext. 3010
nancy@cisinfo.net
Sanford (Sandy) Lubin
Director
(805) 481-3155
slubin@cbslo.com
Judy Ryan
Director
(800) 929-3400, ext. 201
jryan@kroll.com
Tom Swider
Director
(856) 787-9005, ext. 1201
tswider@creditlenders.com
Donald J. Unger
Director
(303) 670-7993, ext. 222
don@advcredit.com
NCRA Staff
Terry Clemans
Executive Director
(630) 539-1525
tclemans@ncrainc.org
Jan Gerber
Office Manager/Membership Services
(630) 539-1525
jgerber@ncrainc.org
President
Gary Tumbiolo, CMI
(919) 452-1529
garytumbiolo@aol.com
President-Elect
Laurie Abshier, GML, CMI
(661) 283-1262
E-Mail: lauriea@gemcorp.com
Senior Vice President
Candace Smith, CMI, CME
(512) 329-9040
csmith@wrstarkey.com
Vice PresidentNorthwestern Region
Jill M. Kinsman
(206) 344-7827
jill.kinsman@usbank.com
Vice PresidentWestern Region
Tim Courtney
(760) 792-5620
desertranchrealty@hotmail.com
Vice PresidentCentral Region
Lisa Puckett
(405) 741-5485
lpuckett@ameagletitle.com
Vice PresidentEastern Region
Christine Pollard
(646) 584-8332
cpollard1046@gmail.com
Secretary
Murielle Barnes, CME
(806) 373-6641
napmw123@yahoo.com
Treasurer
Hulene Bridgman-Works
(972) 494-2788
hulene137@yahoo.com
Parliamentarian
Dawn Adams, GML, CMI
(607) 737-2584
dawnvadams@live.com
NAMB Board of Directors
National Association of Professional
Mortgage Women
P.O. Box 451718 O Garland, TX 75042
Phone #: (800) 827-3034 O Fax #: (469) 524-5121
Web site: www.napmw.org
Officers
Directors
2010 Board of Directors
National Board of Directors
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www.calyxsoftware.com
Now the prognosticators have changed
the question. Instead of asking whether
rates are rising or falling, they are now
asking: How long will they stay low? It is
quite logical that we should now shift the
focus because it seems very unlikely that
rates can move significantly down from
todays levels now that they have hit a
shade below the 4.5 percent mark as of
early August. A couple of points here
O That is what we said when rates
went below five percent. Dont
expect them to dip anymore.
O Even though you and the experts may
not be expecting rates to drop any fur-
ther, that does not mean your
prospects are thinking the same thing.
The first point I will make I seem to
be making every month, and I have been
for my whole careernever try to pre-
dict the future. Yes, there is much more
room for rates to rise than to fall.
However, we need some evidence that
the economy is going to gain steam. That
will not happen until the real estate
markets start to recover and the real
estate markets will not recover until the
economy produces jobs. Well, the econ-
omy cannot produce jobs at the rate we
need it without a healthy real estate
market. Talk about a vicious circle. Yes,
we are in a terrible vicious circle today
and it is the exact opposite of the cycle
that produced the real estate explosion
of a half-a decade ago. Every positive
How Long Will They Stay Low?
influence was causing other positive
effects. For example, the fact that houses
were going up in value was causing the
public to want even more houses.
I did read with interest a recent
CNN/Money article last month that was
titledVenture Capitalists Are Back.
Here is an excerpt:
These are the glory days of the residen-
tial real estate investor. Low prices, rock-
bottom interest rates and stable rental
markets have created huge buying oppor-
tunities. Its awesome right now. I dont
think well ever see another time like
this, said Tanya Marchiol of Team
Investments, which has operations in
about 10 states, but focuses mostly on
the Phoenix market. These investors are
known to many as vultures because they
swoop in and buy distressed proper-
tiesforeclosures and short sales
cheap.
Now vultures are not necessarily flip-
ping properties. Some are fixing them and
renting them. The point is that while the
general American public is not rushing to
purchase real estate, smart investors are.
This is one indication of a bottom in the
markets. However, it does not say when
the markets will start moving up. The real
turn does not happen until Americans are
not only working, but they are working
and not worried about losing their job.
Here is the second point: You should
be rooting for rates to move up. Why?
Because rates moving up will be one
result of a real estate recovery. More
than half of those who want to refinance
at these low rates cannot do so because
they simply do not qualify. They wont
qualify until lenders start loosening
credit guidelines (and I am not talking
about going back to the no money
down, stated-income, low credit score
era) and housing prices are going up. So
even rising rates could help at least
some people refinance. For now, you
should be focusing on two things
First, helping get people qualified.
There are three main reasons now they
dont qualify:
O They dont have income (hard to
help with that).
O Their credit score is too low.
O They are underwater.
While today, you cannot get more than
half of your prospects qualified, you can
help many others. Lets say you see 20
prospects in month and 10 of them do not
qualify. Perhaps you convert three into
loans. What if you could convert two
more? Thats an income increase of 66
percent. Not bad. You do that by making
sure their credit score is as high as it can
be and not by doing the work yourself
by getting them to a mortgage profession-
al. This helps conversions in two ways:
O Some can now qualify under todays
tight standards.
O Because of risk-based premiums,
which are not going away even when
credit standards loosen, a higher score
will enable you to lower your rate
quote for them. This helps against
competition and will help make more
refinance transactions make sense.
The underwater issue is another
tough issue, but not as insurmountable
as the income issue. The two avenues are
modification or short refis with a lender,
and if this is not possible, debt reduction
that will help them pare down the mort-
gage in the long run. I understand that
neither of these may mean a transaction
to you today; however, in the long run, it
helps them become clients, and in the
short run, it will result in referrals.
I am always counseling loan officers to
have more of a long-term review if they
want to be successful. Dont just focus on
the deals that are possible right now, but
build a base for the future, like the ven-
ture capitalists are doing with the real
estate market. Want to learn about how
to help people with both score improve-
ment and debt reduction with one sys-
tem? Download this recorded Webinar at
http://fdi.originationpro.com/.
The second focus for right now
help your prospects see that there is
more of a risk for rates to rise right now
than fall. Keep in mind that you are not
predicting that rates will go up and you
are not predicting how long they will stay
down. However, I guarantee if rates do
spike up, or I should say when rates spike
upyour phone will be ringing off the
hook from prospects that were waiting
for rates to go a little lower or just pro-
crastinating and are now afraid they
missed the boat. Actually, little spikes
in rate help our business in the short
run because it wakes people up. I gave
you an avenue to help get people
qualified. Now I have to give you an
avenue to wake people up. I have
developed a letter which is part of our
NewsletterPro Marketing System. It
focuses upon the cost of waiting. You
need to show people the cost of wait-
ing for rates to go down. There is a
cost, even if rates stay the same. If you
would like a copy of this letter, email
me at dave@hershmangroup.com.
Here is my message: Lets stop focus-
ing on how long rates will stay down.
Lets focus on how to get more people
to take advantage of these record-low
rates. As the venture capitalists say,
This is the opportunity of a lifetime
Dont let your clients miss it.
Dave Hershman is a leading author for the
mortgage industry with eight books and sev-
eral hundred articles to his credit. He is also
head of OriginationPro Mortgage School
and a top industry speaker. Daves Certified
Mortgage Advisor Program can be found at
www.webinars.originationpro.com. If you
would like to stay ahead of what is hap-
pening in the markets, visit ratelink.origina-
tionpro.com for a free trial or e-mail suc-
cess@hershmangroup.com.
You should be rooting for rates to
move up. Why? Because rates
moving up will be one result of a
real estate recovery.
5
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REMEMBER THE
GOOD OLD DAYS?
When you could speak directly with
easy-to-reach underwriters who issued
fast approvals with common sense
underwriting? Well so do we.
Go Back in Time.
At Terrace Mortgage Company, we believe in
providing friendly, fast service with a personal
touch, and weve done just that for 22 years. We
pride ourselves on our easy-to-reach, seasoned
underwriters who use common sense and offer
unparalleled support by phone or email every
step of the way. And we understand you need to
close quickly. So we send a link with the closing
package directly to the closing company right
after you get a clear-to-close.
Terrace Mortgage Company
Celebrating 22 years of wholesale lending
www.terracemortgage.com
Sandy Garcia, National Sales Director
(866) 934-4631, ext 301
NMLS#7101
FHA announces plan
to assist underwater
homeowners with
new refi option
In an effort to help
responsible homeown-
ers who owe more on
their mortgage than
the value of their prop-
erty, the U.S. Department of Housing &
Urban Development (HUD) will begin
providing an additional refinancing
option for underwater borrowers.
Originally announced in March, this
enhancement of Federal Housing
Administration (FHA) refinance pro-
gram will offer certain underwater
non-FHA borrowers who are current on
their existing mortgage and whose lien
holders agree to write off at least 10
percent of the unpaid principal bal-
ance of the first mortgage, the oppor-
tunity to qualify for a new FHA-insured
mortgage.
The FHA Short Refinance option is
targeted to help people who owe more
on their mortgage than their home is
worthalso known as being underwa-
terbecause their local markets saw
large declines in home values. As
announced earlier this year, this
change, as well as other programs that
have been put in place, will help the
Obama Administration meet its goal of
stabilizing housing markets by offering
a second chance to up to three to four
million struggling homeowners
through the end of 2012.
Participation in FHAs short refi-
nance program is voluntary and
requires the consent of all lien holders.
To be eligible for a new loan, the
homeowner must owe more on their
mortgage than their home is worth
and be current on their existing mort-
gage. The homeowner must qualify for
the new loan under standard FHA
underwriting requirements. The prop-
erty must be the homeowners primary
residence and the borrowers existing
first lien holder must agree to write off
at least 10 percent of their unpaid
principal balance. In addition, the
existing loan to be refinanced must not
be an FHA-insured loan, and the refi-
nanced FHA-insured first mortgage
must have a loan-to-value (LTV) ratio of
no more than 97.75 percent and a
combined loan-to-value ratio no
greater than 115 percent.
To facilitate the refinancing of new
FHA-insured loans under this program,
the U.S. Department of Treasury will
provide incentives to existing second
lien holders who agree to full or partial
extinguishment of the liens. To be eli-
gible, servicers must execute a Servicer
Participation Agreement (SPA) with
Fannie Mae, in its capacity as financial
agent for the United States, on or
before Oct. 3, 2010.
For more information, visit www.hud.gov.
FHFA establishes new
goals for GSEs
The Federal Housing Finance
Agency (FHFA) has sent a final
rule to the Federal Register
establishing new housing
goals for Fannie Mae and
Freddie Mac, the government-sponsored
enterprises (GSEs) for 2010-2011. The
Housing and Economic Recovery Act of
2008 (HERA) required the FHFA to establish
housing goals for the GSEs for targeted seg-
ments of the mortgage market.
In previous years, the U.S.
Department of Housing & Urban
Development (HUD) set overall goals
that measured the combined perform-
ance of single-family and multifamily
mortgages. In contrast, the new goals
required by HERA target specific seg-
ments of those markets. The new goals
also reflect essential conservatorship
requirements to ensure the GSEs focus
on core business activities to support
the mortgage market while minimizing
losses on their existing mortgages.
The final rule establishes three sin-
gle-family, owner-occupied home pur-
chase mortgage goals for low-income
families, very low-income families, and
families living in geographical areas
with lower-income populations, areas
with high concentrations of minority
residents, and federally-declared disas-
ter areas. The latter goal also includes a
specialized sub-goal to ensure that the
enterprises address housing needs in
lower-income and minority areas. The
final rule also contains a goal for sin-
gle-family, owner-occupied refinance
mortgages for low-income families.
The home purchase and refinance
goals are expressed as minimum goal-
qualifying mortgage shares of home
purchase or refinance mortgages
continued on page 10
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MortgageCompanySpecialist@amertoner.com
control process, review their prefund-
ing quality controls, and have written
procedures in place for how third-party
originators will be approved.
O The Desktop Underwriter now looks
for discrepancies between data ele-
ments and elements at loan deliv-
ery in more than a dozen addition-
al warning areas.
Additional challenges
Mortgage professionals also must take
into account the more stringent selling
requirements that Freddie
Mac announced in its Aug.
16 bulletin which applies
to mortgages with settle-
ment dates on or after Dec.
1, 2010. A key provision of
the updates outlined in
Bulletin 2010-19 revises
requirements for inquiries
on a borrowers credit
report amongst others.
Lenders now will be
required to look into the
borrowers credit report
inquiries made in the pre-
vious 120 days, rather
than the 90 days previous-
ly required. If the borrow-
er was granted additional
credit, the lender will be
required to obtain verifi-
cation of the debt, and
include the debt in qualifying the bor-
rower. This revised requirement will
apply to all loans, not only manually
underwritten loans.
These required extra steps have the
potential to slow down applications
and weigh down a time-strapped
offices productivity unless the most
up-to-date resources and a smart plan
of action are in use.
Fortunately, the credit-information
industry has also been evolving rapidly
this year, introducing a variety of tools to
help mortgage professionals successfully
navigate todays compliance environ-
ment. These new technologies and
enhanced tools enable mortgage profes-
sionals to stay compliant and, at the same
time, keep their profitability on track.
Detailed reports, rapid
response times
One of the most valuable tools for ensuring
compliance is a report that allows mort-
gage professionals to easily compare a
credit report that was pulled during origi-
nation to one pulled at the time of closing.
These reports can be delivered in just sec-
onds and include such important details as
a credit score comparison, credit score fac-
tor comparison, trade line comparison,
Increasingly stringent new regulations
and recommendations are simply a
fact of life for todays mortgage profes-
sionals. Whether the focus of your busi-
ness is on meeting the needs of repeat
customers or you are actively seeking
to introduce yourself to new clients,
when it comes to compliance, were all
in the same boat. And right now, that
boat is sailing in uncharted waters.
This summer, mortgage profession-
als have been familiarizing themselves
with the ins and outs of Fannie Maes
new Loan Quality Initiative (LQI) and
the impact it is going to
have on their interactions
with applicants. Fannie
Mae issued these require-
ments and recommenda-
tions in an effort to
improve compliance with
its eligibility and under-
writing guidelines, hav-
ing determined that com-
pliance will help curb the
rise in loan repurchase
requests to lenders.
Mortgage professionals
now are expected to take
a number of additional
verification and qualifica-
tion steps as they work
with their applicants to
reduce the risk of buy-
backs. They are now dig-
ging deeper, starting with
the prospective borrowers identifying
information, gathering more detailed
information about the property and
appraisal, and scrutinizing the appli-
cants credit profile both at the time of
application and again just before clos-
ing. Changes we are seeing include:
O A borrowers identity now must con-
form to federal documentation require-
ments. He or she must have either a
valid Social Security Number or individ-
ual taxpayer identification number.
O A property unit number must be pro-
vided if the property on a mortgage
application is part of a multi-unit
development like a condominium.
O All debts incurred by the borrower
up to the mortgage closing date
must be disclosed on the applicants
final application and included in
the loan qualification. It also is up
to the mortgage professional to
have systems and controls in place
to evaluate those liabilities.
O Mortgage professionals quality control
process requirements have been
revised, including the timing of quality
control reviews after closings. Offices
now are expected to audit their quality
Smooth Sailing With New
Compliance Tools
By Greg Holmes
Mortgage profes-
sionals need not feel
at sea over recent
industry changes as
long as they have the
proper tools at their
disposal.
continued on page 8
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Consumers want to work with people
they can trust and believe.
Trust starts by setting higher
standards for the mortgage industry.
public record comparison, inquiries com-
parison, and information sources compari-
son. General information also is included,
as is a convenient quick-reference summa-
ry section. Manual inquiry verifications also
are helpful in this regard because they can
help determine new account information,
as are soft code inquiries, which are avail-
able for pre- and post-funding reviews.
The tax return verification remains a
helpful resource for comparing the
income-related lines of a borrowers tax
return with the same lines on file at the
Internal Revenue Service (IRS), ensuring
new compliance tools continued from page 6
that the original IRS figures have not been
tampered with. These reports also can
highlight any discrepancies with Social
Security Administration files. Verifications
are invaluable in the fight against mort-
gage loan fraud, a crime with an impact
that runs into billions of dollars.
A number of other tools are also
available to check an applicants Social
Security Number, address, phone num-
ber, employment information, liabili-
ties and the propertys history. These
reports also can highlight fraud and
other alerts on an applicants file.
The speed with which mortgage pro-
fessionals can obtain these reports is a
huge advantage in quickly identifying
and resolving possible red flags. The
ability to order and receive delivery of
appraisals electronically is another
valuable time-saver.
Ensuring an accurate
credit score
Fannie Mae raised its minimum score
requirement to 620 in the beginning of
July. Even a few points can mean the
difference in whether a mortgage appli-
cant is approved or denied, so scoring
tools are especially valuable to mort-
gage professionals in todays market.
O Credit snapshot: The ability to size
up an applicants creditworthiness
at a glance is especially helpful, and
a new credit report cover sheet is
one product that does just that. It
forecasts an applicants 30-day mid-
score, warns if nominal increases in
the revolving balance put that mid-
score at risk, and highlights key indi-
cators that require attention, such
as accounts in dispute.
O Score analysis: It often is essential to
get the story behind an applicants
credit score. A proprietary product is
now available to generate a detailed
analysis of a credit score, scrutinizing
both the positive and negative factors
that influence that score. Separate
analyses can be generated for one,
two or three credit bureaus, as well as
for a co-applicant. A summary report
suggests actions for the applicant to
reach his or her target score.
O Rapid rescoring: Mortgage profes-
sionals now have the ability to forward
documents supplied by their appli-
cants directly to the credit bureaus for
rush investigation and rapid re-scor-
ing. The process can quickly rectify
misreported, inaccurate or outdated
information; correct an account status
or balance; remove derogatory infor-
mation and accounts reported in error,
and more. An updated report and
score can be provided in as little as 72
hours, after each bureau has verified
the documentation.
O Customized plan: Proprietary pro-
grams, such as Credit Plus Inc.s
Lending Hand program, has demon-
strated that it can help as many as
83 percent of applicants who were
declined due to not meeting score
minimums to qualify for mortgage
loans.
1
A team of experts reviews the
documentation to conduct an in-
depth file analysis, then creates a
customized action plan for the
applicant. The program can even
alert the mortgage professional with
follow-up reports when an applicant
has made progress and becomes a
good candidate to close a loan.
Mortgage professionals need not feel
lost at sea over recent industry changes
as long as they have the proper tools at
their disposal. These resources can, in
fact, ensure smooth sailing that can
weather any market conditions.
Greg Holmes is national director of sales
and marketing at Credit Plus Inc., a
leader in credit-information services
since 1928. He may be reached by phone
at (800) 258-3488 or by e-mail at
beyondbundled@creditplus.com.
Footnote
1-A sampling of 500 declined loan
applications due to not meeting score
minimums that were re-reviewed using
the Lending Hand or Lending Hand
Express programs from Credit Plus Inc.
showed 83 percent of borrowers
reached their target credit score.
At United Northern, we give you the freedom to originate and succeed with our winning team.
About working with United Northern Mortgage Bankers
Ongoing training and consultation with top industry executives
Access to in-house marketing services
Pricing support desk to ensure maximum profitability on each
loan, while maintaining a competitive advantage over the street
Proven leading-edge technology (built on Encompass 360
technology)
Virtual office support
Licensing and regulatory compliance services
An in-house team to monitor SAFE Act compliance
In-house underwriting
Most loans underwritten in 24 to 48 hours
Multiple valuation tools to research value
In-house valuation desk to help ensure accurate
values and responsive turnaround time
Multiple established warehouse lines
Limited room available for established Team Leaders and
Licensed Mortgage Originators. Become part of an
established 30-year Mortgage Banker with
a proven track record and success.
Learn about the great opportunities
available by making an appointment with
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888-600-8808, ext. 1 or by e-mailing info@unitednorthern.jobs.
United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker License #100724 New Jersey Dept. of Banking and Insurance Mortgage Lender License #L0046623 Penn-
sylvania Dept. of Banking Mortgage Lender License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker License #MC5070
North Carolina Commissioner of Banks Mortgage Lender License #L140365 South Carolina State Board of Financial Institutions Supervised Lender License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License
#ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender
10
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SAVE THE DATE!
Mortgage Brokers and Loan Originators
Attend the 2010 NAMB/WEST Conference
December 4-6, 2010 at the MGM Grand Las Vegas.
Visit www.NAMBWEST.comfor updates.
NAMB/WEST
news flash continued from page 5
acquired by the GSEs. The benchmark
goal levels for the low-income and very
low-income home purchase goals did
not change from the proposed housing
goals rule, however, the final rule
adjusts the low-income refinance goal
downward reflecting recent market
conditions.
FHFA does not intend for the GSEs
to undertake economically adverse or
high-risk activities in support of the
goals, nor does it intend for the
enterprises state of conservatorship
to be a justification for withdrawing
support from these important market
segments.
As noted in the final rule, FHFA
expects to take future regulatory
action to address the housing goals
treatment of purchases of multifamily
loans that aid the conversion of prop-
erties that have affordable rents to
properties that have less affordable,
market rate rents. FHFA also may
solicit further comments on how the
housing goals can further promote
susustainable homeownership and
how multifamily subordinate liens can
be structured to benefit low-income
residents. The final rule is effective 30
days after publication in the Federal
Register.
For more information, visit www.fhfa.gov.
Former New Century
execs barred for five
years by SEC for
misleading disclosures
The Securities & Exchange
Commission (SEC) has
accepted settlement offers
from three former officers
of New Century Financial
Corporation: Brad A. Morrice, the former
New Century chief executive officer and
co-founder; Patti M. Dodge, the former
chief financial officer; and David N.
Kenneally, former New Century controller.
The SECs complaint alleges, among other
things, that New Centurys second and
third quarter 2006 Forms 10-Q and two
late 2006 private stock offerings contained
false and misleading statements regarding
its sub-prime mortgage business. Each of
the defendants agreed to be barred for
five years from serving as an officer and
director of a public company.
The complaint further alleges that
Morrice and Dodge knew about certain
negative trends in New Centurys loan
portfolio from reports they received
and that they participated in the dis-
closure process, but they did not take
adequate steps to ensure that the neg-
ative trends were properly disclosed.
The Commissions complaint also
alleges that in the second and third
quarters of 2006, Kenneally, contrary
to Generally Accepted Accounting
Principles, implemented changes to
New Centurys method for estimating
its loan repurchase obligation and
failed to ensure that New Centurys
backlog of pending loan repurchase
requests were properly accounted for,
resulting in an understatement of New
Centurys repurchase reserve and a
material overstatement of New Centurys
financial results. The complaint further
alleges that Dodge was told of the
methodology changes and the backlog
of repurchase requests but did not
ensure that they were properly account-
ed for and disclosed.
To settle the charges, Morrice con-
sented to the entry of a permanent
injunction prohibiting him from violat-
ing the antifraud provisions of Section
17(a) of the Securities Act of 1933
(Securities Act) and Section 10(b) of
the Securities Exchange Act of 1934
(Exchange Act) and Rule 10b-5 thereun-
der, and the internal controls, false
statements to accountants, and certifi-
cation provisions of Section 13(b)(5) of
the Exchange Act and Rules 13b2-2 and
13a-14 thereunder; and from aiding
and abetting violations of the reporting
provisions of Section 13(a) of the
Exchange Act and Rules 12b-20, 13a-11,
and 13a-13 thereunder. He also agreed
to disgorge $464,354 with $76,991 in
prejudgment interest thereon, and to
pay a $250,000 civil penalty.
To settle the charges, Dodge con-
sented to the entry of a permanent
injunction prohibiting her from violat-
ing the antifraud provisions of Section
17(a) of the Securities Act and Section
10(b) of the Exchange Act and Rule
10b-5 thereunder, and the books and
records, internal controls, false state-
ments to accountants, and certifica-
tion provisions of Section 13(b)(5) of
the Exchange Act and Rules 13b2-1,
13b2-2, and 13a-14 thereunder; and
from aiding and abetting violations of
the reporting provisions of Section
13(a) of the Exchange Act and Rules
12b-20, 13a-11, and 13a-13 thereun-
der. She also agreed to disgorge
$379,808 with $70,192 in prejudg-
ment interest thereon, and to pay a
$100,000 civil penalty.
Kenneally has consented to the
entry of a permanent injunction pro-
hibiting him from violating the
antifraud provisions of Sections 10(b) of
the Exchange Act and Rule 10b-5 there-
under, and the books and records,
internal controls, and false statements
to accountants provisions of Section
13(b)(5) of the Exchange Act and Rules
13b2-1 and 13b2-2 thereunder; and
from aiding and abetting violations of
the reporting provisions of Section
13(a) of the Exchange Act and Rules
12b-20, 13a-11, and 13a-13 thereun-
der. He also agreed to disgorge
$126,676 with $23,324 in prejudgment
interest thereon, and to pay a $32,500
civil penalty.
For more information, visit www.sec.gov.
11
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EXECUTIVE OFFICES:
108 Corporate Park Drive, Suite 301
White Plains, NY 10604
CALL:
Louis Tesoriero at (888) 329-GHMC
ltesoriero@ghmc.com
www.joinguaranteed.com
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FinCEN report finds
suspicious activity related
to mortgage fraud rises
four percent in 2009
The Financial Crimes
Enforcement Network
(FinCEN), has released its
2009 Mortgage Loan
Fraud (MLF) study which
found the number of mortgage fraud
suspicious activity reports (SARs) filed in
2009 grew four percent compared to the
number of mortgage fraud SARs filed in
2008. FinCEN also reported that just
looking at the fourth quarter of 2009,
mortgage fraud SAR filings increased six
percent over the same period in 2008.
Consistent with recent years, nine
percent of all SARs filed in 2009 indicat-
ed MLF as an activity characterization.
However, looking at just the fourth quar-
ter, this proportion rose to 11 percent.
In addition to the increase in SAR MLF
filings, the analysis shows an increase in
the prevalence of post-origination loan
reviews by a variety of mortgage market
businesses other than mortgage lenders.
Mortgage loan purchasers and providers
of mortgage insurance, certificate insur-
ance, or similar credit enhancement have
taken an increasing role in detecting
potential fraud or misrepresentations.
FinCEN is an active participant in the
fight against mortgage fraud working
closely with local, state and federal law
enforcement, assessing potential vulner-
abilities and sharing information that
can lead to successful prosecutions, said
FinCEN Director James H. Freis Jr. These
numbers tell us that we must remain
vigilant and continue taking action to
focus resources and hold accountable
perpetrators of mortgage fraud.
The report also lists where MLF SARs
are most common by state by county
and by metropolitan area. The following
table shows the Metropolitan Statistical
Areas (MSAs) with the most SAR MLF fil-
ings and the number of mortgage loan
fraud SARs that were filed in 2009.
The volume of SAR filings in any given
period does not directly correlate to the
number or timing of suspected fraudulent
incidents in that period. The numbers
reported show when the suspicious activi-
ty was reported even if the activity
occurred prior to 2009. FinCENs data indi-
cates that almost 75 percent of mortgage
loan fraud SARs report suspicious activity
that occurred more than one year prior to
filing the SAR. Foreclosures, repurchases,
insurance investigations, and enforcement
actions appear in SAR narratives as con-
tributing factors to the ultimate discovery
and reporting of suspicious activities.
For more information, visit www.fincen.gov.
HOPE NOW reports: One
million-plus permanent
loan mods completed to
date in U.S.
HOPE NOW, the pri-
vate sector alliance of
mortgage servicers,
investors, mortgage
insurers and non-profit counselors esti-
mates the industry has completed 1.13
million permanent loan modifications
for at-risk homeowners so far in 2010.
For the month of July, the data shows the
industry completed more than 120,000
proprietary loan modifications for home-
owners, which closely matched the num-
ber from the previous month. As report-
ed by U.S. Treasury Department, mort-
gage servicers also completed 36,695
Home Affordable Modification Program
(HAMP) modifications in July.
If a homeowner does not qualify for
HAMP, mortgage servicers determine
eligibility for a proprietary loan modifi-
cation that may help a homeowner stay
in their home. In fact, 86 percent of pro-
prietary modifications completed in
July reduced the monthly payment for
homeowners in order to make them
more sustainable.
HOPE NOW also reports that since
January of this year, mortgage delinquen-
cies of 60 days or more past due have
dropped 20 percent as of July 2010.
Since HOPE NOW initiated survey data
reporting (July 2007), more than 3.5 mil-
lion homeowners have saved their homes
via permanent loan modifications. This
total reflects the combination of propri-
etary loan modifications plus those com-
pleted under HAMP (as reported by the
U.S. Treasury). Combined with other mort-
gage options, such as repayment plans and
forbearance, the mortgage industry has
assisted almost 10.4 million homeowners
since HOPE NOW was formed in 2007.
The industry continues to make
progress in assisting large numbers of bor-
rowers who are at risk of foreclosure, said
Faith Schwartz, senior advisor for HOPE
NOW. Our data this year shows some pos-
itive trends, including a high percentage of
proprietary mods that include reductions
of monthly principal and interest pay-
ments. This translates into more afford-
able loan modifications for homeowners.
For more information, visit www.hopenow.com.
Federal Reserve proposes
enhanced protections
and disclosures for
mortgage transactions
The Federal Reserve
Board (FRB) has pro-
posed enhanced con-
sumer protections and
continued on page 12
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disclosures for home mortgage transac-
tions. The proposal includes significant
changes to Regulation Z (Truth-in-
Lending) and represents the second
phase of the Boards comprehensive
review and update of the mortgage lend-
ing rules in the regulation. The proposed
changes reflect the results of consumer
testing by the Board, which will begin
accepting public comment.
The latest proposal would: Improve
the disclosures consumers receive for
reverse mortgages and impose rules for
reverse mortgage advertising to ensure
advertisements contain accurate and
balanced information; prohibit certain
unfair practices in the sale of financial
products with reverse mortgages;
improve the disclosures that explain a
consumers right to rescind certain
mortgage transactions and clarify the
responsibilities of the creditor if a con-
sumer exercises the right; and ensure
that consumers receive new disclosures
when the parties agree to modify the
key terms of an existing closed-end
mortgage loan.
Under the proposal, the timing, con-
tent, and format of reverse mortgage
disclosures would be changed to make
the disclosures more useful to con-
sumers. Currently, consumers typically
receive lengthy disclosures when apply-
ing that do not explain the particular
features unique to reverse mortgages.
Under the proposed rules, consumers
would receive disclosures on or with
the application form, using simple lan-
guage to highlight the basic features
and risks of reverse mortgages. Shortly
after filling out the application, con-
sumers would receive transaction-spe-
cific disclosures that reflect the actual
terms of the reverse mortgage being
offered.
For more information, visit www.feder-
alreserve.gov.
Obama Administration
announces additional
aid to unemployed
homeowners
The Obama Administration
has announced additional
support to help homeown-
ers struggling with unem-
ployment through two targeted foreclo-
sure-prevention programs. Through the
existing Housing Finance Agency (HFA)
Innovation Fund for the Hardest Hit
Housing Markets (the Hardest Hit
Fund), the U.S. Department of the
Treasury will make $2 billion of addi-
tional assistance available for HFA pro-
grams for homeowners struggling to
make their mortgage payments due to
unemployment. Additionally, the U.S.
Department of Housing & Urban
Development (HUD) will soon launch a
complementary $1 billion Emergency
Homeowners Loan Program to provide
assistancefor up to 24 monthsto
homeowners who are at risk of foreclo-
sure and have experienced a substan-
tial reduction in income due to invol-
untary unemployment, underemploy-
ment or a medical condition.
We remain committed to helping
struggling homeowners, and this pro-
gram will provide additional assistance
to states hit hardest by unemployment,
said Assistant Secretary for Financial
Stability Herb Allison. This is part of the
Administrations comprehensive hous-
ing policy that has helped to stabilize a
fragile housing market and allows
responsible homeowners the chance to
reduce their monthly mortgage pay-
ments to affordable levels.
President Obama first announced
the Hardest Hit Fund in February 2010
to allow states hit hard by the econom-
ic downturn flexibility in determining
how to design and implement pro-
grams to meet the local challenges
homeowners in their state are facing.
Under the additional assistance
announced, states eligible to receive
support have all experienced an unem-
ployment rate at or above the national
average over the past 12 months. Each
state will use the funds for targeted
unemployment programs that provide
temporary assistance to eligible home-
owners to help them pay their mort-
gage while they seek re-employment,
additional employment or undertake
job training.
HUDs new Emergency Homeowner
Loan Program will build on Treasurys
Hardest Hit initiative by targeting assis-
tance to struggling unemployed home-
owners in other hard hit areas to help
them avoid preventable foreclosures,
said Bill Apgar, HUD Senior Advisor for
Mortgage Finance. Together, these ini-
tiatives represent a combined $3 billion
investment that will ultimately impact a
broad group of struggling borrowers
across the country and in doing so fur-
ther contribute to the Administrations
efforts to stabilize housing markets and
communities across the country.
States that have already benefited
from previously announced assistance
under the Hardest Hit Fund may use
these additional resources to support
the unemployment programs previous-
ly approved by Treasury or they may
opt to implement a new unemploy-
ment program. States that do not cur-
rently have Hardest Hit Fund unem-
ployment programs must submit pro-
posals to Treasury by Sept. 1, 2010 that,
within established guidelines, meet the
distinct needs of their state.
For more information, visit www.hud.gov.
PROGRESS in Lending
Association formed to
promote thought
leadership and innovation
The PROGRESS in Lending Association
The Appraisal Review
Its Time Has Come
Most on the origination side of the lend-
ing industry have scarcely heard the term,
appraisal review. Those who have heard
of it probably do not know what and
when it has been used as a lending
resource. It is one of these obscure prod-
ucts and terms that many are cognizant of
at a subliminal level, but that we seldom
have a reason for an understanding of.
Historically, the term, appraisal review,
was one that was known
and understood as a tool
lurking in the background
that was kept mostly under
wraps except for special sit-
uations, such as foreclo-
sures, suspected fraud and
challenges to an appraisals
that were not high enough
to meet the expectations of
the borrower or lender.
Well, I suggest to you
that this is about to change.
Unless I am grossly mistak-
en, you will hear the term
appraisal review more
often in the months and
years to come. As I see
things, it is one of, if not the
only, weapon of choice in
the war against bad loans,
mortgage fraud and bank bailouts. In
recent years, our industry and economy
has been riddled with problem loans.
Many, if not most of them, have been
linked to problematic appraisals.
In the past, we have seen mortgage
lenders, with a financial interest in the
closing of a loan, select and employ
appraisers to perform appraisals on
their own loans. We reached the point
where everyone who has a stake in the
closing of a loan has exerted pressure,
political and otherwise, to impose as
much control as possible over the
process, in order to favor the successful
closing of loans. Much of what has gone
on is under the microscope of Congress,
and it is unlikely that it will be allowed
in the future. Having said that, we all
know how politics work.
There is much pressure from lobbyists
of the larger financial institutions to con-
tinue to allow the larger banks to con-
tinue to order appraisals directly from
favored appraisers. This is done under
the auspices of independence of sepa-
rate departments within the institution.
It is done, in many cases, with platforms
that select appraisers from a blind pool
of available vendors. In spite of the lack
of arms-length trans-
parency, some of these
practices will still be per-
mitted. Given this likeli-
hood, regulators will have
to resort to another way to
verify the authenticity and
accuracy of the appraisal.
Going forward, much of
that other way is going to
be the appraisal review. In
the past, it was used very
little in the origination of
loans. It has been mostly
used for post-closing analy-
sis. I suggest to you that the
time has come for the
appraisal review. It is time
for it to come in out of the
shadows and stand on its
own as a viable alternative
to the simple appraisal being accepted at
face value without question.
Yes, there have been informal appraisal
reviews performed in the past; however,
this has not proven to be very effective.
These reviews have been performed, in
many cases, by non-appraisers without
documentation. They have been little more
than a cursory skimming over the apprais-
al to catch glaring errors, with little or no
record maintained of the process. You may
look for more formal appraisal reviews,
prepared by state-certified appraisers. In
some cases, the reviews will be field
reviews, which mean that the reviewer
actually performs a follow-up inspection of
the subject property and essentially per-
forms another appraisal of the property.
By Charlie W. Elliott Jr., MAI, SRA
Unless I am grossly
mistaken, you will hear
the term appraisal
review more often in
the months and years
to come.
continued on page 20
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The FTCs complaint charges the
acquisition reduced competition in six
geographic areas: The Portland,
Oregon, metropolitan area, consisting
of Clackamas, Multnomah and
Washington counties; Benton County,
Ore.; Jackson County, Ore.; Marion
County, Ore.; Linn County, Ore.; and the
Detroit, Mich. metropolitan area con-
sisting of Oakland, Macomb and Wayne
counties.
In the Portland, Oregon, area, the
complaint alleges the acquisition left
Fidelity with a controlling interest in
the title plant that is the sole provider
of title insurance information services.
In the three other Oregon counties, the
acquisition reduced the number of
independent title plants from four to
three.
In the Detroit metropolitan area, the
FTC contends the acquisition may give
Fidelity the power to affect the compet-
itive significance of Data Trace, an inde-
pendent title services provider, and the
only firm in these counties other than
Fidelity with a complete and up-to-date
title plant.
The FTCs proposed settlement order
will replace the competition lost
through Fidelitys acquisition of
LandAmericas title insurance sub-
sidiaries. First, it requires Fidelity to sell
part of its ownership in the joint title
plant in Portland, Ore. to Northwest
Title. This will ensure Fidelity does not
own a majority of the only title plant
serving the Portland market. Second, it
requires Fidelity to sell a copy of the
data from each of the title plants serv-
ing Oregons Benton, Jackson, Linn and
Marion counties to Northwest Title. This
will restore the number of independent
title plant owners in each county to
fourthe same number as before the
acquisition. Third, the proposed order
requires Fidelity to sell a copy of the
title data in the three Detroit-area
counties that LandAmerica provided to
Data Trace before the acquisition to an
FTC-approved buyer. This will limit
Fidelitys ability to affect the competi-
tive significance of Data Trace, an abili-
ty that Fidelity gained through its
acquisition LandAmericas assets.
Finally, the order requires Fidelity to
notify the FTC before acquiring 50 per-
cent or more of any joint title plant in
California, Colorado, Nevada, New
Mexico, Oregon and Texasstates
where Fidelitys acquisition of
LandAmericas subsidiaries has
increased Fidelitys ownership interest
in title plants.
For more information, visit www.fnf.com
or www.ftc.gov.
HUD Fair Housing Report
finds disability discrimina-
tion tops list of complaints
The U.S. Department
of Housing & Urban
Development (HUD) has
released the Obama
Administrations first
annual report on the
continued on page 16
has announced its formation. This new
association was started to provides a
place for innovation and thought lead-
ership to occur in the industry to move
the mortgage industry forward.
Technology is going to play a criti-
cal role in how mortgage lenders com-
ply with new regulation, remain com-
petitive, ensure profitability, and serve
borrowers looking to get their piece of
the American Dream. Thats why this
association was formed, said Tony
Garritano, founder and chairman of
PROGRESS in Lending.
As a speaker, PROGRESS Chairman
and Founder Tony Garritano has
worked hard to inform executives
about how technology should be a tool
used to further business objectives. For
over 10 years, Garritano has worked as
a journalist, researcher and speaker in
the mortgage technology space.
Starting this association was the next
step for someone like Tony, who has
dedicated his career to providing mort-
gage executives with the information
needed to make informed technology
decisions.
PROGRESS executive team is a vol-
unteer group made up of mortgage
professionals who have a combined
100-plus years of industry experience.
This new association provides a
place for thoughts and ideas to flow
freely, said Roger Gudobba, chief exec-
utive officer at PROGRESS in Lending
Association. Its easier to move things
forward when youre in a group. This
association is a central place for indus-
try participants to have discussions
about how technology can improve the
process.
CEO Gudobba has over 20 years of
mortgage experience. At present he is
also chief strategy officer at technology
vendor Compliance Systems. He is a
long-time advocate of data standardi-
zation and a more data-driven
approach to mortgage lending.
For more information, visit www.pro-
gressinlending.com.
Fidelity National
Financial settles FTC
charges in acquisition of
LandAmerica
To settle Federal Trade
Commission (FTC) charges
that its 2008 acquisition
of three LandAmerica
Financial Inc. subsidiaries
was anticompetitive, Fidelity National
Financial Inc. will sell several title plants
and related assets in the Portland, Ore.
and Detroit, Mich. metropolitan areas,
and in four other Oregon counties.
Title plants are databases used by
abstractors, title insurers, title insur-
ance agents, and others to determine
the ownership of, and interests in, real
property in connection with underwrit-
ing and issuance of title insurance
polices and for other purposes.
According to the FTC, Fidelitys acquisi-
tion of the LandAmerica assets was
anticompetitive in several local mar-
kets for the provision of title insurance
information services by title plants.
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Peter Norden, Chief Executive Officer,
REMN-Real Estate Mortgage Network
In 1999, he started Northern
Star which eventually became
Opteum Financial Services.
Peter served as president and
chief executive officer of
Opteum until the company was
merged with Bimini Mortgage
Management. Presently, Peter
serves as chief executive officer
of Real Estate Mortgage
Network (REMN), headquar-
tered in River Edge, N.J.
How did you get involved
in the mortgage business?
I got involved in this busi-
ness 33 years ago believe it
or not. When I got out of
college, I went to work for the account-
ing firm of Touche Ross, which is now
Deloitte & Touche, and I ended up by
pure accident specializing in auditing
mortgage bankers. I just really grew to
love the business and then one of my
clients offered me a job to come in as
the companys controller at the ripe old
age of 22. I graduated college pretty
early, at the age of 20, and had my first
business when I was 12. I have been
extremely entrepreneurial my entire
life.
What was your business when you
were 12?
Selling stereo equipment and not
off the truck either. It was legal and
legit. I went to college to get an
accounting degree to give me the back-
ground to run my own businessnot
because I wanted to be an accountant. I
was the furthest thing from an account-
ant in the world. I just knew at a really
young age there were tons of salespeo-
ple out there, but salespeople generally
cannot run a business. I only worked for
Touche Ross for two-and-a half-years
and specialized in mortgage banking. I
was fast-tracking at Touche and actual-
ly they told me I would be a partner in
Each month, National Mortgage
Professional Magazine will focus on one of
the industrys top players in our Mortgage
Professional of the Month feature. Our
readers are encouraged to contact us by e-
mail at newsroom@nmpmediacorp.com
for consideration in being featured in a
future Mortgage Professional of the
Month column.
This month, we had a chance to chat
with Peter Norden, currently chief execu-
tive officer of Real Estate Mortgage
Network Inc. (REMN). Nordens business
acumen developed at the young age of
12, when, as he describes, he was in the
business of selling stereo equipment. A
graduate of Fairleigh Dickinson
University with a BA in accounting, Peter
began his career with the accounting
firm of Touche Ross, now Deloitte &
Touche, auditing mortgage bankers. He
moved on to the mortgage finance side
of things when he joined Globe Mortgage
in 1977 for an 11-year run with the com-
pany. In 1988, Peter bought out Atlanta,
Ga.-based Old Town Mortgage, merged it
with New Jersey-based First Builders
Financial Corporation and called the
new entity First Town Mortgage, serving
as the companys chief executive officer
and president.
seven years. I did everything fairly
young. I ended up specializing in mort-
gage banking and ended up getting
hired away as controller of a company
named Globe Mortgage in 1977.
I was a kid, and from there, I ended
up staying at Globe because the chief
executive officer of the company treat-
ed me like I was his son. He even intro-
duced me as a son everywhere we went.
Within six years, I was running pretty
much the entire operation. I ended up
staying 11 years which I certainly didnt
expect, more because he constantly left
the carrot out there that I would be an
owner and it never happened.
After this experience, how did you
grow in the world of mortgage
financing?
I knew all of the banking relationships
and all of the trading relationships, and
I became a trader. I was fascinated by
the trading side of the business I
loved it. I hired a lot of people in the
accounting area, and I took over trad-
ing at Globe and really did it all myself.
I am a hedger and trader. Ive traded
mortgages for 20 years. I still do it
occasionally for my personal account. I
ended up running most of Globe
Mortgage for a number of years,
except for the multifamily side, as the
whole residential side fell under my
supervision.
In 1988, I decided that I wanted to
run a company myself and the banks I
knew would back me. I did a 100 per-
cent leveraged buyout of a company
based in Atlanta called Old Town
Mortgage. We merged Old Town with a
builder-owned company in New Jersey
called First Builders Financial
Corporation, which was owned by the
Kaplan Organization and run by Marty
Levine. We put the two companies
together and formed First Town. We
took Old Town Mortgage and First
Builders Financial, and made First
Town Mortgage. Old Builders didnt
sound too good as a company name, so
we used the name First Town Mortgage.
Basically, the company that I bought
did $1 million a month in business and
that was it. First Builders did maybe $5
million a month at the time which was
all built to build and nothing else. We
built it up and nearly doubled our vol-
ume every year.
We built it up to about a $1.5 billion
a year company, and at that point, we
sold the company to Chase in 1999. We
had a restrictive covenant with Chase
where I couldnt do retail for two years
and I held up that agreement. When we
sold to Chase they didnt take any of our
administration people, so basically, I
started up the wholesale operation
called Northern Star in 1999. Northern
Star was a wholesale operation that was
geared more toward sub-prime to
match our ownership because we had
an ownership interest in SouthStar
Funding, which was a fairly large sub-
prime wholesaler. We didnt run
SouthStar, but we did have the capital
behind the company.
My retail employees came back en
masse to the retail division of Northern
Star. We built First Town up and then
brought in a large group from California
to do wholesale and correspondent
lending, and brought in current REMN
Director of National Sales Joe Amoroso.
Joe came on board as we were looking
to buy a company in Connecticut that
eventually became Opteum Financial
Services. We were doing $1 billion-plus
per month at Opteum, until it was sold
to Bimini, a REIT (real estate investment
I feel that in order to build
a quality shop, you have to have
quality paper coming through
the shop.
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trust) in 2005, but in reality, it was
viewed more as a merger.
I owned a huge amount of Bimini
and was the number two shareholder
of the company. I ended up retiring in
June of 2007 when I really decided I
didnt want to be in the origination
business any more.
Back when you had an interest in
both SouthStar and Opteum, how did
you operate both companies as they
each competed for market share?
From Opteums perspective, the
company was really an all-day shop
and not a sub-prime shop. We did
very little sub-prime at Opteum. The
only sub-prime Opteum did was
what Joe [Amoroso] did, which was
not a big piece of our overall busi-
ness. I would say our sub-prime vol-
ume might have been three percent
of our overall volume on a monthly
basis it wasnt really what we
were doing.
Opteum was doing prime business,
but we were predominantly an all-day
shop, so we never really competed with
SouthStar. I was once part of the public
company and was allowed to keep my
interest in SouthStar, but it was held in
a blind trust and I could have nothing
to do with it. I got off the board of
SouthStar. I had really nothing to do
with its ownership or the day-to-day
operations of SouthStar. I had a blind
trust that owned the stock and that was
all I had so thats how it was segregated
from my perspective once it was a pub-
lic company and everybody was okay
with that.
At the end of 2007, a friend of mine
who had a small hedge fund
approached me to do something with
him creative on the distressed mort-
gage side. That sort of piqued my
interest and we realized there were a
lot of hedge funds out there buying
distressed mortgages. As they were
buying distressed mortgages, their
whole platform was to buy $1 billion
worth of mortgages at 0.60 cents on
the dollar, and flip it for 0.70 cents on
the dollar within a week, make a 10-
point spread, and then move on to the
next deal.
All the buyers that were buying all
the paper had no one to sell it to, and
most of them got stuck with the
paper, so we wanted to come up with
something different. The theory we
came up with was to acquire a small
mortgage originator that did not have
any legacy that had warehouse lines,
agency approvals and multi-state
licenses. I knew Doug Rotella, who
owned Real Estate Mortgage Network
(REMN), for nearly 20 years. I talked to
Doug and he needed the capital, and
we ended up effectively acquiring
REMN.
Discuss the purchase and growth of
Real Estate Mortgage Network (REMN)
into what it is today?
Initially, we put capital in on a pre-
ferred stock basis without taking any
ownership or voting stock. We did it
through a warrant structure, basically
so that the states were okay and we
didnt take control. I just gave Doug
[Rotella] capital to use and the theory
was we would refinance a lot of the
paper that we were buying at 0.40
cents on the dollar. Soon thereafter,
the agencies changed pretty dramati-
cally as to what you could do and could
not do, and it was no longer easy to
refinance a lot of that paper.
Many of our old employees heard
that I had bought this little originator,
which I didnt actually take ownership
of until March of 2010. We didnt exer-
cise our options or get state approval
until March of 2010.
Many of my former employees
wanted to come back again to join us
at REMN, and we viewed it as a huge
opportunity because most of the
wholesalers were out of business and
if theres one thing that I knew, it was
the ins and outs of the mortgage busi-
ness. I had been through similar busi-
ness situations in the past, and
although I was hesitant to return to
business on a larger scale, I think the
opportunity now in this business is
greater than Ive ever seen it in my
entire career. Nearly 80 percent of the
originators who were in the business
just five years ago are now gone.
There is not a lot of competition and
there is very little capital in the mort-
gage origination companies out there,
and from a mortgage servicing per-
spective, you could potentially build a
servicing platform with the tightest
underwriting standards we have seen
in our entire lives. Servicing, to me, is
absolutely worth gold.
We effectively took over the Security
Atlantic platform, and by putting it all
together, we ended up with an entity
that has roughly $30 million in capital
and you are simply not going to find
many independent companies with
that kind of capital base.
What is the current state of REMNs
warehouse lines?
We have all the warehousing we need
now. If anything, we are now turning
banks away because we do not need
additional warehouse lines. The only
thing we are looking at now and are
being approached pretty heavily about
is servicing portfolios.
About one year ago, we received our
Ginnie Mae approval, and during this
time period, weve actually kept about
$850 million so far that weve retained.
Our intention is that wed like to retain
about 50-60 percent of our overall pro-
duction. Basically, the aggregators
arent really paying us what we consid-
er to be fair value for the servicing.
Obviously, its a major cash issue if you
retain all of that servicing and weve
been fine in managing it. Were really
managing to cash, but we continue to
explore situations where people are
offering us $50-$150 million in capital
to retain a larger percentage of servic-
ing. So we are looking at deals like that
to see whether or not they make sense,
but I think the opportunity to build an
origination platform and servicing plat-
form now is probably the best I have
ever seen it.
What are you looking at in terms of
cost per loan of originations com-
pared to previous years? Are we
almost at an all-time high in the cost
per loan area?
We are currently probably at the mark
of highest cost per loan weve ever
seen, but you are also at the highest
mark for margins that Ive ever seen. I
have not really had any pressure to
reduce those margins because theres
just no company that can offer the sup-
port for service levels that REMN does.
There are certainly the four big aggre-
gators out there, and they may be
priced substantially better than us, on
any given day. But if you cannot get a
loan closed there in a timely fashion,
price doesnt make too much of a dif-
ference. Well get the loans closed and
thats how REMN is built.
The biggest problem we are encoun-
tering now from a cost perspective is
that you need to have so many more
underwriters underwriting the same
number of loans. This is where you
increase your overhead. We used to do
six loans a day for a full-time under-
writer and now were at three-and-a-
half per day because everyones under-
writing standards and guidelines are so
much more complex.
Do you have any comments on deal-
ing with third-party originations
(TPOs) as opposed to the direct
channel?
From a TPO perspective, the cost to
originate the loan is dramatically less
than the cost to originate a loan on
the retail side there is no question
about it. As far as investor acceptabil-
ity, it has been difficult. At this point,
everybody is very happy with the
quality of the paper, and I dont real-
ly see an issue in any way shape or
form.
With the Ginnie Mae portfolio we
have, we do not look at it loan by loan
and pick and choose what were retain-
ing and what were not. It has nothing
to do with that whatsoever and the
weighted average FICO score of our FHA
paper is 705.
The quality of our paper is excep-
tional, and I feel that in order to build
a quality shop, you have to originate
quality paper. We make prudent deci-
sions. Were not doing loans for FICO
scores under 620 and jacking up mar-
gins we have no interest in loans of
that nature. Its all about building a
quality shop both on the production
side and on the servicing side as well.
Building your company is about
building a base to get an IPO done. I do
think the opportunity is there to build
and I find the TPO side interesting
because again, there are not a lot of
players that provide the level of service
that we do.
With our previous company,
SouthStar, that was really the story.
SouthStar was successful not because
they were priced competitively in the
market, but because they could actual-
ly get a loan closed within 24 hours.
This is the same mentality on the TPO
side at REMN.
I believe that, at this point, TPO
underwriting and criteria are actually
tougher than on the retail side. Its real-
ly interesting, and one of our investors
even came and said this to us which
surprised me. During an audit, they
said that they prefer the TPO business
to the retail market. That was the first
time Ive actually heard anybody say
that in the last couple of years. The rea-
son is that every retail shop that he
goes into, they cant put things through
as they did in the past. It is very difficult
to change a retail loan officers mental-
ity relative to what you can do and
what you cannot do.
On the wholesale side, because
youre not dealing with the loan officer
directly, you can dictate what you will
take and what you wont take and that
mortgage broker can go wherever they
want to, but you are dictating what you
will and wont take.
In a retail scenario, its more difficult
to put your foot down with the sales
force because a good salesperson in the
retail space can go to 10 other shops
and do well. They dont have that and
you have a lot more flexibility to be
tighter on the wholesale side than on
the retail side.
When I really think about it and
think about the pressure I get when I
put through something that I really
want to to tighten the noose on
retail is extremely difficult to do with-
out causing ramifications. On the
wholesale side, it really isnt difficult
to doyou just do it. In viewing the
I view any mistakes that
I have made as a lesson and
just move forward and hopefully
learn from it.
I think the opportunity
now in this business is greater
than Ive ever seen it in my
entire career.
continued on page 16
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news flash continued from page 13
mortgage professional continued from page 15
state of fair housing in America. HUDs
Fiscal Year 2009 annual State of Fair
Housing Report highlights the agencys
progress in enforcing the Fair Housing Act,
identifies challenges that remain, and
demonstrates its commitment to acting
now to end housing discrimination.
The report, which covers the last full
fiscal year of HUDs complaint investi-
gations and fair housing activities, was
released during HUDs National Fair
Housing Policy Conference in New
Orleans. The report shows that discrim-
ination based on a persons disability
status continues to account for the
largest-single category of complaints.
Of the 10,242 complaints filed with
HUD and its fair housing partners dur-
ing fiscal year 2009, 44 percent alleged
disability discrimination, while 31 per-
cent alleged discrimination based on
race, and 20 percent based on family
status. The number and type of com-
plaints received are consistent with the
previous two years.
Despite much progress and hard
work, Americans continue to face hous-
ing discrimination because theyre in a
wheelchair, are a different color, or
background, or have children, stated
John Trasvia, Assistant Secretary for
Fair Housing and Equal Opportunity.
This report is a stark reminder that
HUD and our fair housing partners
must redouble our commitment to end
housing discrimination.
This years report highlights HUDs
enforcement efforts, including those
that led to changes of policies and
equal housing opportunities for racial
and ethnic minorities, persons with
disabilities, and others. HUD also
handled an array of discrimination
cases that resulted in compensation
for the victims or pertained to fami-
lies with children.
The report also highlights HUDs
efforts to ensure that the agencys core
housing programs are open to all,
regardless of sexual orientation or gender
identity. Last month, HUD announced
that it will now require all applicants for
Fiscal Year 2010 grant funding to certify
that they have not been charged with a
systemic violation of state or local laws
that are equivalent to the Fair Housing
Act based on a persons lesbian, bisexual,
gay and transgender status.
HUD and its fair housing partners
are on the front lines when it comes to
fighting housing discrimination, and
our job to prevent it is not complete
without addressing 21st Century
issues, said Trasvia.
For more information, visit
www.hud.gov/fairhousing.
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:
newsroom@nmpmediacorp.com
Note: Submissions sent via e-mail are
preferred. The deadline for submissions
is the 1st of the month prior to the tar-
get issue.
overall quality of loans that I see com-
ing through the system, I have more
problems with loans on the retail side
than I do from the wholesale side.
In your career, is there actually one
mistake or regret, even if you learned
something that you wish you could
take back, redo or sweep under the
carpet, and not have anyone know
about it?
Thats an interesting question. Im not
one who regrets anything I ever do.
Ive never regretted anything Ive
done in my entire career. I view any
mistakes that I have made as a lesson
and just move forward and hopefully
learn from it. Unfortunately, I have
repeated some mistakes, but overall,
my experience has really been pretty
good in the business, so I cannot say I
have one big regret one way or the
other.
I have been very fortunate in the
mortgage business. I have a lot of peo-
ple very dedicated to me, but they also
know Im very dedicated to them and I
will pretty much do anything for any-
body who works for me. Im very rela-
tionship-oriented, so I deal with a lot of
these people on a day-to-day basis. Ive
grown to know a lot of people on the
wholesale side, and Ive gotten close to
a lot of them in a very short period of
time.
Its been a very difficult industry to
be in over the past two years, but the
relationships that I have with the peo-
ple involved in it is really what keeps
me here and keeps me coming back.
I have been extremely
entrepreneurial my entire life.
Mortgage Revolution, a non-profit, grassroots movement of true mortgage
professionals joining forces to influence a positive change in the mortgage
industry, has announced that the mortgage industry is undergoing an
encouraging renaissance, only 24 months after the sub-prime crisis. To
continue this positive momentum, Mortgage Revolution has announced its
fourth event, MRev New York, Friday-Sunday, Oct. 15-17, 2010, at the
Westchester Marriott in Tarrytown, N.Y.
Mortgage rates have reached historic lows and affordability has reached
a record high, said Brian Larrabee, co-founder of Mortgage Revolution and a
20-year veteran of the industry. But just as important, high-quality mortgage
professionals, who have improved their skills and enhanced their networks,
are once again feeling positive about the mortgage industry and are working
ever more closely with borrowers to help them make the right mortgage deci-
sion. We are very pleased that Mortgage Revolution has been able to play an
important part and helped almost 1,000 mortgage professionals become bet-
ter at what they do and we urge all members of the mortgage industry to
attend MRev New York and become part of our positive evolution.
Mortgage Revolution events focus on education and networking. Each
day, attendees collaborate for eight to 10 hours of intensive, hands-on
classes on a variety of subjects. Then, each evening attendees reconnect to
polish the skills they have learned during the daytime sessions.
I still love being a mortgage professional, even though its a much more
difficultand at times a more cumbersome job than it was five years ago
stated Florida Home Finance Advisor, Chris Brown. But when I see a fam-
ilys eyes well-up with pride after receiving the keys to their first home, it
makes all the industry turbulence worthwhile. At its core, the mortgage
business remains a very rewarding profession.
In late 2008, Brown was becoming increasingly frustrated. Lenders were
not interested in lending, even to the most highly qualified borrowers. Real
estate prices were depreciating. It was the perfect storm. In January 2010,
Brown attended the first Mortgage Revolution event held in Atlanta, Ga.
First off, I have never been around a group of people so willing to help lift
the spirits of others. Just when many of us needed to be picked up, Mortgage
Revolution reminded me of why I got into this business in the first place, said
Brown. In addition to recharging my batteries, Mortgage Revolution helped
improve my skills and has been a key factor in my recent success.
At Mortgage Revolution, I learned how to incorporate social media and
video marketing into my practice said Philadelphia-based originator
Jason Klaskin. And the results have been phenomenal.
We have some pretty aggressive goals for MRev New York said Klaskin.
All attendees will build their own blog. Everyone will shoot their first video.
It is not just about learning the skills, but rather putting them into action.
An event like Mortgage Revolution used to cost several thousand dollars
to attend. The fact that Mortgage Revolution is volunteer-based allows us to
minimize costsand opens the experience up to everybody, said Larrabee.
In addition, at the end of the event, we typically raise over $15,000 for
local charities. It is very inspiring to be a part of this movement.
Mortgage Revolution
to Present MRev New York
Oct. 15-17
Grassroots movement to visit Westchester
Marriott in Tarrytown, N.Y. this October
For more information about Mortgage Revolution,
visit www.mrev.org and
www.facebook.com/mortgage.revolution.
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What is really plaguing the FHA housing and real estate markets?
For the past eight months, I have been reading how the housing market is collapsing with
record lows in sales, loan originations, first-time homebuying markets, and new con-
struction. It all appears to point back to the deal the industry made with the devil when
it sold its soul for sub-prime lending.
Since the collapses of the market, lenders and investors have tightened their lending cri-
teria in order to strengthen their portfolio as a result of failing loans and repurchase demands.
I dont blame them; however, as a result of overcompensating in tougher underwriting crite-
ria in order to have a stronger creditworthy borrower; the lenders have blocked the tradi-
tional Federal Housing Administration (FHA) borrower from qualifying for an FHA loan.
For years, FHA has been the loan of choice of first-time homebuyers, middle-income, and
moderately-low income applicants. With todays credit score-driven decision-making, the tradi-
tional FHA applicant does not qualify for the FHA loan due to the lender underwriting templates.
The average FHA loan credit score in 2006 ranged from 665 for an Excellent ranked
loan, 654 Good and 603 for Fair. These rankings are a result of post-closing quality
control performed on FHA loans.
I Excellent: No errors or a minor error.
I Good: Minor errors and will sell on the secondary market.
I Fair: Errors and questions with credit or collateral and may be challenged for a repurchase.
I Poor: Found fraud in the file.
The average FHA credit score today is Excellent 712, Good 695, Fair 691. As you
can see, in less than five years, the difference in the average FHA credit score in 2006 and
2010 is 47 points in the Excellent ranking, 41 point in the Good ranking and 88 points
in a Fair ranking.
Based on credit scoring, the FHA product is no longer the product of the average mort-
gage applicant. Borrowers who qualify for FHA loans today have above average credit
scores. Because of the overcompensating underwriting criteria, many will not qualify for
an FHA loan, such as minorities, young couples and single parents who have a reliable in-
come stream, but have had some hiccups along the way.
If the mortgage industry wants to recover, make lending available to the average credit
score borrower. Lenders should shoot for a average 688 for an Excellent, 674 for a
Good and a 645 for a Fair. This recommendation is still high, but its a start in the re-
covery of the economy. Adjusting the credit score back down will do more for the mort-
gage and housing industry than any tax credit or stimulus.
By Tommy A. Duncan, CMT
Sponsored by
Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Serv-
ices LLC. For answers to your QC and FHA questions, please contact Tommy at
(615) 591-2528 or e-mail taduncan@qcmortgage.com. You may also visit Qual-
ity Mortgage Services LLC on the Web at www.qualitymortgageservices.com.
2006 2007 2008 2009 2010
Excellent 665 663 675 695 712
Good 654 637 666 687 695
Fair 603 615 638 680 691
Poor 579 567 620 647 706
Coester Appraisal CEO
commissioned by AllRegs
to author educational
materials
Coester Appraisal Group,
a nationwide appraisal
management company
(AMC), has announced that its Chief Executive
Officer Brian Coester has been commissioned
by AllRegs, an information provider for the
mortgage lending industry, to create instruc-
tion manuals, video tutorials and classroom
training programs for lenders. These educa-
tional materials will serve to educate lenders
on how to protect themselves against repur-
chase requests based on erroneous assess-
ments of the loan files appraisal.
According to Coester, discrepancies
in appraisals account for roughly 15
percent of all repurchase requests.
Once a buyback letter is received, the
recipient is under obligation to repur-
chase the loan in questionoften hun-
dreds of thousands of dollars, if not
moreunless it can prove that it is not
responsible for the discrepancy.
Coester, who is an expert at success-
fully rebutting repurchase requests
that are erroneously based on apprais-
al discrepancies, will be addressing the
specific steps that the recipient of a
buyback letter can take to determine
the validity of the claims, and success-
fully refute them if inaccurate.
Repurchase requests that are based
on faulty or erroneous appraisals are
often built on misunderstandings, said
Coester. But because many lenders
dont know how to appropriately
respond to the request, they end up
repurchasing the loan, even though
theyre not at fault. As with any process,
there are certain processes and proce-
dures that greatly enhance a lenders
chance of successfully refuting the
request. Im happy to share my expert-
ise and help lenders to protect them-
selves from unnecessary penalties.
For more information, visit
www.CoesterAppraisals.com or
www.AllRegs.com.
Cenlar and Mortgage
Builder form LOS
servicing partnership
Mortgage Builder
Software, a provider
of loan origination software (LOS) tech-
nology, has announced its strategic
alliance with Cenlar FSB, a sub-servicer
of mortgage loans. Mortgage Builder
has integrated with Cenlar to provide a
seamless process for boarding closed
mortgage loans from its LOS system
directly to the Cenlar servicing plat-
form. The new association began with
both companies relationship with the
Lenders One Mortgage Cooperative, an
alliance of independent mortgage
bankers that originates more loans
than any non-bank mortgage company
in the United States.
Lenders One members use Cenlars
capabilities for customized, private-
label subservicing on a wide variety of
mortgages they originate, giving them
numerous financial and competitive
advantages by retaining the servicing
rights to their loans. Mortgage Builder
is a preferred LOS software choice for
Lenders One members and the two
companies found common ground
through the alliance, both enjoying
high reputations for the quality of their
offerings.
Through this integration with
Cenlar, Mortgage Builder users can
immediately place loans on the indus-
try-leading sub-servicers system, taking
virtually all of the human error out of
the process, says Keven Smith,
Mortgage Builders president and CEO.
It makes a key part of the servicing-
retained strategy much simpler for
lenders of all sizes.
Mortgage Builders Smith noted that
his firms relationship with Cenlar is
especially timely, given the increasing
industry trend toward process integra-
tion all across the mortgage process,
from origination to servicing and on to
investor delivery.
With the advent of the GSEs
Uniform Mortgage Data Program
(UMDP), digital processes will rapidly
become the industry standard, said
Smith. This partnership between
Mortgage Builder and Cenlar FSB posi-
tions our clients for early UMDP confor-
mance, reduced costs to originate
loans, and a better process for con-
sumers. Our integration with Cenlar
helps Lenders Ones independent mort-
gage bankers compete with even the
largest banks in the market, he says,
and provides yet another among
scores of good reasons to become part
of that alliance.
For more information, visit
www.MortgageBuilder.com or www.cenlar.com.
continued on page 25
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Now that the yield spread premium (YSP)
has gone the way of nature, and a credit
has taken its place, perhaps its time to
make sure that the public understands that
the credit, in whole or in part, provides
payment for goods and services that the
mortgage broker has actually rendered.
1
The new Good Faith Estimate (GFE),
which became effective Jan. 1, 2010, reflects
the change from YSP to credit. Back in
November 2008, when the U S Department
of Housing & Urban Development (HUD)
evaluated the responses of consumer pro-
tection advocates to using a credit, several
organizations asserted that to describe
lender-paid broker compensation as a cred-
it to reduce settlement costs is misleading.
2
For example, some maintained that there
is no requirement that the lender payment
will actually be used in this manner;
3
while
others stated that the proposed language
presumes a trade off through a reduction
in upfront costs, and research shows that
this does not occur, except in limited cir-
cumstances. In other words, public com-
ments opined that the characterization of
the YSP as a credit only exacerbates the
issue of the nonexistent trade off.
4
Industry responses to HUD varied, but
were generally consistent with respect to
opposing the credit. For instance, some
took the position that neither the pro-
posed GFE, nor the proposed HUD-1, can
accommodate a lenders compensation
payment to the broker based on the loan
amount, or based on a flat dollar
amount.
5
This view held that if a lender
were to pay broker compensation that is
not tied to the interest rate, there would
be no way to disclose the payment without
artificially inflating the charges paid by the
borrower;
6
while others stated that,
among other things, if a broker intends to
rely primarily on the lender for compensa-
tion, the dollar-for-dollar offset of the YSP
against other service charges will necessi-
tate that the broker increase the disclosed
consumer paid fees.
7
In support of its position, HUD reaf-
firmed the view in its Policy Statement
2001-1, in which it made clear that ear-
lier disclosure and the entry of YSPs as
credits to borrowers would offer
greater assurance that lender payments
to mortgage brokers serve borrowers
best interests. (See 66 FR 53056.)
8
Furthermore, HUD asserted that the
revised GFE was the result of an itera-
tive testing process, comprised of six
rounds of consumer testing of the form
during the period 2003 through 2007,
9
and it concluded that consumers were
not confused by this new GFE.
The YSP is applied as a credit to the
borrower on the GFE.
10
A credit for the
interest rate chosen (sometimes known
as yield spread premium or YSP) is
stated on the GFE in such a way that it
contains the mortgage brokers compen-
sation for the loan plus any lender fees
for origination (except for any charge
for the specific interest rate chosen).
11
The mortgage brokers compensation
on the new GFE is contained in the
Origination Charge.
12
Lenders pay the
credit and, of course, they are the ones
that charge the discount points.
But does the applicant actually
know what the credit actually pays?
Because the YSP is effectively gone
from disclosure and the credit is to be
used to partially or fully pay for the
mortgage brokers services, a new term
should be used to assure the public of
the unique purpose of that credit, with
respect to the goods and services actu-
ally provided by the mortgage broker.
Consequently, I would like to offer a
new term to the industry to help assure
the publics positive perception of the
critical role played by mortgage bro-
kers.
Hence, the following Proclamation!
Please be advised that this
Proclamation is a work of fiction and is
not an official document, doctrine, posi-
tion or view of any governmental agency,
employee of a governmental agency or
mortgage industry association. This is my
declaration of a way to improve commu-
nication between applicants for residen-
tial mortgage loans and mortgage brokers
with respect to the latters compensation,
as well as to show the important role the
mortgage broker plays in arranging resi-
dential mortgage loans for applicants.
Although I believe there is substantial reg-
ulatory foundation on which to base the
use of the new term stated in the
Proclamation for educational and promo-
tional purposes, please note that informa-
tion and suggestions contained herein are
not intended to be and are not a source of
legal advice. Please be sure to consult a
competent residential mortgage compli-
ance professional in advance before using
the new term in educational and promo-
tional venues.
Jonathan Foxx, former chief compliance
officer for two of the countrys top pub-
licly-traded residential mortgage loan
originators, is the president and manag-
ing 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 contact-
ed at (516) 442-3456 or by e-mail at
jfoxx@lenderscompliancegroup.com.
Footnotes
1In a series of articles in this publication,
I endeavored to show the necessary and
positive role played by the Yield Spread
Premium in residential mortgage origina-
tions. I argued that it was not a kickback,
as some media and politicians claimed,
Statement of Policy 1999-1 Regarding
Lender Payments to Mortgage Brokers,
and Guidance Concerning Unearned
Fees Under Section 8(b).
15Ibid.
1624 CFR Part 3500, RESPA
Statement of Policy 1999-1: Regarding
Lender Payments to Mortgage Brokers;
Final Rule.
17Ibid.
18Ibid.
19Ibid.
20Ibid.
21HR 4173: Dodd-Frank Wall Street
Reform and Consumer Protection Act,
111th Congress (2009-2010), Title XIV,
inter alia, 1403 (Prohibition on
Steering Incentives).
22A consumer may finance origina-
tion fees or costs, as long as the fees or
costs do not vary based on loan terms or
the consumers decision to finance such
fees, providing this financing takes
place at the consumers option and
solely through principal or rate. Also
allowed are incentive payments to the
MLO based on the number of loans orig-
inated within a specified period of time.
See Second Summary of Mortgage
Related Provisions of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (HR 4173), 07/13/10,
Mortgage Bankers Association.
23See Foxx, Jonathan, Landmark
Financial Legislation: New Rules for
Mortgage OriginatorsPart I: Reformation
and Regulations, August 2010, Volume 2,
Issue 8, pp. 28-42. And, inter alia, Op.cit.
21, 1403.
24See 24 CFR Parts 203 and 3500,
Real Estate Settlement Procedures Act
(RESPA): Rule To Simplify and Improve
the Process of Obtaining Mortgages
and Reduce Consumer Settlement
Costs; Final Rule, Federal Register/Vol.
73, No. 222/Monday, Nov. 17, 2008,
pp. 68204-68288. Also: Op. cit. 21.
25In my article, published in July
2009, I suggested that there was a way
the consumer (and, therefore, market
forces) could have the ability to set a
fair market standard for compensation
payments that are reasonably related
to the value of the services actually fur-
nished and performed. That could be
done simply by crediting the YSP
directly to the borrower. As I wrote:
The borrower would then have the
choice to use the YSP in accordance
with the borrowers own interests.
Once the borrower specifically author-
izes how the YSP is to be used, a stan-
dard of reasonableness would be
established. Market forces will respond
accordingly, as borrowers agree to the
utilization of the YSP. Placing the con-
trol of the YSP into the hands of the
borrower and letting its use be deter-
mined by the borrower will protect the
borrower and provide a true safe har-
bor. See: Foxx, Jonathan, Saving the
Yield Spread Premium, National
Mortgage Professional Magazine, July
2009, Volume 1, Issue 3, pp. 26-28.
26Op. cit.21.
27The new term may be referred to
as the Compensable Services Fee or
by its acronym, CSF.
By Jonathan Foxx
Yield Spread Premium is Gone!
A Proclamation declares a new term
when legitimately
used in accordance
with guidelines
set forth by the
U S Department
of Housing &
Urban Development. For further read-
ing, the series can be found as follows:
I Foxx, Jonathan, Yield Spread Premiums,
Compensation or Kickback?, National
Mortgage Professional Magazine, June
2009, Volume 1, Issue 2, pp. 18-20.
I Foxx, Jonathan, Saving the Yield
Spread Premium, National Mortgage
Professional Magazine, July 2009,
Volume 1, Issue 3, pp. 26-28.
I Foxx, Jonathan, Service Release
Premium Versus Yield Spread Premium:
Match or Mismatch?, National Mortgage
Professional Magazine, August 2009,
Volume 1, Issue 4, pp. 34-35.
2Real Estate Settlement Procedures Act
(RESPA): Rule To Simplify and Improve
the Process of Obtaining Mortgages and
Reduce Consumer Settlement Costs, Final
Rule, Federal Register, Volume 73, No.
222, 11/17/08, pp. 68223-68288
(Consumer Representatives).
3Ibid.
4Ibid.
5Ibid.
6Ibid.
7Ibid.
8Ibid. p 68225 (HUD Determination).
9Ibid. p 68225.
10New RESPA Rule FAQs, Section:
GFE Block 2, Q&A # 7, 04/02/10.
11Ibid. Section: GFE Block 1, Q&A #
1. Also, the amount shown in Block 1
may contain all or some of the credit
for the interest rate chosen.
12Ibid. Q&A # 9: Block 1, Our orig-
ination charge on the GFE contains all
charges for origination services per-
formed by or on behalf of a lender
and/or a mortgage broker. Origination
services includes, but is not limited to,
the following: taking of the loan appli-
cation, loan processing, underwriting
of the loan, funding of the loan, acting
as an intermediary between a borrow-
er and lender, obtaining verifications
and appraisals, and any processing and
administrative services required to
perform these functions.
13I want to thank Joel Berman, pub-
lisher of National Mortgage Professional
Magazine, for mentioning to me the
need to have the nugatory Yield Spread
Premium replaced with a term that may
more precisely reflect its purpose, where
it is used in whole or in part to compen-
sate the mortgage broker. However, I
am solely responsible for creating the
new terminology that I have advocated
(and its context).
1424 CFR Part 3500, RESPA Statement
of Policy 2001-1: Clarification of
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WHEREAS, the mortgage broker provides goods or facilities that are
actually furnished or services actually performed for the compensa-
tion paid;
14
and,
WHEREAS, those payments are reasonably related to the value of the
goods or facilities actually furnished or services that are actually per-
formed;
15
and,
WHEREAS, the Department of Housing and Urban Development has
identified the following compensable services that are normally
performed by the mortgage broker in the origination of a loan:
16
O Taking information from the borrower and filling out the application
O Analyzing the prospective borrowers income and debt and pre-
qualifying the prospective borrower to determine the maximum
mortgage that the prospective borrower can afford
O Educating the prospective borrower in the home buying and
financing process, advising the borrower about the different types
of loan products available, and demonstrating how closing costs
and monthly payments could vary under each product
O Collecting financial information (tax returns, bank statements) and
other related documents that are part of the application process
O Initiating/ordering VOEs (verifications of employment) and VODs
(verifications of deposit)
O Initiating/ordering requests for mortgage and other loan verifications
O Initiating/ordering appraisals
O Initiating/ordering inspections or engineering reports
O Providing disclosures (Truth-in-Lending, Good Faith Estimate, oth-
ers) to the borrower
O Assisting the borrower in understanding and clearing credit problems
O Maintaining regular contact with the borrower, realtors, lender,
between application and closing to appraise them of the status of
the application and gather any additional information as needed
O Ordering legal documents
O Determining whether the property was located in a flood zone or
ordering such service
O Participating in the loan closing; and,
WHEREAS, the aforementioned compensable services are not limit-
ed to even those services indicated;
17
and,
WHEREAS, the Yield Spread Premium is an indirect fee paid by con-
sumers to mortgage brokers based upon the interest rate of each
loan entered into by the mortgage broker;
18
and,
WHEREAS, some or all of the Yield Spread Premium is a payment for
compensable services;
19
and,
WHEREAS, lender payments of the Yield Spread Premium to mort-
gage brokers may reduce the upfront costs to consumers;
20
and,
WHEREAS, the Yield Spread Premium has been effectively legislated
out of existence;
21
and,
WHEREAS, the law now prohibits a mortgage broker from receiving
compensation, such as a Yield Spread Premium, based on the terms
of the mortgage loan;
22
and,
WHEREAS, the law now also effectively prevents the mortgage broker
from receiving compensation from other sources if such compensation is
being otherwise received, directly or indirectly, from the consumer;
23
and,
WHEREAS, a credit to the consumer has been legislated into existence
to replace that part of the Yield Spread Premium that pertains to
compensable services;
24
and,
WHEREAS, the particular credit to the consumer which pertains to
compensable services is and by rights always ought to be understood
as a fee paid for compensable services rendered by the mortgage bro-
ker;
25
and,
WHEREAS, the aforementioned credit is to be used for payment of all
or a portion of the Yield Spread Premium or any other premium
payable by the lender to the mortgage broker;
26
NOW, THEREFORE, BE IT RESOLVED that, henceforth,
mortgage brokers shall refer to that part of the credit to
the consumer which pertains to compensable serv-
ices as the COMPENSABLE SERVICES FEE (or
CSF);
27
and,
BE IT FURTHER RESOLVED, that the term
COMPENSABLE SERVICES FEE may be used
for normal educational and promotional
purposes by mortgage brokers who arrange
residential mortgage loans for consumers,
where such use of the term COMPENSABLE
SERVICES FEE is lawfully permitted for nor-
mal educational and promotional purposes.
IN WITNESS WHEREOF, I have set my hand
and caused this PROCLAMATION to become
declared throughout all the land, on the
day of its publication in the month of
September 2010.
A PROCLAMATION
CONCERNING
THE NEW TERM
COMPENSABLE SERVICES FEE
TO DESCRIBE COMPENSATION
EARNED BY MORTGAGE BROKERS
IN
RESIDENTIAL MORTGAGE LOAN TRANSACTIONS
13
KNOW ALL PERSONS BY THESE PRESENTS:
Jonathan Foxx
In Cuius Rei Testimonium
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SEEKING ACTIVE
MORTGAGE BANK FOR
ACQUISITION
I have a client that is actively looking to purchase a Mortgage Bank li-
censed in at least, New Jersey, New York, and Pennsylvania. The re-
quirements we have include a low FHA Compare Ratio, minimum
of two existing warehouse lines in good standing, and at least three
correspondent lender relationships that are also in good standing,
with at least one being an A Tier investor. Must have full eagle.
The owner/partner will need to be able to stay on until the change
of control is completed for quality control purposes. There will be
compensation paid during that time frame. There will be a quality
control workow to insure low exposure. Our management team is
in place to make it a seamless transition. We would also consider
merging our management team with the existing management team
if the situation is right.
We will use our net-worth to secure the warehouse lines when the
change of control is complete.
We are very open and willing to hear any situations, business plans, of-
fers, etc. Please email me at todierna@ctcsettlement.com with a good
time to discuss this, or call me anytime at (631) 835-0000. I look forward
to hearing from you.
Very truly yours,
Tricia A. Odierna, Esq.
LAW OFFICE OF TRICIA A. ODIERNA
2150 JOSHUAS PATH, SUITE 202
HAUPPAUGE, NY 11788
At what time will the reviews take
place in the lending process, and how will
it affect the loans under consideration?
This will vary with different lenders and
their policies. All appraisals for mortgage
loans will have a pre-closing appraisal
review, performed by a qualified apprais-
er. Some of the reviews will be more for-
mal than others. I consider a formal
review to be either a desk review or a field
review on a form for that purpose. The
appraiser signs these appraisal reviews in
the same way as they were by the original
appraiser. Once performed, they may
support or disagree with the original
appraisers findings and opinions. In the
case of a disagreement, the original
appraisal will either be repaired or reject-
ed, depending upon the severity of the
problem within the appraisal. In some
cases, the review appraiser will conclude
that the actual property value is different
than the value stated in the original
appraisal, and the loan will either be
modified or cancelled.
Others will also use the tool as a post-
closing, quality control instrument to
ferret out appraisers not up to the tasks.
These appraisers will be removed from
the approved list of the lender if found
to be turning out substandard work.
In cases of pre-closing appraisal
reviews, we can expect over time to see
that all appraisals are reviewed by quali-
fied state-certified appraisers. Some of
these may not be formal review appraisals
on every loan, but where appraisals do not
pass the smell test, either formal desk
reviews or field reviews will be performed
prior to closing. This, which is perhaps the
most significant point to be made, will be
done in an effort for the lender and its
staff to distance themselves from pressur-
ing or influencing the appraiser.
In summary and conclusion, we can
expect to see more appraisal scrutiny on all
loans. Certified appraisers in the form of
appraisal reviews will perform this over-
sight. Loans, which may have been made in
the past, will not pass muster, in some cases,
due to this stricter monitoring. In general,
more emphasis will be placed upon insuring
that the appraisal is unbiased, legitimate
and accurate. For loan officers and other
stakeholders, who believe that appraisal
reviews reduce the probability that a loan
will close, appraisal reviews, in some cases,
will improve the probability of a closing. The
review is a search for the true value of a
property, whether it be higher or lower than
that claimed in the initial appraisal.
Charlie W. Elliott Jr., MAI, SRA, is president
of Elliott & Company Appraisers, a nation-
al real estate appraisal company. He can
be reached at (800) 854-5889, e-mail char-
lie@elliottco.com or visit his companys
Web site, www.appraisalsanywhere.com.
value nation continued from page 12
Mortgage Regulators (AARMR), which will
establish and maintain a Nationwide
Mortgage Licensing System and Registry
(NMLS). The U.S. Department of Housing
& Urban Development (HUD) then has
the ultimate oversight in determining
compliance and is responsible for ensur-
ing that SAFE Act standards are met.
At the surface, there are several prob-
lems already apparent in defining and
enforcing this Act. While painstakingly
attempting to define a loan originator,
various forms of lending institutions and
agencies, and what a mortgage loan itself
is, the Act goes on to dis-
cuss what a loan originator
must now do in order to
conduct business. In addi-
tion to current state licens-
ing requirements, a loan
originator must have a
background check per-
formed, which includes
fingerprinting, the pulling
of a credit report, and a
criminal history profile.
Furthermore, approved
educational courses and
tests must be taken and
passed. Even a minimum
net worth must be met or
a surety bond posted.
A measure of
protection, but
at what cost?
Lets now look at what
the estimated potential
cost of implementing the SAFE Act
might be. Assuming $50 for finger-
prints, $150 in educational classes,
$300 in registration fees, and $20 for a
credit report, that sums up to $520 for
every individual who wants to be a
loan originator. With an excess of
100,000 individuals (a conservative
estimate, based on figures from the
Mortgage Bankers Association) who
will be subject to these rules, you can
see that the price tag facing the indus-
try for these requirements approaches
$100 million. And since the bulk of
these fees are recurring costs, the Act
represents $100 million annually in
additional costs.
Considering that between six and
seven million loans are originated
every year, this added amount comes
to an extra $15 in pure cost for every
loan. So, who will underwrite this
cost? Ostensibly, the loan originator
(or his or her company) is on the hook
for these fees as a result of the legis-
lation. However, basic economics and
past precedents indicate that this
increase will be passed along to the
consumer, resulting in a higher cost
Since the passage of the Secure and Fair
Enforcement for Mortgage Licensing Act
of 2008 (SAFE Act), states and governing
agencies have been scrambling to enact
new laws and amend existing proce-
dures that facilitate the licensing of
mortgage loan originators in order to
meet the requirements of this new fed-
eral law.
The SAFE Act has, in fact, had many
benefits. For example, it has put a stop
to the easy entrance/easy exit loan
originator (now, its just easy exit). This
should help ensure that the industry
attracts more qualified
and ethical individuals,
rather than someone just
looking for a fast buck
when mortgages are in
high demand.
Unfortunately, while
enacted with the best
intentions to protect the
consumer and to mitigate
fraud, and ultimately to
assist in the recovery of
the housing market, the
act has also created con-
fusion for mortgage pro-
fessionals while engen-
dering skepticism that it
will adequately protect
against deceptive lending
practices.
A brief history
The SAFE Act arose out of
the economic crisis that
began in 2007. The Housing and
Economic Recovery Act of 2008 (HERA)
was put together quickly with the
intent of mitigating the root causes of
the crisis, and to implement sweeping
reform over what many felt were long-
standing problems in the real estate,
lending and banking industries. These
problems, critics assert, contributed to
the boom and subsequent bust in the
housing market, with its falling home
prices, rising foreclosure rates and vol-
umes of bad debt. The stated objective
of the legislation was to enhance con-
sumer protection and reduce fraud.
This, in turn, seemed to imply that ille-
gal or unethical practices on the part of
mortgage originators were to be
blamed for at least part of the indus-
trys troubles.
Enter Title V of HERA, the SAFE Act
which, in essence, establishes the
requirement to build and maintain a
national registry of individuals who are
engaged in originating loans on residen-
tial properties.
1
The legislation holds that
each state is responsible for complying
with the SAFE Act standards. They are to
be assisted in this by the Conference of
State Bank Supervisors (CSBS) and the
American Association of Residential
Are You Really SAFE From
Predatory Mortgage Originators?
By Lawrence Fried
Considering that
between six and seven
million loans are
originated every year,
this added amount
comes to an extra $15
in pure cost for every
loan. So, who will
underwrite this cost?
continued on page 24
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Registration, Level or Not, Here It Comes
The final rules to implement the SAFE Act requirements for the registration of
mortgage loan originators (MLOs) take effect Oct. 1, 2010. Employees of feder-
ally-regulated and other depository institutions who meet the definition of an
MLO must be registered by the end of the initial transition period. The National
Mortgage Licensing System and Registry (NMLS&R) is projected to begin receiving
registrations as early as Jan. 28, 2011.
Each agency will be providing advanced notice when the NMLS&R will for-
mally begin accepting federal registrations. Agency-regulated institutions and
their MLOs will have a 180-day initial registration period during which time they
may continue to originate. MLOs subject to this rule should not attempt to regis-
ter before the initial transition period begins.
Registration process
During the 180-day transition period, MLOs must register themselves through the
NMLS&R to obtain a unique identifier. All regulated institutions will be required
to provide certain limited information to the Registry specific to the entity, which
will enable the MLO to complete their registration process. The MLO must also
provide additional information that will include:
I The MLOs fingerprints for submission to the Federal Bureau of Investigation
(FBI) to perform a national criminal background check, and
I Information regarding the MLOs employment history and any relevant civil or
criminal history.
Certain limited information on the MLO and identifying information of the in-
stitution will then be available to consumers using the Registry by accessing its
public Web site. Once registered, the MLO must maintain their registration by re-
newing annually between Nov. 1 and Dec. 31.
The unlevel playing field
The most hotly debated issue since the passage of the SAFE Act has been the fairness
of requiring full licensure of non-depository MLOs while only requiring registration
for MLOs working for depository institutions. Opinions vary and, as with any con-
tentious issue, there are two sides that can basically be summarized:
I Non-Depository Licensees will tell you the banks cut a deal with congressional
leaders to exempt themselves in order to create a competitive advantage in
the marketplace.
I Agency-regulated Depository institutions are on record saying they should not
be penalized for the inappropriate actions of other lenders that led to the en-
actment of the SAFE Act.
No matter how its rationalized, the depository institutions think they are above
licensure for MLOs. For the time being, we will live with an unlevel playing field and
MLOs working for depository institutions will face the registration process.
Possible SAFE leveling
At the recent American Association of Residential Mortgage Regulators (AARMR) Con-
ference, the functions of the new Consumer Financial Protection Bureau were outlined
for this gathering of state regulators. Peggy Twohig of the U.S. Treasury Department, in
charge of standing up to this new Bureau said, (we) intend to level the playing
field between depository and non-depository institutions regarding the SAFE Act.
This was big news and it took the conference by surprise. It remains to be seen
if the Bureau will have the intestinal fortitude to stop playing politics and truly
level our field of play.
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 na-
tional education protocols. Go to AbacusMortgageTraining.comto find out more about
your obligations for testing, education and licensure, or call (888) 341-7767.
BIG FHA Updates: NegEQ Refi,
CLTVs, MIPs and Credit Scores
The end of the summer was a big one
for the Federal Housing Administration
(FHA) and I have compiled a list of the
highlights of each FHA update. The
combined loan-to-value (CLTV) ratio,
mortgage insurance premium (MIP) and
credit score changes continue the dis-
turbing trend of FHA becoming more
and more like Fannie Mae and Freddie
Mac. I noticed this philosophical shift
once Commissioner David H. Stevens
took office in July of 2009 and observed
that in many press releases and U.S.
Department of Housing & Urban
Development (HUD) testimony, there
was reference to future changes that
would strengthen FHA and bring FHA
more in line with the other agencies.
Although I am all for making FHA
stronger, I fear that many of the policy
changes over the last year are moving
FHA away from its original mission of
helping the average creditworthy
American achieve homeownership.
Here are the points to remember
about these changes:
FHAs NegEQ refinance
program
On Aug. 6, 2010, FHA published
Mortgagee Letter 10-23 which details
the refinance program available to
homeowners who owe more than the
value of their homes. Although HUD
estimates an economic benefit up to
$35 billion, the success will be deter-
mined by the current lien holders who
must participate by writing down the
mortgages at least 10 percent. The pro-
gram is for loans whose case numbers
are issued on Sept. 7, 2010 and closed
by Dec. 31, 2012.
Here are eight things you need to
know about this program:
1. The loan to be paid off cannot be an
FHA loan and must be current.
2. The max loan-to-value (LTV) ratio is
97.75 percent and the max CLTV is 115
percent.
3. Second lien holders must subordi-
nate to the new first.
4. Loans that receive an accept/approve
by TOTAL do not require a review of
income or credit history.
5. Loans that receive a Refer by TOTAL
and/or manually underwritten files, the
ratios cannot exceed 31/50 (31 percent
includes both first and seconds) and
must have acceptable credit history
with a minimum credit score of 500.
6. Lenders cannot use premium pric-
ing to pay off debt to qualify borrow-
er or bring mortgage current for the
borrower.
7. The performance of loans refinanced
under the NegEQ refinance will not be
included in the lenders compare ratio,
but will have separate criteria in
Neighborhood Watch.
8. The borrower must occupy the sub-
ject property.
Unlimited CLTVs
eliminated for refinance
transactions
This update from Mortgagee Letter 10-
24 contains changes to the new maxi-
mum CLTV limits for refinance transac-
tions which will be effective for case
numbers assigned on or after Sept. 7,
2010. The combined amount of the
FHA-insured first mortgage and any
subordinate lien may not exceed the
applicable FHA LTV and the geographi-
cal maximum mortgage amount (does
not apply to streamline refinance trans-
actions).
Here are the four items from this
Mortgagee Letter that you need to
know about:
1. Rate and term (or no cash-out) refi-
nances 97.75 percent.
2. Refinances for borrowers in negative
equity positions* 115 percent.
3. FHA-to-FHA streamline refinances
with or without appraisals 125 percent.
4. Cash-out refinances 85 percent.
*This refinance option is only available
through Dec. 31, 2012. See Mortgagee
Letter 2010-23 for more information.
FHA MIP changes now
official
With the passing of HR 5981 and the
resulting Public Law 111-229, FHA was
given authority to change the amount
charged to borrowers for both the
continued on page 24
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By Jonathan Foxx
This great Nation will endure as it has endured, will revive
and will prosper. So, first of all, let me assert my firm belief
that the only thing we have to fear is fear itselfnameless,
unreasoning, unjustified terror which paralyzes needed
efforts to convert retreat into advance. In every dark hour
of our national life a leadership of frankness and vigor has
met with that understanding and support of the people
themselves which is essential to victory.
Franklin D. Roosevelt, First Inaugural Address (1933)
1
We are now living in a time when fear stalks the land. Its impossible not to notice its
insidious maneuverings in many areas of everyday life. Fear of losing a job. Fear of los-
ing a home. Fear of losing a pension. Fear of losing stock equity value. Fear of devalued
or depleted savings. Fear of losing health insurance. Fear of inflation and fear of defla-
tion. Fear of certain religions. Fear of a terrorist attack. Fear of rising education costs and
tuition. Fear of continued political gridlock. Fear of disintermediation. Fear of a contin-
uing credit freeze. Fear of reduced Social Security and Medicare benefits. Fear of the
impact of climate change. Fear of decaying infrastructure. Fear of socialism, as well as
crony capitalism. Fear of more wars. Fear of jobs being sent overseas. Fear of another
financial meltdown. Fear of government intervention and fear of government non-inter-
vention. Fear of burdensome federal regulations. And fear of bedrock industries and
whole company towns becoming permanently decimated by recessionary pressures.
In such a political and economic environment, our politicians seek to calm our fears
by providing salvific ways and means, promising various kinds of safety, certainty and
stability. The way of the politician is the way of legislating laws and their implementing
regulationsthrough more regulation or, occasionally, less regulation. Politicians rarely
get involved in politics to preserve the status quo. They seek public office in order to
bring about change. We hope for prescience from our politicians. Voters are rarely inter-
ested in keeping things just the way they are; most of the time, voters represent special
interests that compete with one another for access to the levers of political power.
But groups weakened in the midst of a fearful polity are also weakened at the
ballot box and have less clout with lobbyists. Industry associations that may have
once been able in a strong economy to support bold lobbying initiatives, expect-
ing politicians to respond to their interests, lose membership in a declining econ-
omy, where fear often gains traction; and, because of that reduced membership,
the money needed to protect the group through mounting political campaigns
and successful lobbying efforts is drastically reduced.
Our industry, the mortgage industry, has been weakened. Mortgage originators are
not exempt from the impact of huge political forces that either foster or succumb to fear.
In the wake of the recent financial collapse, the mortgage industry finds itself today
faced with a blizzard of new regulations. There are reformist politicians who advocate
for these new regulations, giving forth apologies that rival the reasoning of the most elo-
quent, ancient rhetoricians; and, there are politicians who condemn these same, new
regulations, proclaiming that the prior existing regulations should have been (but were
not) enforced, and that interposing new regulations in a deteriorating economy only
adds to the industrys already hefty and costly regulatory burden. Both sides have had
their say and their vote; and, this time, the reformists have made the law, consisting of
2,319 pages, covering a vast stretch of financial regulatory requirements.
The Wall Street Reform and Consumer Protection Act, known as the Dodd-Frank
Act (Act), is the federal governments response to the financial collapse, offering finan-
cial reform of the financial system in general, and to the mortgage industry in particu-
lar.
2
It has been legislated into law at a time when fear pervades politics and the eco-
nomic climate continues to worsen, with high unemployment, an eroding tax base, a
swelling budget deficit, trillions of dollars in debt, and increasingly compressed corpo-
rate profit margins. The Act hopes to provide that salvific safety, certainty and stability
that will calm our fears. But it is legislation that reacts to events past, and it is not nec-
essarily proactive about possible events that may yet transpire. Financial bubbles, after
all, exist due to the blindness of market participants, not their foresight.
The Act, signed into law by President Barack Obama on July 21, 2010, is a federal
statute that principally intends to legislate the presumed ways to avoid future systemic
failures in the countrys financial infrastructure. Importantly, it seeks to provide new
regulations that will protect consumers in the financial marketplaceand especially
the mortgage marketplacethrough the creation of a new bureaucracy within the
Treasury, to be called the Bureau of Consumer Financial Protection (Bureau).
3
At least
16 consumer protection laws will be affected or transferred to the Bureau, including
the Alternative Mortgage Transaction Parity Act (AMTPA), Community Reinvestment
Act (CRA), Consumer Leasing Act (CLA), Electronic Funds Transfer Act (EFTA), Equal
Credit Opportunity Act (ECOA), Fair Credit Billing Act (FCBA), Fair Credit Reporting Act
(except with respect to sections 615(e), 624 and 628) (FCRA), Fair Debt Collection
Practices Act (FDCPA), Federal Deposit Insurance Act, subsections 43(c) through
43(f)(12) (FDIA) Gramm-Leach-Bliley Act, sections 502 through 509 (GLBA), Home
Mortgage Disclosure Act (HMDA), Home Ownership and Equity Protection Act (HOEPA),
Real Estate Settlement Procedures Act (RESPA), SAFE Mortgage Licensing Act (SAFE Act),
Truth-in-Lending Act (TILA), and Truth-in-Savings Act (TISA).
4
In the previous article in this three-part series, I outlined the mortgage loan regu-
latory provisions of the Act.
5
As I wrote in that article, this series on the Dodd-Frank
Act is meant to provide an overview. However, the legislation is extremely detailed
and extensive. Therefore, for guidance and risk management support, I strongly rec-
ommend that you consult a residential mortgage compliance professional or regula-
tory counsel to develop policies and procedures to implement the Acts requirements.
In this article, I will summarize certain salient aspects of the Mortgage Reform
and Predatory Lending Act (Mortgage Reform Act).
6
It is a primary component of
the Act and requires careful review and analysis in order to implement properly.
And, in the third and final article well consider the new Bureau of Consumer
Financial Protection and offer some observations on how the many features of the
Act may affect the mortgage industrys prospects.
Mortgage Reform and Predatory Lending Act
Restoration calls, however, not for changes in ethics alone. This Nation asks for
action, and action now.
Franklin D. Roosevelt, First Inaugural Address (1933)
7
The following matrix provides a brief overview of the Mortgage Reform and
Predatory Lending Act, with respect to the minimum standards for mortgages.
8
Mortgage Reform and Predatory Lending Act
Title XIV of the Dodd-Frank Act
Minimum Standards for Mortgages
Ability to Repay
Safe Harbor and Rebuttable Presumption
Defense to Foreclosure
Prepayment Penalties
Single Payment Credit Insurance
Arbitration Agreements
Negative Amortization Loans
Anti-Deficiency Protections
Partial Payments
Increase to Civil Liability Provisions
Lender Rights for Borrower Deception
Hybrid Adjustable Rate Mortgages
Required Disclosures at Consummation
Required Monthly Statements
Government Accounting Office Report
23
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O Interest-Only Loans
Repayment Ability: Based on the payment amount required to amortize the
loan by its final maturity.
O Negative AmortizationCalculation
Repayment Ability: Based on any balance increase that may accrue from any
negative amortization provision.
O Calculating Payment of Principal and InterestAssumptions
Proceeds are fully disbursed on the date of the consummation of the loan.
The loan is to be repaid in substantially equal monthly amortizing payments
for principal and interest over the entire term of the loan with no balloon pay-
ment, unless the loan contract requires more rapid repayment (including bal-
loon payment), in which case the calculation must be made in accordance
with prescribed regulations.
12
The interest rate over the life of the loan is a fixed rate equal to the fully indexed
rate at the time of the loan closing, without considering the introductory rate.
13
O Hybrid Loans Refinanced With Current Lender
Converting a hybrid loan into to a standard loan to be made by the same
creditor in any case in which there would be the (a) reduction in monthly
payment and (b) the mortgagor has not been delinquent on any payment on
the existing hybrid loan:
I Repayment Ability based on:
a) Mortgagors good standing on the existing mortgage.
b) If the extension of new credit would prevent a likely default should the
original mortgage reset and give such concerns a higher priority as an
acceptable underwriting practice.
c) Offer rate discounts and other favorable terms to such mortgagor that
would be available to new customers with high credit ratings based on
such underwriting practice.
Safe harbor and rebuttable presumption
Lenders may presume to have a safe harbor where such loans have satisfied the
ability to repay criteria summarized above. These loans are called qualified
mortgages and meet specific requirements. The ability to repay presumption is
based on using certain, defined parameters. The safe harbor provisions may
change from time to time for qualified mortgages if the Federal Reserve Board
(Board) finds that such revised regulations are necessary or proper to ensure that
responsible, affordable mortgage credit remains available to consumers.
14
Qualified mortgages
The following criteria define the qualified mortgage, as a residential mortgage
loan for which:
O The regular periodic payments for the loan may not result in an increase of the
principal balance or allow the consumer to defer repayment of principal.
15
O The terms do not result in a balloon payment, where a balloon payment is a
scheduled payment that is more than twice as large as the average of earlier
scheduled payments.
16
O The income and financial resources relied upon to qualify the obligors on the
loan are verified and documented.
O In the case of a fixed rate loan, the underwriting process is based on a payment
schedule that fully amortizes the loan over the loan term and takes into
account all applicable taxes, insurance, and assessments.
O In the case of an adjustable rate loan, the underwriting is based on the maxi-
mum rate permitted under the loan during the first five years, and a payment
schedule that fully amortizes the loan over the loan term and takes into
account all applicable taxes, insurance, and assessments.
O Compliance with any guidelines or regulations is required by the Federal Reserve
Board relating to ratios (i.e., debt-to-income), other ability to repay standards.
O The total points and fees payable in connection with the loan do not exceed
three percent of the total loan amount.
17
There has been some concern relating to the effective compliance date of the
Mortgage Reform Acts requirements. The Bureau will be implementing the Mortgage
Reform Act and receiving the authorities from the Truth-in-Lending Act and other
statutes (see above). The Bureau will be charged with finalizing the provisions of the
Mortgage Reform Act within 18 months of the designated date of transfer of author-
ities of the enumerated laws (see above). The regulatory implementation, once prom-
ulgated in final form, will become effective within 12 months.
Because the Mortgage Reform Act does not have an effective date, the Act itself
becomes the operative date for certain provisions that will not be included in the
above-described rulemaking process and timeframe. This means that certain provi-
sions are effective one day after July 21, 2010the advent date of the law.
9
Amongst
those affected provisions are the implementation of revisions to a mortgage origina-
tors compensation, limits to prepayment penalties, HOEPAs high cost triggers,
required disclosures at consummation and single-payment credit insurance.
10
Mortgage Reform ActCertain provisions
Ability to repay
With the exception of reverse mortgages or temporary or bridge loans with 12
months or less remaining in amortizationincluding any loan to purchase a new
dwelling where the consumer plans to sell a different dwelling within 12 months
certain requirements will be implemented on residential mortgage loans (on an
amortized basis). Borrower payment ability is derived through a reasonable and
good faith determination, based on verified and documented information.
Basis for Determination
Lenders must consider the following criteria in determining payment ability:
O Credit history
O Current income
11
O Expected income the consumer is reasonably assured of receiving
O Current obligations
O Debt to income ratio or residual income the consumer will have after paying
non-mortgage debit and mortgage-related obligations
O Employment status
O Other financial resource other than the consumers equity in the dwelling or
real property that secures payment of the loan
If the creditor plans on making more than one loan secured by the same resi-
dence, then payment ability must be made using the combined payments of all
such loans, utilizing a reasonable and good faith determination.
Verification of income
Income verification is based on:
O Internal Revenue Service Form W-2
O Tax returns
O Payroll receipts
O Financial institution records, or
O Other third-party documents that provide reasonably reliable evidence of the
consumers income or assets
Exemption
There is an exemption for a streamlined refinance made, guaranteed or insured by
federal departments or agencies from the income verification requirement, provided:
1. The consumer is not more than 30 days past due on the prior existing loan.
2. The refinancing does not increase the balance of the prior existing loan, other
than permissible fees and charges related to the loan product itself.
3. Total points and fees do not exceed three percent of the total new loan amount,
other than bona fide third-party fees not retained by the mortgage originator.
4. The interest rate on the refinanced loan is lower than the interest rate of the original loan,
unless the borrower is refinancing from an adjustable rate to a fixed-rate loan, under guide-
lines that the department or agency shall establish for loans they make, guarantee or issue.
5. The mortgage is fully amortizing.
6. Loan terms do not permit a balloon payment.
7. Both the loan being refinanced and the refinancing satisfy all requirements of
the department or agency making, guaranteeing, or insuring the refinancing.
Non-standard loans
Repayment determination for a category called Non-Standard Loans. The follow-
ing are the grouped into this category along with their respective amortizing and
schedule parameters:
O Variable Rate Loans that defer repayment of any principal or interest:
Repayment Ability: Based on a fully amortizing repayment schedule.
continued on page 25
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in obtaining financing. Furthermore,
the added administrative burden and
fees may reduce the number of people
approved to originate loans, poten-
tially slowing down the origination
process and further raising production
costs.
By reducing the productivity of any
one originator, per loan costs will likely
further increase. Given that the lenders
are beholden to their stakeholders to
maintain margins and profit, these
costs are likely to be reflected in the
price of obtaining a loan.
The most troublesome conundrum
arising out of the SAFE Act is that there
is an embedded assumption in the
resulting legislation that it is possible
to weed out most, if not all, unscrupu-
lous loan originators by regulatory fiat.
However, in dealing with matters of
human nature, and with complex
transactions that involve multiple par-
ties and data sources, its not that sim-
ple. Just because someone is entered in
the NMLS, there is no guarantee that
they will foreswear all future fraudu-
lent activities. And of course fraud can
occur at multiple points in the origina-
tion work flow continuumeven at
the borrower level. The SAFE Act
addresses only one element of a highly
elaborate system.
Moreover, the SAFE Act does not
provide for the continual monitoring
of agents in the system. While the sys-
tem may make it harder for someone
to get registered initially, any regis-
trant could later turn bad and cause
a lot of damage before they are identi-
fied and stopped. Periodic agent
reviews by the lenders or self-engen-
dered re-certification by the agents
themselves would also likely drive up
the cost of doing business as yet anoth-
er layer of red tape is added to an
organizations procedures.
A more holistic approach
is required
Creation of a residential mortgage is a
highly complex process involving
numerous people and a multitude of
tasks. The SAFE Act does not require
mortgage underwriters or loan proces-
sors to go through a similar qualifica-
tion or registry procedure. Fraud can be
introduced anywhere along the line by
these people or others who have access
to loan data and files throughout the
process. Even closing agents, post-clos-
ing activities and audit procedures,
introduce the possibility of changes to
data and paperwork.
The SAFE Act addresses the individ-
ual loan originator and really just one
step in the origination processthat of
the individual (loan originator) counsel-
ing the borrower on the appropriate
financial product and the income they
received as a result of the consultation.
However, originators can also be
involved in fraud later in the process,
are you really safe continued from page 20
such as in the manipulation of apprais-
al information/appraised values, etc. in
order to get loan approval and, thus,
commissions paid.
Given this situation, a more holistic
approach should be taken to ensure
that fraud can be systematically identi-
fied across the entire mortgage loan
origination process. Why focus solely on
the agents when the process of the loan
origination itself can be used to help
identify, weed out and correct fraudu-
lent information?
Technology offers a
better way
Trust, but verify has long been a
watchword of international relations.
This recognizes a fundamental truth: It
is virtually impossible to identify all of
the bad actors in a process upfront, no
matter how many safeguards are put in
place.
Fortunately, for the mortgage
industry, there is a better way. New
cloud-based lending technologies pro-
vide the opportunity to monitor for
and detect fraud throughout the lend-
ing process. This approach is both far
less intrusive and more cost-effective
than the NMLS, giving the lender the
ability to check loan data throughout
the process to ensure it is complete,
accurate and unchanged through loan
delivery. In this way, it is not dissimilar
to the Six Sigma processes that were
introduced in product manufacturing
a decade or more agoa system of
continuous monitoring designed to
drive quality.
Until recently, it has been difficult to
replicate this kind of technology-driven
quality control in mortgage origination.
After all, creating a loan is not like
building a widget: There is unpre-
dictability to the process that does not
exist in manufacturing. That is now
starting to change.
Baby vs. bathwater
The mortgage industry has always been
subject to periods of boom and bust,
though the last several years have been
extraordinary ones by anyones stan-
dards. Yet, the market has reacted to
self-correct. Underwriting guidelines
have adjusted dramatically to counter
the years of easy credit. Exotic loan
products have been eliminated.
Government regulators have
stepped in to try and address the prob-
lems that developed over the last cycle.
While there is an important role for reg-
ulation, it is not the only, or necessarily
the first, line of defense. By its nature,
regulation tends to be expensive, cum-
bersome and potentially off-target.
Often, rules are designed to solve last
years crisis, not the next impending cri-
sis on the horizon.
On the other hand, some technolog-
ical solutions offer a level of control
and flexibility that can adjust to regula-
tions and market conditions, as well as
individual agent-level actions. Cloud-
based technologies in particular are
gaining adoption within the mortgage
industry and are evolving rapidly to
enable best business practices and to
adjust to changing circumstances.
Fraud and fraudsters are nothing, if
not infinitely, malleable in their efforts
to game whatever system is put in
place. When it comes to detecting the
latest iteration of their schemes, tech-
nology gives lenders a fighting chance.
Lawrence Fried is a mortgage market
analyst with Dorado Corporation, a
provider of cloud-based consumer lend-
ing solutions based in San Mateo, Calif.
He may be reached at (650) 227-7300 or
by visiting www.dorado.com.
Footnote
1For those who are interested in
reading through the legal documen-
tation, you can find it here:
www.hud.gov/offices/hsg/ramh/safe/
smlicact.cfm.
By reducing the productivity of
any one originator, per loan costs
will likely further increase.
fha insider continued from page 21
upfront and the annual premiums. These
changes as outlined in Mortgagee Letter
10-28, are effective for all case numbers
assigned on or after Oct. 4, 2010.
Here are the six things you need to
know about these changes:
1. The upfront premium is now one
percent for all standard FHA programs.
2. The annual premium is now 0.90per-
cent for LTVs greater than 95 percent
on 30-year loans.
3. The annual premium is now 0.85
percent for LTVs equal to or less than
95 percent on 30-year loans.
4. The annual premium is now 0.25
percent for LTVs greater than 90 per-
cent on 15-year loans.
5. The annual premium is now 0.00
percent for LTVs equal to or less than
90 percent on 15-year loans.
6. These premiums apply to purchases,
regular refinances and streamlines.
Please note that this new law also
gives FHA the authority to raise the
annual premium at will up to 1.5 percent
for LTVs at or below 95 percent and 1.55
percent for LTVs more than 95 percent.
FHA implements
minimum credit scores
Mortgagee Letter 10-29 establishes mini-
mum credit scoring requirements for all
standard FHA programs* and is effective
for case numbers assigned on or after
Oct. 4, 2010.
Here are the four things you need to
know about these changes:
1. Borrowers with a minimum credit
score at or above 580 are eligible for
maximum financing.
2. Borrowers with a minimum credit
score between 500 and 579 are limited
to a 90 percent LTV.
3. Borrowers with a minimum credit
score of less than 500 are not eligible
for FHA-insured mortgage financing.
4. Borrowers with a non-traditional
credit history or insufficient credit are
eligible for maximum, but must meet
the underwriting guidance in HUD
4155.1 4.C.3.
*Please note that these new require-
ments do not apply to: Title I, Home
Equity Conversion Mortgages; HOPE for
Homeowners; Section 247; Section 248;
Section 223(e), Section 238.
Go FHA!
Jeff Mifsud founded Southfield, Mich.-
based Mortgage Seminars LLC in 2004,
has been an FHA originator for 13 years,
is a contributor to LoanToolbox.com and
is a former FHA underwriter. Jeff may be
reached at (877) 342-9100 or e-mail
jeff@mseminars.com.
Visit author Jeff Mifsuds
Web site at http://msemi-
nars.com for tips and infor-
mation on FHA loans and
details from some of the nations top
FHA specialists.
Although I am all for making
FHA stronger, I fear that many of
the policy changes over the last
year are moving FHA away from
its original mission of helping the
average creditworthy American
achieve homeownership.
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25
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heard on the street continued from page 17
Fairway Independent
Mortgage enters the
wholesale market
Fairway Independent
Mortgage Corporation
has announced that it
is entering the wholesale market with select
banks, credit unions and brokers. The
company will build a national whole-
sale platform by leveraging its expertise
in Federal Housing Administration
(FHA), agency and USDA lending and
the seasoned management and staff it
has assembled.
As a retail lender, Fairway
Independent Mortgage currently pro-
vides mortgages directly to borrowers.
By creating a wholesale channel, the
company will be able to fund loans for
customers of other banks, credit unions
and mortgage brokers. It will fund
third-party origination (TPO) business
through several business lines including
fulfillment, broker and correspondent.
The move comes after a record year
in loan originations for Fairway
Independent Mortgage, which sur-
passed $3.4 billion in loan volume in
2009. While this will be Fairways first
foray into the wholesale market, its
senior management has a collective
150 years of experience in the whole-
sale mortgage industry. Fairways
wholesale team is a blend of mortgage
professionals that made up the success-
ful third-party origination sales and
operations teams of Union Federal
Bank and MidAmerica Bank.
As the mortgage industry continues
to rebound, we see a fantastic opportu-
nity for us in the wholesale market,
particularly with our strong focus on
FHA lending, high-touch customer serv-
ice and top-notch talent, said Steve
Jacobson, chief executive officer of
Fairway Independent Mortgage.
Although our goals are modest, we
believe we can bring the same success-
ful culture, speed and quality of service
to the wholesale space as FHA experts
who are able to serve banks, credit
unions and other loan originators.
Entering the wholesale market is the
right thing for us to do right now.
For more information, visit www.fair-
waywholesalelending.com.
Mortgage Builder and
NYLX form pricing
partnership
Mortgage Builder
Software, a provider
of loan origination
software (LOS) tech-
nology, has completed its integration
with product eligibility and pricing
(PPE) technology provider, NYLX, of Mt.
Arlington, N.J. The partnership results
in a new level of sophistication for
price decisioning, allowing mortgage
lenders to achieve the best possible
pricing for loan products, benefiting
consumers by obtaining the most
favorable terms for their home financ-
ing transactions. Through NYLX and its
LoanDecisions platform, Mortgage
Builder users have seamless access to
real-time pricing information available
anywhere in the industry without ever
leaving the Mortgage Builder platform.
This direct access allows our users
the ability to give immediate alterna-
tives to borrowers with complete con-
fidence and accuracy, says Keven
Smith, chief executive officer and
president of Mortgage Builder. In
addition to the speed of determining
available programs and their prices,
the lender is saved the time and effort
often wasted on loans that have no
chance of closing.
NYLX integrations have helped our
customers achieve a more cohesive
technology environment, says Howard
Conyack, chief executive officer of
NYLX. As Buy Side and Sell-Side pricing
is managed to optimize profit, our inte-
grations ensure that we are returning
accurate data to the database of record
via our LoanDecisions application.
Integrated tools and eligibility reason-
ing help to qualify borrowers earlier in
the origination process, supporting
close conversion.
For more information, visit
www.MortgageBuilder.com or www.nylx.com.
Essent Guaranty raises
$100 million in additional
capital and issues first
MI policies
Essent Guaranty Inc.,
a mortgage insurer
founded to provide private capital to
Americas housing finance system, has
announced that its parent company,
Essent Group Ltd., has secured an addi-
tional $100 million in capital commit-
ments from new and current investors.
The additional commitments raise
Essents total equity commitments to
$600 million. Essent Guaranty also
announced substantial progress during
the last quarter, including establishing
active lender relationships, issuing
mortgage insurance (MI) certificates,
initiating Essent Online as its business-
to-business Web portal, and achieving
approval to issue mortgage insurance
nationwide.
During 2009 and early 2010, the
company focused on building our oper-
ating platform and obtaining the nec-
essary regulatory and licensing
approvals to open our doors for busi-
ness at Essent Guaranty, said Mark
Casale, president and chief executive
officer of Essent. Since our announce-
ment on February 18th that Fannie
Mae and Freddie Mac approved Essent
as a qualified mortgage insurer, we
have turned our full attention to serv-
ing lender clients and homeowners. We
have had an enormously productive
continued on page 29
O The term of the loan does not exceed 30 years, except as such term may be
extended by the guaranteeing or insuring federal departments or agencies (i.e.,
high-cost areas), and
O In the case of a reverse mortgage (except where an exemption applies, as indicat-
ed above), a reverse mortgage which meets the standards for a qualified mortgage.
Points and fees
Other than bona-fide third-party charges not retained by the mortgage originator,
creditor, or an affiliate of the creditor or mortgage originator, total points and
fees are those points and fees payable in connection with the loan.
O Calculation: Points and fees exclude either of the amounts described in the fol-
lowing scenarios, but not both:
Scenario # 1: Up to and including two bona-fide discount points payable by
the consumer in connection with the mortgage, but only if the interest rate
from which the mortgages interest rate will be discounted does not exceed
by more than one percentage point the average prime offer rate.
18
Scenario # 2: Unless two bona-fide discount points have been excluded
under Scenario # 1, up to and including one bona-fide discount point
payable by the consumer in connection with the mortgage, but only if the
interest rate from which the mortgages interest rate will be discounted does
not exceed by more than two percentage points the average prime offer rate.
O Bona Fide Discount Points: Loan discount points which are knowingly paid by the
consumer for the purpose of reducing, and which in fact result in a bona fide reduc-
tion of, the interest rate or time-price differential applicable to the mortgage.
O Interest Rate Reduction: Scenario # 1 and Scenario # 2 (see above) do not
apply to discount points used to purchase an interest rate reduction, unless
the amount of the interest rate reduction purchased is reasonably consistent
with established industry norms and practices for secondary mortgage mar-
ket transactions.
O Smaller Loans: For lenders that extend smaller loans to meet the requirements
of the presumption, the Board will consider the potential impact of such rules
on rural areas and other areas where home values are lower.
O Balloon Loans: The term qualified mortgage includes a balloon loan:
Meeting all of the criteria for a qualified mortgage (see above);
For which the lender makes a determination that the consumer is able to
make all scheduled payments, except the balloon payment, out of income or
assets other than the collateral;
For which the underwriting is based on a payment schedule that fully amor-
tizes the loan over a period of not more than 30 years and takes into account
all applicable taxes, insurance, and assessments; and
That is extended by a lender which:
I Operates predominantly in rural or underserved areas;
I Together with all affiliates, has total annual residential mortgage loan orig-
inations that do not exceed a limit set by the Board;
I Retains the balloon loans in portfolio; and
I Meets any asset size threshold and any other criteria as the Board may
establish, consistent with the purposes of this subtitle.
Defense to foreclosure
The Mortgage Reform Act amends the Truth-in-Lending Act (TILA)
19
by adding a
new section entitled Defense of Foreclosure. Pursuant to this section of TILA, a
consumer now may assert a defense of recoupment
20
claim for violations when a
creditor, assignee, or other holder of a residential mortgage loan or anyone act-
ing on behalf of such creditor, assignee, or holder, initiates a judicial or non-judi-
cial foreclosure of the residential mortgage loan, or any other action to collect the
debt in connection with such loan. Areas that provide additional protection to
consumers include steering violations and the failure to properly determine the
borrowers ability to repay. Also, a set off is now provided without regard for the
time limit on a private action for damages.
21
The amount of recoupment or set off is equal to the amount which the con-
sumer would be entitled for damages for a valid claim brought in an original
action against the creditor, plus the costs to the consumer of the action, includ-
ing a reasonable attorneys fee.
22
continued from page 23
continued on page 26
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Submit your scenarios at WeApproveLoans.com or call (877) 353-2233.
continued from page 25
Prepayment penalties
A lender may not charge a prepayment penalty for a residential mortgage loan, if
it meets any one of the following criteria:
O Has an adjustable rate; or
O Has an annual percentage rate (APR) that exceeds the average prime offer rate
(APOR) for a comparable transaction, as of the date the interest rate is set:
First lien loans (1) with principal amounts at or below limits set by Freddie
Mac, the APR is more than 1.5 points above the APOR for comparable trans-
actions, as published by the Board; (2) with principal amounts above limits
set by Freddie Mac, the APR is more than 2.5 points above the APOR.
Second lien loans the APR is more than 3.5 points above the APOR.
Restrictions
O During the first year period beginning on the date the loan is consummated,
the prepayment penalty may not exceed an amount equal to three percent of
the outstanding balance on the loan.
O In the second year from the date the loan is consummated, the prepayment
penalty may not exceed an amount equal to two percent of the outstanding
balance on the loan.
O In the third year from the date the loan is consummated, the prepayment
penalty may not exceed an amount equal to one percent of the outstanding
balance on the loan.
O After the end of the three-year period beginning on the date the loan is con-
summated, no prepayment penalty may be imposed on a qualified mortgage.
Required to provide alternative financing
O A lender may not offer a consumer a residential mortgage loan product
that has a prepayment penalty without offering the consumer a residential
mortgage loan product that does not have a prepayment penalty as a term
of the loan.
Single payment credit insurance
Prohibition and exceptions
Prohibition: Lenders may not finance,
23
directly or indirectly, any credit life, cred-
it disability, credit unemployment, or credit property insurance, or any other acci-
dent, loss-of-income, life or health insurance, or any payments directly or indi-
rectly for any debt cancellation or suspension agreement or contract.
Exceptions: (1) Insurance premiums or debt cancellation or suspension fees cal-
culated and paid in full on a monthly basis that are not considered
financed by the creditor; and,
(2) Credit unemployment insurance for which the unemployment
insurance premiums are reasonable, the lender receives no direct
or indirect compensation in connection with the unemployment
insurance premiums, and the unemployment insurance premiums
are paid pursuant to another insurance contract (i.e., third-party)
and not paid to an affiliate of the creditor.
Arbitration agreements
Prohibition: Lenders are not permitted to have arbitration provisions or any other
non-judicial procedure in mortgage contracts as the method for resolving any
controversy or settling any claims arising out of the mortgage transaction.
24
At any
time after a dispute or claim has arisen under the transaction arises, however, the
consumer and the creditor or any assignee may agree to arbitration or any other
non-judicial procedure as the method for resolving any controversy.
Statutory Cause of ActionNo Wavier: Lenders are not permitted to have provisions
in mortgage contracts that may apply to or be interpreted so as to bar a consumer
from bringing an action in an appropriate district court (i.e., federal court) of the
United States, or any other court of competent jurisdiction, for damages or other
relief in connection with any alleged violation of the Mortgage Reform Act or any
other federal law.
Negative amortization loans
Lenders may not offer negative amortization loans on residential mortgages and
HELOCs, excluding reverse mortgages, unless prior to the consummation the
lender provides the consumer with a statement that:
O The pending transaction will or may, as the case may be, result in negative
amortization;
O Describes negative amortization in the manner required by the Board;
O Negative amortization increases the outstanding principal balance of the
account; and
O Negative amortization reduces the consumers equity in the dwelling or real
property.
Counseling
If the transaction is not a qualified mortgage (see Safe Harbor and Rebuttable
Presumption section for definition) and the consumer is a first-time borrower, the
consumer must provide the lender with sufficient documentation to demon-
strate that homeownership counseling was completed by the consumer.
25
Anti-deficiency protections
An anti-deficiency law is a state law which provides that, in the event of foreclosure
the consumer is not liable, in accordance with the terms and limitations of that states
law, for any deficiency between the sale price obtained through foreclosure and the
outstanding balance of the mortgage. The Mortgage Reform Act provides protection to
the consumer with respect to actions taken by the lender that are subject to anti-defi-
ciency laws. In this regards, the creditor or mortgage originator must provide a written
notice to the consumer describing the protection provided by the anti-deficiency law
and the significance for the consumer of the loss of such protection before the loan
is consummated. Therefore, prior to consummating a refinance, notification to the
consumer that refinancing would cause loss of protection must be provided.
Partial payments
TILA has been further amended
26
to require a creditor or an entity becoming a cred-
itor to notify the consumer about the creditors policy regarding the acceptance of
partial payments, and, if partial payments are accepted, how such payments (1) will
be applied to the mortgage, and (2) if such payments will be placed in escrow.
27
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Increase to civil liability provisions
Private rights of action brought under TILA have been extended with respect to
statutory damages, as follows:
O Transaction: not less than $200 or more than $2,000
O Class Action: the lesser of $1 million or one percent of the creditors net worth.
Claims may be brought in any United States district court (i.e., federal court), or
in any other court of competent jurisdiction, before the end of the three-year
period beginning on the date of the occurrence of the violation.
27
Lender rights for borrower deception
There is now an exemption from liability and rescission where borrower fraud or
deception has taken place in the transaction: No creditor or assignee will be liable
to an obligor, if such obligor or co-obligor has been convicted of obtaining the
mortgage through actual fraud. Of course, the lender may have additional reme-
dies available by law or contract.
Hybrid adjustable-rate mortgages
A hybrid adjustable-rate mortgage (H-ARM) has a fixed interest rate for an intro-
ductory period that adjusts or resets to a variable interest rate after such period.
The Board reserves the right to issue additional disclosure regulations for
adjustable rate mortgages other than H-ARMs.
New consumer notification requirements must be provided that state the reset
terms and alternatives, as follows:
O Reset: During the one-month period that ends six months before the date on which
the interest rate in effect during the introductory period of the H-ARM adjusts or
resets to a variable interest rate or, in the case of such an adjustment or resetting
that occurs within the first six months after consummation, at the consummation
the creditor or servicer of the H-ARM must provide a written notice, separate and dis-
tinct from all other correspondence to the consumer, with this information:
Index: The index or formula used in making adjustments to or resetting the
interest rate and a source of information about the index or formula.
Calculation: An explanation of how the new interest rate and payment would
be determined, including an explanation of how the index was adjusted, such
as by the addition of a margin.
Good Faith Estimate (GFE): A GFE based on accepted industry standards, pro-
vided by the creditor or servicer, which states the amount of the monthly pay-
ment to be applied after the date of the adjustment or reset, and the assump-
tions on which this estimate is based.
O Alternatives: A list of alternatives consumers may pursue before the date of adjust-
ment or reset, and descriptions of the actions available to consumers, including:
Refinancing
Renegotiation of loan terms
Payment forbearances
Pre-foreclosure sales
O Contact Information: Counseling agencies or programs, and state housing
finance authority.
Required disclosures at consummation
Prior to consummation, new disclosures are required.
O Variable (Adjustable) RateDisclosure:
The amount of the initial monthly payment of principal and interest, and the
amount of such initial monthly payment including the escrows.
28
Also, the
amount of the fully indexed monthly payment of principal and interest, and
the amount of such fully indexed monthly payment including the escrows.
O Settlement Charges: The aggregate amount of settlement charges, the amount
of charges included in the loan, the amount of such charges the borrower must
pay at closing, the approximate amount of the wholesale rate of funds in con-
nection with the loan, and the aggregate amount of other fees or required pay-
ments in connection with the loan.
O Fees Paid: The aggregate amount of fees paid to the mortgage originator in con-
nection with the loan, the amount of such fees paid directly by the consumer,
and any additional amount received by the originator from the creditor.
O Total Interest: The total amount of interest that the consumer will pay over the
life of the loan as a percentage of the principal of the loan.
Required monthly statements
There has been an amendment to TILA regarding monthly billing statements.
29
The
Board reserves the right to issue additional disclosure regulations. For each billing
cycle, a statement must be provided to the borrower that provides the following:
O Amount of the principal obligation under the mortgage.
O Current interest rate in effect for the loan.
O Date on which the interest rate may next reset or adjust.
O Amount of any prepayment fee to be charged, if any.
O Description of any late payment fees.
O Telephone number and electronic mail address that may be used by the oblig-
or to obtain information regarding the mortgage.
O Contact Information: counseling agencies or programs, and state housing finance
authority.
Exception: A fixed-rate residential mortgage loan where the creditor, assignee or
servicer issues a coupon book to the obligor that contains substantially the same
information as indicated above.
Report to the GAO
Before the end of the one-year period beginning on the date of the enactment, the
Comptroller General of the United States will conduct a study to determine the effects of
the Mortgage Reform Act on the availability and affordability of credit for consumers. The
report will produce findings for the mortgage market for mortgages that are not within
the safe harbor (discussed above); on the ability of prospective homebuyers to obtain
financing; on the ability of homeowners facing resets or adjustments to refinance; on
minorities ability to access affordable credit compared with other prospective borrowers;
and, on home sales and construction. The report will also contain findings and conclu-
sions regarding the extending of the rescission right, if any, on adjustable rate loans and
its impact on litigation; state foreclosure laws and, if any, an investors ability to transfer
a property after foreclosure; expanding the existing provisions of the Home Ownership
and Equity Protection Act of 1994 (HOEPA); prohibiting prepayment penalties on high-cost
mortgages; and, establishing counseling services under the Department of Housing and
Urban Development and offered through the Office of Housing Counseling.
Meeting the challenge
Finally, in our progress toward a resumption of work we require two
safeguards against a return of the evils of the old order; there must be
a strict supervision of all banking and credits and investments; there
must be an end to speculation with other peoples money, and there
must be provision for an adequate but sound currency.
Franklin D. Roosevelt, First Inaugural Address (1933)
30
We have now come to the end of the second part in this three-part series about mort-
gage reform. Due to this financial reform legislation, over the next few years (and beyond)
the way we will originate mortgages will markedly change, our assumptions will be chal-
lenged, and the financial considerations we bring to our work will be transformed.
Many new guidelines yet to be promulgated await future interpretation and imple-
mentation. Litigation will inevitably ensue, individual and class action, come what may.
A new Bureau of Consumer Financial Protection will soon become the center of
our focus; its leadership, structure, and rulemaking will determine our mortgage
origination processes and market actions.
31
In the next and final article, I will sum-
marize the features of this Bureau and discuss how the fulfilling of its legislated pur-
pose will change and inform the mortgage industry. The countrys economic stabil-
ity is inherently linked to the health of the mortgage industry. In due course, we will
know if this mortgage reform contributes to its long term well-being.
Jonathan Foxx, former chief compliance officer for two of the countrys top publicly-
traded residential mortgage loan originators, is the president and managing direc-
tor of Lenders Compliance Group, a mortgage risk management firm devoted to pro-
viding regulatory compliance advice and counsel to the mortgage industry. He may
be contacted at (516) 442-3456 or by e-mail at jfoxx@lenderscompliancegroup.com.
Footnotes
1Franklin D. Roosevelt, Inaugural Address, March 4, 1933, as published in
Samuel Rosenman, ed., The Public Papers of Franklin D. Roosevelt, Volume Two:
The Year of Crisis, 1933 (New York: Random House, 1938), 1116.
2HR 4173: Dodd-Frank Wall Street Reform and Consumer Protection Act, 111th
Congress (2009-2010): A bill to promote the financial stability of the United States by
improving accountability and transparency in the financial system, to end too big to
continued on page 28
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Atare Agbamu is one of only a handful of people in the reverse mortgage arena
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As an originator, he has hands-on experience educating seniors and their advi-
sors. As author of the Forward on Reversecolumn inThe Mortgage Press since
2002, Atare Agbamu communicates nationally with the housing finance commu-
nity, bringing the unique insights and experience of an ardent reverse mortgage
expert into a wider business context.
This book combines Atares keen insights and know-how with extensive re-
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professionals.
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The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and
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Think Reverse!
Table of Contents
Part I:
The new pillar of retirement security
Part II:
Marketing reverse mortgages: Its 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
fail, to protect the American taxpayer by ending bailouts, to protect consumers from
abusive financial services practices, and for other purposes. Sponsored by
Representative Barney Frank (D-MA) and Senator Christopher Dodd (D-CT).
3Foxx, Jonathan, The Birth of an Agency, National Mortgage Professional
Magazine, September 2009, Volume 1, Issue 5, pp. 4-27. This article provides a
chart that outlines the Bureaus structure and authorities.
4Foxx, Jonathan, he CFPA Controversy: Asking the Tough Questions, National
Mortgage Professional Magazine, October 2009, Volume 1, Issue 6, pp.22-25.
5Foxx, Jonathan, Landmark Financial Legislation: New Rules for Mortgage
OriginatorsPart I: Reformation and Regulations, National Mortgage
Professional Magazine, August 2010, Volume 2, Issue 8, pp. 28-42.
6My analysis will not address the Acts new regime for national bank federal preemp-
tion in the area of state consumer financial laws, or, for that matter, the new framework
for determining the states enforcement powers against financial services companies.
7Op. cit 1.
8Op. cit. 2, the matrix and subsequent outline of the Mortgage Reform Act
Certain Provisions are based on Title XIV, Subtitle B (Minimum Standards for
Mortgages), Subsections 1411-1422.
9Op. cit. 2, Section 4: Effective Date, states: Except as specifically provided in
this Act or the amendments made by this Act, this Act and such amendments shall
take effect one day after the date of enactment of this Act.
10Op. cit. 5.
11Seasonal income may be used, including income from a small business, con-
sidering the seasonality and irregularity of such income in the underwriting and
the scheduling of payments.
12Accordingly, with respect to any loan which has an annual percentage rate (APR)
that does not exceed the average prime offer rate (APOR) for a comparable transaction,
as of the date the interest rate is set, by 1.5 or more percentage points for a first loan;
and by 3.5 or more percentage points for a subordinate loan; or, using the contracts
repayment schedule, with respect to a loan which has an APR, as of the date the inter-
est rate is set, at least 1.5 percentage points above the APOR for a first lien residential
mortgage loan; and 3.5 percentage points above the APOR for a subordinate loan.
13The term fully-indexed rate means the index rate prevailing on a residen-
tial mortgage loan at the time the loan is made plus the margin that will apply
after the expiration of any introductory interest rates.
14Op. cit. 2, Title XIV, Subtitle B (Minimum Standards for Mortgages),
Subsections 1412 (3)(B)(i).
15Except as provided by the Mortgage Reform Acts requirements for balloon mortgages.
16Except as provided by the Mortgage Reform Acts requirements for balloon mortgages.
17Other than bona fide third party charges not retained by the mortgage originator, cred-
itor, or an affiliate of the creditor or mortgage originator, total points and fees payable in con-
nection with the refinancing may not exceed three percent of the total new loan amount.
18The term average prime offer rate (APOR) means the average prime offer
rate for a comparable transaction as of the date on which the interest rate for the
transaction is set, as published by the Federal Reserve Board.
19Section 130 of the Truth in Lending Act (15 U.S.C. 1640).
20The term recoupment generally refers to an affirmative defense that may be
asserted by a defendant whose claim is based upon the same transaction that is the
subject of the plaintiffs suit.
21The term set off has been judicially defined as a claim arising out of a
completely independent and unrelated transaction, which is asserted to offset
liability for another claim [Atlantic City Hasp. v. Finkle, 110 N.J., 1970].
22The statute of limitations for private right of action for such violations of TILA
does not apply to such recoupment defenses.
23The prohibition applies to any residential mortgage loan or with any exten-
sion of credit under an open end consumer credit plan secured by the principal
dwelling of the consumer (i.e., HELOC).
24The prohibition applies to any residential mortgage loan or with any exten-
sion of credit under an open end consumer credit plan secured by the principal
dwelling of the consumer (i.e., HELOC).
25Homeownership counseling is acceptable from organizations or counselors
certified by the Secretary of U.S. Department of Housing & Urban Development
(HUD) as competent to provide such counseling.
26Section 129C of the Truth-in-Lending Act.
27The statute of limitations extension is provided for any violation of 15 U.S.C.
1639 or the newly created Section 129B and 129C of TILA.
28All applicable taxes, insurance, and assessments.
29Section 128 of the Truth in Lending Act (15 U.S.C. 1638).
30Op. cit 1.
31For more information about the Bureau of Consumer Financial Protection, please
see my articles, referenced above: The Birth of an Agency; The CFPA Controversy: Asking
the Tough Questions; and, Landmark Financial Legislation: New Rules for Mortgage
OriginatorsPart I: Reformation and Regulations (Op. cit 3, 4, 5).
continued from page 27
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THE
MORTGAGE
PROFESSIONAL
TRUSTED
By Greg Schroeder
I started writing this column to assist brokers in regaining their
status as Trusted Mortgage Professionals because as a former
wholesale lender, I passionately believe in the wholesale chan-
nel and want to see it succeed once more. However, the grum-
blings Ive been hearing lately regarding licensing, insurance and
the like have left me somewhat troubled. Its time for me to stop being polite and
start getting real.
Mortgage brokers facilitate the largest financial transaction most consumers
will ever undertake, but theres so much more to the home purchase than just
numbers. Owning a home is part of the American dream. Homes are where we
raise our families and make memories that last a lifetime. There is a sense of se-
curity and comfort attached to ones homeits our refuge from the storm. With
so much at stake for the consumer, is it really so ludicrous to demand that the
agents facilitating this transaction be licensed, bonded and insured?
Think about it you have to have a license to trade stocks or issue insurance.
Want your hair colored or a drink at your local watering hole after a hard day? The
professionals applying that nice shade of copper or pouring that scotch must be
licensed as well.
Having a license signals to the consumer that he or she can place some meas-
ure of trust in that licensed professional because there are consequences for non-
compliance with the terms and conditions of that license. In addition, a license
also provides certain protections to the licensed professional, usually in the form
of some recourse through the issuing entity for addressing allegations of mis-
conduct.
Recent changes to net worth requirements have placed the bulk of responsi-
bility for loan buybacks on the shoulders of wholesale lenders, and those lenders
are going to want some means of recompense from their third-party originator
(TPO) partners if a loan officer does something to damage the integrity of a loan
or pool of loans. Gone are the days when, in such a case, brokers could simply de-
clare bankruptcy and open up shop as a new origination firm. The industry is
watching, and it is demanding accountability from everyone.
Brokers had it really easy in the mortgage bubble heyday. Times were good.
Profits were plentiful and housing prices had nowhere to go but up. It didnt mat-
ter that having unlicensed loan officers originating loans created increased po-
tential for fraud, negligence and predatory lending. Even originating loans
without documentationa practice most would now agree is just plain foolish
was accepted without batting an eye. Investors were willing to take on these enor-
mous risks because they thought the money that would be made would far exceed
the cost of accepting this risk. We all know how that story turned out so why is
there so much resistance to creating accountability?
Its time to be professional. Its time to take pride in what we do. A true Trusted
Mortgage Professional views consumer protection as priority number one, and
because he or she has nothing to hide, the true Trusted Mortgage Professional
has no problem possessing insurance to cover acts of dishonesty and/or fraud on
the part of loan officers and is happy to be licensed, tested and registered. Its not
just that it makes good business senseits also the right thing to do.
Greg Schroeder is president of Comergence Compliance Monitoring. To learn
more about how the Comergence Compliance Trusted Mortgage Professional
program can help, call (714) 495-4720.
Its Time to Step Up
Thoughts on the new age of broker accountability
heard on the street continued from page 25
period, highlighted by the issuance of
our first mortgage insurance policies
and successfully raising an additional
$100 million in capital.
In May 2009, Essent said it had
raised an initial $500 million in capital
commitments from a group of experi-
enced financial services investors
including Pine Brook Road Partners,
Goldman Sachs, JP Morgan Chase,
PartnerRe, RenaissanceRe Ventures
Ltd., and others.
Our additional capital raise, as well
as the recent capital raises by other
mortgage insurance companies, affirms
the view we have shared with public
policy makers that private capital is
available to take prudent mortgage
credit risk, said Essents Vice Chairman
Adolfo Marzol. We hope Essent will
continue to play an important role in
enhancing confidence that a sound
mortgage finance system can attract
capital into the private mortgage insur-
ance industry to take and manage
mortgage credit risk.
The company also announced that
its lender customers now have access to
Essents ordering and servicing portal,
Essent Online at www.essent.us. Essent
launched the portal in May, which
enables lenders to submit loans for MI,
update loan parameters, and upload
documents. Mortgage loan servicers
can activate a certificate, transfer serv-
icing and run reports using the portal.
We are pleased that our lenders will
be able to order mortgage insurance
from Essent using a secure and easy
Web-based process through Essent
Online, said Casale. Our team has
been working hard to engage our
lender partners and establish an oper-
ating platform that supports the needs
of our customers and makes doing
business with Essent an easy and effi-
cient experience.
Essent also has received state licens-
ing approval in all 50 states and the
District of Columbia and is able to write
mortgage insurance nationwide, facili-
tated by Essents participation in the
National Association of Insurance
Commissioners National Treatment
licensing pilot program.
For more information, visit www.essent.us.
Titan Lenders signs nine
mortgage bankers in
second quarter
Mortgage fulfill-
ment outsource
services provider Titan Lenders
Corporation (TLC) has signed nine mort-
gage banker clients in the second quar-
ter of 2010. TLC, a U.S.-based domestic
mortgage fulfillment outsource opera-
tion, offers a parallel and variable cost-
alternative solution to lenders that
maintain back office and warehouse
line management operations.
TLCs new clients include: Ace Lending
LLC of Wisconsin; America One Mortgage
Corporation, America Preferred Lending,
GM West Funding and Thayer Financial
Corporation of California; Choice One
Mortgage Corporation, Homelynx Home
Loans and Liberty Mortgage Lending Inc.
in Florida; and Hi-Tech Mortgage Inc. in
Arizona.
Independent mortgage bankers are
inking new services commitments cau-
tiously these days and focusing on
granular, loan level quality as their
operations benchmark, said TLC
President Mary Kladde. Mortgage
lenders are motivated by compliance
pressures and fiscal prudence to out-
source detail-intensive back office
operations and fulfillment services,
including post-closing loan review.
Titan Lenders Corporations patent-
ed, proprietary Web-based software
Cerberyx (CBX) supports a full suite of
fulfillment services, including: Funding,
compliance, closing, post-closing, pur-
chase review for correspondents and
warehouse lenders, trailing documents,
MERs management, Federal Housing
Administration (FHA) insuring, and doc-
ument management (imaging).
For more information, visit
www.TitanLendersCorp.com.
Mortgage Professionals
to Watch
O Mortgage Concepts has promoted
Leonard J. Ramirez to chief operat-
ing officer and has added Scott A.
Milner as vice president.
O Robert Tranchell has been named
reverse mortgage manager of Mount
Vernon Mortgages reverse mortgage
division.
continued on page 37
Leonard J. Ramirez
Scott A. Milner
Robert Tranchell
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Looking Into the Future of
Mortgage Banking
We hear all the time that the only two
things in life we can count on are
death and taxes. Well, there is a third
that is often forgotten and that is:
Change. Any time I am asked to reflect
on the future of anything, my first
thought is, Oh, how convenient it
would be to have a crystal ball. Since
none of us have one, we are forced to
rely on other methods to analyze and
prepare for what we think might come.
Unfortunately, for too many in our
industry, a question about the future of
the mortgage banking
industry has no meaning
to them. Many have
already moved on, forced
out of the business by a
downturn so severe that
only those interested in
staving off public panic
refer to it as anything
other than a depression.
But, for those of us still
here who are still com-
mitted to earning a living
and providing a service
to mortgage borrowers,
there can be a no more
important question.
What will the future
hold for our industry?
What skill set will be
required to succeed here
and how can those intent
on achieving that success
navigate the legislative minefield that
has resulted from the financial crash?
These are questions that I have person-
ally spent a lot of time thinking about.
Im not one of the chief executive offi-
cers who have survived this down-
turn. No, I chose to enter the fray after
the downturn had already begun and I
did it with the sure knowledge that this
industry does have a future and I could
lead a firm to success in that future.
Making sense of violent
change
Our industry is not the first to experience
the kind of change weve lived through
over the past few years. It has happened
to other industries before us and it will
happen again in the future. One com-
mon factor of disruptive change, regard-
less of the affected industry, is a dust
storm of data that makes it virtually
impossible to make sense of the change
while its happening. A quick glance at
the headlines over the past few years
will illustrate this.
Until very recently (and some would
argue that were not even there yet), it
wasnt clear how damaging the down-
turn would be, how many
banks would be forced
out of business, how
many jobs would be lost
or how long would it take
to recover. When one
expert would go on
record with an opinion,
three others would step
up to refute it. Who are
we to believe?
Everyone, including
the federal government,
seems bent on determin-
ing who is to blame and
what caused the melt-
down. Personally, I dont
care about any of that
because I believe it will
take years to work
through all of that only to
find answers that surprise
no one. I choose to leave
that to the historians to figure out. Im
more interested in the impact of the
crash and what it will take to move for-
ward through this time of disruptive
change into the future.
A clear path to the future
Heeding the advice of Albert Einstein, it
is clear that we certainly cannot keep
doing things the way we have done
them in the past if we hope to succeed.
It is critical that we learn from the past,
but the pathway to the future will not
be discovered if we keep looking into
the rearview mirror. Well miss the wide
open road ahead of us that is full of
opportunities. Weve seen it happen
already to so many firms in our space.
Seeing a clear path to the future
requires us to look at things in a differ-
ent way. As we conduct our planning
sessions, we look at the industry
through the lens of the three major
forces that are affecting our industry
right now: Compliance (or quality),
marketing and technology. Focusing
our view through these lenses helps us
better understand not only where we
are today, but also where we need to be
in order to stay competitive and add
value.
The compliance
(or quality) lens
Most companies in any industry can
succeed based on the power of their
marketing departments. They have
something to sell, and if they can sell it,
they can stay in business. If not, theyre
out of the game. Thats how it normally
works.
However, for firms operating in the
U.S. financial services sector, it doesnt
work that way. Banks dont need to
spend all of their resources on sales in
order to remain in business because
they have something that most people
wantMoney. In banking today, suc-
cess isnt guaranteed to firms that can
sell enough to stay in business. Rather,
it all depends upon the way they do
business.
Toyota is a great example. After
World War II, Japan was devastated
and was forced to completely change
the way it did business if they had
ever hoped to compete in the global
manufacturing market. W. Edward
Deming, the father of the Quality
Sciences, brought these game-chang-
ing methodologies to Japan after his
unsuccessful attempts at convincing
American manufacturing companies
that they needed to adopt a quality
approach. Toyotas decision to adopt
led them to become the powerhouse
that they are today. That is not to say
that Toyota is perfect given their
recent issues, but the lesson here is in
how they responded to that adversity,
and more importantly, they had a
business culture that could quickly
adapt once again. Weve seen the
commercials and ads showing that
they are spending $1 million per
hour on improving their business.
Some have described the last few
years as somewhat of a complete dev-
astation to how we do business. As a
case in point, take the recently
announced lawsuit against one of the
nations top five banks. The plaintiff
alleges that because the bank didnt
take every possible action that might
result in the borrower keeping his
home, the institution violated Home
Affordable Modification Program
(HAMP) guidelines and is subject to for-
feiture. Its not clear yet whether this
case will actually go to court, but the
ramifications are potentially serious.
This is but one example of a finan-
cial institution caught between those it
serves and the brick wall of legislation
and regulation that threatens to choke
the life out of them. I would venture to
guess that it will get worse before it gets
better.
To succeed in the future, companies
need to see compliance as a quality
problem. They must look beyond just
compliance and re-assess the overall
quality of their processes. What is it
about their processes that would allow
for poor quality? How can they leverage
technology to improve and manage
their processes to ensure quality and
compliant work?
Let me give you one more example.
As a result of the new changes in com-
pensation, many companies have
increased the costs to the consumer to
make up for the shrinking margins. This
might work for the short term, but the
competitive landscape will begin to
squeeze that as well. I just heard some-
one recently talking about how they
lost a client to someone who was will-
ing to do a loan for $250. It is unavoid-
able that that kind of pressure will
force companies to look inward to find
inefficiencies that they can fix to maxi-
mize their profitability, which is just
another way to say what I said above:
They will be forced to assess the way
they do business.
Any successful firm in the future
needs to have quality and compliance
built into its DNA or they will simply
cease to exist.
The marketing lens
While everyone may want money,
banks dont exist to serve everyone.
Knowing what markets an institution
should be serving, at what price and
By Rene F. Rodriguez
Heeding the advice
of Albert Einstein, it is
clear that we certainly
cannot keep doing
things the way we
have done them in
the past if we hope
to succeed.
31
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how, is the purview of the marketing
department and its going to be
increasingly important in the future.
As financial services firms continue
to focus on niches, competitive pres-
sures will increase and the firms with
the best handle on marketing and pro-
motion will emerge as the strongest in
their geographical markets.
In the future, a successful firm will be
perceived by the rest of the market as a
leader in its niche. Goodwill and trust is
a hard-won commodity that can no
longer be obtained easily with tradition-
al media. Banks must find a way to rise
above the sludge left over from the crash
and brush off the image of the Wall
Street fat cat in favor of a more person-
able and trustworthy service provider.
This will be very challenging for
large national lenders to accomplish, as
they just cannot move and adopt as
fast. With that being said, I see, ulti-
mately, a return of the mortgage bro-
ker. But, and I mean a big but, not
the mortgage broker of the past. Im
referring to the local professional busi-
nessperson who understands the busi-
ness, truly cares about their clients and
is willing to take the time to explain the
process to a borrower at a kitchen
table, will eventually be a hot com-
modity again.
But to capitalize on this opportunity
when it returns, brokers must take the
time now to hone their craft by becom-
ing experts in lending guidelines;
improve their skills by learning how to
communicate and present complex
financial concepts and be able to clear-
ly outline what it means to the borrow-
er; and harness the right technologies
that enable them to increase productiv-
ity and prevent non-compliance in real-
time versus waiting until the end of the
process to check for it.
The technology lens
Finally, and most importantly in my
mind, is the technology lens, the ability
to see the transaction not as simply a
pile of paper, but as an orderly progres-
sion of processes that speeds the loan in
a compliant and quality fashion from
lead to post-close. There is no way that
mortgage professionals of the future
can act on what they learn by looking
through the compliance and marketing
lenses without good technology. Its
more vital today than ever before.
Lenders of the future must be fast,
agile, lean and affordable, all of which
determines how effectively they can
implement the proper technology. But
it will not be technology, as we have
known it so far. Lenders of the future
will need much more flexible systems
that can easily and quickly be deployed
to sell new programs to new classes of
borrowers. This will require a true part-
nership between the lender and the
technology provider.
The technology that lends itself to
this kind of relationship and offers this
kind of power does not come in a box.
Technology that can adapt to the ever-
changing needs of the mortgage mar-
ketplace of the future can only be pro-
vided through Web-based solutions. It
will be a template-based solution that
is easy to customize, very fast to deploy
and seamlessly connected to analytics
for compliance and audit trails and
dashboards for effective management.
The software will live in the cloud,
whether it is a public cloud or a private
cloud, which gives the bank full control
over the data. It will be updated in real
time on a near-continuous basis. It will
not require large IT teams to main-
tainat least for the originatorand
will allow business users to get under
the hood and make changes without
fear of losing critical information. It
will be an extension of the originator
and will enable compliance and mar-
keting without requiring high levels of
resources to run. It will probably also
be available at a variable cost that
changes with the originators business.
Finally, it will enable full customer rela-
tionship management (CRM) before,
during and after the transaction with
data that threads through. No more
importing and exporting of data, which
is a quality nightmare.
The future will be one in which spe-
cialization is taken to the extreme.
Successful mortgage banks will be made
up of Jedi Warriors who specialize in
compliance, marketing and technology,
as it will take all three, plus strong lead-
ership to succeed. But before these pro-
fessionals can be deployed, the future
must be visualized. We can only do that
effectively by seeing the landscape
through these three lenses.
If we do that, we will be in a very
good position to succeed in the future
mortgage business.
Rene F. Rodriguez is chief executive officer of
Austin, Texas-based MortgageDashboard.
He is a renowned behavioral, leadership
and organizational change expert, world-
class sales trainer and dynamic keynote
speaker. He can be reached by e-mail at
rene@mortgagedashboard.com or visit
www.mortgagedashboard.com.
It is critical that we learn from the
past, but the pathway to the future
will not be discovered if we keep
looking into the rearview mirror.
Why and How You Control
the Future
Braving the Great Waves of Change
Who controls the future of mortgage
banking? Regulators? Secondary market
investors? Fannie Mae, Freddie Mac and
the Federal Housing Administration
(FHA)?
No my friends. You control the
future. Your future in mortgage bank-
ing is what you make it to be. Allow me
to explain.
Youve survived the Great Mortgage
Meltdown of 2007-2009. Youve kept
updated on all the industry and regulatory
changes. Youve built flexi-
ble, yet functional, systems
around the new underwrit-
ing realities. Youve proba-
bly taken counsel and inspi-
ration from at least one
therapist, pastor, rabbi,
priest or spiritual guide to
cope with the constant
onslaught of changes in
your business and life.
Youve made it through that
great wildness of life called
change, and you are better
and wiser for it. If I asked
you to articulate the one
quality about yourself that
has helped you survive the
last few years in the mort-
gage industry, what would
you say?
My guess is that you
would probably say, The
ability to recognize,
respond, and adapt to change. After
all, the ranks of former loan origina-
tors are lined up with many of your
colleagues who could not adapt to the
enormous Hurricane of Change that
keeps flooding our beloved industry. So
you, like a lone warrior in an epic
drama, have heroically survived the
First Great Wave of Change in the mort-
gage industry. Take a moment to
appreciate where youve been and
what youve accomplished.
Okay, so what about right now and
the future?
The Second Great Wave of Change is
here at our doorstep. The regulators
have returned with a vengeance, alter-
ing compensation structures, and re-
writing all the rules once again. Some
of these changes will take hold within
the next several months, and other
changes will take hold over the next
few years once the massive financial
reform law is implemented. The gov-
ernment-sponsored enterprises (GSEs)
are fighting for their lives, and their
fate will be determined within the next
year. The FHA has risen up like a strong
giant, only to fall dangerously ill and
fight for its own survival by constantly
churning out guideline changes. The
only way to survive this Second Great
Wave of Change is to draw on the
strength and skill that you acquired
during the First Wave.
You can do it, because
youve been here before
and you know the land-
scape.
I started by asking you a
simple question: Who
controls the future of mort-
gage banking? The future
of the mortgage banking is
change. Therefore, the real
question to ask here is,
Who controls change?
The answer is that
change happens, but you
control the pace at which
you adapt to the change.
Therefore, you control the
future. If you dont adapt
well to change, the
Hurricane of Change that
is the future of the mort-
gage industry will burn
you out. It will chase you
out of the industry even as it chased out
many of your former colleagues. If you
adapt slowly to change, you will be
pushed to the sidelines of mediocrity and
frustration. The Hurricane of Change will
slowly chip away at your income, and
drain the joy out of your professional
career in mortgage banking.
However, if you adapt well to
change, the future will be way better
than the past. The good old days of
mortgage banking look like a dry desert
of poverty compared with the blossom-
ing garden of wealth that awaits you in
the future. You can transform the
Hurricane of Change into your best
competitive advantage while your com-
petitors are preoccupied with survival.
Sounds interesting; but how can this
work in real life?
By Gibran Nicholas
If I asked you to
articulate the one
quality about your-
self that has helped
you survive the last
few years in the
mortgage industry,
what would you
say?
continued on page 32
It has been an amazing opportunity to
live and work in mortgage banking over
the last 20 years. But perhaps none of
those years have been more exciting
than the past two. Some may choose a
different adjective to describe it (many
not fit for print), and that anyone with
this notion is a glutton for punishment.
I disagree! Living in a time when major
historical events are playing out around
us on a daily basis is nothing less than
thrilling. Without question, there have
been some tough days, weeks, months
and quarters, but if you
are still in the game today,
youre tougher, wiser and
a bit more humble than
just a few short years ago.
With all this change and
uncertainty, Im regularly
asked by peers, employ-
ees, partners, and cus-
tomers, what will the
future hold for mortgage
banking? I think that pic-
ture is becoming clearer
with each passing week.
The future of private
mortgage banking has
some interesting times
ahead. Unfortunately, the
wild ride weve been on
over the last several years is
far from being over. The
future will include some
unknowns, some inevitable
issues, some exciting oppor-
tunities, and certainly,
some unwanted changes
that every mortgage banker
will simply need to accept.
That which is escaped now, is pain to
come.
Proverbs
Perhaps this quote from the book of
Proverbs has greater meaning for you
having experienced the last several
years in mortgage banking. I think it is
fair to say that, for mortgage bankers,
the last two years has brought more
change than the two decades prior to
it. Most of this change (many would
call it pain) has been forced upon us
in response to businesses within our
industry who temporarily escaped
the consequences of failed products
and flawed strategies. One example of
32
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Consider an example from the
world of mobile phones and technolo-
gy. Specifically, consider how Apple
and the iPhone survived and thrived
during the Hurricane of Change in the
mobile phone industry. The interesting
thing is not that Apple created the
iPhone. The interesting thing is that
Apple keeps improving the iPhone.
Apple doesnt stop improving just
because they survived and thrived dur-
ing one or two Great Waves of Change
that have flooded the mobile phone
industry. Its not enough to be success-
ful once. Its not enough to simply ride
one or two Great Waves of Change. In
order to maintain consistent levels of
success in any industry, you must con-
stantly improve and stay on the cutting
edge, while anticipating and riding the
waves of change.
We can learn from this and apply it
to how we respond to the Hurricane of
Change that constantly floods the
mortgage industry. Its not enough that
you survived (and maybe even thrived)
during the Great Mortgage Meltdown.
The key is to relentlessly focus on
improving yourself now and into the
future. Improve your Realtor relation-
ships. Improve the way you convert
rate shoppers. Improve the way you
generate referrals from CPAs and
financial advisors. Improve the speed
and ease with which you simplify com-
pliance and understand the Hurricane
of Change. Your mission, should you
choose to accept it, is to constantly
improve yourself and ride the danger-
ous waves of the Hurricane of Change
at the same time all without getting
burned out!
But how? Consider an example
from the world of personal fitness.
You work out, you eat, you rest, and
then you repeat the process over and
over again. The workout cannot
always be the same; it must focus on
different muscle groups and levels of
resistance. The food cannot be filled
with processed sugar and fat; it must
be nutritious and have varying bal-
ances of protein and carbohydrates.
The rest cannot be overlooked or
short changed; it must be consistent
in order to re-energize your body and
help you maintain high levels of
endurance and strength.
This type of cycle is exactly what
you need to consistently maintain
high levels of success in the mortgage
industry. You need to regularly partic-
ipate in training opportunities that
boost your levels of knowledge and
equip you with new skills. These are
like the workout sessions that con-
stantly challenge you to higher levels
of performance. You need to regular-
ly fill your mind and heart with quali-
ty content and strategic insights. These
are like the nutritious foods and recov-
ery drinks you take after a good work-
out. You need to rest and recharge and
have a fulfilling personal life in addi-
tion to your career in the mortgage
industry. This will help you avoid
burnout and keep your career situa-
tion aligned with your priorities in life.
Apple doesnt stop innovating and
improving when it comes out with a
killer product like the iPod, the iPhone
or the iPad. Apple keeps researching,
creating and improving their products
in order to remain on the cutting edge.
People with nice physiques dont stop
working out or challenging their bodies
once they reach a certain level of phys-
ical health. They keep challenging
themselves to higher levels in order to
maintain their health and improve
their bodies.
Truly successful mortgage origina-
tors do not stop learning and challeng-
ing themselves once they survive the
Great Mortgage Meltdown. They recom-
mit themselves to excellence every day
and remain on the cutting edge. They
discipline their minds and take
advanced training courses in order to
build more business muscle and out-
perform the competition. They consis-
tently feed themselves quality content
and strategic insights that help them
improve themselves and better under-
stand the Hurricane of Change all at the
same time. Remember, you control
your future.
Gibran Nicholas is the founder and
chairman of the CMPS Institute
(CMPSInstitute.orgNMLS Provider ID#
1400384). The CMPS Institute adminis-
ters the Certified Mortgage Planning
Specialist (CMPS) designation and has
enrolled more than 5,500 members since
2005. Through CMPS, Gibran empowers
mortgage professionals with confidence,
unique knowledge, and dynamic mar-
keting resources to simplify compliance,
increase their competitive advantage,
and generate more business. Visit
Gibrans blog and Web site at
http://gibrannicholas.com.
Visit author Gibran
Nicholass blog at
http://gibrannicholas.com
where he shares his insights
on economics, real estate and finan-
cial issues, including the current
mortgage and credit crises.
Who controls the future of mort-
gage banking? The future of the
mortgage banking is change.
A Look Into the Crystal Ball of
Mortgage Banking
this flawed strategy is the overreliance
by many, in recent years, on statistical
algorithms as a pure replacement for
case-by-case, experiential-based judg-
ment. Flawed strategies like these have
left us to adapt to a new and increas-
ingly regulated marketplace, spawned
in response to a perceived need to pre-
vent the consequences of these strate-
gies to our industry, and their ripple
effect upon the overall economy. In
this new marketplace were left with
two choices:
O Make opportunities to
create a better busi-
ness out of the chal-
lenges of our new mar-
ketplace; or
O Be consumed by those
challenges.
The opportunity avail-
able to any company that
desires it lies in the
acknowledgement of a
new marketplace, and its
willingness to lead the
charge in transforming
their business according-
ly. Those organizations
that do it will own future
market share. In reading
the tea leaves, the over-
whelming consensus is
that there will be poten-
tially fewer overall mort-
gages written, more regu-
lation, fewer secondary
channel options, and a lot
of people throwing in the
proverbial towel. The end
game for those who remain will be
who gets whats left? The smart lead-
ers and companies that invest in reno-
vations and technology to drive produc-
tivity and quality in response to the
margin pressures from a heightened
regulatory environment will succeed in
creating a competitive advantage that
drives both revenues and profits.
No forecast of the future is complete
without considering the size and scope
of the overall market for the foresee-
able future. Currently, the market is
running at about $1.2 trillion. This is
considerably smaller than what has
By Dave Zitting
The smart leaders
and companies that
invest in renovations
and technology to
drive productivity and
quality in response to
the margin pressures
from a heightened reg-
ulatory environment
will succeed in creating
a competitive advan-
tage that drives both
revenues and profits.
The wild ride continues, but major opportunities lie ahead
continued on page 33
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good news is that the very challenges
inherent to mortgage bankings
future represent opportunities for
great success for the right kind of
company. That company is one which
has the ability to work within shrink-
ing money supply channels by securi-
tizing its own paper, building scale
through volume growth, capturing
efficiencies and developing excellent
banking relationships within all sec-
ondary market channels. These
organizations will have a massive leg
up on the competition, and will ulti-
mately enjoy strong gains in market-
share. Productivity and automation
built into the lending manufacturing
process is imperative not only for the
sake of saving margin, but also for
complying with the new doctrine
deployed by the Federal Reserve and
Consumer Financial Protection
Agency (CFPA) enforcement officials.
And, I dont need to tell you that
these entities have big teeth and cer-
tainly mean business!
The new rules regarding loan officer
compensation are the latest example
of the changing regulatory environ-
ment, and its impact on the economic
engine of every mortgage banker. This
is an enormous change that affects
every aspect of our business. I find it
interesting to hear some of my col-
leagues still commiserating over the
new rulings. That should already be
worked out in your minds. If you
understand the true meaning of this
legislation, your companies should
work just fine creating and deploying
the new systems and structures
required to support it.
Dont waste another minute on com-
plaining about realities that are here to
stay. Start investing now in the growth
and expansion of your business.
Renovate every aspect of your company
to ensure that it fits in the new world,
the Era of Dodd-Frank. If you are wait-
ing around to see how things will
shake out, then wake up! These
changes are here to stay. If you think
you can fly under the radar by not
adopting, or only partially adopting,
the realities of the new mortgage mar-
ketplace, I implore you to rethink that
strategy.
There is no question in my mind that
the future of mortgage banking is filled
with excitement and opportunity for
those that know how to execute and
build a platform designed for the
future. I would venture to forecast with
almost certainty that our market will
shrink, there will be fewer players in
the game, and market share will be
ultimately shared by fewer overall com-
panies. This will not be great news for
the unprepared that will be the next
been the market size over the last half
decade. If youve only been in mort-
gage banking the last five years, the
current decline feels even more pro-
nounced. In reality, a $1.2 or $1.5 tril-
lion market is respectable and reflec-
tive of a normal market expected for
the foreseeable future. The industry
may experience occasional refinance
tailwinds (like that experienced cur-
rentlyand could enjoy going into
2011), but these have been artificially
created by macro economic policy, and
not contributable to market-size sus-
tainability. There are many who might
argue that we are at the bottom of
cycle that has to go up. After all, what
goes down must go back up, right?
Unfortunately, this is not always
how it plays out. When a trend goes
down, it can stay down, or go down fur-
ther! I believe we are seeing the market
at its best altitude for the time being,
with a number of incidences that can
occur that could potentially result in a
loss of altitude.
Consider a few questions that may
help you gauge for yourself whether
our market will be growing, shrinking
or maintaining. Lets consider the pro-
file of the homebuyer of the future.
O Will it be the homeowner that is cur-
rently at a four percent interest rate
that would need to accept seven
percent-plus on the new upgraded
home?
O Will it be the first-time homebuyer
that just got out of college who
watched their parents or family
friends painstakingly lose their
home to foreclosure in years past?
O Will mom and dad dish out advice
that homebuying is as easy and nat-
ural as waking up in the morning?
O Will downpayments be low and/or
simple to come by?
O Will credit return to a relaxed model
any time in the next decade-plus?
O Will affordability continue to mirac-
ulously improve?
O Is our population expanding at such
a pace that it will naturally create
demand?
If you feel any of the above ques-
tions come with an answer that poten-
tially increases the size of the mortgage
market, I implore you to do the
research and get the facts. The evi-
dence suggests that our industry is still
contracting and will continue down
that path for some time.
The prudent question then for any
mortgage banker considering the
future is, What is the best way to
thrive in a flattening, or possibly con-
tracting market? My answer is, just
find a way to stay in the game. The
Otherwise, you may be the next victim
of a changing marketplace!
I congratulate you for being a member of
what is rapidly becoming an exclusive club!
Dave Zitting is chief executive officer of
Salt Lake City, Utah-based Primary
Residential Mortgage Inc. He may be
reached by phone at (801) 596-8707, ext.
1001 or e-mail dgzitting@primeres.com.
victim of our changing landscape. And,
on an unrelated note, its probably not
going to be a great thing for the
American consumer. But that is a ques-
tion for a different article.
If this description of the future
seems overwhelming and scary, there is
no time like the present to acknowl-
edge the realities and change your
mindset from fear to determination.
Americans realize that now is the time to
clean house. Its time that we have a new
crop of Congressmen and women who will
do their best to undo as much of the dam-
age that has been done before it is truly
too late. If you are not involved in politics,
you need to become involved now for the
sake of our industry and our country.
After recently speaking
at a conference (I would be
happy to speak at your
next conference), some-
one, who reads my A View
From the C-Suite month-
ly, asked me, Dave, Ive
been reading your articles
and have been intrigued
and encouraged by your
prediction that more
money will be made in the
next five years in mortgage
lending than the previous
25 years, and I am won-
dering if in light of all the
changes taking place in
our industry, whether you
still believe this to be pos-
sible? Let me assure you
as I did that person yes,
I absolutely and emphatically declare
that more money will be made in mort-
gage banking in the next five years than
in the previous 25 years!
You may be thinking, How is this possi-
ble? Heres a tip most people that hear
that statement do not bother to ask the
logical follow up questions. Maybe that is
because some simply do not believe it is
possible, and therefore, find themselves
living a self-fulfilling prophecy operating at
levels far below what they are capable of
enjoying. Their disbelief or unbelief dis-
qualifies them for a shot at the prize.
On the other side of the spectrum,
there are those who hear or read the
same proclamation and walk away quiet-
ly knowing that it is not only possible but
that they are some of the few already
enjoying the prize. In spite of all the
negativity, obstacles and challenges fac-
ing our industry, they are living the
dream. But one thing I have noticed, they
are not talking about it and often-
times, you wont know by the way they
live that they are as successful as they are.
Then there is everyone in between the
doubters and the doers who still have a
shot at the prize, but for a lack of disci-
pline, lack of vision or a host of other rea-
sons, they fail to achieve their full potential.
By the way, you may wonder what
qualifies me to make such a bold state-
ment as I do with this prediction. Its not
the fact that Ive been in the mortgage
business for 37 years, nor is it because I
have owned or been an owner/operating
partner in a number of mortgage or
mortgage-related companies across the
country, but rather, its the fact that for
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Columbus, Louisville, Minneapolis/St. Paul, Oklahoma City/Tulsa
area became know as the C-Suite, the
group of offices where the CEO, CFO, COO
and other C-Level executives work.
My apologies again to the readers of
this article over the past year who have
wondered what I meant by the C-Suite.
I now understand why it may have been
difficult to understand the perspective
from which I have been
writing these articles for
the past year if you havent
understood what I meant
by that C-Suite. Hopefully,
you now understand that
each month when I write
this article, I endeavor to
provide a perspective that
should be or hopefully it is
coming from the C-Suite in
the form of decisions made
by the C-Level executives
running the company.
So, back to the subject
of this months article
which is having to do with
the extraordinary changes
coming on our industry
changes that are beyond
anything most of us ever
thought possible. Things have been set
in motion, mostly by the federal gov-
ernment, that will undoubtedly result
in yet more dramatic changes in the
way we go about our business.
O We have not yet begun to under-
stand the full impact of financial
regulations, thanks to the Dodd-
Frank legislation that was signed
into law a short time ago.
O We have not yet begun to compre-
hend the full impact of the higher cap-
ital requirements for every independ-
ent mortgage banker across the coun-
try.
O We have not yet begun to realize the
full impact of the unbelievable growth
of the federal government and the
control it has over our industry.
O We have not yet begun to realize the
consequences of this Congress out-
of-control spending.
Sadly, the regulations being put in
place to protect consumers are actually
hurting them and the economy. The
more stimulus that we have thrust
upon us, the longer it will take for us to
get to an economic bottom so that we
can start the recovery that we so des-
perately want and need.
Yes, changes are coming, all the result
of regulations already passed by
Congressmen and Congresswomen that
have little or no understanding of the con-
sequences to our industry or to the con-
sumers theyre trying to protect. I dont
care what side of the political aisle you
may favor, but the vast majority of
A View From the C-Suite
In getting ready to write this article, I went
back and re-read the article I wrote a year
ago about the future of mortgage banking
entitled, What Lies Ahead for Mortgage
Lending? Back when I was writing that
article, I remembered asking myself, Do I
really dare write about what I see coming
at this industry? I saw some really ugly
things coming down the pike, and pre-
dicted as much. Unfortunately, those pre-
dictions, all of which came to pass, are but
a prelude to what is yet to come. Change
is coming some good and some not so
good, but interestingly enough, both the
good and the not so good changes are
going shake this industry to its core. That
is why Im titling this months article
Change? You Havent Seen Anything Yet!
But first, an explanation as to what a
C-Suite is. I have been writing for
National Mortgage Professional Magazine
now for over a year and was recently
made aware that a large number of faith-
ful readers of this series of article have
been wondering What the heck does
Dave mean by the C-Suite? My apologies
for any confusion or questions and I
maybe will ask that this explanation be
included in future articles.
Every company has a Chief the
boss, the owner, the president and chief
executive officer (CEO). The bigger the com-
pany, the more Chiefs there are.
Mortgage companies typically have a chief
financial officer (CFO), and frequently, a
chief operating officer (COO), and in the
case of banks involved in lending, a chief
credit officer (CCO). This group of senior
managers is commonly referred to as C-
Level executives. And because these C-
Level executives typically have their offices
in the same location, i.e. office suite, that
By David Lykken
If you are not
involved in politics,
you need to become
involved now for the
sake of our industry
and our country.
Mortgage Banking Change?
You Havent Seen Anything Yet!
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Mortgage Training and Education
panies they included in the more in-depth
study. It is fascinating to read. For the com-
panies that made it past the final cut, were
some interesting common denominators.
What I saw were these primary five CHIEF
guiding principles: Character, Honesty,
Integrity, Ethics and Faith (CHIEF).
Please excuse me for playing on this
acronym, but I am going to emphatical-
ly say that unless you have these CHIEF
principles guiding you as the chief
executive of your company, your proba-
bility of extraordinary success is limited,
if not impossible. These guiding princi-
ples are like having a good bright
lantern while hiking a precarious path in
the night. For those of us in this indus-
try, we are walking a very precarious
path with an increasing number of
twists and turns (changes) ahead. One
misstep could put you out of business as
quickly as falling off a cliff would.
The change that is coming to our
industry is largely the result of the fact
that many lost sight of these five guiding
principles. But here is the redemptive
good news. The greatest distinction we
have as humans amongst all of Gods cre-
ation is that we have free will. We can
make a quality decision to change, and if
the will to change is based on the right
principles, we can change our lives, our
companies, our future and our destiny.
On Aug. 28, Glenn Beck had a
Restoring Honor rally in Washington,
D.C., where hundreds of thousands of
Americans from every walk of life, race
and religion showed up en mass. In my
opinion, the reason many came was
more than just to support the cause,
but to make a statement about their own
commitment to return to honor which
involves each of these CHIEF principles
Character, Honesty, Integrity, Ethics, and
the most important, Faith.
For those who choose to change and
embrace these CHIEF principles, I believe
their chances for success increases expo-
nentially. Conversely, for those who do
not, the chance of failure increases dra-
matically. Im not looking forward to the
coming government controls and intru-
sions into our industry. Many believe that
this coming November, we will see an
uprising of We the people I pray that
We the people will elect a new crop
of freshmen Congressmen and
Congresswomen will have the will and
guts to roll back much, if not all, of what
the current Congress has put in place.
But no matter which way all that goes, I
know that if you will operate by these
five CHIEF principles, you can be one of
those that will be Built to Last and
achieve success regardless of how chal-
lenging environment becomes.
As always, I welcome your feedback.
David Lykken is president, mortgage
strategies and managing partner with
Mortgage Banking Solutions. David has
more than 35 years of industry experi-
ence and has garnered a national repu-
tation. 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 dlykken@mortgagebank-
ingsolutions.com.
To listen to author David
Lykkens online radio
show, log on to
www.bl ogtal kradi o.com
and type in Lykken on Lending in
the Search box on the right-hand
side of the page.
the past 10 years, I have had the privi-
lege of serving as a consultant to hun-
dreds upon hundreds of companies
across this great country. I have watched
some companies that most didnt think
had a snowballs chance in hell of mak-
ing it succeeded beyond anything any-
one could imagine. Conversely, I have
watched companies that many thought
were surely destined for greatness, crash
and burn seemingly unexplainably.
One of my favorite business authors is
James Collins. He has written several good
books, the most notable being, Good to
Great. But my favorite book written by
James Collins and co-authored by Jerry
Porras is Built to Last. If you have this book,
read it again. If you dont, I recommend
you buy it and download it onto your
favorite e-reader as well. Heres why
they studied and researched a large num-
ber of companies in search of the best of
the best companies. The criteria used to
select the companies they studied was
amazing. When I read the list, I began to
wonder if any company could meet their
stringent requirements to qualify.
Interestingly, too many companies quali-
fied and the criteria was made even more
stringent to narrow down the list of com-
36
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It is a new day in HECM counseling (and
lending) in America.
Beginning this month, the U.S.
Department of Housing & Urban
Development (HUD) is mandating extra
questions that HECM counselors must
ask reverse mortgage prospects in pre-
lending counseling. These questions
and processes are packaged as the
Financial Interview Tool or FIT.
Along with FIT, HUD is also requiring
HECM counselors to do a benefits audit
for seniors, using an online resource
called BenefitsCheckUp (BCU). Across the
country, there are public and private
benefit programs for seniors with limited
means. For those who qualify, these pro-
grams could supplement reverse mort-
gage cash or render it unnecessary, pre-
serving it for times of real need.
The National Council on Aging
(NCOA), a HUD counseling intermediary
since 2007, created these toolsresults
of years of exclusively serving seniors.
Lending, including reverse mortgage
lending, is over-weighted in left-brain
skills and processes and severely under-
weighted in right-brain insights and
perspective. The FIT questions are
designed to correct this structural intel-
lectual imbalance and bring about a
more holistic or whole-person approach
to HECM counseling (and lending). FIT
questions cover areas such as funds
usage, absence or presence of other
safety nets, for example, insurance poli-
cy or pension benefits for a surviving
spouse, and transitional issues like wid-
owhood, divorce and separation,
among others.
The FIT/BCU approach has been
used through the NCOA national net-
work since 2007, and NCOAs data and
experience show that it has been a suc-
cess with seniors. Like any good organi-
zation attuned to good ideas and best
practices, HUD got wind of FIT and BCU,
studied them, and adopted them for its
own ends: Protect seniors and manage
its insurance business risks at the
Federal Housing Administration (FHA).
A review of some initial industry par-
ticipants comments suggests there are
some misconceptions about FIT (and
BCU). With focus on FIT questions and
risk-factors, the series explain these
new realities in reverse mortgage lend-
ing in the age of the Dodd-Frank Act.
FIT for Reverse Mortgage Lenders:
Part I
FIT is all about questions
continued on page 42
Headlines and breaking news from
NationalMortgageProfessional.com.
Headlines and blogs from
around the web.
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heard on the street continued from page 29
O Mortgage Banking Solutions has
named F. Anthony Tony Musgrave
as a senior consultant.
O Freddie Mac has named Jerry Weiss
to the newly created position of
chief administrative officer.
O Timothy Geithner, secretary of the
U.S. Department of the Treasury,
has named John G. Walsh acting
comptroller of the currency.
O Jeremy Daugherty has joined
Prospect Mortgage as the new dis-
trict manager for the companys
southern Nevada region.
O Prommis Solutions has named John
Marecki vice president of East Coast
foreclosure operations.
O Chase has hired four new loan offi-
cers, including Tom Boudreau,
Peter Gerardi, Frank Martins and
Maureen Petrellese.
O RoundPoint Financial Group has
named Dave Worrall executive vice pres-
ident and national servicing manager.
O Kathy Marquardt has been named
associate vice president of commercial
servicing and council coordinator for the
Mortgage Bankers Association (MBA).
O Former National Football League
(NFL) player Arturo Freeman has
joined MyCapitalAccess.
O Sandy Simmons has been named opera-
tions manager of BluFi Direct Mortgage.
O Radian has promoted both Angela
Capone and Candice Racine to the
position of area sales manager.
O AMS Servicing LLC has appointed
Kevin J. Cooke to the position of
senior vice president, sale and busi-
ness development.
O Larry Sneathern has joined Beech
Street Capital as senior vice presi-
dent of loan origination.
O Steve Kenny has been promoted to
the position of commercial real
estate banking region executive for
Bank of America Merrill Lynch.
O Richard D. Powers has been named
president and chief operations offi-
cer of DJSP Enterprises Inc.
O Grandbridge Real Estate Capital LLC
has announced a number of promo-
tions, including, Richard Thomas to
senior vice president; Garner Tip
Strickland to vice president; Frank
Sciara, Chad Collins and Rad
Davenport as assistant vice presidents;
Tommy Ware to real estate analyst II;
Brett Olsen and David Schwarz IV to
real estate analyst III; David Cortez to
real estate analyst IV; and Sean Clancy
to real estate appraiser IV.
O Allied Home Mortgage Capital
Corporation has appointed Jeanne
L. Stell as consultant and compli-
ance manager.
Your turn
National Mortgage Professional Magazine
invites its readers to submit any infor-
mation, events, passages, promotions,
personal or professional occurrences
that seem appropriate and/or other per-
tinent data to the attention of:
Heard on the
Street/Mortgage
Professionals to Watch
column
Phone #: (516) 409-5555
E-mail:
newsroom@nmpmediacorp.com
Note: Submissions sent via e-mail are pre-
ferred. The deadline for submissions is the
1st of the month prior to the target issue.
Tony Musgrave
We are seeking nominations from our readers for the National Mortgage Professional
Magazines 40 Under 40 feature, slated to appear in our November 2010 edition.
Who qualifies: Anyone who is under the age of 40 and has had a major impact on the
industry. This could be through innovation, association participation, sales force
automation, community activism, management techniques, technology or any other
significant method that has influenced our industry. We would need a short, three-line
bio on you, along with a color photo and company contact info to complete the profile.
To be considered for the 40 Under 40 feature, visit
NMPMag.com/submit40under40 to submit your nominations.
National Mortgage Professional Magazine
Presents ... The 40 Under 40
The 40 Most Influential Mortgage
Professionals Under 40
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presented by the
The New Jersey Association of Mortgage Brokers and The Pennsylvania Association of Mortgage Brokers
Visit www.njamb.org for more information on Exhibit and Individual Attendee Registration
MONDAY, SEPTEMBER 20, 2010
11:00 a.m. Golf Outing Check In
Harbor Pines, Egg Harbor City, NJ
12:00 Noon Lunch at Golf Course Harbor Pines
9:00 a.m. - 6:30 p.m. Continuing Education:
8-Hr SAFE Course (includes 1-Hr PA)
7:00 p.m. - 9:00 p.m. Opening Networking Cocktail Reception
in the Exhibit Hall
TUESDAY, SEPTEMBER 21, 2010
8:30 a.m. - 9:00 a.m. Continental Breakfast
9:00 a.m. - 12:30 p.m. General Session
12:30 p.m. - 5:30 p.m. Exhibit Hall Open
12:30 p.m. - 2:00 p.m. Lunch in Exhibit Hall
2:30 p.m. - 4:00 p.m. Panel: Branch Opportunities for Mortgage Brokers
4:00 p.m. - 5:30 p.m. Special FHA Session
a) How should Brokers prepare to work with
Lenders under the new FHA ruling.
b) How to originate and process FHA Loans.
6:00 p.m. - 8:00 p.m. Networking Cocktail Reception
WEDNESDAY, SEPTEMBER 22, 2010
9:00 a.m. - 12:00 p.m. Concurrent Programs
Meet FHA Lenders & Companies offering Net
Branch Opportunities at Roundtables
(In order to purchase a table you MUST be an
exhibitor for the exhibit hall)
10:30 a.m. - 12:00 p.m. Panel: Opportunities in obtaining Warehouse Lines
12:15 p.m. - 1:30 p.m. Luncheon with Speaker:
Mortgage Fraud Scams - How to Avoid Them!
1:30 p.m. - 5:30 p.m. 4 Hr NJ State Laws Pre-license Education
1:30 p.m. - 3:00 p.m. Panel: How to Increase Client Credit Scores
3:00 p.m. Conference Ends
TENTATIVE PROGRAM AT A GLANCE
Inlanta updates site for
customer convenience
Inlanta Mortgage has
completed a redesign
of its Web site,
www.inlanta.com, to
offer loan applicants and other site visitors
a quicker and more convenient way to
learn about the companys full range of
programs and services. Inlantas new site
includes many valuable consumer
resources and tools. Applicants can get
answers to many frequently asked
mortgage questions and even set up a
customized tracker to alert them when
rates reach a target level. Visitors also
have an opportunity to initiate a free,
no obligation consultation with an
Inlanta mortgage professional about
any of Inlantas loan programs for
home purchase, home renovation and
refinance.
The new Web site accomplishes our
goal of offering visitors a one-stop
source for mortgage answers and solu-
tions, said Jean Badciong, chief oper-
ating officer at Inlanta Mortgage. It
offers an easy and secure way to com-
plete a quick loan request, submit a
loan application or view the status of a
loan from the convenience of any com-
puter or mobile device. Whether they
are interested in a conventional loan,
FHA mortgage, refinancing, or even a
reverse mortgage, visitors can use the
Web site to get the information they
need to proceed with confidence.
Visitors also can learn about the
companys 17-year history, read about
recent news and events, and explore
employment opportunities and part-
nership programs with Inlanta.
Testimonials from Inlanta customers
address the companys professional-
ism, the refinancing process, and how
Inlanta has made the dream of home
ownership a reality for many individu-
als, couples and families.
For more information, visit www.inlanta.com.
Credit Plus announces
Credit Radar report
Credit Plus Inc. has announced that it is
offering Credit Radar from CreditXpert
Inc., an automatically generated cover
page for mortgage credit reports that
gives lenders an instant snapshot of an
applicants credit worthiness.
Credit Radar combines revolution-
ary credit intelligence and industry
best practices into a simple, elegant
cover page that is delivered automati-
cally with every credit report, said
Greg Holmes, national director of sales
and marketing for Credit Plus. Lenders
can instantly size-up their loan appli-
cants and spot any critical issues, all
without digging through the actual
credit report. And because its a cover
page, its automatically delivered with
no additional logins or clicks.
Each Credit Radar page includes
an easy to scan summary of three
components:
A forecast of the applicants mid-
score in 30 days, enabling the lender to
immediately be aware of potential
problems at closing; a mid-score risk
component that alerts the lender if
nominal increases in the applicants
revolving balance would put the mid-
score at risk of dropping; and key indi-
cators that may require the lenders
attention.
For more information, visit www.credit-
plus.com.
Interthinx expands risk
services to collateral
valuation
Interthinx has announced the launch of
Interthinx Review Appraisal Services for
the residential mortgage market.
Interthinx has combined its experienced
appraisal team with the technical
prowess of the Appraisal.com platform
developed by ACI, a leading provider of
technology solutions for the valuation
industry, to provide in-depth desk and
field review services to its national client
network. Interthinx is a provider of com-
prehensive risk mitigation solutions in
the areas of mortgage fraud, collateral
valuation, regulatory compliance, audit
services, and loss forecasting.
We saw the need for improving the
industrys approach within the valua-
tion space, said Mark Chapin, chief
valuation officer at Interthinx. Doing
business the same old way simply
wont work anymore. Thats why weve
begun to apply our proficiency in fraud
analytics to modify the way appraisals
are analyzed. By providing additional
data sources and better tools for exam-
ining property valuations, Interthinx
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GSF Wholesale -
The Safe Place for
your business!
Protect your loans with GSF
Contact the Client Relations Manager today at
1-877-494-4448
or service@gsfsales.com
Originating and closing loans these days can be very challenging. Lengthy
turn times, inexperienced underwriters, and high costs can contribute to
fewer closed loans.
GSF Wholesale is the safe and secure place for all of your business.
Our experienced staff is dedicated to ensuring your loans are protected.
With seasoned underwriters, efcient quality control department and
competitive pricing, GSF Wholesale is focused on you and your business
every day to meet the challenges of the new lending environment.
GSFSal es. com
offers lenders the opportunity to
reduce collateral risk significantly via
an innovative, Web-based system.
Interthinx Review Appraisal Services
includes desk and field appraisal reviews
(current and retrospective) and reconcilia-
tion services. All services use a certified
licensed level real estate appraiser, select-
ed only after a stringent background
check has met Interthinx standards. The
opinion is supported by data from public
and Interthinx proprietary sources and
the knowledge and experience of the
review appraiser. The offering helps
lenders mitigate the risk of investor buy-
backs due to collateral valuation issues.
The analytics and tools we are devel-
oping in tandem with ACI are shaping the
future of valuation, said Kevin Coop,
president of Interthinx. Expanding our
current valuation services division to pro-
vide in-depth desk and field appraisal
review services that leverage our propri-
etary data, analytics, and systems is a nat-
ural and necessary step for Interthinx and
our customers. We look forward to pro-
viding trustworthy, high-quality, and
streamlined services for lenders and
investors nationwide.
For more information, visit
www.interthinx.com.
Ellie Mae announces
Success-Based Pricing
option for Encompass 360
Ellie Mae has
announced a
pricing struc-
ture available
to customers of Encompass360
Mortgage Management Solution
Banker Edition. In addition to its host-
ed and licensed models, Encompass360
Banker Edition is available as a
Success-Based Pricing model. With
this model, customers do not have to
purchase the technology. Instead, they
pay a feewhich may be passed to the
borrower, to the extent permissible by
law, as part of the lenders origination,
document preparation and processing
feesfor each closed loan.
Encompass360s Success-Based Pricing
gives us the same access to all the bells
and whistleslike loan officer websites to
communicate with borrowers, closing
tools and automated loan origination
compliance checksall without a long-
term investment, said Encompass360
customer Joe Cuttone, owner and chief
executive officer of American Fidelity
Mortgage Services. Were a medium-
sized company with a system that rivals
any solution in the industryand that
includes the technologies used by the big
players. It really makes economic sense
for us.
All Success-Based Pricing customers
have the exact same fully integrated access
to Encompass360s comprehensive set of
features that licensed-pricing customers
have, including private-labeled borrower-
facing Web sites, electronic disclosures and
eSigning, electronic document manage-
ment technologies, Encompass Closer doc-
ument preparation services, and
Encompass Compliance Service automat-
ed compliance technologies.
Customers opting for Success-Based
Pricing may order an unlimited number
of disclosures and closing documents
may be drawn as many times as is need-
ed, all for no extra charge. There are no
or minimal upfront fees for new Banker
Edition customers to get started using
Encompass360 Success-Based Pricing.
Nominal monthly fees are required if
closed loan minimums for such month
are not met and the per-closed loan fee
may be based, in part, upon the number
of originators per customer company.
Some of our customers asked for
the type of flexibility and business con-
trol that comes with this type of pric-
ing, so we are providing it to them,
said Jonathan Corr, chief strategy offi-
cer for Ellie Mae. Ellie Mae has always
had a strong commitment to helping
customers do more and better busi-
ness. This is a win-win pricing model
where our customers success becomes
our success. Were giving our customers
one more way to do business in a way
that makes most sense for them, while
theyre still getting a footprint of capa-
bilities that span the full spectrum of
the mortgage loan origination cycle.
For more information, visit
www.elliemae.com.
Del Mar DataTrac partners
with CCMC on regulatory
compliance solution
Del Mar DataTrac Inc. (DMD),
a provider of end-to-end
mortgage lending automa-
tion solutions, and CCMC
Inc., a technology interface provider,
have released DMDBridge, a connectiv-
ity tool that automatically moves loan
data from a lenders third-party origi-
nation system to the DataTrac mort-
gage banking system of record. The
first DMDBridge was created for com-
panies with loan officers working in
Encompass 360 that rely on DataTrac as
their centralized mortgage lending
platform. DMDBridge captures all of
the data in the industry standard DU
3.2 file set plus the addition of loan
information needed to ensure compli-
ance with Real Estate Settlement
Procedures Act (RESPA) and other
emerging regulatory requirements.
DMDBridge pulls fee information
required by RESPA for borrower disclo-
sures and escrow information for the
Truth-in-Lending (TIL) disclosure from
Encompass and automatically popu-
lates fields in DataTrac. Without
DMDBridge, processors are required to
manually enter loan file information
from the LOS into DataTrac, introduc-
ing inefficiency and the adjunct risks of
re-keying data.
DMD is all about making mortgage
bankers more efficient, which includes
adapting to new regulations and the
increased need for loan data detail that
flows from point-of-sale through to sec-
ondary marketing to meet end-to-end
compliance requirements, said Rob
Katz, president of DMD. We went to
CCMC to help develop a tool our users
continued on page 40
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Contact one of our Regional Managers in your area
TX, OK, LA: David Walden 1-214-878-6300 dwalden@iservelending.com
Southeast & East Coast: Ken Michael 1-931-222-8023 kmichael@iservelending.com
CA, OR, WA, NV: Allen Friedman 1-415-298-2500 afriedman@iservelending.com
UT, CO, ID, WY, MT: Tony Moore 1-801-824-7243 tmoore@iservelending.com
KEY #1
Offer your borrowers full product line,
BEAT THE STREET PRICING and
dedicated service support
FHA, Conventional, Jumbo, Super Jumbo,
USDA, VA and Reverse Mortgage products
& more coming!
On-line pricing system with lock-in and ap-
proval engine
Automated pre-approvals
Full 24/7 access to processing and under-
writing pipeline management
24 to 48 hour turn times on conditions and
underwriting
Fund loans in two weeks
KEY #2
Have a POWERFUL lender behind you
Full service Direct Lender
Multi-state lending
As a HomePath Lender we can deliver
leads directly from FannieMae
Experienced underwriters and staff to as-
sist with your loans
Non-Disclosure of YSP on HUD
Appraisals ordered in-house through our
appraisal department and using local ap-
praisers
In-house licensing department to handle all
State Licensing and Compliance
The security and stability of a big lender
with the personal touch of a small lender
KEY #3
Maximize Branch PROFITABILITY and
Branch Manager COMPENSATION
Generous commission split
Branch managers are able to control their
branchs profts by designing their own rev-
enue model for the four sources of income
indigenous to their market
W-2 Employee with group health, dental,
vision and disability benefts
Matching 100% dollar for dollar 401K con-
tributions with vesting in 3 years
Support for all accounting, human resources,
payroll, licensing and operations
new to market continued from page 39
need because it is the best interface
provider in our industry.
The DMDBridge has been architect-
ed to allow for additional third-party
systems to seamlessly integrate to
DataTrac, and CCMC is already working
extensions to various serving systems.
CCMC is proud of its partnership
with DMD and has created the
DMDBridge interface to serve DataTrac
users ongoing needs with full support
services and software updates, said
CCMC Vice President Dana Giesler. We
are pleased that DMD users are experi-
encing an immediate return on invest-
ment and relief from compliance
headaches.
For more information, visit www.dmd-
inc.com or www.ccmcinc.com.
IVS releases automated
inspection form for
distressed properties
Infinity Valuation Services
(IVS), a full-service valua-
tion company for dis-
tressed properties, has
announced that it now provides a fully-
automated property inspection form to
support its services. IVS works with thou-
sands of real estate agents across the coun-
try to provide interior and exterior broker
price opinions (BPOs), appraisals and
property inspections. As an integrated
component of IVSs BPO system, the new
form now enables the company to tailor
the inspection report information to bet-
ter meet the needs of clients.
As an expert in the distressed prop-
erty industry, we have created an auto-
mated form that is designed to address
the specific questions and concerns of
organizations regarding their dis-
tressed assets, said Chris West, presi-
dent and chief executive officer of IVS.
The form enables IVS to add compo-
nents to the inspection to address spe-
cific concerns our clients have about
their respective portfolios or pool of
assets. Once the property has been
inspected, agents can easily enter the
information and upload the correspon-
ding photos for immediate delivery to
our clients.
The automated inspection form pro-
vides the answers to a series of ques-
tions about the property including:
Details about the current condition
(interior and/or exterior); the need for
repairs or maintenance; the occupancy
status; listing detail and nearest com-
parables; and code violations (poten-
tial or confirmed).
The form can be used to check on list-
ing agents to ensure they are maintaining
properties for maximum buyer attention
at a fraction of the cost of sending staff
on inspections. In addition, a bank or
financial institution can use the form to
check on the quality of the agents used to
manage their real estate-owned (REO)
properties. A loan servicer can use the
form to check on the condition of a prop-
erty immediately prior to a foreclosure
sale or after a natural disaster and traders
can use the form to ensure bulk sale
properties are in saleable condition right
before finalizing a bid.
Our mission is to provide indispen-
sable services that enable our clients to
make critical valuation decisions, said
West. We accomplish this by taking the
time to ensure that we understand the
goals of our clients and communicate
that information to our agents. The
introduction of an automated property
inspection form is our latest effort to
advance that mission.
For more information, visit www.ivsbpo.com.
eTEC to market InHouse
Connexions as private
label appraisal process
management technology
InHouse Inc., a
provider of apprais-
al solutions for
banks, lenders and other mortgage orig-
inators, announces that eTEC, a leading
appraisal management company (AMC),
has added a private-labeled version of
InHouses Connexions technology to its
product and service offerings.
Connexions will be available through
eTEC as eTEC Powered by Connexions.
It is the first appraisal technology to
combine analytics, data mining and
workflow on one platform as well as
the only appraisal management tech-
nology that allows users to manage any
combination and number of appraisal
vendorsAMCs, appraisal companies
and individual appraisersall from
one central platform.
Offering eTEC Powered by Connexions
not only expands eTECs business oppor-
tunities as an AMC, but also provides its
lender customers with a time-tested tool
for managing the entire appraisal work-
flow in addition to ensuring geographic
competence and optimal appraiser selec-
tion according to the property.
The system gives lenders the free-
dom to run their appraisal process in
the way that works best for them, while
staying compliant with the Home
Valuation Code of Conduct (HVCC), FHA
Appraiser Independence, and other
guidelines. Lenders also have the abili-
ty to add AMCs and appraisers into the
system in seconds, so they never have
to be locked into any specific vendor.
We now sell the technology as part
of an appraisal package to lenders,
said Susan King, executive vice presi-
dent and national sales director for
eTEC. We know that a lot of lenders
prefer to do business with more than
one AMC, and we saw that Connexions
accomplished that objective with eco-
nomic and compliance sense. Users are
assured of the highest quality, most
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W E A R E R E M N W H O L E S A L E
These days, not many mortgage companies
are talking product. Naturally, REMN has FHA,
VA and Conventional solutions to fit the needs
of your customers. But, at REMN, our most
valuable product is our people. The REMN
Sales and Operations teams give you and
your loans the time and attention you
deserve. Even better, at REMN, same-day
approvals are guaranteed.* You can rely on us
to get the little, yet vital, things taken care of
on time. Its time to get to know our people.
Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third
parties. Information is accurate as of date of printing and is subject to change without notice.
* Same-day decisions guaranteed if file is received by 11 a.m. EST.
Learn more at www.remnwholesale.com
Our product is
our people.
reasonable prices, and of course, com-
pliance is always covered. Were happy
to be providing these opportunities to
our customers.
For more information, visit www.inhouse-
usa.com.
StreetLinks expands its
guarantee to include
appraiser competency
Fannie Maes
announcement
SEL-2010-09,
June 30, 2010
specifies lender responsibility and liability
regarding appraiser selection criteria,
regardless if the selection is performed
by a third-party appraisal management
company (AMC). StreetLinks National
Appraisal Services (StreetLinks) has always
provided, on every appraisal at no addi-
tional cost, an exclusive Warranty of
Appraisal Quality, which provides indem-
nification to lenders in the event of a veri-
fied appraisal related repurchase demand.
StreetLinks revised Warranty of Appraisal
Quality & Appraiser Competency provides
comprehensive indemnification to lenders
inclusive of Fannie Maes appraiser selec-
tion criteria mandates.
Now that Fannie has clarified that
the liability for appraiser selection and
competency rests solely on the lenders
shoulders, all lenders should give care-
ful consideration to AMC models that
prioritize transactional profit over geo-
graphic proximity and report quality,
explained Tony Ebeyer, StreetLinks
chief operating officer. Appraiser prox-
imity, geo-competency and historical
quality have always been the keystones
to StreetLinks proprietary assignment
methodology, IQ-Selectregardless of
the impact on our margin.
StreetLinks has long been the indus-
try leader in appraiser proximity, geo-
competency and appraisal quality as
evidenced by its approach to appraisers.
StreetLinks has never mandated fees to
its appraiser partnersappraisers set their
own market fees. In addition, all assign-
ments are processed through IQ-Select,
which ranks appraisers on proximity, his-
torical quality, historical service metrics
and capacity.
Everything in the new Fannie Mae reg-
ulations has always been at the core of our
business model which provides the high-
est quality appraisal reports in the indus-
try. Lenders can be assured that our
appraiser selection and assignment
methodology, backed by our warranty, is
compliant with Fannies requirements,
said Steve Haslam, StreetLinks chief execu-
tive officer. Fannie has officially placed
the burden on the lender for compliance
with best-practice appraisal assignment.
As such, lenders should carefully scrutinize
the appraiser selection and assignment
methodology used by their AMC or in-
house appraisal management solution.
StreetLinks provides appraisals
nationwide that are fully compliant
with Federal Housing Administration
(FHA), the Home Valuation Code of
Conduct (HVCC), Fannie Mae, Freddie
Mac and all other current regulations.
An innovator in the appraisal manage-
ment marketplace with its industry-first
Certificate of Compliance and TILA-
Trigger technology, StreetLinks manu-
ally pre-underwrites every appraisal for
compliance with lender guidelines.
For more information, visit www.streetlinks.com.
Ellie Mae announces the
addition of PHH Mortgage
to Encompass 360 program
PHH Mortgage
Corporation, a
subsidiary of PHH Corporation, and Ellie
Mae, the enterprise mortgage origina-
tion technology provider, have jointly
announced that PHH Mortgage has
been added as a lender to Ellie Maes
Encompass360 Select program, which is
exclusively accessed by preferred cus-
tomers of Encompass360.
The Encompass360 Select program
enables a unique and proactive two-way
flow of communication between pre-
ferred Encompass customers and PHH
Mortgage. After these customers submit
loan information into Encompass360,
that information is matched instanta-
neously against pre-determined PHH
Mortgage loan criteria and the pricing
for the loan is automatically presented
on the customers Encompass360 screen.
Customers that are pre-approved by
PHH Mortgage can also upload loan
applications into the PHH Mortgage
Speedy Online Application and Response
(S.O.A.R.) loan origination system, lock
loans and check loan status in real-time.
The program provides approved cus-
tomers with seamless synchronization
between all loan submissions to PHH
Mortgage and the loan conditions and
data that are comprehensively stored in
the customers Encompass360 system.
Our business partnership and inte-
gration with Ellie Maes Encompass360
loan origination system is one of the
first its kind. It will help clients improve
their service delivery to their cus-
tomers, as well as allow them to help
simplify the process of selling their
loans in the secondary market, said
Mike Dirrane, executive vice president
of sales for PHH Mortgage. This rela-
tionship is only being offered to a group
of preferred Encompass360 customers
that have demonstrated their ability to
write the quality of business that aligns
with PHH Mortgages standards.
continued on page 42
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new to market continued from page 41
Encompass360 Select customers also
benefit from PHH Mortgages loan deci-
sions in as little as three business days.
These select originators have the flexibil-
ity of functioning as a broker or banker,
depending on the transaction, and oper-
ating as either a delegated or non-dele-
gated correspondent. Additional bene-
fits include access to PHH Mortgage
underwriters, training, channel decision-
makers, exclusive customer service team
members, and a dedicated help desk.
PHH Mortgage offerings within the
Encompass360 Select program are pre-
sented to program customers who are pre-
approved to do business with PHH
Mortgage. Encompass360 Select customers
that are not pre-approved with PHH
Mortgage may apply through its stream-
lined application process and will receive a
decision in as few as five business days.
We are very pleased to be adding PHH
Mortgage as a lender in the Encompass360
Select program, said Jonathan Corr, chief
strategy officer for Ellie Mae. PHH Mortgage
stands for the kind of service quality and
dedication that our Encompass360 cus-
tomers expect from their best lenders. By
proactively offering PHH Mortgages mar-
ket-forward pricing and products within
Encompass360, Ellie Mae is taking another
important step toward expanded efficiency
and productivity for our customers, provid-
ing more choices and moving toward a
more holistic approach that elevates total
loan quality.
For more information, visit www.phh-
mortgage.com or www.elliemae.com.
ALTA announces update
to RESPA-compliant
uniform instructions
The American Land Title
Association (ALTA) has
announced that it has
updated its uniform set of
instructions to help facili-
tate the handling of new
settlement documents that became
mandatory Jan. 1, 2010 due to changes
to the Real Estate Settlement Procedures
Act (RESPA). The Uniform Supplemental
HUD-1/1A Instructions are now available
in an editable PDF file format and facili-
tates the transfer of information from
lenders to settlement agents in order to
create an accurate, compliant HUD-1/1A.
By including this information in a
standardized format that can be keyed
in directly from a computer, ALTAs
Uniform Supplemental HUD-1/1A
Instructions greatly reduce the burden
on lenders and settlement agents relat-
ed to preparation and approval of final
HUD-1/1A documents, said Mark
Winter, president of ALTA. Lenders and
settlement agents who seek a more effi-
cient and compliant closing and fund-
ing process will adopt this form.
On Jan. 1, 2010, the U.S. Department
of Housing & Urban Development (HUD)
began requiring lenders and mortgage
brokers provide consumers with a stan-
dard Good Faith Estimate (GFE) that dis-
closes key loan terms and closing costs.
Closing agents are required to provide
borrowers a new HUD-1 Settlement
Statement that compares consumers
final and estimated costs.
Adopting a standardized format for
transmitting the information from the
loan originator to the settlement agent
that is necessary for the completion of
the HUD-1 will benefit all of the partic-
ipants in the settlement process by
improving the efficiencies and accuracy
of the finished product.
Uniformity benefits the loan origi-
nator, settlement agent and consumer
by reducing the incidence of errors,
thereby eliminating problems at and
after the settlement as well as speeding
up the settlement process, Winter said.
This supplemental document in its
updated form adds efficiency and
transparency to the new mortgage doc-
uments and should prove advanta-
geous to lenders looking for a standard
way to send Good Faith Estimate infor-
mation to settlement agents.
For more information, visit www.alta.org.
ProLender Solutions
launches FHA Connection
interface
P r o L e n d e r
Solutions Inc.,
a lending soft-
ware provider for mortgage lenders,
has announced the release of its FHA
Connection interface, which allows
users to easily send information from
the ProLender software directly into
FHA Connection, eliminating the need
for users to log into FHA Connection
and manually complete the screens.
The FHA Connection interface
streamlines the process for FHA loans
said Steve Hendrix, training and sup-
port manager at ProLender Solutions.
Our clients are excited they can lever-
age the information already in
ProLender and not have to go to a sep-
arate website anymore. It just makes
their job so much easier and eliminates
a lot of duplicate data entry.
The ProLender team, working togeth-
er in partnership with their clients, creat-
ed the new FHA Connection screen with-
in the ProLender application to include
the ability to validate the subject proper-
ty address, obtain a CAIVRS authoriza-
tion, request a case number assignment
and submit the appraisal logging. With
just a few clicks of the mouse, the user
can send the required information over
to FHA Connection and receive a
response back which improves efficiency
and reduces potential mistakes.
ProLender develops paperless lend-
ing software specifically designed for
mortgage lenders looking to streamline
their operation. Because the ProLender
system integrates with many loan origi-
nation systems, credit systems, doc sys-
tems, MERS, warehouse banks and
We look at FIT risk factors and frame
questions to help loan officers talk with
seniors about soft risks that may affect
their ability to stay at home and bene-
fit from the reverse mortgage. Although
FIT is a HECM counseling tool, the
issues it addresses can help lenders
appreciate and manage reputation, lit-
igation, and financial risks uniquely
associated with HECM lending.
Here are the series goals:
O Address FIT misconceptions among
lenders and promote better under-
standing;
O Sensitize lenders to some of the soft
risks in HECM lending;
O Promote a holistic or whole-person
approach to HECM lending;
O Advance the idea that protecting FHAs
HECM Insurance Fund from losses is
the business of every industry partici-
pant. The industrys health depends on
the insurance funds soundness.
FIT is all about asking questions,
talking about risks seniors may not con-
sider because of the pressures of imme-
diate needs, and helping them make
better borrowing decisions. Sound bor-
rowing decisions help lenders,
investors and HUD avoid losses.
Atare E. Agbamu is author of Think
Reverse! and more than 140 articles on
reverse mortgages. Since 2002, he writes
the nationally-distributed column,
Forward on Reverse. A former director
of reverse mortgages at Minneapolis-
based AdvisorNet Mortgage LLC,
Agbamu has years of hands-on experi-
ence marketing and originating reverse
mortgages. Through his advisory,
ThinkReverse LLC, Agbamu advises
financial professionals, institutions and
regulators across the country. In a 2007
national report on reverse mortgages,
AARP cited Agbamus work. He can be
reached by phone at (612) 203-9434 and
e-mail at atare@thinkreverse.com.
Visit author Atare E. Agbamus
blog at thinkreverse.com for
his thoughts and insights
on the reverse mortgage
marketplace.
forward on reverse continued from page 36
Although FIT is a HECM coun-
seling tool, the issues it addresses
can help lenders appreciate and
manage reputation, litigation,
and financial risks uniquely asso-
ciated with HECM lending.
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were committed
to brokers!
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or email lconstant@ridgewoodbank.com
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Markets may be volatile, but theres one thing you can always count on, the total commitment
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much more, all users are able to work
from one corporate lending platform,
thus streamlining the process and elim-
inating the potential for costly mistakes.
We take great pride in working
with our clients to always provide the
greatest efficiency in technology and
this new FHA interface is another
example of that said Kevin Roczey,
president of ProLender Solutions.
For more information, visit www.pro-
lender.com.
LoanSifters product and
pricing engine now avail-
able to eMagic users
eMagic has announced that LoanSifters
real-time product and pricing engine is
now available to eMagic users through a
seamless integration, allowing lenders
and originators to identify, price and
process loans with greater accuracy and
speed than ever before. The integration
empowers eMagic users to further grow
profits and stay compliant with a grow-
ing number of industry regulations and
evolving investor guidelines.
"Our relationship with LoanSifter pro-
vides eMagic customers a competitive
advantage and better profitability. It also
streamlines the mortgage loan process,
said Chad Northington, managing director
of eMagic. eMagic customers now have
up-to-the-minute access to price loan sce-
narios in LoanSifter with lead or loan infor-
mation gathered in eMagic. This includes
underwriting guidelines, pricing incentives
and rejection details. eMagic customers can
upgrade to load any investor rate sheet, as
well as their own. The results can also be
automatically sent back to eMagic.
eMagic.com is an e-commerce sub-
sidiary of Mortgage Guaranty Insurance
Corporation (MGIC). LoanSifters products
provide instant, up-to-the-minute pricing,
product and guidelines on over 150 cor-
respondent and wholesale investors,
including MGICs own mortgage insurance
pricing and eligibility guidelines. Through
an upgrade to LoanSifters solutions,
eMagic customers can have access to
auto-quoting sites, automated email
alerts and drip marketing, open house fly-
ers, scenario tracking and alerts.
In todays environment, mortgage
lenders need seamless tools that give
them a competitive edge, said Bruce
Backer, president of LoanSifter. What
we bring to eMagic customers is just
thatan opportunity to remain nim-
ble with an automated workflow that
offers improved, accurate data quality,
better control and compliance, and
improved profitability.
For more information, visit
www.LoanSifter.com or www.eMagic.com.
Embrace Home Loans
launches Streamline 203(K)
home improvement loans
Embrace Home
Loans, a direct
lender for Fannie
Mae and Freddie Mac, approved by the
Federal Housing Administration (FHA) and
U.S. Department of Veterans Affairs (VA),
and an issuer for Ginnie Mae, announced
that it has begun offering Streamline 203(k)
loans. The company said the loans cover a
variety of home improvements and repairs
and allow borrowers to take out a single
mortgage covering the purchase and reha-
bilitation of a dwelling. Much like other FHA
loans offered by the company, the FHA
insures the 203(k) loan in a partnership with
Embrace Home Loans.
Streamline 203(k) loans can accommo-
date repair costs up to $35,000. To be eligi-
ble for the program, a property can only
contain between one and four dwelling
units and must have been constructed for at
least one year. Not all home improvements
are covered under the 203(k) program.
"Embrace Home Loans has already
helped hundreds of thousands of families
with their mortgage financing needs," said
Kurt Noyce, president of Embrace Home
Loans. "We look forward to helping many
more families revitalize communities by
offering Streamline 203(k) loans. The pro-
gram streamlines the complicated process
of buying a home requiring rehabilitation,
allowing homebuyers to combine the cost
of purchase and improvement in a single
loan, making it a great choice for many
prospective and current homeowners."
Streamline 203(k) loans cover the
repair or replacement of roofs, gutters,
HVAC systems, plumbing, electrical sys-
tems and flooring. They can also be used
to cover minor, non-structural remodel-
ing projects, painting, weatherization, dis-
ability access improvements and appli-
ance replacement. They cannot be used
for major remodeling projects, new con-
struction, structural repair, environmen-
tal mitigations, landscaping, luxury
improvements or certain, more compli-
cated home improvement projects.
"The 203(k) loan program was created
by the Federal Housing Administration in
order to rehabilitate older neighborhoods
and to expand home ownership opportu-
nities," said Noyce. "By adding Streamline
203(k) loans to our product offerings, we
are able to continue this noble project and
assist in the revitalization of communities
across the United States. And because
Embrace Home Loans is an experienced
FHA insured loan lender, we are well
equipped to manage the 203(k) loan pro-
gram smoothly and effectively. We are very
proud to serve communities and families
by providing this important loan product."
For more information, visit
www.embracehomeloans.com.
Your turn
National Mortgage Professional Magazine
invites you to submit any information
promoting new niche loan programs,
new products or any other announce-
ment related to the introduction of a new
program, to the attention of:
New to Market column
Phone #: (516) 409-5555
E-mail:
newsroom@nmpmediacorp.com
Note: Submissions sent via e-mail are pre-
ferred. The deadline for submissions is the
1st of the month prior to the target issue.
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Appraisal Management
Company
We are a premier National Appraisal Company since 1970.
We have a complete product line for your entire organization.
We guarantee HVCC and FHA regulatory compliance.
Let our experience work for you. The way valuations should be.
Coester Appraisal Group
7650 Standish Place, Suite 107 Rockville, MD 20855
www.coesterappraisals.com
(888) 485-1999 Ext. 2
Branch Manager
Continuing Education
Contact Management/CRM
Branch Manager
Freedom Mortgage Corporation, The BEST Branch Solution, Period.
Freedom Mortgage Corporation
www.fmbranch.com
info@fmbranch.com
800.220.9498
iServe offers a complete product mix - aggressively priced, with
hassle-free service & turntimes. Branching & Loan Offcer
opportunities available nationwide. For a change, focus on
production, quick closes & a good night's sleep!
iServe Residential Lending
www.iservelending.com
afriedman@iservelending.com
415-298-2500
Be in business for yourself, but not by yourself. Join GSF Mortgage's
Professional Branch Network. Enjoy freedom and stability and reap
the rewards. Signing bonus for Branch Managers, retain 100% of
your commissions. Absolutely NO files fees, NO splits
GSF Mortgage
15430 W Capitol Dr. Brookfield, WI 53005
1-877-494-4448
www.gsfprobranch.com
Find out what Guaranteed can do for you.
Branch Program for Professionals. It's what we do.
Guaranteed Home Mortgage Company, Inc.
108 Corporate Park Drive, Ste 301
White Plains, NY 10604
888-329-GHMC www.joinguaranteed.com
Established in 1993 and headquartered in Waukesha, Wisconsin,
Inlanta Mortgage is a multi-state mortgage banking company com-
mitted to delivering superior service to our branch clients.
For more information, call 262-513-9853 or visit www.inlanta.com.
Inlanta Mortgage
W229 N1433 Westwood Drive, Suite 103
Waukesha, WI 53186
www.inlanta.com 262-513-9853
United Northern Mortgage Bankers......888-600-8808
Limited room available for established Team Leaders and
Licensed Mortgage Originators. Become part of an established
30-year Mortgage Banker with a proven track record and success.
WorkCenter CRM ....................................877.498.6888
A CRM & contact management solution designed for mortgage
professionals. Automated campaigns & LOS synchronization make
WorkCenter an intuitive timesaver for staying in touch with clients.
Church Financing
Church Purchase & Construction $100,000 to $2,500,00
Church Refnance & Cash Out Churches all 50 states
75% of Appraised Value 20 Yr. Fixed Rate
CONCORD CHURCH FINANCE
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800-926-0399 Fax: 858-756-8108
Brokers United ........................................877-710-0948
Consulting & Branch opportunities. Exclusive opportunities with a
top Federally Chartered Bank, Mortgage Banker and/or Mortgage
Banker/Broker Platform. Email Jeff Flees at jeff@brokersunited.net.
Closing Gifts
Increase your Loans,Get the Edge & Generate More Referrals!
Offer your clients a 5 Day 4 Night Cruise certificate for Two to Mexico,
the Bahamas or the Western Caribbean (up to a $1798.00 value) only
when they close a loan with you. Only $159.00 per certificate!!
Cruise4Two-Loan Incentives
1-866-541-8077
www.Cruise4Two.com
Compliance Consultants
The first full-service, mortgage risk management firm
in the country, specializing exclusively in mortgage compliance.
Pioneers in outsourcing solutions for mortgage compliance.
Our Compliance Team Will:
Leverage your existing employees.
Improve your productivity.
Collaborate on projects.
Make the most of your current technology.
Bring innovation to your company.
Be a strong cultural fit.
Free you to focus on your core competencies.
Give you access to world-class expertise.
Lower your total operational costs.
LENDERS COMPLIANCE GROUP
167 West Hudson Street - Suite 200
Long Beach | NY | 11561 | (516) 442-3456
www.LendersComplianceGroup.com
Time is running out...are you ready?
Pass the S.A.F.E. Act Test, meet your 20 hours of Pre-licensure,
and complete the 8 hours of Continuing Education you need
The Ultimate Test Prep Kit and Test Prep Boot Camps Cover
everything to pass the S.A.F.E. Act Test on your frst try.
20-hour Pre-licensure - Packed with everything to successfully
complete your pre-licensure requirements.
Continuing Education - Exciting, NMLS approved courses that
meet your Continuing Education needs and build your business.
MSS Learning Center
(800) 963-1900
www.MortgageSuccessSource.com/learning.php
Email: info@MortgageSuccessSource.com
Bookmark this!
Access these
listings online at
nmpmag.com/directory_list
Does Advertising in
the Resource
Registry Work?
It just did!
Call 888-409-9770
ext. 4 to Register
your company.
45
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Education
"North Lake College - Specialized Education In Mortgage Banking.
Earn An Associates Degree in Mortgage Banking From the First Fully
Accredited Mortgage Banking Degree Program in the U.S. For
Information About Our 30 Year Program email:kbaker1@dcccd.edu.
North Lake College
5001 North MacArthur Blvd, Room T-231-C
Irving, TX 75038
(972) 273-3467 http://www.northlakecollege.edu/
Errors and Omissions
Insurance
Doc Management
DocVelocity is an end-to-end paperless solution designed to sim-
plify the loan origination experience. Imagine having all your doc-
uments in the loan process as electronic files, all online, from pre-
approval to closing. DocVelocity provides: Fast and easy loan
delivery to any lender Automatic doc sorting, naming and filing
Real-time online document sharing for anyone you choose
Friendly and intuitive user interface No start-up fees, and free
training and support. DocVelocity addresses important compli-
ance issues while giving your office the competitive advantage of
being paperless. It streamlines all aspects of the mortgage
process and most important, it does so in one easy-to-use and
inexpensive package. Its newest version, DocVelocity 2.5, adds
over 50 new features and enhancements to make the best paper-
less office even better. DocVelocity is the flagship product of
Paperless Office Solutions, Inc., a wholly owned subsidiary of
Flagstar Bancorp. Visit www.docvelocity.com to find out more.
DocVelocity
www.docvelocity.com
(877) 362-8356
sales@docvelocity.com
Events
The Expo for Real Estate Professionals"
For ongoing Networking Events throughout the year please visit
www.nycnetworkgroup.com.
NYC Real Estate Expo LLC
Anthony Kazazis - Director
apkazazis@optonline.net www.nycrealestateexpo.com
646.210.2545 914.763.8008
Hard Money/Private Lending
ACC Mortgage, Inc.
932 Hungerford Drive #6 Rockville, MD 20850
240-314-0399 240-314-0336 fax
WeApproveLoans.com
We are doing traditional subprime lending, fix & flip lending and
hard money lending.
Income Verication Services
Advanced Data
(800) 537 - 0458
www.advanceddata.com
verifications@advanceddata.com
Advanced Data is a leading national provider of data services,
streamlining income and employment verification with proprietary
software. Clients can submit 4506-T directly through Encompass360.
Also ask about our AVM and flood services!
CB Malaga Insurance Services LLC......877-245-5887
Insurance broker providing errors & omissions (E&O)
insurance to mortgage brokers and bankers. All loan types.
Available in 22 states. www.CBspecialty.com
Jumbo
Sign up with the
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Move your Jumbos to a better neighborhood. ING Mortgage is
your home for Portfolio loans up to $3,000,000. We offer aggressive
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Leads
Our network attract over one million visitors per month. Our paid
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sumers searching online for the right mortgage lender.
MortgageLoan.com
SM
www.mortgageloan.com 877-390-4750
MortgageLoan.com is the largest online directory
for mortgage professionals and a favorite of
consumers shopping for mortgage loans.
Reach affluent and creditworthy consumers who are in-market and
ready to transact. Bankrate is a consumer direct Web site, NOT a
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Our proprietary Advertiser Portal gives you complete control
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Attracting over 7 million unique
consumers every month
www.Bankrate.com 561-630-1257
Loan Incentives
Increase your Loans,Get the Edge & Generate More Referrals!
Offer your clients a 5 Day 4 Night Cruise certificate for Two to Mexico,
the Bahamas or the Western Caribbean (up to a $1798.00 value) only
when they close a loan with you. Only $159.00 per certificate!!
Cruise4Two-Loan Incentives
1-866-541-8077
www.Cruise4Two.com
Loan Origination Systems
Calyx Software, the #1 provider of mortgage solutions is dedicated
to offering reliable and affordable software that streamlines, inte-
grates and optimizes the loan process. Find out how PointCentral
can streamline your business and create compliant processes today.
Calyx Software
800-362-2599
sales@calyxsoftware.com
www.calyxsoftware.com
End-to-end LOS system for multi-channel lending.
PreQual thru Interim Servicing. Includes all back-office functionality;
Underwriting,Secondary Marketing,Post Closing and much more
SaaS, ASP and Client Server delivery options.
Mortgage Builder Software
24370 Northwestern Highway, Suite 200
Southfield, MI 48075
800-460-5040 www.mortgagebuilder.com
Loan Management Systems
Xetus ....................................................877-GO-XETUS
XetusOne is a powerful, easy-to-use loan management system
that streamlines loan processing. Our affordable SaaS applications
are lenders #1 choice for origination, subordination & modification.
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Title
Wholesale/Residential
Wholesale/Residential
Intracoastal Abstract Co. Inc. ................516-358-0505
Privately owned & operated full service title insurance agency
in NY, NJ and FL, with affiliates throughout the US & Canada.
Escrow Agent in Florida. www.intracoastalabstract.com.
Flagstar Wholesale Lending, a division of Flagstar Bank, is one of
the nations largest wholesale and correspondent mortgage
lenders, providing the technology, products, service and support
that independent mortgage brokers, correspondents, and bankers
need in todays mortgage arena. In the ever-changing environ-
ment of mortgage banking, Flagstar takes pride in accommodat-
ing the specific needs of each customer. At Flagstar, we under-
stand that you need every available advantage to stay ahead of
the competition. This is why we provide multiple technology
options to meet your needs to register, lock, underwrite, close,
fund and deliver your loans. Our wholesale website
(wholesale.flagstar.com) and the loan processing tool Loantrac
provides our customers with the functionality that make it easier
and faster to close loans, saving you time and money! Visit whole-
sale.flagstar.com to learn more.
Flagstar Wholesale Lending
www.wholesale.flagstar.com
(866) 945-9872
WLSC@flagstar.com
Retail Branch
Are you a broker/owner or current branch manager looking to
expand your business into Mortgage Banking with FHA capabilities?
Then our PARTNER BRANCH ADVANTAGE program is perfect
for you. We are offering you all the benefts of partnering with an
established lender while still enjoying your independence.
Mortgage Concepts is a nationwide FHA Direct Lender with a 16
year long reputation of excellence.
YOUR SUCCESS IS OUR SUCCESS!
For more information contact THOMAS R. SIRICO, Vic President
of Business Development at (917) 923-1472 or email at
tsirico@mortgageconcepts.com.
We look forward to sharing our services with you!
(800) LOANS-15
www.mortgageconcepts.com
We offer competitive pricing and fast turn-times for FHA, VA,
Conventional, and USDA programs without having a retail pres-
ence in the industry. We are a wholesale lender with 22 years of
experience and believe in exceptional service.
Terrace Mortgage
4010 W. Boyscout Blvd., Suite 550
Tampa, FL 33607
866-934-4631 www.terracemortgage.com
Your Ad Here
The Resource Registry is a directory of lenders (wholesaler or
retail that are recruiting), affiliated services and resources
that is seen by more than 191,181 active Professionals.
Call 888-409-9770 ext 4. to register your company.
If your ad was here, you would be seen by
191,181 Mortgage Professionals looking for
resources to help them in their business.
Regulatory/Compliance
Comergence Compliance Monitoring is the mortgage industrys only
Complete broker desk management software and outsource solution
for TPO management and monitoring. We can supplement lenders in-
house management and monitoring resources departments.
Comergence Compliance Monitoring, LLC
630 The City Drive South, Suite 205 Orange, CA 92868
Office: 714-740-9000
www.ComergenceCompliance.com
Sales Coach/Training
Secondary Marketing
Consulting
At Abacus we make your education count!
Nationally approved mortgage education provider - #1400011
NMLS Approved Prelicensing and Continuing education courses
National and State Exam Prep Materials - start studying now!
Abacus Mortgage Training and Education
PO Box 780
Summerfield, NC 27358
888-341-7767 www.GetYourEd.com
Call 888-409-9770 ext 4.
to register your company.
Broker to Banker Services.com ..........(951) 746-3075
We complete your applications for approval
Save the time and hassle
contact: brokertobankerservices.com
Lykken on Lending is a weekly 60-minute show hosted
by mortgage veteran of 37 yrs, David Lykken, along with
special guest Alice Alvey & Joe Farr as well as featured
special guests. Each week we provide our listeners
with up-to-the-minute information of what is happening
in mortgage and housing industry.
Sign-on weekly at
nmpmag.com/lykkenonlending
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SAVE THE DATE!
Join the
2010 NAMB/WEST Conference
December 4-6, 2010 at the
MGM Grand Las Vegas!
Visit www.NAMBWEST.com
for updates.
For more details on Exhibiting and Sponsorship,
please contact Kinsley at 303-798-3664 or
registration@kinsleymeetings.com
Exhibitors will receive a
complimentary ad in the
December issue of the
National Mortgage Professional
Exhibitors and Sponsors
48
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SEPTEMBER 2010
Sunday-Tuesday, September 26-28
Mortgage Bankers Association Regulatory
Compliance Conference 2010
JW Marriott Hotel
1331 Pennsylvania Avenue
Washington, D.C.
For more information, call (800) 793-6222
or visit www.mortgagebankers.org.
OCTOBER 2010
Sunday-Tuesday, October 10-12
National Association of Hispanic Real
Estate Professionals/Asian Real Estate
Association of America 2010 Real Estate
Marketing Conference
The Bellagio Resort
3600 South Las Vegas Boulevard
Las Vegas, Nev.
For more information, call (858) 622-
9046 or visit www.nahrep.org.
Monday-Tuesday, October 11-12
Virginia Association of Mortgage Brokers
22nd Annual Convention
Colonial Williamsburg-Williamsburg Lodge
310 South England Street
Williamsburg, Va.
For more information, call (804) 285-
7557 or visit www.vamb.org.
Friday, October 22
Evolution: The Oregon Association of
Mortgage Professionals Mortgage Industry
Convention & Trade Show
1849 SW Salmon Street
Portland, Ore.
For more information, call (503) 670-
8586 or visit www.oamponline.com.
Sunday-Wednesday, October 24-27
Mortgage Bankers Association 97th
Annual Convention & Expo
Atlanta Georgia Congress Center
285 Andrew Young International
Boulevard NW Atlanta
For more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
NOVEMBER 2010
Thursday, November 4
Utah Association of Mortgage Brokers
2010 Annual Expo
Noahs
322 West 11000 South
South Jordan, Utah
For more information, call (801) 787-
6611 or visit www.uamb.org.
Monday-Wednesday, November 8-10
Mortgage Bankers of Pennsylvania
Conference
Wyndham-Conference Center
95 Presidential Circle
Gettysburg, Pa.
For more information, call (973) 379-
7447 or visit www.mba-pa.org.
Tuesday, November 9
Tennessee Association of Mortgage
Professionals 2010 Mortgage Industry
Showcase
The Best Western Cedar Bluff Inn
420 North Peters Road Knoxville, Tenn.
For more information, call (615) 302-
0001 or visit www.tnamb.org.
Tuesday, November 16
Missouri Association of Mortgage
Professionals 17th Annual Convention
St. Charles Convention Center
1 Convention Center Plaza
St. Charles, Mo.
For more information, call (314) 909-
9747 or visit www.mamb.net.
Wednesday-Friday, November 17-19
Mortgage Bankers Association Accounting,
Tax & Finance Management Conference 2010
The Roosevelt New Orleans
123 Barrone Street New Orleans, La.
For more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
DECEMBER 2010
Saturday-Monday, December 4-6
NAMB/WEST 2010
MGM Grand Las Vegas
3799 Las Vegas Boulevard South
Las Vegas
For more information, call (703) 342-
5900 or visit www.namb.org.
FEBRUARY 2011
Sunday-Wednesday, February 6-9
Mortgage Bankers Associations
Commercial Real Estate
Finance/Multifamily Housing Convention
& Expo 2011
Manchester Grand Hyatt San Diego
One Market Place San Diego, Calif.
For more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
Tuesday-Friday, February 22-25
Mortgage Bankers Association National
Mortgage Servicing Conference & Expo
Gaylord Texan Hotel & Convention
Center
1501 Gaylord Trail
Grapevine, Texas
For more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
APRIL 2011
Sunday-Wednesday, April 3-6
2011 National Association of Mortgage
Brokers 2011 Legislative & Regulatory
Conference
Hyatt Regency Washington
on Capitol Hill
400 New Jersey Avenue NW
Washington, D.C.
For more information, call (703) 342-
5900 or visit www.namb.org.
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 newsroom@nmpmediacorp.com.
COMPANY WEB SITE PAGE
Abacus Mortgage Training and Education .......... www.getyoured.com ....................................21 & 35
ACC Mortgage .................................................. www.weapproveloans.com ....................................26
American Toner & Ink ...................................... mortgagecompanyspecialist@amertoner.com ..........6
BankFinancial .................................................. www.bankfinancial.com ......................................34
Calyx Software ................................................ www.calyxsoftware.com ........................................4
CB Malaga Insurance Services LLC ...................... www.cbspecialty.com ..........................................13
Coester Appraisal Group.................................... www.coesterappraisals.com ..................................36
Comergence Compliance Monitoring, LLC .......... www.comergencetrustedmember.com ............8 & 29
Flagstar Wholesale Lending .............................. www.wholesale.flagstar.com ....................Back Cover
Freedom Mortgage .......................................... www.fmbranch.com ......................Inside Back Cover
Gateway Mortgage Group, LLC .......................... www.gatewayloan.com ........................................26
GSF Mortgage Corporation ................................ www.gsfprobranch.com ................Inside Front Cover
GSF Funding .................................................... www.gsfsales.com ................................................39
Guaranteed Home Mortgage.............................. www.joinguaranteed.com ....................................11
Inlanta Mortgage.............................................. www.inlantapartners.com ....................................13
iServe Residential Lending, LLC ........................ www.iservecompanies.com ..................................40
MBA-NJ/NJAMB ................................................ www.mbanj.com ..................................................38
MortgageProShop.com...................................... www.mortgageproshop.com ..................................28
Mortgage Concepts .......................................... www.mortgageconcepts.com ..................................7
NAMB/WEST .................................................... www.nambwest.com ....................................10 & 47
NAPMW .......................................................... www.napmw.org ..................................................37
PB Financial Group Corp. .................................. pbfinancialgrp.com ..............................................48
Quality Mortgage Services ................................ www.qcmortgage.com ..................................17 & 33
REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ....................................41
Ridgewood Savings Bank .................................. www.ridgewoodbank.com ....................................43
Seeking Active Mortgage Bank......................................................................................................20
Terrace Mortgage Company .............................. www.terracemortgage.com ....................................5
United Northern Mortgage Bankers Ltd. ............ www.unitednorthern.jobs .............................. 9 & 33
Xetus Mortgage Corporation.............................. www.xetus.com ..................................................42
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